ex10ggg.htm


    Exhibit
10-ggg

    


    


    


    


    


    


     

    AT&T
NON-QUALIFIED PENSION PLAN

     

    


    


    


     

    
      
        	 	

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

                  


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

                  


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

                

              	 


      

    

     

     

    As
Amended and Restated Effective January 1, 1997, Including

    Amendments
Adopted Through December 31, 2008

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    AT&T
NON-QUALIFIED PENSION PLAN

     

    


    Article
1.

    Purpose

     

    This
AT&T Non-Qualified Pension Plan (the “Plan”) is an amendment and restatement
of predecessor programs sponsored by the Company that were first adopted on
October 1, 1980, and reflects amendments adopted through December 31,
2008.  The Plan provides supplemental pension, disability and death
benefits to certain employees of AT&T Corp. (“AT&T”) and its Affiliated
Corporations, as defined herein. The Plan is intended to constitute an unfunded
plan of deferred compensation for a select group of management or highly
compensated employees for purposes of Title I of ERISA.  Except as
otherwise indicated herein, the provisions of this amended and restated AT&T
Non-Qualified Pension Plan shall apply only with respect to a Participant, as
defined herein, who terminates employment on or after January 1, 1997. For
former employees who terminated employment before January 1, 1997, the
provisions of the AT&T Non-Qualified Pension Plan in effect on the date of
the former employee’s termination of employment shall govern.

     

    Effective
January 1, 1997, the Plan was amended to provide a Special Update to the Basic
Formula and a Special Update to the Alternate Formula, for employees who were
actively employed and participating in the Plan on January 1,
1997.  Effective January 1, 1998, the Plan was amended to discontinue
ongoing benefit accruals for employees other than Officers, to implement a Cash
Balance Formula as the only formula providing ongoing accruals, and to provide
for the transfer of the benefit accrued as of December 31, 1996 under the
AT&T Mid-Career Pension Plan to this Plan, for Officers who participate in
this Plan on or after January 1, 1998.

     

    Effective
January 1, 2004, the Plan was amended to provide benefit accruals for a select
group of management or highly compensated employees of a Participating Company
who participate in the AT&T Executive Deferred Compensation
Plan.  The benefit provided to such employees by the Plan is generally
equal to the reduction in the benefit payable to or on behalf of such employee
under the AT&T Management Pension Plan and the AT&T Excess Benefit and
Compensation Plan, resulting from such employee’s election to defer amounts
(“Qualified Deferrals” herein) under the AT&T Executive Deferred
Compensation Plan or the AT&T Inc. Cash Deferral Plan.  Accruals
under this provision ceased December 31, 2007.

     

    Effective
after December 31, 2008, benefit accruals under this Plan are limited to
accruals under the cash balance formula with respect to short term incentive
awards, for employees who are Officers on December 31, 2008. These accruals will
continue for this group of Officers until the individuals “SERP Vesting Date,”
as defined herein, at which time the benefit will be frozen. Employees who
become Officers after December 31, 2008 are not entitled to benefits under this
Plan, except with respect to benefits earned under a prior formula that was
frozen effective December 31, 1997, or with respect to benefits based on
Qualified Deferrals, with respect to which benefit accruals ceased December 31,
2007.

     

    During
the period from January 1, 2005 to December 31, 2008, the Plan has been operated
in good faith compliance with the provisions of Code Section 409A, Internal
Revenue Notice 2005-1, and the final Treasury Regulations for Code Section 409A,
and any other generally applicable guidance published in the Internal Revenue
Service Bulletin with an effective date prior to January 1, 2009.  On
or after January 1, 2009, this Plan shall be interpreted and construed
consistent with the requirements of Code Section 409A and all applicable
guidance issued thereunder with respect to all accrued benefits under this Plan,
including, except as indicated below, those benefits that may be otherwise
treated as existing prior to the statutory effective date of Code Section 409A
(“grandfathered benefits”) within the meaning of Treasury Regulation Section
1.409A-6(a)(3).  The preceding sentence notwithstanding, it is the
intention of the Company that the grandfathering provisions of Code Section 409A
be applied under this Plan with respect to any Participant (and any surviving
Spouse, Beneficiary or Estate of such Participant) who terminated employment
prior to January 1, 2005, with respect to all benefits earned under the Plan
with respect to such Participant prior to termination of
employment.  If any individual who terminated employment prior to
January 1, 2005 is rehired after December 31, 2004 and earns additional benefits
following reemployment the terms of the Plan shall be applied separately with
respect to benefits earned prior to January 1, 2005 and with respect to benefits
earned following rehire. The Company reserves the right to amend any provision
of the Plan or any election submitted by a Participant, or take any other action
that the Company deems appropriate to ensure compliance with Code Section 409A,
including altering the time and form of any distribution so as to accomplish the
intended purpose of this Plan.

     


    Article
2. 

    Definitions

     

    Unless
the context clearly indicates otherwise, the following terms have the meanings
described below when used in this Plan, and references to a particular Article,
Section, or Appendix shall mean the Article, Section, or Appendix so delineated
in this Plan.

     

    Section 2.01 Adjusted Career
Average Pay

     

        “Adjusted
Career Average Pay,” as used in the Alternate Formula described in
Section 4.02(b), means (i) in the case of an Officer, the sum of A and B below, divided by
such Officer’s Term of Employment, and (ii) in the case of an E-band Employee,
the amount described in B below divided by
such E-band Employee’s Term of Employment;  for purposes of this
Section 2.01, the last day of a Participant’s Term of Employment is the earliest
to occur of July 31, 1997, the date specified in the applicable provision of
Section 3.02(c) for purposes of determining a benefit under the Alternate
Formula, or the date of the Participant’s termination of employment from a
Participating Company:

     

    
      	
               
      

            	
              A.

            	
              the
      sum of (1) and (2), where (1) is the product of (a) the average of the
      Officer’s annual Short Term Incentive Awards includable in the 1989 Base
      Period, and (b) the Officer’s Term of Employment as of December 31, 1989,
      and (2) is his or her Short Term Incentive Awards and any Deferred Salary
      for the period from January 1, 1990 through the earliest to occur of (i)
      July 31, 1997, (ii) the date specified in the applicable provision of
      Section 3.02(c) for purposes of determining a benefit under the Alternate
      Formula, or (iii) the date of the Participant’s termination of employment
      from a Participating Company.

            


    

     

    
      	
               
      

            	
              B.

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

            


    

     

    Section 2.02  Administrator

     

        “Administrator” means the person identified
as the Pension Plan Administrator under the Pension Plan, or such other person
or entity designated by the Company.

     

    Section 2.03 Affiliated
Corporation

     

        “Affiliated
Corporation” means any corporation or other entity of which 50 percent or more
of the voting stock is owned directly or indirectly by AT&T.

     

    Section 2.04 AT&T, Company

     

        “AT&T” or
“Company” means AT&T Corp., a New York Corporation, or its successors.
Effective on November 18, 2005, AT&T Corp. was acquired by SBC
Communications Inc. (now known as AT&T Inc.) pursuant to a plan and
agreement of merger dated January 30, 2005.

     

    Section 2.05 AT&T Controlled
Group

     

        “AT&T
Controlled Group” means AT&T and each other entity required to be aggregated
with AT&T under Code Sections 414(b), (c), (m), or (o). With respect to
periods on or after November 18, 2005, the controlled group shall be determined
with respect to entities required to be aggregated recognizing the acquisition
of AT&T Corp. by SBC Communications Inc. (now known as AT&T
Inc.).

     

    Section 2.06 1989 Base
Period

     

        “1989 Base
Period” means the period from January 1, 1987, through December 31, 1989,
inclusive.  Notwithstanding the provisions of the immediately
preceding sentence, the “1989 Base Period” shall in no event include any period
on or after the date specified in the applicable provision of Section 3.02(c)
for purposes of determining a benefit under the Basic Formula or under the
Alternate Formula.

     

    Section 2.07 1992 Base
Period

     

        “1992 Base
Period” means the period from January 1, 1990, through December 31, 1992,
inclusive.  Notwithstanding the provisions of the immediately
preceding sentence, the “1992 Base Period” shall in no event include any period
on or after the date specified in the applicable provision of Section 3.02(c)
for purposes of determining a benefit under the Alternate Formula or under the
Alternate Minimum Formula.

     

    Section 2.08 1996 Base
Period

     

        “1996 Base
Period” means the period from January 1, 1994 through December 31, 1996,
inclusive.  Notwithstanding the provisions of the immediately
preceding sentence, the “1996 Base Period” shall in no event include any period
on or after the date specified in the applicable provision of Section 3.02(c)
for purposes of determining a benefit under the Special Update to the Basic
Formula or under the Special Update to the Alternate Formula.

     

    Section 2.09 Board

     

        “Board” means
the Board of Directors of AT&T.

     

    Section 2.10 Cash Balance
Account

     

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

     

    Section 2.11 Cash Balance
Participant

     

        “Cash Balance
Participant” means an employee who is on the active roll of a Participating
Company as an Officer on or after January 1, 1998. Notwithstanding the preceding
sentence, an individual who is promoted to an Officer position after December
31, 2008 shall not be eligible to earn benefits as a “Cash Balance
Participant.”

     

    Section 2.12 CIC Eligible
Employee

     

    “CIC
Eligible Employee” means a Deferral Participant who is considered a “CIC
Eligible Employee” under the terms of the Pension Plan.

     

    Section 2.13 Code

     

    “Code”
means the Internal Revenue Code of 1986, as amended from time to time. Any
reference to a particular section of the Code includes any applicable
regulations promulgated under that section.

     

    Section 2.14
Committee

     

    “Committee”
means the Employees’ Benefit Committee appointed by AT&T to administer the
Pension Plan.

     

    Section 2.15 Concert
Employee

     

    “Concert
Employee” means a former employee of a Participating Company who, pursuant to
pertinent agreement(s) concluded between AT&T and British
Telecommunications, PLC (“BT”) became employed by a Concert entity after
December 15, 1999 and before April 1, 2002, under such circumstances that his or
her net credited service would be subject to an immediate bridge if the Concert
entity were a participating company under the Pension Plan,  who was
an Officer immediately prior to his or her employment by Concert, and who
returned to the employment of a Participating Company as an Officer immediately
following the termination of his or her employment by Concert on or before April
1, 2002.  For purposes of this definition, “Concert” means the joint
venture established pursuant to pertinent agreement(s) concluded between
AT&T and BT.

     

    Section 2.16 Covered Compensation
Base

     

    “Covered
Compensation Base” means an amount which is the average of the maximum wage
amounts on which an employee’s liability for Social Security taxes was
determined for each year beginning with January 1, 1958 and ending with December
31, 1993.

     

    Section 2.17 Deferral
Participant

     

    “Deferral
Participant” means an employee who defers compensation under the AT&T
Executive Deferred Compensation Plan, or for periods after 2006, the AT&T
Inc. Cash Deferral Plan, to the extent that such deferred compensation is a
Qualified Deferral.

     

    Section 2.18 Deferred
Salary

     

    “Deferred
Salary” means any salary amounts deferred under the AT&T Senior Manager
Incentive Award Deferral Plan, for periods commencing on or after
January 1, 1994 and prior to January 1, 2005.  For periods
commencing on or after January 1, 2005, “Deferred Salary” is
zero.  Deferred Salary does not include amounts deferred pursuant to
Code Section 401(k) or amounts contributed pursuant to Code Section
125.

     

    Section 2.19 Deferred Vested
Benefit

     

    “Deferred
Vested Benefit” means a benefit determined pursuant to Section 4.02E
(under  benefit formulas prior to January 1, 1998) and payable to a
Participant who is vested under the Pension Plan at the time of his or her
termination of employment, and who is not Service Pension Eligible as of the
date specified by the relevant provision of  this Plan.

     

    Section 2.20 Disability Benefit

     

    “Disability
Benefit” means the benefit payable from the Plan to a Participant who, prior to
January 1, 1998, became eligible for a disability pension from the Pension Plan
while an Officer.  If the disability pension from the Pension Plan is
discontinued (other than by reason of attainment of normal retirement age, as
defined in the Pension Plan), the Disability Benefit hereunder shall also be
discontinued.

     

    Section 2.21 E-band
Employee

     

    “E-band
Employee” means any employee of a Participating Company employed in a position
evaluated or classified by the Company as an “E-band” (formerly E-level, Fifth
level and SG-12 through SG-14) or equivalent position in a banded environment,
or Manager 5 or its equivalent in a non-banded environment, except that no
employee who is assigned to such a position on a temporary basis after being
notified in writing of the temporary status of such assignment shall be an
“E-band Employee” for any purpose under this Plan.

     

    Section 2.22 ERISA

     

    “ERISA”
means the Employee Retirement Income Security Act of 1974, as amended from time
to time. Any reference to a particular section of ERISA includes any applicable
regulations promulgated under that section.

     

    Section 2.23 50% Joint and
Survivor Annuity

     

    “50%
Joint and Survivor Annuity” means an annuity form of payment under which
payments continue to the surviving Spouse of the Participant, effective as of
the first day of the month after the death of the Participant, and continuing
until the last day of the month in which the death of the Spouse occurs, in an
amount equal to fifty percent of the amount of the monthly benefit which was
being paid to the Participant.  If the Spouse predeceases the
Participant after the Pension Commencement Date (and the pension is other than a
Deferred Vested Pension described in Section 4.02(a)(iii)), the Participant’s
pension shall be restored by the amount of the original reduction for this
election, starting with the pension payment for the month following the death of
the Spouse. For purposes of the 50% Joint and Survivor Annuity, the Spouse is
the Spouse to whom the Participant was married on his or her Pension
Commencement Date. This definition does not apply with respect to any benefit
payable pursuant to a SERP Election made by a SERP Participant.

     

    Section 2.24 100% Joint and
Survivor Annuity

     

    “100%
Joint and Survivor Annuity” means an annuity form of payment under which
payments continue to the surviving Spouse of the Participant, effective as of
the first day of the month after the death of the Participant, and continuing
until the last day of the month in which the death of the Spouse occurs, in an
amount equal to amount of the monthly benefit which was being paid to the
Participant.  If the Spouse predeceases the Participant after the
Pension Commencement Date, the Participant’s pension shall be restored by the
amount of the original reduction for this election, starting with the pension
payment for the month following the death of the Spouse. For purposes of the
100% Joint and Survivor Annuity, the Spouse is the Spouse to whom the
Participant was married on his or her Pension Commencement Date. This definition
does not apply with respect to any benefit payable pursuant to a SERP Election
made by a SERP Participant.

     

    Section 2.25 Leave of
Absence

     

    A “Leave of Absence” means where a
person is absent from employment with AT&T on a leave of absence, military
leave, or sick leave, where the leave is given in order to prevent a break in
the continuity of term of employment, and permission for such leave is granted
(and not revoked) in conformity with the rules of the employer that employs the
individual, as adopted from time to time, and the employee is reasonably
expected to return to service. Except as set forth below, the leave shall not
exceed six (6) months for purposes of this Plan, and the employee shall
Terminate Employment upon termination of such leave if the employee does not
return to work prior to or upon expiration of such six (6) month period, unless
the individual retains a right to reemployment under law or by contract. A
twenty-nine (29) month limitation shall apply in lieu of such six (6) month
limitation if the leave is due to the employee being “disabled” (within the
meaning of Treasury Regulation Section 1.409A-3(i)(4). A Leave of Absence shall
not commence or shall be deemed to cease under the Plan where the employee has
incurred a Termination of Employment.

     

    Section 2.26 Normal Retirement Date

     

    “Normal
Retirement Date” means the Participant’s normal retirement date as that term is
defined in the Pension Plan.

     

    Section 2.27 Officer

     

    “Officer”
means any employee of a Participating Company holding a position evaluated or
classified by the Company above the “E-band” level in a banded environment, or
classified at the Manager 6 level or above in a non-banded environment, except
that no employee who is assigned to such a position on a temporary basis after
being notified in writing of the temporary status of such assignment shall be an
“Officer” for any purpose under this Plan.

     

    Section 2.28
Participant

     

    “Participant”
means an Officer or an E-band Employee who satisfies the requirements of Article
3 for eligibility to accrue benefits under the Plan.  An employee who
has become a Participant, but who is no longer eligible to accrue benefits under
the Plan, shall continue to be a Participant with respect to any nonforfeitable
benefits he or she has accrued under the Plan, until such accrued benefits have
been fully discharged through payment or through the purchase of an annuity
contract.

     

    Section2.29 Participating
Company

     

    “Participating
Company” means AT&T and any Affiliated Corporation which shall have
determined, with the concurrence of AT&T, to participate in the
Plan.  In order to be a Participating Company under this Plan, a
company must also be a participating company under the AT&T Management
Pension Plan.

     

    Section 2.30 Pension
Commencement Date

     

    “Pension
Commencement Date” means the first day of the first month for which a payment
under this Plan is payable in the form of an annuity or any other form. With
respect to payments that commenced prior to January 1, 2009, the pension
commencement date under the Pension Plan was the same as the Pension
Commencement Date under this Plan.

     

    
      Section
2.31 Pension Plan

       

    

    “Pension
Plan” means the AT&T Management Pension Plan, as amended and restated from
time to time, and effective January 1, 2007, the AT&T Pension Benefit Plan –
AT&T Legacy Management Program.

     

    Section 2.32 Pension Plan
Benefit

     

    “Pension
Plan Benefit” means (i) for purposes of determining the benefit under Section
4.02E(b) of the Plan, the “accrued benefit” under any of the pay base formulas
under the Pension Plan, other than the special update formula,  (ii)
for purposes of determining the benefit under Section 4.02E(e) of the Plan, the
“accrued benefit” under any of the pay base formulas under the Pension Plan,
including the special update formula, and (iii) for purposes of determining the
benefit under Section 4.02E(c) of the Plan, the “accrued benefit” under the
Pension Plan under any of the pay base formulas under the Pension Plan,
including the special update formula, each of (i), (ii)  and (iii)
herein determined without regard to the limitations on covered compensation
under Code Section 401(a)(17), or the limitations on benefit accruals and
payments under Code Section 415 and, unless otherwise indicated in the Plan,
before any reduction in such pension benefit for the cost of a survivor benefit
or for early commencement. Notwithstanding the provisions of the immediately
preceding sentence, in applying the pay base formulas under the Pension Plan to
a Participant described in Section 3.02(c), service and compensation after the
date specified in the applicable provisions of Section 3.02(c) for purposes of
determining the benefit under Section 4.02E(b) or Section 4.02E(e) of this Plan
shall be excluded.

     

    
      	
              Section
      2.33  

            	
              Plan

            


    

     

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

     

    
      	
              Section
      2.34  

            	
              Position
      Rate

            


    

     

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

     

    
      	
              Section
      2.35  

            	
              Qualified
      Deferral

            


    

     

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

     

    
      	
              Section
      2.36  

            	
              Qualified
      Deferrals Cash Balance Account

            


    

     

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

     

    
      	
              Section
      2.37  

            	
              SERP

            


    

     

    “SERP”
means the 2005 Supplemental Employee Retirement Plan of AT&T Inc., as
amended from time to time.

     

    Section
2.38  SERP
Effective Date

     

    “SERP
Effective Date” means SERP Effective Date as defined in the SERP.

     

    
      	
              Section
      2.39  

            	
              SERP
      Election

            


    

     

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

     

    
      	
              Section
      2.40  

            	
              SERP
      Participant

            


    

     

    “SERP
Participant” means an individual who has been designated as eligible to
participate in the SERP.  For purposes of this Plan, such individual
is considered a SERP Participant whether or not he or she has satisfied the
vesting requirements of the SERP.

     

    
      	
              Section
      2.41  

            	
              SERP
      Vesting Date

            


    

     

    “SERP
Vesting Date” means the date a SERP Participant becomes vested in his or her
benefit under the 2005 Supplemental Employee Retirement Plan of AT&T Inc.,
or January 1, 2011 if later.

     

    
      	
              Section
      2.42  

            	
              Service
      Benefit

            


    

     

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

     

    
      	
              Section
      2.43  

            	
              Service
      Pension Eligible

            


    

     

    “Service
Pension Eligible” means (i) with respect to a termination of employment prior to
January 1, 1997, the Participant is eligible for a service pension under the
Pension Plan; and (ii) with respect to a termination of employment on or after
January 1, 1997, the Participant meets the following requirements:

     

    
      	
               
      

            	
              (i)

            	
              the
      Participant’s term of employment has been at least thirty years,
      regardless of his or her age, or

            


    

     

    
      	
               
      

            	
              (ii)

            	
              the
      Participant’s term of employment has been at least twenty-five years and
      he or she has reached the age of fifty years,
or

            


    

     

    
      	
               
      

            	
              (iii)

            	
              the
      Participant’s term of employment has been at least twenty years and he or
      she has reached the age of fifty-five years,
or

            


    

     

    
      	
                     
      (iv)  

            	
              the
      Participant’s term of employment has been at least ten years and he or she
      has reached the age of sixty-five
years.

            


    

     

    For
purposes of subparagraphs (i) through (iv) above, a Participant’s “term of
employment” is determined under the provisions of the Pension Plan, as that plan
was in effect on January 1, 1997, and is measured as of the date specified by
the relevant provision of this Plan as if the Participant terminated employment
of such date, or if no date is specified, as of the date of such Participant’s
termination of employment.  In determining the Participant’s “term of
employment” under the Pension Plan, and in determining a Participant’s status as
eligible for a service pension under the Pension Plan, the effect of the
Management Pension Enhancement under the Pension Plan for employees with five or
more years of term of employment (under the Pension Plan) as of December 30,
1989, shall be disregarded.

     

    
      	
              Section
      2.44  

            	
              Short
      Term Incentive Award

            


    

     

    “Short
Term Incentive Award” means the actual amount awarded annually (including any
such amounts deferred pursuant to the AT&T Senior Management Incentive Award
Deferral Plan or the AT&T Executive Deferred Compensation Plan) to an
Officer pursuant to the AT&T Short Term Incentive Plan, or any predecessor
short term incentive plan. A Short Term Incentive Award shall, for purposes of
Sections 4.02E(a) and 4.02E(d) of this Plan, be considered to be awarded on the
last day of the performance period with respect to which it is earned. For
purposes of the annual award credit under the Cash Balance Account, the Short
Term Incentive Awards shall be taken into account in the year paid (or in which
it would have been paid, if not deferred) and only if such amount is paid (or
would have been paid, if not deferred) on or before the end of the month in
which the Officer terminates employment. Notwithstanding the preceding, after
calendar year 2007, a short term incentive award shall be taken into account if
it is paid in the month following termination of employment as part of the
regular payroll schedule applied for payment of amounts earned during the final
pay period of the month in which employment terminated.

     

    Effective
December 15, 1999, any short term award received from Concert by a Concert
Employee while employed in “Concert service” (as defined in the Pension Plan)
shall be treated as a Short Term Incentive Award provided that, had the award
been received from a Pension Plan participating company, it would have been
considered a Short Term Incentive Award.

     

    
      	
              Section
      2.45  

            	
              Special
      Update Adjusted Career Average Pay

            


    

     

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

     

    
      	
              Section
      2.46  

            	
              Specified
      Employee

            


    

     

    Any
Participant who is a Key Employee (as defined in Code Section 416(i) without
regard to paragraph (5) thereof), as determined by AT&T in accordance with
its uniform policy with respect to all
arrangements subject to Code Section 409A, based upon the 12-month period ending
on each December 31st (such 12-month period is referred to below as the
identification period). All Participants who are determined to be Key Employees
under Code Section 416(i) (without regard to paragraph (5) thereof) during the
identification period shall be treated as Key Employees for purposes of the Plan
during the 12-month period that begins on the first day of the 4th month
following the close of such identification period.

     

    
      	
              Section
      2.47  

            	
               Successor
      Plan Sponsor

            


    

     

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

     

    
      	
              Section
      2.48  

            	
              Spouse

            


    

     

    “Spouse”
means a person of the opposite sex who is the lawful spouse of a married
Participant, under the laws of the state of the Participant’s domicile, and at
the relevant time period stated under the applicable Plan
provisions.   Notwithstanding the preceding, if an alternate
payee (as that term is defined in Section 414(p) of the Code) is deemed the
surviving spouse for purposes of all or a portion of the Participant’s benefit
under the Pension Plan, such alternate payee shall not be deemed to be the
“spouse” for any purpose under this Plan.

     

    
      	
              Section
      2.49  

            	
              Term
      of Employment

            


    

     

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

     

    
      	
              Section
      2.50  

            	
              Termination
      of Employment

            


    

     

    The
ceasing of the Participant’s employment from the AT&T controlled group of
companies for any reason whatsoever, whether voluntarily or involuntarily.
Effective January 1, 2009, references herein to Termination of Employment,
Terminate Employment, or a similar reference, shall mean the event where the
employee has a separation from service, as defined under Code Section 409A, with
all members of the AT&T controlled group. Notwithstanding the foregoing, the
employment relationship of a Participant with the AT&T controlled group is
considered to remain intact while the individual is on a Leave of
Absence.

     

    
      	
              Section
      2.51  

            	
              Total
      Compensation

            


    

     

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

     

    
      	
              Section
      2.52  

            	
              Transition
      Employee

            


    

     

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

     

    
      	
              Section
      2.53  

            	
              Years
      of Service

            


    

     

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

     



    Article
3.

    Participation
and Eligibility for Plan Benefits

     

    
      	
              Section
      3.01  

            	
               Eligibility
      to Accrue Plan Benefits

            


    

     

    Effective
for periods prior to January 1, 1997, eligibility to accrue benefits under this
Plan shall be determined in accordance with the provisions of the Plan as in
effect from time to time prior to January 1, 1997.

     

    Effective
January 1, 1997 through July 31, 1997, all Officers and E-band Employees shall
be eligible to accrue benefits under this Plan.

     

    During
the period beginning August 1, 1997 and ending December 31, 1997, no employee
will accrue additional retirement benefits under this Plan.

     

    Effective
January 1, 1998, an employee who was an Officer prior to January 1, 1998 shall
be eligible to accrue benefits under the Cash Balance Formula of this Plan,
during the period on or after January 1, 1998 that he or she continues to be an
Officer of a Participating Company.   Any other employee who
becomes an Officer prior to January 1, 2009 shall become eligible to accrue
benefits under the Cash Balance Formula on the date he or she becomes an
Officer. Notwithstanding the preceding, such Officer shall not accrue additional
benefits hereunder after the SERP Vesting Date. An individual who is not an
Officer on December 31, 2008 shall not be eligible to accrue benefits under the
Plan after December 31, 2008.

     

    Effective
January 1, 2004, an employee who defers compensation under the AT&T
Executive Deferred Compensation Plan, or the AT&T Inc. Cash Deferral Plan
for periods after December 31, 2006, shall be eligible to accrue benefits under
this Plan with respect to amounts deferred under such plan, to the extent such
amounts deferred are Qualified Deferrals.  Notwithstanding the
preceding, a Qualified Deferral does not include amounts deferred with respect
to any paycheck dated after December 31, 2007.

     

    No
individual shall become a Participant in this Plan after December 31,
2008.

     

    


     

    
      	
              Section
      3.02  

            	
              Eligibility
      to Receive Plan Benefits

            


    

     

    (a) Participants
Who Are Officers

     

    Participants Who Are
Officers Before January 1, 2009

     

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

     

    
      	
              (i)  

            	
              If
      the Participant is a Cash Balance Participant, a Benefit Based on the Cash
      Balance Account, as described in Section 4.03E(f), provided that the
      Participant is vested under the Pension Plan at the time of his or her
      termination of employment from the AT&T Controlled
    Group;

            


    

     

    
      	
              (ii)  

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

            


    

     

    
      	
              (iii)  

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

            


    

     

    
      	
              (iv)  

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

            


    

     

    Participants
Who Become Officers After December 31, 2008

     

    
      	
              (v)  

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

            


    

     

    (b) Participants
Who Are E-band Employees (and Certain Officer Promotions)

     

    Subject
to the provisions of Section 3.01, Section 3.02(c) regarding reassignments and
reclassifications, and Section 3.02(d) regarding Qualified Deferrals, a
Participant who is an E-band Employee, and a Participant who becomes an Officer
after December 31, 2008, shall be eligible for the following pension benefits
from the Plan, in an amount determined in accordance with the provisions of
Article 4 and, as applicable Appendix E:

     

    
      	
              (i)  

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

            


    

     

    
      	
              (ii)  

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

            


    

     

    In
applying the provisions of this Section 3.02(b) to a Participant who is promoted
to Officer after December 31, 2008, the determinations in (i) and (ii) of
whether the Participant is Service Pension Eligible shall be made as of such
Participant’s SERP Effective Date. The benefit with respect to such a
Participant shall be determined as described in Section 3.02(a)(v).

     

    (c) Reassignments

     

    
      	
               
      

            	
               (i)

            	
              An
      Officer who, on or after January 1, 1986 and before January 1, 1998,
      was reassigned to a position evaluated below the E-band level for reasons
      other than unsatisfactory performance, and who has satisfied the vesting
      requirements of the Pension Plan as of the reassignment date shall be
      eligible for benefits as follows:

            


    

     

    (A) such
a former Officer who was Service Pension Eligible as of the reassignment date,
shall be eligible for a Service Benefit under Section 3.02(a)(ii) as of his or
her termination of employment.  The benefit of any reassigned Officer
described in this Section 3.02(c)(i)(A) shall equal the greater of (1) or (2),
as follows:

     

    
      	
              (1)  

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

            


    

     

    
      	
              (2)  

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

            


    

     

    (B) such
a former Officer who was not Service Pension Eligible, but who was eligible for
a deferred vested pension pursuant to the Pension Plan as of the reassignment
date, shall be eligible for a Deferred Vested Benefit under Section 3.02(a)(iii)
as of his or her termination of employment.  For purposes of
determining benefits pursuant to this Section 3.02(c)(i) (B) the Participant’s
Term of Employment shall exclude any period following the earliest to occur of
the last day of the year in which such reassignment occurs, July 31, 1997, or
termination of employment, and.

     

    
      	
               
      

            	
              (ii)

            	
              An
      Officer who, on or after January 1, 1986 and before January 1, 1998,
      was reassigned to a position evaluated below the E-band level, and who was
      not Service Pension Eligible or eligible for a deferred vested pension
      pursuant to the Pension Plan as of the reassignment date, will not be
      eligible for benefits under this
Plan.

            


    

     

    
      	
               
      

            	
              (iii)

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

            


    

     

     (A)
such a former Officer who was Service Pension Eligible as of the reassignment
date, shall be eligible for a Service Benefit under Section 3.02(a)(ii) upon his
or her termination of employment. The benefit of any reassigned Officer
described in this Section 3.02(c)(iii)(A) shall equal the greater of (1) and (2)
as follows:

     

    
      	
              (1)  

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

            


    

     

    
      	
              (2)  

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

            


    

     

     (B)
such a former Officer who was not Service Pension Eligible but was eligible for
a deferred vested pension pursuant to the Pension Plan, as of the reassignment
date, shall be eligible for a Deferred Vested Benefit under Section 3.02(a)(iii)
upon his or her termination of employment.  The benefit of any
reassigned Officer described in this Section 3.02(c)(iii)(B) shall be computed
under Section 4.02(a) (the Basic Formula), or Section 4.02(d) (the Special
Update to the Basic Formula), as applicable, in effect as of the date of such
reassignment.  For purposes of determining a benefit under the Basic
Formula, the Participant’s Term of Employment shall exclude any period following
the earliest to occur of the last day of the year in which his or her job was
reclassified, July 31, 1997, or termination of employment; for purposes of
determining a benefit under the Special Update to the Basic Formula, the
Participant’s Term of Employment shall exclude any period following the earliest
to occur of the last day of the year in which his or her job was reclassified,
December 31, 1996, or termination of employment.

     

    
      	
               
      

            	
              (iv)

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

            


    

     

    
      	
                    
      (v)  

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

            


    

     

    (d) Benefits
Based on Qualified Deferrals

     

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


    Article
4.

    Pension
Benefits After 2008

     

    
      	
              Section
      4.01  

            	
              Applicable
      Benefit Formulas.

            


    

     

    The
provisions of this Article 4 apply with respect to benefits payable to or with
respect to a Participant who terminates employment on or after December 1,
2008.  This article also describes the distribution provisions with
respect to Participants who terminated employment after December 31, 2004 with
respect to whom benefit payments had not commenced on or before December 1,
2008. The determination of pension benefits in all other cases is made as
described in Appendix E. Appendix E generally includes the provisions of Article
4 as in effect prior to December 31, 2008.  References in the Plan to
a provision in Article 4 should in general be interpreted as reference to the
corresponding provision in Appendix E when applied to or with respect to a
termination of employment prior to December 1, 2008.

     

    (a) Participants
Terminated Before January 1, 1997

     

    The
Service Benefit, Deferred Vested Benefit, or Disability Benefit payable to a
Participant who terminated employment from a Participating Company prior to
January 1, 1997 is determined in accordance with the terms of the Plan as in
effect from time to time prior to January 1, 1997.

     

    (b) Active
Participants on  January 1, 1997

     

    
      	
               
      

            	
              (i)

            	
              Participants Whose Eligibility
      to Accrue Benefits Ends Prior to August 1,
  1997.

            


    

     

    
      	
               
      

            	
              (A)

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

            


    

     

    
      	
               
      

            	
              (B)

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

            


    

     

    
      	
               
      

            	
               (C)

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

            


    

     

    
      	
               
      

            	
              (D)

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

            


    

     

    
      	
               
      

            	
               (ii)

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

            


    

     

    
      	
               
      

            	
              (A)

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

            


    

     

    
      	
               
      

            	
              (B)

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

            


    

     

    
      	
               
      

            	
              (C)

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

            


    

     

    
      	
               
      

            	
              (D)

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

            


    

     

    (c) New
Participants after January 1, 1997 and before January 1, 1998

     

    
      	
               
      

            	
              (i)

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

            


    

     

    
      	
               
      

            	
              (ii)

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

            


    

     

    
      	
               
      

            	
              (iii)

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

            


    

     

    (d) Participants
who are Officers on or after January 1, 1998 (Cash Balance
Participants)

     

    Participants Who Are
Officers Before January 1, 2009

     

    
      	
               
       (i)

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

            


    

     

    
      	
                
       (ii)

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

            


    

     

    Participants
Who Become Officers After December 31, 2008

     

    
      	
               
      

            	
              (iii)

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

            


    

     

    (e)   Surviving
Spouse of an E-band Employee or Officer

     

     An
Automatic Survivor Annuity will be paid to the Spouse to whom an E-band Employee
or Officer is married at the time of his or her death while an active employee,
provided such Participant is vested as of his or her date of death, and
satisfies the provisions of Section 4.04 at the date of death.  The
benefit payable to such Spouse shall be equal to the present value of the
benefit determined in accordance with Section 4.04.  The provisions of
this Section 4.01(e) do not apply to a benefit determined under the cash balance
formula of Section 4.11, or to a benefit based on a Mid-Career Pension Benefit
of Section 4.07E. The benefit to a Surviving Spouse shall not be payable under
both this Section 4.01(e) and Section 4.01(f).

     

    (f) Surviving
Spouse (or Estate) of a Cash Balance Participant

     

    A
benefit, determined pursuant to the provisions of Section 4.10, shall be payable
to the surviving Spouse (or estate, in the case of a Participant who is not
married at the time of death) of a Cash Balance Participant who is vested in his
or her benefit under the Pension Plan as of his or her date of death and who
dies prior to commencing distribution of his or her benefit under the
Plan.  The benefit to a Surviving Spouse shall not be payable under
both this Section 4.01(f) and Section 4.01(e).

     

    (g) Deferral
Participant

     

    An
individual who is a Deferral Participant shall be eligible for a benefit
determined pursuant to Section 4.11, provided that such Participant is vested in
his or her benefit under the Pension Plan upon his or her termination of
employment from the AT&T Controlled Group.  Notwithstanding any
other provision of the Plan to the contrary, such benefit shall be payable in
addition to any other benefits otherwise payable under the Plan.

     

    (h) Surviving
Spouse (or Estate) of a Deferral Participant

     

    A
benefit, determined pursuant to the provisions of Section 4.10, shall be payable
to the surviving Spouse (or estate, in the case of a Participant who is not
married at the time of death) of a Deferral Participant who is vested in his or
her benefit under the Pension Plan as of his or her date of death and who dies
prior to commencing distribution of his or her benefit under the
Plan.

     

    
      	
              Section
      4.02  

            	
              Benefit
      Formulas (other than Cash Balance)

            


    

     

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

    


    
      	
              Section
      4.03  

            	
              Cash
      Balance Accounts

            


    

     

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

    


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

    


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

    


    
      	
              Section
      4.04  

            	
              Automatic Survivor
    Annuities

            


    

     

    The
Automatic Survivor Annuity described in this Section 4.04 does not apply to a
benefit determined under the cash balance formula of Section 4.03 or 4.11, or to
a benefit based on the Mid-Career Pension Benefit of Section 4.07. The Automatic
Survivor Annuity is payable upon the death of a Participant who dies while
actively employed after December 31, 2008, if such Participant’s benefit under
the Plan is determined under a formula described in Section 4.02E.

     

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

     

    
      	
              Section
      4.05  

            	
              Special
      Increases

            


    

     

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

     

    
      	
              Section
      4.06  

            	
              Monthly
      Payments

            


    

     

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

     

    
      	
              Section
      4.07  

            	
              Mid-Career
      Pension Benefit

            


    

     

    The
description of the Mid-Career Pension Benefit is set forth in Section 4.07E of
Appendix E.

     

    
      	
              Section
      4.08  

            	
              Treatment
      During Subsequent Employment

            


    

     

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

     

    
      	
              Section
      4.09  

            	
              Payment
      of Pensions

            


    

     

    (a) Commencement
Prior to 2005

     

    Provisions
governing the payment of pension benefits that commenced after 2004 and prior to
2009 are set forth in Section 4.09E of Appendix E.

     

    (b) Commencement
After 2004 and Prior to 2009

     

    Provisions
governing the payment of pension benefits that commenced after 2004 and prior to
2009 are set forth in Section 4.09E of Appendix E.

     

    (c) Commencement
After 2008

     

    Payment
of benefits that commence after December 1, 2008, except in the case of a
survivor benefit payable with respect to a Participant who commenced
distribution of a Plan benefit on or before December 1, 2008, shall be made in
the time and form as described in the following subparagraphs (i) through (iv),
as applicable.

    


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

    


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

    


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

    


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

    


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

    


    (A) Participants Who Are Not
SERP Participants:

    


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

    


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

    


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

    


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

    


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

    


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

    


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

    


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

    


    
      	
               
      

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

            


    

    


    
      	
               
      

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

            


    

    


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

    


     

    (d) Payments
to Specified Employees

     

    Notwithstanding
the provisions of the preceding sections 4.09(a) through 4.09(c), effective on
and after January 1, 2005 with respect to payments in the form of a commercial
annuity pursuant to Section 6.01 and effective on and after January 1, 2009 with
respect to all other payments under the Plan, payment under the Plan to or with
respect to a Participant who is eligible to participate in the SERP or who is
determined to meet the definition of Specified Employee shall be payable as
otherwise provided in this Plan, except that the initial payment shall be made
no earlier than six (6) months following his or her Termination of
Employment.  If, absent this Section 4.09(d), payment to a Specified
Employee would have commenced before the expiration of such six-month period,
the first payment with respect to such Specified Employee will include the sum
of the annuity payments withheld, together with interest
thereon.    For purposes of the immediately preceding
sentence, interest shall be credited using the GAAP Rate in effect as of the end
of the calendar year immediately preceding the Participant’s Termination of
Employment, for distributions made after December 31, 2007.  “GAAP
Rate” means such rate as defined under the SERP for the referenced period.
Notwithstanding the preceding, for distributions made prior to January 1, 2008,
interest credited for purposes of this Section 4.09(d) shall be at an effective
annual rate equal to 120 percent of the Federal Mid-term rate in effect as of
the date such annuity payments otherwise would have commenced.

     

    
      	
              Section
      4.10  

            	
              Payment
      of Plan Benefits Following Death

            


    

     

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

    


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

    


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

    


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

    


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

    


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

    


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

    


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

    


    


    
      	
              Section
      4.11  

            	
                 Qualified
      Deferrals Cash Balance Account

            


    

     

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

    


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

    


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

    


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



    Article
5.

    Death
Benefits

     

    
      	
              Section
      5.01  

            	
              Participation

            


    

     

    A Death
Benefit shall be provided under this Article 5, in the following cases: (a) upon
the death prior to January 1, 1998 of an active Officer; (b) upon the death of
an Officer who, on or after August 10, 1980 and prior to January 1, 1998, (i)
terminated employment with eligibility for a pensioner death benefit under the
Pension Plan (excluding for purposes of this Section 5.01 the effect of any
management pension enhancement pursuant to the Pension Plan) or (ii) terminated
employment with eligibility to receive payments under the AT&T Senior
Management Long Term Disability and Survivor Protection Plan; (c) upon the death
prior to January 1, 2008 of an active Officer, provided such Officer is eligible
for the sickness death benefit under the Pension Plan; or (d) upon the death of
an Officer who is on the active payroll of a Participating Company on January 1,
1998 and who terminates employment prior to January 1, 2008, if such Officer was
Service Pension Eligible or otherwise satisfied eligibility requirements for the
Pensioner Death Benefit under the Pension Plan (such as, under certain
circumstances, the Rule of 65, as defined in the Pension Plan), at the time of
his or her termination of employment (excluding for purposes of this Section
5.01 the effect of any management pension enhancement pursuant to the Pension
Plan). A Participant who terminates employment on or after January 1, 1998 and
is subsequently reemployed prior to January 1, 2008 shall not be eligible for a
Death Benefit following such reemployment unless he or she was eligible for the
pensioner death benefit under the Pension Plan as of the date of such earlier
termination of employment, and provided further that such Participant’s last
employment with a Participating Company was with one covered by the death
benefit provisions of the Pension Plan; such eligibility for a Death Benefit
shall terminate with respect to a Participant who remains employed within the
AT&T Controlled Group on January 1, 2008.

     

    Notwithstanding
the provisions of the preceding paragraph, no Death Benefit under this Article 5
shall be provided with respect to a Participant who made a qualified election
for a form of payment that resulted in a lump sum distribution of the full
present value of his or her accrued benefit (as reduced to reflect the
limitations of Code Section 415 and Code Section 401(a)(17) as of the
Participant’s Pension Commencement Date) under the Pension Plan.

     

    The Death
Benefit under this Article 5 is in addition to the sickness and pensioner death
benefits under the Death Benefit Plan in the Pension Plan, and shall be paid to
the same beneficiary or beneficiaries, and administered in the same manner as
such benefits under the Death Benefit Plan in the Pension
Plan.  Notwithstanding the preceding, effective for deaths occurring
on or after January 1, 2009, the Death Benefit shall be paid in a lump sum
within a reasonable period of time following the date the Beneficiary is
identified by the Committee or its delegate.

     

    
      	
              Section
      5.02  

            	
              Death
      Benefits

            


    

     

    (a) Sickness
or Pensioner Death Benefit

     

    In the
case of the death of an Officer described in Section 5.01, as eligible for death
benefit coverage, except as otherwise determined under Section 5.02(a)(ii), a
Death Benefit equal to one year’s wages (as defined below) shall be
paid.

     

    (i)           Death
after January 1, 1996 and before January 1, 1998

     

    For
purposes of determining the Death Benefit payable under Section 5.02(a), with
respect to an Officer described in Section 5.01, who died after January 1, 1994
and before January 1, 1998, “one year’s wages” is defined as the greater of (A)
the Officer’s Short Term Award for the calendar year preceding the earlier of
(i) his or her date of death, or (ii) the date of his or her termination of
employment, or (B) the Officer’s Short Term Award with respect to any later
partial calendar year of service, but only with respect to a calendar year prior
to 1998.

     

    (ii)           Death
on or after January 1, 1998

     

    For
purposes of determining the Death Benefit under Section 5.02(a), with respect to
an Officer described in Section 5.01, who dies on or after January 1, 1998, the
amount of the Death Benefit shall equal the amount that would have been payable
if the Participant died with eligibility for the Death Benefit as of December
31, 1997.

     

    


     

    (b) Other
Post-Retirement Death Benefits

     

    Additional
death benefits described in this Section 5.02(b) shall be provided, (i) with
respect to an Officer who terminated employment on a service pension or
disability pension under the Pension Plan, after December 31, 1986 and before
January 1, 1997 (or who terminated employment on a service pension or a
disability pension prior to December 31, 1986, provided he or she did not attain
age fifty-five on or before December 31, 1983), and (ii) with respect to an
Officer who terminates employment after December 31, 1996, only if such Officer
is Service Pension Eligible at the time of his or her termination of
employment.  The death benefits described under Section 5.02(b)(ii)
shall also be paid upon the death of an Officer who terminates employment with
entitlement to the benefits under the AT&T Senior Management Long Term
Disability and Survivor Protection Plan.

     

    (i) Group
Life Differential

     

    Upon the
death of an Officer, age sixty-six or older who retired after December 31, 1986
and before October 1, 1990, the difference between (i) the amount of his or her
Basic Group Life Insurance coverage under the Company’s Group Life Insurance
Program, as in effect on the day before his or her sixty-sixth birthday, and
(ii) the amount of such insurance coverage, as in effect on the date of his or
her death, shall be paid in a lump sum to the beneficiary or beneficiaries
designated by the Officer, or, if there is no such beneficiary, to the Officer’s
estate.

     

    (ii) Tax
Differential

     

    An
individual who is the beneficiary of a deceased retired Officer or of an Officer
who terminated employment with entitlement to payments under the AT&T Senior
Management Long Term Disability and Survivor Protection Plan, and who receives
one or more of the benefits listed below, shall be eligible to receive, under
this Section 5.02(b)(ii), a tax differential payment related to the difference
between (i) the beneficiary’s assumed federal income tax liability on such
benefit or benefits and (ii) the beneficiary’s assumed federal income tax
liability had such benefit or benefits been paid as a non-tax death benefit
under a life insurance policy on the life of the retired Officer:

     

    
      	
               
      

            	
              (A)

            	
              Post-Retirement
      Survivor Annuity described in Section
4.04(b),

            


    

     

    
      	
               
      

            	
              (B)

            	
              Pensioner
      Death Benefit described in Section
5.02(a),

            


    

     

    
      	
               
      

            	
              (C)

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

            


    

     

    
      	
               
      

            	
              (D)

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

            


    

     

    
      	
               
      

            	
              (E)

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

            


    

     

    
      	
               
      

            	
              (F)

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

            


    

     

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

    


     

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

     


    Article
6.

    Source
Of Payment

     

    
      	
              Section
      6.01  

            	
              Source
      of Payments

            


    

     

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

    


    (b)   In
addition, the Company may, in its sole discretion, purchase and distribute one
or more commercial annuity contracts, or cause the trustee of the trust to
purchase and distribute one or more commercial annuity contracts, to make
benefit payments required under this Plan, to any Officer, as defined herein, or
the Surviving Spouse of any Officer, provided, however, that with respect to an
annuity purchase occurring prior to January 1, 2005,  the purchase and
distribution of any such annuity contracts shall be no sooner than the
expiration of any forfeiture provisions applicable to the
Officer  under the AT&T Non-Competition Guidelines, or as
otherwise may be provided in accordance with procedures establish by the
Executive Vice President – Human Resources (or any successor to such position),
and provided further that, effective January 1, 2004, the Company’s right to
direct that payments under the Plan shall be made through one or more commercial
annuity contracts shall be applicable to only the benefits payable to any
Participant, or the Surviving Spouse of any such Participant, as applicable, who
(1) was  on the active payroll of the Company (or on an approved leave
of absence with guaranteed right of reinstatement) and classified as an Officer
on December 31, 2003, and (2) satisfies the age and service requirements, or is
within twelve months of satisfying the  requirements in effect at the
time the Participant terminates employment with the Company for the receipt of
retirement-related health benefits under the AT&T Corp. Postretirement
Welfare Benefits Plan (or any successor to such plan) (other than by virtue of
the “Rule of 65”or  through a Company-sponsored employee-paid health
benefits access program, or through the AT&T Corp. Separation Medical Plan),
without regard to whether or not the Officer has five years of service as of
December 31, 1999.

    


    Any such
annuity contracts described above may be purchased from a commercial insurer
acceptable to the Executive Vice President - Human Resources (or any successor
to such position). Further, the Executive Vice President - Human Resources (or
any successor to such position), may determine, in his or her sole discretion,
to pay additional sums to any Officer, from the Company’s general assets or from
the trust, if any, to reimburse the Officer for additional federal and state
income taxes estimated to be incurred by reason of the distribution of any such
annuity contracts. The Executive Vice President - Human Resources (or any
successor to such position) shall establish a methodology or methodologies for
determining the amount of such additional sums. The methodology or methodologies
selected shall be those that the Executive Vice President - Human Resources (or
any successor to such position) determines, in his or her sole discretion, to be
the most effective and administratively feasible for the purpose of producing
after-tax periodic benefit payments that approximate the after-tax periodic
benefit payments that would have been received by Officers in the absence of the
distribution of the annuity contract.  Any such purchase and
distribution of an annuity contract shall be a full and complete discharge of
the Plan’s, AT&T’s and the Participating Companies’ liability for payments
assumed by the issuer of the annuity contract.

    


    (c)    Notwithstanding
the provisions of the preceding Section 6.01(b), effective January 1, 2005, a
Participant who is eligible to elect to receive his or her benefit under the
Plan in the form of a third-party commercial annuity contract pursuant to
Section 6.01(b) shall be required to submit an election, on a form provided by
the Company, with respect to the time and form of payment in which benefits
under this Plan shall be distributed for any reason other than the death of the
Participant.  Such election form shall be submitted to the Company no
later than one of the following dates, whichever is applicable:  (i)
such Participant’s separation from service, with respect to distribution of such
annuity contract during the 2005 calendar year, (ii) the earlier of (A) such
employee’s separation from service, or (B) December 31, 2005, with respect to
the distribution of such annuity contract during the 2006 calendar year, and
(iii) December 31, 2006, for distributions of such annuity contracts occurring
after the 2006 calendar year.  Notwithstanding the foregoing, the
Company may permit such a Participant to submit a distribution election form in
2006 with respect to his or her benefits under the Plan, provided that such
election in the 2006 calendar year may not result in a change in payment
elections with respect to payments that the Participant would otherwise receive
during the 2006 calendar year, or to cause payments to be made in 2006, to the
extent permitted under the proposed Treasury Regulations under Code Section
409A.

    


    (d)  Notwithstanding
the provisions of the preceding Section 6.01(b) and Section 6.01(c), the annuity
purchase program described in Section 6.01(b) shall be discontinued effective
September 6, 2007, and any election in effect on September 6, 2007 pursuant to
which a Participant has elected to receive distribution of his or her benefits
under this Plan through the purchase of a commercial annuity contract shall be
null and void, as such election relates to any distribution from this Plan to a
Participant or Surviving Spouse occurring after September 6, 2007.

     

    
      	
              Section
      6.02  

            	
              Unfunded
      Status

            


    

     

    The Plan
at all times shall be entirely unfunded for purposes of the Code and ERISA, and,
except as provided in Section 6.01, no provision shall be made at any time with
respect to segregating any assets of a Participating Company for the payment of
any benefits hereunder. The Plan constitutes a mere promise by the Participating
Companies to make payments, if any, in the future. No Participant, surviving
Spouse or any other person shall have any interest in any particular assets of a
Participating Company by reason of the right to receive a benefit under the
Plan, and to the extent a Participant, surviving Spouse, or any other person,
acquires a right to receive benefits under this Plan, such right shall be no
greater than the right of any unsecured general creditor of any Participating
Company.

     

     

    Article
7.

    Administration
Of The Plan

     

    
      	
              Section
      7.01  

            	
              Administration
      and Authorities

            


    

     

    The Plan
shall be administered by the Company, and it shall have full discretionary
authority to manage and control the operation and administration of the Plan,
including the power to interpret the provisions of the Plan, to make
determinations of fact, promulgate rules and regulations, to determine benefit
eligibility of individuals and classes of Participants (including, without
limitation, determinations of a Participant’s applicable Term of Employment and
Position Rate), delegate its powers and duties hereunder to the Committee, the
Administrator, or others, and to take such other action as it shall find
necessary and appropriate to implement the provisions of the Plan. The Committee
and the Administrator may retain attorneys, consultants, accountants or other
persons (who may be employees of the Company or an Affiliated Corporation) to
render advice and assistance, and may delegate any of the authorities conferred
on them to such persons as they shall determine to be appropriate to effect the
discharge of their duties hereunder. The Company, other Participating Companies,
and any of their Officers and E-band Employees, shall be entitled to rely upon
the advice, opinions, and determinations of any such persons. Any exercise of
the authorities set forth in this Article 7, whether by the Company, the
Committee or its delegate, or the Administrator, shall be final and binding upon
the Company, its Affiliated Corporations, their officers, directors and affected
Participants and beneficiaries.

     

    
      	
              Section
      7.02  

            	
              Committee

            


    

     

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

     

    
      	
              Section
      7.03  

            	
              Indemnification

            


    

     

    No member
of the Board, the Committee or the Administrator shall be personally liable, by
reason of any contract or other instrument executed by such individual, or on
his or her behalf, in his or her capacity as a member of the Board, the
Committee or the Administrator, nor for any mistake of judgment made in good
faith, and AT&T shall indemnify and hold harmless each member of the Board,
each member of the Committee, the Administrator and each other employee,
officer, or director of AT&T, to whom any duty or power relating to the
administration or interpretation of the Plan have been allocated or delegated,
against any cost or expense (including attorneys’ fees) or liability (including
any sum paid in settlement of a claim) arising out of any act or omission to act
in connection with the Plan, unless arising out of such person’s own fraud or
bad faith.

     

    
      	
              Section
      7.04  

            	
              Benefit
      Claims and Appeals

            


    

     

    (a) Benefit
Claims

     

    All
claims for benefit payments under the Plan shall be submitted in writing by the
Participant, a Surviving Spouse, beneficiary, or the estate of the Participant,
or the duly authorized representative of such person or estate (“Claimant” for
purposes of this Section 7.04) to the Administrator. The Administrator shall
notify the Claimant in writing within 90 days after receipt as to whether the
claim has been granted or denied. This period may be extended for up to an
additional 90 days, for a total of 180 days, in the case of special
circumstances provided that written notice of the extension is furnished to the
Claimant prior to the termination of the initial 90-day period. The extension
notice shall indicate the special circumstances requiring an extension of time
and the date by which the Administrator expects to render the benefit
determination. In the event the claim is denied, in whole or in part, the
Claimant will receive notice of the Administrator’s decision, including: (i) the
specific reasons for the adverse determination, (ii) reference to the pertinent
Plan provisions on which the adverse determination is based, (iii) a description
of any additional material or information necessary for the Claimant to perfect
the claim and an explanation of why such material or information is necessary,
and (iv) a description of the Plan’s procedures for appealing the adverse
determination (including applicable time limits) and the Claimant’s right to
bring a civil action under section 502(a) of ERISA following an adverse
determination on review.

     

    (b) Benefit
Appeals

     

    A Claimant whose claim for benefits has
been denied, in whole or in part, may, within 60 days of receipt of any adverse
benefit determination, appeal such denial to the Committee. All appeals shall be
in the form of a written statement and shall (i) set forth all of the reasons in
support of favorable action on the appeal, (ii) identify those provisions of the
Plan upon which the Claimant is relying, and (iii) include copies of any other
documents, records and other materials which may support favorable consideration
of the claim. If the Claimant submits a written request for review of a denied
claim, the Claimant is entitled to receive, upon request and free of charge,
reasonable access to, and copies of, all documents, records and other
information relevant to the claim (as defined in DOL Reg. §2560.503-1(m)(8) for
claims filed on or after January 1, 2002), and (iv) a statement of the right of
the Claimant to bring a civil action under section 502(a) of ERISA following an
adverse benefit determination on review.  The Claimant may raise
issues even if such issues were not raised in the initial benefit determination.
The Committee shall decide the issues presented within 60 days after receipt of
such request, but this period may be extended for up to an additional 60 days in
the case of special circumstances provided that written notice of the extension
is furnished to the Claimant prior to the termination of the initial 60-day
period.  The extension notice shall indicate the special circumstances
requiring an extension of time and the date by which the Committee expects to
render the determination. In the case of an adverse determination, the decision
of the Committee shall be set forth in writing and include (i) the specific
reason or reasons for the adverse determination, (ii) reference to the pertinent
Plan provisions on which the denial is based, (iii) a statement that the
Claimant is entitled to receive, upon request and free of charge, reasonable
access to, and copies of, all documents, records, and other information (as
defined in DOL Reg. §2560.503-1(m)(8) for claims filed on or after January 1,
2002) relevant to the Claimant’s claim for benefits, and (iv) a statement of the
right of the Claimant to bring a civil action under section 502(a) of
ERISA.

     

    Any
Claimant whose claim for benefits has been denied shall have such further rights
of review as are provided in ERISA § 503, and the Committee and
Administrator shall retain such right, authority, and discretion as is provided
in or not expressly limited by ERISA § 503.

     

    (c) Final
Review

     

    The
Committee shall serve as the final review committee, under the Plan and ERISA,
for the review of all appeals by Claimants (as defined in Section 7.04) whose
initial claims for benefits have been denied, in whole or in part, by the
Administrator. The Committee shall have the authority, subject to Section
7.04(c), to determine conclusively for all parties any and all questions arising
from administration of the Plan, and shall have sole and complete discretionary
authority and control to manage the operation and administration of the Plan,
including, but not limited to, authorizing disbursements according to the Plan,
the determination of all questions relating to eligibility for participation and
benefits, interpretation of all Plan provisions, determination of the amount and
kind of benefits payable to any Participant, Surviving Spouse or estate, and the
construction of disputed and doubtful terms. Such decisions by the Committee
shall be conclusive and binding on all parties and not subject to further
review.

     

    (d) Action
by Trustee

     

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

     

    



    Article
8.

    Adoption,
Amendment And Termination

     

    
      	
              Section
      8.01  

            	
              Adoption
      of Plan

            


    

     

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

     

    
      	
              Section
      8.02  

            	
              Amendment
      and Termination

            


    

     

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

     

    Notwithstanding
the preceding, the Board may adopt any prospective or retroactive amendment that
it determines is necessary for the Plan to maintain its compliance with Code
Section 409A.

    


    
      	
              Section
      8.03  

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

            


    

     

    (a)           Subject
to Section 9.01 of this Plan, in the event AT&T sells, spins off, or
otherwise disposes of an Affiliated Corporation, or disposes of all or
substantially all of the assets of an Affiliated Corporation, such that one or
more Participants terminate employment with a Participating Company for the
purpose of accepting employment with the acquirer of such Affiliated Corporation
or such assets, each such Participant shall be deemed to have terminated his or
her employment with such Participating Company for all relevant purposes under
this Plan. Notwithstanding the preceding, effective January 1, 2005, no
distribution shall commence pursuant to this Section 8.03(a) unless the
Participant has a separation from service, as defined under Code Section 409A,
with all members of the AT&T controlled group.

     

    (b)           Notwithstanding
the provisions of Section 8.03(a), and subject to Section 9.01 of this Plan, if
the sale, spin-off, or other disposition of the stock or assets of an Affiliated
Corporation is to a Successor Plan Sponsor, with the effect that a Participant
is or becomes a Transition Employee, the Successor Plan Sponsor shall be solely
liable for the payment of the annual benefits and death benefits described in
this Plan, and the entitlement of the Transition Employee, or of his or her
surviving Spouse or beneficiary, to benefits under this Plan shall terminate. A
Transition Employee shall not be considered to have terminated his or her
employment with AT&T or a Participating Company for any purpose under this
Plan.

     



    Article
9.

    General
Provisions

     

    
      	
              Section
      9.01  

            	
              Binding
      Effect

            


    

     

    The Plan
shall be binding upon and inure to the benefit of each Participating Company and
its successors and assigns, and to the benefit of each Participant, his or her
successors, assigns, designees, spouse, and estate. The
Plan also shall be binding upon any successor corporation or organization
succeeding to substantially all of the assets and business of AT&T, but
nothing in the Plan shall preclude AT&T from merging or consolidating into
or with, or transferring all or substantially all of its assets to, another
corporation which assumes the Plan and all obligations of AT&T hereunder.
AT&T agrees that it will make appropriate provision for the preservation of
the rights of Participants, surviving Spouses and beneficiaries under the Plan,
in any agreement or plan or reorganization into which it may enter to effect any
merger, consolidation, reorganization or transfer of assets. Upon such a merger,
consolidation, reorganization, or transfer of assets and assumption of
obligations, that results in a Participant continuing to be employed by the
Company or an Affiliated Corporation, the term “Participating Company” shall
refer to such other corporation and the Plan shall continue in full force and
effect as to that Participant and his or her lawful spouse or other
beneficiary.

     

    
      	
              Section
      9.02  

            	
              Fiduciary
      Relationship

            


    

     

    Nothing
contained in the Plan, and no action taken pursuant to the provisions of the
Plan, shall create or be construed to create a trust or contract of any kind, or
a fiduciary relationship between or among AT&T, any other Participating
Company, any Affiliated Corporation, the Board, the Administrator, the
Committee, any Participant, any surviving Spouse or any other
person.

     

    
      	
              Section
      9.03  

            	
              No
      Guarantee of Employment

            


    

     

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

     

    
      	
              Section
      9.04  

            	
              Tax
      Withholding

            


    

     

    AT&T
shall withhold all federal, state, local or other taxes required by law to be
withheld from payments or accruals under the Plan.

     

    
      	
              Section
      9.05  

            	
              Assignment
      of Benefits

            


    

     

    Benefits
under the Plan may not be anticipated, alienated, sold, transferred, assigned,
pledged, executed upon, encumbered, or subjected to any charge or legal process;
no interest or right to receive a benefit may be taken, either voluntarily or
involuntarily, for the satisfaction of the debts of, or other obligations or
claims against, any Participant, Spouse, or beneficiary, including without
limitation, any judgment or claim for alimony, support or separate maintenance
pursuant to a domestic relations order within the meaning of Section 206(d)(3)
of ERISA, and claims in bankruptcy proceedings. Any such attempted disposition
shall be null and void.

     

    
      	
              Section
      9.06  

            	
              Facility
      of Payment

            


    

     

    If the
Administrator shall find that any person to whom any amount is or was payable
under the Plan is unable to care for his or her affairs, because of illness or
accident, then any payment, or any part thereof, due to such person (unless a
prior claim therefore has been made by a duly appointed legal representative),
may, if the Administrator so directs AT&T, be paid to the same person or
institution that the benefits with respect to such person are paid under the
Pension Plan, if applicable, or to the person’s spouse, under the laws of the
state of the person’s domicile, Participant’s surviving
Spouse,  child, or relative, or to an institution maintaining or
having custody of such person, or to any other person deemed by the
Administrator to be a proper recipient, on behalf of such person otherwise
entitled to payment. Any such payment shall be in complete discharge of the
liability for such amount, of AT&T, the Board, the Committee, the
Administrator, and the Participating Company therefore. If any payment, to which
a Participant, a surviving Spouse, or a beneficiary, is entitled under this
Plan, is unclaimed or otherwise not subject to payment to the person or persons
so entitled, the amounts representing such payment or payments shall be
forfeited after a period of two (2) years from the date the first such payment
was payable and shall not escheat to any state or revert to any party; provided,
however, that any such payment or payments shall be restored if any person
otherwise entitled to such payment or payments makes a valid claim.

     

    
      	
              Section
      9.07  

            	
              Severability

            


    

     

    If any
section, clause, phrase, provision or portion of this Plan, or the application
thereof, to any person or circumstance, shall be invalid or unenforceable under
any applicable law, such invalidity or unenforceability shall not affect or
render invalid or unenforceable the remainder of this Plan, and shall not affect
the application of any section, clause, provision, or portion hereof to other
persons or circumstances.

     

    
      	
              Section
      9.08  

            	
              Effective
      Date

            


    

     

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

     

    
      	
              Section
      9.09  

            	
              Plan
      Year

            


    

     

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

     

    
      	
              Section
      9.10  

            	
              Headings

            


    

     

    The
captions of the sections and articles hereof have been inserted solely as a
matter of convenience and shall not in any manner define or limit the scope or
intent of any provision of the Plan.

     

    
      	
              Section
      9.11  

            	
              Governing
      Law

            


    

     

    To the
extent such laws are not preempted by the laws of the United States of America,
the Plan shall be governed by the laws of the State of Texas, except as to its
principles of conflict of laws.

     

    
      	
              Section
      9.12  

            	
              Forfeiture
      of Benefits

            


    

     

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

    


     

    
      	
              Section
      9.13  

            	
              Special
      Classification

            


    

     

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

     

    
      	
              Section
      9.14  

            	
              Claims
      Release

            


    

     

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

     

    
      	
              Section
      9.15  

            	
              Damage
      Claims or Suits

            


    

     

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

     

    
      	
              Section
      9.16  

            	
              Judgment
      or Settlement

            


    

     

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

     

    
      	
              Section
      9.17  

            	
              Payment
      under Law

            


    

     

    In the
case that any benefit (which the Committee or the Administrator, as applicable,
shall determine to be of the same general character as a benefit provided by the
Plan) is payable to any Participant, to his or her beneficiary(ies), to his or
her estate, or to his or her surviving Spouse under any law now in force or
hereafter enacted, only the excess, if any, of the amount prescribed in the
Plan, above the amount of such payment prescribed by law, shall be payable under
the Plan; provided, however, that no benefit payable under the Plan shall be
reduced by reason of any governmental benefit or pension payable on account of
military service or by reason of any benefit which the recipient would be
entitled to receive under the Social Security Act or the Railroad Retirement
Act. In those cases where, because of differences in the beneficiaries, or in
the time or methods of payment or otherwise, the determination of any such
excess is not ascertainable by mere comparison but adjustments are necessary,
the Committee or the Administrator, as applicable, shall, in its discretion,
determine whether or not in fact any such excess exists and make the adjustments
necessary to carry out in a fair and equitable manner the spirit of the
provision for the payment of any such excess. Further, in determining whether or
not there is an excess, to the extent any payments under any law are considered
in determining whether there is any excess payable to an employee under any
other plan sponsored by the Company, the amount of such payments under law shall
not be considered under this Plan.

     

    
      	
              Section
      9.18  

            	
              CIC
      Provision

            


    

     

            
(a)   Applicability

     

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

     

    
      	
              (b)  

            	
              Nonforfeitable
      Benefits

            


    

     

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

     

    
      	
              (c)  

            	
              Amendments
      to CIC Provisions

            


    

     

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

     

    
      	
              Section
      9.19  

            	
              Entire
      Plan

            


    

     

    This
written Plan document is the exclusive statement of the terms of this Plan, and
any claim of right or entitlement under the Plan shall be determined in
accordance with its provisions pursuant to the procedures described in Article
7. Unless otherwise authorized by the Board or its delegate, no amendment or
modification to this Plan shall be effective until reduced to writing and
adopted pursuant to Section 8.02.

     

    
      	
              Section
      9.20  

            	
              Overpayments

            


    

     

    If any overpayment is made by the Plan
for any reason, the Plan shall have the right to recover such
overpayment.  The Participant shall cooperate fully with the Plan to
recover any overpayment and provide any necessary information and required
documents. Any recovery of overpayment pursuant to this Section 9.20 may be
deducted from future benefits payable to or on behalf of the Participant from
this Plan.




    
      
        
           

        

         


      

      
         


        
          

        

      

      
         


        
          AT&T
Non-Qualified Pension Plan

        

      

    


    Appendix
A.

    Section
4.02(c)E Alternate Minimum Formula - Table of Factors

     

    
      	
              Service/Age

            	
              50
      or less

            	
              51

            	
              52

            	
              53

            	
              54

            	
              55

            	
              56

            	
              57

            	
              58

            	
              59

            	
              60

            	
              61

            	
              62

            	
              63

            	
              64

            	
              65

            
	
              20
      or less

            	
              1.33

            	
              1.33

            	
              1.33

            	
              1.36

            	
              1.43

            	
              1.47

            	
              1.43

            	
              1.38

            	
              1.33

            	
              1.28

            	
              1.25

            	
              1.20

            	
              1.15

            	
              1.10

            	
              1.05

            	
              1.00

            
	
              21

            	
              1.38

            	
              1.32

            	
              1.32

            	
              1.35

            	
              1.42

            	
              1.46

            	
              1.42

            	
              1.37

            	
              1.32

            	
              1.27

            	
              1.24

            	
              1.19

            	
              1.14

            	
              1.09

            	
              1.05

            	
              1.00

            
	
              22

            	
              1.42

            	
              1.37

            	
              1.31

            	
              1.34

            	
              1.41

            	
              1.45

            	
              1.41

            	
              1.36

            	
              1.30

            	
              1.26

            	
              1.23

            	
              1.18

            	
              1.14

            	
              1.09

            	
              1.05

            	
              1.00

            
	
              23

            	
              1.47

            	
              1.41

            	
              1.36

            	
              1.33

            	
              1.40

            	
              1.44

            	
              1.40

            	
              1.35

            	
              1.29

            	
              1.25

            	
              1.22

            	
              1.17

            	
              1.13

            	
              1.09

            	
              1.04

            	
              1.00

            
	
              24

            	
              1.52

            	
              1.46

            	
              1.40

            	
              1.39

            	
              1.39

            	
              1.43

            	
              1.39

            	
              1.34

            	
              1.29

            	
              1.24

            	
              1.21

            	
              1.17

            	
              1.12

            	
              1.08

            	
              1.04

            	
              1.00

            
	
              25

            	
              1.58

            	
              1.51

            	
              1.45

            	
              1.43

            	
              1.45

            	
              1.42

            	
              1.38

            	
              1.33

            	
              1.28

            	
              1.23

            	
              1.20

            	
              1.16

            	
              1.12

            	
              1.08

            	
              1.04

            	
              1.00

            
	
              26

            	
              1.57

            	
              1.50

            	
              1.44

            	
              1.42

            	
              1.44

            	
              1.41

            	
              1.37

            	
              1.32

            	
              1.27

            	
              1.22

            	
              1.19

            	
              1.15

            	
              1.11

            	
              1.08

            	
              1.04

            	
              1.00

            
	
              27

            	
              1.57

            	
              1.49

            	
              1.43

            	
              1.42

            	
              1.43

            	
              1.40

            	
              1.36

            	
              1.31

            	
              1.26

            	
              1.21

            	
              1.18

            	
              1.15

            	
              1.11

            	
              1.07

            	
              1.04

            	
              1.00

            
	
              28

            	
              1.56

            	
              1.48

            	
              1.42

            	
              1.41

            	
              1.43

            	
              1.39

            	
              1.36

            	
              1.31

            	
              1.25

            	
              1.21

            	
              1/18

            	
              1.14

            	
              1.11

            	
              1.07

            	
              1.04

            	
              1.00

            
	
              29

            	
              1.55

            	
              1.48

            	
              1.42

            	
              1.40

            	
              1.42

            	
              1.39

            	
              1.35

            	
              1.30

            	
              1.25

            	
              1.20

            	
              1.17

            	
              1.14

            	
              1.10

            	
              1.07

            	
              1.03

            	
              1.00

            
	
              30

            	
              1.38

            	
              1.36

            	
              1.33

            	
              1.35

            	
              1.39

            	
              1.38

            	
              1.34

            	
              1.29

            	
              1.24

            	
              1.19

            	
              1.17

            	
              1.13

            	
              1.10

            	
              1.07

            	
              1.03

            	
              1.00

            
	
              31

            	
              1.38

            	
              1.35

            	
              1.33

            	
              1.34

            	
              1.39

            	
              1.37

            	
              1.34

            	
              1.29

            	
              1.24

            	
              1.19

            	
              1.16

            	
              1.13

            	
              1.10

            	
              1.06

            	
              1.03

            	
              1.00

            
	
              32

            	
              1.37

            	
              1.35

            	
              1.32

            	
              1.34

            	
              1.38

            	
              1.37

            	
              1.33

            	
              1.28

            	
              1.23

            	
              1.18

            	
              1.16

            	
              1.12

            	
              1.09

            	
              1.06

            	
              1.03

            	
              1.00

            
	
              33

            	
              1.37

            	
              1.34

            	
              1.32

            	
              1.34

            	
              1.38

            	
              1.36

            	
              1.33

            	
              1.28

            	
              1.23

            	
              1.18

            	
              1.15

            	
              1.12

            	
              1.09

            	
              1.06

            	
              1.03

            	
              1.00

            
	
              34

            	
              1.36

            	
              1.34

            	
              1/31

            	
              1.33

            	
              1.37

            	
              1.36

            	
              1.32

            	
              1.27

            	
              1.22

            	
              1.17

            	
              1.15

            	
              1.12

            	
              1.09

            	
              1.06

            	
              1.03

            	
              1.00

            
	
              35
      or more

            	
              1.36

            	
              1.33

            	
              1.31

            	
              1.33

            	
              1.37

            	
              1.35

            	
              1.32

            	
              1.27

            	
              1.22

            	
              1.17

            	
              1.14

            	
              1.11

            	
              1.09

            	
              1.06

            	
              1.03

            	
              1.00

            


    

    



    
      
        
           

        

         


      

      
         


        
          

        

      

      
         


        
           

        

      

    


    Appendix
B.                                           

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

     

    


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

    


    Attained
Age

     

    
      	
              Years/Months

            	
              0

            	
              1

            	
              2

            	
              3

            	
              4

            	
              5

            	
              6

            	
              7

            	
              8

            	
              9

            	
              10

            	
              11

            
	
              50

            	
              .29

            	
              .29

            	
              .30

            	
              .30

            	
              .31

            	
              .31

            	
              .32

            	
              .32

            	
              .32

            	
              .33

            	
              .33

            	
              .34

            
	
              51

            	
              .34

            	
              .34

            	
              .35

            	
              .35

            	
              .36

            	
              .36

            	
              .37

            	
              .37

            	
              .37

            	
              .38

            	
              .38

            	
              .39

            
	
              52

            	
              .39

            	
              .40

            	
              .40

            	
              .41

            	
              .42

            	
              .42

            	
              .43

            	
              .44

            	
              .44

            	
              .45

            	
              .46

            	
              .46

            
	
              53

            	
              .47

            	
              .48

            	
              .48

            	
              .49

            	
              .50

            	
              .50

            	
              .51

            	
              .52

            	
              .52

            	
              .53

            	
              .54

            	
              .54

            
	
              54

            	
              .55

            	
              .56

            	
              .57

            	
              .57

            	
              .58

            	
              .59

            	
              .60

            	
              .60

            	
              .61

            	
              .62

            	
              .63

            	
              .63

            
	
              55

            	
              .64

            	
              .64

            	
              .66

            	
              .66

            	
              .66

            	
              .66

            	
              .67

            	
              .67

            	
              .67

            	
              .67

            	
              .69

            	
              .69

            
	
              56

            	
              .69

            	
              .69

            	
              .71

            	
              .71

            	
              .71

            	
              .72

            	
              .72

            	
              .72

            	
              .74

            	
              .74

            	
              .74

            	
              .76

            
	
              57

            	
              .76

            	
              .76

            	
              .78

            	
              .78

            	
              .78

            	
              .79

            	
              .79

            	
              .79

            	
              .81

            	
              .81

            	
              .81

            	
              .83

            
	
              58

            	
              .83

            	
              .83

            	
              .84

            	
              .84

            	
              .86

            	
              .86

            	
              .88

            	
              .88

            	
              .88

            	
              .90

            	
              .90

            	
              .91

            
	
              59

            	
              .91

            	
              .91

            	
              .93

            	
              .93

            	
              .95

            	
              .95

            	
              .97

            	
              .97

            	
              .97

            	
              .98

            	
              .98

            	
              1.00

            
	
              60

            	
              1.00

            	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      


    

    


    



    
      
        
           

        

         


      

      
         


        
          

        

      

      
         


        
        

      

    


    Appendix
C.

    Initial
Conversion Factors

     

    
      	
               

              Age

            	
              Conversion

              Factor

            	
               

              Age

            	
              Conversion

              Factor

            
	
              20

            	
              17.16

            	
              43

            	
              50.04

            
	
              21

            	
              17.88

            	
              44

            	
              51.60

            
	
              22

            	
              18.48

            	
              45

            	
              52.92

            
	
              23

            	
              19.20

            	
              46

            	
              55.08

            
	
              24

            	
              20.04

            	
              47

            	
              57.12

            
	
              25

            	
              20.76

            	
              48

            	
              59.28

            
	
              26

            	
              22.08

            	
              49

            	
              61.32

            
	
              27

            	
              24.12

            	
              50

            	
              63.24

            
	
              28

            	
              26.16

            	
              51

            	
              65.88

            
	
              29

            	
              29.76

            	
              52

            	
              68.28

            
	
              30

            	
              31.68

            	
              53

            	
              70.80

            
	
              31

            	
              33.72

            	
              54

            	
              73.20

            
	
              32

            	
              35.16

            	
              55

            	
              75.60

            
	
              33

            	
              36.48

            	
              56

            	
              78.60

            
	
              34

            	
              37.44

            	
              57

            	
              81.60

            
	
              35

            	
              38.40

            	
              58

            	
              84.60

            
	
              36

            	
              40.08

            	
              59

            	
              87.48

            
	
              37

            	
              41.64

            	
              60

            	
              90.36

            
	
              38

            	
              42.84

            	
              61

            	
              94.56

            
	
              39

            	
              44.16

            	
              62

            	
              98.76

            
	
              40

            	
              45.36

            	
              63

            	
              102.84

            
	
              41

            	
              46.92

            	
              64

            	
              106.92

            
	
              42

            	
              48.60

            	
              65
      or later

            	
              111.12

            


    

    


     


    
      
        
        

         


      

      
         


        
          

        

      

      
         


        
        

      

    


    Appendix
D.

    Deferred
Vested Benefit – Early Commencement Factors

     

    


    Single
Life Annuity Early Commencement Factors

     

    Based
Upon Completed Years and Months of Age

     

    At Commencement of
Non-Service Benefit

     

    
      	
              Years\Months

            	
              0

            	
              1

            	
              2

            	
              3

            	
              4

            	
              5

            	
              6

            	
              7

            	
              8

            	
              9

            	
              10

            	
              11

            
	
              50

            	
              0.26

            	
              0.26

            	
              0.26

            	
              0.26

            	
              0.26

            	
              0.26

            	
              0.27

            	
              0.27

            	
              0.27

            	
              0.27

            	
              0.27

            	
              0.28

            
	
              51

            	
              0.28

            	
              0.28

            	
              0.28

            	
              0.28

            	
              0.28

            	
              0.29

            	
              0.29

            	
              0.29

            	
              0.29

            	
              0.29

            	
              0.30

            	
              0.30

            
	
              52

            	
              0.30

            	
              0.30

            	
              0.30

            	
              0.31

            	
              0.31

            	
              0.31

            	
              0.31

            	
              0.32

            	
              0.32

            	
              0.32

            	
              0.32

            	
              0.32

            
	
              53

            	
              0.33

            	
              0.33

            	
              0.33

            	
              0.33

            	
              0.34

            	
              0.34

            	
              0.34

            	
              0.34

            	
              0.34

            	
              0.35

            	
              0.35

            	
              0.35

            
	
              54

            	
              0.35

            	
              0.36

            	
              0.36

            	
              0.36

            	
              0.36

            	
              0.37

            	
              0.37

            	
              0.37

            	
              0.37

            	
              0.38

            	
              0.38

            	
              0.38

            
	
              55

            	
              0.38

            	
              0.39

            	
              0.39

            	
              0.39

            	
              0.40

            	
              0.40

            	
              0.40

            	
              0.40

            	
              0.41

            	
              0.41

            	
              0.41

            	
              0.42

            
	
              56

            	
              0.42

            	
              0.42

            	
              0.43

            	
              0.43

            	
              0.43

            	
              0.44

            	
              0.44

            	
              0.44

            	
              0.44

            	
              0.45

            	
              0.45

            	
              0.45

            
	
              57

            	
              0.46

            	
              0.46

            	
              0.46

            	
              0.47

            	
              0.47

            	
              0.48

            	
              0.48

            	
              0.48

            	
              0.49

            	
              0.49

            	
              0.49

            	
              0.50

            
	
              58

            	
              0.50

            	
              0.50

            	
              0.51

            	
              0.51

            	
              0.52

            	
              0.52

            	
              0.52

            	
              0.53

            	
              0.53

            	
              0.54

            	
              0.54

            	
              0.54

            
	
              59

            	
              0.55

            	
              0.55

            	
              0.56

            	
              0.56

            	
              0.57

            	
              0.57

            	
              0.57

            	
              0.58

            	
              0.58

            	
              0.59

            	
              0.59

            	
              0.60

            
	
              60

            	
              0.60

            	
              0.61

            	
              0.61

            	
              0.62

            	
              0.62

            	
              0.63

            	
              0.63

            	
              0.64

            	
              0.64

            	
              0.65

            	
              0.65

            	
              0.66

            
	
              61

            	
              0.66

            	
              0.67

            	
              0.67

            	
              0.68

            	
              0.68

            	
              0.69

            	
              0.70

            	
              0.70

            	
              0.71

            	
              0.71

            	
              0.72

            	
              0.72

            
	
              62

            	
              0.73

            	
              0.74

            	
              0.74

            	
              0.75

            	
              0.76

            	
              0.76

            	
              0.77

            	
              0.78

            	
              0.78

            	
              0.79

            	
              0.80

            	
              0.80

            
	
              63

            	
              0.81

            	
              0.82

            	
              0.82

            	
              0.83

            	
              0.84

            	
              0.85

            	
              0.85

            	
              0.86

            	
              0.87

            	
              0.88

            	
              0.88

            	
              0.89

            
	
              64

            	
              0.90

            	
              0.91

            	
              0.91

            	
              0.92

            	
              0.93

            	
              0.94

            	
              0.95

            	
              0.96

            	
              0.97

            	
              0.97

            	
              0.98

            	
              0.99

            
	
              65

            	
              l.00

            	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      


    

    


     

    




    
      
        
        

         


      

      
         


        
          

        

      

      
         


        
        

      

    


    Appendix
E.

    Article
4E - Pension Benefits

     

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

    


    Section
4.01E     Applicable Benefit Formulas.

     

    For
purposes of applying the provisions of Sections 4.01 and 4.02 with respect to a
Participant described in Section 3.02(c), the Participant’s “Term of Employment”
and the day for the determination of such a Participant’s status as “Service
Pension Eligible” shall be subject to the provisions of Section
3.02(c).

     

    (a) Participants
Terminated Before January 1, 1997

     

    The
Service Benefit, Deferred Vested Benefit, or Disability Benefit payable to a
Participant who terminated employment from a Participating Company prior to
January 1, 1997 is determined in accordance with the terms of the Plan as in
effect from time to time prior to January 1, 1997.

     

    (b) Active
Participants on January 1, 1997

     

    
      	
               
      

            	
              (i)

            	
              Participants Whose Eligibility
      to Accrue Benefits Ends Prior to August 1,
  1997.

            


    

     

    
      	
               
      

            	
              (A)

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

            


    

     

    
      	
               
      

            	
              (B)

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

            


    

     

    
      	
               
      

            	
              (C)

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

            


    

     

    
      	
               
      

            	
              (D)

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

            


    

     

    
      	
               
      

            	
              (ii)

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

            


    

     

    
      	
               
      

            	
              (A)

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

            


    

     

    
      	
               
      

            	
              (B)

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

            


    

     

    
      	
               
      

            	
              (C)

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

            


    

     

    
      	
               
      

            	
              (D)

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

            


    

     

    (c) New
Participants after January 1, 1997 and before January 1, 1998

     

    
      	
               
      

            	
              (i)

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

            


    

     

    
      	
               
      

            	
              (ii)

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

            


    

     

    
      	
               
      

            	
              (iii)

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

            


    

     

    (d) Participants
who are Officers on or after January 1, 1998 (Cash Balance
Participants)

     

    Participants Who Are
Officers Before January 1, 2009

     

    
      	
               
      

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

            


    

     

    
      	
               
      

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

            


    

     

    Participants
Who Become Officers After December 31, 2008

     

    
      	
               
      

            	
              (iii)

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

            


    

     

    (e) Surviving
Spouse of an Officer (other than a Cash Balance Participant)

     

    (i)  An
Automatic Survivor Annuity will be paid to the Spouse to whom an Officer (other
than a Cash Balance Participant) is married at the time of his or her death,
provided such Participant is vested as of his or her date of death, and
satisfies the provisions of Section 4.04(a) or Section 4.04(b), as
applicable.  The benefit payable to such Spouse shall be determined in
accordance with Section 4.04(a) if such Officer is an employee of the AT&T
Controlled Group at the time of death, and in accordance with Section 4.04(b) if
such Officer is not an employee of the AT&T Controlled Group at the time of
death.

     

    (ii)  Notwithstanding
the provisions of the preceding subsection 4.01(e)(i), if the Officer elects
distribution of his or her Pension Plan benefit in the form of a 50% Joint and
Survivor Annuity and dies following his or her Pension Commencement Date, the
surviving Spouse will be eligible for a monthly benefit equal to 50% of the
monthly benefit being paid to the Officer at the time of his or her
death.  The benefit payable to the surviving Spouse will commence on
the first day of the month following the date of the Officer’s death. For
purposes of this subsection 4.01(e)(ii), the surviving Spouse is the Spouse to
whom the Officer was married at his or her date of death.  In no event
will a benefit be paid pursuant to this subsection 4.01(e)(ii), if a benefit is
payable pursuant to subsection 4.01(e)(i) or subsection 4.01(g).

     

    (f) Surviving
Spouse of an E-band Employee

     

     An
Automatic Survivor Annuity will be paid to the Spouse to whom an E-band Employee
is married at the time of his or her death while an active employee, provided
such Participant is vested as of his or her date of death, and satisfies the
provisions of Section 4.04(a) at the date of death.  The benefit
payable to such Spouse shall be determined in accordance with Section
4.04(a).  The provisions of this Section 4.01(f) do not apply to a
benefit determined under the cash balance formula of Section 4.11, or to a
benefit based on a Mid-Career Pension Benefit of Section 4.07.

     

    (g) Surviving
Spouse (or Estate) of a Cash Balance Participant

     

    A
benefit, determined pursuant to the provisions of Section 4.10, shall be payable
to the surviving Spouse (or estate, in the case of a Participant who is not
married at the time of death) of a Cash Balance Participant who is vested in his
or her benefit under the Pension Plan as of his or her date of death and who
dies prior to commencing distribution of his or her benefit under the
Plan.

     

    A
benefit, determined pursuant to the provisions of Section 4.09, shall be payable
to the surviving Spouse of a Cash Balance Participant who dies prior to December
1, 2008 following commencement of his or her benefits under the Plan, if such
Participant’s benefit was being paid under the 50% Joint and Survivor Annuity or
100% Joint and Survivor Annuity form of payment.

     

    (h) Deferral
Participant

     

    An
individual who is a Deferral Participant shall be eligible for a benefit
determined pursuant to Section 4.11, provided that such Participant is vested in
his or her benefit under the Pension Plan upon his or her termination of
employment from the AT&T Controlled Group.  Notwithstanding any
other provision of the Plan to the contrary, such benefit shall be payable in
addition to any other benefits otherwise payable under the Plan.

     

    (i) Surviving
Spouse (or Estate) of a Deferral Participant

     

    A
benefit, determined pursuant to the provisions of Section 4.11(f), shall be
payable to the surviving Spouse (or estate, in the case of a Participant who is
not married at the time of death) of a Deferral Participant who is vested in his
or her benefit under the Pension Plan as of his or her date of death and who
dies prior to commencing distribution of his or her benefit under the
Plan.

     

    A
benefit, determined pursuant to the provisions of Section 4.09, shall be payable
to the surviving Spouse of a Deferral Participant who dies prior to December 1,
2008 following commencement of his or her benefits under the Plan, if such
Participant’s benefit was being paid under the 50% Joint and Survivor Annuity or
100% Joint and Survivor Annuity form of payment.

     

    Section
4.02E     Benefit Formulas (other than Cash
Balance)

     

    (a) Basic
Formula

     

    
      	
               
      

            	
              (i)

            	
              Service
      Benefit.  The annual Service Benefit under the Basic
      Formula shall be determined by adding (A) the product of one and
      five-tenths percent (1.5%) of the average annual Short Term Incentive
      Awards for the 1989 Base Period and the Officer’s Term of Employment as of
      December 31, 1989, and (B) the sum of one and six-tenths percent (1.6%) of
      the Short Term Incentive Award for each successive full or partial
      calendar year of employment following 1989, through the earlier of the
      date of termination of active participation in the Plan or July 31,
      1997.

            


    

     

    
      	
               
      

            	
              (ii)

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

            


    

     

    
      	
               
      

            	
              (iii)

            	
              Deferred Vested
      Benefit.

            


    

     

    The
annual benefit determined under the Basic Formula for as Officer eligible for a
Deferred Vested Benefit under the provisions of Section 3.02(a)(iii) shall be
payable commencing at the Officer’s Normal Retirement Date in an amount equal to
the benefit determined pursuant to Section 4.02(a)(i). An Officer who has
elected to have his deferred vested pension under the Pension Plan payable early
in reduced amounts pursuant to the terms and conditions of the Pension Plan
shall be deemed to have elected to have his or her Deferred Vested Benefit under
this Plan payable early in reduced amounts.  In the event of such an
election, the amount of Deferred Vested Benefit shall be determined as
follows:

     

    
      	
               
      

            	
               (A)

            	
              with
      respect to payments for the months occurring on or after January, 1997 and
      prior to August, 1997, the amount determined pursuant to Section
      4.02(a)(i) shall be multiplied by a factor determined in accordance with
      Appendix D, based on the Participant’s age on his or her Pension
      Commencement Date, or

            


    

     

    
      	
                              
        (B)

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

            


    

     

    
      	
               
      

            	
               (iv)

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

            


    

     

    (b) Alternate
Formula

     

    The
annual Service Benefit under the Alternate Formula shall be the excess of B over
A, where A equals the Participant’s annual Pension Plan Benefit and B equals the
product of (i) one and seven-tenths percent of the Participant’s Adjusted Career
Average Pay, less eight-tenths of one percent of the Participant’s Covered
Compensation Base, and (ii) the Participant’s Term of Employment. The Service
Benefit under this Alternate Formula will be reduced in case of commencement
before age sixty by multiplying such benefit by the appropriate reduction factor
from Appendix B.  For purposes of the Alternate Formula, the
Participant’s Term of Employment is determined as of the earliest to occur of
(i) July 31, 1997, (ii) the date specified in the applicable provision of
Section 3.02(c) for purposes of determining a benefit under the Alternate
Formula, or (iii) the date of termination of employment from a Participating
Company.

     

    (c) Alternate
Minimum Formula

     

    The
annual Service Benefit under the Alternate Minimum Formula in this Section
4.02(c) shall be an amount equal to (A) the product of the greater of the amount
determined under the following Formula A or Formula B, multiplied by the
applicable factor set forth in Appendix A, where such factor is based on the
Participant’s age and service as of December 31, 1996, less (B) the amount of
the Officer’s Pension Plan Benefit (as adjusted to reflect any reduction for
early commencement).  If the Pension Commencement Date under this Plan
occurs prior to the date the Participant is eligible to commence receipt of his
or her deferred vested pension from the AT&T Management Pension Plan,
payments under this Plan shall be made without the reduction in (B) of the
immediately preceding sentence until the earliest date on which the Participant
is eligible to commence distribution of such deferred vested pension from the
AT&T Management Pension Plan, at which time payments from the Plan shall be
adjusted to reflect such reduction.

     

    
      	
               
      

            	
              (i)

            	
              Formula
      A.  For purposes of the Alternate Minimum Formula in this
      Section 4.02(c), Formula A means the sum of (a) the product of one
      and five tenths percent of average calendar year Total Compensation for
      the 1992 Base Period and the Term of Employment as of December 31, 1992
      and (b) one and six tenths percent of Total Compensation for the calendar
      year 1993. Such sum shall be actuarially reduced in case of commencement
      before age fifty-five by applying the appropriate reduction factor set
      forth in Section 4.02(a)(ii).

            


    

     

    
      	
               
      

            	
              (ii)

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

            


    

     

    (d) Special
Update to the Basic Formula

     

    
      	
               
      

            	
              (i)

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

            


    

     

    
      	
              (ii)  

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

            


    

     

    
      	
              (iii)  

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

            


    

     

    (e)  Special
Update to the Alternate Formula

     

    The
annual Service Benefit under the Special Update to the Alternate Formula shall
be the excess of B over A, where A equals the Participant’s Pension Plan Benefit
and B equals the product of (i) and (ii), where (i) is one and seven-tenths
percent of the Participant’s Special Update Adjusted Career Average Pay, less
eight-tenths of one percent of the Participant’s Covered Compensation Base
(determined as of December 31, 1996), and (ii) is the lesser of (1) one plus the
Participant’s Term of Employment as of December 31, 1996 and (2) one hundred and
five percent of the Participant’s Term of Employment as of December 31, 1996.
The benefit under this Alternate Formula will be reduced in case the Pension
Commencement Date is before age sixty by applying the appropriate reduction
factor from the Table of such factors shown in Appendix B to such
benefit.  The Special Update to the Alternate Formula is equal to zero
for any determination date prior to January 1, 1997.

     

    Section
4.03E   Cash Balance Accounts

     

    The provisions of this Section 4.03E
describe the establishment and development of the Cash Balance Account with
respect to a Participant who is an Officer on or after January 1, 1998 and
before January 1, 2009 with respect to benefits that commence under the Cash
Balance Formula prior to January 1, 2009. Except as modified by the provisions
of Article 4 of the main text of the Plan, the methodology set forth in this
Section 4.03E also applies for purposes of determining a Benefit Based on the
Cash Balance Account with respect to benefits that commence after December 1,
2008 to or with respect to a Participant who was an Officer prior to January 1,
2009.

    


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

    


    


    (a) Establishment
of Cash Balance Accounts

     

    A Cash
Balance Participant’s Cash Balance Account is a hypothetical bookkeeping account
used solely in calculating the amount of the Cash Balance Participant’s Benefit
Based on the Cash Balance Account. The Cash Balance Account is calculated by
accumulating the initial cash balance credit determined pursuant to Section
4.03(b), annual award credits determined pursuant to Section 4.03(c), and
interest credits determined pursuant to Section 4.03(d).

     

    A
Participant’s Cash Balance Account shall be established as of the later of
January 1, 1998 or the date the Participant becomes a Cash Balance Participant
in the Plan. Except as provided in Section 4.03(b), the initial Cash Balance
Account shall be zero.

     

    (b) Initial
Cash Balance Credit

     

    (i)           Effective
as of January 1, 1998, the Cash Balance Account of each Cash Balance Participant
on the roll of a Participating Company on that date shall be credited with an
initial cash balance credit determined by multiplying the Participant’s
conversion benefit (as defined below) by one hundred seven percent (107%) of the
applicable conversion factor set forth in Appendix C, based on the Participant’s
attained age (in whole years) as of December 31, 1996.  The Cash
Balance Participant’s conversion benefit under this Section 4.03(b) shall equal
one-twelfth of his or her annual benefit determined in accordance with Section
4.02(d).

     

    (ii)           The
initial cash balance credit shall be zero for any Participant who is not an
Officer on January 1, 1998.   

     

    (c) Annual
Award Credit

     

    (i) January
1, 1998

     

    Effective
as of January 1, 1998, the Cash Balance Account of each Cash Balance Participant
on the roll of a Participating Company on that date shall be credited with an
annual award credit.  This annual award credit shall equal the sum of
(A) and (B) where (A) is the product of (I) and (II), where (I) is the Short
Term Incentive Award, if any, for 1997 and (II) is two times the pay factor for
the Participant as set forth in Section 4.04(c)(v) of the Pension Plan, based on
the Participant’s attained age as of December 31, 1997, and (B) is the credit
based on the Participant’s 1997 Deferred Salary, if any, determined pursuant to
the following (x), (xi) or (xii), as applicable, where for purposes of (x), (xi)
and (xii), “pay factor” means the pay factor as set forth in Section 4.04(c)(v)
of the Pension Plan based on the Participant’s attained age as of December 31,
1997, and:

     

    
      	
              (x)  

            	
              if
      the sum of the pay taken into account for such Participant under the
      Pension Plan and the AT&T Excess Benefit and Compensation Plan (such
      sum constituting “1997 Considered Pay”) is equal to or greater than the
      Social Security Wage Base for 1997, the credit described in Section
      4.03(c)(i)(B) shall be equal to the Participant’s 1997 Deferred Salary
      multiplied by two times the pay factor,
and

            


    

     

    
      	
              (xi)  

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

            


    

     

    
      	
              (xii)  

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

            


    

     

    (ii) Calendar
Year 1998 and Thereafter

     

    Except as
otherwise provided herein, effective as of December 31, 1998, and each December
31 thereafter, the Cash Balance Account of each individual who is a Cash Balance
Participant during the respective calendar year shall be credited with an annual
award credit. The Cash Balance Participant’s annual award credit shall
equal  (A), plus, for Plan Years prior to 2005, (B), where (A) is the
product of (I) and (II), where (I) is the Short Term Incentive Award for the
respective calendar year (as determined pursuant to Section 2.40), and (II) is
two times the supplemental pay factor for the Participant as set forth in
Section 4.04(c)(v) of the Pension Plan, based on the Participant’s attained age
as of December 31 of such calendar year, and (B) is the credit based on the
Participant’s Deferred Salary, if any, for the calendar year determined pursuant
to the following (xiii), (xiv) or (xv), as applicable, where for purposes of
(x), (xi) and (xii), “pay factor” means the pay factor as set forth in Section
4.04(c)(v) of the Pension Plan based on the Cash Balance Participant’s attained
age as of December 31 of such calendar year, and

     

    
      	
              (xiii)  

            	
              if
      the sum of the pay taken into account for such Participant under the
      Pension Plan and the AT&T Excess Benefit and Compensation Plan (such
      sum constituting “Considered Pay”) is equal to or greater than the Social
      Security Wage Base for the calendar year, the credit described in Section
      4.03(c)(ii)(B) shall be equal to the Participant’s Deferred Salary
      multiplied by two times the pay factor,
and

            


    

     

    
      	
              (xiv)  

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

            


    

     

    
      	
              (xv)  

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

            


    

     

    Notwithstanding
the foregoing, in any calendar year in which a Cash Balance Participant
terminates employment, any such annual award credit shall be based on his or her
attained age as of the end of the month in which the Participant terminates
employment and shall be credited to the Participant’s Cash Balance Account as of
that date.

     

    (d) Interest
Credits

     

    Beginning
in 1998, a Cash Balance Participant’s Cash Balance Account shall be credited
with an interest credit based on the balance of his or her Cash Balance Account
as of the first day of the Plan Year.  Notwithstanding the provisions
of the immediately preceding sentence, no Interest Credits shall be made with
respect to the period after the last day of the month immediately preceding the
Participant’s Pension Commencement Date.

     

    For the
Plan Year in which a Cash Balance Participant terminates employment, his or her
Cash Balance Account shall also be credited with an interest credit based on any
annual award credit for that Plan Year.

     

    Unless
the Participant commences his or her pension during the Plan Year, the interest
credit shall be made as of the last day of that Plan Year.  For the
Plan Year in which the Participant commences his or her pension, the interest
credit shall be made as of the last day of the month immediately preceding the
Participant’s Pension Commencement Date.

     

    The
interest crediting rate shall be the same interest crediting rate in effect for
such period under the Pension Plan, and shall be credited at the same time and
in the same manner as interest credits are applied under the Pension
Plan.

     

    (e) Cash
Balance Account Attributable to the Mid-Career Pension Benefit

     

     (i)           With
respect to an employee who is an Officer on or after January 1, 1998, effective
as of the later of January 1, 1998 or the first day of the month following the
transfer to this Plan of the liability for a Participant’s annual benefit from
the AT&T Mid-Career Pension Plan, if any, as described in Section 4.07, a
Mid-Career Cash Balance Subaccount shall be established for such
Participant.  The initial credit to such Mid-Career Cash Balance
Subaccount shall be determined by multiplying the Cash Balance Participant’s
Mid-Career Conversion Benefit (as defined below) by one hundred seven percent
(107%) of the applicable conversion factor set forth in Appendix C, based on the
Cash Balance Participant’s attained age (in whole years) as of December 31,
1996.  The Cash Balance Participant’s Mid-Career Conversion Benefit
under this Section 4.03(b) shall equal the monthly benefit (commencing at Normal
Retirement Age) transferred from the AT&T Mid-Career Pension
Plan.  Such initial Mid-Career Cash Balance Subaccount shall be
credited with interest credits as follows:

     

    
      	
               
      

            	
              (A)

            	
              with
      respect to the Mid-Career Cash Balance Subaccount for a Participant who is
      Officer on January 1, 1998, interest credits, beginning in 1998,
      determined in the manner described in Section
  4.03(d);

            


    

     

    
      	
               
      

            	
               (B)

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

            


    

     

    
      	
               
      (I)            
      

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

            


    

     

    
      	
              (II)       
        

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

            


    

     

     (ii)           A
benefit attributable to the Mid-Career Cash Balance Subaccount, if any, shall be
payable only if the Participant has completed a Term of Employment of at least
five years classified by the Company as full-time, for one or more Participating
Companies, at E-band or above, prior to the Normal Retirement Date. For purposes
of determining whether the Participant has completed a Term of Employment of at
least five years, the provisions of the Pension Plan providing exceptions to
what is considered a break in the continuity of service shall not
apply.  Except as otherwise provided under the terms of the Plan, if
the Participant becomes eligible to receive a benefit based on the Mid-Career
Cash Balance Subaccount, the Mid-Career Cash Balance Subaccount shall be added
to the Participant’s Cash Balance Account determined pursuant to Section 4.03(b)
through (d).

     

    (f) Benefit
Based on the Cash Balance Account

     

    A Cash
Balance Participant’s Benefit Based on the Cash Balance Account shall be a
monthly benefit determined in the manner described in the Pension Plan, taking
into account the Participant’s Cash Balance Account as of the date such benefit
is being determined.

     

    Section
4.04E    Automatic Survivor Annuities

     

    The
Automatic Survivor Annuity described in this Section 4.04 does not apply to a
benefit determined under the cash balance formula of Section 4.03 or 4.11, or to
a benefit based on the Mid-Career Pension Benefit of Section
4.07.  For purposes of this Section 4.04, an Officer who is not
Service Pension Eligible at the time of his or her termination of service with a
Participating Company shall not be considered a retired Officer, unless such
Officer was eligible for a Disability Benefit at the time of his or her
termination of service.

     

    (a) Before-Retirement

     

    The
surviving Spouse shall be entitled to a pre-retirement Automatic Survivor
Annuity determined pursuant to this Section 4.04(a) effective commencing as of
the first day of the month following the death of a Participant who dies while
an employee if such Participant  has a Term of Employment of at least
fifteen years at the time of death, or,  if such Participant meets the
age and Term of Employment requirements for a Service Benefit (or is Service
Pension Eligible) at the time of his or her death. The pre-retirement Automatic
Survivor Annuity shall be payable monthly in an amount equal to forty five
percent (forty six percent effective for benefits commencing on or after July 1,
1998) of the monthly benefit that would have been payable to the Participant
pursuant to Section 4.02 had such Participant terminated employment with a
Service Benefit, regardless of his or her actual eligibility therefore, on the
date of his or her death.  For purposes of determining the Automatic
Survivor Annuity provided in this Section 4.04(a), the early retirement
discounts in Sections 4.02(a), 4.02(b), 4.02(d) or 4.02(e) shall not
apply.  With respect to a Participant whose benefit is determined
pursuant to Section 4.01(d)(ii)(B), the Automatic Survivor Annuity shall not
include the portion, if any, of the Participant’s benefit attributable to the
Participant’s transferred Mid-Career Pension Benefit described in Section
4.07.

     

    (b) Post-Retirement

     

    (i)           Subject
to the provisions of Section 4.04(b)(ii), upon the death of an Officer receiving
(or eligible to receive) a Service or Disability Benefit under this Plan who
retired on or after December 31, 1986 (or retired prior to that date but had not
reached age fifty-five on or before December 31, 1983), a survivor annuity in
the amount of forty five percent  (forty six percent effective for
benefits commencing on or after July 1, 1998) of such retired Officer’s monthly
benefit amount will be payable beginning on the first day of the month following
the date of his or her death to the surviving Spouse to whom  such
retired Officer is married at the time of death.  If the Officer had
not yet commenced distribution of his or her benefit, the benefit will be
reduced for early commencement, as if the Officer’s Pension Commencement Date
were the date payments to the surviving Spouse commence. For purposes of
determining the monthly benefit payable to the surviving Spouse pursuant to this
Section 4.04(b), the Officer’s Service or Disability Benefit determined pursuant
to Section 4.02 is based on the amount that would be paid in the form of a
single life annuity, and is not reduced to reflect any optional form of payment.
With respect to a Participant whose benefit is determined pursuant to Section
4.01(d)(ii)(B), the Automatic Survivor Annuity shall not include the portion, if
any, of the Service or Disability Benefit attributable to the Participant’s
transferred Mid-Career Pension Benefit described in Section 4.07.

     

    (ii)           In
the case of an Officer who terminates employment on or after August 1, 1997, no
benefit shall be payable pursuant to Section 4.04(b)(i) unless (A) the Officer’s
benefit under the Pension Plan is larger under a “pay base” formula of the
Pension Plan than under the cash balance formula of such plan, (B) the benefit
determined under Section 4.02(a), 4.02(b), 4.02(d) or 4.02(e), as applicable, is
greater than the benefit determined under Section 4.03 of this Plan, and (C) the
Officer elected to receive his or her Pension Plan benefit in the form of a
single life annuity or a 50% joint and survivor annuity.   For
purposes of making the determination under (A) and (B) of this Section
4.04(b)(ii), any applicable reduction for commencement prior to age 65 is taken
into account, and any amounts attributable to the Mid-Career Pension Benefit,
whether pursuant to Section 4.03(e) or Section 4.07, shall be
disregarded.  If pursuant to the immediately preceding provisions of
this Section 4.04(b)(ii) the provisions of Section 4.04(b)(i) do not apply with
respect to such Participant, the benefits, if any, payable following the death
of a Participant after his or her Pension Commencement Date shall be determined
solely in accordance with the provisions of Section 4.09(a)(iv).

     

    Section
4.05E    Special Increases

     

    Monthly
pension payments being made under the Plan to a terminated Participant or the
surviving Spouse of a terminated Participant shall be increased by the same
percentage and pursuant to the same terms and conditions, as are set forth for
comparable payments to similarly situated individuals, from time to time, under
the Pension Plan.

     

    Section
4.06E   Monthly Payments

     

    The
annual benefit determined under Section 4.02 shall be divided by twelve to
determine a monthly benefit amount.  All annuity benefits under the
Plan shall be payable monthly or at such other periods as the Committee or the
Administrator, as applicable, may determine in each case; a benefit payable
other than monthly shall be adjusted to reflect the period covered by such
payment.

     

    Section
4.07E    Mid-Career Pension Benefit

     

    (a) Transfer
of Mid-Career Pension Benefit

     

    Effective
January 1, 1998, for an Officer who is a Participant as of January 1, 1998, the
liability for the monthly benefit from the AT&T Mid-Career Pension Plan, if
any, shall be transferred to this Plan, and the AT&T Mid-Career Pension Plan
shall retain no further obligation with respect to such
benefit.   With respect to an employee who becomes an Officer
after January 1, 1998, the liability for the annual benefit from the AT&T
Mid-Career Pension Plan, if any, shall be transferred to this Plan effective
upon his or her designation as an Officer, and the AT&T Mid-Career Pension
Plan shall retain no further obligation with respect to such benefit. Solely for
purposes of determining the benefit transferred to this Plan, it shall be
assumed that the Participant had completed a Term of Employment of at least five
years classified by the Company as full-time, for one or more Participating
Companies, at E-band or above prior to December 31, 1997, and had terminated
employment as of December 31, 1997.

     

    (b) Eligibility
for Payment of Mid-Career Pension Benefit

     

    Following
the transfer of the AT&T Mid-Career Pension Plan benefit to this Plan, such
transferred benefit shall be paid from this Plan, in the manner described in
Section 4.07(c), provided that such Participant has completed a Term of
Employment of at least five years classified by the Company as full-time, for
one or more Participating Companies, at E-band or above, prior to the last day
of the month in which he or she reaches Normal Retirement Age. For purposes of
determining whether the Participant has completed a Term of Employment of at
least five years, the provisions of the Pension Plan providing exceptions to
what is considered a break in the continuity of service shall not
apply.  Notwithstanding the preceding provisions of this Section 4.07,
if a benefit paid under this Plan is paid pursuant to the Cash Balance Formula
of Section 4.03, no additional benefit shall be paid pursuant to this Section
4.07, because such transferred benefit is already included in the determination
of benefit amounts under Section 4.03.

     

    (c) Manner
of Payment of Mid-Career Pension Benefit

     

    The
transferred Mid-Career Pension Benefit is included in the benefit determined
pursuant to Section 4.01(d)(ii)(A) or Section 4.01(d)(ii)(B), as
applicable.  A Mid-Career Pension Benefit payable pursuant to Section
4.01(d)(ii)(A) is included in the “Benefit Based on the Cash Balance Account”
described in Section 4.03(f), through the operation of Section
4.03(e)(ii).  If a Participant’s benefit is payable pursuant to
Section 4.01(d)(ii)(B) and commences prior to January 1, 2009, the portion of
such benefit attributable to the Mid-Career Pension Benefit shall be paid only
in the form of a single life annuity, and if such benefit commences prior to
Normal Retirement Date shall be reduced in accordance with the terms of the
AT&T Mid-Career Pension Plan as in effect on December 31, 1997, and shall
not be included in determining the Automatic Survivor Annuity of Section 4.04
(a) or Section 4.04(b). In addition to the provisions of this Section 4.07(c),
distribution of the Mid-Career Pension Benefit shall be subject to the
provisions of Section 4.09.

     

    Section
4.08E     Treatment During Subsequent
Employment

     

    When a
Participant’s Term of Employment includes service with more than one
Participating Company, the last Participating Company to employ him or her
immediately prior to his or her termination of employment, with entitlement to a
benefit hereunder, shall be responsible for the full benefit under this Plan. If
a Participant’s benefit payments under the Pension Plan are suspended under the
terms of the Pension Plan, because of his or her employment or reemployment
subsequent to termination of employment, any benefit payment he or she is
entitled to under this Plan shall be permanently suspended for the period of
such employment or reemployment to the same extent and in the same manner,
consistent with the terms and conditions applicable to the suspension of benefit
payments under the Pension Plan, provided, however, that payments to which an
Officer is entitled under an annuity contract purchased on his or her behalf
shall not be suspended for the period of such employment or
reemployment.  Payment of a Participant’s benefit under this Plan
shall resume simultaneously with the recommencement of his or her benefits under
the Pension Plan. Following recommencement of benefit payments under this Plan,
the Participant (or surviving Spouse) shall not be eligible to receive any
payments under this Plan that would otherwise have been payable but for the
suspension.

     

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

     

    Section
4.09E    Payment of Pensions

     

    (a) Commencement
Prior to 2005

     

    (i)
Subject to the exception set forth in paragraph (ii) of this Section 4.09(a),
(regarding the Alternate Minimum Formula), benefits payable to the Participant
under this Plan shall commence on the date the benefits under the Pension Plan
are first paid to the Participant, and shall, except for the reasons specified
in Section 3.02(a)(iv), Section 4.08 or Section 9.12, continue to the death of
the recipient.  Benefits payable to the surviving Spouse or the estate
of the Participant shall commence and be paid as indicated in the applicable
provision of this Plan.

     

    (ii) Any
benefit payable to an Officer pursuant to Section 4.02(c) shall not commence
before age sixty-five, except that an Officer who has been employed for at least
five years as an Officer as of December 31, 1993, and as to whom the sum of his
or her attained age and Term of Employment equaled or exceeded seventy as of
that date, shall be eligible to commence his or her benefit as of the first day
of the month following his or her termination of employment and shall, except
for the reasons specified in Section 4.09(a)(i), continue to his or her
death.

     

     (iii)
For a Participant who terminated employment prior to August 1, 1997, the benefit
under this Plan shall be payable in the form of a single life
annuity.  Any post-retirement survivor benefits, with respect to such
a Participant, shall be determined solely in accordance with the provisions of
Section 4.04(b).

     

    (iv) This
Section 4.09(a)(iv) applies only to a Participant who terminates employment on
or after August 1, 1997, and who is not described in Section
4.09(a)(v).

     

    (A)   If
the Participant elects the cash payment option under the Pension Plan, with no
remaining annuity payable from the Pension Plan, or a lump sum, if applicable,
the benefit under this Plan shall be paid in the form of a single life
annuity.  For purposes of this subparagraph (A), an annuity payable
under the AT&T Excess Benefit and Compensation Plan is not considered to be
an annuity payable from the Pension Plan.

     

    (B)  If
the Participant elected the cash payment option under the Pension Plan, with an
annuity remaining under the Pension Plan, the benefit under this Plan shall be
paid in the same form as the remaining annuity under the Pension Plan is
paid.

     

    (C)  The
form of payment under this Plan shall be the same form of payment, as elected by
the Participant under the Pension Plan, unless the benefit under the Pension
Plan is the cash payment option or a lump sum, if applicable, (in which case the
form of payment under this Plan shall be determined pursuant to the immediately
preceding subparagraphs (A) or (B)).  If the form of payment under the
Pension Plan includes a joint and survivor form of payment with the survivor
benefit payable to an alternate payee, the benefit to the Participant under this
Plan shall be (i) paid as a single life annuity, if the Participant is not
married on the Pension Commencement Date, or (ii) paid in the joint and survivor
form of payment elected by the Participant under the Pension Plan, with the
survivor benefit under this Plan payable to the Spouse to whom the Participant
is married at the Pension Commencement Date, if the Participant is married on
the Pension Commencement Date.

     

      (D)  The
single life annuity benefit otherwise payable under this Plan to a Participant
will be reduced as follows to reflect the form of payment: (1) the benefit under
this Plan based on the Cash Balance Account shall be reduced by 8% (10% for a
Pension Commencement Date prior to July 1, 1999) if payment is made in the form
of a 50% Joint and Survivor Annuity, and by 15% (18% for a Pension Commencement
Date prior to July 1, 1999) if payment is made in the form of a 100% Joint and
Survivor Annuity; (2) the benefit under this Plan which is not based on the Cash
Balance Account, with respect to a Participant who is not Service Pension
Eligible on termination of employment, shall be reduced by 12% if the benefit is
to be paid under the 50% Joint and Survivor Annuity form of payment; and (3) in
the case of a Participant whose benefit under the Plan is based on a formula
other than the Cash Balance Account, a benefit payable in the form of a 100%
Joint and Survivor Annuity shall be reduced for commencement prior to Normal
Retirement Date by applying the early commencement factors applicable to the
cash balance formula, as described in the Pension Plan, and shall be reduced for
the 100% Joint and Survivor Annuity form of payment by 15% (18% for a Pension
Commencement Date prior to July 1, 1999).

     

      (E)  Notwithstanding
the preceding (A) through (D), the benefit payable under this Plan that is
attributable to the Mid-Career Pension Benefit and paid pursuant to Section
4.01(d)(ii)(B) shall be paid only in the form of a single life
only.

     

    (v) The
benefit under this Plan with respect to an Officer who is Service Pension
Eligible at his or her termination of employment on or after August 1, 1997, and
who meets the requirements set forth in Section 4.04(b)(ii), shall be paid in
the form of a single life annuity, and any post-retirement survivor benefit will
be determined pursuant to Section 4.04(b)(ii).  In lieu of the benefit
payable pursuant to the immediately preceding sentence, such Officer may instead
elect distribution of his benefit in the form of a 100% Joint and Survivor
Annuity, with reduction for commencement prior to Normal Retirement Date and for
the 100% Joint and Survivor Annuity form of payment determined as described in
the preceding subsection 4.09(a)(iv)(D)(3).

     

    (b) Commencement
After 2004 and Prior to 2009

     

    Except as
provided in Section 6.01 regarding payments in the form of a commercial annuity
contract, the provisions of Section 4.09(a) regarding the time and form of
payment of benefits under the Plan shall apply with respect to benefits for
which distribution to a Participant commenced, or with respect to benefits
payable on behalf of a Participant whose death occurred, after 2004 and prior to
2009. The provisions of Section 4.09(a) relating to commencement of the benefit
under the Pension Plan shall refer to commencement of the Participant’s regular
pension under the Pension Plan (and not to commencement of any benefit under the
Pension Plan based on the Special CIC Credit or the Force Management Pension
Credit).

     

    (c) Commencement
After 2008

     

    Provisions
related to payment of benefits to the Participant that commence after December
31, 2008 or with respect to a Participant who is an employee on December 31,
2008 and whose death occurs after December 31, 2008 are not included in Appendix
E.  Such payments shall be made in the time and form as described in
Section 4.09(c) of Article 4 as in effect after December 31, 2008 as set forth
in the main text of the Plan.

    


     

    (d) Payments
to Specified Employees

     

    Notwithstanding
the provisions of the preceding sections 4.09(a) through 4.09(c), effective on
and after January 1, 2005 with respect to payments in the form of a commercial
annuity pursuant to Section 6.01 and effective on and after January 1, 2009 with
respect to all other payments under the Plan, payment under the Plan to or with
respect to a Participant who is determined to meet the definition of Specified
Employee shall be payable as otherwise provided in this Plan, except that the
initial payment shall be made no earlier than six (6) months following his or
her Termination of Employment.  If, absent this Section 4.09(d),
payment to a Specified Employee would have commenced before the expiration of
such six-month period, the first payment with respect to such Specified Employee
will include the sum of the annuity payments withheld, together with interest
thereon.    For purposes of the immediately preceding
sentence, interest shall be credited using the GAAP Rate in effect as of the end
of the calendar year immediately preceding the Participant’s Termination of
Employment, for distributions made after December 31, 2007.  “GAAP
Rate” means such rate as defined under the SERP for the referenced period.
Notwithstanding the preceding, for distributions made prior to January 1, 2008,
interest credited for purposes of this Section 4.4(d) shall be at an effective
annual rate equal to 120 percent of the Federal Mid-term rate in effect as of
the date such annuity payments otherwise would have commenced.

     

    Section
4.10E    Preretirement Survivor Benefits for Cash Balance
Participants

     

    (a) Preretirement
Death Benefit

     

    (i)  If
a Cash Balance Participant who is vested under the Pension Plan dies before the
date as of which his or her benefit commences under this Plan, and he or she has
a surviving Spouse at the time of death, a single life annuity determined
pursuant to Section 4.10(b), shall be payable to the surviving Spouse commencing
on the first day of any month following the death of the Participant, (A) with
respect to a Participant who terminated employment prior to January 1, 2005, or
(B) with respect to a Participant who terminated employment after December 31,
2004 and dies before December 1, 2008, but only to the extent that such
surviving Spouse otherwise satisfies the requirements of the Plan with respect
to receipt of such a benefit.  Payment shall commence at the same time
as payment to a surviving Spouse commences under the Pension Plan. For purposes
of this Section 4.10(a), the surviving Spouse shall be the Spouse to whom the
Participant is married on the date of the Participant’s death and who has
survived the Cash Balance Participant to at least the next calendar day after
the Cash Balance Participant’s death.   If the Cash Balance
Participant is unmarried at the date of his or her death, or if the surviving
Spouse does not survive the Participant to at least the next calendar day after
the Participant’s death, the Participant’s Cash Balance Account shall be payable
to the estate of the Participant.  No death benefit is payable with
respect to a Participant who terminated employment after December 31, 2004 who
dies after December 1, 2008, except as described in Section 4.09(c)(ii) of
Article 4 of the main text of the Plan effective after December 31, 2008 (such
provisions which are not included in this Appendix E),

     

    (ii)  If
a Participant dies before the date as of which his or her benefit commences
under this Plan, and he or she does not have a surviving Spouse at the time of
his or her death, or if such surviving Spouse is not eligible for a benefit
pursuant to the provisions of Section 4.10(a)(i), a lump sum benefit shall be
payable to the surviving Spouse of the Participant, or, if there is no surviving
Spouse, to the Participant’s estate, within a reasonable period of time
following the death of the Participant.  The amount of such single
cash payment shall be equal to the Participant’s Cash Balance
Account.

     

    (iii) If
a Participant dies before the date as of which his or her benefit commences
under this Plan and he or she is survived by a surviving Spouse who is entitled
to a benefit pursuant to the preceding Section 4.10(a)(i) or Section
4.10(a)(ii), and such surviving Spouse dies prior to the date payment of
benefits under this Plan commence, a lump sum benefit shall be payable to the
estate of the surviving Spouse upon the death of the surviving Spouse. The
amount of such single cash payment shall be equal to the Participant’s Cash
Balance Account.

     

    (b) Single
Life Annuity

     

    A
surviving Spouse’s single life annuity shall equal the Cash Balance
Participant’s Benefit Based on the Cash Balance Account under Section 4.03(f),
but substituting the surviving Spouse’s attained age, for the age of the
Participant when applying the procedures of the Pension Plan for purposes of
such determination.

     

    If the
Cash Balance Participant would have been eligible for a benefit determined
pursuant to Section 4.02 had he or she terminated employment on the day
preceding the date of death, the surviving Spouse’s single life annuity will be
determined in accordance with the provisions of Section 4.04(a), if that
provision produces a higher benefit (determined as of the Spouse’s Pension
Commencement Date) for the surviving Spouse than the benefit determined under
this Section 4.10(b).

     

    Section
4.11E    Qualified Deferrals Cash Balance
Account

     

    The provisions of this Section 4.03E
describe the establishment and development of the Qualified Deferrals Cash
Balance Account with respect to benefits that commence under the Qualified
Deferrals Cash Balance Account Formula prior to January 1, 2009. Except as
modified by the provisions of Article 4 of the main text of the Plan, the
methodology set forth in this Section 4.11E also applies for purposes of
determining a Benefit Based on the Qualified Deferrals Cash Balance Account with
respect to benefits that commence after December 1, 2008.

    


    


    (a) Establishment
of Qualified Deferrals Cash Balance Accounts

     

    A
Deferral Participant’s Qualified Deferrals Cash Balance Account is a
hypothetical bookkeeping account used solely in calculating the amount of the
Deferral Participant’s Benefit Based on the Qualified Deferrals Cash Balance
Account. The Qualified Deferrals Cash Balance Account is calculated by
accumulating the annual qualified deferral credits determined pursuant to
Section 4.11(b), and deferral interest credits determined pursuant to Section
4.11(c).

     

    A
Participant’s Qualified Deferrals Cash Balance Account shall be established as
of the date the Deferral Participant begins to make Qualified Deferrals under
the AT&T Executive Deferred Compensation Plan or the AT&T Inc. Cash
Deferral Plan.

     

    (b) Annual
Qualified Deferral Credits

     

    Effective
as of each December 31 following the date an individual becomes a Deferral
Participant, the Qualified Deferrals Cash Balance Account of such individual
shall be credited with an annual qualified deferral credit. The Deferral
Participant’s annual qualified deferral credit shall equal the credit based on
the participant’s Qualified Deferral, if any, for the calendar year determined
pursuant to the following (xvi), (xvii) or (xviii), as applicable, where for
purposes of (xvi), (xvii) and (xviii), “pay factor” means the pay factor as set
forth in Section 4.04(c)(v) of the Pension Plan based on the Participant’s
attained age as of December 31 of such calendar year, and

     

    
      	
              (xvi)  

            	
              if
      the sum of the pay taken into account for such Participant under the
      Pension Plan and the AT&T Excess Benefit and Compensation Plan (such
      sum constituting “Considered Pay”) is equal to or greater than the Social
      Security Wage Base for the calendar year, the annual qualified deferral
      credit shall be equal to the Qualified Deferral multiplied by two times
      the pay factor, and

            


    

     

    
      	
              (xvii)  

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

            


    

     

    
      	
              (xviii)  

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

            


    

     

    Notwithstanding
the foregoing, in any calendar year in which a Deferral Participant terminates
employment, any such annual qualified deferral credit shall be based on his or
her attained age as of the end of the month in which the participant terminates
employment and shall be credited to the Qualified Deferrals Cash Balance Account
as of that date.

     

    Annual
Qualified Deferral Credits were discontinued under the Plan effective with
respect to amounts deferred from any paycheck dated after December 31,
2007.

     

    (c) CIC
Subaccount

     

    A
Deferral Participant who is a CIC Eligible Employee shall have a “CIC credit”
credited to his or her CIC Subaccount as of the date of such termination of
employment that allows the Deferral Participant to be considered a CIC Eligible
Employee.  The CIC credit shall be an amount equal to the sum of (i)
and (ii) as follows:

     

    
      	
              (i)  

            	
              The
      CIC Eligible Employee’s Qualified Deferral for the calendar year
      immediately preceding the calendar year in which the “change in control”
      (as such term is defined in the Pension Plan) occurs, multiplied by the
      lesser of (A) five percent for each whole year of the CIC Eligible
      Employee’s Term of Employment as of the last day of the month in which the
      change in control occurs, or (B) one hundred
  percent;

            


    

     

    
      	
              (ii)  

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

            


    

     

    The CIC
Subaccount shall be credited with interest credits in the manner described in
the following Section 4.11(d). The benefit amount, method of payment, and
pre-retirement survivor benefit, if any, attributable to the CIC Subaccount
shall be determined in the manner described with respect to the “CIC Credit”
under the Pension Plan. The benefit provisions of this Section 4.11(c) shall be
subject to the provisions of Section 9.18.    For purposes
of any joint and survivor annuity benefit, the surviving Spouse is the Spouse to
whom the Participant was married on his or her Pension Commencement
Date.

     

    In order to fulfill the intent of the
CIC resolutions as adopted by the Board of Directors of the Company in October,
2000, prior to the adoption of the AT&T Executive Deferred Compensation
Plan, solely for the purpose of determining severance payments with respect to a
CIC Eligible Employee under an “applicable severance plan” as that term is
defined in Section G.07(j) of the Pension Plan, the benefit attributable to the
CIC Subaccount with respect to a Deferral Participant shall be treated as paid
from the Pension Plan.

     

    (d) Deferral
Interest Credits

     

    Effective
as of each December 31 following the date an individual becomes a Deferral
Participant, the Qualified Deferrals Cash Balance Account of such individual
shall be credited with an interest credit based on the balance of his or her
Qualified Deferrals Cash Balance Account as of the first day of the Plan
Year.  Notwithstanding the provisions of the immediately preceding
sentence, no Interest Credits shall be made with respect to the period after the
last day of the month immediately preceding the participant’s Pension
Commencement Date.

     

    For the
Plan Year in which a Deferral Participant terminates employment, his or her
Qualified Deferrals Cash Balance Account shall also be credited with an interest
credit based on any annual qualified deferral credit for that Plan
Year.

     

    Unless
the Participant commences his or her pension during the Plan Year, the interest
credit shall be made as of the last day of that Plan Year.  For the
Plan Year in which the Deferral Participant commences his or her pension, the
interest credit shall be made as of the last day of the month immediately
preceding the participant’s Pension Commencement Date.

     

    The
interest crediting rate shall be the same interest crediting rate in effect for
such period under the Pension Plan, and shall be credited at the same time and
in the same manner as interest credits are applied under the Pension
Plan.

     

    (e) Benefit
Based on the Qualified Deferrals Cash Balance Account

     

    A
Deferral Participant’s Benefit Based on the Qualified Deferrals Cash Balance
Account shall be a monthly benefit determined in the manner described in the
Pension Plan, taking into account the participant’s Qualified Deferrals Cash
Balance Account as of the date such benefit is being determined, and multiplied
by twelve to produce an annual benefit.  Notwithstanding the
preceding, the Benefit Based on the Qualified Deferrals Cash Balance Account
shall not exceed (I) the benefit that would have been payable under the Pension
Plan, determined before application of the limitations of Code Section
401(a)(17) and Code Section 415, if eligible pay under the Pension Plan for a
Plan Year included the Qualified Deferrals for such Plan Year, minus (II) the
benefit actually payable under the Pension Plan plus the benefit actually
payable under the AT&T Excess Benefit and Compensation Plan, where (I) and
(II) are determined as of the Participant’s Pension Commencement Date, and the
form of payment elected by the participant.  The Benefit Based on the
Qualified Deferrals Cash Balance Account shall be paid in the same form of
payment elected by the Participant under the Pension
Plan.  Notwithstanding the preceding, if the Participant elected the
cash payment option under the Pension Plan, the benefit under this Plan shall be
paid in the same form as the remaining annuity elected by the Participant under
the Pension Plan.  For purposes of any joint and survivor annuity
benefit, the surviving Spouse is the Spouse to whom the Participant was married
on his or her Pension Commencement Date.

     

    (f) Preretirement
Death Benefit

     

    (i)  If
a Deferral Participant dies prior to his or her Pension Commencement Date and he
or she has a surviving Spouse at the time of death, a single life annuity
determined pursuant to the following Section 4.11(f)(iv), commencing on the
first day of any month following the death of the Participant, shall be payable
to the surviving Spouse if such Participant terminates employment after December
31, 2004 and dies before January 1, 2009, but only to the extent that such
surviving Spouse otherwise satisfies the requirements of the Plan with respect
to receipt of such a benefit. For purposes of this Section 4.11(f), a surviving
Spouse shall be the individual to whom the Participant is legally married on the
date of the Participant’s death and who has survived the Participant to at least
the next calendar day after the Participant’s death.  If the Deferral
Participant is unmarried at the date of his or her death, or if the surviving
Spouse does not survive the Participant to at least the next calendar day after
the Participant’s death, the Participant’s Qualified Deferrals Cash Balance
Account shall be payable to the estate of the Participant.

     

    (ii)  If
a Deferral Participant dies before the date as of which his or her benefit
commences under this Plan, and he or she does not have a surviving Spouse at the
time of his or her death, or if such surviving Spouse is not eligible for a
benefit pursuant to the provisions of Section 4.11(f)(i), a lump sum benefit
shall be payable to the surviving Spouse of the Participant, or, if there is no
surviving Spouse, to the Participant’s estate, within a reasonable period of
time following the death of the Participant.  The amount of such
single cash payment shall be equal to the Participant’s Qualified Deferrals Cash
Balance Account.

     

    (iii) If
a Deferral Participant dies before the date as of which his or her benefit
commences under this Plan and he or she is survived by a surviving Spouse who is
entitled to a benefit pursuant to the preceding Section 4.11(f)(i) or Section
4.11(f)(ii), and such surviving Spouse dies prior to the date payment of
benefits under this Plan commence, a lump sum benefit shall be payable to the
estate of the surviving Spouse within a reasonable period of time following the
death of the surviving Spouse. The amount of such single cash payment shall be
equal to the Participant’s Qualified Deferrals Cash Balance
Account.

     

    (iv)  A
surviving Spouse’s single life annuity payable pursuant to Section 4.11(f)(i)
shall equal the Participant’s Benefit Based on the Qualified Deferrals Cash
Balance Account under Section 4.03(d), but substituting the surviving Spouse’s
attained age, for the age of the Participant when applying the procedures of the
Pension Plan for purposes of such determination.