Exhibit
10-j


AT&T
INC.


 


STOCK
PURCHASE AND DEFERRAL PLAN


 


 


Article 1 - Statement of Purpose


 


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


 


Article 2 -
Definitions


 


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


 


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


  


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


 


(a)    
 base salary; 


 


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


 


(c) Annual Bonus. 


 


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


 


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


 



 

 






 












 





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


 


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


 


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


 


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


 


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


 


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


 


Eligible Employee.  An
Employee who:


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


 


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


 


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


  


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


 


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


 


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


 



 

 






 












 





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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 



 

 






 












 





 


 


Net Credited Service                               Age


                                10
years or more                  65 or older


                                20
years or more                  55 or older


                                25
years or more                  50 or older


                                30
years or more                  Any age


 


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


 


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


 


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


 


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


 


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


 


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


 



 

 






 












 





Stock.  The common
stock of AT&T Inc.


 


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


 


Termination of Employment. References herein to “Termination of Employment,"
“Terminate Employment” or a similar reference, shall mean the event where the
Employee has a “separation from service,” as defined under Section 409A, with
all Employers. For purposes of this Plan, a Termination of Employment with
respect to an Employer shall be deemed to also occur when such Employer incurs
a Change in Control. 


 


 


Article 3 -
Administration of the Plan


 


3.1          The
Committee.  


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


 


3.2          Authorized
Shares of Stock.  


(a) Except as provided below, the number of shares of Stock which may be
distributed pursuant to the Plan, exclusive of Article 8 - Options, is
76,000,000.  The number of shares of Stock which may be issued pursuant to the
exercise of Stock Options is 34,000,000 (together with an equal number of Stock
Options).  In determining the number of authorized shares remaining available
for issuance, shares withheld for taxes in a distribution shall not be
considered issued and shall not reduce the number of authorized shares.  When
an Option is exercised, the authorized shares of Stock that may be issued
pursuant to an Option exercise shall be reduced by the number of Options so
exercised.  To the extent an Option issued under this Plan is canceled,
terminates, expires, or lapses for any reason, such Option shall again be
available for issuance under the Plan.  Conversions of Stock awards into Share
Units and their eventual distribution (excluding the effects of any dividends
on such Share Units) shall count only against the limits of the plans from
which they originated and shall not be applied against the limits in this
Plan.  To the extent Share Units are credited through deferrals of Stock or
Employee Contributions where the distribution of which would be deductible by
AT&T under Section 162(m) of the Code without regard to the size of the
distribution, and such deductible Share Units are available for distribution,
such Share Units shall be distributed first.  


 



 

 






 












 





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


 


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


 


3.3          Claims and Appeals.


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


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


If
the claim is denied by the AT&T Executive Compensation Administration
Department, in whole or in part, the AT&T Executive Compensation
Administration Department shall provide a written decision using language
calculated to be understood by the Claimant and setting forth:  (i) the
specific reason or reasons for such denial; (ii) specific references to
pertinent provisions of this Plan on which such denial is based; (iii) a
description of any additional material or information necessary for the
Claimant to perfect his or her claim and an 



 





 












 





explanation
of why such material or such information is necessary; (iv) a description of
the Plan’s procedures for review of denied claims and the steps to be taken if
the Claimant wishes to submit the claim for review; (v) the time limits for
requesting a review of a denied claim under this section and for conducting the
review under this section; and (vi)  a statement of the Claimant’s right to
bring a civil action under Section 502(a) of ERISA if the claim is denied
following review under this section. 


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


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


During
its review of the claim, the Committee shall:


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


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


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


After
considering all materials presented by the Claimant, the Committee will render
a decision, written in a manner designed to be understood by the Claimant.  If
the Committee denies the claim on review, the written decision will include (i)
the specific reasons for the decision; (ii) specific references to the
pertinent provisions of this Plan on which the decision is based; (iii) a
statement that the Claimant is entitled to receive, upon request to the 



 





 












 





Committee
and free of charge, reasonable access to, and copies of, all documents,
records, and other information relevant to the claim; and (iv) a statement of
the Claimant’s right to bring a civil action under Section 502(a) of ERISA. 


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


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


 


Article 4 -
Contributions


 


4.1          Election
to Make Contributions.   


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


 


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


 


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


 



 

 






 


 












 





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


 


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


 


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


 


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


 


4.2          Purchase
of Share Units.  


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


 


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


 


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


 


4.3          Reinvestment
of Dividends.    


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



 





 


 












 





of such record date, and
dividing the product by the FMV of a share of Stock on the last day of such
month.  


 


 


Article 5 -
AT&T Matching Contributions


 


5.1          AT&T
Match.   


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


 


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


 


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


 


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


 


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


    


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


 


(b) In the event the Participant is not eligible to earn pension accruals
under a pension plan offered by AT&T or a Subsidiary and either (1) first
becomes an Employee on or after January 1, 2015, or (2) the Participant
Terminates Employment on or after January 1, 2015, and the Participant is
subsequently rehired as an Employee, then the “eighty percent (80%)” reference
in section 5.1(a) shall be replaced with “one hundred percent (100%)” for
purposes of determining the number of Matching Share Units to which the
Participant would be entitled pursuant to contribution elections made after
such hiring or rehiring.


 


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



 








 





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


 


5.2          Distribution
of Share Units Acquired with Matching Contributions.  


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



 


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


 


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


 


 


Article 6 -
Distributions


 


6.1          Distributions of Share Units.   


(a)  Initial Election with Respect to a Share Deferral Account.  At the
time the Participant makes an election to make Employee Contributions with
respect to a Share Deferral Account, the Participant shall also elect the
calendar year the Share Deferral Account shall be distributed, which may be
from the first through fifth calendar years after the Plan Year the Account
commenced (except as otherwise provided in this Plan with respect to Matching
Share Units).  For example, if an Account commenced in 2005, the Participant
may elect to commence the distribution in any calendar year from and including
2006 to and including 2010.  If no timely distribution election is made by the
Participant, then the Participant will be deemed to have made an election to
have the Share Deferral Account distributed in a single installment in the
first calendar year after the calendar year the Account commenced.  


 


(b)  Election to Delay a Scheduled Distribution.  


(i)        
 An Employee may elect to defer a scheduled distribution of a Share
Deferral Account for five (5) additional calendar years beyond that previously
elected (except as otherwise provided in this Plan with respect to Matching
Share Units).  Unless otherwise provided by AT&T, the election to defer the
distribution must be made on or after October 16, and on or before the last
Business Day of the next following December, of the calendar year that is the
second calendar year preceding the calendar year of the relevant scheduled
distribution.    



 

 






 








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


(iii)      An
election to defer the distribution of a Share Deferral Account may not be made
in the same calendar year that the election to establish the Share Deferral
Account is made.  Notwithstanding anything to the contrary in this Plan: 


a.       
 an election to defer the distribution of a Share Deferral Account
must be made at least 12 months prior to the date of the first scheduled
payment under the prior distribution election, and 


b.        the
election shall not take effect until at least 12 months after the date on which
the election is made.


  


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


 


6.2          Death
of the Participant.


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


 


6.3          Unforeseeable
Emergency Distribution.  


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


 


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



 








 





such assets would not cause
severe financial hardship, or by cessation of deferrals under the Plan.  


 


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


 


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


 


6.4          Ineligible
Participant.  


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


 


6.5          Conflict
of Interest Distribution.


                AT&T
may in its sole discretion accelerate a distribution(s) to the Participant,
provided he or she is no longer actively employed by AT&T: (a) to the
extent necessary for any Federal officer or employee in the executive branch to
comply with an ethics agreement with the Federal government or (b) to the
extent reasonably necessary to avoid the violation of an applicable Federal,
state, local, or foreign ethics law or conflicts of interest law (including
where such payment is reasonably necessary to permit the service provider to
participate in activities in the normal course of his or her position in which
the service provider would otherwise not be able to participate under an
applicable rule).  Any such distribution may only be made in accordance with
Section 409A of the Code and the regulations thereunder.


 


6.6          Distribution Process.         


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



 

 






 












 





Article 7 - Transition Provisions


 


7.1          Stockholder Approval   


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


 


7.2          2005
Share Deferral Accounts.   


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


 


7.3          2007
Amendments.


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


 


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


 


7.4          2008
Amendments.


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


 



 

 






 












 





Article 8 - Options


 


8.1          Grants.   


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


 


8.2          Term
of Options.   


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


 


8.3          Exercise
Price.   


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


 


8.4          Issuance
of Options. 


 


(a)  For each Share Deferral Account established by a Participant
pursuant to an Employee Contribution election where such election was made
prior to January 1, 2010:


 


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


 


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


 


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


 


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


 


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


 



 

 






 








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


 


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


 


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


 


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


 


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


 


 


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


 


8.5          Exercise
and Payment of Options.  


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


 


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


 



 

 






 












 





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


 


Payment may be made:


 


(a) in cash, or


 


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


 


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


 


or;


 


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


 


 


8.6          Restrictions
on Exercise and Transfer.   


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



 





 












 





guardian or legal representative. 
In each such case the Option holder shall be considered a Participant for the
limited purpose of exercising such Options.  


 


8.7          Termination
of Employment.  


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


 


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


 


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


 


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


 


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


 


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


 


 


Article 9 -
Discontinuation, Termination, Amendment.


 


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


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


 


9.2          AT&T's
Right to Terminate Plan.   


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


 


After termination of the Plan, Participants shall continue to earn
dividend equivalents in the form of Share Units on undistributed Share Units
and shall continue to receive all distributions under this Plan at such time as
provided in and pursuant to the terms and conditions 



 





 












 


 





of Participant's elections and
this Plan.  Notwithstanding the foregoing, the termination of the Plan shall be
made solely in accordance with Section 409A of the Code and in no event shall
cause the accelerated distribution of any Account unless such termination is
effected in accordance with Section 409A of the Code.  


 


9.3          Amendment. 



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


 


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


 


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


 


Article 10 – Miscellaneous.


 


10.1        Tax
Withholding.  


Upon distribution of Stock, including but not limited to, shares of Stock
issued upon the exercise of an Option, AT&T shall withhold shares of Stock
sufficient in value, using the FMV on the date determined by AT&T to be
used to value the Stock for tax purposes, to satisfy the minimum amount of
Federal, state, and local taxes required by law to be withheld as a result of
such distribution. Employment taxes incurred by a Participant on Employee
Contributions and on Matching Contributions shall be withheld from the
Participant’s regular wages or paid in cash by the Participant as they become
due.


 


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



 








 


 





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


 


10.2        Elections
and Notices.   


Notwithstanding anything to the contrary contained in this
Plan, all elections and notices of every kind under this Plan shall be made (1)
on forms prepared by AT&T or the General Counsel, Secretary or Assistant
Secretary, or their respective delegates, or (2) in such other manner as
permitted or required by AT&T or the General Counsel, Secretary or
Assistant Secretary, or their respective delegates, including through
electronic means, over the Internet or otherwise. An election shall be deemed
made when received by AT&T (or its designated agent, but only in cases
where the designated agent has been appointed for the purpose of receiving such
election), which may waive any defects in form. Unless made irrevocable by the
electing person, each election with regard to making Employee Contributions or
distributions of Share Deferral Accounts shall become irrevocable at the close
of business on the last day the Employee is permitted to make such election.
Notwithstanding anything to the contrary in this Plan, AT&T may place
additional limits on the times during which elections may be made to make
contribution(s) or to delay distribution(s). 


 


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


 


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


 


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


 


10.3        Unsecured
General Creditor.  


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



 

 






 












 





10.4        Non-Assignability.  


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


 


10.5        Employment
Not Guaranteed.  


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


 


10.6        Errors.


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


 


10.7        Captions. 



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


 


10.8        Governing
Law.


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


 


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



 

 









 





any dispute relating hereto and (d) that the parties waive
any and all objections and defenses to bringing any such action before such
Texas court, including but not limited to those relating to lack of personal
jurisdiction, improper venue or forum non conveniens. 


 


10.9        Plan
to Comply with Section 409A.  


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


 


10.10      Successors
and Assigns.  


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


 


10.11 
Loyalty Conditions for Officer Level
Employees and Senior Managers


 


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


 


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


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


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


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



 

 






 












 





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


(iv)              
 “Confidential
Information” shall mean all information belonging to, or otherwise relating to,
an Employer Business, which is not generally known, regardless of the manner in
which it is stored or conveyed to Participant, and which the Employer Business
has taken reasonable measures under the circumstances to protect from
unauthorized use or disclosure.  Confidential Information includes trade
secrets as well as other proprietary knowledge, information, know-how, and
non-public intellectual property rights, including unpublished or pending
patent applications and all related patent rights, formulae, processes,
discoveries, improvements, ideas, conceptions, compilations of data, and data,
whether or not patentable or copyrightable and whether or not it has been
conceived, originated, discovered, or developed in whole or in part by
Participant.  For example, Confidential Information includes, but is not
limited to, information concerning the Employer Business’ business plans,
budgets, operations, products, strategies, marketing, sales, inventions,
designs, costs, legal strategies, finances, employees, customers, prospective
customers, licensees, or licensors; information received from third parties
under confidential conditions; or other valuable financial, commercial,
business, technical or marketing information concerning the Employer Business,
or any of the products or services made, developed or sold by the Employer
Business.  Confidential Information does not include information that (i) was
generally known to the public at the time of disclosure; (ii) was lawfully
received by Participant from a third party; (iii) was known to Participant
prior to receipt from the Employer Business; or (iv) was independently
developed by Participant or independent third parties; in each of 



 





 


 












 





the foregoing circumstances, this
exception applies only if such public knowledge or possession by an independent
third party was without breach by Participant or any third party of any
obligation of confidentiality or non-use, including but not limited to the
obligations and restrictions set forth in this Plan.


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


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


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


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