Document:

usac_Ex10-21

		
			Exhibit 10.21
		

		
			 
		

		
			USA COMPRESSION PARTNERS, LP
		

		
			 
		

		
			AMENDED AND RESTATED ANNUAL CASH INCENTIVE PLAN
		

		
			 
		

		
			1.          Purpose. The purpose of this Plan is to motivate management personnel (at or above director level) plus other selected key salaried personnel who perform services for the Partnership and/or its affiliates and subsidiaries to earn annual cash awards through the achievement of performance and target goals.
		

		
			 
		

		
			2.          Definitions. As used in this Plan, the following terms shall have the meanings herein specified:
		

		
			 
		

		
			2.1               Actual Results means the amount of Adjusted EBITDA, Distributable Cash Flow, Leverage Ratio, Safety Target or other applicable measure specified for the Budget Target(s) for a Plan Year actually achieved for such Plan Year as determined by the Partnership following the end of such Plan Year.
		

		
			 
		

		
			2.2               Adjusted EBITDA means the definition of Adjusted EBITDA as provided in the Partnership’s Annual Report on Form 10-K for the Plan Year.
		

		
			 
		

		
			2.3               Annual Bonus means the cash bonus paid to an Eligible Employee for the Plan Year.
		

		
			 
		

		
			2.4               Annual Target Bonus means, for an Eligible Employee, a percentage of such Eligible Employee’s Eligible Earnings, and shall be dependent on a number of factors which may include but are not limited to an employee’s position title, job responsibilities, and reporting level within the Company. For each Eligible Employee who also maintains an employment agreement with the Company (or its subsidiary), their Annual Target Bonus will be governed both by the Plan and their respective employment agreement.
		

		
			 
		

		
			2.5               Annual Target Bonus Pool means, for a Plan Year, the Annual Target Bonus of the Eligible Employees of the Company, collectively, for that Plan Year.
		

		
			 
		

		
			2.6               Board means the Board of Directors of the Company.
		

		
			
		

		
			

		 

 

		

		
			2.7               Bonus Pool Payout Factor means the multiplier factor applied to the Annual Target Bonus Pool to determine the Funded Bonus Pool for the applicable Plan Year. The payout is determined by the comparison of the Budget Target(s) for the Plan Year to Actual Results. General guidelines for the Budget Target and the Bonus Pool Payout Factor associated with such Budget Target for a Plan Year are set forth below, but each are subject to the sole discretion of the Compensation Committee. The Bonus Pool Payout Factor for purposes of the Plan shall be adjusted each Plan Year based on the specific allocation of Annual Target Bonus Pools to each of the specified Budget Target(s). Such allocations of each Budget Target to the total Annual Bonus Pool shall be determined on an annual basis by the Compensation Committee. The Adjusted EBITDA Budget Target shall comprise 30% of the total Annual Target Bonus Pool, the Distributable Cash Flow Budget Target shall comprise 30% of the total Annual Target Bonus Pool, the Leverage Ratio Budget Target shall comprise 30% of the total Annual Target Bonus Pool, the Safety Target shall comprise the remaining 10% of the total Annual Target Bonus Pool. While the Funded Bonus Pool will reflect an aggregation of performance under each Bonus Pool Payout Factor the performance of Adjusted EBITDA Budget Target shall drive calculation of the Bonus Pool, as no other targets shall be considered unless the Adjusted EBITDA Budget Target results is at least 80% of its Budget Target.
		

		
			 
		

		
			Adjusted EBITDA Budget Target Payout Factor Guidelines - 30%
		

		
			 
		

			
					
						% of Budget Target

					
					
						Bonus Pool Payout Factor

				
	
					
						>=110.0

					
					
						1.20x

				
	
					
						109.9 – 105.0

					
					
						1.10x

				
	
					
						104.9 – 95.0

					
					
						1.00x

				
	
					
						94.9 – 90.0

					
					
						.90x

				
	
					
						89.9 – 80.0

					
					
						.75x

				
	
					
						< 80.0

					
					
						.0x

				

		
			 
		

		
			
		

		
			

		 

		

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			Distributable Cash Flow Budget Target Payout Factor Guidelines – 30%
		

		
			 
		

			
					
						% of Budget Target

					
					
						Bonus Pool Payout Factor

				
	
					
						>=110.0

					
					
						1.20x

				
	
					
						109.9 – 105.0

					
					
						1.10x

				
	
					
						104.9 – 95.0

					
					
						1.00x

				
	
					
						94.9 – 90.0

					
					
						.90x

				
	
					
						89.9 – 80.0

					
					
						.75x

				
	
					
						< 80.0

					
					
						.0x

				

		
			 
		

		
			Leverage Ratio Budget Target Payout Factor Guidelines – 30%
		

		
			 
		

			
					
						Range within Budget Target

					
					
						Bonus Pool Payout Factor

				
	
					
						More than 0.250 below Budget Target

					
					
						1.20x

				
	
					
						0.250 – 0.125 below

					
					
						1.10x

				
	
					
						0.124 below – 0.125 above

					
					
						1.00x

				
	
					
						0.126 – 0.375 above

					
					
						.70x

				
	
					
						0.376 – 0.500 above

					
					
						.50x

				
	
					
						>0.500 above

					
					
						.0x

				

		
			 
		

		
			Safety Budget Target Payout Factor Guidelines – 10%
		

		
			 
		

			
					
						% of Target

					
					
						Bonus Pool Payout Factor

				
	
					
						<100%

					
					
						1.00x

				
	
					
						100% - 105%

					
					
						.90x

				
	
					
						105.1% - 110%

					
					
						.80x

				
	
					
						110.1% - 115%

					
					
						.70x

				
	
					
						115.1% - 125%

					
					
						.60x

				
	
					
						>125%

					
					
						.0x

				

		
			
		

		
			

		 

		

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			2.8               Budget Target means the specific amount of Adjusted EBITDA, Distributable Cash Flow, Leverage Ratio, Safety Target and/or other measure(s) established by the Compensation Committee for the Company for a Plan Year.
		

		
			 
		

		
			2.9               Company means USA Compression GP, LLC, a Delaware limited liability company. The term “Company” shall include any successor to USA Compression GP, LLC, any subsidiary of USA Compression GP, LLC, or affiliate thereof that has adopted the Plan, or any entity succeeding to the business of USA Compression GP, LLC, or any subsidiary or affiliate, by merger, consolidation, liquidation, or purchase of assets or equity, or similar transaction.
		

		
			 
		

		
			2.10             Compensation Committee means the Compensation Committee of the Company’s Board.
		

		
			 
		

		
			2.11             Distributable Cash Flow means the definition of Distributable Cash Flow as provided in the Partnership’s Annual Report on Form 10-K for the Plan Year.
		

		
			 
		

		
			2.12             Eligible Earnings means the aggregate regular earnings received by an Eligible Employee during the Plan Year. For the avoidance of doubt, neither distribution payments or distribution equivalent payments on any Partnership phantom or common units nor any other bonus or sign-on payments received by an Eligible Employee during the Plan Year shall be included in the calculation of Eligible Earnings for an Eligible Employee.
		

		
			 
		

		
			2.13             Eligible Employee has the meaning set forth in Section 4 below.
		

		
			 
		

		
			2.14             Funded Bonus Pool means the Annual Target Bonus Pool for a Plan Year multiplied by the applicable Bonus Pool Payout Factor for such Plan Year. The establishment and amount of a Funded Bonus Pool is 100% discretionary and subject to the final approval of and/or adjustment by the Compensation Committee.
		

		
			 
		

		
			2.15             Leverage Ratio has the meaning assigned to such term in the Partnership’s revolving credit facility as of the first day of any given Plan Year; provided,  that, for the purposes of calculating the Leverage Ratio for this Plan, EBITDA, as defined in the Partnership’s revolving credit facility, attributable to the full Plan Year shall be used in lieu of any other time period.
		

		
			
		

		
			

		 

		

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			2.16             Partnership means USA Compression Partners, LP, a Delaware master limited partnership.
		

		
			 
		

		
			2.17             Person means an individual, corporation, limited liability company, partnership, joint venture, trust, unincorporated organization, association, government agency or political subdivision thereof or other entity.
		

		
			 
		

		
			2.18             Plan means the Partnership’s Amended and Restated Annual Bonus Plan as set forth herein, as the same may be amended from time to time.
		

		
			 
		

		
			2.19             Plan Year means the performance (calendar) year for the measurement and determination of the Budget Target and the calculation of Actual Results. Unless otherwise determined by the Compensation Committee, each Plan Year shall be the one year period commencing on January 1 and ending on December 31 of the calendar year.
		

		
			 
		

		
			2.20             Safety Target means the Total Incident Recordable Rate (TRIR) as calculated by the U.S. Occupational Safety and Health Administration for the Plan Year.
		

		
			 
		

		
			3.          Plan Guidelines and Administration. The administration of the Plan and any potential Annual Bonus awarded pursuant to the Plan are subject to the sole determination and discretion of the Compensation Committee. The Compensation Committee will review the Partnership’s performance results for the designated Plan Year, the Budget Target and Bonus Pool Payout Factor for each Plan Year and thereafter will determine, in consultation with the Company’s Chief Executive Officer, whether or not and to what extent to approve the Funded Bonus Pool under the Plan. 
		

		
			 
		

		
			The Compensation Committee may delegate the responsibility for the administration and operation of the Plan to the Chief Executive Officer of the Company or his/her designee(s). The Compensation Committee or the person(s) to which administrative authority has been delegated (the Committee or such person referred to as the “Plan Administrator”) shall have the authority to interpret and construe any and all provisions of the Plan, including the establishment for any designated Plan Year or from time to time any Budget Targets, Budget Target guidelines, Bonus Pool Payout Factors and/or such other economic or performance factors as the Plan Administrator shall determine and whether and to what extent any such targets, guidelines or factors has been achieved. Any determination made by the Plan Administrator shall be final and conclusive and binding on all persons.
		

		
			
		

		
			

		 

		

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			4.          Eligible Employees. Subject to the discretion of the Compensation Committee and such other criteria as may be established by the Compensation Committee in general or for a particular Plan Year, management personnel (at or above director level) plus other selected key salaried personnel of the Company providing services to the Partnership and its subsidiaries are eligible to participate in the Annual Target Bonus Pool for a Plan Year. No Eligible Employee shall be entitled to receive an Annual Bonus for a Plan Year unless he or she is actively employed by the Company on the date the Annual Bonus for such Plan Year is paid by the Company even if such payment date is after the Plan Year. 
		

		
			 
		

		
			Notwithstanding the foregoing, in the event of an Eligible Employee’s Disability (as such term is defined by the Partnership’s 2013 Long-Term Incentive Plan, as amended) or death after the completion of a Plan Year but prior to the payment of the Annual Bonus, such Eligible Employee or his/her estate, as applicable shall be eligible to receive such Eligible Employee’s Annual Bonus. Additionally, in a situation where an Eligible Employee is displaced as a result of a transaction and such transaction closes on or after December 31 of the Plan Year but prior to payment of the Annual Bonus, such Eligible Employee will be able to receive a bonus award even though he/she is not employed on the date of payment of the Annual Bonus. 
		

		
			 
		

		
			Employees of Energy Transfer LP and its subsidiaries (other than the Company, the Partnership and their respective subsidiaries) and Sunoco GP LLC and its subsidiaries shall participate in the Amended and Restated Energy Transfer LP Annual Bonus Plan and the Sunoco GP LLC Annual Cash Incentive Plan, respectively and shall not be eligible to participate under this Plan.
		

		
			 
		

		
			5.          Annual Bonus Payments for Eligible Employees. As soon as reasonably practicable following the end of the Plan Year, management of the Company will determine the Annual Target Bonus for each Eligible Employee. The Funded Bonus Pool from which Annual Bonuses are paid to Eligible Employees shall equal (a) the aggregate of the Annual Target Bonuses of all Eligible Employees multiplied by (b) the Bonus Pool Payout Factor for such Plan Year, as determined by the Compensation Committee after review of the performance results for the Plan year. The amount of the Annual Bonus for an Eligible Employee from the Funded Bonus Pool shall be determined in management’s sole discretion and shall be based on a number of factors including an employee’s performance, length of employment and such other factors as may be determined by management in its sole discretion, which factors may not be the same for all Eligible Employees. Notwithstanding the foregoing, the Compensation Committee shall make determination of the Annual Bonus of all of the Company’s named executive officers and such other executive officers as may be determined from time to time. The Annual Bonus, if any, shall be paid within one week following delivery by the Partnership’s independent auditor of the audit of the Partnership’s financial statements for the Plan Year in which the Annual Bonus relates, but in no case later than March 15 of the year following the Plan Year in which the Annual Bonus relates.
		

		
			 
		

		
			In no event, shall the aggregate amount of the Annual Bonus payments for the Plan Year exceed, in total, the Funded Bonus Pool for such Plan Year. Notwithstanding any 
		

		
			
		

		
			

		 

		

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			provision herein, funds allocated under this Plan for distribution to Eligible Employees is 100% discretionary.
		

		
			 
		

		
			6.          Amendment and Termination. The Compensation Committee, at its sole discretion, may, without prior notice to or consent of any Eligible Employees, amend the Plan or terminate the Plan at any time and at all times.
		

		
			 
		

		
			7.          Indemnification. Neither the Company, any participating affiliate, nor the Board, or the Compensation Committee, of the Company or any participating affiliate, nor any officer or employee of the Company or any participating affiliate shall be liable for any act, omission, interpretation, construction or determination made in connection with the Plan in good faith; and the members of the Company’s Board, the Compensation Committee and/or management of the Company shall be entitled to indemnification and reimbursement by the Company to the maximum extent permitted by law in respect of any claim, loss, damage or expense (including counsel’s fees) arising from their acts, omission and conduct in their official capacity with respect to the Plan.
		

		
			 
		

		
			8.         General provisions.
		

		
			 
		

		
			8.1              Non-Guarantee of Employment or Participation in the Plan. Nothing contained in this Plan shall be construed as a contract of employment between the Company, the Partnership and/or any of its affiliates and any employee of the Company or any of its affiliates, and nothing in this Plan shall confer upon any employee, including an Eligible Employee, any right to continued employment with the Company and/or its affiliate, or interfere with the right of the Company, the Partnership and/or its affiliate to terminate the employment, with or without cause, of an employee, including an Eligible Employee. Nothing in this Plan shall give any employee any right to participate in the Plan and/or to receive an Annual Bonus with respect to any Plan Year. Notwithstanding the foregoing, for each Eligible Employee who also maintains an employment agreement with the Company (or its subsidiary), their Annual Target Bonus and participation in the Plan will be governed both by the Plan and their respective employment agreement.
		

		
			 
		

		
			8.2              Interests Not Transferable. No right, interest or benefit under the Plan shall be subject in any manner to alienation, sale, transfer, assignment, pledge, attachment or other legal process, or encumbrance of any kind, and any attempt to do so shall be void.
		

		
			 
		

		
			8.3              Controlling Law. To the extent not superseded by federal law, the law of the State of Texas, without regard to the conflicts of laws provisions thereunder, shall be controlling in all matters relating to the Plan.
		

		
			
		

		
			

		 

		

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			8.4              Severability. If any Plan provision or any Annual Bonus award hereunder is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any person or award, or would disqualify the Plan or any award under the law deemed applicable by the Compensation Committee, such provision shall be construed or deemed amended to conform to the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Compensation Committee, materially altering the intent of the Plan or the award, such provision shall be stricken as to such jurisdiction, person or award and the remainder of the Plan and any such award shall remain in full force and effect.
		

		
			 
		

		
			8.5              No Trust or Fund Created. Neither the Plan nor any award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company and its affiliates and an employee, including an Eligible Employee or any other person. The Plan shall constitute an unfunded mechanism for the Company to pay bonus compensation to participants from its general assets. No participant shall have any security or other interest in the assets of the Company.
		

		
			 
		

		
			8.6              Headings. Headings are given to the sections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision of it.
		

		
			 
		

		
			8.7              Tax Withholding. The Company and/or any participating affiliate will deduct from any payment otherwise due under this Plan to a Participant (or beneficiary) amounts required by law to be withheld for purposes of federal, state or local taxes.
		

		
			 
		

		
			8.8              Off-set. The Company reserves the right to withhold any or all portions of an award or to reduce an award to a participant up to an amount equal to any amount the participant owes to the Company or any of its affiliates.
		

		
			 
		

		
			8.9              Effective Date. This Plan is effective for the Plan Year commencing on January 1, 2019.
		

		
			 
		

		
			 
		

		 

		

			8EX-4.1

 Exhibit 4.1 

[Form of Note] 
 (FACE
OF NOTE) 
 THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY
OR A NOMINEE OF A DEPOSITORY. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM IN ACCORDANCE WITH THE PROVISIONS OF THE INDENTURE AND THE TERMS OF THE SECURITIES, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITORY. 
 UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
(“DTC”), TO AT&T INC., OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. 
 AT&T INC. 

4.350% Global Notes due 2029 

CUSIP NO. [●] 
 ISIN NO.
[●] 
 No. R-[●] 

$500,000,000 
 AT&T Inc., a
corporation duly organized and existing under the laws of the State of Delaware (herein called “AT&T”, which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to
Cede & Co., or registered assigns, the principal sum of Five Hundred Million Dollars ($500,000,000) on March 1, 2029 (the “Maturity Date”), and to pay interest on said principal sum from February 19, 2019 or from the
most recent Interest Payment Date to which interest has been paid or duly provided for, semiannually in arrears on March 1 and September 1 in each year, commencing on September 1, 2019 (each an “Interest Payment Date”) and
on the Maturity Date, at the interest rate of 4.350% per annum, until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in
such Indenture, be paid to the Person in whose name this Note (or one or more predecessor Notes) is registered at the close of business on the Regular Record Date for such interest, which shall be the close of business on the fifteenth day preceding
the respective Interest Payment Date (each, a “Regular Record Date”). Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the
Person in whose name this Note (or one or more predecessor Notes) is registered at the close of business on a special record date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of
Notes not less than 15 days prior to such special record date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in said Indenture. 

 Any money that AT&T deposits with the Trustee or its Paying Agent for the payment of
principal or any interest on this Note that remains unclaimed for two years after the date upon which the principal and interest are due and payable, will be repaid to AT&T upon AT&T’s request unless otherwise required by mandatory
provisions of any applicable unclaimed property law. After that time, unless otherwise required by mandatory provisions of any unclaimed property law, the Holder of this Note will be able to seek any payment to which such Holder may be entitled to
collect only from AT&T. 
 If the Notes are issued in definitive form, payment of the principal and interest on this Note due at the
Maturity Date or upon redemption will be made at the Maturity Date or upon redemption, as the case may be, upon presentation of this Note, in immediately available funds, at the office of The Bank of New York Mellon Trust Company, N.A., the Paying
and Transfer Agent and Registrar for the Notes, currently located at 601 Travis Street, 16th Floor, Houston, Texas 77002. 

Payment of interest on this Note due on an Interest Payment Date, other than interest at maturity or upon redemption, may be paid by check
mailed to the address of the Holder entitled thereto as such address shall appear in the Note register. Notwithstanding the foregoing, (1) the Depository as Holder of the Notes or (2) a Holder of more than U.S.$5,000,000 in aggregate
principal amount of Notes in definitive form is entitled to require the Paying Agent to make payments of interest, other than interest due at maturity or upon redemption, by wire transfer of immediately available funds into an account maintained by
the Holder in the United States, by sending appropriate wire transfer instructions as long as the Paying Agent receives the instructions not less than ten days prior to the applicable Interest Payment Date. 

Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place. 

  
 2 

 Unless the certificate of authentication hereon has been executed by the Trustee referred to
on the reverse hereof by manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. 

  
 3 

 IN WITNESS WHEREOF, AT&T INC. has caused this instrument to be signed in its corporate
name, manually or by facsimile, by its duly authorized officers and has caused its corporate seal to be imprinted hereon. 
  

							
	Dated: February 19, 2019	 		 	AT&T INC.
				
	[SEAL]	 		 		 	
		 		 	By:	 	  

		 		 		 	George B. Goeke
		 		 		 	Senior Vice President and Treasurer
				
		 		 	By:	 	  

		 		 		 	Julianne K. Galloway
		 		 		 	Vice President and Assistant Treasurer

 Trustee’s Certificate of Authentication 

This is one of the 4.350% Global Notes due 2029 
 of the series
designated herein referred to 
 in the within-mentioned Indenture. 

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., 
 as Trustee

  

									
	By:	 	  
	 		  	Dated:	  	February 19, 2019
		 	Authorized Signatory	 		  		  	

 REVERSE OF NOTE 

This Note is one of a duly authorized issue of debt securities of AT&T of the series specified on the face hereof, issued under and
pursuant to an Indenture, dated as of May 15, 2013, between AT&T and The Bank of New York Mellon Trust Company, N.A., as Trustee (the “Trustee,” which term includes any successor Trustee under the Indenture), to which indenture
and all indentures supplemental thereto (collectively, the “Indenture”) reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, AT&T and the Holders
of the Notes and of the terms upon which the Notes are, and are to be, authenticated and delivered. The Notes will be issued in fully registered form only and in minimum denominations of $2,000 and integral multiples of $1,000 thereafter. This Note
is one of the series designated on the face hereof initially limited in aggregate principal amount to $3,000,000,000. 
 The Indenture
permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of AT&T and the rights of the Holders of the Notes under the Indenture at any time by AT&T and the Trustee with
the consent of the Holders of a majority in principal amount of the Notes at the time outstanding. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Notes at the time outstanding to
waive compliance by AT&T with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and
upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note. 

No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of AT&T, which
is absolute and unconditional, to pay the principal of and interest on this Note at the times, place and rate, and in the coin or currency, herein prescribed. 

Registrar and Paying Agent 

AT&T shall maintain in the Borough of Manhattan, The City of New York, an office or agency where Notes may be surrendered for registration
of transfer or exchange (“Registrar”) and an office or agency where Notes may be presented for payment or for exchange (“Paying Agent”). AT&T has initially appointed the Trustee, The Bank of New York Mellon Trust Company,
N.A., as its Registrar and Paying Agent. AT&T may vary or terminate the appointment of any of its paying or transfer agencies, and may appoint additional paying or transfer agencies. 

 Optional Redemption by AT&T 

The Notes may be redeemed at any time prior to December 1, 2028, as a whole or in part, at AT&T’s option, at any time and from
time to time on at least 30 days’, but not more than 60 days’, prior notice mailed (or otherwise transmitted in accordance with DTC procedures) to the registered address of each Holder of the Notes. The redemption price will be
calculated by AT&T and will be equal to the greater of (i) 100% of the principal amount of the Notes to be redeemed or (ii) the sum of the present values of the Remaining Scheduled Payments (as defined below) discounted to the redemption
date, on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months), at a rate equal to the sum of the Treasury Rate (as defined below) plus 30
basis points. The Notes may be redeemed at any time on or after December 1, 2028, as a whole or in part, at AT&T’s option, at any time and from time to time on at least 30 days’, but not more than 60 days’, prior notice
mailed (or otherwise transmitted in accordance with DTC procedures) to the registered address of each Holder of the Notes at a redemption price equal to 100% of the principal amount of the Notes to be redeemed. AT&T will calculate the redemption
price. In each case, accrued but unpaid interest will be payable to the redemption date. 
 “Treasury Rate” means, with respect to
any redemption date, the rate per annum equal to the semiannual equivalent yield to maturity or interpolation (on a day count basis) of the interpolated Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date, as determined by AT&T or an Independent Investment Banker appointed by AT&T. 

“Comparable Treasury Issue” means the United States Treasury security or securities selected by an Independent Investment Banker as
having an actual or interpolated maturity comparable to the remaining term of the Notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt
securities of a comparable maturity to the remaining term of such Notes. 
 “Independent Investment Banker” means one of the
Reference Treasury Dealers, appointed by AT&T. 
 “Comparable Treasury Price” means, with respect to any redemption date,
(1) the average of the Reference Treasury Dealer Quotations for such redemption date after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (2) if AT&T obtains fewer than three such Reference Treasury
Dealer Quotations, the average of all such quotations. 
 “Reference Treasury Dealer Quotations” means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by AT&T, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to AT&T
by such Reference Treasury Dealer at 3:30 p.m., New York City time, on the third Business Day preceding such redemption date. 

“Reference Treasury Dealer” means each of BNP Paribas Securities Corp., Goldman Sachs & Co. LLC, Morgan Stanley &
Co. LLC, Wells Fargo Securities, LLC and their respective affiliates and, at the option of AT&T, one other nationally recognized investment banking firm 

  
 2 

 
that is a primary U.S. Government Securities dealer in the United States (a “Primary Treasury Dealer”); provided, however, that if any of the foregoing shall cease to be a Primary
Treasury Dealer, AT&T will substitute therefor another Primary Treasury Dealer.  
 “Remaining Scheduled Payments”
means, with respect to each Note to be redeemed, the remaining scheduled payments of principal and interest on the Note that would be due after the related redemption date but for the redemption. If that redemption date is not an Interest Payment
Date with respect to the Note, the amount of the next succeeding scheduled interest payment on the Note will be reduced by the amount of interest accrued on the Note to the redemption date. 

On and after the redemption date, interest will cease to accrue on the Notes or any portion of the Notes called for redemption, unless
AT&T defaults in the payment of the redemption price and accrued interest. On or before the redemption date, AT&T will deposit with its Paying Agent or the Trustee money sufficient to pay the redemption price of and accrued interest on the
Notes to be redeemed on that date. 
 In the case of any partial redemption, selection of the Notes to be redeemed will be made in
accordance with applicable procedures of DTC. 
 Payment of Additional Amounts 

AT&T will, subject to the exceptions and limitations set forth below, pay as additional interest on this Note such additional amounts
(“Additional Amounts”) as are necessary so that the net payment by AT&T or its Paying Agent of the principal of and interest on this Note to a person that is a United States Alien, after deduction for any present or future tax,
assessment or governmental charge of the United States or a political subdivision or taxing authority thereof or therein, imposed by withholding with respect to the payment, will not be less than the amount that would have been payable in respect of
this Note had no withholding or deduction been required. As used herein, “United States Alien” means any person who, for United States federal income tax purposes, is a foreign corporation, a
non-resident alien individual, a non-resident alien fiduciary of a foreign estate or trust, or a foreign partnership one or more of the members of which is, for United
States federal income tax purposes, a foreign corporation, a non-resident alien individual or a non-resident alien fiduciary of a foreign estate or trust. 

The foregoing obligation to pay Additional Amounts shall not apply: 

(1)    to any tax, assessment or governmental charge that is imposed or withheld solely because the
beneficial owner, or a fiduciary, settlor, beneficiary or member of the beneficial owner if the beneficial owner is an estate, trust or partnership, or a person holding a power over an estate or trust administered by a fiduciary holder: 

(a)    is or was present or engaged in a trade or business in the United States, has or had a permanent
establishment in the United States, or has any other present or former connection with the United States or any political subdivision or taxing authority thereof or therein; 

  
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 (b)    is or was a citizen or resident or is or was
treated as a resident of the United States; 
 (c)    is or was a foreign or domestic personal holding
company, a passive foreign investment company or a controlled foreign corporation with respect to the United States or is or was a corporation that has accumulated earnings to avoid United States federal income tax; 

(d)    is or was a bank receiving interest described in Section 881(c)(3)(A) of the Internal Revenue
Code of 1986, as amended (the “Code”); or 
 (e)    is or was an actual or constructive owner
of 10% or more of the total combined voting power of all classes of stock of AT&T entitled to vote; 

(2)    to any Holder that is not the sole beneficial owner of the Notes, or a portion thereof, or that is a
fiduciary or partnership, but only to the extent that the beneficial owner, a beneficiary or settlor with respect to the fiduciary, or a member of the partnership would not have been entitled to the payment of an Additional Amount had such
beneficial owner, beneficiary, settlor or member received directly its beneficial or distributive share of the payment; 

(3)    to any tax, assessment or governmental charge that is imposed or withheld solely because the
beneficial owner or any other person failed to comply with certification, identification or information reporting requirements concerning the nationality, residence, identity or connection with the United States of the Holder or beneficial owner of
the Notes, if compliance is required by statute, by regulation of the United States Treasury Department or by an applicable income tax treaty to which the United States is a party as a precondition to exemption from such tax, assessment or other
governmental charge; 
 (4)    to any tax, assessment or governmental charge that is imposed other than
by deduction or withholding by AT&T or a paying agent from the payment; 
 (5)    to any tax,
assessment or governmental charge that is imposed or withheld solely because of a change in law, regulation, or administrative or judicial interpretation that is announced or becomes effective after the day on which the payment becomes due or is
duly provided for, whichever occurs later; 
 (6)    to an estate, inheritance, gift, sales, excise,
transfer, wealth or personal property tax or any similar tax, assessment or governmental charge; 

  
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 (7)    to any tax, assessment or other governmental
charge any paying agent (which term may include AT&T) must withhold from any payment of principal of or interest on any Note, if such payment can be made without such withholding by any other paying agent; or 

(8)    in the case of any combination of the above items. 

In addition, any amounts to be paid on this Note will be paid net of any deduction or withholding imposed or required pursuant to Sections
1471 through 1474 of the Code, any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b) of the Code, or any fiscal or regulatory legislation, rules or practices adopted
pursuant to any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code, and no Additional Amounts will be required to be paid on account of any such deduction or
withholding.     
 The Notes are subject in all cases to any tax, fiscal or other law or regulation or administrative
or judicial interpretation applicable. Except as specifically provided under this section entitled “Payment of Additional Amounts” and under the heading “Redemption Upon a Tax Event”, AT&T shall not have to make any payment
with respect to any tax, assessment or governmental charge imposed by any government or a political subdivision or taxing authority. 
 Any
reference in the terms of the Notes to any amounts in respect of the Notes shall be deemed also to refer to any Additional Amounts which may be payable under this provision. 

Redemption Upon a Tax Event 

If (a) AT&T becomes or will become obligated to pay Additional Amounts as a result of any change in, or amendment to, the laws (or any
regulations or rulings promulgated thereunder) of the United States (or any political subdivision or taxing authority thereof or therein), or any change in, or amendments to, any official position regarding the application or interpretation of such
laws, regulations or rulings, which change or amendment is announced or becomes effective, on or after February 13, 2019 or (b) a taxing authority of the United States takes an action on or after February 13, 2019, whether or not with
respect to AT&T or any of its affiliates, that results in a substantial probability that AT&T will or may be required to pay such Additional Amounts, then AT&T may, at its option, redeem, as a whole, but not in part, the Notes on any
Interest Payment Date on not less than 30 nor more than 60 calendar days’ prior notice, at a redemption price equal to 100% of their principal amount, together with interest accrued thereon to the date fixed for redemption. No redemption
pursuant to (b) above may be made unless AT&T shall have received an opinion of independent counsel to the effect that an act taken by a taxing authority of the United States results in a substantial probability that AT&T will or may be
required to pay the Additional Amounts and AT&T shall have delivered to the Trustee a certificate, signed by a duly authorized officer, stating that based on such opinion, AT&T is entitled to redeem the Notes pursuant to their terms. 

  
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 Further Issues 

AT&T reserves the right from time to time, without notice to or the consent of the Holders of the Notes, to create and issue further notes
ranking equally and ratably with the Notes in all respects, or in all respects except for the payment of interest accruing prior to the issue date or except for the first payment of interest following the issue date of those further notes. Any
further notes will have the same terms as to status, redemption or otherwise as, and will be fungible for United States federal income tax purposes with, the Notes. Any further notes shall be issued pursuant to a resolution of the board of directors
of AT&T, a supplement to the Indenture, or under an officers’ certificate pursuant to the Indenture. 
 Notes in Definitive Form

 If (1) an Event of Default has occurred with regard to the Notes represented by this Note and has not been cured or waived in
accordance with the Indenture, or (2) the Depository is at any time unwilling or unable to continue as depository and a successor depository is not appointed by AT&T within 90 days, AT&T may issue notes in definitive form in exchange
for this Note. In either instance, an owner of a beneficial interest in the Notes will be entitled to the physical delivery in definitive form in exchange for this Note, equal in principal amount to such beneficial interest and to have such Notes
registered in its name. 
 Notes so issued in definitive form will be issued as registered notes in minimum denominations of $2,000 and
integral multiples of $1,000 thereafter, unless otherwise specified by AT&T. 
 Notes so issued in definitive form may be transferred by
presentation for registration to the Registrar at its New York office and must be duly endorsed by the Holder or the Holder’s attorney duly authorized in writing, or accompanied by a written instrument or instruments of transfer in form
satisfactory to AT&T or the Trustee duly executed by the Holder or his attorney duly authorized in writing. 
 AT&T may require
payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any exchange or registration of transfer of definitive Notes. 

Default 
 In case an Event
of Default, as defined in the Indenture, shall have occurred and be continuing, the principal hereof may be declared, and upon such declaration shall become, due and payable, in the manner, with the effect and subject to the conditions provided in
the Indenture. 

  
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 Miscellaneous 

For purposes of the Notes, a Business Day means a business day in The City of New York. 

No director, officer, employee or stockholder, as such, of AT&T shall have any liability for any obligations of AT&T under this Note,
the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Holder by accepting this Note waives and releases all such liability. The waiver and release are part of the consideration for the issue
of this Note. 
 The Notes are the unsecured and unsubordinated obligations of AT&T and will rank pari passu with
all other evidences of indebtedness issued in accordance with the Indenture. 
 Notices to Holders of the Notes will be given only to the
depositary, in accordance with its applicable policies as in effect from time to time. 
 Prior to due presentment of this Note for
registration of transfer, AT&T, the Trustee and any agent of AT&T or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for all purposes, whether or not this Note be overdue, and neither AT&T, the
Trustee nor any such agent shall be affected by notice to the contrary. 
 All terms used in this Note which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.  
 The Indenture and this Note shall be governed by and construed in
accordance with the laws of the State of New York. 

  
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