Document:

ex10w.htm

    Exhibit 10-w

    

    

    

    

    

    

    

    

    

    

    1995
MANAGEMENT STOCK OPTION PLAN

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    Plan
Effective:  January 1, 1996

    Revisions
Effective:  November 16, 2001

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    AT&T
INC.

    1995
MANAGEMENT STOCK OPTION PLAN

    

    

    ARTICLE
1.  PURPOSE, DEFINITIONS AND EFFECTIVE DATE

    

    
      	
              1.1

            	
              Purpose.  The
      purpose of the 1995 Management Stock Option Plan ("Plan") is to promote
      the success and enhance the value of AT&T Inc. (the "Company") by
      linking the personal interests of the Employees of the Company and its
      Subsidiaries to the interests of the Company's shareowners, and by
      providing Employees with an additional incentive for outstanding
      performance.

            

    

    

    
      	
              1.2

            	
              Additional
      Definitions. In addition to definitions set forth elsewhere in the
      Plan, for purposes of the Plan:

            

    

    

    
      	
                   
      (a)  

            	
              "Cause"
      shall mean willful and gross misconduct on the part of a Participant that
      is materially and demonstrably detrimental to the Company or any
      Subsidiary as determined by the Company in its sole
      discretion.

            

    

    

    
      	
               
      

            	
              (b)

            	
              “Disability”
      shall mean absence of an Employee from work under the relevant Company or
      Subsidiary disability plan.

            

    

    

    
      	
               
      

            	
               (c)

            	
              "Employee"
      shall mean any employee of the Company or of one of the Company’s
      Subsidiaries.  Directors who are not otherwise employed by the
      Company or one of its Subsidiaries shall not be considered Employees under
      the Plan.

            

    

    

    
      	
               
      

            	
               (d)

            	
              "Exchange
      Act" shall mean the Securities Exchange Act of 1934, as amended, or any
      successor Act thereto.

            

    

    

    
      	
               
      

            	
               (e)

            	
              "Fair
      Market Value" shall mean the closing price on the New York Stock Exchange
      (“NYSE”) for Shares on the relevant date, or if such date was not a
      trading day, the next preceding trading date, all as determined by the
      Company.  A trading day is any day that the Shares are traded on
      the NYSE.  In lieu of the foregoing, the Committee may select
      any other index or measurement to determine the Fair Market Value of
      Shares under the Plan.

            

    

    

    
      	
               
      

            	
               (f)

            	
              "Option"
      shall mean the right to purchase one or more shares of the common stock of
      AT&T Inc. on the terms and conditions contained in this Plan, the
      rules of the Committee, and the terms of the Option.  “Awards”
      shall mean Options.

            

    

    

    
      	
               
      

            	
              (g)

            	
              “Participant”
      shall mean an Employee or former Employee that participates in this
      Plan.

            

    

    

    
      	
               
      

            	
              (h)

            	
              "Retirement"
      shall mean the termination of a Participant's employment with the Company
      or one of its Subsidiaries, for reasons other than death, Disability or
      for Cause, on or after the date Participant has attained one of the
      following combinations of age and service at termination of employment on
      or after April 1, 1997, except as otherwise indicated
    below:

            

    

     

    
    

     

    
      
        
          	
                  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 

                

        

      

    

    

    With
respect to a Participant who is granted an EMP Service Pension under and
pursuant to the provisions of the AT&T Pension Benefit Plan - Nonbargained
Program upon termination of employment, the term "Retirement" shall include such
Participant's termination of employment.

    

    In
determining whether a Participant's Termination of Employment under the Enhanced
Pension and Retirement Program ("EPR") is a Retirement as defined above, 5 years
shall be added to each of Age and Net Credited Service.

    

    

    
      	
               
      

            	
               (i)

            	
              "Rotational
      Work Assignment Company"("RWAC") shall mean any entity with which AT&T
      Inc. or any of its Subsidiaries may enter into an agreement to provide an
      employee for a rotational work
assignment.

            

    

    

    
      	
               
      

            	
               (j)

            	
              "Shares"
      or "Stock" or "Shares of Stock" shall mean the common stock of AT&T
      Inc.

            

    

    

    
      	
               
      

            	
               (k)

            	
              "Subsidiary"
      shall mean any corporation in which the Company owns directly, or
      indirectly through subsidiaries, more than fifty percent (50%) of the
      total combined voting power of all classes of Stock, or any other entity
      (including, but not limited to, partnerships and joint ventures) in which
      the Company owns more than fifty percent (50%) of the combined equity
      thereof.

            

    

    

    

    
      	
              1.3

            	
              Effective
      Date.  The Plan shall be effective on the date it is
      approved by the Company's Board of
Directors.

            

    

    

    

    ARTICLE
2.  ADMINISTRATION

    

    
      	
              2.1

            	
              The
      Committee.  The Plan shall be administered by a committee
      (the "Committee") which shall be the Human Resources Committee or any
      other committee appointed by the Board of Directors (the
      "Board").

            

    

    

    

    
      	
              2.2  

            	
              Authority of the
      Committee. The Committee shall have full power, except as
      limited by law

            

    

    and
subject to the provisions herein, in its sole and exclusive discretion: to grant
Awards; to select the recipients of Awards; to determine the eligibility of a
person to participate in the Plan or to receive a particular Award; to determine
the sizes and types of Awards; to determine the terms and conditions of such
Awards in a manner consistent with the Plan; to construe and interpret the Plan
and any agreement or instrument entered into under the Plan; to establish,
amend, or waive rules and regulations for the Plan's administration; and
(subject to the provisions of Article 5 herein) to amend the terms and
conditions of any outstanding Award to the extent such terms and conditions are
within the discretion of the Committee as provided in the
Plan.  Further, the Committee shall make all other determinations in
its discretion which may be necessary or advisable for the administration of the
Plan.

    

    References
to determinations or other actions by the Company, herein, shall mean actions
authorized by the Committee, the Chairman of the Board of the Company, the
Senior Executive Vice President of the Company in charge of Human Resources or
their respective successors or duly authorized delegates, in each case in the
discretion of such person.

    

    All
determinations and decisions made by the Company pursuant to the provisions of
the Plan, and all related orders and resolutions of the Board shall be final,
conclusive, and binding on all persons, including the Company, its stockholders,
Employees, Participants, and their estates and beneficiaries.

    

     

    

    ARTICLE 3.  SHARES
SUBJECT TO THE PLAN

    

    
      	
              3.1

            	
              Number of
      Shares.  Subject to adjustment as provided in Section 3.3
      Adjustments in
      Authorized Shares, herein, the total number of Shares of Stock for
      which Options may be granted under the Plan may not exceed 160,000,000
      Shares.  These Shares may be either authorized but unissued or
      reacquired Shares.  The Committee or the Board may amend this
      Plan to increase the number of authorized
  Shares.

            

    

    

    
      	
              3.2

            	
              Lapsed
      Options.  If any Option granted under the Plan is
      canceled, terminates, expires, or lapses for any reason, any Shares
      subject to such Option again shall be available for the grant of an Option
      under the Plan.

            

    

    

    
      	
              3.3

            	
              Adjustments in
      Authorized Shares.  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 the Company affecting the Shares, such adjustment
      shall be made in the number and class of Shares which may be delivered
      under the Plan, and in the number and class of and/or price of Shares
      subject to outstanding Options granted under the Plan, as may be
      determined to be appropriate and equitable by the Committee, in its sole
      discretion, to prevent dilution or enlargement of rights; and provided
      that the number of Shares subject to any Option shall always be a whole
      number.

            

    

    

    
 

    ARTICLE 4.  STOCK
OPTIONS

    

    
      	
              4.1

            	
              Grant of
      Options.  Subject to the terms and provisions of the
      Plan, Options may be granted to such Employees, at such times and on such
      terms and conditions, as shall be determined by the Committee; provided,
      however, no Options may be granted after the 10th anniversary of the
      effective date of the Plan.  The Committee or the Board shall
      have discretion in determining the number of Options and the number of
      Shares subject to each Option granted to each
      Participant.  Without limiting the generality of the foregoing,
      the Committee shall have the authority to establish guidelines setting
      forth anticipated grant levels which correspond to various salary grades,
      salary ranges or the equivalent
thereof.

            

    

    

    
      	
              4.2

            	
              Form of
      Issuance.  Options may be issued in the form of a
      certificate or may be recorded on the books and records of the Company for
      the account of the Participant.  If an Option is not issued in
      the form of a certificate, then the Option shall be deemed granted upon
      issuance of a notice of the grant addressed to the
      recipient.  The terms and conditions of an Option shall be set
      forth in the certificate, in the notice of the issuance of the grant, or
      in such other documents as the Committee shall determine.  The
      Committee may require a Participant to enter into a written agreement
      containing terms and conditions relating to the Option and its
      exercise.

            

    

    

    
      	
              4.3

            	
              Option
      Price.  The Option Price for each grant of an Option
      shall be determined by the Committee; provided, however, that the minimum
      Option Price shall be one hundred percent (100%) of the Fair Market Value
      of a Share on the date the Option is granted.  If the Committee
      does not specify an Option Price then the Option Price shall be the Fair
      Market Value of a Share on the date the Option is
  granted.

            

    

    

    
      	
              4.4  

            	
              Duration of
      Options.  Each Option shall expire at such time as the
      Committee shall determine at the time of grant provided, however, that no
      Option shall be exercisable later than the tenth (10th) anniversary date
      of its grant.  In the event the Committee does not specify the
      expiration date of an Option, then such Option will expire on the tenth
      (10th)
      anniversary date of its grant, except as otherwise provided
      herein.  For options granted before June 29, 2001, the foregoing
      reference to “tenth (10th)
      anniversary” shall be replaced with “fifth (5th)
      anniversary”.

            

    

    

    
      	
              4.5

            	
              Vesting of
      Options.  Options shall vest at such times and under such
      terms and conditions as determined by the Committee provided, however,
      unless another vesting period is provided by the Committee at or before
      the grant of an Option, one-third of the Options will vest on each of the
      first three anniversaries of the grant; if one Option remains after
      equally dividing the grant by three, it will vest on the first anniversary
      of the grant, if two Options remain, then one will vest on each of the
      first two anniversaries.  The Committee shall have the right to
      accelerate the vesting of any Option; however, the Chairman of the Board
      or the Senior Executive Vice President-Human Resources, or their
      respective successors, or such other persons designated by the Committee,
      shall have the authority to accelerate the vesting of Options for any
      Employee who is not at that time an officer, director or ten percent
      beneficial owner, as those terms are defined under Section 16 of the
      Exchange Act.

            

    

    

    
      	
              4.6.

            	
              Exercise of
      Options.  Options granted under the Plan shall be
      exercisable at such times and be subject to such restrictions and
      conditions as the Committee or the Board shall in each instance approve,
      which need not be the same for each grant or for each Participant.
      Exercises of Options may be effected only on days and during the hours
      that the New York Stock Exchange is open for regular
      trading.  The Company may further change or limit the times or
      days Options may be exercised.  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.

            

    

    

    
      	
               
      

            	
              Options
      shall be exercised by providing notice to the designated agent selected by
      the Company (if no such agent has been designated, then to the Company),
      in the manner and form determined by the Company, which notice shall be
      irrevocable, setting forth the exact number of Shares with respect to
      which the Option is being exercised and including with such notice payment
      of the Option Price.  When Options have been transferred, the
      Company 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.

            

    

    

    
      	
              4.7

            	
              Payment.  The
      Option Price shall be paid in full at the time of exercise.  No
      Shares shall be issued or transferred until full payment has been received
      therefor.

            

    

    

    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 the Committee or
      the Company may impose from time to time, and further subject to
      suspension or termination of this provision by the Committee or the
      Company at any time, by:

            

    

    

    
      	
               
      

            	
              (i)

            	
              delivery
      of Shares of Stock owned by the Participant in partial (if in partial
      payment, then together with cash) or full payment; provided, however, as a
      condition to paying any part of the Option Price in Stock, at the time of
      exercise of the Option, the Participant must establish to the satisfaction
      of the Company that the Stock tendered to the Company must have been held
      by the Participant for a minimum of six (6) months preceding the tender;
      or

            

    

    

    
      	
               
      

            	
              (ii)

            	
              if
      the Company has designated a stockbroker to act as the Company’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 Shares to pay the Option 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
      Option Price and tax withholding to the Company.  In the event
      the stockbroker sells any Shares on behalf of a Participant, the
      stockbroker shall be acting solely as the agent of the Participant, and
      the Company 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 Option
      Price and tax withholding) are paid to the
  Company.

            

    

    

    If payment is made by the delivery
of Shares of Stock, the value of the Shares delivered shall be equal to the Fair
Market Value of the Shares on the day preceding the date of exercise of the
Option.

    

    Restricted Stock may not be used to pay
the Option Price.

    

    

    

    
      	
              4.8  

            	
              Termination of
      Employment.  Unless otherwise provided by the Committee,
      the following limitations on exercise of Options shall apply upon
      termination of employment:

            

    

    

    
      	
               
      

            	
              (a)

            	
              Termination by Reason
      of Death or Disability.  In the event the employment of a
      Participant is terminated by reason of death or Disability any outstanding
      Options granted to the Participant shall vest as of the date of
      termination of employment and may be exercised, if at all, no more than
      one (1) year following termination of employment, unless the Options, by
      their terms, expire earlier.  For options granted on and after
      May 1, 1997, the above referenced exercise period of “one (1) year” shall
      be “three (3) years.”

            

    

    

    
      	
               
      

            	
              (b)

            	
              Termination by
      Retirement.  In the event the employment of a Participant
      is terminated by reason of
Retirement:

            

    

    

    (i)           Upon
the Participant's termination of employment, all outstanding unvested Options
granted to the Participant shall vest as of the date of the Participant's
termination of employment; provided, however, this provision shall not apply to
a Participant who, as determined by AT&T, is an officer level employee for
compensation purposes unless the employee is age 55 or older at termination of
employment, nor shall this provision apply to a Participant who is an EPR
Terminee (as that term is defined in the AT&T Pension Benefit Plan or the
Ameritech Management Pension Plan); provided further, however, this vesting
provision shall not apply to an Option granted prior to September 28, 2001,
unless and except for those Options outstanding as of September 27, 2001, that
have an Option Price equal to or more than the Fair Market Value of Stock on
such date; and

     

    (ii)          Any
outstanding Options granted to the Participant which are vested as of the date
of termination of employment may be exercised, if at all, no more than three (3)
years following termination of employment, unless the Options, by their terms,
expire earlier.   For options granted on and after May 1, 1997,
the above referenced exercise period of “three (3) years” shall be “five (5)
years.”  If the Participant is Retirement eligible at the time the
Participant terminates employment by reason of death or disability (as defined
above) after March 31, 2000, then for purposes of this section, the Participant
shall be deemed to have terminated employment by reason of
Retirement.

     

    
      	
               
      

            	
              (c)

            	
              Termination of
      Employment for Other Reasons.  If the employment of a
      Participant shall terminate for any reason other than the reasons set
      forth in (a) or (b), above, and other than for Cause, all outstanding
      Options granted to the Participant which are vested as of the date of
      termination of employment may be exercised by the Participant within the
      period beginning on the effective date of termination of employment and
      ending three (3) months after such date, unless the Options, by their
      terms, expire earlier.  For options granted on and after May 1,
      1997 but before January 26, 2001, the above referenced exercise period of
      “three (3) months” shall be “one (1)
year.”

            

    

    

    
      	
               
      

            	
              (d)

            	
              Termination for
      Cause.  If the employment of a Participant shall
      terminate for Cause, all outstanding Options held by the Participant shall
      immediately terminate and be forfeited to the Company, and no additional
      exercise period shall be allowed.

            

    

    

    
      	
               
      

            	
              (e)

            	
              Options not Vested at
      Termination.  Any outstanding Options not vested as of
      the effective date of termination of employment shall expire immediately
      and shall be forfeited to the
Company.

            

    

    

    
      	
              4.9

            	
              Transfers.  For
      purposes of the Plan, transfer of employment of a Participant between the
      Company and any one of its Subsidiaries (or between Subsidiaries) or
      between the Company or a Subsidiary and a RWAC, to the extent the term of
      employment at a RWAC is equal to or less than five (5) years, shall not be
      deemed a termination of employment under this Plan.  Provided,
      however termination of employment with a RWAC without a concurrent
      transfer to the Company or any of its Subsidiaries shall be deemed a
      termination of employment as that term is used in this
      Plan.  Similarly, termination of an entity’s status as a
      Subsidiary or as a RWAC shall be deemed a termination of employment of any
      Participants employed by such Subsidiary or
  RWAC.

            

    

    

    
      	
              4.10

            	
              Restrictions on
      Exercise and Transfer of Options. Unless otherwise provided by the
      Committee;

            

    

    

    
      	
               
      

            	
              (a)

            	
              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, except as
      otherwise provided by the Company’s Rules for Employee Beneficiary
      Designations, as the same may be amended from time to time, 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.

            

    

    

    
      	
               
      

            	
              (b)

            	
              No
      Option shall be transferable except: (a) in the case of the Participant,
      only upon the Participant’s death and in accordance with the Company’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.

            

    

    

    

    
      	
              4.11

            	
              Change in
      Control. Upon the occurrence of a Change in Control, unless
      otherwise determined by the Committee or the Board prior to such Change in
      Control, all Options held by Participants hereunder shall immediately
      become vested and exercisable, notwithstanding the provisions of Section
      4.6 Exercise of
      Options to the contrary.  A "Change in Control" shall be
      deemed to have occurred if (i) any "person" (as such term is used in
      Sections 13(d) and 14(d) of the Exchange Act), other than a trustee or
      other fiduciary holding securities under an employee benefit plan of the
      Company or a corporation owned directly or indirectly by the shareowners
      of the Company in substantially the same proportions as their ownership of
      stock of the Company, is or becomes the "beneficial owner" (as defined in
      Rule 13d-3 under said Act), directly or indirectly, of securities of the
      Company representing twenty percent (20%) or more of the total voting
      power represented by the Company's then outstanding voting securities, or
      (ii) during any period of two (2) consecutive years, individuals who at
      the beginning of such period constitute the Board of Directors of the
      Company and any new Director whose election by the Board of Directors or
      nomination for election by the Company's shareowners was approved by a
      vote of at least two-thirds (2/3) of the Directors then still in office
      who either were Directors at the beginning of the period or whose election
      or nomination for election was previously so approved, cease for any
      reason to constitute a majority thereof, or (iii) the shareowners of the
      Company approve a merger or consolidation of the Company with any other
      corporation, other than a merger or consolidation which would result in
      the voting securities of the Company outstanding immediately prior thereto
      continuing to represent (either by remaining outstanding or by being
      converted into voting securities of the surviving entity) at least eighty
      percent (80%) of the total voting power represented by the voting
      securities of the Company or such surviving entity outstanding immediately
      after such merger or consolidation, or the shareowners of the Company
      approve a plan of complete liquidation of the Company or an agreement for
      the sale or disposition by the Company of all or substantially all the
      Company's assets.

            

    

    

    

    
      	
              4.12

            	
              Competition
      and Solicitation.  In the event a Participant directly or
      indirectly, engages in competitive activity, or has become associated
      with, employed by, controls, or renders service to any business that is
      engaged in competitive activity, with (i) the Company, (ii) any
      Subsidiary, or (iii) any business in which any of the foregoing have a
      substantial interest, or if the Participant attempts, directly or
      indirectly, to induce any employee of the Company or a Subsidiary to be
      employed or perform services elsewhere without the permission of the
      Company, then the Company may (i) cancel any Option granted to such
      Participant, whether or not vested, in whole or in part; and/or (ii)
      rescind any exercise of the Participant’s Options that occurred on or
      after that date six months prior to engaging in such activity, in which
      case the Participant shall pay the Company the gain realized or received
      upon such exercise of Options.  "Has become associated with"
      shall include, among other things, beneficial ownership of 1/10 of 1% or
      more of a business engaged in competitive activity.  The
      determination of whether a Participant has engaged in any such activity
      and whether to cancel Options and/or rescind the exercise of Options shall
      be made by AT&T, and in each case such determination shall be final,
      conclusive and binding on all
persons.

            

    

    

     

    

    ARTICLE
5.  AMENDMENT, MODIFICATION, AND TERMINATION

    

    
      	
              5.1

            	
              Amendment,
      Modification, and Termination.  The Committee or the
      Board, may at any time and from time to time, terminate, amend, or modify
      the Plan.

            

    

    

    
      	
              5.2

            	
              Awards Previously
      Granted.  No termination, amendment, or modification of
      the Plan shall in any material manner adversely affect any Option
      previously granted under the Plan, without the written consent of the
      Participant holding such Option.

            

    

    

     

    

    ARTICLE
6.  WITHHOLDING

    

    
      	
              6.1  

            	
              Tax
      Withholding.  Upon exercise of an Option, the Company
      shall withhold Shares sufficient in value, using the Fair Market Value on
      the date determined by the Company to be used to value the Shares 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
    exercise.

            

    

    

    
      	
               
      

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

            

    

    

    
      	
               
      

            	
              Unless
      otherwise determined by the Committee, when the method of payment for the
      Option Price is from the sale by a stockbroker pursuant to Section
      4.7(b)(ii), 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 Fair
      Market Value of the Stock.

            

    

    

     

    

    ARTICLE
7.  MISCELLANEOUS

    

    
      	
              7.1

            	
              Employment.  Nothing
      in the Plan shall interfere with or limit in any way the right of the
      Company or any Subsidiary thereof to terminate any Participant's
      employment at any time, nor confer upon any Participant any right to
      continue in the employment of the Company or any Subsidiary
      thereof.

            

    

    

    
      	
              7.2

            	
              Participation.  No
      Employee shall have the right to be selected to receive an Option under
      the Plan, or, having been so selected, to be selected to receive a future
      Option.

            

    

    

    
      	
              7.3

            	
              Successors.  All
      obligations of the Company under the Plan shall be binding on any
      successor to the Company, whether the existence of such successor is the
      result of a direct or indirect purchase, merger, consolidation, or
      otherwise, of all or substantially all of the business and/or assets of
      the Company.

            

    

    

    
      	
              7.4  

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

            

    

    

    Because
awards under the Plan are granted in Texas, records relating to the Plan and
awards thereunder are located in Texas, and the Plan and awards thereunder are
administered in Texas, the Company and the Participant to whom an award under
this Plan is granted, 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 awards under
this Plan, including but not limited to any disputes arising out of or relating
to the interpretation and enforceability of any awards 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 Bexar 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.

    

    
      	
              7.5

            	
              Gender and
      Number.  Except where otherwise indicated by the context,
      any masculine term used herein also shall include the feminine; the plural
      shall include the singular and the singular shall include the
      plural.

            

    

    

    
      	
              7.6

            	
              Severability.  In
      the event any provision of the Plan shall be held illegal or invalid for
      any reason, the illegality or invalidity shall not affect the remaining
      parts of the Plan, and the Plan shall be construed and enforced as if the
      illegal or invalid provision had not been
  included.

            

    

    

    
      	
              7.7

            	
              Requirements of
      Law.  The granting of Awards and the issuance of Shares
      under the Plan shall be subject to all applicable laws, rules, and
      regulations, and to such approvals by any governmental agencies or
      national securities exchanges as may be
  required.

            

    

    

    
      	
              7.8

            	
              Errors.  At
      any time AT&T may correct any error made under the Plan without
      prejudice to AT&T.  Such corrections may include, among
      other things, changing or revoking an issuance of an
  Award.

            

    

    

    
      	
              7.9

            	
              Elections and
      Notices.  Notwithstanding anything to the contrary
      contained in this Plan, all elections and notices of every kind shall be
      made on forms prepared by AT&T or the General Counsel, Secretary or
      Assistant Secretary, or their respective delegates or shall be made 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.  AT&T may limit the
      time an election may be made in advance of any
  deadline.

            

    

    

    Where any
notice or filing required or permitted to be given to AT&T under the Plan,
it shall be delivered to the principal office of AT&T, directed to the
attention of the Senior Executive Vice President-Human Resources of 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.ex10z.htm

    

     

    Exhibit
10-z

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    PACIFIC
TELESIS GROUP

     

    EXECUTIVE
DEFERRAL PLAN

     

    (Amended
as of November 20, 2008)

     

     

     

     

     

     

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

    PACIFIC
TELESIS GROUP

     

    EXECUTIVE DEFERRAL
PLAN

     

    (Restated
as of December 1, 1995)

    

    SECTION
1. Purpose.

    

    The
Pacific Telesis Group Executive Deferral Plan (the "Plan") provides certain
Officers of the Company with an opportunity to defer compensation and accrue
earnings on a pre-tax basis and with an opportunity to receive employer matching
contributions that cannot be provided to them under the Pacific Telesis Group
Supplemental Retirement and Savings Plan for Salaried Employees ("the Savings
Plan") because of the limitations imposed by section 401(a)(17) of the Internal
Revenue Code of 1986, as amended (the "Code").

    

    SECTION
2. Eligibility to
Participate

    

    The
following employees are eligible to participate in the Plan:

    

    (A) Officers
of Pacific Telesis Group and/or Pacific Bell;

    

    (B) The
Officers of any corporate Affiliate of Pacific Telesis Group who are
specifically designated to participate by the Board of Directors of Pacific
Telesis Group and the Board of Directors of such corporate
Affiliate.

    

    Prior to
April 1, 1994, certain employees of AirTouch Communications (formerly "PacTel
Corporation") were eligible to participate in the Plan, and they retain certain
rights to benefits as provided under the Plan.

    

    SECTION
3. Plan
Accounts.

    

    3.1     Establishment of
Account. An account shall be established for each eligible employee who
elects to become a participant in the Plan in accordance with the procedures set
forth in Section 4 of the Plan. The account shall be credited with allocations
and earnings under Sections 4, 5 and 6 and debited with distributions under
Section 7 of the Plan.

    

    3.2     Predecessor Plan
Accounts. An employee's account under the Pacific Telesis Group Senior
Management Incentive Award Deferral Plan (the "Predecessor Plan") was
transferred to this Plan as of January 1, 1985 (the "Effective Date" of this
Plan), if the employee was then an eligible employee as provided in Section 2.
In such a case, the employee's account under this Plan was credited as of the
Effective Date with the amount credited to the employee's account under the
Predecessor Plan as of December 31, 1984, and such amount shall bear interest
from the Effective Date in accordance with Section 6. Elections regarding
distribution made under the Predecessor Plan shall not be affected by the
transfer of an employee's account to this Plan.

    

    3.3     No Funding or
Assignment. For income tax purposes under the Code and for purposes of
Title I of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"),
it is intended that this
Plan constitute an
unfunded deferred compensation arrangement. The
amounts credited to Plan accounts for employees of each participating Company
shall be held in the general funds of such participating Company. All amounts in
such accounts, including all Compensation deferred by an employee, shall remain
an asset of the participating Company. A participating Company shall not be
required to reserve or otherwise set aside funds for the payment of amounts
credited to Plan accounts. The obligation of a participating Company to pay
benefits under the Plan constitutes a mere promise to make benefit payments in
the future, and shall be unfunded as to the employee, whose rights shall be
those of a general unsecured creditor. Title to and beneficial ownership of any
assets which a participating Company may set aside or otherwise designate to
make payments under the Plan shall at all times remain in the participating
Company, and the employee shall not have any property interest in any specific
assets of a participating Company. The rights of an employee or his or her
beneficiary to benefit payments under the Plan are not subject in any manner to
assignment, alienation, pledge or garnishment by creditors.

    

    SECTION
4. Deferred
Compensation.

    

    4.1     Annual Deferral and
Distribution Election. An eligible employee may elect to participate in
the Plan prior to the beginning of any calendar year or within 30 days of first
becoming eligible to participate in the Plan or a feature of the Plan (with
respect to such Plan feature). An employee's election shall direct that
compensation in one or more of the following categories (collectively
"Compensation") be deferred and credited to an account under the Plan, subject
to the limitations and effectiveness prescribed for each category of
Compensation, and shall direct that such Compensation, together with all other
amounts credited under the Plan with respect to such Compensation under Section
5 (Company Match) and Section 6 (Earnings), shall be distributed in accordance
with a distribution option set forth in Section 7.

    

    (A) Salary. An employee
may elect to defer part of his or her salary otherwise payable for services
performed in a calendar year, but not less than $2,500 nor more than 80% of
salary. Such election shall become effective for salary otherwise payable for
services performed in the payroll period beginning (i) immediately subsequent to
the election, in the case of an employee who makes an election within 30 days of
first becoming eligible to participate in the Plan, or (ii) on or after the
first day of the calendar year to which the election applies in all other cases.
An election related to salary otherwise payable for services performed in any
calendar year shall become irrevocable on the last day prior to the beginning of
such calendar year (or the applicable payroll period for which the election
becomes effective, in the case of an election made within 30 days of first
becoming eligible to participate in the Plan).

    

    (B) STIP. An employee may
elect to defer all or part, but not less than $5,000, of his or her awards under
the Short-Term Incentive Plan or Short-Term Incentive Compensation Plan of
Pacific Telesis Group or an Affiliate, or a similar or successor plan or program
("STIP"), for services performed in a calendar year and otherwise payable in the
calendar year following such calendar year. An election related to the STIP
award for services performed in a calendar year shall become irrevocable on the
last day prior to the year in which the services are performed.

    
 

    (C) LTIP. An employee may
elect to defer all or part, but not less than $5,000, of his or her awards under
the Pacific Telesis Group Senior Management Long-Term Incentive Plan or the
similar plan of an Affiliate ("LTIP"), for services performed in a three-year
performance period and otherwise payable in the calendar year following such
three-year performance period. An election related to the LTIP award otherwise
payable for services performed in a three-year performance period shall become
irrevocable on the last day prior to the beginning of the three-year performance
period applicable to that LTIP award.

    

    (D) Other Awards. An
employee may elect to defer all or part of his or her awards under any other
bonus, special award, or any other similar form of compensation ("Other Awards")
otherwise payable to him or her by a participating Company with respect to
services performed in a calendar year. An election related to Other Awards
otherwise payable in a calendar year shall become irrevocable on the last day
prior to the beginning of such calendar year.

    

    Notwithstanding
the foregoing, in no event shall deferrals under the Plan include that portion
of Compensation required for all applicable tax, Social Security and employee
benefit plan withholding, whether or not such withholding requirement is related
to this Plan, and no deferral election made under this Section 4.1 shall be
effective with respect to salary or other awards payable during any calendar
year after 1995, STIP payable during any calendar year after 1996 and LTIP payable
during any calendar year after 1998, except LTIP as may have already been
elected for deferral on forms on file as of December 31, 1994.

    

    4.2  Form of Election.
Modification or Termination. An employee's election or written notice of
modification or termination shall be made in accordance with procedures
established by the Plan Administrator, in the form of a document approved by the
Plan Administrator, executed by the employee and filed with the Plan
Administrator or his or her designee. The Plan Administrator may permit an
employee to make a series of annual elections to be effective in future years,
in which case such elections shall become irrevocable as provided in Section
4.1. An election which has not become irrevocable may be modified, terminated or
reinstated by the employee prior to the time such election would have become
irrevocable as provided in Section 4.1. An election with respect to salary, ST1P
or her Awards for services performed in a calendar year and/or with respect to
LTIP for services performed in a three-year performance period shall be deemed
irrevocably terminated when the employee, whether by transfer or termination of
employment, ceases to be eligible to participate in the Plan during such
calendar year and/or such three-year performance period (as
applicable).

    

    4.3  Modification of Irrevocable
Election by the Committee. Upon receipt of a written request made by or
on behalf of an employee, the Committee in its sole discretion may modify or
terminate the employee's election with respect to Compensation otherwise payable
in a calendar year as
it deems necessary to prevent extreme financial hardship to the employee,
notwithstanding that the election has become effective and irrevocable as
provided in Section 4.1.

    

    4.4  Allocation
to Accounts. Deferred
amounts related to Compensation which would otherwise have been paid by a
participating Company shall be credited to the employee's account as of the date
the Compensation would otherwise have been paid. Deferred amounts related to
Compensation which would otherwise have been distributed in Pacific Telesis Group
common shares shall be credited to the employee's account as deferred Pacific
Telesis Group shares as of the date such Pacific Telesis Group shares would
otherwise have been transferred to the employee.

     

    SECTION
5. Company
Match.

    

    5.1  Eligibility for Company
Match. An employee who (A) elects to defer Compensation under the Plan
for a calendar year, and (B) has made the maximum elective deferral under the
Savings Plan permitted by section 402(g) of the Code for such calendar year
(except to the extent that a further limitation is required by section 401(k)(3)
of the Code), shall be eligible to have additional amounts based on Compensation
deferred pursuant to this Plan ("Company Match") credited to his or her account
hereunder.

    

    5.2  Amount of Company
Match. The Company Match credited to an employee's account under this
Plan with respect to Compensation deferred during a calendar year shall be equal
to

    

    (A) the
amount of Compensation deferred into the employee's Plan account, multiplied
by

    

    (B) the
percentage in effect for that calendar year at which the employee's Basic
Contributions to the Savings Plan are matched by employing Company
contributions;

    provided,
however, that the maximum Company Match credited to the employee's account shall
not exceed

    

    (C) 6% of the
employee's Savings Plan Salary, multiplied by

    

    (D) the
percentage in effect for that calendar year at which the employee's Basic Contributions to the Savings Plan are matched
by employing Company contributions,
reduced by

    

    (E) the total
amount of matching Company contributions credited to the employee's account
under the Savings Plan.

    

    For purposes of determining the amount of Compensation
deferred into the employee's Plan
account, deferred Pacific Telesis Group shares shall be valued by multiplying
the number of shares deferred by the Price of Pacific Telesis Group common
shares on the deferral date.

    

    5.3 
Allocation to
Account. Until fully credited for the calendar year, and subject to the
delay provided in Section 5.4, Company Match shall be credited to an employee's
account under this Plan as of each date that deferred Compensation is credited
to the employee's account under this Plan.

    

    5.4   Maximum Pre-Tax Savings Plan
Deferrals Required. No Company Match shall be credited to an employee's
account for a calendar year until the employee has made before-tax contributions
under the Savings Plan equal to the maximum elective deferrals permitted under
section 402(g) of the Code, as further limited by section 401(k)(3) of the Code.
Thereafter, the employee's account shall immediately be credited with an amount
equal to the Company Match that would otherwise have been previously credited
under Section 5.3.

    

    5.5  
Savings Plan
Provisions Prevail.. The provisions of
this Section 5 shall not limit or affect the application of the provisions
regarding matching Company contributions in the Savings Plan, which shall take
precedence over the provisions of this Section 5.

     

    SECTION
6.  Earnings on
Accounts.

    

    6.1  Interest Allocations to
Accounts. Deferred amounts related to Compensation which would otherwise
have been paid in cash shall bear interest from the date the Compensation would
otherwise have been paid. Interest shall be applied to Company Match credited to
an employee's account as if such Company Match had been credited to the
employee's account at the same time that the related amounts of Compensation
deferred hereunder were credited to the employee's account. The interest
credited to an account shall be compounded annually at the end of each calendar
year.

    

    6.2  Rate of Interest. The
rate of interest to be applied to account balances for a calendar year shall be
determined by the Committee from time to time, and promptly communicated to
eligible employees in advance of its application, but in no event shall (A) the
interest rate be decreased below the average 10-Year Treasury note rate, (B) any
reduction apply to interest already credited to Plan accounts for periods prior
to the Committee's action, or (C) any interest rate previously guaranteed for a
given period and communicated to eligible employees be reduced during such
period except as may be equitable in light of any change in applicable law which
substantially increases the burden to the participating Companies of paying such
guaranteed interest.

    

    6.3   Retroactive Limitation of
Interest Accrual in Case of Early Separation. Notwithstanding Section
6.2, an employee whose Separation occurs before he or she attains age 55 will
receive interest on all deferred cash Compensation and Company Match based on
the average 10-Year Treasury note rate for all years of participation in this
Plan, rather than tt rate of interest established by the Committee for any
particular calendar year.

    

    6.4   Dividends and Adjustments
for Pacific Telesis Group Shares. An employee's account credited with
deferred Pacific Telesis Group shares shall be credited on each subsequent
dividend payment date for Pacific Telesis Group shares with an amount equivalent
to the dividend payable on the number of Pacific Telesis Group common shares
equal to the number of deferred Pacific Telesis Group shares in the employee's
account on the record date for such dividend. Such amount shall then be
converted to a number of additional deferred Pacific Telesis Group shares,
determined by dividing such amount by the price of Pacific Telesis Group common
shares on the dividend payment date. For purposes of the preceding sentence, the
price of Pacific Telesis Group common shares as of a particular date shall be
the average of the daily high and low sale prices of Pacific Telesis Group
common shares on the New York Stock Exchange ("NYSE") for the period of five
trading days ending on such date, or the period of five trading days immediately
preceding such date if the NYSE is closed on the date. In the event of any
change in outstanding Pacific Telesis Group common shares by reason of any stock
dividend or split, recapitalization, merger, consolidation, combination or
exchange of shares or other similar corporate change, the Committee shall make
such adjustments, if any, that it deems appropriate in the number of deferred
Pacific Telesis Group shares then credited to an employee's account. Any and all
such adjustments shall be conclusive and binding upon all parties
concerned.

     

    SECTION
7. Distribution.

    

    7.1   Distribution
Elections. At the time an eligible employee makes an election to defer
Compensation otherwise payable for services performed in a calendar year, the
employee also shall make an election with respect to the distribution (during
the employee's lifetime and in the event of the employee's death) of such
deferred Compensation and Company Match and earnings credited to the employee's
Plan account with respect to such deferred Compensation. Subject to the
provisions on Hardship distributions in Section 7.6.3 and the provisions on
Options for Distribution in the Event of Death in Section 7.3, distribution
elections shall become effective and irrevocable at the same times the election
to defer such Compensation becomes effective and irrevocable under Section
4.1.

    

    7.2   Options for Distribution
During Life. An employee may elect to receive the amounts credited to the
employee's account in one payment or in a number of monthly or annual
installments (over a period not exceeding 15 years) calculated in accordance
with procedures established by the Plan Administrator. As specified by the
employee, distributions shall commence as soon as practicable after the first
day of the calendar quarter next following the employee's

    

    (A) Separation;

    

    (B) attainment
of a specified age between 59 1/2 and 70;

    

    (C) the
earlier of attainment of a specified age not less than age 59 1/2 or Separation;
or

    

    (D) the
earlier of age 70 or a specified number of years (maximum of 5) after
Separation.

    

    7.3  Options for Distribution In
the Event of Death. An employee may elect that, in the event the employee
should die before full payment of all amounts credited to the employee's
account, the balance of the deferred account shall be distributed to the
beneficiary or beneficiaries designated by the employee

    

    (A) in one
payment;

    

    (B) in a
number of monthly or annual installments (over a period not exceeding 10 years),
calculated in accordance with procedures established by the Plan Administrator;
or

    

    (C) by a
continuation of the monthly or annual installment distributions elected under
Section 7.2.

    

    A single
payment or first installment elected under paragraphs (A) or (8) of this Section
shall be paid as soon as practicable after the first day of the next calendar
quarter beginning after the employee's death. If an employee who has elected to
continue installment distributions under paragraph (C) of this Section dies
before commencement of such distributions, the distributions shall commence in
accordance with the employee's election under Section 7.2, using as any
specified age the date the employee would have attained that age if he or she
had continued to live. If no election has been made under this Section 7.3, the
balance of the deferred account shall be distributed in one payment. If no
beneficiary designation has been made, distribution shall be made to the estate
of the employee.

    

    At any
time an employee who is a participant in the Pacific Telesis Group 1996
Executive Deferred Compensation Plan may revoke all elections made with respect
to the time and form of distribution of all remaining amounts credited to the
employee's account in the event of death, and make an irrevocable election
directing that all remaining amounts credited to the employee's account in the
event of death shall be distributed at the same time and in the same manner as
such employee has elected with respect to distribution of his or her account
under the Pacific Telesis Group 1996 Executive Deferred Compensation Plan in the
event of death. At any time an employee who is not a participant in the Pacific
Telesis Group 1996 Executive Deferred Compensation Plan may revoke all elections
made with respect to the time and form of distribution of all remaining amounts
credited to the employee's account in the event of death, and make an
irrevocable election directing that all remaining amounts credited to the
employee's account in the event of death shall be distributed at the same time
and in the same form, in accordance with one of the above methods described in
(A), (B) or (C) above. Such election shall be effective upon receipt by the Plan
Administrator or his or her designee.

    

      7.4   Form of Elections.
Distribution elections and beneficiary designations shall be made in writing in
the form of a document or documents approved by the Plan Administrator, executed
by the employee and filed with the Plan Administrator or his or her designee. An
employee may designate one or more individuals or a trust as his or her
beneficiary, and may change the beneficiary designation at any time, effective
upon receipt by the Plan Administrator or his or her designee.

    

      7.5  Form and Timing of
Distribution. Amounts credited to an employee's Plan account as cash plus
accumulated interest, less applicable withholding taxes, shall be distributed in
cash. Amounts credited as deferred Pacific Telesis Group shares, less applicable
withholding taxes, shall be distributed in the form of whole Pacific Telesis
Group common shares, plus cash for any fractional share. Installment
distributions subsequent to the first installment shall be paid on or about the
anniversary date of the first annual installment or on or about the first day of
each succeeding month, whichever is applicable, until the entire balance of the
employee's Plan account is paid. Account balances held pending distribution
shall continue to be credited with interest or additional deferred Pacific
Telesis Group shares, as applicable, determined in accordance with Section 6.
Monthly distribution payments within a single calendar year will be uniform, but
the total amount paid each year will vary with changes in the yield on the
account during the prior year.

    

      7.6  Distributions Not in Accordance with Elections.

    

      
7.6.1  Postponement of
Payment. With respect to Plan account balances accrued pursuant to
elections filed after February 17, 1993, the Committee may postpone payment of
Plan benefits to an employee (A) who, in the year Plan benefits would otherwise
be payable, is a "covered employee" for purposes of the $1 million limitation on
deductible compensation under Section 162(m) of the Internal Revenue Code, and
(B) whose compensation for the year in which Plan benefits would otherwise be
payable would, but for such postponement, exceed the $1 million limit on
deductibility. In addition, notwithstanding an election pursuant to Section 7.2,
at the sole discretion of the Committee, in the event an employee's Separation
is on account of total and permanent disability, the Committee may postpone
payment of benefits to such employee to commence in a year later than the year
in which his or her Plan benefits would otherwise be payable, provided that no
such postponement shall extend beyond the earlier of (a) 10 years from the date
of Separation or (b) the year in which such employee attains age
65.

    

    Notwithstanding
the foregoing, the following shall apply with respect to Plan participants who,
as of December 31, 2004, were employed by an affiliate of AT&T Inc. and who
had not attained age fifty-five (55):

    

    7.6.1 Postponement of
Payment.  If the Committee reasonably anticipates that the
payment of any or all of an employee’s Plan benefits, if made as scheduled,
would not be deductible due to the application of Code Section 162(m), the
distribution of such employee’s Plan benefits may be delayed to (A) the end of
the employee’s first taxable year in which the Committee reasonably anticipates
(or should reasonably anticipate) that the deduction of such payment would not
be barred by application of Code Section 162(m), or (B) the 15th day of
the third month of the year following the year of the employee’s separation from
service; provided, however, this delayed payment provision shall apply only to
the extent all payments of non-qualified deferred compensation from plans
sponsored by AT&T Inc. (or any affiliate) are similarly
delayed.

    

    7.6.2  Immediate Single
Payment. Notwithstanding an election pursuant to Section 7.2, at the sole
discretion of the Committee the entire amount then credited to the employee's
account shall be paid as soon as practicable in a single payment if an employee
is involuntarily terminated by his or her Company or becomes employed by a
governmental agency having jurisdiction over the activities of Pacific Telesis
Group or any of its Affiliates.

    

    Notwithstanding
the foregoing, the following shall apply with respect to Plan participants who,
as of December 31, 2004, were employed by an affiliate of AT&T Inc. and who
had not attained age fifty-five (55):

    

    7.6.2 Immediate Single
Payment.  Notwithstanding an election pursuant to Section 7.2,
at the sole discretion of the Committee the entire amount then credited to the
employee's account shall be paid as soon as practicable in a single payment if
an employee becomes employed by a governmental agency having jurisdiction over
the activities of Pacific Telesis Group or any of its Affiliates to the extent
(A) necessary for any employee in the executive branch of the United States
government to comply with an ethics agreement with the Federal government, or
(B) reasonably necessary to avoid the violation of an applicable Federal, state
or local ethics law or conflicts of interest law (including where such payment
is reasonably necessary to permit the employee to participate in activities in
the normal course of the employee’s position in which the employee would
otherwise not be able to participate under an applicable rule).  For
purposes of this section, a payment is reasonably necessary to avoid the
violation of a Federal, state or local ethics law or conflicts of interest law
if the payment is a necessary part of a course of action that results in
compliance with a Federal, state or local ethics law or conflicts of interest
law that would be violated absent such course of action, regardless of whether
other actions would also result in compliance with Federal, state or local
ethics law or conflicts of interest law.

    

    7.6.3 Hardship
Distribution. Upon receipt of a written request made by or on behalf of
an employee, the Committee in its sole discretion may authorize a Hardship
distribution from the employee's Plan account. For purposes of the Plan,
"Hardship" means an unanticipated emergency that is caused by an event beyond
the control of the employee and that would result in severe financial hardship
if early distribution were not permitted. As determined by the Committee in its
sole discretion, Hardship may include one or more of the following:

    

    (A) A sudden
and unexpected illness or accident of the employee;

    

    (B) Extraordinary
and unreimbursed medical or hospital expenses incurred by the employee or a
member of his or her family or a relative;

    

    (C) The loss
of the employee's property due to casualty; or

    

    (D) Any other
similar unforeseeable emergency that is caused by and event beyond the control
of the employee and would impose a severe financial hardship if early
distribution were not permitted.

    

    A
distribution based on Hardship cannot exceed the amount required to meet the
immediate financial need created by the Hardship and not reasonably available
from other resources of the employee, including reimbursement or compensation by
insurance or otherwise. However, an employee shall not be required to request a
hardship distribution from the Savings Plan in order to receive a Hardship
distribution under this Plan.

    

    Notwithstanding
the foregoing, the following shall apply with respect to Plan participants who,
as of December 31, 2004, were employed by an affiliate of AT&T Inc. and who
had not attained age fifty-five (55):

     

        7.6.3 Unforeseeable Emergency
Distribution.  Upon receipt of a written request made by or on
behalf of an employee, the Committee in its sole discretion may authorize a
distribution from the employee's Plan account in the event of an unforeseeable
emergency. For purposes of the Plan, "unforeseeable emergency" means (A) a
severe financial hardship to the employee resulting from an illness or accident
of the employee, the employee’s spouse, the employee’s beneficiary, or the
employee’s dependent (as defined in Code Section 152 without regard to Code
Section 152(b)(1), (b)(2) and (d)(1)(B)), (B) loss of he employee’s property due
to casualty, or (C) other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the control of the employee.  As
determined by the Committee in its sole discretion, Hardship may include one or
more of the following:

    

    
      	
               
      

            	
              (A)

            	
              the
      imminent foreclosure of or eviction from the employee’s primary residence;
      ;

            

    

    
      	
               
      

            	
              (B)

            	
              the
      need to pay for medical expenses, including non-refundable deductibles, as
      well as for the costs of prescription drug medication;
  or

            

    

    
      	
               
      

            	
              (C)

            	
              the
      need to pay for the funeral expense of a spouse, a beneficiary, or a
      dependent (as defined in Code Section 152 without regard to Code Section
      152(b)(1), (b)(2) and (d)(1)(B))

            

    

    

    A
distribution on account of an unforeseeable emergency may not be made to the
extent that such emergency is or may be relieved through reimbursement or
compensation from insurance or otherwise, or by liquidation of the employee’s
assets, to the extent the liquidation of such assets would not cause severe
financial hardship. Distributions based on an unforeseeable emergency cannot
exceed the amount reasonably necessary to meet the emergency need (which may
include amounts necessary to pay any Federal, state or local income taxes or
penalties reasonably anticipated to result from the
distribution).  However, an employee shall not be required to request
a  hardship distribution or unforeseeable emergency distribution that
might be available from the 401(k) plan or other nonqualified deferred
compensation plan in which the employee participates.

    

    

    The
following two provisions shall apply with respect to Plan participants who, as
of December 31, 2004, were employed by an affiliate of AT&T Inc. and who had
not attained age fifty-five (55):

     

        7.6.4 Distributions to Specified
Employees.   Notwithstanding any other provision of the
Plan to the contrary (other than Plan Section 7.6.2), if an employee is a
“specified employee” within the meaning of Treasury Regulation Section
1.409A-1(i), distribution shall be made in accordance with the employee’s
distribution election, provided, however, that no distribution shall be made to
such employee on account of separation from service before the date that is six
(6) months after the date of separation from service (or, if earlier, the date
of death of such employee).

    

        7.6.5 Distributions Upon Income
Inclusion Under Code Section 409A.   Distributions to an
employee may commence at any time the Plan fails to meet the requirements of
Code Section 409A and the regulations issued thereunder, as applicable to and
with respect to such employee; provided, however, the amount of such
distribution shall not exceed the amount required to be included in income as a
result of the failure to comply with such requirements.

    

    7.7   Payment Obligation. The
obligation to distribute benefits under the Plan shall be borne primarily by the
last Company to employ an employee in a position eligible to participate in the
Plan immediately prior to the distribution. A Company's withdrawal from
participation in the Plan shall not affect that Company's liability hereunder.
If for any reason the primarily liable Company fails to make timely payment of a
amount due under the Plan, Pacific Telesis Group shall be secondarily liable for
the obligation. Notwithstanding the foregoing, Pacific Telesis Group shall be
solely and exclusively responsible for providing the benefits accrued under the
Plan by a Post-Separation AirTouch Employee.

     

    SECTION
8. Administration:
Claims and Review Procedures.

    

    8.1   
 Plan
Administrator. The Plan Administrator shall be the Executive Vice
President, Human Resources Department of Pacific Telesis Group. The Plan
Administrator shall have the authority to administer and interpret the Plan,
including sole discretion to determine the rights of an employee or beneficiary
under the Plan, and to authorize disbursements under the Plan, except for
decisions expressly reserved by the Plan for the Committee or for the Board of
Directors of Pacific Telesis Group or of an Affiliate.

    

    8.2   
 Initial Claim
Unnecessary. No claim for benefits shall be required for commencement of
distributions in accordance with an employee's election under Sections 7.2 and
7.3 of the Plan. The obligation of a Company to make distributions under the
Plan shall not be affected by any action or inaction (on the part of an
employee, his beneficiaries or any Company) with respect to amounts owed,
including but not limited to the failure to make timely demand, the granting of
extensions of time or other indulgences, the failure to make timely payment or
the failure to give notices other than those prescribed in Section
8.3.

    

    8.3     Review of Adverse
Decisions. An employee or beneficiary who disagrees with a decision by
the Plan Administrator relating to the payment of benefits under the Plan may
submit a claim requesting Plan benefits in writing to the Committee, which shall
respond in writing. A claim shall be deemed denied unless the response is sent
within 90 days (or within 180 days, if the Committee extends the time to respond
by notifying the claimant in writing of the special circumstances requiring an
extension and the date by which the response is expected). If the claim is
denied in whole or part, the response shall state (A) the specific reasons,
making specific reference to pertinent provisions of the Plan; (B) at additional
information, if any, would help perfect the claim for benefits; and (C) what
steps the claimant must take to submit the claim for review: Within 60
days after the date of a denial, a claimant may file a written request for the
Pacific Telesis Group Board of Directors to review the denial. Notwithstanding
Section 8.2 of the Plan, such request for review must be made in a timely manner
for the purpose of seeking any further review of a decision or determining any
entitlement to a benefit under the Plan. The Board of Directors shall notify the
claimant in writing of the review decision, specifying the reasons for the
decision and the Plan provisions on which it is based. A claim shall be deemed
denied unless the decision on appeal is sent within 60 days (or within 120 days,
if the Board extends the time to respond by notifying the claimant in writing).
The Plan Administrator, Committee and Board shall retain such right, authority
and discretion as are provided or not expressly limited in section 503 of ERISA
and the regulations thereunder and, if the Committee denies a claim upon review,
the claimant shall have such further rights of review as are provided
therein.

     

    SECTION
9. Amendment and
Termination.

    

    The
Pacific Telesis Group Board of Directors may at any time make changes in the
Plan or terminate the Plan, but such changes or termination shall have
prospective effect only and shall not adversely affect the rights of any
employee, without his or her consent, to any benefit under the Plan to which
such employee was entitled prior to the effective date of such change or termination. Any termination
of the Plan shall not terminate the
deferral of Compensation previously
deferred into a Plan account, but may prevent the deferral of Compensation not
yet earned and the crediting of Company Match thereon, notwithstanding the
employee's prior election to defer such Compensation. Changes in the interest
rate applied to account balances which are made by the Committee in accordance
with Section 6.2 of the Plan shall not be deemed to be Plan amendments,
notwithstanding that they apply to Compensation previously earned and deferred.
The Executive Vice President, Human Resources Department of Pacific Telesis
Group, with the approval of the Executive Vice President and General Counsel of
Pacific Telesis Group, shall be authorized to make minor or administrative
changes to the Plan.

     

    SECTION
10. Definitions.

    

    For
purposes of this Plan, the following words shall have the meaning so defined
unless the context clearly indicates otherwise:

    

    10.1    "Affiliate" as the
term relates to Pacific Telesis Group or to AirTouch Communications (formerly
"PacTel Corporation"), means a subsidiary of or other entity that controls, is
controlled by, or is under common control with Pacific Telesis Group or AirTouch
Communications, as the case may be. As used herein, "control" means the
possession, directly or indirectly, of the power to direct or use the direction
of the management and policies of such entity, whether through ownership of
voting securities or other interests, by contract or otherwise.

    

    10.2    "AirTouch Group"
means AirTouch Communications (or its successor) and its Affiliates immediately
after the total and complete separation of AirTouch Communications from Pacific
Telesis Group.

    

    10.3     "Committee" shall
mean the Compensation and Personnel Committee of the Board of Directors of
Pacific Telesis Group.

    

    10.4     "Company" shall mean
Pacific Telesis Group, Pacific Bell or any other corporation which is an
Affiliate of Pacific Telesis Group. Prior to April 1, 1994, Company also
included PacTel Corporation (now "AirTouch Communications") and any other
corporation; which was an Affiliate of PacTel Corporation.

    

    10.5    
"Effective
Date" means January 1, 1985, the effective date of the Plan.

    

    10.6      "Officer' means an
officer of a Company, as determined by the Plan

    Administrator,
but the term shall not include Assistant Secretary, Assistant Treasurer,
Assistant Comptroller or any other assistant officer.

    

    10.7      "Post-Separation AirTouch
Employee" means an employee who, immediately after the total and complete
separation of PacTel Corporation from Pacific Telesis Group, was employed by a
member of the AirTouch Group.

    10.8      "Savings Plan" means
the Pacific Telesis Group Supplemental Retirement and Savings Plan for Salaried
Employees. Prior to April 1, 1994, "Savings Plan" also means the PacTel
Corporation Retirement Plan (for employees who were eligible to participate
therein).

    

    10.9       "Savings Plan Salary"
means "Salary" as defined in the Pacific Telesis Group Supplemental Retirement
and Savings Plan for Salaried Employees and, prior to April 1, 1994, "Compensation"
as defined in the PacTel Corporation Retirement Plan, whichever is applicable to
the employee, without reduction for deferrals of salary under this Plan and
without regard to the limit on compensation under section 401(a)(17) of the
Code. If an eligible employee is employed by a participating Company for only a
portion of a calendar year or is on a leave of absence for a portion of a
calendar year, the employee's Savings Plan Salary is prorated to reflect only
the period during which the employee was actively employed by a participating
Company.

    

    10.10      "Separation" means
retirement or termination from all employment with Pacific Telesis Group or its
Affiliates. With respect to a Post-Separation AirTouch Employee, "Separation"
means retirement or termination from all employment with the AirTouch Group
without employment by Pacific Telesis Group or its
Affiliates.

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