ATTInc 10K 2009

ATTINC.
(T)
208 S. AKARD ST
DALLAS, TX, 75202
210−821−4105
www.att.com
10−K
Annual report pursuant to section 13 and 15(d)
Filed on 2/25/2010
Filed Period 2/25/2010
FORM 10−K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
⌧ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2009
OR
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 1−8610
AT&T INC.
Incorporated under the laws of the State of Delaware

I.R.S. Employer Identification Number 43−1301883
208 S. Akard St., Dallas, Texas, 75202

Telephone Number 210−821−4105
Securities registered pursuant to Section 12(b) of the Act: (See attached Schedule A)
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark if the registrant is a well−known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [X] No [ ]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S−T during the preceding 12 months (or for such shorter period that the registrant was
required to submit and post such files). Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S−K is not contained herein, and will not be contained, to the
best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10−K or any amendment to
this Form 10−K. [X]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non−accelerated filer or a smaller reporting company. See
definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12−b2 of the Exchange Act.
Large accelerated filer [X] Accelerated filer [ ]
Non−accelerated filer [ ] Smaller reporting company [ ]
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b−2 of the Exchange Act). Yes [ ] No [X]
Based on the closing price of $24.84 per share on June 30, 2009, the aggregate market value of our voting and non−voting common stock held by
non−affiliates was $146.6 billion.
At January 31, 2010, common shares outstanding were 5,902,074,438.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of AT&T Inc.’s Annual Report to Stockholders for the fiscal year ended December 31, 2009 (Parts I and II).
(2) Portions of AT&T Inc.’s Notice of 2010 Annual Meeting and Proxy Statement dated on or about March 11, 2010 to be filed within the period
permitted under General Instruction G(3) (Parts III and IV).
SCHEDULE A
Securities Registered Pursuant To Section 12(b) Of The Act:
Name of each exchange

Title of each class on which registered
Common Shares (Par Value $1.00 Per New York Stock Exchange
Share)
6.125% AT&T Inc. New York Stock Exchange

Global Notes, Due April 2, 2015

Global Notes due April 28, 2017

Global Notes due April 30, 2040
6.375% Forty−Nine Year AT&T Inc. New York Stock Exchange

Senior Notes, Due February 15, 2056
TABLE OF CONTENTS
Item Page
PART I
1. Business 1
1A. Risk Factors 8
2. Properties 9
3. Legal Proceedings 9
4. Submission of Matters to a Vote of Security Holders 9
Executive Officers of the Registrant 10
PART II
5. Market for Registrant’s Common Equity, Related Stockholder Matters

and Issuer Purchases of Equity Securities 11
6. Selected Financial Data 11
7. Management’s Discussion and Analysis of Financial Condition
and Results of Operations 11
7A. Quantitative and Qualitative Disclosures about Market Risk 11
8. Financial Statements and Supplementary Data 11
9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 11
9A. Controls and Procedures 11
9B. Other Information 12
PART III
10. Directors, Executive Officers and Corporate Governance 13

11. Executive Compensation 13
12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters 14
13. Certain Relationships and Related Transactions, and Director Independence 15
14. Principal Accountant Fees and Services 15
PART IV
15. Exhibits and Financial Statement Schedules 15

AT&T Inc.
PART I
ITEM 1. BUSINESS
GENERAL
AT&T Inc. (“AT&T,” “we” or the “Company”) is a holding company incorporated under the laws of the State of Delaware in 1983 and has its principal
executive offices at 208 S. Akard St., Dallas Texas, 75202 (telephone number 210−821−4105). We maintain an Internet website at www.att.com. (This
website address is for information only and is not intended to be an active link or to incorporate any website information into this document.) We make
available, free of charge, on our website our annual report on Form 10−K, our quarterly reports on Form 10−Q, current reports on Form 8−K and all
amendments to those reports as soon as reasonably practicable after such reports are electronically filed with, or furnished to, the Securities and Exchange
Commission (SEC). We also make available on that website, and in print, if any stockholder or other person so requests, our code of business conduct and
ethics entitled “Code of Ethics” applicable to all employees and Directors, our “Corporate Governance Guidelines,” and the charters for all committees of
our Board of Directors, including Audit, Human Resources and Corporate Governance and Nominating. Any changes to our Code of Ethics or waiver of our
Code of Ethics for senior financial officers, executive officers or Directors will be posted on that website.
History
AT&T, formerly known as SBC Communications Inc. (SBC), was formed as one of several regional holding companies created to hold AT&T Corp.’s
(ATTC) local telephone companies. On January 1, 1984, we were spun−off from ATTC pursuant to an anti−trust consent decree, becoming an independent
publicly traded telecommunications services provider. At formation, we primarily operated in five southwestern states. Our subsidiaries merged with Pacific
Telesis Group in 1997, Southern New England Telecommunications Corporation in 1998 and Ameritech Corporation in 1999, thereby expanding our
wireline operations as the incumbent local exchange carrier (ILEC) into a total of 13 states. In November 2005, one of our subsidiaries merged with ATTC,
creating one of the world’s leading telecommunications providers. In connection with the merger, we changed the name of our company from “SBC
Communications Inc.” to “AT&T Inc.” In December 2006, one of our subsidiaries merged with BellSouth Corporation (BellSouth) making us the ILEC in
an additional nine states. With the BellSouth acquisition, we thereby acquired BellSouth’s 40% economic interest in AT&T Mobility LLC (AT&T
Mobility), formerly Cingular Wireless LLC, and BellSouth’s 34% economic interest in YELLOWPAGES.COM (YPC), resulting in 100% ownership of
AT&T Mobility and YPC. Our services and products are marketed under the AT&T brand name, including alliances such as AT&T Yahoo! and
AT&T | DIRECT TV.
Scope
We rank among the leading providers of telecommunications services in the United States and the world. We offer our services and products to consumers
in the U.S. and services and products to businesses and other providers of telecommunications services worldwide.
The services and products that we offer vary by market, and include: wireless communications, local exchange services, long−distance services,
data/broadband and Internet services, video services, telecommunications equipment, managed networking, wholesale services and directory advertising and
publishing. We group our operating subsidiaries as follows, corresponding to our operating segments for financial reporting purposes:
• wireless subsidiaries provide both wireless voice and data communications services across the U.S. and, through roaming agreements, in a substantial
number of foreign countries,
• wireline subsidiaries provide primarily landline voice and data communication services, AT&T U−Verse SM TV, high−speed broadband and voice
services (U−Verse) and managed networking to business customers.,
• advertising solutions subsidiaries publish Yellow and White Pages directories and sell directory advertising and Internet−based advertising and local
search.
• other subsidiaries provide results from Sterling Commerce, Inc. (Sterling), all corporate and other operations.
Our traditional wireline local exchange subsidiaries operate in 22 states: Alabama, Arkansas, California, Connecticut, Illinois, Indiana, Florida, Georgia,
Kentucky, Louisiana, Kansas, Michigan, Mississippi, Missouri, Nevada, North Carolina, Ohio, Oklahoma, South Carolina, Tennessee, Texas and Wisconsin
(22−state area). Our wireline local exchange services are provided through regulated subsidiaries which operate within authorized regions subject to
regulation by each state in which they operate and by the Federal Communications Commission (FCC). Wireless service providers are regulated by the
FCC. Additional information relating to regulation is contained under the heading “Government Regulation” and in the Annual Report under the heading
“Operating Environment and Trends of the Business,” and is incorporated herein by reference pursuant to General Instruction G(2).
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AT&T Inc.
With the expansion of our company through acquisitions and the resulting ownership consolidation of AT&T Mobility, and with continuing advances in
technology, we plan to offer new services that combine our traditional wireline and wireless services, thereby making our customers’ lives more convenient
and productive and fostering competition and further innovation in the communications and entertainment industry. In 2010, we plan to focus on the areas
discussed below.
Wireless
AT&T Mobility began operations in October 2000 as a joint venture between us and BellSouth and, in 2004, acquired AT&T Wireless Services, Inc. Upon
our acquisition of BellSouth, AT&T Mobility became a wholly−owned subsidiary.
Our Universal Mobile Telecommunications System/ High−Speed Downlink Packet Access third generation (3G) network technology covers most major
metropolitan areas of the U.S. This technology provides superior speeds for data and video services, as well as operating efficiencies, using the same
spectrum and infrastructure for voice and data on an IP−based platform. Our wireless network also relies on digital transmission technologies known as
Global System for Mobile Communication, General Packet Radio Services and Enhanced Data Rates for GSM Evolution for data communications. We
have also announced plans to transition our network to more advanced Long Term Evolution technology in 2011 as network equipment and handsets are
expected to become widely available. We also have continued to expand the number of locations, including airports and cafes, where customers can access
broadband internet connections using wireless fidelity (local radio frequency commonly referred as Wi−Fi) wireless technology.
As of December 31, 2009, we served 85.1 million customers and were a leading provider of mobile wireless voice and data communications services in the
U.S. As the wireless industry continues to mature, we believe that future wireless growth will become increasingly dependent on our ability to offer
integrated handsets and other innovative devices such as netbooks and eReaders and innovative services that will encourage existing customers to upgrade
their services and will attract customers from other providers as well as our ability to minimize turnover of our existing customer base (customer churn). We
intend to accomplish these goals by continuing to expand our network coverage, improve our network quality and offer a broad array of products and
services, including exclusive devices such as Apple iPhone, Wi−Fi enabled devices and free mobile−to−mobile calling among our wireless customers. The
effective management of customer churn is critical to our ability to maximize revenue growth and to maintain and improve our operating margins.
Business Customers
We expect to continue to strengthen the reach and sophistication of our network facilities and our ability to offer a variety of communications services, both
wireless and wireline, to large businesses and wholesale customers worldwide. We expect to offer similar services to small− and medium−businesses and to
increase the attractiveness of our services to governmental customers. We also expect to extend our wholesale business offerings to other service products
and systems integration services.
Data/Broadband
As the communications industry continues to move toward internet−based technologies that are capable of blending traditional wireline and wireless
services, we plan to offer services that take advantage of these new and more sophisticated technologies. In particular, we intend to continue to focus on
deploying our AT&T U−verse sm high−speed broadband and video services and on developing internet protocol−based services that allow customers to
unite their home or business wireline services with their wireless service.
U−verse Services We are continuing to expand our deployment of our U−verse services. In December 2009, we added our two millionth U−verse video
customer, ending the year with approximately 2,065,000 customers. As of December 31, 2009, we passed 22.8 million living units (constructed housing
units as well as platted housing lots) and are marketing the services to almost 72 percent of those units. Our deployment strategy is to enter each new area on
a limited basis in order to ensure that all operating and back−office systems are functioning successfully and then expand within each area as we continue to
monitor these systems. Our rate of expansion will be slowed if we cannot obtain all required local building permits in a timely fashion. We also continue to
work with our vendors on improving, in a timely manner, the requisite hardware and software technology. Our deployment plans could be delayed if we do
not receive required equipment and software on schedule.
We believe that our U−verse TV service is subject to federal oversight as a “video service” under the Federal Communications Act. However, some cable
providers and municipalities have claimed that certain IP services should be treated as a traditional cable service and therefore subject to the applicable state
and local cable regulation. Certain municipalities have delayed our request or have refused us permission to use our existing right−of−ways to deploy or
activate our U−verse−related services and products, resulting in litigation. Pending negotiations and current or threatened litigation involving municipalities
could delay our deployment plans in those areas. In July 2008, the U.S. District Court for Connecticut affirmed its October 2007 ruling that AT&T’s
U−verse TV service is a cable service in Connecticut. We have appealed that decision on the basis that state legislation rendered the case moot. Petitions
have been filed at the FCC alleging that the manner in which AT&T provisions “public, educational, and governmental” (PEG) programming over its
U−verse TV service conflicts with federal law, and a lawsuit has been filed in a California state superior court raising similar allegations under California
law. If the courts having jurisdiction where we have significant deployments of our U−verse services were to decide that federal, state and/or local cable
regulation were applicable to our U−verse services, or if the FCC, state agencies or the courts were to rule that AT&T must deliver PEG programming in a
manner substantially different from the way it does today or in ways that are inconsistent with AT&T’s current network architecture, it could have a
material adverse effect on the cost, timing and extent of our deployment plans.
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AT&T Inc.
Voice over Internet Protocol VoIP is generally used to describe the transmission of voice using Internet−Protocol−based technology rather than a traditional
wire and switch−based telephone network. A company using this technology often can provide voice services at a lower cost because this technology uses
bandwidth more efficiently than a traditional network and because this technology has not been subject to traditional telephone industry regulation. While
the development of VoIP has resulted in increased competition for our wireless and wireline voice services, it also presents growth opportunities for us to
develop new products for our customers.
BUSINESS OPERATIONS
OPERATING SEGMENTS
Our segments are strategic business units that offer different products and services over various technology platforms and are managed accordingly. We
analyze our various operating segments based on segment income before income taxes, reviewing operating revenues, operating expenses (depreciation and
non−depreciation) and equity income for each segment. We make our capital allocations decisions primarily based on the network (wireless or wireline)
providing services. Interest expense and other income (expense) – net, are managed only on a total company basis and are, accordingly, reflected only in
consolidated results. Therefore, these items are not included in the calculation of each segment’s percentage of our total segment income. We have four
reportable segments: (1) Wireless; (2) Wireline; (3) Advertising Solutions; and (4) Other.
Additional information about our segments, including financial information, is included under the heading “Segment Results” on pages 33 through 41 and in
Note 4 of the Annual Report and is incorporated herein by reference pursuant to General Instruction G(2).
WIRELESS
Wireless consists of our subsidiary, AT&T Mobility, which operates as a wireless provider to both business and consumer customers. Our Wireless segment
provided approximately 43% of 2009 total segment operating revenues and 60% of our 2009 total segment income. At December 31, 2009, we had more
than 85 million wireless subscribers.
Services and Products

We offer a comprehensive range of high−quality nationwide wireless voice communications services in a variety of pricing plans, including postpaid and
prepaid service plans. Our voice offerings are tailored to meet the communications needs of targeted customer segments, including youth, family, active
professionals, small businesses, government and major national corporate accounts.
Service – Our voice service is generally offered on a contract basis for one− or two−year periods, referred to as postpaid. Under the terms of these contracts,
service is billed and provided on a monthly basis according to the applicable rate plan chosen. Our wireless services include basic local wireless
communications service, long−distance service and roaming services. Roaming services enable our subscribers to utilize other carriers’ networks when they
are “roaming” outside our network footprint. We also charge fees to other carriers for providing roaming services to their customers when their customers
utilize our network. Additionally, we offer prepaid service to meet the demands of distinct consumer segments, such as the youth market, families and small
business customers, who prefer to control usage or pay in advance.
Wireless data revenues continue to be a growing area of our business, representing an increasing share of our overall subscriber revenue. We are
experiencing solid growth from both consumer and enterprise wireless data services, as an increasing number of our subscribers have upgraded their
handsets to more advanced integrated devices, including Apple iPhone. We are also seeing rapid growth in demand for new wireless devices such as
notebooks, eReaders, direction and navigation aids and monitoring devices. We continue to upgrade our network and coordinate with equipment
manufacturers and applications developers in order to further capitalize on the continued growth in the demand for wireless data services. At December 31,
2009, we were a leading provider of wireless data in the U.S. wireless industry based on subscribers.
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AT&T Inc.
Equipment – We sell a wide variety of handsets, wirelessly enabled computers (i.e., notebooks and netbooks) and personal computer wireless data cards
manufactured by various suppliers for use with our voice and data services. We sell through our own company−owned stores or through agents or
third−party retail stores. We also sell accessories, such as carrying cases, hands−free devices, batteries, battery chargers and other items, to consumers, as
well as to agents and other third−party distributors for resale. Like other wireless service providers, we often provide postpaid contract subscribers
substantial equipment subsidies to initiate or upgrade service. Our subscriber base also includes emerging devices (e.g., eReaders and mobile navigation
devices) purchased by consumers from third−party suppliers which buy data access supported by our network; purchasers of these devices are included in
our reseller base.
Additional information on our Wireless segment is contained in the Annual Report in the “Operating Environment Overview” section under the heading
“Expected Growth Areas,” “Wireless” beginning on page 42 and is incorporated herein by reference pursuant to General Instruction G(2).
WIRELINE
Our Wireline subsidiaries provide both retail and wholesale communication services domestically and internationally. Our Wireline segment provided
approximately 52% of 2009 segment operating revenues and 36% of our 2009 total segment income. We divide our wireline services into three
product−based categories: voice, data and other. Revenues from our traditional voice services have been declining as customers have been switching to
wireless, cable and other internet−based providers. In addition, the continuing economic recession has caused wireline customers to terminate their
residential or business phone service as individuals have lost jobs or otherwise combined households and businesses have closed or reduced operations. We
have responded by offering packages of combined voice and data services, including broadband and video, and intend to continue this strategy during 2010.
Services and Products
Voice – Voice includes traditional local and long−distance service provided to retail customers and wholesale access to our network and individual network
elements provided to competitors. At December 31, 2009, our wireline subsidiaries served approximately 26 million retail consumer access lines, 20 million
retail business access lines and 3 million wholesale access lines. We also have a number of integrated voice and data services, such as integrated network
connections, that provide customers the ability to integrate access for their voice and data services, the data component of which is included in the data
category. Additionally, voice revenues do not include any of our VoIP revenues, which are included in data revenues.
Long distance consists of traditional long distance and international long distance for customers that select us as their primary long−distance carrier. Long
distance also includes services provided by calling card, 1−800 services and conference calling. These services are used in a wide variety of business
applications, including sales, reservation centers or customer service centers. We also provide wholesale switched access service to other service providers.
Voice also includes calling features, fees to maintain wire located inside customer premises and other miscellaneous voice products. Calling features are
enhanced telephone services available to retail customers such as Caller ID, Call Waiting and voice mail. These calling features services are generally more
profitable than basic local phone service.
Data − Data includes traditional products, such as switched and dedicated transport, Internet access and network integration, and data equipment sales, and
U−verse services. Additionally, data products include high−speed connections such as private lines, packet, dedicated Internet and enterprise networking
services, as well as products such as DSL/broadband, dial−up Internet access and Wi−Fi (local radio frequency commonly known as wireless fidelity). We
also provide businesses voice applications over IP−based networks (i.e., Enhanced Virtual Private Networks or “EVPN”). Over the past several years, we
have built out our new multi−protocol label switching/asynchronous transfer mode, or MPLS/ATM network, to supplement, and eventually replace, our
other extensive global data networks. These products allow us to provide highly complex global data networks.
Private Line uses high−capacity digital circuits to transmit from point−to−point in multiple configurations and allows customers to create internal data
networks and to access external data networks.
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AT&T Inc.
Switched Transport services transmit data using switching equipment to transfer the data between multiple lines before reaching its destination. Dedicated
Transport services use a single direct line to transmit data between destinations. DSL is a digital modem technology that converts existing twisted−pair
telephone lines into access paths for multimedia and high−speed data communications to the Internet or private networks. DSL allows customers to
simultaneously make a phone call and access information via the Internet or an office local area network. Digital Services use dedicated digital circuits to
transmit digital data at various high rates of speed.
Network integration services include installation of business data systems, local area networking and other data networking offerings. Internet access
services include a wide range of products for residences and businesses, Internet services offered include basic dial−up access service, dedicated access,
web hosting, e−mail and high−speed access services. Our managed web−hosting services for businesses provide network, server and security infrastructure
as well as built−in data storage and include application performance management, database management, hardware and operating system management. Our
hosting services also provide customers with secure access to detailed reporting information about their infrastructure and applications.
Packet services consist of data networks using packet switching and transmission technologies, including traditional circuit−based, and IP connectivity
services. Packet services enable customers to transmit large volumes of data economically and securely and are used for local area network interconnection,
remote site, point of sale and branch office communications. High−speed packet services are used extensively by enterprise (large business) customers.
Dedicated Internet services are designed to meet the needs of all types of commercial and governmental enterprises, including small and medium sized
businesses. Our managed Internet services provide customers with dedicated high−speed access to the Internet managed by us.
Enterprise networking services provide comprehensive support from network design, implementation and installation to ongoing network operations and
management for networks of varying scales, including local area networks, wide area networks, and virtual private networks. These services include
applications such as e−mail, order entry systems, employee directories, human resource transactions and other database applications.
We also provide local, interstate and international wholesale networking capacity to other service providers. We offer a combination of high−volume
transmission capacity and conventional dedicated line services on a regional, national and international basis to wireless carriers, interexchange carriers,
Internet service providers (ISPs) and facility−based and switchless resellers. Our wholesale customers are primarily large ISPs, wireless carriers,
competitive local exchange carriers (CLECs), regional phone companies, interexchange carriers, cable companies and systems integrators. We also have
sold dedicated network capacity through indefeasible rights−of−use agreements under which capacity is furnished for contract terms as long as 25 years.
Other − Other includes application management, security service, integration services, customer premises equipment, outsourcing, government−related
services, and satellite video services. Security services include business continuity and disaster recovery services as well as premise and network based
security products.
Customer premises equipment and other equipment sales range from single−line and cordless telephones to sophisticated digital PBX systems. PBX is a
private telephone switching system, typically used by businesses and usually located on a customer’s premises, which provides intra−premise telephone
services as well as access to our network.
ADVERTISING SOLUTIONS
Advertising Solutions includes our directory operations, which publish Yellow and White Pages directories and sell directory advertising and Internet−based
advertising and local search. The Advertising Solutions segment provided approximately 4% of total segment operating revenues and 6% of our 2009 total
segment income. This segment sells advertising services throughout the United States, with our print directory operations primarily covering our 22−state
area.
OTHER
Our Other segment includes operations from Sterling, our business integration software and services subsidiary, operator services, corporate and other
operations. The Other segment provided approximately 1% of total segment operating revenues and less than 1% of our 2009 total segment income. We
also include in this segment the equity income (loss) from our investments in Telmex, America Movil and Telmex Internacional. Sterling provides
“multi−enterprise collaboration” services to businesses in various industries, including retail, financial services, manufacturing, healthcare and telecom. In
recent years, Sterling has completed a number of acquisitions in order to provide end−to−end order fulfillment for customers.
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MAJOR CLASSES OF SERVICE
The following table sets forth the percentage of total consolidated reported operating revenues by any class of service that accounted for 10% or more of our
consolidated total operating revenues in any of the last three fiscal years:
Percentage of Total
Consolidated Operating Revenues
2009 2008 2007
Wireless Segment
Wireless service 40% 36% 33%
Wireline Segment
Voice 27% 31% 35%
Data 22% 20% 20%
GOVERNMENT REGULATION
Wireless communications providers must be licensed by the FCC to provide communications services at specified spectrum frequencies within specified
geographic areas and must comply with the rules and policies governing the use of the spectrum as adopted by the FCC. Wireless licenses are issued for a
fixed time period, typically ten years, and we must seek renewal of these licenses. While the FCC has generally renewed licenses given to operating
companies such as us, the FCC has authority to both revoke a license for cause and to deny a license renewal if a renewal is not in the public interest.
Additionally, while wireless communications providers’ prices and service offerings are generally not subject to regulation, the federal government and an
increasing number of states are considering new regulations and legislation relating to various aspects of wireless services.
Our wireline subsidiaries are subject to regulation by state commissions which have the power to regulate intrastate rates and services, including local,
long−distance and network access services. These subsidiaries are also subject to the jurisdiction of the FCC with respect to interstate and international rates
and services, including interstate access charges. Access charges are designed to compensate our wireline subsidiaries for the use of their networks by other
carriers.
Our subsidiaries operating outside the U.S. are subject to the jurisdiction of national and supranational regulatory authorities in the market where service is
provided. Regulation is generally limited to operational licensing authority for the provision of enterprise services.
Additional information relating to regulation of our subsidiaries is contained in the Annual Report under the heading “Operating Environment Overview”
beginning on page 41 and is incorporated herein by reference pursuant to General Instruction G(2).
IMPORTANCE, DURATION AND EFFECT OF LICENSES
Certain of our subsidiaries own or have licenses to various patents, copyrights, trademarks and other intellectual property necessary to conduct business.
Many of our subsidiaries also hold government−issued licenses or franchises to provide wireline or wireless services and regulation affecting those rights is
contained in the Annual Report under the heading “Operating Environment Overview” beginning on page 41 and is incorporated herein by reference
pursuant to General Instruction G(2). We actively pursue patents, trademarks and service marks to protect our intellectual property within the U.S. and
abroad. We maintain a global portfolio of more than 5,000 trademark and service mark registrations. We have also entered into agreements that permit other
companies, in exchange for fees and subject to appropriate safeguards and restrictions, to utilize certain of our trademarks and service marks. We
periodically receive offers from third parties to obtain licenses for patent and other intellectual rights in exchange for royalties or other payments. We also
receive notices asserting that our products or services infringe on their patents and other intellectual property rights. These claims, whether against us
directly or against third−party suppliers of products or services that we, in turn, sell to our customers, such as wireless handsets, could require us to pay
damages, royalties, stop offering the relevant products or services and/or cease other activities. While the outcome of any litigation is uncertain, we do not
believe that the resolution of any of these infringement claims or the expiration or non−renewal of any of our intellectual property rights would have a
material adverse effect on our results of operations.
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AT&T Inc.
MAJOR CUSTOMER
No customer accounted for 10% or more of our consolidated revenues in 2009, 2008 or 2007.
COMPETITION
Information relating to competition in each of our operating segments is contained in the Annual Report under the heading “Competition” beginning on
page 44, and is incorporated herein by reference pursuant to General Instruction G(2).
RESEARCH AND DEVELOPMENT
The majority of our research activities are related to our wireline segment, performed at our subsidiary AT&T Labs. AT&T Labs’ scientists and engineers
conduct research in a variety of areas, including IP; advanced network design and architecture; network operations support systems; data mining
technologies and advanced speech technologies. The majority of the development activities are performed by AT&T Services. The developers within AT&T
Services work with our business units and AT&T Labs to create new services and invent tools and systems to manage secure and reliable networks for us
and our customers. We also have a research agreement with Telcordia Technologies, formerly Bell Communications Research, Inc. Research and
development expenses were $986 in 2009, $832 in 2008 and $985 million in 2007.
EMPLOYEES
As of January 31, 2010, we employed approximately 281,000 persons. Approximately 58 percent of our employees are represented by the Communications
Workers of America (CWA), the International Brotherhood of Electrical Workers (IBEW) or other unions. Contracts covering approximately 120,000
collectively−bargained wireline employees expired during 2009. As of January 31, 2010, the Company and approximately 86,000 employees, covered by
these expired collectively−bargained wireline contracts have ratified new labor agreements. In the absence of an effective contract, the union is entitled to
call a work stoppage.
For approximately 60,000 employees covered by these ratified agreements, the agreements provide for a three−year term and, for the vast majority of those
covered employees, a 3 percent wage increase in years one and two, a wage increase in year three of 2.75 percent, and pension band increases of 2 percent
for each year of the agreement. For both wage and pension band increases, there is potential cost−of−living increase based on the consumer price index for
the third year. These agreements also provide for continued health care coverage with reasonable cost sharing.
For the remaining approximately 26,000 employees covered by these ratified agreements, the agreement provides for a four−year term. The provisions of
the tentative agreement are substantially similar to the provisions of the ratified agreements discussed above, with a wage increase in year four of 2.75
percent and a potential cost−of−living increase in year four instead of in year three.
On February 8, 2010, the Company and the CWA announced a tentative agreement covering approximately 30,000 core wireline employees in the
nine−state former BellSouth region, subject to ratification by those covered employees. The tentative agreement provides for a three−year term and, for the
vast majority of those covered employees, a 3 percent wage increase in years one and two, a wage increase in year three of 2.75 percent, and pension band
increases of 2 percent for each year of the agreement. These agreements also provide for continued health care coverage with reasonable cost sharing.
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AT&T Inc.
ITEM 1A. RISK FACTORS
Information required by this Item is included in the Annual Report under the heading “Risk Factors” on page 55 through page 57 which is incorporated
herein by reference pursuant to General Instruction G(2).
CAUTIONARY LANGUAGE CONCERNING FORWARD−LOOKING STATEMENTS
The following factors could cause our future results to differ materially from those expressed in the forward−looking statements:
• Adverse economic and/or capital access changes in the markets served by us or in countries in which we have significant investments, including the
impact on customer demand and our ability and our suppliers’ ability to access financial markets.
• Changes in available technology and the effects of such changes, including product substitutions and deployment costs.
• Increases in our benefit plans’ costs, including increases due to adverse changes in the U.S. and foreign securities markets, resulting in
worse−than−assumed investment returns and discount rates, and adverse medical cost trends and unfavorable healthcare legislation and regulations.
• The final outcome of Federal Communications Commission and other Federal agency proceedings and reopenings of such proceedings and judicial
review, if any, of such proceedings, including issues relating to access charges, broadband deployment, E911 services, competition, net neutrality,
unbundled loop and transport elements, wireless license awards and renewals and wireless services.
• The final outcome of regulatory proceedings in the states in which we operate and reopenings of such proceedings, and judicial review, if any, of such
proceedings, including proceedings relating to Interconnection terms, access charges, universal service, unbundled network elements and resale and
wholesale rates, broadband deployment including our U−verse services, net neutrality, performance measurement plans, service standards and traffic
compensation.
• Enactment of additional state, federal and/or foreign regulatory and tax laws and regulations pertaining to our subsidiaries and foreign investments,
including laws and regulations that reduce our incentive to invest in our networks, resulting in lower revenue growth and/or higher operating costs.
• Our ability to absorb revenue losses caused by increasing competition, including offerings using alternative technologies (e.g., cable, wireless and
VoIP) and our ability to maintain capital expenditures.
• The extent of competition and the resulting pressure on access line totals and wireline and wireless operating margins.
• Our ability to develop attractive and profitable product/service offerings to offset increasing competition in our wireless and wireline markets.
• The ability of our competitors to offer product/service offerings at lower prices due to lower cost structures and regulatory and legislative actions
adverse to us, including state regulatory proceedings relating to unbundled network elements and nonregulation of comparable alternative technologies
(e.g., VoIP).
• The timing, extent and cost of deployment of our U−verse services; the development of attractive and profitable service offerings; the extent to which
regulatory, franchise fees and build−out requirements apply to this initiative; and the availability, cost and/or reliability of the various technologies
and/or content required to provide such offerings.
• Our continued ability to attract and offer a diverse of portfolio of devices, some on an exclusive basis.
• The availability and cost of additional wireless spectrum and regulations relating to licensing and technical standards and deployment and usage,
including network management rules.
• Our ability to manage growth in wireless data services, including network quality.
• The outcome of pending or threatened litigation including patent and product safety claims by or against third parties.
• The impact on our networks and business of major equipment failures, our inability to obtain equipment/software or have equipment/software serviced
in a timely and cost−effective manner from suppliers, severe weather conditions, natural disasters, pandemics or terrorist attacks.
• Our ability to successfully negotiate new collective bargaining contracts and the terms of those contracts.
• The issuance by the Financial Accounting Standards Board or other accounting oversight bodies of new accounting standards or changes to existing
standards.
• The issuance by the Internal Revenue Service and/or state tax authorities of new tax regulations or changes to existing standards and actions by federal,
state or local tax agencies and judicial authorities with respect to applying applicable tax laws and regulations and the resolution of disputes with any
taxing jurisdictions.
• Our ability to adequately fund our wireless operations, including payment for additional spectrum, network upgrades and technological advancements.
• Changes in our corporate strategies, such as changing network requirements or acquisitions and dispositions, to respond to competition and regulatory,
legislative and technological developments.
Readers are cautioned that other factors discussed in this report, although not enumerated here, also could materially affect our future earnings.
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AT&T Inc.
ITEM 2. PROPERTIES
Our properties do not lend themselves to description by character and location of principal units. At December 31, 2009, approximately 84% of our
property, plant and equipment was owned by our wireline subsidiaries and approximately 15% was owned by our wireless subsidiaries. Central office
equipment represented 34%; network access lines represented approximately 32% of our telephone plant; other equipment, comprised principally of
furniture and office equipment and vehicles and other work equipment, represented 18%; land and buildings represented 11%; and other miscellaneous
property represented 5%.
Substantially all of the installations of central office equipment are located in buildings and on land we own. Many garages, administrative and business
offices, and telephone centers and retail stores are in leased quarters.
ITEM 3. LEGAL PROCEEDINGS
We are a party to numerous lawsuits, regulatory proceedings and other matters arising in the ordinary course of business. Additional information regarding
litigation is included in the Annual Report under the headings “Retiree Phone Concession Litigation” and “NSA Litigation” on page 48, which is
incorporated herein by reference pursuant to General Instruction G(2). As of the date of this report, we do not believe any pending legal proceedings to
which we or our subsidiaries are subject are required to be disclosed as material legal proceedings pursuant to this item.
We are subject from time to time to judicial and administrative proceedings brought by various governmental authorities under federal, state or
local environmental laws. We are required to discuss in our Forms 10−Q and 10−K two of these proceedings, (which are listed below), because each could
result in monetary sanctions (exclusive of interest and costs) of one hundred thousand dollars or more. However, we do not believe that any of them
currently pending will have a material adverse effect on our results of operations.
(a) The City of Philadelphia notified AT&T Corp. in December 2008 that it would seek civil penalties for alleged violations of state and local air emissions
control requirements and permit terms applicable to back−up power generators at an AT&T Corp. facility. In July 2009, AT&T Corp. and the City settled
this matter on terms that included civil penalties of less than one hundred thousand dollars.
(b) The U.S. Environmental Protection Agency (EPA) is seeking civil penalties from AT&T Mobility in connection with alleged violations of federal
environmental statutes in connection with management of back−up power systems at AT&T Mobility facilities. The EPA’s allegations include
noncompliance with requirements to obtain air emission permits for generators and to prepare spill prevention plans for fuel storage tanks. We expect to
settle those allegations on terms that would include civil penalties in the range of $1 to $3 million dollars.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of stockholders in the fourth quarter of 2009.

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AT&T Inc.
EXECUTIVE OFFICERS OF THE REGISTRANT

(As of January 20 , 2010)
Name Age Position Held Since
Randall L. Stephenson 49 Chairman of the Board, Chief Executive Officer 6/2007

and President
William A. Blase Jr. 54 Senior Executive Vice President – Human Resources 6/2007
James W. Callaway 63 Senior Executive Vice President – Executive Operations 5/2007
James W. Cicconi 57 Senior Executive Vice President – External and Legislative Affairs, 11/2008
AT&T Services, Inc.
Catherine M. Coughlin 52 Senior Executive Vice President and Global Marketing Officer 6/2007
Ralph de la Vega 58 President and Chief Executive Officer, AT&T Mobility and 10/2008
Consumer Markets
Richard G. Lindner 55 Senior Executive Vice President and Chief Financial Officer 5/2004
Forrest E. Miller 57 Group President – Corporate Strategy and Development 6/2007
Ronald E. Spears 61 President and Chief Executive Officer, AT&T Business Solutions 11/2008
John T. Stankey 47 President and Chief Executive Officer, AT&T Operations, Inc. 10/2008
Wayne Watts 56 Senior Executive Vice President and General Counsel 6/2007
Rayford Wilkins, Jr. 58 Chief Executive Officer – AT&T Diversified Businesses 10/2008
All of the above executive officers have held high−level managerial positions with AT&T or its subsidiaries for more than the past five years. Executive
officers are not appointed to a fixed term of office.
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AT&T Inc.
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED

STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is listed on the New York Stock Exchange. The number of stockholders of record as of December 31, 2009 and 2008 was 1,454,030 and
1,541,767. The number of stockholders of record as of February 20, 2010, was 1,448,975. We declared dividends, on a quarterly basis, totaling $1.65 per
share in 2009 and $1.61 per share in 2008.
Other information required by this Item is included in the Annual Report under the headings “Quarterly Financial Information” on page 91, “Selected
Financial and Operating Data” on page 30, “Issuer Equity Repurchases” on page 54, and “Stock Trading Information” on the back cover, which are
incorporated herein by reference pursuant to General Instruction G(2).
ITEM 6. SELECTED FINANCIAL DATA
Information required by this Item is included in the Annual Report under the heading “Selected Financial and Operating Data” on page 30, which is
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
Information required by this Item is included in the Annual Report on pages 31 through 52, which is incorporated herein by reference pursuant to General
Instruction G(2).
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information required by this Item is included in the Annual Report under the heading “Market Risk” on pages 52 through 53, which is incorporated herein
by reference pursuant to General Instruction G(2).
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information required by this Item is included in the Annual Report on pages 59 through 91, which is incorporated herein by reference pursuant to General
Instruction G(2).
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING

AND FINANCIAL DISCLOSURE
During our two most recent fiscal years, there has been no change in the independent accountant engaged as the principal accountant to audit our financial
statements and the independent accountant has not expressed reliance on other independent accountants in its reports during such time period.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
The registrant maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed by the registrant is
recorded, processed, summarized, accumulated and communicated to its management, including its principal executive and principal financial officers, to
allow timely decisions regarding required disclosure, and reported within the time periods specified in the SEC’s rules and forms. The Chief Executive
Officer and Chief Financial Officer have performed an evaluation of the effectiveness of the design and operation of the registrant’s disclosure controls and
procedures as of December 31, 2009. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the registrant’s
disclosure controls and procedures were effective as of December 31, 2009.
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AT&T Inc.
Internal Control Over Financial Reporting
(a) Management’s Annual Report on Internal Control over Financial Reporting

The management of AT&T is responsible for establishing and maintaining adequate internal control over financial reporting. AT&T’s internal control
system was designed to provide reasonable assurance as to the integrity and reliability of the published financial statements. AT&T management assessed
the effectiveness of the company’s internal control over financial reporting as of December 31, 2009. In making this assessment, it used the criteria set forth
by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework. Based on its assessment,
AT&T management believes that, as of December 31, 2009, the Company’s internal control over financial reporting is effective based on those criteria.
(b) Attestation Report of the Registered Public Accounting Firm

The registered public accounting firm that audited the financial statements included in the Annual Report containing the disclosure required by this Item,
Ernst & Young LLP, has issued an attestation report on the Company’s internal control over financial reporting. The attestation report issued by Ernst &
Young LLP is included in the Annual Report on page 93, which is incorporated herein by reference pursuant to General Instruction G(2).
ITEM 9B. OTHER INFORMATION
There is no information that was required to be disclosed in a report on Form 8−K during the fourth quarter of 2009 but was not reported.
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AT&T Inc.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information regarding executive officers required by Item 401 of Regulation S−K is furnished in a separate disclosure at the end of Part I of this report since
the registrant did not furnish such information in its definitive proxy statement prepared in accordance with Schedule 14A. Information regarding directors
required by Item 401 of Regulation S−K is incorporated herein by reference pursuant to General Instruction G(3) from the registrant’s definitive proxy
statement, dated on or about March 11, 2010 (Proxy Statement) under the heading “Election of Directors.”
There is no disclosure in this Form 10−K of reporting person delinquencies in response to Item 405 and the registrant, at the time of filing this Annual
Report on Form 10−K, has reviewed the information necessary to ascertain, and has determined that Item 405 disclosure is not expected to be contained in
this Form 10−K or incorporated by reference.
The registrant has a separately−designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of
1934. The members of the committee are Messrs. Aldinger, Chico, Kelly and Madonna. The additional information required by Item 407(d)(5) of
Regulation S−K is incorporated herein by reference pursuant to General Instruction G(3) from the registrant’s Proxy Statement under the heading “Audit
Committee.”
The registrant has adopted a code of ethics entitled “Code of Ethics” that applies to the registrant’s principal executive officer, principal financial officer,
principal accounting officer, or controller or persons performing similar functions. The additional information required by Item 406 of Regulation S−K is
provided in this report under the heading “General” under Part I, Item 1. Business.
ITEM 11. EXECUTIVE COMPENSATION
Information required by Item 402(k) of Regulation S−K is incorporated herein by reference pursuant to General Instruction G(3) from the registrant’s Proxy
Statement under the heading “Compensation of Directors.” Information regarding officers is included in the registrant’s Proxy Statement on the pages
beginning with the heading “Compensation Discussion and Analysis” and ending with, and including, the pages under the heading “Potential Payments
upon Termination or Change in Control” which are incorporated herein by reference pursuant to General Instruction G(3). Information required by Item
407(e)(5) of Regulation S−K is included in the registrant’s Proxy Statement under the heading “Compensation Committee Report” and is incorporated
herein by reference pursuant to General Instruction G(3) and shall be deemed furnished in this Annual Report on Form 10−K and will not be deemed
incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.
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AT&T Inc.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND

MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Information required by Item 403 of Regulation S−K is included in the registrant’s Proxy Statement under the heading “Common Stock Ownership,” which
is incorporated herein by reference pursuant to General Instruction G(3).
Information required by Item 201(d) of Regulation S−K is provided below:
Equity Compensation Plan Information
The following table provides information as of December 31, 2009 concerning shares of AT&T common stock authorized for issuance under AT&T’s
existing equity compensation plans:
Equity Compensation Plan Information
Number of securities remaining available for

Number of securities to be issued upon Weighted−average exercise price future issuance under equity compensation
exercise of outstanding options, warrants of outstanding options, warrants plans (excluding securities reflected in
and rights and rights column (a))
Plan Category (a) (b) (c)
Equity compensation plans
75,250,858 (1) $36.46 110,172,927 (2)
approved by security holders
Equity compensation plans not
54,042,255 (3) $39.07 0
approved by security holders
Total 129,293,113 (4) $37.85 110,172,927
(1) Includes the issuance of stock in connection with the following stockholder approved plans: (a) 38,020,599 stock options under the 1996 Stock and
Incentive Plan, 2001 Incentive Plan, and Stock Purchase and Deferral Plan (SPDP), (b) 1,575,223 phantom stock units under the Stock Savings Plan
(SSP) and 3,633,282 phantom stock units under the SPDP, and (c) 18,194,742 target number of stock−settled performance shares under the 2006
Incentive Plan. At payout, the target number of performance shares may be reduced to zero or increased by up to 150% (452,025 of the performance
shares may be increased by up to 200%). Each phantom stock unit and performance share is settleable in stock on a 1−to−1 basis. The
weighted−average exercise price in the table does not include outstanding performance shares or phantom stock units.
The SSP was approved by stockholders in 1994, and was amended by the Board of Directors in 2000 to increase the number of shares available for
purchase under the Plan (including shares from the company match and reinvested dividend equivalents) and shares subject to options. Stockholder
approval was not required for the amendment. To the extent applicable, the amount shown for approved plans in column (a), in addition to the above
amounts, includes 4,242,727 phantom stock units (computed on a first−in−first−out basis) and 9,584,285 stock options that were approved by the
Board in 2000. Under the SSP, shares could be purchased with payroll deduction and reinvested dividend equivalents by mid−level and above
managers and limited company partial matching contributions. No new contributions may be made to the Plan. In addition, participants received
approximately 2 options for each share purchased with employee payroll deductions. The options have a 10−year term and an exercise strike price
equal to the fair market value of the stock on the date of grant.
(2) Includes 14,564,165 shares that may be issued under the SPDP, 68,280,585 shares that may be issued under the 2006 Incentive Plan, and up to
4,320,234 shares that may be purchased through reinvestment of dividends on phantom shares held in the SSP.
(3) Number of outstanding stock options under the 1995 Management Stock Option Plan (1995 MSOP), which has not been approved by
stockholders. The 1995 MSOP provides for grants of stock options to management employees (10−year terms) subject to vesting requirements and
shortened exercise terms upon termination of employment. No further options may be issued under this plan.
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AT&T Inc.
(4) Does not include certain stock options issued by companies acquired by AT&T that were converted into options to acquire AT&T stock. As of
December 31, 2009, there were 76,052,645 shares of AT&T common stock subject to the converted options, having a weighted−average exercise price
of $35.3764. Also, does not include 186,700 outstanding phantom stock units that were issued by companies acquired by AT&T that are convertible
into stock on a 1−to−1 basis, along with up to 74,569 shares that may be purchased with reinvested dividend equivalents (applies only to 112,012 of
the outstanding phantom stock units). These units have no exercise price. No further phantom stock units, other than reinvested dividends, may be
issued under the assumed plans. The weighted−average exercise price in the table does not include outstanding performance shares or phantom stock
units.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Information required by Item 404 of Regulation S−K is included in the registrant’s Proxy Statement under the heading “Related Person Transactions,”
which is incorporated herein by reference pursuant to General Instruction G(3). Information required by Item 407(a) of Regulation S−K is included in the
registrant’s Proxy Statement under the heading “Independence of Directors,” which is incorporated herein by reference pursuant to General Instruction
G(3).
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Information required by this Item is included in the registrant’s Proxy Statement under the heading “Principal Accountant Fees and Services,” which is
Part IV
ITEM 15. EXHIBITS and FINANCIAL STATEMENT SCHEDULES
(a) Documents filed as a part of the report:
Page
(1) Report of Independent Registered Public Accounting Firm *
Financial Statements covered by Report of Independent Registered Public
Accounting Firm:
Consolidated Statements of Income *
Consolidated Balance Sheets *
Consolidated Statements of Cash Flows *
Consolidated Statements of Changes in Stockholders’ Equity *
Notes to Consolidated Financial Statements *
* Incorporated herein by reference to the appropriate portions of the registrant’s Annual Report to
Stockholders for the fiscal year ended December 31, 2009. (See Part II.)
Page
(2) Financial Statement Schedules:
II − Valuation and Qualifying Accounts 22
Financial statement schedules other than those listed above have been omitted because the required information is contained in the financial statements
and notes thereto, or because such schedules are not required or applicable.
(3) Exhibits:
Exhibits identified in parentheses below, on file with the SEC, are incorporated herein by reference as exhibits hereto. Unless otherwise indicated, all
exhibits so incorporated are from File No. 1−8610.
Exhibit
Number
3−a Restated Certificate of Incorporation, filed with the Secretary of State of Delaware on May 1, 2009. (Exhibit 3 to Form 10−Q filed for June 30,
2009.)
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AT&T Inc.
3−b Bylaws amended December 18, 2009. (Exhibit 3 to Form 8−K dated December 18, 2009.)
4−a Certificate of Designations for Perpetual Cumulative Preferred Stock of SBC Communications Inc., filed with the Secretary of State of
the State of Delaware on November 18, 2005. (Contained in Restated Certificate of Incorporation filed as Exhibit 3−a.)
4−b No instrument which defines the rights of holders of long−term debt of the registrant and all of its consolidated subsidiaries is filed
herewith pursuant to Regulation S−K, Item 601b)(4)(iii)(A), except for the instruments referred to in 4−c, 4−d, 4−e, 4−f, 4−g and 4−h
below. Pursuant to this regulation, the registrant hereby agrees to furnish a copy of any such instrument not filed herewith to the SEC
upon request.
4−c Guaranty of certain obligations of Pacific Bell Telephone Co. and SBC Communications Inc. (Exhibit 4−c to Form 10−K for 2007.)
4−d Guaranty of certain obligations of Ameritech Capital Funding Corp., Illinois Bell Telephone Co., Indiana Bell Telephone Co. Inc.,
Michigan Bell Telephone Co., The Ohio Bell Telephone Co., Pacific Bell Telephone Co., Southern New England Telecommunications
Corp., The Southern New England Telephone Co., Southwestern Bell Telephone Co., Wisconsin Bell, Inc. (Exhibit 4−c to Form 10−Q
for September 30, 2005.)
4−e Guarantee of certain obligations of AT&T Corp. (Exhibit 4−e to Form 8−K dated December 16, 2005.)
4−f Guarantee of certain obligations of BellSouth. (Exhibit 4.3 to Form 8−K dated December 29, 2006.)
4−g Cingular Third Supplemental Indenture. (Exhibit 4.1 to Form 8−K dated December 29, 2006.)
4−h Indenture dated as of November 1, 1994 between SBC Communications Inc. and The Bank of New York, as Trustee. (Exhibit 4−h to
Form 10−K for 2008.)
10−a Short Term Incentive Plan, dated November 18, 2005. (Exhibit 10−a to Form 10−K for 2008.)
10−b Supplemental Life Insurance Plan, amended and restated effective January 1, 2010. (Exhibit 10−d to Form 10−Q filed for June 30,
2009.)
10−c Supplemental Retirement Income Plan, amended and restated December 31, 2008. (Exhibit 10−c to Form 10−K for 2008.)
10−d Senior Management Deferred Compensation Plan (effective for Units of Participation Having a Unit Start Date Prior to January 1,
1988). (Exhibit 10−d to Form 10−K for 2008.)
10−e Senior Management Deferred Compensation Program of 1988 (effective for Units of Participation Having a Unit Start Date of January
1, 1988 or later). (Exhibit 10−e to Form 10−K for 2008.)
10−f Officer Disability Plan, amended and restated effective January 1, 2010. (Exhibit 10−i to Form 10−Q filed for June 30, 2009.)
10−g Salary and Incentive Award Deferral Plan, dated December 31, 2004. (Exhibit 10−g to Form 10−K for 2006.)
10−h AT&T Inc. Health Plan, amended and restated effective January 1, 2010. (Exhibit 10−e to Form 10−Q filed for June 30, 2009.)
10−i Retirement Plan for Non−Employee Directors. (Exhibit 10−i to Form 10−K for 2007.)
10−j Form of Indemnity Agreement, effective July 1, 1986, between SBC (now AT&T Inc.) and its directors and officers. (Exhibit 10−j to
10−k Administrative Plan, amended and restated November 1, 2009.
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AT&T Inc.
10−l Stock Savings Plan, dated December 31, 2004. (Exhibit 10−l to Form 10−K for 2006.)
10−m Pacific Telesis Group Supplemental Cash Balance Plan, amended as of July 1, 1996. (Exhibit 10−lll to Form 10−K for 2007.)
10−n 1996 Stock and Incentive Plan, dated November 2, 2002. (Exhibit 10−n to Form 10−K for 2008.)
10−o Non−Employee Director Stock and Deferral Plan, amended and restated June 26, 2008. (Exhibit 10−f to Form 10−Q filed for June 30,
2008.)
10−p Pacific Telesis Group Deferred Compensation Plan for Nonemployee Directors. (Exhibit 10−p to Form 10−K for 2007.)
10−p(i) Resolutions amending the Plan, effective November 21, 1997. (Exhibit 10−p(i) to Form10−K for 2007.)
10−q Pacific Telesis Group Outside Directors’ Deferred Stock Unit Plan. (Exhibit 10−q to Form 10−K for 2007.)
10−r Pacific Telesis Group 1996 Directors’ Deferred Compensation Plan. (Exhibit 10−r to Form 10−K for 2007.)
10−r(i) Resolutions amending the Plan, effective November 21, 1997. (Exhibit 10−r(i) to Form 10−K for 2007.)
10−s Transition Agreement by and between BellSouth Corporation and Rafael de la Vega, dated December 29, 2003. (Exhibit 10−s to Form
10−K for 2007.)
10−t 2001 Incentive Plan, dated November 18, 2005. (Exhibit 10−t to Form 10−K for 2008.)
10−u Pacific Telesis Group 1996 Executive Deferred Compensation Plan, amended November 20, 2008. (Exhibit 10−u to Form 10−K for
2008.)
10−v AT&T Inc. Change in Control Severance Plan, amended and restated effective January 1, 2010.
10−w 1995 Management Stock Option Plan, dated November 16, 2001. (Exhibit 10−w to Form 10−K for 2008.)
10−x Non−Employee Director Stock Purchase Plan, effective June 27, 2008. (Exhibit 10−e to Form 10−Q filed for June 30, 2008.)
10−y Communications Concession Program for Directors, amended and restated November 2009.
10−z Pacific Telesis Group Executive Deferral Plan, amended November 20, 2008. (Exhibit 10−z to Form 10−K for 2008.)
10−aa Five Year Credit Agreement. (Exhibit 10 to Form 8−K dated July 12, 2006.)
10−bb Stock Purchase and Deferral Plan, amended and restated November 19, 2009.
10−cc Cash Deferral Plan, amended and restated November 19, 2009.
10−dd Master Trust Agreement for AT&T Inc. Deferred Compensation Plans and Other Executive Benefit Plans and subsequent amendments
dated August 1, 1995 and November 1, 1999.
10−ee 2005 Supplemental Employee Retirement Plan, amended and restated January 1, 2010. (Exhibit 10−a to Form 10−Q filed for June 30,
2009.)
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AT&T Inc.
10−ff AT&T Corp. 1997 Long Term Incentive Program, dated March 14, 2000. (Exhibit 10−gg to Form 10−K for 2005.)
10−gg AT&T Corp. 2004 Long Term Incentive Program. (Exhibit 10−hh to Form 10−K for 2005.)
10−hh AT&T Corp. Executive Deferred Compensation Plan (formerly known as AT&T Corp. Senior Management Incentive Award Deferral
Plan), amended and restated January 1, 2008. (Exhibit 10−hh to Form 10−K for 2008.)
10−ii 2006 Incentive Plan, amended and restated effective through January 28, 2010.
10−jj Pension Benefit Makeup Plan #1, amended December 31, 2008. (Exhibit 10−jj to Form 10−K for 2008.)
10−kk BellSouth Corporation Executive Incentive Award Deferral Plan, as amended and restated effective January 1, 2008. (Exhibit 10−kk to
10−ll BellSouth Corporation Nonqualified Deferred Compensation Plan, dated January 1, 2005. (Exhibit 10−ll to Form 10−K for 2006.)
10−mm BellSouth Officer Compensation Deferral Plan, amended January 1, 2005.
10−nn BellSouth Corporation Deferred Compensation Plan for Non−Employee Directors, dated March 9, 1984. (Exhibit 10−nn to Form
10−K for 2006.)
10−oo BellSouth Corporation Director’s Compensation Deferral Plan, as amended and restated effective as of January 1, 2005. (Exhibit 10−a
to Form 10−Q for September 30, 2007.)
10−pp BellSouth Corporation Stock Plan, dated April 24, 1995. (Exhibit 10−pp to Form 10−K for 2006.)
10−qq BellSouth Corporation Stock and Incentive Compensation Plan, as amended June 28, 2004.
10−qq(i) First Amendment to the BellSouth Corporation Stock and Incentive Compensation Plan, dated September 26, 2005. (Exhibit 10ii to
Form 10−Q for September 30, 2005 of BellSouth Corporation (File No. 1−8607).)
10−qq(ii) Second Amendment to BellSouth Corporation Stock and Incentive Compensation Plan, effective June 26, 2008. (Exhibit 10−qq(ii) to
10−rr Cingular Wireless Long Term Compensation Plan, amended and restated effective November 1, 2007. (Exhibit 10−rr to Form 10−K
for 2007.)
10−ss Master Trust Agreement for AT&T Corp. Deferred Compensation Plans and Other Executive Benefit Plans, effective January 13,
1994. (Exhibit 10−ss to Form 10−K for 2006.)
10−ss(i) First Amendment to Master Trust Agreement, effective December 23, 1997. (Exhibit 10−ss(i) to Form 10−K for 2006.)
10−tt BellSouth Corporation Non−Employee Director Non−Qualified Stock Option Terms and Conditions (for options granted under the
BellSouth Corporation Stock and Incentive Compensation Plan).
10−uu BellSouth Corporation Amended And Restated Trust Under Board Of Directors Benefit Plan(s), effective October 11, 2006. (Exhibit
10−u to Form 10−K for 2006.)
10−vv BellSouth Non−Employee Directors Charitable Contribution Program, effective February 29, 1992. (Exhibit 10−vv to Form 10−K for
2006.)
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AT&T Inc.
10−vv(i) First Amendment to the Non−Employee Directors Charitable Contribution Program, effective January 27, 1997. (Exhibit 10−vv(i) to
10−vv(ii) Second Amendment to the Non−Employee Directors Charitable Contribution Program, effective February 25, 2002. (Exhibit 10−vv(ii)
to Form 10−K for 2006.)
10−ww AT&T Management Relocation Plan. (Exhibit 10−b to Form 10−Q for June 30, 2007.)
10−ww(i) Amendment to AT&T Management Relocation Plan, dated November 20, 2008. (Exhibit 10−ww to Form 10−Q filed for
March 31, 2009.)
10−xx AT&T Corp, Senior Management Long Term Disability and Survivor Protection Plan, amended December 31, 2008. (Exhibit 10−xx
to Form 10−K for 2008.)
10−yy Cingular Wireless Cash Deferral Plan, effective November 1, 2001. (Exhibit 10−yy to Form 10−K for 2007.)
10−zz BellSouth Corporation Supplemental Executive Retirement Plan, amended and restated effective January 1, 2010. (Exhibit10−gto
Form 10−Q filed for June 30, 2009.)
10−aaa BellSouth Supplemental Life Insurance Plan, amended and restated November 1, 2009.
10−bbb BellSouth Compensation Deferral Plan, as amended and restated effective January 1, 2005. (Exhibit 10−bbb to Form 10−K for 2007.)
10−ccc Cingular Wireless BLS Executive Transition Benefit Plan. (Exhibit 10−ccc to Form 10−K for 2007.)
10−ddd Cingular Wireless SBC Executive Transition Benefit Plan. (Exhibit 10−ddd to Form 10−K for 2007.)
10−eee BellSouth Nonqualified Deferred Income Plan, as amended and restated effective January 1, 2005. (Exhibit 10−eee to Form 10−K for
2008.)
10−fff AT&T Mobility 2005 Cash Deferral Plan. (Exhibit 10−fff to Form 10−K for 2007.)
10−ggg AT&T Corp. Non−Qualified Pension Plan, as amended and restated effective December 31, 2008. (Exhibit 10−ggg to Form 10−K for
2008.)
10−hhh AT&T Corp. Excess Benefit and Compensation Plan, as amended and restated effective December 31, 2008. (Exhibit 10−hhh to Form
10−K for 2008.)
10−iii BellSouth Split−Dollar Life Insurance Plan, as amended December 31, 2008, and restated effective January 1, 2005. (Exhibit 10−iii to
10−jjj Form of Non−Disclosure and Non−Solicitation Agreement.
12 Computation of Ratios of Earnings to Fixed Charges.
13 Portions of AT&T’s Annual Report to Stockholders for the fiscal year ended December 31, 2009. Only the information incorporated
by reference into this Form 10−K is included in the exhibit.
21 Subsidiaries of AT&T Inc.
23 Consent of Ernst & Young LLP, independent registered public accounting firm for AT&T.
24 Powers of Attorney.
31 Rule 13a−14(a)/15d−14(a) Certifications

31.1 Certification of Principal Executive Officer
31.2 Certification of Principal Financial Officer
32 Section 1350 Certification
19
AT&T Inc.
101 XBRL Instance Document
We will furnish to stockholders upon request, and without charge, a copy of the Annual Report to Stockholders and the Proxy Statement, portions of which
are incorporated by reference in the Form 10−K. We will furnish any other exhibit at cost.
20
AT&T Inc.
Schedule II − Sheet 1
AT&T INC.
SCHEDULE II − VALUATION AND QUALIFYING ACCOUNTS
Allowance for Doubtful Accounts
Dollars in Millions
COL. A COL. B COL. C COL. D COL. E

Additions
(1) (2) (3)
Balance at Charged to Charged to
Beginning of Costs and Other Balance at End
Period Expenses (a) Accounts (b) Acquisitions Deductions (c) of Period
Year 2009 $ 1,270 1,763 30 2 1,860 $ 1,205

Year 2008 $ 1,364 1,796 929 − 2,819 $ 1,270
Year 2007 $ 1,276 1,617 366 − 1,895 $ 1,364
___________________
(a) Excludes direct charges and credits to expense on the consolidated statements of income and reinvested earnings related to interexchange carrier
receivables.
(b) Includes amounts previously written off which were credited directly to this account when recovered and amounts related to long−distance carrier
receivables which were billed by AT&T.
(c) Amounts written off as uncollectible.
21
AT&T Inc.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on the 25 th day of February, 2010.
AT&T INC.
/s/ Richard G.
Lindner
Richard G.
Lindner
Senior Executive
Vice President
and Chief
Financial
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant
and in the capacities and on the date indicated.
Principal Executive Officer:

Randall Stephenson*
Chairman of the Board, Chief Executive Officer
and President
Principal Financial and Accounting Officer:

Richard G. Lindner
Senior Executive Vice President
and Chief Financial Officer
/s/ Richard G.
Lindner
Richard G.
Lindner, as
attorney−in−fact
and on his own
behalf as
Principal
Financial Officer
and Principal
Accounting
Officer
February 25, 2010
Directors:
Randall L. Stephenson* Jon C. Madonna*
William F. Aldinger III* Lynn M. Martin*
Gilbert F. Amelio* John B. McCoy*
Reuben V. Anderson* Mary S. Metz*
James H. Blanchard* Joyce M. Roché*
August A. Busch III* Laura D’Andrea Tyson*
Jaime Chico Pardo* Patricia P. Upton*
James P. Kelly*
* by power of attorney
22
Exhibit 10−k
ADMINISTRATIVE PLAN
Effective November 1, 2009
The benefits under this Plan are offered by AT&T Inc. (“AT&T”) to persons who have been identified by AT&T as executive officers under Rule
3b−7 of the Securities Exchange Act of 1934 (“Executive Officers”).
Administration of Plan. The Plan or the benefits hereunder may be modified or terminated by the Human Resources Committee in its sole discretion at
any time.
Except to the extent otherwise provided herein, the Vice President responsible for Human Resources (or the successor to such position) shall be the
Administrator of the Plan and will administer the Plan, interpret, construe and apply its provisions in accordance with its terms. The Administrator, in his or
her sole discretion, may establish, adopt or revise rules, as he or she may deem necessary or advisable for the administration of the Plan, including the
allocation or limitation of benefits.
The Administrator may adopt another plan, not to exceed the benefits included herein, for the benefit of such other employees or former employees of
Employers as the Administrator may determine in his or her sole discretion, on such terms and conditions as the Administrator shall determine. The
Administrator may, from time to time, revise the plan solely to increase the financial limits on benefits, not to exceed the corresponding proportional
increase in the consumer price index from January 1, 2003, through the date of change.
All decisions of the Administrator shall be final and binding unless the Board of Directors or its delegate should determine otherwise.
No Employment Rights. Nothing herein shall constitute a contract of continuing employment or in any manner obligate AT&T or any Executive
Officer to continue the employment relationship of, or obligate an Executive Officer to continue in the service of AT&T or any Affiliate.
Non−Transferability. No recipient of benefits under this Plan nor any other person shall have any right to sell, assign, transfer, pledge, anticipate,
mortgage or otherwise encumber, transfer, hypothecate or convey any of the benefits hereunder, or any part thereof, which are, and all rights to which are,
expressly declared to be unassignable and non−transferable.
Notice. Any notice required or permitted to be given to the Administrator under the Plan shall be sufficient if in writing and hand delivered, or sent by
certified mail, to the principal office of AT&T, directed to the attention of the Senior Executive Vice President−Human Resources. Any notice required or
permitted to be given to any other person shall be sufficient if in writing and hand delivered, or sent by certified mail, to the person at the person's last
known mailing address as reflected on the records of his or her employing company. Notice shall be deemed given as of the date of delivery or, if delivery
is made by mail, as of the date shown on the postmark or on the receipt for certification.
Validity. In the event any provision of this Plan is held invalid, void or unenforceable, the same shall not affect, in any respect whatsoever, the validity
of any other provision of this plan.
Applicable Law. This Plan shall be governed and construed in accordance with the laws of the State of Texas to the extent not preempted by the
Employee Retirement Income Security Act of 1974, as amended, and regulations thereunder ("ERISA").
Automobile. Each Executive Officer may receive the use of a four−door automobile or an automobile allowance and expenses associated with the
operation of the automobile. The Administrator shall determine the amount of the allowance for each Executive Officer provided that the allowance shall
not exceed $2,000 per month.
Communications. Each Executive Officer may receive reasonable communications services including local, long distance, DSL, Internet, wireless,
satellite television/video and related equipment.
Financial Counseling. Executive Officers may receive income tax preparation services and financial planning services from a list of designated
providers not to exceed $14,000 per year.
Estate Planning. Executive Officers may receive estate planning documentation services not to exceed $10,000 per year. The Estate Planning limit
restarts in the event of a company−initiated relocation to another state.
Clubs. Executive Officers may receive initiation fees, dues, assessments and other charges for reasonable memberships as approved by the CEO or the
Administrator, in each case in his or her sole discretion. AT&T does not reimburse for dues, initiation fees or other expenses incurred in connection with a
membership in a club that discriminates in its membership policies based on race, creed, gender or ethnic origin. The Administrator shall report annually to
the Human Resources Committee as to the usage of this benefit by the Chief Executive Officer and to the Chief Executive Officer on the usage by all other
Executive Officers.
Executive Protection. Based upon the concern for the security of Executive Officers, the need to secure their optimum availability for business
purposes and to permit uninterrupted communications between them, the Executive Officers are authorized to receive home security services, and,
whenever feasible, to use AT&T provided aircraft in connection with business travel and to use such aircraft for the personal travel of Executive Officers
where the Chief Executive Officer, in his or her sole discretion, deems such use appropriate because of similar considerations.
Retirement. Upon the Retirement of an Executive Officer, he or she may receive up to an additional amount for financial consulting reasonably in
connection with his/her Retirement, as follows: In any given year, 1. for retirements occurring from January 1 through June 30 (inclusive), the amount will
be $20,000 in the calendar year of retirement; 2. for retirements occurring from July 1 through November 30 (inclusive), the amount will be $10,000 in the
calendar year of retirement and $10,000 in the immediately following calendar year; and 3. For retirements occurring from December 1 through December
31 (inclusive), the amount will be $20,000 in the year following retirement. A Retired Executive Officer shall continue to receive the communications
benefits until death and his or her survivor shall receive the communications benefit for six (6) billing cycles. After the Retirement of an Executive Officer
on or before December 31, 2009, he or she shall continue to receive the financial counseling and estate planning benefits until his or her death. Executive
Officers that retire on or after January 1, 2010 shall continue to receive the financial counseling and estate planning benefits for up to 36 months following
retirement or until the end of the year following the year of death, whichever occurs earlier. After the death of an Executive Officer or Retired Executive
Officer, his or her survivor shall receive the communications benefit for 6 billing cycles and shall receive the financial counseling and estate planning
benefits for the remainder of the year of death and the immediately following calendar year. In a Retired Executive Officer’s final calendar year of
eligibility, the Annual Limits shall be pro−rated on a monthly basis, based on the number of full or partial months the Retired Executive Officer worked in
the calendar year of Retirement divided by twelve (12).
Loyalty Conditions.
This Section applies to Executive Officers who are actively employed on or after January 1, 2010.
Executive Officers acknowledge that no coverage and benefits would be provided under this Plan on and after January 1, 2010 but for the loyalty
conditions and covenants set forth below, and that the conditions and covenants herein are a material inducement to AT&T’s willingness to sponsor the Plan
and to offer Plan coverage and benefits for the Executive Officers on or after January 1, 2010. Accordingly, as a condition of receiving coverage and any
Plan benefits on or after January 1, 2010, each Executive Officer is deemed to agree that he shall not, without obtaining the written consent of AT&T in
advance, participate in activities that constitute engaging in competition with AT&T or engaging in conduct disloyal to AT&T, as those terms are defined in
this Section. Further, notwithstanding any other provision of this Plan, all coverage and benefits under this Plan on and after January 1, 2010 with respect to
an Executive Officer and his or her Dependents shall be subject in their entirety to the enforcement provisions below if the Executive Officer, without the
Administrator’s consent participates in an activity that constitutes engaging in competition with AT&T or engaging in conduct disloyal to AT&T, as defined
below.
Definitions. For purposes of this Section and of the Plan generally:
an “Employer Business” shall mean AT&T, any subsidiary, or any business in which AT&T or a subsidiary or an affiliated company of AT&T has a
substantial ownership or joint venture interest;
“engaging in competition with AT&T” shall mean, while employed by an Employer Business or within two (2) years after the Executive Officer’s
termination of employment, engaging by the Executive Officer in any business or activity in all or any portion of the same geographical market where the
same or substantially similar business or activity is being carried on by an Employer Business. “Engaging in competition with AT&T” shall not include
owning a nonsubstantial publicly traded interest as a shareholder in a business that competes with an Employer Business. “Engaging in competition with
AT&T” shall include representing or providing consulting services to, or being an employee or director of, any person or entity that is engaged in
competition with any Employer Business or that takes a position adverse to any Employer Business.
“engaging in conduct disloyal to AT&T” means, while employed by an Employer Business or within two (2) years after the Executive Officer’s
termination of employment, (i) soliciting for employment or hire, whether as an employee or as an independent contractor, for any business in competition
with an Employer Business, any person employed by AT&T or its affiliates during the one (1) year prior to the termination of the Executive Officer’s
employment, whether or not acceptance of such position would constitute a breach of such person’s contractual obligations to AT&T and its affiliates;
(ii) soliciting, encouraging, or inducing any vendor or supplier with which the Executive Officer had business contact on behalf of any Employer Business
during the two (2) years prior to the termination of the Executive Officer’s employment, for any reason to terminate, discontinue, renegotiate, reduce, or
otherwise cease or modify its relationship with AT&T or its affiliate; or (iii) soliciting, encouraging, or inducing any customer or active prospective
customer with whom Executive Officer had business contact, whether in person or by other media, on behalf of any Employer Business during the
two (2) years prior to the termination of Executive Officer’s employment for any reason (“Customer”), to terminate, discontinue, renegotiate, reduce, or
otherwise cease or modify its relationship with any Employer Business, or to purchase competing goods or services from a business competing with any
Employer Business, or accepting or servicing business from such Customer on behalf of himself or any other business. “Engaging in conduct disloyal to
AT&T” also means, disclosing Confidential Information to any third party or using Confidential Information, other than for an Employer Business, or
failing to return any Confidential Information to the Employer Business following termination of employment.
“Confidential Information” shall mean all information belonging to, or otherwise relating to, an Employer Business, which is not generally known,
regardless of the manner in which it is stored or conveyed to the Executive Officer, and which the Employer Business has taken reasonable measures under
the circumstances to protect from unauthorized use or disclosure. Confidential Information includes trade secrets as well as other proprietary knowledge,
information, know−how, and non−public intellectual property rights, including unpublished or pending patent applications and all related patent rights,
formulae, processes, discoveries, improvements, ideas, conceptions, compilations of data, and data, whether or not patentable or copyrightable and whether
or not it has been conceived, originated, discovered, or developed in whole or in part by the Executive Officer. For example, Confidential Information
includes, but is not limited to, information concerning the Employer Business’ business plans, budgets, operations, products, strategies, marketing, sales,
inventions, designs, costs, legal strategies, finances, employees, customers, prospective customers, licensees, or licensors; information received from third
parties under confidential conditions; or other valuable financial, commercial, business, technical or marketing information concerning the Employer
Business, or any of the products or services made, developed or sold by the Employer Business. Confidential Information does not include information that
(i) was generally known to the public at the time of disclosure; (ii) was lawfully received by the Executive Officer from a third party; (iii) was known to the
Executive Officer prior to receipt from the Employer Business; or (iv) was independently developed by the Executive Officer or independent third parties;
in each of the foregoing circumstances, this exception applies only if such public knowledge or possession by an independent third party was without breach
by the Executive Officer or any third party of any obligation of confidentiality or non−use, including but not limited to the obligations and restrictions set
forth in this Plan.
Forfeiture of Benefits. Coverage and benefits under this Plan shall be forfeited and shall not be provided under this Plan for any period as to which the
Administrator determines that, within the time period and without the written consent specified, the Executive Officer has been either engaging in
competition with AT&T or engaging in conduct disloyal to AT&T.
Equitable Relief. The parties recognize that any Executive Officer’s breach of any of the covenants in this Section will cause irreparable injury to
AT&T, will represent a failure of the consideration under which AT&T (in its capacity as creator and sponsor of the Plan) agreed to provide the Executive
Officer with the opportunity to receive Plan coverage and benefits, and that monetary damages would not provide AT&T with an adequate or complete
remedy that would warrant AT&T’s continued sponsorship of the Plan and payment of Plan benefits for all Executive Officers. Accordingly, in the event of
an Executive Officer’s actual or threatened breach of the covenants herein, the Administrator, in addition to all other rights and acting as a fiduciary under
ERISA on behalf of all Executive Officers, shall have a fiduciary duty (in order to assure that AT&T receives fair and promised consideration for its
continued Plan sponsorship and funding) to seek an injunction restraining the Executive Officer from breaching the covenants in this Section. In addition,
AT&T shall pay for any Plan expenses that the Administrator incurs hereunder, and shall be entitled to recover from the Executive Officer its reasonable
attorneys’ fees and costs incurred in obtaining such injunctive remedies. To enforce its repayment rights with respect to an Executive Officer, the Plan shall
have a first priority, equitable lien on all Plan benefits provided to or for the Executive Officer and his or her Dependents. In the event the Administrator
succeeds in enforcing the terms of this Article through a written settlement with the Executive Officer or a court order granting an injunction hereunder, the
Executive Officer shall be entitled to collect Plan benefits prospectively, if the Executive Officer is otherwise entitled to such benefits, net of any fees and
costs assessed pursuant hereto (which fees and costs shall be paid to AT&T as a repayment on behalf of the Executive Officer), provided that the Executive
Officer complies with said settlement or injunction.
Uniform Enforcement. In recognition of AT&T’s need for nationally uniform standards for the Plan administration, it is an absolute condition in
consideration of any Executive Officer’s accrual or receipt of benefits under the Plan after January 1, 2010 that each and all of the following conditions
apply to all Executive Officers and to any benefits that are paid or are payable under the Plan:
(1) To the maximum extent applicable ERISA shall control all issues and controversies hereunder, and the Administrator
shall serve for purposes hereof as a “fiduciary” of the Plan, and as its “named fiduciary” within the meaning of ERISA.
(2) All litigation between the parties relating to this Article shall occur in federal court, which shall have exclusive
jurisdiction, any such litigation shall be held in the United States District Court for the Northern District of Texas, and the only remedies available with
respect to the Plan shall be those provided under ERISA to the extent it is applicable.
(3) If the Administrator determines in its sole discretion either (I) that AT&T or its affiliate that employed the Executive
Officer terminated the Executive Officer’s employment for cause, or (II) that equitable relief enforcing the Executive Officer’s covenants under this Section
is either not reasonably available, not ordered by a court of competent jurisdiction, or circumvented because the Executive Officer has sued in state court, or
has otherwise sought remedies not available under ERISA (to the extent applicable), then in any and all of such instances the Executive Officer shall not be
entitled to collect any Plan benefits, and if any Plan benefits have been paid to the Executive Officer, the Executive Officer shall immediately repay all Plan
benefits to the Plan (which shall be used to pay Plan administrative expenses or Plan benefits) upon written demand from the Administrator. Furthermore,
the Executive Officer shall hold AT&T and its affiliates harmless from any loss, expense, or damage that may arise from any of the conduct described in
clauses (I) and (II) hereof.
Taxes. Subject to the foregoing loyalty and enforcement provisions, recipients of benefits under this Plan who retire on or before December 31, 2009
shall receive an amount equal to that necessary to offset the Federal, state and local income taxes, as well as associated employment taxes, of the recipient
(including taxes on tax reimbursements) resulting from the benefits in this Plan, other than (1) the monthly automobile allowance for Executive Officers;
and (2) personal use of aircraft.
Annual Limits. Expenses will be charged against the annual limits for the calendar year based on the date of the invoice.
Exhibit 10−v
CHANGE IN CONTROL SEVERANCE PLAN
Effective January 1, 2007

Amended through January 1, 2010
AT&T INC.
CHANGE IN CONTROL SEVERANCE PLAN
Article 1− Purpose
The purpose of the AT&T Inc. Change in Control Severance Plan (the “Plan”) is to foster the continuous employment of key management personnel of the
Company and its Subsidiaries and to reinforce and encourage their continued attention and dedication to their duties in the face of potentially disturbing
circumstances arising from the possibility of a Change in Control (as defined in Section 2) of the Company, although no such change is now apparent or
contemplated.
Article 2 − Definitions
As used in this Plan, the following terms shall have the respective meanings set forth below, and, when the meaning is intended, the initial letter of the word
is capitalized:
“Base Salary” means the Participant’s annual rate of base salary in effect immediately prior to the occurrence of the circumstance giving rise to the
Participant’s Termination of Employment, or, if greater, the Participant’s annual rate of base salary in effect immediately prior to the Change in Control.
“Board” means the Board of Directors of the Company and, after a Change in Control, the “board of directors” of the Ultimate Parent (as defined below
under Change in Control).
“Bonus Amount” means a Participant’s target annual bonus for the fiscal year in which the Change in Control occurs or in which Participant’s Date of
Termination occurs, whichever is greater; provided that, if a target annual bonus has not been established for the applicable fiscal year, then the target
annual bonus established for the preceding fiscal year shall be substituted in lieu thereof.
“Cause” means (i) the willful and continued failure by a Participant to substantially perform his or her duties with the Company and its Subsidiaries (other
than any such failure resulting from his or her incapacity due to physical or mental impairment, or any such actual or anticipated failure after the issuance of
a notice of termination by him or her for Good Reason) after a written demand for substantial performance is delivered to the Participant by the Company
which demand specifically identifies the manner in which the Company believes that he or she has not substantially performed his or her duties, or (ii) the
willful engaging by a Participant in conduct which is demonstrably and materially injurious to the Company or any Subsidiary, monetarily or
otherwise. For purposes of this definition, no act, or failure to act, on a Participant’s part shall be deemed “willful” unless done, or omitted to be done, by
the Participant not in good faith and without reasonable belief that his or her action or omission was in the best interest of the Company and its
Subsidiaries. Notwithstanding the foregoing, a Participant shall not be deemed to have been terminated for Cause unless and until there shall have been
delivered to him or her a copy of a resolution duly adopted by the affirmative vote of not less than three−quarters (3/4) of the entire membership of the
Board at a meeting of the Board called and held for such purpose (after reasonable notice to the Participant and an opportunity for him or her, together with
counsel, to be heard before the Board), finding that in the good faith opinion of the Board the Participant was guilty of the conduct set forth above in clauses
(i) or (ii) of the first sentence of this definition and specifying the particulars thereof in detail.
“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 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
consummation of 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 fifty percent (50%) of the total voting power represented by the voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation (such post−merger surviving entity the "Ultimate Parent"), 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.
“Committee” means the Human Resources Committee of the Board.
“Company” means AT&T Inc.
“Date of Termination” means the date of the Participant's Termination of Employment with the Company and its Subsidiaries as determined under Section
4.1 of the Plan.
“Disability” has the meaning ascribed under the relevant Employer’s long−term disability plan.
“Employee” means any person employed as an employee by an Employer and paid on an Employer’s employee 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 the Employer. For
purposes of this Plan, a person on a Leave of Absence who otherwise would be an Employee shall be deemed to be an Employee.
“Employer” means the Company or any of its Subsidiaries provided that, if an entity ceases to be a Subsidiary during the Termination Period, such entity
shall continue to be an Employer and the Employee shall continue to be a Participant until the second anniversary of the Change in Control and,
notwithstanding any other provision to the contrary, any benefits under the Plan shall be paid or provided by the Company.
“Exchange Act” means the Securities Exchange Act of 1934.
“Executive Officer” means a person who has been identified by the Company as an executive officer under Rule 3b−7 of the Securities Exchange Act of
1934 prior to a Change in Control.
“Good Reason” means, without the Participant’s express written consent, the occurrence of any of the following events after a Change in Control: (i) the
assignment to the Participant of any duties inconsistent with his or her title(s) or status immediately prior to the Change in Control, or a substantial adverse
alteration in the nature or status of his or her responsibilities from those in effect immediately prior to the Change in Control; (ii) a reduction in the
Participant’s annual base salary, target short−term or long term incentive award opportunity (including any current payments that may be made thereunder,
such as the payment of dividend equivalents) as in effect immediately prior to the Change in Control, except for across−the−board salary reductions
similarly affecting all officers of the Company and its Subsidiaries and all managers in equivalent positions of any person in control of the Company; (iii)
the failure to pay to the Participant any portion of his or her current compensation or deferred compensation under any compensation or benefit program
within seven (7) days of the date such payment is due; (iv) the failure to continue to provide the Participant with benefits substantially similar to those
enjoyed by him or her under the pension, life insurance, medical, health, accident and disability plans, or any fringe benefit material to the Participant that
he or she was eligible for at the time of the Change in Control; the direct or indirect material reduction in any of such benefits; or the failure to provide the
Participant with the number of paid vacation days to which he or she is entitled on the basis of his or her duration of service with the Company and its
Subsidiaries, in accordance with the Employer's normal vacation policy in effect immediately prior to the Change in Control; (v) the failure to obtain a
satisfactory agreement from any successor to assume and agree to perform this Plan, as contemplated in Article 7; or (vi) any purported termination of the
Participant’s employment after a Change in Control which is not effected pursuant to a notice of termination satisfying the requirements of Sections 4.1 and
8.1 (for purposes of this Plan, no such purported termination shall be effective); provided, however, that a good faith determination within ninety (90) days
of the occurrence of a Change in Control by a Participant who is the Chief Executive Officer of the Company (the “CEO”) or who was an Executive Officer
on January 1, 1990 that, as a result of such Change in Control, he or she is not able to discharge his or her duties effectively shall constitute Good Reason.
An isolated, insubstantial and inadvertent action taken in good faith implicating clauses (i), (iv), (v) or (vi) of this definition which is fully corrected by the
Company prior to the Date of Termination specified in the notice of termination shall not constitute Good Reason. A Participant’s right to terminate his or
her employment for Good Reason shall not be affected by his or her incapacity due to physical or mental impairment. A Participant’s continued
employment shall not constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason hereunder.
“Leave of Absence” shall mean when a Participant is absent from employment with an Employer on a leave of absence military leave, or sick leave, 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 incur a Termination of
Employment upon cessation of such leave if the Employee does not return to work prior to that time, 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)), and the Employee shall incur a Termination of Employment upon cessation of
such leave. 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. For purposes of this Plan, a Leave of Absence shall be deemed to also include a transfer by an Employer of a person to, and continuous
employment by, an entity for a rotational work assignment. To be a rotational work assignment, the Employer must have indicated in writing to the person
that the person was to be rehired by the Employer upon the earlier of the termination of the rotational work assignment and the end of the six month period
commencing on the first day of such potential work assignment.
“Officer Level Employee” means any Executive Officer and any Employee who is an “officer level” Employee for compensation purposes as shown on the
records of the Company and its Subsidiaries.
“Participant” means the CEO, each Officer Level Employee who had in effect on September 28, 2006 a Severance Benefits – Change in Control Agreement
with the Company, and each other Officer Level Employee (i) who is designated from time to time in writing by the CEO and (ii) whose designation is
evidenced in writing by a notification of participation to the Employee signed by the CEO. A person shall cease to be a Participant upon (a) the
Participant’s Termination of Employment prior to a Potential Change in Control or (b) the Board, the Committee or the CEO determining, in their sole
discretion, that the person shall cease to qualify for benefits under this Plan (but any such determination made in respect of a Participant shall be considered
an amendment of the Plan adverse to the interests of the affected Participant and is subject to the provisions of Section 8.5). Notwithstanding the foregoing,
only the Committee shall have the authority to exclude from participation or take any other action with respect to Executive Officers.
“Potential Change in Control” shall be deemed to have occurred if (i) the Company enters into an agreement, the consummation of which would result in
the occurrence of a Change in Control or (ii) the Board adopts a resolution to the effect that, for purposes of this Plan, a potential change in control of the
Company has occurred.
“Qualifying Termination” means a Participant’s Termination of Employment during the Termination Period (i) by the Employer other than for Cause or (ii)
by the Participant for Good Reason. Termination of Employment on account of death, Disability or Retirement shall not be treated as a Qualifying
Termination.
“Retirement” means the Participant’s mandatory retirement in accordance with the Employer’s mandatory retirement age policy, if any, for officers as in
effect immediately prior to a Change in Control or in accordance with any retirement arrangement established with the Participant’s consent with respect to
him or her; provided, however, that a Participant's termination for Good Reason shall not constitute Retirement.
“Specified Employee” means any Participant who is a “Key Employee” (as defined in Code Section 416(i) without regard to paragraph (5) thereof), as
determined by the Company in accordance with its uniform policy with respect to all arrangements subject to Code Section 409A, based upon the twelve
(12) month period ending on each December 31st (such twelve (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
Specified Employees for purposes of the Plan during the twelve (12) month period that begins on the first day of the 4th month following the close of such
identification period.
“Subsidiary” means any corporation, partnership, venture or other entity in which the Company holds, directly or indirectly, a fifty percent (50%) or greater
ownership interest. The Committee may, at its sole discretion, designate, on such terms and conditions as the Committee shall determine, any other
corporation, partnership, limited liability company, venture or other entity a Subsidiary for purposes of this Plan.
“Termination of Employment” means the event where the Participant has a “separation from service,” as defined under Section 409A, with the Employer.
“Termination Period” means the period of time beginning with a Change in Control and ending on the second anniversary of such Change in Control.
Article 3 − Effectiveness of the Plan
This Plan shall be effective as of January 1, 2007. Nothing in this Plan shall be deemed to entitle any Participant to continued employment with
any Employer, and if a Participant's employment with any Employer terminates prior to a Change in Control, the Participant shall have no rights under this
Plan (except in the case of a Qualifying Termination).
Article 4 − Payments Upon a Qualifying Termination
4.1 Termination of Employment.
(a) Notice of Termination. Any purported termination of a Participant’s employment during the Termination Period by an
Employer or by a Participant shall be communicated by written notice of termination to the other party in accordance with this Section 4.1 and
Section 8.1 (regarding notices). For purposes of this Plan, a “notice of termination” shall mean a notice which shall indicate the specific
termination provision in this Plan relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for the
Participant’s Termination of Employment under the provision so indicated. The failure by the Participant or the Employer to set forth in such
notice any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Participant or the
Employer hereunder or preclude the Participant or the Employer from asserting such fact or circumstance in enforcing the Participant’s or the
Employer’s rights hereunder.
(b) Date of Termination. If a Participant has a Qualifying Termination, the Date of Termination shall be the date specified
in the notice of termination (which, in the case of a termination other than for Cause or a termination for Good Reason shall not be less than
fifteen (15) nor more than sixty (60) days from the date such notice is given). If a Participant's Termination of Employment is for Cause, the
Date of Termination shall not be less than thirty (30) days from the date notice is given. In the event of a dispute arising out of the Participant’s
Termination of Employment, the Date of Termination will be determined in accordance with Section 4.1(c).
(c) Disputes Involving Termination. If within fifteen (15) days after any notice of termination is given, or, if later, prior to
the Date of Termination (as determined without regard to this provision), the party receiving such notice of termination notifies the other party
that a dispute exists concerning whether the termination is a Qualifying Termination or for Cause, the Date of Termination for purposes of
Section 4.2 hereof shall be the date on which the dispute is finally resolved either by mutual written agreement of the parties, or by a final
judgment, order or decree of a court of competent jurisdiction (which is not appealable or with respect to which the time for appeal therefrom has
expired and no appeal has been perfected); provided, however, that if the dispute is not resolved prior to the end of the Termination Period, the
Termination Period shall be extended so as not to deprive the Participant of the benefits under Section 4.2 in respect of such termination;
provided further, that the Date of Termination shall be extended by a notice of dispute only if such notice is given in good faith and the party
giving such notice pursues the resolution of such dispute with reasonable diligence. During the pendency of any such dispute (the “Dispute
Period”), subject to Section 6.1, the Employer will (i) continue to pay the Participant his or her full Base Salary in accordance with the
Company’s payroll practice in effect from time to time (provided that the amount paid in any calendar year shall be equal to the Participant’s
annual rate of Base Salary or a proportionate fraction thereof with respect to portions of calendar years during the Dispute Period (other than
amounts that are required to be paid in a subsequent calendar year pursuant to Section 6.1)), and (ii) continue the Participant as a participant in all
Health Benefits as described in Section 4.2(c) of the Plan (subject to Section 6.2 of the Plan) on the same basis as provided under Section 4.2(c).
Amounts paid under this provision are in addition to all other amounts due under this Plan and shall not be offset against or reduce any other
amounts due under this Plan.
4.2 Severance Payments.
If the Participant has a Qualifying Termination, then the Company shall or shall cause the Employer to provide to the Participant:
(a) his or her full base salary through the Date of Termination at the rate in effect at the time notice of termination is given,
plus all other amounts to which he or she is entitled under any compensation plan in effect immediately prior to the Change in Control, at the
time such payments are due; provided that, subject to the Participant’s execution of (and not revoking) a Release in the form attached to this Plan
as Schedule A (the “Release”) for purposes of determining the amount to which a Participant is entitled under the Financial Counseling Program,
he or she shall be regarded as having retired under the terms of the program; and
(b) subject to the Participant’s execution of (and not revoking) a Release, a lump sum cash payment equal to the result of
multiplying (i) the sum of (A) the Participant’s Base Salary, plus (B) the Participant’s Bonus Amount by (ii) 2.99; provided, however, that if the
amount of such payment cannot be finally determined on or before such day, the Participant shall be paid an estimate, as determined in good faith
by the Company of the minimum amount of such payment and the remainder of such payment (together with interest at the rate provided in
section 1274(b)(2)(B) of the Internal Revenue Code of 1986, as amended (the “Code”)) as soon as the amount thereof can be determined;
provided further that, in the event that the amount of the estimated payment exceeds the amount subsequently determined to have been due, such
excess shall be reimbursed by the Participant, payable on the fifth (5 th) day after demand by the Company (together with interest at the rate
provided in section 1274(b)(2)(B) of the Code); and
(c) subject to the Participant’s execution of (and not revoking) a Release, if the Participant is not otherwise entitled to such
benefits at no cost to him or her pursuant to the terms of such plans, subject to section 6.2 of the Plan, for a thirty six (36) month period from the
Date of Termination or until December 31 of the year in which the Participant reaches age sixty−five (65), whichever is the shorter period (the
“Benefit Period”), life, health and dental benefits (including spouse and dependent coverage) (“Health Benefits”) substantially similar to those
that he or she was receiving immediately prior to the Date of Termination and such benefits shall be provided at no cost to the Participant (or
spouse and dependents). Notwithstanding the foregoing, the Participant shall not be provided any Health Benefit pursuant to this Section 4(c) if
an equivalent benefit is actually received by the Participant during the Benefit Period from another Employer following his or her Date of
Termination and any such Health Benefit actually received by the Participant shall be reported by the Participant to the Company; and
(d) subject to the Participant’s execution of (and not revoking) a Release, if the Participant is subject to any excise tax
imposed under Section 4999 of the Code (the “Excise Tax”) by reason of the Change in Control and the prior deferral of income (whether or not
the Participant has a Qualifying Termination), then the Company shall pay to the Participant an amount as specified in Schedule B.
(e) Except as otherwise expressly provided pursuant to this Plan, this Plan shall be construed and administered in a manner
which avoids duplication of compensation and benefits which may be provided under any other plan, program, policy, or other arrangement or
individual contract. In the event a Participant is covered by any other plan, program, policy, individually negotiated agreement or other
arrangement, in effect as of his or her Date of Termination, that may duplicate the payments and benefits provided for in this Article 4, the
Company may reduce or eliminate the duplicative benefits provided for under the Plan but solely to the extent such reduction or elimination does
not cause the Participant to be subject to penalty taxes under Section 409A.
(f) This Plan does not abrogate any of the usual entitlements which a Participant has or will have, first, while a regular
employee, and subsequently, after termination, and thus a Participant shall be entitled to receive all benefits payable to him or her under each and
every qualified plan, welfare plan and any other plan or program relating to benefits and deriving from his or her employment with the Company
and it Subsidiaries, but solely in accordance with the terms and provisions thereof.
Article 5 − Withholding Taxes
The Company and its Subsidiaries may withhold from all payments due to the Participant (or his beneficiary or estate) hereunder all
taxes which, by applicable federal, state, local or other law, is required to be withheld.
Article 6 − Certain Additional Agreements under Section 409A
6.1 Delay of Payment. In the event that a payment to be made pursuant to Sections 4.1(c), 4.2(b) or Schedule B or any other amounts under this
Plan that constitutes non−qualified deferred compensation under Section 409A of the Code ("Section 409A") is to be made to a “Specified Employee,” such
payment will be delayed for six (6) months after the Date of Termination if required in order to avoid additional tax under Section 409A and paid in a single
lump sum on the first business day of the month following the end of such six (6) month period. If a Participant who is a Specified Employee dies within
six (6) months following such Termination of Employment, any such delayed payments shall not be further delayed, and shall be immediately payable
within thirty (30) days to his or her estate in accordance with the applicable provisions of this Plan.
6.2 Health Benefits. Health Benefits shall be provided in such a manner that such benefits (and the costs and premiums thereof) are excluded
from the Participant’s income for federal income tax purposes and, if the Company reasonably determines that providing continued coverage under one or
more of its health care benefit plans contemplated herein could be taxable to the Participant, the Company shall provide such benefits at the level required
hereby through the purchase of individual insurance coverage.
6.3 Cash Payments. The Company shall use its best efforts to pay, or shall use its best efforts to cause the Employer to pay, to the Participant the
cash lump sum described in Section 4.2(b) within eight (8) days following the execution by the Participant of the Release (subject to the Participant not
revoking such Release); provided, however, that in no event shall such payment be made later than the later of (i) the date provided in Section 6.1, if
applicable, and (ii) the end of the ninety (90) day period commencing with the Date of Termination.
6.4 No Adverse Action. No Employer will take any action that would expose any payment or benefit to a Participant under this Plan to the
additional tax imposed under Section 409A unless (i) the Employer is obligated to take the action under an agreement, plan or arrangement, (ii) a Participant
requests the action, (iii) the Employer advises such Participant in writing that the action may result in the imposition of the additional tax and (iv) such
Participant subsequently requests the action in a writing that acknowledges that he or she will be responsible for any effect of the action under Section
409A.
Article 7 − Successors; Binding Agreement
7.1 The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially
all of the business and/or assets of the Company to unconditionally assume all of the obligations of the Employer hereunder. Failure of the Company to
obtain such assumption prior to the effectiveness of any such succession shall constitute Good Reason hereunder and shall entitle the Participants to
compensation and other benefits in the same amount and on the same terms as the Participants would be entitled hereunder if they had a Qualifying
Termination, except that for purposes of implementing the foregoing, the date on which any succession becomes effective shall be deemed the Date of
Termination.
7.2 The benefits provided under this Plan shall inure to the benefit of and be enforceable by the Participant’s personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and legatees. If the Participant shall die while any amounts would be payable to the
Participant hereunder had the Participant continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of
this Plan to such person or persons appointed in writing by the Participant to receive such amounts or, if no person is so appointed, to the Participant’s
estate.
Article 8 − Miscellaneous
8.1 Elections and Notices.
Notwithstanding anything to the contrary contained in this Plan, all elections and notices of every kind under this Plan shall be made
on forms prepared by the Company or its General Counsel, Secretary or Assistant Secretary, or their respective delegates or shall be made in such other
manner as permitted or required by the Company or its 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 the Company (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.
If not otherwise specified by this Plan or the Company, any notice or filing required or permitted to be given to the Company under the
Plan shall be delivered to the principal office of the Company, directed to the attention of the Senior Executive Vice President in charge of Human
Resources for the Company 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 the Employer or, at the option of the Company, to the Participant’s e−mail address as shown on the records of the Employer. It is the
Participant’s responsibility to ensure that the Participant’s addresses are kept up to date on the records of the Employer. In the case of notices affecting
multiple Participants, the notices may be given by general distribution at the Participants’ work locations.
8.2 No Mitigation; Resolution of Disputes and Costs.
(a) In no event shall the Participant be obligated to seek other employment or take other action by way of mitigation of the
amounts payable to the Participant under any of the provisions of this Plan and, except as provided in Section 4.2(c), such amounts shall not be
reduced whether or not the Participant obtains other employment.
(b) Participants may submit claims for benefits by giving notice to the Company pursuant to Section 8.1. If a Participant
believes that he or she has not received coverage or benefits to which he or she is entitled under the Plan, the Participant may notify the Company
in writing of a claim for coverage or benefits. If the claim for coverage or benefits is denied in whole or in part, the Company shall notify the
applicant in writing of such denial within thirty (30) days (which may be extended to sixty (60) days under special circumstances), with such
notice setting forth: (i) the specific reasons for the denial; (ii) the Plan provisions upon which the denial is based; (iii) any additional material or
information necessary for the applicant to perfect his or her claim; and (iv) the procedures for requesting a review of the denial. Upon a denial of
a claim by the Company, the Participant may: (i) request a review of the denial by the Board or, where review authority has been so delegated,
by such other person or entity as may be designated by the Board for this purpose; (ii) review any Plan documents relevant to his or her claim;
and (iii) submit issues and comments to the Board or its delegate that are relevant to the review. Any request for review must be made in writing
and received by the Board or its delegate within sixty (60) days of the date the applicant received notice of the initial denial, unless special
circumstances require an extension of time for processing. The Board or its delegate will make a written ruling on the applicant’s request for
review setting forth the reasons for the decision and the Plan provisions upon which the denial, if appropriate, is based. This written ruling shall
be made within thirty (30) days of the date the Board or its delegate receives the applicant’s request for review unless special circumstances
require an extension of time for processing, in which case a decision will be rendered as soon as possible, but not later than sixty (60) days after
receipt of the request for review. All extensions of time permitted by this Section 18 will be permitted at the sole discretion of the Board or its
delegate. If the Board does not provide the Participant with written notice of the denial of his or her appeal, the Participant’s claim shall be
deemed denied.
(c) Notwithstanding anything in this Plan to the contrary, any court, tribunal or arbitration panel that adjudicates any
dispute, controversy or claim arising between a Participant and any Employer, or any of their delegates or successors, in respect of a Participant’s
Qualifying Termination, will apply a de novo standard of review to any determinations made by such person. Such de novo standard shall apply
notwithstanding the grant of full discretion hereunder to any such person or characterization of any such decision by such person as final, binding
or conclusive on any party.
(d) If any contest or dispute shall arise under this Plan involving a Participant’s Termination of Employment or involving
the failure or refusal of any Employer to perform fully in accordance with the terms hereof, the Company shall or shall cause the Employer to
reimburse the Participant on a current basis for all reasonable legal fees and related expenses, if any, incurred by the Participant at any time from
the Effective Date of this Plan through the Participant’s remaining lifetime (or, if longer, through the 20th anniversary of the Change in
Control) in connection with such contest or dispute (regardless of the result thereof), together with interest at the rate provided in section
1274(b)(2)(B) of the Code, such interest to accrue thirty (30) days from the date the Company receives the Participant’s statement for such fees
and expenses through the date of payment thereof, regardless of whether or not the Participant’s claim is upheld by a court of competent
jurisdiction or an arbitration panel; provided, however, that the Participant shall be required to repay immediately any such amounts to the
Employer to the extent that a court or an arbitration panel issues a final and non−appealable order setting forth the determination that the position
taken by the Participant was frivolous or advanced by the Participant in bad faith. To comply with Section 409A, in no event shall the payments
by the Employer under this Section 8.2(d) be made later than the end of the calendar year next following the calendar year in which such fees and
expenses were incurred, provided, that the Participant shall have submitted an invoice for such fees and expenses at least ten (10) days before the
end of the calendar year next following the calendar year in which such fees and expenses were incurred. The amount of such legal fees and
expenses that the Employer is obligated to pay in any given calendar year shall not affect the legal fees and expenses that the Employer is
obligated to pay in any other calendar year, and the Participant’s right to have the Employer pay such legal fees and expenses may not be
liquidated or exchanged for any other benefit.
8.3 Survival. The respective obligations and benefits afforded to the Company and the Participant as provided in Articles 4 (to the extent that
payments or benefits are owed as a result of a Qualifying Termination that occurs during the term of this Plan), 5, 6, 7 and 8 shall survive the termination of
this Plan.
8.4 Governing Law; Validity.
To the extent not preempted by Federal law, the Plan, and all benefits and agreements hereunder, and any and all disputes in
connection therewith, shall be governed by and construed in accordance with the substantive laws of the State of Delaware, 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.
8.5 Amendment and Termination. The Board or the Committee may amend (and, by amendment, terminate) this Plan at any time; provided,
however, that (i) no amendment that reduces or eliminates any benefit or other entitlement of any Participant or that is otherwise adverse to the interests of a
Participant (an “Adverse Amendment”) may take effect prior to the beginning of any calendar year, and any such amendment shall be void and of no effect,
unless the Participant was notified of such amendment by September 30 of the prior year, (ii) no Adverse Amendment may be adopted during the period of
time beginning on a Potential Change in Control and ending on the earlier of (a) the termination of the agreement that constituted the Potential Change in
Control and (b) the second anniversary of the resulting Change in Control, without the Participant’s written consent, and (iii) no Adverse Amendment may
be adopted during the period commencing on a Change in Control and ending on the second anniversary of the Change in Control without the Participant’s
written consent. The restrictions on amendments set forth in the prior sentence shall not apply to any amendment adopted within the period specified in
clauses (ii) or (iii), above, if the following three conditions are satisfied: (1) the amendments do not take effect until the expiration of the periods, as
applicable, set forth in such clauses, (2) each adversely affected Participant receives written notice of the adoption of such amendments within ten (10) days
of such adoption and (3) such written notice is provided at least ninety (90) days prior to such amendments taking effect.
8.6 Interpretation and Administration. The Plan shall be administered by the Board. The Board may delegate any of its powers under the Plan to
a committee thereof or prior to a Change in Control, to the CEO. Unless otherwise provided in this Plan, actions of the Board or such committee shall be
taken by a majority vote of its members. All references to the “Board” herein shall be deemed to be references to such delegate, as appropriate. The Board
shall have the authority (i) to exercise all of the powers granted to it under the Plan, (ii) to construe, interpret and implement the Plan, (iii) to prescribe,
amend and rescind rules and regulations relating to the Plan, (iv) to make all determinations necessary or advisable in administration of the Plan and (v) to
correct any defect, supply any omission and reconcile any inconsistency in the Plan.
8.7 Type of Plan. This Plan is intended to be, and shall be interpreted as an unfunded employee welfare plan under Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”) and Section 2520.104−24 of the Department of Labor Regulations, maintained primarily
for the purpose of providing employee welfare benefits, to the extent that it provides welfare benefits, and under Sections 201, 301 and 401 of ERISA, as a
plan that is unfunded and maintained primarily for the purpose of providing deferred compensation, to the extent that it provides such compensation, in each
case for a select group of management or highly compensated employees.
8.8 Nonassignability. Benefits under the Plan may not be sold, assigned, transferred, pledged, anticipated, mortgaged, or otherwise encumbered,
transferred, hypothecated, or conveyed in advance of actual receipt of the amounts, if any, payable hereunder, or any part thereof by the Participant.
Schedule A
RELEASE AND WAIVER
I, ________________, hereby fully waive and forever release and discharge Company, AT&T, any and all other subsidiaries of Company and of AT&T,
their officers, directors, agents, servants, employees, successors and assigns and any and all employee benefit plans maintained by AT&T or any subsidiary
thereof and/or any and all fiduciaries of any such plan from any and all common law and/or statutory claims, causes of action or suits of any kind
whatsoever arising from or in connection with my past employment by Company (and any AT&T subsidiary to the extent applicable) and/or my separation
therefrom, including but not limited to claims, actions, causes of action or suits of any kind allegedly arising under the Employee Retirement Income
Security Act (ERISA), as amended, 29 USC §§ 1001 et seq.; the Rehabilitation Act of 1973, as amended, 29 USC §§ 701 et seq.; the Civil Rights Acts of
1866 and 1870, as amended, 42 USC §§ 1981, 1982 and 1988; the Civil Rights Act of 1871, as amended, 42 USC §§ 1983 and 1985; the Civil Rights Act of
1964, as amended, 42 USC § 2000d et seq.; the Americans With Disabilities Act, as amended, 42 USC §§ 12101 et seq., and the Age Discrimination in
Employment Act of 1967 (ADEA), as amended, 29 USC §§ 621 et seq., known and unknown. In addition, I, ___________, agree not to file any lawsuit or
other claim seeking monetary damage or other relief in any state or federal court or with any administrative agency against any of the aforementioned
parties in connection with or relating to any of the aforementioned matters. Provided, however, by executing this Release and Waiver, I,
________________, do not waive rights or claims that may arise after the date of execution; provided further, however, this Release and Waiver shall not
affect my right to receive or enforce through litigation, any indemnification rights to which I am entitled as a result of my past employment by the Company
or contract rights pursuant to the Agreement and Release and Waiver of Claims entered into contemporaneously herewith and, if applicable, any subsidiary
of AT&T; and, provided further, this Release and Waiver shall not affect the ordinary distribution of benefits/entitlements, if any, to which I am entitled
upon termination from Company; it being understood by me that said benefits/entitlements, if any, will be subject to and provided in accordance with the
terms and conditions of their respective governing plan and this Agreement.
Schedule B
Additional Reimbursement Payments by the Company
(a) Pursuant to Section 4.2(d) of the Plan, in the event it shall be determined that any payment, award, benefit or distribution (or
any acceleration of any payment, award, benefit or distribution) by the Company (or any of its affiliated entities) or any entity which effectuates a Change in
Control (or any of its affiliated entities) to or for the benefit of the Participant (whether pursuant to the terms of this Plan or otherwise, but determined
without regard to any additional payments required under this Schedule B) (the “Payments”) would be subject to the excise tax imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended (the “Code”), or any interest or penalties are incurred by the Participant with respect to such excise tax
(such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company shall remit to
the Internal Revenue Service or any other applicable taxing authority an additional payment (a “Reimbursement Payment”) in an amount such that after
payment by the Participant of all taxes (including any Excise Tax) imposed upon the Reimbursement Payment, the Participant retains an amount of the
Reimbursement Payment equal to the Excise Tax imposed upon the Payments; provided, however, that the Company shall have the obligation to make a
Reimbursement Payment only to the extent the Participant is subject to the Excise Tax by virtue of the reduction of his or her “base amount” (as defined in
Section 280G(b)(3) of the Code) by reason of his or her election to defer a portion of his or her compensation payable during the applicable period (such
Excise Tax, a “Qualifying Excise Tax”). For purposes of determining the amount of the Reimbursement Payment, the Participant shall be deemed to (i) pay
federal income taxes at the highest marginal rates of federal income taxation for the calendar year in which the Reimbursement Payment is to be made and
(ii) pay applicable state and local income taxes at the highest marginal rate of taxation for the calendar year in which the Reimbursement Payment is to be
made, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(b) Subject to the provisions of Paragraph (a), all determinations required to be made under this Schedule B, including whether
and when a Reimbursement Payment is required, the amount of such Reimbursement Payment, the amount of any Option Redetermination (as defined
below), and the assumptions to be utilized in arriving at such determinations, shall be made by a public accounting firm that is retained by the Company as
of the date immediately prior to the Change in Control (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company
and the Participant within fifteen (15) business days of the receipt of notice from the Company or the Participant that there has been a Payment, or such
earlier time as is requested by the Company (collectively, the “Determination”). For the avoidance of doubt, the Accounting Firm may use the Option
Redetermination amount in determining the reduction of the Payments to the Safe Harbor Cap. Notwithstanding the foregoing, in the event (i) the Board
shall determine prior to the Change in Control that the Accounting Firm is precluded from performing such services under applicable auditor independence
rules or (ii) the Audit Committee of the Board determines that it does not want the Accounting Firm to perform such services because of auditor
independence concerns or (iii) the Accounting Firm is serving as accountant or auditor for the person(s) effecting the Change in Control, the Board shall
appoint another nationally recognized public accounting firm to make the determinations required hereunder (which accounting firm shall then be referred
to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company, and the Company shall enter
into any agreement reasonably requested by the Accounting Firm in connection with the performance of the services hereunder. The Reimbursement
Payment under this Schedule B with respect to any Payments shall be made no later than thirty (30) days following such Payment. If the Accounting Firm
determines that no Qualifying Excise Tax is payable by a Participant, it shall furnish the Participant with a written opinion to such effect, and to the effect
that failure to report the Qualifying Excise Tax, if any, on the Participant’s applicable federal income tax return will not result in the imposition of a
negligence or similar penalty. The Determination by the Accounting Firm shall be binding upon the Company and the Participant.
As a result of the uncertainty in the application of Section 4999 of the Code at the time of the Determination, it is possible that
Reimbursement Payments which will not have been made by the Company should have been made (“Underpayment”) or Reimbursement Payments are
made by the Company which should not have been made (“Overpayment”), consistent with the calculations required to be made hereunder. In the event the
amount of the Reimbursement Payment is less than the amount necessary to reimburse the Participant for the Qualifying Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such Underpayment (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code) shall be promptly remitted to the Internal Revenue Service or any other applicable taxing authority an additional payment (to or
for the benefit of the Participant. In the event the amount of the Reimbursement Payment exceeds the amount necessary to reimburse the Participant for
the Qualifying Excise Tax, the Accounting Firm shall determine the amount of the Overpayment that has been made and any such Overpayment (together
with interest at the rate provided in Section 1274(b)(2) of the Code) shall be promptly paid by the Participant (to the extent the Participant has received a
refund if the applicable Qualifying Excise Tax has been paid to the Internal Revenue Service) to or for the benefit of the Company. The Participant shall
cooperate, to the extent his or her expenses are reimbursed by the Company, with any reasonable requests by the Company in connection with any contests
or disputes with the Internal Revenue Service in connection with the Excise Tax. In the event that the Company makes a Reimbursement Payment to the
Participant and subsequently the Company determines that the value of any accelerated vesting of stock options held by the Participant shall be
redetermined within the context of Treasury Regulation §1.280G−1 Q/A 33 (the “Option Redetermination”), the Participant shall (i) file with the Internal
Revenue Service an amended federal income tax return that claims a refund of the overpayment of the Qualifying Excise Tax attributable to such Option
Redetermination and (ii) promptly pay the refunded Qualifying Excise Tax to the Company; provided that the Company shall pay all reasonable
professional fees incurred in the preparation of the Participant’s amended federal income tax return. If the Option Redetermination occurs in the same year
that the Reimbursement Payment is included in the Participant’s taxable income, then in addition to returning the refund to the Company, the Participant
will also promptly return to the Company any tax benefit realized by the return of such refund and the return of the additional tax benefit payment (all
determinations pursuant to this sentence shall be made by the Accounting Firm).
Notwithstanding any other provision to the contrary, a Reimbursement Payment described in this Schedule B shall be made by the end
of the calendar year next following the calendar year in which the related taxes are remitted to the taxing authority by the Participant.
Exhibit 10−y
AT&T INC. BOARD OF DIRECTORS

COMMUNICATIONS CONCESSION PROGRAM
Communications Concession
Applies to both active and retired non−employee Directors.
1. Primary Residence Equipment

Each Director will receive equipment that will allow the provision of services offered by affiliates of AT&T at the Director’s primary residence as
designated by the Director. If the relevant AT&T affiliate does not service the area of the Director’s residence and it is impractical to obtain the
equipment from an affiliate, then AT&T will reimburse the Director for equipment provided by another company. Provision of equipment at the
primary residence will not count against the annual communications allowance, whether the equipment is provided by the AT&T affiliate or another
carrier (where equipment from the affiliate is not available).
2. Concession for Equipment at Other Residences and for Services

Each Director will receive communications equipment (other than at the primary residence) and services each year in an amount not to exceed the
following limits:
• for active Directors and Directors retiring on or after November 20, 2009, ten percent of the combined annual basic retainer and annual
deferred stock unit award in effect for such year;
• for Directors retiring before November 20, 2009, seven percent of the combined annual basic retainer and annual deferred stock unit award
in effect for such year.
3. Requirements
• All concession services must be provided by AT&T affiliates, including AT&T Mobility and AT&T Long Distance. The only exception is
service and equipment to the primary residence where the residence is not served by an AT&T affiliate. Services and equipment will only
be provided to locations in the continental United States.
• The concession benefits are for the personal use of the Director and his/her immediate family sharing the same household.
• In order to keep you informed, the Secretary’s Office will send you a semi−annual notice indicating the usage of your concession. If your
usage exceeds the maximum benefit, you will be asked to reimburse AT&T.
• A Director’s surviving spouse will continue to receive benefits for fourteen months after the date of the Director’s death.
• This concession benefit may be amended or terminated at any time by the AT&T Board of Directors.
Amended November 2009

Effective July 2004
Exhibit 10−bb
AT&T INC.
STOCK PURCHASE AND DEFERRAL PLAN
Adopted November 19, 2004

As amended through November 19, 2009
Article 1 − Statement of Purpose
The purpose of the Stock Purchase and Deferral Plan (“Plan”) is to increase stock ownership by, and to provide savings opportunities to, a select
group of management employees of AT&T Inc. (“AT&T”) and its Subsidiaries.
Article 2 − Definitions
For the purpose of this Plan, the following words and phrases shall have the meanings indicated, unless the context indicates otherwise:
Annual Bonus. The award designated the “Annual Bonus” by AT&T (including but not limited to an award that may be paid in more frequent
installments than annually), together with any individual discretionary award made in connection therewith, or comparable awards, if any, determined by
AT&T to be used in lieu of these awards.
Base Compensation. The following types of cash−based compensation paid by an Employer (but not including payments made by a non−Employer,
such as state disability payments), before reduction due to any contribution pursuant to this Plan or reduction pursuant to any deferral plan of an Employer,
including but not limited to a plan that includes a qualified cash or deferral arrangement under Section 401(k) of the Code:
(a) base salary;
(b) lump sum payments in lieu of a base salary increase; and
(c) Annual Bonus.
Payments by an Employer under a disability plan made in lieu of any compensation described above, shall be deemed to be a part of the
respective form of compensation it replaces for purposes of this definition. Base Compensation does not include zone allowances or any other geographical
differential and shall not include payments made in lieu of unused vacation or other paid days off, and such payments shall not be contributed to this Plan.
Determinations by AT&T (the Committee with respect to Officer Level Employees) of the items that make up Base Compensation shall be
final. The Committee may, from time to time, add or subtract types of compensation to or from the definition of “Base Compensation” provided, however,
any such addition or subtraction shall be effective only with respect to the next period in which a Participant may make an election to establish a Share
Deferral Account. Base Compensation that was payable in a prior Plan Year but paid in a later Plan Year shall not be used to determine Employee
Contributions or Matching Contributions in such later Plan Year.
Business Day. Any day during regular business hours that AT&T is open for business.
Change in Control. With respect to AT&T’s direct and indirect ownership of an Employer, a “Change in the effective control of a Corporation,”
as defined in Treasury Regulation Section 1.409A−3(i)(5)(vi)(A)(1), regardless of whether the Employer is a corporation or non corporate entity as
permitted by the regulation, and using “50 percent” in lieu of “30 percent” in such regulation. A Change in Control will not apply to AT&T itself.
Chief Executive Officer. The Chief Executive Officer of AT&T Inc.
Code. References to the Code shall be to provisions of the Internal Revenue Code of 1986, as amended, including regulations promulgated thereunder and
successor provisions. Similarly, references to regulations shall include amendments and successor provisions.
Committee. The Human Resources Committee of the Board of Directors of AT&T Inc.
Disability. Absence of an Employee from work with an Employer under the relevant Employer's disability plan.
Eligible Employee. An Employee who:

(a) is a full or part time, salaried Employee of AT&T or an Employer in which AT&T has a direct or indirect 100% ownership interest and who is
on active duty or Leave of Absence (but only while such Employee is deemed by the Employer to be an Employee of such Employer);
(b) is, as determined by AT&T, a member of Employer's “select group of management or highly compensated employees” within the meaning of
the Employee Retirement Income Security Act of 1974, as amended, and regulations thereunder (“ERISA”), which is deemed to include each Officer Level
Employee; and
(c) has an employment status which has been approved by AT&T to be eligible to participate in this Plan or is an Officer Level Employee.
Notwithstanding the foregoing, AT&T (the Committee with respect to Officer Level Employees) may, from time to time, exclude any Employee
or group of Employees from being deemed an “Eligible Employee” under this Plan.
In the event a court or other governmental authority determines that an individual was improperly excluded from the class of persons who would
be permitted to make Employee Contributions during a particular time for any reason, that individual shall not be permitted to make such contributions for
purposes of the Plan for the period of time prior to such determination.
Employee. Any person employed by an Employer and paid on an Employer’s payroll system, excluding persons hired for a fixed maximum term
and excluding persons who are neither citizens nor permanent residents of the United States, all as determined by AT&T. For purposes of this Plan, a person
on Leave of Absence who otherwise would be an Employee shall be deemed to be an Employee.
Employee Contributions. Amounts credited to a Share Deferral Account pursuant to Section 4.1 (Election to Make Contributions) of the Plan.
Employer. AT&T Inc. or any of its Subsidiaries.
Exercise Price. The price per share of Stock purchasable under an Option.
Fair Market Value or FMV. In valuing Stock or any other item subject to valuation under this Plan, the Committee may use such index or
measurement as the Committee may reasonably determine from time to time, and such index or measurement shall be the FMV of such Stock or other item,
provided that for purposes of determining the Exercise Price of Stock Options, the Committee shall use a value consistent with the requirements of Section
409A. In the absence of such action by the Committee, FMV means, with respect to Stock, the closing price on the New York Stock Exchange (“NYSE”)
of the Stock on the relevant date, or if on such date the Stock is not traded on the NYSE, then the closing price on the immediately preceding date such
Stock is so traded.
Leave of Absence. Where a person is absent from employment with an Employer on a leave of absence, military leave, sick leave, or Disability
where the leave is given in order to prevent a break in the continuity of term of employment, and permission for such leave is granted (and not revoked) in
conformity with the rules of the Employer that employs the individual, as adopted from time to time, and the Employee is reasonably expected to return to
service. Except as set forth below, the leave shall not exceed six (6) months for purposes of this Plan, and the Employee shall Terminate Employment upon
termination of such leave if the Employee does not return to work prior to or upon expiration of such six (6) month period, unless the individual retains a
right to reemployment under law or by contract. A twenty−nine (29) month limitation shall apply in lieu of such six (6) month limitation if the leave is due
to the Employee being "disabled" (within the meaning of Treasury Regulation §1.409A−3(i)(4)). A Leave of Absence shall not commence or shall be
deemed to cease under the Plan where the Employee has incurred a Termination of Employment.
Officer Level Employee. Any executive officer of AT&T, as that term is used under the Securities Exchange Act of 1934, as amended, and any Employee
that is an “officer level” Employee for compensation purposes as shown on the records of AT&T.
Options or Stock Options. Options to purchase Stock issued pursuant to this Plan.
Participant. An Employee or former Employee who participates in this Plan.
Plan Year. Each of the following shall be a Plan Year: the period January 1, 2005, through January 15, 2006; the period January 16, 2006,
through December 31, 2006; and, for all later Plan Years, it is defined as the period from January 1 through December 31.
Retirement or Retire. Termination of Employment on or after the earlier of the following dates, unless otherwise provided by the Committee: (a)
for Officer Level Employees, the date the Participant is at least age 55 and has five (5) years of Net Credited Service; or (b) the date the Participant has
attained one of the following combinations of age and Net Credited Service:
Net Credited Service Age

10 years or more 65 or older
30 years or more Any age
For purposes of this Plan only, Net Credited Service shall be calculated in the same manner as “Pension Eligibility Service” under the AT&T
Pension Benefit Plan – Nonbargained Program (“Pension Plan”), as amended from time to time, except that service with an Employer shall be counted as
though the Employer were a “Participating Company” under the Pension Plan and the Employee was a participant in the Pension Plan.
Senior Manager. Any Employee who is a “senior manager” for compensation purposes as shown on the records of AT&T.
Shares or Share Units. An accounting entry representing the right to receive an equivalent number of shares of Stock.
Share Deferral Account or Account. The Account or Accounts established annually by an election by a Participant to make Employee Contributions to the
Plan, with each Account relating to a Plan Year. For each Plan Year after 2008, there shall be (1) a separate Share Deferral Account for Share Units
purchased with Employee Contributions of Base Compensation (excluding Annual Bonus) and related Matching Share Units and (2) a separate Share
Deferral Account for Share Units purchased with Employee Contributions of Short Term Incentive Award and/or Annual Bonus and any related Matching
Share Units. Earnings on Share Units and Matching Share Units shall accrue to the respective Share Deferral Accounts where they are earned.
Short Term Incentive Award. A cash award paid by an Employer (and not by a non−Employer, such as state disability payments) under the Short
Term Incentive Plan or any successor plan, together with any individual discretionary award made in connection therewith; an award under a similar plan
intended by the Committee to be in lieu of an award under such Short Term Incentive Plan, including, but not limited to, Performance Units granted under
the 2006 Incentive Plan or any successor plan. It shall also include any other award that the Committee designates as a Short Term Incentive Award
specifically for purposes of this Plan (regardless of the purpose of the award) provided the deferral election is made in accordance with Section 409A.
Specified Employee. Any Participant who is a “Key Employee” (as defined in Code Section 416(i) without regard to paragraph (5) thereof), as
determined by AT&T in accordance with its uniform policy with respect to all arrangements subject to Code Section 409A, based upon the 12−month
period ending on each December 31st (such 12−month period is referred to below as the “identification period”). All Participants who are determined to be
Key Employees under Code Section 416(i) (without regard to paragraph (5) thereof) during the identification period shall be treated as Key Employees for
purposes of the Plan during the 12−month period that begins on the first day of the 4th month following the close of such identification period.
Stock. The common stock of AT&T Inc.
Subsidiary. Any corporation, partnership, venture or other entity or business with which AT&T would be considered a single employer under
Sections 414(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
21,000,000. 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). Only the actual number of shares of Stock that are issued (shares issued would not include, for example, any reduction in shares to be
issued as a result of tax withholding in connection with a distribution of Stock, exercise of options, or otherwise) shall be counted against the authorized
number of shares of Stock. To the extent an Option issued under this Plan is canceled, terminates, expires, or lapses for any reason, such Option shall again
be available for issuance under the Plan. Conversions of Stock awards into Share Units and their eventual distribution (excluding the effects of any
dividends on such Share Units) shall count only against the limits of the plans from which they originated and shall not be applied against the limits in this
Plan. To the extent Share Units are credited through deferrals of Stock or Employee Contributions where the distribution of which would be deductible by
AT&T under Section 162(m) of the Code without regard to the size of the distribution, and such deductible Share Units are available for distribution, such
Share Units shall be distributed first.
(b) In the event the Committee determines that continuing the issuance of Share Units under the Plan or Stock Options under the Plan may cause
the number of shares of Stock that are to be distributed under this Plan or the number of Stock Options (as determined pursuant to subsection (a), above) to
exceed the number of authorized shares of Stock, then in lieu of distributing Stock, the Committee may provide after such determination and only with
respect to Share Units that have not theretofore been credited to a Share Deferral Account, that such Share Units may be settled in cash equal to the value of
the Stock that would otherwise be distributed based on the FMV of the Stock on the date of the distribution of such Share Unit. The Committee may also
provide after such determination and only with respect to Stock Options that have not theretofore been issued that such Stock Options may only be settled
on a Net−Settled basis in cash equal to the value of the Stock that would otherwise be distributed based on the FMV of the Stock on the day of exercise.
(c) In the event of a merger, reorganization, consolidation, recapitalization, separation, liquidation, stock dividend, stock split, share combination,
or other change in the corporate structure of AT&T affecting the shares of Stock (including a conversion of Stock into cash or other property), such
adjustment shall be made to the number and class of the shares of Stock which may be delivered under the Plan (including but not limited to individual
limits), and in the number and class of and/or price of shares of Stock subject to outstanding Options granted under the Plan, and/or in the number of
outstanding Options and Share Units, or such other adjustment determined by the Committee, in each case as may be determined to be appropriate and
equitable by the Committee, in its sole discretion, to prevent dilution or enlargement of rights.
3.3 Claims and Appeals.
(a) Claims. A person who believes that he or she is being denied a benefit to which he or she is entitled under this Plan (hereinafter
referred to as a “Claimant”) may file a written request for such benefit with the Executive Compensation Administration Department, setting forth his or her
claim. The request must be addressed to the AT&T Executive Compensation Administration Department at its then principal place of business.
(b) Claim Decision. Upon receipt of a claim, the AT&T Executive Compensation Administration Department shall review the claim and
provide the Claimant with a written notice of its decision within a reasonable period of time, not to exceed ninety (90) days, after the claim is received. If
the AT&T Executive Compensation Administration Department determines that special circumstances require an extension of time beyond the initial ninety
(90)− day claim review period, the AT&T Executive Compensation Administration Department shall notify the Claimant in writing within the initial ninety
(90)−day period and explain the special circumstances that require the extension and state the date by which the AT&T Executive Compensation
Administration Department expects to render its decision on the claim. If this notice is provided, the AT&T Executive Compensation Administration
Department may take up to an additional ninety (90) days (for a total of one hundred eighty (180) days after receipt of the claim) to render its decision on
the claim.
If the claim is denied by the AT&T Executive Compensation Administration Department, in whole or in part, the AT&T Executive
Compensation Administration Department shall provide a written decision using language calculated to be understood by the Claimant and setting forth: (i)
the specific reason or reasons for such denial; (ii) specific references to pertinent provisions of this Plan on which such denial is based; (iii) a description of
any additional material or information necessary for the Claimant to perfect his or her claim and an explanation of why such material or such information is
necessary; (iv) a description of the Plan’s procedures for review of denied claims and the steps to be taken if the Claimant wishes to submit the claim for
review; (v) the time limits for requesting a review of a denied claim under this section and for conducting the review under this section ; and (vi) a
statement of the Claimant’s right to bring a civil action under Section 502(a) of ERISA if the claim is denied following review under this section .
(c) Request for Review. Within sixty (60) days after the receipt by the Claimant of the written decision on the claim provided for in this
section , the Claimant may request in writing that the Committee review the determination of the AT&T Executive Compensation Administration
Department. Such request must be addressed to the Committee at the address for giving notice in this Plan. To assist the Claimant in deciding whether to
request a review of a denied claim or in preparing a request for review of a denied claim, a Claimant shall be provided, upon written request to the
Committee and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claim. The Claimant or his
or her duly authorized representative may, but need not, submit a statement of the issues and comments in writing, as well as other documents, records or
other information relating to the claim for consideration by the Committee. If the Claimant does not request a review by the Committee of the AT&T
Executive Compensation Administration Department’s decision within such sixty (60)−day period, the Claimant shall be barred and estopped from
challenging the determination of the AT&T Executive Compensation Administration Department.
(d) Review of Decision. Within sixty (60) days after the Committee’s receipt of a request for review, the Administrator will review the
decision of the AT&T Executive Compensation Administration Department. If the Committee determines that special circumstances require an extension
of time beyond the initial sixty (60)−day review period, the Committee shall notify the Claimant in writing within the initial sixty (60)−day period and
explain the special circumstances that require the extension and state the date by which the Committee expects to render its decision on the review of the
claim. If this notice is provided, the Committee may take up to an additional sixty (60) days (for a total of one hundred twenty (120) days after receipt of
the request for review) to render its decision on the review of the claim.
During its review of the claim, the Committee shall:
(1) Take into account all comments, documents, records, and other information submitted by the Claimant relating to the claim,
without regard to whether such information was submitted or considered in the initial review of the claim conducted pursuant to this section;
(2) Follow reasonable procedures to verify that its benefit determination is made in accordance with the applicable Plan
documents; and
(3) Follow reasonable procedures to ensure that the applicable Plan provisions are applied to the Participant to whom the claim
relates in a manner consistent with how such provisions have been applied to other similarly−situated Participants.
After considering all materials presented by the Claimant, the Committee will render a decision, written in a manner designed to be
understood by the Claimant. If the Committee denies the claim on review, the written decision will include (i) the specific reasons for the decision; (ii)
specific references to the pertinent provisions of this Plan on which the decision is based; (iii) a statement that the Claimant is entitled to receive, upon
request to the Committee and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claim; and
(iv) a statement of the Claimant’s right to bring a civil action under Section 502(a) of ERISA.
The Committee shall serve as the final review committee under the Plan and shall have sole and complete discretionary authority to
administer, interpret, construe and apply the Plan provisions, and determine all questions of administration, interpretation, construction, and application of
the Plan, including questions and determinations of eligibility, entitlement to benefits and the type, form and amount of any payment of benefits, all in its
sole and absolute discretion. The Committee shall further have the authority to determine all relevant facts and related issues, and all documents, records
and other information relevant to a claim conclusively for all parties, and in accordance with the terms of the documents or instruments governing the
Plan. Decisions by the Committee shall be conclusive and binding on all parties and not subject to further review.
In any case, a Participant or Beneficiary may have further rights under ERISA. The Plan provisions require that Participants or
Beneficiary pursue all claim and appeal rights described in this section before they seek any other legal recourse regarding claims for benefits.
Article 4 − Contributions
4.1 Election to Make Contributions.

(a) The Committee shall establish dates and other conditions for participation in the Plan and making contributions as it deems
appropriate. Except as otherwise provided by the Committee, each year an Employee who is an Eligible Employee as of September 30 may thereafter make
an election on or prior to the last Business Day of the immediately following November (such election shall be cancelled if the Employee is not an Eligible
Employee on the last day such an election may be made) to contribute on a pre−tax basis, through payroll deductions, any combination of the following:
(1) From 6% to 30% (in whole percentage increments) of the Participant’s monthly Base Compensation, other than Annual Bonus, during the
calendar year (the Plan Year for such contributions) following the calendar year of such election. The Employee Contributions shall be used to
acquire Share Units to be credited to the Share Deferral Account for that Plan Year.
(2) Up to 95% (in whole percentage increments or limited to the target amount) of a Short Term Incentive Award, or from 6% to 30% (in whole
percentage increments) of Annual Bonus, in each case such contributions shall be made during the second calendar year (which is the Plan Year
for such contributions) following the year of such election, except that in 2008 a separate election may be made with respect to contributions to
be made in 2009. An Employee may make such an election with respect to the type of Award (Short Term Incentive Award or Annual Bonus)
that the Employee is under as of the time the Employee’s eligibility to make such election is determined. If because of a promotion or otherwise,
the Employee receives a different type of Award instead of, or in partial or full replacement for, the type of Award subject to the Employee’s
election for the relevant Plan Year, the election will apply to the other Award as well, including but not limited to any individual discretionary
award related thereto.
(b) The Committee may permit an Eligible Employee to make an election to purchase Share Units under this Plan with compensation other than Base
Compensation or Short Term Incentive Awards on such terms and conditions as such Committee may permit from time to time, provided that any such
election is made in accordance with Section 409A of the Code. In no event shall an acquisition of Share Units pursuant to this paragraph (b) or pursuant to
the conversion of a right to receive Stock into Share Units (such as through a distribution of Stock under the 2001 Incentive Plan) result in the crediting of
an AT&T Matching Contribution or Options.
(c) Notwithstanding anything to the contrary in this Plan, no election shall be effective to the extent it would permit an Employee Contribution or
distribution to be made that is not in compliance with Section 409A of the Code. To the extent such election related to Employee Contributions that
complied with such statute and regulations thereunder, that portion of the election shall remain valid, except as otherwise provided under this Plan.
(d) To the extent permitted by Section 409A of the Code, AT&T may refuse or terminate, in whole or in part, any election to purchase Share
Units in the Plan at any time; provided, however, that only the Committee may take such action with respect to persons who are Officer Level Employees.
(e) In the event the Participant takes a hardship withdrawal pursuant to Treasury Regulation §1.401(k)−1 from a benefit plan qualified under the
Code and sponsored by an Employer, any election to make Employee Contributions by such Participant shall be cancelled on a prospective basis, and the
Participant shall not be permitted to make a new election with respect to Employee Contributions that would be contributed during the then current and
immediately following calendar year.
4.2 Purchase of Share Units.

(a) Employee Contributions (as well as any corresponding AT&T Matching Contributions) shall be made pursuant to a proper election, only
during the Participant’s lifetime; provided, however, with respect to Employee Contribution elections made prior to 2007, the Employee must remain an
Eligible Employee while making any such contributions. In the event of a Change in Control of an Employer, subsequent compensation from the Employer
may not be contributed to the Plan. The Employer may continue the then current elections of the participants under a subsequent plan in order to comply
with applicable tax laws.
(b) The number of Share Units purchased by a Participant during a calendar month shall be found by dividing the Participant's Employee
Contributions during the month by the FMV of a share of Stock on the last day of such month.
(c) A contribution to the Plan shall be made when the compensation – from which the contribution is to be deducted – is to be paid (“paid,” as
used in this Plan, includes amounts contributed to the Plan that would have been paid were it not for an election under this Plan), as determined by the
relevant Employer. The Committee may modify or change this paragraph (c) from time to time.
4.3 Reinvestment of Dividends.

In the month containing a record date for a cash dividend on Stock, each Share Deferral Account shall be credited with that number of Share
Units equal to the declared dividend per share of Stock, multiplied by the number of Share Units held in such Share Deferral Account as of such record date,
and dividing the product by the FMV of a share of Stock on the last day of such month.
Article 5 − AT&T Matching Contributions
5.1 AT&T Match.

(a) Each month AT&T shall credit the Participant's relevant Share Deferral Account with the number of “Matching Share Units” found by taking eighty
percent (80%) of the Participant's Employee Contributions from Base Compensation made to this Plan and to the Cash Deferral Plan during the month with
respect to the first six percent (6%) of the Participant’s monthly Match Eligible Compensation (as defined below) and dividing the resulting figure by the
FMV of the Stock on the last day of such month. The monthly “Match Eligible Compensation” shall be the sum of:
(1) the monthly Employee Contributions from Base Compensation to this Plan and the Cash Deferral Plan (in the aggregate, “Deferred BC”),
plus
(2) the amount of the Participant’s monthly Base Compensation in excess of the Deferred BC (“Non−Deferred BC”) but only to the extent such
monthly Non−Deferred BC, when aggregated with the Participant’s total Non−Deferred BC for prior months in such Plan Year, as determined by
the relevant Employer, exceeds the limit in effect under Section 401(a)(17) of the Code applicable with respect to such Plan Year.
The foregoing formula shall apply regardless of whether or not the Participant makes contributions to a 401(k) plan.
A Participant may receive Matching Share Units in a Share Deferral Account for a particular form of compensation only if the Participant is then making
contributions to the same Share Deferral Account; provided, however, this condition shall not apply for purposes of determining under Section 5.1(a)(2)
whether the limit described therein has been reached.
As provided in the definition of Share Deferral Account, Matching Share Units shall be credited to the respective Share Deferral Account that is related to
the same form of Employee Contributions (either (1) Base Compensation excluding Annual Bonus or (2) Annual Bonus).
(b) In the sole discretion of the Committee, in the event the Committee reduces the number of Options that AT&T issues for each Share Unit purchased, the
Committee may provide for the contribution of a Bonus Matching Contribution on such terms as the Committee determines. Such Bonus Matching
Contribution may not exceed 20% of the Participant’s Employee Contributions for the month. The Bonus Matching Contribution shall be subject to such
terms and conditions as required by the Committee and, unless otherwise provided by the Committee, to the same vesting and distribution requirements as
AT&T Matching Contributions.
5.2 Distribution of Share Units Acquired with Matching Contributions.

A Participant's Matching Share Units shall be distributed in a lump sum, in accordance with the Plan's distribution provisions, in the earlier of: (a)
the calendar year following the calendar year of the Termination of Employment of the Participant, or (b) the calendar year in which the Participant reaches
age 55, in each case only with respect to Matching Share Units relating to Share Deferral Accounts for Plan Years before such distribution calendar year.
Matching Share Units acquired as part of a Share Deferral Account that commences in or after the calendar year the Employee reaches age 55 or
after the calendar year in which the Employee Terminates Employment will be distributed in the same manner and time as other Share Units in such Share
Deferral Account.
Notwithstanding anything to the contrary in this section, Matching Share Units acquired in 2008 and later shall be distributed at the same time as
other Share Units (including those acquired with Employee Contributions) in the same Share Deferral Account.
Article 6 − Distributions
6.1 Distributions of Share Units.

(a) Initial Election with Respect to a Share Deferral Account. At the time the Participant makes an election to make Employee Contributions
with respect to a Share Deferral Account, the Participant shall also elect the calendar year the Share Deferral Account shall be distributed, which may be
from the first through fifth calendar years after the Plan Year the Account commenced (except as otherwise provided in this Plan with respect to Matching
Share Units). For example, if an Account commenced in 2005, the Participant may elect to commence the distribution in any calendar year from and
including 2006 to and including 2010. If no timely distribution election is made by the Participant, then the Participant will be deemed to have made an
election to have the Share Deferral Account distributed in a single installment in the first calendar year after the calendar year the Account
commenced. However, for purposes of Initial Elections with respect to Plan Years prior to 2008 only, in the event the Participant Terminates Employment,
the distribution of the Share Deferral Unit shall occur in the calendar year following the calendar year of the Participant’s Termination of Employment
unless the Employee has made an irrevocable election under (b), below.
(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 (other than as a result of a Change in Control), the distribution shall not
occur until the later of such March 10 or six (6) months after the Termination of Employment, except it shall be distributed upon the Participant’s earlier
death in accordance with this Plan.
6.2 Death of the Participant.

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

If a Participant experiences an “Unforeseeable Emergency,” the Participant may submit a written petition to AT&T (the Committee in the case of
Officer Level Employees), to receive a partial or full distribution of his Share Deferral Account(s). In the event that AT&T (the Committee in the case of
Officer Level Employees), upon review of the written petition of the Participant, determines in its sole discretion that the Participant has suffered an
“Unforeseeable Emergency,” AT&T shall make a distribution to the Participant from the Participant’s Share Deferral Accounts (other than Matching Share
Units), on a pro−rata basis, within the later of 90 days following such determination or the end of the calendar year in which determination was made,
subject to the following:
(a) “Unforeseeable Emergency” shall mean a severe financial hardship to the Participant resulting from an illness or accident of the
Participant, the Participant’s legal spouse, the Participant’s beneficiary, or the Participant’s dependent (as defined in Code Section 152, without regard to
Code Section 152(b)(1), (b)(2), and (d)(1)(B)); loss of the Participant’s property due to casualty; or other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the Participant, all as determined in the sole discretion of the Committee. Whether a
Participant is faced with an Unforeseeable Emergency permitting a distribution is to be determined based on the relevant facts and circumstances of each
case, but, in any case, a distribution on account of Unforeseeable Emergency shall not be made to the extent that such emergency is or may be relieved
through reimbursement or compensation from insurance or otherwise, by liquidation of the Participant’s assets, to the extent the liquidation of such assets
would not cause severe financial hardship, or by cessation of deferrals under the Plan.
(b) The amount of a distribution to be made because of an Unforeseeable Emergency shall not exceed the lesser of (i) the FMV of the
Participant's vested Share Deferral Account, calculated as the date on which the amount becomes payable, as determined by AT&T (the Committee in the
case of Officer Level Employees) in its sole discretion, and (ii) the amount reasonably necessary, as determined by the AT&T (the Committee in the case of
Officer Level Employees) in its sole discretion, to satisfy the emergency need (which may include amounts necessary to pay any Federal, state, local, or
foreign income taxes or penalties reasonably anticipated to result from the distribution). Determinations of the amount reasonably necessary to satisfy the
emergency need shall take into account any additional compensation that is available if the plan provides for cancellation of a deferral election upon a
payment due to an Unforeseeable Emergency. The determination of amounts reasonably necessary to satisfy the Unforeseeable Emergency need is not
required to, but may, take into account any additional compensation that, due to the Unforeseeable Emergency, is available under another nonqualified
deferred compensation plan but has not actually been paid, or that is available due to the Unforeseeable Emergency under another plan that would provide
for deferred compensation except due to the application of the effective date provisions under Treasury Regulation §1.409A−6.
(c) Upon such distribution on account of an Unforeseeable Emergency under this Plan, any election to make Employee Contributions by such
Participant shall be immediately cancelled, and the Participant shall not be permitted to make a new election with respect to Employee Contributions that
would be contributed during the then current and immediately following calendar year.
6.4 Ineligible Participant.

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

A Share Deferral Account shall be distributed under this Plan by taking the number of Share Units comprising the Account to be distributed and
converting them into an equal number of shares of Stock. (Once distributed, a Share Unit shall be canceled.)
Article 7 − Transition Provisions
7.1 Stockholder Approval

The Plan was approved by Stockholders at the 2005 Annual Meeting of Stockholders.
7.2 2005 Share Deferral Accounts.

Notwithstanding Article 4 to the contrary, if an Employee is an Eligible Employee on September 30, 2004, the Employee may make an election
under Article 4 on or prior to December 15, 2004, with respect to the establishment of a Share Deferral Account for the (i) contribution of Base
Compensation and/or Short Term Incentive Awards paid during the period from January 1, 2005, through January 15, 2006, which shall be the Plan Year
for such Share Deferral Account; and/or (ii) the conversion of a distribution of Stock that would be made during the same Plan Year pursuant to the 2001
Incentive Plan into an equal number of Share Units, so long as such conversion would not cause the recognition of income for Federal income tax purposes
in respect of such distribution of Stock prior to distribution of Share Units under this Plan.
7.3 2007 Amendments.

(a) Amendments made to the Plan on November 15, 2007, shall be effective January 1, 2008. except for amendments to this Article 7, which
shall be effective upon adoption. Any Participants electing prior to November 15, 2007, to make Employee Contributions in 2008 shall have their elections
canceled if they do not consent by December 14, 2007, to all prior amendments to this Plan and to the Cash Deferral Plan. Subject to the foregoing consent
requirements, all Employee Contribution elections made prior to 2008, including but not limited to elections to contribute Stock that would be distributed
under the 2001 Incentive Plan or a successor plan, shall remain in force, subject to all other terms of the amended Plan. In addition, all unvested but not
forfeited Matching Share Units shall vest on November 15, 2007. Matching Shares that have been forfeited shall not be reinstated, and no amendment to
this Plan shall be interpreted as reinstating such forfeitures.
(b) Not withstanding anything to the contrary in this Plan, a Participant who as of December 29, 2006, was eligible for an additional payment
pursuant to Section 4A of the BellSouth Corporation Executive Incentive Award Deferral Plan shall not, with respect to the 2008 Plan Year, receive
Matching Share Units on Base Compensation that exceeds $230,000.

For Plan Years prior to 2009, Participants who, at the time of the determination of their eligibility to participate in an Account, are paid through a “sales
plan” involving the use of commissions may elect to contribute up to 40% of Base Compensation. For the 2008 Plan Year, only Salary and Short Term
Incentive Awards paid after Termination of Employment may be contributed to the Plan.
Article 8 − Options
8.1 Grants.
Options may be issued in definitive form or recorded on the books and records of AT&T for the account of the Participant, at the discretion of
AT&T. If AT&T elects not to issue the Options in definitive form, they shall be deemed issued, and the Participants shall have all rights incident thereto as
if they were issued on the dates provided herein, without further action on the part of AT&T or the Participant. In addition to the terms herein, all Options
shall be subject to such additional provisions and limitations as provided in any Administrative Procedures adopted by the Committee prior to the issuance
of such Options. The number of Options issued to a Participant shall be reflected on the Participant's annual statement of account.
8.2 Term of Options.

The Options may only be exercised: (a) after the earlier of (i) the expiration of one (1) year from date of issue or (ii) the Participant's
Termination of Employment, and (b) no later than the tenth (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:
(1) on June 15 of the Plan Year for the Share Deferral Account, the Participant shall receive two (2) Options for each Share Unit acquired by the
Participant as part of such Share Deferral Account during the immediately preceding January through May period with Employee Contributions
of Base Compensation and/or Short Term Incentive Award. A fractional number of Options shall be rounded up to the next whole number.
(2) on the February 15 immediately following the Plan Year for the Share Deferral Account, a Participant shall receive:
(i) two (2) Options for each Share Unit acquired by the Participant as part of such Share Deferral Account during the immediately
preceding June through the remainder of the relevant Plan Year with Employee Contributions of Base Compensation and/or Short
Term Incentive Award; and
(ii) two (2) Options for each Share Unit acquired prior to such date by the Participant with dividend equivalents that were derived,
directly or indirectly (such as dividend equivalents paid on Share Units acquired with dividend equivalents), from Share Units
acquired with Employee Contributions as part of such Share Deferral Account.
(b) A fractional number of Options shall be rounded up to the next whole number.
(c) If Stock is not traded on the NYSE on any of the foregoing Option issuance dates, then the Options shall not be issued until the next such day
on which Stock is so traded.
(d) If a Participant Terminates Employment other than (i) while Retirement eligible or (ii) because of death or Disability, no further Options shall
be issued to or with respect to such Participant. In the event of re−Employment following a Termination of Employment, the preceding sentence shall not
apply to those Options resulting from participation in the Plan after such re−Employment until a subsequent Termination of Employment.
(e) No more than 400,000 Options shall be issued to any individual under this Plan during a calendar year. No Share Unit may be counted more
than once for the issuance of Options.
(f) The Committee may, in its sole discretion, at any time, increase or lower the number of Options that are to be issued for each Share Unit
acquired, not to exceed two (2) Options per Share Unit purchased. However, if the Committee lowers the number of Options, then such change shall only
be effective with respect to the next Share Deferral Account a Participant may elect to establish.
(g) The Committee may also, at any time and in any manner, limit the number of Options which may be acquired as a result of the Short Term
Incentive Award being contributed to the Plan. Further, except as otherwise provided by the Committee, in determining the number of Options to be issued
to a Participant with respect to a Participant's contribution of a Short Term Incentive Award to the Plan and subsequent crediting of Share Units, Options
may be issued only with respect to an amount which does not exceed the target amount of such award (or such other portion of the award as may be
determined by the Committee). Where a Participant’s election to contribute a Short Term Incentive Award to the Plan becomes applicable to Annual
Bonus, the above limitation on options shall apply to the contribution of Annual Bonus as though it were a Short Term Incentive Award.
(h) No options shall be issued to or in respect of a Participant for a particular issuance, unless at least ten (10) Options will be issued to that
Participant.
8.5 Exercise and Payment of Options.

Options shall be exercised by providing notice to the designated agent selected by AT&T (if no such agent has been designated, then to AT&T),
in the manner and form determined by AT&T, which notice shall be irrevocable, setting forth the exact number of shares of Stock with respect to which the
Option is being exercised and including with such notice payment of the Exercise Price. When Options have been transferred, AT&T or its designated
agent may require appropriate documentation that the person or persons exercising the Option, if other than the Participant, has the right to exercise the
Option. No Option may be exercised with respect to a fraction of a share of Stock.
Exercises of Options may be effected only on days and during the hours that the New York Stock Exchange is open for regular trading or as
otherwise provided or limited by AT&T. If an Option expires on a day or at a time when exercises are not permitted, then the Options may be exercised no
later than the immediately preceding date and time that the Options were exercisable.
The Exercise Price shall be paid in full at the time of exercise. No Stock shall be issued or transferred until full payment has been received
therefore.
Payment may be made:
(a) in cash, or
(b) unless otherwise provided by the Committee at any time, and subject to such additional terms and conditions and/or modifications
as AT&T may impose from time to time, and further subject to suspension or termination of this provision by AT&T at any time, by:
(i) delivery 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 Exercise Price in Stock, at the time of exercise of the Option, the Participant must
establish to the satisfaction of AT&T that the Stock tendered to AT&T must have been held by the Participant for a minimum of six
(6) months preceding the tender; 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.
If payment is made by the delivery of Stock, the value of the Stock delivered shall be equal to the FMV of the Stock on the day preceding the
date of exercise of the Option.
Restricted Stock may not be used to pay the Option exercise price.
8.6 Restrictions on Exercise and Transfer.

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

(a) Not Retirement Eligible. Unless otherwise provided by the Committee, if a Participant Terminates Employment while not Retirement
eligible, a Participant's Options may be exercised, to the extent then exercisable:
(i) if such Termination of Employment is by reason of death or Disability, then for a period of three (3) years from the date of such
Termination of Employment or until the expiration of the stated term of such Option, whichever period is shorter; or
(ii) if such Termination of Employment is for any other reason, then for a period of one (1) year from the date of such Termination of
Employment or until the expiration of the stated term of such Option, whichever period is shorter.
(b) Retirement Eligible. Unless otherwise provided by the Committee, if a Participant Terminates Employment while Retirement eligible, the
Participant's Option may be exercised, to the extent then exercisable: (i) for a period of five (5) years from the date of Retirement or (ii) until the expiration
of the stated term of such Option, whichever period is shorter.
(c) Re−Employment of a Participant after a Termination of Employment shall have no effect on the periods during which Options resulting from the prior
Employment may be exercised. For example, if the Option exercise period has been shortened because of the prior Termination of Employment, it shall not
be extended because of the re−Employment.
(d) Notwithstanding any other definition of Termination of Employment under this Plan, for purposes of this Article 8 – Options only, a Termination of
Employment shall mean the cessation of the Employee being employed by any corporation, partnership, venture or other entity in which AT&T holds,
directly or indirectly, a 50% or greater ownership interest, including but not limited to where AT&T ceases to hold such interest in the employing
company. In addition, the definition of Retirement for purposes of this Article 8 shall use the immediately foregoing definition of Termination of
Employment in lieu of any other definition.
Article 9 − Discontinuation, Termination, Amendment.
9.1 AT&T's Right to Discontinue Offering Share Units.

The Committee may at any time discontinue offerings of Share Units under the Plan. Any such discontinuance shall have no effect upon existing
Share Units or the terms or provisions of this Plan as applicable to such Share Units.
9.2 AT&T's Right to Terminate Plan.

The Committee may terminate the Plan at any time. Upon termination of the Plan, contributions shall no longer be made under the Plan.
After termination of the Plan, Participants shall continue to earn dividend equivalents in the form of Share Units on undistributed Share Units and
shall continue to receive all distributions under this Plan at such time as provided in and pursuant to the terms and conditions of Participant's elections and
this Plan. Notwithstanding the foregoing, the termination of the Plan shall be made solely in accordance with Section 409A of the Code and in no event
shall cause the accelerated distribution of any Account unless such termination is effected in accordance with Section 409A of the Code.
9.3 Amendment.
The Committee may at any time amend the Plan in whole or in part including but not limited to changing the formulas for determining the
amount of AT&T Matching Contributions under Article 5 or decreasing the number of Options to be issued under Article 8; provided, however, that no
amendment, including but not limited to an amendment to this section, shall be effective, without the consent of a Participant, to alter, to the material
detriment of such Participant, a Share Deferral Account of the Participant, other than as provided elsewhere in this section. For purposes of this section, an
alteration to the material detriment of a Participant shall include, but not be limited to, a material reduction in the period of time over which Stock may be
distributed to a Participant, any reduction in the Participant's number of vested Share Units or Options, or an increase in the Exercise Price or decrease in the
term of an Option. Any such consent may be in a writing, telecopy, or e−mail or in another electronic format. An election to acquire Share Units with
Employee Contributions shall be conclusively deemed to be the consent of the Participant to any and all amendments to the Plan prior to such election, and
such consent shall be a condition to making any election with respect to Employee Contributions.
Notwithstanding anything to the contrary contained in this section of the Plan, the Committee may modify this Plan with respect to any person
subject to the provisions of Section 16 of the Securities Exchange Act of 1934, as amended (“Exchange Act”) to place additional restrictions on the exercise
of any Option or the transfer of any Stock not yet issued under the Plan.
The Plan is established in order to provide deferred compensation to a select group of management and highly compensated employees with in
the meaning of Sections 201(2) and 301(a)(3) of ERISA. To the extent legally required, the Code and ERISA shall govern the Plan, and if any provision
hereof is in violation of an applicable requirement thereof, the Company reserves the right to retroactively amend the Plan to comply therewith to the extent
permitted under the Code and ERISA. The Company also reserves the right to make such other changes as may facilitate implementation of Section 409A
of the Code. Provided, however, that in no event shall any such amendments be made in violation of the requirements of Section 409A of the Code.
Article 10 – Miscellaneous.
10.1 Tax Withholding.

Upon distribution of Stock, including but not limited to, shares of Stock issued upon the exercise of an Option, AT&T shall withhold shares of
Stock sufficient in value, using the FMV on the date determined by AT&T to be used to value the Stock for tax purposes, to satisfy the minimum amount of
Federal, state, and local taxes required by law to be withheld as a result of such distribution.
Any fractional share of Stock payable to a Participant shall be withheld as additional Federal withholding, or, at the option of AT&T, paid in cash
to the Participant.
Unless otherwise determined by the Committee, when the method of payment for the Exercise Price is from the sale by a stockbroker pursuant to
Section 8.5, hereof, of the Stock acquired through the Option exercise, then the tax withholding shall be satisfied out of the proceeds. For administrative
purposes in determining the amount of taxes due, the sale price of such Stock shall be deemed to be the FMV of the Stock.

Notwithstanding anything to the contrary contained in this Plan, all elections and notices of every kind under this Plan 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. Unless made irrevocable by the electing
person, each election with regard to making Employee Contributions or distributions of Share Deferral Accounts shall become irrevocable at the close of
business on the last day to make such election. AT&T may limit the time an election may be made in advance of any deadline.
If not otherwise specified by this Plan or AT&T, any notice or filing required or permitted to be given to AT&T under the Plan shall be delivered to the
principal office of AT&T, directed to the attention of the Senior Executive Vice President in charge of Human Resources for AT&T or his or her
successor. Such notice shall be deemed given on the date of delivery.
Notice to the Participant shall be deemed given when mailed (or sent by telecopy) to the Participant's work or home address as shown on the
records of AT&T or, at the option of AT&T, to the Participant's e−mail address as shown on the records of AT&T. It is the Participant's responsibility to
ensure that the Participant's addresses are kept up to date on the records of AT&T. In the case of notices affecting multiple Participants, the notices may be
given by general distribution at the Participants' work locations.
By participating in the Plan, each Participant agrees that AT&T may provide any documents required or permitted under the Federal or state
securities laws, including but not limited to the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, by e−mail, by
e−mail attachment, or by notice by e−mail of electronic delivery through AT&T's Internet Web site or by other electronic means.
10.3 Unsecured General Creditor.

Participants and their beneficiaries, heirs, successors, and assigns shall have no legal or equitable rights, interest, or claims in any property or
assets of any Employer. No assets of any Employer shall be held under any trust for the benefit of Participants, their beneficiaries, heirs, successors, or
assigns, or held in any way as collateral security for the fulfilling of the obligations of any Employer under this Plan. Any and all of each Employer's assets
shall be, and remain, the general, unpledged, unrestricted assets of such Employer. The only obligation of an Employer under the Plan shall be merely that
of an unfunded and unsecured promise of AT&T to distribute shares of Stock corresponding to Share Units and Options, under the Plan.
10.4 Non−Assignability.
Neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage, or otherwise
encumber, transfer, hypothecate or convey in advance of actual receipt, shares of Stock corresponding to Share Units under the Plan, if any, or any part
thereof, which are, and all rights to which are, expressly declared to be unassignable and non−transferable. No part of the Stock distributable shall, prior to
actual distribution, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or
any other person, nor be transferable by operation of law in the event of a Participant's or any other person's bankruptcy or insolvency.
10.5 Employment Not Guaranteed.

Nothing contained in this Plan nor any action taken hereunder shall be construed as a contract of employment or as giving any employee any
right to be retained in the employ of an Employer or to serve as a director.
10.6 Errors.
At any time AT&T or an Employer may correct any error made under the Plan without prejudice to AT&T or any Employer. Neither AT&T nor
any Employer shall be liable for any damages resulting from failure to timely allow any contribution to be made to the Plan or for any damages resulting
from the correction of, or a delay in correcting, any error made under the Plan. In no event shall AT&T or any Employer be liable for consequential or
incidental damages arising out of a failure to comply with the terms of the Plan.
10.7 Captions.
The captions of the articles, sections, and paragraphs of this Plan are for convenience only and shall not control nor affect the meaning or
construction of any of its provisions.
10.8 Governing Law.

To the extent not preempted by Federal law, the Plan, and all benefits and agreements hereunder, and any and all disputes in connection
therewith, shall be governed by and construed in accordance with the substantive laws of the State of Texas, without regard to conflict or choice of law
principles which might otherwise refer the construction, interpretation or enforceability of this Plan to the substantive law of another jurisdiction.
Because benefits under the Plan are granted in Texas, records relating to the Plan and benefits thereunder are located in Texas, and the Plan and
benefits thereunder are administered in Texas, AT&T and the Participant under this Plan, for themselves and their successors and assigns, irrevocably
submit to the exclusive and sole jurisdiction and venue of the state or Federal courts of Texas with respect to any and all disputes arising out of or relating to
this Plan, the subject matter of this Plan or any benefits under this Plan, including but not limited to any disputes arising out of or relating to the
interpretation and enforceability of any benefits or the terms and conditions of this Plan. To achieve certainty regarding the appropriate forum in which to
prosecute and defend actions arising out of or relating to this Plan, and to ensure consistency in application and interpretation of the Governing Law to the
Plan, the parties agree that (a) sole and exclusive appropriate venue for any such action shall be an appropriate Federal or state court in Dallas County,
Texas, and no other, (b) all claims with respect to any such action shall be heard and determined exclusively in such Texas court, and no other, (c) such
Texas court shall have sole and exclusive jurisdiction over the person of such parties and over the subject matter of any dispute relating hereto and (d) that
the parties waive any and all objections and defenses to bringing any such action before such Texas court, including but not limited to those relating to lack
of personal jurisdiction, improper venue or forum non conveniens.
10.9 Plan to Comply with Section 409A.

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

This Plan shall be binding upon AT&T and its successors and assigns.
10.11 Loyalty Conditions for Officer Level Employees and Senior Managers
Each Officer Level Employee or a Senior Manager who elects to make Employee Contributions under Section 4.1 of this Plan shall be subject to the
agreements and conditions of this section.
(a) By making an Employee Contribution election under Section 4.1 of this Plan after September 1, 2009, a Participant acknowledges
that AT&T would be unwilling to provide for such an election but for the loyalty conditions and covenants set forth in this section, and that the conditions
and covenants herein are a material inducement to AT&T’s willingness to sponsor the Plan and to offer Plan benefits for the Participants. Accordingly, as a
condition to making an Employee Contribution election under Section 4.1 of this Plan after September 1, 2009, each such electing Participant is deemed to
agree that he shall not, without obtaining the written consent of the Committee in advance, participate in activities that constitute engaging in competition
with AT&T or engaging in conduct disloyal to AT&T, as those terms are defined in this section.
(b) Definitions. For purposes of this section and of the Plan generally:
(i) an “Employer Business” shall mean AT&T Inc. and any of its Subsidiaries, or any business in which they or
any affiliate of theirs has a substantial ownership or joint venture interest;
(ii) “engaging in competition with AT&T” shall mean, while employed by AT&T or any of its Subsidiaries, or
within two (2) years after Participant’s Termination of Employment, engaging by the Participant in any business or activity in all or
any portion of the same geographical market where the same or substantially similar business or activity is being carried on by an
Employer Business. “Engaging in competition with AT&T” shall not include owning a non−substantial publicly traded interest as a
shareholder in a business that competes with an Employer Business. “Engaging in competition with AT&T” shall include representing
or providing consulting services to, or being an employee of, any person or entity that is engaged in competition with any Employer
Business or that takes a position adverse to any Employer Business.
(iii) “engaging in conduct disloyal to AT&T” means, while employed by AT&T or any of its Subsidiaries, or
within two (2) years after Participant’s Termination of Employment, (i) soliciting for employment or hire, whether as an employee or
as an independent contractor, for any business in competition with an Employer Business, any person employed by AT&T or any of its
Subsidiaries during the one (1) year prior to the Participant’s Termination of Employment, whether or not acceptance of such position
would constitute a breach of such person’s contractual obligations to AT&T or any of its Subsidiaries; (ii) soliciting, encouraging, or
inducing any vendor or supplier with which Participant had business contact on behalf of any Employer Business during the two (2)
years prior to the Participant’s Termination of Employment (regardless of the reason for that termination) to terminate, discontinue,
renegotiate, reduce, or otherwise cease or modify its relationship with AT&T or any of its Subsidiaries; or (iii) soliciting, encouraging,
or inducing any customer or active prospective customer with whom Participant had business contact, whether in person or by other
media (“Customer”), on behalf of any Employer Business during the two (2) years prior to the Participant’s Termination of
Employment (regardless of the reason for that termination), to terminate, discontinue, renegotiate, reduce, or otherwise cease or
modify its relationship with any Employer Business, or to purchase competing goods or services from a business competing with any
Employer Business, or accepting or servicing business from such Customer on behalf of himself or any other business. “Engaging in
conduct disloyal to AT&T” shall also mean, disclosing Confidential Information to any third party or using Confidential Information,
other than for an Employer Business, or failing to return any Confidential Information to the Employer Business following termination
of employment.
(iv) “Confidential Information” shall mean all information belonging to, or otherwise relating to, an Employer
Business, which is not generally known, regardless of the manner in which it is stored or conveyed to Participant, and which the
Employer Business has taken reasonable measures under the circumstances to protect from unauthorized use or
disclosure. Confidential Information includes trade secrets as well as other proprietary knowledge, information, know−how, and
non−public intellectual property rights, including unpublished or pending patent applications and all related patent rights, formulae,
processes, discoveries, improvements, ideas, conceptions, compilations of data, and data, whether or not patentable or copyrightable
and whether or not it has been conceived, originated, discovered, or developed in whole or in part by Participant. For example,
Confidential Information includes, but is not limited to, information concerning the Employer Business’ business plans, budgets,
operations, products, strategies, marketing, sales, inventions, designs, costs, legal strategies, finances, employees, customers,
prospective customers, licensees, or licensors; information received from third parties under confidential conditions; or other valuable
financial, commercial, business, technical or marketing information concerning the Employer Business, or any of the products or
services made, developed or sold by the Employer Business. Confidential Information does not include information that (i) was
generally known to the public at the time of disclosure; (ii) was lawfully received by Participant from a third party; (iii) was known to
Participant prior to receipt from the Employer Business; or (iv) was independently developed by Participant or independent third
parties; in each of the foregoing circumstances, this exception applies only if such public knowledge or possession by an independent
third party was without breach by Participant or any third party of any obligation of confidentiality or non−use, including but not
limited to the obligations and restrictions set forth in this Plan.
(c) Equitable Relief. The parties recognize that any Participant’s breach of any of the covenants in this section will cause irreparable
injury to the AT&T, will represent a failure of the consideration under which AT&T (in its capacity as creator and sponsor of the Plan) agreed to provide the
Participant with the opportunity to receive Plan benefits, and that monetary damages would not provide AT&T with an adequate or complete remedy that
would warrant AT&T’s continued sponsorship of the Plan (including the accrual or granting of Share Units, Matching Share Units and Options) for all
Participants. Accordingly, in the event of a Participant’s actual or threatened breach of the covenants in this section, the Committee, in addition to all other
rights and acting as a fiduciary under ERISA on behalf of all Participants, shall have a fiduciary duty (in order to assure that AT&T receives fair and
promised consideration for its continued Plan sponsorship and funding) to seek an injunction restraining the Participant from breaching the covenants in this
Section. AT&T shall pay for any Plan expenses that the Committee incurs hereunder, and shall be entitled to recover from the Participant its reasonable
attorneys’ fees and costs incurred in obtaining such injunctive remedies.
(d) Uniform Enforcement. In recognition of AT&T’s need for nationally uniform standards for the Plan administration, it is an
absolute condition in consideration of any Participant’s ability to make Employee Contribution elections under Section 4.1 of this Plan after September 1,
2009, that each and all of the following conditions apply to all such electing Participants:
(i) ERISA shall control all issues and controversies hereunder, and the Committee shall serve for purposes hereof
as a “fiduciary” of the Plan and its “named fiduciary” within the meaning of ERISA.
(ii) All litigation between the parties relating to this section shall occur in federal court, which shall have
exclusive jurisdiction; any such litigation shall be held in the United States District Court for the Northern District of Texas, and the
only remedies available with respect to the Plan shall be those provided under ERISA.
Exhibit 10−cc
AT&T INC.
CASH DEFERRAL PLAN
ADOPTED NOVEMBER 19, 2004
AS AMENDED THROUGH NOVEMBER 19, 2009

Article 1 Statement of Purpose
The purpose of the Cash Deferral Plan (“Plan”) is to provide savings opportunities to a select group of management employees of AT&T Inc.
(“AT&T”) and its Subsidiaries.
Article 2 Definitions
For the purpose of this Plan, the following words and phrases shall have the meanings indicated, unless the context indicates otherwise:
Annual Bonus. The award designated the “Annual Bonus” by AT&T (including but not limited to an award that may be paid in more frequent
installments than annually), together with any individual discretionary award made in connection therewith, or comparable awards, if any, determined by
AT&T to be used in lieu of these awards.
Base Compensation. The following types of cash−based compensation paid by an Employer (but not including payments made by a
non−Employer, such as state disability payments), before reduction due to any contribution pursuant to this Plan or reduction pursuant to any deferral plan
of an Employer, including but not limited to a plan that includes a qualified cash or deferral arrangement under Section 401(k) of the Code:
(a) base salary;
(b) lump sum payments in lieu of a base salary increase; and
(c) Annual Bonus.
Payments by an Employer under a disability plan made in lieu of any compensation described above, shall be deemed to be a part of the
respective form of compensation it replaces for purposes of this definition. Base Compensation does not include zone allowances or any other geographical
differential and shall not include payments made in lieu of unused vacation or other paid days off, and such payments shall not be contributed to this Plan.
Determinations by AT&T (the Committee with respect to Officer Level Employees) of the items that make up Base Compensation shall be
final. The Committee may, from time to time, add or subtract types of compensation to or from the definition of “Base Compensation” provided, however,
any such addition or subtraction shall be effective only with respect to the next period in which a Participant may make an election to establish a Cash
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 in the later Plan Year.
Business Day. Any day during regular business hours that AT&T is open for business.
Cash 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 a separate Cash Deferral Account for Base
Compensation (excluding Annual Bonus) and a separate Cash Deferral Account for the Short Term Incentive Award and/or Annual Bonus. Earnings on
each of Employee Contributions shall accrue to the respective Cash Deferral Accounts where they are earned.
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“(i)(5)(vi)(A)(1), regardless of whether the Employer is a corporation or non−corporate entity
as permitted by the regulation, and using “50 percent” in lieu of “30 percent” in such regulation. A Change in Control will not apply to AT&T itself.
Chief Executive Officer. The Chief Executive Officer of AT&T Inc.
Code. References to the Code shall be to provisions of the Internal Revenue Code of 1986, as amended, including regulations promulgated
thereunder and successor provisions. Similarly, references to regulations shall include amendments and successor provisions.
Committee. The Human Resources Committee of the Board of Directors of AT&T Inc.
Disability. Absence of an Employee from work with an Employer under the relevant Employer’s disability plan.
Eligible Employee. An Employee who:
(a) is a full or part time, salaried Employee of AT&T or an Employer in which AT&T has a direct or indirect 100% ownership interest and who is
on active duty or Leave of Absence (but only while such Employee is deemed by the Employer to be an Employee of such Employer);
(b) is, as determined by AT&T, a member of Employer’s “select group of management or highly compensated employees” within the meaning
of the Employee Retirement Income Security Act of 1974, as amended, and regulations thereunder (“ERISA”), which is deemed to include each Officer
Level Employee; and
(c) has an employment status which has been approved by AT&T to be eligible to participate in this Plan or is an Officer Level Employee.
Notwithstanding the foregoing, AT&T (the Committee with respect to Officer Level Employees) may, from time to time, exclude any Employee
or group of Employees from being deemed an “Eligible Employee” under this Plan.
In the event a court or other governmental authority determines that an individual was improperly excluded from the class of persons who would
be permitted to make Employee Contributions during a particular time for any reason, that individual shall not be permitted to make such contributions for
purposes of the Plan for the period of time prior to such determination.
Employee. Any person employed by an Employer and paid on an Employer’s payroll system, excluding persons hired for a fixed maximum term
and excluding persons who are neither citizens nor permanent residents of the United States, all as determined by AT&T. For purposes of this Plan, a
person on Leave of Absence who otherwise would be an Employee shall be deemed to be an Employee.
Employee Contributions. Amounts credited to a Cash Deferral Account pursuant to Section 4.1 (Election to Make Contributions) of the Plan.
Employer. AT&T Inc. or any of its Subsidiaries.
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, the 2006 Incentive Plan or any successor plan, or any other award that the Committee specifically permits to be
contributed to a Cash Deferral Account under this Plan (regardless of the purpose of the award).
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“(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.
Participant. An Employee or former Employee who participates in this Plan.
Plan Interest Rate. An annual rate of interest equal to Moody’s Long−Term Corporate Bond Yield Average for the September preceding the
calendar year during which the interest rate will apply. The Committee may choose another method of calculating the Plan Interest Rate, but such other
method may only apply to Cash Deferral Units that Participants have not yet elected to establish.
Plan Year. Each of the following shall be a Plan year: the period from January 1, 2005 through January 15, 2006; the period January 16, 2006
through December 31, 2006; and, for all later Plan Years, it is defined as the period from January 1 through December 31.
Retirement or Retire. Termination of Employment on or after the date the Participant has attained one of the following combinations of age and
Net Credited Service:

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 the same existed on October1, 2008, 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.
Short Term Incentive Award. A cash award paid by an Employer (and not by a non−Employer, such as state disability payments) under the Short
Term Incentive Plan or any successor plan, together with any individual discretionary award made in connection therewith; an award under a similar plan
intended by the Committee to be in lieu of an award under such Short Term Incentive Plan, including, but not limited to, Performance Units granted under
the 2006 Incentive Plan or any successor plan. It shall also include any other award that the Committee designates as a Short Term Incentive Award
specifically for purposes of this Plan (regardless of the purpose of the award) provided the deferral election is made in accordance with Section 409A.
Specified Employee. Any Participant who is a “Key Employee” (as defined in Code Section 416(i) without regard to paragraph (5) thereof), as
determined by AT&T in accordance with its uniform policy with respect to all arrangements subject to Code Section 409A, based upon the 12−month
period ending on each December 31st (such 12−month period is referred to below as the “identification period”). All Participants who are determined to be
Key Employees under Code Section 416(i) (without regard to paragraph (5) thereof) during the identification period shall be treated as Key Employees for
purposes of the Plan during the 12−month period that begins on the first day of the 4th month following the close of such identification period.
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 also shall be deemed to 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 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 Claims and Appeals.
(a) Claims. A person who believes that he or she is being denied a benefit to which he or she is entitled under this Plan (hereinafter
referred to as a “Claimant”) may file a written request for such benefit with the Executive Compensation Administration Department, setting forth his or her
claim. The request must be addressed to the AT&T Executive Compensation Administration Department at its then principal place of business.
(b) Claim Decision. Upon receipt of a claim, the AT&T Executive Compensation Administration Department shall review the claim and
provide the Claimant with a written notice of its decision within a reasonable period of time, not to exceed ninety (90) days, after the claim is received. If
the AT&T Executive Compensation Administration Department determines that special circumstances require an extension of time beyond the initial ninety
(90)−day claim review period, the AT&T Executive Compensation Administration Department shall notify the Claimant in writing within the initial ninety
(90)−day period and explain the special circumstances that require the extension and state the date by which the AT&T Executive Compensation
Administration Department expects to render its decision on the claim. If this notice is provided, the AT&T Executive Compensation Administration
Department may take up to an additional ninety (90) days (for a total of one hundred eighty (180) days after receipt of the claim) to render its decision on
the claim.
If the claim is denied by the AT&T Executive Compensation Administration Department, in whole or in part, the AT&T Executive
Compensation Administration Department shall provide a written decision using language calculated to be understood by the Claimant and setting forth: (i)
the specific reason or reasons for such denial; (ii) specific references to pertinent provisions of this Plan on which such denial is based; (iii) a description of
any additional material or information necessary for the Claimant to perfect his or her claim and an explanation of why such material or such information is
necessary; (iv) a description of the Plan’s procedures for review of denied claims and the steps to be taken if the Claimant wishes to submit the claim for
review; (v) the time limits for requesting a review of a denied claim under this section and for conducting the review under this section; and (vi) a statement
of the Claimant’s right to bring a civil action under Section 502(a) of ERISA if the claim is denied following review under this section.
(c) Request for Review. Within sixty (60) days after the receipt by the Claimant of the written decision on the claim provided for in this
section, the Claimant may request in writing that the Committee review the determination of the AT&T Executive Compensation Administration
Department. Such request must be addressed to the Committee at the address for giving notice under 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 of the AT&T Executive
Compensation Administration Department’s decision by the Committee within such sixty (60)−day period, the Claimant shall be barred and estopped from
challenging the determination of the AT&T Executive Compensation Administration Department.
(d) Review of Decision. Within sixty (60) days after the Committee’s receipt of a request for review, the Administrator will review the
decision of the AT&T Executive Compensation Administration Department. If the Committee determines that special circumstances require an extension
of time beyond the initial sixty (60)−day review period, the Committee shall notify the Claimant in writing within the initial sixty (60)−day period and
explain the special circumstances that require the extension and state the date by which the Committee expects to render its decision on the review of the
claim. If this notice is provided, the Committee may take up to an additional sixty (60) days (for a total of one hundred twenty (120) days after receipt of
the request for review) to render its decision on the review of the claim.
During its review of the claim, the Committee shall:
(1) Take into account all comments, documents, records, and other information submitted by the Claimant relating to the claim, without
regard to whether such information was submitted or considered in the initial review of the claim conducted pursuant to this section;
(2) Follow reasonable procedures to verify that its benefit determination is made in accordance with the applicable Plan documents; and
(3) Follow reasonable procedures to ensure that the applicable Plan provisions are applied to the Participant to whom the claim relates in a
manner consistent with how such provisions have been applied to other similarly−situated Participants.
After considering all materials presented by the Claimant, the Committee will render a decision, written in a manner designed to be understood
by the Claimant. If the Committee denies the claim on review, the written decision will include (i) the specific reasons for the decision; (ii) specific
references to the pertinent provisions of this Plan on which the decision is based; (iii) a statement that the Claimant is entitled to receive, upon request to the
Committee and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claim; and (iv) a statement
of the Claimant’s right to bring a civil action under Section 502(a) of ERISA.
The Committee shall serve as the final review committee under the Plan and shall have sole and complete discretionary authority to administer,
interpret, construe and apply the Plan provisions, and determine all questions of administration, interpretation, construction, and application of the Plan,
including questions and determinations of eligibility, entitlement to benefits and the type, form and amount of any payment of benefits, all in its sole and
absolute discretion. The Committee shall further have the authority to determine all relevant facts and related issues, and all documents, records and other
information relevant to a claim conclusively for all parties, and in accordance with the terms of the documents or instruments governing the Plan. Decisions
by the Committee shall be conclusive and binding on all parties and not subject to further review.
In any case, a Participant or Beneficiary may have further rights under ERISA. The Plan provisions require that Participants or Beneficiary
pursue all claim and appeal rights described in this section before they seek any other legal recourse regarding claims for benefits.
Article 4 Contributions
4.1 Election to Make Contributions.
(a) The Committee shall establish dates and other conditions for participation in the Plan and making contributions as it deems
appropriate. Except as otherwise provided by the Committee, each year an Employee who is an Eligible Employee as of September 30 may thereafter make
an election on or prior to the last Business Day of the immediately following November (such election shall be cancelled if the Employee is not an Eligible
Employee on the last day such an election may be made) to contribute on a pre−tax basis, through payroll deductions, any combination of the following:
(1) From 1% to 50% (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. Employees who are below the level of Senior Manager, as
shown on the records of AT&T at the time of the election, may contribute no more than 25% or such other amount as determined by AT&T.
(2) Up to 95% (in whole percentage increments) of a Short Term Incentive Award, or up to 50% (in whole percentage increments) of Annual
Bonus (25% for Employees who are below the level of Senior Manager), 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 make other contributions 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.)
(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 make contributions
to the Plan at any time; provided, however, 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)‘ 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.
(f) To the extent a Participant makes contributions to the Plan where the payment of which would be deductible by AT&T under Section 162(m)
of the Code without regard to the size of the distribution, such contributions and earnings thereon shall be distributed first.
(g) With respect to a Plan Year, an Employee may elect to (1) make Employee Contributions of Base Compensation other than Annual Bonus to
this Plan but only if the Employee elects to contribute at least 15% of Base Compensation other than Annual Bonus for the same Plan Year to the Stock
Purchase and Deferral Plan and/or (2) make Employee Contributions of Annual Bonus to this Plan but only if the Employee elects to contribute at least 15%
of Annual Bonus for the same Plan Year to the Stock Purchase and Deferral Plan.
4.2 Contributions to a Cash Deferral Account.
(a) Employee 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) A Participant’s contributions shall be credited to the Participant’s Cash Deferral Account on the day 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. Earnings on each Cash Deferral Account shall be recorded on Participant’s statements
quarterly. The Committee may modify or change this paragraph (b) from time to time.
4.3 Earnings on Cash Deferral Accounts.
During a calendar year, the Participant’s Cash Deferral Account shall accrue interest on amounts held by such Account at the Plan Interest Rate
for such year, compounded quarterly on the last day of each quarter. Interest will accrue on unpaid amounts in the Cash Deferral Account from the date
credited to such Account.
Article 5 Distributions
5.1 Distributions of Cash Deferral Accounts.
(a) Initial Election with Respect to a Cash Deferred Account. At the time the Participant makes an election to make Employee Contributions
with respect to a Cash Deferral Account, the Participant shall also elect the calendar year of the distribution of the Cash Deferral Account and the number of
installments. The Participant may elect either of the following:
(1) Specified Date Distribution. That the distribution of the Cash Deferral Account commence in the calendar year specified by the Participant,
but no later than the 5th calendar year after the Plan Year the Cash Deferral Account commenced, in up to Ten (10) installments. However, for purposes of
Initial Elections with respect to Plan Years prior to 2009 only, in the event the Participant Terminates Employment prior to the calendar year of the
distribution, the Cash Deferral Account must commence distribution the calendar year following the calendar year of the Termination of Employment, with
the same number of installments, unless the Employee has made an irrevocable election under (b), below. For example, if the Participant elected a 2010
distribution with five (5) installments, but Terminated Employment in 2007, the Cash Deferral Account would commence distribution in 2008.
(2) Retirement Distribution. That the distribution of the Cash Deferral Account commence the calendar year following the calendar year of
Retirement in up to (10) installments. If the Participant Terminates Employment while not Retirement eligible, the distribution shall commence the calendar
year following the calendar year of Termination of Employment, but shall be limited to five (5) installments. This distribution alternative will not be
available for Initial Elections made after 2007.
If no timely distribution election is made by the Participant, then the Participant will be deemed to have made an election to have the Cash
Deferral Account distributed in a single installment in the first calendar year after the calendar year Employee Contributions were first made.
(b) If an Employee elected a Specified Date Distribution for a Cash Deferral Account, the Employee may elect a new Specified Date Distribution
commencement date but not a new number of installments; provided, however, Termination of Employment will not accelerate the distribution, unlike the
initial deferral election. Unless otherwise provided by the Committee, the election of a new commencement date 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 commencement date. 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 that would otherwise commence 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. The new distribution election must delay commencement of the
distribution by five (5) years. An election to create a new Specified Date Distribution and defer the commencement of the distribution of a Cash Deferral
Account may not be made in the same calendar year the election to establish the Cash Deferral Account is made. Notwithstanding anything to the contrary
in this Plan, (1) such election to create a new Specified Date Distribution 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 Cash 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 the Account. In the event the distribution is to be made to a
“Specified Employee” as a result of the Participant’s Termination of Employment (other than as a result of a Change in Control), the distribution shall not
occur until the later of such March 10 or six (6) months after the Termination of Employment, except it shall be distributed upon the Participant’s earlier
death in accordance with this Plan. The distributions shall continue annually on each successive March 10 (or such other date as determined by AT&T)
until the number of installments elected by the Participant is reached. In each installment, AT&T shall distribute to the Participant that portion of the
Participant’s Cash Deferral Account that is equal to the total dollar amount of the Participant’s Account divided by the number of remaining installments.
(d) The Committee may establish other distribution alternatives from time to time, but such alternatives may be offered no earlier than the next
period in which a Participant may make an election to establish a Cash Deferral Account.
5.2 Death of the Participant.
In the event of the death of a Participant, notwithstanding anything to the contrary in this Plan, all undistributed Cash 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.
5.3 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 Cash 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 Cash Deferral Accounts, 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 amount reasonably necessary, as
determined by AT&T (the Committee in the case of Officer Level Employees) in its sole discretion, to satisfy the emergency need (which may include
amounts necessary to pay any Federal, state, local, or foreign income taxes or penalties reasonably anticipated to result from the
distribution). Determinations of the amount reasonably necessary to satisfy the emergency need shall take into account any additional compensation that is
available if the plan provides for cancellation of a deferral election upon a payment due to an Unforeseeable Emergency. The determination of amounts
reasonably necessary to satisfy the Unforeseeable Emergency need is not required to, but may, take into account any additional compensation that, due to
the Unforeseeable Emergency, is available under another nonqualified deferred compensation plan but has not actually been paid, or that is available due to
the Unforeseeable Emergency under another plan that would provide for deferred compensation except due to the application of the effective date
provisions under Treasury Regulation § 1.409A–.
(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.
5.4 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.
Article 6 Transition Provisions
6.1 2005 Cash 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 Cash Deferral Account for the contribution of Base Compensation
and/or Incentive Awards that would otherwise be paid during the period from January 1, 2005, through January 15, 2006, which shall be the Plan Year for
such Cash Deferral Account.
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 Stock Purchase and Deferral Plan. Subject to the foregoing
consent requirements, all Employee Contribution elections made prior to 2008, including but not limited to elections to contribute cash with respect to
Performance Shares granted 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.
6.3 2008 Amendments. For the 2008 Plan Year, only Salary and Short Term Incentive Awards paid after Termination of Employment may
be contributed to the Plan.
Article 7 Discontinuation, Termination, Amendment.
7.1 AT&T’s Right to Discontinue Offering Cash Deferral Accounts.
The Committee may at any time discontinue offerings of Cash Deferral Accounts or contributions under the Plan. Any such discontinuance shall
have no effect upon existing Cash Deferral Accounts or the terms or provisions of this Plan as applicable to such Accounts.
7.2 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 interest on undistributed amounts 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.
7.3 Amendment.
The Committee may at any time amend the Plan in whole or in part; 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, any of the Cash
Deferral Accounts 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 the Participant’s Cash Deferral Account may be
distributed to a Participant, any reduction in the amounts credited to the Participant’s Cash Deferral Accounts, or any reduction in the Plan Interest Rate
(other than as it may fluctuate in accordance with its terms) for Cash Deferral Accounts previously elected by the Participant. Any such consent may be in a
writing, telecopy, or e−mail or in another electronic format. An election to make Employee Contributions shall be conclusively deemed to be the consent of
the Participant to any and all amendments to the Plan prior to such election, and such consent shall be a condition to making any election with respect to
Employee Contributions.
The Plan is established in order to provide deferred compensation to a select group of management and highly compensated employees with in
the meaning of Sections 201(2) and 301(a)(3) of ERISA. To the extent legally required, the Code and ERISA shall govern the Plan, and if any provision
hereof is in violation of an applicable requirement thereof, the Company reserves the right to retroactively amend the Plan to comply therewith to the extent
permitted under the Code and ERISA. The Company also reserves the right to make such other changes as may facilitate implementation of Section 409A
of the Code. Provided, however, that in no event shall any such amendments be made in violation of the requirements of Section 409A of the Code.
Article 8 Miscellaneous
8.1 Tax Withholding.
Upon a distribution from a Participant’s Cash Deferral Account, AT&T shall withhold sufficient amounts to satisfy the minimum amount of
Federal, state, and local taxes required by law to be withheld as a result of such distribution.
8.2 Loyalty Conditions for Officer Level Employees and Senior Managers.
Each Officer Level Employee or a Senior Manager who elects to make Employee Contributions under Section 4.1 of this Plan shall be subject to
the agreements and conditions of this section.
(a) By making an Employee Contribution election under Section 4.1 of this Plan after September 1, 2009, a Participant acknowledges
that AT&T would be unwilling to provide for such an election but for the loyalty conditions and covenants set forth in this section, and that the conditions
and covenants herein are a material inducement to AT&T’s willingness to sponsor the Plan and to offer Plan benefits for the Participants. Accordingly, as a
condition to making an Employee Contribution election under Section 4.1 of this Plan after September 1, 2009, each such electing Participant is deemed to
agree that he shall not, without obtaining the written consent of the Committee in advance, participate in activities that constitute engaging in competition
with AT&T or engaging in conduct disloyal to AT&T, as those terms are defined in this section.
(b) Definitions. For purposes of this section and of the Plan generally:
(i) an “Employer Business” shall mean AT&T Inc. and any of its Subsidiaries, or any business in which they or
any affiliate of theirs has a substantial ownership or joint venture interest;
(ii) “engaging in competition with AT&T” shall mean, while employed by AT&T or any of its Subsidiaries, or
within two (2) years after Participant’s Termination of Employment, engaging by the Participant in any business or activity in all or
any portion of the same geographical market where the same or substantially similar business or activity is being carried on by an
Employer Business. “Engaging in competition with AT&T” shall not include owning a non−substantial publicly traded interest as a
shareholder in a business that competes with an Employer Business. “Engaging in competition with AT&T” shall include representing
or providing consulting services to, or being an employee of, any person or entity that is engaged in competition with any Employer
Business or that takes a position adverse to any Employer Business.
(iii) “engaging in conduct disloyal to AT&T” means, while employed by AT&T or any of its Subsidiaries, or
within two (2) years after Participant’s Termination of Employment, (i) soliciting for employment or hire, whether as an employee or
as an independent contractor, for any business in competition with an Employer Business, any person employed by AT&T or any of its
Subsidiaries during the one (1) year prior to the Participant’s Termination of Employment, whether or not acceptance of such position
would constitute a breach of such person’s contractual obligations to AT&T or any of its Subsidiaries; (ii) soliciting, encouraging, or
inducing any vendor or supplier with which Participant had business contact on behalf of any Employer Business during the two (2)
years prior to the Participant’s Termination of Employment (regardless of the reason for that termination) to terminate, discontinue,
renegotiate, reduce, or otherwise cease or modify its relationship with AT&T or any of its Subsidiaries; or (iii) soliciting, encouraging,
or inducing any customer or active prospective customer with whom Participant had business contact, whether in person or by other
media (“Customer”), on behalf of any Employer Business during the two (2) years prior to the Participant’s Termination of
Employment (regardless of the reason for that termination), to terminate, discontinue, renegotiate, reduce, or otherwise cease or
modify its relationship with any Employer Business, or to purchase competing goods or services from a business competing with any
Employer Business, or accepting or servicing business from such Customer on behalf of himself or any other business. “Engaging in
conduct disloyal to AT&T” shall also mean, disclosing Confidential Information to any third party or using Confidential Information,
other than for an Employer Business, or failing to return any Confidential Information to the Employer Business following termination
of employment.
(iv) “Confidential Information” shall mean all information belonging to, or otherwise relating to, an Employer
Business, which is not generally known, regardless of the manner in which it is stored or conveyed to Participant, and which the
Employer Business has taken reasonable measures under the circumstances to protect from unauthorized use or
disclosure. Confidential Information includes trade secrets as well as other proprietary knowledge, information, know−how, and
non−public intellectual property rights, including unpublished or pending patent applications and all related patent rights, formulae,
processes, discoveries, improvements, ideas, conceptions, compilations of data, and data, whether or not patentable or copyrightable
and whether or not it has been conceived, originated, discovered, or developed in whole or in part by Participant. For example,
Confidential Information includes, but is not limited to, information concerning the Employer Business’ business plans, budgets,
operations, products, strategies, marketing, sales, inventions, designs, costs, legal strategies, finances, employees, customers,
prospective customers, licensees, or licensors; information received from third parties under confidential conditions; or other valuable
financial, commercial, business, technical or marketing information concerning the Employer Business, or any of the products or
services made, developed or sold by the Employer Business. Confidential Information does not include information that (i) was
generally known to the public at the time of disclosure; (ii) was lawfully received by Participant from a third party; (iii) was known to
Participant prior to receipt from the Employer Business; or (iv) was independently developed by Participant or independent third
parties; in each of the foregoing circumstances, this exception applies only if such public knowledge or possession by an independent
third party was without breach by Participant or any third party of any obligation of confidentiality or non−use, including but not
limited to the obligations and restrictions set forth in this Plan.
(c) Equitable Relief. The parties recognize that any Participant’s breach of any of the covenants in this section will cause irreparable
injury to the AT&T, will represent a failure of the consideration under which AT&T (in its capacity as creator and sponsor of the Plan) agreed to provide the
Participant with the opportunity to receive Plan benefits, and that monetary damages would not provide AT&T with an adequate or complete remedy that
would warrant AT&T’s continued sponsorship of the Plan (including the accrual or granting of Share Units, Matching Share Units and Options) for all
Participants. Accordingly, in the event of a Participant’s actual or threatened breach of the covenants in this section, the Committee, in addition to all other
rights and acting as a fiduciary under ERISA on behalf of all Participants, shall have a fiduciary duty (in order to assure that AT&T receives fair and
promised consideration for its continued Plan sponsorship and funding) to seek an injunction restraining the Participant from breaching the covenants in this
Section. AT&T shall pay for any Plan expenses that the Committee incurs hereunder, and shall be entitled to recover from the Participant its reasonable
attorneys’ fees and costs incurred in obtaining such injunctive remedies.
(d) Uniform Enforcement. In recognition of AT&T’s need for nationally uniform standards for the Plan administration, it is an
absolute condition in consideration of any Participant’s ability to make Employee Contribution elections under Section 4.1 of this Plan after September 1,
2009, that each and all of the following conditions apply to all such electing Participants:
(i) ERISA shall control all issues and controversies hereunder, and the Committee shall serve for purposes hereof
as a “fiduciary” of the Plan and its “named fiduciary” within the meaning of ERISA.
(ii) All litigation between the parties relating to this section shall occur in federal court, which shall have
exclusive jurisdiction; any such litigation shall be held in the United States District Court for the Northern District of Texas, and the
only remedies available with respect to the Plan shall be those provided under ERISA.
Notwithstanding anything to the contrary contained in this Plan, all elections and notices of every kind under this Plan 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. Unless made irrevocable by the electing
person, each election with regard to making Employee Contributions or distributions of Cash Deferral Accounts shall become irrevocable at the close of
business on the last day to make such election. AT&T may limit the time an election may be made in advance of any deadline.
If not otherwise specified by this Plan or AT&T, any notice or filing required or permitted to be given to AT&T under the Plan shall be delivered
to the principal office of AT&T, directed to the attention of the Senior Executive Vice President in charge of Human Resources for AT&T or his or her
successor. Such notice shall be deemed given on the date of delivery.
Notice to the Participant shall be deemed given when mailed (or sent by telecopy) to the Participant’s work or home address as shown on the
records of AT&T or, at the option of AT&T, to the Participant’s e−mail address as shown on the records of AT&T. It is the Participant’s responsibility to
ensure that the Participant’s addresses are kept up to date on the records of AT&T. In the case of notices affecting multiple Participants, the notices may be
given by general distribution at the Participants’ work locations.
By participating in the Plan, each Participant agrees that AT&T may provide any documents required or permitted under the Federal or state
securities laws, including but not limited to the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, by e−mail, by
e−mail attachment, or by notice by e−mail of electronic delivery through AT&T’s Internet Web site or by other electronic means.
8.4 Unsecured General Creditor.
Participants and their beneficiaries, heirs, successors, and assigns shall have no legal or equitable rights, interest, or claims in any property or
assets of any Employer. No assets of any Employer shall be held under any trust for the benefit of Participants, their beneficiaries, heirs, successors, or
assigns, or held in any way as collateral security for the fulfilling of the obligations of any Employer under this Plan. Any and all of each Employer’s assets
shall be, and remain, the general, unpledged, unrestricted assets of such Employer. The only obligation of an Employer under the Plan shall be merely that
of an unfunded and unsecured promise of AT&T to make distributions under and in accordance with the terms of the Plan.
8.5 Non−Assignability.
Neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage, or otherwise
encumber, transfer, hypothecate or convey in advance of actual receipt, any Cash Deferral Account under the Plan, if any, or any part thereof, which are,
and all rights to which are, expressly declared to be unassignable and non−transferable. No part of a distributable Cash Deferral Account shall, prior to
actual distribution, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or
any other person, nor be transferable by operation of law in the event of a Participant’s or any other person’s bankruptcy or insolvency.
8.6 Employment Not Guaranteed.
Nothing contained in this Plan nor any action taken hereunder shall be construed as a contract of employment or as giving any employee any
right to be retained in the employ of an Employer or to serve as a director.
8.7 Errors.
At any time AT&T or an Employer may correct any error made under the Plan without prejudice to AT&T or any Employer. Neither AT&T nor
any Employer shall be liable for any damages resulting from failure to timely allow any contribution to be made to the Plan or for any damages resulting
from the correction of, or a delay in correcting, any error made under the Plan. In no event shall AT&T or any Employer be liable for consequential or
incidental damages arising out of a failure to comply with the terms of the Plan.
8.8 Captions.
The captions of the articles, sections, and paragraphs of this Plan are for convenience only and shall not control nor affect the meaning or
construction of any of its provisions.
8.9 Governing Law.
To the extent not preempted by Federal law, the Plan, and all benefits and agreements hereunder, and any and all disputes in connection
therewith, shall be governed by and construed in accordance with the substantive laws of the State of Texas, without regard to conflict or choice of law
principles which might otherwise refer the construction, interpretation or enforceability of this Plan to the substantive law of another jurisdiction.
Because benefits under the Plan are granted in Texas, records relating to the Plan and benefits thereunder are located in Texas, and the Plan and
benefits thereunder are administered in Texas, AT&T and the Participant under this Plan, for themselves and their successors and assigns, irrevocably
submit to the exclusive and sole jurisdiction and venue of the state or Federal courts of Texas with respect to any and all disputes arising out of or relating to
this Plan, the subject matter of this Plan or any benefits under this Plan, including but not limited to any disputes arising out of or relating to the
interpretation and enforceability of any benefits or the terms and conditions of this Plan. To achieve certainty regarding the appropriate forum in which to
prosecute and defend actions arising out of or relating to this Plan, and to ensure consistency in application and interpretation of the Governing Law to the
Plan, the parties agree that (a) sole and exclusive appropriate venue for any such action shall be an appropriate Federal or state court in Dallas County,
Texas, and no other, (b) all claims with respect to any such action shall be heard and determined exclusively in such Texas court, and no other, (c) such
Texas court shall have sole and exclusive jurisdiction over the person of such parties and over the subject matter of any dispute relating hereto and (d) that
the parties waive any and all objections and defenses to bringing any such action before such Texas court, including but not limited to those relating to lack
of personal jurisdiction, improper venue or forum non conveniens.
8.10 Plan to Comply with Section 409A.
In the event any provision of this Plan is held invalid, void, or unenforceable, the same shall not affect, in any respect whatsoever, the validity of
any other provision of this Plan. Notwithstanding any provision to the contrary in this Plan, each provision in this Plan shall be interpreted to permit the
deferral of compensation in accordance with Section 409A of the Code and any provision that would conflict with such requirements shall not be valid or
enforceable.
8.11 Successors and Assigns.
This Plan shall be binding upon AT&T and its successors and assigns.
EXHIBIT DD
MASTER
TRUST AGREEMENT FOR
SOUTHWESTERN BELL CORPORATION
DEFERRED COMPENSATION PLANS AND OTHER

EXECUTIVE BENEFIT PLANS
By and Between
SOUTHWESTERN BELL CORPORATION,
PARTICIPATING TRUST TRUSTEES
And
BOATMEN'S TRUST COMPANY, AS TRUSTEE
MASTER TRUST AGREEMENT FOR

SOUTHWESTERN BELL CORPORATION
SENIOR MANAGEMENT DEFERRED COMPENSATION PLANS AND
OTHER EXECUTIVE BENEFIT PLANS
This Trust Agreement is made and entered into by and between SOUTHWESTERN BELL CORPORATION, a Delaware corporation (the
"Company"), BOATMEN'S TRUST COMPANY, a Missouri corporation (the "Trustee"), and Boatmen's Trust Company as trustee of each Participating
Trust (as such term is hereinafter defined). Boatmen's Trust Company acting in its capacity as trustee of each Participating Trust is hereinafter referred to as
the "Participating Trust Trustee". The parties agree as follows:
The Company and the Participating Trust Trustees hereby establish with the Trustee a trust to hold all monies and other property, together with
the earnings, income, additions and appreciation thereon and thereto, as shall be paid or transferred to it hereunder in accordance with the terms and
conditions of this Trust Agreement. The Trustee hereby accepts the trust established under this Trust Agreement and agrees to hold, IN TRUST, all monies
and other property transferred to it hereunder for the uses and purposes and upon the terms and conditions set forth herein, and the Trustee further agrees to
discharge and perform fully and faithfully all of the duties and obligations imposed upon it under this Trust Agreement.
PREAMBLE
The Company and the Participating Trust Trustees have entered into the following trust agreements, each of which is incorporated herein by
this reference, thereby establishing eight separate trusts (each of which is referred to herein as a "Participating Trust"):
• Trust Agreement for Southwestern Bell Corporation

Senior Management Deferred Compensation Plan of 1988
Senior Management Deferred Compensation Plan of 1988 (Early Payment Option)
Senior Management Deferred Compensation Plan
Management Deferred Compensation Plan of 988
Management Deferred Compensation Plan
Compensation Deferral Plan
Senior Management Supplemental Retirement Income Plan
Management Pension Plan (Benefits In Excess of Code ss. 415 Limitations)
The Company and the Participating Trust Trustees wish to establish his trust to facilitate the administration of the Participating Trusts.
The Company and/or the respective Participating Trust Trustee shall provide the Trustee with certified copies of the following items: (i)
Participating Trust Agreement; and (ii) lists and specimen signatures of representatives authorized to take action in regard to the administration of the
Participating Trust and/or this trust, including any changes of such representatives promptly following any such change.
The purpose of this trust is to facilitate the administration of the Participating Trusts which were themselves each established for the benefit of
eligible participants of the plan to which the Participating Trust relates (each such plan being hereinafter referred to as a "Plan").
This trust shall be and hereby is declared to be subject to the provisions of each Participating Trust.
The Company and the Participating Trust Trustees and the Trustee agree that the trust hereby created has been established to facilitate the
administration of the Participating Trusts (which themselves were each established to pay obligations of the Company pursuant to a Plan) and is subject to
the rights of general creditors of the Company, and accordingly is a grantor trust under the provisions of Sections 671 through 677 of the Internal Revenue
Code of 1986 as amended (the "Code"). The Company hereby agrees to report all items of income and deduction of the trust on its own income tax returns;
and the Company shall have no right to any distributions from the trust or any claim against the trust for funds necessary to pay any income taxes which the
Company is required to pay on account of reporting the income of the trust on its income tax returns. No contribution to or income of the trust is intended to
be taxable to Plan participants until benefits are distributed to them.
Each Plan is intended to be "unfunded" and maintained "primarily for the purpose of providing deferred compensation for a select group of
management or highly compensated employees" for purposes of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") and as such
is intended not to be covered by Parts 2 through 4 of subtitle B of Title I of ERISA (relating to participation and vesting, funding and fiduciary
responsibility). The existence of this trust is not intended to alter this characterization of any Plan.
Any additional trust may become a Participating Trust hereunder with the consent of the Company and the Trustee upon adoption of this
Agreement and delivery to the Trustee of assets to purchase units hereunder for such trust in accordance with 2.1 and 3.3 hereof.
ARTICLE I
Effective Date; Duration
1.1 Effective Date and Trust Year
This trust shall become effective when the Trust Agreement has been executed by the Company, the Participating Trust Trustees and the
Trustee and the Company and/or a Participating Trust Trustee has made a contribution to the trust. The trust year shall be the calendar year.
1.2 Duration
1.2.1 This trust shall continue in effect until all assets of the trust fund are exhausted through distribution of Participating Trust assets in accordance
with the provisions of the Participating Trusts or return of Participating Trust assets to the Participating Trust Trustees or to the Company in accordance
with Participating Trust provisions. Notwithstanding the foregoing, this trust shall terminate on the day before twenty−one years after the death of the last
survivor of all of the present or future participants in any Plan who are now living and those persons now living who are designated as beneficiaries of any
such participants in accordance with the terms of any Plan.
ARTICLE II
Trust Fund
2.1 Contributions
The Company and the Participating Trust Trustees hereby establish with the Trustee, and the Trustee hereby accepts, a trust consisting of such cash or other
property acceptable to the Trustee as shall be paid or delivered to the Trustee from time to time by the Company or any Participating Trust Trustee together
with the earnings, income, additions and appreciation thereon and thereto. All such payments and deliveries of cash or other property shall be deemed to be
made as of the Valuation Date (as such term is hereinafter defined) coinciding with or next following such payment or delivery and shall purchase units in
accordance with the provisions of 3.3. With respect to contributions made by the Company, the Company shall designate the Participating Trust for which
such contributions are made; provided, however, the Company may designate that funds it contributes not be allocated to any Participating Trust but instead
that such contribution be allocated to the Company's account that shall be maintained hereunder. The Trustee shall hold the fund in trust and manage and
administer it in accordance with the terms and provisions of this Agreement.
Before a Potential Change in Control (as such term is defined in the Participating Trusts), subject to 3.2.1, the Trustee shall transfer from the Company's
account hereunder to the account of any Participating Trust such amount as the Company directs. Upon a Potential Change in Control, any funds then held
in the Company's account hereunder shall be allocated as of the Valuation Date coinciding with or next following the Potential Change in Control to the
Participating Trusts hereunder. The amount allocated to each such Participating Trust shall be that portion of the total amount in the Company's account that
is proportional to the ratio of a Participating Trust's Potential Change in Control Funding Amount (as such term is defined in the Participating Trusts) to the
aggregate of the Potential Change in Control Funding Amounts of all of the Participating Trusts.
2.2 Investments
2.2.1 The trust fund may be invested primarily in insurance or annuity contracts ("Contracts"). Such Contracts may be purchased by the Company
and transferred to the Trustee by the Company or a Participating Trust Trustee as in−kind contributions or may be purchased by the Trustee with the
proceeds of cash contributions (or may be purchased upon direction by the Company pursuant to 2.2.2 or an Investment Manager pursuant to 2.2.4). The
Company's contributions to the trust shall include sufficient cash to make projected premium payments on such Contracts and payments of interest due on
loans secured by the cash value of such Contracts, unless the Company makes such payments directly. The Trustee shall have the power to exercise all
rights, privileges, options and elections granted by or permitted under any Contract or under the rules of the issuing insurance company ("Insurer"),
including the right to obtain policy loans against the cash value of the Contract. The Company or a Participating Trust Trustee or a Committee (as such term
is defined in the Participating Trusts) may from time to time direct the Trustee in writing as to the designation of the beneficiary of a Plan participant under
a Contract for any part of the death benefits payable to such beneficiary thereunder, and the Trustee shall file such designation with the Insurer.
2.2.2 The trustee shall invest the trust fund in accordance with written directions by the Company. However, after a Change in Control (as such term
is defined in the Participating Trusts) no investments shall be made in any securities or instruments issued by the Company or other assets of the Company
without the written Consent of Participants (as such term is defined in the Participating Trusts). The Trustee shall act only as an administrative agent in
carrying out directed investment transactions and shall not be responsible for the investment decision. If a directed investment transaction violates any duty
to diversify, to maintain liquidity or to meet any other investment standard under this trust or applicable law, the entire responsibility shall rest upon the
Company. The Trustee shall be fully protected in acting upon or complying with any investment objectives, guidelines, restrictions or directions provided in
accordance with this paragraph.
Notwithstanding the foregoing, after a Change in Control the Company shall no longer be entitled to direct the Trustee with respect to the investment of the
trust fund pursuant to this 2.2.2, unless the Written Consent of Participants is obtained for the Company to continue to have this right pursuant to this 2.2.2.
If such written Consent of Participants is not obtained, the trust fund shall be invested by the Trustee pursuant to 2.2.3 or an Investment Manager pursuant to
2.2.4 and the Trustee or Investment Manager shall also have the right to invest the trust fund primarily in insurance or annuity contracts pursuant to 2.2.1.
2.2.3 If the Trustee does not receive instructions from the Company for the investment of part or all of the trust fund, the Trustee shall invest and
reinvest the assets of the trust as the Trustee, in its sole discretion, may deem appropriate, including (without limiting the generality of the foregoing)
improved and unimproved real property, whether or not income producing, common and preferred stocks, shares or certificates of participation issued by
investment companies, investment trusts and mutual funds, common or pooled investment funds, bonds, debentures, mortgages, deeds of trust, insurance
and annuity contracts, notes secured by real or personal property, leases, ground leases, limited partnership interests, real or personal property interests
owned, developed or managed by joint ventures or limited partnerships, obligations of governmental bodies, both domestic and foreign, notes, commercial
paper, certificates of deposit, and other securities or evidences of indebtedness, secured or unsecured, including variable amount notes, convertible securities
of all types and kinds, interest−bearing savings or deposit accounts with any federally−insured bank (including the Trustee or an affiliate of the Trustee) or
any savings and loan association, and any other property permitted as trust investments under applicable law; provided, however, the Trustee is hereby
specifically authorized to sell covered call options but shall not purchase such options or otherwise deal in options or futures contracts.
The Trustee is hereby specifically authorized to invest in any common or pooled investment fund or mutual fund now or hereafter maintained by the Trustee
or an affiliate of the Trustee and any interest−bearing savings or deposit accounts with the banking department of the Trustee or an affiliate of the Trustee.
2.2.4 The Company may appoint one or more investment managers ("Investment Manager") subject to the following provisions:
(a) The Company may appoint one or more Investment Managers to manage (including the power to acquire and dispose of) a specified
portion of the assets of the trust (hereinafter referred to as that Investment Manager's "Segregated Fund"). Any Investment Manager so
appointed must be either (A) an investment adviser registered as such under the Investment Advisers Act of 1940, (B) a bank, as defined in
that Act, or (C) an insurance company qualified to perform services in the management, acquisition or disposition of the assets of trusts under
the laws of more than one state; and any Investment Manager so appointed must acknowledge in writing to the Company and to the Trustee
that it is a fiduciary with respect to the Plans. The Trustee, until notified in writing to the contrary, shall be fully protected in relying upon any
written notice of the appointment of an Investment Manager furnished to it by the Company. In the event of any vacancy in the office of
Investment Manager, the Trustee shall be deemed to be the Investment Manager of that Investment Manager's Segregated Fund until an
Investment Manager thereof shall have been duly appointed; and in such event, until an Investment Manager shall have been so appointed
and qualified, references herein to the Trustee's acting in respect of that Segregated Fund pursuant to direction from the Investment Manger
shall be deemed to authorize the Trustee to act in its own discretion in managing and controlling the assets of that Segregated Fund, and
subparagraph (c) below shall have no effect with respect thereto and shall be disregarded.
(b) Each Investment Manager appointed pursuant to subparagraph (a) above shall have exclusive authority and discretion to manage and
control the assets of its Segregated Fund and may invest and reinvest the assets of the Segregated Fund in any investments in which the
Trustee is authorized to invest under 2.2.3, subject to the limitations of 2.2.3 and subject to the terms and limitations of any written instruments
pertaining to its appointment as Investment Manager. Copies of any such written instruments shall be furnished to the Trustee. In addition,
each Investment Manager from time to time and at any time may delegate to the Trustee (or in the event of any vacancy in the office of
Investment Manager, the Trustee may exercise in respect of that Investment Manager's Segregated Fund) discretionary authority to invest and
reinvest otherwise uninvested cash held in its Segregated Fund temporarily in bonds, notes or other evidences of indebtedness issued or fully
guaranteed by the United States of America or any agency or instrumentality thereof, or in other obligations of a short−term nature, including
prime commercial obligations or part interests therein.
(c) Unless the Trustee knowingly participates in, or knowingly undertakes to conceal, an act or omission of an Investment Manager, knowing
such act or omission to be a breach of the fiduciary responsibility of the Investment Manager with respect to any Plan, the Trustee shall not be
liable for any act or omission of any Investment Manager and shall not be under any obligation to invest or otherwise manage the assets of any
Plan that are subject to the management of any Investment Manager. Without limiting the generality of the foregoing, the Trustee shall not be
liable by reason of its taking or refraining from taking at the direction of an Investment Manager any action in respect of that Investment
Manager's Segregated Fund. The Trustee shall be under no duty to question or to make inquiries as to any direction or order or failure to give
direction or order by any Investment Manager; and the Trustee shall be under no duty to make any review of investments acquired for the trust
at the direction or order of any Investment Manager and shall be under no duty at any time to make any recommendation with respect to
disposing of or continuing to retain any such investment.
2.3 Excess Assets
Excess Assets (as such term is defined in the Participating Trusts) allocable to any Participating Trust that are held in this trust may be returned to the
Company in accordance with the provisions of such Participating Trust and 3.2 hereof. Funds not allocated to any Participating Trust shall not be returned to
the Company (payments made out of the Company's account on behalf of a Participating Trust pursuant to 3.2 shall not constitute a return to the Company
of any unallocated funds).
2.4 Subtrusts
2.4.1 Upon written direction of the Company, the Trustee shall establish a separate subtrust ("Subtrust") for each participant in a Plan. The Subtrust
shall reflect an undivided interest in the Participating Trust's assets of the trust fund and shall not require any segregation of particular assets. In the event
the Company directs the Trustee to establish separate Subtrusts, the Company shall direct the Trustee with respect to the allocation of assets of the trust fund
among each separate Subtrust. After a Change in Control, any such direction by the Company with respect to the allocation of assets of the trust fund among
separate Subtrusts may be made only with the Written Consent of Participants affected thereby. If the Trustee does not receive a valid direction with respect
to the allocation of assets of the trust fund among separate Subtrusts within 90 days after such Subtrusts are established, the assets of the trust fund or
affected portion thereof shall be allocated in accordance with the provisions of the applicable Participating Trust. With respect to any new contributions to
the trust by the Company after separate Subtrusts have been established, the Company shall designate each participant for which such contributions are
made. The Trustee shall have no duty to inquire whether any of the foregoing allocations of assets of the trust fund or contributions to the trust are made in
compliance with the terms of any Plan.
After establishment of separate Subtrusts, the interest of each Subtrust in this trust shall be accounted for as a separate fund of the trust and no part of the
assets allocable to one participant and his/her Subtrust shall be utilized to provide any benefits under any Plan to any other participant.
The Trustee shall allocate investment earnings and losses of the trust fund among the Subtrusts in proportion to their account balances. Payments to general
creditors during Insolvency Administration under 5.2 shall be charged against each Subtrust in proportion to its account balance plus payment therefrom to
the beneficiary thereof made during the previous duration of said Subtrust, except that payment of benefits to a Plan participant as a general creditor shall be
charged against the Subtrust for that participant.
2.4.2 Upon direction of a Participating Trust Trustee, the Trustee shall establish a separate subtrust for each participant (each a "Participant Trust")
in a Plan. The Participant Trust shall reflect an undivided interest in the Participating Trust's assets of the trust fund and shall not require any segregation of
particular assets. The assets of the trust shall be allocated to such separate Participant Trusts in accordance with the provisions of the applicable
Participating Trust. After such allocation, the interest of each Participant Trust in this trust shall be accounted for as a separate fund of the trust and no part
of the assets allocable to one participant and his/her Participant Trust shall be utilized to provide any benefits under any Plan to any other participant.
(a) With respect to any new contributions to the trust by the Company after the Participant Trusts have been established, the Company shall
designate each participant and his/her associated Participant Trust for which such contributions are made.
(b)Investment earnings and losses of the trust fund of the Plan shall be allocated among the Participant Trusts in proportion to their account
balances. Payments to general creditors during Insolvency Administration shall be charged, until each such trust is exhausted, against each
Participant Trust in proportion to its account balance plus payments therefrom to the beneficiary thereof made during the previous duration of
said Participant Trust, except that payment of benefits to a Plan participant as a general creditor shall be charged against the appropriate
Participant Trust for that participant.
(c) Following the establishment of Participant Trusts, a Plan's benefits shall be paid to each participant or his/her beneficiary(ies) in
accordance with the terms of the Plan until all assets allocable to his/her Participant Trust are exhausted. Thereafter, a participant shall have
no claim against any of the other assets of this trust. Notwithstanding the foregoing, if at any time after the establishment of Participant Trusts,
the value of a participant's Participant Trust shall be $100,000 or less, distribution of the value of such Participant Trust shall be made by the
Trustee to such participant at such time in a lump sum. Thereafter, such participant shall have no claim against any of the other assets of this
trust, but shall retain any rights which he may have against the Company pursuant to the Plan.
(d) If at any time after the establishment of Participant Trusts in accordance with this 2.4.2, the Company shall fund the trust to the level
required by the applicable Participating Trust to avoid the establishment of separate Participant Trusts, then at the Company's option and upon
notice by the Company to the Trustee to such effect, the requirement of this 2.4.2 for separate Participant Trusts shall cease (and the provisions
related thereto shall have no force or effect) and such requirement shall thereafter recommence only if the Participating Trust funding level
thereafter falls below the level described in the applicable Participating Trust as requiring the establishment of separate Participant Trusts.
2.5 Substitution of Other Property
2.5.1 The Company shall have the power to reacquire part or all of the trust fund at any time, by substituting for it other readily marketable property
of equivalent value, net of any costs of disposition. Such power is exercisable in a nonfiduciary capacity and may be exercised without the consent of
participants or any other person.
2.5.2 The value of any insurance Contracts reacquired under 2.5.1 shall be the present value of future projected cash flow or benefits payable under
the Contract, but not less than the cash surrender value. The projection shall include death benefits based on reasonable mortality assumptions. The value of
all other assets in the trust fund shall be fair market value. Values shall be determined by the Trustee and may be based on the determination of Experts (See
2.6.2).
2.6 Administrative Powers of Trustee
2.6.1 Subject in all respects to applicable provisions of this Trust Agreement, the Participating Trust Agreements and the Plans, including
limitations on investment of the trust fund, the Trustee shall have the rights, powers and privileges of an absolute owner when dealing with property of the
trust, including (without limiting the generality of the foregoing) the powers listed below:
(a) To sell, convey, transfer, exchange, partition, lease, and otherwise dispose of any of the assets of the trust at any time held by the
Trustee under this Trust Agreement;
(b) To exercise any option, conversion privilege or subscription right given the Trustee as the owner of any security held in the trust; to
vote any corporate stock either in person or by proxy, with or without power of substitution; to consent to or oppose any reorganization,
consolidation, merger, readjustment of financial structure, sale, lease or other disposition of the assets of any corporation or other organization,
the securities of which may be an asset of the trust; and to take any action in connection therewith and receive and retain any securities
resulting therefrom;
(c) To deposit any security with any protective or reorganization committee, and to delegate to such committee such power and
authority with respect thereto as the Trustee may deem proper, and to agree to payout of the trust such portion of the expenses and
compensation of such committee as the Trustee, in its discretion, shall deem appropriate;
(d) To cause any property of the trust to be issued, held or registered in the name of the Trustee as trustee, or in the name of one or
more of its nominees, or one or more nominees of any system for the central handling of securities, or in such form that title will pass by
delivery, provided that the records of the Trustee shall in all events indicate the true ownership of such property;
(e) To renew or extend the time of payment of any obligation due or to become due;
(f) To commence or defend lawsuits or legal or administrative proceedings; to compromise, arbitrate or settle claims, debts or damages
in favor of or against the trust; to deliver or accept, in either total or partial satisfaction of any indebtedness or other obligation, any property;
to continue to hold for such period of time as the Trustee may deem appropriate any property so received; and to pay all costs and reasonable
attorneys' fees in connection therewith out of the assets of the trust;
(g) To grant options to purchase or to acquire options to purchase any real property;
(h) To foreclose any obligation by judicial proceeding or otherwise;
(i) To manage any real property in the trust in the same manner as if the Trustee were the absolute owner thereof, including the power
to lease the same for such term or terms within or beyond the existence of the trust and upon such conditions, including (but not by way of
limitation) agreements for the purchase or disposal of buildings thereon and options to the tenant to renew such lease from time to time, or to
purchase such property, as the Trustee may deem proper;
(j) To borrow money from any person in such amounts, upon such terms and for such purposes as the Trustee, in its discretion, may
deem appropriate; and in connection therewith, to execute promissory notes, mortgages or other obligations and to pledge or mortgage any
trust assets as security; and to lend money on a secured or unsecured basis to any person other than a party in interest;
(k) To appoint one or more persons or entities as ancillary trustee or sub−trustee for the purpose of investing in and holding title to real
or personal property or any interest therein located outside the State of Missouri; provided that any such ancillary trustee or sub−trustee shall
act with such power, authority, discretion, duties, and functions of the Trustee as shall be specified in the instrument establishing such ancillary
or subtrust, including (without limitation) the power to receive, hold and manage property, real or personal, or undivided interests therein; and
the Trustee may pay the reasonable expenses and compensation of such ancillary trustees or sub−trustees out of the trust;
(l) To deposit any securities held in the trust with a securities depository;
(m) To hold such part of the assets of the trust uninvested for such limited periods of time as may be necessary for purposes of orderly
account administration or pending required directions, without liability for payment of interest;
(n) To determine how all receipts and disbursements shall be credited, charged or apportioned as between income and principal, and
the decision of the Trustee shall be final and not subject to question by any participant or beneficiary of the trust; and
(o) Generally to do all acts, whether or not expressly authorized, which the Trustee may deem necessary or desirable for the orderly
administration or protection of the trust fund.
2.6.2 The Trustee may engage one or more independent attorneys, accountants, actuaries, appraisers or other experts (each an "Expert") for any
purpose, including the determination of Excess Assets (as such term is defined in the Participating Trusts). The determination of an Expert shall be final and
binding on the Company, the Participating Trust Trustees, the Trustee, and all of the Plans' participants unless within 30 days after receiving a determination
deemed by any participant to be adverse, any participant initiates suit in a court of competent jurisdiction seeking appropriate relief. The Trustee shall have
no duty to oversee or independently evaluate the determination of the Expert. The Trustee shall be authorized to pay the fees and expenses of any Expert out
of the assets of the trust fund.
2.6.3 The Company shall from time to time pay taxes (references in this Trust Agreement to the payment of taxes shall include interest and
applicable penalties) of any and all kinds whatsoever which at any time are lawfully levied or assessed upon or become payable in respect of the trust fund,
the income or any property forming a part thereof, or any security transaction pertaining thereto. To the extent that any taxes levied or assessed upon the
trust fund are not paid by the Company or contested by the Company pursuant to the last sentence of this paragraph, the Trustee shall pay such taxes out of
the trust fund, and the Company shall upon demand by the Trustee deposit into the trust fund an amount equal to the amount paid from the trust fund to
satisfy such tax liability. If requested by the Company, the Trustee shall, at the company's expense, contest the validity of such taxes in any manner deemed
appropriate by the Company or its counsel, but only if it has received an indemnity bond or other security satisfactory to it to pay any expenses of such
contest. Alternatively, the Company may itself contest the validity of any such taxes, but any such contest shall not affect the Company's obligation to
reimburse the trust fund for taxes paid from the trust fund.
2.6.4 In the event a Plan's participant's beneficiary designation results in a participant or the participant's spouse being deemed to have made a
"generation−skipping transfer" as defined in Section 2611 of the Code, then to the extent that the participant or participant's "executor", as said term is
defined in the Code (or the spouse of the participant or said spouse's statutory executor in the case of a generation−skipping transfer deemed to have been
made by a participant's spouse), have not previously used the total generation−skipping transfer exemption that is available under Section 2631 of the Code
to such transferor, such unused exemption shall be allocated in the manner prescribed by Section 2632 of the Code, except that (a) any generation−skipping
transfer resulting from said beneficiary designation shall be excluded from the allocation; and (b) the method of allocation under Section 2632 shall be
reversed so that such unused portion of said transferor's exemption shall be applied first to trusts or trust equivalents of which transferor is the deemed
transferor and from which taxable distributions occur and, second, to direct skips occurring at said transferor's death. Any portion of said transferor's total
generation−skipping transfer exemption not used pursuant to the provisions of the previous sentence shall be allocated to the transfer resulting from the
beneficiary designation that gives rise to the generation−skipping transfer hereunder.
Notwithstanding any provisions in a Plan or this Trust Agreement to the contrary, the Company and Trustee may withhold any benefits payable to a
beneficiary as a result of the death of the participant or any other beneficiary until such time as (a) the Company or Trustee is able to determine whether a
generation−skipping transfer tax, as defined in Chapter 13 of the Code, or any substitute provision therefor, is payable by the Company or Trustee; and (b)
the Company or Trustee has determined the amount of generation−skipping transfer tax that is due, including interest thereon. If any such tax is payable, the
Company or Trustee shall reduce the benefits otherwise payable hereunder to such beneficiary by the amount necessary to provide said beneficiary with a
benefit equal to the amounts that would have been payable if the original benefits had been calculated on the basis of a present value at the time of the
generation−skipping transfer equal to the then present value of the originally contemplated benefit less an amount equal to the generation−skipping transfer
tax and any interest thereon that is payable as a result of the death in question. The Company or Trustee may also withhold from distribution by further
reduction of the then net present value of benefits calculated in accordance with the terms of the previous sentence such amounts as the Company or Trustee
feels are reasonably necessary to pay additional generation−skipping transfer tax and interest thereon from amounts initially calculated to be due. Any
amounts so withheld shall be payable as soon as there is a final determination of the applicable generation−skipping tax and interest thereon. No interest
shall be payable by the Company or Trustee to any beneficiary for the period of time that is required from the date of death to the time when the
aforementioned generation−skipping transfer tax determinations are made and the amount of benefits payable to a beneficiary can be fully determined.
ARTICLE III
Administration
3.1 Committees; Company Representatives
3.1.1 Each Plan is administered by a Committee appointed by the Company. A Committee has general responsibility to interpret its Plan and
determine the rights of participants and beneficiaries.
3.1.2 The Trustee shall be given the names and specimen signatures of the members of each Committee and any other Company and Participating
Trust Trustee's representatives authorized to take action in regard to the administration of a Plan and/or this trust. The Trustee shall accept and rely upon the
names and signatures until notified of any change. Instructions to the Trustee shall be signed for the Committee by such person as the Committee may
designate and for the Company by such representative as the Company may designate.
3.2 Payments From Trust Fund
3.2.1 From time to time, upon receipt of written directions from the Company or a Participating Trust Trustee, delivered before a Valuation Date,
the Trustee shall make payments on behalf of a Participating Trust from the Company's account or the beneficial interest of a Participating Trust to such
persons, in such manner and in such amounts as the Company or Participating Trust Trustee, as applicable, shall direct, and amounts paid out of the trust
pursuant to such direction shall cease to constitute a part of this trust. All such payments shall be made as of the Valuation Date next following receipt of
such written direction.
3.2.2 The Trustee, as directed by the Company, shall make any required income tax withholding and shall pay amounts withheld to taxing
authorities on the Company's behalf or determine that such amounts have been paid by the Company.
3.2.3 The Company or a Participating Trust Trustee, by written direction delivered to the Trustee not less than 10 days before a Valuation Date, may
direct the withdrawal and transfer to a Participating Trust as of that Valuation Date of part or all of a Participating Trust's entire beneficial interest in the
fund. The Trustee shall determine the value of such beneficial interest as of that Valuation Date and transfer the amount of such value to that Participating
Trust as soon as practicable after such Valuation Date, either in cash, or, in the discretion of the Trustee, in other property or partly in cash and partly in
other property. This trust shall terminate upon the complete withdrawal therefrom of the entire beneficial interests of all Participating Trusts.
3.2.4 The Trustee shall use the assets of the trust or any Subtrust or any Participant Trust to make benefit payments or other payments in the
following order of priority;
(a) All assets of the trust or any Subtrust or any Participant Trust other than Contracts with Insurers, in such order as the Trustee may
determine;
(b) Cash contributions from the Company; and the Company hereby agrees to make cash contributions to the trust to enable the
Trustee to make all benefit payments and other payments when due, unless the Company makes such payments directly, whenever the Trustee
or a Participating Trust Trustee advises the Company that the assets of the trust or any Subtrust or any Participant Trust, other than Contracts
with Insurers, are insufficient to make such payments; and
(c) Contracts with Insurers held in the trust or any Subtrust or any Participant Trust; and in using any such Contracts, the Trustee shall
first borrow 50% of the cash surrender value of each such Contract, proceeding in order of Contracts from the Contracts which have been in
force for the longest times (and in alphabetical order based on the last name of the insured for Contracts placed in force on the same date) to
the Contracts which have most recently been placed in force; and thereafter the Trustee shall surrender Contracts in the same order of priority
as set forth above.
Notwithstanding the foregoing, the Trustee may use the assets of the trust or any Subtrust or any Participant Trust in any other order of priority directed by
the Company with the Written Consent of Participants affected thereby.
3.2.5 The Trustee and each Participating Trust Trustee hereby appoint Company as paying agent of each Participating Trust and this trust. Company
shall advise each Participating Trust Trustee and the Trustee monthly by the 20th of each month regarding amounts required to be paid during the following
month to each Plan's participants and beneficiaries. The Trustee and Participating Trust Trustees shall advise the Company as to cash available to pay such
benefits. At the end of each month, this trust on behalf of each Participating Trust, to the extent directed by the Company, shall deposit with the Company as
paying agent for this trust and the Participating Trust, from such Participating Trust's portion of the fund, an amount up to that necessary for the Company to
pay benefits to participants and beneficiaries during the following month on behalf of such Participating Trust. Deposit of any such trust/Participating Trust
monies with the Company shall not constitute a return to the Company of any assets of any Participating Trust. Company shall make payments to
participants and beneficiaries on behalf of the applicable Participating Trust. Amounts necessary to pay benefits to participants and beneficiaries that are not
provided by the Participating Trust shall be paid by the Company. Rather than charge a payment made pursuant to this 3.2.5 to a particular Participating
Trust, the Company may direct the Trustee to charge such payment against the Company's account maintained hereunder.
3.3 Valuations
3.3.1 As of the last day of November, 1989 and as of the last day of each month thereafter or more frequently as agreed upon by the Company, the
Participating Trust Trustees and the Trustee (hereinafter called "Valuation Dates"), the Trustee shall determine the fair market value of the fund in such
manner as the Trustee in its discretion shall prescribe and the Company shall approve, but in accordance with a method consistently followed and uniformly
applied. In determining fair market value, the Trustee shall utilize and shall be entitled to rely upon the Company, published quotations or pricing services
that the Trustee deems reliable, or in the absence thereof, upon estimates or appraisals of value obtained from sources that the Trustee deems qualified,
including bankers, brokers, dealers or others, who are familiar with the type of investment involved and who may be employees of the Trustee. The
Trustee's reasonable valuations shall be binding on the Participating Trusts and all persons interested therein.
3.3.2 (a) For purposes of valuing the beneficial interests of Participating Trusts and of the Company's account maintained hereunder, the fund shall
be divided into units without distinction between principal and income. Each unit shall represent a proportionate undivided beneficial interest in the fund as
a whole, but shall not represent any right, title, or interest in or to any specific asset of the fund, title to which shall be in the Trustee. All units of the fund
shall be of equal value. No unit shall have any priority or preference over any other. No participating Trust may assign any part of its equity or interest in the
fund.
(b) Upon any payment by the Company on behalf of the Company account or by the company on behalf of a participating Trust or by a fiduciary of a
Participating Trust of the Trustee pursuant to 2.1, the Company account or Participating Trust, as applicable, shall be deemed to have bought, at a unit price
equal to the unit value on that date, one or more full and/or fractional units having an aggregate value equal to the amount of the payment. The Trustee may
accept property at its fair market value in lieu of cash in payment of the purchase price of units. There shall be no limit on the number of units the Company
account or any one Participating Trust may buy.
(c) When directed by the Company or a Plan's Committee or a Participating Trust Trustee to make a payment out of the beneficial interest of the
Participating Trust as provided in 3.2, the Trustee shall cancel a number of full and/or fractional units having an aggregate value equal to the amount of the
payment. Any payment made out of the beneficial interest of the Company account shall cancel a number of full and/or fractional units having an aggregate
value equal to the amount of the payment. Neither the Company account nor any Participating Trust shall have claims to any part of the fund in excess of
the value of such account's or Participating Trust's units.
(d) At the inception of the fund, the value of each unit shall be $10.00. Thereafter, the Trustee shall revalue each unit as of each Valuation Date. Revaluation
shall be made by establishing as provided in 3.3.1 the fair market value of the fund as of the close of business on the Valuation Date and dividing that value
by the total number of units of the fund outstanding on that date. Such revaluation shall be made in accordance with a method consistently followed and
uniformly applied and shall be completed as soon as practicable after the Valuation Date. On any Valuation Date, the Trustee may either increase or
decrease the number of outstanding units in the fund.
3. Records
The Trustee shall keep complete records on the trust fund open to the inspection by the Company and each Plan's Committee and Participating Trust
Trustees at all reasonable times. In addition to accountings required below, the Trustee shall furnish to the Company and each Plan's Committee and
Participating Trust Trustees any information requested about the trust fund in whatever format as the Company/Committees/Participating Trust Trustees
may reasonably request.
3.5 Accountings
3.5.1 The Trustee shall furnish the Company and each Participating Trust Trustee with a complete statement of accounts annually within 60 days
after the end of the trust year showing assets and liabilities and income and expense for the year of the trust and each Participating Trust and each Subtrust
and each Participant Trust and shall furnish the Company and each Participating Trust Trustee with such complete statements at such other times as the
Company and/or each Participating Trust Trustee may reasonably request. The form and content of the statement of account shall be sufficient for the
Company to include in computing its taxable income and credits the income, deductions and credits against tax that are attributable to the trust fund and
shall be in whatever format as the Company may reasonably request.
3.5.2 The Company and/or each Participating Trust Trustee may object to an accounting within 180 days after it is furnished and require that it be
settled by audit by a qualified, independent certified public accountant. The auditor shall be chosen by the Trustee from a list of at least five such
accountants furnished by the Company or Participating Trust Trustee at the time the audit is requested. Either the Company or Participating Trust Trustee or
the Trustee may require that the account be settled by a court of competent jurisdiction, in lieu of or in conjunction with the audit. All expenses of any audit
or court proceedings, including reasonable attorneys' fees, shall be allowed as administrative expenses of the trust.
3.5.3 If neither the Company nor Participating Trust Trustees object to an accounting within the time provided, the account shall be settled for the
period covered by it.
3.5.4 When an account is settled, it shall be final and binding on all parties, including all participants and persons claiming through them.
3.6 Expenses and Fees
3.6.1 The trustee shall be reimbursed for all expenses and shall be paid a reasonable fee fixed by agreement with the Company from time to time.
No increase in the fee shall be effective before 60 days after the Trustee gives notice to the Company of the increase. The trustee shall notify the Company
periodically of expenses and fees.
3.6.2 The Company shall pay administrative fees and expenses. If not so paid, the fees and expenses shall be paid from the trust fund. The Company
shall reimburse the trust fund for any fees and expenses paid out of it.
ARTICLE IV
Liability
4.1 Indemnity
Subject to such limitations as may be imposed by applicable law, the Company shall indemnify and hold harmless the trustee from any claim, loss, liability
or expense arising from any action or inaction in administration of this trust based on direction or information from either the Company, any Committee,
any Participating Trust Trustee, any Investment Manager or any Expert, absent willful misconduct or bad faith on the part of the Trustee or Participating
Trust Trustee.
4.2 Bonding
The Trustee need not give any bond or other security for performance of its duties under this trust.
ARTICLE V
Insolvency
5.1 Determination of Insolvency
5.1.1 The Company is "Insolvent" for purposes of this trust if:
(a) The Company is unable to pay its debts as they come due; or
(b) The Company is the subject of a pending proceeding as a debtor under the federal Bankruptcy Code (or any successor federal statute).
5.1.2 The Company shall promptly give notice to the Trustee upon becoming Insolvent. The Chief Executive officer of the Company and the Board
(as such term is defined in the Participating Trusts) shall be obligated to give such notice. If the Trustee receives such notice or receives from any other
person claiming to be a creditor of the Company a written allegation that the Company is Insolvent, the Trustee shall independently determine whether such
Insolvency exists. The expenses of such determination shall be allowed as administrative expenses of the trust.
5.1.3 The Trustee shall continue making payments from the trust fund to participants under any Plan while it is determining the existence of
Insolvency. Such payments shall cease and the Trustee shall commence Insolvency
Administration under 5.2 upon the earlier of:
(a) A determination by the Trustee or a court of competent jurisdiction that the Company is Insolvent; or
(b) 30 days after the notice or allegation of Insolvency is received under 5.1.2, unless the Trustee or a court of competent jurisdiction has
determined that the Company is not Insolvent since receipt of such notice or allegation.
5.1.4 The Trustee shall have no obligation to investigate the financial condition of the Company prior to receiving a notice or allegation of Insolvency under
5.1.2.
5.2 Insolvency Administration
5.2.1 During "Insolvency Administration", the Trustee shall hold the trust fund for the benefit of the general creditors of the Company and make
payments only in accordance with 5.2.2. The Trustee shall continue the investment of the trust fund in accordance with 2.2.
5.2.2 The Trustee shall make payments out of the trust fund in one or more of the following ways:
(a) To general creditors in accordance with instructions from a court, or a person appointed by a court, having jurisdiction over the
Company's condition of Insolvency;
(b) To any Plan's participants and beneficiaries in accordance with such instructions; or
(c) in payment of its own fees or expenses.
5.2.3 The Trustee shall have a priority claim against the trust fund with respect to its own fees and expenses.
5.3 Termination of Insolvency Administration
5.3.1 Insolvency Administration shall terminate when the Trustee determines that the Company:
(a) Is not Insolvent, in response to a notice or allegation of Insolvency under 5.1.2; or
(b) Has ceased to be Insolvent; or
(c) Has been determined by a court of competent jurisdiction not to be Insolvent or to have ceased to be Insolvent.
5.3.2 Upon termination of Insolvency Administration under 5.3.1, the trust fund shall continue to be held for the benefit of the participants in the
Plans. Benefit payments due during the period of Insolvency Administration shall be made as soon as practicable, together with interest from the due dates
at the following rates:
(a) if a Plan is deferred compensation plan or other defined contribution plan, at the rate credited on the participant's account under
such plan.
(b) if a Plan is a supplemental executive retirement plan or other defined benefits plan or any other plan (other than a plan referred to
in (a) immediately above), at a rate equal to the interest rate fixed by the Pension Benefit Guaranty Corporation for valuing immediate
annuities in the preceding month.
5.4 Creditors' Claims During Solvency
5.4.1 During periods of Solvency the Trustee shall hold the trust fund exclusively to pay the Plans' benefits and fees and expenses of the trust until
all Plan benefits have been paid. Creditors of the Company shall not be paid during Solvency from the trust fund, which may not be seized by or subjected
to the claims of such creditors in any way.
5.4.2 A period of "Solvency" is any period not covered by 5.2.
ARTICLE VI
Successor Trustees
6.1 Resignation and Removal

6.1.1 The Trustee may resign at any time by notice to the Company and the Participating Trust Trustees, which shall be effective in 60 days unless
the Company and the Participating Trust Trustees and the Trustee agree otherwise.
6.1.2The Trustees may be removed by the Company on 60 days' notice or shorter notice accepted by the Trustee. After a Change in Control the Trustee may
be removed only with the Written Consent of Participants.
6.1.3 When resignation or removal is effective, the Trustee shall begin transfer of assets to the successor Trustee immediately. The transfer shall be
completed within 60 days, unless the Company extends the time limit.
6.1.4 If the Trustee resigns or is removed, the Company shall appoint a successor by the effective date of resignation or removal under 6.1.1 or
6.1.2. After a Change in Control a successor Trustee may be appointed only with the Written Consent of Participants. If no such appointment has been
made, the Trustee may apply to a court of competent jurisdiction for appointment of a successor or for instructions. All expenses of the Trustee in
connection with the proceeding shall be allowed as administrative expenses of the trust.
6.2 Appoint of Successor
6.2.1 The Company may appoint any national or state bank or trust company that is unrelated to the Company as a successor to replace the Trustee
upon resignation or removal. The appointment shall be effective when accepted in writing by the new Trustee, which shall have all of the rights and powers
of the former Trustee, including ownership rights in the trust assets. The former trustee shall execute any instruments necessary or reasonably requested by
the Company or the successor trustee to evidence the transfer. After a Change in Control a successor trustee may be appointed only with the Written
Consent of Participants.
6.2.2 The successor Trustee need not examine the records and acts of any prior Trustee and may retain or dispose of existing trust assets, subject to
Article II. The successor Trustee shall not be responsible for, and the Company shall indemnify and hold harmless the successor Trustee from any claim or
liability because of, any action or inaction of any prior Trustee or any other past event, any existing condition or any existing assets.
6.3 Accountings; Continuity
6.3.1 A Trustee who resigns or is removed shall submit a final accounting to the Company and Participating Trust Trustees as soon as practicable.
The accounting shall be received and settled as provided in 3.5 for regular accountings.
6.3.2 No resignation or removal of the Trustee or change in identity of the Trustee for any reason shall cause a termination of any Plan or this trust.
ARTICLE VII
General Provisions
7.1 Interests Not Assignable
7.1.1 The interest of a participant in the trust fund may not be assigned, pledged or otherwise encumbered, seized by legal process, transferred or
subjected to the claims of the participant's creditors in any way.
7.1.2 The Company may not create a security interest in the trust fund in favor of any of its creditors. The Trustee shall not make payments from the
trust fund of any amounts to creditors of the Company who are not Plan participants, except as provided in 5.2.
7.1.3 The participants shall have no interests in the assets of the trust fund beyond the right to receive payment of Plan benefits from such assets
outside periods of Insolvency Administration under 5.2. During Insolvency Administration the participants' rights to trust assets shall not be superior to
those of any other general creditors of the Company.
7.2 Amendments
The Company and the Participating Trust Trustees and the Trustee may amend this trust at any time by a written instrument executed by all parties;
provided however, this Trust Agreement may not be amended to remove the requirement that this Trust Agreement is subject to the provisions of each
Participating Trust.
7.3 Applicable Law
This trust shall be governed, construed and administered according to the laws of Missouri, except as preempted by ERISA.
7.4 Agreement Binding on All Parties
This Trust Agreement shall be binding upon the heirs, personal representatives, successors and assigns of any and all present and future parties.
7.5 Notices and Directions
Any notice or direction under this trust shall be in writing and shall be effective when actually delivered or, if mailed, upon receipt. Mail to a party shall be
directed to the address stated below or to such other address as the party may specify by notice to the other parties. Notices to any Committee shall be sent
to the address of the Company. Until notice is given to the contrary, notices to the Company and Participating Trust Trustees and the Trustee shall be
addressed as follows:
Company: Southwestern Bell Corporation

One Bell Center
St. Louis, Missouri 63101−3099
Attention: Senior Vice President−Finance
and Treasurer
Trustee: Boatmen's Trust Company

510 Locust Street, P.O. Box 14737
St. Louis, Missouri 63178
Attention: Pension Administration
Participating Trust Boatmen's Trust Company

Trustees: 510 Locust Street, P.O. Box 14737
St. Louis, Missouri 63178
Attention: Pension Administration
7.6 No Implied Duties
The duties of the Trustee shall be those stated in this trust, and no other duties shall be implied.
7.7 Beneficiary (ies); Beneficiary's Benefits
For purposes of this Trust Agreement, (1) any person to whom payment under a Plan is made or is to be made in the event of a participant's death shall be
such participant's "beneficiary," (2) Benefits under a Plan paid or to be paid to a participant's beneficiary shall be considered a benefit paid or to be paid to
the participant, as applicable, and (3) after the death of the participant, a participant's beneficiary (ies), collectively, shall stand in the place and stead of the
participant and shall be considered the Plan participant and treated as such, except such beneficiary (ies) shall have no vote and shall not be counted as a
participant for purposes of determining the Written Consent of Participants pursuant to 1.2.6 of any participating Trust.
7.8 Gender, Singular and Plural
All pronouns and any variations thereof shall be deemed to refer to the masculine or feminine, as the identity of the person or persons may require. As the
context may require, the singular may be read as the plural and
the plural as the singular.
ARTICLE VIII
INSURER
8.1 Insurer Not a Party
An Insurer shall not be deemed to be a party to this trust, and its obligation shall be measured and determined solely by the terms of its Contracts and other
agreements executed by it.
8.2 Authority of Trustee
An Insurer shall accept the signature of the Trustee to any documents or papers executed in connection with its Contracts. The signature of the Trustee shall
be conclusive proof to the Insurer that the person on whose life an application is being made is eligible to have such Contract issued on his life and is
eligible for a Contract of the type and amount requested.
8.3 Contract Ownership
An Insurer shall deal with the Trustee as the sole and absolute owner of the trust's interests in its Contracts and shall have not obligation to inquire whether
any action or failure to act on the part of the Trustee is in accordance with our authorized by the terms of a Plan or a Participating Trust or this trust.
8.4 Limitation of Liability
An Insurer shall be fully discharged from any and all liability for any action taken or any amount paid in accordance with the direction of the Trustee and
shall have no obligation to see to the proper application of the amounts so paid. The Insurer shall have no liability for the operation of this trust or a Plan,
whether or not in accordance with their terms and provisions.
8.5 Change of Trustee
An Insurer shall be fully discharged from any and all liability for dealing with a party or parties indicated on its records to be the Trustee until such time as
it shall receive at its home office written notice of the appointment and qualification of a successor Trustee.
IN WITNESS WHEREOF, the Company and participating Trust Trustees and the Trustee have caused this Agreement to be executed by their respective
duly authorized officers on the date set forth below.
Company: SOUTHWESTERN BELL CORPORATION
Attest: By: /s/ C.C. Carr

Cassandra C. Carr
Ann Goddard Its Senior Vice President−Finance
Vice President And Treasurer
And Secretary
Executed: 11−3, 1989
Trustee: BOATMEN'S TRUST COMPANY
Attest: By: /s/ Lyle Brizendine

Lyle W. Brizendine
Assistant Secretary Its Senior Vice President
Boatmen's Trust Company as Participating Trust

Trustee pursuant to Trust Agreement for Southwestern
Bell Corporation Senior Management Deferred
Compensation Plan of 1988

Assistant Secretary Lyle W. Brizendine

Compensation Plan of 1988 (Early Payment Option)


Compensation Plan


Bell Corporation Management Deferred Compensation
Plan of 1988


Bell Corporation Management Deferred Compensation Plan


Bell Corporation Compensation Deferral Plan


Bell Corporation Senior Management Supplemental
Retirement Income Plan


Bell Corporation Management Pension Plan (Benefits
In Excess of Code ss. 415 Limitations)

Acknowledgments
State of Missouri)
ss.
County of St. Louis)
On this 3rd day of November, in the year 1989, before me personally came Cassandra C. Carr, to me known, who, being by me duly sworn, did depose and
say that she resides at 1700 Mason Knoll Road, St. Louis, Missouri 63131: that she is Senior Vice President−Finance and Treasurer of Southwestern Bell
Corporation, the corporation described in and which executed the above instrument; that she knows the corporate seal of said corporation; that the seal was
affixed by authority of the Board of Directors of said corporation, and that she signed her name thereto by like authority.
/s/ Barbara J. Salen

BARBARA J. SALEN
NOTARY PUBLIC STATE OF MISSOURI
ST. LOUIS COUNTY
MY COMMISSION EXP AUG. 19, 1993
Acknowledgments
State of Missouri)
ss.
City of St. Louis)
On this 3rd day of November, in the year 1989, before me personally came Lyle W. Brizendine, to me known, who, being by me duly sworn, did depose
and say that he resides at 1710 Connemara, St. Louis, Missouri 63021: that he is Senior Vice President of Boatmen's Trust Company, the corporation
described in and which executed the above instrument in the capacity as Trustee; that he knows the corporate seal of said corporation; that the seal was
affixed by authority of the Board of Directors of said corporation, and that he signed his name thereto by like authority.
/s/Susan M. McIntosh
SUSAN M. MCINTOCH
ST. LOUIS CITY
MY COMMISSION EXP APR. 13, 1993
Acknowledgments
State of Missouri)
ss.
City of St. Louis)
On this 6th day of November, in the year 1989, before me personally came Lyle W. Brizendine, to me known, who, being by me duly sworn, did depose and
say that he resides at 1710 Connemara, St. Louis, Missouri 63021: that he is Senior Vice President of Boatmen's Trust Company, the corporation described
in and which executed the above instrument in the capacity as Participating Trust Trustee pursuant to Trust Agreement for Southwestern Bell Corporation
Senior Management Deferred Compensation Plan of 1988; that he knows the corporate seal of said corporation; that the seal was affixed by authority of the
Board of Directors of said corporation, and that he signed his name thereto by like authority.
SUSAN M. MCINTOCH
ST. LOUIS CITY
Acknowledgments
State of Missouri)
ss.
City of St. Louis)
Senior Management Deferred Compensation Plan of 1988 (Early Payment Option); that he knows the corporate seal of said corporation; that the seal was
affixed by authority of the Board of Directors of said corporation, and that he signed his name thereto by like authority.
SUSAN M. MCINTOCH
ST. LOUIS CITY
Acknowledgments
State of Missouri)
ss.
City of St. Louis)
Senior Management Deferred Compensation Plan; that he knows the corporate seal of said corporation; that the seal was affixed by authority of the Board
of Directors of said corporation, and that he signed his name thereto by like authority.
SUSAN M. MCINTOCH
ST. LOUIS CITY
Acknowledgments
State of Missouri)
ss.
City of St. Louis)
Management Deferred Compensation Plan of 1988; that he knows the corporate seal of said corporation; that the seal was affixed by authority of the Board
of Directors of said corporation, and that he signed his name thereto by like authority.
SUSAN M. MCINTOCH
ST. LOUIS CITY
Acknowledgments
State of Missouri)
ss.
City of St. Louis)
Management Deferred Compensation Plan; that he knows the corporate seal of said corporation; that the seal was affixed by authority of the Board of
Directors of said corporation, and that he signed his name thereto by like authority.
SUSAN M. MCINTOCH
ST. LOUIS CITY
Acknowledgments
State of Missouri)
ss.
City of St. Louis)
Compensation Deferral Plan; that he knows the corporate seal of said corporation; that the seal was affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
SUSAN M. MCINTOCH
ST. LOUIS CITY
Acknowledgments
State of Missouri)
ss.
City of St. Louis)
Senior Management Supplemental Retirement Income Plan; that he knows the corporate seal of said corporation; that the seal was affixed by authority of
the Board of Directors of said corporation, and that he signed his name thereto by like authority.
SUSAN M. MCINTOCH
ST. LOUIS CITY
Acknowledgments
State of Missouri)
ss.
City of St. Louis)
Management Pension Plan (benefits In Excess of Code ss. 415 Limitations); that he knows the corporate seal of said corporation; that the seal was affixed
by authority of the Board of Directors of said corporation, and that he signed his name thereto by like authority.
SUSAN M. MCINTOCH
ST. LOUIS CITY
FIRST AMENDMENT TO TRUST AGREEMENT

Effective August 1, 1995
This Amendment (the "First Amendment"), amends the MASTER TRUST AGREEMENT FOR SOUTHWESTERN BELL CORPORATION DEFERRED
COMPENSATION PLANS AND OTHER EXECUTIVE BENEFIT PLANS (the "Trust Agreement"), previously made and entered into by and between
SBC COMMUNICATIONS INC., a Delaware corporation (the "Company"), formerly known as Southwestern Bell Corporation, BOATMEN'S TRUST
COMPANY, a Missouri corporation (the "Trustee"), and BOATMEN'S TRUST COMPANY as trustee of each Participating Trust in the Trust Agreement
(BOATMEN'S TRUST COMPANY acting in its capacity as trustee of each Participating Trust is hereinafter referred to as the respective Participating
Trust's "Participating Trust Trustee"), which Trust Agreement is incorporated herein by this reference.
WHEREAS, the Company and the Participating Trust Trustees have established with the Trustee a trust in accordance with the terms and conditions of the
Trust Agreement, and
WHEREAS, the Trustee has accepted the trust established under the Trust Agreement and has agreed to hold, IN TRUST, all monies and other property
transferred to it thereunder for the uses and purposes and upon the terms and conditions set forth therein, and
WHEREAS, the Trustee has further agreed to discharge and perform fully and faithfully all of the duties and obligations imposed upon it under the Trust
Agreement, and
WHEREAS, the Company wishes to amend the Trust Agreement consistent with the Amendment provision thereof, to reflect the recent name change of the
Company from Southwestern Bell Corporation to SBC Communications Inc., and
WHEREAS, the Participating Trust Trustees and the Trustee agree to the Amendment contained herein:
NOW, THEREFORE, the Company and the Participating Trust Trustees and the Trustee hereby agree as follows:
(1) Effective August 1, 1995, the Trust Agreement shall be and hereby is renamed the "MASTER TRUST AGREEMENT FOR SBC COMMUNICATIONS
INC. DEFERRED COMPENSATION PLANS AND OTHER EXECUTIVE BENEFIT PLANS"; and, coincident with such change, the words
"Southwestern Bell Corporation" wherever found in the Trust Agreement shall be and hereby are replaced with the words "SBC Communications Inc." and
all references in the Trust Agreement to Southwestern Bell Corporation shall mean and shall be construed as references to SBC Communications Inc.
(2) Except as modified by this First Amendment, all other terms and provisions of the Trust Agreement remain in full force and effect.
IN WITNESS WHEREOF, the Company and the Participating Trust Trustees and the Trustee have caused this First Amendment to be executed by their
respective duly authorized officers on the date set forth below.
Company: SBC COMMUNICATIONS INC.

Atttest: By: /s/ D. E Kiernan
Its Senior Vice President,
/s/ Judith M. Sahm Treasurer & Chief Financial
Secretary Officer
Executed: 9/22, 1995
Trustee: BOATMAN'S TRUST COMPANY
Attest: By: /s/ Lyle W. Brizendine

Its Executive Vice President
/s/ Paul J. Skyle
Assistant Secretary Executed: 9/27, 1995
BOATMEN'S TRUST COMPANY as

Participating Trust Trustee pursuant to the
Trust Agreement for each of the following:
• SBC COMMUNICATIONS INC. SENIOR

MANAGEMENT DEFERRED COMPENSATION PLAN
OF 1988

OF 1988 (EARLY PAYMENT OPTION)

• SBC COMMUNICATIONS INC. MANAGEMENT

DEFERRED COMPENSATION PLAN OF 1988

DEFERRED COMPENSATION PLAN
• SBC COMMUNICATIONS INC. COMPENSATION

DEFERRAL PLAN

MANAGEMENT SUPPLEMENTAL RETIREMENT
INCOME PLAN
• SBC COMMUNICATIONS INC. PENSION BENEFIT

PLAN − NONBARGAINED PROGRAM (BENEFITS
IN EXCESS OF CODE SECTION 415
LIMITATIONS)
• SBC COMMUNICATIONS INC. PENSION MAKE−UP

DUE TO DEFERRED COMPENSATION
PARTICIPATION
Attest: By: /s/ Lyle W. Brizendine

Its Executive Vice President
/s/ Paul J. Skyle
Assistant Secretary Executed: 9/27, 1995
ACKNOWLEDGEMENTS
State of Texas)
ss
City of San Antonio)
On this 22nd day of September, in the year 1995, before me personally came Donald E. Kiernan, to me known, who, being by me duly sworn, did depose
and say that he is Senior Vice President, Treasurer & Chief Financial Officer of SBC Communications Inc., the corporation described in and which
executed the above instrument; that he knows the corporate seal of said corporation; that the seal was affixed by authority of the Board of Directors of said
Vicki Brehm /s/ Vicki Brehm

Notary Public
State of Texas
My Comm. Exp. Aug. 9 1997
State of Missouri)
ss
City of St. Louis)
On this 27th day of September, in the year 1995, before me personally came Lyle W. Brizendine, to me known, who, being by me duly sworn, did depose
and say that he is Executive Vice President of Boatmen's Trust Company, the corporation described in and which executed the above instrument in the
capacity as Trustee; that he knows the corporate seal of said corporation; that the seal was affixed by authority of the Board of Directors of said corporation,
and that he signed his name thereto by like authority.
/s/ Susan L. Sehrt
Susan L. Sehrt
Notary Public−State of Missouri
St. Louis County
My Commission Expires March 31, 1996
ACKNOWLEDGMENTS
State of Missouri)
ss
City of St. Louis)
On this 27th day of September, in the year 1995, before me personally came Lyle W. Brizendine, to me known, who, being by me duly sworn, did depose
and say that he is Executive Vice President of Boatmen's Trust Company, the corporation described in and which executed the above instrument in the
capacity as Participating Trust Trustee pursuant to each Participating Trust Trust Agreement; that he knows the corporate seal of said corporation; that the
seal was affixed by authority of the Board of Directors of said corporation, and that he signed his name thereto by like authority.
/s/ Susan L. Sehrt

Susan L. Sehrt
Notary Public−State of Missouri
St. Louis County
My Commission Expires March 31, 1996
SECOND AMENDMENT TO TRUST AGREEMENT

Effective November 1, 1999
This Amendment (the "Second Amendment"), amends the MASTER TRUST AGREEMENT FOR SBC COMMUNICATIONS INC. DEFERRED
COMPENSATION PLANS AND OTHER EXECUTIVE BENEFIT PLANS (the "Trust Agreement"), between SBC COMMUNICATIONS INC., a
Delaware corporation (the "Company"), formerly known as Southwestern Bell Corporation, BOSTON SAFE DEPOSIT AND TRUST COMPANY,
successor Trustee, a Massachusetts trust company and wholly−owned indirect subsidiary of Mellon Bank Corporation (the "Trustee"), and BOSTON SAFE
DEPOSIT AND TRUST COMPANY as successor trustee of each Participating Trust in the Trust Agreement (BOSTON SAFE DEPOSIT AND TRUST
COMPANY acting in its capacity as the successor trustee of each Participating Trust is hereinafter referred to as the respective Participating Trust's
"Participating Trust Trustee"), which Trust Agreement is incorporated herein by this reference.
WHEREAS, the Company and the Participating Trust Trustees are parties to a trust with the Trustee in accordance with the terms and conditions of the
Trust Agreement, and
WHEREAS, the Trustee has accepted the trust established under the Trust Agreement and has agreed to hold, IN TRUST, all monies and other property
transferred to it thereunder for the uses and purposes and upon the terms and conditions set forth therein, and
WHEREAS, the Trustee has further agreed to discharge and perform fully and faithfully all of the duties and obligations imposed upon it under the Trust
Agreement, and
WHEREAS, the Company wishes to amend the Trust Agreement consistent with the Amendment provision thereof, to permit the payment of trustee,
actuary and investment manager fees and expenses from funds allocated to the Company's account maintained under the Trust Agreement, i.e., from funds
not allocated to any Participating Trust, and
WHEREAS, the Participating Trust Trustees and the Trustee agree to the Amendment contained
herein:
NOW, THEREFORE, the Company and the Participating Trust Trustees and the Trustee hereby agree as follows:
(1) Effective November 1, 1999, 3.6.2 of the Trust Agreement shall be and hereby is replaced by the following:
3.6.2 The Company shall be responsible for the payment of the fees and expenses of this trust, including but not limited trustee fees, actuary fees
and investment manager fees. The Company shall pay such fees and expenses or may direct the Trustee to pay such fees out of funds allocated to the
Company's account maintained under this trust, i.e., from funds not allocated to any Participating Trust.
(2) Except as modified by this Second Amendment, all other terms and provisions of the Trust Agreement remain in full force and effect.
IN WITNESS WHEREOF, the Company and Participating Trust Trustees and the Trustee have caused this Second Amendment to be executed by their
respective duly authorized officers on the date set forth below.
Company: SBC COMMUNICATIONS INC.
Attest:
By: /s/ D.E. Kiernan
Its Senior Executive
Vice President and
Chief Financial Officer
/s/ Judith M. Sahm
Secretary
Executed: November 2, 1999
Trustee: BOSTON SAFE DEPOSIT AND TRUST

COMPANY
By: /s/ Douglas M. Cook

Attest: Its First Vice President
/s/ Kimberly A. Carr

Assistant Secretary Executed: November 19, 1999
BOSTON SAFE DEPOSIT AND TRUST COMPANY as

Participating Trust Trustee pursuant to the
Trust Agreement for each of the following:

OF 1988

OF 1988 (EARLY PAYMENT OPTION)


DEFERRED COMPENSATION PLAN OF 1988

DEFERRED COMPENSATION PLAN
• SBC COMMUNICATIONS INC. COMPENSATION

DEFERRAL PLAN

MANAGEMENT SUPPLEMENTAL RETIREMENT
INCOME PLAN
• SBC COMMUNICATIONS INC. PENSION BENEFIT

PLAN−NONBARGAINED PROGRAM (BENEFITS IN
EXCESS OF CODE SECTION 415 LIMITATIONS)
• SBC COMMUNICATIONS INC. PENSION MAKE−UP

DUE TO DEFERRED COMPENSATION
PARTICIPATION
• RESTATED TRUST NO. 3 FOR PACIFIC TELESIS

GROUP EXECUTIVE SUPPLEMENTAL PENSION
BENEFITS
By: /s/ Douglas M. Cook

Its First vice President
Attest:
/s/ Kimberly A. Carr Executed: November 19, 1999

Assistant Secretary
ACKNOWLEDGEMENTS
State of Texas)
ss
County of Bexar)
On this 1st day of November, in the year 1999, before me personally came Donald E. Kiernan, to me known, who being by me duly sworn, did depose and
say that he is Senior Executive Vice President and Chief Financial Officer of SBC Communications Inc., the corporation described in and which executed
the above instrument; that he knows the corporate seal of said corporation; that the seal was affixed by authority of the Board of Directors of said
/s/ Linda J. Snoga

Notary Public, State of Texas
My Commission Expires
January 21, 2002
ACKNOWLEDGEMENTS
Commonwealth of Massachusetts)
ss
County of Middlesex)
On this 19th day of November, in the year 1999, before me personally came Douglas M. Cook, to me known, who being by me duly sworn, did depose and
say that he is First Vice President of Boston Safe Deposit and Trust Company, the corporation described in and which executed the above instrument in the
capacity as Trustee; that he knows the corporate seal of said corporation; that the seal was affixed by authority of the Board of Directors of said corporation,
and that he signed his name thereto by like authority.
/s/ Patricia S. Smith

May 10, 2002
ACKNOWLEDGEMENTS
Commonwealth of Massachusetts)
ss
County of Middlesex)
On this 19th day of November, in the year 1999, before me personally came Douglas M. Cook, to me known, who, being by me duly sworn, did depose and
say that he is First Vice President of Boston Safe Deposit and Trust Company, the corporation described in and which executed the above instrument in the
capacity as Participating Trust Trustee pursuant to each Participating Trust Trustee Agreement; that he knows the corporate seal of said corporation; that the
seal was affixed by authority of the Board of Directors of said corporation, and that he signed his name thereto by like authority.
/s/ Patricia S. Smith

May 10, 2002
Exhibit 10−ii
AT&T INC.
2006 INCENTIVE PLAN

Plan Effective: May 1, 2006
Amended Through: January 28, 2010

AT&T INC.
2006 Incentive Plan
Article 1. Establishment and Purpose.
1.1 Establishment of the Plan. AT&T Inc., a Delaware corporation (the “Company” or “AT&T”), hereby establishes an incentive
compensation plan (the “Plan”), as set forth in this document.
1.2 Purpose of the Plan. The purpose of the Plan is to promote the success and enhance the value of the Company by linking the personal
interests of Participants to those of the Company’s shareowners, and by providing Participants with an incentive for outstanding
performance.
1.3 Effective Date of the Plan. The Plan was originally effective on May 1, 2006, and is being hereby amended and restated effective
January 28, 2010.
Article 2. Definitions. Whenever used in the Plan, the following terms shall have the meanings set forth below and, when the meaning is
intended, the initial letter of the word is capitalized:
(a) “Applicable Law” means the legal requirements relating to the administration of options and share−based or
performance−based awards under any applicable laws of the United States, any other country, and any provincial, state, or local
subdivision, any applicable stock exchange or automated quotation system rules or regulations, as such laws, rules, regulations and
requirements shall be in place from time to time.
(b) “Award” means, individually or collectively, a grant or award under this Plan of Stock Options, Restricted
Stock (including unrestricted Stock), Restricted Stock Units, Performance Units, or Performance Shares.
(c) “Award Agreement” means an agreement which may be entered into by each Participant and the Company,
setting forth the terms and provisions applicable to Awards granted to Participants under this Plan.
(d) “Board” or “Board of Directors” means the AT&T Board of Directors.
(e) “Cause” shall mean willful and gross misconduct on the part of an Employee that is materially and
demonstrably detrimental to the Company or any Subsidiary as determined by the Company in its sole discretion.
(f) “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 consummation of 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 fifty percent (50%) 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.
(g) “Code” means the Internal Revenue Code of 1986, as amended from time to time.
(h) “Committee” means the committee or committees of the Board of Directors given authority to administer the
Plan as provided in Article 3.
(i) “Director” means any individual who is a member of the AT&T Board of Directors.
(j) “Disability” shall mean absence of an Employee from work under the relevant Company or Subsidiary long
term disability plan.
(k) “Employee” means any employee of the Company or of one of the Company’s Subsidiaries. “Employment”
means the employment of an Employee by the Company or one of its Subsidiaries. Directors who are not otherwise employed by the
Company shall not be considered Employees under this Plan.
(l) “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, or any successor
Act thereto.
(m) “Exercise Price” means the price at which a Share may be purchased by a Participant pursuant to an Option,
as determined by the Committee.
(n) “Fair Market Value” shall mean the closing price on the New York Stock Exchange (“NYSE”) for a Share 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, from time to time, select any
other index or measurement to determine the Fair Market Value of Shares under the Plan, including but not limited to an average
determined over a period of trading days.
(o) “Insider” shall mean an Employee who is, on the relevant date, an officer, director, or ten percent (10%)
beneficial owner of the Company, as those terms are defined under Section 16 of the Exchange Act.
(p) “Officer Level Employee” shall mean a Participant who is an officer level Employee for compensation
purposes as indicated on the records of AT&T.
(q) “Option” means an option to purchase Shares from AT&T.
(r) “Participant” means an Employee or former Employee who holds an outstanding Award granted under the
Plan.
(s) “Performance Unit” and “Performance Share” shall each mean an Award granted to an Employee pursuant to
Article 8 herein.
(t) “Plan” means this 2006 Incentive Plan. The Plan may also be referred to as the “AT&T 2006 Incentive Plan”
or as the “AT&T Inc. 2006 Incentive Plan.”
(u) “Retirement” or to “Retire” shall mean the Participant’s Termination of Employment for any reason other
than death, Disability or for Cause, on or after the earlier of the following dates, or as otherwise provided by the Committee: (1) for
Officer Level Employees , the date the Participant is at least age 55 and has five (5) years of net credited service); or (2) the date the
Participant has attained one of the following combinations of age and service, except as otherwise indicated below:

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 that may be 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.
(v) “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.
(w) “Senior Manager” shall mean a Participant who is a senior manager for compensation purposes as indicated
on the records of AT&T.
(x) “Shares” or “Stock” means the shares of common stock of the Company.
(y) “Subsidiary” shall mean any corporation, partnership, venture or other entity in which AT&T holds, directly
or indirectly, a fifty percent (50%) or greater ownership interest. The Committee may, at its sole discretion, designate, on such terms
and conditions as the Committee shall determine, any other corporation, partnership, limited liability company, venture other entity a
Subsidiary for purposes of this Plan. Unless otherwise provided by the Committee, Cingular and its direct or indirect majority−owned
subsidiaries shall each be deemed a Subsidiary so long as AT&T holds a direct or indirect twenty five percent (25%) or greater
ownership interest in Cingular Wireless LLC or its successor.
(z) “Termination of Employment” or a similar reference shall mean the event where the Employee is no longer
an Employee of the Company or of any Subsidiary, including but not limited to where the employing company ceases to be a
Subsidiary. With respect to any Award that constitutes a “nonqualified deferred compensation plan” within the meaning of Section
409A of the Code, “Termination of Employment” shall mean a “separation from service” as defined under Section 409A of the Code.
Article 3. Administration.
3.1 The Committee. Administration of the Plan shall be as follows:
(a) With respect to Insiders, the Plan and Awards hereunder shall be administered by the Human Resources
Committee of the Board or such other committee as may be appointed by the Board for this purpose (each of the Human Resources
Committee and such other committee is the “Disinterested Committee”), where each Director on such Disinterested Committee is a
“Non−Employee Director,” as that term is used in Rule 16b−3 under the Exchange Act (or any successor designation for determining
the committee that may administer plans, transactions or awards exempt under Section 16(b) of the Exchange Act), as that rule may be
modified from time to time.
(b) With respect to persons who are not Insiders, the Plan and Awards hereunder shall be administered by each of
the Disinterested Committee and such other committee, if any, to which the Board may delegate such authority (such other Committee
shall be the “Non−Insider Committee”), and each such Committee shall have full authority to administer the Plan and all Awards
hereunder, except as otherwise provided herein or by the Board. The Disinterested Committee may, from time to time, limit the
authority of the Non−Insider Committee in any way. Any Committee may be replaced by the Board at any time.
(c) Except as otherwise indicated from the context, references to the “Committee” in this Plan shall be to either
of the Disinterested Committee or the Non−Insider Committee.
3.2 Authority of the Committee. The Committee shall have complete control over the administration of the Plan and shall have the
authority in its sole discretion to (a) exercise all of the powers granted to it under the Plan, (b) construe, interpret and implement the
Plan, grant terms and grant notices, and all Award Agreements, (c) prescribe, amend and rescind rules and regulations relating to the
Plan, including rules governing its own operations, (d) make all determinations necessary or advisable in administering the Plan, (e)
correct any defect, supply any omission and reconcile any inconsistency in the Plan, (f) amend the Plan to reflect changes in applicable
law (whether or not the rights of the holder of any Award are adversely affected, unless otherwise provided by the Committee), (g)
grant Awards and determine who shall receive Awards, when such Awards shall be granted and the terms and conditions of such
Awards, including, but not limited to, conditioning the exercise, vesting, payout or other term of condition of an Award on the
achievement of Performance Goals (defined below), (h) unless otherwise provided by the Committee, amend any outstanding Award
in any respect, not materially adverse to the Participant, including, without limitation, to (1) accelerate the time or times at which the
Award becomes vested, unrestricted or may be exercised (and, in connection with such acceleration, the Committee may provide that
any Shares acquired pursuant to such Award shall be Restricted Shares, which are subject to vesting, transfer, forfeiture or repayment
provisions similar to those in the Participant’s underlying Award), (2) accelerate the time or times at which shares of Common Stock
are delivered under the Award (and, without limitation on the Committee’s rights, in connection with such acceleration, the Committee
may provide that any shares of Common Stock delivered pursuant to such Award shall be Restricted Shares, which are subject to
vesting, transfer, forfeiture or repayment provisions similar to those in the Grantee’s underlying Award), or (3) waive or amend any
goals, restrictions or conditions applicable such Award, or impose new goals, restrictions and (i) determine at any time whether, to
what extent and under what circumstances and method or methods (1) Awards may be (A) settled in cash, shares of Stock, other
securities, other Awards or other property (in which event, the Committee may specify what other effects such settlement will have on
the Participant’s Award), (B) exercised or (C) canceled, forfeited or suspended, (2) Shares, other securities, cash, other Awards or
other property and other amounts payable with respect to an Award may be deferred either automatically or at the election of the
Participant or of the Committee, or (3) Awards may be settled by the Company or any of its Subsidiaries or any of its or their
designees.
No Award may be made under the Plan more than ten years after April 30, 2016.
References to determinations or other actions by AT&T or the Company, herein, shall mean actions authorized by the Committee, the
Chairman of the Board of AT&T, 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, provided, however, only the Disinterested
Committee may take action with respect to Insiders with regard to granting or determining the terms of Awards or other matters that
would require the Disinterested Committee to act in order to comply with Rule 16b−3 promulgated under the Exchange Act.
All determinations and decisions made by AT&T pursuant to the provisions of the Plan and all related orders or resolutions of the
Board shall be final, conclusive, and binding on all persons, including but not limited to the Company, its stockholders, Employees,
Participants, and their estates and beneficiaries.
Article 4. Shares Subject to the Plan.
4.1 Number of Shares. Subject to adjustment as provided in Section 4.3 herein, the number of Shares available for issuance under the Plan
shall not exceed 90 million Shares. The Shares granted under this Plan may be either authorized but unissued or reacquired
Shares. The Disinterested Committee shall have full discretion to determine the manner in which Shares available for grant are
counted in this Plan.
4.2 Share Accounting. Without limiting the discretion of the Committee under this section, unless otherwise provided by the Disinterested
Committee, the following rules will apply for purposes of the determination of the number of Shares available for grant under the Plan
or compliance with the foregoing limits:
(a) If an outstanding Award for any reason expires or is terminated or canceled without having been exercised or
settled in full, or if Shares acquired pursuant to an Award subject to forfeiture or repurchase are forfeited or repurchased by the
Company for an amount not greater than the Participant’s original purchase price, the Shares allocable to the terminated portion of
such Award or such forfeited or repurchased Shares shall again be available for issuance under the Plan.
(b) Shares shall not be deemed to have been issued pursuant to the Plan with respect to any portion of an Award
that is settled in cash, other than an Option.
(c) Shares withheld or reacquired by the Company in satisfaction of tax withholding obligations under a
Restricted Stock Award shall not again be available for issuance under the Plan; however Shares withheld for tax withholding from
other awards shall be available for issuance again.
(d) If the exercise price of an Option is paid by tender to the Company, or attestation to the ownership, of Shares
owned by the Participant, or an Option is settled without the payment of the exercise price, the number of shares available for issuance
under the Plan shall be reduced by the gross number of shares for which the Option is exercised.
4.3 Adjustments in Authorized Plan Shares. In the event of any merger, reorganization, consolidation, recapitalization, separation,
liquidation, Stock dividend, split−up, Share combination, or other change in the corporate structure of the Company affecting the
Shares, an adjustment shall be made in the number and class of Shares 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 subject to outstanding Awards granted under the
Plan, and/or the number of outstanding Options, Shares of Restricted Stock, and Performance Shares (and Performance Units and
other Awards whose value is based on a number of Shares) constituting outstanding Awards, as may be determined to be appropriate
and equitable by the Disinterested Committee, in its sole discretion, to prevent dilution or enlargement of rights.
Article 5. Eligibility and Participation.
5.1 Eligibility. All management Employees are eligible to receive Awards under this Plan.
5.2 Actual Participation. Subject to the provisions of the Plan, the Committee may, from time to time, select from all eligible Employees,
those to whom Awards shall be granted and shall determine the nature and amount of each Award. No Employee is entitled to receive
an Award unless selected by the Committee.
Article 6. Stock Options.
6.1 Grant of Options. Subject to the terms and provisions of the Plan, Options may be granted to eligible Employees at any time and from
time to time, and under such terms and conditions, as shall be determined by the Committee. In addition, the Committee may, from
time to time, provide for the payment of dividend equivalents on Options, prospectively and/or retroactively, on such terms and
conditions as the Committee may require. The Committee shall have discretion in determining the number of Shares subject to
Options granted to each Employee; provided, however, that no single Employee may receive Options under this Plan for more than
one percent (1%) of the Shares approved for issuance under this Plan during any calendar year. The Committee may not grant
Incentive Stock Options, as described in Section 422 of the Code, under this Plan.
6.2 Form of Issuance. Each Option grant may be issued in the form of an Award Agreement and/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 an Award Agreement, then the
Option shall be deemed granted as determined by the Committee. The terms and conditions of an Option shall be set forth in the
Award Agreement, in the notice of the issuance of the grant, or in such other documents as the Committee shall determine. Such terms
and conditions shall include the Exercise Price, the duration of the Option, the number of Shares to which an Option pertains (unless
otherwise provided by the Committee, each Option may be exercised to purchase one Share), and such other provisions as the
Committee shall determine.
6.3 Exercise Price. Unless a greater Exercise Price is determined by the Committee, the Exercise Price for each Option Awarded under
this Plan shall be equal to one hundred percent (100%) of the Fair Market Value of a Share on the date the Option is granted.
6.4 Duration of Options. Each Option shall expire at such time as the Committee shall determine at the time of grant (which duration may
be extended by the Committee); 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.
6.5 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 Participant who is not an Insider.
6.6 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 shall in each instance approve, which need not be the same for each grant or for each
Participant. Exercises of Options may be effect only on days and during the hours that the New York Stock Exchange is open for
regular trading. The Company may 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 Exercise
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.
6.7 Payment. Unless otherwise determined by the Committee, the Exercise Price shall be paid in full at the time of exercise. No Shares
shall be issued or transferred until full payment has been received.
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 Company at any time, by:
(i) delivery of Shares 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 Exercise Price in Shares, 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 has 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 together with instructions to such stockbroker irrevocably instructing the stockbroker: (A) to immediately
sell (which shall include an exercise notice that becomes effective upon execution of a sale order) a sufficient portion of the
Shares to be received from the Option exercise 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 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 Shares 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, the value of the Shares delivered shall be equal to the then most recent Fair Market
Value of the Shares established before the exercise of the Option.
Restricted Stock may not be used to pay the Exercise Price.
6.8 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 Death or Disability. In the event of the Participant’s Termination of Employment by reason
of death or Disability, all outstanding Options granted to that Participant shall immediately vest as of the date of Termination of
Employment and may be exercised, if at all, no more than three (3) years from the date of the Termination of Employment, unless the
Options, by their terms, expire earlier. However, in the event the Participant was eligible to Retire at the time of Termination of
Employment, notwithstanding the foregoing, the Options may be exercised, if at all, no more than five (5) years from the date of the
Termination of Employment, unless the Options, by their terms, expire earlier.
(b) Termination for Cause. In the event of the Participant’s Termination of Employment by the Company for
Cause, all outstanding Options held by the Participant shall immediately be forfeited to the Company and no additional exercise period
shall be allowed, regardless of the vested status of the Options.
(c) Retirement or Other Termination of Employment. In the event of the Participant’s Termination of
Employment for any reason other than the reasons set forth in (a) or (b), above:
(i) If upon the Participant’s Termination of Employment, the Participant is eligible to Retire (and if the Participant is an
Officer Level Employee , the employee must also be age 55 or older at Termination of Employment), then all outstanding
unvested Options granted to that Participant shall immediately vest as of the date of the Participant’s Termination of
Employment;
(ii) All outstanding Options which are vested as of the effective date of Termination of Employment may be exercised, if at
all, no more than five (5) years from the date of Termination of Employment if the Participant is eligible to Retire, or three
(3) months from the date of the Termination of Employment if the Participant is not eligible to Retire, as the case may be,
unless in either case the Options, by their terms, expire earlier; and
(iii) In the event of the death of the Participant after Termination of Employment, this paragraph (c) shall still apply and not
paragraph (a), above.
(d) Options not Vested at Termination. Except as provided in paragraphs (a) and (c)(i), above, all Options held
by the Participant which are not vested on or before the effective date of Termination of Employment shall immediately be forfeited to
the Company (and the Shares subject to such forfeited Options shall once again become available for issuance under the Plan).
(e) Notwithstanding the foregoing, the Committee may, in its sole discretion, establish different, or waive, terms
and conditions pertaining to the effect of Termination of Employment on Options, whether or not the Options are outstanding, but no
such modification shall shorten the terms of Options issued prior to such modification or otherwise be materially adverse to the
Participant.
6.9 Employee 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 period of employment
at a RWAC is equal to or less than five (5) years, shall not be deemed a Termination of Employment. Provided, however, for purposes
of this Article 6, 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 herein. 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.
6.10 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 AT&T’s Rules
for Employee Beneficiary Designations, 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: (i) in the case of the Participant, only upon the Participant’s death and
in accordance with the AT&T Rules for Employee Beneficiary Designations; and (ii) in the case of any holder after the Participant’s
death, only by will or by the laws of descent and distribution.
6.11 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 7. Restricted Stock.
7.1 Grant of Restricted Stock. Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may
grant Shares of Restricted Stock to eligible Employees in such amounts and upon such terms and conditions as the Committee shall
determine. In addition to any other terms and conditions imposed by the Committee, vesting of Restricted Stock may be conditioned
upon the achievement of Performance Goals in the same manner as provided in Section 8.4, herein, with respect to Performance
Shares. No Employee may be awarded, in any calendar year, a number of Shares in the form of Restricted Stock (or Restricted Stock
Units) exceeding one percent (1%) of the Shares approved for issuance under this Plan.
7.2 Restricted Stock Agreement. The Committee may require, as a condition to receiving a Restricted Stock Award, that the Participant
enter into a Restricted Stock Award Agreement, setting forth the terms and conditions of the Award. In lieu of a Restricted Stock
Award Agreement, the Committee may provide the terms and conditions of an Award in a notice to the Participant of the Award, on
the Stock certificate representing the Restricted Stock, in the resolution approving the Award, or in such other manner as it deems
appropriate.
7.3 Transferability. Except as otherwise provided in this Article 7, and subject to any additional terms in the grant thereof, Shares of
Restricted Stock granted herein may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until fully
vested.
7.4 Restrictions. The Restricted Stock shall be subject to such vesting terms, including the achievement of Performance Goals (as
described in Section 8.4), as may be determined by the Committee. Unless otherwise provided by the Committee, to the extent
Restricted Stock is subject to any condition to vesting, if such condition or conditions are not satisfied by the time the period for
achieving such condition has expired, such Restricted Stock shall be forfeited. The Committee may impose such other conditions
and/or restrictions on any Shares of Restricted Stock granted pursuant to the Plan as it may deem advisable including but not limited to
a requirement that Participants pay a stipulated purchase price for each Share of Restricted Stock and/or restrictions under applicable
Federal or state securities laws; and may legend the certificates representing Restricted Stock to give appropriate notice of such
restrictions. The Committee may also grant Restricted Stock without any terms or conditions in the form of vested Stock Awards.
The Company shall also have the right to retain the certificates representing Shares of Restricted Stock in the Company’s possession
until such time as the Shares are fully vested and all conditions and/or restrictions applicable to such Shares have been satisfied.
7.5 Removal of Restrictions. Except as otherwise provided in this Article 7 or otherwise provided in the grant thereof, Shares of
Restricted Stock covered by each Restricted Stock grant made under the Plan shall become freely transferable by the Participant after
completion of all conditions to vesting, if any. However, the Committee, in its sole discretion, shall have the right to immediately vest
the shares and waive all or part of the restrictions and conditions with regard to all or part of the Shares held by any Participant at any
time.
7.6 Voting Rights, Dividends and Other Distributions. Participants holding Shares of Restricted Stock granted hereunder may exercise
full voting rights and shall receive all regular cash dividends paid with respect to such Shares. Except as provided in the following
sentence, in the sole discretion of the Committee, other cash dividends and other distributions paid to Participants with respect to
Shares of Restricted Stock may be subject to the same restrictions and conditions as the Shares of Restricted Stock with respect to
which they were paid. If any such dividends or distributions are paid in Shares, the Shares shall be subject to the same restrictions and
conditions as the Shares of Restricted Stock with respect to which they were paid.
7.7 Termination of Employment Due to Death or Disability. In the event of the Participant’s Termination of Employment by reason of
death or Disability, all restrictions imposed on outstanding Shares of Restricted Stock held by the Participant shall immediately lapse
and the Restricted Stock shall immediately become fully vested as of the date of Termination of Employment.
7.8 Termination of Employment for Other Reasons. Unless otherwise provided by the Committee, in the event of the Participant’s
Termination of Employment for any reason other than those specifically set forth in Section 7.7 herein, all Shares of Restricted Stock
held by the Participant which are not vested as of the effective date of Termination of Employment immediately shall be forfeited and
returned to the Company.
7.9 Employee 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 period of employment
at a RWAC is equal to or less than five (5) years, shall not be deemed a Termination of Employment. Provided, however, for purposes
of this Article, 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 herein. 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.
7.10 Restricted Stock Units. In lieu of or in addition to Restricted Stock, the Committee may grant Restricted Stock Units under such terms
and conditions as shall be determined by the Committee. Restricted Stock Units shall be subject to the same terms and conditions
under this Plan as Restricted Stock except as otherwise provided in this Plan or as otherwise provided by the Committee. Except as
otherwise provided by the Committee, the award shall be settled and pay out promptly upon vesting (to the extent permitted by Section
409A of the Code), and the Participant holding such Restricted Stock Units shall receive, as determined by the Committee, Shares (or
cash equal to the Fair Market Value of the number of Shares as of the date the award becomes payable) equal to the number of such
Restricted Stock Units. Restricted Stock Units shall not be transferable, shall have no voting rights, and shall not receive dividends, but
shall, unless otherwise provided by the Committee, receive dividend equivalents at the time and at the same rate as dividends are paid
on Shares with the same record and pay dates. Upon a Participant’s Termination of Employment due to Death or Disability, his or her
Restricted Stock Units will vest, and in the case of Death, will pay out promptly, and in the case of Disability, will only pay out in
accordance with the terms of the grant (without regard to the Termination due to Disability). If the Participant dies after Termination
of Employment, vested Restricted Stock Units will be promptly paid out.
Article 8. Performance Units and Performance Shares.
8.1 Grants of Performance Units and Performance Shares. Subject to the terms of the Plan, Performance Shares and Performance Units
may be granted to eligible Employees at any time and from time to time, as determined by the Committee. The Committee shall have
complete discretion in determining the number of Performance Units and/or Performance Shares Awarded to each Participant and the
terms and conditions of each such Award.
8.2 Value of Performance Shares and Units.
(a) A Performance Share is equivalent in value to a Share. In any calendar year, no individual may be awarded
Performance Shares having a potential payout of Shares exceeding one percent (1%) of the Shares approved for issuance under this
Plan.
(b) A Performance Unit shall be equal in value to a fixed dollar amount determined by the Committee. In any
calendar year, no individual may be Awarded Performance Units having a potential payout equivalent exceeding the Fair Market
Value, as of the date of granting the Award, of one percent (1%) of the Shares approved for issuance under this Plan. The number of
Shares equivalent to the potential payout of a Performance Unit shall be determined by dividing the maximum cash payout of the
Award by the Fair Market Value per Share on the effective date of the grant. The Committee may denominate a Performance Unit
Award in dollars instead of Performance Units. A Performance Unit Award may be referred to as a “Key Executive Officer Short
Term Award.”
8.3 Performance Period. The Performance Period for Performance Shares and Performance Units is the period over which the
Performance Goals are measured. The Performance Period is set by the Committee for each Award; however, in no event shall an
Award have a Performance Period of less than one year.
8.4 Performance Goals. For each Award of Performance Shares or Performance Units, the Committee shall establish (and may establish
for other Awards) performance objectives (“Performance Goals”) for the Company, its Subsidiaries, and/or divisions of any of
foregoing, using the Performance Criteria and other factors set forth in (a) and (b), below. It may also use other criteria or factors in
establishing Performance Goals in addition to or in lieu of the foregoing. A Performance Goal may be stated as an absolute value or as
a value determined relative to an index, budget, prior period, similar measures of a peer group of other companies or other standard
selected by the Committee. Performance Goals shall include payout tables, formulas or other standards to be used in determining the
extent to which the Performance Goals are met, and, if met, the number of Performance Shares and/or Performance Units which would
be converted into Stock and/or cash (or the rate of such conversion) and distributed to Participants in accordance with Section
8.6. Unless previously canceled or reduced, Performance Shares and Performance Units which may not be converted because of
failure in whole or in part to satisfy the relevant Performance Goals or for any other reason shall be canceled at the time they would
otherwise be distributable. When the Committee desires an Award of Performance Shares, Performance Units, Restricted Stock or
Restricted Stock Units to qualify under Section 162(m) of the Code, as amended, the Committee shall establish the Performance Goals
for the respective Award prior to or within 90 days of the beginning of the Performance Period relating to such Performance Goal, and
not later than after 25% of such period has elapsed. For all other Awards, the Performance Goals must be established before the end of
the respective Performance Period.
(a) The Performance Criteria which the Committee is authorized to use, in its sole discretion, are any of the
following criteria or any combination thereof, including but not limited to the offset against each other of any combination of the
following criteria:
(1) Financial performance of the Company (on a consolidated basis), of one or more of its Subsidiaries, and/or a division of
any of the foregoing. Such financial performance may be based on net income, Value Added (after− tax cash operating
profit less depreciation and less a capital charge), EBITDA (earnings before interest, taxes, depreciation and amortization),
revenues, sales, expenses, costs, gross margin, operating margin, profit margin, pre−tax profit, market share, volumes of a
particular product or service or category thereof, including but not limited to the product’s life cycle (for example, products
introduced in the last 2 years), number of customers or subscribers, number of items in service, including but not limited to
every category of access or other telecommunication or television lines, return on net assets, return on assets, return on
capital, return on invested capital, cash flow, free cash flow, operating cash flow, operating revenues, operating expenses,
and/or operating income.
(2) Service performance of the Company (on a consolidated basis), of one or more of its Subsidiaries, and/or of a division of
any of the foregoing. Such service performance may be based upon measured customer perceptions of service
quality. Employee satisfaction, employee retention, product development, completion of a joint venture or other corporate
transaction, completion of an identified special project, and effectiveness of management.
(3) The Company’s Stock price, return on stockholders’ equity, total stockholder return (Stock price appreciation plus
dividends, assuming the reinvestment of dividends), and/or earnings per Share.
(4) Impacts of acquisitions, dispositions, or restructurings, on any of the foregoing.
(b) Except to the extent otherwise provided by the Committee in full or in part, if any of the following events
occur during a Performance Period and would directly affect the determination of whether or the extent to which Performance Goals
are met, the effects of such events shall be disregarded in any such computation: changes in accounting principles; extraordinary items;
changes in tax laws affecting net income and/or Value Added; natural disasters, including but not limited to floods, hurricanes, and
earthquakes; and intentionally inflicted damage to property which directly or indirectly damages the property of the Company or its
Subsidiaries. No such adjustment shall be made to the extent such adjustment would cause the Award to fail to satisfy the
performance based exemption of Section 162(m) of the Code.
8.5 Dividend Equivalents on Performance Shares. For each Award of Performance Shares, the Committee may establish a cash payment
(“Dividend Equivalent”) in an amount equal to the dividend payable on one Share to each Participant for each Performance Share held
by a Participant on the record date for the dividend. Such Dividend Equivalent, if any, will be payable at the time the relevant AT&T
common stock dividend is payable or at such other time as determined by the Committee, and may be modified or terminated by the
Committee at any time.
8.6 Form and Timing of Payment of Performance Units and Performance Shares. As soon as practicable (but in no event more than ninety
(90) days) after the applicable Performance Period has ended and all other conditions (other than Committee actions) to conversion
and distribution of a Performance Share and/or Performance Unit Award have been satisfied (or, if applicable, at such other time
determined by the Committee at or before the establishment of the Performance Goal), the Committee shall determine whether and the
extent to which the Performance Goals were met for the applicable Performance Units and Performance Shares. If Performance Goals
have been met, then the number of Performance Units and Performance Shares to be converted into Stock and/or cash and distributed
to the Participants shall be determined in accordance with the Performance Goals for such Awards, subject to any limits imposed by
the Committee. Unless the Participant has elected to defer all or part of his Performance Units or Performance Shares as provided in
Article 10, herein, payment of Performance Units and Performance Shares shall be made in a single lump sum, as soon as reasonably
administratively possible following the determination of the number of Shares or amount of cash to which the Participant is
entitled. Performance Units will be distributed to Participants in the form of cash. Performance Shares will be distributed to
Participants in the form of 50% Stock and 50% Cash, or at the Participant’s election, 100% Stock or 100% Cash. In the event the
Participant is no longer an Employee at the time of the distribution, then the distribution shall be 100% in cash, provided the
Participant may elect to take 50% or 100% in Stock. At any time prior to the distribution of the Performance Shares and/or
Performance Units (or if distribution has been deferred, then prior to the time the Awards would have been distributed), unless
otherwise provided by the Committee or prohibited by this Plan (such as in the case of a Change in Control), the Committee shall have
the authority to reduce or eliminate the number of Performance Units or Performance Shares to be converted and distributed, or to
cancel any part or all of a grant or award of Performance Units or Performance Shares, or to mandate the form in which the Award
shall be paid (i.e., in cash, in Stock or both, in any proportions determined by the Committee).
Unless otherwise provided by the Committee, any election to take a greater amount of cash or Stock with respect to Performance
Shares must be made in the calendar year prior to the calendar year in which the Performance Shares are distributed (or if distribution
has been deferred, then in the year prior to the year the Performance Shares would have been distributed absent such deferral).
For the purpose of converting Performance Shares into cash and distributing the same to the holders thereof (or for determining the
amount of cash to be deferred), the value of a Performance Share shall be the Fair Market Value of a Share on the date the Committee
authorizes the payout of Awards. Performance Shares to be distributed in the form of Stock will be converted at the rate of one (1)
Share per Performance Share.
8.7 Termination of Employment Due to Death or Disability. In the event of the Participant’s Termination of Employment by reason of
death or Disability during a Performance Period, the Participant shall receive a lump sum payout of the related outstanding
Performance Units and Performance Shares calculated as if all unfinished Performance Periods had ended with 100% of the
Performance Goals achieved, valued as of the first business day of the calendar year following the date of Termination of
Employment and payable as soon thereafter as reasonably possible. Where the amount or part of Dividend Equivalents is determined
by the number of Performance Shares that are paid out or is otherwise determined by a performance measure, and the related
Performance Period for the Dividend Equivalents was not completed at Termination of Employment, or in the event of the
Termination of Employment by reason of death or Disability, then the Dividend Equivalents will be calculated as though 100% of the
goals were achieved and paid as soon reasonably possible following the first business day of the calendar year.
8.8 Termination of Employment for Other Reasons. Unless the Committee determines otherwise, in the event of the Participant’s
Termination of Employment for other than a reason set forth in Section 8.7 (and other than for Cause), if the Participant is not
Retirement eligible at Termination of Employment, then upon Termination, the number of the Participant’s Performance Units and/or
Performance Shares shall be reduced at the time of the Termination of Employment so that the Participant may receive no more than a
prorated payout of all Performance Units and Performance Shares granted, based on the number of months the Participant worked at
least one day during the respective Performance Period divided by the number of months in the Performance Period, to be paid, if at
all, at the same time and under the same terms that such outstanding Performance Units and Performance Shares would otherwise be
paid.
8.9 Termination of Employment for Cause. In the event of the Termination of Employment of a Participant by the Company for Cause, all
Performance Units and Performance Shares shall be forfeited by the Participant to the Company.
8.10 Nontransferability. Performance Units and Performance Shares may not be sold, transferred, pledged, assigned, or otherwise alienated
or hypothecated, other than in accordance with the AT&T Rules for Employee Beneficiary Designations.
Article 9. Beneficiary Designation. In the event of the death of a Participant, distributions or Awards under this Plan, other than Restricted
Stock, shall pass in accordance with the AT&T Rules for Employee Beneficiary Designations, as the same may be amended from time
to time. Beneficiary Designations of a Participant received by AT&T prior to November 16, 2001, that were applicable to awards
under the 1996 Stock and Incentive Plan will also apply to awards under this Plan unless and until the Participant provides to the
contrary in accordance with the procedures set forth in such Rules.
Article 10. Deferrals. Unless otherwise provided by the Committee, a Participant may, as permitted by the Company, defer all or part of Awards
made under this Plan in accordance with and subject to the terms of such plans so long as such deferral is determined by the Company
to be consistent in all respects with Section 409A of the Code.
Article 11. Employee Matters.

11.1 Employment Not Guaranteed. Nothing in the Plan shall interfere with or limit in any way the right of the Company or any Subsidiary
to terminate any Participant’s Employment at any time, nor confer upon any Participant any right to continue in the employ of the
Company or one of its Subsidiaries.
11.2 Participation. No Employee shall have the right to be selected to receive an Award under this Plan, or, having been so selected, to be
selected to receive a future Award.
11.3 Loyalty Conditions and Enforcement. This section relates solely to Awards granted on or after January 1, 2010 to a Participant who is
an Officer Level Employee or a Senior Manager as of the date the Award is made.
(a) Each Award under the Plan is intended to closely align the Participant’s long−term interests with those of the
Company and its shareholders, and the conditions set forth in subsections (b) or (d) hereof (collectively, the “Loyalty Conditions”) are
intended to protect the Company’s critical need for each Participant’s loyalty to the Company and its shareholders. If any Participant
does not comply with a Loyalty Condition, either during employment or within the periods described below following Termination of
Employment for any reason, then the Participant is acting contrary to the long−term interests of the Company, and there will be a
failure of the consideration on which the Participant received any Award or Awards pursuant to the Plan. Accordingly, unless
otherwise provided in the Award, as a condition of such Award granted on or after January 1, 2010, the Participant is deemed to agree
that he shall not, without obtaining the written consent of AT&T in advance, violate the Loyalty Provisions of this Section
11.3. Unless otherwise expressly provided in an Award Agreement, if the Participant violates a Loyalty Condition, then the Company
may terminate any outstanding, unexercised, unexpired, unpaid, or deferred Awards granted on or after January 1, 2010 (“Award
Termination”), rescind any exercise, payment or delivery pursuant to any Award or Awards (“Rescission”), or recapture any cash or
Shares (whether restricted or unrestricted) issued pursuant to any Award or Awards, or proceeds from the Participant’s sale of such
Shares (“Recapture”).
(b) During the Participant’s employment with the Company and any of its Subsidiaries and for a period of two
years after a Termination of Employment for any reason, a Participant shall not, without the Company’s prior written authorization, (i)
disclose to anyone outside the Company or use, other than in the Company’s business, any Confidential Information, or (ii) disclose
any trade secrets of the Company, as that term is defined under Applicable Law, for as long as such information is not generally
known to the Company’s competitors through no fault or negligence of the Participant.
“Confidential Information” means all information belonging to, or otherwise relating to the business of the Company, which is not
generally known, regardless of the manner in which it is stored or conveyed to Participant, and which the Company has taken
reasonable measures under the circumstances to protect from unauthorized use or disclosure. Confidential Information includes trade
secrets as well as other proprietary knowledge, information, know−how, and non−public intellectual property rights, including
unpublished or pending patent applications and all related patent rights, formulae, processes, discoveries, improvements, ideas,
conceptions, compilations of data, and data, whether or not patentable or copyrightable and whether or not it has been conceived,
originated, discovered, or developed in whole or in part by Participant. For example, Confidential Information includes, but is not
limited to, information concerning the Company’s business plans, budgets, operations, products, strategies, marketing, sales,
inventions, designs, costs, legal strategies, finances, employees, customers, prospective customers, licensees, or licensors; information
received from third parties under confidential conditions; or other valuable financial, commercial, business, technical or marketing
information concerning the Company, or any of the products or services made, developed or sold by the Company. Confidential
Information does not include information that (i) was generally known to the public at the time of disclosure; (ii) was lawfully
received by Participant from a third party; (iii) was known to Participant prior to receipt from the Company; or (iv) was independently
developed by Participant or independent third parties; in each of the foregoing circumstances, this exception applies only if such public
knowledge or possession by an independent third party was without breach by Participant or any third party of any obligation of
confidentiality or non−use, including but not limited to the obligations and restrictions set forth in this Agreement.
(c) Coincidentally with the exercise, receipt of payment, or delivery of cash or Shares pursuant to an Award
granted after January 1, 2010, the Company may require that the Participant shall give a certification to the Company in writing if the
Participant is not for any reason in full compliance with the terms and conditions of the Plan, including its Loyalty Conditions. If a
Termination of Employment has occurred for any reason, the Participant’s certification shall state the name and address of the
Participant’s then−current employer or any entity for which the Participant performs business services and the Participant’s title, and
shall identify any organization or business in which the Participant owns an equity interest of greater than five percent.
(d) If the Company determines, in its sole and absolute discretion, that (i) a Participant has violated any of the
Loyalty Conditions, or (ii) during his or her employment by the Company or any of its Subsidiaries, or within two years after the
Termination of Employment for any reason, a Participant has engaged in any of the following conduct:
(i) owned, operated or controlled, or participated in the ownership, operation or control of, any business enterprise
(including, without limitation, any corporation, partnership, proprietorship or other venture) that competes with the
Company in the Restricted Business (defined below) anywhere in the Restricted Territory (defined below);
(ii) become employed as an officer or executive by any business enterprise (including, without limitation, any corporation,
partnership, proprietorship or other venture) that competes with the Company in the Restricted Business anywhere in the
Restricted Territory, if such employment or engagement requires Participant to compete against the Company in the
Restricted Business;
(iii) solicited any nonclerical employee of the Company with whom the Participant had Contact during his or her employment
to terminate employment with the Company; or
(iv) committed any breach of Participant’s fiduciary duty or the duty of loyalty, as determined by Applicable Law, then the
Committee may, in its sole and absolute discretion, impose an Award Termination, Rescission, and/or Recapture with
respect to any or all of the Participant’s Awards granted after January 1, 2010, including any Shares or cash associated
therewith, or any proceeds thereof. For purposes of this Agreement, the term “Restricted Business” means the business of
providing communications or connectivity services, including both wireless and wire−lined telephone, messaging, Internet,
data, and related services; the term “Restricted Territory” shall mean the state in which the Participant maintained his or
her principal office with the Company on the date the Award was granted; and the term “Contact” means interaction
between the Participant and the nonclerical employee during performance of Participant’s job responsibilities on behalf of
the Company.
(e) Within ten days after receiving notice from the Company of any such activity described in subsection (d)
above, the Participant shall deliver to the Company the cash or Shares acquired pursuant to any and all Awards granted on or after
January 1. 2009, or, if Participant has sold the Shares, the gain realized, or payment received as a result of the rescinded exercise,
payment, or delivery; provided, that if the Participant returns Shares that the Participant purchased pursuant to the exercise of an
Option (or the gains realized from the sale of such Shares), the Company shall promptly refund the exercise price, without earnings or
interest, that the Participant paid for the Shares. Any payment by the Participant to the Company pursuant to this Section shall be
made either in cash or by returning to the Company the number of Shares that the Participant received in connection with the rescinded
exercise, payment, or delivery. It shall not be a basis for Award Termination, Rescission or Recapture if, after a Termination of
Employment, the Participant purchases, as an investment or otherwise, stock or other securities of an organization engaged in the
Restricted Business, so long as (i) such stock or other securities are listed upon a recognized securities exchange or traded over the
counter, and (ii) such investment does not represent more than a ten percent (10%) equity interest in the organization or business.
(f) Notwithstanding the foregoing provisions of this Section, the Company has sole and absolute discretion not to
require Award Termination, Rescission and/or Recapture, and its determination not to require Award Termination, Rescission and/or
Recapture with respect to any particular act by a particular Participant or Award shall not in any way reduce or eliminate the
Company’s authority to require Award Termination, Rescission and/or Recapture with respect to any other act or Participant or
Award. Nothing in this Section shall be construed to impose obligations on the Participant to refrain from engaging in lawful
competition with the Company after the Participant’s Termination of Employment that does not violate subsections (b) or (d) of this
Section, other than any obligations that are part of any separate agreement between the Company and the Participant or that arise under
Applicable Law.
(g) All administrative and discretionary authority given to the Company under this Section shall be exercised by
the most senior human resources executive of the Company or such other person or committee (including without limitation the
Committee) as the Committee may designate from time to time.
(h) If any provision within this Section is determined to be unenforceable or invalid under any applicable law,
such provision will be applied to the maximum extent permitted by Applicable Law, and shall automatically be deemed amended in a
manner consistent with its objectives and any limitations required under Applicable Law.
11.4 Reimbursement of Company for Unearned or Ill−gotten Gains. Unless otherwise specifically provided in an Award Agreement, and to
the extent permitted by Applicable Law, the Committee may in its sole and absolute discretion, without obtaining the approval or
consent of the Company’s shareholders or of any Participant, with respect to Awards granted after January 1, 2010, require that any
Participant reimburse the Company for all or any portion of any Awards granted or settled under this Plan (with each such case being a
“Reimbursement”), or the Committee may require the Termination or Rescission of, or the Recapture associated with, any Award, if
and to the extent the Committee determines in its discretion that either —
(a) the Participant personally engaged in one or more material acts of fraud or misconduct that have caused or
partially caused the need for a financial restatement by the Company and/or any Affiliate; or
(b) (i) the granting, vesting, or payment of such Award (or portion thereof) was predicated upon the achievement
of financial results involving statements of earnings, revenues, gains, or other financial criteria relating to the Company, an Affiliate or
Affiliates of the Company, or any divisions or units of any of them; (ii) the Participant benefited from a calculation that later proves to
be materially inaccurate; and (iii) a lower granting, vesting, payment, or other settlement of such Award would have occurred but for
the conduct described in clause (b)(ii) of this Section.
In each instance described in clause (a) or (b) above, the Committee may, to the extent practicable and allowable under Applicable
Laws, require Reimbursement, Award Termination or Rescission of, or Recapture relating to, any such Award granted to a Participant;
provided that the Company will not seek Reimbursement, Award Termination or Rescission of, or Recapture relating to, any such
Awards that were paid or vested more than three years prior to the first date of a financial period that is subject to a restatement
described in clause (a) above.
Article 12. Change in Control.
Unless the Committee provides otherwise prior to the grant of an Award, upon the occurrence of a Change in Control, the following
shall apply to such Award:
(a) Any and all Options granted hereunder to a Participant immediately shall become vested and exercisable
upon the Termination of Employment of the Participant by the Company or by the Participant for “Good Reason”;
(b) Unless otherwise determined by the Committee, the payout of Performance Units and Performance Shares
shall be determined exclusively by the attainment of the Performance Goals established by the Committee, which may not be modified
after the Change in Control, and AT&T shall not have the right to reduce the Awards for any other reason;
(c) For purposes of this Plan, “Good Reason” means in connection with a termination of employment by a
Participant within two (2) years following a Change in Control, (a) a material adverse alteration in the Participant’s position or in the
nature or status of the Participant’s responsibilities from those in effect immediately prior to the Change in Control, or (b) any material
reduction in the Participant’s base salary rate or target annual bonus, in each case as in effect immediately prior to the Change in
Control, or (c) the relocation of the Participant’s principal place of employment to a location that is more than fifty (50) miles from the
location where the Participant was principally employed at the time of the Change in Control or materially increases the time of the
Participant’s commute as compared to the Participant’s commute at the time of the Change in Control (except for required travel on
the Company’s business to an extent substantially consistent with the Participant’s customary business travel obligations in the
ordinary course of business prior to the Change in Control).
In order to invoke a Termination of Employment for Good Reason, a Participant must provide written notice to AT&T or the
Employer with respect to which the Participant is employed or providing services of the existence of one or more of the conditions
constituting Good Reason within ninety (90) days following the Participant’s knowledge of the initial existence of such condition or
conditions, specifying in reasonable detail the conditions constituting Good Reason, and AT&T shall have thirty (30) days following
receipt of such written notice (the “Cure Period”) during which it may remedy the condition. In the event that AT&T or the Employer
fails to remedy the condition constituting Good Reason during the applicable Cure Period, the Participant’s “separation from service”
(within the meaning of Section 409A of the Code) must occur, if at all, within two (2) years following such Cure Period in order for
such termination as a result of such condition to constitute a Termination of Employment for Good Reason.
Article 13. Amendment, Modification, and Termination.
13.1 Amendment, Modification, and Termination. The Board or the Disinterested Committee may at any time and from time to time, alter
or amend the Plan or any Award in whole or in part or suspend or terminate the Plan in whole or in part.
13.2 Awards Previously Granted. No termination, amendment, or modification of the Plan or any Award shall adversely affect in any
material way any Award previously granted under the Plan, without the written consent of the Participant holding such Award;
provided, however, that any such modification made for the purpose of complying with Section 409A of the Code may be made by the
Company without the consent of any Participant.
13.3 Delay in Payment. To the extent required in order to avoid the imposition of any interest and/or additional tax under Section
409A(a)(1)(B) of the Code, any amount that is considered deferred compensation under the Plan or Agreement and that is required to
be postponed pursuant to Section 409A of the Code, following the a Participant’s Termination of Employment shall be delayed for six
months if a Participant is deemed to be a “specified employee” as defined in Section 409A(a)(2)(i)(B) of the Code; provided that, if
the Participant dies during the postponement period prior to the payment of the postponed amount, the amounts withheld on account of
Section 409A shall be paid to the executor or administrator of the decedent’s estate within 60 days following the date of his
death. A “Specified Employee” means 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 twelve (12) month period ending on each December 31st (such twelve (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 Specified Employees for purposes of the Plan
during the twelve (12) month period that begins on the first day of the 4th month following the close of such identification period.
Article 14. Withholding.
14.1 Tax Withholding. Unless otherwise provided by the Committee, the Company shall deduct or withhold an amount sufficient to satisfy
Federal, state, and local taxes (including but not limited to the Participant’s employment tax obligations) required by law to be
withheld with respect to any taxable event arising or as a result of this Plan (“Withholding Taxes”).
14.2 Share Withholding. Unless otherwise provided by the Committee, upon the exercise of Options, the lapse of restrictions on Restricted
Stock, the distribution of Performance Shares in the form of Stock, or any other taxable event hereunder involving the transfer of
Stock to a Participant, the Company shall withhold Stock equal in value, using the Fair Market Value on the date determined by the
Company to be used to value the Stock for tax purposes, to the Withholding Taxes applicable to such transaction.
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 Exercise Price is from the sale by a stockbroker
pursuant to Section 6.7(b)(ii), herein, 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.
If permitted by the Committee, prior to the end of any Performance Period a Participant may elect to have a greater amount of Stock
withheld from the distribution of Performance Shares to pay withholding taxes; provided, however, the Committee may prohibit or
limit any individual election or all such elections at any time.
Article 15. Successors.
All obligations of the Company under the Plan, with respect to Awards granted hereunder, 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.
Article 16. Legal Construction.
16.1 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.
16.2 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.
16.3 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.
16.4 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.
16.5 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 but not limited to elections or notices 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.
16.6 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.
16.7 Venue. 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 Dallas County, Texas, and no other, (b) all claims with respect to any such action shall be heard and
determined exclusively in such Texas court, and no other, (c) such Texas court shall have sole and exclusive jurisdiction over the
person of such parties and over the subject matter of any dispute relating hereto and (d) that the parties waive any and all objections
and defenses to bringing any such action before such Texas court, including but not limited to those relating to lack of personal
jurisdiction, improper venue or forum non conveniens.
EXHIBIT 10−mm
BELLSOUTH
OFFICER COMPENSATION DEFERRAL PLAN
(AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2005)
BELLSOUTH OFFICER COMPENSATION DEFERRAL PLAN
Effective as of the 1st day of January, 2002, BellSouth Corporation ("BellSouth") established the BellSouth Officer Compensation Deferral Plan (the
"Plan"). The Plan is hereby amended and restated in its entirety effective as of the 1st day of January, 2005.
BACKGROUND AND PURPOSE
A. GOAL. BellSouth desires to provide its executives, and those of its Affiliates that participate in the Plan, with an opportunity (i) to defer the receipt and
income taxation of a portion of such executives' compensation; and (ii) to receive an investment return on those deferred amounts based on either (A) the
return of BellSouth stock, an indexed rate of interest, or a combination of the two, or (B) for executives who satisfy BellSouth's stock ownership guidelines,
the return of a selected group of mutual and other investment funds.
B. PURPOSE. The purpose of the Plan is to set forth the terms and conditions under which these deferrals may be made and deemed invested and to
describe the nature and extent of the executives' rights to their deferred amounts.
C. TYPE OF PLAN. The Plan constitutes an unfunded, nonqualified deferred compensation plan that benefits certain designated employees who are
within a select group of key management or highly compensated employees. Each Participating Company alone has the obligation to pay amounts payable
under the Plan to Plan Participants, and such payments are not, and will not be, an obligation of any other Participating Company.
ARTICLE I
DEFINITIONS
For purposes of the Plan, each of the following terms, when used with an initial capital letter, shall have the meaning set forth below unless a different
meaning plainly is required by the context.
1.1 "ACCOUNT" shall mean, with respect to a Participant or Beneficiary, the total dollar amount or value evidenced by the last balance posted in
accordance with the terms of the Plan to the account record established for such Participant or Beneficiary with respect to the Deferral Contributions of such
Participant for any Plan Year.
1.2 "AFFILIATE" shall mean at any time any corporation, joint venture or partnership in which BellSouth owns directly or indirectly, (i) with respect to a
corporation, stock possessing at least ten percent (10%) of the total combined voting power of all classes of stock in the corporation, or (ii) in the case of a
joint venture or partnership, a ten percent (10%) or greater interest in the capital or profits of such joint venture or partnership.
1.3 "ANNUAL BONUS" shall mean, with respect to each Eligible Executive for a specified Plan Year, such Eligible Executive's actual award amount to
be paid under the Short Term Bonus Plan for such Plan Year (payable in the succeeding year).
1.4 "BASE SALARY" shall mean, with respect to each Eligible Executive for a specified Plan Year, the gross regular, periodic base salary paid or payable
to the Eligible Executive for each payroll period during such Plan Year, including any of the Eligible Executive's own before−tax and after−tax
contributions to, or deferrals under, any Code Section 401(k), Code Section 125, nonqualified deferred compensation or other employee benefit plan or
program, maintained by a Participating Company from time to time, but excluding any contributions or benefits paid under any such plan or program by a
Participating Company.
1.5 "BELLSOUTH" shall mean BellSouth Corporation, a Georgia corporation.
1.6 "BENEFICIARY" shall mean, with respect to a Participant, the person(s) determined in accordance with Section 5.4 to receive any death benefits that
may be payable under the Plan upon the death of the Participant.
1.7 "BOARD" shall mean the Board of Directors of BellSouth.
1.8 "BONUS DEFERRAL ELECTION" shall mean an election in such form as is provided by the Plan Administrator on which an Eligible Executive may
elect to defer a portion of such executive's Annual Bonus.
1.9 "BUSINESS DAY" shall mean each day on which the New York Stock Exchange operates and is open to the public for trading.
1.10 "CODE" shall mean the Internal Revenue Code of 1986, as amended.
1.11 "COMPANY STOCK" shall mean the $1.00 par value per share voting common stock of BellSouth.
1.12 "COMPENSATION" shall mean, for any Plan Year, the Participant's annualized Base Salary rate as in effect on November 15 preceding the
beginning of the Plan Year. Provided, however, that with respect to an Eligible Executive whose eligibility to actively participate in the Plan commences
after November 15 preceding the beginning of the Plan Year, such amount shall be the Participant's annualized Base Salary rate as in effect on the first day
of the first payroll period after which the Eligible Executive is eligible to actively participate in the Plan. Notwithstanding the foregoing, the Plan
Administrator, in its sole discretion, may specify dates other than those described above on which a Participant's annualized Base Salary rate for a Plan Year
is to be determined. For any Participant employed by a Participating Company whose compensation structure does not readily fit this definition,
"Compensation" shall mean cash compensation as defined by the Plan Administrator.
1.13 "CREDITED INTEREST RATE" shall mean, for each Plan Year, the rate of return equal to Moody's Monthly Average of Yields of Aa Corporate
Bonds, as published by Moody's Investors Service, Inc., for the month of July immediately preceding such Plan Year. If such rate (or any alternative rate
described in this sentence) is at any time no longer available, the Plan Administrator shall designate an alternative rate which, in the Plan Administrator's
reasonable judgment, is generally comparable to the rate described in the preceding sentence, and such alternative rate shall thereafter be the Credited
Interest Rate.
1.14 "DEFERRAL CONTRIBUTIONS" shall mean, as applicable, for each Plan Year that portion of a Participant's Base Salary and/or Annual Bonus
deferred, and for each Performance Period that portion of a Participant's Performance Share Payment deferred, under the Plan pursuant to Section 3.2.
1.15 "DEFERRAL ELECTION" shall mean an election in such form as is provided by the Plan Administrator on which an Eligible Executive may elect to
defer under the Plan a portion of such Eligible Executive's Base Salary.
1.16 "EFFECTIVE DATE" shall mean January 1, 2005, the date this restatement of the Plan is effective. The Plan initially was effective as of January 1,
2002.
1.17 "ELECTION DEADLINE" shall mean:
(a) With respect to a Deferral Election and a Bonus Deferral Election, for an individual who is eligible to participate in the Plan for an entire Plan Year and
is employed by a Participating Company on such date, the November 30 (or if November 30 is not a Business Day, the last Business Day immediately
preceding November 30) immediately preceding the first day of such Plan Year. Notwithstanding the foregoing, with the approval of the Plan
Administrator, "Election Deadline" may mean, with respect to such an Eligible Executive for a Plan Year, the December 31 (or if December 31 is not a
Business Day, the last Business Day immediately preceding December 31) immediately preceding the first day of such Plan Year.
(b) With respect to a Deferral Election and a Bonus Deferral Election, for an individual who becomes employed by a Participating Company as an Eligible
Executive after the November 30 (or such other date) described in the preceding paragraph and on or before October 1 of a Plan Year and who is eligible to
participate in the Plan during the remainder of such Plan Year pursuant to Section 2.2, the date which is thirty (30) days after the date the individual first
becomes eligible to participate in the Plan.
(c) With respect to a Performance Share Deferral Election, the November 30 (or if November 30 is not a Business Day, the last Business Day immediately
preceding November 30) immediately preceding the final year of the Performance Period.
1.18 "ELECTION PACKAGE" shall mean a package consisting of a Deferral Election, a Bonus Deferral Election, a Performance Share Deferral Election,
an Investment Election and such other forms and documents distributed to an Eligible Executive by the Plan Administrator for the purpose of allowing such
Eligible Executive to elect to actively participate in the Plan for a Plan Year.
1.19 "ELIGIBLE EXECUTIVE" shall mean, for each Plan Year, each management employee of a Participating Company who (i) is a member of a select
group of highly compensated or key management employees, and (ii) is designated by the Plan Administrator as a member of BellSouth's "executive
compensation group," or is otherwise designated by the Plan Administrator as eligible to participate in the Plan.
1.20 "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended.
1.21 "FINANCIAL HARDSHIP" shall mean a severe financial hardship to the Participant resulting from a sudden and unexpected illness or accident of the
Participant or of the Participant's dependent [as defined in Code Section 152(a)], 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. Financial Hardship shall be determined by
the Plan Administrator on the basis of the facts of each case, including information supplied by the Participant in accordance with uniform guidelines
prescribed from time to time by the Plan Administrator; provided, the Participant will be deemed not to have a Financial Hardship to the extent that such
hardship is or may be relieved:
(a) through reimbursement or compensation by insurance or otherwise;
(b) by liquidation of the Participant's assets, to the extent the liquidation of assets would not itself cause severe financial hardship; or
(c) by cessation of deferrals under the Plan.
Examples of what are not considered to be unforeseeable emergencies include the

need to send a Participant's child to college or the desire to purchase a home.
1.22 "INTEREST INCOME OPTION" shall mean the Investment Option described in Section 4.4, pursuant to which a Participant's deemed investment
earnings are determined on the basis of the Credited Interest Rate.
1.23 "INTEREST INCOME SUBACCOUNT" shall mean a bookkeeping subaccount reflecting that portion of a Participant's Account for each Plan Year
which is deemed to be invested in the Interest Income Option.
1.24 "INVESTMENT ELECTION" shall mean an election in such form as is provided by the Plan Administrator on which an Eligible Executive may elect
to have Deferral Contributions for a Plan Year (and all investment earnings attributable thereto) deemed invested in the Stock Unit Option, the Interest
Income Option and/or the Mutual Fund Option (including the underlying Mutual Funds).
1.25 "INVESTMENT OPTIONS" shall mean the Stock Unit Option, the Interest Income Option and the Mutual Fund Option (including the underlying
Mutual Funds).
1.26 "MUTUAL FUND" shall mean the investment funds selected from time to time by the Plan Administrator for purposes of determining the rate of
return on amounts deemed invested in the Mutual Fund Option pursuant to the terms of the Plan.
1.27 "MUTUAL FUND OPTION" shall mean the Mutual Fund Option described in Section 4.5, pursuant to which a Participant's deemed investment
earnings are determined by the rate of return applicable to Mutual Funds.
1.28 "MUTUAL FUND SUBACCOUNT" shall mean a bookkeeping subaccount reflecting that portion of a Participant's Account for each Plan Year which
is deemed to be invested in the Mutual Fund Option.
1.29 "PARTICIPANT" shall mean any person participating in the Plan pursuant to the provisions of Article II.
1.30 "PARTICIPATING COMPANY" shall mean BellSouth and each Affiliate which, by action of its board of directors (or equivalent governing body),
adopts the Plan as a Participating Company with the approval of the Plan Administrator. Such entities shall be listed on Exhibit A hereto, which shall be
updated from time to time to reflect the addition of new Participating Companies and the effective dates of their participation, and the deletion of any
entities which are no longer Participating Companies.
1.31 "PERFORMANCE PERIOD" shall mean the three consecutive calendar year period (or other period of time) specified in a performance share award
agreement (or similar document) made pursuant to the Stock Plan with respect to which a Performance Share Deferral Election is made.
1.32 "PERFORMANCE SHARE AWARD" shall mean, with respect to each Eligible Executive for a specified Performance Period, an award of
"Performance Shares" (as such term is defined in the Stock Plan) made pursuant to the Stock Plan with respect to such Performance Period.
1.33 "PERFORMANCE SHARE DEFERRAL ELECTION" shall mean an election in such form as is provided by the Plan Administrator on which an
Eligible Executive may elect to defer a portion of such executive's Performance Share Payment.
1.34 "PERFORMANCE SHARE PAYMENT" shall mean the aggregate of any and all amounts to be paid with respect to a Performance Share Award.
1.35 "PLAN" shall mean the BellSouth Officer Compensation Deferral Plan, as contained herein and all amendments hereto.
1.36 "PLAN ADMINISTRATOR" shall mean the Chief Executive Officer of BellSouth and any individual or committee the Chief Executive Officer
designates to act on his or her behalf with respect to any or all of the Chief Executive Officer's responsibilities hereunder; provided, the Board may
designate any other person or committee to serve in lieu of the Chief Executive Officer as the Plan Administrator with respect to any or all of the
administrative responsibilities hereunder.
1.37 "PLAN YEAR" shall mean the calendar year.
1.38 "SHORT TERM BONUS PLAN" shall mean, effective April 26, 2004, the BellSouth Corporation Stock and Incentive Compensation Plan, or any
successor plan. Prior to April 26, 2004, "Short Term Bonus Plan" referred to the BellSouth Corporation Officer Short Term Incentive Award Plan.
1.39 "STOCK/INTEREST OPTION" shall mean the investment option comprised of the Stock Unit Option and/or the Interest Income Option, as described
in Section 4.2(b)(i).
1.40 "STOCK PLAN" shall mean the BellSouth Corporation Stock and Incentive Compensation Plan, or any successor plan.
1.41 "STOCK UNIT" shall mean an accounting entry that represents an unsecured obligation of a Participating Company to pay to a Participant an amount
which is based on the fair market value of one share of Company Stock as set forth herein. A Stock Unit shall not carry any voting, dividend or other similar
rights and shall not constitute an option or any other right to acquire any equity securities of BellSouth.
1.42 "STOCK UNIT OPTION" shall mean the Investment Option described in Section 4.3, pursuant to which a Participant's deemed investment earnings
are determined by the rate of return applicable to Stock Units.
1.43 "STOCK UNIT SUBACCOUNT" shall mean a bookkeeping subaccount reflecting that portion of a Participant's Account for each Plan Year which is
deemed to be invested in the Stock Unit Option.
1.44 "VALUATION DATE" shall mean each Business Day. Notwithstanding the foregoing, for any specific purpose determined in the sole discretion of
the Plan Administrator, "Valuation Date" shall mean any day or days declared by the Plan Administrator, in its sole discretion, to be a Valuation Date. If the
Plan provides for a valuation to be made on a day that is not a Valuation Date, such valuation shall be made as of the Valuation Date immediately preceding
such day.
ARTICLE II
ELIGIBILITY AND PARTICIPATION
2.1 ANNUAL PARTICIPATION. Each individual who is an Eligible Executive as of the first day of a Plan Year and is employed by a Participating
Company before the beginning of such Plan Year shall be eligible to defer a portion of such Eligible Executive's Base Salary, Annual Bonus and
Performance Share Payment, if any, and thereby to actively participate in the Plan for such Plan Year. Such individual's participation shall become effective
as of the first day of such Plan Year, provided that the Eligible Executive properly and timely completes the election procedures described in Section 2.3.
For purposes of the Plan, references to "Plan Year" with respect to a Performance Share Deferral Election shall mean the Plan Year that is the final calendar
year of the Performance Period.
2.2 INTERIM PLAN YEAR PARTICIPATION. Each individual who becomes employed by a Participating Company as an Eligible Executive on or before
October 1 of a Plan Year, and who is not otherwise eligible to participate in the Plan during such Plan Year in accordance with Section 2.1, shall be
immediately eligible upon commencement of such employment to make a Deferral Election and/or Bonus Deferral Election, and thereby to actively
participate in the Plan, for the remainder of such Plan Year. Such individual's participation shall become effective as of the first day of the calendar month
following the calendar month in which such Deferral Election and/or Bonus Deferral Election is made, provided that the Eligible Executive properly and
timely completes the election procedures described in Section 2.3.
2.3 ELECTION PROCEDURES. Each Eligible Executive may elect to defer a portion of such Eligible Executive's Base Salary, Annual Bonus and/or
Performance Share Payment, and thereby become an active Participant for a Plan Year (or, if Section 2.2 is applicable, for the remainder of such Plan Year),
by delivering a completed Deferral Election, Bonus Deferral Election and/or Performance Share Deferral Election and an Investment Election to the Plan
Administrator by the applicable Election Deadline for such Plan Year. Such an election shall be effective only if the individual is actively employed as an
Eligible Executive at the time the individual delivers the completed Deferral Election, Bonus Deferral Election and/or Performance Share Deferral Election
and Investment Election to the Plan Administrator. The Plan Administrator may also require the Eligible Executive to complete other forms and provide
other data, as a condition of participation in the Plan.
2.4 CESSATION OF ELIGIBILITY. An Eligible Executive's active participation in the Plan shall terminate, and the Eligible Executive shall not be eligible
to make any additional Deferral Contributions, for any portion of a Plan Year following the date the Eligible Executive's employment with BellSouth and all
Participating Companies terminates (unless such individual is reemployed as an Eligible Executive later in such Plan Year). In addition, an individual who
actively participated in the Plan during prior Plan Years but who is not an Eligible Executive or does not complete the election procedures, for a subsequent
Plan Year, shall cease active participation in the Plan for such subsequent Plan Year. If an individual's active participation in the Plan ends, such individual
shall remain an inactive Participant in the Plan until the earlier of (i) the date the full amount of such individual's Accounts is distributed from the Plan, or
(ii) the date the individual again becomes an Eligible Executive and recommences active participation in the Plan. During the period of time that an
individual is an inactive Participant in the Plan, such individual's Accounts shall continue to be credited with earnings as provided in the Plan.
ARTICLE III
PARTICIPANTS' ACCOUNTS; DEFERRAL CONTRIBUTIONS
3.1 PARTICIPANTS' ACCOUNTS.
(a) ESTABLISHMENT OF ACCOUNTS. The Plan Administrator shall establish and maintain one or more Accounts on behalf of each Participant for each
Plan Year for which the Participant makes Deferral Contributions. The Plan Administrator shall credit each Participant's Account with the Participant's
Deferral Contributions for such Plan Year and earnings attributable thereto, and shall maintain such Account until the value thereof has been distributed to
or on behalf of such Participant or his or her Beneficiary.
(b) NATURE OF CONTRIBUTIONS AND ACCOUNTS. The amounts credited to a Participant's Accounts shall be represented solely by bookkeeping
entries. Except as provided in Article VII, no monies or other assets shall actually be set aside for such Participant, and all payments to a Participant under
the Plan shall be made from the general assets of the Participating Companies.
(c) SEVERAL LIABILITIES. Each Participating Company shall be severally (and not jointly) liable for the payment of benefits under the Plan under
Deferral Elections, Bonus Deferral Elections and Performance Share Deferral Elections executed by Eligible Executives with, and while employed by, such
(d) GENERAL CREDITORS. Any assets which may be acquired by a Participating Company in anticipation of its obligations under the Plan shall be part
of the general assets of such Participating Company. A Participating Company's obligation to pay benefits under the Plan constitutes a mere promise of such
Participating Company to pay such benefits, and a Participant or Beneficiary shall be and remain no more than an unsecured, general creditor of such
3.2 DEFERRAL CONTRIBUTIONS. Each Eligible Executive may irrevocably elect to have Deferral Contributions made on his or her behalf for a Plan
Year (or, if Section 2.2 is applicable, for the remainder of such Plan Year), by completing in a timely manner a Deferral Election, Bonus Deferral Election
and/or Performance Share Deferral Election and an Investment Election, and following other election procedures as provided in Section 2.3. Subject to any
modifications, additions or exceptions that the Plan Administrator, in its sole discretion, deems necessary, appropriate or helpful, the following terms shall
apply to such Deferral Elections, Bonus Deferral Elections and Performance Share Deferral Elections:
(a) EFFECTIVE DATE.
(i) BASE SALARY DEFERRAL ELECTION. Subject to Section 3.2(a)(iv), a Deferral Election made by a Participant shall be effective beginning with the
first regular, periodic paycheck earned and paid (A) with respect to a Participant participating for the entire Plan Year, in such Plan Year, and (B) with
respect to a Participant participating for a portion of a Plan Year, in accordance with Section 2.2, in the calendar month following the calendar month in
which the Participant makes his or her Deferral Election.
(ii) BONUS DEFERRAL ELECTION. Subject to Section 3.2(a)(iv), a Bonus Deferral Election made by a Participant shall be effective (A) with respect to a
Participant participating for the entire Plan Year, for the Annual Bonus earned during the Plan Year, and (B) with respect to a Participant participating for a
portion of Plan Year in accordance with Section 2.2, for the Annual Bonus earned during such portion of the Plan Year.
(iii) PERFORMANCE SHARE DEFERRAL ELECTION. Subject to Section 3.2(a)(iv), a Performance Share Deferral Election shall be effective for the
Performance Share Payment earned during the Performance Period with respect to which such election is made.
(iv) OTHER REQUIREMENTS. To be effective, a Participant's Deferral Election, Bonus Deferral Election and/or Performance Share Deferral Election, as
applicable, must be made by the Election Deadline. If an Eligible Executive fails to deliver a Deferral Election, a Bonus Deferral Election or a Performance
Share Deferral Election, or to complete any of the other requisite election procedures for a Plan Year, in a timely manner, the Eligible Executive shall be
deemed to have elected not to participate in the Plan for that Plan Year.
(b) TERM. Each Deferral Election for a Plan Year that is made by a Participant shall remain in effect with respect to the specified portion of all Base Salary
earned and paid or payable during such Plan Year (or, in the case of a Participant participating for a portion of the Plan Year in accordance with Section 2.2,
with respect to the specified portion of all Base Salary paid or payable during the remainder of such Plan Year) but shall not apply to any subsequent Plan
Year. Each Bonus Deferral Election for a Plan Year that is made by a Participant shall be effective with respect to the specified portion of Annual Bonus, if
any, earned during such Plan Year (or, in the case of a Participant participating for a portion of the Plan Year in accordance with Section 2.2, for the
specified portion of the Annual Bonus earned during the remainder of such Plan Year), but shall not apply to any subsequent Plan Year. Each Performance
Share Deferral Election that is made by a Participant shall be effective with respect to the specified portion of Performance Share Payment, if any, under the
Performance Share Award to which it relates, but shall not apply to any subsequent Performance Share Award.
(c) BASE SALARY DEFERRAL ELECTION AMOUNT. Each Eligible Executive's Deferral Election for a Plan Year shall specify a whole percentage of
his or her Compensation to be deferred from his or her Base Salary for such year. Notwithstanding the foregoing, the Plan Administrator, in its sole
discretion, may allow an Eligible Executive to complete a Deferral Election specifying either (i) a whole dollar amount of his or her Base Salary to be
deferred, with such amount being expressed in increments of $1,000 (or such other increments as the Plan Administrator may determine), or (ii) a
percentage of his or her Base Salary paid or payable for each payroll period, with the amount of such deferral to vary as the Eligible Executive's Base Salary
changes. The maximum amount of Base Salary that an Eligible Executive may defer for any Plan Year shall be fifty−five percent (55%) of the Eligible
Executive's Compensation for such Plan Year rounded up to the next highest thousand dollars. The total amount elected to be deferred shall be withheld
from such Eligible Executive's regular, periodic paychecks of Base Salary in substantially equal installments (except as contemplated in clause (ii) above)
throughout the Plan Year. If any election would result in a fractional dollar amount to be withheld, the Plan Administrator, in its sole discretion, may
determine that such amount will be rounded up to the next highest whole dollar. Notwithstanding any provision of the Plan or a Deferral Election to the
contrary, however, the amount withheld from any payment of Base Salary shall be reduced automatically, if necessary, so that it does not exceed the amount
of such payment net of all withholding, allotments and deductions, other than any reduction pursuant to such Deferral Election. No amounts shall be
withheld during any period an individual ceases to receive Base Salary as an actively employed Eligible Executive for any reason during the Plan Year
except that, in the case of an individual on an approved paid leave of absence as an Eligible Executive (including a paid leave of absence under a short term
disability plan of a Participating Company), amounts shall be withheld from such leave of absence payments and otherwise treated in the same manner as if
such payments constituted Base Salary under the Plan. No adjustment shall be made in the amount to be withheld from any subsequent payment of Base
Salary for a Plan Year to compensate for any missed or reduced withholding amounts above.
(d) BONUS DEFERRAL ELECTION AMOUNT. The Bonus Deferral Election of each Eligible Executive shall specify a whole percentage of such Eligible
Executive's Annual Bonus to be deferred, not to exceed fifty percent (50%) and not less than five percent (5%). Notwithstanding any provision of the Plan
or a Bonus Deferral Election to the contrary, the amount withheld from any bonus payment shall be reduced automatically, if necessary, so that it does not
exceed the amount of such payment net of all withholding, allotments and deductions other than any reduction pursuant to such Bonus Deferral Election.
(e) PERFORMANCE SHARE DEFERRAL ELECTION AMOUNT. The Performance Share Deferral Election of each Eligible Executive shall specify a
whole percentage of such Eligible Executive's Performance Share Payment to be deferred, not less than five percent (5%) and not to exceed one hundred
percent (100%) of the amount actually payable to the Eligible Executive with respect to the Performance Share Award. Notwithstanding any provision of
the Plan or a Performance Share Deferral Election to the contrary, the amount withheld from any Performance Share Payment shall be reduced
automatically, if necessary, so that it does not exceed the amount of such payment net of all withholding, allotments and deductions, other than any
reduction pursuant to such Performance Share Deferral Election.
(f) REVOCATION. Once made, a Participant may not revoke a Deferral Election or Bonus Deferral Election for a Plan Year, or a Performance Share
Deferral Election with respect to a Performance Share Award.
(g) CREDITING OF DEFERRED COMPENSATION.
(i) STOCK UNIT OPTION AND/OR INTEREST INCOME OPTION. If a Participant elects to have all or any portion of his or her deferred Base Salary for
a Plan Year deemed invested in the Stock/Interest Option pursuant to Section 4.2(b), the Plan Administrator shall credit to the Participant's Account for such
Plan Year, as of the first day of such Plan Year (or, as of the effective date of participation of a Participant described in Section 2.2), the entire amount of
the Participant's deferred Base Salary for such Plan Year. If a Participant elects to have all or any portion of his or her deferred Annual Bonus for a Plan
Year deemed invested in the Stock/Interest Option pursuant to Section 4.2(b), the Plan Administrator shall credit to the Participant's Account, as of the first
day of the Plan Year in which the Participant's Annual Bonus for such Plan Year is actually paid under the Short Term Bonus Plan, the entire amount
deferred. If a Participant elects to have all or any portion of his or her deferred Performance Share Payment for a Performance Period deemed invested in the
Stock/Interest Option pursuant to Section 4.2(b), the Plan Administrator shall credit to the Participant's Account, as of the first day of the Plan Year next
following the end of the Performance Period, the entire amount deferred. If for any reason the entire amount of the Participant's Deferral Contributions so
elected are not made, the Participant's Account shall be automatically adjusted, retroactively to the first day of such Plan Year (or, if applicable, the effective
date of participation of a Participant described in Section 2.2), to reflect the amount of Deferral Contributions actually made from Base Salary (or pursuant
to Section 3.4, if applicable), Annual Bonus and/or Performance Share Payment during the Plan Year. Notwithstanding the foregoing, if a Participant
described in this Section 3.2(g)(i) is an "Executive Officer" (as such term is defined in the Stock Plan), the Plan Administrator shall instead credit to such
Participant's Account for a Plan Year, as of the last day of the applicable Plan Year, the entire amount of the Participant's Base Salary, Annual Bonus and/or
Performance Share Payment actually deferred, retroactively to the first day of such Plan Year (or, if applicable, the effective date of participation of a
Participant described in Section 2.2).
(ii) MUTUAL FUND OPTION. If a Participant elects to have all or any portion of his or her deferred Base Salary for a Plan Year deemed invested in the
Mutual Fund Option pursuant to Section 4.2(b), the Plan Administrator shall credit to the Participant's Account, as of each Valuation Date that is on (or as
soon as administratively practicable after) a payroll period payment date, the Deferral Contribution made from Base Salary for such payroll period. If a
Participant elects to have all or any portion of his or her deferred Annual Bonus for a Plan Year deemed invested in the Mutual Fund Option pursuant to
Section 4.2(b), the Plan Administrator shall credit to the Participant's Account, as of the Valuation Date that is on (or as soon as administratively practicable
after) the date the Participant's Annual Bonus for the prior Plan Year is actually paid under the Short Term Bonus Plan, the amount of such Annual Bonus
that is deferred. If a Participant elects to have all or any portion of his or her deferred Performance Share Payment for a Performance Period deemed
invested in the Mutual Fund Option pursuant to Section 4.2(b), the Plan Administrator shall credit to the Participant's Account, as of each Valuation Date
that is on (or as soon as administratively practicable after) the date that each separate payment to be made to the Participant with respect to the Performance
Share Award is actually payable, the amount of such Performance Share Award that is deferred.
3.3 DEFERRAL ELECTIONS AND MULTIPLE PARTICIPATING COMPANIES. Any Deferral Election, Bonus Deferral Election and/or Performance
Share Deferral Election which is timely executed and delivered to the Plan Administrator shall be effective to defer Base Salary, Annual Bonus and/or a
Performance Share Payment earned by the Participant from the Participating Company employing such Participant at the time of the Participant's election or
any other Participating Company employing such Participant during the Plan Year for which the Deferral Election, Bonus Deferral Election is effective, or
during the Performance Period with respect to which a Performance Share Deferral Election is effective. In particular, a Participant (i) who timely executes
and delivers a Deferral Election, Bonus Deferral Election and/or Performance Share Deferral Election while employed by one Participating Company and
subsequently transfers to another Participating Company, or (ii) who terminates employment and subsequently becomes employed by another Participating
Company, shall have the Base Salary, Annual Bonus and/or Performance Share Payment that is paid or payable to such Participant by both Participating
Companies reduced under the terms of the Deferral Election, Bonus Deferral Election and/or Performance Share Deferral Election and the Plan as if the
transfer or termination and reemployment had not occurred; provided that, as provided in Section 3.2(c), no amounts of Base Salary shall be withheld to the
extent they are attributable to any portion of the Plan Year during which such Participant is not receiving Base Salary as an Eligible Executive of a
3.4 TERMINATION UNDER SEVERANCE ARRANGEMENT. Notwithstanding the foregoing, a Participant eligible to participate in a severance plan or
arrangement sponsored by a Participating Company which provides for a lump−sum severance payment upon termination of employment may elect, on
such form and at such time and in such manner as shall be prescribed by the Plan Administrator, to reduce the amount of a lump−sum severance payment to
which the Participant may become entitled under such plan or arrangement. The amount of such reduction shall not exceed the dollar amount by which the
Participant's deferred Base Salary for the Plan Year in which such termination occurs would not have been made at the time of termination of employment,
and the amount so elected shall for all purposes be treated as Deferral Contributions made under the Plan.
3.5 VESTING. A Participant shall at all times be fully vested in the Participant's Deferral Contributions and all investment earnings attributable thereto.
3.6 DEBITING OF DISTRIBUTIONS. As of each Valuation Date, the Plan Administrator shall debit each Participant's Account for any amount distributed
from such Account since the immediately preceding Valuation Date.
ARTICLE IV
DETERMINATION AND CREDITING OF INVESTMENT RETURN
4.1 GENERAL INVESTMENT PARAMETERS. The rate of return credited to each Participant's Account shall be determined on the basis of the
Investment Option(s) selected by the Participant. The terms of this selection process and the manner in which investment return is credited are set forth in
this Article IV.
4.2 PARTICIPANT DIRECTION OF DEEMED INVESTMENTS. Each Participant generally may direct that his or her Deferral Contributions for each
Plan Year shall be deemed invested in the Stock/Interest Option, the Mutual Fund Option or both, and then may select among the options offered within that
selection. The Participant may make a separate election for his or her deferred Base Salary and deferred Annual Bonus for each Plan Year and deferred
Performance Share Payment for each Performance Period. Notwithstanding the foregoing, the Mutual Fund Option may be elected only by Participants
who, as of June 30 of the year in which the Investment Election is made, satisfy the BellSouth stock ownership target then applicable to each such
Participant under BellSouth's executive stock ownership guidelines. Once made, a Participant may not revoke an election between the Stock/Interest Option
and the Mutual Fund Option.
(a) NATURE OF PARTICIPANT DIRECTION. A Participant's election of the deemed investments shall be for the sole purpose of determining the rate of
return to be credited to such Participant's Account for such Plan Year, and shall not be treated or interpreted in any manner whatsoever as a requirement or
direction to actually invest assets in Company Stock, an interest income fund, a mutual fund or any other investment media. The Plan, as an unfunded,
nonqualified deferred compensation plan, at no time shall have any actual investment of assets relative to the benefits or Accounts hereunder.
(b) INVESTMENT OF CONTRIBUTIONS. In conjunction with completing each of a Deferral Election, Bonus Deferral Election and/or Performance Share
Deferral Election for a Plan Year, an Eligible Executive shall complete a separate Investment Election in which he or she elects the whole percentages of the
amount deferred under such Deferral Election, such Bonus Deferral Election or such Performance Share Deferral Election (as applicable) to be deemed
invested in (i) the Stock/Interest Option, and/or (ii) if available with respect to the executive, the Mutual Fund Option; provided, the combined percentages
allocated to the Stock/Interest Option and the Mutual Fund Option shall equal one hundred percent (100%). Once a Participant makes an election between
the Stock/Interest Option and the Mutual Fund Option for a Plan Year, he or she may not change such election. If the Eligible Executive elects the
Stock/Interest Option, he or she must then select his or her investment mix as described in subsection (i) hereinbelow; and if the Eligible Executive elects
the Mutual Fund Option, he or she must then select his or her investment mix as described in subsection (ii) hereinbelow.
(i) STOCK UNIT OPTION AND/OR INTEREST INCOME OPTION. An Eligible Executive who selects the Stock/Interest Option with respect to eitherhis
or her deferred Base Salary, deferred Annual Bonus or deferred Performance Share Payment shall specify any whole percentage to be invested in the Stock
Unit Option and any whole percentage to be invested in the Interest Income Option, such that the total of the two percentages equals the total percentage of
his deferred amount allocated to the Stock/Interest Option.
ii) MUTUAL FUND OPTION. An Eligible Executive, who as of June 30 of the year during which the Investment Election is made satisfies BellSouth's
stock ownership target applicable to such Executive under BellSouth's executive stock ownership guidelines, and who selects the Mutual Fund Option with
respect to either his or her deferred Base Salary, deferred Annual Bonus or deferred Performance Share Payment, shall specify the whole percentage of such
Deferral Contributions that will be deemed invested in each Mutual Fund. Within the Mutual Fund Option, a Participant may make subsequent Investment
Elections to change the percentage of such Deferral Contributions that will be deemed invested in each Mutual Fund, and any such election shall apply to all
such Deferral Contributions credited to his or her Account after the election becomes effective. Any such election shall be effective on or as soon as
administratively practicable after the Plan Administrator's receipt of the election. All such Investment Elections shall be (A) made in whole percentages, (B)
effected at the 4:00 p.m. Eastern Time closing price of the applicable Mutual Fund on each applicable Valuation Date, and (C) subject to such additional
rules as the Plan Administrator may prescribe.
(c) INVESTMENT OF EXISTING ACCOUNT BALANCES.
(i) STOCK/INTEREST OPTION. A Participant with all or part of his or her Account deemed invested in the Stock/Interest Option may not make an
Investment Election (i) changing all or any portion of such deemed investment among investment alternatives within the Stock/Interest Option, or (ii)
transferring all or any portion of such deemed investments to the Mutual Fund Option. Thus, once an amount is deemed invested in the Stock/Interest
Option, it shall continue to be so invested until such amount is distributed.
(ii) MUTUAL FUND OPTION. A Participant with all or part of his or her Account deemed invested in the Mutual Fund Option may make subsequent
Investment Elections changing the percentage of that portion of his or her existing Account balance that will be deemed invested in each Mutual Fund. Any
such election shall be effected at the 4:00 p.m. Eastern Time closing price of the applicable Mutual Fund on the Valuation Date that is coincident with or as
soon as administratively practicable after the Plan Administrator's receipt of such election. All such Investment Elections shall be made in whole
percentages, and subject to such additional rules as the Plan Administrator may prescribe. No Investment Election may be made changing a deemed
investment from the Mutual Fund Option to the Stock/Interest Option.
(d) INVESTMENT SUBACCOUNTS. For the sole purpose of tracking a Participant's Investment Elections and calculating deemed investment earnings
attributable to a Participant's Account for a Plan Year pursuant to the terms of this Article IV, the Plan Administrator shall establish and maintain for such
Participant for such Plan Year a Stock Unit Subaccount, an Interest Income Subaccount and a Mutual Fund Subaccount, as necessary, the total of which
shall equal such Participant's Account for such Plan Year.
4.3 STOCK UNIT OPTION.
a) STOCK UNIT SUBACCOUNT. To the extent an Eligible Executive makes an Investment Election in accordance with Section 4.2 to have his or her
Deferral Contributions for a Plan Year deemed to be invested in the Stock Unit Option, the Participant's Stock Unit Subaccount shall be credited (subject to
the adjustment described in subsection 3.2(g), if applicable) with the applicable portion of each such Deferral Contribution at the time such Deferral
Contribution is credited to the Participant's Account under Section 3.2(g), with a number of Stock Units equal to the number of full and fractional shares of
Company Stock that could have been purchased with such portion of the Eligible Executive's Deferral Contribution at the average of the high and low sales
prices of one share of Company Stock on the New York Stock Exchange for the last Business Day of each of the three (3) calendar months immediately
preceding the first day of such Plan Year.
(b) CASH DIVIDENDS. As of each date on which BellSouth has paid a cash dividend on Company Stock, the number of Stock Units credited to a
Participant's Stock Unit Subaccount shall be increased by a number of additional Stock Units equal to the quotient of (i) the amount of dividends that would
have been paid on the number of shares of Company Stock equivalent to the number of Stock Units credited to such subaccount on such dividend payment
date, divided by (ii) the 4:00 p.m. Eastern Time closing price of Company Stock on the New York Stock Exchange on such dividend payment date.
(c) ADJUSTMENTS. In the event of any change in outstanding shares of Company Stock, by reclassification, recapitalization, merger, consolidation,
spinoff, combination, exchange of shares, stock split, reverse stock split or otherwise, or in the event of the payment of a stock dividend on Company Stock,
or in the event of any other increase or decrease in the number of outstanding shares of Company Stock, other than the issuance of shares for value received
by BellSouth or the redemption of shares for value, the Plan Administrator shall adjust the number and/or form of Stock Units in the manner it deems
appropriate in its reasonable judgment to reflect such event, including substituting or adding publicly traded shares of companies other than the Company as
a basis for determining Stock Units. The Plan Administrator similarly shall make such adjustments as it deems are appropriate in its reasonable judgment in
the form, including the basis of measurement, of Stock Units in the event all shares of Company Stock cease for any reason to be outstanding or to be
actively traded on the New York Stock Exchange. In the event the Plan Administrator determines in its reasonable judgment that it would not be possible to
appropriately reflect an event under this paragraph (c) by adjusting the number and/or form of Stock Units, the Plan Administrator shall establish a special
Valuation Date appropriate to such event for all Stock Unit Subaccounts and shall cause such subaccounts, as so valued, automatically to be converted into
Interest Income Subaccounts, which thereafter shall be subject to Section 4.4.
4 INTEREST INCOME OPTION.
(a) INTEREST INCOME SUBACCOUNT. To the extent that an Eligible Executive makes an Investment Election in accordance with Section 4.2 to have
his or her Deferral Contributions for a Plan Year deemed to be invested in the Interest Income Option, the Participant's Interest Income Subaccount shall be
credited (subject to the adjustment described in subsection 3.2(g), if applicable) with the applicable portion of each such Deferral Contribution at the time
such Deferral Contribution is credited to the Participant's Account under Section 3.2(g).
(b) CREDITING OF DEEMED INTEREST. As of each Valuation Date, the Plan Administrator shall credit a Participant's Interest Income Subaccounts
with the amount of earnings applicable thereto for the period since the immediately preceding Valuation Date. Such crediting of earnings for each Interest
Income Subaccount shall be effected, as follows:
(i) AMOUNT INVESTED. The Plan Administrator shall determine the amount of (A) in the case of an Interest Income Subaccount
established in connection with a Deferral Election or Bonus Deferral Election for the Plan Year, or established in connection with a Performance Share
Deferral Election for the Performance Period, such Participant's Deferral Contributions credited to such Participant's Interest Income Subaccount as of
the immediately preceding Valuation Date, plus any investment earnings credited to such Participant's Interest Income Subaccount since the
immediately preceding Valuation Date; and (B) in the case of an Interest Income Subaccount for a prior Plan Year, the balance of such Participant's
Interest Income Subaccount as of the immediately preceding Valuation Date, plus any investment earnings credited to such Participant's Interest
Income Subaccount since the immediately preceding Valuation Date, minus the amount distributed from such Participant's Interest Income Subaccount
since the immediately preceding Valuation Date; and
(ii) DETERMINATION OF AMOUNT. The Plan Administrator then shall apply the Credited Interest Rate for such Plan Year to such
Participant's adjusted Interest Income Subaccount (as determined in subparagraph (i) hereof), and the total amount of investment earnings resulting
therefrom shall be credited to such Participant's Interest Income Subaccount as of such Valuation Date.
4.5 MUTUAL FUND OPTION.
(a) MUTUAL FUNDS. From time to time, the Plan Administrator shall select two (2) or more Mutual Funds for purposes of determining the rate of return
on amounts deemed invested in the Mutual Fund Option in accordance with the terms of the Plan. The Plan Administrator may change, add or remove
Mutual Funds on a prospective basis at any time and in any manner it deems appropriate.
(b) MUTUAL FUND SUBACCOUNT. To the extent that an Eligible Executive makes an Investment Election in accordance with Section 4.2 to have his or
her Deferral Contributions for a Plan Year deemed to be invested in the Mutual Fund Option, the Participant's Mutual Fund Subaccount shall be credited
with the applicable portion of each such Deferral Contribution at the time such Deferral Contribution is credited to the Participant's Account under Section
3.2(g), with the investment in each Mutual Fund based on the 4:00 p.m. Eastern Time closing price of the Mutual Fund on such crediting date.
(c) CREDITING OF EARNINGS. As of each Valuation Date, the Plan Administrator shall determine the value of a Participant's Mutual Fund Subaccount
(as well as the earnings and/or losses thereof) by valuing the deemed investments in the Mutual Funds as if such subaccount actually were invested therein.
4.6 GOOD FAITH VALUATION BINDING. In determining the value of Accounts, the Plan Administrator shall exercise its best judgment, and all such
determinations of value (in the absence of bad faith) shall be binding upon all Participants and their Beneficiaries.
4.7 ERRORS AND OMISSIONS IN ACCOUNTS. If an error or omission is discovered in the Account of a Participant or in the amount of a Participant's
Deferral Contributions, the Plan Administrator, in its sole discretion, shall cause appropriate, equitable adjustments to be made as soon as administratively
practicable following the discovery of such error or omission.
ARTICLE V
PAYMENT OF ACCOUNT BALANCES
5.1 BENEFIT AMOUNTS.
(a) BENEFIT ENTITLEMENT. As the benefit under the Plan, each Participant (or Beneficiary) shall be entitled to receive the total amount of the
Participant's Accounts, determined as of the most recent Valuation Date, and payable at such times and in such forms as described in this Article V.
(b) VALUATION OF BENEFIT. For purposes hereof, each Account of a Participant as of any Valuation Date shall be equal to the total value such
Participant's Stock Unit Subaccount, Interest Income Subaccount and Mutual Fund Subaccount.
(c) CONVERSION OF STOCK UNITS INTO DOLLARS. For purposes of converting some or all of a Participant's Stock Units into a dollar amount in
valuing the Participant's Accounts as of any Valuation Date, the value of each Stock Unit shall be equal to the average of the high and low sales prices of
one share of Company Stock on the New York Stock Exchange for the last Business Day of each of the three (3) months of the calendar quarter most
recently completed on or prior to such Valuation Date.
5.2 ELECTIONS OF TIMING AND FORM. In conjunction with, and at the time of, completing a Deferral Election and/or Bonus Deferral Election for
each Plan Year, or a Performance Share Deferral Election for each Performance Share Award, an Eligible Executive shall select the timing and form of the
distribution that will apply to the Account for such Eligible Executive's Deferral Contributions (and deemed investment earnings attributable thereto) for
such Plan Year. The terms applicable to this selection process are as follows:
(a) TIMING. For a Participant's Account for each Plan Year, such Participant may elect that distribution will be made or commence as of any January 1
following the Plan Year of deferral; provided, a Participant may not select a benefit payment or commencement date for such Account that is (i) earlier than
(A) in the case of a Deferral Election, the second January 1 following the end of the Plan Year for which the deferral is made, or (B) in the case of a Bonus
Deferral Election or a Performance Share Deferral Election, the third January 1 following the end of the Plan Year for which the deferral is made; or (ii)
later than the twentieth (20th) January 1 following the end of the Plan Year of deferral.
(b) FORM OF DISTRIBUTION. For a Participant's Account for each Plan Year, such Participant may elect that distribution will be paid in one of the
following forms:
(i) a single lump−sum cash payment; or
(ii) substantially equal annual installments (adjusted for investment earnings between payments in the manner described in Article IV) over a period of two
(2) to ten (10) years.
(c) MULTIPLE SELECTIONS. An Eligible Executive may select a different benefit payment or commencement date and/or a different form of distribution
with respect to his or her Account for each Plan Year. For ease of administration, the Plan Administrator may combine Accounts and subaccounts of a
Participant to which the same benefit payment/commencement date and the same form of distribution apply.
5.3 BENEFIT PAYMENTS TO A PARTICIPANT.
(a) TIMING. A Participant shall receive or begin receiving a distribution of each of his or her Accounts as of the earlier of (i) the January 1 selected by such
Participant with respect to each such Account pursuant to the terms of Section 5.2(a); or (ii) the January 1 immediately following the date that such
Participant's employment with BellSouth and all Affiliates ends for any reason, unless the Participant returns to employment with BellSouth or one of the
Affiliates before such January 1; provided, however, that with respect to a Bonus Deferral Election or Performance Share Deferral Election of a Participant
whose employment has so terminated, distribution shall be made or begin no sooner than the January 1 immediately following the date on which the Annual
Bonus or Performance Share Payment is payable. An amount payable "as of" any January 1 shall be made as soon as practicable after such January 1 and,
unless extenuating circumstances arise, no later than January 31.
(b) FORM OF DISTRIBUTION. A Participant shall receive or begin receiving a distribution of each of his or her Accounts in cash in the form selected by
such Participant with respect to such Account pursuant to the terms of Section 5.2(b).
(c) VALUATION OF SINGLE LUMP−SUM PAYMENTS. The amount of a Participant's single lump−sum distribution of any of his or her Accounts as of
any applicable January 1 shall be equal to the value of such Account as of the Valuation Date immediately preceding the date on which such distribution is
paid.
(d) VALUATION OF INSTALLMENT PAYMENTS. For purposes of determining the amount of any installment payment to be paid as of a January 1
from an Account, the following shall apply:
(i) for any amount of such Account attributable to an Interest Income Subaccount as of the immediately preceding Valuation Date, such amount shall
be divided by the number of remaining installments to be paid from such Account (including the current installment);
(ii) for any portion of such Account attributable to a Stock Unit Subaccount as of the immediately preceding Valuation Date, the total number of Stock
Units constituting such portion shall be divided by the number of remaining installments to be paid from such Account (including the current
installment), and the resulting number of Stock Units shall be converted into a dollar amount (pursuant to the terms of Section 5.1(c)) as of such
Valuation Date; and
(iii) for any amount of such Account attributable to a Mutual Fund Subaccount as of the immediately preceding Valuation Date, such amount shall be
divided by the number of remaining installments to be paid from such Account (including the current installment).
5.4 DEATH BENEFITS.
(a) GENERAL. If a Participant dies before receiving the entire amount of his or her benefit under the Plan, such Participant's Beneficiary shall receive
distribution of amounts remaining in the Participant's Accounts in the form, as elected by the Participant on a Beneficiary designation form described in
Section 5.6, of either:
(i) a single lump−sum cash payment of the entire balance in the Participant's Accounts as of the January 1 immediately following the date of the
Participant's death; or
(ii) (A) for Accounts with respect to which distribution has not commenced under Section 5.2 at the time of the Participant's death, substantially equal
annual installments (adjusted for investment earnings between payments in the manner described in Article IV) over a period of two (2) to ten (10)
years, commencing as of the January 1 immediately following the Participant's death; and (B) for Accounts with respect to which distribution has
commenced in the form of installments described in Section 5.2(b)(ii) at the time of the Participant's death, continuation of such installment payment
schedule.
An amount payable "as of" any January 1 shall be made as soon as practicable after such January 1 and, unless extenuating circumstances arise, no later than
January 31.
(b) VALUATION. The valuation rules described in subsections 5.3(c) and 5.3(d) shall apply to payments described in this Section 5.4.
5.5 WITHDRAWALS.
(a) HARDSHIP WITHDRAWALS. Upon receipt of an application for a hardship withdrawal and the Plan Administrator's decision, made in its sole
discretion, that a Participant has suffered a Financial Hardship, the Plan Administrator shall cause the payment of a distribution to such Participant. Such
distribution shall be paid in a single−sum payment in cash as soon as administratively feasible after the Plan Administrator determines that the Participant
has incurred a Financial Hardship. The amount of such single−sum payment shall be limited to the amount reasonably necessary to meet the Participant's
requirements resulting from the Financial Hardship. The amount of such distribution shall reduce the Participant's Account balance as provided in Section
3.6.
(b) WITHDRAWALS WITH FORFEITURE. Notwithstanding any other provisions of this Article V to the contrary, a Participant may elect, at any time
prior to the distribution of his or her entire benefit hereunder, to withdraw all or a portion of (i) the remaining amount credited to one or more of his or her
Accounts, determined as of the Valuation Date on which such distribution is processed, in twenty−five percent (25%) increments; plus (ii) the amount of
Deferral Contributions made since such Valuation Date. Such distribution shall be made in the form of a single−sum payment in cash, as prescribed in
Section 5.2(b)(i), as soon as administratively feasible after the date of the Participant's election under this subsection (b). At the time such distribution is
made, an amount equal to ten percent (10%) of the amount distributed shall be permanently and irrevocably forfeited (and, if the distribution request is more
than ninety percent (90%) of such Participant's Account, the forfeiture amount shall be deducted from his or her distribution amount to the extent there
otherwise will be an insufficient remaining Account balance from which to deduct this forfeiture). In addition, the Participant receiving such distribution
shall immediately cease to make Deferral Contributions with respect to a Deferral Election for the Plan Year in which such withdrawal occurs, and any
Bonus Deferral Election and/or Performance Share Deferral Election with respect to such Plan Year shall be disregarded, and such Participant shall not be
eligible to resume Deferral Contributions until the first day of the Plan Year coinciding with or immediately following the one year anniversary of such
distribution.
5.6 BENEFICIARY DESIGNATION.
(a) GENERAL. A Participant shall designate a Beneficiary or Beneficiaries for all of his or her Accounts by completing the form prescribed for this purpose
for the Plan by the Plan Administrator and submitting such form as instructed by the Plan Administrator. Once a Beneficiary designation is made, it shall
continue to apply until and unless such Participant makes and submits a new Beneficiary designation form for this Plan.
(b) NO DESIGNATION OR DESIGNEE DEAD OR MISSING. In the event that:
(i) a Participant dies without designating a Beneficiary;
(ii) the Beneficiary designated by a Participant is not surviving or in existence when payments are to be made or commence to such designee under the Plan,
and no contingent Beneficiary, surviving or in existence, has been designated; or
(iii) the Beneficiary designated by a Participant cannot be located by the Plan Administrator within 1 year from the date benefit payments are to be made or
commence to such designee; then, in any of such events, the Beneficiary of such Participant shall be the Participant's surviving spouse, if any can then be
located, and if not, the estate of the Participant, and the entire balance in the Participant's Accounts shall be paid to such Beneficiary in the form of a single
lump−sum cash payment described in Section 5.4(a)(i).
(c) DEATH OF BENEFICIARY. If a Beneficiary who survives the Participant, and to whom payment of Plan benefits commences, dies before complete
distribution of the Participant's Accounts, the entire balance in such Accounts shall be paid to the estate of such Beneficiary in the form of a single
lump−sum cash payment as of the January 1 immediately following such Beneficiary's death. An amount payable "as of" any January 1 shall be made as
soon as practicable after such January 1 and, unless extenuating circumstances arise, no later than January 31. The valuation rules described in subsection
5.3(c) shall apply to any payments described in this subsection 5.6(c).
5.7 TAXES. If the whole or any part of any Participant's or Beneficiary's benefit hereunder shall become subject to any estate, inheritance, income,
employment or other tax which a Participating Company shall be required to pay or withhold, the Participating Company shall have the full power and
authority to withhold and pay such tax out of any monies or other property in its hand for the account of the Participant or Beneficiary whose interests
hereunder are so affected. Prior to making any payment, the Participating Company may require such releases or other documents from any lawful taxing
authority as it shall deem necessary.
ARTICLE VI
CLAIMS
6.1 INITIAL CLAIM. Claims for benefits under the Plan may be filed with the Plan Administrator on forms or in such other written documents, as the Plan
Administrator may prescribe. The Plan Administrator shall furnish to the claimant written notice of the disposition of a claim within 90 days after the
application therefor is filed. In the event the claim is denied, the notice of the disposition of the claim shall provide the specific reasons for the denial,
citations of the pertinent provisions of the Plan, and, where appropriate, an explanation as to how the claimant can perfect the claim and/or submit the claim
for review.
6.2 APPEAL. Any Participant or Beneficiary who has been denied a benefit shall be entitled, upon request to the Plan Administrator, to appeal the denial of
his or her claim. The claimant (or his or her duly authorized representative) may review pertinent documents related to the Plan and in the Plan
Administrator's possession in order to prepare the appeal. The request for review, together with written statement of the claimant's position, must be filed
with the Plan Administrator no later than 60 days after receipt of the written notification of denial of a claim provided for in Section 6.1. The Plan
Administrator's decision shall be made within 60 days following the filing of the request for review. If unfavorable, the notice of the decision shall explain
the reasons for denial and indicate the provisions of the Plan or other documents used to arrive at the decision.
6.3 SATISFACTION OF CLAIMS. The payment of the benefits due under the Plan to a Participant or Beneficiary shall discharge the Participating
Company's obligations under the Plan, and neither the Participant nor the Beneficiary shall have any further rights under the Plan upon receipt by the
appropriate person of all benefits. In addition, (i) if any payment is made to a Participant or Beneficiary with respect to benefits described in the Plan from
any source arranged by BellSouth or a Participating Company including, without limitation, any fund, trust, insurance arrangement, bond, security device,
or any similar arrangement, such payment shall be deemed to be in full and complete satisfaction of the obligation of the Participating Company under the
Plan to the extent of such payment as if such payment had been made directly by such Participating Company; and (ii) if any payment from a source
described in clause (i) shall be made, in whole or in part, prior to the time payment would be made under the terms of the Plan, such payment shall be
deemed to satisfy such Participating Company's obligation to pay Plan benefits beginning with the benefit which would next become payable under the Plan
and continuing in the order in which benefits are so payable, until the payment from such other source is fully recovered. The Plan Administrator or such
Participating Company, as a condition to making any payment, may require such Participant or Beneficiary to execute a receipt and release therefor in such
form as shall be determined by the Plan Administrator or the Participating Company. If receipt and release is required but the Participant or Beneficiary (as
applicable) does not provide such receipt and release in a timely enough manner to permit a timely distribution in accordance with the general timing of
distribution provisions in the Plan, the payment of any affected distribution may be delayed until the Plan Administrator or the Participating Company
receives a proper receipt and release.
ARTICLE VII
SOURCE OF FUNDS
Each Participating Company shall provide the benefits described in the Plan from its general assets. However, to the extent that funds in one or more trusts,
or other funding arrangement(s), allocable to the benefits payable under the Plan are available, such assets may be used to pay benefits under the Plan. If
such assets are not sufficient or are not used to pay all benefits due under the Plan, then the appropriate Participating Company shall have the obligation, and
the Participant or Beneficiary, who is due such benefits, shall look to such Participating Company to provide such benefits. No Participant or Beneficiary
shall have any interest in the assets of any trust, or other funding arrangement, or in the general assets of the Participating Companies other than as a
general, unsecured creditor. Accordingly, a Participating Company shall not grant a security interest in the assets held by the trust in favor of the
Participants, Beneficiaries or any creditor.
ARTICLE VIII
PLAN ADMINISTRATION
8.1 ACTION BY THE PLAN ADMINISTRATOR.
(a) INDIVIDUAL ADMINISTRATOR. If the Plan Administrator is an individual, such individual shall act and record his or her actions in writing. Any
matter concerning specifically such individual's own benefit or rights hereunder shall be determined by the Board or its designee.
(b) ADMINISTRATIVE COMMITTEE. If the Plan Administrator is a committee, action of the Plan Administrator may be taken with or without a meeting
of committee members; provided, action shall be taken only upon the vote or other affirmative expression of a majority of the committee members qualified
to vote with respect to such action. If a member of the committee is a Participant or Beneficiary, such member shall not participate in any decision which
solely affects his or her own benefit under the Plan. For purposes of administering the Plan, the Plan Administrator shall choose a secretary who shall keep
minutes of the committee's proceedings and all records and documents pertaining to the administration of the Plan. The secretary may execute any
certificate or any other written direction on behalf of the Plan Administrator.
8.2 RIGHTS AND DUTIES OF THE PLAN ADMINISTRATOR. The Plan Administrator shall administer the Plan and shall have all powers necessary to
accomplish that purpose, including (but not limited to) the following:
(a) to construe, interpret and administer the Plan;
(b) to make determinations required by the Plan, and to maintain records regarding Participants' and Beneficiaries' benefits hereunder;
(c) to compute and certify to Participating Companies the amount and kinds of benefits payable to Participants and Beneficiaries, and to determine the time
and manner in which such benefits are to be paid;
(d) to authorize all disbursements by a Participating Company pursuant to the Plan;
(e) to maintain all the necessary records of the administration of the Plan;
(f) to make and publish such rules and procedures for the regulation of the Plan as are not inconsistent with the terms hereof;
(g) to delegate to other individuals or entities from time to time the performance of any of its duties or responsibilities hereunder; and
(h) to hire agents, accountants, actuaries, consultants and legal counsel to assist in operating and administering the Plan.
The Plan Administrator shall have the exclusive right to construe and interpret the Plan, to decide all questions of eligibility for benefits and to determine
the amount of such benefits, and its decisions on such matters shall be final and conclusive on all parties.
8.3 BOND; COMPENSATION. The Plan Administrator and (if applicable) its members shall serve as such without bond and without compensation for
services hereunder. All expenses of the Plan Administrator shall be paid by the Participating Companies.
ARTICLE IX
AMENDMENT AND TERMINATION
9.1 AMENDMENTS. Subject to Section 9.3, the Board shall have the right, in its sole discretion, to amend the Plan in whole or in part at any time and from
time to time. In addition, the Plan Administrator shall have the right, in its sole discretion, to amend the Plan at any time and from time to time so long as
such amendment is not of a material nature.
9.2 TERMINATION OF PLAN. Subject to Section 9.3, BellSouth reserves the right to discontinue and terminate the Plan at any time, for any reason. Any
action to terminate the Plan shall be taken by the Board and such termination shall be binding on all Participating Companies, Participants and Beneficiaries.
9.3 LIMITATION ON AUTHORITY. Except as otherwise provided in this Section 9.3, no contractual right created by and under any Deferral Election,
Bonus Deferral Election or Performance Share Deferral Election made prior to the effective date of any amendment or termination shall be abrogated by any
amendment or termination of the Plan, absent the express, written consent of the Participant who made the Deferral Election, Bonus Deferral Election or
Performance Share Deferral Election.
(a) PLAN AMENDMENTS. The limitation on authority described in this Section 9.3 shall not apply to any amendment of the Plan which is reasonably
necessary, in the opinion of counsel, (i) to preserve the intended income tax consequences of the Plan described in Section 10.1, (ii) to preserve the status of
the Plan as an unfunded, nonqualified deferred compensation plan for the benefit of a select group of management or highly compensated employees and
not subject to the requirements of Part 2, Part 3 and Part 4 of Title I of ERISA, or (iii) to guard against other material adverse impacts on Participants and
Beneficiaries, and which, in the opinion of counsel, is drafted primarily to preserve such intended consequences, or status, or to guard against such adverse
impacts.
(b) PLAN TERMINATION. The limitation on authority described in this Section 9.3 shall not apply to any termination of the Plan as the result of a
determination that, in the opinion of counsel, (i) Participants and Beneficiaries generally are subject to federal income taxation on Deferral Contributions or
other amounts in Participant Accounts prior to the time of distribution of amounts under the Plan, or (ii) the Plan is generally subject to Part 2, Part 3 or Part
4 of Title I of ERISA, but in either case only if such termination is reasonably necessary, in the opinion of counsel, to guard against material adverse
impacts on Participants and Beneficiaries, or BellSouth or Participating Companies. Upon such termination, the entire amount in each Participant's
Accounts shall be distributed in a single lump−sum distribution as soon as practicable after the date on which the Plan is terminated. In such event, the Plan
Administrator shall declare that the date of termination (or, if such day is not a Business Day, the last Business Day immediately preceding such day) shall
be a Valuation Date and all distributions shall be made based on the value of the Accounts as of such Valuation Date.
(c) OPINIONS OF COUNSEL. In each case in which an opinion of counsel is contemplated in this Section 9.3, such opinion shall be in writing and
delivered to the Board, rendered by a nationally recognized law firm selected or approved by the Board.
ARTICLE X
MISCELLANEOUS
10.1 TAXATION. It is the intention of BellSouth that the benefits payable hereunder shall not be deductible by the Participating Companies nor taxable for
federal income tax purposes to Participants or Beneficiaries until such benefits are paid by the Participating Company to such Participants or Beneficiaries.
When such benefits are so paid, it is the intention of the Participating Companies that they shall be deductible by the Participating Companies under Code
Section 162.
10.2 WITHHOLDING. All payments made to a Participant or Beneficiary hereunder shall be reduced by any applicable federal, state or local withholding
or other taxes or charges as may be required under applicable law.
10.3 NO EMPLOYMENT CONTRACT. Nothing herein contained is intended to be nor shall be construed as constituting a contract or other arrangement
between a Participating Company and any Participant to the effect that the Participant will be employed by the Participating Company or continue to be an
employee for any specific period of time.
10.4 HEADINGS. The headings of the various articles and sections in the Plan are solely for convenience and shall not be relied upon in construing any
provisions hereof. Any reference to a section shall refer to a section of the Plan unless specified otherwise.
10.5 GENDER AND NUMBER. Use of any gender in the Plan will be deemed to include all genders when appropriate, and use of the singular number will
be deemed to include the plural when appropriate, and vice versa in each instance.
10.6 ASSIGNMENT OF BENEFITS. The right of a Participant or Beneficiary to receive payments under the Plan may not be anticipated, alienated, sold,
assigned, transferred, pledged, encumbered, attached or garnished by creditors of such Participant or Beneficiary, except by will or by the laws of descent
and distribution and then only to the extent permitted under the terms of the Plan.
10.7 LEGALLY INCOMPETENT. The Plan Administrator, in its sole discretion, may direct that payment be made to an incompetent or disabled person,
for whatever reason, to the guardian of such person or to the person having custody of such person, without further liability on the part of a Participating
Company for the amount of such payment to the person on whose account such payment is made.
10.8 ENTIRE DOCUMENT. This Plan document sets forth the entire Plan and all rights and limits. Except for a formal amendment hereto, no document
shall modify the Plan or create any additional rights or benefits.
10.9 GOVERNING LAW. The Plan shall be construed, administered and governed in all respects in accordance with applicable federal law (including
ERISA) and, to the extent not preempted by federal law, in accordance with the laws of the State of Georgia. If any provisions of this instrument shall be
held by a court of competent jurisdiction to be invalid or unenforceable, the remaining provisions hereof shall continue to be fully effective.
EXHIBIT A
Participating Companies
(as of January 1, 2005)
Participating Company Names _________________________Effective Date______________
1. BellSouth Advertising & Publishing Corporation January 1, 2002
2. BellSouth Corporation January 1, 2002
3. BellSouth D.C., Inc. January 1, 2002
4. BellSouth International, Inc. January 1, 2002
5. BellSouth Telecommunications, Inc. January 1, 2002

Exhibit 10−qq
BELLSOUTH CORPORATION
STOCK AND INCENTIVE COMPENSATION PLAN
(As Amended June 28, 2004)
1. Purpose.
The purpose of the Plan is to strengthen BellSouth Corporation, a Georgia corporation (the "Company"), by providing an incentive to its and its
Subsidiaries' (as defined herein) employees, officers, consultants and directors, thereby encouraging them to devote their abilities and industry to the success
of the Company's business enterprise. It is intended that this purpose be achieved by extending to employees (including future employees who have
received a formal written offer of employment), officers, consultants and directors of the Company and its Subsidiaries an added incentive for high levels of
performance and unusual efforts through the grant of Restricted Stock, Restricted Stock Units, Options, Stock Appreciation Rights, Dividend Equivalent
Rights, Performance Awards, Annual Incentive Awards and Share Awards (as each term is herein defined).
2. Definitions.
For purposes of the Plan:
2.1 "Administrator" means the Compensation Committee, the Director Committee or the Company Administrator, as applicable.
2.2 "Affiliate" means any entity directly or indirectly controlled by, controlling or under common control with the Company.
2.3 "Agreement" means a written or electronic agreement between the Company and a Participant evidencing the grant of an Option or Award and
setting forth the terms and conditions thereof.
2.4 "Annual Bonus Pool" has the meaning set forth in Section 10.2.
2.5 "Annual Incentive Award" has the meaning set forth in Section 10.2.
2.6 "Award" means a grant of Restricted Stock, a Restricted Stock Unit, a Stock Appreciation Right, a Performance Award, a Dividend Equivalent Right,
a Share Award, an Annual Incentive Award or any or all of them.
2.7 "Beneficiary" means an individual designated as a Beneficiary pursuant to Section 21.4.
2.8 "Board" means the Board of Directors of the Company.
2.9 "Cause" means: (a) intentional failure to perform reasonably assigned duties, (b) dishonesty or willful misconduct in the performance of duties, (c)
involvement in a transaction in connection with the performance of duties to the Company or any of its Subsidiaries which transaction is adverse to the
interests of the Company or any of its Subsidiaries and which is engaged in for personal profit or (d) willful violation of any law, rule or regulation in
connection with the performance of duties (other than traffic violations or similar offenses).
2.10 "Change in Capitalization" means any increase or reduction in the number of Shares, any change (including, but not limited to, in the case of a
spin−off, dividend or other distribution in respect of Shares, a change in value) in the Shares or any exchange of Shares for a different number or kind of
Shares or other securities of the Company or another corporation, by reason of a reclassification, recapitalization, merger, consolidation, reorganization,
spin−off, split−up, issuance of warrants, rights or debentures, stock dividend, stock split or reverse stock split, cash dividend, property dividend,
combination or exchange of Shares, repurchase of Shares, change in corporate structure or otherwise.
2.11 "Change in Control" means the occurrence of any of the following:
(a) An acquisition (other than directly from the Company) of any voting securities of the Company (the "Voting Securities") by any "Person" (as the term
"person" is used for purposes of Section 13(d) or 14(d) of the Exchange Act), immediately after which such Person has "Beneficial Ownership" (within the
meaning of Rule 13d−3 promulgated under the Exchange Act) of more than twenty percent (20%) of (i) the then−outstanding Shares or (ii) the combined
voting power of the Company's then−outstanding Voting Securities; provided, however, that in determining whether a Change in Control has occurred
pursuant to this paragraph (a), the acquisition of Shares or Voting Securities in a Non−Control Acquisition (as hereinafter defined) shall not constitute a
Change in Control. A "Non−Control Acquisition" shall mean an acquisition by (i) an employee benefit plan (or a trust forming a part thereof) maintained by
(A) the Company or (B) any corporation or other Person the majority of the voting power, voting equity securities or equity interest of which is owned,
directly or indirectly, by the Company (for purposes of this definition, a "Related Entity"), (ii) the Company or any Related Entity, or (iii) any Person in
connection with a Non−Control Transaction (as hereinafter defined);
(b) The individuals who, as of the effective date of the Plan, are members of the Board (the "Incumbent Board"), cease for any reason to constitute at least a
majority of the members of the Board or, following a Merger (as hereinafter defined), the board of directors of (i) the corporation resulting from such
Merger (the "Surviving Corporation"), if fifty percent (50%) or more of the combined voting power of the then−outstanding voting securities of the
Surviving Corporation is not Beneficially Owned, directly or indirectly, by another Person (a "Parent Corporation") or (ii) if there is one or more than one
Parent Corporation, the ultimate Parent Corporation; provided, however, that, if the election, or nomination for election by the Company's common
shareholders, of any new director was approved by a vote of at least two−thirds of the Incumbent Board, such new director shall, for purposes of the Plan,
be considered a member of the Incumbent Board; and provided, further, however, that no individual shall be considered a member of the Incumbent Board
if such individual initially assumed office as a result of an actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the
Board (a "Proxy Contest"), including by reason of any agreement intended to avoid or settle any Proxy Contest; or
(c) The consummation of:
(i) A merger, consolidation or reorganization (x) with or into the Company or (y) in which securities of the Company are issued (a "Merger"), unless such
Merger is a "Non−Control Transaction." A "Non−Control Transaction" shall mean a Merger in which:
(A) the shareholders of the Company immediately before such Merger own directly or indirectly immediately following such Merger at least sixty percent
(60%) of the combined voting power of the outstanding voting securities of (1) the Surviving Corporation, if there is no Parent Corporation or (2) if there is
one or more than one Parent Corporation, the ultimate Parent Corporation;
(B) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such Merger constitute at
least a majority of the members of the board of directors of (1) the Surviving Corporation, if there is no Parent Corporation, or (2) if there is one or more
than one Parent Corporation, the ultimate Parent Corporation; and
(C) no Person other than (1) the Company or another corporation that is a party to the agreement of Merger, (2) any Related Entity, or (3) any employee
benefit plan (or any trust forming a part thereof) that, immediately prior to the Merger, was maintained by the Company or any Related Entity, or (4) any
Person who, immediately prior to the Merger had Beneficial Ownership of twenty percent (20%) or more of the then outstanding Shares or Voting
Securities, has Beneficial Ownership, directly or indirectly, of twenty percent (20%) or more of the combined voting power of the outstanding voting
securities or common stock of (x) the Surviving Corporation, if there is no Parent Corporation, or (y) if there is one or more than one Parent Corporation,
the ultimate Parent Corporation; provided, however, that any Person described in clause (4) of this subsection (C) may not, immediately following the
Merger, Beneficially Own more than thirty percent (30%) of the combined voting power of the outstanding voting securities of the Surviving Corporation or
the Parent Corporation, as applicable, for the Merger to constitute a Non−Control Transaction;
(ii) A complete liquidation or dissolution of the Company; or
(iii) The sale or other disposition of all or substantially all of the assets of the Company and its Subsidiaries taken as a whole to any Person (other than (x) a
transfer to a Related Entity or (y) the distribution to the Company's shareholders of the stock of a Related Entity or any other assets).
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any Person (the "Subject Person") acquired Beneficial
Ownership of more than the permitted amount of the then outstanding Shares or Voting Securities as a result of the acquisition of Shares or Voting
Securities by the Company which, by reducing the number of Shares or Voting Securities then outstanding, increases the proportional number of shares
Beneficially Owned by the Subject Persons; provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the
acquisition of Shares or Voting Securities by the Company and, after such share acquisition by the Company, the Subject Person becomes the Beneficial
Owner of any additional Shares or Voting Securities and such Beneficial Ownership increases the percentage of the then outstanding Shares or Voting
Securities Beneficially Owned by the Subject Person, then a Change in Control shall occur.
If a Participant's employment is terminated by the Company without Cause prior to the date of a Change in Control but the Participant reasonably
demonstrates that the termination (A) was at the request of a third party who has indicated an intention or taken steps reasonably calculated to effect a
Change in Control or (B) otherwise arose in connection with, or in anticipation of, a Change in Control which has been threatened or proposed, such
termination shall be deemed to have occurred after a Change in Control for purposes of the Plan provided a Change in Control shall actually have occurred.
2.12 "Chief Executive Officer" means the Chief Executive Officer of the Company.
2.13 "Code" means the Internal Revenue Code of 1986, as amended.
2.14 "Company" means BellSouth Corporation, a Georgia corporation.
2.15 "Company Administrator" means the Chief Executive Officer, the Company's senior officer responsible for human resources matters or such other
person or persons as are designated by the Compensation Committee to administer the Plan on behalf of Participants who are neither Non−Employee
Directors nor Covered Employees.
2.16 "Compensation Committee" means the Executive Nominating and Compensation Committee of the Board, or any successor committee of the Board
which administers the Plan as provided in Section 3.
2.17 "Covered Employee" means, with respect to any grant of an Option or Award, a Participant who (a) the Compensation Committee deems may be or
become a covered employee as defined in Section 162(m)(3) of the Code for any year that such Option or Award may result in remuneration to the
Participant and for which year such Participant may receive remuneration over $1 million which would not be deductible under Section 162(m) of the Code
but for the provisions of the Plan and any other "qualified performance−based compensation" plan (as defined under Section 162(m) of the Code) of the
Company; provided, however, that the Compensation Committee may determine that a Participant has ceased to be a Covered Employee prior to settlement
of any Option or Award or (b) is designated as a Covered Employee for purposes of the Plan.
2.18 "Director" means a member of the Board.
2.19 "Director Committee" means the Director Nominating and Corporate Governance Committee of the Board, or any successor committee of the Board
which administers the Plan as provided in Section 3.
2.20 "Disability":
(a) shall have the meaning set forth in the Company's principal management long−term disability plan under which the Participant is covered, if any; or
(b) if the Participant is not covered under the Company's principal management long−term disability plan, shall have the meaning set forth in any other
Company−sponsored long−term disability plan under which the Participant is covered; or
(c) if Participant is not covered under any such plan, shall mean disability within the meaning of Section 22(e)(3) of the Code.
2.21 "Division" means any of the operating units or divisions of the Company designated as a Division by the Administrator.
2.22 "Dividend Equivalent Right" means a right to receive cash or Shares based on the value of dividends that are paid with respect to Shares.
2.23 "Effective Date" means the date of approval of the Plan by the Company's shareholders` pursuant to Section 21.5.
2.24 "Eligible Director" means a Director who is not an employee of the Company or any Subsidiary.
2.25 "Eligible Individual" means any of the following individuals who is designated by the Administrator as eligible to receive Options or Awards subject
to the conditions set forth herein: (a) any Director, officer or employee of the Company or a Subsidiary, (b) any individual to whom the Company or a
Subsidiary has extended a formal, written offer of employment, and (c) any consultant or advisor of the Company or a Subsidiary.
2.26 "Eligible Officer" means an Officer designated by the Compensation Committee under Section 10.1.
2.27 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
2.28 "Fair Market Value" on any date means (a) for purposes of Sections 4.2, 5.7, 6.5, 8.2, 9.1(d) and 21.2, and for purposes of Sections 5.2 and 6.3(b)
with respect to Covered Employees and Directors, the average of the high and low sales prices of the Shares on such date on the New York Stock Exchange,
or if there are no sales on such day, for the most recent prior day in which a Share was sold on the New York Stock Exchange, and (b) for all other purposes
means a price that is based on the opening, closing, actual, high, low, or average selling prices of a Share on the applicable date, the preceding trading day,
the next succeeding trading day, or an average of trading days, as determined by the Compensation Committee in its discretion. Such definition(s) of Fair
Market Value shall be specified in each Agreement and may differ depending on whether Fair Market Value is in reference to the grant, exercise, vesting,
settlement, or payout of an Award. If, however, the accounting standards used to account for equity awards granted to Participants are substantially
modified subsequent to the effective date of the Plan, the Compensation Committee shall have the ability to determine an Award's Fair Market Value based
on the relevant facts and circumstances.
2.29 "Good Reason" means a reduction in a Participant's annual base salary as in effect immediately before a Change in Control or the failure to pay
abonus award to which a Participant is otherwise entitled under any of the
short−term or long−term incentive plans in which the Participant participates (or any successor incentive compensation plans) at the time such awards are
usually paid.
2.30 "Incentive Stock Option" means an Option satisfying the requirements of Section 422 of the Code and designated by the Administrator as an
Incentive Stock Option.
2.31 "Net Income" for a fiscal year means the amount reported as "income before cumulative effect of accounting changes" in the Company's Form 10−K
filed with the Securities and Exchange Commission for that fiscal year, as determined in accordance with generally accepted accounting principles.
2.32 "Nonemployee Director" means a Director who is a "nonemployee director" within the meaning of Rule 16b−3 promulgated under the Exchange
Act.
2.33 "Nonqualified Stock Option" means an Option which is not an Incentive Stock Option.
2.34 "Operating Cash Flow" for a fiscal year means the amount reported as "net cash provided by operating activities" in the Company's Form 10−K filed
with the Securities and Exchange Commission for that fiscal year, as determined in accordance with generally accepted accounting principles.
2.35 "Option" means a Nonqualified Stock Option and/or an Incentive Stock Option.
2.36 "Outside Director" means a Director who is an "outside director" within the meaning of Section 162(m) of the Code and the regulations promulgated
thereunder.
2.37 "Parent" means any corporation which is a "parent corporation" (within the meaning of Section 424(e) of the Code) with respect to the Company.
2.38 "Participant" means a person to whom an Award or Option has been granted under the Plan.
2.39 "Performance Awards" means Performance Shares, Performance Units, Performance−Based Restricted Stock or any or all of them.
2.40 "Performance−Based Compensation" means any Option or Award that is intended to constitute "performance based compensation" within the
meaning of Section 162(m)(4)(C) of the Code and the regulations promulgated thereunder.
2.41 "Performance−Based Restricted Stock" means Shares issued or transferred to an Eligible Individual under Section 9.2.
2.42 "Performance Cycle" means the time period specified by the Administrator at the time Performance Awards are granted during which the
performance of the Company, a Subsidiary or a Division will be measured.
2.43 "Performance Objectives" means the objectives set forth in Sections 9.3 and 10.2 for the purpose of determining the degree of payout and/or vesting
of Performance Awards and Annual Incentive Awards, respectively.
2.44 "Performance Shares" means Performance Shares granted to an Eligible Individual under Section 9.1.
2.45 "Performance Units" means Performance Units granted to an Eligible Individual under Section 9.1.
2.46 "Plan" means the BellSouth Corporation Stock and Incentive Compensation Plan, as amended from time to time.
2.47 "Prior Plans" means the Amended and Restated BellSouth Corporation Stock Plan, the BellSouth Corporation Stock Option Plan, the BellSouth
Executive Long Term Incentive Plan, the BellSouth Corporation Non−Employee Director Stock Option Plan and the BellSouth Corporation Non−Employee
Director Stock Plan.
2.48 "Restricted Stock" means Shares issued or transferred to an Eligible Individual pursuant to Section 8.
2.49 "Restricted Stock Units" means rights granted to an Eligible Individual under Section 8 representing a number of hypothetical Shares.
2.50 "Share Award" means an Award of Shares granted pursuant to Section 11.
2.51 "Shares" means the common stock, par value $1 per share, of the Company and any other securities into which such Shares are changed or for which
such Shares are exchanged.
2.52 "Stock Appreciation Right" means a right to receive all or some portion of the increase, if any, in the value of the Shares as provided in Section 6
hereof.
2.53 "Subsidiary" means (a) except as provided in subsection (b) below, any corporation which is a subsidiary corporation within the meaning of Section
424(f) of the Code with respect to the Company, and (b) in relation to the eligibility to receive Options or Awards other than Incentive Stock Options and
continued employment for purposes of Options and Awards (unless the Administrator determines otherwise), any entity, whether or not incorporated, in
which the Company directly or indirectly owns at least ten percent (10%) or more of the outstanding equity or other ownership interests.
2.54 "Ten−Percent Shareholder" means an Eligible Individual who, at the time an Incentive Stock Option is to be granted to him or her, owns (within the
meaning of Section 422(b)(6) of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the
Company, a Parent or a Subsidiary.
2.55 "Termination Date" means the date that is ten (10) years after the Effective Date, unless the Plan is earlier terminated by the Board pursuant to
Section 17 hereof.
3. Administration.
3.1 Committees; Procedure. The Plan shall be administered by the Compensation Committee with respect to Covered Employees, by the Director
Committee with respect to Eligible Directors and, subject to rules, regulations and guidelines that may be established by the Compensation Committee, by
the Company Administrator with respect to all other Eligible Individuals. The Compensation Committee or the Director Committee may adopt such rules,
regulations and guidelines as it deems are necessary or appropriate for the administration of the Plan. Subject to such rules, regulations or guidelines, the
Company Administrator shall have the power to adopt rules, regulations and guidelines to permit it to administer the Plan with respect to Eligible
Individuals other than Covered Employees. The Compensation Committee shall consist of at least two (2) Directors, each of whom shall be a Nonemployee
Director and an Outside Director. For purposes of the preceding sentence, if one or more members of the Compensation Committee is not a Nonemployee
Director and an Outside Director but recuses himself or herself or abstains from voting with respect to a particular action taken by the Compensation
Committee, then the Compensation Committee, with respect to that action, shall be deemed to consist only of the members of the Compensation Committee
who have not recused themselves or abstained from voting.
3.2 Administrator Powers. Subject to the express terms and conditions set forth herein, the Administrator shall have the power from time to time to:
(a) determine those Eligible Individuals to whom Options shall be granted under the Plan and the number of such Options to be granted and prescribe the
terms and conditions (which need not be identical) of each such Option, including the exercise price per Share, the vesting schedule and the duration of each
Option, and make any amendment or modification to any Option Agreement consistent with the terms of the Plan;
(b) select those Eligible Individuals to whom Awards shall be granted under the Plan and determine the number of Shares or amount of cash in respect of
which each Award is granted, the terms and conditions (which need not be identical) of each such Award, and make any amendment or modification to any
Agreement consistent with the terms of the Plan;
(c) construe and interpret the Plan and the Options and Awards granted hereunder and establish, amend and revoke rules and regulations for the
administration of the Plan, including, but not limited to, correcting any defect or supplying any omission, or reconciling any inconsistency in the Plan or in
any Agreement, in the manner and to the extent it shall deem necessary or advisable, including so that the Plan and the operation of the Plan comply with
Rule 16b−3 under the Exchange Act, the Code to the extent applicable and other applicable law, and otherwise to make the Plan fully effective;
(d) determine the duration and purposes for leaves of absence which may be granted to a Participant on an individual basis without constituting a
termination of employment or service for purposes of the Plan;
(e) exercise its discretion with respect to the powers and rights granted to it as set forth in the Plan; and
(f) generally, exercise such powers and perform such acts as are deemed necessary or advisable to promote the best interests of the Company with respect
to the Plan.
All decisions and determinations by the Administrator in the exercise of the above powers shall be final, binding and conclusive upon the Company, its
Subsidiaries, the Participants and all other persons having any interest therein.
3.3 Notwithstanding anything herein to the contrary, with respect to Participants working outside the United States, the Administrator may determine the
terms and conditions of Options and Awards and make such adjustments to the terms thereof as are necessary or advisable to fulfill the purposes of the Plan
taking into account matters of local law or practice, including tax and securities laws of jurisdictions outside the United States.
3.4 Indemnification. No member of the Compensation Committee, the Director Committee or the Company Administrator shall be liable for any action,
failure to act, determination or interpretation made in good faith with respect to the Plan or any transaction hereunder. The Company hereby agrees to
indemnify each member of the Compensation Committee, the Director Committee and the Company Administrator for all costs and expenses and, to the
extent permitted by applicable law, any liability incurred in connection with defending against, responding to, negotiating for the settlement of or otherwise
dealing with any claim, cause of action or dispute of any kind arising in connection with any actions in administering the Plan or in authorizing or denying
authorization to any transaction hereunder.
3.5 No Repricing of Options or Stock Appreciation Rights. The Administrator shall have no authority to make any adjustment (other than in connection
with a stock dividend, recapitalization or other transaction where an adjustment is permitted or required under the terms of the Plan) or amendment, and no
such adjustment or amendment shall be made, that reduces or would have the effect of reducing the exercise price of an Option or Stock Appreciation Right
previously granted under the Plan, whether through amendment, cancellation or replacement grants, or other means, unless the Company's shareholders
shall have approved such adjustment or amendment.
4. Stock Subject to the Plan; Grant Limitations.
4.1 Aggregate Number of Shares Authorized for Issuance. Subject to any adjustment as provided in the Plan, the Shares to be issued under the Plan may
be, in whole or in part, authorized but unissued Shares or issued Shares which shall have been reacquired by the Company and held by it as treasury shares.
The aggregate number of Shares that may be made the subject of Awards or Options granted under the Plan shall not exceed eighty million (80,000,000), no
more than five million (5,000,000) of which may be granted as Incentive Stock Options.
4.2 Individual Limit. The aggregate number of Shares that may be the subject of Options, Stock Appreciation Rights, Performance−Based Restricted
Stock and Performance Shares, together with the Share−Equivalent number of Performance Units, granted to an Eligible Individual in any calendar year
may not exceed two and one−half million (2,500,000). For purposes of this Section 4, the Share−Equivalent number of Performance Units shall be equal to
the quotient of (i) the aggregate dollar amount in which the Performance Units are denominated, divided by (ii) the Fair Market Value of a Share on the date
of grant.
4.3 Calculating Shares Available.
(a) Upon the granting of an Award or an Option, the number of Shares available under this Section 4 for the granting of further Awards and Options shall
be reduced as follows:
(i) In connection with the granting of an Option, Stock Appreciation Right (other than a Stock Appreciation Right Related to an Option), Restricted Stock
Unit, Share Award or Award of Restricted Stock, Performance−Based Restricted Stock or Performance Shares, the number of Shares available under this
Section 4 for the granting of further Options and Awards shall be reduced by the number of Shares in respect of which the Option or Award is granted or
denominated; provided, however, that if any Option is exercised by tendering Shares, either actually or by attestation, to the Company as full or partial
payment of the Option Price, the maximum number of Shares available under this Section 4 shall be increased by the number of Shares so tendered.
(ii) In connection with the granting of a Performance Unit, the number of Shares available under this Section 4 for the granting of further Options and
Awards initially shall be reduced by Shares Equivalent number of Performance Units granted, with a corresponding adjustment if the Performance Unit is
ultimately settled in whole or in part with a different number of Shares.
(iii) In connection with the granting of a Dividend Equivalent Right, the number of Shares available under this Section 4 shall not be reduced; provided,
however, that if Shares are issued in settlement of a Dividend Equivalent Right, the number of Shares available for the granting of further Options and
Awards under this Section 4 shall be reduced by the number of Shares
so issued.
(b) Notwithstanding Section 4.3(a), in the event that an Award is granted that, pursuant to the terms of the Agreement, cannot be settled in Shares, the
aggregate number of Shares that may be made the subject of Awards or Options granted under the Plan shall not be reduced. Whenever any outstanding
Option or Award or portion thereof expires, is canceled, is settled in cash (including the settlement of tax withholding obligations using Shares) or is
otherwise terminated for any reason without having been exercised or payment having been made in respect of the entire Option or Award, the number of
Shares available under this Section 4 shall be increased by the number of Shares previously allocable under Section 4.3(a) to the expired, canceled, settled
or otherwise terminated portion of the Option or Award. In addition, upon settlement of a Stock Appreciation Right in Shares, the excess of the number of
Shares covered by the Stock Appreciation Right over the number of Shares issued in settlement of the Stock Appreciation Right may again be the subject of
Options or Awards granted hereunder.
5. Stock Options.
5.1 Authority of Administrator. Subject to the provisions of the Plan, the Administrator shall have full and final authority to select those Eligible
Individuals who will receive Options, and the terms and conditions of the grant to any such Eligible Individual shall be set forth in an Agreement. Incentive
Stock Options may be granted only to Eligible Individuals who are employees of the Company or any Subsidiary.
5.2 Exercise Price. The purchase price or the manner in which the exercise price is to be determined for Shares under each Option shall be determined
by the Administrator and set forth in the Agreement; provided, however, that the exercise price per Share under each Option shall not be less than the
greater of (i) the par value of a Share and (ii) 100% of the Fair Market Value of a Share on the date the Option is granted (110% in the case of an Incentive
Stock Option granted to a Ten−Percent Shareholder); provided, further, however, that Fair Market Value with respect to Options granted to Covered
Employees and Directors shall be determined in accordance with Section 2.28(a).
5.3 Maximum Duration. Options granted hereunder shall be for such term as the Administrator shall determine; provided that an Incentive Stock Option
shall not be exercisable after the expiration of ten (10) years from the date it is granted (five (5) years in the case of an Incentive Stock Option granted to a
Ten−Percent Shareholder) and a Nonqualified Stock Option shall not be exercisable after the expiration of ten (10) years from the date it is granted;
provided, further, however, that unless the Administrator provides otherwise an Option (other than an Incentive Stock Option) may, upon the death of the
Participant prior to the expiration of the Option, be exercised for up to one (1) year following the date of the Participant's death even if such period extends
beyond ten (10) years from the date the Option is granted. The Administrator may, subsequent to the granting of any Option, extend the term thereof, but in
no event shall the term as so extended exceed the maximum term provided for in the preceding sentence.
5.4 Vesting. Subject to Section 5.9, each Option shall become exercisable in such installments (which need not be equal) and at such times as may be
designated by the Administrator and set forth in the Agreement. To the extent not exercised, installments shall accumulate and be exercisable, in whole or
in part, at any time after becoming exercisable, but not later than the date the Option expires. The Administrator may accelerate the exercisability of any
Option or portion thereof at any time.
5.5 Limitations on Incentive Stock Options. To the extent that the aggregate Fair Market Value (determined as of the date of the grant) of Shares with
respect to which Incentive Stock Options granted under the Plan and "incentive stock options" (within the meaning of Section 422 of the Code) granted
under all other plans of the Company or its Subsidiaries (in either case determined without regard to this Section 5.5) are exercisable by a Participant for the
first time during any calendar year exceeds $100,000, such Incentive Stock Options shall be treated as Nonqualified Stock Options. In applying the
limitation in the preceding sentence in the case of multiple Option grants, unless otherwise required by applicable law, Options which were intended to be
Incentive Stock Options shall be treated as Nonqualified Stock Options according to the order in which they were granted such that the most recently
granted Options are first treated as Nonqualified Stock Options.
5.6 Transferability.
(a) Except as otherwise provided in this Section 5.6, no Option shall be transferable by the Participant otherwise than by will or by the laws of descent and
distribution, and an Option shall be exercisable during the lifetime of such Participant only by the Participant or his or her guardian or legal
representative. The Administrator may set forth in the Agreement evidencing an Option (other than an Incentive Stock Option) at the time of grant or
thereafter, that the Option, or a portion thereof, may be transferred to any third party, including but not limited to, members of the Participant's immediate
family, to trusts solely for the benefit of such immediate family members and to partnerships in which such family members and/or trusts are the only
partners. In addition, for purposes of the Plan, unless otherwise determined by the Administrator at the time of grant or thereafter, a transferee of an Option
pursuant to this Section 5.6(a) shall be deemed to be the Participant; provided that the rights of any such transferee thereafter shall be nontransferable except
that such transferee, where applicable under the terms of the transfer by the Participant, shall have the right previously held by the Participant to designate a
Beneficiary. For this purpose, immediate family means the Participant's spouse, parents, children, stepchildren and grandchildren and the spouses of such
parents, children, stepchildren and grandchildren. The terms of an Option shall be final, binding and conclusive upon the beneficiaries, executors,
administrators, heirs and successors of the Participant. Notwithstanding Section 21.2, or the terms of any Agreement, the Company or any Subsidiary shall
not withhold any amount attributable to the Participant's tax liability from any payment of cash or Shares to a transferee or transferee's Beneficiary under
this Section 5.6(a), but may require the payment of an amount equal to the Company's or any Subsidiary's withholding tax obligation as a condition to
exercise or as a condition to the release of cash or Shares upon exercise or upon transfer of the option.
(b) The approval of this Plan by the Company's shareholders shall constitute an amendment of each of the Prior Plans in a manner such that the provisions
of Section 5.6(a) above shall be incorporated into each of the Prior Plans and any inconsistent provisions in the Prior Plans shall be deleted. Outstanding
option grants under the Prior Plans shall be interpreted in a manner consistent with the amendment to the Prior Plans described in the preceding
sentence. The election by a Participant or Beneficiary (including for this purpose a participant or beneficiary under the Prior Plans) to transfer any such
options pursuant to this Section 5.6(b) shall constitute consent by the Participant or Beneficiary to such amendment if such consent is required.
5.7 Method of Exercise. The exercise of an Option shall be made only by giving written notice delivered in person or by mail to the person designated
by the Company, specifying the number of Shares to be exercised and, to the extent applicable, accompanied by payment therefor and otherwise in
accordance with the Agreement pursuant to which the Option was granted. The exercise price for any Shares purchased pursuant to the exercise of an
Option shall be paid in any or any combination of the following forms: (a) cash or its equivalent (e.g., a check) or (b) the transfer, either actually or by
attestation, to the Company of Shares that have been held by the Participant for at least six (6) months (or such lesser period as may be permitted by the
Administrator) prior to the exercise of the Option, such transfer to be upon such terms and conditions as determined by the Administrator or (c) in the form
of other property as determined by the Administrator. In addition, Options may be exercised through a registered broker−dealer pursuant to such cashless
exercise procedures that are, from time to time, deemed acceptable by the Administrator. Any Shares transferred to the Company as payment of the
exercise price under an Option shall be valued at their Fair Market Value on the date of exercise of such Option. If requested by the Administrator, the
Participant shall deliver the Agreement evidencing the Option to the Company, which shall endorse thereon a notation of such exercise and return such
Agreement to the Participant. No fractional Shares (or cash in lieu thereof) shall be issued upon exercise of an Option and the number of Shares that may be
purchased upon exercise shall be rounded to the nearest number of whole Shares.
5.8 Rights of Participants. No Participant shall be deemed for any purpose to be the owner of any Shares subject to any Option unless and until (a) the
Option shall have been exercised pursuant to the terms thereof, (b) the Company shall have issued and delivered Shares (whether or not certificated) to the
Participant, a securities broker acting on behalf of the Participant or such other nominee of the Participant, and (c) the Participant's name, or the name of his
or her broker or other nominee, shall have been entered as a shareholder of record on the books of the Company. Thereupon, the Participant shall have full
voting, dividend and other ownership rights with respect to such Shares, subject to such terms and conditions as may be set forth in the applicable
Agreement.
5.9 Effect of Change in Control. Unless otherwise provided in an Agreement, (a) in the event of a Change in Control, all Options outstanding on the date
of such Change in Control shall become immediately and fully exercisable and (b) in the event that a Participant's (other than a Director's) employment with
the Company and its Subsidiaries terminates within two (2) years following a Change in Control as a result of a termination by the Company without Cause
or by the Participant for Good Reason, each Option held by the Participant that was exercisable as of the date of termination of the Participant's employment
shall remain exercisable for a period ending not before the earlier of (a) the first anniversary of the termination of the Participant's employment or service
and (b) the expiration of the stated term of the Option.
6. Stock Appreciation Rights.
6.1 Grant. The Administrator may in its discretion, either alone or in connection with the grant of an Option, grant Stock Appreciation Rights to Eligible
Individuals in accordance with the Plan, the terms and conditions of which shall be set forth in an Agreement. A Stock Appreciation Right may be granted
(a) at any time if unrelated to an Option or (b) if related to an Option, either at the time of grant or at any time thereafter during the term of the Option.
6.2 Stock Appreciation Right Related to an Option. If granted in connection with an Option, a Stock Appreciation Right shall cover the same Shares
covered by the Option (or such lesser number of Shares as the Administrator may determine) and shall, except as provided in this Section 6, be subject to
the same terms and conditions as the related Option.
a) Exercise; Transferability. A Stock Appreciation Right granted in connection with an Option (i) shall be exercisable at such time or times and only to the
extent that the related Option is exercisable, (ii) shall be exercisable only if the Fair Market Value of a Share on the date of exercise exceeds the exercise
price specified in the Agreement evidencing the related Incentive Stock Option and (iii) shall not be transferable except to the extent the related Option is
transferable.
(b) Amount Payable. Upon the exercise of a Stock Appreciation Right related to an Option, the Participant shall be entitled to receive an amount
determined by multiplying (i) the excess of the Fair Market Value of a Share on the date preceding the date of exercise of such Stock Appreciation Right
over the per Share exercise price under the related Option, by (ii) the number of Shares as to which such Stock Appreciation Right is being exercised.
Notwithstanding the foregoing, the Administrator may limit in any manner the amount payable with respect to any Stock Appreciation Right by including
such a limit in the Agreement evidencing the Stock Appreciation Right at the time it is granted.
(c) Treatment of Related Options and Stock Appreciation Rights Upon Exercise. Upon the exercise of a Stock Appreciation Right granted in connection
with an Option, the Option shall be canceled to the extent of the number of Shares as to which the Stock Appreciation Right is exercised, and upon the
exercise of an Option granted in connection with a Stock Appreciation Right, the Stock Appreciation Right shall be canceled to the extent of the number of
Shares as to which the Option is exercised or surrendered.
6.3 Stock Appreciation Right Unrelated to an Option. A Stock Appreciation Right unrelated to an Option shall cover such number of Shares as the
Administrator shall determine.
(a) Terms; Duration. Stock Appreciation Rights unrelated to Options shall contain such terms and conditions as to exercisability, vesting and duration as
the Administrator shall determine, but in no event shall they have a term of greater than ten (10) years; provided that unless the Administrator provides
otherwise a Stock Appreciation Right may, upon the death of the Participant prior to the expiration of the Award, be exercised for up to one (1) year
following the date of the Participant's death even if such period extends beyond ten (10) years from the date the Stock Appreciation Right is granted.
(b) Amount Payable. Upon exercise of a Stock Appreciation Right unrelated to an Option, the Grantee shall be entitled to receive an amount determined by
multiplying (i) the excess of the Fair Market Value of a Share on the date immediately preceding the date of exercise of such Stock Appreciation Right over
the Fair Market Value of a Share on the date the Stock Appreciation Right was granted, by (ii) the number of Shares as to which the Stock Appreciation
Right is being exercised; provided, however, that for purposes of this Section 6.3(b), in respect of Stock Appreciation Rights granted to Covered Employees
and Directors, Fair Market Value shall be determined in accordance with Section 2.28(a). Notwithstanding the foregoing, the Administrator may limit in
any manner the amount payable with respect to any Stock Appreciation Right by including such a limit in the Agreement evidencing the Stock Appreciation
Right at the time it is granted.
(c) Transferability. (i) Except as otherwise provided in this Section 6.3(c), no Stock Appreciation Right unrelated to an Option shall be transferable by the
Participant otherwise than by will or the laws of descent and distribution, and a Stock Appreciation Right shall be exercisable during the lifetime of such
Participant only by the Participant or his or her guardian or legal representative. The Administrator may set forth in the Agreement evidencing a Stock
Appreciation Right at the time of grant or thereafter, that the Award, or a portion thereof, may be transferred to any third party, including but not limited to,
members of the Participant's immediate family, to trusts solely for the benefit of such immediate family members and to partnerships in which such family
members and/or trusts are the only partners. In addition, for purposes of the Plan, unless otherwise determined by the Administrator at the time of grant or
thereafter, a transferee of a Stock Appreciation Right pursuant to this Section 6.3(c) shall be deemed to be the Participant; provided that the rights of any
such transferee thereafter shall be nontransferable except that such transferee, where applicable under the terms of the transfer by the Participant, shall have
the right previously held by the Participant to designate a Beneficiary. For this purpose, immediate family means the Participant's spouse, parents, children,
stepchildren and grandchildren and the spouses of such parents, children, stepchildren and grandchildren. The terms of a Stock Appreciation Right shall be
final, binding and conclusive upon the beneficiaries, executors, administrators, heirs and successors of the Participant. Notwithstanding Section 21.2, or the
terms of any Agreement, the Company or any Subsidiary shall not withhold any amount attributable to the Participant's tax liability from any payment of
cash or Shares to a transferee or transferee's Beneficiary under this Section 6.3(c), but may require the payment of an amount equal to the Company's or any
Subsidiary's withholding tax obligation as a condition to exercise or as a condition to the release of cash or Shares upon exercise or upon transfer of the
Stock Appreciation Right.
(ii) The approval of this Plan by the Company's shareholders shall constitute an amendment of each of the Prior Plans in a manner such that the provisions
of Section 6.3(c)(i) above shall be incorporated into each of the Prior Plans and any inconsistent provisions in the Prior Plans shall be deleted. Outstanding
stock appreciation rights under the Prior Plans shall be interpreted in a manner consistent with the amendment to the Prior Plans described in the preceding
sentence. The election by a Participant or Beneficiary (including for this purpose a participant or beneficiary under the Prior Plans) to transfer any such
stock appreciation rights pursuant to this Section 6.3(c) shall constitute consent by the Participant or Beneficiary to such amendment if such consent is
required.
6.4 Method of Exercise. Stock Appreciation Rights shall be exercised by a Participant only by giving written notice delivered in person or by mail to the
person designated by the Company, specifying the number of Shares with respect to which the Stock Appreciation Right is being exercised. If requested by
the Administrator, the Participant shall deliver the Agreement evidencing the Stock Appreciation Right being exercised and the Agreement evidencing any
related Option to the Company, which shall endorse thereon a notation of such exercise and return such Agreement to the Participant.
6.5 Form of Payment. Payment of the amount determined under Section 6.2(b) or 6.3(b) may be made in the discretion of the Administrator solely in
whole Shares in a number determined at their Fair Market Value on the date preceding the date of exercise of the Stock Appreciation Right, or solely in
cash, or in a combination of cash and Shares. If the Administrator decides to make full payment in Shares and the amount payable results in a fractional
Share, payment for the fractional Share will be made in cash.
6.6 Effect of Change in Control. Unless otherwise provided in an Agreement, (a) in the event of a Change in Control, all Stock Appreciation Rights
shall become immediately and fully exercisable and (b) in the event a Participant's (other than a Director's) employment with the Company and its
Subsidiaries terminates as a result of a termination within two (2) years following a Change in Control by the Company without Cause or by the Participant
for Good Reason, each Stock Appreciation Right held by the Participant that was exercisable as of the date of termination of the Participant's employment
shall remain exercisable for a period ending not before the earlier of the first anniversary of (a) the termination of the Participant's employment or service
and (b) the expiration of the stated term of the Stock Appreciation Right.
7. Dividend Equivalent Rights.
The Administrator may in its discretion, grant Dividend Equivalent Rights either in tandem with an Option or Award or as a separate Award, to Eligible
Individuals in accordance with the Plan. The terms and conditions applicable to each Dividend Equivalent Right shall be specified in the Agreement under
which the Dividend Equivalent Right is granted. Amounts payable in respect of Dividend Equivalent Rights may be payable currently or, if applicable,
deferred until the lapsing of restrictions on such Dividend Equivalent Rights or until the vesting, exercise, payment, settlement or other lapse of restrictions
on the Option or Award to which the Dividend Equivalent Rights relate. In the event that the amount payable in respect of Dividend Equivalent Rights are
to be deferred, the Administrator shall determine whether such amounts are to be held in cash or reinvested in Shares or deemed (notionally) to be
reinvested in Shares. If amounts payable in respect of Dividend Equivalent Rights are to be held in cash, there may be credited at the end of each year (or
portion thereof) interest on the amount of the account at the beginning of the year at a rate per annum as the Administrator, in its discretion, may determine.
Dividend Equivalent Rights may be settled in cash or Shares or a combination thereof, in a single installment or multiple installments, as determined by the
Administrator.
8. Restricted Stock; Restricted Stock Units.
8.1 Restricted Stock. The Administrator may grant to Eligible Individuals Awards of Restricted Stock, which shall be evidenced by an Agreement. Each
Agreement shall contain such restrictions, terms and conditions as the Administrator may, in its discretion, determine and (without limiting the generality of
the foregoing) such Agreements may require that an appropriate legend be placed on Share certificates. Awards of Restricted Stock shall be subject to the
terms and provisions set forth below in this Section 8.1 and in Section 8.3.
(a) Rights of Participant. Shares of Restricted Stock granted pursuant to an Award hereunder shall be issued in the name of the Participant as soon as
reasonably practicable after the Award is granted provided that the Participant has executed an Agreement evidencing the Award, the appropriate blank
stock powers and, in the discretion of the Administrator, an escrow agreement and any other documents which the Administrator may require as a condition
to the issuance of such Shares. At the discretion of the Administrator, Shares issued in connection with an Award of Restricted Stock shall be deposited
together with the stock powers with an escrow agent (which may be the Company) designated by the Administrator. Unless the Administrator determines
otherwise and as set forth in the Agreement, upon delivery of the Shares to the escrow agent, the Participant shall have all of the rights of a shareholder with
respect to such Shares, including the right to vote the Shares and to receive all dividends or other distributions paid or made with respect to the Shares.
(b) Non−transferability. Until all restrictions upon the Shares of Restricted Stock awarded to a Participant shall have lapsed in the manner set forth in
Section 8.1(c), such Shares shall not be sold, transferred or otherwise disposed of and shall not be pledged or otherwise hypothecated.
(c) Lapse of Restrictions.
(i) Generally. Subject to the provisions of Section 8.3, restrictions upon Shares of Restricted Stock awarded hereunder shall lapse at such time or times and
on such terms and conditions as the Administrator may determine. The Agreement evidencing the Award shall set forth any such restrictions.
ii) Effect of Change in Control. Unless otherwise determined by the Administrator at the time of grant and set forth in the Agreement evidencing the
Award of Restricted Stock, restrictions on Shares of Restricted Stock shall lapse upon termination of a Participant's employment with, or service as a
Director of, the Company and its Subsidiaries within two (2) years following a Change in Control if such termination is by the Company without Cause or
by the Participant for Good Reason. The Administrator may determine at the time of the grant or thereafter and set forth in the Agreement evidencing the
Award of Restricted Stock that terminations of employment under other circumstances within two (2) years following a Change in Control will result in the
lapse of restrictions on Shares of Restricted Stock.
(d) Treatment of Dividends. At the time an Award of Restricted Stock is granted, the Administrator may, in its discretion, determine that the payment to
the Participant of dividends, or a specified portion thereof, declared or paid on such Shares by the Company shall be (i) deferred until the lapsing of the
restrictions imposed upon such Shares and (ii) held by the Company for the account of the Participant until such time. In the event that dividends are to be
deferred, the Administrator shall determine whether such dividends are to be reinvested in Shares (which shall be held as additional Shares of Restricted
Stock) or held in cash. If deferred dividends are to be held in cash, there may be credited interest on the amount of the account at such times and at a rate
per annum as the Administrator, in its discretion, may determine. Payment of deferred dividends in respect of Shares of Restricted Stock (whether held in
cash or as additional Shares of Restricted Stock), together with interest accrued thereon, if any, shall be made upon the lapsing of restrictions imposed on
the Shares in respect of which the deferred dividends were paid, and any dividends deferred (together with any interest accrued thereon) in respect of any
Shares of Restricted Stock shall be forfeited upon the forfeiture of such Shares.
(e) Delivery of Shares. Upon the lapse of the restrictions on Shares of Restricted Stock, the Administrator shall cause a stock certificate or evidence of
book entry Shares to be delivered to the Participant with respect to such Shares of Restricted Stock, free of all restrictions hereunder.
8.2 Restricted Stock Unit Awards. The Administrator may grant to Eligible Individuals Awards of Restricted Stock Units, which shall be evidenced by
an Agreement. Each such Agreement shall contain such restrictions, terms and conditions as the Administrator may, in its discretion, determine. Awards of
Restricted Stock Units shall be subject to the terms and provisions set forth below in this Section 8.2 and in Section 8.3.
(a) Payment of Awards. Each Restricted Stock Unit shall represent the right of the Participant to receive a payment upon vesting of the Restricted Stock
Unit or on any later date specified by the Administrator equal to the Fair Market Value of a Share as of the date the Restricted Stock Unit was granted, the
vesting date or such other date as determined by the Administrator at the time the Restricted Stock Unit was granted. The Administrator may, at the time a
Restricted Stock Unit is granted, provide a limitation on the amount payable in respect of each Restricted Stock Unit. The Administrator may provide for
the settlement of Restricted Stock Units in cash or with Shares having a Fair Market Value equal to the payment to which the Participant has become
entitled.
(b) Effect of Change in Control. Unless otherwise determined by the Administrator at the time of grant and set forth in the Agreement evidencing the
Award of Restricted Stock Units, Restricted Stock Units shall become fully vested upon termination of a Participant's employment with, or service as a
Director of, the Company and its Subsidiaries within two (2) years following a Change in Control if such termination is by the Company without Cause or
by the Participant for Good Reason. The Administrator may determine at the time of the grant or thereafter and set forth in the Agreement evidencing the
Award of Restricted Stock Units that terminations of employment under other circumstances within two (2) years following a Change in Control will result
in the full vesting of Restricted Stock Units.
8.3 Minimum Vesting for Restricted Stock and Restricted Stock Unit Award. Except as otherwise provided in Sections 8.1(c)(ii) and 8.2(b), Awards of
Restricted Stock and Restricted Stock Units shall not vest more rapidly than with respect to one−third of the Shares subject to such Award on each of the
first three anniversaries of the date such Award is granted, other than with respect to up to four million (4,000,000) Shares, which may be subject to such
shorter vesting schedules as the Administrator shall determine.
9. Performance Awards.
9.1 Performance Units and Performance Shares. The Administrator, in its discretion, may grant Awards of Performance Units and/or Performance
Shares to Eligible Individuals, the terms and conditions of which shall be set forth in an Agreement.
(a) Performance Units. Performance Units shall be denominated in a specified dollar amount and, contingent upon the attainment of specified Performance
Objectives within the Performance Cycle, represent the right to receive payment as provided in Sections 9.1(c) and (d) of the specified dollar amount or a
percentage (which may be more than 100%) of the specified dollar amount depending on the level of Performance Objective attained; provided, however,
that the Administrator may at the time a Performance Unit is granted specify a maximum amount payable in respect of a vested Performance Unit. Each
Agreement shall specify the number of Performance Units to which it relates, the Performance Objectives which must be satisfied in order for the
Performance Units to vest and the Performance Cycle within which such Performance Objectives must be satisfied.
(b) Performance Shares. Performance Shares shall be denominated in Shares and, contingent upon the attainment of specified Performance Objectives
within the Performance Cycle, each Performance Share represents the right to receive payment as provided in Sections 9.1(c) and (d) of the Fair Market
Value of a Share on the date the Performance Share was granted, the date the Performance Share became vested or any other date specified by the
Administrator or a percentage (which may be more than 100%) of such amount depending on the level of Performance Objective attained; provided,
however, that the Administrator may at the time a Performance Share is granted specify a maximum amount payable in respect of a vested Performance
Share. Each Agreement shall specify the number of Performance Shares to which it relates, the Performance Objectives which must be satisfied in order for
the Performance Shares to vest and the Performance Cycle within which such Performance Objectives must be satisfied.
(c) Vesting and Forfeiture. Subject to Sections 9.3(c) and 9.4, a Participant shall become vested with respect to the Performance Shares and Performance
Units to the extent that the Performance Objectives set forth in the Agreement are satisfied for the Performance Cycle; provided, however, that, except as
may be provided pursuant to Section 9.4, no Performance Cycle for Performance Shares and Performance Units shall be less than one (1) year.
(d) Payment of Awards. Subject to Sections 9.3(c) and 9.4, payment to Participants in respect of vested Performance Shares and Performance Units shall
be made as soon as practicable after the last day of the Performance Cycle to which such Award relates or at such other time or times as the Administrator
may determine. Subject to Section 9.4, such payments may be made entirely in Shares valued at their Fair Market Value, entirely in cash, or in such
combination of Shares and cash as the Administrator in its discretion shall determine at any time prior to such payment; provided, however, that if the
Administrator in its discretion determines to make such payment entirely or partially in Shares of Restricted Stock, the Administrator must determine the
extent to which such payment will be in Shares of Restricted Stock and the terms of such Restricted Stock at the time the Award is granted.
9.2 Performance−Based Restricted Stock. The Administrator, in its discretion, may grant Awards of Performance−Based Restricted Stock to Eligible
Individuals, the terms and conditions of which shall be set forth in an Agreement. Each Agreement may require that an appropriate legend be placed on
Share certificates. Awards of Performance−Based Restricted Stock shall be subject to the following terms and provisions:
(a) Rights of Participant. Performance−Based Restricted Stock shall be issued in the name of the Participant as soon as reasonably practicable after the
Award is granted or at such other time or times as the Administrator may determine; provided, however, that no Performance−Based Restricted Stock shall
be issued until the Participant has executed an Agreement evidencing the Award, the appropriate blank stock powers and, in the discretion of the
Administrator, an escrow agreement and any other documents which the Administrator may require as a condition to the issuance of such
Performance−Based Restricted Stock. At the discretion of the Administrator, Shares issued in connection with an Award of Performance−Based Restricted
Stock shall be deposited together with the stock powers with an escrow agent (which may be the Company) designated by the Administrator. Except as
restricted by the terms of the Agreement, upon delivery of the Shares to the escrow agent, the Participant shall have, in the discretion of the Administrator,
all of the rights of a shareholder with respect to such Shares, including the right to vote the Shares and to receive all dividends or other distributions paid or
made with respect to the Shares. Each Agreement shall specify the number of Shares of Performance−Based Restricted Stock to which it relates, the
Performance Objectives which must be satisfied in order for the Performance−Based Restricted Stock to vest and the Performance Cycle within which such
Performance Objectives must be satisfied.
(b) Lapse of Restrictions. Subject to Sections 9.3(c) and 9.4, restrictions upon Performance−Based Restricted Stock awarded hereunder shall lapse and
such Performance−Based Restricted Stock shall become vested at such time or times and on such terms, conditions and satisfaction of Performance
Objectives as the Administrator may, in its discretion, determine at the time an Award is granted; provided, however, that, except as may be provided
pursuant to Section 9.4, no Performance Cycle for Performance−Based Restricted Stock shall be less than one (1) year.
(c) Treatment of Dividends. At the time the Award of Performance−Based Restricted Stock is granted, the Administrator may, in its discretion, determine
that the payment to the Participant of dividends, or a specified portion thereof, declared or paid on Shares represented by such Award which have been
issued by the Company to the Participant shall be (i) deferred until the lapsing of the restrictions imposed upon such Performance−Based Restricted Stock
and (ii) held by the Company for the account of the Participant until such time. In the event that dividends are to be deferred, the Administrator shall
determine whether such dividends are to be reinvested in Shares (which shall be held as additional Shares of Performance−Based Restricted Stock) or held
in cash. If deferred dividends are to be held in cash, there may be credited interest on the amount of the account at such times and at a rate per annum as the
Administrator, in its discretion, may determine. Payment of deferred dividends in respect of Shares of Performance−Based Restricted Stock (whether held
in cash or in additional Shares of Performance−Based Restricted Stock), together with interest accrued thereon, if any, shall be made upon the lapsing of
restrictions imposed on the Performance−Based Restricted Stock in respect of which the deferred dividends were paid, and any dividends deferred (together
with any interest accrued thereon) in respect of any Performance−Based Restricted Stock shall be forfeited upon the forfeiture of such Performance−Based
Restricted Stock.
(d) Delivery of Shares. Upon the lapse of the restrictions on Shares of Performance−Based Restricted Stock awarded hereunder, the Administrator shall
cause a stock certificate or evidence of book entry Shares to be delivered to the Participant with respect to such Shares, free of all restrictions hereunder.
9.3 Performance Objectives
(a) Establishment. Performance Objectives for Performance Awards may be expressed in terms of (i) consolidated earnings before or after taxes (including
earnings before interest, taxes, depreciation and amortization), (ii) net income, (iii) operating income, (iv) earnings per Share, (v) book value per Share, (vi)
return on shareholders' equity, (vii) expense management, (viii) return on investment, (ix) improvement in capital structure, (x) profitability of an
identifiable business unit or product, (xi) maintenance or improvement of profit margins, (xii) stock price, (xiii) market share, (xiv) revenues or sales, (xv)
costs, (xvi) cash flow, (xvii) working capital, (xviii) return on assets, (xix) total shareholder return or (xx) any combination of the foregoing. Performance
Objectives may be in respect of the performance of the Company, any of its Subsidiaries, any of its Divisions or any combination thereof. Performance
Objectives may be absolute or relative (to prior performance of the Company or to the performance of one or more other entities or external indices) and
may be expressed in terms of a progression within a specified range. The Performance Objectives with respect to a Performance Cycle shall be established
in writing by the Administrator by the earlier of (i) the date on which a quarter of the Performance Cycle has elapsed and (ii) the date which is ninety (90)
days after the commencement of the Performance Cycle, and in any event while the performance relating to the Performance Objectives remain
substantially uncertain.
(b) Effect of Certain Events. Unless otherwise provided by the Administrator at the time the Performance Objectives in respect of a Performance Award
are established, performance shall be adjusted to omit the effects of extraordinary items, gain or loss on the disposal of a business segment (other than
provisions for operating losses or income during the phase−out period), unusual or infrequently occurring events and transactions that have been publicly
disclosed and the cumulative effects of changes in accounting principles, all as determined in accordance with generally accepted accounting principles (to
the extent applicable). In addition, at the time of the granting of a Performance Award, or at any time thereafter, the Administrator may provide for the
manner in which performance will be measured against the Performance Objectives (or may adjust the Performance Objectives) to reflect the impact of
specified corporate transactions (such as a stock split or stock dividend), special charges, and tax law changes; provided, that in respect of Performance
Awards to Covered Employees, such provisions shall be permitted only to the extent permitted under Section 162(m) of the Code and the regulations
promulgated thereunder without adversely affecting the treatment of any Performance Award as Performance−Based Compensation.
(c) Determination of Performance. Prior to the vesting, payment, settlement or lapsing of any restrictions with respect to any Performance Award granted
to a Covered Employee, the Administrator shall certify in writing that the applicable Performance Objectives have been satisfied to the extent necessary for
such Award to qualify as Performance−Based Compensation. In respect of a Performance Award, the Administrator may, in its sole discretion, reduce the
amount of cash paid or number of Shares issued that become vested or on which restrictions lapse. The Administrator shall not be entitled to exercise any
discretion otherwise authorized hereunder with respect to such Awards if the ability to exercise such discretion or the exercise of such discretion itself
would cause the compensation attributable to such Awards to fail to qualify as Performance−Based Compensation.
9.4 Effect of Change in Control. In the event of a Change in Control, unless otherwise determined by the Administrator and set forth in the Agreement
evidencing the Award:
(a) Participants shall (i) become vested in a portion of all then outstanding Performance Units and Performance Shares determined by multiplying (x) the
number of such Performance Units and Performance Shares that would have vested based on the greater of actual levels of achievement attained against the
applicable Performance Objective (determined as if the Performance Cycle ended on the date of the Change in Control) and the target levels of achievement
established for the Performance Cycle, by (y) a fraction, the numerator of which is the number of days that have elapsed during the Performance Cycle
through the date of the Change in Control and the denominator of which is the total number of days in the Performance Cycle and (ii) be entitled to receive
in respect of all Performance Units and Performance Shares which become vested as a result of a Change in Control a cash payment within ten (10) days
after such Change in Control.
(b) All restrictions shall lapse immediately on a portion of all then outstanding Shares of Performance−Based Restricted Stock determined by multiplying
(x) the number of such Shares on which such restrictions would have lapsed based on the greater of actual levels of achievement attained against the
applicable Performance Objective (determined as if the Performance Cycle ended on the date of the Change in Control) and the target levels of achievement
established for the Performance Cycle, by (y) a fraction, the numerator of which is the number of days that have elapsed during the Performance Cycle
through the date of the Change in Control and the denominator of which is the total number of days in the Performance Cycle.
9.5 Non−transferability. Until the vesting of Performance Units and Performance Shares or the lapsing of any restrictions on Performance−Based
Restricted Stock, as the case may be, such Performance Units, Performance Shares or Performance−Based Restricted Stock shall not be sold, transferred or
otherwise disposed of and shall not be pledged or otherwise hypothecated.
10. Annual Incentive Awards.
10.1 Eligibility. The Compensation Committee shall designate which Officers are eligible for Annual Incentive Awards under the Plan ("Eligible
Officers"). An individual shall not be ineligible by reason of being a Director. The Compensation Committee may establish such additional rules for
eligibility as it determines are appropriate. The actual payment of an Annual Incentive Award to any Eligible Officer shall be subject to the provisions of
this Section 10.
10.2 Awards. Eligible Officers are eligible to receive a cash payment in respect of a fiscal year (an "Annual Incentive Award") determined as a
percentage of an incentive pool, which pool is equal to the greater of: (a) nine−tenths of one percent (0.9%) of the Operating Cash Flow for the fiscal year;
or (b) one and one−half percent (1.5%) of the Net Income for the fiscal year (the "Annual Bonus Pool"). The terms and conditions of Annual Incentive
Awards shall be as determined by the Compensation Committee and set forth in an Award Agreement. Such terms and conditions shall be consistent with
the provisions of this Section 10 and shall be consistent with such awards qualifying as Performance−Based Compensation.
10.3 Performance Objectives and Performance−Based Limit. Annual Incentive Awards shall only be payable under the Plan in respect of a fiscal year if
the Company has positive Operating Cash Flow or Net Income for such year. Within the first ninety (90) days of each fiscal year, the Compensation
Committee shall determine the percentage of the Annual Bonus Pool that represents the potential Annual Incentive Award for each Eligible Officer for that
fiscal year. In no event may the Annual Bonus Pool percentage for any Eligible Officer exceed twenty−five percent (25%) of the Annual Bonus Pool. The
sum of the Annual Bonus Pool percentages for all Eligible Officers cannot exceed one hundred percent (100%) of the Annual Bonus Pool.
10.4 Determination of Performance. Prior to the payment of any Annual Incentive Award to an Eligible Officer and following receipt of a report from the
Company's independent auditor of the Operating Cash Flow and Net Income for the year, the Compensation Committee shall certify in writing that the
applicable Performance Objective has been satisfied and the amount of the Annual Bonus Pool, in each case, to the extent necessary so that all Annual
Incentive Awards for Eligible Officers who are Covered Employees qualify as Performance−Based Compensation.
10.5 Calculation of Annual Incentive Awards. As soon as practicable after the determination of the Annual Bonus Pool for a fiscal year, the
Compensation Committee shall calculate the amount of each Eligible Officer's Annual Incentive Award based on his or her allocated portion of the Annual
Bonus Pool; provided, however, that the Compensation Committee may, in its discretion, reduce the amount payable in respect of an Annual Incentive
Award for any Eligible Officer. In no event may the portion of the Annual Bonus Pool allocated to an Eligible Officer be increased in any way, including as
a result of the reduction of any other Eligible Officer's allocated portion. No portion of the Annual Bonus Pool which is not paid to Eligible Officers in
respect of a particular year shall be carried over to any subsequent year.
10.6 Payment of Annual Incentive Awards. All Annual Incentive Awards shall be paid by the Company and its Subsidiaries in cash as soon as
practicable following certification by the Compensation Committee pursuant to Section 10.4 and the calculation pursuant to Section 10.5. Such payment,
however, may be subject to deferral under any plan or program the Administrator may establish for this purpose, provided that any additional amounts
credited under any such deferral plan or program during the period of deferral shall be determined based either on a reasonable rate of interest or on a
specific investment or deemed investment including Shares, as may be determined by the Compensation Committee within the limits of the regulations
under Section 162(m) of the Code.
10.7 Effect of Certain Events. At the time of the granting of an Annual Incentive Award, or at any time thereafter, the Compensation Committee may
provide for the manner in which performance will be measured against the Performance Objectives (or may adjust the Performance Objectives) to reflect
the impact of specified corporate transactions (such as a stock split or stock dividend), special charges, and tax law changes; provided, however, that such
provisions shall be permitted only to the extent permitted under Section 162(m) of the Code and the regulations promulgated thereunder without adversely
affecting the treatment of any Annual Incentive Award as Performance−Based Compensation.
10.8 Non−transferability. Annual Incentive Awards shall not be sold, transferred or otherwise disposed of and shall not be pledged or otherwise
hypothecated.
10.9 No Right to Award. No person shall have any claim to be paid an Annual Incentive Award under the Plan and there is no obligation for uniformity
of treatment of Eligible Officers under Section 10 of the Plan. The selection of Eligible Officers to receive Annual Incentive Awards and the amount of the
Annual Incentive Awards rest completely in the absolute and final discretion of the Compensation Committee. The Compensation Committee's discretion is
limited only by the Annual Bonus Pool and the limits provided in Sections 10.3 and 10.5. Neither the existence of the Annual Bonus Pool, nor any prior
practice by the Compensation Committee as to the payment or amount of Annual Incentive Awards, shall be deemed to create an obligation for the
Compensation Committee to pay any Annual Incentive Award for any year or to pay an Annual Incentive Award equal to the allocated percentage of the
Annual Bonus Pool or any other amount.
11. Share Awards.
The Administrator may grant a Share Award to any Eligible Individual on such terms and conditions as the Administrator may determine in its sole
discretion. Share Awards may be made as additional compensation for services rendered by the Eligible Individual or may be in lieu of cash or other
compensation to which the Eligible Individual is entitled from the Company.
12. Awards to Directors.

12.1 Authority of Director Committee. Subject to the provisions of the Plan, the Director Committee shall have the full and final authority to award
Options and Awards to Eligible Directors, and the terms and conditions of any grant to any such Eligible Director shall be set forth in an Agreement. This
Section 12 sets forth special provisions that, unless otherwise provided in an Agreement, shall be applicable to Options and Awards granted to Eligible
Directors under the Plan.
12.2 Aggregate Limit. Options or Awards in respect of no more than two and one−half million (2,500,000) Shares shall be granted to Eligible Directors
under the Plan.
12.3 Individual Limit. Grants of Options and Awards to any Eligible Director in any calendar year shall not be made in respect of more than twenty−five
thousand (25,000) Shares.
12.4 Vesting. Unless otherwise provided in an Agreement, an Option or Award granted to an Eligible Director under the Plan shall become exercisable
and the restrictions on an Award granted to an Eligible Director shall lapse, as applicable, on the first anniversary of the date of grant; provided, however,
that in the event that, prior to the first anniversary of the date of grant, (a) the Director terminates his service on the Board by reason of (i) death, (ii)
Disability, or (iii) retirement (as determined in accordance with the then applicable retirement policy for Directors), or (b) a Change in Control shall occur,
then an Option or Award shall become immediately exercisable and the restrictions on an Award shall immediately lapse, as applicable, upon the
occurrence of such event. Subject to the foregoing, an Option or Stock Appreciation Right granted to a Director shall be exercisable at any time in whole or
in part (but if in part, in an amount equal to at least 100 Shares or, if less, the number of Shares remaining to be exercised under the Award or Option) on
any business day of the Company before the date such Option or Award expires in accordance with Section 12.4.
12.5 Duration. Unless otherwise provided in an Agreement, an Option or Stock Appreciation Right granted to an Eligible Director shall expire on the
earlier of:
(a) the first date on or after the date of grant and prior to a Change in Control on which the Director (i) resigns from or is not re−elected to the Board prior
to being eligible for retirement or (ii) resigns as a result of an interest or affiliation which would prohibit continued service as a director;
(b) the date the Option or Stock Appreciation Right has been exercised in full; or
c) one day after the expiration of the ten−year period which begins on the date of grant of the Option or Stock Appreciation Right or, in the case of a
Director who dies within one (1) year prior to such day, the last day of the one−year period which begins on the date of the Director's death.
13. Effect of a Termination of Employment.
The Agreement evidencing the grant of each Option and each Award shall set forth the terms and conditions applicable to such Option or Award upon a
termination or change in the status of the employment of the Participant by the Company, a Subsidiary or a Division (including a termination or change by
reason of the sale of a Subsidiary or a Division), which, except for Director Options, shall be as the Administrator may, in its discretion, determine at the
time the Option or Award is granted or thereafter.
14. Adjustment Upon Changes in Capitalization.
14.1 In the event of a Change in Capitalization, the Administrator shall conclusively determine the appropriate adjustments, if any, to (a) the maximum
number and class of Shares or other stock or securities with respect to which Options or Awards may be granted under the Plan, (b) the maximum number
and class of Shares or other stock or securities that may be issued upon exercise of Incentive Stock Options, (c) the maximum number and class of Shares or
other stock or securities with respect to which Options or Awards may be granted to any Eligible Individual in any calendar year, (d) the number and class
of Shares or other stock or securities which are subject to outstanding Options or Awards granted under the Plan and the exercise price therefore, if
applicable and (e) the Performance Objectives.
14.2 Any such adjustment in the Shares or other stock or securities (a) subject to outstanding Incentive Stock Options (including any adjustments in the
exercise price) shall be made in such manner as not to constitute a modification as defined by Section 424(h)(3) of the Code and only to the extent otherwise
permitted by Sections 422 and 424 of the Code or (b) subject to outstanding Options or Awards that are intended to qualify as Performance−Based
Compensation shall be made in such a manner as not to adversely affect the treatment of the Options or Awards as Performance−Based Compensation.
14.3 If, by reason of a Change in Capitalization, a Participant shall be entitled to, or shall be entitled to exercise an Option with respect to, new, additional
or different shares of stock or securities of the Company or any other corporation, such new, additional or different shares shall thereupon be subject to all
of the conditions, restrictions and performance criteria which were applicable to the Shares subject to the Award or Option, as the case may be, prior to such
Change in Capitalization.
15. Effect of Certain Transactions.
Subject to Sections 5.9, 6.6, 8.1(c)(ii), 8.2(c) and 9.4 or as otherwise provided in an Agreement, following (a) the liquidation or dissolution of the Company
or (b) a merger or consolidation of the Company (a "Transaction"), either (i) each outstanding Option or Award shall be treated as provided for in the
agreement entered into in connection with the Transaction or (ii) if not so provided in such agreement, each Optionee and Grantee shall be entitled to
receive in respect of each Share subject to any outstanding Options or Awards, as the case may be, upon exercise of any Option or payment or transfer in
respect of any Award, the same number and kind of stock, securities, cash, property or other consideration that each holder of a Share was entitled to receive
in the Transaction in respect of a Share; provided, however, that such stock, securities, cash, property, or other consideration shall remain subject to all of
the conditions, restrictions and performance criteria which were applicable to the Options and Awards prior to such Transaction. Without limiting the
generality of the foregoing, the treatment of outstanding Options and Stock Appreciation Rights pursuant to clause (i) of this Section 15 in connection with a
Transaction in which the consideration paid or distributed to the Company's stockholders is not entirely shares of common stock of the acquiring or resulting
corporation may include the cancellation of outstanding Options and Stock Appreciation Rights upon consummation of the Transaction provided either (x)
the holders of affected Options and Stock Appreciation Rights have been given a period of at least fifteen (15) days prior to the date of the consummation of
the Transaction to exercise the Options or Stock Appreciation Rights (whether or not they were otherwise exercisable) or (y) the holders of the affected
Options and Stock Appreciation Rights are paid (in cash or cash equivalents) in respect of each Share covered by the Option or Stock Appreciation Right
being cancelled an amount equal to the excess, if any, of the per share price paid or distributed to stockholders in the transaction (the value of any non−cash
consideration to be determined by the Administrator in its sole discretion) over the exercise price of the Option or Stock Appreciation Right. For avoidance
of doubt, (1) the cancellation of Options and Stock Appreciation Rights pursuant to clause (y) of the preceding sentence may be effected notwithstanding
anything to the contrary contained in this Plan or any Agreement and (2) if the amount determined pursuant to clause (y) of the preceding sentence is zero or
less, the affected Option or Stock Appreciation Right may be cancelled without any payment therefor. The treatment of any Option or Award as provided in
this Section 15 shall be conclusively presumed to be appropriate for purposes of Section 14.
16. Interpretation.
16.1 Section 16 Compliance. The Plan is intended to comply with Rule 16b−3 promulgated under the Exchange Act and the Administrator shall interpret
and administer the provisions of the Plan or any Agreement in a manner consistent therewith. Any provisions inconsistent with such Rule shall be
inoperative and shall not affect the validity of the Plan.
16.2 Section 162(m). Unless otherwise expressly stated in the relevant Agreement, each Option, Stock Appreciation Right, Annual Incentive Award and
Performance Award granted to a Covered Employee under the Plan is intended to be Performance−Based Compensation. Accordingly, unless otherwise
determined by the Administrator, if any provision of the Plan or any Agreement relating to such an Option or Award does not comply or is inconsistent with
Section 162(m) of the Code or the regulations promulgated thereunder (including IRS Regulation 1.162−27 unless and to the extent it is superseded by an
interim or final regulation), such provision shall be construed or deemed amended to the extent necessary to conform to such requirements, and no provision
shall be deemed to confer upon the Administrator discretion to increase the amount of compensation otherwise payable to a Covered Employee in
connection with any such Option or Award upon the attainment of the Performance Objectives.
17. Termination and Amendment of the Plan or Modification of Options and Awards.
17.1 Plan Amendment or Termination. The Board may at any time terminate the Plan and the Board may at any time and from time to time amend,
modify or suspend the Plan; provided, however, that:
(a) no such amendment, modification, suspension or termination shall impair or adversely alter any Options or Awards theretofore granted under the Plan,
except with the consent of the Participant, nor shall any amendment, modification, suspension or termination deprive any Participant of any Shares which he
or she may have acquired through or as a result of the Plan; and
(b) no material amendment and, to the extent necessary under any applicable law, regulation or exchange requirement, no other amendment shall be
effective unless approved by the shareholders of the Company in accordance with applicable law, regulation or exchange requirement.
17.2 Modification of Options and Awards. No modification of an Option or Award shall adversely alter or impair any rights or obligations under the
Option or Award without the consent of the Participant.
18. Non−Exclusivity of the Plan.
The adoption of the Plan by the Board shall not be construed as amending, modifying or rescinding any previously approved incentive arrangement or as
creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the
granting of stock options otherwise than under the Plan, and such arrangements may be either applicable generally or only in specific cases.
19. Limitation of Liability.
As illustrative of the limitations of liability of the Company, but not intended to be exhaustive thereof, nothing in the Plan shall be construed to:
(a) give any person any right to be granted an Option or Award other than at the sole discretion of the Administrator;
(b) give any person any rights whatsoever with respect to Shares except as specifically provided in the Plan;
(c) limit in any way the right of the Company or any Subsidiary to terminate the employment of any person at any time; or
(d) be evidence of any agreement or understanding, express or implied, that the Company will employ any person at any particular rate of compensation or
for any particular period of time.
20. Regulations and Other Approvals; Governing Law.
20.1 Except as to matters of federal law, the Plan and the rights of all persons claiming hereunder shall be construed and determined in accordance with
the laws of the State of Georgia without giving effect to conflicts of laws principles thereof.
20.2 The obligation of the Company to sell or deliver Shares with respect to Options and Awards granted under the Plan shall be subject to all applicable
laws, rules and regulations, including all applicable federal and state securities laws, and the obtaining of all such approvals by governmental agencies as
may be deemed necessary or appropriate by the Administrator.
20.3 The Board may make such changes as may be necessary or appropriate to comply with the rules and regulations of any government authority, or to
obtain for Eligible Individuals granted Incentive Stock Options the tax benefits under the applicable provisions of the Code and regulations promulgated
thereunder.
20.4 Each Option and Award is subject to the requirement that, if at any time the Administrator determines, in its discretion, that the listing, registration
or qualification of Shares issuable pursuant to the Plan is required by any securities exchange or under any state or federal law, or the consent or approval of
any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the grant of an Option or Award or the issuance of
Shares, no Options or Awards shall be granted or payment made or Shares issued, in whole or in part, unless listing, registration, qualification, consent or
approval has been effected or obtained free of any conditions as acceptable to the Administrator.
20.5 Notwithstanding anything contained in the Plan or any Agreement to the contrary, in the event that the disposition of Shares acquired pursuant to the
Plan is not covered by a then current registration statement under the Securities Act of 1933, as amended (the "Securities Act"), and is not otherwise exempt
from such registration, such Shares shall be restricted against transfer to the extent required by the Securities Act and Rule 144 or other regulations
promulgated thereunder. The Administrator may require any individual receiving Shares pursuant to an Option or Award granted under the Plan, as a
condition precedent to receipt of such Shares, to represent and warrant to the Company in writing that the Shares acquired by such individual are acquired
without a view to any distribution thereof and will not be sold or transferred other than pursuant to an effective registration thereof under the Securities Act
or pursuant to an exemption applicable under the Securities Act or the rules and regulations promulgated thereunder. The certificates evidencing any of
such Shares shall be appropriately amended or have an appropriate legend placed thereon to reflect their status as restricted securities as aforesaid.
21. Miscellaneous.
21.1 Multiple Agreements. The terms of each Option or Award may differ from other Options or Awards granted under the Plan at the same time, or at
some other time. The Administrator may also grant more than one Option or Award to a given Eligible Individual during the term of the Plan, either in
addition to, or subject to Section 3.4, in substitution for, one or more Options or Awards previously granted to that Eligible Individual.
21.2 Withholding of Taxes.
(a) The Company or any Subsidiary shall withhold from any payment of cash or Shares to a Participant or other person under the Plan an amount sufficient
to cover any withholding taxes which may become required with respect to such payment or shall take any other action as it deems necessary to satisfy any
income or other tax withholding requirements as a result of the grant or exercise of any Award under the Plan. The Company or any Subsidiary shall have
the right to require the payment of any such taxes and require that any person furnish information deemed necessary by the Company or any Subsidiary to
meet any tax reporting obligation as a condition to exercise or before making any payment pursuant to an Award or Option. Unless otherwise specified in
an Agreement at the time of grant, a Participant may, in satisfaction of his or her obligation to pay withholding taxes in connection with the exercise, vesting
or other settlement of an Option or Award, elect to have withheld a portion of the Shares then issuable to him or her having an aggregate Fair Market Value
equal to the withholding taxes.
(b) If a Participant makes a disposition, within the meaning of Section 424(c) of the Code and regulations promulgated thereunder, of any Share or Shares
issued to such Participant pursuant to the exercise of an Incentive Stock Option within the two−year period commencing on the day after the date of the
grant or within the one−year period commencing on the day after the date of transfer of such Share or Shares to the Participant pursuant to such exercise, the
Participant shall, within ten (10) days of such disposition, notify the Company thereof, by delivery of written notice to the Company at its principal
executive office.
21.3 Plan Unfunded. The Plan shall be unfunded. Except for reserving a sufficient number of authorized Shares to the extent required by law to meet the
requirements of the Plan, the Company shall not be required to establish any special or separate fund or to make any other segregation of assets to assure
payment of any Award or Option granted under the Plan.
21.4 Beneficiary Designation. Each Participant may, from time to time, name one or more individuals (each, a "Beneficiary") to whom any benefit under
the Plan is to be paid in case of the Participant's death before he or she receives any or all of such benefit. Each such designation shall revoke all prior
designations by the same Participant, shall be in a form prescribed by the Company, and will be effective only when filed by the Participant in writing with
the Company during the Participant's lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant's death shall be paid to
the Participant's estate.
21.5 Effective Date/Term. The effective date of the Plan shall be the date on which the Plan is approved by the affirmative vote of the holders of a
majority of the securities of the Company present, or represented, and entitled to vote at a meeting of shareholders duly held in accordance with the
applicable laws of the State of Georgia within twelve (12) months of the adoption of the Plan by the Board (the "Effective Date"). Upon such approval of
the Plan by the shareholders, no further awards shall be granted under the Prior Plans or under the BellSouth Corporation Officer Short Term Incentive
Award Plan.
The Plan shall terminate on the Termination Date. No Option or Award shall be granted after the Termination Date. The applicable terms of the Plan, and
any terms and conditions applicable to Options and Awards granted prior to the Termination Date shall survive the termination of the Plan and continue to
apply to such Options and Awards.
Exhibit 10−tt
BELLSOUTH CORPORATION
NON−EMPLOYEE DIRECTOR
NQSO
TERMS AND CONDITIONS
1. General. These Terms and Conditions constitute a part of the BellSouth Corporation Stock and Incentive Compensation Plan Non−Qualified Stock
Option Agreement (this "Agreement") to which they are attached and apply to the NQSO granted thereunder.
2. Date Exercisable. The NQSO shall be exercisable at any time in whole or in part (but if in part, in an amount equal to at least 100 Shares or, if less, the
number of Shares remaining to be exercised under this Agreement) on any business day of BellSouth before the date such option expires under Section 3 of
this Agreement and after the earlier of
(a) the first anniversary of the Grant Date; or
(b) in the event, prior to the date in (a) above, (1) Optionee terminates service on the Board by reason of (A) death, (B) Disability (as defined
in the Plan), or (C) retirement (as determined in accordance with the then applicable retirement policy for Directors), or (2) a Change in
Control shall occur, the date of the occurrence of such event.
3. Expiration. The NQSO shall expire and Optionee shall have no further
rights under this Agreement on the earlier of
(a) the first date on or after the Grant Date and prior to a Change in Control on which Optionee (i) resigns from or is not re−elected to the
Board prior to being eligible for retirement under clause (1)(C) of Section 2(b); or (ii) resigns as a result of an interest or affiliation which
would prohibit continued service as a director;
(b) the date the NQSO has been exercised in full; or
(c) one day after the expiration of the ten−year period which begins on the Grant Date or, in the event Optionee dies within one year prior to
such day, the last day of the one−year period which begins on the date of Optionee's death.
4. Method of Exercise. The NQSO may be exercised by properly completing and actually delivering the applicable written notice of exercise form (the
"Notice of Exercise Form") to BellSouth, together with payment in full of the purchase price for the Shares the Optionee desires to purchase through such
exercise. Subject to Section 6 of this Agreement, and as provided in the Notice of Exercise Form, payment may be made in the form of cash or Shares, or a
combination of cash and Shares.
5. Effective Date of Exercise. An exercise under Section 4 shall be effective on the date a properly completed Notice of Exercise Form, together with
payment of the purchase price, is delivered in person or by mail to, and accepted by, the executive compensation group at BellSouth headquarters, or as
otherwise specified in the Notice of Exercise Form.
6. Value of Stock. Any Shares which are tendered to BellSouth as payment and any Shares which are transferred by BellSouth shall be valued at their Fair
Market Value, which for this purpose, is defined as the average of the high and low sales prices on the New York Stock Exchange ("NYSE") on the date of
exercise or, if there are no sales on the date of exercise, the average of the high and low sales prices on the NYSE on the most recent prior day on which a
Share was sold on the NYSE.
7. Transferability. No rights granted under this Agreement shall be transferable by Optionee during Optionee's lifetime, and such rights shall be
exercisable during Optionee's lifetime only by Optionee. If Optionee dies before the expiration of the NQSO as described in Section 3 of this Agreement,
any rights under this Agreement that did not expire prior to Optionee's death and any rights which arise as a result of Optionee's death shall be exercisable
by Optionee's Beneficiary as determined under the Plan and such Beneficiary shall be treated as the Optionee under this Agreement upon the death of
Optionee.
8. Stockholder Status. Optionee shall have no rights as a stockholder with respect to any Shares under this Agreement before the date such Shares have
been duly issued to Optionee, and no adjustment shall be made for dividends of any kind or description whatsoever or for distributions of other rights of any
kind or description whatsoever respecting such Shares except as expressly set forth
in the Plan.
9. Other Laws. BellSouth shall have the right to refuse to issue or transfer any Shares under this Agreement if BellSouth, acting in its absolute discretion,
determines that the issuance or transfer of such Shares might violate any applicable law or regulation or entitle BellSouth to recovery under Section 16(b) of
the Securities Exchange Act of 1934, and any payment tendered in such event to exercise the NQSO shall be promptly refunded to Optionee.
10. Exercise Restrictions. BellSouth shall have the right to restrict or otherwise delay the issuance of any Shares purchased or paid under this Agreement
until the requirements of any applicable laws or regulations and any stock exchange requirements have been in BellSouth's judgment satisfied in
full. Furthermore, any Shares which are issued as a result of purchases or payments made under this Agreement shall be issued subject to such restrictions
and conditions on any resale and on any other disposition as BellSouth shall deem necessary or desirable under any applicable laws or regulations or in light
of any stock exchange requirements.
11. Taxes. BellSouth shall withhold from any payment of cash or Shares under this Agreement or take such other action as is permissible under the Plan
which BellSouth deems necessary to satisfy any income or other tax withholding requirements as a result of an exercise under this Agreement. BellSouth
shall have the right to require the payment of any such taxes and require that any person furnish information deemed necessary by BellSouth to meet any tax
reporting obligation before making any payment pursuant to this Agreement.
12. Jurisdiction and Venue. Acceptance of this Agreement shall be deemed to constitute Optionee's consent to the jurisdiction and venue of the Superior
Court of Fulton County, Georgia and the United States District Court for the Northern District of Georgia for all purposes in connection with any suit,
action, or other proceeding relating to this Agreement, including the enforcement of any rights under this Agreement and any process or notice of motion in
connection with such situation or other proceeding may be serviced by certified or registered mail or personal service within or without the State of Georgia,
provided a reasonable time for appearance is allowed.
13. Miscellaneous.
(a) Optionee's rights under this Agreement can be modified, suspended or canceled in accordance with the terms of the Plan.
(b) This Agreement shall be subject to the provisions, definitions, terms and conditions set forth in the Plan, all of which are incorporated by this
reference in this Agreement and, unless defined in this Agreement, any capitalized terms in this Agreement shall have the same meaning assigned to
those terms under the Plan.
(c) The Plan and this Agreement shall be governed by the laws of the State of Georgia.
(d) The exercise of the NQSO shall not be affected by the exercise or non−exercise of any other option.
BellSouth Corporation Stock and Incentive Compensation Plan
Granted to Optionee Social Option Price $ Per

Security No. Grant Date Number of Shares Share Expiration Date
Non−Employee Director
Non−Qualified Stock Option
AGREEMENT
BellSouth Corporation ("BellSouth"), a Georgia corporation, pursuant to action of its Board of Directors ("Board") and in accordance with the BellSouth
Corporation Stock and Incentive Compensation Plan ("Plan"), hereby grants a Non−Qualified Stock Option ("NQSO") to the Optionee named above to
purchase from BellSouth the above stated number of shares of BellSouth common stock, $1.00 par value ("Shares"), at the option price per share ("Option
Price") stated above. The NQSO is subject to the Terms and Conditions which are a part of and are attached to this Agreement and to the further terms and
conditions set forth in the Plan. The NQSO is granted effective as of the Grant Date stated above. It shall expire on the Expiration Date stated above, and
accordingly shall not be exercisable on and after that date, subject to its earlier expiration under Section 3 of the attached Terms and Conditions.
BellSouth Corporation
By: ___________________________
Authorized Officer
Exhibit 10−aaa
BELLSOUTH SUPPLEMENTAL LIFE INSURANCE PLAN
Amended and Restated Effective November 1, 2009
1. PURPOSE
The purpose of the BellSouth Supplemental Life Insurance Plan (the "Plan") is to provide an insurance arrangement under which BellSouth Corporation and
its subsidiaries and affiliates can assist key employees in acquiring and financing life insurance coverage.
During the period from January 1, 2005 through December 31, 2008, the Plan has been operated in good faith compliance with the provisions of Code
Section 409A, Internal Revenue Service Notice 2005−1, the proposed Treasury Regulations for Code Section 409A, the Final Treasury Regulations for
Code Section 409A, applicable Internal Revenue Services Notices and Announcements and any other generally applicable guidance published in the
Internal Revenue Service Bulletin.
2. DEFINITIONS
For purposes of this Plan, the following terms have the meanings set forth below:
2.01 "Coverage Amount" means the Policy death benefit payable under the Participant's Policy.
2.02 "Coverage Level" means the Single Life Coverage insurance death benefit the Employee is eligible for under the Plan, determined based on the
Employee's job classification, in accordance with the schedule of Coverage Levels maintained by the Plan Administrator. Provided ,however, that
to determine the amount of insurance (death benefit for which an Employee is eligible, the applicable amount from the schedule of Coverage
Levels shall be reduced by one hundred percent (100%) of the amount of any Single Life Coverage insurance death benefit and by fifty percent
(50%) of the amount of any Survivorship Coverage insurance death benefit provided to the Employee under the BellSouth Split−Dollar Life
Insurance Plan, the BellSouth Corporation Executive Life Insurance Plan, or the BellSouth Corporation Senior Manager Life Insurance Plan.
2.03 "Disability" means that the Participant is receiving disability benefits under any long−term disability plan sponsored by the Employer or an
affiliated entity.
2.04 "Effective Date" means the effective date of the Plan, which is January 1, 1998.
2.05 "Employee" means an employee or former employee of the Employer who is eligible to participate in the Plan.
2.06 "Employer" means BellSouth Corporation and any subsidiary or affiliate of BellSouth Corporation which is authorized by the Plan Administrator
to participate in this Plan.
2.07 "Employer Premium" means, with respect to a Participant's Policy, the Total Policy Premium payable for the year, less the portion of the
premium to be paid by the Participant pursuant to Section 5.01 of the Plan.
2.08 "Enrollment Age" means the Participant's age at the time of enrollment in the Plan as to the Participant's initial Coverage Amount under the Plan,
and it means the Participant's age at a subsequent enrollment for an increased Coverage Amount as to the increased Coverage Amount.
2.09 "Insurance Cost" means, with respect to a Participant, the annual cost for the Participant's Coverage Amount determined pursuant to the
Insurance Cost schedule maintained by the Plan Administrator. The Insurance Cost for a Participant shall be determined at the time of the
Participant's enrollment in the Plan, based on the Participant's Coverage Amount and Enrollment Age, and shall not change thereafter. A smoker
rate shall be used to determine the Insurance Cost for any Participant who is deemed a smoker by the Insurer; a nonsmoker rate shall be used for
all other Participants. A change in the Insurance Cost schedule will be effective only as to Plan enrollments occurring after the effective date of
the change; it shall not affect the Insurance Cost for a Participant with respect to any Coverage Amount in effect for the Participant prior to the
effective date of the change. If a Participant's coverage is in effect for a period of less than twelve (12) months during any Policy Year, the
Participant's Insurance Cost for that year shall be determined by multiplying the annual cost as determined from the Insurance Cost schedule by a
fraction, the numerator of which is the number of full months that the coverage is in effect and the denominator of which is twelve (12).
2.10 "Insurer" means, with respect to a Participant's Policy, the insurance company issuing the insurance policy on the Participant's life (or on the joint
lives of the Participant and the Participant's spouse, in the case of a Survivorship Policy) pursuant to the provisions of the Plan.
2.11 "Participant" means an Employee who is participating in the Plan.
2.12 "Participant Premium" means, with respect to each Policy Year (or portion thereof) for a Participant, the Participant's Insurance Cost.
2.13 "Permanent Policy" means a Participant's Policy having cash values which are projected to be sufficient to continue to provide death benefit
coverage at least equal to the Participant's Coverage Amount until the policy maturity date specified in the Participant's Policy (determined
without regard to any Policy rider which extends the maturity date beyond the originally scheduled policy maturity date), and which is projected
to have a cash accumulation value equal to at least ninety−five percent (95%) of the Policy Coverage Amount at the maturity date specified in
such Policy, with no further premium payments. The determination of whether a Policy is at a given time a Permanent Policy shall be made by
the Plan Administrator, based on Policy projections provided by the Insurer or its agent utilizing the Policy's then current mortality rates and
Policy expenses, and the following Policy interest crediting rates. For the Policy Year in which the determination is made and for all prior Policy
years, if any, the Policy projection shall be based on the actual interest crediting rates in effect for the Policy (or, if such rate is not known when
the determination is made, the actual rate in effect for the preceding Policy Year). For each of the ten (10) succeeding Policy Years, the
projections shall reflect that rate decreased ratably such that the rate for the tenth Policy Year following the Policy Year in which the
determination is made shall be five percent (5%). For all successive Policy Years, the projection shall reflect a five percent (5%) Policy interest
crediting rate. Notwithstanding the foregoing, if the interest crediting rate in effect for the Policy Year in which the determination is made is less
than five percent (5%), the projections shall reflect such lower rate for all Policy Years thereafter.
2.14 "Plan" means the BellSouth Supplemental Life Insurance Plan, embodied herein.
2.15
"Plan Administrator" means the Chief Executive Officer of BellSouth Corporation and any individual or committee he designates to act on his
behalf with respect to any or all of his responsibilities hereunder; provided, the Board of Directors of BellSouth Corporation may designate any
other person or committee to serve in lieu of the Chief Executive Officer as the Plan Administrator with respect to any or all of the administrative
responsibilities hereunder.
2.16 "Policy" means the life insurance coverage acquired on the life of the Participant (or on the joint lives of the Participant and the Participant's
spouse, in the case of a Survivorship Policy) by the Participant or other Policy Owner issued pursuant to the terms of this Plan. The Plan
Administrator shall determine the specific policies which may be acquired under the Plan, and shall maintain a list of approved policies.
2.17 "Policy Owner" means the Participant or that person or entity to whom the Participant has assigned his interest in the Policy.
2.18 "Policy Year" means the twelve month period (and each successive twelve month period) beginning on the issue date of the Policy.
2.19 "Premium Payment Years" means, with respect to a Participant's Policy, the number of consecutive Policy Years, beginning with the first Policy
Year, and continuing for the longer of: (1) all Policy Years ending at the end of the Policy Year during which the Participant attains age
sixty−two (62) (or, if the Participant dies before such time, the end of the Policy Year during which the Participant would have attained such
age); or (2) five (5) Policy Years. Notwithstanding the foregoing, if prior to the end of such period the Policy qualifies as a Permanent Policy, the
Premium Payment Years shall end at such earlier time.
2.20 "Retirement" means a termination of the Participant's employment with the Employer under circumstances where the Participant is immediately
eligible to receive pension benefits under the Supplemental Executive Retirement Plan (SERP) maintained by the Employer or one of its
subsidiaries.
2.21 "Single Life Coverage" means life insurance coverage on the life of the Participant.
2.22 “Specified Employee” shall mean, for periods on or after December 29, 2006, 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 31 st (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 4 th month following the close of such identification period. For periods prior to December 29, 2006, the term
Specified Employee shall mean a “specified employee” under Code Section 409A.
2.23 "Survivorship Coverage" means life insurance coverage on the lives of the Participant and the Participant's spouse, with the life insurance death
benefit to be payable at the death of the last survivor of the Participant and the Participant's spouse.
2.24 "TotaI Policy Premium" means the level annual premium amount for the Participant's Single Life Coverage Policy that is projected to result in
the Policy qualifying as a Permanent Policy if the annual premium amount is paid each year for all scheduled Premium Payment Years, assuming
the Participant qualifies for the Insurer's guaranteed issue nonsmoker rates, or if the Participant is deemed by the Insurer to be a smoker, the
Insurer's guaranteed issue smoker rates. The determination as to the amount of the Total Policy Premium shall be based on Single Life Coverage
even if the Participant elects Survivorship Coverage. If more than one type of Single Life Coverage Policy is available under the Plan, the Plan
Administrator shall determine the Single Life Coverage Policy to be used to determine the Total Policy Premium. The Total Policy Premium for
a Participant shall be determined when the Participant enrolls for coverage under the Plan, and shall not be changed thereafter; it shall be based
on the Participant's Coverage Level, or, if less, the actual Coverage Amount elected by the Participant.
3. ELIGIBILITY
3.01 General. Each Employee who is designated by the Plan Administrator as a member of the Employer's "executive compensation group” or as a
"senior manager" shall be eligible to participate in the Plan, provided that the Employee (and any other appropriate party, such as the Employee's
spouse or a Policy Owner other than the Employee as determined by the Plan Administrator) relinquishes any rights to or interests in any policies
providing interim coverage during the rehabilitation of Confederation Life Insurance Company under the BellSouth Corporation Executive Life
Insurance Plan or the BellSouth Corporation Senior Manager Life Insurance Plan and completes such other forms as the Plan Administrator may
require. Each such Employee on the Effective Date shall be eligible to participate in the Plan as of the Effective Date. Each Employee
subsequently satisfying such eligibility requirements shall be eligible to participate in the Plan effective as of the first day of the calendar quarter
(i.e., January 1, April 1, July 1, and October 1) following the date on which such standards are satisfied.
3.02 Type of Coverage. If an Employee is married at the time the Employee enrolls in the Plan, the Employee can elect to participate in either Single
Life Coverage or Survivorship Coverage. An Employee who is unmarried at the time the Employee enrolls in the Plan shall be eligible for Single
Life Coverage only. The election of one type of coverage shall not preclude the Participant from electing the other type of coverage as to any
increased Coverage Level the Participant becomes eligible for pursuant to Section 4.02 of the Plan.
3.03 Conversion of Coverage. Subject to any proof of insurability required by the Insurer, a Participant (or other Policy Owner) can elect to convert
Survivorship Coverage to Single Life Coverage, and with respect to a married Participant, the Participant (or other Policy Owner) can elect to
convert Single Life Coverage to Survivorship Coverage. Provided, however, that the number of Premium Payment Years for a Participant shall
not be redetermined in connection with a conversion from one type of coverage to another. Upon a conversion, the cash values of the replaced
Policy shall be transferred to the new Policy in accordance with the Insurer's practices. Any Insurer charges or tax liability resulting from a
conversion shall be borne by the Participant or other Policy Owner.
4. AMOUNT OF COVERAGE
4.01 General. An Employee who is eligible to participate in the Plan under Section 3.01 of the Plan shall be eligible for the full Coverage Level as
specified in the Plan under Section 2.02. However, within sixty (60) days of becoming eligible to participate, a Participant can elect a Coverage
Amount which is less than the applicable Coverage Level; provided, however, that the Coverage Amount elected must be an even multiple of
$100,000. If a Participant elects a Coverage Amount less than the Participant's Coverage Level (or fails to elect any Coverage), the Participant
cannot later increase the Coverage Amount except in connection with a promotion under Section 4.02 of the Plan.
4.02 Promotions. Employees promoted to a job classification or position eligible for an increased Coverage Level shall be eligible for the increased
Coverage Level effective as of the first day of the calendar quarter (i.e., January 1, April 1, July 1, and October 1) following the promotion. The
additional Coverage Amount available to the Participant under this Section shall be equal to the applicable Coverage Level after the promotion
reduced by any Coverage Amounts already in effect for a Participant. In order to be effective, any election for an increase in the Coverage
Amount must be made within the time period prescribed by the Plan Administrator in enrollment materials provided to the Employee.
4.03 Survivorship Coverage. If a Participant elects Survivorship Coverage, the amount of Survivorship Coverage will be determined by the Plan
Administrator based on the Participant's age and smoker or nonsmoker status, the age and insurability of the Participant's spouse, and based on
the Participant's Total Policy Premium. The Coverage Amount shall be the highest amount such that the Policy will qualify as a Permanent Policy
if the Total Policy Premium is paid for each year that is a scheduled Premium Payment Year.
5. PAYMENT OF PREMIUMS
5.01 Participant Premium Payments. A Participant shall pay the Participant Premium for each Policy Year which is a Premium Payment Year for the
Participant. The amount shall be paid by the Participant to the Employer by payroll (or retirement income) deductions of equal installments
during the Policy Year, or in such other manner as may be determined by the Plan Administrator. The Employer shall pay the Participant
Premium amount to the Insurer, and can do so as collected from the Participant or can advance payments to the Insurer for a Policy Year at any
time during the Policy Year or up to thirty (30) days in advance of the Policy Year. If a Participant terminates employment with the Employer,
and the Employer has made such an advance payment of the Participant Premium to the Insurer, the Employer may withhold any uncollected
portion of the advanced Participant Premium from any amount payable to the Participant by the Employer to the extent permitted by law.
Notwithstanding the other provisions of this paragraph, no Participant Premium shall be required with respect to Survivorship Coverage after the
death of the Participant.
5.02 Employer Premium Payments. The Employer shall pay the Employer Premium for a Participant's Policy within thirty (30) days of the beginning
of each Policy Year which is a Premium Payment Year.
Notwithstanding any other Plan provision to the contrary, if a Participant (who was not earned and vested in all deferred compensation under the
plan as of December 31, 2004 and thus was not grandfathered from the requirements of Code Section 409A) incurs a “separation from service”
(within the meaning of Code Section 409A) on or after January 1, 2005, and at the time of such separation from service, the Participant is a
Specified Employee who is eligible to continue participation due to his Retirement or Disability, then payment of any Employer Premium shall
be delayed until the date that is six months after the Participant’s separation from service.
5.03 Additional Employer Premium Payments. For each of the last three (3) scheduled Premium Payment Years for a Participant, the Plan
Administrator shall determine whether there will be any increased Employer premium payment with respect to a Participant's Policy. The Plan
Administrator shall first determine whether the Participant's Policy is then projected to qualify as a Permanent Policy if the Total Policy Premium
is paid each year for the remaining scheduled Premium Payment Years. If the Policy is projected to qualify as a Permanent Policy, no increased
Employer Premium payment shall be required for such Premium Payment Year. If the projections indicate that the Policy will not qualify as a
Permanent Policy, then the amount payable by the Employer under Section 5.02 shall be increased by an amount which will result in the Policy
qualifying as a Permanent Policy if such increased amount is paid for each remaining Premium Payment Year, but any such increase in Employer
Premium shall be limited by the maximum premium amounts permissible for such Policy under Internal Revenue Code Sections 7702 and 7702A
(or comparable successor sections) without forfeiting any of the favorable tax attributes associated with life insurance policies. The determination
as to whether any increased amount is payable shall be made separately for each of the last three (3) Premium Payment Years. However, the
Employer Premium payable under Section 5.02 shall not be reduced to an amount that is less than the amount which would have been payable by
the Employer for a Premium Payment Year without regard to this Section 5.03. Regardless of the type of coverage actually provided to a
Participant, and notwithstanding any changes in the type of coverage provided to the Participant under Section 3.03, the increased Employer
Premium payable under this Section 5.03 shall be the amount that would be payable if the Participant had elected Single Life Coverage and
maintained such coverage for all Policy Years; also, if more than one type of Single Life Coverage Policy is available under the Plan, the Single
Life Coverage Policy used to determine Total Policy Premium under Section 2.24 shall be used to make the determination under this Section
5.03. In the event tax law limits preclude the Employer from qualifying a Policy as a Permanent Policy by the end of the last scheduled Premium
Payment Year, then the Employer's obligation to pay premiums under Section 5.02 and 5.03 (and make additional Employer payments under
Section 5.04) shall be extended until projections indicate that the Policy qualifies as a Permanent Policy.
5.04 Additional Employer Payments.
a. If the payment of an Employer Premium under Section 5.02 (or any increased amount under Section 5.03) results in the recognition of
income for tax purposes by the Participant in any year, the Employer shall pay to the Participant an amount determined by the Plan Administrator
which is designed to approximate (1) the sum of the total federal and state income taxes and applicable payroll taxes which would be payable by
the Participant at the highest marginal rate provided for under applicable federal income tax laws, and at the highest marginal rate provided for
under applicable state income tax laws for the state of the Participant's tax domicile, on the income so recognized, plus (2) the total federal and
state income taxes and applicable payroll taxes which would be payable by the Participant on the payment described in clause (1).
b. If the payment of any Employer Premium under Section 5.02 (or any increased amount under Section 5.03) on Survivorship Coverage after
the death of the Employee results in the recognition of income for tax purposes by the Participant's spouse or other Policy Owner, the Employer
shall pay to the Participant's spouse or other Policy Owner an amount determined by the Plan Administrator which is designed to approximate the
total federal and state income taxes which would be payable by the Participant's spouse or other Policy Owner at the highest marginal rate
provided for under applicable federal income tax laws, and at the highest marginal rate provided for under applicable state income tax laws for
the state of the tax domicile of the Participant's spouse or other Policy Owner, attributable to such premium payment.
c. For purposes of this Section 5.04, a tax shall be deemed payable or income shall be deemed recognized if either (i) it is finally determined by
the Internal Revenue Service, or (ii) an opinion is given by the Employer's counsel, that the tax is payable.
d. Any payment made to a Participant or a Participant's spouse under this Section shall be made no later than April 1 of the year following
the year to which the payment relates.
e. Any amount to be paid to a Participant, a Participant's spouse, or other Policy Owner under this Section, and the amounts payable, shall
be conclusively determined by the Plan Administrator based on generally applicable tax rates and not based upon the unique tax situation of each
Participant, Participant's spouse, or other Policy Owner.
f. Notwithstanding any other provisions of Section 5.04, effective November 1, 2009, any Participant who AT&T Inc. has determined in its
sole discretion to be an executive officer of AT&T Inc. under Rule 3b−7 of the Securities Exchange Act of 1934 shall not be eligible to receive
Additional Employer Payments described in Sections 5.04(a) or 5.04(b) (i.e., in general, no tax gross−up benefits).
5.05 Termination of Obligation to Pay Premiums. Notwithstanding anything herein to the contrary, the Employer's obligation to pay premiums
(including any increased amounts under Section 5.03) with respect to the Participant's Policy, shall terminate upon the first to occur of any of the following
events:
a. Termination of employment of the Participant with the Employer prior to the Participant's death for reasons other than Retirement or
Disability.
b. The written notice by the Employer to the Participant following a resolution by the Board of Directors of BellSouth Corporation to
terminate this Plan.
c. As to Single Life Coverage only, the death of the Participant.
d. As to Survivorship Coverage only, the death of the last survivor of the Participant and the Participant's spouse.
e. The surrender or cancellation of the Participant's Policy, except that a Policy will not be considered surrendered or canceled if the
surrender or cancellation is in connection with the replacement of the Policy with another Policy pursuant to the provisions of the Plan.
f. The withdrawal of any Policy cash values, or borrowing against the Policy cash values, by the Participant or other Policy Owner.
g. The reduction of the Participant's Policy death benefit to a level that is less than the initial Policy Coverage Amount, except that a
conversion from Survivorship Coverage to Single Life Coverage shall not be considered a reduction in Policy death benefit for the
purpose of this Section.
h. The determination by the Plan Administrator that the Policy will qualify as a Permanent Policy with no further Employer Premium payments.
6. POLICY OWNERSHIP
6.01 Ownership. The Policy Owner shall be the sole and exclusive owner of a Participant's Policy and shall be entitled to exercise all of the rights of
ownership.
6.02 Possession of Policy. The Policy Owner shall keep possession of the Policy.
7. GOVERNING LAWS & NOTICES
7.01 Governing Law. This Plan shall be governed by and construed in accordance with the laws of the State of Georgia.
7.02 Notices. All notices hereunder shall be in writing and sent by first class mail with postage prepaid. Any notice to the Employer shall be
addressed to BellSouth Corporation at its office at 1155 Peachtree Street, N.E. ,Atlanta. GA 30367−6000, ATIENTION: Human Resources –
Director Executive Benefits. Any notice to the Employee shall be addressed to the Employee at the address for the Employee maintained in the
Employer's records. Any party may change the address for such party herein set forth by giving notice of such change to the other parties
pursuant to this Section.
8. NOT A CONTRACT OF EMPLOYMENT
This Plan shall not be deemed to constitute a contract of employment between an Employee and the Employer or a Participant and the Employer, nor shall
any provision restrict the right of the Employer to discharge an Employee or Participant, or restrict the right of an Employee or Participant to terminate
employment.
9. AMENDMENT, TERMINATION, ADMINISTRATION, CONSTRUCTION

AND SUCCESSORS
9.01 Amendment. The Board of Directors of BellSouth Corporation, or its delegate, shall have the right in its sole discretion, to amend the Plan in
whole or in part at any time and from time to time. In addition, the Plan Administrator shall have the right, in its sole discretion, to amend the
Plan at any time and from time to time so long as such amendment is not of a material nature. Notwithstanding the foregoing, no modification or
amendment shall be effective so as to decrease any benefits of a Participant unless the Participant consents in writing to such modification or
amendment. Written notice of any material modification or amendment shall be given promptly to each Participant.
9.02 Termination. The Board of Directors of BellSouth Corporation may terminate the Plan without the consent of the Participants or Employees.
The Plan shall be terminated effective December 31, 2008 for employees who are actively employed by the Company on December 31, 2008.
The Plan shall continue with its current terms for Participants who are former employees as of December 31, 2008.
9.03 Successors. The terms and conditions of this Plan shall enure to the benefit of and bind the Employer, the Participant, their successors, assignees,
and representatives. If, subsequent to the Effective Date of the Plan, substantially all of the stock or assets of the Employer are acquired by
another corporation or entity or if the Employer is merged into, or consolidated with, another corporation or entity, then the obligations created
hereunder shall be obligations of the acquirer or successor corporation or entity.
10. PLAN ADMINISTRATION
10.01 Individual Administrator. If the Plan Administrator is an individual, he shall act and record his actions in writing. Any matter concerning
specifically such individual's own benefit or rights hereunder shall be determined by the Board of Directors of BellSouth Corporation or its
delegate.
10.02 Administrative Committee. If the Plan Administrator is a committee, or if any of the duties or responsibilities of the Plan Administrator are
vested in a committee, action of the Plan Administrator may be taken with or without a meeting of committee members; provided, action shall be
taken only upon the vote or other affirmative expression of a majority of the committee members qualified to vote with respect to such action. If a
member of the committee is a Participant, he or she shall not participate in any decision which solely affects his or her own benefit under the
Plan. For purposes of administering the Plan, the Plan Administrator shall choose a secretary who shall keep minutes of the committee's
proceedings and all records and documents pertaining to the administration of the Plan. The secretary may execute any certificate or other written
direction on behalf of the Plan Administrator.
10.03 Rights and Duties of the Plan Administrator. The Plan Administrator shall administer the Plan and shall have all powers necessary to accomplish
that purpose, including (but not limited to) the following:
a. to construe, interpret and administer the Plan;
b. to make determinations required by the Plan, and to maintain records regarding Participants' benefits hereunder;
c. to compute and certify the amount and kinds of benefits payable to Participants, and to determine the time and manner in which such
benefits are to be paid;
d. to authorize all disbursements pursuant to the Plan;
e. to maintain all the necessary records of the administration of the Plan;
f. to make and publish such rules and procedures for the regulation of the Plan as are not inconsistent with the terms hereof;
g. to designate to other individuals or entities from time to time the performance of any of its duties or responsibilities hereunder; and
h. to hire agents, accountants, actuaries, consultants and legal counsel to assist in operating and administering the Plan.
The Plan Administrator shall have the exclusive right to construe and interpret the Plan, to decide all questions of eligibility for benefits and to
determine the amount of benefits, and its decisions on such matters shall be final and conclusive on all parties.
10.04 Bond; Compensation. The Plan Administrator and (if applicable) its members shall serve as such without bond and without compensation for
services hereunder.
11. CLAIMS PROCEDURE
11.01 Named Fiduciary. The Plan Administrator is hereby designated as the named fiduciary under this Plan.
11 .02 Claims Procedures. Any controversy or claim arising out of or relating to this Plan shall be filed with the Plan Administrator which shall make all
determinations concerning such claim. Any decision by the Plan Administrator denying such claim shall be in writing and shall be delivered to all
parties in interest in accordance with the notice provisions of Section 7.02 hereof. Such decision shall set forth the reasons for denial in plain
language. Pertinent provisions of the Plan shall be cited and, where appropriate, an explanation as to how the Employee can perfect the claim will be
provided. This notice of denial of benefits will be provided within 90 days of the Plan Administrator's receipt of the Employee's claim for benefits. If
the Plan Administrator fails to notify the Employee of its decision regarding the claim, the claim shall be considered denied, and the Employee shall
then be permitted to proceed with the appeal as provided in this Section.
An Employee who has been completely or partially denied a benefit shall be entitled to appeal this denial of his/her claim by filing a written
statement of his/her position with the Plan Administrator no later than sixty (60) days after receipt of the written notification of such claim denial.
The Plan Administrator shall schedule an opportunity for a full and fair review of the issue within thirty (30) days of receipt of the appeal. The
decision on review shall set forth specific reasons for the decision, and shall cite specific references to the pertinent Plan provisions on which the
decision is based.
Following the review of any additional information submitted by the Employee, either through the hearing process or otherwise, the Plan
Administrator shall render a decision on the review of the denied claim in the following manner:
a. The Plan Administrator shall make its decision regarding the merits of the denied claim within sixty (60) days following receipt of the request for
review (or within 120 days after such receipt, in a case where there are special circumstances requiring extension of time for reviewing the appealed
claim). The Plan Administrator shall deliver the decision to the claimant in writing. If an extension of time for reviewing the appealed claim is
required because of special circumstances, written notice of the extension shall be furnished to the Employee prior to the commencement of the
extension. If the decision on review is not furnished within the prescribed time, the claim shall be deemed denied on review.
b. The decision on review shall set forth specific reasons for the decision, and shall cite specific references to the pertinent Plan provisions on which
the decision is based.
Exhibit 10−jjj
FORM OF
NON−DISCLOSURE AND NON−SOLICITATION AGREEMENT
This Agreement is effective as of ________________, 200__, between AT&T Inc., a Delaware corporation, (collectively with its direct and
indirect subsidiaries and affiliates referred to herein as the “Company”) and [Name of Executive] (“Executive”). Executive is employed by [Name of
Executive’s Employer], which is a direct or indirect affiliate or subsidiary of AT&T Inc.
In consideration of Executive’s (i) original or continued employment with the Company, (ii) current and continued specialized training in the
Company’s business, (iii) current and continued access to the Company’s proprietary and confidential information during Executive’s employment, (iv) the
compensation that will be paid to Executive during Executive’s employment, (v) the award of ____________________ shares of AT&T Inc. Restricted
Stock, and (vi) future eligibility to participate in the Company’s executive compensation and benefit plans that include loyalty−related covenants effective
January 1, 2010, the Company and Executive agree to the terms set forth below. The Restricted Stock will be granted under the 2006 Incentive Plan
effective with the execution of this agreement and will have a vesting date of November 19, 2012.
1. ACKNOWLEDGMENTS
1.1 The Company and the Executive acknowledge and agree as follows:
(a) The Executive has performed and will continue to perform significant functions with respect to the development of the Company’s
“Confidential Information” (defined below), which Confidential Information is shared only with a very limited number of Company executives who
have an absolute need to know the information.
(b) Executive has a need to know such Confidential Information for purposes of successfully performing the Executive’s assigned
employment related responsibilities. The Company is willing to make such Confidential Information available to Executive on the terms and
conditions described in this Agreement.
(c) The Confidential Information developed, received, and to be developed or received by Executive is highly valuable, and, if disclosed
to another person or entity, the Company would be harmed.
2. EXECUTIVE COVENANTS
2.1 Covenant not to Disclose
(a) During Executive’s employment with the Company and for a period of twenty−four (24) months following the termination of that
employment (whether such termination is voluntary or involuntary), Executive will not use, disclose or reveal to any person any Confidential
Information except when acting within the scope of Executive’s duties or with prior written authorization from the Company.
(b) Following termination of employment, Executive shall return to Company, and shall not take or retain, any Confidential Information,
including, without limitation, any Confidential Information in electronic form, or any computer or data storage device belonging to the Company,
without prior written authorization from the Company, and Executive will continue to faithfully perform all of Executive’s contractual, legal and
ethical obligations to the Company to the extent such obligations continue in effect.
(c) As used in this Agreement, the term “Confidential Information” means all information belonging to, or otherwise relating to the
business of the Company, which is not generally known, regardless of the manner in which it is stored or conveyed to Executive, and which the
Company has taken reasonable measures under the circumstances to protect from unauthorized use or disclosure. Confidential Information includes
trade secrets as well as other proprietary knowledge, information, know−how, and non−public intellectual property rights, including unpublished or
pending patent applications and all related patent rights, formulae, processes, discoveries, improvements, ideas, conceptions, compilations of data,
and data, whether or not patentable or copyrightable and whether or not it has been conceived, originated, discovered, or developed in whole or in
part by Executive. For example, Confidential Information includes, but is not limited to, information concerning the Company’s business plans,
budgets, operations, products, strategies, marketing, sales, inventions, designs, costs, legal strategies, finances, supervisory employees, employee
costs, customers, prospective customers, licensees, or licensors; information received from third parties under confidential conditions; or other
valuable financial, commercial, business, technical or marketing information concerning the Company, or any of the products or services made,
developed or sold by the Company. Confidential Information does not include information that (i) was generally known to the public at the time of
disclosure; (ii) was lawfully received by Executive from a third party; (iii) was known to Executive prior to receipt from the Company; or (iv) was
independently developed by Executive or independent third parties; in each of the foregoing circumstances, this exception applies only if such
public knowledge or possession by an independent third party was without breach by Executive or any third party of any obligation of
confidentiality or non−use, including, but not limited to, the obligations and restrictions set forth in this Agreement.
(d) Nothing in this Section 2.1 shall be deemed to limit Executive’s non−disclosure obligations under any applicable rule, statute, or
regulation. Executive’s obligations under this Section 2 shall continue in perpetuity with respect to any and all information that constitutes a trade
secret under applicable law.
2.2 Covenants not to Solicit or Hire
(a) During Executive’s employment with the Company and for a period of twenty−four (24) months following the termination of that
employment (whether such termination is voluntary or involuntary), Executive will not hire for another employer, recruit or solicit to work for
another employer as an employee or contractor, or assist or participate in any way in such hiring, recruitment or solicitation of, any non−clerical
employee of the Company who was employed by the Company as of the date that Executive’s employment terminates and with whom Executive
had Contact (as defined below) during Executive’s employment with the Company.
(b) As used in this Agreement, “Contact” means interaction between Executive and the non−clerical employee during performance of
Executive’s job duties on behalf of the Company.
(c) Nothing in this Section 2.2 shall be deemed to prohibit communications other than those whose purpose is to encourage or entice a
non−clerical employee to terminate or limit his or her employment with the Company.
(d) Nothing in this Section 2.2 shall be deemed to prohibit any conduct as to which Executive obtains the express prior written consent of
the Company.
2.3 Remedies for Breach
The parties recognize that Executive’s breach of this Agreement will cause irreparable injury to the Company, such that monetary damages
would not provide an adequate or complete remedy. Accordingly, in the event of Employee’s actual or threatened breach of the provisions of this
Agreement, the Company, in addition to all other rights, shall be entitled to an injunction restraining Executive from breaching this Agreement, and to
recover from Executive its reasonable attorneys’ fees and costs incurred in obtaining such remedies.
3. RIGHTS IN DEVELOPMENTS
All writings, artwork, developments, inventions, techniques, methods, improvements, products, devices, programs, or systems that Executive,
either alone or in concert with other Company employees or contractors, shall conceive, develop, or make within the scope of Executive’s employment by
the Company or that are related to such employment shall be divulged to the Company and shall be the sole property of the Company as
work−made−for−hire. In the event that anything Executive, either alone or in concert with other Company employees or contractors, conceives, develops,
or makes within the scope of Executive’s employment or related to Executive’s employment does not qualify as a work−made−for−hire under applicable
laws, Executive hereby assigns to the Company all interest and rights therein, including, without limitation, worldwide copyright in all forms and media,
now or hereafter known. The Company shall own all rights throughout the world to anything Executive, either alone or in concert with other Company
employees or contractors, conceives, develops, or makes within the scope of Executive’s employment or related to Executive’s employment, whether or not
copyright or patent applications or other procedures for the establishment of proprietary rights are pursued. Executive shall cooperate fully in the
establishment and maintenance of all such rights of the Company throughout the world by executing such documents as may reasonably be requested for
such purposes, such as copyright applications, Letters Patent, and assignments thereof to the Company.
4. OBLIGATIONS TO PREVIOUS EMPLOYERS
Executive hereby warrants and certifies that Executive’s employment by the Company does not and will not breach any of Executive’s
obligations under any agreement to which Executive is a party with any of Executive’s previous employers; that Executive has not taken or retained, and
will not take or retain, any documents or other records, whether in paper, electronic or any other form, or any computer or electronic storage device,
belonging to any previous employer, including, without authorization from any such employer; that Executive has faithfully performed, and will continue to
faithfully perform, all of Executive’s contractual, legal and ethical obligations to any previous employer, to the extent such obligations continue in effect;
and that Executive will not use or disclose any confidential information belonging to any previous employer in connection with Executive’s employment by
the Company.
5. CHOICE OF LAW / EXCLUSIVE FORUM SELECTION
This Agreement shall be construed under, governed by and enforced in accordance with the laws of the State of ___________. Any action
brought to enforce, invalidate or otherwise affect the terms of this Agreement may be brought only in the federal or state courts in __________ County in
the State of ___________. The parties each hereby consent to personal jurisdiction in the federal and state courts in ___________ County in the State of
____________ and to service of process in the State of __________. Nothing in this Agreement, however, shall diminish either party’s amenability to
service of process in other jurisdictions under applicable “long−arm” jurisdiction provisions. [use forum specific to Executive]
6. ASSIGNMENT
Executive acknowledges that the services to be rendered are unique and personal. Accordingly, Executive may not assign any of his or her rights
or delegate any duties or obligations under this Agreement. The rights and obligations of the Company under this Agreement shall inure to the benefit of
and be binding upon the successors and assigns of the Company.
7. SEVERABILITY
If any provision of this Agreement is held to be unenforceable, such provision will be distinct and severable from the other provisions of this
Agreement, and such unenforceability will not affect the validity and enforceability of the remaining provisions.
8. MISCELLANEOUS
8.1 Executive acknowledges that this Agreement does not confer the right to be employed by the Company for any specific period of
time and that Executive’s employment relationship with the Company is at−will and may be terminated by either party at any time.
8.2 The waiver or consent by the Company of any provision of this Agreement, or the waiver or consent by the Company of a breach
of any provision of this Agreement by Executive shall not operate or be construed as a further or continuing waiver or consent of any subsequent breach by
Executive. No waiver or consent shall be valid or binding on the Company unless made in writing and signed by an authorized representative of the
Company.
8.3 Section headings in this Agreement are used for convenience or reference only and shall not affect the meaning of any provision of
this Agreement.
8.4 The language of all parts of this Agreement shall in all cases be construed as a whole, according to its fair meaning, and not strictly
for or against either of the parties. This Agreement constitutes the sole and entire agreement between the parties relating to its subject matter, and it
supersedes and cancels all previous agreements or understandings between the parties except that this Agreement shall not be deemed to supersede or cancel
any obligations of Executive under the [list specific plans and agreements that include non−compete, non−solicit, and/or confidentiality provisions] AT&T
Supplemental Employee Retirement Plan, any deferred compensation or stock option award plan, or any other AT&T benefit or welfare plan as to which
Executive is a participant or beneficiary. In executing this Agreement neither party has relied on any statements, promises, or representations made by the
other party except as specifically stated in this Agreement.
8.5 Executive and the Company represent and agree that each has reviewed all aspects of this Agreement, has carefully read and fully
understands all provisions of this Agreement, and is knowingly and voluntarily entering into this Agreement. Both parties represent and agree that they
have had the opportunity to review any and all aspects of this Agreement with the legal advisor or advisors of their choice before executing this Agreement,
and have in fact received and considered such legal advice and counsel as they wish to obtain.
IN WITNESS WHEREOF, the parties have duly executed this Agreement effective as of the date written above.
AT&T INC.
[Name of Executive]
By:
Title:
Exhibit 12
AT&T, INC.
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
Dollars in millions
2009 2008 2007 2006 2005

Earnings:
Income from continuing operations before income
taxes $ 18,999 $ 20,164 $ 18,399 $ 10,886 $ 5,720
Equity in net income of affiliates included above (734) (819) (692) (2,043) (609)
Fixed Charges 5,102 4,964 4,536 2,209 1,681
Distributed income of equity affiliates 317 164 395 97 158
Interest capitalized (740) (659) (171) (73) (36)
Earnings, as adjusted $ 22,944 $ 23,814 $ 22,467 $ 11,076 $ 6,914
Fixed Charges:
Interest expense $ 3,379 $ 3,390 $ 3,507 $ 1,843 $ 1,456
Interest capitalized 740 659 171 73 36
Dividends on preferred securities − 4 3 3 31
Portion of rental expense representative of interest
factor 983 911 855 290 158
Fixed Charges $ 5,102 $ 4,964 $ 4,536 $ 2,209 $ 1,681
Ratio of Earnings to Fixed Charges 4.50 4.80 4.95 5.01 4.11
*All periods presented exclude undistributed earnings on investments accounted for under the equity method as well as "Income From discountinued
Operations, net of tax" in our Consolidated Statements of Income, which was from the sale of our interest in the directory advertising business in Illinois
and northwest Indiana.
Selected Financial and Operating Data
Dollars in millions except per share amounts
At December 31 or for the year ended: 2009 2008 2007 20062 20053
Financial Data1
Operating revenues $ 123,018 $ 124,028 $ 118,928 $ 63,055 $ 43,764
Operating expenses $ 101,526 $ 100,965 $ 98,524 $ 52,767 $ 37,596
Operating income $ 21,492 $ 23,063 $ 20,404 $ 10,288 $ 6,168
Interest expense $ 3,379 $ 3,390 $ 3,507 $ 1,843 $ 1,456
Equity in net income of affiliates $ 734 $ 819 $ 692 $ 2,043 $ 609
Other income (expense) – net $ 152 $ (328) $ 810 $ 398 $ 398
Income taxes $ 6,156 $ 7,036 $ 6,252 $ 3,525 $ 932
Net Income $ 12,843 $ 13,128 $ 12,147 $ 7,361 $ 4,787
Less: Net Income Attributable to Noncontrolling Interest $ (308) $ (261) $ (196) $ (5) $ (1)
Net Income Attributable to AT&T $ 12,535 $ 12,867 $ 11,951 $ 7,356 $ 4,786
Earnings Per Common Share:
Net Income Attributable to AT&T $ 2.12 $ 2.17 $ 1.95 $ 1.89 $ 1.42
Earnings Per Common Share – Assuming Dilution:
Net Income Attributable to AT&T $ 2.12 $ 2.16 $ 1.94 $ 1.89 $ 1.42
Total assets $ 268,752 $ 265,245 $ 275,644 $ 270,634 $ 145,632
Long-term debt $ 64,720 $ 60,872 $ 57,255 $ 50,063 $ 26,115
Total debt $ 72,081 $ 74,991 $ 64,115 $ 59,796 $ 30,570
Construction and capital expenditures $ 17,335 $ 20,335 $ 17,888 $ 8,393 $ 5,612
Dividends declared per common share $ 1.65 $ 1.61 $ 1.47 $ 1.35 $ 1.30
Book value per common share $ 17.34 $ 16.42 $ 19.15 $ 18.58 $ 14.09
Ratio of earnings to fixed charges 4.50 4.80 4.95 5.01 4.11
Debt ratio7 41.3% 43.7% 35.6% 34.1% 35.9%
Weighted-average common shares
outstanding (000,000) 5,900 5,927 6,127 3,882 3,368
Weighted-average common shares
outstanding with dilution (000,000) 5,924 5,958 6,170 3,902 3,379
End of period common shares
outstanding (000,000) 5,902 5,893 6,044 6,239 3,877
Operating Data
Wireless customers (000)4 85,120 77,009 70,052 60,962 54,144
In-region network access lines in service (000)5 49,392 55,610 61,582 66,469 49,413
In-region broadband connections (000)6,7 17,254 16,265 14,802 12,170 6,921
Number of employees 282,720 302,660 309,050 304,180 189,950
1
Amounts in the above table have been prepared in accordance with U.S. generally accepted accounting principles.
2
Our 2006 income statement amounts reflect results from BellSouth Corporation (BellSouth) and AT&T Mobility LLC (AT&T Mobility), formerly
Cingular Wireless LLC, for the two days following the December 29, 2006 acquisition. Our 2006 balance sheet and end-of-year metrics include 100% of
BellSouth and AT&T Mobility. Prior to the December 29, 2006, BellSouth acquisition, AT&T Mobility was a joint venture in which we owned 60% and
was accounted for under the equity method.
3
Our 2005 income statement amounts reflect results from AT&T Corp. for the 43 days following the November 18, 2005, acquisition. Our 2005 balance
sheet and end-of-year metrics include 100% of AT&T Corp.
4
The number presented represents 100% of AT&T Mobility cellular/PCS customers.
5
In-region represents access lines serviced by our incumbent local exchange companies (in 22 states since the BellSouth acquisition and in 13 states prior
to that acquisition). Beginning in 2006, the number includes BellSouth lines in service.
6
Broadband connections include in-region DSL lines, in-region U-verse High Speed Internet access, satellite broadband and 3G LaptopConnect cards.
7
Prior period amounts restated to conform to current period reporting methodology.
1
Management’s Discussion and Analysis of Financial Condition and Results of Operations
For ease of reading, AT&T Inc. is referred to as “we,” “us,” “AT&T” or the “Company” throughout this document, and
the names of the particular subsidiaries and affiliates providing the services generally have been omitted. AT&T is a
holding company whose subsidiaries and affiliates operate in the communications services industry both in the United
States and internationally, providing wireless and wireline telecommunications services and equipment as well as
directory advertising and publishing services. You should read this discussion in conjunction with the consolidated
financial statements and accompanying notes. A reference to a “Note” in this section refers to the accompanying Notes
to Consolidated Financial Statements. In the tables throughout this section, percentage increases and decreases that
equal or exceed 100% are not considered meaningful and are denoted with a dash.
RESULTS OF OPERATIONS
Consolidated Results Our financial results are summarized in the table below. We then discuss factors affecting our
overall results for the past three years. These factors are discussed in more detail in our “Segment Results” section. We
also discuss our expected revenue and expense trends for 2010 in the “Operating Environment and Trends of the
Business” section.
Percent Change
2009 vs. 2008 vs.
2009 2008 2007 2008 2007
Operating Revenues $ 123,018 $ 124,028 $ 118,928 (0.8)% 4.3%
Operating expenses
Cost of services and sales 50,405 49,556 46,801 1.7 5.9
Selling, general and administrative 31,407 31,526 30,146 (0.4) 4.6
Depreciation and amortization 19,714 19,883 21,577 (0.8) (7.9)
Total Operating Expenses 101,526 100,965 98,524 0.6 2.5
Operating Income 21,492 23,063 20,404 (6.8) 13.0
Income Before Income Taxes 18,999 20,164 18,399 (5.8) 9.6
Net Income Attributable to AT&T 12,535 12,867 11,951 (2.6) 7.7
Diluted Earnings Per Share 2.12 2.16 1.94 (1.9)% 11.3%
Overview
Operating income decreased $1,571, or 6.8%, in 2009 and increased $2,659, or 13.0%, in 2008. Our operating income
margin increased from 17.2% in 2007 to 18.6% in 2008 and decreased to 17.5% in 2009. Operating income in 2009
decreased primarily due to the decline in voice revenues and directory print advertising, an increase in pension and other
postemployment benefits (OPEB) expense, and the higher cost of equipment sales in our Wireless segment attributed to
the continued success of Apple iPhone. These changes were partially offset by lower employee-related costs due to
workforce reductions, along with the continued growth in wireless service and wireline data revenue. In 2008, operating
income increased primarily due to continued growth in wireless service and data revenues, along with a decrease in the
amortization of merger-related intangibles.
Operating revenues decreased $1,010, or 0.8%, in 2009 and increased $5,100, or 4.3%, in 2008. Revenues in 2009
reflect the continuing decline in voice revenues and a decline in directory revenue driven by lower print revenue. These
declines were partially offset by continued growth in wireless service revenue due to an increase in average number of
customers of 9.4%, driven in part by the continued success of Apple iPhone and an increase in wireline data revenue
largely due to Internet Protocol (IP) data growth, including AT&T U-verseSM and broadband growth. Increases in 2008
reflect an increase in wireless subscribers and data revenues, primarily related to IP data, partially offset by the
continued decline in voice revenues.
The declines in our wireline voice and advertising revenues reflect continuing economic pressures on our customers as
well as competition. Total retail consumer voice connections decreased 11.4% in 2009. Business customers also
disconnected switched access lines, reduced usage-based services and reduced print advertising. Customers
disconnecting access lines switched to wireless, Voice over Internet Protocol (VoIP) and cable offerings for voice and
data or terminated service permanently as businesses closed or consumers left residences. While we lose the voice
revenues, we have the opportunity to increase wireless service or wireline data revenues should the customer choose us
as their wireless or VoIP provider. We also continue to expand our VoIP service for customers who have access to our
U-verse video service.
2
Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
Cost of services and sales expenses increased $849, or 1.7%, in 2009 and $2,755, or 5.9%, in 2008. The increase in
2009 was primarily due to higher upgrade costs and higher equipment costs related to advanced integrated devices,
along with an increase in pension/OPEB expenses. Pension/OPEB expense increased due to lower-than-expected return
on assets and an increase in amortization of actuarial losses, both primarily from investment losses in 2008. Partially
offsetting these increases were decreases in employee-related costs primarily driven by workforce reductions. The
increase in 2008 was primarily due to higher equipment costs related to increased sales of advanced integrated devices.
Also increasing 2008 expenses was severance associated with announced workforce reductions and hurricane-related
expenses affecting both the Wireless and Wireline segments.
Selling, general and administrative expenses decreased $119, or 0.4%, in 2009 and increased $1,380, or 4.6%, in
2008. The decrease in 2009 was primarily due to declines in employee-related costs (excluding pension/OPEB) due to
workforce reductions, decreases in materials and supplies expense along with decreases in wireless advertising and
promotions expense. These decreases were partially offset by an increase in pension/OPEB expense, and higher
commissions, customer service costs and IT/Interconnect costs resulting from wireless subscriber growth along with
increased support for data services and integrated devices. The increase in 2008 was primarily due to higher
commissions and residuals due to the growth in wireless subscribers, and higher severance associated with announced
workforce reductions. Partially offsetting these increases in 2008 were merger-integration costs recognized in 2007 and
not in 2008.
Depreciation and amortization expenses decreased $169, or 0.8%, in 2009 and $1,694, or 7.9%, in 2008. The decrease
in 2009 was primarily due to the declining amortization of identifiable intangible assets, primarily customer
relationships, partially offset by increased depreciation resulting from capital additions. The decrease in 2008 was
primarily due to lower amortization expense on intangible assets.
Interest expense decreased $11, or 0.3%, in 2009 and $117, or 3.3%, in 2008. Interest expense decreased slightly
during 2009 due to an increase in interest charged during construction, which is capitalized instead of expensed. In
2008, interest expense declined primarily due to a decrease in our weighted-average interest rate and an increase in
interest charged during construction, partially offset by an increase in our average debt balances.
Equity in net income of affiliates decreased $85, or 10.4%, in 2009, primarily due to foreign currency translation
losses at América Móvil S.A. de C.V. (América Móvil), Télefonos de México, S.A. de C.V. (Telmex) and Telmex
Internacional, S.A.B. de C.V. (Telmex Internacional), partially offset by improved results at América Móvil. Equity in
net income of affiliates increased $127, or 18.4%, in 2008, primarily due to improved results from our investments in
América Móvil, Telmex and Telmex Internacional, partially offset by foreign currency translation losses.
Other income (expense) – net We had other income of $152 in 2009, other expense of $328 in 2008 and other income
of $810 in 2007. Results for 2009 included a $112 gain on the sale of investments, $100 of interest and leveraged lease
income, and $42 of gains on the sale of a professional services business, partially offset by $102 of asset impairments.
Other expense for 2008 included losses of $467 related to asset impairments, partially offset by $156 of interest and
leveraged lease income. Other income for 2007 included $810 related to a $409 gain on a spectrum license exchange,
$215 of interest and leveraged lease income and a $161 gain on the sale of non-strategic assets and investments.
Income taxes decreased $880, or 12.5%, in 2009 and increased $784, or 12.5%, in 2008. The decrease in 2009 was due
to lower income before taxes and the recognition of benefits related to audit issues and judicial developments, while the
increase in 2008 was primarily due to higher income before taxes. Our effective tax rate in 2009 was 32.4%, compared
to 34.9% in 2008 and 34.0% in 2007. The decrease in our effective tax rate in 2009 was primarily due to the recognition
of benefits related to audit issues and judicial developments. The increase in our effective tax rate in 2008 was primarily
due to higher income before taxes, which resulted in a greater percentage of our income being taxed at marginal rates.
3
Segment Results
Our segments are strategic business units that offer different products and services over various technology platforms
and are managed accordingly. Our operating segment results presented in Note 4 and discussed below for each segment
follow our internal management reporting. We analyze our various operating segments based on segment income before
income taxes, reviewing operating revenues, expenses (depreciation and non-depreciation) and equity income for each
segment. We make our capital allocations decisions primarily based on the network (wireless or wireline) providing
services. Interest expense and other income (expense) – net are managed only on a total company basis and are,
accordingly, reflected only in consolidated results. Each segment’s percentage of total segment operating revenue and
income calculations is derived from our segment results table in Note 4 and reflects amounts before eliminations. We
have four reportable segments: (1) Wireless, (2) Wireline, (3) Advertising Solutions and (4) Other.
The Wireless segment accounted for approximately 43% of our 2009 total segment operating revenues as compared to
39% in 2008 and 60% of our 2009 total segment income as compared to 46% in 2008. This segment provides wireless
voice and advanced data communications services across the United States.
The Wireline segment accounted for approximately 52% of our 2009 total segment operating revenues as compared to
55% in 2008 and 36% of our 2009 total segment income as compared to 47% in 2008. This segment uses our regional,
national and global network to provide consumer and business customers with landline voice and data communications
services, AT&T U-verseSM TV, high-speed broadband and voice services (U-verse) and managed networking to
business customers. Additionally, we offer satellite television services through our agency arrangements.
The Advertising Solutions segment accounted for approximately 4% of our 2009 and 2008 total segment operating
revenues and 6% of our 2009 total segment income as compared to 7% in 2008. This segment includes our directory
operations, which publish Yellow and White Pages directories and sell directory advertising, Internet-based advertising
and local search.
The Other segment accounted for approximately 1% of our 2009 total segment operating revenues as compared to 2%
in 2008 and less than 1% of our 2009 and 2008 total segment income. This segment includes results from Sterling
Commerce, Inc. (Sterling), customer information services, payphone, and all corporate and other operations. Also,
included in the Other segment are impacts of corporate-wide decisions for which the individual operating segments are
not being evaluated. During 2008, we announced our intention to discontinue our retail payphone operations previously
included in this segment. Additionally, this segment includes our portion of the results from our international equity
investments and charges of $550 and $978 associated with our workforce reductions in 2009 and 2008.
The following tables show components of results of operations by segment. We discuss significant segment results
following each table. We discuss capital expenditures for each segment in “Liquidity and Capital Resources.”
4
Wireless
Segment Results
Percent Change
2009 vs. 2008 vs.
2009 2008 2007 2008 2007
Segment operating revenues
Service $ 48,657 $ 44,410 $ 38,678 9.6% 14.8%
Equipment 4,940 4,925 4,006 0.3 22.9
Total Segment Operating Revenues 53,597 49,335 42,684 8.6 15.6
Segment operating expenses
Operations and support 34,561 32,481 28,585 6.4 13.6
Total Segment Operating Expenses 40,326 38,251 35,664 5.4 7.3
Segment Operating Income 13,271 11,084 7,020 19.7 57.9
Equity in Net Income of Affiliates 9 6 16 50.0 (62.5)
Segment Income $ 13,280 $ 11,090 $ 7,036 19.7% 57.6%
Centennial Acquisition
In November 2009, we acquired Centennial Communications, Corp. (Centennial), a regional provider of wireless and
wired communications services with approximately 865,000 customers as of December 31, 2009, and its operations
have been included in our consolidated results since the acquisition date.
Wireless Properties Transactions

In May 2009, we announced a definitive agreement to acquire certain wireless assets from Verizon Wireless (VZ) for
approximately $2,350 in cash. The assets primarily represent former Alltel Wireless assets. We will acquire wireless
properties, including licenses and network assets, serving approximately 1.5 million subscribers in 79 service areas
across 18 states. In October 2009, the Department of Justice (DOJ) cleared our acquisition of Centennial, subject to the
DOJ’s condition that we divest Centennial’s operations in eight service areas in Louisiana and Mississippi. We are in
the process of finalizing definitive agreements and seeking regulatory approvals to sell all eight Centennial service areas
ultimately identified in that ruling. We anticipate we will close the sales during the first half of 2010. As of December
31, 2009, the fair value of the assets subject to the sale, net of related liabilities, was $282. Since the properties we will
acquire use a different network technology than our Global System for Mobile Communication (GSM) technology, we
expect to incur additional costs to convert that network and subscriber handsets to our GSM technology.
Dobson Acquisition
In November 2007, we acquired Dobson Communications Corporation (Dobson). Dobson marketed wireless services
under the Cellular One brand and had provided roaming services to AT&T subsidiaries since 1990. Dobson had 1.7
million subscribers across 17 states, mostly in rural and suburban areas. Dobson was incorporated into our wireless
operations subsequent to its acquisition.
Wireless Customer and Operating Trends

As of December 31, 2009, we served 85.1 million wireless customers, compared to 77.0 million at December 31, 2008,
and 70.1 million at December 31, 2007. Approximately 59% of our wireless customer net additions in 2009 were
postpaid customer additions which were lower than the impact in the prior year, as we saw a significant increase in
gross and net additions in our reseller customer business in 2009. Sales of emerging devices, such as netbooks and
eReaders, are largely included in our reseller customer base. We expect continued growth in sales of emerging devices.
Improvement in our postpaid churn levels since 2007 contributed to our net additions and retail customer growth in
2009 and 2008. This improvement was attributable to network enhancements, attractive products and services offerings,
including Apple iPhone, customer service improvements, and continued high levels of advertising.
Gross customer additions were 21.4 million in 2009 and 2008. Postpaid customer gross additions have continued to
increase due to attractive plan offerings and exclusive product offerings, such as Apple iPhone, and unique quick
messaging devices.
As the wireless industry continues to mature, we believe that future wireless growth will become increasingly dependent
on our ability to offer innovative services, which will encourage existing customers to upgrade their current services and
5
devices and will attract customers from other providers, as well as on our ability to minimize customer churn. Average
service revenue per user (ARPU) in 2009 was flat compared to 2008 after increasing 1% in 2008 compared to 2007
primarily due to increased data services ARPU growth offsetting declining voice and other service ARPU. ARPU from
postpaid customers increased 2.7% in 2009 and 3.7% in 2008, reflecting usage of more advanced handsets, such as
Apple iPhone 3GS, by these customers, evidenced by a 23.5% increase in postpaid data services ARPU in 2009 and a
36.4% increase in postpaid data services ARPU in 2008. The continued increase in postpaid data services revenue was
related to increased use of text messaging, Internet access, e-mail and other data services. We expect continued growth
from data services, as more customers purchase advanced integrated devices and other emerging devices, such as
netbooks, eReaders, and mobile navigation devices, and broadband laptop cards, and as we continue to expand our
network. The growth in data services ARPU in 2009 was offset by a 6.7% decline in voice ARPU and the growth in
data services ARPU in 2008 was partially offset by a 6.5% decline in voice and other service ARPU. Voice and other
service ARPU in 2009 and 2008 declined due to lower access charges, roaming revenues, and long-distance usage.
Increases in our FamilyTalk® and reseller customer base, which have lower ARPU than traditional postpaid customers,
have also contributed to these declines. For 2009, roaming revenues were lower due to a decline in domestic roaming
activity. For 2008, roaming revenues were lower due to acquisitions and rate negotiations as part of roaming cost
savings initiatives, which slowed international growth, and lower regulatory cost recovery charges. We expect
continued pressure on voice and other service ARPU.
The effective management of customer churn is also critical to our ability to maximize revenue growth and to maintain
and improve margins. Customer churn is calculated by dividing the aggregate number of wireless customers who cancel
service during each month in a period by the total number of wireless customers at the beginning of each month in that
period. Our customer churn rate was 1.48% for 2009, down from 1.68% for 2008 and 1.67% for 2007. The churn rate
for postpaid customers was 1.16% for 2009 and 1.19% for 2008, down from 1.27% for 2007. The decline in postpaid
churn reflects network enhancements and broader coverage, more affordable rate plans and exclusive devices, and free
mobile-to-mobile calling among our wireless customers.
Wireless Operating Results

Our Wireless segment operating income margin was 24.8% in 2009, 22.5% in 2008 and 16.4% in 2007. The higher
margin in 2009 was primarily due to revenue growth of $4,262, while the higher margin in 2008 was primarily due to
revenue growth of $6,651. Each revenue increase exceeded the corresponding operating expense increase of $2,075 in
2009 and $2,587 in 2008. The expense increase for 2008 is net of a decrease in depreciation and amortization of $1,309.
Service revenues are comprised of local voice and data services, roaming, long-distance and other revenue. Service
revenues increased $4,247, or 9.6%, in 2009 and $5,732, or 14.8%, in 2008. The increases consisted of the
following:
• Data service revenue increases of $3,539, or 33.4%, in 2009 and $3,647, or 52.5%, in 2008. The increases
were primarily due to the increased number of subscribers and heavier usage by subscribers of advanced
handsets and other data-centric emerging devices, such as netbooks, eReaders, and mobile navigation
devices. The increases in data service ARPU of 22.0% in 2009 and 33.8% in 2008 reflect this trend. Our
significant data growth also reflects an increased number of subscribers using our 3G network. Data
service revenues represented approximately 29.0% and 23.9% of our Wireless segment service revenues in
2009 and 2008.
• Voice and other service revenue increases of $708, or 2.1%, in 2009 and $2,085, or 6.6%, in 2008. The
increase in 2009 was due to a 9.4% increase in the average number of wireless customers, down from
14.0% in 2008. Voice and other service ARPU declined 6.7% in 2009 and 6.5% in 2008.
Equipment revenues increased $15, or 0.3%, in 2009 and increased $919, or 22.9%, in 2008. The lower
incremental increase in 2009 was due to lower traditional handset sales, offset by sales of more advanced integrated
devices. The increase in 2008 was due to higher handset revenues, reflecting higher gross customer additions, and
customer upgrades to more advanced devices.
6
Operations and support expenses increased $2,080, or 6.4%, in 2009, compared to an increase of $3,896, or
13.6%, in 2008. The increase in 2009 was primarily due to the following:
• equipment cost increases of $1,246, reflecting the higher cost of acquiring more advanced integrated
devices compared to prior periods;
• Interconnect, universal service fee (USF) and reseller expense increases of $426 due to higher network
traffic and revenue growth;
• upgrade commissions and residual expense increases of $313 due to sales and upgrades to more advanced
devices;
• customer service cost increases of $214 due to customer growth; and
• Finance, IT, and other administrative cost increases of $306.
These increases were partially offset by selling expense decreases of $337, attributable to lower traditional handset
sales exceeding the impact of the sale of more advanced integrated devices and roaming expense decreases of $165
due to usage and rate declines. Total equipment costs continue to be higher than equipment revenues due to the sale
of discounted devices in connection with promotions.
The increase in 2008 was primarily due to the following:

• equipment sales expense increase of $2,005;
• upgrade commissions and residual expense increases of $745;
• selling expense increase of $362 and customer service cost increase of $159;
• USF increase of $204 and reseller expense increase of $145; and
• Finance, IT, and other administrative cost increases of $538.
The increase in equipment sales expense, commission expense, and selling expense resulted from an increase in
sales of higher-cost 3G devices, the introduction of Apple iPhone 3G handsets in 2008, an increase in the number
of handset accessory sales, lower per-unit accessory costs compared to 2007, and higher handset upgrade volume.
The increase in commission expense is also attributable to higher commission rates. Interconnect and other costs
also increased by $141 due to increased usage and integration costs related to the 2007 acquisition of Dobson.
The increase in reseller costs in 2008 was attributable to higher license, maintenance and other reseller costs,
partially offset by cost reductions from the migration of network usage from the T-Mobile USA (T-Mobile)
network in California and Nevada to our networks in these states.
These increases were partially offset by incollect roaming cost decreases of $249 and network system cost
decreases of $132. The decrease in network system costs was the result of benefits from network and systems
integration and cost-reduction initiatives of $218, decreases in data processing and payroll costs of $109, partially
offset by incremental rents related to Dobson and general building expense increases of $124, and hurricane and
other incremental network cost increases of $99.
Depreciation and amortization decreased $5, or 0.1%, in 2009 and decreased $1,309, or 18.5%, in 2008.
Amortization expense decreased $450, or 21.8%, in 2009 due to lower amortization of intangibles attributable to
the BellSouth acquisition, partially offset by amortization of intangible assets attributable to subscribers added in
the November 2009 acquisition of Centennial and the 2007 acquisition of Dobson. Depreciation expense increased
$445, or 12.0%, in 2009 due to ongoing capital spending for network upgrades and expansion, partially offset by
certain network assets becoming fully depreciated.
7
Depreciation expense decreased $539, or 12.7%, in 2008. Depreciation expense decreased $695 in 2008 due to
certain network assets becoming fully depreciated and decreased $612 due to Time Division Multiple Access
(TDMA) assets being depreciated on an accelerated basis through 2007. These decreases were partly offset by
incremental depreciation on capital assets placed in service during 2008. Amortization expense decreased $770, or
27.2%, in 2008 due to declining amortization of identified intangible assets, most of which are amortized using the
sum-of-the-months-digits method of amortization, partially offset by Dobson intangible assets acquired by AT&T
Mobility.
Wireless Supplementary Operating and Financial Data

Percentage Change
2009 vs. 2008 vs.
2009 2008 2007 2008 2007
Wireless Customers (000) 85,120 77,009 70,052 10.5% 9.9%
Net Customer Additions (000) 7,278 6,699 7,315 8.6 (8.4)
Total Churn 1.48% 1.68% 1.67% (20) bps 1 bps
Postpaid Customers (000) 65,146 60,098 55,310 8.4% 8.7%

Net Postpaid Customer Additions (000) 4,323 4,634 3,982 (6.7) 16.4
Postpaid Churn 1.16% 1.19% 1.27% (3) bps (8) bps
8
Wireline
Segment Results
Percent Change
2009 vs. 2008 vs.
2009 2008 2007 2008 2007
Segment operating revenues
Voice $ 33,082 $ 38,198 $ 41,630 (13.4)% (8.2)%
Data 26,723 25,353 24,075 5.4 5.3
Other 5,865 6,304 5,878 (7.0) 7.2
Total Segment Operating Revenues 65,670 69,855 71,583 (6.0) (2.4)
Operations and support 44,646 45,440 46,177 (1.7) (1.6)
Total Segment Operating Expenses 57,739 58,646 59,593 (1.5) (1.6)
Segment Operating Income 7,931 11,209 11,990 (29.2) (6.5)
Equity in Net Income of Affiliates 18 19 31 (5.3) (38.7)
Segment Income $ 7,949 $ 11,228 $ 12,021 (29.2)% (6.6)%
Operating Margin Trends

Our Wireline segment operating income margin was 12.1% in 2009, compared to 16.0% in 2008 and 16.7% in 2007.
Results for 2009 and 2008 reflect revenue declines that exceeded expense declines. Our Wireline segment operating
income decreased $3,278, or 29.2%, in 2009 and decreased $781, or 6.5%, in 2008. Our operating income continued to
be pressured by access line declines due to economic pressures on our consumer and business wireline customers and
competition, as customers either reduced usage or disconnected traditional landline services and switched to alternative
technologies, such as wireless and VoIP. Our strategy is to offset these line losses by increasing non-access-line-related
revenues from customer connections for data, video and voice. Additionally, we have the opportunity to increase
Wireless segment revenues if customers choose AT&T Mobility as an alternative provider. Wireline operating margins
are declining primarily due to reduced voice revenue, partially offset by continued growth in data revenue. Also
contributing to pressure on our operating margins was increased pension/OPEB expense in 2009.
Voice revenues decreased $5,116, or 13.4%, in 2009, and decreased $3,432, or 8.2%, in 2008 primarily due to
continuing economic pressures and declining demand for traditional voice and other legacy services by our consumer
and business customers. Included in voice revenues are revenues from local voice, long-distance and local wholesale
services. Voice revenues do not include VoIP revenues, which are included in data revenues.
• Local voice revenues decreased $2,763, or 12.2%, in 2009 and decreased $1,887, or 7.7%, in 2008. The
decrease in 2009 was driven primarily by an 11.2% decline in switched access lines and a decrease in average
local voice revenue per user. The decrease in 2008 was driven primarily by a loss of revenue of $1,230 from a
decline in access lines and by $422 from a decline in our national mass-market customer base acquired from
AT&T Corp. (ATTC). We expect our local voice revenue to continue to be negatively affected by increased
competition from alternative technologies, the disconnection of additional lines and economic pressures.
• Long-distance revenues decreased $2,133, or 15.3%, in 2009 and decreased $1,195, or 7.9%, in 2008 primarily
due to decreased demand from business and consumer customers, which decreased revenues $1,583 in 2009
and $532 in 2008, and a net decrease in demand for long-distance service, due to expected declines in the
number of national mass-market customers, which decreased revenues $546 in 2009 and $677 in 2008.
Data revenues increased $1,370, or 5.4%, in 2009 and increased $1,278, or 5.3%, in 2008. Data revenues accounted for
approximately 41% of wireline operating revenues in 2009, 36% in 2008 and 34% in 2007. Data revenues include
transport, IP and packet-switched data services.
IP data revenues increased $1,969, or 17.8%, in 2009 and increased $1,537, or 16.1%, in 2008 primarily driven by
AT&T U-verse expansion and growth in IP-based strategic business services, which include Ethernet, virtual private
networks (VPN), application and managed services. Strategic business service revenues increased $603 in 2009 and
$741 in 2008, driven mostly by VPN, and U-verse video service increased $980 in 2009 and $402 in 2008. Broadband
high-speed Internet access increased IP data revenues $300 in 2009 and $497 in 2008. The increase in IP data revenues
in 2009 and 2008 reflects continued growth in the customer base and migration from other traditional circuit-based
services.
9
Traditional packet-switched data services, which include frame relay and asynchronous transfer mode services,
decreased $536, or 20.8%, in 2009 and $423, or 14.1%, in 2008. This decrease is primarily due to lower demand as
customers continue to shift to IP-based technology such as VPN, DSL and managed Internet services, and the
continuing economic recession. We expect these traditional, circuit-based services to continue to decline as a percentage
of our overall data revenues.
Other operating revenues decreased $439, or 7.0%, in 2009 and increased $426, or 7.2%, in 2008. Major items included
are integration services and customer premises equipment, government-related services and outsourcing, which account
for more than 60% of total revenue for all periods. Equipment sales and related network integration revenues decreased
$405 in 2009 primarily due to economic pressures, and increased $260 in 2008, driven by an increase in management
services partially offset by reduced equipment sales and related network integration. Governmental professional
services revenue decreased $116 in 2009 driven by the divestiture of a professional services business in 2009 and
increased $100 in 2008 driven by growth across various contracts.
Operations and support expenses decreased $794, or 1.7%, in 2009 and $737, or 1.6%, in 2008. Operations and
support expenses consist of costs incurred to provide our products and services, including costs of operating and
maintaining our networks and personnel costs, such as salary, wage and bonus accruals. Costs in this category include
our repair technicians and repair services, certain network planning and engineering expenses, operator services,
information technology and property taxes. Operations and support expenses also include bad debt expense; advertising
costs; sales and marketing functions, including customer service centers; real estate costs, including maintenance and
utilities on all buildings; credit and collection functions; and corporate support costs, such as finance, legal, human
resources and external affairs. Pension and postretirement costs, net of amounts capitalized are also included to the
extent that they are associated with these employees.
The 2009 decrease was primarily due to lower employee-related costs of $918, primarily related to workforce
reductions. Other cost reductions included decreases in traffic compensation (related to lower international long-
distance revenues and lower volume of calls from our declining national mass-market customer base), including portal
fees, of $655, nonemployee-related expenses, such as bad debt expense, materials and supplies costs, of $441 and $134
related to contract services.
Partially offsetting these decreases was an increase in pension/OPEB expense of $1,370 due to a lower-than-expected
return on assets and an increase in amortization of actuarial losses, both primarily from investment losses in 2008. See
Note 11 for more information related to pension/OPEB expense.
The major decreases in 2008 were $633 in traffic compensation (related to lower international long-distance revenue,
and lower volume of calls from our declining national mass-market customer base), including portal fees, and $618 of
pension/OPEB expense. Other cost reductions included decreases in other support cost of $616 primarily due to higher
advertising costs incurred in 2007 for brand advertising and rebranding related to the BellSouth acquisition and lower
compensation expense of $420 reflecting shifts of workforce levels to sales organizations.
Partially offsetting these decreases, operation and support expenses increased by $1,135, related to higher nonemployee-
related expenses, such as contract services, agent commissions and materials and supplies. Other increases were salary
and wages of $423; and higher cost of equipment sales and related U-verse network integration of $60.
Depreciation and amortization expenses decreased $113, or 0.9%, in 2009 and $210, or 1.6%, in 2008. The 2009
decrease was primarily related to lower amortization of intangibles for the customer lists associated with ATTC,
BellSouth and Yahoo! partially offset by the inclusion of Centennial related depreciation starting in the fourth quarter of
2009. The 2008 decline was a result of decreasing intangible amortization partially offsetting increased depreciation
resulting from capital additions.
10
Supplemental Information
Telephone, Wired Broadband and Video Connections Summary

Our switched access lines and other services provided by our local exchange telephone subsidiaries at December 31,
2009, 2008 and 2007, are shown below and trends are addressed throughout this segment discussion.
(in 000s) Percent Change

2009 vs. 2008 vs.
2009 2008 2007 2008 2007
Switched Access Lines1
Retail consumer 26,378 30,614 35,009 (13.8)% (12.6)%
Retail business2 20,106 21,810 22,795 (7.8) (4.3)
Retail Subtotal2 46,484 52,424 57,804 (11.3) (9.3)
Percent of total switched access lines 94.1% 94.3% 93.9%
Wholesale Subtotal2 2,826 3,068 3,527 (7.9) (13.0)

Payphone (Retail and Wholesale)3 82 118 251 (30.5) (53.0)

Total Switched Access Lines 49,392 55,610 61,582 (11.2) (9.7)
Total Retail Consumer Voice Connections6 27,332 30,838 35,009 (11.4) (11.9)
Total Wired Broadband Connections4 15,789 15,077 14,156 4.7 6.5
Satellite service5 2,174 2,190 2,116 (0.7) 3.5

U-verse video 2,065 1,045 231 97.6 -
Video Connections 4,239 3,235 2,347 31.0% 37.8%
1
Represents access lines served by AT&T’s Incumbent Local Exchange Carriers (ILECs) and affiliates.
2
Prior period amounts restated to conform to current period reporting methodology.
3
Revenue from retail payphone lines is reported in the Other segment. We are in the process of ending
our retail payphone operations.
4
Total wired broadband connections include DSL, U-verse High Speed Internet access and satellite
broadband.
5
Satellite service includes connections under our agency and resale agreements.
6
Includes consumer U-verse Voice over IP connections.
Advertising Solutions
Segment Results
Percent Change
2009 vs. 2008 vs.
2009 2008 2007 2008 2007
Total Segment Operating Revenues $ 4,809 $ 5,502 $ 5,851 (12.6)% (6.0)%
Operations and support 2,922 2,998 3,066 (2.5) (2.2)
Depreciation and amortization 649 789 924 (17.7) (14.6)
Total Segment Operating Expenses 3,571 3,787 3,990 (5.7) (5.1)
Segment Income $ 1,238 $ 1,715 $ 1,861 (27.8)% (7.8)%
Operating Results
Our Advertising Solutions segment operating income margin was 25.7% in 2009, 31.2% in 2008 and 31.8% in 2007.
The decrease in the segment operating income margin in both 2009 and 2008 was primarily the result of decreased
operating revenues.
11
Operating revenues decreased $693, or 12.6%, in 2009 largely driven by continuing declines in print revenue of $774
and lower sales agency revenue of $34 due to the sale of the independent line of business segment of the L.M. Berry
Company. This decrease was partially offset by Internet advertising revenue growth of $132. The ongoing economic
recession has reduced demand for advertising and customers have continued to shift to Internet-based search services,
although the recession has also curbed search usage by consumers. Operating revenues decreased $349, or 6%, in 2008
largely driven by continuing declines in print revenue of $453 and lower sales agency revenue of approximately $113
due to the sale of the independent line of business segment of the L.M. Berry Company. This decrease was partially
offset by increased Internet advertising revenue of $196.
Operating expenses decreased $216, or 5.7%, in 2009 largely driven by decreases in depreciation and amortization
expense of $140, product related costs of $74, advertising costs of $44, and professional and contracted expense of $17.
These expense decreases were partially offset by an increase in pension/OPEB and other benefit costs of $66. Operating
expenses decreased $203, or 5.1%, in 2008 largely driven by decreased depreciation and amortization of $135 resulting
from use of an accelerated method of amortization for the customer list acquired as part of the BellSouth acquisition,
and lower employee, professional and contract related expenses. These expense decreases were partially offset by
increased YELLOWPAGES.COM, LLC (YPC) expansion costs.
Other
Segment Results
Percent Change
2009 vs. 2008 vs.
2009 2008 2007 2008 2007
Total Segment Operating Revenues $ 1,731 $ 2,042 $ 2,229 (15.2)% (8.4)%
Total Segment Operating Expenses 2,678 2,986 2,040 (10.3) 46.4
Segment Operating Income (Loss) (947) (944) 189 (0.3) -
Equity in Net Income of Affiliates 706 794 645 (11.1) 23.1
Segment Income (Loss) $ (241) $ (150) $ 834 (60.7)% -
Our Other segment operating results consist primarily of Sterling, customer information services (primarily operator
services and payphone), corporate and other operations. Sterling provides business-integration software and services.
Operating revenues decreased $311, or 15.2%, in 2009 and $187, or 8.4%, in 2008. The decrease in 2009 is primarily
due to reduced revenues from our operator services, retail payphone operations and Sterling. The 2008 decline is
primarily related to lower revenues from operator services and retail payphone operations.
Operating expenses decreased $308, or 10.3%, in 2009 and increased $946, or 46.4%, in 2008.
The changes were primarily due to charges of $550 and $978 associated with our workforce reductions in 2009 and
2008 as a result of the restructure of our operations from a collection of regional companies to a single national
approach.
Our Other segment also includes our equity investments in international companies, the income from which we report
as equity in net income of affiliates. Our earnings from foreign affiliates are sensitive to exchange-rate changes in the
value of the respective local currencies. Our foreign investments are recorded under generally accepted accounting
principles (GAAP), which include adjustments for the equity method of accounting and exclude certain adjustments
required for local reporting in specific countries. Our equity in net income of affiliates by major investment is listed
below:
2009 2008 2007

América Móvil $ 505 $ 469 $ 381
Telmex 133 252 265
Telmex Internacional 72 72 -
Other (4) 1 (1)
Other Segment Equity in
Net Income of Affiliates $ 706 $ 794 $ 645
12
Equity in net income of affiliates decreased $88 in 2009. Our investment in Telmex and Telmex Internacional
decreased $119, reflecting lower operating results and currency translation losses, partially offset by $36 of improved
operating results at América Móvil. The $149 increase in 2008 reflects improved operating results at América Móvil, as
well as lower depreciation and tax expenses, and improved results at Telmex and Telmex Internacional. On January 13,
2010, América Móvil announced that its Board of Directors had authorized it to submit an offer for 100% of the equity
of Carso Global Telecom, S.A. de C.V. (CGT), a holding company that owns 59.4% of Telmex and 60.7% of Telmex
Internacional, in exchange for América Móvil shares; and an offer for Telmex Internacional shares not owned by CGT,
to be purchased for cash or to be exchanged for América Móvil shares, at the election of the shareholders.
OPERATING ENVIRONMENT AND TRENDS OF THE BUSINESS
2010 Revenue Trends We expect our operating environment in 2010 to remain challenging as the economic recession
continues, competition remains strong and the federal regulatory framework may or may not remain receptive to
investment. Despite this environment, we expect our operating revenues in 2010 to remain stable, reflecting continuing
growth in our wireless and broadband/data services. We expect our primary driver of growth to be wireless, especially
in sales and increased use of advanced handsets and emerging devices (such as netbooks, eReaders and mobile
navigation devices) and that all our major customer categories will continue to increase their use of Internet-based
broadband/data services. We expect continuing declines in traditional access lines and in advertising from our print
directories. Where available, our U-verse services are proving effective in stemming access line losses, and we expect to
continue to expand our U-verse service offerings in 2010.
2010 Expense Trends We expect a challenging operating environment for 2010. We will continue to focus sharply on
cost-control measures, including areas such as organizational and systems integration. We will continue our ongoing
initiatives to improve customer service and billing so we can realize our strategy of bundling services and providing a
simple customer experience. We expect our 2010 operating income margin to be stable with the opportunity to improve
margins, in the event the U.S. economy improves. We do not expect significant pension funding requirements in 2010.
Expenses related to growth areas of our business, especially in the wireless area, will apply some pressure to our
operating income margin.
Market Conditions During 2009, the securities and mortgage markets and the banking system in general experienced
some stabilization compared with 2008 as the year progressed, although bank lending and the housing industry
remained weak. The ongoing weakness in the general economy has also affected our customer and supplier bases. We
saw lower demand from our residential customers as well as our business customers at all organizational sizes. Some of
our suppliers continue to experience increased financial and operating costs. To a large extent, these negative trends
were offset by continued growth in our wireless and IP-related services. While the economy appears to have stabilized
at a weakened level at year-end, we do not expect a quick return to growth during 2010. Should the economy instead
deteriorate further, we likely will experience further pressure on pricing and margins as we compete for both wireline
and wireless customers who have less discretionary income. We also may experience difficulty purchasing equipment in
a timely manner or maintaining and replacing warranteed equipment from our suppliers.
Included on our consolidated balance sheets are assets held by benefit plans for the payment of future benefits. The
losses associated with the securities markets declines during 2008 are not expected to have an impact on the ability of
our benefit plans to pay benefits. We do not expect to make significant funding contributions to our pension plans in
2010. However, because our pension plans are subject to funding requirements of the Employee Retirement Income
Security Act of 1974, as amended (ERISA), a continued weakness in the markets could require us to make contributions
to the pension plans in order to maintain minimum funding requirements as established by ERISA. In addition, our
policy on recognizing losses on investments in the pension and other postretirement plans accelerated the recognition of
losses in 2009 earnings (see “Significant Accounting Policies and Estimates”).
OPERATING ENVIRONMENT OVERVIEW
AT&T subsidiaries operating within the U.S. are subject to federal and state regulatory authorities. AT&T subsidiaries
operating outside the U.S. are subject to the jurisdiction of national and supranational regulatory authorities in the
markets where service is provided, and regulation is generally limited to operational licensing authority for the
provision of services to enterprise customers.
In the Telecommunications Act of 1996 (Telecom Act), Congress established a national policy framework intended to
bring the benefits of competition and investment in advanced telecommunications facilities and services to all
Americans by opening all telecommunications markets to competition and reducing or eliminating regulatory burdens
13
that harm consumer welfare. However, since the Telecom Act was passed, the Federal Communications Commission
(FCC) and some state regulatory commissions have maintained certain regulatory requirements that were imposed
decades ago on our traditional wireline subsidiaries when they operated as legal monopolies. Where appropriate, we are
pursuing additional legislative and regulatory measures to reduce regulatory burdens that inhibit our ability to compete
more effectively and offer services wanted and needed by our customers. For example, we are supporting regulatory and
legislative efforts that would offer new video entrants a streamlined process for bringing new video services to market
and for offering more timely competition to traditional cable television providers. With the advent of the Obama
Administration, the composition of the FCC has changed, and the new Commission appears to be more open than the
prior Commission to maintaining or expanding regulatory requirements on entities subject to its jurisdiction. In
addition, Congress, the President and the FCC all have declared a national policy objective of ensuring that all
Americans have access to broadband technologies and services. To that end, Congress has charged the FCC with
developing a National Broadband Plan and delivering that plan to Congress in early 2010. The Commission has issued
dozens of notices seeking comment on whether and how it should modify its rules and policies on a host of issues,
which would affect all segments of the communications industry, to achieve universal access to broadband. These issues
include rules and policies relating to universal service support, intercarrier compensation and regulation of special
access services, as well as a variety of others that could have an impact on AT&T’s operations and revenues. However,
at this stage, it is too early to assess what, if any, impact such changes could have on us.
In addition, states representing a majority of our local service access lines have adopted legislation that enables new
video entrants to acquire a single statewide or state-approved franchise (as opposed to the need to acquire hundreds or
even thousands of municipal-approved franchises) to offer competitive video services. We also are supporting efforts to
update and improve regulatory treatment for retail services. Passage of legislation is uncertain and depends on many
factors.
Our wireless operations operate in robust competitive markets but are likewise subject to substantial governmental
regulation. Wireless communications providers must be licensed by the FCC to provide communications services at
specified spectrum frequencies within specified geographic areas and must comply with the rules and policies governing
the use of the spectrum as adopted by the FCC. The FCC has recognized the importance of providing carriers with
access to adequate spectrum to permit continued wireless growth and has begun investigating how to develop policies to
promote that goal. While wireless communications providers’ prices and service offerings are generally not subject to
state regulation, an increasing number of states are attempting to regulate or legislate various aspects of wireless
services, such as in the area of consumer protection.
AT&T has previously noted that the broadband marketplace is robustly competitive and that we do not block
consumers from accessing the lawful Internet sites of their choice. We therefore believe that prescriptive “net
neutrality” rules are not only unnecessary but also counterproductive to the extent they would restrict broadband
Internet access providers from developing innovative new services for consumers and/or content and application
providers. Nor do we believe that wireless providers should be prohibited from entering into exclusive arrangements
with handset manufacturers or that government should regulate wireless early termination fees as is currently being
proposed. It is widely recognized that the wireless industry in the United States is characterized by innovation,
differentiation, declining prices and extensive competition among handset manufacturers, service providers and
applications. For this reason, additional broadband regulation and new wireless requirements are unwarranted.
Expected Growth Areas

We expect our wireless services and data wireline products to remain the most significant portion of our business and
have also discussed trends affecting the segments in which we report results for these products (see “Wireless Segment
Results” and “Wireline Segment Results”). Over the next few years, we expect an increasing percentage of our growth
to come from: (1) our wireless service and (2) data/broadband, through existing and new services. We expect that our
previous acquisitions will enable us to strengthen the reach and sophistication of our network facilities, increase our
large-business customer base and enhance the opportunity to market wireless services to that customer base. Whether,
or the extent to which, growth in these areas will offset declines in other areas of our business is not known.
Wireless Wireless is our fastest-growing revenue stream and we expect to deliver continued revenue growth in the
coming years. We believe that we are in a growth period of wireless data usage and that there are substantial
opportunities available for next-generation converged services that combine wireless, broadband, voice and video.
Our Universal Mobile Telecommunications System/High-Speed Downlink Packet Access 3G network technology
covers most major metropolitan areas of the U.S. This technology provides superior speeds for data and video services,
and it offers operating efficiencies by using the same spectrum and infrastructure for voice and data on an IP-based
14
platform. Our wireless networks also rely on digital transmission technologies known as GSM, General Packet Radio
Services and Enhanced Data Rates for GSM Evolution for data communications. As of December 31, 2009, we served
85.1 million customers. We have also announced plans to transition from 3G network technology to a higher
transmission speed technology called Long-Term Evolution. We expect to test this technology this year and then deploy
it beginning in 2011, as we expect network equipment and handsets to become more widely available.
As the wireless industry continues to mature, we believe that future wireless growth will become increasingly dependent
on our ability to offer innovative services that will encourage existing customers to upgrade their services, either by
adding new types of services, such as data enhancements, or through increased use of existing services, such as through
equipment upgrades. These innovative services should attract customers from other providers, as well as minimize
customer churn. We intend to accomplish these goals by continuing to expand our network coverage, improve our
network quality and offer a broad array of products and services, including exclusive devices such as Apple iPhone 3G
and free mobile-to-mobile calling among our wireless customers. Minimizing customer churn is critical to our ability to
maximize revenue growth and to maintain and improve our operating margins.
U-verse Services We are continuing to expand our deployment of U-verse high-speed broadband and TV services. As
of December 31, 2009, we have passed 22.8 million living units (constructed housing units as well as platted housing
lots) and are marketing the services to almost 72 percent of those units. Our deployment strategy is to enter each new
area on a limited basis in order to ensure that all operating and back-office systems are functioning successfully and
then expand within each as we continue to monitor these systems. Our rate of expansion will be slowed if we cannot
obtain all required local building permits in a timely fashion. We also continue to work with our vendors on improving,
in a timely manner, the requisite hardware and software technology. Our deployment plans could be delayed if we do
not receive required equipment and software on schedule.
We believe that our U-verse TV service is subject to federal oversight as a “video service” under the Federal
Communications Act. However, some cable providers and municipalities have claimed that certain IP services should
be treated as a traditional cable service and therefore subject to the applicable state and local cable regulation. Certain
municipalities have delayed our request or have refused us permission to use our existing right-of-ways to deploy or
activate our U-verse-related services and products, resulting in litigation. Pending negotiations and current or threatened
litigation involving municipalities could delay our deployment plans in those areas. In July 2008, the U.S. District Court
for Connecticut affirmed its October 2007 ruling that AT&T’s U-verse TV service is a cable service in Connecticut. We
have appealed that decision on the basis that state legislation rendered the case moot. Petitions have been filed at the
FCC alleging that the manner in which AT&T provisions “public, educational, and governmental” (PEG) programming
over its U-verse TV service conflicts with federal law, and a lawsuit has been filed in a California state superior court
raising similar allegations under California law. If courts having jurisdiction where we have significant deployments of
our U-verse services were to decide that federal, state and/or local cable regulation were applicable to our U-verse
services, or if the FCC, state agencies or the courts were to rule that AT&T must deliver PEG programming in a manner
substantially different from the way it does today or in ways that are inconsistent with AT&T’s current network
architecture, it could have a material adverse effect on the cost, timing and extent of our deployment plans.
REGULATORY DEVELOPMENTS
Set forth below is a summary of the most significant developments in our regulatory environment during 2009. While
these issues, for the most part, apply only to certain subsidiaries in our Wireline segment, the words “we,” “AT&T” and
“our” are used to simplify the discussion. The following discussions are intended as a condensed summary of the issues
rather than as a precise legal description of all of these specific issues.
International Regulation Our subsidiaries operating outside the U.S. are subject to the jurisdiction of regulatory
authorities in the market where service is provided. Our licensing, compliance and advocacy initiatives in foreign
countries primarily enable the provision of enterprise (i.e., large business) services. AT&T is engaged in multiple efforts
with foreign regulators to open markets to competition, reduce network costs and increase our scope of fully authorized
network services and products.
Federal Regulation A summary of significant 2009 federal regulatory developments follows.
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Net Neutrality On October 22, 2009, the FCC adopted a Notice of Proposed Rulemaking (NPRM) seeking comment
on six proposed “net neutrality” rules that are intended to preserve the “free and open Internet.” The proposed rules
apply to providers of “broadband Internet access service” and state that, subject to “reasonable network management,”
such a provider:
• May not prevent any of its users from sending or receiving the lawful content of the user’s choice over the
Internet.
• May not prevent any of its users from running the lawful applications or using the lawful services of the user’s
choice.
• May not prevent any of its users from connecting to and using on its network the user’s choice of lawful
devices that do not harm the network.
• May not deprive any of its users of the user’s entitlement to competition among network providers, application
providers, service providers and content providers.
• Must treat lawful content, applications and services in a nondiscriminatory manner.
• Must disclose such information concerning network management and other practices as is reasonably required
for users and content, application and service providers to enjoy the protections specified in these rules.
The NPRM states that the proposed rules would apply to all platforms over which broadband Internet access services
are provided, including mobile wireless broadband, while recognizing that different platforms involve significantly
different technologies, market structures, patterns of consumer usage and regulatory history. The comment cycle on the
NPRM concludes in the first quarter of 2010. We are unable to determine the impact of this proceeding on our operating
results and financial condition at this time.
COMPETITION
Competition continues to increase for telecommunications and information services. Technological advances have
expanded the types and uses of services and products available. In addition, lack of or a reduced level of regulation of
comparable alternatives (e.g., cable, wireless and VoIP providers) has lowered costs for these alternative
communications service providers. As a result, we face heightened competition as well as some new opportunities in
significant portions of our business.
Wireless
We face substantial and increasing competition in all aspects of our wireless business. Under current FCC rules, six or
more PCS licensees, two cellular licensees and one or more enhanced specialized mobile radio licensees may operate in
each of our service areas, which results in the potential presence of multiple competitors. Our competitors are
principally three national (Verizon Wireless, Sprint Nextel Corp. and T-Mobile) and a larger number of regional
providers of cellular, PCS and other wireless communications services. More than 95% of the U.S. population lives in
areas with three mobile telephone operators and more than half the population lives in areas with at least five competing
carriers.
We may experience significant competition from companies that provide similar services using other communications
technologies and services. While some of these technologies and services are now operational, others are being
developed or may be developed in the future. We compete for customers based principally on price, service offerings,
call quality, coverage area and customer service.
Wireline
Our wireline subsidiaries expect continued competitive pressure in 2010 from multiple providers, including wireless,
cable and other VoIP providers, interexchange carriers and resellers. In addition, economic pressures are forcing
customers to terminate their traditional local wireline service and substitute wireless and Internet-based services,
intensifying a pre-existing trend toward wireless and Internet use. At this time, we are unable to quantify the effect of
competition on the industry as a whole or financially on this segment. However, we expect both losses of revenue share
in local service and gains resulting from business initiatives, especially in the area of bundling of products and services,
including wireless and video, large-business data services and broadband. In most markets, we compete with large cable
companies, such as Comcast Corporation, Cox Communications, Inc. and Time Warner Cable Inc., for local, high-speed
Internet and video services customers and other smaller telecommunications companies for both long-distance and local
services customers.
Our wireline subsidiaries generally remain subject to regulation by state regulatory commissions for intrastate services
and by the FCC for interstate services. In contrast, our competitors are often subject to less or no regulation in providing
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comparable voice and data services or the extent of regulation is in dispute. Under the Telecom Act, companies seeking
to interconnect to our wireline subsidiaries’ networks and exchange local calls enter into interconnection agreements
with us. Any unresolved issues in negotiating those agreements are subject to arbitration before the appropriate state
commission. These agreements (whether fully agreed-upon or arbitrated) are then subject to review and approval by the
appropriate state commission.
In a number of the states in which we operate as an ILEC, state legislatures or the state public utility commissions have
concluded that the voice telecommunications market is competitive and have allowed for greater pricing flexibility for
nonbasic residential retail services, including bundles, promotions and new products and services. While it has been a
number of years since we have been allowed to raise local service rates in certain states, some of these state actions
have been challenged by certain parties and are pending court review.
In addition to these rates and service regulations noted above, our wireline subsidiaries (excluding rural carrier
affiliates) operate under state-specific elective “price-cap regulation” for retail services (also referred to as “alternative
regulation”) that was either legislatively enacted or authorized by the appropriate state regulatory commission. Under
price-cap regulation, price caps are set for regulated services and are not tied to the cost of providing the services or to
rate-of-return requirements. Price-cap rates may be subject to or eligible for annual decreases or increases and also may
be eligible for deregulation or greater pricing flexibility if the associated service is deemed competitive under some state
regulatory commission rules. Minimum customer service standards may also be imposed and payments required if we
fail to meet the standards.
We continue to lose access lines due to competitors (e.g., wireless, cable and VoIP providers) who can provide
comparable services at lower prices because they are not subject to traditional telephone industry regulation (or the
extent of regulation is in dispute), utilize different technologies, or promote a different business model (such as
advertising based) and consequently have lower cost structures. In response to these competitive pressures, for several
years we have utilized a bundling strategy that rewards customers who consolidate their services (e.g., local and long-
distance telephone, high-speed Internet, wireless and video) with us. We continue to focus on bundling wireline and
wireless services, including combined packages of minutes and video service through our U-verse service and our
relationships with satellite television providers. We will continue to develop innovative products that capitalize on our
expanding fiber network.
Additionally, we provide local, domestic intrastate and interstate, international wholesale networking capacity and
switched services to other service providers, primarily large Internet Service Providers using the largest class of
nationwide Internet networks (Internet backbone), wireless carriers, Competitive Local Exchange Carriers, regional
phone ILECs, cable companies and systems integrators. These services are subject to additional competitive pressures
from the development of new technologies and the increased availability of domestic and international transmission
capacity. The introduction of new products and service offerings and increasing satellite, wireless, fiber-optic and cable
transmission capacity for services similar to those provided by us continues to provide competitive pressures. We face a
number of international competitors, including Equant, British Telecom and SingTel as well as competition from a
number of large systems integrators, such as Electronic Data Systems.
Advertising Solutions
Our Advertising Solutions subsidiaries face competition from approximately 100 publishers of printed directories in
their operating areas. Competition also exists from other advertising media, including newspapers, radio, television and
direct-mail providers, as well as from directories offered over the Internet. Through our wholly-owned subsidiary, YPC,
we compete with other providers of Internet-based advertising and local search.
ACCOUNTING POLICIES AND STANDARDS
Critical Accounting Policies and Estimates Because of the size of the financial statement line items they relate to,
some of our accounting policies and estimates have a more significant impact on our financial statements than others.
The following policies are presented in the order in which the topics appear in our consolidated statements of income.
Allowance for Doubtful Accounts We maintain an allowance for doubtful accounts for estimated losses that
result from the failure of our customers to make required payments. When determining the allowance, we consider
the probability of recoverability based on past experience, taking into account current collection trends as well as
general economic factors, including bankruptcy rates. Credit risks are assessed based on historical write-offs, net of
recoveries, and an analysis of the aged accounts receivable balances with reserves generally increasing as the
receivable ages. Accounts receivable may be fully reserved for when specific collection issues are known to exist,
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such as pending bankruptcy or catastrophes. The analysis of receivables is performed monthly, and the bad-debt
allowances are adjusted accordingly. A 10% change in the amounts estimated to be uncollectible would result in a
change in uncollectible expense of approximately $120.
Pension and Postretirement Benefits Our actuarial estimates of retiree benefit expense and the associated
significant weighted-average assumptions are discussed in Note 11. One of the most significant of these
assumptions is the return on assets assumption, which was 8.50% for the year ended December 31, 2009. In setting
the long-term assumed rate of return, management considers capital markets’ future expectations and the asset mix
of the plans’ investments. The actual long-term return can, in relatively stable markets, also serve as a factor in
determining future expectations. However, the dramatic adverse market conditions in 2008 have skewed the
calculation of the long-term actual return; the actual 10-year return was 3.67% through 2009 and 4.21% through
2008, compared with 9.18% through 2007. The severity of the 2008 losses will make the 10-year actual return less
of a relevant factor in management’s evaluation of future expectations. In 2009, we experienced actual returns on
investments much greater than what was expected, creating a reduction in pension and postretirement expense for
2010. Based on future expectations and the plans’ asset mix, management has left unchanged the long-term
assumed rate of return for 2010. If all other factors were to remain unchanged, we expect that a 1.0% decrease in
the assumed long-term rate of return would cause 2010 combined pension and postretirement cost to increase $639.
Under GAAP, the expected long-term rate of return is calculated on the market-related value of assets (MRVA).
GAAP requires that actual gains and losses on pension and postretirement plan assets be recognized in the MRVA
equally over a period of up to five years. We use a methodology, allowed under GAAP, under which we hold the
MRVA to within 20% of the actual fair value of plan assets, which can have the effect of accelerating the
recognition of excess actual gains and losses into the MRVA in less than five years. This methodology did not have
a material impact on our 2008 or 2007 combined net pension and postretirement costs.
Our assumed discount rate of 6.50% at December 31, 2009, reflects the hypothetical rate at which the projected
benefit obligations could be effectively settled or paid out to participants. We determined our discount rate based on
a range of factors, including a yield curve comprised of the rates of return on several hundred high-quality, fixed-
income corporate bonds available at the measurement date and the related expected duration for the obligations.
These bonds were all rated at least Aa3 or AA- by one of the nationally recognized statistical rating organizations,
denominated in U.S. dollars, and neither callable, convertible nor index linked. For the year ended December 31,
2009, we decreased our discount rate by 0.50%, resulting in an increase in our pension plan benefit obligation of
$2,065 and an increase in our postretirement benefit obligation of $1,847. For the year ended December 31, 2008,
we increased our discount rate by 0.50%, resulting in a decrease in our pension plan benefit obligation of $2,176
and a decrease in our postretirement benefit obligation of $2,154. Should actual experience differ from actuarial
assumptions, the projected pension benefit obligation and net pension cost and accumulated postretirement benefit
obligation and postretirement benefit cost would be affected in future years. Note 11 also discusses the effects of
certain changes in assumptions related to medical trend rates on retiree health care costs.
Depreciation Our depreciation of assets, including use of composite group depreciation and estimates of useful
lives, is described in Notes 1 and 5. We assign useful lives based on periodic studies of actual asset lives. Changes
in those lives with significant impact on the financial statements must be disclosed, but no such changes have
occurred in the three years ended December 31, 2009. However, if all other factors were to remain unchanged, we
expect that a one-year increase in the useful lives of the largest categories of our plant in service (which accounts
for more than three-fourths of our total plant in service) would result in a decrease of approximately $2,420 in our
2010 depreciation expense and that a one-year decrease would result in an increase of approximately $3,480 in our
2010 depreciation expense.
Asset Valuations and Impairments We account for acquisitions using the acquisition method as required by
GAAP. Under GAAP, we allocate the purchase price to the assets acquired and liabilities assumed based on their
estimated fair values. The estimated fair values of intangible assets acquired are based on the expected discounted
cash flows of the identified customer relationships, patents, tradenames and FCC licenses. In determining the future
cash flows, we consider demand, competition and other economic factors.
Customer relationships, which are finite-lived intangible assets, are primarily amortized using the sum-of-the-
months-digits method of amortization over the period in which those relationships are expected to contribute to our
future cash flows. The sum-of-the-months-digits method is a process of allocation, and reflects our belief that we
expect greater revenue generation from these customer relationships during the earlier years of their lives.
Alternatively, we could have chosen to amortize customer relationships using the straight-line method, which
would allocate the cost equally over the amortization period. Amortization of other intangibles, including patents
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and amortizable tradenames, is determined using the straight-line method of amortization over the expected
remaining useful lives. We do not amortize indefinite-lived intangibles, such as wireless FCC licenses or certain
tradenames (see Note 6).
Goodwill and wireless FCC licenses are not amortized but tested annually for impairment, as required by GAAP.
We conduct our impairment tests as of October 1. Goodwill is tested on a reporting unit basis, and our reporting
units generally coincide with our segments, except for certain operations in the Other segment. The carrying
amounts of goodwill, by segment (which is the same as reporting unit for Wireless, Wireline and Advertising
Solutions), at December 31, 2009 were: Wireless $35,037; Wireline $31,608; Advertising Solutions $5,731; and
Other $883. At December 31, 2008, the carrying amounts of goodwill by segment were: Wireless $33,851;
Wireline $31,381; Advertising Solutions $5,694; and Other $903. Within the Other segment, goodwill associated
with our Sterling operations was $477 for 2009 and 2008. Additionally, FCC licenses are tested for impairment on
an aggregate basis, consistent with the management of the business on a national scope. These annual impairment
tests resulted in no material impairment of indefinite-lived goodwill or FCC licenses. If there are indications of
significant decreases in fair value of these assets, testing may also be done more frequently than the annual test.
There were no indications of a significant decrease in fair value in 2009. We review other long-lived assets for
impairment whenever events or circumstances indicate that the carrying amount may not be recoverable over the
remaining life of the asset or asset group.
Goodwill impairment testing is a two step process. The first step involves determining the fair value of the
reporting unit and comparing that to the book value. If the fair value exceeds the book value, then no further testing
is required. If the fair value is less than the book value, then a second step is performed.
In the second step, the fair values of all of the assets and liabilities of the reporting unit, including those that may
not be currently recorded, are determined. The difference between the sum of all of those fair values and the overall
reporting unit’s fair value is a new implied goodwill amount that is compared to the recorded goodwill. If implied
goodwill is less than the recorded goodwill, then an impairment to the recorded goodwill is recorded. The amount
of this impairment may be more or less than the difference between the overall fair value and book value of the
reporting unit. It may even be zero if the fair values of other assets are less than their book values. Goodwill is the
only asset that may be impaired when testing goodwill.
As shown in Note 6, more than 98% of our goodwill resides in the Wireline, Wireless and Advertising Solutions
segments. For each of those segments, publicly traded companies whose services are consistent with those
primarily offered by the segment exist, giving a market indication of enterprise value. Enterprise value is the sum of
a company’s equity and debt values. One standard valuation technique is to determine enterprise value as a multiple
of a company’s operating income before depreciation and amortization. We determined the multiples of the public
companies and then calculated a weighted-average of those multiples. Using those weighted-averages, we then
calculated fair values for each of those segments to determine if additional testing was required and, in all
circumstances, no additional testing was required. In the event of a 10% drop in the fair values of the reporting
units, the fair values would have still exceeded the book values of the reporting units and additional testing would
still have not been required.
Consistent with prior years, we performed our test of the fair values of FCC licenses using a discounted cash flow
model (the Greenfield Approach). The Greenfield Approach assumes a company is started, owning only the
wireless FCC licenses, and then makes investments required to build an operation comparable to the one in which
the licenses are presently utilized. We utilized a 17-year discrete period to isolate cash flows attributable to the
licenses including modeling the hypothetical build out. The projected cash flows are based on certain financial
factors including revenue growth rates, Operating Income Before Depreciation and Amortization (OIBDA)
margins, and churn rates. Wireless revenue growth is expected to trend down from our 2008 growth rate of 15.6%
to a long-term growth rate that reflects expected long-term inflation trends. Our churn rates are expected to
continue declining from 1.68% in 2008, in line with expected trends in the industry but at a rate comparable with
industry-leading churn. OIBDA margins should continue to increase from the 2008 level of 38.0% to more than
40.0%.
This model then incorporates cash flow assumptions regarding investment in the network, development of
distribution channels and the subscriber base, and other inputs for making the business operational. The
assumptions which underlie the development of the network, subscriber base and other critical inputs of the
discounted cash flow model were based on a combination of average marketplace participant data and our historical
results, trends and business plans. Operating metrics such as capital investment per subscriber, acquisition costs per
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subscriber, minutes of use per subscriber, etc. were also used to develop the projected cash flows. Since the cash
flows associated with these other inputs were included in the annual cash flow projections, the present value of the
unlevered free cash flows of the segment, after investment in the network, subscribers, etc., is attributable to the
wireless FCC licenses. The terminal value of the segment, which incorporates an assumed sustainable growth rate,
is also discounted and is likewise attributed to the licenses. The discount rate of 9.0% used to calculate the present
value of the projected cash flows is based on the optimal long-term capital structure of a market participant and its
associated cost of debt and equity. The discount rate utilized in the analysis is also consistent with rates we use to
calculate the present value of the projected cash flows of licenses acquired from third parties.
If either the projected rate of growth of cash flows or revenues were to decline by 1%, or if the discount rate were
to increase by 1%, the fair values of the wireless FCC licenses, while less than currently projected, would still be
higher than the book value of the licenses. The fair value of the licenses exceeded the book value by more than one-
fourth.
We review other long-lived assets for impairment under GAAP whenever events or circumstances indicate that the
carrying amount may not be recoverable over the remaining life of the asset or asset group. In order to determine
that the asset is recoverable, we verify that the expected future cash flows directly related to that asset exceed its
fair value, which is based on the undiscounted cash flows. The discounted cash flow calculation uses various
assumptions and estimates regarding future revenue, expense and cash flows projections over the estimated
remaining useful life of the asset.
Cost investments are evaluated to determine whether mark-to-market declines are temporary and reflected in other
comprehensive income, or other than temporary and recorded as an expense in the income statement. This
evaluation is based on the length of time and the severity of decline in the investment’s value. At the end of the first
quarter of 2009 and at the end of 2008, we concluded the severity of decline had led to an other-than-temporary
decline in the value of assets contained in an independently managed trust for certain BellSouth employee benefits.
Income Taxes Our estimates of income taxes and the significant items giving rise to the deferred assets and
liabilities are shown in Note 10 and reflect our assessment of actual future taxes to be paid on items reflected in the
financial statements, giving consideration to both timing and probability of these estimates. Actual income taxes
could vary from these estimates due to future changes in income tax law or the final review of our tax returns by
federal, state or foreign tax authorities.
In 2007, we adopted new GAAP rules and began accounting for uncertain tax positions under those provisions. As
required, we use our judgment to determine whether it is more likely than not that we will sustain positions that we
have taken on tax returns and, if so, the amount of benefit to initially recognize within our financial statements. We
regularly review our uncertain tax positions and adjust our unrecognized tax benefits in light of changes in facts and
circumstances, such as changes in tax law, interactions with taxing authorities and developments in case law. These
adjustments to our unrecognized tax benefits may affect our income tax expense. Settlement of uncertain tax
positions may require use of our cash.
New Accounting Standards
Revenue Arrangements with Multiple Deliverables In October 2009, the Financial Accounting Standards Board (FASB)
issued “Multiple-Deliverable Revenue Arrangements” (Accounting Standards Update (ASU) 2009-13), which addresses
how revenues should be allocated among all products and services included in our sales arrangements. It establishes a
selling price hierarchy for determining the selling price of each product or service, with vendor-specific objective
evidence (VSOE) at the highest level, third-party evidence of VSOE at the intermediate level, and a best estimate at the
lowest level. It replaces “fair value” with “selling price” in revenue allocation guidance, eliminates the residual method
as an acceptable allocation method, and requires the use of the relative selling price method as the basis for allocation. It
also significantly expands the disclosure requirements for such arrangements, including, potentially, certain qualitative
disclosures. ASU 2009-13 will be effective prospectively for sales entered into or materially modified in fiscal years
beginning on or after June 15, 2010 (i.e., the year beginning January 1, 2011, for us). The FASB permits early adoption
of ASU 2009-13, applied retrospectively, to the beginning of the year of adoption. We are currently evaluating the
impact on our financial position and results of operations.
Software In October 2009, the FASB issued “Certain Revenue Arrangements That Include Software Elements” (ASU
2009-14), which clarifies the guidance for allocating and measuring revenue, including how to identify software that is
out of the scope. ASU 2009-14 amends accounting and reporting guidance for revenue arrangements involving both
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tangible products and software that is “more than incidental to the tangible product as a whole.” That type of software
and hardware will be outside of the scope of software revenue guidance, and the hardware components will also be
outside of the scope of software revenue guidance and may result in more revenue recognized at the time of the
hardware sale. Additional disclosures will discuss allocation of revenue to products and services in our sales
arrangements and the significant judgments applied in the revenue allocation method, including impacts on the timing
and amount of revenue recognition. ASU 2009-14 will be effective prospectively for revenue arrangements entered into
or materially modified in fiscal years beginning on or after June 15, 2010 (i.e., the year beginning January 1, 2011, for
us). ASU 2009-14 has the same effective date, including early adoption provisions, as ASU 2009-13. Companies must
adopt ASU 2009-14 and ASU 2009-13 at the same time. We are currently evaluating the impact on our financial
position and results of operations.
See Note 1 for a discussion of recently issued or adopted accounting standards.
OTHER BUSINESS MATTERS
Retiree Phone Concession Litigation In May 2005, we were served with a purported class action in U.S. District
Court, Western District of Texas (Stoffels v. SBC Communications Inc.), in which the plaintiffs, who are retirees of
Pacific Bell Telephone Company, Southwestern Bell and Ameritech, contend that the telephone concession provided by
the company is, in essence, a “defined benefit plan” within the meaning of ERISA, as amended. In October 2006, the
Court certified two classes. The issue of whether the concession is an ERISA pension plan was tried before the judge in
November 2007. In May 2008, the court ruled that the concession was an ERISA pension plan. We asked the court to
certify this ruling for interlocutory appeal, and in August 2008, the court denied our request. In May 2009, we filed a
motion for reconsideration with the trial court. That motion is pending. A trial on the appropriate remedy has been set
for June 1, 2010. We believe that an adverse outcome having a material effect on our financial statements in this case is
unlikely, but we will continue to evaluate the potential impact of this suit on our financial results as it progresses.
NSA Litigation Twenty-four lawsuits were filed alleging that we and other telecommunications carriers unlawfully
provided assistance to the National Security Agency (NSA) in connection with intelligence activities that were initiated
following the events of September 11, 2001. In the first filed case, Hepting et al v. AT&T Corp., AT&T Inc. and Does
1-20, a purported class action filed in U.S. District Court in the Northern District of California, plaintiffs alleged that the
defendants disclosed and are currently disclosing to the U.S. Government content and call records concerning
communications to which Plaintiffs were a party. Plaintiffs sought damages, a declaratory judgment, and injunctive
relief for violations of the First and Fourth Amendments to the United States Constitution, the Foreign Intelligence
Surveillance Act (FISA), the Electronic Communications Privacy Act, and other federal and California statutes. We
filed a motion to dismiss the complaint. The United States asserted the “state secrets privilege” and related statutory
privileges and also filed a motion asking the court to dismiss the complaint. The Court denied the motions, and we and
the United States appealed. In August 2008, the U.S. Court of Appeals for the Ninth Circuit remanded the case to the
district court without deciding the issue in light of the passage of the FISA Amendments Act, a provision of which
addresses the allegations in these pending lawsuits (immunity provision). The immunity provision requires the pending
lawsuits to be dismissed if the Attorney General certifies to the court either that the alleged assistance was undertaken
by court order, certification, directive, or written request or that the telecom entity did not provide the alleged
assistance. In September 2008, the Attorney General filed his certification and asked the district court to dismiss all of
the lawsuits pending against the AT&T Inc. telecommunications companies. The court granted the Government's
motion to dismiss and entered final judgments in July 2009. In addition, a lawsuit seeking to enjoin the immunity
provision’s application on grounds that it is unconstitutional was filed. In March 2009, we and the Government filed
motions to dismiss this lawsuit. The court granted the motion to dismiss and entered final judgment in July 2009. All
cases brought against the AT&T entities have been dismissed. In August 2009, plaintiffs in all cases filed an appeal with
the Ninth Circuit Court of Appeals.
Management believes these actions are without merit and intends to continue to defend these matters vigorously.
Labor Contracts As of January 31, 2010, we employed approximately 281,000 persons. Approximately 58 percent of
our employees are represented by the Communications Workers of America (CWA), the International Brotherhood of
Electrical Workers (IBEW) or other unions. Contracts covering approximately 120,000 collectively bargained wireline
employees expired during 2009. As of January 31, 2010, the Company and approximately 86,000 employees, covered
by these expired collectively bargained wireline contracts, have ratified new labor agreements. In the absence of an
effective contract, the union is entitled to call a work stoppage.
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For approximately 60,000 employees covered by ratified agreements, the agreements provide for a three-year term and,
for the vast majority of those covered employees, a 3 percent wage increase in years one and two, a wage increase in
year three of 2.75 percent, and pension band increases of 2 percent for each year of the agreement. For both wage and
pension band increases, there is a potential cost-of-living increase based on the consumer price index for the third year.
These agreements also provide for continued health care coverage with reasonable cost sharing.
For the remaining approximately 26,000 employees covered by ratified agreements, the agreement provides for a four-
year term. The provisions of the tentative agreement are substantially similar to the provisions of the ratified agreements
discussed above, with a wage increase in year four of 2.75 percent and a potential cost-of-living increase in year four
instead of in year three.
On February 8, 2010, the Company and the CWA announced a tentative agreement covering approximately 30,000 core
wireline employees in the nine-state former BellSouth region, subject to ratification by those covered employees. The
tentative agreement provides for a three-year term and, for the vast majority of those covered employees, a 3 percent
wage increase in years one and two, a wage increase in year three of 2.75 percent, and pension band increases of 2
percent for each year of the agreement. These agreements also provide for continued health care coverage with
reasonable cost sharing.
Health Care Legislation We provide a variety of medical and prescription drug benefits to certain active and retired
employees under various plans. In 2009, the U.S. Senate and House of Representatives each passed comprehensive
health care reform legislation. It is unclear if differences between these bills can be reconciled and a final bill passed in
2010. Among the major provisions of the bills are the taxation of the Medicare Part D subsidy, Medicare payment
reforms, an excise tax on “Cadillac” plans as well as mandates for providing coverage and other requirements for
delivery of health care to employees and retirees. The final outcome of the legislation could cause negative impacts to
our results and bring uncertainty to our future costs.
Environmental We are subject from time to time to judicial and administrative proceedings brought by various
governmental authorities under federal, state or local environmental laws. Although we are required to reference in our
Forms 10-Q and 10-K any of these proceedings that could result in monetary sanctions (exclusive of interest and costs)
of one hundred thousand dollars or more, we do not believe that any of them currently pending will have a material
adverse effect on our results of operations.
LIQUIDITY AND CAPITAL RESOURCES
We had $3,802 in cash and cash equivalents available at December 31, 2009. Cash and cash equivalents included cash
of $437 and money market funds and other cash equivalents of $3,365. Cash and cash equivalents increased $2,010
since December 31, 2008. During 2009, cash inflows were primarily provided by cash receipts from operations and the
issuance of long-term debt. These inflows were partially offset by cash used to meet the needs of the business including,
but not limited to, payment of operating expenses, funding capital expenditures, dividends to stockholders, repayment of
debt and payment of interest on debt. We discuss many of these factors in detail below.
Cash Provided by or Used in Operating Activities

During 2009, cash provided by operating activities was $34,445 compared to $33,656 in 2008. Our higher operating
cash flow reflects decreased tax payments of $836, partially offset by reduced net income and increased interest
payments of $146. During 2009, our payments for current income taxes were lower than 2008 due primarily to changes
in law impacting the timing of payments. The timing of cash payments for income taxes is governed by the IRS and
other taxing authorities and differs from the timing of recording tax expense, which is reported in accordance with
GAAP. The decrease in current tax payments was partially offset by an increase in audit-related payments in 2009. We
anticipate using approximately $2,350 of cash in 2010 to complete the acquisition of various assets from Verizon that it
was required to divest as part of its acquisition of Alltel.
During 2008, our primary source of funds was cash from operating activities of $33,656 compared to $34,242 in 2007.
Operating cash flows decreased primarily due to increased tax payments of $1,294 partially offset by improvement in
operating income excluding depreciation. During 2008, tax payments were higher primarily due to increased income.
22
Cash Used in or Provided by Investing Activities

During 2009, cash used in investing activities consisted of:
• $16,595 in capital expenditures, excluding interest during construction.
• $740 in interest during construction.
• $787, net of cash acquired, related to the acquisition of Centennial.
• $111 related to spectrum and licenses.
• $85 related to other acquisitions.
During 2009, cash provided by investing activities consisted of:

• $287 from dispositions of non-strategic assets.
• $55 from the sale of securities, net of investments.
• $51 related to other activities.
Our capital expenditures are primarily for our wireless and wireline subsidiaries’ networks, our U-verse services, and
support systems for our communications services. Total capital spending in 2009 was $16,595, which was a $3,081
decrease from 2008. Capital spending in our Wireless segment, excluding interest during construction, only increased
1% for 2009; the modest increase in capital spending reflected a 6% increase in network expenditures, tempered by
reductions in non-network spending. Expenditures were used for network capacity growth, integration and upgrades to
our Universal Mobile Telecommunications System/High-Speed Packet Access network, as well as for IT and other
support systems for our wireless service. Capital expenditures in our Wireline segment, excluding interest during
construction, which represented 64.3% of our capital expenditures, decreased 21% for 2009, reflecting decreased
spending on U-verse services as the upgrades to our existing network become more mature. In addition, capital
expenditures decreased due to less spending on wireline voice services, and lower DSL and High Capacity volumes.
The Other segment capital expenditures were less than 2% of total capital expenditures for 2009. Included in the Other
segment are equity investments, which should be self funding as they are not direct AT&T operations; as well as
corporate, diversified business and Sterling operations, which we expect to fund using cash from operations. We expect
to fund any Advertising Solutions segment capital expenditures using cash from operations. We expect total 2010
capital investment to be in the $18 billion to $19 billion range. This level of investment is framed by the expectation
that regulatory and legislative decisions relating to the telecom sector will continue to be sensitive to investment.
Cash Used in or Provided by Financing Activities

We paid dividends of $9,670 in 2009, $9,507 in 2008 and $8,743 in 2007, reflecting dividend rate increases. In
December 2009, our Board of Directors approved a 2.4% increase in the quarterly dividend from $0.41 to $0.42 per
share. This follows a 2.5% dividend increase approved by AT&T's Board in December 2008. Dividends declared by our
Board of Directors totaled $1.65 per share in 2009, $1.61 per share in 2008 and $1.47 per share in 2007. Our dividend
policy considers both the expectations and requirements of stockholders, internal requirements of AT&T and long-term
growth opportunities. It is our intent to provide the financial flexibility to allow our Board of Directors to consider
dividend growth and to recommend an increase in dividends to be paid in future periods. All dividends remain subject
to approval by our Board of Directors.
During 2009, we received net proceeds of $8,161 from the issuance of $8,228 in long-term debt. Debt proceeds were
used for general corporate purposes, including the repayment of maturing debt. Long-term debt issuances consisted of:
• $1,000 of 4.85% global notes due in 2014.
• £750 of 5.875% global notes due in 2017 (equivalent to $1,107 when issued).
• £1,100 of 7.0% global notes due in 2040 (equivalent to $1,621 when issued).
We entered into cross-currency swaps to exchange the above foreign currency proceeds and the future principal and
interest payments to U.S. dollars.
During 2009, debt repayments totaled $13,236 and consisted of:

• $8,633 in repayments of long-term debt (includes repayment of $1,957 for Centennial debt).
• $4,583 in repayments of commercial paper and short-term bank borrowings.
• $20 in repayments of other debt.
23
At December 31, 2009, we had $7,361 of debt maturing within one year, which included $7,328 of long-term debt
maturities and $33 of other borrowings. Debt maturing within one year includes the following notes that may be put
back to us by the holders:
• $1,000 of annual put reset securities issued by BellSouth Corporation can be put each April until maturity in
2021.
• An accreting zero-coupon note may be redeemed each May, excluding May 2011, until maturity in 2022. If the
zero-coupon note (issued for principal of $500 in 2007) is held to maturity, the redemption amount will be
$1,030.
We have a five-year credit agreement with a syndicate of investment and commercial banks. In June 2009, one of the
participating banks, Lehman Brothers Bank, Inc., which had declared bankruptcy, terminated its lending commitment of
$535 and withdrew from the agreement. As a result of this termination, the outstanding commitments under the
agreement were reduced from a total of $10,000 to $9,465. We still have the right to increase commitments up to an
additional $2,535 provided no event of default under the credit agreement has occurred. The current agreement will
expire in July 2011. We also have the right to terminate, in whole or in part, amounts committed by the lenders under
this agreement in excess of any outstanding advances; however, any such terminated commitments may not be
reinstated. Advances under this agreement may be used for general corporate purposes, including support of commercial
paper borrowings and other short-term borrowings. There is no material adverse change provision governing the
drawdown of advances under this credit agreement. This agreement contains a negative pledge covenant, which requires
that, if at any time we or a subsidiary pledges assets or otherwise permits a lien on its properties, advances under this
agreement will be ratably secured, subject to specified exceptions. We must maintain a debt-to-EBITDA (earnings
before interest, income taxes, depreciation and amortization, and other modifications described in the agreement)
financial ratio covenant of not more than three-to-one as of the last day of each fiscal quarter for the four quarters then
ended. We comply with all covenants under the agreement. At December 31, 2009, we had no borrowings outstanding
under this agreement.
During 2009, the following other financing activities occurred:

• We received $483 related to derivative collateral; $261 was a return of collateral we posted to derivative
counterparties in 2008 and $222 was collateral we collected from counterparties in 2009.
• We paid $275 to minority interest holders.
• We received proceeds of $28 from the issuance of treasury shares related to the settlement of share-based awards.
We plan to fund our 2010 financing activities through a combination of cash from operations and debt issuances. The
timing and mix of debt issuance will be guided by credit market conditions and interest rate trends. The emphasis of our
financing activities will be the payment of dividends, subject to approval by our Board of Directors, and the repayment
of debt.
Other
Our total capital consists of debt (long-term debt and debt maturing within one year) and stockholders’ equity. Our
capital structure does not include debt issued by our international equity investees. Our debt ratio was 41.3%, 43.7%
and 35.6% at December 31, 2009, 2008 and 2007. The debt ratio is affected by the same factors that affect total capital.
Total capital increased $2,665 in 2009 compared to a decrease of $8,121 in 2008. The 2009 total capital increase was
due to increased retained earnings and an increase in other comprehensive income, partially offset by a $2,910 decrease
in debt, all factors which lowered the debt ratio in 2009.
The primary factor contributing to the increase in our 2008 debt ratio was the $16,677 increase in accumulated other
comprehensive loss that reflected a decrease in retirement plans funded status and an increase in debt of $10,876 related
to our financing activities. Our stockholders’ equity balance was down $19,020 primarily due to the decrease in
retirement plan funded status.
CONTRACTUAL OBLIGATIONS, COMMITMENTS AND CONTINGENCIES
Current accounting standards require us to disclose our material obligations and commitments to making future
payments under contracts, such as debt and lease agreements, and under contingent commitments, such as debt
guarantees. We occasionally enter into third-party debt guarantees, but they are not, nor are they reasonably likely to
become, material. We disclose our contractual long-term debt repayment obligations in Note 8 and our operating lease
payments in Note 5. Our contractual obligations do not include expected pension and postretirement payments as we
maintain pension funds and Voluntary Employee Beneficiary Association trusts to fully or partially fund these benefits
24
(see Note 11). In the ordinary course of business, we routinely enter into commercial commitments for various aspects
of our operations, such as plant additions and office supplies. However, we do not believe that the commitments will
have a material effect on our financial condition, results of operations or cash flows.
Our contractual obligations as of December 31, 2009, are in the following table. The purchase obligations that follow
are those for which we have guaranteed funds and will be funded with cash provided by operations or through
incremental borrowings. The minimum commitment for certain obligations is based on termination penalties that could
be paid to exit the contract. Since termination penalties would not be paid every year, such penalties are excluded from
the table. Other long-term liabilities were included in the table based on the year of required payment or an estimate of
the year of payment. Such estimate of payment is based on a review of past trends for these items, as well as a forecast
of future activities. Certain items were excluded from the following table as the year of payment is unknown and could
not be reliably estimated since past trends were not deemed to be an indicator of future payment.
Substantially all of our purchase obligations are in our Wireline and Wireless segments. The table does not include the
fair value of our interest rate swaps. Our capital lease obligations and bank borrowings have been excluded from the
table due to the immaterial value at December 31, 2009. Many of our other noncurrent liabilities have been excluded
from the following table due to the uncertainty of the timing of payments, combined with the absence of historical
trending to be used as a predictor of such payments. Additionally, certain other long-term liabilities have been excluded
since settlement of such liabilities will not require the use of cash. However, we have included in the following table
obligations which primarily relate to benefit funding and severance due to the certainty of the timing of these future
payments. Our other long-term liabilities are: deferred income taxes (see Note 10) of $23,803; postemployment benefit
obligations (see Note 11) of $27,849; and other noncurrent liabilities of $13,350, which included deferred lease revenue
from our agreement with American Tower of $509 (see Note 5).
Payments Due By Period

Less than 1 More than 5
Contractual Obligations Total Year 1 - 3 Years 3 - 5 Years Years
Long-term debt obligations1 $ 70,021 $ 7,328 $ 12,372 $ 10,614 $ 39,707
Interest payments on long-term debt 66,233 4,178 7,318 5,990 48,747
Operating lease obligations 20,534 2,429 4,322 3,560 10,223
Unrecognized tax benefits2 5,181 299 - - 4,882
Purchase obligations3 10,228 2,890 4,095 2,549 694
Total Contractual Obligations $ 172,197 $ 17,124 $ 28,107 $ 22,713 $ 104,253
1
Represents principal or payoff amounts of notes and debentures at maturity or, for putable debt, the next put opportunity.
2
The non-current portion of the unrecognized tax benefits is included in the “More than 5 Years” column, as we cannot reasonably estimate the
timing or amounts of additional cash payments, if any, at this time. See Note 10 for additional information.
3
We calculated the minimum obligation for certain agreements to purchase goods or services based on termination fees that can be paid to exit the
contract. If we elect to exit these contracts, termination fees for all such contracts in the year of termination could be approximately $404 in 2010,
$469 in the aggregate for 2011 and 2012, $113 in the aggregate for 2013 and 2014 and $3 in the aggregate, thereafter. Certain termination fees are
excluded from the above table, as the fees would not be paid every year and the timing of such payments, if any, is uncertain.
MARKET RISK
We are exposed to market risks primarily from changes in interest rates and foreign currency exchange rates. These
risks, along with other business risks, impact our cost of capital. It is our policy to manage our debt structure and
foreign exchange exposure in order to manage capital costs, control financial risks and maintain financial flexibility
over the long term. In managing market risks, we employ derivatives according to documented policies and procedures,
including interest rate swaps, interest rate locks, foreign exchange contracts, and combined interest rate foreign
exchange contracts (cross-currency swaps). We do not use derivatives for trading or speculative purposes. We do not
foresee significant changes in the strategies we use to manage market risk in the near future.
Interest Rate Risk
The majority of our financial instruments are medium- and long-term fixed rate notes and debentures. Changes in
interest rates can lead to significant fluctuations in the fair value of these instruments. The principal amounts by
expected maturity, average interest rate and fair value of our liabilities that are exposed to interest rate risk are described
in Notes 8 and 9. In managing interest expense, we control our mix of fixed and floating rate debt, principally through
the use of interest rate swaps. We have established interest rate risk limits that we closely monitor by measuring interest
rate sensitivities in our debt and interest rate derivatives portfolios.
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All our foreign-denominated debt has been swapped from fixed-rate foreign currencies to fixed-rate U.S. dollars at
issuance through cross-currency swaps, removing interest rate risk and foreign currency exchange risk associated with
the underlying interest and principal payments. Likewise, periodically we enter into interest rate locks to partially hedge
the risk of increases in the benchmark interest rate during the period leading up to the probable issuance of fixed-rate
debt. We expect gains or losses in our cross-currency swaps and interest rate locks to offset the losses and gains in the
financial instruments they hedge.
Following are our interest rate derivatives subject to material interest rate risk as of December 31, 2009. The interest
rates illustrated below refer to the average rates we expect to pay based on current and implied forward rates and the
average rates we expect to receive based on derivative contracts. The notional amount is the principal amount of the
debt subject to the interest rate swap contracts. The fair value asset (liability) represents the amount we would receive
(pay) if we had exited the contracts as of December 31, 2009.
Maturity
Fair
Value
2010 2011 2012 2013 2014 Thereafter Total 12/31/09
Interest Rate Derivatives
Interest Rate Swaps:
Receive Fixed/Pay Variable
Notional Amount Maturing - $3,200 $3,050 $1,750 - $1,000 $9,000 $399
Weighted-Average Variable
Rate Payable1 3.1% 4.4% 4.8% 5.6% 6.1% 6.4%
Weighted-Average Fixed
Rate Receivable 5.8% 5.7% 5.3% 5.6% 5.6% 5.6%
1
Interest payable based on current and implied forward rates for One, Three or Six Month London Interbank Offered Rate (LIBOR) plus a
spread ranging between approximately 36 and 654 basis points.
Foreign Exchange Risk
We are exposed to foreign currency exchange risk through our foreign affiliates and equity investments in foreign
companies. We do not hedge foreign currency translation risk in the net assets and income we report from these sources.
However, we do hedge a large portion of the exchange risk involved in anticipation of highly probable foreign currency-
denominated transactions and cash flow streams, such as those related to issuing foreign-denominated debt, receiving
dividends from foreign investments, and other receipts and disbursements.
Through cross-currency swaps, all of our foreign-denominated debt has been swapped from fixed-rate foreign
currencies to fixed-rate U.S. dollars at issuance, removing interest rate risk and foreign currency exchange risk
associated with the underlying interest and principal payments. We expect gains or losses in our cross-currency swaps
to offset the losses and gains in the financial instruments they hedge.
In anticipation of other foreign currency-denominated transactions, we often enter into foreign exchange contracts to
provide currency at a fixed rate. Our policy is to measure the risk of adverse currency fluctuations by calculating the
potential dollar losses resulting from changes in exchange rates that have a reasonable probability of occurring. We
cover the exposure that results from changes that exceed acceptable amounts.
For the purpose of assessing specific risks, we use a sensitivity analysis to determine the effects that market risk
exposures may have on the fair value of our financial instruments and results of operations. To perform the sensitivity
analysis, we assess the risk of loss in fair values from the effect of a hypothetical 10% depreciation of the U.S. dollar
against foreign currencies from the prevailing foreign currency exchange rates, assuming no change in interest rates. For
foreign exchange contracts outstanding at December 31, 2009, the change in fair value was immaterial. Furthermore,
because our foreign exchange contracts are entered into for hedging purposes, we believe that these losses would be
largely offset by gains on the underlying transactions.
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Issuer Equity Repurchases
On December 10, 2007, our Board of Directors authorized a share repurchase plan of 400 million shares that expired at
December 31, 2009. During 2009, we repurchased 133 thousand shares at a cost of $3. We anticipate concentrating on
reducing debt levels in 2010.
Total Number of
Average Shares Purchased as Maximum Number of
Total Number Price Part of Publicly Shares that May Yet
of Shares Paid per Announced Plans or Be Purchased Under
Purchase Period Purchased Share1 Programs the Plans or Programs
February 1, 2009 –
February 28, 2009 133,334 $ 25.16 133,334 0
Total 133,334 $ 25.16 133,334 0
1
Average Price Paid per Share excludes transaction costs.
Stock Performance Graph
The comparison above assumes $100 invested on December 31, 2004, in AT&T common stock, Standard & Poor’s 500
Index (S&P 500), and Standard & Poor's 500 Integrated Telecom Index (Telecom Index). Total return equals stock
price appreciation plus reinvestment of dividends.
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RISK FACTORS
In addition to the other information set forth in this document, including the matters contained under the caption
“Cautionary Language Concerning Forward-Looking Statements,” you should carefully read the matters described
below. We believe that each of these matters could materially affect our business. We recognize that most of these
factors are beyond our ability to control and therefore we cannot predict an outcome. Accordingly, we have organized
them by first addressing general factors, then industry factors and, finally, items specifically applicable to us.
A worsening U.S. economy would magnify our customers’ and suppliers’ current financial difficulties and could
materially adversely affect our business.
We provide services and products to consumers and large and small businesses in the United States and to larger
businesses throughout the world. The current economic recession in the U.S. has adversely affected our customers’
demand for and ability to pay for existing services, especially local landline service, and their interest in purchasing new
services. Our suppliers are also facing higher financing and operating costs. Should these current economic conditions
worsen, we likely would experience both a further decrease in revenues and an increase in certain expenses, including
expenses relating to bad debt and equipment and software maintenance. We also may incur difficulties locating
financially stable equipment and other suppliers, thereby affecting our ability to offer attractive new services. We are
also likely to experience greater pressure on pricing and margins as we continue to compete for customers who would
have even less discretionary income. While our largest business customers have been less affected by these adverse
changes in the U.S. economy, if the continued adverse economic conditions in the U.S., Europe and other foreign
markets persist or worsen, those customers would likely be affected in a similar manner.
Adverse changes in medical costs and the U.S. securities markets and interest rates could materially increase our
benefit plan costs.
Our pension and postretirement costs are subject to increases, primarily due to continuing increases in medical and
prescription drug costs, and can be affected by lower returns in prior years on funds held by our pension and other
benefit plans, which are reflected in our financial statements over several years. Investment returns on these funds
depend largely on trends in the U.S. securities markets and the U.S. economy. In calculating the annual costs included
on our financial statements of providing benefits under our plans, we have made certain assumptions regarding future
investment returns, medical costs and interest rates. If actual investment returns, medical costs and interest rates are
worse than those previously assumed, our annual costs will increase.
The FASB requires companies to recognize the funded status of defined benefit pension and postretirement plans as an
asset or liability in our statement of financial position and to recognize changes in that funded status in the year in which
the changes occur through comprehensive income. Therefore, an increase in our costs will have a negative effect on our
balance sheet.
The ongoing uncertainty in global financial markets could materially adversely affect our ability and our larger
customers' ability to access capital needed to fund business operations.
The recent instability in the global financial markets and ongoing uncertainty affecting these markets have resulted in
extreme volatility in the credit, equity and fixed income markets. This volatility has limited, in some cases severely,
most companies’ access to the credit markets, leading to significantly higher borrowing costs for companies or, in many
cases, the inability of these companies to fund their ongoing operations. As a result, our larger customers, who tend to
be heavy users of our data and wireless services, may be forced to delay or reduce or be unable to finance purchases of
our products and services and may delay payment or default on outstanding bills to us. In addition, we contract with
large financial institutions to support our own treasury operations, including contracts to hedge our exposure on interest
rates and foreign exchange and the funding of credit lines and other short-term debt obligations, including commercial
paper. While we have been successful in continuing to access the credit and fixed income markets when needed, a
financial crisis could render us unable to access these markets, severely affecting our business operations.
Changes in available technology could increase competition and our capital costs.
The telecommunications industry has experienced rapid changes in the last several years. The development of wireless,
cable and IP technologies has significantly increased the commercial viability of alternatives to traditional wireline
telephone service and enhanced the capabilities of wireless networks. In order to remain competitive, we have begun to
deploy a more sophisticated wireline network and continue to deploy a more sophisticated wireless network, as well as
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research other new technologies. If the new technologies we have adopted or on which we have focused our research
efforts fail to be cost-effective and accepted by customers, our ability to remain competitive could be materially
adversely affected.
Changes to federal, state and foreign government regulations and decisions in regulatory proceedings could
materially adversely affect us.
Our wireline subsidiaries are subject to significant federal and state regulation while many of our competitors are not. In
addition, our subsidiaries and affiliates operating outside the U.S. are also subject to the jurisdiction of national and
supranational regulatory authorities in the market where service is provided. Our wireless subsidiaries are regulated to
varying degrees by the FCC and some state and local agencies. Adverse rulings by the FCC relating to broadband issues
could impede our ability to manage our networks and recover costs and lessen incentives to invest in our networks. The
development of new technologies, such as IP-based services, also has created or potentially could create conflicting
regulation between the FCC and various state and local authorities, which may involve lengthy litigation to resolve and
may result in outcomes unfavorable to us. In addition, increased public focus on alleged changes in the global climate
has led to proposals at state, federal and foreign government levels to increase regulation on various types of emissions,
including those generated by vehicles and facilities consuming large amounts of electricity.
Increasing competition in our wireline markets could adversely affect wireline operating margins.
We expect competition in the telecommunications industry to continue to intensify. We expect this competition will
continue to put pressure on pricing, margins and customer retention. A number of our competitors that rely on
alternative technologies (e.g., wireless, cable and VoIP) and business models (e.g., advertising-supported) are typically
subject to less (or no) regulation than our wireline and ATTC subsidiaries and therefore are able to operate with lower
costs. These competitors also have cost advantages compared to us, due in part to a nonunionized workforce, lower
employee benefits and fewer retirees (as most of the competitors are relatively new companies). We believe such
advantages can be offset by continuing to increase the efficiency of our operating systems and by improving employee
training and productivity; however, there can be no guarantee that our efforts in these areas will be successful.
Increasing competition in the wireless industry could adversely affect our operating results.
On average, we have three to four other wireless competitors in each of our service areas and compete for customers
based principally on price, service/device offerings, call quality, coverage area and customer service. In addition, we are
likely to experience growing competition from providers offering services using alternative wireless technologies and
IP-based networks as well as traditional wireline networks. We expect market saturation may cause the wireless
industry’s customer growth rate to moderate in comparison with historical growth rates, leading to increased
competition for customers. We expect that the availability of additional 700 MHz spectrum could increase competition
and the effectiveness of existing competition. This competition will continue to put pressure on pricing and margins as
companies compete for potential customers. Our ability to respond will depend, among other things, on continued
improvement in network quality and customer service and effective marketing of attractive products and services, and
cost management. These efforts will involve significant expenses and require strategic management decisions on, and
timely implementation of, equipment choices, marketing plans and financial budgets.
Equipment failures, natural disasters and terrorist attacks may materially adversely affect our operations.
Major equipment failures or natural disasters, including severe weather, terrorist acts or other breaches of network or IT
security that affect our wireline and wireless networks, including telephone switching offices, microwave links, third-
party owned local and long-distance networks on which we rely, our cell sites or other equipment, could have a material
adverse effect on our operations. While we have insurance coverage for some of these events, our inability to operate
our wireline or wireless systems, even for a limited time period, may result in significant expenses, a loss of customers
or impair our ability to attract new customers, which could have a material adverse effect on our business, results of
operations and financial condition.
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The success of our U-verse services initiative will depend on the timing, extent and cost of deployment; the
development of attractive and profitable service offerings; the extent to which regulatory, franchise fees and
build-out requirements apply to this initiative; and the availability and reliability of the various technologies
required to provide such offerings.
The trend in telecommunications technology is to shift from the traditional circuit- and wire-based technology to IP-
based technology. IP-based technology can transport voice and data, as well as video, from both wired and wireless
networks. IP-based networks also potentially cost less to operate than traditional networks. Our competitors, many of
which are newer companies, are deploying this IP-based technology. In order to continue to offer attractive and
competitively priced services, we are deploying a new broadband network to offer IP-based voice, data and video
services. Using a new and sophisticated technology on a very large scale entails risks but also presents opportunities to
expand service offerings to customers. Should deployment of our network be delayed or costs exceed expected
amounts, our margins would be adversely affected and such effects could be material. Should regulatory requirements
be different than we anticipated, our deployment could be delayed, perhaps significantly, or limited to only those
geographical areas where regulation is not burdensome. In addition, should the delivery of services expected to be
deployed on our network be delayed due to technological or regulatory constraints, performance of suppliers, or other
reasons, or the cost of providing such services becomes higher than expected, customers may decide to purchase
services from our competitors, which would adversely affect our revenues and margins, and such effects could be
material.
Continuing growth in our wireless services will depend on continuing access to adequate spectrum, deployment
of new technology and offering attractive services to customers.
The wireless industry is undergoing rapid and significant technological changes and a dramatic increase in usage, in
particular demand for and usage of data and other non-voice services. We must continually invest in our wireless
network in order to continually improve our wireless service to meet this increasing demand and remain competitive.
Improvements in our service depend on many factors, including continued access to and deployment of adequate
spectrum. We must maintain and expand our network capacity and coverage as well as the associated wireline network
needed to transport voice and data between cell sites. Network service enhancements may not occur as scheduled or at
the cost expected due to many factors, including delays in determining equipment and handset operating standards,
supplier delays, regulatory permitting delays or labor-related delays. Deployment of new technology also may adversely
affect the performance of the network for existing services. If the FCC does not allocate sufficient spectrum to allow the
wireless industry in general, and the company in particular, to increase its capacity or if we cannot deploy the services
customers desire on a timely basis or at adequate cost while maintaining network quality levels, then our ability to
attract and retain customers, and therefore maintain and improve our operating margins, could be materially adversely
affected.
Unfavorable litigation or governmental investigation results could require us to pay significant amounts or lead
to onerous operating procedures.
We are subject to a number of lawsuits both in the U.S. and in foreign countries, including, at any particular time,
claims relating to antitrust, patent infringement, wage and hour, personal injury, and our advertising, sales and billing
and collection practices. We also spend substantial resources complying with various government standards, which may
entail related investigations. As we deploy newer technologies, especially in the wireless area, we also face current and
potential litigation relating to alleged adverse health effects on customers or employees who use such technologies
including, for example, wireless handsets. We may incur significant expenses defending such suits or government
charges and may be required to pay amounts or otherwise change our operations in ways that could materially adversely
affect our operations or financial results.
A majority of our workforce is represented by labor unions. Absent the successful negotiation of certain
agreements that expired during 2009, we could experience lengthy work stoppages.
A majority of our employees are represented by labor unions as of year-end 2009. Labor contracts covering many of the
employees expired during 2009. Approximately 75 percent of employees covered by expired contracts have ratified new
agreements. We experienced a work stoppage in 2004 when the contracts involving our wireline employees expired,
and we may experience additional work stoppages in 2010. A work stoppage could adversely affect our business
operations, including a loss of revenue and strained relationships with customers, and we cannot predict the length of
any such strike. We cannot predict what will be the provisions for a new contract nor the impact of a new contract on
our financial condition.
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CAUTIONARY LANGUAGE CONCERNING FORWARD-LOOKING STATEMENTS
Information set forth in this report contains forward-looking statements that are subject to risks and uncertainties, and actual results
could differ materially. Many of these factors are discussed in more detail in the “Risk Factors” section. We claim the protection of
the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995.
The following factors could cause our future results to differ materially from those expressed in the forward-looking statements:
• Adverse economic and/or capital access changes in the markets served by us or in countries in which we have significant
investments, including the impact on customer demand and our ability and our suppliers’ ability to access financial markets.
• Changes in available technology and the effects of such changes, including product substitutions and deployment costs.
• Increases in our benefit plans’ costs, including increases due to adverse changes in the U.S. and foreign securities markets,
resulting in worse-than-assumed investment returns and discount rates, and adverse medical cost trends and unfavorable health
care legislation and regulations.
• The final outcome of Federal Communications Commission and other federal agency proceedings and reopenings of such
proceedings and judicial review, if any, of such proceedings, including issues relating to access charges, broadband deployment,
E911 services, competition, net neutrality, unbundled loop and transport elements, wireless license awards and renewals and
wireless services.
• The final outcome of regulatory proceedings in the states in which we operate and reopenings of such proceedings and judicial
review, if any, of such proceedings, including proceedings relating to Interconnection terms, access charges, universal service,
unbundled network elements and resale and wholesale rates, broadband deployment including our U-verse services, net
neutrality, performance measurement plans, service standards and traffic compensation.
• Enactment of additional state, federal and/or foreign regulatory and tax laws and regulations pertaining to our subsidiaries and
foreign investments, including laws and regulations that reduce our incentive to invest in our networks, resulting in lower
revenue growth and/or higher operating costs.
• Our ability to absorb revenue losses caused by increasing competition, including offerings that use alternative technologies (e.g.,
cable, wireless and VoIP) and our ability to maintain capital expenditures.
• The extent of competition and the resulting pressure on access line totals and wireline and wireless operating margins.
• Our ability to develop attractive and profitable product/service offerings to offset increasing competition in our wireless and
wireline markets.
• The ability of our competitors to offer product/service offerings at lower prices due to lower cost structures and regulatory and
legislative actions adverse to us, including state regulatory proceedings relating to unbundled network elements and
nonregulation of comparable alternative technologies (e.g., VoIP).
• The timing, extent and cost of deployment of our U-verse services; the development of attractive and profitable service
offerings; the extent to which regulatory, franchise fees and build-out requirements apply to this initiative; and the availability,
cost and/or reliability of the various technologies and/or content required to provide such offerings.
• Our continued ability to attract and offer a diverse portfolio of devices, some on an exclusive basis.
• The availability and cost of additional wireless spectrum and regulations relating to licensing and technical standards and
deployment and usage, including network management rules.
• Our ability to manage growth in wireless data services, including network quality.
• The outcome of pending or threatened litigation, including patent and product safety claims by or against third parties.
• The impact on our networks and business of major equipment failures, our inability to obtain equipment/software or have
equipment/software serviced in a timely and cost-effective manner from suppliers, severe weather conditions, natural disasters,
pandemics or terrorist attacks.
• Our ability to successfully negotiate new collective bargaining contracts and the terms of those contracts.
• The issuance by the Financial Accounting Standards Board or other accounting oversight bodies of new accounting standards or
changes to existing standards.
• The issuance by the Internal Revenue Service and/or state tax authorities of new tax regulations or changes to existing standards
and actions by federal, state or local tax agencies and judicial authorities with respect to applying applicable tax laws and
regulations and the resolution of disputes with any taxing jurisdictions.
• Our ability to adequately fund our wireless operations, including payment for additional spectrum; network upgrades and
technological advancements.
• Changes in our corporate strategies, such as changing network requirements or acquisitions and dispositions, to respond to
competition and regulatory, legislative and technological developments.
Readers are cautioned that other factors discussed in this report, although not enumerated here, also could materially affect our future
earnings.
31
AT&T Inc.
Consolidated Statements of Income
2009 2008 2007
Operating Revenues
Wireless service $ 48,563 $ 44,249 $ 38,568
Voice 32,314 37,321 40,798
Data 25,454 24,373 23,206
Directory 4,724 5,416 4,806
Other 11,963 12,669 11,550
Total operating revenues 123,018 124,028 118,928
Operating Expenses
Cost of services and sales (exclusive of depreciation and
amortization shown separately below) 50,405 49,556 46,801
Selling, general and administrative 31,407 31,526 30,146
Depreciation and amortization 19,714 19,883 21,577
Total operating expenses 101,526 100,965 98,524
Operating Income 21,492 23,063 20,404
Other Income (Expense)

Interest expense (3,379) (3,390) (3,507)
Equity in net income of affiliates 734 819 692
Other income (expense) – net 152 (328) 810
Total other income (expense) (2,493) (2,899) (2,005)
Income Before Income Taxes 18,999 20,164 18,399
Income taxes 6,156 7,036 6,252
Net Income 12,843 13,128 12,147
Less: Net Income Attributable to Noncontrolling Interest (308) (261) (196)
Net Income Attributable to AT&T $ 12,535 $ 12,867 $ 11,951
Basic Earnings Per Share $ 2.12 $ 2.17 $ 1.95

Diluted Earnings Per Share $ 2.12 $ 2.16 $ 1.94
The accompanying notes are an integral part of the consolidated financial statements.
32
AT&T Inc.
Consolidated Balance Sheets
December 31,
2009 2008
Assets
Current Assets
Cash and cash equivalents $ 3,802 $ 1,792
Accounts receivable – net of allowances for doubtful accounts of $1,205 and $1,270 14,978 16,047
Prepaid expenses 1,572 1,538
Deferred income taxes 1,274 1,014
Other current assets 2,708 2,165
Total current assets 24,334 22,556
Property, Plant and Equipment – Net 100,093 99,088
Goodwill 73,259 71,829
Licenses 48,759 47,306
Customer Lists and Relationships – Net 7,420 10,582
Other Intangible Assets – Net 5,644 5,824
Investments in Equity Affiliates 2,921 2,332
Other Assets 6,322 5,728
Total Assets $ 268,752 $ 265,245
Liabilities and Stockholders’ Equity

Current Liabilities
Debt maturing within one year $ 7,361 $ 14,119
Accounts payable and accrued liabilities 20,999 20,032
Advanced billing and customer deposits 4,170 3,849
Accrued taxes 1,696 1,874
Dividends payable 2,479 2,416
Total current liabilities 36,705 42,290
Long-Term Debt 64,720 60,872
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes 23,803 19,196
Postemployment benefit obligation 27,849 31,930
Other noncurrent liabilities 13,350 14,207
Total deferred credits and other noncurrent liabilities 65,002 65,333
Stockholders’ Equity
Common stock ($1 par value, 14,000,000,000 authorized at December 31, 2009 and
7,000,000,000 authorized at December 31, 2008: issued 6,495,231,088 at
December 31, 2009 and 2008) 6,495 6,495
Additional paid-in capital 91,707 91,728
Retained earnings 39,366 36,591
Treasury shares (593,300,187 at December 31, 2009,
and 602,221,825 at December 31, 2008, at cost) (21,260) (21,410)
Accumulated other comprehensive loss (14,408) (17,057)
Noncontrolling interest 425 403
Total stockholders’ equity 102,325 96,750
Total Liabilities and Stockholders’ Equity $ 268,752 $ 265,245
33
AT&T Inc.
Consolidated Statements of Cash Flows
Dollars in millions, increase (decrease) in cash and cash equivalents
2009 2008 2007
Operating Activities
Net income $ 12,843 $ 13,128 $ 12,147
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 19,714 19,883 21,577
Undistributed earnings from investments in equity affiliates (419) (654) (297)
Provision for uncollectible accounts 1,763 1,796 1,617
Deferred income tax expense (benefit) 2,104 5,889 (240)
Net (gain) loss from impairment and sale of investments - 517 (11)
Gain on license exchange - - (409)
Changes in operating assets and liabilities:
Accounts receivable (454) (1,421) (1,491)
Other current assets (355) 827 (1,020)
Accounts payable and accrued liabilities 2,372 (5,563) 672
Share-based payment excess tax benefit - (15) (173)
Net income attributable to noncontrolling interest (308) (261) (196)
Other – net (2,815) (470) 2,066
Total adjustments 21,602 20,528 22,095
Net Cash Provided by Operating Activities 34,445 33,656 34,242
Investing Activities
Construction and capital expenditures:
Capital expenditures (16,595) (19,676) (17,717)
Interest during construction (740) (659) (171)
Acquisitions, net of cash acquired (983) (10,972) (2,873)
Dispositions 287 1,615 1,594
Sales of securities, net of investments 55 68 455
Sale of other investments - 436 -
Other 51 45 36
Net Cash Used in Investing Activities (17,925) (29,143) (18,676)
Financing Activities
Net change in short-term borrowings with original
maturities of three months or less (3,910) 2,017 (3,411)
Issuance of long-term debt 8,161 12,416 11,367
Repayment of long-term debt (8,654) (4,010) (6,772)
Purchase of treasury shares - (6,077) (10,390)
Issuance of treasury shares 28 319 1,986
Dividends paid (9,670) (9,507) (8,743)
Share-based payment excess tax benefit - 15 173
Other (465) 136 (224)
Net Cash Used in Financing Activities (14,510) (4,691) (16,014)
Net increase (decrease) in cash and cash equivalents 2,010 (178) (448)
Cash and cash equivalents beginning of year 1,792 1,970 2,418
Cash and Cash Equivalents End of Year $ 3,802 $ 1,792 $ 1,970
34
AT&T Inc.
Consolidated Statements of Changes in Stockholders’ Equity
Dollars and shares in millions except per share amounts
2009 2008 2007
Shares Amount Shares Amount Shares Amount
Common Stock
Balance at beginning of year 6,495 $ 6,495 6,495 $ 6,495 6,495 $ 6,495
Issuance of shares - - - - - -
Balance at end of year 6,495 $ 6,495 6,495 $ 6,495 6,495 $ 6,495
Additional Paid-In Capital

Balance at beginning of year $ 91,728 $ 91,638 $ 91,352
Issuance of treasury shares 29 87 225
Share-based payments (50) 3 61
Balance at end of year $ 91,707 $ 91,728 $ 91,638
Retained Earnings
Balance at beginning of year $ 36,591 $ 33,297 $ 30,375
Net income attributable to AT&T ($2.12, $2.16, and $1.94 per share) 12,535 12,867 11,951
Dividends to stockholders ($1.65, $1.61, and $1.47 per share) (9,733) (9,506) (8,945)
Adoption of FASB guidance related to unrecognized tax benefits - - (50)
Other (27) (67) (34)
Balance at end of year $ 39,366 $ 36,591 $ 33,297
Treasury Shares
Balance at beginning of year (602) $ (21,410) (451) $ (15,683) (256) $ (7,368)
Purchase of shares - - (164) (6,077) (267) (10,390)
Issuance of shares 9 150 13 350 72 2,075
Balance at end of year (593) $ (21,260) (602) $ (21,410) (451) $ (15,683)
35
AT&T Inc.
Consolidated Statements of Changes in Stockholders’ Equity (continued)
Dollars and shares in millions except per share amounts
2009 2008 2007
Amount Amount Amount
Accumulated Other Comprehensive Income (Loss) Attributable to
AT&T, net of tax:
Balance at beginning of year $ (17,057) $ (380) $ (5,314)
Foreign currency translation adjustments,
net of taxes of $72, $(239), and $10 151 (443) 19
Net unrealized gains (losses) on available-for-sale securities:
Unrealized gains (losses), net of taxes of $84, $(139), and $35 176 (259) 65
Less reclassification adjustment realized in net income,
net of taxes of $23, $(9), and $(19) 48 (16) (35)
Net unrealized gains (losses) on cash flow hedges:`
Unrealized gains (losses), net of taxes of $329, $(148), and $(38) 610 (274) (71)
Less reclassification adjustment realized in net income,
net of taxes of $8, $9, and $9 15 17 17
Defined benefit postretirement plans (see Note 11):
Net actuarial gains (losses) and prior service benefit (cost) arising
during period, net of taxes of $1,044, $(9,298), and $3,411 1,397 (15,582) 4,734
Amortization of net actuarial loss and prior service benefit
included in net income, net of taxes of $157, $(74), and $125 252 (120) 206
Other - - (1)
Other comprehensive income (loss) attributable to AT&T 2,649 (16,677) 4,934
Balance at end of year $ (14,408) $ (17,057) $ (380)
Noncontrolling Interest:
Balance at beginning of year $ 403 $ 380 $ 386
Net income attributable to noncontrolling interest 308 261 196
Distributions (285) (260) (205)
Translation adjustments applicable to noncontrolling interest, net of tax (1) 22 3
Balance at end of year $ 425 $ 403 $ 380
Total Stockholders’ Equity at beginning of year $ 96,750 $ 115,747 $ 115,926

Total Stockholders’ Equity at end of year $ 102,325 $ 96,750 $ 115,747
Total Comprehensive Income (Loss), net of tax:

Net income attributable to AT&T $ 12,535 $ 12,867 $ 11,951
Other comprehensive income (loss) attributable to AT&T per above 2,649 (16,677) 4,934
Comprehensive income (loss) attributable to AT&T $ 15,184 $ (3,810) $ 16,885
Net income attributable to noncontrolling interest $ 308 $ 261 $ 196

Other comprehensive income (loss) attributable to noncontrolling interest
per above (1) 22 3
Comprehensive income attributable to noncontrolling interest $ 307 $ 283 $ 199
Total Comprehensive Income (Loss) $ 15,491 $ (3,527) $ 17,084
36
Notes to Consolidated Financial Statements
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation Throughout this document, AT&T Inc. is referred to as “AT&T,” “we” or the “Company.”
The consolidated financial statements have been prepared pursuant to Regulation S-X and other applicable rules
of the Securities and Exchange Commission. The consolidated financial statements include the accounts of the
Company and our majority-owned subsidiaries and affiliates. Our subsidiaries and affiliates operate in the
communications services industry both domestically and internationally, providing wireless and wireline
communications services and equipment, managed networking, wholesale services, and advertising solutions.
All significant intercompany transactions are eliminated in the consolidation process. Investments in partnerships
and less-than-majority-owned subsidiaries where we have significant influence are accounted for under the equity
method. Earnings from certain foreign equity investments accounted for using the equity method are included for
periods ended within up to one month of our year-end (see Note 7).
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP)
requires management to make estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes, including estimates of probable losses and expenses. Actual results could
differ from those estimates. We have reclassified certain amounts in prior-period financial statements to conform
to the current period’s presentation.
Recent Accounting Standards
Accounting Standards Codification In June 2009, the Financial Accounting Standards Board (FASB) issued
standards that established the FASB Accounting Standards Codification (ASC or Codification) as the source of
authoritative GAAP by the FASB for nongovernmental entities. The ASC supersedes all non-SEC accounting and
reporting standards that existed at the ASC’s effective date. The FASB uses Accounting Standards Updates
(ASU) to amend the ASC. We refer to ASUs throughout our interim and annual reports where deemed relevant
and make general references to pre-Codification standards (e.g., GAAP standards for acquisitions). These
standards were effective for interim and annual periods ending after September 15, 2009 (i.e., the quarterly period
ended September 30, 2009, for us).
Subsequent Events In May 2009, the FASB issued a standard that established general standards of accounting for
and disclosing events that occur after the balance sheet date but before financial statements are issued or are
available for issuance. They were effective for interim and annual periods ending after June 15, 2009 (i.e., the
quarterly period ended June 30, 2009, for us). In preparing the accompanying audited consolidated financial
statements, we have reviewed all known events that have occurred after December 31, 2009, and through
February 25, 2010, the filing date of our Annual Report on Form 10-K, for inclusion in the financial statements
and footnotes.
Noncontrolling Interests Reporting In December 2007, the FASB issued a standard that requires noncontrolling
interests held by parties other than the parent in subsidiaries to be clearly identified, labeled, and presented in the
consolidated balance sheets within stockholders’ equity, but separate from the parent’s equity. For us, the new
standard became effective January 1, 2009, with restatement of prior financial statements. Instead of including
noncontrolling interest in Other income (expense) – net in our consolidated statements of income, we disclose
three measures of net income: net income, net income attributable to noncontrolling interest, and net income
attributable to AT&T, and our operating cash flows in our consolidated statements of cash flows reflect net
income. Furthermore, we continue to base our basic and diluted earnings per share calculations on net income
attributable to AT&T.
In January 2010, the FASB issued guidance that amends accounting and disclosure requirements for a decrease in
ownership in a business under existing GAAP standards for consolidations. It also clarifies the types of businesses
that are in the scope of these consolidations. As required by this guidance, we retroactively applied the
amendments as of January 1, 2009, which did not have a material impact on our financial statements or footnote
disclosures.
Fair Value Measurements and Disclosures In April 2009, the FASB issued staff positions that require enhanced
disclosures, including interim disclosures, on financial instruments, determination of fair value in turbulent
markets, and recognition and presentation of other-than-temporary impairments. These staff positions were
37
Notes to Consolidated Financial Statements (continued)
effective for interim and annual reporting periods beginning in our second quarter of 2009. They increased our
interim disclosures but have not had a material impact on our financial position or results of operations.
In August 2009, the FASB issued “Measuring Liabilities at Fair Value” (ASU 2009-05), which amends existing
GAAP for fair value measurement guidance by clarifying the fair value measurement requirements for liabilities
that lack a quoted price in an active market. Per the Codification, a valuation technique based on a quoted market
price for the identical or similar liability when traded as an asset or another valuation technique (e.g., an income
or market approach) that is consistent with the underlying principles of GAAP for fair value measurements would
be appropriate. ASU 2009-05 also clarifies that a reporting entity is not required to add or adjust valuation inputs
to compensate for transfer restrictions on in-scope liabilities. ASU 2009-05 was effective August 2009, the
issuance date, and has not had a material impact on our financial position or results of operations.
In September 2009, the FASB issued “Investments in Certain Entities That Calculate Net Asset Value per Share
(or Its Equivalent)” (ASU 2009-12), which provides guidance for an investor on using the net asset value per
share provided by an investee to estimate the fair value of an alternative investment when the fair value for the
primary investment is not readily determinable. It affects certain investments that are required or permitted by
GAAP to be measured or disclosed at fair value on a recurring or nonrecurring basis. It requires disclosures by
major category of investment about certain attributes (e.g., applicable redemption restrictions, unfunded
commitments to the issuer of the investments, and the investment strategies of that issuer). ASU 2009-12 was
effective for interim and annual periods ending on or after December 15, 2009 (i.e., the year ended December 31,
2009, for us). See Note 11 for the impact of our adoption of ASU 2009-12.
In January 2010, the FASB issued “Fair Value Measurements and Disclosures—Improving Disclosures about Fair
Value Measurements” (ASU 2010-06), which requires new disclosures and reasons for transfers of financial
assets and liabilities between Levels 1 and 2. ASU 2010-06 also clarifies that fair value measurement disclosures
are required for each class of financial asset and liability, which may be a subset of a caption in the consolidated
balance sheets, and those disclosures should include a discussion of inputs and valuation techniques. It further
clarifies that the reconciliation of Level 3 measurements should separately present purchases, sales, issuances, and
settlements instead of netting these changes. With respect to matters other than Level 3 measurements, ASU
2010-06 is effective for fiscal years and interim periods beginning on or after December 15, 2009 (i.e., the quarter
ending March 31, 2010, for us). New guidance related to Level 3 measurements is effective for fiscal years and
interim periods beginning on or after December 15, 2010 (i.e., the quarter ending March 31, 2011, for us). We are
currently evaluating the impact of ASU 2010-06 on our disclosures.
See Note 9 for fair value measurements and disclosures for our investment securities and derivatives.
Derivative Instruments and Hedging Activities Disclosures In March 2008, the FASB amended the disclosure
requirements for derivative instruments and hedging activities. The new guidance requires enhanced disclosures
about an entity’s derivative and hedging activities to improve the transparency of financial reporting. We adopted
the new guidance as of January 1, 2009, which increased our quarterly and annual disclosures but did not have an
impact on our financial position and results of operations. See Note 9 for a comprehensive discussion of our
derivatives and hedging activities, including the underlying risks that we are managing as a company, and the new
disclosure requirements under GAAP.
Pension and Other Postretirement Benefits In December 2008, the FASB issued a staff position that amended an
employer’s disclosure requirements for pensions and other postretirement benefits. The new guidance replaced the
requirement to disclose the percentage of fair value of total plan assets with a requirement to disclose the fair
value of each major asset category. It also amended GAAP standards for fair value measurements to clarify that
defined benefit pension or other postretirement plan assets were not subject to other prevailing GAAP standards
for fair value disclosures. We adopted the new guidance for the year ended December 31, 2009. This guidance
significantly increased the amount of annual disclosures for plan assets in our annual report, and it will increase
our future interim disclosures in that regard (see Note 11).
Business Combinations In December 2007, the FASB amended GAAP for acquisitions, requiring that costs
incurred to effect the acquisition (i.e., acquisition-related costs) be recognized separately from the acquisition.
Under prior guidance, restructuring costs that the acquirer expected but was not obligated to incur, which included
changes to benefit plans, were recognized as if they were a liability assumed at the acquisition date. Amended
GAAP for acquisitions requires the acquirer to recognize those costs separately from the business combination.
38
We adopted the new guidance as of January 1, 2009, and applied it to acquisitions consummated after 2008,
including the Centennial Communications, Corp. (Centennial) acquisition, as discussed in Note 2.
Equity Method Investments Accounting In November 2008, the Emerging Issues Task Force (EITF) reached a
consensus on new clarification guidance regarding the application of the equity method. It states equity method
investments should be recognized using a cost accumulation model. It also requires that equity method
investments as a whole be assessed for other-than-temporary impairment in accordance with existing GAAP for
equity method investments. The new guidance was effective, on a prospective basis, for initial or additional equity
method investments transactions and subsequent impairments recognized in interim and annual periods that
began on or after December 15, 2008 (i.e., as of January 1, 2009, for us). The new guidance did not have a
material impact on our financial position or results of operations.
Revenue Arrangements with Multiple Deliverables In October 2009, the FASB issued “Multiple-Deliverable
Revenue Arrangements” (ASU 2009-13), which addresses how revenues should be allocated among all products
and services included in our sales arrangements. It establishes a selling price hierarchy for determining the selling
price of each product or service, with vendor-specific objective evidence (VSOE) at the highest level, third-party
evidence of VSOE at the intermediate level, and a best estimate at the lowest level. It replaces “fair value” with
“selling price” in revenue allocation guidance, eliminates the residual method as an acceptable allocation method,
and requires the use of the relative selling price method as the basis for allocation. It also significantly expands the
disclosure requirements for such arrangements, including, potentially, certain qualitative disclosures. ASU 2009-
13 will be effective prospectively for sales entered into or materially modified in fiscal years beginning on or after
June 15, 2010 (i.e., the year beginning January 1, 2011, for us). The FASB permits early adoption of ASU 2009-
13, applied retrospectively, to the beginning of the year of adoption. We are currently evaluating the impact on
our financial position and results of operations.
Software In October 2009, the FASB issued “Certain Revenue Arrangements That Include Software Elements”
(ASU 2009-14), which clarifies the guidance for allocating and measuring revenue, including how to identify
software that is out of the scope. ASU 2009-14 amends accounting and reporting guidance for revenue
arrangements involving both tangible products and software that is “more than incidental to the tangible product
as a whole.” That type of software and hardware will be outside of the scope of software revenue guidance, and
the hardware components will also be outside of the scope of software revenue guidance and may result in more
revenue recognized at the time of the hardware sale. Additional disclosures will discuss allocation of revenue to
products and services in our sales arrangements and the significant judgments applied in the revenue allocation
method, including impacts on the timing and amount of revenue recognition. ASU 2009-14 will be effective
prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after
June 15, 2010 (i.e., the year beginning January 1, 2011, for us). ASU 2009-14 has the same effective date,
including early adoption provisions, as ASU 2009-13. Companies must adopt ASU 2009-14 and ASU 2009-13 at
the same time. We are currently evaluating the impact on our financial position and results of operations.
Valuation and Other Adjustments Included in the current liabilities reported on our consolidated balance sheets
are acquisition-related accruals established prior to 2009. The liabilities include accruals for severance, lease
terminations and equipment removal costs associated with our acquisitions of AT&T Corp. (ATTC), BellSouth
Corporation (BellSouth), and Dobson Communications Corporation (Dobson). Following is a summary of the
accruals recorded at December 31, 2008, cash payments made during 2009, and the adjustments thereto:
12/31/08 Cash Adjustments 12/31/09

Balance Payments and Accruals Balance
Severance accruals paid from:
Company funds $ 140 $ (108) $ (26) $ 6
Pension and postemployment
benefit plans 103 (5) - 98
Lease terminations1 387 (53) (122) 212
Equipment removal and other
related costs 88 (38) (27) 23
Total $ 718 $ (204) $ (175) $ 339
1
Adjustments and accruals include a $106 reversal of BellSouth lease termination costs, with an offset to goodwill.
39
Employee Separations In accordance with GAAP, we established obligations for expected termination benefits
provided under existing plans to former or inactive employees after employment but before retirement. These
benefits include severance payments, workers’ compensation, disability, medical continuation coverage, and other
benefits. At December 31, 2009, we had severance accruals of $676 and at December 31, 2008, we had severance
accruals of $752.
Split-Dollar Life Insurance In 2007, the EITF ratified the consensus on new guidance related to the accounting
for endorsement split-dollar life insurance arrangements and collateral assignment split-dollar life insurance
arrangements. The new guidance covers split-dollar life insurance arrangements (where the company owns and
controls the policy) and provides that an employer should recognize a liability for future benefits in accordance
with GAAP standards for an employer’s accounting for postretirement benefits other than pensions. The new
guidance became effective for fiscal years that began after December 15, 2007 (i.e., as of January 1, 2008, for us),
and we recorded additional postretirement liabilities of $101 and a decrease, net of taxes, to retained earnings of
$63.
Income Taxes We adopted GAAP standards for income taxes, as amended, as of January 1, 2007. With our
adoption of those amended standards, we provide deferred income taxes for temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the computed tax basis of those
assets and liabilities (per the amended standards). Under the amended standards, the tax basis of assets and
liabilities are based on amounts that meet the recognition threshold and are measured pursuant to the measurement
requirement in those standards. To the extent allowed by GAAP, we provide valuation allowances against the
deferred tax assets for which the realization is uncertain. We review these items regularly in light of changes in
federal and state tax laws and changes in our business.
We report, on a net basis, taxes imposed by governmental authorities on revenue-producing transactions between
us and our customers in our consolidated statements of income.
Cash Equivalents Cash and cash equivalents include all highly-liquid investments with original maturities of
three months or less, and the carrying amounts approximate fair value. At December 31, 2009, we held $437 in
cash and $3,365 in money market funds and other cash equivalents.
Investment Securities See Note 9 for disclosures related to our investment securities, including available-for-
sale securities.
Revenue Recognition Revenues derived from wireless, local telephone, long-distance, data and video services
are recognized when services are provided. This is based upon either usage (e.g., minutes of traffic processed),
period of time (e.g., monthly service fees) or other established fee schedules. Our wireless service revenues are
billed either in advance, arrears or are prepaid. Our wireless Rollover® rate plans include a feature whereby
unused anytime minutes do not expire each month but rather are available, under certain conditions, for future use
for a period not to exceed one year from the date of purchase. Using historical subscriber usage patterns, we defer
these revenues based on an estimate of the portion of unused minutes expected to be utilized prior to expiration.
We record an estimated revenue reduction for future adjustments to customer accounts, other than a provision for
doubtful accounts, at the time revenue is recognized based on historical experience. Service revenues also include
billings to our customers for various regulatory fees imposed on us by governmental authorities. Cash incentives
given to customers are recorded as a reduction of revenue. When required as part of providing service, revenues
and associated expenses related to nonrefundable, upfront service activation and setup fees are deferred and
recognized over the associated service contract period or customer life (for wireless). If no service contract exists,
those fees are recognized over the average customer relationship period. Associated expenses are deferred only to
the extent of such deferred revenue. For contracts that involve the bundling of services, revenue is allocated to the
services based on their relative fair value. We record the sale of equipment to customers as gross revenue when
we are the primary obligor in the arrangement, when title is passed and when the products are accepted by
customers. For agreements involving the resale of third-party services in which we are not considered the primary
obligor of the arrangement, we record the revenue net of the associated costs incurred. For contracts in which we
provide customers with an indefeasible right to use network capacity, we recognize revenue ratably over the stated
life of the agreement.
40
We recognize revenues and expenses related to publishing directories on the amortization method, which
recognizes revenues and expenses ratably over the life of the directory title, typically 12 months.
Traffic Compensation Expense We use various estimates and assumptions to determine the amount of traffic
compensation expenses recognized during any reporting period. Switched traffic compensation costs are accrued
utilizing estimated rates by product, formulated from historical data and adjusted for known rate changes and
volume levels. Such estimates are adjusted monthly to reflect newly-available information, such as rate changes
and new contractual agreements. Bills reflecting actual incurred information are generally not received until three
to nine months subsequent to the end of the reporting period, at which point a final adjustment is made to the
accrued switched traffic compensation expense. Dedicated traffic compensation costs are estimated based on the
number of circuits and the average projected circuit costs. These costs are adjusted to reflect actual expenses over
the three months following the end of the reporting period as bills are received.
Allowance for Doubtful Accounts We maintain an allowance for doubtful accounts for estimated losses that
result from the failure or inability of our customers to make required payments. When determining the allowance,
we consider the probability of recoverability of accounts receivable based on past experience, taking into account
current collection trends as well as general economic factors, including bankruptcy rates. Credit risks are assessed
based on historical write-offs, net of recoveries, as well as an analysis of the aged accounts receivable balances
with allowances generally increasing as the receivable ages. Accounts receivable may be fully reserved for when
specific collection issues are known to exist, such as pending bankruptcy or catastrophes. The analysis of
receivables is performed monthly, and the allowances are adjusted accordingly.
Inventory Inventories, which are included in “Other current assets” on our consolidated balance sheets, were
$885 at December 31, 2009, and $862 at December 31, 2008. Wireless handsets and accessories, which are valued
at the lower of cost or market value (determined using current replacement cost) were $790 as of December 31,
2009, and $749 as of December 31, 2008. The remainder of our inventory includes new and reusable supplies and
network equipment of our local telephone operations, which are stated principally at average original cost, except
that specific costs are used in the case of large individual items. Inventories of our other subsidiaries are stated at
the lower of cost or market.
Property, Plant and Equipment Property, plant and equipment is stated at cost, except for assets acquired using
acquisition accounting, which are recorded at fair value (see Note 2). The cost of additions and substantial
improvements to property, plant and equipment is capitalized. The cost of maintenance and repairs of property,
plant and equipment is charged to operating expenses. Property, plant and equipment is depreciated using straight-
line methods over their estimated economic lives. Certain subsidiaries follow composite group depreciation
methodology; accordingly, when a portion of their depreciable property, plant and equipment is retired in the
ordinary course of business, the gross book value is reclassified to accumulated depreciation — no gain or loss is
recognized on the disposition of this plant.
Property, plant and equipment is reviewed for recoverability whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An impairment loss shall be recognized only if the
carrying amount of a long-lived asset is not recoverable and exceeds its fair value. The carrying amount of a long-
lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use
and eventual disposition of the asset.
The fair value of a liability for an asset retirement obligation is recorded in the period in which it is incurred if a
reasonable estimate of fair value can be made. In periods subsequent to initial measurement, period-to-period
changes in the liability for an asset retirement obligation resulting from the passage of time and revisions to either
the timing or the amount of the original estimate of undiscounted cash flows are recognized. The increase in the
carrying value of the associated long-lived asset is depreciated over the corresponding estimated economic life.
Software Costs It is our policy to capitalize certain costs incurred in connection with developing or obtaining
internal-use software. Capitalized software costs are included in “Property, Plant and Equipment” on our
consolidated balance sheets and are primarily amortized over a three-year period. Software costs that do not meet
capitalization criteria are expensed immediately.
Goodwill and Other Intangible Assets Goodwill represents the excess of consideration paid over the fair value
of net assets acquired in business combinations. Goodwill and other indefinite-lived intangible assets are not
41
amortized but are tested at least annually for impairment. We have completed our annual goodwill impairment
testing for 2009, which did not result in an impairment.
Intangible assets that have finite useful lives are amortized over their useful lives, a weighted-average of 8.1
years. Customer relationships are amortized using primarily the sum-of-the-months-digits method of amortization
over the expected period in which those relationships are expected to contribute to our future cash flows based in
such a way as to allocate it as equitably as possible to periods during which we expect to benefit from those
relationships.
A significant portion of intangible assets in our Wireless segment are Federal Communications Commission
(FCC) licenses that provide us with the exclusive right to utilize certain radio frequency spectrum to provide
wireless communications services. While FCC licenses are issued for a fixed time (generally 10 years), renewals
of FCC licenses have occurred routinely and at nominal cost. Moreover, we have determined that there are
currently no legal, regulatory, contractual, competitive, economic or other factors that limit the useful lives of our
FCC licenses, and therefore the FCC licenses are indefinite-lived intangible assets under the GAAP standards for
goodwill and other intangible assets.
In accordance with GAAP, we test wireless FCC licenses for impairment on an aggregate basis, consistent with
the management of the business on a national scope. During the fourth quarter of 2009, we completed the annual
impairment tests for indefinite-lived wireless FCC licenses. These annual impairment tests resulted in no material
impairment of indefinite-lived wireless FCC licenses. We recorded an immaterial $18 impairment to wireline
licenses we no longer plan to use.
Advertising Costs Advertising costs for advertising products and services or for promoting our corporate image
are expensed as incurred.
Foreign Currency Translation We are exposed to foreign currency exchange risk through our foreign affiliates
and equity investments in foreign companies. Our foreign subsidiaries and foreign investments generally report
their earnings in their local currencies. We translate our share of their foreign assets and liabilities at exchange
rates in effect at the balance sheet dates. We translate our share of their revenues and expenses using average rates
during the year. The resulting foreign currency translation adjustments are recorded as a separate component of
accumulated other comprehensive income in the accompanying consolidated balance sheets. We do not hedge
foreign currency translation risk in the net assets and income we report from these sources. However, we do hedge
a large portion of the foreign currency exchange risk involved in anticipation of highly probable foreign currency-
denominated transactions, which we explain further in our discussion of our methods of managing our foreign
currency risk (see Note 9).
NOTE 2. ACQUISITIONS, DISPOSITIONS, AND OTHER ADJUSTMENTS
Acquisitions
Centennial In November 2009, we acquired the assets of Centennial, a regional provider of wireless and wired
communications services with approximately 865,000 customers as of December 31, 2009. Total consideration of
$2,961 included $955 in cash for the redemption of Centennial’s outstanding common stock and liquidation of
outstanding stock options and $2,006 for our acquisition of Centennial’s outstanding debt (including liabilities
related to assets subject to sale, as discussed below), of which we repaid $1,957 after closing in 2009. The
preliminary fair value measurement of Centennial’s net assets at the acquisition date resulted in the recognition of
$1,276 of goodwill, $647 of spectrum licenses, and $273 of customer lists and other intangible assets for the
Wireless segment. The Wireline segment added $339 of goodwill and $174 of customer lists and other intangible
assets from the acquisition. The acquisition of Centennial impacted our Wireless and Wireline segments, and we
have included Centennial’s operations in our consolidated results since the acquisition date. As the value of
certain assets and liabilities are preliminary in nature, they are subject to adjustment as additional information is
obtained about the facts and circumstances that existed at the acquisition date. When the valuation is final, any
changes to the preliminary valuation of acquired assets and liabilities could result in adjustments to identified
intangibles and goodwill. See Notes 6 and 8 for additional information regarding the impact of the Centennial
acquisition on our goodwill and other intangibles and our long-term debt repayment for 2009.
Wireless Properties Transactions In May 2009, we announced a definitive agreement to acquire certain
wireless assets from Verizon Wireless (VZ) for approximately $2,350 in cash. The assets primarily represent
42
former Alltel Wireless assets. We will acquire wireless properties, including licenses and network assets, serving
approximately 1.5 million subscribers in 79 service areas across 18 states. In October 2009, the Department of
Justice (DOJ) cleared our acquisition of Centennial, subject to the DOJ’s condition that we divest Centennial’s
operations in eight service areas in Louisiana and Mississippi. We are in the process of finalizing definitive
agreements and seeking regulatory approvals to sell all eight Centennial service areas ultimately identified in that
ruling. We anticipate we will close the sales during the first half of 2010. As of December 31, 2009, the fair value
of the assets subject to the sale, net of related liabilities, was $282. These net assets include property, plant and
equipment, spectrum licenses, customer lists and other intangible assets, and working capital, which are not
deemed material for isolated presentation as assets held for sale and liabilities related to assets held for sale in our
consolidated balance sheet as of December 31, 2009, and we included these net assets in our Other current assets
balance.
Dobson In November 2007, we acquired Dobson for approximately $2,500. Under the purchase method of
accounting, the transaction was valued, for accounting purposes, at $2,580. Our December 31, 2007 consolidated
balance sheet included the preliminary valuation of the fair value of Dobson’s assets and liabilities, including
goodwill of $2,623, FCC licenses of $2,230, customer lists of $517 and other intangible assets totaling $8
associated with this transaction. Final adjustments to the preliminary valuation included an increase to goodwill of
$990, a decrease in licenses of $781 and a decrease in customer lists of $12. The resulting balances are $3,613 for
goodwill, $1,449 for licenses and $505 for customer lists. Adjustments were primarily related to changes in the
valuation of certain licenses and an increase in the estimate of relative obsolescence of property, plant and
equipment resulting in a decrease in value and shorter average remaining economic life, and an adjustment to the
value of the markets included in the divestiture order by the FCC. Pursuant to the order, we exchanged certain
properties, spectrum and $355 in cash for other licenses and properties. Deferred tax adjustments are associated
with the above mentioned items. Dobson marketed wireless services under the Cellular One brand and had
provided roaming services to AT&T subsidiaries since 1990. Dobson had 1.7 million subscribers across 17 states.
Dobson’s operations were incorporated into our wireless operations following the date of acquisition.
Other Acquisitions During 2009, we acquired a provider of mobile application solutions and a security
consulting business for a combined $50 before closing costs. The fair value of the acquired businesses’ net assets
resulted in the recognition of $41 of goodwill and $3 in customer lists and other intangible assets.
During 2008, we acquired Easterbrooke Cellular Corporation, Windstream Wireless, Wayport Inc. and the
remaining 64% of Edge Wireless for a combined $663, recording $449 in goodwill. The acquisitions of these
companies are designed to expand our wireless and Wi-Fi coverage area.
During 2007, we acquired Interwise®, a global provider of voice, Web and video conferencing services to
businesses, for $122 and Ingenio®, a provider of Pay Per Call® technology for directory and local search business,
for $195, net of cash. We recorded $304 of goodwill related to these acquisitions.
Dispositions
In 2009, we sold a professional services business for $174 and eliminated $113 of goodwill.
In April 2008, we sold to Local Insight Regatta Holdings, Inc., the parent company of Local Insight Yellow
Pages, the Independent Line of Business segment of the L.M. Berry Company for $230.
In May 2007, we sold to Clearwire Corporation (Clearwire), a national provider of wireless broadband Internet
access, education broadband service spectrum and broadband radio service spectrum valued at $300. Sale of this
spectrum was required as a condition to the approval of our acquisition of BellSouth.
Other Adjustments
As ATTC and BellSouth stock options that were converted at the time of the respective acquisitions are exercised,
the tax effect on those options may further reduce goodwill. During 2008, we recorded $1 in related goodwill
reductions for ATTC and $9 for BellSouth.
43
NOTE 3. EARNINGS PER SHARE
A reconciliation of the numerators and denominators of basic earnings per share and diluted earnings per share for
income from continuing operations for the years ended December 31, 2009, 2008 and 2007, are shown in the table
below:
Year Ended December 31, 2009 2008 2007

Numerators
Numerator for basic earnings per share:
Net income attributable to AT&T $ 12,535 $ 12,867 $ 11,951
Dilutive potential common shares:
Other share-based payment 10 9 8
Numerator for diluted earnings per share $ 12,545 $ 12,876 $ 11,959
Denominators (000,000)
Denominator for basic earnings per share:
Weighted-average number of common
shares outstanding 5,900 5,927 6,127
Dilutive potential common shares:
Stock options 3 9 24
Other share-based payment 21 22 19
Denominator for diluted earnings per share 5,924 5,958 6,170
Basic earnings per share $ 2.12 $ 2.17 $ 1.95
Diluted earnings per share $ 2.12 $ 2.16 $ 1.94
At December 31, 2009, 2008 and 2007, we had issued and outstanding options to purchase approximately 178
million, 204 million and 231 million shares of AT&T common stock. The exercise prices of options to purchase a
weighted-average of 163 million, 144 million and 93 million shares in 2009, 2008, and 2007 were above the
average market price of AT&T stock. Accordingly, we did not include these amounts in determining the dilutive
potential common shares for the respective periods. At December 31, 2009, the exercise price of 19 million share
options was below market price.
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NOTE 4. SEGMENT INFORMATION
Our segments are strategic business units that offer different products and services over various technology
platforms and are managed accordingly. Our operating segment results presented in Note 4 and discussed below
for each segment follow our internal management reporting. We analyze our various operating segments based on
segment income before income taxes. Interest expense and other income (expense) – net are managed only on a
total company basis and are, accordingly, reflected only in consolidated results. Therefore, these items are not
included in the calculation of each segment’s percentage of our consolidated results. The customers and long-
lived assets of our reportable segments are predominantly in the United States. We have four reportable segments:
(1) Wireless, (2) Wireline, (3) Advertising Solutions and (4) Other.
The Wireless segment uses our nationwide network to provide consumer and business customers with wireless
voice and advanced data communications services.
The Wireline segment uses our regional, national and global network to provide consumer and business customers
with landline voice and data communications services, AT&T U-verseSM TV, high-speed broadband and voice
services (U-verse) and managed networking to business customers. Additionally, we offer satellite television
services through our agency arrangements.
The Advertising Solutions segment includes our directory operations, which publish Yellow and White Pages
directories and sell directory advertising and Internet-based advertising and local search. This segment includes
the results of YELLOWPAGES.COM, LLC (YPC), which was a joint venture with BellSouth prior to the
December 29, 2006 acquisition and is now a wholly-owned subsidiary of AT&T. For segment reporting
disclosure, we have carried forward the deferred revenue and deferred cost balances for BellSouth at the
acquisition date in order to reflect how the segment is managed. This is different for consolidated reporting
purposes where BellSouth deferred revenue and expenses from directories published during the 12-month period
ending with the December 29, 2006 acquisition date, are not recognized and therefore were not included in the
opening balance sheet. For management reporting purposes, we continue to amortize these balances over the life
of the directory. Thus, our Advertising Solutions segment results in 2007 include revenue of $964 and expenses of
$308, related to directories published in the Southeast region during 2006, prior to our acquisition of BellSouth.
These amounts are eliminated in the consolidation and elimination column in the following reconciliation.
The Other segment includes results from Sterling Commerce, Inc. (Sterling), customer information services and
all corporate and other operations. This segment includes our portion of the results from our international equity
investments. Also included in the Other segment are impacts of corporate-wide decisions for which the individual
operating segments are not being evaluated.
In the following tables, we show how our segment results are reconciled to our consolidated results reported in
accordance with GAAP. The Wireless, Wireline, Advertising Solutions and Other columns represent the segment
results of each such operating segment. The consolidation and elimination column adds in those line items that we
manage on a consolidated basis only: interest expense and other income (expense) – net. This column also
eliminates any intercompany transactions included in each segment’s results as well as the Advertising Solutions
revenue and expense in 2007 related to directories published in the Southeast region during 2006, mentioned
previously. In the Segment assets line item, we have eliminated the value of our investments in our fully
consolidated subsidiaries and the intercompany financing assets as these have no impact to the segments’
operations.
45
Segment results, including a reconciliation to AT&T consolidated results, for 2009, 2008 and 2007 are as follows:
At December 31, 2009 or for the year ended
Advertising Consolidation Consolidated
Wireless Wireline Solutions Other and Elimination Results
Revenues from external customers $ 53,504 $ 63,331 $ 4,724 $ 1,459 $ - $ 123,018
Intersegment revenues 93 2,339 85 272 (2,789) -
Total segment operating revenues 53,597 65,670 4,809 1,731 (2,789) 123,018
Operations and support expenses 34,561 44,646 2,922 2,471 (2,788) 81,812
Depreciation and amortization expenses 5,765 13,093 649 207 - 19,714
Total segment operating expenses 40,326 57,739 3,571 2,678 (2,788) 101,526
Segment operating income 13,271 7,931 1,238 (947) (1) 21,492
Interest expense - - - - 3,379 3,379
Equity in net income of affiliates 9 18 - 706 1 734
Other income (expense) – net - - - - 152 152
Segment income before income taxes $ 13,280 $ 7,949 $ 1,238 $ (241) $ (3,227) $ 18,999
Segment assets $ 115,282 $ 163,028 $ 9,782 $ 13,567 $ (32,907) $ 268,752
Investment in equity method investees 4 - - 2,917 - 2,921
Expenditures for additions to long-lived assets 5,921 11,166 22 226 - 17,335

Revenues from external customers $ 49,174 $ 67,669 $ 5,417 $ 1,768 $ - $ 124,028
Segment operating income 11,084 11,209 1,715 (944) (1) 23,063
Equity in net income of affiliates 6 19 - 794 - 819
Other income (expense) – net - - - - (328) (328)
Segment income before income taxes $ 11,090 $ 11,228 $ 1,715 $ (150) $ (3,719) $ 20,164
Segment assets $ 112,146 $ 157,501 $ 11,038 $ 8,769 $ (24,209) $ 265,245
46

Revenues from external customers $ 42,574 $ 69,571 $ 5,771 $ 1,976 $ (964) $ 118,928
Segment operating income 7,020 11,990 1,861 189 (656) 20,404
Equity in net income of affiliates 16 31 - 645 - 692
Other income (expense) – net - - - - 810 810
Segment income before income taxes $ 7,036 $ 12,021 $ 1,861 $ 834 $ (3,353) $ 18,399
Segment assets $ 103,559 $ 158,338 $ 13,103 $ 2,859 $ (2,215) $ 275,644
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NOTE 5. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is summarized as follows at December 31:
Lives (years) 2009 2008

Land - $ 1,724 $ 1,730
Buildings 35-45 24,271 23,372
Central office equipment 3-10 78,314 75,054
Cable, wiring and conduit 10-50 74,325 72,109
Other equipment 5-15 39,918 34,434
Software 3-5 8,841 8,348
Under construction - 3,159 3,532
230,552 218,579
Accumulated depreciation and amortization 130,459 119,491
Property, plant and equipment – net $ 100,093 $ 99,088
Our depreciation expense was $15,959 in 2009, $15,313 in 2008 and $15,625 in 2007.
Certain facilities and equipment used in operations are leased under operating or capital leases. Rental expenses
under operating leases were $2,889 for 2009, $2,733 for 2008 and $2,566 for 2007. At December 31, 2009, the
future minimum rental payments under non-cancelable operating leases for the years 2010 through 2014 were
$2,429, $2,276, $2,057, $1,859 and $1,707, with $10,230 due thereafter. Certain real estate operating leases
contain renewal options that may be exercised. Capital leases are not significant.
American Tower Corp. Agreement
In August 2000, we reached an agreement with American Tower Corp. (American Tower) under which we
granted American Tower the exclusive rights to lease space on a number of our communications towers. In
exchange, we received a combination of cash and equity instruments as complete prepayment of rent with the
closing of each leasing agreement. The value of the prepayments was recorded as deferred revenue and
recognized in income as revenue over the life of the leases. The balance of deferred revenue was $509 in 2009,
$539 in 2008 and $569 in 2007.
NOTE 6. GOODWILL AND OTHER INTANGIBLE ASSETS
Changes in the carrying amounts of goodwill, by segment, for the years ended December 31, 2009 and 2008,
are as follows:
Advertising
Wireless Wireline Solutions Other Total
Balance as of January 1, 2008 $ 32,713 $ 31,301 $ 5,788 $ 911 $ 70,713

Goodwill acquired 264 185 - - 449
Goodwill adjustments for prior-
year acquisitions and tax
adjustments 990 (95) (26) - 869
Other (116) (10) (68) (8) (202)
Balance as of December 31, 2008 33,851 31,381 5,694 903 71,829
Goodwill acquired 1,276 344 36 - 1,656
Other (90) (117) 1 (20) (226)
Balance as of December 31, 2009 $ 35,037 $ 31,608 $ 5,731 $ 883 $ 73,259
Goodwill and wireless FCC licenses are not amortized but tested annually as of October 1 for impairment as
required by GAAP. The carrying amounts of goodwill, by segment (which is the same as reporting unit for
Wireless, Wireline and Advertising Solutions), at December 31, 2009 were Wireless $35,037; Wireline
$31,608; Advertising Solutions $5,731; and Other $883 and at December 31, 2008 were Wireless $33,851;
Wireline $31,381; Advertising Solutions $5,694; and Other $903. Within the Other segment, goodwill
associated with our Sterling operations was $477 for 2009 and 2008. Additionally, FCC licenses are tested for
48
impairment on an aggregate basis, consistent with the management of the business on a national scope. These
annual impairment tests resulted in no impairment of indefinite-lived goodwill or wireless FCC licenses in 2009
and 2008. Goodwill in the Other segment as of January 1, 2008, is net of a $1,791 impairment that was
recognized in a prior period. We review other long-lived assets for impairment whenever events or
circumstances indicate that the carrying amount may not be recoverable over the remaining life of the asset or
asset group.
Goodwill acquired relates primarily to the acquisition of Centennial and a provider of mobile application
solutions (see Note 2). Changes to goodwill include adjustments totaling $90 related to wireless liabilities in
connection with a business combination and disposition of a wireline entity for $117 in 2009.
Our other intangible assets are summarized as follows:
December 31, 2009 December 31, 2008

Gross Gross
Carrying Accumulated Carrying Accumulated
Other Intangible Assets Amount Amortization Amount Amortization
Amortized intangible assets:
Customer lists and
relationships:
AT&T Mobility $ 5,804 $ 3,097 $ 10,429 $ 6,409
BellSouth 9,215 5,597 9,215 4,062
ATTC 3,134 2,377 3,100 2,038
Other 926 588 788 441
Subtotal 19,079 11,659 23,532 12,950
Other 1,176 767 1,724 1,130
Total $ 20,255 $ 12,426 $ 25,256 $ 14,080
Indefinite-life intangible assets

not subject to amortization:
Licenses $ 48,759 $ 47,306
Trade name 5,235 5,230
Total $ 53,994 $ 52,536
Amortized intangible assets are definite-life assets, and as such, we record amortization expense based on a
method that most appropriately reflects our expected cash flows from these assets with a weighted-average
amortization period of 8.1 years (8.0 years for customer lists and relationships and 9.6 years for other).
Amortization expense for definite-life intangible assets was $3,755 for the year ended December 31, 2009,
$4,570 for the year ended December 31, 2008, and $5,952 for the year ended December 31, 2007. Amortization
expense is estimated to be $2,977 in 2010, $1,994 in 2011, $1,315 in 2012, $730 in 2013 and $346 in 2014. In
2009, Mobility wrote off $4,889 in fully amortized intangible assets (primarily customer lists).
Licenses include wireless FCC licenses of $48,650 at December 31, 2009, and $47,267 at December 31, 2008,
that provide us with the exclusive right to utilize certain radio frequency spectrum to provide wireless
communications services. While FCC licenses are issued for a fixed time, renewals of FCC licenses have
occurred routinely and at nominal cost. Moreover, we have determined that there are currently no legal,
regulatory, contractual, competitive, economic or other factors that limit the useful lives of our FCC licenses
and therefore we treat the FCC licenses as indefinite-lived intangible assets. In 2009, we recorded an immaterial
$18 impairment to wireline licenses we no longer plan to use.
NOTE 7. EQUITY METHOD INVESTMENTS
Investments in partnerships, joint ventures and less-than-majority-owned subsidiaries in which we have

significant influence are accounted for under the equity method.
Our investments in equity affiliates include primarily international investments. As of December 31, 2009, our
investments in equity affiliates included a 9.8% interest in Télefonos de México, S.A. de C.V. (Telmex),
Mexico’s national telecommunications company, and an 8.8% interest in América Móvil S.A. de C.V. (América
49
Móvil), primarily a wireless provider in Mexico with telecommunications investments in the United States and
Latin America. In 2007, Telmex’s Board of Directors and shareholders approved a strategic initiative to split off
its Latin American businesses and its Mexican yellow pages business to a new holding company, Telmex
Internacional, S.A.B. de C.V. (Telmex Internacional). Our investment in Telmex Internacional is 9.9%. We are
a member of a consortium that holds all of the class AA shares of Telmex stock, representing voting control of
the company. Another member of the consortium, Carso Global Telecom, S.A. de C.V. (CGT), has the right to
appoint a majority of the directors of Telmex. We also are a member of a consortium that holds all of the class
AA shares of América Móvil stock, representing voting control of the company. Another member of the
consortium has the right to appoint a majority of the directors of América Móvil. On January 13, 2010, América
Móvil announced that its Board of Directors had authorized it to submit an offer for 100% of the equity of CGT,
a holding company that owns 59.4% of Telmex and 60.7% of Telmex Internacional, in exchange for América
Móvil shares; and an offer for Telmex Internacional shares not owned by CGT, to be purchased for cash or to
be exchanged for América Móvil shares, at the election of the shareholders.
The following table is a reconciliation of our investments in equity affiliates as presented on our consolidated
balance sheets:
2009 2008
Beginning of year $ 2,332 $ 2,270
Additional investments 44 -
Equity in net income of affiliates 734 819
Dividends received (317) (164)
Currency translation adjustments 125 (574)
Other adjustments 3 (19)
End of year $ 2,921 $ 2,332
Undistributed earnings from equity affiliates were $3,408 and $2,989 at December 31, 2009 and 2008. The
currency translation adjustment for 2009 and 2008 reflects the effect of exchange rate fluctuations on our
investments in Telmex, Telmex Internacional and América Móvil.
The fair value of our investment in Telmex, based on the equivalent value of Telmex L shares at December 31,
2009, was $1,492. The fair value of our investment in América Móvil, based on the equivalent value of América
Móvil L shares at December 31, 2009, was $6,741. The fair value of our investment in Telmex Internacional,
based on the equivalent value of Telmex Internacional L shares at December 31, 2009, was $1,597.
NOTE 8. DEBT
Long-term debt of AT&T and its subsidiaries, including interest rates and maturities, is summarized as follows
at December 31:
2009 2008
Notes and debentures
Interest Rates Maturities1
0.35% – 2.99% 2009 – 2010 $ 3,500 $ 1,500
3.00% – 4.99% 2009 – 2014 5,853 10,577
5.00% – 6.99% 2009 – 2095 41,331 37,613
7.00% – 9.10% 2009 – 2097 19,069 18,007
Other 136 138
Fair value of interest rate swaps recorded in debt 310 527
70,199 68,362
Unamortized premium, net of discount 1,612 1,846
Total notes and debentures 71,811 70,208
Capitalized leases 237 167
Total long-term debt, including current maturities 72,048 70,375
Current maturities of long-term debt (7,328) (9,503)
Total long-term debt $ 64,720 $ 60,872
1
Maturities assume putable debt is redeemed by the holders at the next opportunity.
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Current maturities of long-term debt include debt that may be put back to us by the holders in 2010.
We have $1,000 of annual put reset securities issued by BellSouth that can be put each April until maturity in
2021. If the holders do not require us to repurchase the securities, the interest rate will be reset based on current
market conditions. Likewise, we have an accreting zero-coupon note that may be redeemed each May,
excluding May 2011, until maturity in 2022. If the zero-coupon note (issued for principal of $500 in 2007) is
held to maturity, the redemption amount will be $1,030.
Debt maturing within one year consists of the following at December 31:
2009 2008
Commercial paper $ - $ 4,575
Current maturities of long-term debt 7,328 9,503
Bank borrowings1 33 41
Total $ 7,361 $ 14,119
1
Outstanding balance of short-term credit facility of a foreign subsidiary.
During 2009, we received net proceeds of $8,161 from the issuance of $8,228 in long-term debt. Debt proceeds
were used for general corporate purposes, including the repayment of maturing debt. Long-term debt issuances
consisted of:
• £750 of 5.875% global notes due in 2017 (equivalent to $1,107 when issued).
• £1,100 of 7.0% global notes due in 2040 (equivalent to $1,621 when issued).
During 2009, debt repayments totaled $13,236 and consisted of:

• $8,633 in repayments of long-term debt (includes repayment of $1,957 for Centennial debt).
• $4,583 in repayments of commercial paper and short-term bank borrowings.
• $20 in repayments of other debt.
As of December 31, 2009 and 2008, we were in compliance with all covenants and conditions of instruments
governing our debt. Substantially all of our outstanding long-term debt is unsecured. Excluding capitalized
leases, the aggregate principal amounts of long-term debt and the corresponding weighted-average interest rate
scheduled for repayment are as follows:
2010 2011 2012 2013 2014 Thereafter

Debt repayments1 $ 7,328 $ 7,536 $ 4,836 $ 5,825 $ 4,789 $ 39,707
Weighted-average interest rate 3.4% 7.1% 6.6% 5.6% 5.1% 6.6%
1
Debt repayments assume putable debt is redeemed by the holders at the next opportunity.
Credit Facility We have a five-year credit agreement with a syndicate of investment and commercial banks. In
June 2009, one of the participating banks, Lehman Brothers Bank, Inc., which had declared bankruptcy,
terminated its lending commitment of $535 and withdrew from the agreement. As a result of this termination,
the outstanding commitments under the agreement were reduced from a total of $10,000 to $9,465. We still
have the right to increase commitments up to an additional $2,535 provided no event of default under the credit
agreement has occurred. The current agreement will expire in July 2011. We also have the right to terminate, in
whole or in part, amounts committed by the lenders under this agreement in excess of any outstanding
advances; however, any such terminated commitments may not be reinstated. Advances under this agreement
may be used for general corporate purposes, including support of commercial paper borrowings and other short-
term borrowings. There is no material adverse change provision governing the drawdown of advances under
this credit agreement. This agreement contains a negative pledge covenant, which requires that, if at any time
we or a subsidiary pledges assets or otherwise permits a lien on its properties, advances under this agreement
will be ratably secured, subject to specified exceptions. We must maintain a debt-to-EBITDA (earnings before
interest, income taxes, depreciation and amortization, and other modifications described in the agreement)
financial ratio covenant of not more than three-to-one as of the last day of each fiscal quarter for the four
quarters then ended. We comply with all covenants under the agreement. At December 31, 2009, we had no
borrowings outstanding under this agreement.
51
Defaults under the agreement, which would permit the lenders to accelerate required payment, include
nonpayment of principal or interest beyond any applicable grace period; failure by AT&T or any subsidiary to
pay when due other debt above a threshold amount that results in acceleration of that debt (commonly referred
to as “cross-acceleration”) or commencement by a creditor of enforcement proceedings within a specified
period after a monetary judgment above a threshold amount has become final; acquisition by any person of
beneficial ownership of more than 50% of AT&T common shares or a change of more than a majority of
AT&T’s directors in any 24-month period other than as elected by the remaining directors (commonly referred
to as a “change-in-control”); material breaches of representations in the agreement; failure to comply with the
negative pledge or debt-to-EBITDA ratio covenants described above; failure to comply with other covenants for
a specified period after notice; failure by AT&T or certain affiliates to make certain minimum funding
payments under Employee Retirement Income Security Act of 1974, as amended (ERISA); and specified events
of bankruptcy or insolvency.
NOTE 9. FAIR VALUE MEASUREMENTS AND DISCLOSURE
GAAP standards require disclosures for financial assets and liabilities that are remeasured at fair value at least
annually. GAAP standards establish a three-tier fair value hierarchy, which prioritizes the inputs used in
measuring fair value. The Fair Value Measurement and Disclosure framework provides a fair value hierarchy
that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest
priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements)
and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value
hierarchy under Fair Value Measurement and Disclosure are described below:
Level 1 Inputs to the valuation methodology are unadjusted quoted prices for identical assets or
liabilities in active markets that AT&T has the ability to access.
Level 2 Inputs to the valuation methodology include:

• Quoted prices for similar assets and liabilities in active markets;
• Quoted prices for identical or similar assets or liabilities in inactive markets;
• Inputs other than quoted market prices that are observable for the asset or liability;
• Inputs that are derived principally from or corroborated by observable market data by
correlation or other means.
If the asset or liability has a specified (contractual) term, the Level 2 input must be
observable for substantially the full term of the asset or liability.
Level 3 Inputs to the valuation methodology are unobservable and significant to the fair value
measurement.
• Fair value is often based on internally developed models in which there are few, if any,
external observations.
The asset’s or liability’s fair value measurement level with the fair value hierarchy is based on the lowest level
of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the
use of observable inputs and minimize the use of unobservable inputs.
The valuation methodologies described above may produce a fair value calculation that may not be indicative of
net realizable value or reflective of future fair values. AT&T believes its valuation methods are appropriate and
consistent with other market participants. The use of different methodologies or assumptions to determine the
fair value of certain financial instruments could result in a different fair value measurement at the reporting
date. There have been no changes in the methodologies used at December 31, 2009 and 2008. See Note 11 for
disclosures relating to pension and other postemployment benefits.
52
Long-Term Debt and Other Financial Instruments
The carrying amounts and estimated fair values of our long-term debt, including current maturities and other
financial instruments, are summarized as follows at December 31:
2009 2008
Carrying Fair Carrying Fair
Amount Value Amount Value
Notes and debentures $ 71,811 $ 75,212 $ 70,208 $ 70,955
Commercial paper - - 4,575 4,575
Bank borrowings 33 33 41 41
Available-for-sale securities 1,885 1,885 1,632 1,632
The fair values of our notes and debentures were estimated based on quoted market prices, where available, or
on the net present value method of expected future cash flows using current interest rates. The carrying value of
debt with an original maturity of less than one year approximates market value.
Investment Securities
Our investment securities consist of available-for-sale instruments which include $1,574 of equities, $226 in
government fixed income bonds and $85 of other securities. Substantially all of our available-for-sale securities
are Level 1 and Level 2. Realized gains and losses on these securities are included in “Other income (expense) –
net” in the consolidated statements of income using the specific identification method. Unrealized gains and
losses, net of tax, on available-for-sale securities are recorded in accumulated other comprehensive income
(accumulated OCI). Unrealized losses that are considered other than temporary are recorded in other income
(expense) – net, with the corresponding reduction to the carrying basis of the investment.
At the end of the first quarter of 2009 and at the end of 2008, we concluded that the severity in the decline in
market values of these assets had led to an other-than-temporary impairment, writing them down $102 in 2009
and $332 in 2008, and recording the amount in Other Income (Expense).
Our short-term investments, other short-term and long-term held-to-maturity investments (including money
market securities) and customer deposits are recorded at amortized cost, and the respective carrying amounts
approximate fair values.
Our investment securities maturing within one year are recorded in “Other current assets,” and instruments with
maturities of more than one year are recorded in “Other Assets” on the consolidated balance sheets.
Derivative Financial Instruments
We employ derivatives to manage certain market risks, primarily interest rate risk and foreign currency
exchange risk. This includes the use of interest rate swaps, interest rate locks, foreign exchange forward
contracts and combined interest rate foreign exchange contracts (cross-currency swaps). We do not use
derivatives for trading or speculative purposes. We record derivatives on our consolidated balance sheets at fair
value (all of our derivatives are Level 2). Cash flows associated with derivative instruments are presented in the
same category on the consolidated statements of cash flows as the item being hedged.
The majority of our derivatives are designated as either a hedge of the fair value of a recognized asset or
liability or of an unrecognized firm commitment (fair value hedge), or a hedge of a forecasted transaction or of
the variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge).
Only a portion of our foreign exchange forward contracts are not designated to receive hedge accounting.
Fair Value Hedging We designate our fixed-to-floating interest rate swaps as fair value hedges. The purpose of
these swaps is to manage interest rate risk by managing our mix of fixed-rate and floating-rate debt. These
swaps involve the receipt of fixed rate amounts for floating interest rate payments over the life of the swaps
without exchange of the underlying principal amount. Accrued and realized gains or losses from interest rate
swaps impact interest expense on the consolidated statements of income. Unrealized gains on interest rate swaps
are recorded at fair market value as assets, and unrealized losses on interest rate swaps are recorded at fair
53
market value as liabilities. We record changes in the fair value of the swaps, along with the changes in the fair
value of the hedged asset or liability that is attributable to the hedged risk. Changes in the fair value of the
interest rate swaps offset changes in the fair value of the fixed-rate notes payable they hedge due to changes in
the designated benchmark interest rate and are recognized in interest expense, though they net to zero. Realized
gains or losses upon early termination of our fair value hedges would be recognized in interest expense.
Cash Flow Hedging Unrealized gains on derivatives designated as cash flow hedges are recorded at fair value
as assets, and unrealized losses on derivatives designated as cash flow hedges are recorded at fair value as
liabilities, both for the period they are outstanding. For derivative instruments designated as cash flow hedges,
the effective portion is reported as a component of accumulated OCI until reclassified into interest expense in
the same period the hedged transaction affects earnings. The gain or loss on the ineffective portion is recognized
in income from continuing operations in each current period.
We designate our cross-currency swaps as cash flow hedges. We have entered into multiple cross-currency
swaps to hedge our exposure to variability in expected future cash flows that are attributable to foreign currency
risk generated from the issuance of our Euro- and British pound sterling-denominated debt. These agreements
include initial and final exchanges of principal from fixed foreign denominations to fixed U.S.-denominated
amounts, to be exchanged at a specified rate, which was determined by the market spot rate upon issuance.
They also include an interest rate swap of a fixed foreign-denominated rate to a fixed U.S.-denominated interest
rate. We evaluate the effectiveness of our cross-currency swaps each quarter. In the year ended December 31,
2009, no material ineffectiveness was measured.
Periodically, we enter into and designate interest rate locks to partially hedge the risk of changes in interest
payments attributable to increases in the benchmark interest rate during the period leading up to the probable
issuance of fixed-rate debt. We designate our interest rate locks as cash flow hedges. Gains and losses when we
settle our interest rate locks are amortized into income over the life of the related debt, except where a material
amount is deemed to be ineffective, which would be immediately reclassified to income. In the year ended
December 31, 2009, no material ineffectiveness was measured. Over the next 12 months, we expect to
reclassify $21 from accumulated OCI to interest expense due to the amortization of net losses on historical
interest rate locks. Our unutilized interest rate locks carry mandatory early terminations, the latest occurring in
April 2012.
We hedge a large portion of the exchange risk involved in anticipation of highly probable foreign currency-
denominated transactions. In anticipation of these transactions, we often enter into foreign exchange contracts to
provide currency at a fixed rate. Some of these instruments are designated as cash flow hedges while others
remain non-designated, largely based on size and duration. Gains and losses at the time we settle or take
delivery on our designated foreign exchange contracts are amortized into income over the next few months as
the hedged funds are spent by our foreign subsidiaries, except where a material amount is deemed to be
ineffective, which would be immediately reclassified to income. In the year ended December 31, 2009, no
material ineffectiveness was measured.
Non-designated and Discontinued Hedging Instruments Changes in the fair value of non-designated derivatives
are recorded in other income (expense) – net, along with the change in fair value of the underlying asset or
liability, as applicable. When hedge accounting is discontinued, the derivative is adjusted for changes in fair
value through other income (expense) – net. For fair value hedges, the swap asset or liability and the underlying
hedged liability or asset will no longer be adjusted for changes in fair value, and the net adjustment to the
hedged item at that time will be amortized into earnings over the remaining life of the hedged item. For cash
flow hedges, gains and losses that were in accumulated OCI as a component of stockholders' equity in
connection with hedged assets or liabilities or forecasted transactions will be recognized in other income
(expense) - net, in the same period the hedged item affects earnings.
Collateral and Credit-Risk Contingency We have entered into agreements with most of our derivative
counterparties, establishing collateral thresholds based on respective credit ratings and netting agreements. At
December 31, 2009, we held $222 of counterparty collateral (a receipt liability). Under the agreements, if our
credit rating had been downgraded one rating level, we still would not have been required to post collateral (a
deposit asset). We do not offset the fair value of collateral, whether the right to reclaim cash collateral (a
receivable) or the obligation to return cash collateral (a payable), against the fair value of the derivative
instruments.
54
Following is the notional amount of our outstanding derivative positions:
December 31,
2009
Interest rate swaps $ 9,000
Cross-currency swaps 7,502
Interest rate locks 3,600
Foreign exchange contracts 293
Total $ 20,395
Following are our derivative instruments and their related hedged items affecting our financial position and
performance:
Fair Value of Derivatives in the Consolidated Balance Sheet

Derivatives designated as hedging instruments and reflected as other assets, other liabilities and, for a portion of
interest rate swaps, accounts receivable.
December 31,
Asset Derivatives 2009
Interest rate swaps $ 399
Cross-currency swaps 635
Interest rate locks 150
Foreign exchange contracts 2
Total $ 1,186
December 31,
Liability Derivatives 2009
Cross-currency swaps $ (390)
Interest rate locks (6)
Foreign exchange contracts (7)
Total $ (403)
The balance of the unrealized derivative gain (loss) in accumulated OCI was $142 at December 31, 2009, and
$(483) at December 31, 2008.
55
Effect of Derivatives on the Consolidated Statement of Income

Year ended
Fair Value Hedging Relationships December 31, 2009
Interest rate swaps (Interest expense):
Gain (Loss) on interest rate swaps $ (216)
Gain (Loss) on long-term debt 216
In addition, the net swap settlements that accrued and settled in the year ended December 31,
2009, were also reported as reductions of interest expense.
Year ended
Cash Flow Hedging Relationships December 31, 2009
Cross-currency swaps:
Gain (Loss) recognized in accumulated OCI $ 738
Other income (expense) reclassified from accumulated OCI into income -
Interest rate locks:

Gain (Loss) recognized in accumulated OCI 203
Interest income (expense) reclassified from accumulated OCI into income (23)
Foreign exchange contracts:

Gain (Loss) recognized in accumulated OCI (2)
Other income (expense) reclassified from accumulated OCI into income -
Non-designated Hedging Instruments

Foreign exchange contracts (Other income) $ (1)
NOTE 10. INCOME TAXES
Significant components of our deferred tax liabilities (assets) are as follows at December 31:
2009 2008
Depreciation and amortization $ 18,796 $ 18,269
Intangibles (nonamortizable) 1,990 1,990
Employee benefits (14,220) (14,825)
Net operating loss and other carryforwards (1,846) (2,220)
Investment in wireless partnership 18,646 16,028
Other – net (2,019) (2,250)
Subtotal 21,347 16,992
Deferred tax assets valuation allowance 1,182 1,190
Net deferred tax liabilities $ 22,529 $ 18,182
Net long-term deferred tax liabilities $ 23,803 $ 19,196

Less: Net current deferred tax assets (1,274) (1,014)
Net deferred tax liabilities $ 22,529 $ 18,182
At December 31, 2009, we had combined net operating and capital loss carryforwards (tax effected) for federal
income tax purposes of $362 and for state and foreign income tax purposes of $1,125, expiring through 2028.
Additionally, we had federal credit carryforwards of $66 and state credit carryforwards of $293, expiring
primarily through 2026.
We recognize a valuation allowance if, based on the weight of available evidence, it is more likely than not that
some portion, or all, of a deferred tax asset will not be realized. Our valuation allowances at December 31, 2008
and 2009, relate primarily to state net operating loss carryforwards.
As required by GAAP, we recognize the financial statement effects of a tax return position when it is more
likely than not, based on the technical merits, that the position will ultimately be sustained. For tax positions
that meet this recognition threshold, we apply our judgment, taking into account applicable tax laws, our
56
experience in managing tax audits and relevant GAAP, to determine the amount of tax benefits to recognize in
our financial statements. For each position, the difference between the benefit realized on our tax return and the
benefit reflected in our financial statements is recorded on our balance sheet as an unrecognized tax benefit
(UTB). We update our unrecognized tax benefits at each financial statement date to reflect the impacts of audit
settlements and other resolution of audit issues, expiration of statutes of limitation, developments in tax law and
ongoing discussions with taxing authorities. A reconciliation of the change in our UTB balance from January 1,
2009 to December 31, 2009, and January 1, 2008 to December 31, 2008, is as follows:
Federal, State and Foreign Tax 2009 2008

Balance at beginning of year $ 6,190 $ 5,901
Increases for tax positions related to the current year 982 811
Increases for tax positions related to prior years 877 715
Decreases for tax positions related to prior years (1,984) (1,237)
Settlements (81) -
Balance at end of year 5,984 6,190
Accrued interest and penalties 1,539 1,802
Gross unrecognized income tax benefits 7,523 7,992
Less: Deferred federal and state income tax benefits (892) (998)
Less: Tax attributable to timing items included above (2,542) (3,371)
Total UTB that, if recognized, would impact the
effective income tax rate as of the end of the year $ 4,089 $ 3,623
During 2009 and 2008, we made net deposits totaling $1,151 and $191 to several taxing jurisdictions. These
deposits are not included in the reconciliation above but reduce our unrecognized tax benefits balance. Net of
these deposits and a $1,000 deposit made in 2007, our unrecognized tax benefits balance at December 31, 2009,
was $5,181, of which $4,882 was included in “Other noncurrent liabilities” and $299 was included in “Accrued
taxes” on our consolidated balance sheets. Our unrecognized tax benefits balance at December 31, 2008, was
$6,801, of which $5,042 was included in “Other noncurrent liabilities” and $1,759 was included in “Accrued
taxes” on our consolidated balance sheets.
We record interest and penalties related to federal, state and foreign unrecognized tax benefits in income tax
expense. Accrued interest and penalties included in unrecognized tax benefits were $1,539 as of December 31,
2009, and $1,802 as of December 31, 2008. Interest and penalties included in our consolidated statements of
income were $(215) for 2009, $152 for 2008, and $303 for 2007.
The Company and our subsidiaries file income tax returns in the U.S. federal jurisdiction and various state and
foreign jurisdictions. Our income tax returns are regularly audited and reviewed by the IRS as well as by state
and foreign taxing authorities.
The IRS has completed field examinations of AT&T’s tax returns through 2005, and all audit periods prior to
1998 are closed for federal purposes. We were unable to reach agreement with the IRS regarding treatment of
Universal Service Fund receipts on our 1998 and 1999 tax returns and, as a result, we filed a refund suit in U.S.
District Court (District Court). In July 2009, the District Court granted the Government’s motion for summary
judgment and entered final judgment for the Government. We appealed the final judgment to the U.S. Court of
Appeals for the Fifth Circuit. We are engaged with the IRS Appeals Division (Appeals) in settling our 2000 –
2002 returns and expect to reach a resolution of most issues in early 2010. We do not expect the resolution to
have a material impact on our unrecognized tax benefits. In early 2009, the IRS completed its field examination
of our 2003 – 2005 income tax returns and issued its final Revenue Agent’s Report (RAR). This RAR assessed
additional taxes related primarily to the timing of certain deductions related to our network assets. We made a
deposit of $650 to reduce the accrual of interest while we continue to work with Appeals to resolve the
contested issues. The IRS began its examination of our 2006 – 2008 income tax returns in 2009. During 2010,
we expect to reach an accelerated resolution with the IRS for depreciation and amortization deductions claimed
on our 2008 return related to a restructuring of our wireless operations. At this time, we are unable to estimate
the impact of a resolution on our unrecognized tax benefits. The IRS has completed the examination of all
acquired entity tax returns through 2003 (ATTC and AT&T Mobility through 2005) and, with the exception of
BellSouth, all years through 2001 are closed. We expect the IRS to complete its examination of the BellSouth
2004 – 2005 income tax returns during 2010.
57
The components of income tax expense are as follows:
2009 2008 2007

Federal:
Current $ 2,852 $ 1,160 $ 5,872
Deferred – net 2,194 5,163 (413)
5,046 6,323 5,459
State, local and foreign:
Current 1,200 (13) 621
Deferred – net (90) 726 173
1,110 713 794
Total $ 6,156 $ 7,036 $ 6,253
A reconciliation of income tax expense and the amount computed by applying the statutory federal income tax
rate (35%) to income before income taxes, income from discontinued operations, extraordinary items and
cumulative effect of accounting changes is as follows:
2009 2008 2007

Taxes computed at federal statutory rate $ 6,649 $ 7,057 $ 6,440
Increases (decreases) in income taxes resulting from:
State and local income taxes – net of federal income tax benefit 559 497 549
Other – net (1,052) (518) (737)
Total $ 6,156 $ 7,036 $ 6,252
Effective Tax Rate 32.4% 34.9% 34.0%
NOTE 11. PENSION AND POSTRETIREMENT BENEFITS
Pension Benefits and Postretirement Benefits

Substantially all of our U.S. employees are covered by one of our noncontributory pension and death benefit
plans. Many of our management employees participate in pension plans that have a traditional pension formula
(i.e., a stated percentage of employees’ adjusted career income) and a frozen cash balance or defined lump sum
formula. In 2005, the management pension plan for those employees was amended to freeze benefit accruals
previously earned under a cash balance formula. Each employee’s existing cash balance continues to earn
interest at a variable annual rate. After this change, those management employees, at retirement, may elect to
receive the portion of their pension benefit derived under the cash balance or defined lump sum as a lump sum
or an annuity. The remaining pension benefit, if any, will be paid as an annuity if its value exceeds a stated
monthly amount. Management employees of former ATTC, BellSouth, AT&T Mobility and new hires after
2006 participate in cash balance pension plans. Nonmanagement employees’ pension benefits are generally
calculated using one of two formulas: benefits are based on a flat dollar amount per year according to job
classification or are calculated under a cash balance plan that is based on an initial cash balance amount and a
negotiated annual pension band and interest credits. Most nonmanagement employees can elect to receive their
pension benefits in either a lump sum payment or an annuity.
We also provide a variety of medical, dental and life insurance benefits to certain retired employees under
various plans and accrue actuarially determined postretirement benefit costs as active employees earn these
benefits.
On December 31, 2009, the AT&T Pension Plan and the Cingular Wireless Pension Plan were merged into the
AT&T Puerto Rico Pension Benefit Plan. At November 1, 2008, BellSouth pension plans and U.S. Domestic
ATTC bargained employees were merged in the AT&T Pension Benefit Plan. At December 31, 2007, defined
benefit pension plans formerly sponsored by Ameritech Publishing Ventures and AT&T Mobility were merged
in the AT&T Pension Benefit Plan.
During 2009, union contracts covering 120,000 collectively bargained wireline employees expired. As of
January 31, 2010, 86,000 employees covered by these expired collectively bargained wireline contracts have
ratified new labor contracts. In the absence of an effective contract, the union is entitled to call a work stoppage.
58
For approximately 60,000 employees covered by these ratified agreements, the agreements provide for a three-
year term and, for the vast majority of those covered employees, a 3 percent wage increase in years one and
two, a wage increase in year three of 2.75 percent, and pension band increases of 2 percent for each year of the
agreement. For both wage and pension band increases, there is a potential cost-of-living increase based on the
Consumer Price Index for the third year. These agreements also provide for continued health care coverage with
reasonable cost sharing.
For the remaining approximately 26,000 employees, the agreement provides for a four-year term with
provisions substantially similar to the provisions of the ratified agreements discussed above, with a wage
increase in year four of 2.75 percent and a potential cost-of-living increase in year four instead of in year three.
On February 8, 2010, the Company and the CWA announced a tentative agreement covering approximately
30,000 core wireline employees in the nine-state former BellSouth region, subject to ratification by those
covered employees. The tentative agreement provides for a three-year term and, for the vast majority of those
covered employees, a 3 percent wage increase in years one and two, a wage increase in year three of 2.75
percent, and pension band increases of 2 percent for each year of the agreement. These agreements also provide
for continued health care coverage with reasonable cost sharing.
In August 2009, retirees were informed of medical and drug coverage changes. In addition, we adopted changes
to our pension plans consistent with the Pension Protection Act of 2006 (PPA). Because of these modifications,
our amortization of prior service (benefit) cost also changed, reducing costs by $128 in the third quarter of
2009. In the fourth quarter of 2009, our pension and postretirement costs have decreased, which is consistent
with reductions that began in August 2009. These modifications will decrease costs in 2010.
Obligations and Funded Status

For defined benefit pension plans, the benefit obligation is the “projected benefit obligation,” the actuarial
present value, as of our December 31 measurement date, of all benefits attributed by the pension benefit
formula to employee service rendered to that date. The amount of benefit to be paid depends on a number of
future events incorporated into the pension benefit formula, including estimates of the average life of
employees/survivors and average years of service rendered. It is measured based on assumptions concerning
future interest rates and future employee compensation levels.
For postretirement benefit plans, the benefit obligation is the “accumulated postretirement benefit obligation,”
the actuarial present value as of a date of all future benefits attributed under the terms of the postretirement
benefit plan to employee service rendered to the valuations date.
The following table presents this reconciliation and shows the change in the projected benefit obligation for the
years ended December 31:
Postretirement
Pension Benefits Benefits
2009 2008 2009 2008
Benefit obligation at beginning of year $ 50,822 $ 53,522 $ 37,531 $ 40,385
Service cost - benefits earned during the period 1,070 1,173 334 429
Interest cost on projected benefit obligation 3,355 3,319 2,434 2,550
Amendments (685) (15) (3,115) (4)
Actuarial loss (gain) 2,439 (1,450) 1,402 (3,406)
Special termination benefits 118 70 9 5
Settlements - - - -
Benefits paid (6,269) (5,795) (2,370) (2,548)
Other - (2) - 120
Benefit obligation at end of year $ 50,850 $ 50,822 $ 36,225 $ 37,531
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The following table presents the change in the value of plan assets for the years ended December 31 and the
plans’ funded status at December 31:
Postretirement
2009 2008 2009 2008
Fair value of plan assets at beginning of year $ 46,828 $ 70,810 $ 10,175 $ 16,999
Actual return on plan assets 6,312 (18,190) 1,991 (4,688)
Benefits paid1 (6,269) (5,795) (823) (2,301)
Contributions 2 - 195 165
Other - 3 (25) -
Fair value of plan assets at end of year 46,873 46,828 11,513 10,175
Funded (unfunded) status at end of year2 $ (3,977) $ (3,994) $ (24,712) $ (27,356)
1
At our discretion, certain postretirement benefits are paid from AT&T cash accounts and do not reduce Voluntary
Employee Beneficiary Association (VEBA) assets. Future benefit payments may be made from VEBA trusts and
thus reduce those asset balances.
2
Funded status is not indicative of our ability to pay ongoing pension benefits or of our obligation to fund
retirement trusts. Required pension funding is determined in accordance with Employee Retirement Income
Security Act (ERISA) regulations.
Amounts recognized on our consolidated balance sheets at December 31 are listed below:
Pension Benefits Postretirement Benefits

2009 2008 2009 2008
Current portion of employee benefit obligation1 $ - $ - $ (2,021) $ (729)
Employee benefit obligation2 (3,977) (3,994) (22,691) (26,627)
Net amount recognized $ (3,977) $ (3,994) $ (24,712) $ (27,356)
1
Included in “Accounts payable and accrued liabilities.”
2
Included in “Postemployment benefit obligation.”
Amounts included in our accumulated other comprehensive income that have not yet been recognized in net
periodic benefit cost at December 31 are listed below:
Pension Benefits Postretirement Benefits

2009 2008 2009 2008
Net loss $ 23,041 $ 23,004 $ 3,991 $ 3,695
Prior service cost (credit) (181) 562 (4,644) (1,999)
Total $ 22,860 $ 23,566 $ (653) $ 1,696
The accumulated benefit obligation for our pension plans represents the actuarial present value of benefits based
on employee service and compensation as of a certain date and does not include an assumption about future
compensation levels. The accumulated benefit obligation for our pension plans was $49,122 at December 31,
2009, and $48,618 at December 31, 2008.
Net Periodic Benefit Cost and Other Amounts Recognized in Other Comprehensive Income
Our combined net pension and postretirement cost recognized in our consolidated statements of income was
$1,921, $324 and $1,078 for the years ended December 31, 2009, 2008 and 2007.
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The following tables present the components of net periodic benefit obligation cost and other changes in plan
assets and benefit obligations recognized in other comprehensive income:
Net Periodic Benefit Cost

Postretirement
2009 2008 2007 2009 2008 2007
Service cost - benefits earned
during the period $ 1,070 $ 1,173 $ 1,257 $ 334 $ 429 $ 511
Interest cost on projected benefit
obligation 3,355 3,319 3,220 2,434 2,550 2,588
Expected return on plan assets (4,561) (5,602) (5,468) (955) (1,327) (1,348)
Amortization of prior service cost
(credit) and transition asset 58 133 142 (469) (360) (359)
Recognized actuarial (gain) loss 656 10 241 (1) (1) 294
Net pension and postretirement
cost (benefit)1 $ 578 $ (967) $ (608) $ 1,343 $ 1,291 $ 1,686
1
During 2009, 2008 and 2007, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003
reduced postretirement benefit cost by $255, $263 and $342. This effect is included in several line items above.
Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income
Postretirement
2009 2008 2007 2009 2008 2007
Net loss (gain) $ 435 $ 13,857 $ (2,131) $ (1,242) $ 1,716 $ (2,525)
Prior service cost (credit) (392) (16) 139 (322) 32 (28)
Amortization of net loss (gain) 412 4 154 (1) - 181
Amortization of prior service cost
(credit) 69 83 78 (223) (222) (223)
Total recognized in net pension and
postretirement cost and other
comprehensive income $ 524 $ 13,928 $ (1,760) $ (1,788) $ 1,526 $ (2,595)
The estimated net loss for pension benefits that will be amortized from accumulated other
comprehensive income into net periodic benefit cost over the next fiscal year is $683, and the prior
service credit for pension benefits that will be amortized from accumulated other comprehensive income
into net periodic benefit cost over the next fiscal year is $16. The estimated net gain for postretirement
benefits that will be amortized from accumulated other comprehensive income into net periodic benefit
cost over the next fiscal year is $8, and the prior service credit for postretirement benefits that will be
amortized from accumulated other comprehensive income into net periodic benefit cost over the next
fiscal year is $625.
Assumptions
In determining the projected benefit obligation and the net pension and postemployment benefit cost, we used
the following significant weighted-average assumptions:
2009 2008 2007

Discount rate for determining projected benefit obligation at
December 31 6.50% 7.00% 6.50%
Discount rate in effect for determining net cost (benefit) 7.00% 6.50% 6.00%
Long-term rate of return on plan assets 8.50% 8.50% 8.50%
Composite rate of compensation increase for determining
projected benefit obligation and net pension cost (benefit) 4.00% 4.00% 4.00%
Approximately 10% of pension and postretirement costs are capitalized as part of construction labor, providing
a small reduction in the net expense recorded. Uncertainty in the securities markets and U.S. economy could
result in investment returns less than those assumed. GAAP requires that actual gains and losses on pension and
postretirement plan assets be recognized in the market-related value of assets (MRVA) equally over a period of
61
not more than five years. We use a methodology, allowed under GAAP, under which we hold the MRVA to
within 20% of the actual fair value of plan assets, which can have the effect of accelerating the recognition of
excess actual gains and losses into the MRVA to less than five years. Due to investment losses on plan assets
experienced in 2008, this methodology contributed approximately $1,577 to our combined net pension and
postretirement cost in 2009 as compared with not using this methodology. This methodology did not have a
material impact on 2008 and 2007 combined net pension and postretirement benefits. Should the securities
markets decline or medical and prescription drug costs increase at a rate greater than assumed, we would expect
increasing annual combined net pension and postretirement costs for the next several years. Should actual
experience differ from actuarial assumptions, the projected pension benefit obligation and net pension cost and
accumulated postretirement benefit obligation and postretirement benefit cost would be affected in future years.
Discount Rate Our assumed discount rate of 6.50% at December 31, 2009, reflects the hypothetical rate at
which the projected benefit obligations could be effectively settled or paid out to participants. We determined
our discount rate based on a range of factors, including a yield curve comprised of the rates of return on several
hundred high-quality, fixed-income corporate bonds available at the measurement date and the related expected
duration for the obligations. These bonds were all rated at least Aa3 or AA- by one of the nationally recognized
statistical rating organizations, denominated in U.S. dollars, and neither callable, convertible nor index linked.
For the year ended December 31, 2009, we decreased our discount rate by 0.50%, resulting in an increase in our
pension plan benefit obligation of $2,065 and an increase in our postretirement benefit obligation of $1,847. For
the year ended December 31, 2008, we increased our discount rate by 0.50%, resulting in a decrease in our
pension plan benefit obligation of $2,176 and a decrease in our postretirement benefit obligation of $2,154.
Expected Long-Term Rate of Return Our expected long-term rate of return on plan assets of 8.50% for 2010
and 2009 reflects the average rate of earnings expected on the funds invested, or to be invested, to provide for
the benefits included in the projected benefit obligations. In setting the long-term assumed rate of return,
management considers capital markets future expectations and the asset mix of the plans’ investments. Actual
long-term return can, in relatively stable markets, also serve as a factor in determining future expectations.
However, the dramatic adverse market conditions in 2008 have skewed traditional measures of long-term
return, such as the 10-year return, which was 3.67% through 2009 and 4.21% through 2008, compared with
9.18% through 2007. The severity of the 2008 losses may make the 10-year return less of a relevant factor in
future expectations. In 2009, we experienced actual returns on investments much greater than what was
expected, which will create a reduction in combined pension and postretirement costs for 2010. Based on the
future expectations for the target asset mix, this assumption will remain unchanged for 2010. We consider many
factors that include, but are not limited to, historical returns on plan assets, current market information on long-
term returns (e.g., long-term bond rates) and current and target asset allocations between asset categories. The
target asset allocation is determined based on consultations with external investment advisors. This assumption,
which is based on our long-term expectations of market returns in future years, is one of the most significant of
the weighted-average assumptions used to determine our actuarial estimates of pension and postretirement
benefit expense. If all other factors were to remain unchanged, we expect that a 1% decrease in the expected
long-term rate of return would cause 2010 combined pension and postretirement cost to increase $639.
Composite Rate of Compensation Increase Our expected composite rate of compensation increase of 4%
reflects the long-term average rate of salary increases.
Health Care Cost Trend Our health care cost trend assumptions are developed based on historical cost data, the
near-term outlook and an assessment of likely long-term trends. In addition to the health care cost trend, we
assume an annual 3% growth in administrative expenses and an annual 3% growth in dental claims. Due to
benefit design changes (e.g., increased co-pays and deductibles for prescription drugs and certain medical
services), we have generally experienced better-than-expected claims cost in recent years. The following table
provides our assumed average health care cost trend based on the demographics of plan participants:
2010 2009
Health care cost trend rate assumed for current year
Retirees 64 and under 5.00 % 5.21 %
Retirees 65 and over 5.00 % 5.36 %
Rate to which the cost trend is assumed to decline
(the ultimate trend rate) 5.00 % 5.00 %
Year that rate reaches the ultimate trend rate 2010 2010
62
A one percentage-point change in the assumed combined medical and dental cost trend rate would have the
following effects:
One Percentage- One Percentage-

Point Increase Point Decrease
Increase (decrease) in total of service
and interest cost components $ 325 $ (266)
Increase (decrease) in accumulated
postretirement benefit obligation 3,423 (2,842)
Prior to August 2009, a majority of our labor contracts contained an annual dollar cap for nonmanagement
retirees who retire during the term of the labor contract. However, we waived the cap during the relevant
contract periods and thus did not collect contributions from those retirees. We have similarly waived the cap for
nonmanagement retirees who retired prior to inception of the labor contract. In accordance with the substantive
plan provisions required in accounting for postretirement benefits under GAAP, we did not account for the cap
in the value of our accumulated postretirement benefit obligation (i.e., for GAAP purposes, we assumed the cap
would be waived for all future contract periods). In August 2009, the company announced that the annual dollar
caps would be enforced for some groups beginning in 2010, with alternative uncapped plans available and
participants assumed to move to the uncapped plans. Consequently, no substantive assumptions about the
annual caps being waived are reflected after August 2009.
We also changed from a static mortality table to a generational mortality table, creating an increase in our
pension and postretirement benefit obligations as of December 31, 2009, as well as an increase in net pension
and postretirement costs in 2010. Given full recognition of bargained changes, assumption changes and
recognition of gains/losses, our combined pension and postretirement cost is expected to decrease for 2010
compared to 2009.
Plan Assets
Plan assets consist primarily of private and public equity, government and corporate bonds, and real assets. The
asset allocations of the pension plans are maintained to meet ERISA requirements. Any plan contributions, as
determined by ERISA regulations, are made to a pension trust for the benefit of plan participants. We maintain
VEBA trusts to partially fund postretirement benefits; however, there are no ERISA or regulatory requirements
that these postretirement benefit plans be funded annually.
The principal investment objectives are to ensure the availability of funds to pay pension and postretirement
benefits as they become due under a broad range of future economic scenarios, to maximize long-term
investment return with an acceptable level of risk based on our pension and postretirement obligations, and to
be broadly diversified across and within the capital markets to insulate asset values against adverse experience
in any one market. Each asset class has broadly diversified characteristics. Substantial biases toward any
particular investing style or type of security are sought to be avoided by managing the aggregation of all
accounts with portfolio benchmarks. Asset and benefit obligation forecasting studies are conducted periodically,
generally every two to three years, or when significant changes have occurred in market conditions, benefits,
participant demographics or funded status. Decisions regarding investment policy are made with an
understanding of the effect of asset allocation on funded status, future contributions and projected expenses.
The current asset allocation policy and risk level for the pension plan and VEBA assets are based on a study
completed and approved during 2009.
63
The plans’ weighted-average asset target and actual allocations as a percentage of plan assets, including the
notional exposure of future contracts by asset categories at December 31, are as follows:
Pension Assets Postretirement (VEBA) Assets

Target 2009 2008 Target 2009 2008
Equity securities:
Domestic 26% – 36% 34 % 34 % 34% – 44% 39 % 39 %
International 12% – 22% 16 16 22% – 32% 27 21
Fixed income securities 27% - 37% 30 30 15% - 25% 20 25
Real assets 6% – 16% 8 11 0% – 7% 2 3
Private equity 4% – 14% 10 9 0% – 9% 4 6
Other 0% - 5% 2 - 3% - 13% 8 6
Total 100 % 100 % 100 % 100 %
At December 31, 2009, AT&T securities represented less than one-half of a percent of assets held by our
pension plans and VEBA trusts.
Investment Valuation
Investments are stated at fair value. Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at the measurement date. See “Fair
Value Measurement” for further discussion.
Investments in securities traded on a national securities exchange are valued at the last reported sales price on
the last business day of the year. If no sale was reported on that date, they are valued at the last reported bid
price. Investments in securities not traded on a national securities exchange are valued using pricing models,
quoted prices of securities with similar characteristics or discounted cash flows. Over-the-counter (OTC)
securities and government obligations are valued at the bid price or the average of the bid and asked price on the
last business day of the year from published sources where available and, if not available, from other sources
considered reliable. Depending on the types and contractual terms of OTC derivatives, fair value is measured
using a series of techniques, such as Black-Scholes option pricing model, simulation models or a combination
of various models.
Common/collective trust funds and 103-12 investment entities are valued at quoted redemption values that
represent the net asset values of units held at year-end which management has determined approximates fair
value.
Alternative investments, including investments in private equities, private bonds, limited partnerships, hedge
funds, real assets and natural resources, do not have readily available market values. These estimated fair values
may differ significantly from the values that would have been used had a ready market for these investments
existed, and such differences could be material. Private equity, private bonds, limited partnership interests,
hedge funds and other investments not having an established market are valued at net asset values as determined
by the investment managers, which management has determined approximates fair value. Private equity
investments are often valued initially based upon cost; however, valuations are reviewed utilizing available
market data to determine if the carrying value of these investments should be adjusted. Such market data
primarily includes observations of the trading multiples of public companies considered comparable to the
private companies being valued. Investments in real assets funds are stated at the aggregate net asset value of
the units of these funds, which management has determined approximates fair value. Real assets and natural
resource investments are valued either at amounts based upon appraisal reports prepared by appraisers or at
amounts as determined by an internal appraisal performed by the investment manager, which management has
determined approximates fair value.
Purchases and sales of securities are recorded as of the trade date. Realized gains and losses on sales of
securities are determined on the basis of average cost. Interest income is recognized on the accrual basis.
Dividend income is recognized on the ex-dividend date.
64
Fair Value Measurement

GAAP standards require disclosures for financial assets and liabilities that are remeasured at fair value at least
annually. GAAP standards establish a three-tier fair value hierarchy, which prioritizes the inputs used in
measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active
markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or
indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists,
therefore requiring an entity to develop its own assumptions. See Note 9 “Fair Value Measurement and
Disclosure” for a discussion of fair value hierarchy that prioritizes the inputs to valuation techniques used to
measure fair value.
The following tables set forth by level, within the fair value hierarchy, the pension and postretirement assets and
liabilities at fair value as of December 31, 2009:
Pension Assets and Liabilities at Fair Value as

of December 31, 2009
Level 1 Level 2 Level 3 Total
Interest bearing investments $ 134 $ 2,277 $ - $ 2,411
Equity securities:
Domestic 9,253 3,207 2 12,462
International 4,928 1,766 - 6,694
Fixed income securities:
U.S. Government and governmental agencies - 5,295 - 5,295
Corporate and other bonds and notes - 4,548 - 4,548
Private equity 36 10 5,312 5,358
Real assets - - 3,650 3,650
Other 128 206 - 334
Market value of securities on loan:
Interest bearing investments - 300 - 300
Equity – domestic 1,907 1 - 1,908
Equity – international 597 15 - 612
Corporate bonds and notes - 659 - 659
Other 22 8 - 30
Collateral value of securities lending - 6,039 - 6,039
Total plan net assets at fair value $ 17,005 $ 27,293 $ 8,964 $ 53,262
Other assets (liabilities)1 (6,389)
Total Plan Net Assets $ 46,873
1
Other assets (liabilities) include accounts receivable, accounts payable and net adjustment for securities lending payable.
65
Postretirement Assets and Liabilities at Fair

Value as of December 31, 2009
Level 1 Level 2 Level 3 Total
Interest bearing investments $ 49 $ 1,145 $ - $ 1,194
Equity securities:
Domestic 2,484 1,175 - 3,659
International 2,534 755 - 3,289
Fixed income securities:
Corporate and other bonds and notes - 485 - 485
Private equity - - 583 583
Real assets - - 117 117
Other 33 11 - 44
Market value of securities on loan:
Equities - domestic 354 118 - 472
Equities – international 95 82 - 177
U.S. government bonds and notes - 74 - 74
Corporate and other bonds and notes - 15 - 15
Collateral value of securities lending - 765 - 765
Total plan net assets at fair value $ 5,549 $ 6,132 $ 700 $ 12,381
Other assets (liabilities)1 (868)
Total Plan Net Assets $ 11,513
1
Other assets (liabilities) include accounts receivable, accounts payable and net adjustment for securities lending payable.
The tables below set forth a summary of changes in the fair value of the pension and postretirement assets Level
3 investment assets for the year ended December 31, 2009:
Equity -
Pension Assets Domestic Private equity Real assets Total
Balance, beginning of year $ 21 $ 5,494 $ 5,281 $ 10,796
Actual return on plan assets:
Assets sold during the
period - 130 (41) 89
Assets still held at
reporting date 10 (652) (1,829) (2,471)
Purchases, sales, issuances
and settlements (net) (29) 340 239 550
Balance, End of Year $ 2 $ 5,312 $ 3,650 $ 8,964
Postretirement Assets Private equity Real assets Total

Balance, beginning of year $ 669 $ 210 $ 879
Actual return on plan assets:
Assets sold during the period 23 (34) (11)
Assets still held at reporting date (76) (62) (138)
Purchases, sales, issuances and
settlements (net) (33) 3 (30)
Balance, End of Year $ 583 $ 117 $ 700
66
Estimated Future Benefit Payments

Expected benefit payments are estimated using the same assumptions used in determining our benefit obligation
at December 31, 2009. Because benefit payments will depend on future employment and compensation levels,
average years employed and average life spans, among other factors, changes in any of these factors could
significantly affect these expected amounts. The following table provides expected benefit payments under our
pension and postretirement plans:
Postretirement Medicare Subsidy

Pension Benefits Benefits Receipts
2010 $ 4,897 $ 2,836 $ (113)
2011 4,605 2,665 (121)
2012 4,578 2,627 (132)
2013 4,504 2,615 (143)
2014 4,432 2,596 (154)
Years 2015 – 2019 21,449 12,729 (944)
Supplemental Retirement Plans

We also provide senior- and middle-management employees with nonqualified, unfunded supplemental
retirement and savings plans. While these plans are unfunded, we have assets in a designated nonbankruptcy
remote trust that are independently managed and used to provide for these benefits. These plans include
supplemental pension benefits as well as compensation-deferral plans, some of which include a corresponding
match by us based on a percentage of the compensation deferral.
We use the same significant assumptions for the discount rate and composite rate of compensation increase used
in determining the projected benefit obligation and the net pension and postemployment benefit cost. The
following tables provide the plans’ benefit obligations and fair value of assets at December 31 and the
components of the supplemental retirement pension benefit cost. The net amounts recorded as “Other
noncurrent liabilities” on our consolidated balance sheets at December 31, 2009, was $2,139 and was $2,114 at
December 31, 2008.
The following table provides information for our supplemental retirement plans with accumulated benefit
obligations in excess of plan assets:
2009 2008
Projected benefit obligation $ (2,139) $ (2,114)
Accumulated benefit obligation (2,058) (2,023)
Fair value of plan assets - -
The following tables present the components of net periodic benefit cost and other changes in plan assets and
benefit obligations recognized in other comprehensive income:
Net Periodic Benefit Cost 2009 2008

Service cost - benefits earned during the period $ 11 $ 13
Interest cost on projected benefit obligation 140 141
Amortization of prior service cost 5 6
Recognized actuarial loss 10 21
Net supplemental retirement pension cost $ 166 $ 181
Other Changes Recognized in

Other Comprehensive Income 2009 2008
Net loss (gain) $ 51 $ (66)
Prior service cost (credit) (5) -
Amortization of net loss (gain) 7 11
Amortization of prior service cost 3 4
Total recognized in net supplemental pension cost
and other comprehensive income $ 56 $ (51)
67
The estimated net loss for our supplemental retirement plan benefits that will be amortized from accumulated
other comprehensive income into net periodic benefit cost over the next fiscal year is $16, and the prior service
cost for our supplemental retirement plan benefits that will be amortized from accumulated other
comprehensive income into net periodic benefit cost over the next fiscal year is $2.
Deferred compensation expense was $95 in 2009, $54 in 2008 and $106 in 2007. Our deferred compensation
liability, included in “Other noncurrent liabilities,” was $1,031 at December 31, 2009, and $1,054 at December
31, 2008.
Non-U.S. Plans
As part of our ATTC acquisition, we acquired certain non-U.S. operations that have varying types of pension
programs providing benefits for substantially all of their employees and, to a limited group, postemployment
benefits. The net amounts recorded as “Postemployment benefit obligation” on our consolidated balance sheets
at December 31, 2009 and 2008, were $(9) and $(7).
2009 2008
Benefit obligations at end of year $ (1,040) $ (786)
Fair value of plan assets 1,049 793
Funded status at end of year $ 9 $ 7
The following table provides information for certain non-U.S. defined-benefit pension plans with plan assets in
excess of accumulated benefit obligations:
2009 2008
Projected benefit obligation $ 1,040 $ 786
Accumulated benefit obligation 975 700
Fair value of plan assets 1,049 793
Our International Pension Assets are composed of Level 1 and Level 2 assets. Level 2 assets are primarily made
up of corporate bonds, notes and real assets totaling $688. The remaining assets at fair value are Level 1 assets
totaling $361, related to equity investments and cash.
In determining the projected benefit obligation for certain non-U.S. defined-benefit pension plans, we use
assumptions based upon interest rates relative to each country in which we sponsor a plan. Additionally, the
expected return is based on the investment mix relative to each plan’s assets. Following are the significant
weighted-average assumptions:
2009 2008
Discount rate for determining projected benefit obligation at
December 31 5.16% 6.20%
Discount rate in effect for determining net cost (benefit) 6.20% 5.57%
Long-term rate of return on plan assets 6.24% 6.13%
projected benefit obligation at December 31 3.99% 4.06%
net pension cost 4.06% 4.25%
The following tables present the components of net periodic benefit cost and other changes in plan assets and
benefit obligations recognized in other comprehensive income:
Net Periodic Benefit Cost 2009 2008

Service cost - benefits earned during the period $ 22 $ 25
Interest cost on projected benefit obligation 47 54
Expected return on assets (58) (60)
Amortization of actuarial (gain) (17) (5)
Net pension cost $ (6) $ 14
68
Other Changes Recognized in

Other Comprehensive Income 2009 2008
Net loss (gain) $ 75 $ 70
Amortization of net loss (gain) (8) (2)
Amortization of prior service cost - -
Total recognized in net pension cost and other
comprehensive income $ 67 $ 68
The estimated net loss that will be amortized from accumulated other comprehensive income into net periodic
benefit cost over the next fiscal year is $1.
Contributory Savings Plans

We maintain contributory savings plans that cover substantially all employees. Under the savings plans, we
match in cash or company stock a stated percentage of eligible employee contributions, subject to a specified
ceiling. There are no debt-financed shares held by the Employee Stock Ownership Plans, allocated or
unallocated.
Our match of employee contributions to the savings plans is fulfilled with purchases of our stock on the open
market or company cash. Benefit cost is based on the cost of shares or units allocated to participating
employees’ accounts and was $586, $664 and $633 for the years ended December 31, 2009, 2008 and 2007.
NOTE 12. SHARE-BASED PAYMENT
We account for our share-based payment arrangements using GAAP standards for share-based awards. Our
accounting under these standards may affect our ability to fully realize the value shown on our consolidated
balance sheets of deferred tax assets associated with compensation expense. Full realization of these deferred
tax assets requires stock options to be exercised at a price equaling or exceeding the sum of the exercise price
plus the fair value of the options at the grant date. The provisions of GAAP standards for share-based awards do
not allow a valuation allowance to be recorded unless our future taxable income is expected to be insufficient to
recover the asset. Accordingly, there can be no assurance that the current stock price of our common shares will
rise to levels sufficient to realize the entire tax benefit currently reflected in our consolidated balance sheets.
However, to the extent that additional tax benefits are generated in excess of the deferred taxes associated with
compensation expense previously recognized, the potential future impact on income would be reduced.
At December 31, 2009, we had various share-based payment arrangements, which we describe in the following
discussion. The compensation cost recognized for those plans was $317 for 2009, compared to $166 for 2008
and $720 for 2007, and is included in “Selling, general and administrative” in our consolidated statements of
income. The total income tax benefit recognized in the consolidated statements of income for share-based
payment arrangements was $121 for 2009, compared to $63 for 2008 and $275 for 2007.
Under our various plans, senior and other management and nonmanagement employees and nonemployee
directors have received stock options, performance stock units, and other nonvested stock units. Stock options
issued through December 31, 2009, carry exercise prices equal to the market price of our stock at the date of
grant. Beginning in 1994 and ending in 1999, certain employees of AT&T Teleholdings, Inc. (formerly known
as Ameritech) were awarded grants of nonqualified stock options with dividend equivalents. Prior to 2006,
depending on the grant, stock options vesting could occur up to five years from the date of grant, with most
options vesting ratably over three years. Stock options granted as part of a deferred compensation plan do not
have a vesting period; since 2006, these are the only options issued by AT&T. Performance stock units, which
are nonvested stock units, are granted to key employees based upon our stock price at the date of grant and are
awarded in the form of AT&T common stock and cash at the end of a two- to three-year period, subject to the
achievement of certain performance goals. Other nonvested stock units are valued at the market price of our
common stock at the date of grant and vest typically over a two- to five-year period. As of December 31, 2009,
we were authorized to issue up to 110 million shares of common stock (in addition to shares that may be issued
upon exercise of outstanding options or upon vesting of performance stock units or other nonvested stock units)
to officers, employees, and directors pursuant to these various plans.
69
The compensation cost that we have charged against income for our share-based payment arrangements was as
follows:
2009 2008 2007

Performance stock units $ 290 $ 152 $ 620
Stock options 8 11 14
Restricted stock 21 9 68
Other (2) (6) 18
Total $ 317 $ 166 $ 720
The estimated fair value of the options when granted is amortized to expense over the options’ vesting or
required service period. The fair value for these options, for the indicated years ended, was estimated at the date
of grant based on the expected life of the option and historical exercise experience, using a Black-Scholes
option pricing model with the following weighted-average assumptions:
2009 2008 2007

Risk-free interest rate 3.17% 3.96% 5.01%
Dividend yield 6.82% 4.36% 3.65%
Expected volatility factor 19.65% 18.76% 20.75%
Expected option life in years 7.00 7.00 7.00
A summary of option activity as of December 31, 2009, and changes during the year then ended, is presented
below (shares in millions):
Weighted-
Weighted- Average
Average Remaining Aggregate
Exercise Contractual Intrinsic
Options Shares Price Term (Years) Value 1
Outstanding at January 1, 2009 204 $ 39.41
Granted 3 24.06
Exercised (1) 23.41
Forfeited or expired (28) 54.86
Outstanding at December 31, 2009 178 36.79 1.86 $ 115
Exercisable at December 31, 2009 175 $ 37.01 1.73 $ 103
1
Aggregate intrinsic value includes only those options with intrinsic value (options where the exercise price is
below the market price).
The weighted-average fair value of each option granted during the period was $1.84 for 2009, compared to
$5.04 for 2008 and $7.71 for 2007. The total intrinsic value of options exercised during 2009 was $5, compared
to $78 for 2008 and $667 for 2007.
It is our policy to satisfy share option exercises using our treasury shares. The actual excess tax benefit realized
for the tax deductions from option exercises from these arrangements was less than $1 in 2009, compared to
$10 for 2008 and $77 for 2007.
A summary of the status of our nonvested stock units, which includes performance stock units as of December
31, 2009, and changes during the year then ended is presented as follows (shares in millions):
Weighted-Average
Grant-Date
Nonvested Stock Units Shares Fair Value
Nonvested at January 1, 2009 24 $ 35.18
Granted 16 24.80
Vested (14) 34.51
Forfeited - 28.67
Nonvested at December 31, 2009 26 $ 26.48
70
As of December 31, 2009, there was $365 of total unrecognized compensation cost related to nonvested share-
based payment arrangements granted. That cost is expected to be recognized over a weighted-average period of
1.88 years. The total fair value of shares vested during the year was $471 for 2009, compared to $554 for 2008
and $345 for 2007.
NOTE 13. STOCKHOLDERS’ EQUITY
From time to time, we repurchase shares of common stock for distribution through our employee benefit plans
or in connection with certain acquisitions. In December 2007, the Board of Directors authorized the repurchase
of up to 400 million shares of our common stock. This authorization replaced previous authorizations and
expired on December 31, 2009. As of December 31, 2009, we had repurchased approximately 164 million
shares under this program.
During the Annual Meeting of Shareholders in April 2009, shareholders approved the increase of authorized
common shares of AT&T stock from 7 billion to 14 billion, with no change to the currently authorized 10
million preferred shares of AT&T stock. As of December 31, 2009 and 2008, no preferred shares were
outstanding.
In December 2009, the Company declared its quarterly dividend, which reflected an increase in the amount per
share of common stock from $0.41 to $0.42.
NOTE 14. ADDITIONAL FINANCIAL INFORMATION
December 31,
Consolidated Balance Sheets 2009 2008
Accounts payable and accrued liabilities:
Accounts payable $ 7,514 $ 6,921
Accrued rents and other 3,335 4,437
Accrued payroll and commissions 2,430 2,401
Deferred directory revenue 1,491 1,984
Accrued interest 1,717 1,471
Compensated future absences 563 609
Current portion of employee benefit obligation 2,021 729
Other 1,928 1,480
Total accounts payable and accrued liabilities $ 20,999 $ 20,032
Deferred compensation (included in Other
noncurrent liabilities) $ 1,633 $ 1,648
Consolidated Statements of Income 2009 2008 2007

Advertising expense $ 2,797 $ 3,073 $ 3,430
Interest expense incurred $ 4,119 $ 4,049 $ 3,678
Capitalized interest (740) (659) (171)
Total interest expense $ 3,379 $ 3,390 $ 3,507
Consolidated Statements of Cash Flows 2009 2008 2007

Cash paid during the year for:
Interest $ 3,873 $ 3,727 $ 3,445
Income taxes, net of refunds 4,471 5,307 4,013
71
Consolidated Statements of Changes in 2009 2008 2007

Stockholders’ Equity
Accumulated other comprehensive income (loss) is composed
of the following components, net of taxes, at December 31:
Foreign currency translation adjustment $ (761) $ (912) $ (469)
Unrealized gains on securities 324 100 375
Unrealized gains (losses) on cash flow hedges 142 (483) (226)
Defined benefit postretirement plans (14,112) (15,761) (59)
Other (1) (1) (1)
Accumulated other comprehensive (loss) $ (14,408) $ (17,057) $ (380)
No customer accounted for more than 10% of consolidated revenues in 2009, 2008 or 2007.
A majority of our employees are represented by labor unions as of year-end 2009.
NOTE 15. CONTINGENT LIABILITIES
In addition to issues specifically discussed elsewhere, we are party to numerous lawsuits, regulatory
proceedings and other matters arising in the ordinary course of business. In accordance with GAAP standards
for contingencies, in evaluating these matters on an ongoing basis, we take into account amounts already
accrued on the balance sheet. In our opinion, although the outcomes of these proceedings are uncertain, they
should not have a material adverse effect on our financial position, results of operations or cash flows.
We have contractual obligations to purchase certain goods or services from various other parties. Our purchase
obligations are expected to be approximately $2,890 in 2010, $4,095 in total for 2011 and 2012, $2,549 in total
for 2013 and 2014 and $694 in total for years thereafter.
See Note 9 for a discussion of collateral and credit-risk contingencies.
NOTE 16. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
The following table represents our quarterly financial results:
Stock Price
Basic Diluted
Total Net Income Earnings Earnings
Calendar Operating Operating Net Attributable Per Per
Quarter Revenues Income Income to AT&T Share1 Share1 High Low Close
2009
First $ 30,571 $ 5,737 $ 3,201 $ 3,126 $ 0.53 $ 0.53 $ 29.46 $ 21.44 $ 25.20
Second 30,734 5,506 3,276 3,198 0.54 0.54 27.09 23.38 24.84
Third 30,855 5,388 3,275 3,192 0.54 0.54 27.68 23.19 27.01
Fourth 30,858 4,861 3,091 3,019 0.51 0.51 28.61 25.00 28.03
Annual $ 123,018 $ 21,492 $ 12,843 $ 12,535 2.12 2.12
2008
First $ 30,744 $ 5,980 $ 3,519 $ 3,461 $ 0.58 $ 0.57 $ 41.94 $ 32.95 $ 38.30
Second 30,866 6,567 3,843 3,772 0.64 0.63 40.70 32.63 33.69
Third 31,342 5,618 3,289 3,230 0.55 0.55 33.58 27.51 27.92
Fourth 31,076 4,898 2,477 2,404 0.41 0.41 30.65 20.90 28.50
Annual $ 124,028 $ 23,063 $ 13,128 $ 12,867 2.17 2.16
1
Quarterly earnings per share impacts may not add to full-year earnings per share impacts due to the difference in weighted-
average common shares for the quarters versus the weighted-average common shares for the year.
72
Report of Management
The consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting
principles. The integrity and objectivity of the data in these financial statements, including estimates and judgments
relating to matters not concluded by year-end, are the responsibility of management, as is all other information
included in the Annual Report, unless otherwise indicated.
The financial statements of AT&T Inc. (AT&T) have been audited by Ernst & Young LLP, Independent Registered
Public Accounting Firm. Management has made available to Ernst & Young LLP all of AT&T’s financial records
and related data, as well as the minutes of stockholders’ and directors’ meetings. Furthermore, management believes
that all representations made to Ernst & Young LLP during its audit were valid and appropriate.
Management maintains disclosure controls and procedures that are designed to ensure that information required to
be disclosed by AT&T is recorded, processed, summarized, accumulated and communicated to its management,
including its principal executive and principal financial officers, to allow timely decisions regarding required
disclosure, and reported within the time periods specified by the Securities and Exchange Commission’s rules and
forms.
Management also seeks to ensure the objectivity and integrity of its financial data by the careful selection of its
managers, by organizational arrangements that provide an appropriate division of responsibility and by
communication programs aimed at ensuring that its policies, standards and managerial authorities are understood
throughout the organization.
The Audit Committee of the Board of Directors meets periodically with management, the internal auditors and the
independent auditors to review the manner in which they are performing their respective responsibilities and to
discuss auditing, internal accounting controls and financial reporting matters. Both the internal auditors and the
independent auditors periodically meet alone with the Audit Committee and have access to the Audit Committee at
any time.
Assessment of Internal Control

The management of AT&T is responsible for establishing and maintaining adequate internal control over financial
reporting, as defined in Rule 13a-15(f) or 15d-15(f) under the Securities Exchange Act of 1934. AT&T’s internal
control system was designed to provide reasonable assurance to the company’s management and Board of Directors
regarding the preparation and fair presentation of published financial statements.
AT&T management assessed the effectiveness of the company’s internal control over financial reporting as of
December 31, 2009. In making this assessment, it used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework. Based on its
assessment, AT&T management believes that, as of December 31, 2009, the Company’s internal control over
financial reporting is effective based on those criteria.
Ernst & Young LLP, the independent registered public accounting firm that audited the financial statements
included in this Annual Report, has issued an attestation report on the company’s internal control over financial
reporting.
/s/ Randall Stephenson. /s/ Richard G. Lindner.

Randall Stephenson Richard G. Lindner
Chairman of the Board, Senior Executive Vice President and
Chief Executive Officer and President Chief Financial Officer
73
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders

AT&T Inc.
We have audited the accompanying consolidated balance sheets of AT&T Inc. (the Company) as of December 31,
2009 and 2008, and the related consolidated statements of income, stockholders’ equity, and cash flows for each of
the three years in the period ended December 31, 2009. These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated
financial position of the Company at December 31, 2009 and 2008, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended December 31, 2009, in conformity with U.S. generally
accepted accounting principles.
As discussed in Note 1 to the consolidated financial statements, in 2009 the Company changed its presentation of
noncontrolling interests with the adoption of FASB statement No. 160, Noncontrolling Interests in Consolidated
Financial Statements, an amendment to ARB No. 51, (codified in FASB Accounting Standards Codification (ASC)
Topic 810, Consolidation) effective January 1, 2009.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States), the Company's internal control over financial reporting as of December 31, 2009, based on criteria
established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission and our report dated February 25, 2010 expressed an unqualified opinion thereon.
/s/ Ernst & Young, LLP.

Dallas, Texas
February 25, 2010
74
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting
The Board of Directors and Stockholders

AT&T Inc.
We have audited AT&T Inc.’s (the Company) internal control over financial reporting as of December 31, 2009,
based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (the COSO criteria). The Company’s management is responsible for
maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal
control over financial reporting included in the accompanying Report of Management. Our responsibility is to
express an opinion on the company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether effective internal control over financial reporting was maintained in all material respects. Our audit
included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting
as of December 31, 2009, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States), the consolidated balance sheets of the Company as of December 31, 2009 and 2008, and the related
consolidated statements of income, stockholders’ equity, and cash flows for each of the three years in the period
ended December 31, 2009 and our report dated February 25, 2010 expressed an unqualified opinion thereon.
/s/ Ernst & Young, LLP.

Dallas, Texas
February 25, 2010
75
Exhibit 21
PRINCIPAL SUBSIDIARIES OF
AT&T INC., AS OF DECEMBER 31, 2009
2009 AT&T INC. REPORT TO STOCKHOLDERS
SECURITIES AND EXCHANGE COMMISSION ("SEC")
FORM 10−K filed February 25, 2010
Legal Name State of Incorporation/Formation Conducts Business Under
Illinois Bell Telephone Company Illinois AT&T Illinois;

AT&T Wholesale
Indiana Bell Telephone Company, Incorporated Indiana AT&T Indiana;

AT&T Wholesale
Michigan Bell Telephone Company Michigan AT&T Michigan;

AT&T Wholesale
Nevada Bell Telephone Company Nevada AT&T Nevada;

AT&T Wholesale
Pacific Bell Telephone Company California AT&T California;

AT&T Wholesale;
AT&T DataComm
AT&T International, Inc. Delaware AT&T International
SBC Internet Services, Inc. California AT&T Internet Services;

AT&T Entertainment Services
SBC Long Distance, LLC Delaware AT&T Long Distance
AT&T Teleholdings, Inc. Delaware AT&T Midwest;

AT&T West;
AT&T East
Southwestern Bell Telephone Company Missouri AT&T Arkansas; AT&T Kansas;

AT&T Missouri; AT&T Oklahoma;
AT&T Texas; AT&T Southwest;
AT&T DataComm; AT&T Wholesale
Southwestern Bell Yellow Pages, Inc. Missouri AT&T Advertising Solutions
Sterling Commerce, Inc. Delaware same
The Ohio Bell Telephone Company Ohio AT&T Ohio;

AT&T Wholesale
The Southern New England Telephone Company Connecticut AT&T Connecticut;

AT&T Woodbury
Wisconsin Bell, Inc. Wisconsin AT&T Wisconsin;

AT&T Wholesale
Exhibit 21
AT&T Corp. New York AT&T Corp.; AT&T;

ACC Business;
AT&T Wholesale; Lucky
Dog Phone Co.; SmarTalk;
ConQuest; CQTalk!;
AT&T Wholesale; AT&T Business Solutions; AT&T
Advanced Solutions
AT&T Communications of California, Inc. California same
AT&T Communications of the Mountain States, Colorado Conquest; SmarTalk;CQTalk!;

Inc. www.prepaidserviceguide.com
AT&T Communications of NJ, LP Delaware same
New York same

AT&T Communications of New York, Inc.
Illinois SmarTalk; ConQuest; Lucky Dog Phone Co.;
AT&T Communications of Illinois, Inc. ACC Business
AT&T Communications of the Southern States, Delaware ACC Business; SmarTalk;

LLC prepaidserviceguide.com;
AT&T; Conquest; CQTalk!;
Lucky Dog Phone Co.
Teleport Communications New York New York same
BellSouth Corporation Georgia AT&T South
BellSouth Telecommunications, Inc. Georgia AT&T Southeast

AT&T Alabama
AT&T Florida
AT&T Georgia
AT&T Kentucky
AT&T Louisiana
AT&T Mississippi
AT&T North Carolina
AT&T South Carolina
AT&T Tennessee
Exhibit 21
AT&T Mobility LLC Delaware AT&T Mobility
AT&T Mobility II, LLC Delaware AT&T Mobility
New Cingular Wireless Services, Inc. Delaware AT&T Mobility

Exhibit 23
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in this Annual Report (Form 10−K) of AT&T Inc. (AT&T) of our reports dated February 25, 2010, with
respect to the consolidated financial statements of AT&T and the effectiveness of internal control over financial reporting of AT&T, included in the 2009
Annual Report to Stockholders of AT&T.
Our audits also included the financial statement schedules of AT&T listed in Item 15(a). These schedules are the responsibility of AT&T's management.
Our responsibility is to express an opinion based on our audits. In our opinion, as to which the date is February 25, 2010, the financial statement schedules
referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set
forth therein.
We consent to the incorporation by reference in the following Registration Statements:
(1) Registration Statement (Form S−8 No. 333−111026) pertaining to the AT&T Savings Plan and certain other plans,
(2) Registration Statement (Form S−8 No. 333−34062) pertaining to the Stock Savings Plan,
(3) Registration Statement (Form S−8 No. 333−95887) pertaining to the 1995 Management Stock Option Plan,
(4) Registration Statements (Form S−8 No. 333−30669 (1996 Plan only) and 333−54398) pertaining to the 1996 Stock and Incentive Plan and the
2001 Incentive Plan,
(5) Registration Statement (Form S−8 No. 333−120894) pertaining to the AT&T Stock Purchase and Deferral Plan and Cash Deferral Plan,
(6) Registration Statement (Form S−8 No. 333−129814) pertaining to the AT&T Savings Plan and certain other plans,
(7) Registration Statement (Form S−3 No. 333−143180) of AT&T and the related Prospectuses,
(8) Registration Statement (Form S−8 No. 333−135517) pertaining to the 2006 Incentive Plan,
(9) Registration Statement (Form S−8 No. 333−139749) pertaining to the BellSouth Retirement Savings Plan and other certain BellSouth plans,
(10) Registration Statement (Form S−8 No. 333−162472) pertaining to the AT&T Savings Plan, AT&T Savings and Security Plan, AT&T Long Term
Savings and Security Plan, AT&T Retirement Savings Plan, AT&T Puerto Rico Savings Plan, AT&T Puerto Rico Retirement Savings Plan,
AT&T of Puerto Rico, Inc. Long Term Savings and Security Plan, and the BellSouth Savings and Security Plan; and
(11) Registration Statement (Form S−8 No. 333−152822) pertaining to the AT&T Non−Employee Director Stock Purchase Plan
of our reports dated February 25, 2010, with respect to the consolidated financial statements of AT&T and the effectiveness of internal control over
financial reporting of AT&T, incorporated herein by reference, and our report included in the preceding paragraph with respect to the financial statement
schedules of AT&T included in this Annual Report (Form 10−K) of AT&T for the year ended December 31, 2009.
/s/ Ernst & Young LLP
Dallas, Texas
February 25, 2010
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
THAT, WHEREAS, AT&T INC., a Delaware corporation, hereinafter referred to as the "Corporation," proposes to file with the Securities and Exchange
Commission, under the provisions of the Securities Exchange Act of 1934, as amended, an annual report on Form 10−K; and
WHEREAS, the undersigned is an officer and a director of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints Wayne Watts, Jon P. Klug, Richard G. Lindner, John J. Stephens, or any one of
them, all of the City of Dallas and State of Texas, his attorneys for him and in his name, place and stead, and in each of his offices and capacities in the
Corporation, to execute and file such annual report, and thereafter to execute and file any amendment or amendments thereto, hereby giving and granting to
said attorneys full power and authority to do and perform each and every act and thing whatsoever requisite and necessary to be done in and concerning the
premises, as fully to all intents and purposes as the undersigned might or could do if personally present at the doing thereof, hereby ratifying and confirming
all that said attorneys may or shall lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned executed this Power of Attorney the 29th day of January 2010.
/s/ Randall Stephenson

Randall L. Stephenson
Chairman of the Board,
Chief Executive Officer and
President
Exhibit 24
POWER OF ATTORNEY
WHEREAS, the undersigned is a director of the Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and appoints Randall L. Stephenson, Wayne Watts, Jon P. Klug, Richard G. Lindner, John J.
Stephens, or any one of them, all of the City of Dallas and State of Texas, the attorneys for the undersigned and in the undersigned’s name, place and stead,
and in the undersigned’s office and capacity in the Corporation, to execute and file such annual report, and thereafter to execute and file any amendment or
amendments thereto, hereby giving and granting to said attorneys full power and authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and concerning the premises, as fully to all intents and purposes as the undersigned might or could do if personally
present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully do, or cause to be done, by virtue hereof.
/s/ Gilbert F. Amelio

Gilbert F. Amelio
Director
Exhibit 24
POWER OF ATTORNEY
/s/ William F. Aldinger III

William F. Aldinger III
Director
Exhibit 24
POWER OF ATTORNEY
/s/ Reuben V. Anderson

Reuben V. Anderson
Director
Exhibit 24
POWER OF ATTORNEY
/s/ James H. Blanchard

James H. Blanchard
Director
Exhibit 24
POWER OF ATTORNEY
/s/ August A. Busch III

August A. Busch III
Director
Exhibit 24
POWER OF ATTORNEY
/s/ Jaime Chico Pardo

Jaime Chico Pardo
Director
Exhibit 24
POWER OF ATTORNEY
/s/ James P. Kelly

James P. Kelly
Director
Exhibit 24
POWER OF ATTORNEY
/s/ Jon C. Madonna

Jon C. Madonna
Director
Exhibit 24
POWER OF ATTORNEY
/s/ John B. McCoy

John B. McCoy
Director
Exhibit 24
POWER OF ATTORNEY
/s/ Lynn M. Martin

Lynn M. Martin
Director
Exhibit 24
POWER OF ATTORNEY
/s/ Mary S. Metz

Mary S. Metz
Director
Exhibit 24
POWER OF ATTORNEY
/s/ Joyce M. Roché

Joyce M. Roché
Director
Exhibit 24
POWER OF ATTORNEY
/s/ Laura D'Andrea Tyson

Laura D'Andrea Tyson
Director
Exhibit 24
POWER OF ATTORNEY
/s/ Patricia P. Upton

Patricia P. Upton
Director
Exhibit 31.1
CERTIFICATION
I, Randall Stephenson, certify that:
1. I have reviewed this report on Form 10−K of AT&T Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a−15(e) and 15d−15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a−15(f) and
15d−15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal
quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely
to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over
financial reporting.
Date: February 25, 2010
/s/ Randall Stephenson

Randall Stephenson
Chairman of the Board, Chief Executive Officer
and President
Exhibit 31.2
CERTIFICATION
I, Richard G. Lindner, certify that:
1. I have reviewed this report on Form 10−K of AT&T Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a−15(e) and 15d−15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a−15(f) and
15d−15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal
quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely
to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over
financial reporting.
Date: February 25, 2010
/s/ Richard G. Lindner

Richard G. Lindner
Senior Executive Vice President
and Chief Financial Officer
Exhibit 32
Certification of Periodic Financial Reports
Pursuant to 18 U.S.C. Section 1350, each of the undersigned officers of AT&T Inc. (the “Company”) hereby certifies that the Company’s Annual
Report on Form 10−K for the year ended December 31, 2009 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of
the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results
of operations of the Company.
February 25, 2009 February 25, 2009
By: /s/ Randall Stephenson. By: /s/ Richard G. Lindner.

Randall Stephenson Richard G. Lindner
Chairman of the Board, Chief Executive Officer Senior Executive Vice President
and President and Chief Financial Officer
The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate
disclosure document. This certification shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (“Exchange Act”) or
otherwise subject to liability under that section. This certification shall not be deemed to be incorporated by reference into any filing under the Securities
Act of 1933 or the Exchange Act except to the extent this Exhibit 32 is expressly and specifically incorporated by reference in any such filing.
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature
that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to AT&T Inc. and will be
retained by AT&T Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

ATTInc 10K 2009

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ATTINC.

⌧ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

For the fiscal year ended December 31, 2009

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

For the transition period from to

Commission File Number: 1−8610

Incorporated under the laws of the State of Delaware

208 S. Akard St., Dallas, Texas, 75202

Securities registered pursuant to Section 12(g) of the Act: None.

DOCUMENTS INCORPORATED BY REFERENCE

Securities Registered Pursuant To Section 12(b) Of The Act:

Name of each exchange

6.125% AT&T Inc. New York Stock Exchange

5.875% AT&T Inc. New York Stock Exchange

7.00% AT&T Inc. New York Stock Exchange

6.375% Forty−Nine Year AT&T Inc. New York Stock Exchange

Executive Officers of the Registrant 10

5. Market for Registrant’s Common Equity, Related Stockholder Matters

10. Directors, Executive Officers and Corporate Governance 13

15. Exhibits and Financial Statement Schedules 15

Services and Products

Services and Products

MAJOR CLASSES OF SERVICE

IMPORTANCE, DURATION AND EFFECT OF LICENSES

RESEARCH AND DEVELOPMENT

ITEM 1A. RISK FACTORS

CAUTIONARY LANGUAGE CONCERNING FORWARD−LOOKING STATEMENTS

ITEM 3. LEGAL PROCEEDINGS

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matter was submitted to a vote of stockholders in the fourth quarter of 2009.

EXECUTIVE OFFICERS OF THE REGISTRANT

Name Age Position Held Since

Randall L. Stephenson 49 Chairman of the Board, Chief Executive Officer 6/2007

James W. Callaway 63 Senior Executive Vice President – Executive Operations 5/2007

Forrest E. Miller 57 Group President – Corporate Strategy and Development 6/2007

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED

ITEM 6. SELECTED FINANCIAL DATA

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Internal Control Over Financial Reporting

(a) Management’s Annual Report on Internal Control over Financial Reporting

(b) Attestation Report of the Registered Public Accounting Firm

ITEM 9B. OTHER INFORMATION

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

ITEM 11. EXECUTIVE COMPENSATION

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND

Information required by Item 201(d) of Regulation S−K is provided below:

Equity Compensation Plan Information

Equity Compensation Plan Information

Number of securities remaining available for

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

ITEM 15. EXHIBITS and FINANCIAL STATEMENT SCHEDULES

(a) Documents filed as a part of the report:

10−k Administrative Plan, amended and restated November 1, 2009.

10−mm BellSouth Officer Compensation Deferral Plan, amended January 1, 2005.

10−jjj Form of Non−Disclosure and Non−Solicitation Agreement.

12 Computation of Ratios of Earnings to Fixed Charges.

21 Subsidiaries of AT&T Inc.

31 Rule 13a−14(a)/15d−14(a) Certifications

32 Section 1350 Certification