REG - AT & T Inc. - 1st Quarter Results 2017 <Origin Href="QuoteRef">T.N</Origin> - Part 5

AT&TAnnouncement

23/05/2017 15:40

- Part 5: For the preceding part double click  ID:nRSW0123Gd 

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. 
 
1 
 
Business Day.  Any day during regular business hours that AT&T is open for business. 
 
Change in Control.  With respect to AT&T's direct and indirect ownership of an Employer, a "Change in the effective control
of a Corporation," as defined in Treasury Regulation Section 1.409A-3(i)(5)(vi)(A)(1), regardless of whether the Employer
is a corporation or non corporate entity as permitted by the regulation, and using "50 percent" in lieu of "30 percent" in
such regulation.  A Change in Control will not apply to AT&T itself. 
 
Chief Executive Officer.  The Chief Executive Officer of AT&T Inc. 
 
Code.  References to the Code shall be to provisions of the Internal Revenue Code of 1986, as amended, including
regulations promulgated thereunder and successor provisions.  Similarly, references to regulations shall include amendments
and successor provisions. 
 
Committee.  The Human Resources Committee of the Board of Directors of AT&T Inc. 
 
Disability.  Absence of an Employee from work with an Employer under the relevant Employer's disability plan. 
 
Eligible Employee.  An Employee who: 
 
(a) is a full or part time, salaried Employee of AT&T or an Employer in which AT&T has a direct or indirect 100% ownership
interest and who is on active duty or Leave of Absence (but only while such Employee is deemed by the Employer to be an
Employee of such Employer); 
 
(b) is, as determined by AT&T, a member of Employer's "select group of management or highly compensated employees" within
the meaning of the Employee Retirement Income Security Act of 1974, as amended, and regulations thereunder ("ERISA"), which
is deemed to include each Officer Level Employee; and 
 
(c) has an employment status which has been approved by AT&T to be eligible to participate in this Plan or is an Officer
Level Employee. 
 
Notwithstanding the foregoing, AT&T (the Committee with respect to Officer Level Employees) may, from time to time, exclude
any Employee or group of Employees from being deemed an "Eligible Employee" under this Plan. 
 
In the event a court or other governmental authority determines that an individual was improperly excluded from the class
of persons who would be permitted to make Employee Contributions during a particular time for any reason, that individual
shall not be permitted to make such contributions for purposes of the Plan for the period of time prior to such
determination. 
 
Employee.  Any person employed by an Employer and paid on an Employer's payroll system, excluding persons hired for a fixed
maximum term and excluding persons who are neither citizens nor permanent residents of the United States, all as determined
by AT&T.    For purposes of this Plan, a person on Leave of Absence who otherwise would be an Employee shall be deemed to
be an Employee. 
 
2 
 
Employee Contributions.  Amounts credited to a Share Deferral Account pursuant to Section 4.1 (Election to Make
Contributions) of the Plan. 
 
Employer.  AT&T Inc. or any of its Subsidiaries. 
 
Exercise Price.  The price per share of Stock purchasable under an Option. 
 
Fair Market Value or FMV.  In valuing Stock or any other item subject to valuation under this Plan, the Committee may use
such index or measurement as the Committee may reasonably determine from time to time, and such index or measurement shall
be the FMV of such Stock or other item, provided that for purposes of determining the Exercise Price of Stock Options, the
Committee shall use a value consistent with the requirements of Section 409A.  In the absence of such action by the
Committee, FMV means, with respect to Stock, the closing price on the New York Stock Exchange ("NYSE") of the Stock on the
relevant date, or if on such date the Stock is not traded on the NYSE, then the closing price on the immediately preceding
date such Stock is so traded. 
 
Leave of Absence.  Where a person is absent from employment with an Employer on a leave of absence, military leave, sick
leave, or Disability where the leave is given in order to prevent a break in the continuity of term of employment, and
permission for such leave is granted (and not revoked) in conformity with the rules of the Employer that employs the
individual, as adopted from time to time, and the Employee is reasonably expected to return to service.  Except as set
forth below, the leave shall not exceed six (6) months for purposes of this Plan, and the Employee shall Terminate
Employment upon termination of such leave if the Employee does not return to work prior to or upon expiration of such six
(6) month period, unless the individual retains a right to reemployment under law or by contract.  A twenty-nine (29) month
limitation shall apply in lieu of such six (6) month limitation if the leave is due to the Employee being "disabled"
(within the meaning of Treasury Regulation §1.409A-3(i)(4)).  A Leave of Absence shall not commence or shall be deemed to
cease under the Plan where the Employee has incurred a Termination of Employment. 
 
Officer Level Employee.  Any executive officer of AT&T, as that term is used under the Securities Exchange Act of 1934, as
amended, and any Employee that is an "officer level" Employee for compensation purposes as shown on the records of AT&T. 
 
Options or Stock Options.  Options to purchase Stock issued pursuant to this Plan. 
 
Participant.  An Employee or former Employee who participates in this Plan. 
 
Plan Year.  Each of the following shall be a Plan Year:  the period January 1, 2005, through January 15, 2006; the period
January 16, 2006, through December 31, 2006; and, for all later Plan Years, it is defined as the period from January 1
through December 31. 
 
3 
 
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. 
 
4 
 
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(a) 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 46,000,000.  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 
 
5 
 
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 
 
6 
 
notify the Claimant in writing within the initial ninety (90)-day period and explain the special circumstances that require
the extension and state the date by which the AT&T Executive Compensation Administration Department expects to render its
decision on the claim. If this notice is provided, the AT&T Executive Compensation Administration Department may take up to
an additional ninety (90) days (for a total of one hundred eighty (180) days after receipt of the claim) to render its
decision on the claim. 
 
If the claim is denied by the AT&T Executive Compensation Administration Department, in whole or in part, the AT&T
Executive Compensation Administration Department shall provide a written decision using language calculated to be
understood by the Claimant and setting forth:  (i) the specific reason or reasons for such denial; (ii) specific references
to pertinent provisions of this Plan on which such denial is based; (iii) a description of any additional material or
information necessary for the Claimant to perfect his or her claim and an explanation of why such material or such
information is necessary; (iv) a description of the Plan's procedures for review of denied claims and the steps to be taken
if the Claimant wishes to submit the claim for review; (v) the time limits for requesting a review of a denied claim under
this section and for conducting the review under this section; and (vi)  a statement of the Claimant's right to bring a
civil action under Section 502(a) of ERISA if the claim is denied following review under this section . 
 
(c)       Request for Review. Within sixty (60) days after the receipt by the Claimant of the written decision on the claim
provided for in this section, the Claimant may request in writing that the Committee review the determination of the AT&T
Executive Compensation Administration Department.  Such request must be addressed to the Committee at the address for
giving notice in this Plan.  To assist the Claimant in deciding whether to request a review of a denied claim or in
preparing a request for review of a denied claim, a Claimant shall be provided, upon written request to the Committee and
free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claim. 
The Claimant or his or her duly authorized representative may, but need not, submit a statement of the issues and comments
in writing, as well as other documents, records or other information relating to the claim for consideration by the
Committee.  If the Claimant does not request a review by the Committee of the AT&T Executive Compensation Administration
Department's decision within such sixty (60)-day period, the Claimant shall be barred and stopped from challenging the
determination of the AT&T Executive Compensation Administration Department. 
 
(d)       Review of Decision.  Within sixty (60) days after the Committee's receipt of a request for review, the
Administrator will review the decision of the AT&T Executive Compensation Administration Department.  If the Committee
determines that special circumstances require an extension of time beyond the initial sixty (60)-day review period, the
Committee shall notify the Claimant in writing within the initial sixty (60)-day period and explain the special
circumstances that require the extension and state the date by which the Committee expects to render its decision on the
review of the claim.  If this notice is provided, the Committee may take up to an additional sixty (60) days (for a total
of one hundred twenty (120) days after receipt of the request for review) to render its decision on the review of the
claim. 
 
7 
 
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 
 
8 
 
last day such an election may be made) to contribute on a pre-tax basis, through payroll deductions, any combination of the
following: 
 
(1)  From 6% to 30% (in whole percentage increments) of the Participant's monthly Base Compensation, other than Annual
Bonus, during the calendar year (the Plan Year for such contributions) following the calendar year of such election.  The
Employee Contributions shall be used to acquire Share Units to be credited to the Share Deferral Account for that Plan
Year. 
 
(2)  Up to 95% (in whole percentage increments or limited to the target amount) of a Short Term Incentive Award, or from 6%
to 30% (in whole percentage increments) of Annual Bonus, in each case such contributions shall be made during the second
calendar year (which is the Plan Year for such contributions) following the year of such election, except that in 2008 a
separate election may be made with respect to contributions to be made in 2009. An Employee may make such an election with
respect to the type of Award (Short Term Incentive Award or Annual Bonus) that the Employee is under as of the time the
Employee's eligibility to make such election is determined.  If because of a promotion or otherwise, the Employee receives
a different type of Award instead of, or in partial or full replacement for, the type of Award subject to the Employee's
election for the relevant Plan Year, the election will apply to the other Award as well, including but not limited to any
individual discretionary award related thereto. 
 
(b)  The Committee may permit an Eligible Employee to make an election to purchase Share Units under this Plan with
compensation other than Base Compensation or Short Term Incentive Awards on such terms and conditions as such Committee may
permit from time to time, provided that any such election is made in accordance with Section 409A of the Code.  In no event
shall an acquisition of Share Units pursuant to this paragraph (b) or pursuant to the conversion of a right to receive
Stock into Share Units (such as through a distribution of Stock under the 2001 Incentive Plan) result in the crediting of
an AT&T Matching Contribution or Options. 
 
(c) Notwithstanding anything to the contrary in this Plan, no election shall be effective to the extent it would permit an
Employee Contribution or distribution to be made that is not in compliance with Section 409A of the Code.  To the extent
such election related to Employee Contributions that complied with such statute and regulations thereunder, that portion of
the election shall remain valid, except as otherwise provided under this Plan. 
 
(d)  To the extent permitted by Section 409A of the Code, AT&T may refuse or terminate, in whole or in part, any election
to purchase Share Units in the Plan at any time; provided, however, that only the Committee may take such action with
respect to persons who are Officer Level Employees. 
 
(e)  In the event the Participant takes a hardship withdrawal pursuant to Treasury Regulation §1.401(k)-1 from a benefit
plan qualified under the Code and sponsored by an Employer, any election to make Employee Contributions by such Participant
shall be cancelled on a prospective basis, and the Participant shall not be permitted to make a new election with respect
to Employee Contributions that would be contributed during the then current and immediately following calendar year. 
 
9 
 
4.2 Purchase of Share Units. 
 
(a)  Employee Contributions (as well as any corresponding AT&T Matching Contributions) shall be made pursuant to a proper
election, only during the Participant's lifetime; provided, however, with respect to Employee Contribution elections made
prior to 2007, the Employee must remain an Eligible Employee while making any such contributions.  In the event of a Change
in Control of an Employer, subsequent compensation from the Employer may not be contributed to the Plan.  The Employer may
continue the then current elections of the participants under a subsequent plan in order to comply with applicable tax
laws. 
 
(b)  The number of Share Units purchased by a Participant during a calendar month shall be found by dividing the
Participant's Employee Contributions during the month by the FMV of a share of Stock on the last day of such month. 
 
(c)  A contribution to the Plan shall be made when the compensation - from which the contribution is to be deducted - is to
be paid ("paid," as used in this Plan, includes amounts contributed to the Plan that would have been paid were it not for
an election under this Plan), as determined by the relevant Employer.   The Committee may modify or change this paragraph
(c) from time to time. 
 
4.3 Reinvestment of Dividends. 
 
In the month containing a record date for a cash dividend on Stock, each Share Deferral Account shall be credited with that
number of Share Units equal to the declared dividend per share of Stock, multiplied by the number of Share Units held in
such Share Deferral Account as of such record date, and dividing the product by the FMV of a share of Stock on the last day
of such month. 
 
Article 5 - AT&T Matching Contributions 
 
5.1 AT&T Match. 
 
(a) Each month AT&T shall credit the Participant's relevant Share Deferral Account with  the number of "Matching Share
Units" found by taking eighty percent (80%) of the Participant's Employee Contributions from Base Compensation made to this
Plan and to the Cash Deferral Plan during the month with respect to the first six percent (6%) of the Participant's monthly
Match Eligible Compensation (as defined below) and dividing the resulting figure by the FMV of the Stock on the last day of
such month (such resulting amount shall be the "Matching Contribution").  The monthly "Match Eligible Compensation" shall
be the sum of: 
 
(1) the monthly Employee Contributions from Base Compensation to this Plan and the Cash Deferral Plan (in the aggregate,
"Deferred BC"), plus 
 
(2) the amount of the Participant's monthly Base Compensation in excess of the Deferred BC ("Non-Deferred BC") but only to
the extent such monthly Non-Deferred BC, when aggregated with the Participant's total Non-Deferred BC for prior months in
such Plan Year, as determined by the relevant Employer, exceeds the limit in effect under Section 401(a)(17) of the Code
applicable with respect to such Plan Year. 
 
10 
 
The foregoing formula shall apply regardless of whether or not the Participant makes contributions to a 401(k) plan. 
 
A Participant may receive Matching Share Units in a Share Deferral Account for a particular form of compensation only if
the Participant is then making contributions to the same Share Deferral Account; provided, however, this condition shall
not apply for purposes of determining under Section 5.1(a)(2) whether the limit described therein has been reached. 
 
As provided in the definition of Share Deferral Account, Matching Share Units shall be credited to the respective Share
Deferral Account that is related to the same form of Employee Contributions (either (1) Base Compensation excluding Annual
Bonus or (2) Annual Bonus). 
 
(b) In the event the Participant is not eligible to earn pension accruals under a pension plan offered by AT&T or a
Subsidiary and either (1) first becomes an Employee on or after January 1, 2015, or (2) the Participant Terminates
Employment on or after January 1, 2015, and the Participant is subsequently rehired as an Employee, then the "eighty
percent (80%)" reference in section 5.1(a) shall be replaced with "one hundred percent (100%)" for purposes of determining
the number of Matching Share Units to which the Participant would be entitled pursuant to contribution elections made after
such hiring or rehiring. 
 
(c) In the sole discretion of the Committee, in the event the Committee reduces the number of Options that AT&T issues for
each Share Unit purchased, the Committee may provide for the contribution of a Bonus Matching Contribution on such terms as
the Committee determines.  Such Bonus Matching Contribution may not exceed 20% of the Participant's Employee Contributions
for the month.  The Bonus Matching Contribution shall be subject to such terms and conditions as required by the Committee
and, unless otherwise provided by the Committee, to the same distribution requirements as Matching Contributions.  Pursuant
to the foregoing authority and until otherwise provided by the Committee, effective for Share Accounts created pursuant to
Employee Contribution elections where such elections are made after January 1, 2010,  AT&T shall make Bonus Matching
Contributions equal to 20% of the Participant's monthly Employee Contributions from each of Base Compensation and Short
Term Incentive Award (not to exceed the target amount of such award, which limit shall be pro rated for any partial year
award).  Such Bonus Matching Contribution shall be used to purchase that number of Matching Share Units found by dividing
the relevant Bonus Matching Contribution for the month by the FMV of the Stock on the last day of such month. 
 
5.2          Distribution of Share Units Acquired with Matching Contributions. 
 
A Participant's Matching Share Units shall be distributed in a lump sum, in accordance with the Plan's distribution
provisions, in the earlier of: (a) the calendar year following the calendar year of the Termination of Employment of the
Participant, or (b) the calendar year in which the Participant reaches age 55, in each case only with respect to Matching
Share Units relating to Share Deferral Accounts for Plan Years before such distribution calendar year. 
 
11 
 
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.  A Participant 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 the Committee, the election to defer the
distribution must be made on or after October 1, 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.  To
make this election, the Participant must be an Eligible Employee both on the September 30 immediately preceding such
election and on the last day such an election may be made.  For example, an election to defer a scheduled distribution in
2010 must be made during the period from October 1, 2008, through the last business day of December 2008, and the
Participant must be an Eligible Employee both on September 30, 2008, and the last business day of December 2008.  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, (1) 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 (2) 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 
 
12 
 
(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 
 
13 
 
Unforeseeable Emergency.  The determination of amounts reasonably necessary to satisfy the Unforeseeable Emergency need is
not required to, but may, take into account any additional compensation that, due to the Unforeseeable Emergency, is
available under another nonqualified deferred compensation plan but has not actually been paid, or that is available due to
the Unforeseeable Emergency under another plan that would provide for deferred compensation except due to the application
of the effective date provisions under Treasury Regulation §1.409A-6. 
 
(c)      Upon such distribution on account of an Unforeseeable Emergency under this Plan, any election to make Employee
Contributions by such Participant shall be immediately cancelled, and the Participant shall not be permitted to make a new
election with respect to Employee Contributions that would be contributed during the then current and immediately following
calendar year. 
 
6.4          Ineligible Participant. 
 
Notwithstanding any other provisions of this Plan to the contrary, if AT&T receives an opinion from counsel selected by
AT&T, or a final determination is made by a Federal, state or local government or agency, acting within its scope of
authority, to the effect that an individual's continued participation in the Plan would violate applicable law, then such
person shall not make further contributions to the Plan to the extent permitted by Section 409A of the Code. 
 
6.5          Conflict of Interest Distribution. 
 
AT&T may in its sole discretion accelerate a distribution(s) to the Participant, provided he or she is no longer actively
employed by AT&T: (a) to the extent necessary for any Federal officer or employee in the executive branch to comply with an
ethics agreement with the Federal government or (b) to the extent reasonably necessary to avoid the violation of an
applicable Federal, state, local, or foreign ethics law or conflicts of interest law (including where such payment is
reasonably necessary to permit the service provider to participate in activities in the normal course of his or her
position in which the service provider would otherwise not be able to participate under an applicable rule).  Any such
distribution may only be made in accordance with Section 409A of the Code and the regulations thereunder. 
 
 6.6  Distribution Process.  
 
 
A Share Deferral Account shall be distributed under this Plan by taking the number of Share Units comprising the Account to
be distributed and converting them into an equal number of shares of Stock.  (Once distributed, a Share Unit shall be
canceled.) 
 
Article 7 - Transition Provisions 
 
 7.1  Stockholder Approval  
 
 
The Plan was approved by Stockholders at the 2005 Annual Meeting of Stockholders. 
 
14 
 
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. 
 
15 
 
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 (10 th ) 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. 
 
16 
 
(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. 
 
17 
 
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. 
 
18 
 
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. 
 
19 
 
Article 9 - Discontinuation, Termination, Amendment. 
 
9.1          AT&T's Right to Discontinue Offering Share Units. 
 
The Committee may at any time discontinue offerings of Share Units under the Plan.  Any such discontinuance shall have no
effect upon existing Share Units or the terms or provisions of this Plan as applicable to such Share Units. 
 
9.2          AT&T's Right to Terminate Plan. 
 
The Committee may terminate the Plan at any time.  Upon termination of the Plan, contributions shall no longer be made
under the Plan. 
 
After termination of the Plan, Participants shall continue to earn dividend equivalents in the form of Share Units on
undistributed Share Units and shall continue to receive all distributions under this Plan at such time as provided in and
pursuant to the terms and conditions of Participant's elections and this Plan.  Notwithstanding the foregoing, the
termination of the Plan shall be made solely in accordance with Section 409A of the Code and in no event shall cause the
accelerated distribution of any Account unless such termination is effected in accordance with Section 409A of the Code. 
 
 9.3  Amendment.  
 
 
The Committee may at any time amend the Plan in whole or in part including but not limited to changing the formulas for
determining the amount of AT&T Matching Contributions under Article 5 or decreasing the number of Options to be issued
under Article 8; provided, however, that no amendment, including but not limited to an amendment to this section, shall be
effective, without the consent of a Participant, to alter, to the material detriment of such Participant, a Share Deferral
Account of the Participant, other than as provided elsewhere in this section.   For purposes of this section, an alteration
to the material detriment of a Participant shall include, but not be limited to, a material reduction in the period of time
over which Stock may be distributed to a Participant, any reduction in the Participant's number of vested Share Units or
Options, or an increase in the Exercise Price or decrease in the term of an Option.   Any such consent may be in a 

- More to follow, for following part double click  ID:nRSW0123Gf