Document:

Exhibit 10-a

 

 

AT&T HEALTH PLAN

Effective January 1, 2020 

 

ARTICLE
1   PURPOSE

The AT&T Health Plan
("Plan") provides Participants with certain medical, dental, and
vision benefits, as specified herein.  Effective March 23, 2010, the Plan shall be frozen to
new Participants, except as described in Section 2.15.  The Company intends this
Plan to be a “grandfathered health plan” under the Patient Protection and
Affordable Care Act (the “Affordable Care Act”).  Appendix C hereto contains
the required Participant disclosure regarding the Plan’s grandfathered status
under the Affordable Care Act.

 

ARTICLE 2   DEFINITIONS

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

 

2.1               
 Active
Participant.  “Active Participant” shall mean an Active Employee Participant and his
Dependents.

 

2.2               
 Active
Employee Participant.  “Active Employee Participant” shall mean an Eligible Employee
electing to participate in the Plan while in active service, on a Leave of
Absence or while receiving short term disability benefits under the Officer
Disability Plan.

 

2.3               
 Annual
Deductible. 
“Annual Deductible” shall mean the amount the Active Participant must pay for
Covered Health Services in a Plan Year before the Plan will begin paying for
Covered Benefits in that calendar year.  The Annual Deductible applies to all
Covered Health Services.  The Annual Deductible does not apply to Preventive
Care, Dental Services and Vision Services.   Once the Participant meets his
applicable Annual Deductible, the Plan will begin to pay Covered Benefits,
subject to any required Coinsurance, in accordance with and as governed by
Section 4.1.  The applicable Annual Deductible is set forth in Appendix A
to this Plan. 

 

2.4               
 Annual
Out-of-Pocket Maximum.  “Annual Out-of-Pocket Maximum” shall mean the maximum amount of
Covered Health Services an Active Participant must pay out-of-pocket every
calendar year, including the Participant’s Annual Deductible.  Once the
Participant reaches the applicable Annual Out-of-Pocket Maximum, Covered
Benefits for those Covered Health Services that apply to the Annual
Out-of-Pocket Maximum are payable in accordance with and as governed by Section
4.1 during the rest of that Plan Year.  The following costs shall never apply
toward the Annual Out-of-Pocket Maximum:  (a) any applicable Monthly Contributions
and (b) any charges for Non-Covered Health Services.  Even when the Annual
Out-of-Pocket Maximum has been reached, Covered Benefits will not be provided
for the following:  (a) any applicable Monthly Contributions and (b) any
charges for Non-Covered Health Services.  The applicable Annual Out-of-Pocket
Maximum is set forth in Appendix A to this Plan.

 

2.5               
 AT&T.  “AT&T” shall mean
AT&T Inc.  References to “Company” shall mean AT&T.

 

2.6               
 CEO.  "CEO" shall mean
the Chief Executive Officer of AT&T Inc. 

 

2.7               
 COBRA.  “COBRA” shall mean the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended.

 

2.8               
 Coinsurance.  “Coinsurance” shall mean the
amount an Active Participant must pay each time he/she receives Covered Health
Services, after he/she meets the applicable Annual Deductible.  Coinsurance
payments are calculated as a percentage of Covered Health Services, rather than
a set dollar amount.  Coinsurance does not apply to Preventive Care, Dental
Services and Vision Services (or Medical Services for Retired Participants as
provided in Section 4.1(c)).  The applicable Coinsurance percentage is set
forth in Appendix A to this Plan.  

 

2.9               
 Committee.  "Committee" shall
mean the Human Resources Committee of the Board of Directors of AT&T Inc.

 

2.10            
 Covered
Benefits. 
“Covered Benefits” shall mean the benefits provided by the Plan, as provided
for and governed by Section 4.1 of the Plan.

 

2.11            
 Covered
Health Services.  “Covered Health Services” means all Medical Services or
Preventive Care that would qualify as deductible medical expenses for federal
income tax purposes, whether deducted or not.  Dental Services and Vision Services
are not included in the definition of Covered Health Services. 

 

2.12            
 Dental
Services. 
“Dental Services” shall mean services for dental and orthodontic care.   The
Plan Administrator, in its sole discretion, shall determine whether a
particular service is classified as Preventive Care or a Dental, Medical or
Vision Service. 

 

2.13            
 Dependent(s).  “Dependent(s)” shall mean
those individuals who would qualify as a Participant’s dependent(s) under the terms
of the AT&T Medical Program.

 

2.14            
 Disability.  "Disability" shall
mean qualification for long term disability benefits under Section 3.1 of the
Officer Disability Plan. 

 

2.15            
 Eligible
Employee. 
"Eligible Employee" shall mean an Officer.  Notwithstanding the
foregoing, the CEO may, from time to time, exclude any Officer or group of
Officers from being an “Eligible Employee” under this Plan.  Employees of a
company acquired by AT&T shall not be considered an Eligible Employee
unless designated as such by the CEO.  Notwithstanding the foregoing, only the
Committee shall have the authority to exclude from participation or take any
action with respect to Executive Officers.   

 

Notwithstanding the foregoing provisions,
unless otherwise provided for in Appendix D to this Plan, individuals hired,
rehired or promoted to an Officer level position on or after March 23, 2010
shall be excluded from the term Eligible Employee, and such individuals (and
their Dependents) shall not be eligible to participate in this Plan.

 

2.16            
 Employer.  "Employer" shall
mean AT&T Inc. or any of its Subsidiaries. 

 

2.17            
 Executive
Officer. 
“Executive Officer” shall mean any executive officer of AT&T, as that term
is used under the Securities Exchange Act of 1934.

 

2.18            
 International
Plan.  “International
Plan” shall mean the “AT&T International Health Plan” for Officers serving
in expatriate positions with the Company.  

 

2.19            
 Leave
of Absence. 
“Leave of Absence” shall mean a Company-approved leave of absence.

 

2.20            
 Medical
Services. 
“Medical Services” shall mean medical/surgical, mental health/substance abuse
and prescription pharmacy services.  The Plan Administrator, in its sole
discretion, shall determine whether a particular service is classified as
Preventive Care or a Medical, Dental or Vision Service.  Medical Services do
not include Dental Services and Vision Services.

 

2.21            
 Monthly
Contributions.  “Monthly Contributions” shall mean the monthly premiums or
contributions required for participation in this Plan as further governed by
Article 7 of the Plan.  The applicable Monthly Contributions are set forth in
Exhibit A to this Plan.

 

2.22            
 Non-Covered
Health Services.  “Non-Covered Health Services” shall mean any Medical Services or
Preventive Care which do not meet the definition of Covered Health Services.

 

2.23            
 Officer.  "Officer" shall
mean an individual who is designated as an officer level employee for
compensation purposes on the records of AT&T.

 

2.24            
 Participant.  “Participant” shall mean an
Active Participant or Retired Participant or both, as the context indicates. 

 

2.25            
 Plan
Administrator.  “Plan
Administrator” shall mean the SEVP-HR, or any other person or persons whom the
Committee may appoint to administer the Plan; provided that the Committee may
act as the Plan Administrator at any time.

 

2.26            
 Plan
Year.  ”Plan
Year” shall mean the calendar year. 

 

2.27            
 Preventive
Care. 
“Preventive Care” generally focuses on evaluating a Participant’s current
health status when the Participant is symptom-free and taking the necessary
steps to maintain the Participant’s health. The Plan Administrator, in its sole
discretion, shall determine whether a particular service constitutes Preventive
Care.

 

2.28            
 Qualified
Dependent.  “Qualified Dependent” shall
mean a
Dependent who loses coverage under a COBRA eligible program due to a Qualifying
Event.

 

2.29            
 Qualifying
Event. 
 “Qualifying
Event” shall mean any of the following events if, but for COBRA continuation
coverage, they would result in a Participant’s loss of coverage under this
Plan:  

 

(1)           death
of a covered Eligible Employee;

(2)           termination
(other than by reason of such Eligible Employee’s gross  misconduct) of an
Employee’s employment;

(3)           reduction
in hours of an Eligible Employee;

(4)           divorce
or legal separation of an Eligible Employee or dissolution of an Eligible
Employee’s registered domestic partnership;

(5)           an
Eligible Employee’s entitlement to Medicare benefits; or

(6)           a
Dependent child ceasing to qualify as a Dependent

 

2.30            
 Retire,
Retired or Retirement. 
“Retire,” “Retired” or "Retirement" shall mean the termination of an
Active Employee Participant's employment with AT&T or any of its
Subsidiaries, for reasons other than death, on or after the earlier of the
following dates:  (1) the date such Active Employee Participant has attained
age 55, and, for an Active Employee Participant on or after January 1, 2002, has
five (5) years of service, or (2) the date the Active Employee Participant has
attained one of the following combinations of age and service at termination of
employment on or after April 1, 1997:    

 

Net Credited Service                                               Age 

25 years or more                                                  50
or older

30 years or more                                                  Any
age

 

2.31        Retired
Participant.  “Retired Participant” shall mean a Retired Employee Participant and
his Dependents.   

 

2.32        Retired Employee
Participant.  “Retired Employee Participant” shall mean a former Active
Employee Participant who has Retired within the meaning of Section 2.30 and who
meets the additional requirements of Section 3.2 to be eligible for coverage in
Retirement.

 

2.33        SEVP-HR.            “SEVP-HR” shall
mean AT&T’s highest ranking Officer, specifically responsible for human
resources matters. 

 

2.34        Subsidiary .  "Subsidiary"
shall mean any corporation, partnership, venture or other entity in which
AT&T holds, directly or indirectly, a 50% or greater ownership interest. 
The Committee may, at its sole discretion, designate any other corporation,
partnership, venture or other entity a Subsidiary for the purpose of
participating in this Plan.  

  

2.35        Vision Services.  “Vision Services” shall
mean services for vision care.  The Plan Administrator, in its sole discretion,
shall determine whether a particular service is classified as Preventive Care
or a Vision, Medical or Dental Service.

 

2.36        Medicare
Eligible Retired Participant.   “Medicare Eligible Retired
Participant” shall mean a Retired Participant who is eligible for Medicare due
to reaching the eligible age for Medicare.

 

 

ARTICLE 3   ELIGIBILITY

 

3.1               
 Active
Participants.  Each Eligible Employee shall be eligible to participate
in this Plan along with his/her Dependent(s) beginning on the effective date of
the employee becoming an Eligible Employee. In order to continue participation, the Active
Participant must pay all applicable Monthly Contributions.  If an Active
Employee Participant terminates participation in this Plan at any time for any
reason, that Participant and his/her Dependent(s) shall be 

ineligible
to participate in the Plan at any time in the future. 

 

3.2               
 Retired
Participants.  Provisions of this Plan will continue in effect during Retirement
for each Retired Employee Participant and his/her Dependent(s) with respect to
any Eligible Employee who became a Participant before January 1, 1999.  Neither
an Eligible Employee who became a Participant after December 31, 1998 nor
his/her Dependent(s) shall be eligible for participation hereunder on or after
such Participant’s Retirement. Coverage for Retired Participants shall be
subject to the payment of all applicable Monthly Contributions, as governed by
Article 7.  The provisions of this Plan related to Retired Participants, including
the level of Covered Benefits and the applicable Monthly Premiums, shall begin
to apply on the first day of the month following the month in which the Active
Employee Participant Retires.  If a Retired Employee Participant terminates
participation at any time for any reason, participation of that Retired
Employee participant and his/her Dependent(s) may not be reinstated for any
reason.

 

3.3               
 Requirement
to Enroll and Participate in Medicare and the International Plan.  Notwithstanding any
provision in this plan to the contrary, as a condition to participation in the
Plan, each Participant must be enrolled in, paying for, and participating in
(i) all parts of Medicare for which such Participant is eligible and for which
Medicare would be primary if enrolled therein, except for Medicare Part D
relating to prescription drug coverage, and (ii) the International Plan (if
eligible).

 

ARTICLE 4   BENEFITS

 

4.1               
 Covered
Benefits. Subject to the limitations in this Plan (including but not limited to the
loyalty conditions set forth in Article 8 below),
this Plan provides the benefits described below.  Monthly Contributions for
participation in this Plan, the International Plan, Medicare, or any other
health plan are not considered “services”, and are therefore are not Covered
Benefits under this Plan.

 

(a)   
 Active
Participants (Medical Services and Preventive Care) -  

 

Medical Services - After the Annual Deductible
has been met, 100% payment of Covered Health Services not paid under the
International Plan or Medicare minus the amount of Coinsurance, until the
Active Participant reaches the Annual Out-of-Pocket Maximum, at which time
coverage is 100% of Covered Health Services (or 100% of Covered Health Services
not paid under the International Plan).

   

Preventive Care - Preventive Care is covered at
100%, not subject to the Annual Deductible or Coinsurance.  

 

(b)   
 Active
Participants (Dental Services and Vision Services) -

  

100% payment, through reimbursement or
otherwise, of all Dental Services and Vision Services not paid under the Active
Participant’s (i) Medicare, or (ii) International Plan, provided expenses for
such services would qualify as deductible medical expenses for federal income
tax purposes, whether deducted or not.  

 

(c)    
 Retired
Participants

  

100% payment, through reimbursement or
otherwise, of all Medical, Dental, Vision and Preventive services not paid
under the Retired Participant’s Medicare, provided expenses for such services
would qualify as deductible medical expenses for federal income tax purposes,
whether deducted or not. 

 

 

4.2               
 Priority
of Paying Covered Claims.  Claims for benefits will be applied against the
various health plans, as applicable, and coordinated with Medicare in the
following order: 

(1)               
 Medicare, to the extent the Participant is eligible
therefore and such claim is actually paid by Medicare, 

(2)               
 International Plan, if applicable,

(2)           CarePlus, if elected, 

(3)           Long Term Care Plan, if elected, 

(4)           this Plan.

 

 

ARTICLE 5   TERMINATION OF PARTICIPATION

    

 

5.1               
 Termination
of Participation. 
Participation will cease on the last day of the month in which one of the
following conditions occurs:

 

(1)               
 A Participant ceases to meet the definition of a Dependent
(as set forth in Section 2.13 of this Plan) for any reason, in which case
participation ceases for such Participant;  

 

(2)               
 A Participant eligible to enroll in Medicare is no longer a
participant in all parts of Medicare for which such Participant is eligible to
enroll and for which Medicare would be primary if enrolled therein, except for
Medicare Part D relating to prescription drug coverage, in which case
participation ceases for such Participant;  

 

(3)               
 The Active Employee Participant’s termination of
employment for reasons other than Death, Disability, or Retirement by an
individual who meets the applicable requirements of Section 3.2 in order to
qualify for Plan benefits in Retirement, in which case participation ceases for
the Participant and his/her Dependent(s);

 

(4)               
 The demotion or designation of an Active Employee
Participant so as to no longer be eligible to participate in the Plan, in which
case participation ceases for the Participant and his/her Dependent(s);

 

(5)               
 The Active Employee Participant (or Retired Employee
Participant) participates in an activity that constitutes engaging in
competitive activity with AT&T or engaging in conduct disloyal to AT&T
under Article 8, in which case participation ceases for the Active Employee
Participant (or Retired Employee Participant) and his/her Dependent(s); or 

 

(6)               
 Discontinuance of the Plan by AT&T, or, with
respect to a Subsidiary’s Active Employee Participants (or Retired Employee
Participants), such Subsidiary’s failure to make the benefits hereunder
available to Active Employee Participants employed by it (or its Retired
Employee Participants). 

 

5.2               
 Death.  In the event of the Active
Employee Participant’s (or Retired Employee’s Participant’s) death, his
Dependents may continue participation in this Plan as follows:

 

(1)           In the event of
the death of a Retired Employee Participant such Retired Employee Participant’s
Dependents may continue participation in this Plan, eligible for the Covered
Benefits described in Section 4.1(c) of the Plan, for so long as such
Dependents would have otherwise been eligible to participate under the terms of
the AT&T Medical Program, are paying any applicable contributions for this
Plan as provided in Article 7, and are participating in Medicare if eligible.
If a surviving spouse of such deceased Active Employee Participant otherwise
eligible for participation in the Plan remarries, his/her participation and the
participation of any otherwise eligible Dependents will cease with the
effective date of his/ her marriage.

 

(2)           In the event of
an in-service death of an Active Employee Participant eligible to participate
in the Plan in Retirement as provided under Article 3.2, who was Retirement
eligible, within the meaning of Section 2.30, at the time of death, such Active
Employee Participant’s surviving Dependents may continue participation in this
Plan, eligible for the Covered Benefits described in Section 4.1(a) and (b),
for so long as such Dependents would have otherwise been eligible for
participation under the terms of the AT&T Medical Program, are paying any
applicable contributions for this Plan as provided in Article 7, and are
participating in Medicare if eligible.  If a surviving spouse of such deceased
Active Employee Participant otherwise eligible for participation in the Plan
remarries, his/her participation and the participation of any otherwise
eligible Dependents will cease with the effective date of his/ her marriage.

 

(3)           In the event of
(i) an in-service death of an Active Employee Participant not eligible to
participate in the Plan in Retirement as provided in Article 3.2 or (ii) an
in-service death of an Active Employee Participant eligible to participate in
the Plan in Retirement as provided in Article 3.2 but the individual was not
Retirement eligible, within the meaning of Section 2.30, at the time of death, 

such Active Employee Participant’s Dependent(s) may
continue participation in this Plan, eligible for the Covered Benefits
described in Sections 4.1(a) and (b), for a 36-month period commencing the
month following the month in which such Active Employee Participant dies as
long as such Dependent(s) would have otherwise been eligible for participation
under the terms of the AT&T Medical Program and subject to the payment of
Active Participant Contributions for the first 12 months and payment of Active
COBRA Contributions for the remaining 24 months, as provided by Articles 7 and
10.1.  If the Active Employee Participant’s Dependent(s) are eligible for
COBRA, they will automatically be enrolled in COBRA so that there is no lapse
in coverage, and this 36-month coverage will be integrated and run concurrently
with COBRA coverage.

 6 

ARTICLE 6   DISABILITY

 

6.1               
 Disability.  With respect to any Active
Employee Participant who commences receipt of short term or long term
disability benefits under the Officer Disability Plan, participation under this
Plan will be as follows: 

 

(1)           The Participant will continue to
participate in this Plan, eligible for the Covered Benefits described in
Section 4.1(a) and (b), for as long as he/she receives short term disability
benefits under the Officer Disability Plan and pays the applicable
contributions for this Plan as provided by Article 7. 

 

(2)           An Active Employee Participant not
eligible to participate in the Plan in Retirement as provided in Article 3.2
who commences long term disability benefits under the Officer Disability Plan
or an Active Employee Participant eligible to participate in the Plan in
Retirement as provided in Article 3.2 but who is not Retirement eligible,
within the meaning of Section 2.30, at the time long term disability benefits
under the Officer Disability Plan commence, will cease participation in this
Plan (along with his/her Dependents) effective as of the last day of the
calendar month in which such long term disability benefits commence, unless
such benefits commence on the first day of a calendar month, in which case
participation in this Plan shall cease effective as of the last day of the
prior month.

 

(3)           An Active Employee Participant eligible
to participate in the Plan in Retirement as provided in Article 3.2 ,who is
Retirement eligible, within the meaning of Section 2.30, at the time long term
disability benefits under the Officer Disability Plan commence, will be
eligible to continue participation in this Plan on the same terms and
conditions that participation would be available to such Participant in
Retirement, subject to the payment of applicable contributions for this Plan as
provided by Article 7, regardless of his/her continued receipt of long term disability
benefits under the Officer Disability Plan. 

 

 

ARTICLE
7   COSTS

 

7.1               
 Provision
of Benefits under the Plan.  Except as provided below in this Article 7 with
respect to required Monthly Contributions or with respect to any required
Coinsurance, the benefits available to
Participants under this Plan shall be provided through an insurance policy
maintained by AT&T. 

 

7.2               
 Active
Participant Contributions.  An Active Participant electing to participate in
the Plan will pay Monthly Contributions to participate in the Plan while in
active service, while on Leave of Absence or while receiving short term
disability benefits under the Officer Disability Plan. The Monthly Contribution
for participation may change annually, effective at the beginning of each Plan
Year.  Contributions to be made by Active Participants electing to participate
in the Plan shall be set annually by the SEVP-HR, determined in the SEVP-HR’s
sole and absolute discretion.  The SEVP-HR may adopt tiered rates for similarly
situated groups of Participants based on factors such as the number of
Dependents covered or Medicare eligibility.  Notwithstanding the foregoing,
required Monthly Contributions for Executive Officers shall be approved by the
Committee. 

 

7.3               
 Retired
Participant Contributions.  Retired Participants who elect to participate will
pay Monthly Contributions to participate in the Plan. The Monthly Contribution
for participation may change annually, effective at the beginning of each Plan
Year.  Contributions to be
made by Retired Participants who elect to participate shall be set annually by
the SEVP-HR (in his/her sole and absolute discretion), to the extent their
contributions have not previously been provided for in a separate agreement.

 

7.4               
 Survivor
Contributions.   Upon the death
of a Participant, the Participant’s Dependents shall be required to pay Monthly
Contributions to participate in the Plan.  The Monthly Contributions shall be set annually by the SEVP-HR, in the SEVP-HR’s sole and
absolute discretion.  Any changes to the Monthly Contributions shall be
effective at the beginning of each Plan Year.

 

7.5               
 Contributions
for Participants on Disability.  Participants continuing benefits while on Disability shall be
required to pay Monthly Contributions to participate in the Plan.  The Monthly
Contributions shall be set annually by the SEVP-HR,
determined in the SEVP-HR’s sole and absolute discretion.  Any changes
to the Monthly Contributions shall be effective at the beginning of each Plan
Year.

 

 

 

ARTICLE
8   LOYALTY CONDITIONS

 

8.1               
 Participants
acknowledge that no coverage and benefits would be provided under this Plan on
and after January 1, 2010 but for the loyalty conditions and covenants set
forth in this Article, and that the conditions and covenants herein are a
material inducement to AT&T’s willingness to sponsor the Plan and to offer
Plan coverage and benefits for the Participants on or after January 1, 2010. 
Accordingly, as a condition of receiving coverage and any Plan benefits on or
after January 1, 2010, each Participant is deemed to agree that he/she shall
not, without obtaining the written consent of the Plan Administrator 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.  Further and notwithstanding any other provision of
this Plan, all coverage and benefits under this Plan on and after January 1,
2010 with respect to a Participant and his or her Dependents shall be subject
in their entirety to the enforcement provisions of this Section if the
Participant, without the Plan Administrator’s consent, participates in an
activity that constitutes engaging in competition with AT&T or engaging in
conduct disloyal to AT&T, as defined below.  The provisions of this Article
8 as in effect immediately before such date shall be applicable to Participants
who retire before January 1, 2010.  

8.2               
 Definitions.  For purposes of this Article and of the
Plan generally

(1)               
 an “Employer Business”
shall mean AT&T, any Subsidiary, or any business in which AT&T or a
Subsidiary or an affiliated company of AT&T has a substantial ownership or
joint venture interest; 

(2)               
 “engaging in
competition with AT&T” shall mean, while employed by an Employer Business
or within two (2) years after the 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 nonsubstantial 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 or director of, any
person or entity that is engaged in competition with any Employer Business or
that takes a position adverse to any Employer Business.

(3)               
 “engaging in conduct disloyal
to AT&T” means, while employed by an Employer Business or within two
 (2) years after the 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 its affiliates during the
one (1)  year prior to the termination of the Participant’s
employment, whether or not acceptance of such position would constitute a
breach of such person’s contractual obligations to AT&T and its affiliates;
(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 termination of the Participant’s
employment, for any reason to terminate, discontinue, renegotiate, reduce, or
otherwise cease or modify its relationship with AT&T or its affiliate; 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, on behalf of any Employer Business during the
two (2) years prior to the termination of Participant’s employment
for any reason (“Customer”), 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” also means, 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.

(4)               
 “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 the 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 the 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 the Participant from a third party; (iii) was known to the
Participant prior to receipt from the Employer Business; or (iv) was
independently developed by the 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 the
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.

 

8.3               
 Forfeiture
of Benefits.  Subject
to the provisions of Section 1001(5) of the Affordable Care Act, coverage and
benefits shall be forfeited and shall not be provided under this Plan for any
period as to which the Plan Administrator determines that, within the time
period and without the written consent specified, Participant has been either
engaging in competition with AT&T or engaging in conduct disloyal to
AT&T.

8.4               
 Equitable
Relief.  The parties recognize that any
Participant’s breach of any of the covenants in this Article 8 will cause
irreparable injury to 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 coverage
and 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 and payment of Plan benefits for all Participants.  Accordingly, in
the event of a Participant’s actual or threatened breach of the covenants in
this Article, the Plan Administrator, 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
Article 8.  In addition, AT&T shall pay for any Plan expenses that the
Plan Administrator incurs hereunder, and shall be entitled to recover from the
Participant its reasonable attorneys’ fees and costs incurred in obtaining such
injunctive remedies.  To enforce its repayment rights with respect to a
Participant, the Plan shall have a first priority, equitable lien on all Plan
benefits provided to or for the Participant and his or her Dependents.  In the
event the Plan Administrator succeeds in enforcing the terms of this Article
through a written settlement with the Participant or a court order granting an
injunction hereunder, the Participant shall be entitled to collect Plan
benefits collect Plan benefits prospectively, if the Participant is otherwise
entitled to such benefits, net of any fees and costs assessed pursuant hereto
(which fees and costs shall be paid to AT&T as a repayment on behalf of the
Participant), provided that the Participant complies with said settlement or
injunction. 

8.5               
 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 accrual or receipt of benefits under the Plan after January 1,
2010 that each and all of the following conditions apply to all Participants
and to any benefits that are paid or are payable under the Plan: 

(1)               
 ERISA shall control
all issues and controversies hereunder, and the Committee shall serve for
purposes hereof as a “fiduciary” of the Plan, and as its “named fiduciary”
within the meaning of ERISA.

(2)               
 All litigation between
the parties relating to this Article 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.

(3)               
 If the Plan
Administrator determines in its sole discretion either (I) that AT&T or its
affiliate that employed the Participant terminated the Participant’s employment
for cause, or (II) that equitable relief enforcing the Participant’s covenants
under this Article 8 is either not reasonably available, not ordered by a
court of competent jurisdiction, or circumvented because the Participant has sued
in state court, or has otherwise sought remedies not available under ERISA,
then in any and all of such instances the Participant shall not be entitled to
collect any Plan benefits, and if any Plan benefits have been paid to the, the
Participant shall immediately repay all Plan benefits to the Plan (with such
repayments being used within such year for increased benefits for other
Participants in any manner determined in the Plan Administrator’s discretion)
upon written demand from the Plan Administrator.  Furthermore, the Participant
shall hold AT&T and its affiliates harmless from any loss, expense, or
damage that may arise from any of the conduct described in clauses (I) and (II)
hereof.

 

ARTICLE 9   MISCELLANEOUS

 

9.1               
 Administration.  The Plan Administrator is
the named fiduciary of the Plan and has the power and duty to do all things
necessary to carry out the terms of the Plan.  The Plan Administrator has the
sole and absolute discretion to interpret the provisions of the Plan, to make
findings of fact, to determine the rights and status of Participants and other
under the Plan, to determine which expenses and benefits qualify as Covered
Health Services or Covered Benefits, to make all benefit determinations under
the Plan, to decide disputes under the Plan and to delegate all or a part of
this discretion to third parties and insurers.  To the fullest extent permitted
by law, such interpretations, findings, determinations and decisions shall be
final, binding and conclusive on all persons for all purposes of the Plan.  The
Plan Administrator may delegate any or all of its authority and responsibility
under the Plan to other individuals, committees, third party administrators,
claims administrators or insurers for any purpose, including, but not limited
to the processing of benefits and claims related thereto.  In carrying out
these functions, these individuals or entities have been delegated
responsibility and discretion for interpreting the provisions of the Plan,
making findings of fact, determining the rights and status of Participants and
others under the Plan, and deciding disputes under the Plan and such
interpretations, findings, determinations and decisions shall be final, binding
and conclusive on all persons for all purposes of the Plan.  

 

9.2               
 Amendments
and Termination.  This Plan may be modified or terminated at any time in
accordance with the provisions of AT&T's Schedule of Authorizations. 

 

9.3               
 Newborns'
and Mothers' Health Protection Act of 1996.  To the extent this Plan provides benefits for hospital lengths
of stay in connection with childbirth, the Plan will cover the minimum length
of stay required for deliveries (i.e., a 48-hour hospital stay after a vaginal
delivery or a 96-hour stay following a delivery by Cesarean section.)  The
mother’s or newborn’s attending physician, after consulting with the mother,
may discharge the mother or her newborn earlier than the minimum length of stay
otherwise required by law.  Such coverage shall be subject to all other
provisions of this Plan.

 

9.4               
 Women's
Health and Cancer Rights Act of 1998.  To the
extent this Plan provides benefits for mastectomies, it will provide, for an
individual who is receiving benefits in connection with a mastectomy and who
elects breast reconstruction in connection with such mastectomy, coverage for
reconstruction on the breast on which the mastectomy was performed, surgery and
reconstruction on the other breast to give a symmetrical appearance, and
prosthesis and coverage for physical complications of all stages of the
mastectomy, including lymphedemas.  Such coverage shall be subject to all other
provisions of this Plan.

 

9.5               
 Paul
Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of
2008.   To the extent
this Plan provides mental health benefits or substance use disorder benefits it
will not place annual or lifetime maximums for such benefits that are lower
than the annual and lifetime maximums for physical health benefits.  In
addition, the financial requirements (e.g., deductibles and co-payments) and
treatment limitations (e.g., number of visits or days of coverage) that apply
to mental health benefits or substance use disorder benefits will not be more restrictive
than the predominant financial requirements or treatment limitations that apply
to substantially all medical/surgical benefits; mental health benefits and
substance use disorder benefits will not be subject to any separate cost
sharing requirements or treatment limitations that only apply to such benefits;
if the Plan provides for out of 

 10 

network
medical/surgical or substance use disorder benefits, it will provide for out of
network mental health and substance use disorder benefits and standards for
medical necessity determinations and reasons for any denial of benefits
relating to mental health benefits and substance use disorder benefits will be
made available upon request to plan participants.  Such coverage shall be
subject to all other provisions of this Plan.

 

9.6               
 Continuation
of Coverage During Family or Medical Leave.  During any period which an Active
Employee Participant is on a family or medical leave as defined in the Family
or Medical Leave Act, any benefit elections in force for such Participant shall
remain in effect.  While the Participant is on paid leave, contributions shall
continue.  If the Participant is on an unpaid leave, the Participant may elect
to prepay required contributions on a pre-tax basis before the commencement of
such unpaid leave.  Alternatively, the Participant may elect to make such
payments on an after-tax basis monthly in accordance with an arrangement that
the Plan Administrator shall provide.  If coverage is not continued during the
entire period of the family or medical leave because the Participant declines
to pay the premium, the coverage must be reinstated upon reemployment with no
exclusions or waiting periods, notwithstanding any other provision of this Plan
to the contrary. If the Participant does not return to work upon completion of
the leave, the Participant must pay the full cost of any health care coverage
that was continued on his/her behalf during the leave.  These rules apply to
the COBRA eligible programs.  

  

9.7               
 Rights While
on Military Leave. 
Pursuant to the provisions of the Uniformed
Services Employment and Reemployment Rights Act of 1994, an Active Employee
Participant on military leave will be considered to be on a Leave of Absence
and will be entitled during the leave to the health and welfare benefits that
would be made available to other similarly situated employees if they were on a
Leave of Absence.  This entitlement will end if the individual provides written
notice of intent not to return to work following the completion of the military
leave.  The individual shall have the right to continue his/her coverage,
including any Dependent coverage, for the lesser of the length of the leave or
18 months.  If the military leave is for a period of 31 days or more, the
individual may be required to pay 102 percent of the total premium (determined
in the same manner as a COBRA continuation coverage premium).  If coverage is
not continued during the entire period of the military leave because the
individual declines to pay the premium or the leave extends beyond 18 months,
the coverage must be reinstated upon reemployment with no pre-existing condition
exclusions (other than for service-related illnesses or injuries) or waiting
periods (other than those applicable to all Eligible Employees).

 

9.8               
 Qualified Medical Child Support Orders.  The Plan will comply with any Qualified
Medical Child Support Order issued by a court of competent jurisdiction or
administrative body that requires the Plan to provide medical coverage to a
Dependent child of an Active Employee or Retired Employee Participant.  The
Plan Administrator will establish reasonable procedures for determining whether
a court order or administrative decree requiring medical coverage for a
Dependent child meets the requirements for a Qualified Medical Child Support
Order.  The cost of coverage or any additional cost of such coverage, if any,
shall be borne by the Participant.

 

9.9               
 Right of Recovery.   If the Plan has made an erroneous or excess
payment to any Participant, the Plan Administrator shall be entitled to recover
such excess from the individual or entity to whom such payments were made.  The
recovery of such overpayment may be made by offsetting the amount of any other
benefit or amount payable by the amount of the overpayment under the Plan.

 

ARTICLE 10   COBRA

 

10.1            
 Continuation
of Coverage Under COBRA.  Participants
shall have all COBRA continuation rights required by federal law and all
conversion rights.  COBRA continuation coverage shall be continued as provided
in this Article 10.   

 

10.2            
 COBRA
Continuation Coverage for Terminated Participants.  A covered Active Employee Participant may elect COBRA
continuation coverage, at his/her own expense, if his participation under this
Plan would terminate as a result of one of the following Qualifying Events: an
Employee’s termination of employment or reduction of hours with an Employer.  

 

10.3            
 COBRA
Continuation Coverage for Dependents.  A Qualified
Dependent may elect COBRA continuation coverage, at his/her own expense, if
his/her participation under this Plan would terminate as a result of a
Qualifying Event.  

 

10.4            
 Period of
Continuation Coverage for Covered Participants.  A covered Active Employee Participant who qualifies for COBRA
continuation coverage as a result of a Participant’s termination of employment
or reduction in 

 11 

hours of employment described in
Subsection 10.2 may elect COBRA continuation coverage for up to 18 months
measured from the date of the Qualifying Event.  

 

Coverage under this
Subsection 10.4 may not continue beyond the:

(1)         
 date on which the Active Employee Participant’s Employer ceases to
maintain this Plan;

(2)         
 last day of the month for which premium payments have been made
with respect to this Plan, if the individual fails to make premium payments on
time, in accordance with Subsection 10.6;

(3)         
 date the covered Active Employee Participant becomes entitled to
Medicare; or

(4)         
 date the covered Participant is no longer subject to a
pre-existing condition exclusion under the Participant's other coverage or new
employer plan for the type of coverage available under the COBRA eligible
program for which the COBRA election was made.

 

10.5            
 Period of COBRA Continuation Coverage for Dependents.  If a Qualified
Dependent elects COBRA continuation coverage under a COBRA eligible program as
a result of the an Active Employee Participant’s termination of employment as
described in Subsection 10.2, continuation coverage may be continued for up to
18 months measured from the date of the Qualifying Event.  COBRA continuation
coverage for all other Qualifying Events may continue for up to 36 months.

 

Continuation
coverage under this Subsection 10.5 with respect to a COBRA eligible program
may not continue beyond the date:

(1)         
 on which premium payments have not been made, in accordance with
Subsection 10.6 below;

(2)         
 the Qualified Dependent becomes entitled to Medicare; 

(3)         
 on which the Employer ceases to maintain this Plan; or

(4)         
 the Qualified Dependent is no longer subject to a pre-existing
condition exclusion under the Participant’s other coverage or new employer plan
for the type of coverage available under this Plan. 

 

 

10.6            
 Contribution Requirements for COBRA Continuation Coverage.  Covered
Participants and Qualified Dependents who elect COBRA continuation coverage as
a result of a Qualifying Event will be required to pay continuation coverage
payments.  Continuation coverage payments are the payments required for COBRA
continuation coverage that is an amount equal to a reasonable estimate of the
cost to this Plan of providing coverage for all covered Participants at the
time of the Qualifying Event plus a 2% administrative expense.

 

10.7            
 In the case of a disabled individual who receives an additional
11-month extended coverage under COBRA, the Employer may assess up to 150% of
the cost for this extended coverage period.  Such cost shall be determined on
an actuarial basis and take into account such factors as the Secretary of the
Treasury may prescribe in regulations.

 

Covered Participants
and Qualified Dependents must make the continuation coverage payment prior to
the first day of the month in which such coverage will take effect.  However, a
covered Participant or Qualified Dependent has 45 days from the date of an
affirmative election to pay the continuation coverage payment for the first
month's payment and the cost for the period between the date medical coverage
would otherwise have terminated due to the Qualifying Event and the date the
covered Participant and/or Qualified Dependent actually elects COBRA
continuation coverage.  

 

The covered
Participant and/or Qualified Dependent shall have a 30-day grace period to make
the continuation coverage payments due thereafter.  Continuation coverage
payments must be postmarked on or before the completion of the 30-day grace
period.  If continuation coverage payments are not made on a timely basis,
COBRA continuation coverage will terminate as of the last day of the month for
which timely premiums were made.  The 30-day grace period shall not apply to
the 45-day period for the first month’s payment of COBRA premiums as set out in
the section above. 

 

If payment is
received that is significantly less than the required continuation coverage
payment, then continuation 

coverage will terminate as
of the last day of the month for which premiums were paid.  A payment is
considered significantly less than the amount due if it is greater than the
lesser of $50 or 10% of the required continuation coverage payment.  Upon
receipt of a continuation coverage payment that is insignificantly less than
the required amount, the Plan Administrator must notify the covered Participant
or Qualified Dependent of the amount of the shortfall and provide them with an
additional 30-day grace period from the date of the notice for this payment
only.  

 

10.8            
 Limitation on Participant's Rights to COBRA Continuation Coverage.

 

(1)               
 If a Qualified Dependent loses, or will lose medical coverage
under this Plan as a result of divorce, legal separation, entitlement to
Medicare, or ceasing to be a Dependent, such Qualified Dependent is responsible
for notifying the Plan Administrator in writing within 60 days of the
Qualifying Event.  Failure to make timely notification will terminate the
Qualified Dependent's rights to COBRA continuation coverage under this Article.

(2)               
 A Participant must complete and return the required enrollment
materials within 60 days from the later of (a) the date of loss of coverage, or
(b) the date the Plan Administrator sends notice of eligibility for COBRA
continuation coverage.  Failure to enroll for COBRA continuation coverage
during this 60-day period will terminate all rights to COBRA continuation
coverage under this Article.  An affirmative election of COBRA continuation
coverage by a Participant or his/her spouse shall be deemed to be an election
for that Participant's Dependent(s) who would otherwise lose coverage under the
Plan.

 

Subsequent Qualifying Event.  If a second Qualifying Event occurs during an 18-month extension
explained above, coverage may be continued for a maximum of 36 months from the
date of the first Qualifying Event.  In the event the Dependent loses coverage
due to a Qualifying Event and after such date the Participant becomes entitled
to Medicare, the Dependent shall have available up to 36 months of coverage
measured from the date of the Qualifying Event that causes the loss of
coverage.  If the Participant was entitled to Medicare prior to the Qualifying
Event, the Dependent shall have up to 36 months of coverage measured from the
date of entitlement to Medicare.

 

10.9            
 Extension of
COBRA Continuation Period for Disabled Individuals.  The period of continuation shall be extended to 29 months in
total (measured from the date of the Qualifying Event) in the event the
individual is disabled as determined by the Social Security laws within 60 days
of the Qualifying Event.  The individual must provide evidence to the Plan
Administrator of such Social Security determination prior to the earlier of 60
days after the date of the Social Security determination, or the expiration of
the initial 18 months of COBRA continuation coverage.  In such event, the
Employer may charge the individual up to 150% of the COBRA cost of the
coverage.

 

ARTICLE 11   PRIVACY OF MEDICAL INFORMATION

 

11.1            
 Definitions.  For purposes of this
Article 11, the following defined terms shall have the meaning assigned to such
terms in this subsection: 

(1)           “Business Associate” shall have the meaning assigned
to such phrase at 45 C.F.R. § 160.103; 

 

(2)           “Health Care Operations” shall have the meaning
assigned to such phrase at 45 C.F.R. § 164.501;

 

(3)           “HIPAA” shall mean Parts 160 (“General
Administrative Requirements”) and 164 (“Security and Privacy”) of Title 45 of
the Code of Federal Regulations as such parts are amended from time to time; 

 

(4)           “Payment” shall have the meaning assigned to such
phrase at 45 C.F.R § 160.103;

 

(5)           “Protected Health Information” or “PHI”
shall have the meaning assigned to such phrase at 45 C.F.R. § 160.103; and

 

(6)           “Treatment” shall have the meaning assigned to such
phrase at 45 C.F.R. § 164.501.

 

11.2            
 Privacy
Provisions Relating to Protected Health Information (“PHI”).  The Plan and its Business
Associates shall use and disclose PHI to the extent permitted by, and in
accordance with, HIPAA, for purposes of providing benefits under the Plan and
for purposes of administering the plan, including, by way of illustration and
not 

by way of limitation, for purposes of Treatment,
Payment, and Health Care Operations.  
 

 14 

11.3            
 Disclosure
of De-Identified or Summary Health Information.  The HIPAA Plan, or, with respect to the
HIPAA Plan, a health insurance issuer, may disclose summary health information
(as that phrase is defined at 45 C.F.R. § 160.5049a))  to the Plan Sponsor of
the HIPAA Plan (and its affiliates) if such entity requests such information
for the purpose of: 

 

(1)           Obtaining premium bids from health plans for
providing health

                insurance coverage under the HIPAA Plan; 

 

(2)           Modifying, amending or terminating the group health
benefits

                under the HIPAA Plan. 

 

In addition, the HIPAA Plan or a health insurance insurer with respect
to the HIPAA Plan may disclose to the Plan Sponsor of the HIPAA Plan (or its
affiliates) information on whether an individual is participating in the group
health benefits provided by the HIPAA Plan or is enrolled in, or has ceased
enrollment with health insurance offered by the HIPAA Plan.

 

11.4            
 The
HIPAA Plan Will Use and Disclose PHI as Required by Law      

           or as Permitted by the Authorization of the Participant or
Beneficiary. 

 

Upon submission of an authorization signed by a
Participant, beneficiary, subscriber or personal representative that meets
HIPAA requirements, the HIPAA Plan will disclose PHI. 

 

In addition, PHI will be disclosed to the extent permitted or
required by law, without the submission of an authorization form.

 

11.5            
 Disclosure
of PHI to the Plan Sponsor.  The HIPAA Plan will disclose information to the Plan Sponsor
only upon certification from the Plan Sponsor that the HIPAA Plan documents
have been amended to incorporate the assurances provided below. 

 

The Plan
Sponsor agrees to:

(1)           not use or further disclose PHI other than as
permitted or required by the HIPAA Plan document or as required by law; 

 

(2)           ensure that any affiliates or agents, including a
subcontractor, to whom the Plan Sponsor provides PHI received from the HIPAA
Plan, agrees to the same restrictions and conditions that apply to the Plan
Sponsor with respect to such PHI; 

 

(3)           not use or disclose PHI for employment-related
actions and decisions unless authorized by the individual to whom the PHI
relates; 

 

(4)           not use or disclose PHI in connection with any other
benefits or employee benefit plan of the Plan Sponsor or its affiliates unless
permitted by the Plan or authorized by an individual to whom the PHI
relates; 

 

(5)           report to the Plan any PHI use or disclosure that is
inconsistent with the uses or disclosures provided for of which it becomes
aware; 

 

 

    

(6)           make PHI available to an individual in
accordance with HIPAA’s access rules; 

 

(7)           make PHI available for amendment and incorporate any
amendments to PHI in accordance with HIPAA; 

 

(8)           make available the information required to provide
an accounting

                of disclosures; 

 

(9)           make internal practices, books and records relating
to the use and disclosure of PHI received from the HIPAA Plan available to the
Secretary of the United States Department of Health and Human Resources for
purposes of determining the Plan’s compliance with HIPAA; and

 

(10)         if feasible, return or destroy all PHI
received from the HIPAA Plan that the Plan Sponsor still maintains in any form,
and retain no copies of such PHI when no longer needed for the purpose for
which disclosure was made (or if return or destruction is not feasible, limit
further uses and disclosures to those purposes that make the return or
destruction infeasible). 

 

11.6            
 Separation
Between the Plan Sponsor and the HIPAA Plan.  In accordance with HIPAA,
only the following employees and Business Associate personnel shall be given
access to PHI: 

 

(1)           employees of the AT&T Benefits and/or AT&T
Executive Compensation organizations responsible for administering group health
plan benefits under the HIPAA Plan, including those employees whose functions
in the regular course of business include Payment, Health Care Operations or
other matters pertaining to the health care programs under a HIPAA Plan; 

 

(2)           employees who supervise the work of the employees
described in (1), above; 

 

(3)           support personnel, including other employees outside
of the AT&T Benefits or AT&T Executive Compensation organizations whose
duties require them to rule on health plan-related appeals or perform functions
concerning the HIPAA Plan; 

 

(4)           investigatory personnel to the limited extent that
such PHI is necessary to conduct investigations of possible fraud; 

 

(5)           outside and in-house legal counsel providing counsel
to the HIPAA Plan; 

 

(6)           consultants providing advice concerning the
administration of the HIPAA Plan; and

 

(7)           the employees of Business Associates charged with
providing services to the HIPAA Plan. 

 

 

 16 

The persons identified above
shall have access to and use PHI to the extent that such access and use is
necessary for the administration of group health benefits under a HIPAA Plan. 
If these persons do not comply with this Plan document, the Plan Sponsor shall
provide a mechanism for resolving issues of noncompliance, including
disciplinary sanctions. 

 

11.7            
 Enforcement.   

Enforcement of this Article 11
shall be as provided for by HIPAA. In particular, participants and
beneficiaries are not authorized to sue with regard to purported breaches of
this Article 11 except as explicitly permitted by HIPAA. 

ARTICLE 12                      CLAIM AND APPEAL
PROCESS

 

12.1                        Claims for Benefits under the Plan. – See Appendix B.

 

12.2                        Claims Related to Basic
Eligibility for Coverage under the Plan and Claims Related to the Article 8 Loyalty
Conditions. 

 

 

(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”) based on a claim for basic eligibility for
coverage under the Plan or a claim related to the Article 8 Loyalty Conditions
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 Plan Administrator
review the determination of the AT&T Executive Compensation Administration
Department.  Such request must be addressed to the Plan Administrator at the
address provided in the written decision regarding the claim.  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 Plan Administrator 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 Plan Administrator of the AT&T Executive Compensation Administration
Department’s decision within such sixty (60)-day period, the Claimant shall be
barred and estopped from challenging the determination of the AT&T
Executive Compensation Administration Department. 

(d)           Review of Decision.  Within sixty (60) days after the Plan
Administrator’s receipt of a request for review, the Plan Administrator will
review the decision of the AT&T Executive Compensation Administration
Department.  If the Plan Administrator determines that special circumstances
require an extension of time beyond the initial sixty (60)-day review period,
the Plan Administrator 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 Plan
Administrator expects to render its decision on the review of the claim.  If
this notice is provided, the Plan Administrator 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 Plan Administrator 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 Plan
Administrator will render a decision, written in a manner designed to be
understood by the Claimant.  If the Plan Administrator 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 Plan Administrator 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. 

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.

 

 

APPENDIX A

 

AT&T HEALTH PLAN

 

2020 MONTHLY CONTRIBUTIONS, ANNUAL DEDUCTIBLE,
COINSURANCE PERCENTAGES AND ANNUAL OUT-OF-POCKET MAXIMUM

 

Active Participants

	
  Monthly Contributions

  	
  Individual - $196

  Individual + Spouse - $322

  Individual + 1 or More Children - $212

  Individual + Spouse + 1 or More Children - $501

  
	
  Annual Deductible 

  	
  Individual - $1,700

  All other tiers - $3,400

  
	
  Coinsurance Percentage 

  	
  10% after the Annual Deductible is met.  Coinsurance applies
  until the Annual Out-of-Pocket Maximum is reached.

  
	
  Annual Out-of-Pocket Maximum

  	
  Individual - $6,900

  All other tiers- $13,800 (individual amount of $6,900)

  

 

Retired Participants – Monthly Contributions

	
  Retired Prior to August 31, 1992 and Surviving Spouses

  	
  Individual - $209

  Individual + Spouse - $209

  Individual + 2 or More - $209

  
	
  Retired on or after September 1, 1992 and Surviving Spouses

   

  Note:  The Plan Administrator shall maintain records governing
  whether a Retired Participant is in Class A, B, C or D.  

   

  	
  Class A

  	
  Individual - $667

  Individual + Spouse - $1,016

  Individual + 1 or More Children - $667

  Individual + Spouse + 1 or More Children - $946

  
	
  Class B

  	
  Individual - $799

  Individual + Spouse - $1,150

  Individual + 1 or More Children - $799

  Individual + Spouse + 1 or More Children - $1,159

  
	
  Class C

  	
  Individual - $987

  Individual + Spouse - $1,339

  Individual + 1 or More Children - $987

  Individual + Spouse + 1 or More Children - $1,399

  
	
  Class D

  	
  Individual - $1,266

  Individual + Spouse - $1,906

  Individual + 1 or More Children - $1,266

  Individual + Spouse + 1 or More Children - $1,912

  

 

COBRA Continuation
Coverage – Monthly Contributions

	
  Active COBRA

  	
  Individual - $2,295

  Individual + Spouse - $4,702

  Individual + 1 or More Children - $3,729

  Individual + Spouse + 1 or More Children - $6,725

  
	
  Retired Prior to August 31, 1992 and Surviving Spouses COBRA

  	
  Individual - $1,502

  Individual + 1 - $2,934

  Individual + 2 or More - $4,213

  
	
  Retired on or after September 1, 1992 and Surviving Spouses
  COBRA

  	
  Individual - $1,441

  Individual + Spouse - $2,953

  Individual + 1 or More Children - $2,342

  Individual + Spouse + 1 or More Children - $4,224

  

 

APPENDIX B

 

CLAIMS PROCEDURE APPLICABLE TO CLAIMS FOR BENEFITS
UNDER THE PLAN

 

Claim for Benefits Procedures

You,
your covered dependents or a duly authorized person has the right under ERISA
and the Plan to file a written claim for benefits under the Plan. The following
describes the procedures used by the Plan to process claims for benefits, along
with your rights and responsibilities. These procedures were designed to comply
with the rules of the Department of Labor (DOL) concerning claims for Benefits.
It is important that you follow these procedures to make sure that you receive
full benefits under the Plan.

The
Plan is an ERISA plan, and you may file suit in federal court if you are denied
benefits you believe are due you under the Plan. However, you must complete the
full claims and appeal process offered under the Plan before filing a lawsuit.

Filing a Claim for Benefits

When filing
a claim for benefits, you should file the claim with the Claims Administrator. 
The Claims Administrator is the third party to whom claims and appeal
responsibility has been delegated as permitted under Section 9.1 of the Plan.

The
following are not considered claims for benefits under the Plan:

·       A
claim related to basic eligibility for coverage under the Plan (See Section
12.2 of the Plan).

·       A
claim related to the Loyalty Conditions contained in Article 8 of the Plan (See
Section 12.2 of the Plan).

Claim Filing Limits

A
request for payment of benefits must be submitted within one year after the
date of service or the date the prescription was provided.

Required Information

When
you request payment of benefits from the Plan, you must provide certain
information as requested by the Claims Administrator. 

Benefit Determinations

Post-Service Claims

Post-service
claims are those claims that are filed for payment of benefits after medical
care has been received. If your post-service claim is denied, you will receive
a written notice from the Claims Administrator within 30 days of receipt of the
claim, as long as all needed information identified above and any other
information that the Claims Administrator may request in connection with
services rendered to you was provided with the claim. The Claims Administrator
will notify you within this 30-day period if additional information is needed
to process the Claim and may request a one-time extension not longer than 15
days and pend your Claim until all information is received.

Once
notified of the extension, you then have 45 days to provide this information.
If all of the needed information is received within the 45-day time frame and
the claim is denied, the claims Administrator will notify you of the denial
within 15 days after the information is received. If you don't provide the
needed information within the 45-day period, your claim will be denied.

A
denial notice will explain the reason for denial, refer to the part of the Plan
on which the denial is based, and provide the claim appeal procedures.

Pre-Service Claims

Pre-service
claims are those claims that require notification or approval prior to
receiving medical care or require notification within a specified time period
after service begins as required under the Plan provisions. If your claim is a
pre-service claim and is submitted properly with all needed information, you
will receive written notice of the claim decision from the Claims Administrator
within 15 days of receipt of the claim. If you file a pre-service claim
improperly, the Claims Administrator will notify you of the improper filing and
how to correct it within five days after the pre-service claim is received. If
additional information is needed to process the pre-service claim, the Claims
Administrator will notify you of the information needed within 15 days after
the claim was received and may request a one-time extension not longer than 15
days and pend your claim until all information is received. Once notified of
the extension, you then have 45 days to provide this information. If all of the
needed information is received within the 45-day time frame, the Claims
Administrator will notify you of the determination 

within
15 days after the information is received. If you don't provide the needed
information within the 45-day period, your claim will be denied. A denial
notice will explain the reason for denial, refer to the part of the Plan on
which the denial is based, and provide the claim appeal procedures.

Urgent Care Claims That
Require Immediate Action

Urgent
care claims are those claims that require notification or approval prior to
receiving medical care in which a delay in treatment could seriously jeopardize
your life or health or the ability to regain maximum function or, in the
opinion of a physician with knowledge of your medical condition, could cause
severe pain. In these situations:

·       You
will receive notice of the benefit determination in writing or electronically
within 72 hours after the Claims Administrator receives all necessary
information, taking into account the seriousness of your condition.

·       Notice
of denial may be oral with a written or electronic confirmation to follow
within three days.

If you
filed an urgent claim improperly, the Claims Administrator will notify you of
the improper filing and how to correct it within 24 hours after the urgent
claim was received. If additional information is needed to process the claim,
the Claims Administrator will notify you of the information needed within 24
hours after the claim was received. You then have 48 hours to provide the requested
information.

You
will be notified of a determination no later than 48 hours after either:

·       The Claims
Administrator's receipt of the requested information.

·       The
end of the 48-hour period within which you were to provide the additional
information, if the information is not received within that time.

A
denial notice will explain the reason for denial, refer to the part of the Plan
on which the denial is based, and provide the claim appeal procedures.

Concurrent Care Claims

If an
ongoing course of treatment was previously approved for a specific period of
time or number of treatments, and your request to extend the treatment is an
urgent care claim as defined above, your request will be decided within 24
hours, provided your request is made at least 24 hours prior to the end of the
approved treatment. The Claims Administrator will make a determination on your
request for the extended treatment within 24 hours from receipt of your
request.

If
your request for extended treatment is not made at least 24 hours prior to the
end of the approved treatment, the request will be treated as an urgent care
claim and decided according to the time frames described above. If an ongoing
course of treatment was previously approved for a specific period of time or
number of treatments, and you request to extend treatment in a non-urgent
circumstance, your request will be considered a new claim and decided according
to post-service or pre-service timeframes, whichever applies.

How to Appeal a Claim Decision

If you
disagree with a pre-service or post-service claim determination after following
the above steps, you can contact the applicable Claims Administrator in writing
to formally request an appeal. Your first appeal request must be submitted to
the Claims Administrator within 180 days after you receive the Claim denial.

Appeal Process

A
qualified individual who was not involved in the decision being appealed will
be appointed to decide the appeal. The Claims Administrator may consult with,
or seek the participation of, medical experts as part of the appeal resolution
process. You must consent to this referral and the sharing of pertinent medical
claim information. Upon written request and free of charge you have the right
to reasonable access to and copies of all documents, records and other
information relevant to your claim for benefits. 

Appeals Determinations

Pre-Service
and Post-Service Claim Appeals

You
will be provided written or electronic notification of the decision on your
appeal as follows:

·       For
appeals of pre-service claims, the first-level appeal will be conducted and you
will be notified by the Claims Administrator of the decision within 15 days
from receipt of a request for appeal of a denied Claim. The second-level 

appeal will be conducted and you will be notified by the
Claims Administrator of the decision within 15 days from receipt of a request
for review of the first-level appeal decision.

·       For
appeals of post-service claims, the first-level appeal will be conducted and
you will be notified by the Claims Administrator of the decision within 30 days
from receipt of a request for appeal of a denied claim. The second-level appeal
will be conducted and you will be notified by the Claims Administrator of the
decision within 30 days from receipt of a request for review of the first-level
appeal decision.

·       For
procedures associated with urgent Claims, refer to the following "Urgent
Claim Appeals That Require Immediate Action" section.

·       If you
are not satisfied with the first-level appeal decision of the Claims
Administrator, you have the right to request a second-level appeal from the
Claims Administrator. Your second level appeal request must be submitted to the
Claims Administrator in writing within 60 days from receipt of the first-level
appeal decision.

·       For
pre-service and post-service claim appeals, the Plan Administrator has
delegated to the Claims Administrator the exclusive right to interpret and
administer the provisions of the Plan. The Claims Administrator's decisions are
conclusive and binding.

Please
note that the Claims Administrator's decision is based only on whether or not
benefits are available under the Plan for the proposed treatment or procedure.
The determination as to whether the pending health service is necessary or
appropriate is between you and your physician.

Urgent Claim Appeals
That Require Immediate Action

Your
appeal may require immediate action if a delay in treatment could significantly
increase the risk to your health or the ability to regain maximum function or
cause severe pain.

In
these urgent situations, the appeal does not need to be submitted in writing.
You or your physician should call the Claims Administrator as soon as possible.
The Claims Administrator will provide you with a written or electronic
determination within 72 hours following receipt by the Claims Administrator of
your request for review of the determination taking into account the
seriousness of your condition.

For
urgent claim appeals, the Plan Administrator has delegated to the applicable
Claims Administrator the exclusive right to interpret and administer the
provisions of the Plan. The Claims Administrator's decisions are conclusive and
binding.

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

 

 

    

 

APPENDIX C

DISCLOSURE OF
GRANDFATHERED STATUS

MODEL NOTICE

 

AT&T, as plan
sponsor, believes this Plan is a “grandfathered health plan” under the Patient
Protection and Affordable Care Act (the “Affordable Care Act”).  As permitted
by the Affordable Care Act, a grandfathered health plan can preserve certain
basic health coverage that was already in effect when that law was enacted. 
Being a grandfathered health plan means that the plan may not include certain
consumer protections of the Affordable Care Act that apply to other plans, for
example, the requirement for the provision of preventive health services without
any cost sharing.  However, grandfathered health plans must comply with certain
other consumer protections of the Affordable Care Act, for example, the
elimination of lifetime limits on benefits.

Questions regarding
which protections apply and which protections do not apply to a grandfathered
health plan and what might cause a plan to change from grandfathered health
plan status can be directed to the plan administrator at P.O. Box 30558, Salt Lake
City, Utah  84130-0558.  You  may also contact the Employee Benefits
Security Administration, U.S. Department of labor at 1-866-444-3272 or www.dol.gov/ebsa/healthreform.  This website
has a table summarizing which protections do and do not apply to grandfathered
health plans.  

 

 

 23 

APPENDIX D

 

 

 

Notwithstanding the
provisions and limitations of Section 2.15 of the Plan, the following Officers shall be included in the term
“Eligible Employee” and shall be eligible to participate in the Plan (along
with any Dependents) subject to all applicable provisions of the Plan:

 

	
  Name

  	
  Title

  	
  Effective
  Date of Participation

  
	
  David
  McAtee

  	
  Senior
  Executive Vice President & General Counsel

  	
  February
  1, 2018

  

 

 24Exhibit 10-b

 

AT&T INC.

 

STOCK PURCHASE AND DEFERRAL PLAN

 

Adopted November 19, 2004

As amended through July 25, 2019

 

Article 1 -
Statement of Purpose

 

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

 

Article 2 - Definitions

 

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

 

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

  

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

 

(a)    
 base salary; 

 

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

 

(c) Annual Bonus. 

 

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

 

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

 

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

 

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

 

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

 

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

 1 

and
successor provisions.

 

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

 

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

 

Eligible Employee.  An
Employee who:

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

 

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

 

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

  

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

                Officer Level Employee.  Any executive officer of AT&T, as that term is used
under the Securities Exchange Act of 

 2 

    

1934, as amended,
and any Employee that is an “officer level” Employee for compensation purposes
as shown on the records of AT&T.

 

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

 

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

 

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

 

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

 

Net Credited Service                Age

                                10 years or more                  65
or older

                                20 years or more                  55
or older

                                25 years or more                  50
or older

                                30 years or more                  Any
age

 

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

 

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

 

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

 

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

 

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

 

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

 

Stock.  The common
stock of AT&T Inc.

 

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

 

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

 

 

Article 3 - Administration of the Plan

 

3.1          The Committee.  

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

 

3.2          Authorized Shares of Stock.  

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

 

 

 

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

 

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

 

3.3          Claims
and Appeals.

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

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

If the claim is denied by the AT&T Executive
Compensation Administration Department, in whole or in part, the AT&T
Executive Compensation Administration Department shall provide a written
decision using language calculated to be understood by the Claimant and setting
forth:  (i) the specific reason or reasons for such denial; (ii) specific
references to pertinent provisions of this Plan on which such denial is based;
(iii) a description of any additional material or information necessary for the
Claimant to perfect his or her claim and an explanation of why such material or
such information is necessary; (iv) a description of the Plan’s procedures for
review of denied claims and the steps to be taken if the Claimant wishes to
submit the claim for review; (v) the time limits for requesting a review of a
denied claim under this section and for conducting the review under this
section; and (vi)  a statement of the Claimant’s right to bring a civil action
under Section 502(a) of ERISA if the claim is denied following review under
this section. 

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

 5 

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

During its review of the claim, the Committee shall:

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

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

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

After considering all materials presented by the
Claimant, the Committee will render a decision, written in a manner designed to
be understood by the Claimant.  If the Committee denies the claim on review,
the written decision will include (i) the specific reasons for the decision;
(ii) specific references to the pertinent provisions of this Plan on which the
decision is based; (iii) a statement that the Claimant is entitled to receive,
upon request to the Committee and free of charge, reasonable access to, and
copies of, all documents, records, and other information relevant to the claim;
and (iv) a statement of the Claimant’s right to bring a civil action under
Section 502(a) of ERISA. 

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

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

 

Article 4 - Contributions

 

4.1          Election to Make Contributions.   

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

 

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

 

(2)  Up to 95% (in whole percentage
increments or limited to the target amount) of a Short Term Incentive Award, or
from 6% to 30% (in whole percentage increments) of Annual Bonus, in each case
such contributions shall be made 

    

during the second
calendar year (which is the Plan Year for such contributions) following the year
of such election, except that in 2008 a separate election may be made with
respect to contributions to be made in 2009. An Employee may make such an
election with respect to the type of 

Award (Short Term Incentive Award or
Annual Bonus) that the Employee is under as of the time the Employee’s
eligibility to make such election is determined.  If because of a promotion or
otherwise, the Employee receives a different type of Award instead of, or in
partial or full replacement for, the type of Award subject to the Employee’s
election for the relevant Plan Year, the election will apply to the other Award
as well, including but not limited to any individual discretionary award related
thereto.  

 

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

 

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

 

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

 

(e)  In the event the Participant takes a hardship withdrawal
pursuant to Treasury Regulation §1.401(k)-1 from a benefit plan qualified under
the Code and sponsored by an Employer, any election to make Employee
Contributions of Annual Bonus or Short Term Incentive Award during 2020 by such
Participant shall be cancelled on a prospective basis.  

 

4.2          Purchase of Share Units.  

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

 

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

 

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

 

4.3          Reinvestment of Dividends.    

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

   

 

Article 5 - AT&T Matching Contributions

 

5.1          AT&T Match.   

                (a) Each month AT&T shall credit the
Participant's relevant Share Deferral Account with  the number of “Matching
Share Units” found by taking the percentage of company
matching contribution that the Employee is eligible to receive under the
AT&T Retirement Savings Plan (or such other 401(k) plan of an Employer
that the Employee is eligible to participate in) 

multiplied
by the Participant's Employee Contributions from Base Compensation made to this
Plan and to the Cash Deferral Plan during the month with respect to the first
six percent (6%) of the Participant’s monthly Match Eligible Compensation (as
defined below) and dividing the resulting figure by the FMV of the Stock on the
last day of such month (such resulting amount shall be the “Matching
Contribution”).  The monthly “Match Eligible Compensation” shall be the sum of:

 

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

 

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

 

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

 

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

    

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

 

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

 

5.2          Distribution of Share Units Acquired with
Matching Contributions.  

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

 

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

 

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

 

 

Article 6 - Distributions

 

6.1          Distributions of Share
Units.   

(a)  Initial Election with Respect to a Share Deferral
Account.  At the time the Participant makes an election to make Employee
Contributions with respect to a Share Deferral Account, the Participant shall
also elect the calendar year the Share Deferral Account shall be distributed,
which may be from the first through fifth calendar years after the Plan Year
the Account commenced (except as otherwise provided in this Plan with respect
to Matching Share Units).  For example, if an Account 

commenced
in 2005, the Participant may elect to commence the distribution in any calendar
year from and including 2006 to and including 2010.  If no timely distribution
election is made by the Participant, then the Participant will be deemed to
have made an election to have the Share Deferral Account distributed in a
single installment in the first calendar year after the calendar year the
Account commenced.  

 

(b)  Election to Delay a
Scheduled Distribution.  

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

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

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

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

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

  

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

 

6.2          Death of the Participant.

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

 

6.3          Unforeseeable Emergency Distribution.  

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

 

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

 

(b)     The amount of a distribution to be made because of
an Unforeseeable Emergency shall not exceed the lesser of 

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

 

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

 

6.4          Ineligible Participant.  

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

 

6.5          Conflict of Interest
Distribution.

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

 10 

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

 

6.6          Distribution Process.         

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

 

 

Article 7 - Transition Provisions

 

7.1          Stockholder Approval   

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

 

7.2          2005 Share Deferral Accounts.   

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

 

7.3          2007 Amendments.

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

 

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

 

7.4          2008 Amendments.

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

 

Article 8 - Options

 

8.1          Grants.   

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

 

8.2          Term of Options.   

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

be
subject to earlier termination as provided herein. 

 

8.3          Exercise Price.   

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

 

8.4          Issuance of Options. 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

8.5          Exercise and Payment of Options.  

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

 

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

 

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

 

Payment may be made:

 

(a) in cash, or

 

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

 

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

 

or;

 

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

 

8.6          Restrictions on Exercise and Transfer.   

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

 

8.7          Termination of Employment.  

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

 

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

 

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

 

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

 

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

 

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

 

 

Article 9 - Discontinuation, Termination, Amendment.

 

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

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

 14 

9.2          AT&T's Right to Terminate Plan.   

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

 

After termination of the Plan, Participants shall continue
to earn dividend equivalents in the form of Share Units on undistributed Share
Units and shall continue to receive all distributions under this Plan at such
time as provided in and pursuant to the terms and conditions of Participant's
elections and this Plan.  Notwithstanding the foregoing, the termination of the
Plan shall be made solely in accordance with Section 409A of the Code and in no
event shall cause the accelerated distribution of any Account unless such
termination is effected in accordance with Section 409A of the Code.  

 

9.3          Amendment.  

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

 

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

 

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

 

 

Article 10 – Miscellaneous.

 

10.1        Tax Withholding.  

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

 

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

 

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

10.2        Elections and Notices.   

Notwithstanding anything to the contrary contained in this
Plan, all elections and notices of every kind under this Plan shall be made (1)
on forms prepared by AT&T or the General Counsel, Secretary or Assistant
Secretary, or their respective delegates, or (2) in such other manner as
permitted or required by AT&T or the General Counsel, Secretary or Assistant
Secretary, or their respective delegates, including through electronic means,
over the Internet or otherwise. An election shall 

be
deemed made when received by AT&T (or its designated agent, but only in
cases where the designated agent has been appointed for the purpose of
receiving such election), which may waive any defects in form. Unless made
irrevocable by the electing person, each election with regard to making
Employee Contributions or distributions of Share Deferral Accounts shall become
irrevocable at the close of business on the last day the Employee is permitted
to make such election. Notwithstanding anything to the contrary in this Plan,
AT&T may place additional limits on the times during which elections may be
made to make contribution(s) or to delay distribution(s). 

 

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

 

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

 

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

 

10.3        Unsecured General Creditor.  

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

 

10.4        Non-Assignability.  

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

 

10.5        Employment Not Guaranteed.  

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

 

10.6        Errors.

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

 

10.7        Captions.  

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

 

10.8        Governing Law.    

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

 16 

enforceability of this
Plan to the substantive law of another jurisdiction.   

 

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

 

10.9        Plan to Comply with Section 409A.  

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

 

10.10      Successors and Assigns.  

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

 

10.11  Loyalty Conditions for Officer Level Employees and Senior Managers

 

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

 

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

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

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

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

(iii)             
 “engaging in conduct
disloyal to AT&T” means, while employed by AT&T or any of its
Subsidiaries, or within two (2) years after Participant’s Termination of
Employment, (i) soliciting for employment or hire, whether as an employee or as
an independent contractor, for any business in competition with an Employer
Business, any person employed by AT&T or any of its Subsidiaries during the
one (1) year prior to the Participant’s Termination of Employment, whether or
not acceptance of such position would 

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

(iv)              
 “Confidential
Information” shall mean all information belonging to, or otherwise relating to,
an Employer Business, which is not generally known, regardless of the manner in
which it is stored or conveyed to Participant, and which the Employer Business
has taken reasonable measures under the circumstances to protect from
unauthorized use or disclosure.  Confidential Information includes trade
secrets as well as other proprietary knowledge, information, know-how, and
non-public intellectual property rights, including unpublished or pending
patent applications and all related patent rights, formulae, processes,
discoveries, improvements, ideas, conceptions, compilations of data, and data,
whether or not patentable or copyrightable and whether or not it has been
conceived, originated, discovered, or developed in whole or in part by
Participant.  For example, Confidential Information includes, but is not
limited to, information concerning the Employer Business’ business plans,
budgets, operations, products, strategies, marketing, sales, inventions,
designs, costs, legal strategies, finances, employees, customers, prospective
customers, licensees, or licensors; information received from third parties
under confidential conditions; or other valuable financial, commercial,
business, technical or marketing information concerning the Employer Business,
or any of the products or services made, developed or sold by the Employer Business. 
Confidential Information does not include information that (i) was generally
known to the public at the time of disclosure; (ii) was lawfully received by
Participant from a third party; (iii) was known to Participant prior to receipt
from the Employer Business; or (iv) was independently developed by Participant
or independent third parties; in each of the foregoing circumstances, this
exception applies only if such public knowledge or possession by an independent
third party was without breach by Participant or any third party of any
obligation of confidentiality or non-use, including but not limited to the
obligations and restrictions set forth in this Plan.  

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

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

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

(ii)               
 All litigation between
the parties relating to this section shall occur in federal court, which shall
have exclusive jurisdiction; any such litigation shall be held in the United
States District Court for the 

    

Northern District of
Texas, and the only remedies available with respect to the Plan shall be those
provided under ERISA.

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