10-K

FORM 10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(Mark One)

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
	OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2007
	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

175 E. Houston, San Antonio, Texas 78205-2233

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 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. [   ]

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 $41.50 per share on June 29, 2007, the aggregate market value of our voting and non-voting common stock held by non-affiliates was $253.4 billion.

At January 31, 2008, common shares outstanding were 6,035,725,446.

DOCUMENTS INCORPORATED BY REFERENCE

(1) Portions of AT&T Inc.’s Annual Report to Stockholders for the fiscal year ended December 31, 2007 (Parts I and II).

(2) Portions of AT&T Inc.’s Notice of 2008 Annual Meeting and Proxy Statement dated on or about March 11, 2008 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 Share)	New York Stock Exchange
6.375% Forty-Nine Year AT&T Inc.	New York Stock Exchange
Senior Notes, Due February 12, 2056

TABLE OF CONTENTS

Item		Page
	PART I
1.	Business	1
1A.	Risk Factors	9
2.	Properties	10
3.	Legal Proceedings	10
4.	Submission of Matters to a Vote of Security Holders	10
Executive Officers of the Registrant		11

	PART II
5.	Market for Registrant’s Common Equity, Related
	Stockholder Matters and Issuer Purchases of Equity Securities	12
6.	Selected Financial Data	12
7.	Management’s Discussion and Analysis of Financial Condition
	and Results of Operations	12
7A.	Quantitative and Qualitative Disclosures about Market Risk	12
8.	Financial Statements and Supplementary Data	12
9.	Changes in and Disagreements with Accountants on Accounting
	and Financial Disclosure	13
9A.	Controls and Procedures	13
9B.	Other Information	13

	PART III
10.	Directors, Executive Officers and Corporate Governance	14
11.	Executive Compensation	14
12.	Security Ownership of Certain Beneficial Owners and
	Management and Related Stockholder Matters	15
13.	Certain Relationships and Related Transactions, and Director Independence	16
14.	Principal Accountant Fees and Services	16

	PART IV
15.	Exhibits and Financial Statement Schedules	16

 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 175 E. Houston, San Antonio, Texas 78205-2233 (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 the 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 percent economic interest in AT&T Mobility LLC (AT&T Mobility), formerly Cingular Wireless LLC, and BellSouth’s 34 percent economic interest in YELLOWPAGES.COM (YPC), resulting in 100 percent 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 | DISH Network. In 2007, we rebranded our wireless operations from Cingular to AT&T.

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 telecommunications and video services to residential customers in 22 states and to business and governmental customers, throughout the U.S. and internationally,

·   advertising & publishing subsidiaries provide services related to directory advertising and publishing,

·   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 offered 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” below and in the 2007 AT&T Annual Report to Stockholders 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 2008, 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 networks also rely 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. As of December 31, 2007, we served approximately 70.1 million customers and are the 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 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 the Apple iPhone 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

As we continue to integrate the operations of BellSouth and ATTC, 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 to 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 TV 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. As of December 31, 2007, we have passed approximately 8 million living units (constructed housing units as well as platted housing lots) and are marketing the services to almost 50 percent of those units. Our deployment strategy is to enter each market on a limited basis in order to ensure that all operating and back-office systems are functioning successfully and then expand within each market as we continue to monitor these systems. In these market expansions, we expect to continue to use contracted outside labor in addition to our employees as installers; our rate of expansion will be slowed if we cannot hire and train an adequate number of qualified contractors and technicians to keep pace with customer demand or if we cannot obtain all required local 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. See our “Liquidity” discussion for an update on our U-verse capital spending.

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. 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, it could have a material adverse effect on the cost, timing and extent of our deployment plans.

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 AT&T Inc.

Additional information about our U-verse services is included in our “Operating Environment and Trends of the Business” section under the heading “Expected Growth Areas” on pages 38 through 39 of the 2007 AT&T Annual Report to Stockholders and is incorporated herein by reference pursuant to General Instruction G(2).

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 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 and are managed accordingly. We analyze our various operating segments based on segment income. Interest expense, interest income 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 & publishing; and (4) other.

Additional information about our segments, including financial information, is included under the heading “Segment Results” on pages 29 through 37 and in Note 4 of the 2007 AT&T Annual Report to Stockholders 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 35% of 2007 total segment operating revenues and 32% of our 2007 total segment income. At December 31, 2007, we had more than 70 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. 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, 2007 we were the leading provider of wireless data in the U.S. wireless industry based on subscribers.

Equipment – We sell a wide variety of handsets and personal computer wireless data cards manufactured by various suppliers for use with our voice and data services. 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.

Additional information on our wireless segment is contained in the 2007 AT&T Annual Report to Stockholders in the “Operating Environment Overview” section under the heading “Expected Growth Areas,” “Wireless” beginning on page 38 and is incorporated herein by reference pursuant to General Instruction G(2).

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 AT&T Inc.

Wireline

Wireline consists of our subsidiaries that operate as both retail and wholesale sellers of communication services domestically and internationally. Our wireline segment provided approximately 59% of 2007 segment operating revenues and 55% of our 2007 total segment income. At December 31, 2007, our wireline subsidiaries served approximately 35 million retail consumer lines, 23 million retail business lines and 4 million wholesale lines, for a total of approximately 62 million access lines.

Services and Products

We divide our wireline services into three product-based categories:  voice, data and other.

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. Voice also includes calling features, fees to maintain wire located inside customer premises and other miscellaneous voice products. 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.

Calling features are enhanced telephone services available to retail customers such as Caller ID, Call Waiting and voice mail. Customers that subscribe to these services can have the number and/or name of callers displayed on their phone, be signaled that additional calls are incoming, and send and receive voice messages. These services are not regulated by the FCC and 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. 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 WiFi (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.

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. Integrated Services Digital Network (ISDN), Dedicated Frame Relay, broadband digital subscriber lines (DSL), Digital Services and Synchronous Optical Network (SONET) are examples of Dedicated Transport services. ISDN transmits voice, video and data over a single line in support of a wide range of applications, including Internet access. Frame Relay is a routing technology that breaks a data signal into individual pieces of data to travel at high speeds and then recombines the data prior to arriving at its destination. 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. SONET provides customer access to our backbone network at various high speeds.

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, varying by market. Internet services offered include basic dial-up access service, dedicated access, web hosting, e-mail and high-speed access services.

Packet services consist of data networks using packet switching and transmission technologies, including Frame Relay, asynchronous transfer mode (ATM) 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. Frame relay, including IP-enabled frame relay and ATM Services are widely deployed as private data networks. High speed packet services, including IP-enabled frame relay service, are used extensively by enterprise (large business) customers.

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 AT&T Inc.

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, interchange carriers, Internet service providers (ISPs) and facility-based and switchless resellers. Our wholesale customers are primarily large ISPs, wireless carriers, competitive local exchange carriers, 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 managed web hosting, application management, security service, integration services, customer premises equipment, outsourcing, directory and operator assistance services, government-related services, our  U-verse and satellite video 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. 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 & Publishing

Advertising & Publishing includes our directory operations, which publish Yellow and White Pages directories and sell directory and Internet-based advertising. The advertising & publishing segment provided approximately 5% of total segment operating revenues and 9% of our 2007 total segment income. Our directory subsidiaries operate primarily in our 22-state area.

Other

Our other segment includes operations from Sterling, our business integration software and services subsidiary, payphones, corporate and other operations. The other segment provided approximately 1% of total segment operating revenues and 4% of our 2007 total segment income.

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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 AT&T Inc.

MAJOR CLASSES OF SERVICE

The following table sets forth the percentage of consolidated total 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
	2007			2006			2005
Wireless Segment
Wireless service		33	%		-	%		-	%
Wireline Segment
Voice		35	%		53	%		55	%
Data		20	%		29	%		25	%

Prior to our December 2006 acquisition of BellSouth, our wireless segment revenues were reported in equity in net income of affiliates in our consolidated financial statements due to our equity accounting for the joint venture. We accounted for our 60 percent economic interest in AT&T Mobility under the equity method of accounting since we shared control equally with our 40 percent economic partner in the joint venture. We held equal voting rights and representation on the board of directors that controlled AT&T Mobility. Accordingly, our consolidated results included wireless results in the “Equity in Net Income of Affiliates” line. We did not report wireless revenues in our consolidated financial statements. However, when analyzing our segment results, we evaluated wireless results on a stand-alone basis. The table below shows the effect on our other classes of services (shown in the above table) if we include 100% of AT&T Mobility’s revenues added to our total segment operating revenues.

	Percentage of Total
	Segment Operating Revenues (including 100% of AT&T Mobility)
	2007			2006			2005
Wireless Segment
Wireless service		33	%		34	%		39	%
Wireline Segment
Voice		35	%		34	%		31	%
Data		20	%		18	%		14	%

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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. 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 2007 AT&T Annual Report to Stockholders under the heading “Operating Environment Overview” beginning on page 38, 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. 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 affect on our results of operations.

MAJOR CUSTOMER

No customer accounted for 10% or more of our consolidated revenues in 2007, 2006 or 2005.

COMPETITION

Information relating to competition in each of our operating segments is contained in the 2007 AT&T Annual Report to Stockholders under the heading “Competition” beginning on page 40, and is incorporated herein by reference pursuant to General Instruction G(2).

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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 $985 in 2007, $577 in 2006 and $315 million in 2005.

EMPLOYEES

As of January 31, 2008, we employed approximately 310,000 persons. Approximately 60 percent of our employees are represented by the Communications Workers of America (CWA), the International Brotherhood of Electrical Workers (IBEW) or other unions.

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ITEM 1A. RISK FACTORS

Information required by this Item is included in the 2007 AT&T Annual Report to Stockholders under the heading “Risk Factors” on page 50 through page 51 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 changes in the markets served by us or in countries in which we have significant investments.

·   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.

·   The final outcome of Federal Communications Commission proceedings and reopenings of such proceedings and judicial review, if any, of such proceedings, including issues relating to access charges, broadband deployment, unbundled loop and transport elements 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, 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.

·   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 (our Lightspeed initiative); 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.

·   The outcome of pending or threatened litigation including patent claims by or against third parties.

·   The impact on our networks and business of major equipment failures, severe weather conditions, natural disasters or terrorist attacks.

·   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 access to additional spectrum; network upgrades and technological advancements.

·   The impact of our acquisition of BellSouth, including the risk that the businesses will not be integrated successfully; the risk that the cost savings and any other synergies from the acquisition may take longer to realize than expected or may not be fully realized; and disruption from the acquisition may make it more difficult to maintain relationships with customers, employees or suppliers.

·   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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ITEM 2. PROPERTIES

Our properties do not lend themselves to description by character and location of principal units. At December 31, 2007, approximately 84% of our property, plant and equipment was owned by our wireline subsidiaries and approximately 15% was owned by our wireless subsidiaries. Network access lines represented approximately 33% of our telephone plant; central office equipment represented 34%; land and buildings represented 12%; other equipment, comprised principally of furniture and office equipment and vehicles and other work equipment, represented 16%; 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 2007 AT&T Annual Report to Stockholders under the headings “Antitrust Litigation,” “Retiree Phone Concession Litigation,” “NSA Litigation” and“Prepaid Calling Card Patent Litigation” on pages 43 through 44, 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.

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 the fiscal year covered by this report.

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 AT&T Inc.

EXECUTIVE OFFICERS OF THE REGISTRANT

(As of February 20, 2008)

Name	Age		Position	Held Since
Randall L. Stephenson	47	Chairman of the Board, Chief Executive Officer and President		6/2007
William A. Blase Jr.	52	Senior Executive Vice President – Human Resources		6/2007
James W. Callaway	61	Senior Executive Vice President – Executive Operations		5/2007
James W. Cicconi	55	Senior Executive Vice President –  External and Legislative Affairs		11/2005
Catherine M. Coughlin	50	Senior Executive Vice President and Global Marketing Officer		6/2007
Ralph de la Vega	56	President and Chief Executive Officer – AT&T Mobility		10/2007
Richard G. Lindner	53	Senior Executive Vice President and Chief Financial Officer		5/2004
Forrest E. Miller	55	Group President – Corporate Strategy and Development		6/2007
Ronald E. Spears	59	Group President – Global Business Services		3/2007
John T. Stankey	45	Group President – Telecom Operations		10/2007
Wayne Watts	54	Senior Executive Vice President and General Counsel		6/2007
Rayford Wilkins, Jr.	56	Group President – Diversified Businesses		6/2007

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, 2007 and 2006 was 1,663,676 and 1,766,266. The number of stockholders of record as of February 20, 2008 was 1,649,713. We declared dividends, on a quarterly basis, totaling $1.47 per share in 2007 and $1.35 per share in 2006.

During 2007, non-employee directors acquired shares of common stock pursuant to the Non-Employee Director Stock and Deferral Plan. Under the plan, a director may make an annual election to receive all or part of his or her annual retainer or fees in the form of shares or deferred stock units (DSUs) that are convertible into cash or shares. Each director also receives an annual grant of DSUs. The plan provides that DSUs (and dividends earned thereon) acquired during 2007 and thereafter would be convertible in the form of cash only. During 2007, an aggregate of 18,849 shares and DSUs (from pre-2007 accruals) were acquired by non-employee directors at prices ranging from $36.80 to $42.31, in each case the fair market value of the shares on the date of acquisition. The issuances of shares and DSUs were exempt from registration pursuant to Section 4(2) of the Securities Act.

Other information required by this Item is included in the 2007 AT&T Annual Report to Stockholders under the headings “Quarterly Financial Information” on page 79, “Selected Financial and Operating Data” on page 26, “Issuer Equity Repurchases” on page 49, 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 2007 AT&T Annual Report to Stockholders under the heading “Selected Financial and Operating Data” on page 26, which is incorporated herein by reference pursuant to General Instruction G(2).

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

Information required by this Item is included in the 2007 AT&T Annual Report to Stockholders on pages 27 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 2007 AT&T Annual Report to Stockholders under the heading “Market Risk” on page 48 through page 49, 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 2007 AT&T Annual Report to Stockholders on pages 53 through 79, which is incorporated herein by reference pursuant to General Instruction G(2).

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 AT&T Inc.

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, 2007. 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, 2007.

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, 2007. 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, 2007, 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 2007 AT&T Annual Report to Stockholders on page 82, 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 2007 but was not reported.

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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, 2008 (Proxy Statement) under the heading “Election of Directors.”

Information required by Item 405 of Regulation S-K is incorporated herein by reference pursuant to General Instruction G(3) from the registrant’s Proxy Statement under the heading “Section 16(a) Beneficial Ownership Reporting Compliance.”

The registrant has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act of 1934. The members of the committee are Messrs. Aldinger, Amelio, 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 last page 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.

Information required by Item 407(e)(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 “Compensation Committee Report” and will be deemed furnished in this 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 “CommonStock 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, 2007, concerning shares of AT&T common stock authorized for issuance under AT&T’s existing equity compensation plans.

Equity Compensation Plan Information (1)

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted-average exercise price of outstanding options, warrants and rights (b)	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders	52,989,359	$38.33	132,947,775	(2)
Equity compensation plans not approved by security holders (3)	71,794,640	$40.19	175,363
Total	124,780,999	$39.40	133,123,138

(1) In addition to the shares shown in the table, certain stock options issued by companies acquired by AT&T were converted into options to acquire AT&T stock. As of December 31, 2007, there were 105,527,485 shares of AT&T common stock subject to the converted options, having a weighted-average exercise price of $40.90. No further grants may be issued under the assumed plans.

(2) Of the shares reported, 17,681,214 shares may be issued under the Stock Purchase and Deferral Plan, and 82,453,760 shares may be issued under the 2006 Incentive Plan.

(3) Plans that have not been approved by stockholders include the 1995 Management Stock Option Plan (“1995 Plan”) and the Non-Employee Director Stock and Deferral Plan (“Non-Employee Director Plan”). The 1995 Plan 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. Under the Non-Employee Director Plan, participants may elect to receive stock units in lieu of retainers and fees. In addition, each non-employee Director receives an annual award of stock units equal in value to one and one-half times the annual retainer. Directors who became board members after November 21, 1997, but before September 24, 2004, also receive up to 10 annual grants of stock units equal to $13,000 each. The stock units are paid out in the form of AT&T stock only after the termination of their service as a Director. Under the plan, 175,363 shares remain available for future issuance and are included in the table.

Also included in column (c) are up to 4,382,805 shares that may be purchased under the Stock Savings Plan with reinvested dividend equivalents on deferred share units purchased by mid-level and above managers and limited company partial matching contributions. No new contributions may be made to the plan. The shares purchased are not delivered to the employee until after termination of employment, subject to certain accelerated delivery provisions. In addition, participants receive 2 options for each share purchased with employee payroll deductions. The options have a 10-year term and a strike price equal to the fair market value of the stock on the date of grant. The Stock Savings Plan was last approved by stockholders in 1994. The plan 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 non-approved plans in column (a) includes these additional shares. Shares subject to outstanding options issued under the plan prior to amendment are included under approved plans.

 

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 AT&T Inc.

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 Party 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 incorporated herein by reference pursuant to General Instruction G(3).

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 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, 2006. (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                         

2-a Agreement and Plan of Merger, dated as of January 30, 2005, among AT&T Corp., SBC Communications Inc. and Tau Merger Sub Corporation . (Exhibit 2.1 to Form 8-K dated January 31, 2005.)

2-b Agreement and Plan of Merger, dated as of March 4, 2006, among BellSouth Corporation, AT&T Inc. and ABC Consolidation Corp. (Exhibit 2.1 to Form 8-K dated March 4, 2006.)

3-a Restated Certificate of Incorporation, filed with the Secretary of State of Delaware on July 28, 2006. (Exhibit 3 to Form 10-Q filed for June 30, 2006.)

3-b Bylaws amended June 29, 2007. (Exhibit 3 to Form 8-K dated July 2, 2007.)

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.)

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 AT&T Inc.

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, and 4-g below. Pursuant to this regulation, the registrant hereby aggress 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 Southwestern Bell Telephone Co. (filed herewith and previously filed as Exhibit 4-d to Form 10-K for 1999.)

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.)

10-a Short Term Incentive Plan, dated September 1, 2005. (Exhibit 10-a to Form 10-K for 2005.)

10-b Supplemental Life Insurance Plan, dated May 25, 2007. (Exhibit 10-a to Form 10-Q for  June 30, 2007.)

10-c Supplemental Retirement Income Plan, dated December 31, 2004. (Exhibit 10-c to Form 10-K for 2004.)

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 2002.)

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 2002.)

10-f Officer Disability Plan, formerly the Senior Management Long Term Disability Plan, amended and restated January 1, 2007. (Exhibit 10-f to Form 10-K for 2006.)

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, formerly the Executive Health Plan, amended and restated January 1, 2008.

10-i Retirement Plan for Non-Employee Directors. (filed herewith and previously filed as Exhibit 10-K to Form 10-K for 1997.)

10-j Form of Indemnity Agreement, effective July 1, 1986, between SBC (now AT&T Inc.) and its directors and officers. (filed herewith and previously filed as Appendix 1 to Definitive Proxy Statement dated March 18, 1987.)

10-k Administrative Plan.

10-l Stock Savings Plan, dated December 31, 2004. (Exhibit 10-l to Form 10-K for 2006.)

10-m   Retention Agreement for Ronald Spears, dated February 17, 2006.

10-n 1996 Stock and Incentive Plan, dated November 2, 2002. (Exhibit 10-o to Form 10-K for 2002.)

10-o Non-Employee Director Stock and Deferral Plan. (Exhibit 10 to Form 8-K dated June 30, 2006.)

10-p Pacific Telesis Group Deferred Compensation Plan for Nonemployee Directors. (filed herewith and previously filed as Exhibit 10gg to Form 10-K for 1996 of Pacific Telesis Group (File No. 1-8609).)

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 AT&T Inc.

10-p(i)   Resolutions amending the Plan, effective November 21, 1997. (filed herewith and previously filed as Exhibit 10-v(i) to Form 10-K for 1997.)

10-q Pacific Telesis Group Outside Directors’ Deferred Stock Unit Plan. (filed herewith and previously filed as Exhibit 10oo to Form 10-K for 1995 of Pacific Telesis Group (File No. 1-8609).)

10-r Pacific Telesis Group 1996 Directors’ Deferred Compensation Plan. (filed herewith and previously filed as Exhibit 10qq to Form 10-K for 1996 of Pacific Telesis Group (File No. 1-8609).)

10-r(i)   Resolutions amending the Plan, effective November 21, 1997. (filed herewith and previously filed as Exhibit 10-v(i) to Form 10-K for 1997.)

10-s Transition Agreement by and between BellSouth Corporation and Rafael de la Vega, dated December 29, 2003.

10-t 2001 Incentive Plan, dated January 31, 2003. (Exhibit 10-u to Form 10-K for 2002.)

10-u Employment Agreement between SBC and Edward E. Whitacre Jr. (filed herewith and previously filed as Exhibit 10-y to Form 10-K for 2001.)

10-u(i)   Amendment to Employment Agreement (Exhibit 10.1 to Form 8-K dated March 4, 2006.)

10-v AT&T Inc. Change in Control Severance Plan, effective January 1, 2007. (Exhibit 10-v to Form 10-K for 2006.)

10-w 1995 Management Stock Option Plan, dated November 16, 2001. (Exhibit 10-y to Form 10-K for 2002.)

10-x Investment and Reorganization Agreement dated October 25, 2004, by and among BellSouth Corporation, SBC Communications Inc., Cingular Wireless Corporation, Cingular Wireless LLC, Links I Corporation, Cingular Wireless II, Inc., BLS Cingular Holdings, LLC, SBC Alloy Holdings, Inc., BellSouth Enterprises, Inc., BellSouth Mobile Systems, Inc., BellSouth Mobile Data, Inc. and SBC Long Distance, Inc. (Exhibit 99.01 to Cingular Wireless LLC's Form 8-K dated October 25, 2004.)

10-y Concession Program for Directors, dated July 1, 2004. (Exhibit 10-bb to Form 10-Q for March 31, 2004.)

10-z Employment Agreement with Stanley T. Sigman. (Exhibit 10.49 to Form 10-K for 2002 of Cingular Wireless LLC.)

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 15, 2007.

10-cc Cash Deferral Plan, amended and restated November 15, 2007.

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. (Exhibits 99.1-a, 99.1-b and 99.1-c to Schedule 13-D/A filed on December 28, 2004.)

10-ee 2005 Supplemental Employee Retirement Plan, amended and restated November 17, 2006. (Exhibit 10-ee to Form 10-K for 2006.)

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.)

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 AT&T Inc.

10-hh AT&T Corp. Senior Management Incentive Award Deferral Plan amended and restated September 18, 2006. (Exhibit 10-hh to Form 10-K for 2006.)

10-ii 2006 Incentive Plan, dated May 1, 2006. (Exhibit 10.2 to Form 8-K dated January 26, 2006.)

10-jj Retention Agreement for James W. Cicconi dated January 26, 2006. (Exhibit 10.1 to Form 8-K dated January 26, 2006.)

10-kk BellSouth Corporation Executive Incentive Award Deferral Plan, as amended and restated effective January 1, 2008.

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. (Exhibit 10q to Form 10-K for 2004 of BellSouth Corporation (File No. 1-8607).)

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. (Exhibit 10v-3 to Form 10-Q for June 30, 2004 of BellSouth Corporation (File No. 1-8607).)

10-qq(i) First Amendment to BellSouth Corporation Stock and Incentive Compensation Plan. (Exhibit 10ii to Form 10-Q for September 30, 2005 of BellSouth Corporation (File No. 1-8607).)

10-rr Cingular Wireless Long Term Compensation Plan, amended and restated effective November 1, 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 Non-Employee Director Non-Qualified Stock Option Terms and Conditions (for options granted under the BellSouth Corporation Stock and Incentive Compensation Plan). (Exhibit 10-qq to Form 8-K dated September 30, 2004 of BellSouth Corporation (File No. 1-8607).)

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.)

10-vv(i) First Amendment to the Non-Employee Directors Charitable Contribution Program, effective January 27, 1997. (Exhibit 10-vv(i) to Form 10-K for 2006.)

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 A. (Exhibit 10-a to Form 10-Q for June 30, 2007.)

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 AT&T Inc.

10-xx Compensation Arrangement for Stanley T. Sigman, effective June 1, 2005 (Exhibit 99.1 to Form 8-K dated May 16, 2005, of Cingular Wireless LLC.)

10-yy Cingular Wireless Cash Deferral Plan, effective November 1, 2001.

10-zz BellSouth Corporation Supplemental Executive Retirement Plan, as amended and restated effective January 1, 2005.

10-zz(i) Amendment to the BellSouth Corporation Supplemental Executive Retirement Plan, effective December 31, 2005.

10-aaa BellSouth Supplemental Life Insurance Plan.

10-bbb BellSouth Compensation Deferral Plan, as amended and restated effective January 1, 2005.

10-ccc Cingular Wireless BLS Executive Transition Benefit Plan.

10-ddd Cingular Wireless  SBC Executive Transition Benefit Plan.

10-eee BellSouth Nonqualified Deferred Income Plan, as amended and restated effective January 1, 1999.

10-eee(i) First Amendment to the BellSouth Nonqualified Deferred Income Plan, effective January 1, 2006.

10-fff AT&T Mobility 2005 Cash Deferral Plan.

10-ggg AT&T Corp. Executive Disability Plan, dated February 2004.

10-hhh AT&T Corp. Senior Management Universal Life Insurance Program, effective October 1, 1999.

10-hhh(i) Amendment to AT&T Corp. Senior Management Universal Life Insurance Program, dated July 28, 2003.

10-iii AT&T Corp. Non-Qualified Pension Plan, as amended and restated effective January 1, 1995.

10-iii(i) Amendment to AT&T Corp. Non-Qualified Pension Plan, dated April 16, 1997.

10-iii(ii) Amendment to AT&T Corp. Non-Qualified Pension Plan, dated July 28, 2003.

10-jjj AT&T Corp. Excess Benefit and Compensation Plan, as amended and restated effective October 1, 1996.

10-jjj(i) Amendment to the AT&T Corp. Excess Benefit and Compensation Plan, dated July 28, 2003.

10-kkk BellSouth Split Dollar Life Insurance Plan, as amended and restated effective  November 24, 2003.

10-lll Pacific Telesis Group Supplemental Cash Balance Plan,, amended as of July 1, 1996.

10-mmm Pacific Telesis Group 1996 Executive Deferred Compensation Plan, effective December 1, 1995.

10-nnn Pacific Telesis Group Executive Deferral Plan, restated as of November 1, 1994.

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, 2007. 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.

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 AT&T Inc.

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

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.

21

Schedule II - Sheet 1

AT&T INC.

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

Allowance for Uncollectibles

Dollars in Millions

COL. A	COL. B		COL. C									COL. D		COL. E
			Additions
				(1	)		(2	)		(3	)
	Balance at Beginning of Period		Charged to Costs and Expenses (a)			Charged to Other Accounts (b)			Acquisitions (d)			Deductions (c)		Balance at End of Period
Year 2007	$	1,276		1,617			366			-			1,895	$	1,364
Year 2006	$	1,176		586			101			410			997	$	1,276
Year 2005	$	1,001		744			184			356			1,109	$	1,176

_____________

(a) Excludes direct charges and credits to expense on the 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.

(d)   Acquisition of BellSouth in December 2006 and ATTC in November 2005.

22

Schedule II - Sheet 2

AT&T INC.

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

Accumulated Amortization of Intangibles

Dollars in Millions

COL. A	COL. B		COL. C						COL. D		COL. E
			Additions
				(1)		(2)		(3)
	Balance at Beginning of Period		Charged to Costs and Expenses		Charged to Other Accounts		Acquisitions (a)		Deductions		Balance at End of Period
Year 2007	$	3,997		5,952		-		-		53	$	9,896
Year 2006	$	986		1,033		-		1,978		-	$	3,997
Year 2005	$	719		271		-		-		4	$	986

_____________

(a)   Consolidation of AT&T Mobility due to the December 2006 acquisition of BellSouth.

23

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 27th day of February, 2008.

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 27, 2008

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*	Toni Rembe*
August A. Busch III*	Joyce M. Roché*
James P. Kelly*	Laura D’Andrea Tyson*
Charles F. Knight*	Patricia P. Upton*

* by power of attorney

EX-4.C

Exhibit 4-c

GUARANTEE UNDERTAKING

OF

SBC COMMUNICATIONS, INC.

      I, the Assistant Treasurer of SBC Communications Inc. (the "Corporation"), pursuant to the authority granted to me in the Schedule of Authorizations of the Corporation, dated as of December 19, 1997, hereby undertake on behalf of the Corporation for the benefit of the respective holders of the Debt Securities (as defined below), as follows:

     (1) The Corporation hereby unconditionally and irrevocably guarantees the punctual and full payment of all amounts payable by each of Pacific Bell ("PacBell") and Southwestern Bell Telephone Company ("SWBell") under each of the outstanding Debt Securities as and when the same shall become due and payable (whether at stated maturity, by declaration of acceleration, call for redemption, repayment at the option of the holder or otherwise, in accordance with the terms of each Debt Security and of each indenture under which such security was issued) (the "Guarantee").

     (2) The Guarantee with respect to each outstanding Debt Security will continuously remain in effect until the entire principal of (and premium, if any) and interest, if any, on such Debt Security shall have been paid in full.

     (3) The Guarantee will constitute the direct, absolute and unconditional, unsubordinated and unsecured obligation of the Corporation ranking pari passu with all of its unsecured and unsubordinated obligations.

     (4) The holders of each Debt Security are entitled to enforce their rights under the indenture relating to such security directly against the Corporation, without first instituting a proceeding against the issuer of such security or any other person or entity, upon any event of default in payment of principal, or premium, if any, or interest, if any, on such security (whether at stated maturity, by declaration of acceleration, call for redemption, repayment at the option of the holder or otherwise).

     (5)  This Guarantee undertaking is enforceable to the fullest extent permitted by law.

     (6) For the purposes of this Guarantee undertaking, the term "Debt Securities" shall mean the following: (a) Pacbell's Ten Year 7 1/4% Notes due July 1, 2002, Twelve Year 6 1/4% Notes due March 1, 2005, Thirty Year 6 7/8% Debentures due August 15, 2023, Thirty-Three Year 7 1/8% Debentures due March 15, 2026, Forty Year 7 1/2% Debentures due February 1, 2033, Forty-One Year 6 5/8% Debentures due October 15, 2034, Thirty-Six Year 6% Debentures due November 1, 2002 and the Thirty-Five Year 6 1/2% Debentures due July 1, 2003; and (b) SWBell's Seven Year 6 1/8% Notes due March 1, 2000, Eight Year 6 3/8% Notes due April 1, 2001, Twelve Year 6 5/8% Notes due April 1, 2005, Forty Year 6 7/8% Debentures due February 1, 2011, Twenty-two Year 7% Debentures due July 1, 2015, Thirty Year 7 5/8% Debentures due March 1, 2023, Thirty-Two Year 7 1/4% Debentures due July 15, 2025, its Fifty Year 6 7/8% Debentures due March 31, 2048, Thirty-Six Year 5 7/8% Debentures due June 1, 2003, Forty Year 5 3/8% Debentures due June 1, 2006 and it Forty Year 6 3/4% Debentures due June 1, 2008.

     (7)   The Guarantee is effective on the date hereof.

      IN WITNESS WHEREOF, I have executed this Guarantee undertaking.

Dated: November 8, 1999

  /s/ Roger Wohlert

----------------------------------

Name:  Roger Wohlert

Title: Assistant Treasurer

EX-10.H

Exhibit 10-h
 

AT&T HEALTH PLAN

Effective:  January 1, 1987

           Revisions Effective:  January 1, 2008

AT&T HEALTH PLAN

TABLE OF CONTENTS

ARTICLE 1	PURPOSE	1
ARTICLE 2	DEFINITIONS	1
ARTICLE 3	ELIGIBILITY	3
ARTICLE 4	BENEFITS	3
ARTICLE 5	TERMINATION OF PARTICIPATION	4
ARTICLE 6	DISABILITY	6
ARTICLE 7	COSTS	7
ARTICLE 8	COVENANT NOT TO COMPETE	8
ARTICLE 9	MISCELLANEOUS	9
ARTICLE 10	COBRA	11
ARTICLE 11	PRIVACY OF MEDICAL INFORMATION	14

AT&T HEALTH PLAN

ARTICLE 1  PURPOSE

The AT&T Health Plan ("Plan") provides Eligible Employees, certain Retired Eligible Employees, and each of their Dependents with supplemental medical, dental, and vision benefits.  

ARTICLE 2  DEFINITIONS

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

2.1Basic Plan(s). “Basic Plan(s)” shall mean AT&T’s group managed care medical (known as the AT&T MedicalPlan), dental (non-DHMO option), and vision care plans (including the AT&T Retiree Vision Care Program).   For a Participant who Retired on or before August 31, 1992, Basic Plans shall mean the AT&T Medical and Group Life Insurance Plan–CustomCare (“CustomCare”) and dental (non-DHMO option) plans.

2.2CEO.  "CEO" shall mean the Chief Executive Officer of AT&T Inc.

2.3COBRA.  “COBRA” shall mean the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

2.4Committee.  "Committee" shall mean the Human Resources Committee of the Board of Directors of AT&T Inc.

2.5Dependent(s). “Dependent(s)” shall mean those individuals who would qualify as an Eligible Employee’s dependent(s) under the terms of the major medical Basic Plan in which the Eligible Employee participates, or, if applicable, Substitute Basic Coverage.

2.6Disability.  "Disability" shall mean qualification for long term disability benefits under Section 3.1 of the Officer Disability Plan.

2.7Eligible Employee.  "Eligible Employee" shall mean an Officer.  Notwithstanding the foregoing, the CEO may, from time to time, exclude any Officer or group of Officers from being an “Eligible Employee” under this Plan. Employees of a company acquired by AT&T shall not be considered an Eligible Employee unless designated as such by the CEO.

2.8Employer. "Employer" shall mean AT&T Inc. or any of its Subsidiaries.

2.9Officer.  "Officer" shall mean an individual who is designated as an officer level Employee for compensation purposes on the records of AT&T.

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2.10Participant. “Participant” shall mean an Eligible Employee or Retired Eligible Employee who has been designated to participate in the Plan and his/her Dependent(s).

2.11Plan Year. ”Plan Year” shall mean the calendar year.

2.12Qualified Dependent.  “Qualified Dependent” shall mean a Dependent who loses coverage under a COBRA Eligible Program due to a Qualifying Event.

2.13Qualifying Event.“Qualifying Event” shall mean any of the following events if, but for COBRA continuation coverage, they would result in a Participant’s loss of coverage under this Plan:

(1) death of a covered Employee;

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

(3) reduction in hours of an Employee;

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

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

(6) a Dependent child ceasing to qualify as a Dependent under a Program.

2.14Retire or Retirement.  “Retire” or "Retirement" shall mean the termination of an Eligible Employee's employment with AT&T or any of its Subsidiaries, for reasons other than death, on or after the earlier of the following dates:  (1) the date such Eligible Employee has attained age 55, and, for an Eligible Employee on or after January 1, 2002, has five (5) years of service, or (2) the date the Eligible Employee has attained one of the following combinations of age and service at termination of employment on or after April 1, 1997:

Net Credited Service	Age
25 years or more	50 or older
30 years or more	Any age

2.15SEVP-HR.    “SEVP-HR” shall mean AT&T’s highest ranking Officer, specifically responsible for human resources matters.

2.16Subsidiary.  "Subsidiary" shall mean any corporation, partnership, venture or other entity in which AT&T holds, directly or indirectly, a 50% or greater ownership interest.  The Committee may, at its sole discretion, designate any other corporation, partnership, venture or other entity a Subsidiary for the purpose of participating in this Plan.  Notwithstanding anything herein to the contrary, unless designated a “Subsidiary” pursuant to the immediately preceding sentence, Cingular Wireless LLC, Sterling Commerce, Inc., and their respective subsidiaries shall not be considered a Subsidiary under this Plan.

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2.17   AT&T.  "AT&T" shall mean AT&T Inc.

ARTICLE 3  ELIGIBILITY

3.1Active Participants and their Dependents.Each Eligible Employee shall be eligible to participate in this Plan along with his/her Dependent(s) beginning on the effective date of the employee becoming an Eligible Employee.

Upon becoming an Eligible Employee, he/she shall have 90 days to elect to participate in this Plan.  In order to continue participation, the Eligible Employee must pay all applicable contributions.  If an Eligible Employee terminates participation in this Plan at any time for any reason, that Eligible Employee and his/her Dependent(s) shall be ineligible to participate in the Plan at any time in the future.

3.2Retired Participants and their Dependents.  Provisions of this Plan will continue in effect during Retirement for each Eligible Employee and his/her Dependent(s) with respect to any Eligible Employee who became a Participant before January 1, 1999.  Neither an Eligible Employee who became an Eligible Employee after December 31, 1998 nor his/her Dependent(s) shall be eligible for participation hereunder on or after such Eligible Employee’s Retirement.

3.3Requirement to Enroll and Participate in Basic Plans and Medicare.  As a condition to participation in the Plan, each Participant must be enrolled in, paying for, and participating in (i) the Basic Plans, or, if applicable, Substitute Basic Coverage, and (ii) all parts of Medicare for which such Participant is eligible and for which Medicare would be primary if enrolled therein, except for Medicare Part D relating to prescription drug coverage.

Notwithstanding any other provision of the Plan to the contrary, an individual who first becomes an Eligible Employee in the middle of a Plan Year and who is enrolled in AT&T sponsored group health plans other than the Basic Plans, will be allowed to participate in the Plan for the remainder of the Plan Year along with his/her Dependent(s) who are enrolled in such other AT&T sponsored health plans, as if they were participating in the Basic Plans.  At the next group enrollment opportunity for the Basic Plans, the Eligible Employee and his/her Dependent(s) must enroll in the Basic Plans to continue participation in this Plan.

ARTICLE 4  BENEFITS

4.1Covered Benefits. Subject to the limitations in this Article, this Plan provides 100% payment, through reimbursement or otherwise, of all medical, dental, and vision services not paid under the Eligible Employee’s (i) Basic Plans or, if applicable, Substitute Basic Coverage, or (ii) Medicare, provided expenses for such services would qualify as deductible medical expenses for federal income tax purposes, whether deducted or not. Contributions or premiums for participation in this Plan, the Basic Plans, Medicare, or any other health plan are not considered “services”, and are therefore not eligible benefits under this Plan.

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4.2Benefit Limits.  Benefits paid to any Eligible Employee or any one of his/her Dependents under this Plan shall not exceed $50,000 per Plan Year per individual, and benefits paid to any Eligible Employee and his/her Dependents under this Plan shall not exceed $100,000 total per Plan Year. Amounts paid to or on behalf of an Eligible Employee or his/her Dependent(s) under (i) the Basic Plans, or if applicable, Substitute Basic Coverage, (ii) Medicare, or (iii) any other AT&T sponsored group health plan will not be included in these limits.

4.3Priority of Paying Covered Claims.  Claims for benefits will be applied against the various health plans and coordinated with Medicare in the following order:

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

(2) Basic Plans,

(3) CarePlus, if elected,

(4) Long Term Care Plan, if elected,

(5) this Plan.

4.4Substitute Basic Coverage.  Notwithstanding any other provision of this Plan to the contrary, if an Eligible Employee is eligible for participation under this Plan during Retirement, but not eligible to participate under the Basic Plans, the Plan shall provide medical, dental, and vision benefits for the Eligible Employee and his/her Dependent(s) substantially equivalent to the benefits under the Basic Plans through an insured product (hereinafter, "Substitute Basic Coverage"). Eligibility for Substitute Basic Coverage is conditioned upon the Eligible Employee’s payment of contributions in the same amount that a similarly situated retired Basic Plan participant is required to pay under the Basic Plans. Such Substitute Basic Coverage shall constitute such Eligible Employee’s Basic Plans for all purposes under this Plan.  The costs of Substitute Basic Coverage (except for the required monthly contributions referenced in this paragraph) shall be borne by AT&T, and the costs of Substitute Basic Coverage shall not be included in the determination of any Participant’s annual Plan contribution amount as provided in Article 7.

ARTICLE 5  TERMINATION OF PARTICIPATION

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

(1)   The Participant is no longer a participant in the Basic Plans orSubstitute Basic Coverage, in which case participation ceases for such Participant;

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

(3)   The Eligible Employee’s termination of employment for reasonsother than Death, Disability, or Retirement, in which caseparticipation ceases for the Eligible Employee and his/herDependent(s);

(4)   The demotion or designation of an Eligible Employee so as to nolonger be eligible to participate in the Plan, in which case participation ceases for the Eligible employee and his/herDependent(s);

(5)   The Eligible Employee (or Retired Eligible Employee) engages incompetitive activity under Article 8, in which case participationceases for the Eligible Employee (or Retired Eligible Employee)and his/her Dependent(s); or

(6)   Discontinuance of the Plan by AT&T, or, with respect to aSubsidiary’s Eligible Employees (or Retired Eligible Employees), such Subsidiary’s failure to make the benefits hereunder availableto Eligible Employees employed by it (or its Retired EligibleEmployees), in which case participation ceases for the EligibleEmployee (or Retired Eligible Employee) and his/herDependent(s).

5.2Dependents Failure to Participate in Basic Plans.  If a Dependent ceases participation under a Basic Plan or, if applicable, Substitute Basic Coverage, such Dependent’s participation under this Plan will cease with the same effective date.

5.3Death.  In the event of the Eligible Employee’s (or Retired Eligible Employee’s) death, the Eligible Employee’s (or Retired Eligible Employee’s) Dependents may continue participation in this Plan as follows:

(1) In the event of the death of a Retired Eligible Employee suchRetired Eligible Employee’s Dependents may continue participationin this Plan for so long as such Dependents are participating in theBasic Plans (or, if applicable, Substitute Basic Coverage) and are paying any applicable contributions for this Plan as provided in Article 7.

5

(2) In the event of an in-service death of an Eligible Employee eligible to participate in the Plan in Retirement as provided under Article 3.2, such Eligible Employee’ssurviving Dependents may continueparticipation in this Plan for so long as such Dependents areparticipating in the Basic Plans (or, if applicable Substitute Basic Coverage) and are paying any applicable contributions for thisPlan as provided in Article 7.  If a surviving spouse of such Eligible Employee otherwise eligible for participation in the Plan remarries, his/her participation will cease with the effective date of his/her marriage.

(3) In the event of an in-service death of an Eligible Employee not eligible to participate in the Plan in Retirement as provided in Article 3.2, such Eligible Employee’s Dependent(s) may continue participation in this Plan for a 12-month period commencing the month following the month in which such Eligible Employee dies as long as such Dependent(s) are participating in the Basic Plans and are paying any applicable contributions for this Plan as provided in Article 7.  If the Eligible Employee’s Dependent(s) are eligible for COBRA, they will automatically be enrolled in COBRA so that there is no lapse in coverage, and this 12-month coverage will be integrated and run concurrently with COBRA coverage.

ARTICLE 6  DISABILITY

6.1Disability. With respect to any Eligible Employee who is receiving short term or long term disability benefits under the Officer Disability Plan, participation under this Plan will be as follows:

(1) The Eligible Employee will be eligible to participate in this Plan for as long as he/she receives short term or long term disability benefits under the Officer Disability Plan.

(2) An individual who became an Eligible Employee on or after January 1, 1999 will no longer be eligible to participate in this Plan once long term disability benefits under the Officer Disability Plan are discontinued, unless the Eligible Employee is otherwise eligible for continued benefits under this Plan.

(3) An Employee who became an Eligible Employee before January 1, 1999, will be eligible for participation in this Plan as follows:

(a) If the individual is Retirement eligible at the time long term disability benefits under the Officer Disability Plan commence, he/she will be eligible to continue participation in this Plan on the same terms and conditions that participation would be available to such Eligible Employee in Retirement, regardless of his/her continued receipt of long term disability benefits.

6

(b) If the individual is not Retirement eligible at the time long term disability benefits under the Officer Disability Plan commence, he/she will be eligible to participate in this Plan for as long as such Eligible Employee participates in the Basic Plans.

ARTICLE 7  COSTS

7.1Costs of the Plan.  Except as provided below in this Article 7, costs and expenses incurred in the operation and administration of this Plan will be borne by AT&T, and each Subsidiary shall reimburse AT&T for applicable costs and expenses attributable to Eligible Employees employed by it(and Retired Eligible Employees formerly employed by it).

7.2Participant Contributions for 2006, 2007, and 2008.  For Plan Years 2006 and 2007 contributions made by Participants shall be set annually by the SEVP-HR in an amount that approximates the aggregate monthly contribution the Participant would have paid under this Plan and CustomCare as if CustomCare was the applicable Basic Plan.  The SEVP-HR may adopt tiered rates for similarly situated groups of Participants based on factors such as the number of Dependents covered or Medicare eligibility.  For the 2008 Plan Year, contributions made by Participants shall equal the contributions made by similarly situated Participants in 2007.

7.3Eligible Employee Contributions. Effective January 1, 1999, an Eligible Employee electing to participate in the Plan will pay to participate in the Plan while in active service or while receiving short term or long term disability benefits under the Officer Disability Plan. The contribution for participation may change annually, effective at the beginning of each Plan Year.  Except as provided in Article 7.2 such contribution will equal 10% of the Plan’s actual costs per Eligible Employee and Retired Eligible Employee for the entire Plan Year beginning two (2) years prior to the Plan Year for which the calculation is being made (e.g., the contributions for 2004 are based on the Plan’s costs during calendar year 2002).

7.4Retired Eligible Employees. Eligible Employees entitled to participate in the Plan after Retirement or after termination of long term disability benefits under the Officer Disability Plan who elect to participate will pay to participate in the Plan. The contribution for participation may change annually, effective at the beginning of each Plan Year. Except as provided in Article 7.2 such contribution will equal a percentage of the Plan’s actual costs per Eligible Employee and Retired Eligible Employee for the entire Plan Year beginning two (2) years prior to the Plan Year for which the calculation is being made (e.g., the contributions for 2004 are based on the Plan’s costs during calendar year 2002). An Eligible Employee retiring prior to January 1, 1999 will pay a 10% contribution percentage. Eligible Employees retiring after December 31, 1998 shall pay the lower of the annual contribution percentage determined using such Eligible Employee’s age or years until Retirement as of December 31, 1997 as follows:

7

Age As Of December 31, 1997	Annual Contribution Percentage	OR	Years Until Retirement As Of December 31, 1997	Annual Contribution Percentage
if age 55 or older	10%		if retirement eligible	10%
if age 50 or older but less than 55	25%		if not retirement eligible	10% plus 5% for each whole year* until retirement eligibility (not to exceed 50%)
if less than age 50	50%

*In the event an Eligible Employee is less than one whole year from retirement eligibility, the Annual Contribution Percentage shall be determined as if one whole year from retirement eligibility.

Upon the death of an Eligible Employee the contribution percentage paid by the surviving spouse will be equal to the contribution, adjusted (if applicable) for factors such as the number of Dependents or Medicare eligibility that that would have been paid by the Eligible Employee had he/she survived.  In the event there is no surviving spouse but there are surviving eligible Dependents, such Dependents shall pay a ratable share of the contribution, adjusted (if applicable) for factors such as the number of Dependents or Medicare eligibility that would have been paid by the Eligible Employee had he/she survived.

In order to continue participation, the Retired Eligible Employee or his/her Dependent(s) must pay all applicable contributions.

If a Retired Eligible Employee terminates participation at any time for any reason, participation of that Retired Eligible Employee and his/her Dependent(s) may not be reinstated for any reason.

ARTICLE 8   COVENANT NOT TO COMPETE

Non-Competition.  Notwithstanding any other provision of this Plan, no coverage shall be provided under this Plan with respect to any Eligible Employee who shall, without the written consent of AT&T, and while employed by AT&T or any Subsidiary thereof, or within three (3) years after termination of employment from AT&T or any Subsidiary thereof, engage in competition with AT&T or any Subsidiary thereof or with any business with which a subsidiary of AT&T or an affiliated company has a substantial interest (collectively referred to herein as "Employer business").  For purposes of this Plan, engaging in competition with any Employer business shall mean engaging by Eligible Employee in any business or activity in the same geographical market where the same or substantially similar business or activity is being carried on as an Employer business.  Such term shall not include owning a nonsubstantial publicly traded interest as a shareholder in a business that competes with an Employer business.  However, engaging in competition with an Employer business 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.  Accordingly, benefits shall not be provided under this Plan if, within the time period and without the written consent specified, the Eligible Employee either engages directly in competitive activity or in any capacity in any location becomes employed by, associated with, or renders service to any company, or parent or affiliate thereof, or any subsidiary of any of them, if any of them is engaged in competition with an Employer business, regardless of the position or duties the Eligible Employee takes and regardless of whether or not the employing company, or the company that Eligible Employee becomes associated with or renders service to, is itself engaged in direct competition with an Employer business.

8

ARTICLE 9 MISCELLANEOUS

9.1Administration.  Subject to the terms of the Plan, the CEO or SEVP-HR shall establish such rules as are deemed necessary for the proper administration of the Plan. AT&T will compute a "gross-up" allowance which will be paid to an Eligible Employee to offset any income tax liabilities incurred as a result of receiving benefits under this Plan.

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

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

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

9

9.5Mental Health Parity Act of 1996.  To the extent this Plan provides mental health benefits other than treatment for substance or alcohol abuse, it will not place annual or lifetime maximums for such benefits that are lower than the annual and lifetime maximums for physical health benefits.  Such coverage shall be subject to all other provisions of this Plan.

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

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

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

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

ARTICLE 10  COBRA

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

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

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

10.4Period of Continuation Coverage for Covered Participants.  A covered Participant who qualifies for COBRA continuation coverage as a result of an Eligible Employee’s termination of employment or reduction in hours of employment described in Subsection 10.2 may elect COBRA continuation coverage for up to 18 months measured from the date of the Qualifying Event.  Coverage under this Subsection 10.4 may not continue beyond the:

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

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

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

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

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

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

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

(2)   the Participant becomes entitled to Medicare;

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

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

10.6Contribution Requirements for COBRA Continuation Coverage.  Covered Participants and Qualified Dependents who elect COBRA continuation coverage as a result of a Qualifying Event will be required to pay continuation coverage payments.  Continuation coverage payments are the payments required for COBRA continuation coverage that is an amount equal to a reasonable estimate of the cost to this Plan of providing coverage for all covered Participants at the time of the Qualifying Event plus a  2% administrative expense.  In the case of a disabled individual who receives an additional 11-month extended coverage under COBRA, the Employer may assess up to 150% of the cost for this extended coverage period.  Such cost shall be determined on an actuarial basis and take into account such factors as the Secretary of the Treasury may prescribe in regulations.

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

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

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

10.7Limitation on Participant's Rights to COBRA Continuation Coverage.

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

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

10.8Subsequent Qualifying Event.  If a second Qualifying Event occurs during an 18-month extension explained above, coverage may be continued for a maximum of 36 months from the date of the first Qualifying Event.  In the event the Dependent loses coverage due to a Qualifying Event and after such date the Participant becomes entitled to Medicare, the Dependent shall have available up to 36 months of coverage measured from the date of the Qualifying Event that causes the loss of coverage.  If the Participant was entitled to Medicare prior to the Qualifying Event, the Dependent shall have up to 36 months of coverage measured from the date of entitlement to Medicare.

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

ARTICLE 11  PRIVACY OF MEDICAL INFORMATION

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

 (1)  “Business Associate” shall mean an outside entity or person that performs administrative or other functions on behalf of the Plan;

(2)  “Health Care Operations” shall mean activities that involve, but are not limited to, quality assessment and improvement, the assessment of health care professionals, disease management, case management, legal services, benefits fraud and abuse investigations, and business planning and development (including cost-management and planning analyses).  Health Care Operations also include, but are not limited to, general health care plan administrative functions such as management activities relating to compliance with HIPAA’s administrative simplification requirements, customer service involving the provision of data analysis for the Plan Sponsor of the HIPAA Plan and other entities whose employees participate in the HIPAA Plan, resolution of internalgrievances and due diligence in connection with the sale or transfer of assets to a potential successor in interest if the potential successor is a covered entity, or will become a covered entity, under HIPAA;

(3)  “HIPAA” shall mean the Health Insurance Portability and Accountability Act of 1996 as amended from time to time.

(4)  “Payment” shall mean any activities performed that involve making benefit determinations and payment. These activities include, but are not limited to, billing, reviews for medical necessity, claims management, coordination of benefits, adjudication of health benefits claims (including appeals and other payment-related disputes), subrogation, plan reimbursement, investigations of potential fraud, determining employee contributions, reviews of appropriateness of care, preauthorizations and utilization reviews;

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(5)  “Protected Health Information” or “PHI” shall mean individually  identifiable information created or retained by the HIPAA Plan beginning on or after April 14, 2003 which pertains to a person’s past, present or future physical or mental health, the health care the person is receiving or has received in the past and all past, present or future Payments for the person’s health care;

(6)  “Treatment” means the provision, coordination or management of health care and related services by one or more health care providers. This category includes, but is not limited to, consultations and referrals between health care providers, the coordination or management of health care by a health care provider with a third party and the referral of a patient for health care from one health care provider to another.

11.2Privacy Provisions Relating to Protected Health Information (“PHI”).  The Plan and its Business Associates (collectively referred to in this Article 11 as a “HIPAA Plan”) shall use and disclose PHI to the extent permitted by, and in accordance with, HIPAA.  Specifically, each HIPAA Plan will use and disclose PHI for Treatment, Payment and Health Care Operations.

11.3Disclosure of De-Identified or Summary Health Information.  The HIPAA Plan, or, with respect to the HIPAA Plan, a health insurance issuer, may disclose de-identified or summary health information to the Plan Sponsor of the HIPAA Plan (and its affiliates) if such entity requests the de-identified or summary health information for the purpose of:

 (1)  Obtaining premium bids from health plans for providing health insurance coverage under the HIPAA Plan;

(2)  Modifying, amending or terminating the group health benefits under the HIPAA Plan;

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

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11.4The HIPAA Plan Will Use and Disclose PHI as Required by Law or as Permitted by the Authorization of the Participant or Beneficiary.

Upon submission of an authorization signed by a Participant, beneficiary, subscriber or personal representative that meets HIPAA requirements, the HIPAA Plan will disclose PHI to a Company (or affiliate) sponsored pension plan, long term care plan, disability plan or other benefit plan sponsored by the Company (or an affiliate) with a need to access this PHI for purposes related to such benefit plan’s administration. Authorizations will also be honored when provided to the HIPAA Plan with respect to job accommodation requests, Family Medical Leave Act requests, drug/substance abuse testing, fitness for duty exams, and workers compensation claims.

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

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

The Plan Sponsor agrees to:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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EX-10.I

Exhibit 10-i

AT&T Inc.

Retirement Plan for Non-Employee Directors

Effective February 1, 1986

Preamble

The Retirement Plan for Non-Employee Directors (the "Retirement Plan") provides retirement benefits to certain Directors of AT&T Inc. (the "Corporation") whose right to payment hereunder is not guaranteed.  All rights, hereunder shall be governed by and construed in accordance with the laws of Missouri.

Administration

The Retirement Plan shall be administered by the Officer of the Corporation ("Plan Administrator") as may be designated by the Chief Executive Officer.  The Plan Administrator may delegate any or all duties hereunder to other individuals.  The Plan Administrator's decisions regarding the interpretation and application of the Retirement Plan shall be binding on all parties.

Eligibility

An individual who has never been employed by the Corporation or any of its subsidiaries, who began service as a Director of the Corporation on or before November 21, 1997, who terminates service as a Director of the Corporation on or after February 1, 1986, and who served as a Director of the Corporation ("Board Service") for five years or more shall be eligible to receive benefits under the Retirement Plan (a "Participant").  For the purpose of determining eligibility hereunder, service as a Director of Southwestern Bell Telephone Company prior to January 1, 1984, shall be considered Board Service hereunder.

Directors of companies acquired by the Corporation, directly or indirectly, pursuant to a merger, consolidation, acquisition or otherwise who are appointed to the Corporation's Board pursuant to the agreement providing for such transaction, or any amendments thereof, or any related agreements, shall not be eligible to participate in the Retirement Plan, unless otherwise provided by the Human Resources Committee of the Board.

Benefit Amount

Participants shall receive an annual benefit equal to 10% of the annual retainer for Board Service (exclusive of retainers for Board committees or meeting fees) in effect upon termination of Board Service for each complete year of Board Service, with a maximum annual benefit of 100% of the applicable annual retainer.

Unless a Participant terminates Board Service at or after age 70, benefits under the Retirement Plan shall be actuarially reduced for each month the initial payment date precedes the Participant's attaining age 70; provided, however, that there shall be no reduction in benefits if payments commence prior to age 70 if a Participant terminated Board Service (a) on account of a permanent and total disability in accordance with the definition of Section 22(e)(3) of the Internal Revenue Code or any successor provision, or (b) upon the expiration of the final term of Board Service for which the Participant was of age to stand for election.

Manner and Term of Payments

Benefit payments shall commence on the first day of the first calendar quarter following a Participant's termination of Board Service and shall be paid quarterly thereafter for the longer of the life of the Participant or the 10-year period commencing on the date of the first payment and ending on the day next preceding the tenth anniversary of such date (Life with 10-Year Certain Benefit).  If a Participant who is receiving a Life with 10-Year Certain Benefit dies prior to the expiration of the 10-year period described above, the Participant's Beneficiary shall be entitled to receive the remaining Life with 10-Year Certain Benefit installments which would have been paid to the Participant had the Participant survived for the entire 10-year period.  Each benefit payment shall be one-quarter of the Participant's annual benefit net of applicable withholding taxes if any.

If an individual with five years or more of Board Service dies while still serving as a Director, a pre-retirement death benefit will be calculated and paid as though the individual had retired on the date of death, except that no actuarial reduction shall apply if the individual dies before attaining age 70.

No right or interest in the Retirement Plan or to Retirement Plan benefits shall be assignable or transferable or shall be subject to any lien, obligation or liability of any Participant.

Term of Retirement Plan

The Retirement Plan shall remain in effect until terminated by the AT&T Inc. Board of Directors, which may amend the Retirement Plan from time to time.

Revised: November 18, 2005 - Name Change

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EX-10.J

Form of Director and Officer

Indemnity Agreement

AGREEMENT, effective as of July 1, 1986, between Southwestern Bell Corporation, a Delaware corporation (the "Company"), and separately with each Director and Officer of the Company (the "Indemnitee").

WHEREAS, Indemnitee is a director or officer of the Company;

WHEREAS, both the Company and Indemnitee recognize the increased risk of litigation and other claims being asserted against directors and officers of public companies in today's environment;

WHEREAS, basic protection against undue risk of personal liability of directors and officers heretofore has, in part, been provided through insurance coverage providing reasonable protection at a reasonable cost, and Indemnitee has relied on the availability of such coverage; but as a result of substantial changes in the marketplace for such insurance, it has become increasingly more difficult to obtain such insurance on terms providing reasonable protection at a reasonable cost;

WHEREAS, the Bylaws of the Company require the Company to indemnify and advance expenses to its directors and officers to the full extent permitted by law and the Indemnitee has been serving and continues to serve as a director or officer of the Company in part in reliance on such Bylaws;

WHEREAS, Section 145(f) of the Delaware General Corporation law expressly recognizes that the indemnification provisions of the Delaware Corporation law are not exclusive of any other rights to which a person seeking indemnification may be entitled by bylaw, agreement, vote of stockholders or otherwise, and this Agreement is being entered into pursuant to such provision;

WHEREAS, in recognition of Indemnitee's need for substantial protection against personal liability in order to assure Indemnitee's continued service to the Company in an effective manner and Indemnitee's reliance on the aforesaid Bylaws, and in part to provide Indemnitee with specific contractual assurance that the protection promised by such Bylaws will be available to Indemnitee (regardless of, among other things, any amendment to or revocation of such Bylaws or any change in the composition of the Company's Board of Directors or acquisition of the Company), the Company wishes to provide in this Agreement for the indemnification of and the advancing of expenses to Indemnitee to the full extent (whether partial or complete) permitted by law and as set forth in this Agreement and, to the extent an outside insurance policy/policies is/are maintained, for the continued coverage of Indemnitee under the Company's directors' and officers' liability insurance policies;

WHEREAS, while this Agreement will be of full force and effect immediately upon its execution, the Board of Directors intends to place this Agreement before the Shareowners at the next Annual Meeting for ratification;

NOW, THEREFORE, in consideration of the foregoing premises and of Indemnitee continuing to serve the Company directly or, at its request, with another enterprise, and intending to be legally bound hereby, the parties hereto agree as follows:

1.0 CERTAIN DEFINITIONS.

(a) Change in Control: shall be deemed to have occurred if (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), 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 20^% or more of the total voting power represented by the Company's then outstanding voting securities, or (ii) during any period of two 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 (⅔) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof, or (iii) the Shareowners of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least 80% of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or the Shareowners of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company's assets.

(b)Claim: is any threatened, pending or completed action, suit or proceeding, or any inquiry or investigation, whether conducted by or on behalf of the Company or any other party, that Indemnitee in good faith believes might lead to the institution of any such action, suit or proceeding, whether civil, criminal, administrative, investigative or other.

(c)Expenses: include attorneys' fees and all other costs, expenses and obligations paid or incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, be a witness in or partic­ipate in any Claim relating to any Indemnifiable Event.

(d)Indemnifiable Event: is any event or occurrence related to the fact that Indemnitee is or was a director, officer, employee, agent or fiduciary of the Company, or is or was serving at the request of the Company as a director, officer, employee, trustee, agent or fiduciary of another corporation, partnership or joint venture.

(e)Losses: are any judgments, fines and amounts paid in settlement (including all interest assessments and other charges paid or payable in connection with or in respect of such judgments, fines, penalties or amounts paid in settlement) of such action, suit or proceeding.

(f)Reviewing Party: shall mean (i) the Board of Directors (provided that a majority of directors are not parties to the claim), (ii) a person or body selected by the Board of Directors and (iii) if there has been a Change in Control, the special, independent counsel referred to in subsection 3(b) hereof.

2.0 INDEMNIFICATION AND ADVANCEMENT OF EXPENSES.

Subject to the limitations set forth herein and in Section 3 hereof, the Company hereby agrees to indemnify Indemnitee as follows:

(a)Basic Indemnification. The Company shall hold harmless and indemnify Indemnitee to the fullest extent authorized or permitted (i) by the General Corporation Law of the State of Delaware, or any other applicable law, the Company's Certificate of Incorporation or Bylaws as in effect on the date hereof, or (Ii) by any amendment thereof or other statutory provisions authorizing or permitting such indemnification which is adopted after the date hereof.

(b)Additional Indemnification. Without limiting the generality of subsection (a) hereof, in the event Indemnitee was, is or becomes a Participant in a Claim by reason of (or arising in part out of) an lndemnifiable Event, the Company shall indemnify Indemnitee to the fullest extent permitted by law, as soon as practicable after written demand is presented to the Company, against any and all Expenses and Losses.

(c)Advancement of Expenses. In the event Indemnitee is, was or becomes a Participant in any Claim by reason of an Indemnifiable Event, if so requested by Indemnitee, the Company shall advance any and all such Expenses to Indemnitee.

3.0 GENERAL LIMITATIONS ON INDEMNIFICATION.

(a)Determination of Reviewing Party. Notwithstanding the foregoing, (i) the obligations of the Company set forth in Section 2 hereof (except with respect to Expense advances made prior to any determination by a Reviewing Party referred to below that Indemnitee substantively would not be permitted to be indemnified for Claims for Indemnifiable Events with respect to which such advances are being made) shall be subject to the condition that the Reviewing Party shall not have determined (in a written opinion, in any case in which the special, independent counsel referred to in subsection (b) hereof is involved) that Indemnitee would not be permitted to be so indemnified under applicable law, and (ii) if, when and to the extent that the Reviewing Party determines that Indemnitee would not be permitted to be so indemnified under applicable law, the Company shall be entitled to be reimbursed by Indemnitee (who hereby agrees to reimburse the Company) for all such amounts theretofore paid (unless Indemnitee has commenced legal proceedings in a court of competent jurisdiction to secure a determination that Indemnitee should be indemnified under applicable law, in which event Indemnitee shall not be required to so reimburse the Company until a final judicial determination is made with respect thereto as to which all rights of appeal therefrom have been exhausted or lapsed) and shall not be obligated to indemnify or advance any additional amounts to Indemnitee (unless there has been a determination by a court of competent jurisdiction that the Indemnitee would be permitted to be so indemnified under applicable law).

If there has been no determination by the Reviewing Party or if the Reviewing Party determines that Indemnitee substantively would not be permitted to be indemnified in whole or in part under applicable law, Indemnitee shall have the right to commence litigation in any court in the States of Missouri or Delaware having subject matter jurisdiction thereof and in which venue is proper seeking an order or judgment by the court equivalent to the determination of the Reviewing Party or challenging any such determination by the Reviewing Party or any aspect thereof; any determination by the Reviewing Party otherwise shall be conclusive and binding on the Company and Indemnitee.

(b)Change in Control of Company. The Company agrees that if there is a Change in Control of the Company, then with respect to all matters thereafter arising concerning the rights of Indemnitee to indemnity payments and expense advances under this Agreement or any other agreements or Bylaws now or hereafter in effect relating to Claims for Indemnifiable Events, the Company shall seek legal advice only from special, independent counsel selected by Indemnitee and approved by the Company (which approval shall not be unreasonably withheld), and who has not otherwise performed services for the Company (other than in connection with such matters) or Indemnitee. In the event that Indemnitee and the Company are unable to agree on the selection of the special, independent counsel, such special independent counsel shall be selected by lot from among at least five law firms each in New York City, New York, the State of Delaware and St. Louis, Missouri, having more than fifty attorneys and having a rating of "av" or better in the then current Martindale-Hubbell Law Directory. Such selection shall be made in the presence of Indemnitee (and his legal counsel or either of them, as Indemnitee may elect). Such special, independent counsel, among other things, shall determine whether and to what extent the Indemnitee would be permitted to be indemnified under applicable law and shall render its written opinion to the Company and Indemnitee to such effect.

The Company agrees to pay the reasonable fees of the special, independent counsel referred to above and to fully indemnify such counsel against any and all Expenses and Losses arising out of or relating to this Agreement or its engagement pursuant hereto.

4.0 INSURANCE.

(a)Maintenance of Existing Insurance. The Company represents that it presently has in place certain policies of directors' and officers' liability insurance of such insurance companies and in such amounts as set forth in Schedule A attached hereto. Subject only to the provisions within this Section 4, the Company agrees that so long as the Indemnitee shall continue to serve as a director, officer, employee, agent or fiduciary of the Company, or shall continue at the request of the Company to serve as a director, officer, employee, trustee, agent or fiduciary of another corporation, partnership, joint venture, trust or other enterprise, and thereafter so long as the Indemnitee shall be subject to any possible claim or threatened, pending or completed action, suit or proceeding or any inquiry or investigation, whether civil, criminal or investigative, arising out of the Indemnitee's tenure as a director, officer, employee, agent or fiduciary of the Company (such periods being hereinafter sometimes referred to as the "Indemnification Period"), the Company will purchase and maintain in effect for the benefit of the Indemnitee one or more valid, binding and enforceable policy or policies of directors' and officers' liability insurance providing, in all respects, coverage both in scope and amount which is no less favorable than that presently provided pursuant to the policies set forth in Schedule A.

(b)Limitations on Maintenance of Insurance. The Company shall not be required to maintain said policy or policies of directors' and officers' liability insurance as set forth in subsection (a) of this Section 4 if such insurance is not reasonably available or if it is in good faith determined by the then directors of the Company either that (i) the premium cost of maintaining such insurance is substantially disproportionate to the amount of coverage provided thereunder or (ii) the protection provided by such insurance is so limited by exclusions, deductions or otherwise that there is insufficient benefit to war-rant the cost of maintaining such insurance policies. Anything in this Agreement to the contrary notwithstanding, to the extent that and for so long as the Company shall choose to continue to maintain any policy or policies of directors' and officers' liability insurance during the Indemnification Period, the Company shall be required to maintain similar and equivalent insurance policies for the benefit of the Indemnitee during the Indemnification Period (whether more or less favorable to Indemnitee than the Company's existing policies).

(c) Additional Indemnification in Lieu of Insurance. In the event (i) the Company shall discontinue any policy or policies of directors' and officers' liability insurance providing the coverages specified in subsection (a) of this Section 4 or limit in any way the coverages provided thereunder either in scope or amount, or (ii) such policies or the coverages provided thereunder become unavailable in whole or in part for any reason, the Company agrees to hold harmless and indemnify the Indemnitee for the remainder of the Indemnification Period to the full extent of the coverage which would otherwise have been provided for the benefit of the Indemnitee had such insurance policies specified in subsection (a) been maintained, unless the Indemnitee is otherwise protected by any insurance coverage maintained by the Company for the benefit of the Indemnitee in which event the indemnity provided by this subsection (c) shall be inapplicable to the extent, but only to the extent, of such coverage.

5.0 NO MODIFICATION.

No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

6.0 SUBROGATION.

In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights.

7.0 REIMBURSEMENT.

The Company shall not be liable under this Agreement to make any payment in connection with any claim made against Indemnitee to the extent Indemnitee has otherwise actually received payment (under any insurance policy, Bylaw or otherwise) of the amounts otherwise indemnifiable hereunder.

8.0 EFFECTIVENESS.

This Agreement shall be of full force and effect immediately upon its execution; provided, however, that the Board of Directors of the Company intends to place this Agreement before the Shareowners of the Company at the next annual meeting of Shareowners for ratification, and if Shareowners of the Company fail to ratify this Agreement at such meeting, the Company shall have the right in its sole discretion to terminate this Agreement. Upon any such termination this Agreement will be of no further force or effect.

9.0 NOTIFICATION AND DEFENSE OF CLAIM.

Promptly after receipt by Indemnitee of notice of the commencement of any action, suit or proceeding, Indemnitee will, if a Claim in respect thereof is to be made against the Company under this Agreement, notify the Company of the commencement thereof; but the omission so to notify the Company will not relieve it from any liability which it may have to Indemnitee otherwise than under this Agreement. With respect to any such action, suit or proceeding as to which Indemnitee notifies the Company of the commencement thereof:

(a)the Company will be entitled to participate therein at its own expense; and

(b)except as otherwise provided below, to the extent that it may wish, the Company jointly with any other indemnifying party similarly notified will be entitled to assume the defense thereof, with counsel satisfactory to Indemnitee. After notice from the Company to Indemnitee of its election to assume the defense thereof, the Company will not be liable to Indemnitee under this Agreement for any legal or other expenses subsequently incurred by Indemnitee in connection with the defense thereof other than reasonable costs of investigation or as otherwise provided below. Indemnitee shall have the right to employ its counsel in such action, suit or proceeding, but the fees and expenses of such counsel incurred after notice from the Company of its assumption of the defense thereof shall be at the expense of Indemnitee unless (i) the employment of counsel by Indemnitee has been authorized by the Company, (ii) Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and the Indemnitee in the conduct of the defense of such action or (iii) the Company shall not in fact have employed counsel to assume the defense of such action, in each of which cases the fees and expenses of counsel shall be at the expense of the Company. The Company shall not be entitled to assume the defense of any action, suit or proceeding brought by or on behalf of the Company or as to which the Indemnitee shall have made the conclusion provided for in (ii) above.

 (c)the Company shall not be liable to indemnify the Indemnitee under this Agreement for any amounts paid in settlement of any action or claim effected without its writ-ten consent. The Company shall not settle any action or claim in any manner which would impose any penalty or limitation on the Indemnitee without the Indemnitee's written consent. Neither the Company nor the Indemnitee will unreasonably withhold their consent to any proposed settlement.

10.0 NON-EXCLUSIVITY.

The rights of the Indemnitee hereunder shall not be deemed exclusive of any other rights he may have under the Company's Bylaws or the Delaware General Corporation Law or otherwise, and to the extent that during the Indemnification Period the rights of the then existing directors and officers are more favorable to such directors or officers than the rights currently provided thereunder or under this agreement to Indemnitee, Indemnitee shall be entitled to the full benefits of such more favorable rights.

11.0 BINDING EFFECT.

This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors, assigns, including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company, spouses, heirs and personal and legal representatives. This Agreement shall continue in effect during the Indemnification Period, regardless of whether Indemnitee continues to serve as an officer or director of the Company or of any other enterprise at the Company’s request.

12.0 SEVERABILITY.

The provisions of this Agreement shall be severable in the event that any provision hereof (including any provision within a single section, paragraph or sentence) is held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable, and the remaining provisions shall remain enforceable to the fullest extent permitted by law.

13.0 GOVERNING LAW.

This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware.

14.0 ENTIRE AGREEMENT AND TERMINATION.

This Agreement represents the entire agreement between the parties; and there are no other agreements, contracts or understandings between the parties with respect to the subject matter of this Agreement. No termination or cancellation of this Agreement (except by the Company pursuant to Section 8 hereof) shall be effective unless in writing and signed by both parties hereto.

Executed this	day of	,	1986.
SOUTHWESTERN BELL CORPORATION

By
	Zane E. Barnes, Chairman and Chief Executive Officer

By
	lndemnitee

EX-10.K

Exhibit 10-k

Effective January 1, 2008

Administrative Plan

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.

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 $20,000 of financial consulting reasonably in connection with and incurred within a reasonable time of his or her actual retirement.  After the Retirement of an Executive Officer he or she shall continue to receive the communications, financial counseling and estate planning benefits until his or her death.  After the death of an Executive Officer or Retired Executive Officer, his or her spouse shall receive the communications benefit for 6 billing cycles and shall receive the financial counseling and estate planning benefits for 2 years.

Taxes.  Each recipient of benefits under this Plan 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.

EX-10.M

Exhibit 10-m

February 17, 2006

Ronald Spears

767 5th Avenue

New York, NY   10153

Re: Signing Bonus and Retention Award

Dear Ronald:

Congratulations on the successful closing of the merger between SBC Communications Inc. (now known as AT&T Inc. “AT&T”) and AT&T Corp. (“AT&T Corp.”) on November 18, 2005 (the “Effective Date”).  The Company desires to provide you with an incentive to remain employed with AT&T and its affiliates (together, as constituted from time to time, the “Group”).This is your special Retention Agreement with AT&T Enterprise Services, Inc. (the “Company”).

1.Special Signing Bonus

The Company will pay you a special signing bonus of $401,280 (your “Special Signing Bonus”) as promptly as practicable after you sign and return this Agreement.

2.Award

(a)Purpose.  Upon your execution of this Agreement, you will receive a retention award in the form of 71,555 phantom stock units (your “Retention Award”).  Your Retention Award will be in addition to any other compensation paid to you for your services.

(b)The Phantom Stock Units.  Each phantom stock unit awarded to you under this Agreement constitutes an unfunded and unsecured promise of the Company to pay (or cause to be paid) to you on the applicable payment date the cash equivalent of the fair market value of one share of AT&T common stock, par value $1.00 (“AT&T Share”).  For purposes of this Agreement, the “fair market value” of one AT&T Share will based on the average of the regular session per share closing prices on the New York Stock Exchange for the five (5) consecutive trading days ending on the day before the applicable vesting date or, if applicable, your employment termination date.

(c)Dividend Equivalents.  Each outstanding phantom stock unit awarded to you under this Agreement also entitles you to receive, if and when made, an amount in cash equal to any regular dividend payment made in respect of an AT&T Share.  Phantom stock units that are (i) vested and paid or (ii) forfeited are immediately cancelled, and there shall be no further dividend equivalents paid on such phantom stock units.

(d)Vesting.  You will vest in your Retention Award in two installments.  One-third of your phantom stock units will vest on November 18, 2006 (the “First Vesting Date”) and the remaining two-thirds will vest on November 18, 2008 (the “Second Vesting Date”).

(e)Certain Anti-Dilution Adjustments.  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 AT&T affecting the AT&T Shares, an adjustment shall be made in the number of the outstanding phantom stock units as determined to be appropriate and equitable by AT&T in its sole discretion.

3.Payment of Retention Award

(a)Payment of Retention Award on Vesting Dates.  As promptly as practicable after the First Vesting Date, the Company will pay (or cause to be paid) to you in a cash lump-sum the value of one-third of your Retention Award provided you are in the employ of the Group on the First Vesting Date.  As promptly as practicable after the Second Vesting Date, the Company will pay (or cause to be paid) to you in a cash lump-sum the value of the remaining two-thirds of your Retention Award provided you are in the employ of the Group on the Second Vesting Date.  Upon each payment, the applicable phantom stock units, and the right to receive dividend equivalents thereon, are automatically cancelled.

(b)Treatment on Termination of Employment Prior to November 18, 2008.  If your employment terminates prior to November 18, 2008, you will be accorded the treatment as indicated in the following chart depending on the event that results in your termination of employment:

(the remainder of this page is intentionally left blank)

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Event	Treatment
You Elect to Terminate Your Employment For ANY Reason On or After November 18, 2006 and On or Before December 31, 2006 (the “Window Period”), and you Provide the Company a Termination Notice at Least Sixty (60) Days Prior to Your Termination Date	In lieu of any compensation or benefits under this Agreement that has not already been paid to you prior to the date of your termination of employment, you shall receive (i) the compensation, benefits and treatment as if you were eligible under the terms and conditions of the change in control provisions of the AT&T Officer Separation Plan (the “Separation Plan”) and (ii) any unpaid retention award granted to you from the Retention Bonus Pool as such term is defined in Section 6.8(f) of the Company Disclosure Letter delivered in connection with the Agreement and Plan of Merger dated as of January 30, 2005 among AT&T Corp., SBC Communications Inc. and Tau Merger Sub Corporation, in both cases as if your employment was involuntarily terminated by the Company without Cause; provided, however, any cash payment under the terms of such Separation Plan and/or the Retention Bonus Pool shall be reduced by the amount of your Special Signing Bonus and the dollar amount of your Retention Award previously paid to you under the terms of this Agreement, if any.
The Company Terminates Your Employment Without Cause Prior to November 18, 2007
You Terminate Your Employment Without Good Reason (Except During the Window Period or Except as a Result of Your Death or Disability)	You forfeit the entire unpaid portion of your Retention Award, and no further benefits or payments shall be made.
The Company Terminates Your Employment for Cause
You Terminate Your Employment for Good Reason (Except During the Window Period)	The Company will pay (or cause to be paid) to you in a cash lump-sum the value equal to eighty percent (80%) of your Retention Award less the dollar amount of your Retention Award previously paid to you, if any.  Such payment shall be made as promptly as practicable after your employment termination date.
The Company Terminates Your Employment Without Cause On or After November 18, 2007	The Company will pay (or cause to be paid) to you (or, in the event of your death, your estate) in a cash lump-sum the value equal to the product of (A) one hundred percent (100%) less the Reduction Percentage, times (B) your Retention Award, less the dollar amount of your Retention Award previously paid to you, if any.  The Reduction Percentage shall be twenty percent (20%) multiplied by a fraction, the numerator of which is 1,095 minus the number of days between November 18, 2005 and your termination date and the denominator of which is 1,095.  Such payment shall be made as promptly as practicable after your employment termination date.
Termination of Employment Due to Your Death or Disability

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(c)Release.  As a condition to making any payment described in Section 3(b), the Company may require you to execute and deliver a general release in which you release all claims that you may have against any member of the Group and any of their respective past or present officers, directors, employees or agents other than your rights under this Agreement.

(d)Withholding.  Your Special Signing Bonus and Retention Award are subject to withholding for applicable income and payroll taxes or otherwise as required by law.

4.Early Termination

(a)Termination Notice.  If you wish to terminate your employment during the Window Period or for Good Reason, or the Company wishes to terminate you for Cause, the terminating party must provide a Termination Notice to the other.  A “TerminationNotice” is a written notice that states the specific provision of this Agreement on which termination is based, including, if applicable, the specific clause of the definition of Good Reason or Cause and a reasonably detailed description of the facts that permit termination under that clause.  (The failure to include any fact in a Termination Notice that contributes to a showing of Good Reason or Cause does not preclude either party from asserting that fact in enforcing its rights under this Agreement.)

(b)Termination on Disability or Death.  If the Company determines in good faith that your Disability has occurred, it may give you a Termination Notice.  If, within 30 days of the Termination Notice, you do not return to full-time performance of your responsibilities, your employment will terminate (the “Disability Effective Date”).  If you do return to full-time performance in that 30-day period, the Termination Notice will be cancelled.  Your employment will terminate automatically on your death.

(c)Employment Termination Date.  If your employment is terminated by the Company other than for Disability or death or you terminate your employment for Good Reason, your employment will end on the date specified in the Termination Notice.  If you terminate your employment without Good Reason, your employment will end 60 days after the Company receives the Termination Notice (although the Company may in all events accelerate the end of your employment by providing you with notice or, alternatively, may place you on paid leave during such period).  If your employment is terminated by reason of your death or Disability, your employment will end on the date of death or the Disability Effective Date, as applicable.

(d)Effect of Early Termination.  On termination of your employment in accordance with this Section 4, your employment will end and the Group will have no further obligations to you under this Agreement except as provided in Sections 3 and 5.

5.Excise Tax

If any element of your Special Signing Bonus or your Retention Award constitutes an “excess parachute payment”, as that term is defined in Section 280G of the Internal Revenue Code and the regulations thereunder, you shall be provided the gross-up benefits set forth in Annex A.

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6.Effect on Other AT&T Corp. Agreements

(a)Prior Employment and/or Retention Agreements and Severance Rights.  Except as provided in Section 3(b) of this Agreement and except for any retention award granted to you from the Retention Bonus Pool as such term is defined in Section 6.8(f) of the Company Disclosure Letter delivered in connection with the Agreement and Plan of Merger dated as of January 30, 2005 among AT&T Corp., SBC Communications Inc. and Tau Merger Sub Corporation, this Agreement will supersede any earlier employment agreement, separation plan or understanding and any earlier severance, change-in-control or similar rights you may have with AT&T Corp. or any of its affiliates and you agree that you are not entitled to any severance, change-in-control or similar rights under any such agreement, plan or understanding (including, without limitation, the AT&T Senior Officer Separation Plan, the AT&T Officer Separation Plan, the AT&T E-Band Separation Plan and the AT&T Separation Plan).

(b)Entire Agreement.  This Agreement is the entire agreement between you and the Company with respect to the matters contemplated by this Agreement and supersedes any earlier agreement, written or oral, with respect to the subject matter of this Agreement, including, but not limited to, any agreement to extend the period during which you could claim “Good Reason” under your Separation Plan.  In entering into this Agreement, no party has relied on or made any representation, warranty, inducement, promise or understanding that is not in this Agreement.

7.Certain Obligations

(a)Violation Of the Group’s Code Of Conduct Or the Group’s Non-Competition Guideline.  Notwithstanding any other provision of this Agreement, if it is determined by the Company that you have willfully violated the Group's Code of Conduct or any other written Group policy, where said violation causes significant harm to the Group, and/or violated the AT&T Corp. Non-Competition Guideline (the “Guideline”), attached hereto and incorporated herein as Annex C, you will be required to repay to the Company an amount equal to the economic value of all benefits already provided to you under this Agreement and you shall forfeit all unpaid benefits under this Agreement.

(b)Future Services.  You shall have a continuing obligation to cooperate with the Company on a commercially reasonable basis, in any matter, and to testify in any legal proceeding in which the Company is a party, in each case relating to, or in connection with, your duties and responsibilities while you were employed by the Company.

8.Disputes

You agree to the dispute resolution provisions, including mandatory arbitration, set forth on Annex B, which is a part of this Agreement.

9.General Provisions

(a)Confidentiality.  Except as required by law or regulation, you will not disclose the terms of your Special Signing Bonus, Retention Award or this Agreement, provided that you may disclose such terms to your financial and legal advisors and spouse, each of whom shall be instructed to maintain the terms of your Special Signing Bonus, Retention Award and this Agreement in strict confidence in accordance with the terms hereof.

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(b)Definitions.  When used in this Agreement, the following terms shall have the meanings ascribed to them below:

“Good Reason” means (A) any reduction in your annual base salary rate or (B) any reduction in your target annual bonus, in each case as in effect immediately prior to the Effective Date.  However, (A) Good Reason will not include any isolated, insubstantial and inadvertent failure by the Company that is not in bad faith and is cured promptly on your giving the Company notice, (B) if you do not give a Termination Notice to the Company within 60 days after you have knowledge that an event constituting Good Reason has occurred, the event will no longer constitute Good Reason, and (C) an event will not constitute Good Reason if you have consented to it in accordance with Section 9(c).

“Cause” means (A) commission of a crime, or conviction of a crime, including by a plea of guilty or nolocontendere, involving theft, fraud, dishonesty or moral turpitude, (B) intentional or grossly negligent disclosure of confidential or trade secret information of the Group to anyone not entitled to such information, which causes significant harm to the Group, (C) gross omission or gross dereliction of any statutory or common law duty of loyalty to the Group, which causes significant harm to the Group, or (D) willful violation of the Group's Code of Conduct or any other written Group policy, where said violation causes significant harm to the Group.

“Disability” means your absence from work under the relevant employer sponsored group long-term disability plan applicable to you.

(c)  Notices.  All notices, requests, demands, consents and other communications under this Agreement must be in writing and will be deemed given (1) on the business day sent, when delivered by hand or facsimile transmission (with confirmation) during normal business hours, (2) on the business day after the business day sent, if delivered by a nationally recognized overnight courier or (3) on the third business day after the business day sent if delivered by registered or certified mail, return receipt requested, in each case to the following address or number (or to such other addresses or numbers as may be specified by notice that conforms to this Section 9(c)):

If to you, to the address stated on the first page of this Agreement, and

If to the Company or any other member of the Group, to:

Vice President-Compensation

175 East Houston Street, Room 03-H-60

San Antonio, Texas 78205

(d)Not a Contract of Employment. You and the Company acknowledge that this Agreement does not constitute a contract of employment and your employment with the Company is “at will” and may be terminated by you or the Company at any time and for any reason.  Your Retention Award and other benefits under this Agreement shall not count toward or be considered in determining payments or benefits due under any other plan, program, policy or arrangement with the Group.

(e)Successors.

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(1)This Agreement is personal to you and without the prior written consent of the Company shall not be assignable by you otherwise than by will or the laws of descent and distribution.  This Agreement shall inure to the benefit of and be enforceable by your legal representatives.

(2)This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.

(3)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 assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.  As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid.

(f)Amendments and Waivers.  Any provision of this Agreement may be amended or waived but only if the amendment or waiver is in writing and signed, in the case of an amendment, by you and the Company or, in the case of a waiver, by the party that would have benefited from the provision waived.

(g)Counterparts.  This Agreement may be executed as counterparts, each of which will constitute an original and all of which, when taken together, will constitute one agreement.

*                      *                      *

Please confirm your acceptance of the terms of this Agreement by signing where indicated below.

 Karen E. Jennings

 Executive Vice President-Human Resources

 AT&T Enterprise Services, Inc.

Accepted and Agreed this ____ day of _______________, 200__:

 Ronald Spears

 Vice President-Signature Client Group

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Annex A

Excise Tax

(a)           If any element of the Retention Award or other compensation or benefit provided to you under the terms of this Agreement, or under any other plan, program, policy or other arrangement (“Benefit”), either alone or in combination with other elements of compensation and benefits paid or provided to you, constitutes an “excess parachute payment”, as that term is defined in Section 280G of the Internal Revenue Code and the regulations thereunder, and subjects you to the excise tax pursuant to Section 4999 of the Internal Revenue Code, and any interest and penalties thereon (collectively, the “Excise Tax”), then you shall be entitled to an additional lump-sum cash payment from the Company (the “Excise Tax Adjustment Payment”), subject to mandatory withholding, in an amount equal to the Excise Taxes (including the Excise Tax attributable to the Excise Tax Adjustment Payment related to the Benefit) plus any income and FICA taxes and any interest and penalties thereon attributable to the Excise Tax Adjustment Payment. For purposes of calculating an Excise Tax Adjustment Payment in any year, it shall be assumed that you are subject to Federal and applicable state and local income taxes at the highest marginal Federal and applicable state and local income tax rates, respectively, for the year in which the Excise Tax Adjustment Payment is paid.  Also, the Excise Tax Adjustment Payment to you shall reflect the Federal tax benefits attributable to the deduction of applicable state and local income taxes.

(b)           Subject to the provisions of (c) below, all determinations required to be made under this Annex, including whether and when an Excise Tax Adjustment Payment is required and the amount of such Excise Tax Adjustment Payment and the assumptions utilized in arriving at such determinations, shall be made by an independent accounting firm chosen by the Company (the “Accounting Firm”).  The Accounting Firm shall provide detailed supporting calculations to the Company and to you within thirty (30) business days of the receipt of notice from the Company or you that there has been a Benefit provided to which this Annex applies (or such earlier time as requested by the Company).  Any Excise Tax Adjustment Payment, as determined pursuant to this Section (b), shall be paid by the Company to you within fifteen (15) business days of the receipt of the Accounting Firm's determination.

(c)           Underpayments and Overpayments.

(1)           If it is established pursuant to a final determination of a court or an Internal Revenue Service proceeding, or in the opinion of independent counsel agreed upon by the Company and you, that the Excise Tax payable by you on the Benefit is less than the amount initially taken into account under Section (a) for purposes of calculating the Excise Tax Adjustment Payment related to such Benefit, the Accounting Firm shall recalculate the Excise Tax Adjustment Payment to reflect the actual Excise Tax related to such Benefit.  Within thirty (30) business days following your receipt of notice of the results of such recalculation from the Accounting Firm and/or the Company, you shall repay to the Company the excess of the initial Excise Tax Adjustment Payment over the recalculated Excise Tax Adjustment Payment.

(2)           If it is established pursuant to a final determination of a court or an Internal Revenue Service proceeding, or in the opinion of an independent counsel agreed upon by the Company and you, that the Excise Tax payable by you on the Benefit is more than the amount initially taken into account under Section (a) for purposes of calculating the Excise Tax Adjustment Payment, the Accounting Firm shall recalculate the Excise Tax Adjustment Payment to reflect the actual Excise Tax.  Within fifteen (15) business days following the Company's receipt of notice of the results of such recalculation from the Accounting Firm, the Company shall pay to you the excess of the recalculated Excise Tax Adjustment Payment over the initial Excise Tax Adjustment Payment.

(d)           All fees and expenses of the Accounting Firm shall be borne solely by the Company.

(e)           You shall notify the Company in writing of any written claim by the Internal Revenue Service that, if successful, would require the payment by the Company of an Excise Tax Adjustment Payment or the recalculation of an Excise Tax Adjustment Payment. The notification shall apprise the Company of the nature of such claim, including (1) a copy of the written claim from the Internal Revenue Service, (2) the identification of the element of compensation and/or benefit that is the subject of such Internal Revenue Service claim, and (3) the date on which such claim is requested to be paid.  Such notification shall be given as soon as practicable but no later than ten (10) business days after you actually receive notice in writing of such claim.

Within ten (10) business days following receipt of the notification of the Internal Revenue Service written claim from you, the Company shall pay to you an Excise Tax Adjustment Payment, or the excess of a recalculated Excise Tax Adjustment Payment over the initial Excise Tax Adjustment Payment, as applicable, related to the element of compensation and/or benefit which is the subject of the Internal Revenue Service claim. Within ten (10) business days following such payment to you, you shall provide to the Company written evidence that you have paid the claim to the Internal Revenue Service (the United States Treasury).

Your failure to properly notify the Company of the Internal Revenue Service claim (or to provide any required information with respect thereto) shall not affect any rights granted to you under this Annex, except to the extent that the Company is materially prejudiced in the challenge to such claim as a direct result of such failure.  If the Company notifies you in writing, within sixty (60) business days following receipt from you of notification of the Internal Revenue Service claim, that it desires to contest such claim, you shall:

(1)           give the Company any information reasonably requested by the Company relating to such claim;

(2)           take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time including, without limitation, accepting legal representation with respect to such claim by an attorney selected by the Company and reasonably acceptable to you;

(3)           cooperate with the Company in good faith in order to effectively contest such claim; and

(4)           permit the Company to participate in any proceedings relating to such claim if the Company elects not to assume and control the defense of such claim; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold you harmless, on an after-tax basis, for any Excise Tax, income tax and FICA tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses.  Without limitation on the foregoing provisions of this Annex, the Company shall have the right, at its sole option, to assume the control of all proceedings in connection with such contest, in which case it may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim, and may direct you to sue for a refund or contest the claim in any permissible manner, and you agree to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, that any extension of the statute of limitations relating to payment of tax for your taxable year with respect to which such contested amount is claimed to be due is limited solely to such contested amount.  Furthermore, the Company's rights to assume the control of the contest shall be limited to issues with respect to which an Excise Tax Adjustment Payment would be payable hereunder, and you shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.  To the extent that the contest to the Internal Revenue Service claim is successful, the Excise Tax Adjustment Payment related to the element of compensation and/or benefit that was the subject of the claim shall be recalculated in accordance with the provisions of Section (c)(ii).

Annex B

Disputes.

(a)Employment Matter.  This Annex B applies to any controversy or claim between you and the Group arising out of or relating to or concerning this Agreement or any aspect of your employment with the Group or the termination of that employment (together, an “Employment Matter”).

(b)Mandatory Arbitration.  Subject to the provisions of this Annex B, any Employment Matter will be finally settled by arbitration in Bexar County, Texas administered by the American Arbitration Association under its Commercial Arbitration Rules then in effect.  However, the rules will be modified in the following ways: (1) each arbitrator will agree to treat as confidential evidence and other information presented to the same extent as the information is required to be kept confidential under Annex B, (2) the optional Rules for Emergency Measures of Protections will apply, (3) you and the Group agree not to request any amendment or modification to the terms of this Agreement except as provided in Section (c), (4) a decision must be rendered within 10 business days of the parties’ closing statements or submission of post-hearing briefs and (5) the arbitration will be conducted before a panel of three arbitrators, one selected by you within 10 days of the commencement of arbitration, one selected by the Company in the same period and the third selected jointly by these arbitrators (or, if they are unable to agree on an arbitrator within 30 days of the commencement of arbitration, the third arbitrator will be appointed by the American Arbitration Association; provided that the arbitrator shall be a partner or former partner at a nationally recognized law firm).

(c)Limitation on Damages.  You and the Group agree that there will be no punitive damages payable as a result of any Employment Matter and agree not to request punitive damages.

(d)Injunctions and Enforcement of Arbitration Awards.  You or the Group may bring an action or special proceeding in a state or federal court of competent jurisdiction sitting in Bexar County, Texas to enforce any arbitration award under Section (b).  Also, the Group may bring such an action or proceeding, in addition to its rights under Section (b) and whether or not an arbitration proceeding has been or is ever initiated, to temporarily, preliminarily or permanently enforce any part of Annex B.

(e)Jurisdiction and Choice of Forum.  You and the Group irrevocably submit to the exclusive jurisdiction of any state or federal court located in Bexar County, Texas (the “Forum”) over any Employment Matter that is not otherwise arbitrated or resolved according to Section (b).  This includes any action or proceeding to compel arbitration or to enforce an arbitration award.  Both you and the Group (1) acknowledge that the Forum has a reasonable relation to this Agreement and to the relationship between you and the Group and that the submission to the Forum will apply even if the forum chooses to apply non-Forum law, (2) waive, to the extent permitted by law, any objection to personal jurisdiction or to the laying of venue of any action or proceeding covered by this Section (e) in the Forum, (3) agree not to commence any such action or proceeding in any forum other than the Forum and (4) agree that, to the extent permitted by law, a final and non-appealable judgment in any such action or proceeding in any such court will be conclusive and binding on you and the Group.  However, nothing in this Agreement precludes you or the Group from bringing any action or proceeding in any court for the purpose of enforcing the provisions of Section (b) and this Section (e).

(f)Waiver of Jury Trial.  To the extent permitted by law, you and the Group waive any and all rights to a jury trial with respect to any Employment Matter.

(g)Governing Law.  This Agreement will be governed by and construed in accordance with the law of the State of Texas applicable to contracts made and to be performed entirely within that State.

AT&T Non-Competition Guideline

(as amended December 17, 1997, May 19, 2004, and October 5, 2005)

SECTION 1.  STATEMENT OF PURPOSE

The purpose of this AT&T Non-Competition Guideline is to provide a common set of definitions and set forth the standards for evaluating activity in possible violation of the non-competition clauses contained in various AT&T employee incentive compensation and benefit plans, and in individual agreements or arrangements.

SECTION 2.  DEFINITIONS

As used in this AT&T Non-Competition Guideline the following terms have the meanings set forth below:

1.           The word "Guideline" means this AT&T Non-Competition Guideline.

2.           The words "AT&T" or "Company" means collectively AT&T Corp., a New York corporation, all of its subsidiaries, related entities, lines of business and corporate successors and all business enterprises, including joint ventures, in which it is a partner or has a substantial ownership interest.

3.           The term "Board of Directors" or "Board" means the Board of Directors of AT&T Corp.

4.           The word "Plan" means any AT&T employee incentive compensation and/or benefit plan that contains a non-competition clause, including but not limited to the AT&T 1987, 1997, and 2004 Long Term Incentive Programs, the AT&T Short Term Incentive Plan, the AT&T Non-Qualified Pension Plan, the AT&T Senior Management Universal Life Insurance Program, the Executive Life Insurance Program, the AT&T Senior Management Basic and Individual Life Insurance Programs and the AT&T Supplementary Variable Universal Life Insurance Program, the AT&T Senior Management Long Term Disability and Survivor Protection Plan, the AT&T Mid-Career Pension Plan, the AT&T Senior Management Incentive Award Deferral Plan and any other employee incentive compensation and/or employee benefit plan that the Board or the Executive Vice President-Human Resourcesshall deem appropriate to make subject to the standards of this Guideline.  Notwithstanding anything to the contrary contained in this Guideline or in the AT&T 1997 Long Term Incentive Program, the 1997 All Employee Stock Option Grant shall not be forfeitable in the event an employee holding such grant engages in activity deemed to be in competition with or adverse to the interests of the Company.

5.           The word "Agreement" means any individual agreement or arrangement between AT&T and any current or former employee which incorporates or references this Guideline or which contains a non-competition clause.

 AT&T Non-Competition Guideline  1  October 5, 2005

6.           The word "benefit" means any payment or entitlement to payment conferred pursuant to the terms of any or all of the Plans or Agreements, regardless of how, when or in what form it is made or intended to be made.

7.           The term "affected employee" shall mean an individual who, as a former or present employee, has received, is receiving or would be eligible to receive benefits or payments under any Plan or Agreement.

8.           The phrase "non-competition clause" means any provision, paragraph, division or portion of a Plan or Agreement which states in words or substance that an affected employee will forfeit and relinquish entitlement to compensation and/or benefits under such Plan or Agreement, or that such compensation or benefits shall be reduced or otherwise modified, if such employee engages in activity deemed to be in competition with or adverse to the interests of the Company.

9.           The use in this Guideline of personal pronouns of the masculine gender is intended to include both the masculine and feminine genders.  The use in this Guideline of singular or plural nouns is intended to have individual or collective meaning as applicable to the context as used therein and is in no way to be construed narrowly or such as to limit the scope of this Guideline or any of its provisions.

SECTION 3.  RESPONSIBILITY

Responsibility for interpreting and implementing the standards and provisions of this Guideline is vested solely and exclusively in the Executive Vice President-Human Resources of the Company, or his/her successor, who is empowered to perform all functions necessary or appropriate to fulfill his responsibilities in connection with the forfeiture of compensation and/or benefits, making final determination that certain activity is or is not competitive activity and that the compensation and/or benefits of the affected employee who engages in such activity are or are not forfeited, reduced or otherwise modified by such activity, respectively; and acting on the Company's behalf and in its best interests in all matters relating to the issues covered by this Guideline.  Notwithstanding the above the Executive Vice President - Human Resources shall be authorized to delegate to other Company employees the authority to perform such activities as may be appropriate in connection with his implementation of the provisions of this Guideline, including taking of such legal steps as are necessary to recover compensation and/or benefits paid to an affected employee since the date on which he commenced engaging in activity deemed to be competitive activity.

SECTION 4.  COMPETITIVE ACTIVITY

1.           Finality.  The Executive Vice President - Human Resources of the Company shall have authority to interpret the provisions of this Guideline consistent with their spirit and intent and to interpret the non-competition clause of any Plan or Agreement, and each and every decision of the Executive Vice President - Human Resources shall, with respect to all questions and matters relative to the subjects of forfeiture and competition, be final; except, however, with respect to any award outstanding under the AT&T 2004 Long Term Incentive Program.  The Executive Vice President – Human Resources shall present his recommendation to the Compensation and Employee Benefits Committee of the Board of Directors (the “Committee”) for any action related to the forfeiture of such awards.  The Committee shall then have final authority to cancel and forfeit such awards.

 AT&T Non-Competition Guideline 2  October 5, 2005

2.           Definition.  For purposes of this Guideline and the non-competition clauses contained in any Plan or Agreement, an affected employee's activity is competitive activity (and any or all of his compensation and/or benefits under the Plans or Agreements are subject to forfeiture, reduction or other modification to the fullest extent allowable by law), if such affected employee, during, or within 2 years after the termination of, his employment with the Company, as more fully described below, either (A) establishes a relationship with a competitor of the Company, or, (B) engages in activity which is in conflict with or adverse to the interests of the Company.

a.           As used above in Paragraph 2 of this Section 4, the phrase "establishes a relationship with" shall mean, but shall not be limited to, founding, organizing, establishing, becoming associated with, becoming employed by, rendering services to, consulting or acting as consultant to, serving as director for, being a partner in or owning a substantial interest in, as shareholder or otherwise, such an interest to include, but not be limited to, for example, an interest subject to the reporting requirements of Section 13(d) of the Securities Exchange Act of 1934.

b.           As used above in Paragraph 2 of this Section 4, a "competitor of the Company" is a person, business, entity or enterprise which either (A) designs, develops, manufactures, produces, offers for sale or sells a product or service which can be used as a substitute for, performs substantially the same function as, is a practical alternative for or is generally intended to satisfy the same customer or client needs for any product or service designed, developed, manufactured, produced, offered for sale or sold by the Company, or (B) is a person, business or activity which the Executive Vice President-Human Resources, based upon review of the individual facts and circumstances and in its discretion and judgment, determines, in order to protect the best interests of the Company, to be a competitor within the spirit and intent of this Guideline and the non-competition clauses.  Effective upon the close of the merger between AT&T Corp. and SBC, the definition of a “competitor of the Company” as used above in Paragraph 2 of this Section 4 shall mean a company, if at least 10% of the aggregate revenue of such company for the fiscal year preceding the year in which the employee ceases to be employed by AT&T is derived from the provision of telecommunications products or services that directly compete with telecommunications products or services provided or sold by AT&T (without giving effect to the merger) as of the time the employee ceases to be employed by AT&T.

Thereafter, and notwithstanding any provision of any plan, program, policy, agreement or arrangement of the Company or any of its Subsidiaries to the contrary, the restrictions set forth in this Guideline on establishing a relationship with a competitor of the Company shall not apply to any employee or former employee of the company or any of its Subsidiaries with a salary grade of D band or lower.

c.           As used above in Paragraph 2 of the Section 4, conduct "in conflict with or adverse to the interests of the Company" is conduct by which (1) an affected employee criticizes, denigrates or otherwise speaks adversely, or disclose negative information about, the operations, management or performance of the Company, an affiliate of the Company, or about any director, officer, employee or agent of any of the foregoing; or (2) an affected employee, engages in the recruitment, solicitation or inducement of, or attempts to induce, any employee or employees of the Company to terminate their employment with, or otherwise cease their relationship with, the Company.

 AT&T Non-Competition Guideline  3  October 5, 2005

SECTION 5.  EVALUATION AND DETERMINATION OF COMPETITIVE ACTIVITY

1.           Request for a Determination.  An affected employee who is considering engaging in an activity which an individual would reasonably believe to be competitive activity as that term is used and defined in this Guideline and which thus may be grounds for the Company's invoking the non-competition clause of any Plan or Agreement may request, prior to engaging in such activity, that it be evaluated as described in this Section 5 of the Guideline and that a determination be made and an opinion rendered as to whether such activity is deemed to violate such non-competition clauses.  Such affected employee's request may be made to the Executive Vice President - Human Resources, or such other Company employee as may be selected by the Executive Vice President - Human Resources who will coordinate evaluation of the activity.  To insure that the evaluation and determination are based on all relevant facts and circumstances and thus are consistent with the spirit and intent of this Guideline, such affected employee should accompany his request with a full explanation in writing of whatever information he deems pertinent as well as of a description of the contemplated activity, such explanation to include, but not to be limited to, (A) his contemplated relationship, including, as applicable, his proposed position, title, responsibilities and the nature and extent of his ownership interest, (B) the nature of the business, including, for example, all products and/or services currently being or expected to be designed, developed, manufactured, produced, offered for sale and sold by the business and (C) the most recently available financial information on the business.

2.           Company's Right to Initiate an Evaluation.  The Company reserves the right to initiate an evaluation of any activity of an affected employee which may be competitive activity as that phrase is used and defined in this Guideline.  The Executive Vice President - Human Resources of the Company shall notify the affected employee in writing that such an evaluation has been initiated and that he has the opportunity to submit in writing for consideration whatever information he deems pertinent to a determination, including, but not limited to, a full explanation of the activity as described above in items (A) through (C), inclusive, of Paragraph 1 of this Section 5.

3.           Evaluation.  Whether an affected employee's contemplated or actual activity is or is not competitive activity within the scope and intent of this Guideline shall be evaluated by the Executive Vice President - Human Resources or such individuals as such officer may designate as appropriate.

4.           Determination.  Final determination of whether an affected employee's activity is or is not competitive activity and thus whether his incentive compensation and/or benefits are or are not, respectively, subject to forfeiture shall be made by the Executive Vice President - Human Resources; except, however, with respect to any award outstanding under the AT&T 2004 Long Term Incentive Program.  The Executive Vice President – Human Resources shall present his recommendation to the Compensation and Employee Benefits Committee of the Board of Directors (the “Committee”) for any action related to the forfeiture of such awards.  The Committee shall then have final authority to cancel and forfeit such awards.  After such determination, the Executive Vice President - Human Resources, shall notify the affected employee in writing of the decision.  If the determination is that an affected employee's activity is not or would not be competitive activity, the Company reserves the right to seek, at whatever intervals it deems appropriate, written assurance from the affected employee that the facts and circumstances upon which the activity was evaluated and the determination based have not changed.

 AT&T Non-Competition Guideline  4  October 5, 2005

5.           Notice of Forfeiture.  If, after activity has been evaluated the Executive Vice President - Human Resources determines that contemplated activity would be competitive activity, the Executive Vice President - Human Resources, will notify the affected employee in writing of the determination and advise such affected employee that his incentive compensation and/or benefits are at risk of forfeiture, reduction or other modification.  An affected employee who receives such notice and advice shall, within thirty business days of the date of such notice and advice, provide the Company with written assurance that he has not engaged and will not engage in such contemplated activity.  If, after the expiration of the thirty business day period, the Executive Vice President - Human Resources, has not received such assurance, he shall notify the appropriate Payroll and Benefit organizations to terminate immediately or not to initiate payments of incentive compensation and/or benefits to the affected employee.  If the determination is that an affected employee is currently engaging in competitive activity, the Executive Vice President - Human Resources, shall so advise the affected employee, and shall also direct the appropriate Payroll, Benefit and other affected organizations of the Company to terminate immediately payments of benefits to the affected employee and, in addition, may take such legal steps as are necessary to recover from the affected employee all benefits paid by the Company or on its behalf since the date when such competitive activity is deemed to have commenced.

6.           Opportunity to Withdraw.  If, after activity has been evaluated and the Executive Vice President-Human Resources determines that there are unusual or special circumstances which mitigate against withdrawal of benefits from or denial of benefits to an affected employee who is or has been engaging in activity which is competitive activity within the spirit and intent of this Guideline and the non-competition clauses, the Executive Vice President - Human Resources may, in his discretion and judgment, withhold termination of benefits and offer the affected employee in writing the opportunity to withdraw from the competitive activity; provided, however, that any affected employee who is the recipient of and accepts such an offer shall provide the Executive Vice President - Human Resources, within a reasonable time of the date of such offer as prescribed by such officer, written assurance that such withdrawal has been accomplished.

7.           Reevaluation and Determination.  Notwithstanding prior evaluations and regardless of a previous determination by the Executive Vice President - Human Resources as described in this Guideline, the Company reserves the right, without prior notice to the affected employee, to institute a reevaluation of his activity if, in his discretion and judgment, the Executive Vice President - Human Resources believes that under the facts and circumstances such reevaluation is warranted.  In case of such reevaluation, the affected employee shall be notified by the Executive Vice President - Human Resources, that such reevaluation has been instituted and shall have   the opportunity to submit in writing for consideration by the Executive Vice President - Human Resources a full explanation of whatever information he deems pertinent to the redetermination, such explanation to include, but not to be limited to, a full explanation of the activity as described above in items (A) through (C), inclusive, of Paragraph 1 of this Section 5.  After such reevaluation, there shall be a determination consistent with that described above in Paragraph 4 of this Section 5.

8.           Subsequent Competitive Activity.  If an affected employee commences engaging in activity which is not at the time of commencement considered competitive activity as that phrase is used and defined in this Guideline but within a reasonable period of time thereafter (such period, under ordinary circumstances and unless the Executive Vice President - Human Resources determines otherwise, to be two years) the activity becomes competitive activity as that phrase is used and defined in this Guideline, then the affected employee so engaging in such competitive activity should advise the Executive Vice President - Human Resources.  Upon receipt of such advice, the Executive Vice President - - Human Resources, shall then offer such affected employee the opportunity to withdraw without forfeiture of benefits under the terms of and consistent with the provisions of such an opportunity as described in Paragraph 6 of this Section 5.  If an affected employee engages in subsequent competitive activity in a situation such as that described in the first sentence of this Paragraph 8 of this Section 5 but such affected employee fails to come forward and so advise the Company, then, notwithstanding anything herein to the contrary, after evaluation or reevaluation and determination as described above, benefits to such affected employee shall be immediately terminated and the Company may take such steps as are necessary to recover any benefits paid since the date on which such activity became competitive.  If an affected employee commences engaging in activity which is not at the time of commencement competitive with AT&T as that phrase is used and defined in this Guideline but, subsequent thereto, AT&T designs, develops, manufactures, produces, offers for sale or sells a product or service such as to render the activity competitive, no question of forfeiture arises; provided, however, that, if the affected employee, knew or had reason to know at the time he commenced the activity that AT&T intended to design, develop, manufacture, produce, offers for sale or sell such product or service, then the Company may invoke the non-competition clauses.

 AT&T Non-Competition Guideline  5  October 5, 2005

9.           Consent to Compete.  In extraordinary circumstances and notwithstanding that an affected employee's competitive activity would, under the provisions of the Guideline, be grounds for invoking the non-competition clauses and terminating payment of incentive compensation and/or benefits to such affected employee, the Executive Vice President-Human Resources may consent to an affected employee's engaging in such activity if, in his discretion and judgment, he determines that, despite such activity's technical violation, the facts are overwhelmingly compelling or it is otherwise in the Company's best interest that relief from application of the non-competition clauses is warranted.  In such a case, the Executive Vice President - Human Resources, shall notify the affected employee of such consent; provided, however, that, despite such consent, the Company reserves the right to withdraw such   consent and to invoke the non-competition clauses within a reasonable period of time thereafter (such period, under ordinary circumstances and unless the Executive Vice President - Human Resources determines otherwise, to be two years) and without prior notice if and when, in such officer's discretion and judgment, the facts and circumstances warrant it.

10.           Waiver.  In his discretion, the Executive Vice President-Human Resourcesmay waive the operation of this Guideline, in whole or part, as to an affected employee, including under circumstances where such affected employee has executed a non-competition agreement with the Company.

SECTION 6.  GENERAL PROVISIONS

1.           Amendment.  Except as provided in Paragraph 2 of this Section 6, only the Board or the Committee shall have authority to amend or terminate this Guideline.

2.           Guideline Modifications.  The Executive Vice President - Human Resources, in his discretion and judgment and without notice, may from time to time make such minor changes in the Guideline as he deems required by law, by administrative efficiency, by the introduction, or modification of any Plan or Agreement or by changes in the Company structure.

3.           Severability.  To the extent that one or more of the provisions of this Guideline may be found to be unenforceable in any federal or state jurisdiction, such provisions are intended and are declared to be severable from the whole, and such a judgment shall not jeopardize the enforceability of the balance of the Guideline.

4.           No Intent to Prejudice Employee’s Rights.  This Guideline is intended to protect the interest of the Company and its shareholders and is not intended to prejudice any individual's right to consider, accept, continue or terminate employment, to engage in any activity or to establish any kind of business relationship or ownership interest with any enterprise which is consistent with the terms of this Guideline.

 AT&T Non-Competition Guideline  6  October 5, 2005

EX-10.P

Exhibit 10-p

PACIFIC TELESIS GROUP

DEFERRED COMPENSATION PLAN

FOR

NON-EMPLOYEE DIRECTORS

(Restated as Amended as of November 17, 1995)

 PAGE

ELIGIBILITY 1

1.	PARTICIPATION	1
2.	DEFERRED ACCOUNTS	1
3.	DISTRIBUTION	1
4.	MISCELLANEOUS	3

1.ELIGIBILITY

Each member of the Board of Directors of Pacific Telesis Group ("PTG" or the "Company") who is not an employee of the Company, or any of its subsidiaries, is eligible to participate in a Deferred Compensation Plan for Non-Employee Directors ("Plan").

2.PARTICIPATION

(a)Prior to the beginning of any calendar year, commencing with the calendar year 1985, each eligible Director or designated Director may elect to participate in the Plan by directing that all or any part of the compensation which would otherwise have been payable currently for services as a Director (including fees payable for services as a member of a committee of the Board) during such calendar year and subsequent calendar years shall be credited to a deferred compensation account subject to the terms of thePlan. Notwithstanding the foregoing, nodeferral election made under this Section 2 shall be effective with respect to compensation payable during any calendar year after 1995. [Last sentence added November 17, 1995.]

(b)An election to participate in the Plan shall be in the form of a document executed by the Director and filed with the Secretary of the Company. An election related to fees otherwise payable currently in any calendar year shall become irrevocable on the last day prior to the beginning of such calendar year. An election shall continue until a Director ceases to be a Director or until he or she terminates or modifies such election by written notice. Any such termination or modification shall become effective as of the end of the calendar year in which such notice is given with respect to all fees otherwise payable in subsequent calendar years.

(c)A Director who has filed a termination of election may thereafter again file an election to participate for any calendar year or years subsequent to the filing of such election.

3.DEFERRED ACCOUNTS

Deferred amounts shall be credited to the Director's account and shall bear interest from the date such fees would otherwise have been paid. The interest credited to the account will be compounded annually at the end of each calendar year shall be determined by the PTG Board of Directors from time to time.

4.DISTRIBUTION

(a)            At the time of election to participate in the Plan, a Director shall make an election with respect to the distribution of amounts deferred under the Plan plus accumulated interest. A Director may elect to receive such amounts in one payment or in some other number of approximately level annual installments (not exceeding 15). The amount of an annual installment shall be calculated by dividing the total amount, including interest, credited to the Director's account Immediately prior to such installment by the remaining number of installments. As specified by the Director, the first installment (or the single payment if the Director has so elected) shall be paid as soon as practicable after the first day of the calendar year following (i) the calendar year in which the Director ceases to be a Director of the Company or any of its subsidiaries; (ii) the calendar year in which the Director attains a specified age (between age 59-1/2 and 75), (iii) the earlier of a specified number of years (maximum of five) after the Director ceases to be a Director of the Company or any of its subsidiaries or the attainment of age 75, or (iv) the earlier of the attainment of a specified age (but not younger than 59-1/2) or the calendar year In which the Director ceases to be a Director of the Company or any of its subsidiaries. Subsequent installments shall be paid on the first day of each succeeding calendar year until the entire amount credited to the Director's account is paid. Amounts held pending distribution pursuant to this Item shall continue to accrue interest at the rate stated in Item 3.

1

(b)The election with respect to the distribution of amounts deferred under the Plan plus accumulated interest shall be contained in the document, referred to in Item 2(b), executed by the Director and filed with the Secretary of the Company. Such an election related to fees otherwise payable currently in any calendar year shall become irrevocable on the last day prior to the beginning of such calendar year.

(c)Notwithstanding an election pursuant to Item 4(a), in the event a Directorceases to be a Director of the Company or any of its subsidiaries and becomes a proprietor, officer, partner, employee, or otherwise becomes affiliated with any business that is in competition with the Company or any of its subsidiaries, or becomes employed by any governmental agency having jurisdiction over the activities of the Company or any of its subsidiaries, the entire balance of deferred fees, including interest, shall be paid immediately in a single payment.

(d)A Director may elect that, in the event the Director should die before full payment of all amounts credited to the Director's account, the balance of the deferred amounts shall be distributed in one payment, or in a number of annual installments (not exceeding 10), or by a continuation of the installment distributions being made or to be made to the Director, to the beneficiary or beneficiariesdesignated in writing by the Director, or if no designation has been made, to the estate of the Director in a single payment. The first installment (or the single payment if the Director has so elected, shall be paid on or about the first day of the calendar quarter next following the month of death. The preceding sentence shall not apply if the beneficiary or the beneficiaries are to receive a continuation of installment distributions being made or to be made to the Director. [Entire of (d) amended December 18, 1992]

(e)For purposes of determining when a distribution shall be made under this Section 4, a member of the Board of Directors of Pacific Telesis Group who becomes a member of the Board of Directors of PacTel Corporation on or before the total and complete separation of PacTel Corporation from Pacific Telesis Group shall not be considered to have ceased to be a Director of the Company or any of its subsidiaries until he or she ceases to be a member of the Board of Directors of PacTel Corporation. [Entire of (e) added February 25, 1994.]

2

5.           MISCELLANEOUS

(a)The rights of a Director to any deferred fees and/or interest thereon shall be those of a general creditor and shall not be subject in any manner to assignment by the Director.

(b)The Company shall not be required to reserve, or otherwise set aside, funds for the payment of its obligations hereunder. The Company's obligation to pay the deferred amounts shall be unfunded as to the Director.

(c)Copies of the Plan and any and all amendments thereto shall be made available at all reasonable times at the office of the Secretary of the Company to all Directors.

(d)The Executive Vice President, Human Resource Department of PTG, with the approval of the Executive Vice and General Counsel of PTG, shall be authorized to make minor or administrative changes to the Plan.

3

EX-10.P_I

Exhibit 10-p(i)

CONSENT OF THE

EXECUTIVE COMMITTEE OF

THE BOARD OF DIRECTORS

OF PACIFIC TELESIS GROUP

IN LIEU OF A MEETING

            THE UNDERSIGNED, being all the members of the Executive Committee of the Board of Directors of Pacific Telesis Group (the "Corporation"), a Nevada corporation, do hereby consent to and deem it advisable to adopt and do hereby adopt the following resolutions, without a meeting, pursuant to Nev. Rev. Stat. ss. 78.315, which consent shall have the same force and effect as a unanimous vote at a meeting duly held.

            WHEREAS, as a result of the merger on April 1, 1997, of the Corporation with SBC Communications Inc. (NV), a Nevada corporation, it is desirable to make changes to certain benefit plans of the Pacific Telesis Group:

            THEREFORE, BE IT:

            RESOLVED, that the Pacific Telesis Group Non-Qualified Savings Plan be, and it hereby is, amended as follows:  The following language shall be added at the end of the first paragraph of Section 2:  "An Employee who commences participation in another non-qualified deferral plan of Pacific Telesis Group or of any company controlling, controlled by or under common control with Pacific Telesis Group shall cease to be eligible to participate in this Plan."

      The following language shall be added at the end of the first paragraph of Section 4: "A Participant shall cease participation in this Plan effective upon participation in another non-qualified deferral plan of Pacific Telesis Group or of any company controlling, controlled by or under common control with Pacific Telesis Group."

            RESOLVED FURTHER, that the Pacific Telesis Group 1996 Executive Deferred Compensation Plan be, and it hereby is, amended as follows:

      The following paragraph shall be added at the end of Section 2:  "Provided, however, an employee shall not be eligible to participate in this Plan if the employee participates in another non-qualified deferral plan of Pacific Telesis Group or of any company controlling, controlled by or under common control with Pacific Telesis Group."

      The last sentence of Section 4.2 shall be amended to read as follows:  "An election with respect to Salary, STIP or Other Awards for services performed in a calendar year and/or with respect to LTIP for services performed in a multiple-year performance period shall be deemed irrevocably terminated when the employee, whether by transfer or termination of employment, or by participation in another non-qualified deferral plan of Pacific Telesis Group or of any company controlling, controlled by or under common control with Pacific Telesis Group, ceases to be eligible to participate in the Plan during such calendar year and/or such multiple-year performance period (as applicable)."

            RESOLVED FURTHER, that the Pacific Telesis Group 1996 Directors' Deferred Compensation Plan be, and it hereby is, amended as follows:

      The following paragraph shall be added at the end of Section 4.2:  "If a Director of Pacific Telesis Group as of March 31, 1997, became a Director (which term shall be deemed to include an Advisory Director) of SBC Communications Inc., a Delaware corporation, on April 1, 1997, then such Director may irrevocably elect in writing, on or before December 31, 1997, that the Director shall not be deemed to have ceased being a Director of Pacific Telesis Group so long as the Director continuously serves as a Director of SBC Communications Inc."

            RESOLVED FURTHER, that the Pacific Telesis Group Deferred Compensation Plan for Non-Employee Directors be, and it hereby is, amended as follows:

      The following subsection 4(f) shall be added at the end of Section 4:  "If a Director of Pacific Telesis Group as of March 31, 1997, became a Director (which term shall be deemed to include an Advisory Director) of SBC Communications Inc., a Delaware corporation, on April 1, 1997, then such Director may irrevocably elect in writing, on or before December 31, 1997, that the Director shall not be deemed to have ceased being a Director of Pacific Telesis Group so long as the Director continuously serves as a Director of SBC Communications Inc."

            The  undersigned, consisting of all the members of the Executive Committee of the Board of Directors of the Corporation, have executed these resolutions effective November 21, 1997.

Royce S. Caldwell

James D. Ellis

EX-10.Q

Exhibit 10-q

PACIFIC TELESIS GROUP

OUTSIDE DIRECTORS' DEFERRED STOCK UNIT PLAN

ARTICLE 1.     INTRODUCTION.

The Plan was adopted by the Board on January 26, 1996, to be effective May 2, 1996.  This Plan replaces the Retirement Plan for (a) Outside Directors whose Service commences on or after January 1, 1996, and (b) Outside Directors whose Service commenced before January 1, 1996, but who elect to participate in this Plan in lieu of the Retirement Plan, either as to their entire benefit or as to a portion of their benefit under the Retirement Plan.

The purpose of the Plan is to provide compensation to Outside Directors in a form that aligns their interests with the interests of the Company's stockholders.  The Plan provides for grants of Stock Units whose value at any given time is equal to the value of shares of Common Stock.

ARTICLE 2.     ADMINISTRATION.

The Plan shall be administered by the Committee.  The Committee shall (a) interpret the Plan and (b) make all other decisions relating to the operation of the Plan.  The Committee may adopt such rules or guidelines as it deems appropriate to implement the Plan.  The Committee's determinations under the Plan shall be final and binding on all persons.

ARTICLE 3.     ELIGIBILITY AND PARTICIPATION.

3.1  Commencement of Participation.  Participation in the Plan shall be limited to Outside Directors who either:

     (a)  Start serving as Outside Directors on or after January 1, 1996; or

     (b)  Started serving as Outside Directors before January 1, 1996, but elected to participate in this Plan pursuant to Section 3.2.

Eligible Outside Directors shall begin participating in the Plan on May 2, 1996, or when their Service commences, whichever is later.

3.2  Election To Participate in This Plan.  This Section 3.2 shall apply to each Outside Director who was an Outside Director both on December 31, 1995, and on January 1, 1996.  Such Outside Director shall elect in accordance with the following alternatives:

     (a)  If the Outside Director's annual benefit accrued under the Retirement Plan as of May 1, 1996 is equal to 100% of the annual retainer payable to Outside Directors, the Outside Director may elect to remain a participant in the Retirement Plan; or the Outside Director may elect to become a Participant in this Plan and to waive all benefits under the Retirement Plan (whether such benefits are attributable to Service before or after January 1, 1996).

     (b)  If the Outside Director's annual benefit accrued under the Retirement Plan as of May 1, 1996, is less than 100% of the annual retainer payable to Outside Directors, the Outside Director may elect to remain a participant in the Retirement Plan as to the Outside Director's prorate accrued benefit and receive only certain benefits under this Plan as described under Section 4.2 below, or the Outside Director may elect to become a Participant in this Plan as to his or her entire retirement benefit and to waive all benefits under the Retirement Plan (whether such benefits are attributable to Service before or after January 1, 1996).

The election  under this Section 3.2 shall be made in writing on or before May 1, 1996, and shall be irrevocable thereafter.

3.3  Termination of Participation.  Participation in the Plan shall terminate when the Outside Director has received all benefits payable to him or her under the Plan.

ARTICLE 4.     NUMBER OF STOCK UNITS.

4.1  General Rule.  Each Outside Director who began serving as Outside Director on or after January 1, 1996 shall receive 400 Stock Units for each calendar year in which he or she meets the following requirements:

     (a)  The Outside Director is a Participant on January 1 of such year; and

     (b)  The Outside Director will not receive any grant of shares of Common Stock at any time during such year under the Pacific Telesis Group 1994 Stock Incentive Plan or any other plan of the Company.

The grant of Stock Units for a calendar year shall occur as of the date of the regular annual meeting of the Company's shareowners for such year.

4.2  One-Time Grant for Pre-1996 Directors.  Each Participant whose Service commenced before January 1, 1996, and who has elected to become a participant under this Plan as to his or her entire retirement benefit shall receive a grant of Stock Units as of May 2, 1996.  The number of Stock Units included in such grant shall be equal to:

     (a)  The Present Value of the Participant's accrued benefit under the Retirement Plan as of May 1, 1996, divided by

     (b)  The closing price of one share of Common Stock reported by the New York Stock Exchange Composite Transactions Report (as set forth in the Western Edition of The Wall Street Journal) for the last trading day prior to May 2, 1996.

The number of Stock Units shall be rounded to the nearest multiple of five.

4.3  Additional Grant for Certain Pre-1996 Directors.  This Section 4.3 shall apply to each Participant whose Service commenced before January 1, 1996, and whose annual benefit accrued under the Retirement Plan as of May 1, 1996, is less than 100% of the annual retainer payable to Outside Directors.

     (a)  Numbers of Stock Units Granted A Participant described in this Section 4.3 shall receive an additional grant of Stock Units determined as follows:

          (i)  There shall be calculated the hypothetical Present Value of the Participant's accrued benefit under the Retirement Plan as of the Full Accrual Date, assuming that the Participant had continued to participate in the Retirement Plan until the Full Accrual Date and from such amount shall be subtracted the Present Value of the Participant's accrued benefit in full years under the Retirement Plan as of May 1, 1996.

          (ii) The Participant shall receive an additional grant of Stock Units as of May 2, 1996.  The number of Stock Units included in such additional grant shall be equal to the amount calculated under (i) above, divided by the closing price of one share of Common Stock reported by the New York Stock Exchange Composite Transactions Report (as set forth in the Western Edition of The Wall Street Journal) for the last trading day prior to May 2, 1996.

The number of Stock Units shall be rounded to the nearest multiple of five.

     (b)  Vesting of Stock Units and Associated Dividend Equivalents.  In determining the number of Stock Units (and dividend equivalents associated with such Stock Units) available for settlement and distribution under Article 6, the Stock Units and associated dividend equivalents granted under this Section 4.3 shall vest annually as of the date of the regular annual meeting of the Company's shareowners on a prorata basis during the years between May 2, 1996 and the Outside Director's Full Accrual Date.

ARTICLE 5.     DIVIDEND EQUIVALENTS.

Prior to settlement, each Stock Unit shall carry with it the right to dividend equivalents.  Such right entitles the Participant to be credited with an amount equal to all cash dividends paid on one share of Common Stock while the Stock Unit is outstanding.  Dividend equivalents shall be converted into additional Stock Units and shall be settled pursuant to Article 6.  The conversion into Stock Units shall be based on the closing price of Common Stock reported by the New York Stock Exchange Composite Transactions Report (as set forth in the Western Edition of The Wall Street Journal) for the last trading day prior to the date when the dividend is paid.  The number of Stock Units shall be rounded to the nearest whole number of Units.

ARTICLE 6.     DISTRIBUTION RULES AND SETTLEMENT OF STOCK UNITS.

6.1  General Rule.  Stock Units shall normally be settled as soon as reasonably practicable after the Participant's Service terminates for any reason; provided, however, that any Stock Units or associated dividend equivalents that have not vested under Section 4.3(b) shall not be available for settlement or distribution.  Stock Units shall be settled by paying the Participant a lump sum in cash, unless the Participant has made an election pursuant to Section 6.2 to receive installments.  The amount of such lump sum shall be equal to the product of:

     (a)  The number of vested Stock Units held by the Participant (including dividend equivalents converted into Stock Units); times

     (b)  The closing price of one share of Common Stock reported by the New York Stock Exchange Composite Transactions Report (as set forth in the Western Edition of The Wall Street Journal) for the trading day coinciding with or next preceding the Participant's last day of Service.

6.2  Election of Installment Form of Distribution.  Within 30 days of the time a Participant first begins participation under the Plan, he or she may make an irrevocable written election to receive the distribution of the cash representing the settlement of his or her Stock Units, less applicable withholding and employment taxes, in approximately equal annual installments.  In accordance with procedures established by the Company, a Participant may elect to receive payment in one of the following forms:

     (a)  approximately five equal annual installments; or

     (b)  approximately ten equal annual installments.

Installments subsequent to the first installment to the Participant shall be paid as soon as practicable after the January 1 of each succeeding calendar year until the entire value, less applicable withholding and employment taxes, is distributed.  The portion of Stock Units being held for future installments shall be credited with dividend equivalents as described in Article 5 prior to distribution.  The amount of each installment after the first installment shall be calculated in the manner described in Section 6.1 above, using the closing price the trading coinciding with or next preceding December 31 of the year prior to distribution.

6.3  Death of Participant.  Any payment under Section 6.1 or Section 6.2 after the Participant's death shall be made to his or her beneficiary or beneficiaries.  Each Participant shall designate one or more beneficiaries for this purpose by filing the prescribed form with the Company.  A beneficiary designation may be changed by filing the prescribed form with the Company at any time before the Participant's death.  If no beneficiary was designated or if no designated beneficiary survives the Participant, then any payment after the Participant's death shall be made to his or her estate.

ARTICLE 7.     PROTECTION AGAINST DILUTION

7.1  Adjustments.  In the event of a subdivision of the outstanding shares of Common Stock, a declaration of a dividend payable in Common Stock, a combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise) into a lesser number of shares of Common Stock, a recapitalization, a spinoff or a similar occurrence, the Committee shall make such adjustments as it, in its sole discretion, deems appropriate in one or more of:

     (a)  The number of Stock Units to be granted thereafter under Article 4; and

     (b)  The number of Stock Units already held by any Participant.

7.2  Reorganizations.  In the event that the Company is a party to a merger or other reorganization, Stock Units shall be subject to the agreement of merger or reorganization.  Such agreement may provide, without limitation, for the assumption of the Stock Units by the surviving corporation or its parent (with equitable adjustments), for their continuation by the Company (if the Company is a surviving corporation) or for accelerated settlement in cash.

ARTICLE 8.     GENERAL PROVISIONS.

8.1  Creditors' Rights.  A Participant shall have no rights other than those of a general creditor of the Company.  Stock Units represent an unfunded and unsecured obligation of the Company, subject to the terms and conditions of the Plan.

8.2  Voting Rights.  Participants shall have no voting rights with respect to their Stock Units.

8.3  Assignment of Rights.  Amounts credited under the Plan shall not be anticipated, assigned, attached, garnished, optioned, transferred or made subject to any creditor's process, whether voluntarily, involuntarily or by operation of law.  Any act in violation of this Section 8.3 shall be void.  However, this Section 8.3 shall not preclude a Participant from designating one or more beneficiaries pursuant to Section 6.3, nor shall it preclude a transfer of amounts credited under the Plan by will or by the laws of descent and distribution.

8.4  Withholding Taxes.  To the extent required by applicable federal, state, local or foreign law, a Participant or his or her successor shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise in connection with the Plan.  The Company shall not be required to make any payment under the Plan until such obligations are satisfied.

8.5  Choice of Law.  The Plan shall be governed by, and construed in accordance with, the laws of the State of Nevada (except their choice-of-law provisions).

8.6  Administration and Interpretation.  The Board shall have the sole authority to construe and interpret this Plan in accordance with its terms and provisions and to make rules relating to the administration thereof.  The decision of the Board with respect to any issues relating to the interpretation of this Plan shall be final, conclusive and binding on all parties.  The Board may delegate any part of its duties hereunder to the Company's Executive Vice President-Human Resources, subject to the final authority of the Board.  The Executive Vice President-Human Resources of the Company, with the approval of the Executive Vice President and General Counsel of the Company, shall be authorized to make minor or administrative changes to the Plan.

ARTICLE 9.     FUTURE OF THE PLAN.

9.1  Term of the Plan.  The Plan, as set forth herein, shall become effective on May 2, 1996.  The Plan shall remain in effect until it is terminated pursuant to Section 9.2.

9.2  Amendment or Termination.  The Board may, at any time and for any reason, amend or terminate the Plan.  An amendment of the Plan shall be subject to the approval of the Company's stockholders only to the extent required by applicable laws, regulations or rules.  No Stock Units shall be granted under the Plan after the termination thereof.  The termination of the Plan, or any amendment thereof, shall not affect any Stock Unit previously granted under the Plan; provided, however, that to the extent that the Board approves any new benefit plan or improvement to any existing benefit plan applicable to Outside Directors, it may terminate rights which have already accrued to a Participant under this Plan if, in its sole discretion, it determines that the benefits payable to a Participant under such new or improved plan adequately replace the benefits provided hereunder.

ARTICLE 10.      DEFINITIONS.

10.1 "Board" means the Company's Board of Directors, as constituted from time to time.

10.2 "Committee" means the Compensation and Personnel Committee of the Board.

10.3 "Common Stock" means the common stock of the Company.

10.4 "Company" means Pacific Telesis Group, a Nevada corporation.

10.5 "Full Accrual Date" means the earliest date on which the Outside Director could separate from Service with a benefit under the Retirement Plan equal to 100% of the annual retainer payable to Outside Directors, as in effect at the time of the separation from Service.

10.6 "Outside Director" means a member of the Board who is not a common-law employee of the Company or a subsidiary of the Company.

10.7 "Participant" means an Outside Director who participates in the Plan pursuant to Article 3.

10.8 "Plan" means this Pacific Telesis Group Outside Directors' Deferred Stock Unit Plan, as amended from time to time.

10.9 "Present Value" means the present actuarial value, determined by using the actuarial assumptions that would be applicable on the date in question for calculation of pension benefits under the Pacific Telesis Group Pension Plan for Salaried Employees.

10.10 "Retirement Plan" means the Pacific Telesis Group Outside Directors' Retirement Plan, as amended from time to time.

10.11 "Service" means service as an Outside Director.

10.12  "Stock Unit" means a bookkeeping entry representing, at any given time, the dollar value at such time of one share of Common Stock.

ARTICLE 11.  EXECUTION.

To record the adoption of the Plan by the Board, the Company has caused its duly authorized officer to affix the corporate name and seal hereto.

EX-10.R

Exhibit 10-r

PACIFIC TELESIS GROUP

1996 DIRECTORS' DEFERRED COMPENSATION PLAN

SECTION 1. ELIGIBILITY

Each member of the Board of Directors of Pacific Telesis Group ("Company") who is not an employee of the Company, or any of its Affiliates, is eligible to participate in the 1996 Directors' Deferred Compensation Plan ("Plan").

SECTION 2. PARTICIPATION; DEFERRAL ELECTION

  2.1 Deferral Election.  Prior to the beginning of any calendar year, commencing with the calendar year 1996, each eligible Director or designated Director may elect to participate in the Plan by directing that all or any part of the Compensation which would otherwise have been payable currently for services as a Director during such calendar year and subsequent calendar years shall be credited to a deferred Compensation account subject to the terms of the Plan.

  2.2 Form of Election, Modification or Termination.  An election to participate in the Plan shall be in the form of a document executed by the Director and filed with the Secretary of the Company.  An election related to Compensation otherwise payable currently in any calendar year shall become irrevocable on the last day prior to the beginning of such calendar year.  An election shall continue from year to year until a Director ceases to be a Director or until he or she terminates or modifies such election by written notice.  An election shall terminate on the day after a Director ceases to be a Director.  Any termination or modification by a Director of his or her election shall become effective as of the end of the calendar year in which written notice thereof is received by the Secretary of the Company, and shall be effective with respect to all fees otherwise payable in subsequent calendar years until a new election or modification is made by such Director in accordance with this Section 2.

  2.3 New Election After Prior Election Terminated.  A Director who has filed a termination of election may thereafter again file an election in accordance with Section 2.1 to participate for any calendar year or years subsequent to the filing of such election.

SECTION 3. DEFERRED COMPENSATION ACCOUNTS

  3.1 Establishment of Accounts; Credited Interest.  Deferred amounts shall be credited to the Director's account and shall bear interest from the date such fees would otherwise have been paid.  The interest credited to the account shall be determined by the Board of Directors from time to time and shall be compounded annually at the end of each calendar year.

  3.2 No Funding or Assignment.  It is intended that this Plan constitute an unfunded deferred compensation arrangement.  The amounts credited to the Plan account for each Director shall be held in the general funds of the Company.  All amounts in such accounts, including all Compensation deferred by a Director an all interest credited thereon, shall remain assets of the Company.  The Company shall not be required to reserve or otherwise set aside funds for the payment of amounts credited to Plan accounts.  The obligation of the Company to pay benefits under the Plan constitutes a mere promise to make benefit payments in the future, and shall be unfunded as to the Director, whose rights shall be those of a general unsecured creditor.  Title to and beneficial ownership of any assets which the Company may set aside or otherwise designate to make payments under the Plan shall at all times remain in the Company, and the Director shall not have any property interest in any specific assets of the Company.  The rights of a Director or his or her beneficiary to benefit payments under the Plan are not subject in any manner to assignment, alienation, pledge or garnishment by creditors.

SECTION 4. DISTRIBUTION

  4.1 Distribution Election.  At the time a Director makes an election to defer Compensation under the Plan, the Director shall also make an election with respect to the distribution of amounts credited to the Director's Plan account pursuant to such election, and interest credited thereon, during the Director's lifetime, and in the event of the Director's death prior to distribution of all amounts credited to the Director's Plan account.  Distribution elections shall become effective and irrevocable at the same times the election to defer Compensation becomes effective and irrevocable under Section 2.2.

  4.2 Options for Distribution During Life.  A Director may elect to receive the amounts credited to his or her Plan account in one payment or in some other number of approximately level annual installments (not exceeding 15).  The amount of an annual installment shall be calculated by dividing the total amount, including interest, credited to the Director's account immediately prior to such installment by the remaining number of installments.  As specified by the Director, the first installment (or the single payment if the Director has so elected) shall be paid as soon as practicable after the first day of the calendar year following:

     (A)  the calendar year in which the Director ceases to be a Director of the Company or any of its subsidiaries;

     (B)  the calendar year in which the Director attains a specified age between age 59-1/2 and 75;

     (C)  the earlier of calendar year containing the date that is a specified number of years (maximum of 5) after the date the Director ceases to be a Director of the Company or any of its subsidiaries or the calendar year in which the Director attains age 75; or

     (D)  the earlier of the calendar year in which the Director attains a specified age not younger than 59-1/2 or the calendar year in which the Director ceases to be a Director of the Company or any of its subsidiaries.

If an installment distribution is elected, subsequent installments shall be paid on the first day of each succeeding calendar year until the entire amount credited to the Director's account is paid.  Amounts held pending distribution pursuant to the Director's distribution election shall accrue interest at the rate determined by the Board of Directors for each year such amounts continue to be held.

     4.3  Immediate Single Payment.  Notwithstanding a Director's distribution election pursuant to Section 4.2, in the event a Director ceases to be a Director of the Company or any of its subsidiaries and becomes a proprietor, officer, partner, employee, or otherwise becomes affiliated with any business that is in competition with the Company or any of its subsidiaries, or becomes employed by any governmental agency having jurisdiction over the activities of the Company or any of its subsidiaries, the entire balance of amounts credited to the Director's Plan account, shall be paid as soon as practicable thereafter in a single payment.

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

     (A)  in one payment on or about the first day of the calendar quarter next following the month of death;

     (B)  in a number of annual installments not exceeding 10, commencing on or about the first day of the calendar quarter next following the month of death; or

     (C)  in the same manner elected under Section 4.3 for lifetime distributions to the Director, using as any specified age the date the Director would have attained that age if he or she had continued to live.

If no election has been made under this Section 4.4, the balance of the Director's Plan account shall be distributed in one payment as soon as practicable after the year of the Director's death.  If no beneficiary designation has been made, distribution shall be made to the estate of the Director.

SECTION 5.  ADMINISTRATION, AMENDMENT AND TERMINATION

     5.1  Plan Document.  Copies of the Plan and any and all amendments thereto shall be made available at all reasonable times at the office of the Secretary of the Company to all Directors.

     5.2  Amendment.  The Board of Directors may at any time make changes in the Plan, but such amendment shall have prospective effect only and shall not adversely affect the rights of any Director, without his or her consent, to any benefit under the Plan to which such Director was entitled prior to the effective date of amendment.  Changes in the interest rate applied to Plan account balances as determined by the Board of Directors from time to time in accordance with Section 3.1 shall not be deemed to be Plan amendments, notwithstanding that they apply to Compensation previously earned and deferred.  The Executive Vice President - Human Resources of Pacific Telesis Group, with the approval of the Executive Vice President and General Counsel of Pacific Telesis Group, shall be authorized to make minor or administrative changes to the Plan.

     5.3  Termination.  The Board of Directors may at any time terminate the Plan.  Any termination of the Plan shall not terminate the deferral of Compensation previously deferred into a Plan account, but may prevent the deferral of Compensation not yet earned notwithstanding the Director's prior election to defer such Compensation.

SECTION 6.     DEFINITIONS.

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

     6.1  "Affiliate" as the term relates to Pacific Telesis Group means subsidiary of or other entity  that controls, is controlled by, or is under common control with Pacific Telesis Group.  As used herein, "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such entity, whether through ownership of voting securities or other interests, by contract or otherwise.

     6.2  "Board of Directors" or "Board" shall mean the Board of Directors of Pacific Telesis Group.

     6.3  "Compensation" shall mean a Director's annual retainer fee, fees payable for services as a member of a committee of the Board including committee meeting fees, Board meeting fees, and any other compensation for services as a Director, excluding stock awards under Section 4.2 of the Pacific Telesis Group 1994 Stock Incentive Plan.  Compensation does not include reimbursement for expenses such as telephone service or travel costs.

EX-10.R_I

Exhibit 10-r(i)

CONSENT OF THE

EXECUTIVE COMMITTEE OF

THE BOARD OF DIRECTORS

OF PACIFIC TELESIS GROUP

IN LIEU OF A MEETING

            THE UNDERSIGNED, being all the members of the Executive Committee of the Board of Directors of Pacific  Telesis Group (the  "Corporation"),  a Nevada corporation,  do hereby consent to and deem it advisable to adopt and do hereby adopt the following resolutions, without a meeting, pursuant to Nev. Rev. Stat. ss. 78.315, which consent shall have the same force and effect as a unanimous vote at a meeting duly held.

            WHEREAS, as a result of the merger on April 1, 1997, of the Corporation  with SBC  Communications  Inc.  (NV), a Nevada  corporation, it is desirable to make changes to certain benefit plans of the Pacific Telesis Group:

            THEREFORE, BE IT:

            RESOLVED,  that the Pacific Telesis Group Non-Qualified Savings Plan be, and it hereby is, amended as follows:

The following language shall be added at the end of the first paragraph of Section 2:  "An  Employee who commences participation in another non-qualified deferral plan of Pacific Telesis Group or of any company controlling, controlled by or under common control with Pacific Telesis Group shall cease to be eligible to participate in this Plan."

The following language shall be added at the end of the first paragraph of Section 4: "A Participant shall cease participation in this Plan effective upon participation in another non-qualified deferral plan of Pacific Telesis Group or of any company controlling, controlled by or under common control with Pacific Telesis Group."

            RESOLVED  FURTHER, that the Pacific Telesis Group 1996 Executive

Deferred Compensation Plan be, and it hereby is, amended as follows:

The following paragraph shall be added at the end of Section 2: "Provided, however, an employee shall not be eligible to participate in this Plan if the employee participates in another non-qualified  deferral plan of Pacific Telesis Group or of any company controlling, controlled by or under common control with Pacific Telesis Group."

The last sentence of Section 4.2 shall be amended to read as follows:  "An election with respect to Salary, STIP or Other Awards for services performed in a calendar year and/or with respect to LTIP for services performed in a multiple-year performance period shall be deemed irrevocably terminated when the employee, whether by transfer or termination of employment, or by participation in another non-qualified deferral plan of Pacific Telesis Group or of any company controlling, controlled by or under common control with Pacific Telesis Group, ceases to be eligible to participate in the Plan during such calendar year and/or such multiple-year performance period (as applicable)."

            RESOLVED FURTHER, that the Pacific Telesis Group 1996 Directors' Deferred Compensation Plan be, and it hereby is, amended as follows:

The  following  paragraph  shall be added at the end of Section 4.2: "If a Director of Pacific Telesis Group as of March 31, 1997, became a Director (which term shall be deemed to include an Advisory Director) of SBC Communications Inc., a Delaware corporation, on April 1, 1997, then such Director may irrevocably elect in writing, on or before December 31, 1997, that the Director shall not be deemed to have ceased being a Director of Pacific Telesis Group so long as the Director  continuously  serves as a Director of SBC Communications Inc."

            RESOLVED FURTHER, that the Pacific Telesis Group Deferred Compensation  Plan for Non-Employee  Directors be, and it hereby is, amended as follows:

The following subsection 4(f) shall be added at the end of Section 4: "If a Director of  Pacific Telesis Group as of March 31, 1997, became a Director (which term shall be deemed to include an Advisory Director) of SBC Communications Inc., a Delaware corporation, on April 1, 1997, then such Director may irrevocably elect in writing, on or before December 31, 1997, that the Director shall not be deemed to have ceased being a Director of Pacific Telesis Group so long as the Director continuously serves as a Director of SBC Communications Inc."

            The  undersigned, consisting of all the members of the Executive Committee of the Board of  Directors of the Corporation, have executed these resolutions effective November 21, 1997.

      Royce S. Caldwell                                       James D. Ellis

EX-10.S

Exhibit 10-s

Transition Agreement by and between BellSouth Corporation and

Rafael de la Vega dated December 29, 2003

 TRANSITION AGREEMENT

         THIS AGREEMENT is made and entered into this 29 day of December, 2003, by and between BellSouth Corporation, a Georgia corporation ("Company"), and Rafael de la Vega ("Executive") (each, a "Party" and, collectively, the "Parties"):

         REASONS FOR THIS AGREEMENT. Executive has been employed by Company and its Affiliated Companies since 1974. During his tenure, Executive has served in a variety of senior capacities and currently serves as Company's President - Latin America Operations with overall responsibility for Company's operations in Argentina, Uruguay, Colombia, Venezuela, Chile, Peru, Ecuador, Panama, Nicaragua and Guatemala.

         Executive's previous assignments include having served as Company's President of Broadband and Internet Services with overall responsibility for the deployment, marketing and operations of broadband services, internet services and data support. Prior to that assignment, Executive was responsible for BellSouth Telecommunications, Inc.'s network operations in selected states.

         Company and SBC Communications Inc. combined their respective domestic mobile wireless voice and data services businesses in 2000 into the newly-formed entities Cingular Wireless LLC and Cingular Wireless Management Corp. (together with their subsidiary companies, collectively referred to herein as "Cingular").  Company now desires to have Executive join Cingular as its Chief Operating Officer, a move that will require termination of Executive's employment with Company. Through this Agreement, Company desires, in part, to provide certain transition benefits and severance protections to Executive. Executive has agreed to accept this assignment to Cingular and now intends to separate from employment with Company on December 30, 2003, and thereafter to join Cingular.

         Executive acknowledges that Company and Affiliated Companies have disclosed or made available and in the future will disclose and make available Confidential Information to Executive, which could be used by Executive to Company's or Affiliated Companies' detriment. Executive further acknowledges that the covenant not to compete and other restrictive covenants in this Agreement are fair and reasonable, that enforcement of the provisions of this Agreement will not cause him undue hardship, and that the provisions of this Agreement are reasonably necessary and commensurate with the need to protect Company and Affiliated Companies and their business interests and property from irreparable harm.

         1.       RESIGNATION FROM BELLSOUTH. Executive separates and resigns from employment with Company and any position Executive holds with any Affiliated Company effective December 30, 2003.

         2.       BELLSOUTH SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN.

                  (a)      Executive's transition to Cingular shall not be deemed to trigger a termination of employment with Company for purposes of the BellSouth Corporation Supplemental Executive Retirement Plan ("SERP").  Furthermore, Executive shall not be deemed to have terminated employment for purposes of SERP until such time as Executive's employment with Cingular terminates (or, if Executive leaves Cingular to accept employment without a break in service with another Participating Company, Affiliate or Interchange Company (as such terms are defined in SERP), Executive's employment shall not be deemed to have terminated for purposes of SERP before the earliest date on which Executive is no longer employed by any such entity).

                  (b)      Executive shall continue to participate in SERP for purposes of all benefits provided by SERP and to accrue benefits under SERP for his full period of service with Cingular as if he remained employed by Company. Company shall calculate Executive's SERP benefits by reference to his combined period of service otherwise recognized under SERP plus his period of Cingular service; by reference to compensation paid to Executive by Cingular with respect to his period of service at Cingular; and, to the extent applicable, by reference to compensation paid to him by Company with respect to his period of service with Company and other Affiliated Companies. In addition to offsets provided in SERP, Executive's benefits under SERP shall also be reduced by any benefits payable to him under any one or more tax-qualified or non-qualified defined benefit pension plans, excess plans, make-up plans or supplemental executive retirement plans at Cingular. In determining Executive's SERP benefits accrued while at Cingular, Company shall make such additional adjustments in the administration of SERP and the calculation of Executive's benefits thereunder as shall be necessary and appropriate to take into account Cingular's compensation and employment practices.

         3.       TERMINATION ALLOWANCE.

                  (a)      In the event Executive's employment with Cingular is terminated under circumstances described in Section 3(b) below, Company shall pay to Executive (or, in the event of Executive's death, to his estate) a termination allowance. The termination allowance shall be an amount equal to the sum of (i) two hundred percent (200%) of Executive's Base Salary in effect on the date of Executive's termination of employment, plus (ii) two hundred percent (200%) of the standard award amount applicable to Executive under his employer's short term bonus plan for the year in which his date of termination occurs, less all applicable withholdings, payable in a single lump sum payment. Payment of the termination allowance shall be made as soon as practicable following Executive's termination of employment under circumstances entitling him to such payment, and satisfaction of all conditions described in this Agreement on Executive's entitlement to such payment. For purposes of this Agreement, "Base Salary" shall refer to the gross annual base salary payable to Executive including (A) the amounts of any before-tax contributions made by Executive from such salary to any tax-qualified cash or deferred arrangement sponsored by his employer, and (B) the amount of any other deferrals of such salary under any nonqualified deferred compensation plan(s) maintained by his employer.

                  (b)      Executive's employment shall be deemed to have been terminated under circumstances described in this Section 3(b) only if:

                           (i)      (A) Executive's employment is terminated either by Cingular other than for Cause, or by Executive for Good Reason; (B) Executive shall within thirty (30) days following such termination of employment have notified Company of his desire to return to Company, and within thirty (30) days following such notification Company shall have failed to offer to Executive employment with Company or a subsidiary or affiliate of Company in a "comparable" position (as defined below); and (C) Executive executes a supplemental release, substantially in the form of the release agreement attached to this Agreement as Exhibit "A" (the "Release Agreement"), which is incorporated herein by this reference;

                           (ii)     Executive's employment is terminated by reason of Executive's Disability, and Executive executes a Release Agreement; or

                           (iii)    Executive's employment is terminated by reason of Executive's death.

         For purposes of clause (i) above, a "comparable" position shall mean a position (1) providing Base Salary and a standard or target short term bonus no less than those provided to Executive immediately prior to his termination of employment with Cingular (and disregarding any previous diminution in such amounts which did or would have constituted Good Reason under this Agreement); (2) reporting to Company's Chief Executive Officer; (3) providing types and amounts of other compensation and benefits comparable to those provided to other similarly situated Company officers; and (4) not requiring relocation outside the Atlanta, Georgia, metropolitan area.

         4.       DISCHARGE AND WAIVER. Executive fully releases and forever discharges Company and Affiliated Companies, and any employee, officer, director, representative, agent, successor or assign of Company and Affiliated Companies (both in their personal and official capacities), and all persons acting by, through and under or in concert with any of them, from any and all claims, demands, causes of action, remedies, obligations, costs and expenses of whatever nature, whether under the common law, state law, federal law (including but not limited to the Age Discrimination in Employment Act of 1967) or otherwise, through the date of this Agreement, including those arising from or in connection with the terms and conditions of employment with Company (and Affiliated Companies). This paragraph is not intended to and shall not affect benefits to which Executive may be entitled under any pension, savings, health, welfare, or other benefit plan in which Executive is a participant.

         5.       COVENANT NOT TO SUE. Executive covenants and agrees not to make or file any claim, demand or cause of action or seek any remedy of whatever nature, whether under the common law, state law, federal law or otherwise, arising from or in connection with the matters discharged and waived in Section 4, above. Notwithstanding the foregoing, in the event Executive files a charge or lawsuit under the Age Discrimination in Employment Act of 1967 (ADEA), and thereby challenges the validity of the release described in Section 4, such charge or lawsuit will not be considered a breach of this Section 5.

         6.       CONFIDENTIAL INFORMATION. Executive agrees to protect Confidential Information from misuse or unauthorized disclosure. In addition to complying with all applicable laws governing trade secret and confidential information disclosure, Executive will not (i) use, except in connection with work for Company or Affiliated Companies, or threaten to use, or (ii) disclose, communicate or give others access to (orally, in writing, electronically or digitally) or threaten to disclose, communicate or give other access to any Confidential Information. For purposes of this Agreement, "Confidential Information" shall mean information, whether generated internally or externally, whether in written, oral, digital, electronic or any other form or format, relating to Company's or Affiliated Companies' businesses that derives economic value, actual or potential, from not being generally known to other Persons and is the subject of efforts that are reasonable under the circumstances to maintain its secrecy or confidentiality, including, but not limited to, studies and analyses, technical or nontechnical data, programs, patterns, compilations, devices, methods, models (including cost and /or pricing models and operating models), techniques, drawings, processes, employee compensation data, and financial data (including marketing information and strategies and personnel data). For purposes of this Agreement, Confidential Information does not include information that is not a trade secret three (3) years after termination of Executive's employment with Company, but shall continue to include trade secrets as long as information remains a trade secret under applicable law. Executive acknowledges that any use of, reliance upon, disclosure or other misappropriation of Confidential Information inconsistent with the terms of this Agreement (including without limitation acceptance by Executive of a position in which the inevitability of such use, reliance, disclosure or misappropriation is reasonably anticipated) would result in material and irreparable damage and injury to Company or Affiliated Companies.

         7.       LIMITATION ON COMPETITION. In consideration of the additional payments, benefits and other rights that are being provided to Executive under this Agreement, during the one (1) year period following the Effective Date, Executive agrees not to provide any "Services" (as defined in the third paragraph of this Section 7) to any Person that competes directly with Company or any Affiliated Companies, whether Executive provides the Services as an employee, consultant, independent contractor, advisor or director. After the termination of Executive's employment, the foregoing covenant shall restrict

Executive's actions only with respect to competition in the Territory.

         For purposes of this Agreement, the term "Territory" shall mean the geographical territory consisting of (i) those territories in the countries of Argentina, Uruguay, Colombia, Venezuela, Chile, Peru, Ecuador, Panama, Nicaragua and Guatemala described in Exhibit "B" attached hereto and incorporated by reference herein and (ii) those counties and parishes in the states of Alabama, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, and Tennessee listed on Exhibit "B", which the Parties acknowledge represents geographical territories in which Executive, as of the Effective Date, has (or has had) responsibility for providing Services to Company or Affiliated Companies. The Parties also acknowledge that the entire Territory consists of geographical territories in which Company and Affiliated Companies, directly or indirectly, are conducting business on the Effective Date. In an effort to impose reasonable limitations on the scope of the Territory, Company has not required that Executive comply with the covenant in this Section 7 in all geographical areas where Company and Affiliated Companies are licensed to conduct business and are conducting business, even though the Parties acknowledge that Executive is performing Services throughout that entire area. Executive agrees that because of the widespread nature of Company's business, Executive's engaging in competitive activity anywhere in the Territory would irreparably injure Company or Affiliated Companies and that, therefore, a more limited geographic restriction is neither feasible nor appropriate.

         For purposes of this Agreement, the term "Services" shall mean services which Executive as of the Effective Date is responsible for providing to Company and Affiliated Companies, which Executive acknowledges consists of providing management, administrative and advisory services related to business planning and operations with respect to the communications services business, consisting of wireline (local exchange, exchange access and intraLATA toll) telecommunications services, systems and products, wireless (cellular, personal communications service, and mobile data) communications services, systems and products, electronic commerce or communications (internet and web based applications), data transmission and networking, entertainment services, systems and products, paging services, systems and products, and telecommunications directory advertising and publishing.

         Executive represents and warrants that Executive's education, training and experience are such that this Section 7 will not jeopardize or significantly interfere with Executive's ability to secure other gainful employment.

         8.       INTERPRETATION; SEVERABILITY OF INVALID PROVISIONS. Executive acknowledges and agrees that the limitations described in this Agreement, including specifically the limitations upon his activities, are reasonable in scope, are necessary for the protection of Company's and Affiliated Companies' business, and form an essential part of the consideration for which this Agreement has been entered into. It is the intention of the Parties that the provisions of this Agreement be enforced to the fullest extent permissible under applicable laws and public policies. Nonetheless, the rights and restrictions contained in this Agreement may be exercised and shall be applicable and binding only to the extent they do not violate any applicable laws and are intended to be limited to the extent necessary so that they will not render this Agreement illegal, invalid or unenforceable. If any provision of this Agreement shall be held to be illegal, invalid or unenforceable, the remaining provisions shall remain in full force and effect. The provisions of this Agreement do not in any way limit or abridge Company's or Affiliated Companies' rights under the laws of unfair competition, trade secret, copyright, patent, trademark or any other applicable law(s), all of which are in addition to and cumulative of Company's or Affiliated Companies' rights under this Agreement. Executive agrees that the existence of any claim by Executive against Company or any Affiliated Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to enforcement by Company or any Affiliated Company of any or all of such provisions or covenants.

         9.       CONSEQUENCES OF BREACH OF AGREEMENT BY EXECUTIVE. Executive agrees that he will reimburse Company and Affiliated Companies for any and all attorneys' fees incurred by Company and Affiliated Companies arising out of Executive's breach or threatened breach of any provision of this Agreement.  Executive also understands that his entitlement to and retention of the benefits provided to Executive under this Agreement are expressly conditioned upon his fulfillment of the terms and conditions of the Agreement, and Executive agrees, to the extent permitted or required by law, immediately to return or repay the amounts he has received under this Agreement from Company in excess of One Hundred Dollars ($100.00) upon Executive's breach of any provision of this Agreement. Although, as provided in Section 5 of this Agreement, the filing of a charge or a lawsuit under the Age Discrimination in Employment Act (ADEA) to challenge the validity of the Agreement will not be considered a breach, the severance and other benefits paid to Executive under this Agreement may serve as restitution, recoupment, and/or setoff in the event Executive prevails on the merits of such claim.

         10.      RELIEF. The Parties acknowledge that a breach or threatened breach by Executive of any of the terms of this Agreement would result in material and irreparable damage and injury to Company or Affiliated Companies, and that it would be difficult or impossible to establish the full monetary value of such damage. Therefore, Company and Affiliated Companies shall be entitled to injunctive relief in the event of Executive's breach or threatened breach of any of the terms contained in this Agreement.

         11.      ARBITRATION. Except for the right to seek temporary restraint or interim injunctive relief from a court of competent jurisdiction (as provided in Section 10, any dispute, controversy or claim arising out of or relating to this Agreement, or the breach, termination or invalidity of any provision hereof (collectively, a "Claim") shall be settled by arbitration pursuant to the National Rules for the Resolution of Employment Disputes of the American Arbitration Association. Any such arbitration shall be conducted by one arbitrator, with experience in the matters covered by this Agreement, mutually acceptable to the Parties. If the Parties are unable to agree on the arbitrator within thirty (30) days of one party giving the other party written notice of intent to arbitrate a Claim, the American Arbitration Association shall appoint an arbitrator with such qualifications to conduct such arbitration. The decision of the arbitrator in any such arbitration shall be conclusive and binding on the Parties. Any such arbitration shall be conducted in Atlanta, Georgia.

         The Parties indicate their acceptance of the foregoing arbitration requirement by initialing below:

                RDS                                             RDV

                Company                                    Executive

         12.      AGREEMENT BINDING. This Agreement shall be binding upon and inure to the benefit of Company and Affiliated Companies, and their successors, assignees, and designees, and Executive and Executive's heirs, executors, administrators, personal representatives and assigns.

         13.      ENTIRE AGREEMENT; PREVIOUS AGREEMENT. This Agreement and all exhibits to this Agreement (which are incorporated into the Agreement by reference) contain the entire agreement between the Parties and no statements, promises or inducements made by either Party, or agent of either Party, which are not contained in this Agreement shall be valid or binding; provided, however, that the matters dealt with herein supersede the terms of Company benefit plans and agreements between the Parties entered into pursuant to such plans only to the extent the provisions of such plans and related agreements are inconsistent with this Agreement and other provisions of such plans and related agreements not inconsistent with this Agreement are not affected. This Agreement may not be enlarged, modified or altered except in writing signed by the Parties.

         14.      NONWAIVER. The failure of Company or any Affiliated Companies to insist upon strict performance of the terms of this Agreement, or to exercise any option herein, shall not be construed as a waiver or a relinquishment for the future of such term or option, but rather the same shall continue in full force and effect.

         15.      NOTICES. All notices, requests, demands and other communications required or permitted by this Agreement or by any statute relating to this Agreement shall be in writing and shall be deemed to have been duly given if delivered or mailed, first-class, certified mail, postage prepaid, addressed to Company or Executive at the address reflected on Exhibit "C" attached hereto and incorporated by herein by this reference.

         16.      NONDISCLOSURE. Executive shall not disclose the existence or terms of this Agreement to any third party (excluding Executive's spouse and children), except to receive advice of legal counsel, financial advisors or tax advisors (who shall also be required to maintain its confidentiality) or to comply with any statutory or common law duty; provided that these restrictions on disclosure shall not apply to the extent that the existence of this Agreement are disclosed by Company or any Affiliated Company as part of its periodic public filings and disclosures or otherwise.

         17.      COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall constitute an original and all of which, when taken together, shall constitute one agreement.

         18.      GOVERNING LAW; CONSULTATION WITH COUNSEL. This Agreement shall be construed under and governed by the laws of the State of Georgia. Executive has been advised to consult with an attorney, acknowledges having had ample opportunity to do so and fully understands the binding effect of this Agreement. In this regard, Executive acknowledges that a copy of this Agreement was provided to Executive for review and consideration for up to twenty-two (22) days. Further, Executive understands that this Agreement may be revoked by Executive within seven (7) days from the date of execution of this Agreement. Executive further acknowledges that he is a sophisticated businessperson and that given his opportunity to review, negotiate and reject this Agreement, has bargaining power equal to that of Company. Therefore, the provisions of this Agreement shall not be construed against Company.

         19.      DEFINITIONS. For purposes of this Agreement, the following terms shall have the meaning specified below:

                  (a)      "AFFILIATED COMPANIES" shall mean those subsidiaries and affiliates of Company listed on Exhibit "D" attached hereto and incorporated herein by this reference and any direct successors to those companies through acquisition or merger or by way of name change.

                  (b)      "BASE SALARY" shall have the meaning ascribed to such term in Section 3 of this Agreement.

                  (c)      "CAUSE" shall mean Executive's (i) engaging in an act (or acts) of willful dishonesty involving Cingular, Company or other Affiliated Companies or their business(es) that is demonstrably injurious to Cingular, Company or other Affiliated Companies; or (ii) conviction of a crime classified as a felony.

                  (d)      "CONFIDENTIAL INFORMATION" shall have the meaning ascribed to such term in Section 6 of this Agreement.

                  (e)      "DISABILITY" shall mean an illness, injury or other incapacity which qualifies Executive for long-term disability benefits under the principal management long-term disability plan of Company.

                  (f)      "EFFECTIVE DATE" shall mean the date on which this Agreement is executed by the Parties as set forth on page 1 hereinabove.

                  (g)      "GOOD REASON" shall mean, without Executive's express written consent, any of the following circumstances: (i) a material diminution in the status or responsibilities of Executive's position from those which existed immediately prior to such diminution; (ii) a reduction in Executive's Base Salary as in effect immediately prior to such reduction, or the failure to pay a bonus award to which Executive is otherwise entitled under any of the short term or long term incentive plans in which Executive participates (or any successor incentive compensation plans) at the time such awards are usually paid; (iii) Executive becoming entitled to types or amounts of other compensation and benefits which are materially less (or materially less valuable) than the types or amounts of such compensation and benefits provided to other similarly situated officers; or (iv) a change in the principal place of Executive's employment requiring relocation outside the Atlanta, Georgia, metropolitan area.

                  (h)      "PERSON" shall mean any individual, corporation, limited liability entity, bank, partnership, joint venture, association, joint stock company, trust, unincorporated organization, governmental or other legal or business entity.

                  (i)      "SERP" shall mean the BellSouth Corporation Supplemental Executive Retirement Plan, as amended from time to time.

                  (j)      "SERVICES" shall have the meaning ascribed to such term in Section 7 of this Agreement.

                  (k)      "TERRITORY" shall have the meaning ascribed to such term in Section 7 of this Agreement.

         IN WITNESS WHEREOF, Company has caused this Agreement to be executed by its duly authorized representative, and Executive has executed this Agreement, as of the date written above.

EXECUTIVE:                                           BELLSOUTH CORPORATION

Rafael de la Vega                                      By: Richard D. Sibbernsen

--------------------------                               -----------------------------------

Rafael de la Vega                                     Title: Vice President - Human Resources

                                   EXHIBIT "A"

                                RELEASE AGREEMENT

                  For and in consideration of the mutual promises contained in the Agreement entered into on the __ day of __________, 2003, between Rafael de la Vega ("Executive") and BellSouth Corporation ("Company"), Executive does hereby, for himself, his heirs, executors, administrators, and assigns, release and forever discharge Company, its subsidiary, affiliated and associated companies, and any employee, officer, director, representative, agent, successor or assign of any such entity, and all persons acting by, through and under or in concert with any of them (both in their personal and official capacities), from any and all claims, demands, actions, causes of action, remedies, suits, obligations, damages, losses, costs and expenses, of whatever kind or nature, whether under common law, state law, federal law or otherwise, including without limitation the Age Discrimination in Employment Act of 1967, as amended, through the  date of this Release Agreement, including without limitation those arising from or in connection with the terms and conditions of Executive's employment with Company and any subsidiary, affiliated and associated companies, or the termination of Executive's employment. This Release is not intended to affect benefits to which Executive may be entitled under any pension, savings, health, welfare or other benefit plan in which Executive is a participant.

                  Executive covenants and agrees not to make or file any claim, demand or cause of action or seek any remedy of whatever nature, whether under common law, state law, federal law or otherwise arising from or in connection with the matters discharged and waived above. Notwithstanding the foregoing, in the event Executive files a charge or lawsuit under the Age Discrimination in Employment Act of 1967 ("ADEA") and thereby challenges the validity of the release described herein, such charge or lawsuit will not be considered a breach of this provision.

                  Executive has been advised to consult with an attorney, acknowledges having had ample opportunity to do so, and fully understands the binding effect of this Release Agreement. Executive acknowledges that a copy of this Release Agreement was provided to him on __________, 20__, for review and consideration for up to twenty-two (22) days. Executive understands that this Release may be revoked by him within seven (7) days from the date of execution of this Release Agreement.

                  Executive agrees that this Agreement shall be construed under and governed by the laws of the State of Georgia.

                  Executive now states that the only consideration for his signing this Release Agreement is the mutual promises and payment of the sum described above; that no other promises or agreements of any kind or nature have been made to, or with, him by Company or its agents to cause him to sign this Release Agreement, and that Executive fully understands the meaning and intent of this instrument.

                  WITNESS my hand and seal this ____ day of __________, 20___.

                                                ________________________________

                                                         RAFAEL DE LA VEGA

                                       A-1

                                   EXHIBIT "B"

                              GEOGRAPHIC TERRITORY

LATIN AMERICA

Argentina (Nationwide)

Chile (Nationwide)

Colombia (Nationwide)

Ecuador (Nationwide)

Guatemala (Nationwide)

Nicaragua (Managua and the Pacific Coast)

Panama (Nationwide)

Peru (Nationwide)

Uruguay (Abiatar - Coastal Corridor)

Venezuela (Nationwide)

UNITED STATES

Alabama:          Jefferson and Shelby Counties (Birmingham)

                          Mobile County (Mobile)

Florida:          Broward and Dade Counties (Miami-Ft. Lauderdale)

                      Palm Beach County (West Palm Beach)

Georgia:          Fulton, DeKalb, Cobb and Gwinnett Counties (Atlanta)

Kentucky:         Jefferson County (Louisville)

Louisiana:        Jefferson and Orleans Parishes (New Orleans)

                        East Baton Rouge, Ascension and Livingston Parishes

                       (Baton Rouge)

Mississippi:      Hinds, Madison and Rankin Counties (Jackson)

North Carolina:   Mecklenburg County (Charlotte)

                           Wake County (Raleigh)

South Carolina:   Anderson, Greenville and Spartanburg Counties (Greenville)

                            Richland and Lexington Counties (Columbia)

Tennessee:        Davidson County (Nashville)

                          Shelby County (Memphis)

                                       B-1

                                   EXHIBIT "C"

                                     NOTICES

To Company:       Charles R. Morgan

                  Executive Vice President and

                  General Counsel

                  BellSouth Corporation

                  Suite 2002

                  1155 Peachtree Street, N.E.

                  Atlanta, Georgia 30309-3610

To Executive:     Rafael de la Vega

                  8965 Old Southwick Pass

                  Alpharetta, Georgia 30022

                                       C-1

                                   EXHIBIT "D"

                                    Domestic

                       BellSouth Telecommunications, Inc.

                           BellSouth Enterprises, Inc.

                              Cingular Wireless LLC

                          BellSouth Long Distance, Inc.

                 BellSouth Advertising & Publishing Corporation

                L.M. Berry and Company (d/b/a The Berry Company)

                                  International

                          Abiatar S.A.

                          BellSouth Chile S.A.

                          BellSouth Colombia S.A.

                          BellSouth Comunicaciones S.A.

                          BellSouth Guatemala y Compania, S.C.A.

                          BellSouth International, Inc.

                          BellSouth Inversiones S.A.

                          BellSouth Panama S.A.

                          BellSouth Peru, S.A.

                          BellSouth Shanghai Centre, Ltd.

                          CellCom Israel Ltd.

                          Compania de Radiocomunicaciones Moviles S.A.

                          Compania de Telefonos del Plata S.A.

                          Otecel S.A.

                          SONOFON A/S

                          StarMedia Network, Inc.

                          Telcel C.A.

                          Telefonia Celular de Nicaragua, S.A.

                                       D-1

EX-10.U

Exhibit 10-u

EMPLOYMENT AGREEMENT

THIS AGREEMENT ("Agreement") by and between SBC COMMUNICATIONS INC., a Delaware corporation ("SBC"), SBC MANAGEMENT SERVICES, L.P. (the "Company") and EDWARD E. WHITACRE, JR. ("Employee") is effective the 16th day of November, 2001.

WITNESSETH THAT:

WHEREAS, Employee presently is Chairman of the Board and Chief Executive Officer of SBC and possesses executive skills and experience which SBC acknowledges are of substantial value and importance to the success of SBC’s present and future business operations; and

WHEREAS, SBC, the Company and Employee desire to provide for the terms and conditions upon which Employee will continue in the employ and service of SBC and the Company,

NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements herein set forth, the parties hereto agree as follows:

1.          Employment and Duties. The Company hereby employs Employee, and Employee agrees to continue in the employ of the Company, for the term herein specified (the “Employment Term”). During the Employment Term, Employee shall serve SBC and the Company as Chairman of the Board and Chief Executive Officer and shall devote his full time, attention and effort to the business and affairs of SBC and its affiliates.

2.          Term. Subject to Section 4 below, the Employment Term shall be a five (5) year period commencing November 16, 2001 and ending November 15, 2006; provided, however, upon notice provided by either party to the other within 60 days prior to the second anniversary of this Agreement, the Employment Term shall end on the third anniversary of this Agreement.

3.          Consideration, Benefits and Compensation.

           a.         Consideration. In consideration of Employee’s agreement to enter into this Agreement and to make the non-compete, non-solicitation and confidentiality covenants provided in Section 7, SBC agrees to make a one-time grant to Employee of 2,500,000 SBC options with an exercise price equal to the closing price of SBC Communications Inc. stock on the New York Stock Exchange on the effective date hereof. The options shall be granted under the 2001 Incentive Plan or another plan of SBC or as a special grant having terms substantially similar to the 2001 Incentive Plan. The terms of this agreement shall supercede any conflicting terms contained in any such grant. The options shall only vest upon completion of the earliest to occur of: (A) the end of the fifth (5th) year of the Employment Term; however, three-fifths (3/5) of the options shall vest after the first three (3) years of the Employment Term; (B) termination of the Employee’s employment due to death or Disability, as that term is used in the 2001 Incentive Plan; (C) a change in control, as that term is used in the 2001 Incentive Plan; or (D) in the event the Company terminates the employment of Employee without Cause. In the event the Employee voluntarily terminates his employment prior to the end of the first 3 years of the Employment Term, he shall forfeit all options under this grant. In the event the Employee voluntarily terminates his employment prior to the end of the Employment Term but after the first three years of the Employment Term, he shall forfeit unvested options under this grant.

                 b.         Benefits. In consideration of Employee’s provision of services to SBC and the Company throughout his career with SBC and its affiliates, SBC agrees to continue to provide to Employee, for the duration of Employee’s life, (i) health and welfare benefits on terms and conditions that are at least equivalent to the health and welfare benefits provided to Employee and his eligible dependents as of the date of this Agreement, (the employee’s spouse shall also be eligible to receive company provided health and welfare benefits on terms no less favorable than exist as of the date of employee’s retirement in the event employee shall pre-decease her) and (ii) access to and U.S. domestic use of SBC’s aircraft for a maximum of ten (10) hours per month, office facilities and support staff, and an automobile or automobile benefits at least equivalent to those provided to Employee as of the date of this Agreement; provided, however, Employee shall be responsible for the payment of all taxes incurred by him because of personal use of such aircraft.

              c.         Compensation. In order that SBC and the Company may continue to benefit from Employee’s experience, knowledge, reputation and contacts and in consideration of his services, Employee shall earn and the Company shall pay, during each calendar year of the Employment Term, base salary to be set by the SBC Board of Directors, which shall not be less than the rate of base salary earned by Employee during calendar year 2001, and, during the Employment Term, Employee’s short-term and long-term targets shall not be less than his short-term and long-term targets for calendar year 2001. In addition, Employee shall participate in SBC’s health and welfare, pension and other benefit plans and programs applicable generally to employees of SBC and its affiliates, and in any fringe benefit programs presently existing or hereafter adopted for the benefit of executive employees of SBC and its affiliates that are commensurate with Employee’s position. In the event that any of such programs require future action by the Board of Directors of SBC or a Committee of such Board (for example, as in the case of future stock grants, stock option grants, or long term incentive programs), Employee shall be a candidate for participation in such programs commensurate with Employee’s position on the basis applicable to other eligible executive employees of SBC and its affiliates. SBC and the Company may, from time to time, also consider the award of other forms of compensation to Employee.

4.          Effect of Termination of Employment. The Employment Term and, except as provided in this Section 4, Employee’s right to salary and compensation (including benefits) as provided for in Section 3(c) shall terminate only (a) upon the expiration of the Employment Term pursuant to Section 2, (b) if Employee shall die during the Employment Term, (c) if Employee shall voluntarily terminate his employment, or (d) if Employee’s employment is terminated for Cause during the Employment Term. The Company reserves the right to terminate the employment of Employee for any other reason not specified in the preceding sentence, but in such case, the Company shall be obligated to continue to provide Employee with the salary and compensation through the end of the then current Employment Term and to pay fees and benefits during the consulting period described below.

              For purposes of this Agreement, the term Cause shall mean (i) a willful failure or refusal of Employee to perform his employment or consulting duties and obligations hereunder; (ii) any fraud, embezzlement or other dishonesty of Employee, or (iii) the conviction of Employee of a felony committed in the performance by him of services on behalf of SBC or its affiliates.

              Employee’s right to salary and compensation (including benefits) shall not be limited or affected by any illness or disability of Employee, or on account of any accident or other event (except as provided herein) which either temporarily or permanently, or wholly or partially, shall prevent Employee from performing his employment duties hereunder.

              Employee shall continue to participate, so long as he continues in the employ of the Company or any affiliate of SBC, in employee benefit plans and other fringe benefit programs available to employees generally and to any group or class of employees to which he belongs on the same terms and conditions applicable to employees generally or to such group or class of employees, as the case may be.

5.          Consulting. Employee agrees that commencing upon Retirement, provided he has completed as least three (3) years of the Employment Term, he will provide consulting services and advice to SBC when and as reasonably requested by the Chief Executive Officer or by the Board of Directors of SBC until the earliest of the third anniversary of Employee’s Retirement or the Employee’s death (the “Consulting Term”). In consideration of such services, SBC or its affiliates shall, pay Employee an annual consulting fee equal to 50% of his annual rate of base salary in effect at his Retirement (the “Consulting Fee”), payable in monthly installments. In addition to the benefits specified in Section 3(b), SBC shall provide Employee continued access during the Consulting Term to SBC’s facilities and services comparable to those provided to him prior to his Retirement, including club memberships, financial planning, automobile or allowance therefore, and an office and support staff (collectively referred to as “Consulting Benefits”), on the same basis as such facilities and services were provided to Employee prior to his Retirement. During the Consulting Term, SBC shall also reimburse Employee, upon the receipt of appropriate documentation, for reasonable expenses, which he incurs in providing such consulting services at the request of the Chief Executive Officer or the Board of Directors of SBC. During the Consulting Term, Employee and SBC agree and acknowledge that Employee shall be an independent contractor. Notwithstanding the foregoing, in the event his employment is terminated for Cause during the Employment Term, the obligation to perform consulting services and advice shall not begin and the Company shall not be obligated to pay Employee any fees, benefits, or expenses.

            The Consulting Term and Employee’s right to the Consulting Fee and Consulting Benefits as provided for in this Section 5 shall terminate only (a) upon the expiration of the Consulting Term pursuant to this Section 5, (b) if Employee shall die during the Consulting Term, or (c) if Employee’s consulting arrangement is terminated by SBC for Cause during the Consulting Term. Employee’s right to the Consulting Fee and Consulting Benefits shall not be limited or affected by any illness or disability of Employee, or on account of any accident or other event (except as provided herein) which either temporarily or permanently, or wholly or partially, shall prevent Employee from performing his consulting duties hereunder.

6.          Change of Control. Notwithstanding anything to the contrary herein, in the event that Employee receives a payment pursuant to that certain change in control/severance agreement between Employee and SBC dated March 1, 1989, as amended in an agreement dated March 25, 1998, as a result of a “change in control of the Corporation” (as that term is defined in such change in control/severance agreement, as amended), the Employment Term shall expire on the date such payment is made; provided, however, the number of days in the Employment Term that expire pursuant to this Section 6 shall be added to the Consulting Term, whereupon the Employee shall be entitled to receive the Consulting Fees and Consulting Benefits as described in Section 5 during the Consulting Term as extended by this Section 6.

7.          Non-Disclosure, Non-Solicitation and Non-Compete Agreements. Employee agrees that he will not disclose to any other firm or person any of SBC’s or its affiliates’ trade secrets or any confidential information relating to its or their business. Employee further agrees that, for the three year period commencing upon the expiration of the Employment Term (but excepting any period following a termination by SBC with Cause), or if longer, at any time during the Consulting Term, he will not without the prior consent of SBC, (a) enter the employ of, or have any material interest in, directly or indirectly, any business in this country in competition with SBC or any of its affiliates, (b) contact, solicit or attempt to solicit, directly or indirectly any customer of SBC or any of its affiliates, or (c) induce, directly or indirectly, any personnel of SBC or any of its affiliates to leave SBC or any of its affiliates nor interfere with the faithful discharge by such personnel of their duties to serve SBC or its affiliates.

8          Miscellaneous. Neither this Agreement nor any rights hereunder shall be assignable by either party hereto.

This Agreement shall be construed and interpreted under the laws of the State of Texas. If any payments or benefits provided by SBC, the Company or any of their respective affiliates to Employee are subject to golden parachute excise tax, then SBC shall make Employee whole for such excise taxes on an after-tax basis. Any dispute arising out of or relating to this Agreement, except any dispute by SBC arising out of or relating to matters addressed in Section 7, shall be settled by final and binding arbitration, which shall be the exclusive means of resolving any such dispute, and the parties specifically waive all rights to pursue any other remedy, recourse or relief. Any such arbitration shall be expedited and conducted in San Antonio, Texas and shall be governed by the United States Arbitration Act, 9 U.S.C. Section 1-16, and judgment upon the award rendered by the arbitration may be entered by any court having jurisdiction.

IN WITNESS WHEREOF, the parties have executed this Agreement, as amended, this 16th day of November, 2001.

SBC COMMUNICATIONS INC.

SBC MANAGEMENT SERVICES, L.P.

By: /s/ Jess T. Hay

Printed Name: Jess T. Hay

Its: Chairman, Human Resources

Committee of the Board of Directors

EMPLOYEE

/s/ Edward E. Whitacre, Jr.

Edward E. Whitacre, Jr.

EX-10.BB

Exhibit 10-bb

AT&T  INC.

STOCK PURCHASE AND DEFERRAL PLAN

Adopted November 19, 2004

As amended through November 15, 2007

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:

                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)  Team Award.

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.

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.

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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, 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, Disability (but only while such Employee is deemed by the Employer to be an Employee of such Employer) or Leave of Absence;

(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.

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           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, 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 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

                      20 years or more                                                      55 or older

                      25 years or more                                                      50 or older

                      30 years or more                                                      Any age

Alternative (a) above will not apply for purposes of determining Retirement for making Employee Contributions of Short Term Incentive Awards.  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.

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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 Team Award) 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 Team Award and related Matching Share Units.  Earnings 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; 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 2001 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.

Team Award.  The annual award determined to be the “Team Award” by AT&T, together with any individual award determined by AT&T to be the Individual Discretionary Award made in connection therewith or comparable awards, if any, determined by AT&T to be used in lieu of these awards.

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 occur when such Employer incurs a Change in Control.

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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.

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3.3           Claims Procedure.

Subject to the authority of the Committee over the Plan, AT&T shall appoint a Claims Board to adjudicate claims brought by or in respect to Participants and their beneficiaries relating to benefits under the Plan.  A Participant may apply in writing to the Claims Board to make a claim under this Plan.  The Claims Board shall provide written notice within 90 days to a Participant whose claim hereunder has been denied, setting forth reasons for such denial or explaining that an extension of the time for processing the claim is necessary, written in a manner calculated to be understood by such person.  After receipt of such notice, or expiration of 90 days without any response from the Claims Board, the Participant may appeal the decision in writing to the Senior Executive Vice President of AT&T in charge of Human Resources, or to the person’s successor, within 90 days, except that if the Participant is an Insider, as that term is used in the 2001 Incentive Plan, then the Participant's appeal shall be to the Committee.  The Participant shall receive written notice within 60 days of the resolution of the appeal, and if denied, setting forth reasons for the denial or explaining that an extension of time for processing the appeal is necessary, written in a manner calculated to be understood by such person.  If no notice of the decision on the Participant’s appeal is furnished within the required time frame, the appeal will be deemed denied. The Participant shall receive a full and fair review of the decision denying the claim in accordance with the requirements of ERISA.

All interpretations, determinations and decisions of the Claims Board with respect to any claim, including without limitation the appeal of any claim, shall be made by the Claims Board, in its sole discretion, based on the Plan and comments, documents, records, and other information presented to it, and shall be final, conclusive and binding.

The claims procedures set forth in this section are intended to comply with United States Department of Labor Regulation § 2560.503-1 and should be construed in accordance with such regulation.  In no event shall it be interpreted as expanding the rights of claimants beyond what is required by United States Department of Labor Regulation § 2560.503-1.

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 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 Team Award, 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.  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.

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(2)  Up to 100% (in whole percentage increments or in dollars) of a Short Term Incentive Award (with any contribution of the discretionary award related thereto determined separately by the Employee), or up to 30% (in whole percentage increments) of a Team Award,  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.  An Employee may make such an election with respect to the type of Award (Short Term Incentive Award or Team Award) 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, except that the discretionary award related to the Short Term Incentive Award will not be affected by or affect a Team Award election.

(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.  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 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 solely pursuant to a proper election and only during the Employee's lifetime and while the Participant remains an Employee and the Participant’s Employer has not incurred a Change in Control; provided, however, with respect to Employee Contribution elections made prior to 2007, the Employee must remain an Eligible Employee while making any such contributions.  Notwithstanding the foregoing, Termination of Employment of an Employee shall not result in the cancellation of an election to make Employee Contributions solely with respect to contribution of annual base salary earned prior to Termination but paid within 60 days thereafter or with respect to a Short Term Incentive Award paid after Retirement (and such person shall be deemed an Employee for such contributions).

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(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 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) using the "check date" shown on the related pay record (sometimes referred to as the "paycheck stub") as the contribution date (if no "check date" is shown, then the date of the pay record).  Where there has been an overpayment of gross compensation, the amount of the overpayment will not be considered in determining the contribution amount.  In no event shall the Participant have any recourse against an Employer under this Plan for any underpayment, overpayment or delayed or correcting payment of compensation.  In the event a pay period (the period over which services are rendered for the relevant compensation) relates to services rendered during or before the taxable year of the relevant election, then only the compensation relating to services performed in the calendar year following the calendar year of the election may be contributed to this Plan.  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, exceeds the limit in effect under Section 401(a)(17) of the Code applicable with respect to such Plan Year.

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

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 Team Award or (2) Team Award).

(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           Vesting and 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 only upon becoming vested, 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 if not otherwise forfeited.

Upon the Participant's Termination of Employment, all the Participant's unvested Share Units shall be forfeited and shall not be reinstated if the Participant is re-Employed.

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.  If the Participant Terminates Employment but has a Share Deferral Account that commenced in the same year the Share Deferral Account would be distributed, then that Account would instead distribute in the calendar year following the year of the contribution.  For example, if a Retirement eligible Employee Terminated Employment in 2005 after making an election with regard to a Short Term Incentive Award to be paid in 2006, the Share Deferral Account relating to that award would be distributed in 2007.

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(b)  Election to Delay a Scheduled Distribution.  While an Employee, 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 the September 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.  For example, an election to defer a scheduled distribution in 2010 must be made from September 1, 2008 through 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:

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(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.

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.)

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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 Stock 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 Stock 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.

(b)  Notwithstanding Article 4 to the contrary, an Employee who is an Eligible Employee as of April 30, 2008, may thereafter make an election on or prior to the last Business Day of the immediately following June with respect to the contribution of Team Award or Short Term Incentive Award for the following Plan Year.

(c)  Notwithstanding 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.

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.

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8.2           Term of Options.

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

8.3           Exercise Price.

The Exercise Price of an Option shall be the FMV of the Stock on the date of issuance of the Options and Options 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.

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(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).

(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.

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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, a 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.

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(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 not cause the accelerated distribution of any Account unless such termination is effected in accordance with Section 409A.

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.

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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.  Provided, however, that in no event shall any such amendments be made in violation of the requirements of Section 409 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.

10.2        Elections and Notices.

Notwithstanding anything to the contrary contained in this Plan, all elections and notices of every kind under this Plan shall be made 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.

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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.

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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 Bexar County, Texas, and no other, (b) all claims with respect to any such action shall be heard and determined exclusively in such Texas court, and no other, (c) such Texas court shall have sole and exclusive jurisdiction over the person of such parties and over the subject matter of any dispute relating hereto and (d) that the parties waive any and all objections and defenses to bringing any such action before such Texas court, including but not limited to those relating to lack of personal jurisdiction, improper venue or forum non conveniens.

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.

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EX-10.CC

Exhibit 10-cc

AT&T INC.

CASH DEFERRAL PLAN

Adopted November 19, 2004

As amended through November 15, 2007

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:

           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)  Team Award.

 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.

 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 Team Award) and a separate Cash Deferral Account for the Short Term Incentive Award and/or Team Award.  Earnings on each of Employee Contributions shall accrue to the respective Cash Deferral Accounts where they are earned

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 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, 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, Disability (but only while such Employee is deemed by the Employer to be an Employee of such Employer) or Leave of Absence;

 (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.

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 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 2001 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, 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 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.

 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:

 Net Credited Service                                              Age

                      10 years or more                                                      65 or older

                      20 years or more                                                      55 or older

                      25 years or more                                                      50 or older

                      30 years or more                                                      Any age

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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.

 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; 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 2001 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.

 Team Award.  The annual award determined to be the “Team Award” by AT&T, together with any individual award determined by AT&T to be the Individual Discretionary Award made in connection therewith or comparable awards, if any, determined by AT&T to be used in lieu of these awards.

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 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.

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3.2      Claims Procedure.

 Subject to the authority of the Committee over the Plan, AT&T shall appoint a Claims Board to adjudicate claims brought by or in respect to Participants and their beneficiaries relating to benefits under the Plan.  A Participant may apply in writing to the Claims Board to make a claim under this Plan.  The Claims Board shall provide written notice within 90 days to a Participant whose claim hereunder has been denied, setting forth reasons for such denial or explaining that an extension of the time for processing the claim is necessary, written in a manner calculated to be understood by such person.  After receipt of such notice, or expiration of 90 days without any response from the Claims Board, the Participant may appeal the decision in writing to the Senior Executive Vice President of AT&T in charge of Human Resources, or to the person’s successor, within 90 days, except that if the Participant is an Insider, as that term is used in the 2001 Incentive Plan, then the Participant's appeal shall be to the Committee.  The Participant shall receive written notice within 60 days of the resolution of the appeal, and if denied, setting forth reasons for the denial or explaining that an extension of time for processing the appeal is necessary, written in a manner calculated to be understood by such person.  If no notice of the decision on the Participant’s appeal is furnished within the required time frame, the appeal will be deemed denied.  The Participant shall receive a full and fair review of the decision denying the claim in accordance with the requirements of ERISA.

 All interpretations, determinations and decisions of the Claims Board with respect to any claim, including without limitation the appeal of any claim, shall be made by the Claims Board, in its sole discretion, based on the Plan and comments, documents, records, and other information presented to it, and shall be final, conclusive and binding.

 The claims procedures set forth in this section are intended to comply with United States Department of Labor Regulation § 2560.503-1 and should be construed in accordance with such regulation.  In no event shall it be interpreted as expanding the rights of claimants beyond what is required by United States Department of Labor Regulation § 2560.503-1.

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 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 Team Award, 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.

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(2)  Up to 100% (in whole percentage increments or in dollars) of a Short Term Incentive Award (with any contribution of the discretionary award related thereto determined separately by the Employee), or up to 50% (in whole percentage increments) of a Team Award (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.  An Employee may make such an election with respect to the type of Award (Short Term Incentive Award or Team Award) 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, except that the discretionary award related to the Short Term Incentive Award will not be affected by or affect a Team Award election.

 (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.)

 (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 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 Team Awards to this Plan but only if the Employee elects to contribute at least 15% of Base Compensation other than Team Awards for the same Plan Year to the Stock Purchase and Deferral Plan and/or (2) make Employee Contributions of Team Award to this Plan but only if the Employee elects to contribute at least 15% of Team Award for the same Plan Year to the Stock Purchase and Deferral Plan.

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4.2      Contributions to a Cash Deferral Account.

 (a) Employee Contributions shall be made solely pursuant to a proper election and only during the Employee's lifetime and while the Participant remains an Employee and the Participant’s Employer has not incurred a Change in Control; provided, however, with respect to Employee Contribution elections made prior to 2007, the Employee must remain an Eligible Employee while making any such contributions.  Notwithstanding the foregoing, Termination of Employment of an Employee shall not result in the cancellation of an election to make Employee Contributions solely with respect to contribution of annual base salary earned prior to Termination but paid within 60 days thereafter or with respect to Incentive Awards paid after Retirement (and such person shall be deemed an Employee for such contributions).

 (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 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) using the "check date" shown on the related pay record (sometimes referred to as the "paycheck stub") as the contribution date (if no "check date" is shown, then the date of the pay record).  Earnings on each Cash Deferral Account shall be recorded on Participant’s statements quarterly.  Where there has been an overpayment of gross compensation, the amount of the overpayment will not be considered in determining the contribution amount.  In no event shall the Participant have any recourse against an Employer under this Plan for any underpayment, overpayment or delayed or correcting payment of compensation.  In the event a pay period (the period over which services are rendered for the relevant compensation) relates to services rendered during or before the taxable year of the relevant election, then only the compensation relating to services performed in the calendar year following the calendar year of the election may be contributed to this Plan.  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 in up to five (5) installments.  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.

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(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.

 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.  Regardless of the distribution election made, if the Participant Terminates Employment but has a Cash Deferral Account that commenced in the same year the Cash Deferral Account would commence distribution, then that Account would instead commence distribution in the calendar year following the year the Account commenced.  For example, if a Retirement eligible Employee Terminated Employment in 2005 after making an election with regard to an Incentive Award to be paid in 2006, the Cash Deferral Account relating to that award would commence distribution in 2007.

 (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 and 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 Employee must elect the new distribution and new number of installments, if any, on or after the September 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.  For example, an election to defer a scheduled distribution in 2010 must be made from September 1, 2008 through 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 ”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.

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 (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-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.

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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.

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.

6.2      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 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.

 (b)  Notwithstanding Article 4 to the contrary, an Employee who is an Eligible Employee as of April 30, 2008, may thereafter make an election on or prior to the last Business Day of the immediately following June with respect to the contribution of Team Award or Short Term Incentive Award for the following Plan Year.

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 not cause the accelerated distribution of any Account unless such termination is effected in accordance with Section 409A.

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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.  Provided, however, that in no event shall any such amendments be made in violation of the requirements of Section 409 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      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 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.

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           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.

8.3      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 make distributions under and in accordance with the terms of the Plan.

8.4      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, 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.

8.5      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.

8.6      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.

Page 12

8.7      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.

8.8      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 Bexar County, Texas, and no other, (b) all claims with respect to any such action shall be heard and determined exclusively in such Texas court, and no other, (c) such Texas court shall have sole and exclusive jurisdiction over the person of such parties and over the subject matter of any dispute relating hereto and (d) that the parties waive any and all objections and defenses to bringing any such action before such Texas court, including but not limited to those relating to lack of personal jurisdiction, improper venue or forum non conveniens.

8.9      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.

8.10    Successors and Assigns.

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

Page 13

EX-10.KK

Exhibit 10-kk

BELLSOUTH CORPORATION

EXECUTIVE INCENTIVE AWARD DEFERRAL PLAN

(as amended and restated effective January 1, 2008)

SECTION 1. STATEMENT OF PURPOSE

The purpose of the Executive Incentive Award Deferral Plan is to permit the deferral of all or a portion of an Executive's Short and/or Long Term Incentive Awards. The objective of the Plan is to provide a means of postponing the receipt of income until some future time (e.g., retirement, etc.).  Notwithstanding the foregoing, no deferrals will be permitted under this Plan with respect to awards for services performed in years after 1997.  The Plan also provides for certain additional payments in recognition of reduced company matching contributions to Savings Plans on behalf of Executives under circumstances described herein; though no additional payments are due after 2008.

SECTION 2. DEFINITIONS

1.   The word "Plan" shall mean the BellSouth Corporation Executive Incentive Award Deferral Plan.

2.   The word "Company" shall mean the BellSouth Corporation, or its successors.

3.   The words "Chairman of the Board," "President" and "Board of Directors" or "Board" shall mean the Chairman of the Board of Directors, President and Board of Directors, respectively, of the Company.

4.   The term "Executive" or "eligible employee" shall mean an employee of the Company (or a participating subsidiary of the Company) who holds a position which the Board of Directors has designated to be within that company's Executive Management Group.

SECTION 3. ADMINISTRATION

1.   The senior Human Resources officer of the Company (the "Responsible Officer") shall be responsible for administration of the Plan.

2.   The Responsible Officer shall have the exclusive responsibility and complete discretionary authority to control the operation and administration of the Plan, with all powers necessary to properly carry out such responsibility, including without limitation the power (i) to interpret the terms of the Plan including the power to construe ambiguous or uncertain terms, (ii) to establish reasonable procedures  with which participants must comply to exercise any right established  under the Plan, (iii) to determine status, coverage and eligibility for, and the amount of, benefits, (iv) to resolve all questions that arise in the operation and administration of the Plan, and (v) to delegate his responsibilities hereunder to any person or entity. All actions or determinations of the Responsible Officer (or his delegate) shall (subject to Section 3.3) be final, conclusive and binding on all persons. The rights and duties of participants and other persons and entities are subject to, and governed by, such acts of administration, interpretations, procedures, and delegations.

3.   Claims for benefits under the Plan may be filed with the Responsible Officer (or his delegate) on forms or in such other written documents as the Responsible Officer may prescribe.  The Responsible Officer 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.

Any eligible employee who has been denied a benefit shall be entitled, upon request to the Responsible Officer, to appeal the denial of the claim.  The claimant (or his duly authorized representative) may review pertinent documents related to the Plan and in the Responsible Officer'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 Responsible Officer no later than 60 days after receipt of the written notification of denial of a claim provided for in the preceding paragraph.  The Responsible Officer'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.

SECTION 4. BENEFITS

1.   ELIGIBILITY

An employee of the Company or a subsidiary of the Company which shall have elected to participate in the Plan (each such company sometimes being referred to herein as a "Participating Company") who is eligible for an award under his company's Short Term Incentive Plan and/or who has been granted an award under the BellSouth Corporation Executive Long Term Incentive Plan shall be eligible to participate in the Plan.  In addition, each person who is a "Participant" as that term is defined in Section 4A.2 of the Plan shall be eligible for benefits as described in Section 4A.

2.   PARTICIPATION

(a) Prior to the beginning of any calendar year, an eligible employee may elect to participate in the Plan by directing that all or part of the awards under his company's Short Term Incentive Plan and/or under the BellSouth Corporation Executive Long Term Incentive Plan which the employee's company would otherwise pay currently to the employee in which calendar year and subsequent calendar years shall be credited to a deferred account subject to the terms of the Plan. In no event, however, shall the part of an award under either plan credited to a deferred account subject to the terms of the Plan.  In no event, however, shall the part of an award under either plan credited during any calendar year be less than $1,000 (based on a valuation at the time the award would otherwise be paid).

(b) Such an election to participate in the Plan shall be in the form of a document executed by the employee and filed with the employee's company.  An election related to awards otherwise payable currently in any calendar year shall become irrevocable on the last day prior to the beginning of the preceding calendar year.

(c) An election shall continue until the employee terminates or modifies such election by written notice, or until the employee ceases to be employed by his company (other than a transfer to another company whose employees are eligible to participate in the Plan), in which case the employee shall be considered to have terminated the election.  Any such termination or modification shall become effective as of the end of the calendar year in which such notice is given with respect to all awards for which irrevocable elections regarding deferral have not been made.

(d) An eligible employee who has filed a termination of election may thereafter again file an election to participate with respect to awards otherwise payable in calendar years subsequent to the filing of such election.

(e) For the purpose of this Section 4, an election made by an eligible employee under the comparable provisions of the predecessor Bell System Senior Management Incentive Award Deferral Plan ("the Predecessor Plan") shall be considered as an election made under this Section 4, and the reference to short term incentive awards in such an election under the Predecessor Plan shall be considered to refer to awards under the Short Term Incentive Plan of any company participating in this Plan, and the reference to long term incentive awards in such an election shall be considered to refer to awards under the BellSouth Corporation Long Term Incentive Plan.

3.   DEFERRED ACCOUNTS

(a) Deferred amounts related to awards which would otherwise have been distributed in cash by a Participating Company shall be credited to the employee's account either (i) as cash, as described in Section 4.3(b), or (ii) as deferred Company shares, as described in Section 4.3(c), as elected by the employee in the election form described in Section 4.2(b).  Deferred amounts related to awards which would otherwise have been distributed in Company common shares by a Participating Company shall be credited to the employee's account as deferred Company shares, as described in Section 4.3(c).  The crediting of deferred amounts to an employee's account either as cash or deferred Company shares shall be for the sole purpose of determining the rate of return to be credited to the employee's account, and shall not be treated or interpreted in any manner whatsoever as a requirement or direction to actually invest assets in Company shares or any other investment media.  The Plan, as an unfunded, nonqualified deferred compensation plan, shall not have any actual investment of assets relative to the benefits or accounts hereunder.

(b) Deferred amounts credited to the employee's account as cash shall bear interest from the date the awards would otherwise have been paid.   The interest credited to the account will be compounded at the end of each calendar quarter, and the annual rate of interest applied at the end of any calendar quarter shall be determined by the Board of Directors from time to time.  In addition, if the employee's account under the Predecessor Plan has been transferred to an account under this Plan as of January 1, 1984 effective date of this Plan, then the employee's account under this Plan shall be credited as of such date with the amount credited to the employee's account under the Predecessor Plan as of December 31, 1983, and such amount shall bear interest in accordance with the preceding sentence from the effective date of the Plan.  An employee's account under the Predecessor Plan shall be transferred to an account under this Plan, if the employee is employed by a Participating Company on the effective date of the Plan.

(c) To the extent that an employee elects to have deferred amounts credited to his or her account as deferred Company shares, such employee's account shall be credited as of the date(s) on which the related award(s) would otherwise have been distributed in cash, with the number of shares of Company stock equal to the number of such shares that could have been purchased with the dollar amount of such award(s) at the average of the high and low sales prices of Company common shares on the New York Stock Exchange ("NYSE") for the last day of the month preceding the day on which the related award(s) would otherwise have been distributed in cash or, if on such date the NYSE is not operating and open to the public for trading (a "Business Day"), on the Business Day most recently preceding such day.  Deferred amounts relating to awards which would otherwise have been distributed in Company common shares shall be credited to the employee's account with an equivalent number of deferred Company shares.

Deferred amounts credited to the employee's account as deferred Company shares shall also be credited on each dividend payment date for Company shares with an amount equivalent to the dividend payable on the number of Company common shares equal to the number of deferred Company shares in the employee's account on the record date for such dividend.  Such amount shall then be converted to a number of additional deferred Company shares determined by dividing such amount by the price of Company common shares, as determined in the following sentence.  The price of Company common shares related to any dividend payment date shall be the average of the daily high and low sales prices of Company common shares on the NYSE for the period of five Business Days ending on such dividend payment date, or the period of five Business Days immediately preceding such dividend payment date if the dividend payment date is not a Business Day.

(d) In the event of any change in outstanding Company common shares by reason of any stock dividend or split, recapitalization, merger, consolidation, combination or exchange of shares or other similar corporate change, the Board of Directors shall make such adjustments, if any, that it deems appropriate in the number of deferred Company shares then credited to employees' accounts. Any and all such adjustments shall be conclusive and binding upon all parties concerned.

4.   DISTRIBUTION

(a) At the time an eligible employee makes an election to participate in the Plan, the employee shall also make an election with respect to the distribution (during the employee's lifetime or in the event of the employee's death) of the amounts credited to the employee's deferred account.  Such an election related to awards otherwise payable currently in any calendar year shall become irrevocable on the last day prior to the beginning of such calendar year.  Amounts related to awards which would have been distributed in cash in the absence of a deferral election shall be distributed in cash.  In the case of amounts credited to the employee's account as deferred Company shares, the amount of the cash distribution shall be determined by multiplying the number of deferred Company shares in the employee's account by the price of Company common shares.  For purposes of the preceding sentence, the price of Company common shares shall be the average of the daily high and low sales prices of Company common shares on the NYSE for the last Business Day of the month preceding the payment date (described in Section 4(b)).  Amounts related to awards which would have been distributed in Company common shares in the absence of a deferral shall be distributed in the form of an equal number of Company common shares.

(b) An employee may elect to receive the amounts credited to the employee's account in one payment or in some other number of approximately equal annual installments (not exceeding 20).  The first installment (or the single payment of the employee has so elected) shall be paid as soon as administratively practicable following the first day of the calendar quarter next following the earlier of (1) the end of the month in which the employee attains the age specified in such election (not earlier than age 55), or (2) the end of the month in which the employee retires from a Participating Company, or otherwise terminates employment with any such company (except for a transfer to another such company).

(c) Notwithstanding an election pursuant to this Section 4, Paragraph 4(b), the entire amount then credited to the employee's account shall be paid immediately in a single payment if an employee is discharged for cause by his company, or if an employee otherwise ceases to be employed by his company and becomes a proprietor, officer, partner, employee, or otherwise becomes affiliated with any business that is in competition with Company or any of its subsidiaries, or becomes employed by a governmental agency having jurisdiction over the activities of Company or any of its subsidiaries.

(d) An employee may elect that, in the event the employee should die before full payment of all amounts credited to the employee's account, the balance of the deferred amounts shall be distributed in one payment or in some other number of approximately equal annual installments (not exceeding 10) to the beneficiary or beneficiaries designated in writing by the employee, or if no designation has been made, to the estate of the employee in a lump sum. The first installment (or the single payment if the employee has so elected) shall be paid as soon as administratively practicable following the first day of the calendar quarter next following the month of death.

(e) Installments subsequent to the first installment to the employee, or to a beneficiary or to the employee's estate, shall be paid as soon as administratively practicable following the first day of the applicable calendar quarter in each succeeding calendar year until the entire amount credited to the employee's deferred account shall have been paid.  Deferred amounts held pending distribution shall continue to be credited with interest or additional deferred Company shares, as  applicable, determined in accordance with this Section 4, Paragraph 3(a), (b) and (c).

(f) The obligation to make distribution of deferred amounts credited to an employee's account during any calendar year plus the additional amounts credited on such deferred amounts pursuant to this Section 4, Paragraph 3(a), (b) and (c) shall be borne by the Participating Company which otherwise would have paid the related award currently.  However, the obligation to make distribution with respect to deferred amounts which are related to amounts credited to an employee's account as of the effective date of the Plan, pursuant to this Section 4 Paragraph 3(a), and with respect to which no Participating Company would otherwise have paid the related award currently, shall be borne by the Participating Company which employed the employee on the effective date of the Plan.

(g) For the purposes of this Section 4, an election described in Paragraph 4(a) or a beneficiary designation described in Paragraph 4(d) made under the comparable provision of the Predecessor Plan shall be considered as an election or beneficiary designation, respectively, made under this Section 4.

SECTION 4A. ADDITIONAL PAYMENT.

1.   Each Participating Company shall pay to each Participant, as defined below, an amount determined under this Section at those times and in the manner prescribed in this Section notwithstanding any other obligation of the Participating Company to any person under the other provisions of this Plan.

2.   For purposes of this Section:

A.   "Participant" means any person who participates in the Nonqualified Plan in a Plan Year and any Executive who participates in a Savings Plan in a Plan Year.

In addition to the above requirements, effective January 1, 2008, a Participant must have been designated as an Executive prior to January 1, 2008.

B.   "Plan Year" means each calendar year, but for the first Plan Year means February 1, 1985 through December 31, 1985.

C.   "Computation Date" means December 31 of each Plan Year.

D.   "Payment Date" means (i) with respect to amounts accrued under this Section 4A prior to May 1, 1994, the second anniversary of each Computation Date, and (ii) with respect to amounts accrued under this Section 4A after April 30, 1994 and prior to January 1, 2008, the day in each month on which Participants' regular monthly paychecks are delivered, and (iii) with respect to amounts accrued under this Section 4A on or after January 1, 2008 and prior to January 1, 2009, the payroll payment date immediately following the last day of the month after the close of each calendar quarter (e.g., May 5, 2008 for amounts accrued January – March 2008).

E.   "Nonqualified Plan" means the BellSouth Corporation Nonqualified Deferred Compensation Plan.

F.   "Savings Plan" means the BellSouth Retirement Savings Plan (the "RSP") and any predecessor or successor plan.

3.   (A) For periods prior to May 1, 1994, each Participating Company shall pay to each Participant on each Payment Date an amount equal to:

(1) The dollar amount, if any, actually deferred by the Participant pursuant to the Nonqualified Plan in the Plan Year (or, in the case of Plan Year 1994, the period prior to May 1, 1994) in which the Computation Date occurs, notwithstanding the amount that the Participant elected to defer pursuant to that plan, if different, plus the amount, if any, equal to the remaining base salary paid to the Participant during the Plan Year (or, in the case of Plan Year 1994, the period prior to May 1, 1994) in excess of the amount of such Participant's compensation which may be taken into account under Section 401(a)(17) of the Internal Revenue Code of 1986, as amended (the "Code"), or any successor provision, plus, in the case of Participants who participate in and make the maximum allowable contribution to the RSP in a Plan Year (or, in the case of Plan Year 1994, the period prior to May 1, 1994), the amount of base salary (excluding any base salary taken into account under the preceding provisions of this paragraph 4A.3(A)(l)) paid to the Participant during the Plan Year in excess of the amount of base salary that would produce the maximum contribution to the RSP for a Participant who contributed to the RSP six percent (6%) of his or her Eligible Compensation, as that term or its replacement is defined in the RSP, for the Plan Year (or, in the case of Plan Year 1994, the period prior to May 1, 1994),

(2) multiplied by the lesser of six percent (6%) or the percentage of such Participant's Salary or Eligible Compensation, as those terms or their replacements are defined in the Savings Plan, which the Participant actually caused to be contributed as before-tax or after-tax contributions to the Savings Plans in the Plan Year in which the Computation Date occurs (or, in the case of Plan Year 1994, the period prior to May 1, 1994), notwithstanding the amount elected to be contributed to the Savings Plans, if different; provided, however, that Participants who make the maximum allowable contribution to a Savings Plan in a Plan Year (or, in the case of  Plan Year 1994, the period prior to May 1, 1994) shall be deemed, for purposes of this Paragraph 4A.3(A)(2), to have caused to be contributed six percent (6%) of such Salary or Eligible Compensation for such Plan Year (or, in the case of Plan Year 1994, the period prior to May 1, 1994),

(3) multiplied by the applicable percentage determined for that Plan Year (or, in the case of Plan Year 1994, the period prior to May 1, 1994) in which the Computation Date occurs as the percentage at which contributions by the Participant to the relevant Savings Plan are matched by Company contributions,

(4) plus an amount of interest for the period  beginning on the first day of the Plan Year in which the Computation Date occurs and ending on the Payment Date, which interest shall be calculated on the same basis as interest is calculated on cash awards deferred under this Plan.

(B) For periods after April 30, 1994 and prior to January 1, 2009, each Participating Company shall pay to each Participant on each Payment Date an amount equal to:

(1) the dollar amount, if any, actually deferred by the Participant pursuant to the Nonqualified Plan for the pay period in which such Payment Date occurs, notwithstanding the amount the Participant elected to defer pursuant to that plan, if different, plus the amount, if any, equal to the remaining base salary paid to the Participant for such pay period in excess of the amount of such Participant's compensation which  may be taken into account under Code Section 401(a)(17), or any successor provision, plus, in the case of Participants who participate in and make the maximum allowable contribution to the RSP for such pay period, the amount of base salary (excluding any base salary taken into account under the preceding provisions of this paragraph 4A.3(B)(l)) paid to the Participant during such pay period in excess of the amount of base salary that would produce the maximum contribution to the RSP for a Participant who contributed to the RSP six percent (6%) of his or her Eligible Compensation, as that term or its replacement is defined in the RSP, for such day period,

(2) multiplied by the lesser of six percent (6%) or the percentage of such Participant's Salary or Eligible Compensation, as those terms or their replacements are defined in the Savings Plans, which the Participant actually caused to be contributed as before-tax or after-tax contributions to the Savings Plans for such pay period, notwithstanding the amount elected to be contributed to the Savings Plans, if different; provided, however, that Participants who make the maximum allowable contribution to a Savings Plan for a pay period shall be deemed, for purposes of this paragraph 4A.3(B)(2), to have caused to be contributed six percent (6%) of such Salary or Eligible Compensation for such pay period,

(3) multiplied by the applicable percentage determined for such pay period as the percentage at which contributions by the Participant to the relevant Savings Plan are matched by Company contributions.

(C) For periods on or after January 1, 2009, no “additional payment” amounts under Section 4A shall be payable to any Participant.

4.   A Participant who terminates employment shall be entitled to receive amounts payable under Paragraph 3 of this Section 4A on the Payment Dates otherwise scheduled except in the case of any termination of employment as described in Section 4, Paragraph 4(c), in which event all amounts otherwise payable under Section 4A, Paragraph 3 shall be immediately forfeited.

5.   In the event of a Participant's death prior to receipt of all amounts under Paragraph 3 of this Section 4A, all such unpaid amounts (except as provided in Section 4A, Paragraph 4) shall be paid in a lump sum to the participant's estate as soon as is practical following his death.

SECTION 5. MISCELLANEOUS

(1) The Participating Company only has contractual obligations to make payments to, or on behalf of, the Executive or Participant. The deferred amounts related to each Participating Company shall be held in the general funds of such company.  A Participating Company shall not be required to reserve or otherwise set aside funds for the payment of such deferred amounts.  Executives and Participants (and any other person who acquires a right to receive payments from a Participating Company under this Plan) have the status of general unsecured creditors of the Participating Company.  Nothing contained in this Plan shall create or be construed to create a trust of any kind or a fiduciary relationship between any Participating Company and any Executive or Participant.  The rights of (or attributable to) any Executive or Participant hereunder may not be sold, assigned (either at law or in equity), transferred, pledged, encumbered or subject to attachment, garnishment, levy, execution or other legal or equitable process.  Nor shall any interest of the Executive or Participant be subject to the claims of any creditor of the Executive or Participant.  Finally, no Executive or Participant shall have any rights in any specific assets of any Participating Company.  Any accounting reserve established as a result of the Plan only reflects a contractual obligation of the Participating Company on its books of accounting and does not constitute a segregated fund of assets or separation of assets, and the obligations of each Participating Company only are payable from its operating assets at the time the payment is due.

(2) In addition, (i) if any payment is made to (or attributable to) an Executive or Participant with respect to benefits described in this Plan from any source arranged by Company 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 this Plan to the extent of such payment as if such payment had been made directly by the Participating Company; and (ii) if any payment from a source described in clause (i) above shall be made, in whole or in part, prior to the time payment would be made under the terms of this Plan, such payment shall be deemed to satisfy the 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.  In determining the benefits satisfied by a payment described in clause (ii), Plan benefits, as they become payable, shall be discounted to their value as of the date such actual payment was made using an interest rate equal to the valuation interest rate for deferred annuities as last published by the Pension Benefit Guaranty Corporation prior to the date of such actual payment. If the benefits which actually become payable under this Plan, after applying the discount described in the preceding sentence, are less than the amount of the payment(s) described in clause (ii), any such shortfall shall not be collected from or enforced against the Executive or Participant as a claim by the Participating Company.

(3) The Board of Directors may at any time make changes in the Plan or terminate the Plan, but such changes or termination shall not adversely affect the rights of any employee or Participant, without his consent, to any benefit under the Plan to which such employee or Participant may have been previously entitled prior to the effective date of such change or termination. The Chairman or the Responsible Officer with the concurrence of the General Counsel of the Company shall be authorized to make minor or administrative changes to the Plan.

EX-10.RR

Exhibit 10-rr

CINGULAR WIRELESS

LONG TERM COMPENSATION PLAN

(As Amended and Restated

Effective as of November 1, 2007)

1.0           Purpose.

The purpose of the Cingular Wireless Long Term Compensation Plan (the “Plan”) is to provide Executives and Non-Executives with long term compensation as set forth in the Plan and subject to additional objectives and requirements that may be determined and set forth by the Administrator. The Plan, originally effective January 1, 2002, was amended and restated in its entirety effective January 1, 2003, and January 1, 2004, and is further amended and restated in its entirety effective January 1, 2005 as set forth herein.

2.0           Definitions.

Each term set forth in this Section 2.0 shall have the respective meaning set forth opposite such term for purposes of this Plan, and when the defined meaning is intended the term is capitalized.

“Administrator” means the Board, the Compensation Committee, or the Company Administrator, as applicable.

“AT&T” means AT&T Inc.

“Award” means a final award payable under Section 6.0 following approval by the Administrator.

“BellSouth” means BellSouth Corporation.

“Beneficiary” means the person designated by an Executive to receive any Award paid following the Executive's death as determined pursuant to Section 8.2.

"Board " means the Board of Directors of the Cingular Wireless Corporation.

“Cause” means willful and gross misconduct on the part of a Participant that is materially and demonstrably detrimental to the Company (or any subsidiary or affiliate of the Company) as determined by the Company in its sole discretion.

"Chief Executive Officer" means the Chief Executive Officer of the Company.

“Chief Financial Officer” means the Chief Financial Officer of the Company.

“Chief Operating Officer” means the Chief Operating Officer of the Company.

"Code" means the Internal Revenue Code of 1986, as amended from time to time.

"Compensation Committee" means a  committee of the Board which satisfies the requirement of Section 162(m)(4)(C)(i) of the Code and has responsibility for oversight of the Company’s compensation and benefits programs.

"Company" means Cingular Wireless LLC, a Delaware limited liability company.

“Company Administrator” means the Chief Executive Officer or a person designated by the Chief Executive Officer 1) to administer the Plan for Executives other than the Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer and Executives who are direct reports to the Chief Executive Officer, the Chief Operating Officer and the Chief Financial Officer, and 2) to administer the Plan for Non-Executives.

"Consolidated EBITDA" means consolidated earnings before interest, taxes, depreciation and amortization for the Plan Year for which an Award based on Performance Units or Performance Stock Units is paid, as determined through the audited consolidated statement of income of the Company, 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.

“Corporation” means Cingular Wireless Corporation, a Delaware corporation.

“Covered Employee” means a Participant whom the Compensation Committee deems may be or become a “covered employee,” as defined in Section 162(m)(3) of the Code, for any Plan Year that such Award may result in remuneration to the Participant and for which Plan 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 payment of any Award.

“Disability” means being eligible for and approved for Long Term Disability benefits under the Company’s group long term disability plan for employees.

“Dividend Equivalent Payments” means a cash payment equal to the dividends paid on a common share of BellSouth or AT&T stock during the Performance Period.  The Administrator shall determine when dividend equivalent payments are to be paid.

“Executive” means any executive employee of the Company or any Subsidiary who is a member of the executive compensation group under the Company's compensation practices and who is identified by the Administrator, in its sole discretion, as eligible to participate in the Plan, and is notified by the Administrator that he is eligible to participate in the Plan.

2

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

“Grant or Grants” means a grant of Performance Units, Performance Stock Units, Restricted Stock Units or SA Units to a Participant from the Administrator pursuant to the provisions of Section 6.0 of the Plan.

“Non-Executive” means any employee that is not a member of the executive compensation group under the Company’s compensation practices and who is identified by the Administrator , in its sole discretion, as eligible to participate and who is notified by the Administrator that his is an eligible participant in the Plan.

“Participant” means any Executive or Non-Executive who is eligible to participate in this Plan as determined by the Administrator and is notified in writing by the Administrator that he is eligible to participate in the plan.  Individuals classified, according to the Company’s personnel or other records, as leased employees, independent contractor, temporary agency employees or temporary employees shall not be eligible to participate in the Plan, even if they are deemed to be common law employees.

“Performance Stock Units” or “PS Units” shall mean units granted to Participants with the value of each unit determined by the stock prices of a Share of common stock of BellSouth and AT&T as of the Valuation Date pursuant to Section 6.1 of the Plan. Each Performance Stock Unit shall be eligible to receive Dividend Equivalent Payments as determined by the Administrator.  Performance Stock Units do not have any ownership or voting rights related to the underlying Shares of common stock of BellSouth or AT&T.

“Performance Units” shall mean cash units awarded to Participants pursuant to this Plan.

"Plan" means this Cingular Wireless Long Term Incentive Plan, as amended from time to time.

“Plan Year” means the calendar year.

“Retirement” means the termination of employment for reasons other than Death or Disability, on or after the date on which (1) the Participant is first eligible, upon Termination of Employment, for retiree health coverage in accordance with the terms of the Company’s health plan (or the health plans of AT&T Inc. ("AT&T") or BellSouth Corporation ("BellSouth") with respect to certain Participants who transferred from BellSouth and AT&T to Cingular Wireless LLC ("Cingular") as part of the formation of Cingular and met certain age and service requirements at the time of their contribution to Cingular and whose retiree health coverage will be provided by either BellSouth or AT&T) all as determined by the Company’s health plan and the administrator of such plan, in its sole discretion, (2) a Participant (who is also a participant in the AT&T 2006 Incentive Plan) is considered by AT&T Inc. to be eligible for “Retirement,” for purposes of the AT&T 2006 Incentive Plan or (3) the Participant is eligible to retire under any other guidelines established by the Administrator.

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 “Restricted Stock Units” or “RS Units” shall mean units granted to Participants with the value of each unit determined by the stock prices of a Share of common stock of BellSouth and AT&T as of the Valuation Date pursuant to Section 6.3 of the Plan. Each Restricted Stock Unit shall be eligible to receive Dividend Equivalent Payments as determined by the Administrator.  Restricted Stock Units do not have any ownership or voting rights related to the underlying Shares of common stock of BellSouth or AT&T.

“SA Units” or “Stock Appreciation Units” shall mean the stock appreciation units granted to Participants pursuant to Section 6.2 of the Plan.

“SA Unit Exercise Date” means the date on which exercise of a SA Unit occurs under the Plan.

“SA Unit Exercise Price” means the Fair Market Value of a Share on the SA Unit Exercise Date.

“SA Unit Grant Date” means the date on which a SA Unit is granted to a Participant under the Plan.

“SA Unit Grant Price” means the Fair Market Value of a Share on the SA Unit Grant Date.

 “Shares” means shares of common stock of BellSouth or AT&T, as applicable, under Section 6.2 of the Plan.  When granting Restricted Stock Units, Performance Stock Units, or SA Units, the Administrator, in its discretion, shall determine the percentage of each Performance Stock Unit, Restricted Stock Unit or SA Unit that is attributable to BellSouth Shares and AT&T Shares, respectively.

"Subsidiary" means any corporation, joint venture or partnership in which the Cingular Wireless 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 more interest in the capital or profits of such joint venture or partnership.

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“Termination of Employment” means the event where the Participant is no longer an employee of the Company or of any Subsidiary or member of the Company’s controlled group of corporations or entities as determined by the Code.

“Valuation Date” shall mean the date on which the Valuation Price of each Restricted Stock Unit or Performance Stock Unit is determined.

“Valuation Price” shall mean the value of each Restricted Stock Unit or Performance Stock Unit based on the average of the closing prices on the New York Stock Exchange (“NYSE”) for Shares for the 10 trading days preceding the Valuation Date.  A trading day is any day that the Shares are traded on the NYSE.  In lieu of the foregoing, the Administrator may select any other 10 day trading period to determine the value of each Restricted Stock Unit or Performance Stock Unit.

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3.0           Effective Date.

The Plan was originally effective beginning for Awards granted for the 2002 Plan Year.  The Plan was amended and restated effective January 1, 2003 and January 1, 2004, and further amended and restated as set forth herein effective January 1, 2005 and shall remain in effect until terminated by the Board.

4.0           Administration.

This Plan shall be administered by the Board or Compensation Committee, as applicable, for the Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer and any Executive who is a direct report to the Chief Executive Officer, the Chief Operating Officer, and the Chief Financial Officer.  The Plan shall be administered by the Company Administrator for all other Executives and Non-Executives.  The Administrator  shall (a) determine who is an eligible Participant under the Plan, (b) determine the number of Grants made under the Plan to each Participant, (c) determine the Performance Goals (as defined in Section 6.1(d) for determining Awards, (d) determine the terms and conditions of all Grants under the Plan, (e) determine the Fair Market Value of Shares, (f) approve and provide for payment for all Awards, (g) establish the Valuation Date and the Valuation Price, (h) interpret the Plan, and (i) make all other decisions relating to the operation of the Plan. The Administrator’s actions and determinations under the Plan shall be completely at its sole, absolute and final discretion, and all such actions and determinations shall be final and binding on all persons.  No Administrator shall be personally liable for any action, determination, or interpretation with respect to the Plan or Awards.  All Administrators shall be protected and indemnified by the Company, to the fullest extent permitted by applicable law, in respect of any such action, determination or interpretation. The Administrator may adopt such regulations and guidelines as it deems are necessary or appropriate for the administration of the Plan.

5.0           Eligibility.

Participants shall be eligible for Awards under this Plan. Executives are not rendered ineligible by reason of being a member of the Board. The Administrator may establish such additional rules for eligibility as it determines are appropriate. The actual payment of an Award  to any eligible Participant shall be at the discretion of the Administrator as provided in Sections 4.0, 6.3 and related sections of the Plan.

6.0           Grants and Payment of Awards

6.1           Performance Units or Performance Stock Units

(a)           Grants of Performance Units or Performance Stock Units.  Subject to the terms of the Plan, Performance Units or Performance Stock Units may be granted to Participants at any time and from time, as determined by the Administrator.  The Administrator shall have complete discretion in determining the number of Performance Units or Performance Stock Units granted to each Participant and the conditions for the receipt of an Award based on a Grant of Performance Units or Performance Stock Units.

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(b)           Value of Performance Units or Performance Stock Units.  A Performance Unit shall be equal in value to a fixed dollar amount determined by the Administrator.  A Performance Stock  Unit shall be equal in value to the Valuation Price on the Valuation Date as determined by the Administrator.  The Valuation Price shall be used in establishing the cash payment to be paid once the vesting requirements as adopted by the Administrator have been satisfied.

(c)           Performance Period.  The Performance Period for Performance Units or Performance Stock Units is the period over which the Performance Goals are measured.  The Performance Period shall be set by the Administrator for each Grant; however, in no event shall a Grant have a Performance Period of less than two Plan Years.

(d)           Performance Goals.  For each Grant of Performance Units or Performance Stock Units, the Administrator shall establish performance objectives (“Performance Goals”) for determining whether Awards based on Performance Units or Performance Stock Units are payable.  Performance Goals shall include payout tables, formula or other any other standards determined by the Plan Administrator, in its sole discretion, to be used in determining the extent to which the Performance Goals are met and Awards are payable.

(e)          Awards Based on Performance Units or Performance Stock Units.  The amount of any Award to be paid to an eligible Participant shall be determined by the Administrator in its discretion as set forth in Section 4.0 based on the attainment of Performance Goals, subject only to the limits of Section 6.1(f).  Awards shall be based on and payable for a Performance Period.  All Awards for a Performance Period determined by the Administrator under this Section 6.1 shall be paid by the Company and its Subsidiaries in cash as soon as is practicable following Administrator certification as provided in Section 6.1(g).  Except as otherwise determined by the Administrator, a Participant must be actively employed by the Company on the last day of the last Plan Year of any Performance Period and on the date of payment of any Award as a condition precedent to the receipt of any Award.  Participants not meeting this requirement will be considered to have not met the requirements for receipt of the Award and shall not be paid such Award.  Notwithstanding this condition and requirement, Participants who do not meet this condition due to Death, Retirement or Disability, shall be entitled to the receipt of a pro-rated payment for the Performance Period.  No other partial or pro-rated payments are permitted under the Plan.  In the event of the Participant’s death, any Award payable shall be made to the Participant’s Beneficiary, as governed by Section 7.2.  The Administrator shall have the sole discretion to determine the date on which payments are made.  Awards payable to Participants who incur a Termination of Employment on or after November 1, 2007, shall be governed the provisions of Appendix A to the Plan.

(f)  Dividend Equivalent Payments related to Performance Stock Units.  Participants shall be eligible to receive Dividend Equivalent Payments for each Performance Stock Unit that has been granted to a Participant.  All Dividend Equivalent Payments will be settled in cash.  The Administrator shall have the sole discretion to determine the date on which payments are made and sole discretion to determine if the Dividend Equivalent Payments are subject to Performance Goals.  The Administrator also reserves the discretion to reduce or eliminate the amount of Dividend Equivalent Payments payable to a Participant following the Participant’s Termination of Employment.

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(g) Application of Section 162(m) to Performance Units or Performance Stock Units.

(1)           In the event that the Company becomes subject to the requirements of Section 162(m) of the Code, Awards payable to Covered Employees after such time shall constitute “qualified performance-based compensation” and shall be subject to the achievement of an overall performance goal based on Consolidated EBITDA in order that payments are deductible under Section 162(m) of the Code.

(2)           In the event the Company becomes subject to the provisions of Section 162(m) of the Code, Awards payable after such time to Covered Employees shall only be payable under this Plan for a Plan Year if the Company has positive Consolidated EBITDA for the Plan Year. Furthermore, the maximum award that may be payable under this Plan for a Plan Year (i) to a Covered Employee who is the Chief Executive Officer for any part of the Plan Year, and (ii) to each other Covered Employee will be (i) 0.5% and (ii) 0.3%, respectively, of Consolidated EBITDA for the Plan Year.  This resulting amount for any Plan Year shall be the limit established for purposes of Section 162(m) of the Code, and the actual amount paid to any Executive shall only be that amount, if any, determined by the Administrator under Sections 6.1 and related sections of the Plan.

(3)           In the event that Awards payable to any Covered Employee become subject to the limitations of Section 6.1(f)(2) above,  the Compensation Committee shall determine the maximum amounts that may be paid under Section 6.1(f)(2) for the Plan Year to any Covered Employee and shall certify that any Awards determined under Section 6.1 are within such limits.

(h)           Deferral of Awards Based on Performance Units or Performance Stock Units. Payments may be subject to deferral under  any deferral plan established by the Company for this purpose, provided that in the event Section 162(m) is applicable, any additional amounts credited to any Covered Employee 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 Company stock, as may be determined by the Compensation Committee within the limits of the regulations under Section 162(m) of the Code.

6.2           Stock Appreciation Units

(a)           Grants of Stock Appreciation Units.  Subject to the terms of the Plan, Stock Appreciation Units may be granted to Participants at any time and from time to time, as determined by the Administrator.  The Administrator shall have complete discretion in determining the number of SA Units awarded to each Participant.

(b)           Vesting of SA Units.  Participants shall vest in SA Units according to the vesting schedule adopted by the Administrator.  In the event of a Participant’s Death, Retirement or Disability, all outstanding SA Units shall become fully vested.

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(c)           Exercise of SA Units.  Subject to subsection (d) below, SA Units, once vested, shall be exercisable over the period established by the Administrator, which period shall not exceed (10) years from the date the SA Units are granted.

(d)           Lapse of SA Units.

(1)  Termination of Employment.  In the event of his termination of employment with the Company for any reason, a Participant’s vested SA Units shall lapse at the end of the three month period following the Participant’s termination date or the remaining life of the SA Unit, whichever is earlier.  A terminated Participant’s unvested options shall lapse on his termination date.  Any lapsed SA Units shall be void, without value and unexercisable.

(2)  Termination of Employment Due to Retirement, Death or Disability.  Notwithstanding the foregoing subsection, the vested SA Units of Participant who terminates employment with the Company on account of Death, Retirement or Disability shall lapse at the end of the five year period following the Participant’s Death, Retirement or Disability or the remaining life of the SA Unit, whichever is earlier.

(e)           Payment of Award at Exercise.  Upon the exercise and settlement of a SA Unit in accordance with the terms of this Plan and other requirements set forth by the Administrator, the Participant shall receive a payment equal to the excess, if any, of the SA Unit Exercise Price for the number of SA Units being exercised at that time over the SA Unit Grant Price for such SA Units.  Such payment shall be made in cash.  The Administrator shall have the sole discretion to determine the date on which payments are made.  The Administrator also reserves the discretion to reduce or eliminate the amount of Dividend Equivalent Payments payable to a Participant following the Participant’s Termination of Employment.

(f)           Transferability During Lifetime.  During the lifetime of a Participant to whom SA Units have been granted, only the Participant (or such Participant’s legal representative) may exercise such Grant and receive payment of an Award.  No Grant of SA Units may be sold, assigned, transferred, exchanged, or otherwise encumbered or made subject to any creditor’s process, whether voluntary, involuntary or by operation of law, and any attempt to do shall be of no effect.

(g)           Transferability Upon Death.  In the event of a Participant’s death, all of such person’s outstanding SA Unit Grants will transfer to the maximum extent permitted by law to such person’s Beneficiary (subject to the provisions of Section 7.2 of the Plan) subject to additional rules and restrictions that may be adopted by the Administrator.

(h)           Application of Section 162(m) on SA Units.  In the event the Company becomes subject to the provisions of Section 162(m) of the Code, Awards based on SA Units shall constitute “qualified performance based compensation” and the maximum Grant that may be made to a Covered Employee under the Plan for a Plan Year is 750,000 SA Units.

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6.3           Restricted Stock Units

(a)           Grants of Restricted Stock Units.  Subject to the terms of the Plan, Restricted Stock Units may be granted to Participants at any time and from time to time, as determined by the Administrator.  The Administrator shall have complete discretion in determining the number of RS Units awarded to each Participant.

(b)    Vesting of RS Units.  Participants shall vest in RS Units according to the vesting schedule adopted by the Administrator.   The date on which the vesting schedule is fulfilled shall be the Valuation Date.

(c)           Value of RS Units.  A Restricted Stock Unit shall be equal in value to the Valuation Price on the Valuation Date as determined by the Administrator.  The Valuation Price shall be used in establishing the cash payment to be paid once the vesting requirements as adopted by the Administrator have been satisfied.

 (d)           Awards Based on Restricted Stock Units.  Once the vesting requirement adopted by the Administrator has been fulfilled, an Award shall be paid to an eligible Participant based on the Valuation Price on the Valuation Date as determined by the Administrator.  All Awards shall be paid by the Company and its Subsidiaries in cash as soon as is practicable following the Valuation Date.  Except as otherwise determined by the Administrator, a Participant must be actively employed by the Company on the Valuation Date to receive an Award.  Any unvested Grant will be cancelled following separation of employment.  Notwithstanding this condition and requirement, Participants who do not meet this condition due to Death, Retirement or Disability, shall be entitled to the receipt of a pro-rated Award.  In the event of the Participant’s death, any Award payable shall be made to the Participant’s Beneficiary, as governed by Section 7.2.  The Administrator shall have the sole discretion to determine the date on which payments are made.  Awards payable to Participants who incur a Termination of Employment on or after November 1, 2007, shall be governed the provisions of Appendix A to the Plan.

(e)  Dividend Equivalent Payments related to Restricted Stock Units.  Participants shall be eligible to receive Dividend Equivalent Payments for each unvested Restricted Stock Unit that has been granted to a Participant.  All Dividend Equivalent Payments will be settled in cash.  The Administrator shall have the sole discretion to determine the date on which payments are made.

(f)           Maximum Grant.  The maximum Grant of RS Units that can be made to a Participant is  250,000 RS Units.

6.4           Complete Discretion.  Notwithstanding any other provision in this Plan or related documents, the Administrator shall, at all times, have the sole and complete discretion to determine whether any Awards are to be paid under the Plan, the amount of any such Awards and the recipient of any such Awards.

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7.0           Miscellaneous Administrative Provisions.

7.1.           Amendment and Termination. The Administrator shall have the unilateral right to amend, modify, suspend or terminate the Plan at any time for any reason; provided, that in the event Section 162(m) is applicable, approval by shareholders shall be required as provided in the regulations under Section 162(m) of the Code for any amendment that would have the effect of changing the class of employees eligible for consideration for Awards under Section 5.0, materially changing the definition of Consolidated EBDITA, changing the formula in Sections 6.1(f)(2) and 6.2(h) for determining the maximum amount of Grants or Awards paid to any Executive or changing the provisions of Section 6.1(g) regarding the credit of additional amounts on deferred Awards.

7.2.           Beneficiary .  A Participant may name, from time to time, any beneficiary or beneficiaries (which may be named contingently or successively) as his or her Beneficiary for purposes of the Plan.  Each designation shall be on a form prescribed by the Administrator, will be effective only when delivered to the Company, and when effective will revoke all prior designations by the Participant.  If a Participant dies with no such beneficiary designation in effect, or if the Administrator determines that there is any question about the legal right of the designated beneficiary , such Participant's Beneficiary shall be his or her estate.  The Administrator shall set forth additional rules and requirements regarding the rights of Beneficiaries to receive payment of an Award or exercise a vested SA Unit following the Participant’s death.

7.3.           No Right to Awards. No person shall have any claim to receive a Grant or to be paid an Award under the Plan and there is no obligation for uniformity of treatment of eligible Participants under the Plan. The selection of a Participant to receive Grants or be paid Awards and the amount and payment of Awards rests completely in the absolute and final discretion of the Administrator. The Administrator's discretion is limited only by the maximum amount of a Grant or Award that it may pay as provided in Sections 6.1(f)(2) and 6.2(h), if applicable. Neither the existence of this maximum, nor any prior practice by the Administrator as to the payment or amount of awards, creates an obligation by the Committee to pay any award for any Plan Year or to pay an award equal to the maximum or any other amount

7.4           No Right to Employment/Continued Service or Awards.  The making of a Grant or payment of an Award under the Plan shall impose no obligation on the Company or any Subsidiary to continue the employment or service of a Participant and shall not lessen or affect the Company’s or Subsidiary’s right to terminate the employment or service of such Participant.  No Participant or other Person shall have any claim to be granted any Award, and there is no obligation for uniformity of treatment of Participants, or holders or beneficiaries of Awards.  The terms and conditions of Grants and Awards and the Administrator’s determinations and interpretations with respect thereto need not be the same with respect to each Participant (whether or not such Participants are similarly situated).

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7.5.           No Funding. This Plan shall be unfunded and no assets of the Company or a Subsidiary shall be segregated for the purpose of paying any Awards.

7.6.           Taxes or Deductions. The Company or any Subsidiary shall withhold from any payment under the Plan such taxes as it deems are sufficient to cover any withholding taxes that may become required with respect to such payment. The Company or any Subsidiary shall have the right to require the payment to it of any such taxes and require that any person furnish information deemed necessary by such company to meet any tax reporting obligation before making any payment under the Plan.  The Company shall also withhold any other authorized or required amounts or deductions.

7.7           Other Incentive Plans.  Nothing in this Plan shall prevent the Company and its subsidiaries from maintaining other incentive compensation plans providing for the payment of incentive awards to employees, provided that the requirements of Section 162(m), if applicable, are met by the Company in the administration and operation of such other plans.

7.8           Company Benefit Plans.  The terms of the Company’s benefit plans shall determine whether Awards are included as compensation or earnings under the particular benefit plan.

7.9Governing Law and Venue. This Plan and all related documents shall be governed by the laws of the State of Georgia, without regard to the conflict of laws provisions thereof (except to the extent provisions of federal law may be applicable).  Acceptance of a Grant shall be deemed to constitute 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 such Grant or a corresponding Award, including the enforcement of any rights under this Plan or other document, and shall be deemed to constitute consent to any process or notice of motion in connection with such proceeding being served by certified or registered mail or personal service within or without the State of Georgia, provided a reasonable time for appearance is allowed.

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Appendix A

Terminations of Employment on or

After November 1, 2007

Notwithstanding the provisions of Sections 6.1(e) and 6.3(d) of the Plan requiring a Participant to be actively employed on the last day of the Plan Year of any Performance Period and on the date of payment of any Award as a condition precedent to the payment of an Award (and the provisions related to payments in the event of Death, Disability and Retirement), Participants who do not meet these requirements due to a Termination of Employment on or after November 1, 2007, shall be eligible to receive the following payments for a Performance Period:

Reason for Termination of Employment	Payment of Performance Units, Performance Stock Units or Restricted Stock Units Granted for a Performance Period
Death or Disability (not eligible for Retirement)	The entire Award will be distributed in a lump sum payment in the year following the Participant’s Termination from Employment as if the Performance Goals were met at a level of 100%.
For Cause (even if eligible for Retirement)	The entire Award will be immediately forfeited at the time of the Participant’s Termination of Employment.
Other Reasons (not eligible for Retirement)	Participant’s Award is reduced and the Participant may receive no more than a pro-rated payout of the Award, based on the number of months during which the Participant was actively employed during the Performance Period.1
Retirement (all reasons except for Cause)	The entire Award may be paid out under the same terms as if the Participant were still actively employed by the Company or a Subsidiary on the last day of the last Plan Year of the Performance Period and on the date of payment of the Award.1

1Payment, if any, will be at the regular time for payment (i.e., following the completion of the Performance Period and certification by the Administrator of the Performance Goals and level of payment), and the Award payment will be based upon the Company’s actual results with respect to the Performance Goals and other conditions as set forth in the Plan and as determined by the Administrator.  Also, within its sole discretion and without limitation, the Administrator may reduce or eliminate the Award before the payout of the Award, but only to the extent such Award would not have been payable but for this amendment.

Except as herein modified, the remaining provisions of Section 6.1(e) and 6.3(d) of the Plan, as applicable, shall remain in full force and effect.

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EX-10.YY

Exhibit 10-yy

CINGULAR WIRELESS CASH DEFERRAL PLAN

Effective: November 1, 2001

ARTICLE 1 - - STATEMENT OF PURPOSE

         The purpose of the Cingular Wireless Cash Deferral Plan ("Plan") is to provide a select group of management employees of Cingular Wireless LLC ("CWLLC") and affiliate companies that participate in the Plan with an opportunity (i) to defer the receipt and income taxation of a portion of such individual's compensation; and (ii) to receive an investment return on those deferred amounts.

ARTICLE 2 - - DEFINITIONS

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

         ADMINISTRATOR. The Board or Committee, if such Committee is appointed, as determined by the Board. The Board/Committee may delegate administrative authority to the Chief Executive Officer, the senior Human Resources division officer or another individual. The Administrator may select an outside third party as the recordkeeper of the Plan.

         AFFILIATE. Any corporation, partnership, venture or other entity in which Cingular Wireless or CWLLC holds, directly or indirectly, a 10% or greater ownership interest. The Administrator may, in its sole discretion, designate any other corporation, partnership, venture or other entity an Affiliate for the purpose of allowing it to participate in the Plan.

         BASE SALARY. The annual base salary, as determined by the Administrator, paid by an Employer, 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 deferred arrangement under Section 401(k) of the Code.

         Payments by an Employer under a Disability plan made in lieu of any Base Salary shall be deemed to be a part of the respective form of compensation it replaces for purposes of this definition. Base Salary 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 deemed to be contributed to this Plan.

         BOARD.  The Board of Directors of Cingular Wireless.

         BONUS AWARD. An incentive award based on an assessment of performance, payable by the Employer to a Participant with respect to the Participant's services during a given fiscal year of the Employer. Such amounts shall be deemed earned only upon award by the Employer. For purposes of the Plan, "Bonus Award" shall not include incentive awards which relate to a period exceeding one (1) fiscal year.

         BUSINESS DAY. Any day other than a Saturday, Sunday or a day on which banks in Atlanta, Georgia, are authorized or obligated by law or executive order to close.

         CINGULAR WIRELESS.  Cingular Wireless Corporation.

         CODE. The Internal Revenue Code of 1986, as amended.

         COMMITTEE. The Compensation Committee of the Board of Directors of Cingular Wireless, if such committee is appointed, or other committee with responsibility for oversight of the compensation and benefit programs.

         CONTRIBUTION ACCOUNT. The accounting entry as to each Participant showing the amount of such Participant's Contributions, interest credits and Matching Contributions credited to such account.

         CWLLC. Cingular Wireless LLC, a Delaware limited liability company, of which Cingular Wireless is the manager.

         DISABILITY. Absence of an Employee from work with an Employer under the relevant Employer's disability plan, but only while such Employee is deemed by the Employer to be an Employee of such Employer.

         ELIGIBLE EMPLOYEE.  An Employee who:

         (a) is a full time, salaried Employee who is on active duty, Disability or Leave of Absence,

         (b) is, as determined by the Administrator, a member of the Employer's "select group of management or highly compensated employees" such that the Plan will qualify for treatment as a "Top Hat" plan within the meaning of ERISA,

         (c) has an employment status which has been approved by the Administrator to be eligible to participate in this Plan and

         (d) has been notified in writing by the Administrator that he is eligible to participate in the Plan.

Notwithstanding the foregoing, the Administrator 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 considered Eligible Employees during a particular time for any reason, that individual shall not be an Eligible Employee for purposes of the Plan for the period of time prior to such determination.

         EMPLOYEE. Any person classified as an "employee" according to the payroll and personnel records of an Employer, 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 Administrator. Individuals classified as leased employees or independent contractors according to an Employer's payroll and personnel records shall not be eligible to participate. For purposes of this Plan, a person on Leave of Absence who otherwise would be an Employee shall be deemed to be an Employee.

         EMPLOYER. CWLLC or any Affiliates that adopt the Plan with the consent of the Chief Executive Officer.

         ERISA. The Employee Retirement Income Security Act of 1974, as amended.

         EXECUTIVE. An Employee who is in a position that is eligible to participate in the Employer's Executive Compensation Programs as determined by the Administrator.

         LEAVE OF ABSENCE. Where a person is absent from employment with an Employer on a formally granted leave of absence (i.e., the absence is with formal permission in order to prevent a break in the continuity of term of employment, which permission is granted (and not revoked) in conformity with the rules of the Employer which employs the individual, as adopted from time to time). For purposes of this Plan, a Leave of Absence shall be deemed to also include a transfer of an individual to an entity that is not an Affiliate by an Employer for a rotational work assignment. In the event a transfer to such an entity lasts more than 5 years or the entity's rotational work assignment status is canceled by Cingular Wireless, it shall be deemed a Termination of Employment at that time for purposes of this Plan. To be a rotational work assignment, the Employer must have indicated in writing to the individual that the individual was to be rehired by the Employer on termination of the rotational work assignment.

         LONG-TERM INCENTIVE AWARD. An incentive award, based on an assessment of performance over a period greater than one (1) year, payable by the Employer to a Participant and shall be deemed earned only upon award by the Employer.

         MATCHING CONTRIBUTIONS. The contributions credited to a Participant's Contribution Account pursuant to Section 4.4.

         PARTICIPANT. An Eligible Employee or former Eligible Employee who participates in the Plan.

         PARTICIPANT CONTRIBUTIONS. The amounts Eligible Employees are deemed to contribute, by deferring amounts otherwise payable to them, pursuant to Sections 4 of the Plan.

         PLAN. Cingular Wireless Cash Deferral Plan.

         RETIREMENT OR RETIRE. The Termination of Employment for reasons other than death or Disability, on or after the date on which (1) the Employee is first eligible, upon terminating employment, for retiree health coverage in accordance with the terms of the Employer's health plan; or (2) the Employee is eligible to retire under any other guidelines established by the Administrator.

         SALES INCENTIVES. An incentive award, based on an assessment of performance under an approved sales incentive compensation plan, that is determined by the Administrator to qualify as eligible compensation under this Plan.

         TERMINATION OF EMPLOYMENT. References herein to "Termination of Employment," "Terminate Employment" or a similar reference, shall mean the event where the Employee ceases to be an Employee of any Employer, including but not limited to where the employing company ceases to be an Employer.

ARTICLE 3 - - ADMINISTRATION OF THE PLAN

3.1      THE ADMINISTRATOR.

The Administrator will administer the Plan, interpret, construe and apply its provisions in accordance with its terms. The Administrator may further establish, adopt or revise such rules and regulations as such person may deem necessary or advisable for the administration of the Plan. References to determinations or other actions by the Administrator, herein, shall mean actions authorized by such person or his respective successors or duly authorized delegates, in each case in the discretion of such person. All decisions by the Administrator shall be final and binding.

3.2      CLAIMS PROCEDURE.

If a request for benefits by a Participant or beneficiary is wholly or partially denied, the Administrator will provide such claimant written notice setting forth the denial. A review procedure is available upon written request by the claimant to the Administrator within 90 days after the date of the Administrator's written notice of the denial of the claim, and includes the right to examine pertinent documents and submit issues and comments in writing to the Administrator. The decision on review will be made within 90 days after receipt of the request for review, unless circumstances warrant an extension of time not to exceed an additional 90 days, and shall be in writing. If a decision on review is not made within such period, the Participant's claims shall be deemed denied.

3.3      DECISIONS BINDING.

The Administrator shall have the exclusive discretion to construe and interpret the Plan and make all determinations hereunder. All determinations and decisions of the Administrator as to any disputed question arising under the Plan, including questions of construction and interpretation, shall be final, conclusive and binding on all parties and shall be subject to the fullest discretion afforded by law.

ARTICLE 4 - - CONTRIBUTIONS

4.1      EMPLOYEE ELECTION TO MAKE CONTRIBUTIONS.

         (a) Each year, an Eligible Employee may make an election to make Participant Contributions with respect to Base Salary, Bonus Awards, Sales Incentives, or any other award eligible under this Plan, paid during the immediately following calendar year. The enrollment period for making such elections shall be established by the Administrator. Any such election is irrevocable.

         (b) An Eligible Employee may elect to contribute from 6% to 30%  (in whole percentage increments) of Base Salary, Bonus Awards, or eligible Sales Incentives, as the same may change from time to time, and such Participant Contributions shall be credited to his/her Contribution Account.

         (c) An Eligible Employee who is an Executive may elect to contribute up to an additional 20% (in whole percentage increments) of Base Salary and/or up to an additional 45% of Bonus Awards, as the same may change from time to time, and such Participant Contributions shall be credited to his/her Contribution Account.

         (d) An Eligible Employee who is an Executive may elect to contribute up to 75% (in whole percentage increments) of any Long-Term Incentive Award paid by Cingular Wireless, as the same may change from time to time, and such Participant Contributions shall be credited to his/her Contribution Account.

         (e) The Administrator may refuse or terminate any election by an Eligible Employee to make Participant Contributions at any time; provided, however, only the Board/Committee may take such action with respect to persons who are "executive officers" of CWLLC. Page 9 of 9

4.2      DURATION AND CREDITING OF PARTICIPANT CONTRIBUTIONS.

         (a) Participant Contributions (as well as any corresponding Matching Contributions) shall be made solely pursuant to a proper election and only during the Participant's lifetime and while the Participant remains an Eligible Employee (if the Participant ceases to be an Eligible Employee, his or her election to make Employee Contributions shall be cancelled); provided, however, Termination of Employment of an Eligible Employee shall not constitute loss of eligibility solely with respect to contribution of Base Salary, Bonus Awards, or Sales Incentives earned prior to termination but paid within 60 days thereafter or with respect to a Bonus or Long-Term Incentive Award paid after Retirement (and such person shall be deemed an Eligible Employee for such contributions).

         (b) Participant Contributions shall be credited to a Contribution Account when the compensation would have otherwise actually been paid were it not for an election under this Plan. A contribution from any eligible payment that is delayed for any reason shall be credited when the delayed payment is made.

4.3      CREDITING OF INTEREST.

Interest is to be credited to the Participant's Contribution Account pursuant to the provisions of this Section 4.3 and the procedures adopted by the Administrator for crediting interest. The annual interest rate for each calendar year shall be a reasonable rate of interest as determined by the Vice President and Treasurer with the concurrence of the Chief Financial Officer. However, in no event will the interest rate for any calendar year be less than the Moody's Corporate Bond Yield Average as published by Moody's Investor Services, Inc. (or any successor thereto) for the month ending two months prior to the month in which Eligible Employees make their annual deferral elections under the Plan.

4.4      MATCHING CONTRIBUTIONS.

When an Eligible Employee makes a Participant Contribution, his/her Contribution Account shall be credited with an amount found by multiplying the matching contribution rate provided in the Cingular Wireless 401(k) plan, including any special transition rates, by:

         (a) 6% (or such other percentage as approved by the Committee) of the Participant Contributions; plus,

         (b) 6% of any eligible compensation, excluding the Participant Contribution, that is in excess of the Code Section 401(a)(17) limits.

         (c) 6% of any amount refunded to a participant from the Cingular Wireless 401(k) Saving Plans as a result of the Code Section 401(k) non-discrimination testing or other amounts determined within the discretion of the Administrator.

Compensation paid in the form of a Long Term Incentive Award is not eligible for Matching Contributions.

ARTICLE 5 - - OTHER COMPENSATION AWARDS

5.1      OTHER COMPENSATION AWARDS.

         (a) Any Eligible Employee who (i) would receive from an Employer a  distribution of cash pursuant to any plan or award specifically  permitted to be contributed to this Plan by the Administrator and (ii)  has not recognized any part of such distribution as income for Federal  income taxation purposes, may make an election, during an enrollment  period as determined by the Administrator, to convert such distribution  into a contribution under this Plan, provided such person remains an  Eligible Employee at the time of such contribution. Distribution of  such contributions shall be governed solely by the provisions of this  Plan. The Administrator may refuse or terminate any election under this  Section 5.1 at any time; provided, however, only the Board/Committee  may take such action with respect to persons who are "executive  officers" of CWLLC.

         (b) In no event shall a Contribution pursuant to this Section 5.1 result in the crediting of Matching Contributions.

ARTICLE 6 - - DISTRIBUTIONS

6.1 EMPLOYEE DISTRIBUTIONS FROM PARTICIPANT ACCOUNTS AT TERMINATION OF EMPLOYMENT.

Eligible Employees shall designate the time for a distribution from their Participant Accounts during the enrollment period. Eligible Employees may elect to receive a distribution according to the following guidelines:

Participants may elect to receive a distribution from their account at Termination of Employment. Participants, who are eligible for Retirement at the time of their Termination of Employment, may elect to receive their distributions in 1 to 10 payments beginning in March of the year following termination of Employment.

Participants, who are not eligible for Retirement at the time of Termination of Employment, may elect to receive their distributions in 1 to 3 payments beginning in March of the year following Termination of Employment.

If Participants do not have a valid election on file, distributions will be made in 10 payments, for Participants who are eligible for Retirement at the time of Termination of Employment, and 3 payments, for Participants who are not eligible for Retirement at the time of separation.

6.2 EMPLOYEE ELECTIONS TO RECEIVE DISTRIBUTIONS FROM PARTICIPANT ACCOUNTS PRIOR TO TERMINATION OF EMPLOYMENT.

In lieu of an election to receive a distribution at Termination of Employment, Eligible Employees may elect to receive a distribution from their Participant Accounts prior to Termination of Employment. Such election must be made during the enrollment period. Eligible Employees may elect to receive an "in-service" distribution according to the following guidelines:

Participants may elect to receive an in-service distribution in any year of an 8 year period beginning in the third year following the year of the deferrals. For example, for deferrals in 2002, in-service distributions can be elected in 2005 through 2012.

All in-service distributions will be paid in March of the year of the requested distribution. The total value, consisting of Participant and Company Match Contributions plus accrued interest as of March 1 (the Valuation Date) related to the specific deferral, will be paid in a single payment.

Notwithstanding any of the provisions of this paragraph 6.2, if a Participant terminates employment prior to a scheduled in-service distribution, value of the Employee's Contribution Account will be distributed in accordance with the guidelines for a distribution at Termination of Employment.

6.3       DISTRIBUTIONS FROM PARTICIPANT ACCOUNTS.

         (a) All distributions will be based on the value of the Employee's Contribution Account as of March 1 (or such other date as determined by the Administrator) of the year of the distribution. Generally, Participants should receive distribution payments within 10 workdays.

         (b) Multi-year distributions will be based on the Value of the Employee's Contribution Account as of March 1 (or such other date as determined by the Administrator). Distributions are to be equal to the Participant's Contribution Account balance divided by the number of remaining distributions.

         (c) Notwithstanding the provisions of (a) or (b) above or any provision in the Plan, if the Value of the Employee's Contribution Account is (1) less than $50,000 as of March 1 of the year of the initial distribution payment, the number of multi-year payments can not exceed three, or (2) less than $10,000 of the year of the initial distribution, the total Contribution Account balance will be paid in a single payment.

6.4      REVOKED OR AMENDED ELECTIONS.

A Participant, who has previously elected to receive a distribution prior to Termination of Employment, may revoke such election during an enrollment period as specified by the Administrator. Generally, the enrollment period for revoking such elections will be prior to the year preceding the year of the distribution.  If an election to receive a distribution prior to Termination of Employment is revoked, the value of the distribution will remain in the Employee's Contribution Account and will be distributed at Termination of Employment and no further changes may be elected at any time.

A Participant who has elected to receive a distribution at Termination of Employment, may amend that election to change the number of distribution payments to be received following a Termination of Employment. To be valid, a revised election must be submitted during the enrollment period prior to the year preceding the year of the distribution.

In the event the Participant incurs a Termination of Employment for reasons other than Retirement, the Administrator may, at its sole discretion, accelerate the distribution of all or part of the Participant's Account to the date of the Administrator's choosing, without notice to, or the consent of, the Participant.

6.5      DESIGNATION OF BENEFICIARY; DISTRIBUTIONS AT DEATH.

Each Participant may designate a beneficiary or beneficiaries (who may be named contingently or successively) who, upon the Participant's death, will receive the amounts that otherwise would have been paid to the Participant under the Plan. All designations shall be signed by the Participant, and shall be in such form as prescribed by the Administrator. Each designation shall be effective as of the date received from the Participant.

Participants may change their designations of beneficiary on a form prescribed by the Administrator. The payment of amounts deferred under the Plan shall be in accordance with the last unrevoked written designation of beneficiary that has been signed by the Participant and delivered by the Participant to the Administrator or a designated third party.

In the event that all the beneficiaries named by a Participant pursuant to this Section 6.5 predecease the Participant, the deferred amounts that would have been paid to the Participant or the Participant's beneficiaries shall be paid to the Participant's estate.

In the event a Participant does not designate a beneficiary, or for any reason such designation is ineffective, in whole or in part, the amounts that otherwise would have been paid to the Participant or the Participant's beneficiaries under the Plan shall be paid to the Participant's estate.

In the event of death, the Participant's Contribution Account will be paid in 1 to 10 payments, as specified by the Participant on the Beneficiary Designation Form, subject to the rules contained in Section 6.3(c). If no Beneficiary Designation Form is on file, payments will be made in a single lump sum payment.

6.6      INELIGIBLE PARTICIPANT.

Notwithstanding any other provisions of this Plan to the contrary, if the Administrator or CWLLC receives an opinion from counsel selected by CWLLC, 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 is not, or was not at the time of his or her making Participant contributions to this Plan, to be a "management or highly compensated employee" within the meaning of ERISA, then such person will not be eligible to participate in this Plan and shall receive an immediate distribution of contributions and interest thereon corresponding to the vested portion of his or her account. Upon such distribution, no other distribution shall thereafter be payable under this Plan either to the individual or any beneficiary of the individual.

6.7      DISTRIBUTION PROCESS.

As to a Participant's deferrals of cash compensation, the payment of which would have been deductible by an Employer under Section 162(m) of the Code, regardless of the size of the cash compensation, shall be deemed to be distributed first.

ARTICLE 7 - - DISCONTINUATION, TERMINATION, AMENDMENT.

CWLLC hereby reserves the right to amend, modify or terminate the Plan at any time by action of the Board of Directors. Notwithstanding the foregoing, the Senior Vice President of Human Resources may make ministerial amendments to the plan to conform the plan to the intent of the Administrator.

The Plan is intended to be an unfunded plan maintained primarily to provide deferred compensation benefits for a select group of "management or highly compensated" within the meaning of Sections 201, 301 and 401 of ERISA, and therefore be exempt from the provisions of Parts 2, 3 and 4 of Title I of ERISA. Accordingly, the Board may terminate the Plan and commence termination payout for all or certain Participants, or remove certain employees as Participants, if it is determined by the United States Department of Labor or a court of competent jurisdiction that the Plan constitutes an employee pension benefit plan within the meaning of Section 3(2) of ERISA which is not so exempt. If payout is commenced pursuant to the operation of this Article 7, the payment of such amounts shall be made in a lump sum regardless of the manner selected by each Participant under Article 6 herein as applicable.

ARTICLE 8 - - MISCELLANEOUS

8.1      TAX WITHHOLDING.

Upon distribution the Administrator shall withhold amounts required to satisfy the Federal, state, and local taxes required by law to be withheld as a result of such distribution.

8.2      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 the Administrator or made in such other manner as permitted or required by the Administrator, including through electronic means, over the Internet or otherwise. An election shall be deemed made when received by the Administrator, which may waive any defects in form. Unless made irrevocable by the electing person, each election with regard to making Participant contributions or distributions shall become irrevocable at the close of business on the last day to make such election. The Administrator may limit the time an election may be made in advance of any deadline.

Any notice or filing required or permitted to be given to CWLLC under the Plan shall be delivered to the principal office of CWLLC, directed to the attention of the Senior Executive Vice President-Human Resources of CWLLC 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 CWLLC or, at the option of the Administrator, to the Participant's e-mail address as shown on the records of CWLLC. It is the Participant's responsibility to ensure that the Participant's addresses are kept up to date on the records of CWLLC. In the case of notices affecting multiple Participants, the notices may be given by general distribution at the Participants' work locations.

8.3      RIGHTS OF PARTICIPANTS; UNSECURED GENERAL CREDITOR.

The Plan shall create a contractual obligation on the part of CWLLC to make payments from the Participant's accounts when due. Payment of account balances shall be made out of the general funds of the CWLLC.

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 CWLLC to distribute amounts deferred and interest theron under the Plan.

CWLLC may establish one or more trusts, with such trustee(s) as the Administrator may approve, for the purpose of providing for the payment of deferred amounts. Any such trust created by the CWLLC will conform to the terms of the model trust approved by the Internal Revenue Service pursuant to Revenue Procedure 92-64, or any amendment thereof or successor to the claims of the CWLLC's general creditors. To the extent any deferred amounts under the Plan are actually paid from any trust, the CWLLC shall have no further obligation with respect thereto, but to the extent not so paid, such deferred amounts shall remain the obligation of, and shall be paid by, CWLLC.

8.4      OFFSET.

The Administrator may offset against the Contribution Account otherwise distributable to a Participant, any amounts due an Employer by a Participant, including but not limited to overpayments under any compensation or benefit plans.

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 of such amounts 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 Participant's Contribution Account, 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.

8.7      ERRORS.

At any time the Administrator may correct any error made under the Plan without prejudice to CWLLC, Cingular Wireless or any Affiliates. Such corrections may include, among other things, refunding contributions to a Participant with respect to any period he or she made Participant Contributions while not an Eligible Employee, or canceling the enrollment of a non-Eligible Employee.

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 ERISA, this Plan shall be governed by and construed in accordance with the substantive laws of the State of Georgia, excluding any conflicts or choice of law rule or principle that might otherwise refer constructive or interpretation of this Plan to provisions of the substantive law of any jurisdiction other than the State of Georgia. Any action seeking to enforce the rights of an employee, former employee or person who holds such rights through, from or on behalf of such employee or former employee under this Plan may be brought only in a Federal or state court located in Fulton County, Georgia.

8.10     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.

8.11     SUCCESSORS AND ASSIGNS.

This Plan shall be binding upon CWLLC and Affiliates that have adopted the Plan, and their successors and assigns.

EX-10.ZZ

Exhibit 10-zz

BELLSOUTH CORPORATION

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

Amended and Restated effective as of January 1, 2005

BELLSOUTH CORPORATION

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

ARTICLE I.   STATEMENT OF PURPOSE

The purpose of the BellSouth Corporation Supplemental Executive Retirement Plan is to provide supplemental pension benefits to Executives and certain other employees of BellSouth Corporation and certain subsidiaries of BellSouth Corporation, hereinafter referred to as Participants, who retire or terminate from service. The Plan was originally effective as of January 1, 1984 and was subsequently amended from time to time. The Plan is now hereby amended and restated, effective as of January 1, 2005, and as so amended and restated is intended to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), with respect to all benefits accrued and vested on or after January 1, 2005. Further, with respect to all benefits of Participants employed on or after January 1, 2007, the Plan is intended to fully comply with the requirements of Code Section 409A.

ARTICLE II. DEFINITIONS

1.           The term "ADEA" shall mean the Age Discrimination in Employment Act of 1967, as amended from time to time.

2.           The term "Affiliate" shall mean any corporation, other than BellSouth Corporation (or a Participating Company), which is a member of the same controlled group of corporations (within the meaning of Code Section 414(b)) as BellSouth Corporation and any trade or business (whether or not incorporated) which is under common control with BellSouth Corporation within the meaning of Code Section 414(c).

3.           The term "Annual Bonus Award" shall mean the bonus amount paid annually to a Participant that is included in the calculation of pension benefits under the Pension Plan.

4           The terms "BellSouth Corporation" and "Company" shall mean BellSouth Corporation, a Georgia corporation, or its successors.

5.           The terms "Chairman of the Board", "President" and "Board of Directors" or "Board" shall mean the Chairman of the Board of Directors, President and Board of Directors, respectively, of the Company.

6.           The term “Claim Review Committee” shall mean the Employees’ Benefit Claim Review Committee appointed by the Committee to be the claims fiduciary for any claims brought under the Pension Plan.

7.           The term "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time.

8.           The term "Committee" shall mean the Employee Benefit Committee appointed by the Company to administer the Pension Plan.

9.            The term "Disabled" or “Disability” means the following:

           (a)           the inability of the Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; OR

           (b)           the Participant is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of the Employer;

10.           The term "Executive" shall mean an employee on the active payroll of any Participating Company who holds a position that the Board of Directors has designated to be within the Company’s executive compensation group.

11.           The term “Executive Severance Agreement” means a BellSouth executive change in control agreement entered into by and between an executive who is a Participant in this Plan and BellSouth, as amended and/or superseded from time to time, providing certain benefits in the event of a change in corporate control of BellSouth Corporation.

12.           The term "Former Affiliate" shall have the same meaning as is attributed to such term under the Pension Plan.

13.           The term "Included Earnings" shall have the meaning ascribed to such term in Section 4(a)(ii) of Article IV of this Plan.

14.           The term "Interchange Company" shall have the same meaning as is attributed to such term under the Pension Plan.

15.           The term "Mandatory Retirement Age" shall have the same meaning as is attributed to such term under the Pension Plan.

16.           The term “Merger” shall mean the planned merger, pursuant to the Agreement and Plan of Merger dated as of March 4, 2006 (the “Merger Agreement”), by and among BellSouth, AT&T Inc. (“AT&T”), and ABC Consolidation Corp., a Georgia corporation and wholly-owned subsidiary of AT&T (“Merger Sub”), pursuant to which, at the “Effective Time” (as defined in the Merger Agreement), BellSouth will be merged with and into the Merger Sub.

17.           The term “Merger Severance Plan” means a severance plan (or plans) adopted under the terms of the Company Disclosure Letter to the Merger Agreement (as defined in Section 16 of this Article II).

18.           The term "Net Credited Service", except as expressly limited or otherwise provided in this Plan or under an individual Participant’s employment related agreement with the Company, shall have the same meaning as is attributed to such term under the Pension Plan and shall be interpreted in the same manner as that term is interpreted for purposes of the Pension Plan.

19.           The term "Participants" shall mean all Executives as defined herein, as well as all other management employees (i.e., non-collectively bargained employees) at pay grade E01 (or equivalent) and above and any other employees designated by the Chief Executive Officer of BellSouth Corporation or his or her delegated representative.

20.           The term "Participating Company" shall mean BellSouth Corporation, and each subsidiary of BellSouth Corporation which shall have determined, with the concurrence of the senior human resources officer of BellSouth Corporation, to participate in the Plan.

21.           The term "Pension Act” shall mean the Employee Retirement Income Security Act of 1974 (ERISA) as it may be amended from time to time.

22.           The term "Pension Commencement Date" shall have the same meaning as is attributed to such term under the Pension Plan.       

23.           The term "Pension Plan" shall mean the BellSouth Personal Retirement Account Pension Plan as in effect on the date of the Merger.

24.           The term "Plan" shall mean this BellSouth Corporation Supplemental Executive Retirement Plan.

25.           The term "Post-04 Benefit” shall mean the Participant’s Plan benefit accrued on or after January 1, 2005 determined in accordance with the provisions of Code Section 409A.

26.           The term "Pre-05 Benefit” shall mean the Participant’s Plan benefit accrued and vested as of December 31, 2004 determined in accordance with the provisions of Code Section 409A.

27.           The term “Rabbi Trust Agreement” shall mean each and all of the following: (i) BellSouth Corporation Trust Under Executive Benefit Plan(s); (ii) BellSouth Telecommunications, Inc. Trust Under Executive Benefit Plan(s); (iii) BellSouth Enterprises, Inc. Trust Under Executive Benefit Plan(s); (iv) BellSouth Corporation Trust Under Executive Benefit Plan(s) for Mobile Systems Executives; (v) BellSouth Corporation Trust Under Executive Benefit Plan(s) for Advertising and Publishing Executives; (vi) BellSouth Corporation Trust Under Executive Benefit Plan(s) for Certain BellSouth Companies; in each case, as amended from time to time.

28.           The term "Standard Annual Bonus" shall mean an amount determined by applying a target percentage of a Participant’s base pay rate as determined by the annual compensation plan and the Participant’s current job or pay grade.

29.           The term "Vesting Service Credit", except as expressly limited or otherwise provided in this Plan or under an individual Participant’s employment related agreement with the Company, shall have the same meaning as is attributed to such term under the Pension Plan and shall be interpreted in the same manner as that term is interpreted for purposes of the Pension Plan.

30.           The use in this Plan of personal pronouns of the masculine gender is intended to include both the masculine and feminine genders.

ARTICLE III. ADMINISTRATION

    1.          The Company shall be the Plan Administrator and the Plan Sponsor of the Plan as those terms are defined in the Pension Act. The Company may allocate all or any part of its responsibilities for the operation and administration of the Plan, except to the extent expressly prohibited by the Plan's terms. The Company may designate in writing other persons to carry out its responsibilities under the Plan, and may employ persons to advise it with regard to such responsibilities. The Company, acting through the Committee, the Claim Review Committee or any other person designated by the Company, as applicable, shall have the exclusive responsibility and complete discretionary authority to interpret the terms of the Plan (including the power to construe ambiguous or uncertain terms), to control the operation and administration of the Plan and to resolve all questions in connection therewith, with all powers necessary to enable it to properly carry out such responsibilities, including without limitation the powers and responsibilities set forth in this Section 3, and its determinations shall be final, conclusive and binding on all persons.

    2.          The Plan Administrator shall have the power to determine status, coverage, eligibility for and the amount of benefits under the Plan and all questions arising in connection therewith, with respect to employees of each Participating Company, respectively, and shall have the power to authorize disbursements according to this Plan.

     3.          The review and final determination of claims and appeals for Participants and beneficiaries under the Plan shall be determined by, and in the complete discretion of, the Plan Administrator acting through the Claim Review Committee and in accordance with the claims and appeals procedures set forth in the summary plan description for the Pension Plan and shall be administered and interpreted in accordance with the Pension Act and procedures in effect under the Pension Plan. All determinations of the Plan Administrator shall be final and binding and not subject to further administrative review.

    4.          The expenses of administering the Plan shall be borne by the Company and/or the applicable Participating Company.

    5.          The Company, the Committee and the Claim Review Committee, and each other Plan Administrator described herein, are each a named fiduciary as that term is used in the Pension Act with respect to the particular duties and responsibilities herein provided to be allocated to each of them.

    6.          Any person or group of persons may serve in more than one fiduciary capacity with respect to the Plan.

    7.          Notwithstanding the preceding, effective as of the date of the Merger, responsibility for administration of the Plan shall be determined under the terms of the Rabbi Trust Agreements. As provided in the Rabbi Trust Agreements, claims for benefits, appeals of benefit denials and Plan interpretations shall be made by a “Trust Contractor” or “Independent Fiduciary” (as such terms are defined in the Rabbi Trust Agreements), as the case may be. At any time during which a Trust Contractor or Independent Fiduciary shall, under the terms of the Rabbi Trust Agreements, have such Plan administrative responsibilities, the term “Plan Administrator” as used in this Plan shall refer to such Trust Contractor or Independent Fiduciary.

ARTICLE IV. BENEFITS

    1.        Participation

All persons included in the definition of the term "Participants" are deemed participants in this Plan. In addition, each individual who has participated in this Plan but who has ceased to be included in the definition of "Participants", whether due to demotion, termination or otherwise, shall continue to be a Participant in this Plan, except for purposes of accruing additional benefits under Section 4 of this Article IV, and shall be entitled to a benefit under this Plan if, at the time such individual ceased to be included in the definition of "Participants", he or she had satisfied the service requirements for a deferred vested pension under the Pension Plan. Each such individual shall receive a benefit under the terms of the Plan as in effect immediately prior to the effective date of such demotion, termination or other event, the amount of such benefit to be calculated as if the individual retired (or otherwise terminated employment) on such date, it being the Company's intent that any such demotion, termination or other event removing individuals from the definition of "Participants" shall not adversely affect entitlement to such benefits.

    2.        Mandatory Retirement Age

Each Participant, whether or not eligible for benefits under this Plan, shall cease to be eligible for continued employment no later than the last day of the month in which such Participant attains the Mandatory Retirement Age.

    3.        Eligibility

           (a)           Service Benefit

An individual who is both a Participant in this Plan and who is eligible for a service pension pursuant to the terms of the Pension Plan at the time of employment termination or whose age and Net Credited Service recognized under this Plan would satisfy the eligibility requirements of the Pension Plan for a service pension is eligible for a service benefit pursuant to this Plan. Additionally, each Participant who has attained age 62 or older and whose Net Credited Service is ten years or more at the time of employment termination is eligible for a service benefit under this Plan. Each Participant whose employment terminates pursuant to and under the terms of the Merger Severance Plan may also be eligible for a service benefit under this Plan, if at the time of employment termination the Participant's age and Net Credited Service meets the requirements established under such severance program to be deemed service pension eligible for purposes of this Plan. Each Participant whose employment terminates pursuant to and under the terms of an Executive Severance Agreement shall be deemed to be eligible for a service pension for purposes of this Plan.

           (b)           Deferred Benefit

           (i)           Any individual not described in Section 3(a) of this Article IV who is a Participant in this Plan at the time of voluntary employment termination is eligible for a deferred vested pension pursuant to this Plan, provided he is eligible for a deferred vested pension pursuant to the Pension Plan.

           (ii)           In the event that a Participant’s employment is terminated involuntarily prior to his or her becoming eligible for a deferred benefit under this Plan, and the termination is not for cause, such Participant shall nevertheless be entitled to a deferred benefit hereunder, based upon the Participant’s Vesting Service Credit at his or her date of termination.

           (c)           Disability Pension

An individual who while a Participant in this Plan has become eligible for a disability pension pursuant to the terms of the Pension Plan and who is also determined to be Disabled shall be eligible for a disability pension hereunder, calculated as follows: the amount is determined in accordance with Section 4 of this Article IV calculated to one year after date of Disability (pro-rata if less than 20 years of service) with no reduction factor but offset by the actual service or deferred benefit determined under Section 4 of this Article IV applying all applicable early retirement reduction factors (determined assuming that the service or deferred benefit is payable as an annuity). Should the disability pension be discontinued pursuant to the terms of the Pension Plan, the disability pension hereunder shall be discontinued as well.

    4.        Benefit Amounts

           (a)           Computation of Benefit

                      (i)            (A)            Benefit Formula

The aggregate annualized benefit of each Participant payable as provided in the Plan shall be determined by adding the sum of two percent (2%) of Included Earnings for each year of the Participant's Vesting Service Credit for the first twenty years, plus one and one-half percent (1.5%) of Included Earnings for each year of the Participant's Vesting Service Credit for the next ten years, plus one percent (1%) of Included Earnings for each year of the Participant's Vesting Service Credit for each additional year up to the month in which the Participant retires less (1) 100% of the retirement benefit (unreduced for survivor annuity) payable from the Pension Plan and (2) 100% of the Primary Social Security benefit payable at age 65.

 (B)            Special Rules

(1) With respect to service benefits, the benefit reduction to be applied pursuant to Section 4(a)(i)(A)(1) above for the benefit payable from the Pension Plan shall be the amount of such benefit that would be payable on the date that benefits are eligible to be paid (or become payable) under this Plan (regardless of the Participant’s actual pension commencement date under the Pension Plan) and determined assuming that the Participant elected a single life annuity (regardless of the actual form of benefit elected under the Pension Plan).

(2)           With respect to deferred vested benefits, the benefit reduction to be applied pursuant to Section 4(a)(i)(A)(1) above for the benefit payable from the Pension Plan shall be the amount of such benefit that would be payable on the Participant’s 65th birthday (regardless of the Participant’s actual pension commencement date under the Pension Plan) and determined assuming that the Participant elected a single life annuity (regardless of the actual form of benefit elected under the Pension Plan).

(3)           In the case of any Executive (i) who has attained the age of sixty-two (62) or more or who is deceased, (ii) who was previously employed by a Former Affiliate, (iii) who serves or has served as an officer (as such term is used in the employment practices and policies of the relevant company) of BellSouth Corporation or an Affiliate, and (iv) whose service with a Former Affiliate is disregarded in determining the Executive's Vesting Service  Credit under the Pension Plan, for purposes of this Plan, the Executive’s Vesting Service Credit and Net Credited Service shall be increased by

(x) the Executive's Vesting Service Credit and Net Credited Service with the Former Affiliate(s) (determined under the rules of the Pension Plan as if the Executive had been employed by BellSouth Corporation during such period and had no other service covered under the Pension Plan), multiplied by

(y) a fraction, the numerator of which is the number of whole years (not to exceed ten (10)) of such Executive's Net Credited Service as an officer of BellSouth Corporation or an Affiliate and the denominator of which is ten (10).

Notwithstanding the foregoing, no Executive's Vesting Service Credit or Net Credited Service, for purposes of this Plan shall be increased for service with a Former Affiliate to the extent that any such service would otherwise be considered, directly or indirectly, in determining such Executive's benefits under this Plan by virtue of the terms of any other agreement, plan or arrangement.

(4)           In the case of any Participant whose Vesting Service Credit or Net Credited Service includes a period of service with an employer with respect to which the Participant is entitled to any retirement benefit payable from defined benefit pension plan(s ) (including qualified plans and nonqualified plans such as excess benefit and supplemental executive retirement plans), including any Executive whose Vesting Service Credit and Net Credited Service under this Plan is increased pursuant to Section 4(a)(i)(B)(3) preceding, the benefit reduction described in Section 4(a)(i)(A)(1) above for the retirement benefit payable from the Pension Plan shall include any such retirement benefit payable by such employer. The determination of the benefit reduction for any such benefit shall be made using approaches which approximate as nearly as practicable the approaches used in making such determinations with respect to benefits payable under the Pension Plan, as described above in this Section 4(a)(i). In the case of any Executive whose Vesting Service Credit and Net Credited Service under this Plan is increased pursuant to paragraph (B)(3) of this Section 4(a)(i), the benefit payable by such employer shall first be multiplied by the fraction described in that paragraph and the product thereof shall be the amount of the benefit reduction.

 (5)           A Participant’s service or deferred benefit (the value of which is expressed as an annuity) at the time of termination of employment shall not be less than the service or deferred benefit that would have been payable to the Participant if the Participant had terminated employment on any prior December 31 (using pay, service, offsets and all factors applicable on the previous dates and assuming an immediate benefit commencement).

(6)           In the case of each Participant who terminates employment pursuant to the terms of the Merger Severance Plan, the service benefit or deferred vested benefit calculated hereunder shall be calculated by adding additional months of Vesting Service Credit and an equal amount of months of age with the amount of such months equaling (i) 24, minus (ii) the number of months that have elapsed since the closing of the Merger (but not below zero).

                      (ii)            Included Earnings

Included Earnings shall equal the 12 month average of the sum of (1) the last sixty (60) months of base pay, plus (2) the Annual Bonus Awards payable during or after that sixty (60) month period. The amounts of base pay and other payments used to determine Included Earnings as described above include all amounts during the specified period including those amounts previously deferred pursuant to other plans. If a Participant terminates employment eligible for a benefit under this Plan and thereafter receives compensation of the types described in clause (ii) of this Section 4(a), the additional Included Earnings shall be deemed to have been paid as of the date the Participant terminated employment, and the amount of benefit payable under this Plan shall be corrected accordingly.

           (b)           Minimum Benefit

In no event shall a Participant, whose Vesting Service Credit has been five years or more, who terminates employment on or after his or her sixty-second birthday, or who is retired on a service or disability pension under the Pension Plan or is otherwise eligible for a service pension benefit hereunder, receive a total annual retirement benefit (including any benefit under the Pension Plan) from the Company of less than 15% of the employee's annual base salary plus Standard Annual Bonus in effect on the employee's last day on the active payroll.

           (c)           Early Retirement Discount

(i) The service benefit amount, determined in accordance with the provisions of this Section 4, for each Participant who is granted a service benefit, shall be reduced (before the offset for benefits under the Pension Plan) by one-half percent (0.5%) for each calendar month or part thereof by which the commencement of benefits under this Plan precedes the Participant’s 62nd birthday, except that each employee retired with thirty (30) or more years of service (either Net Credited Service or Vesting Service Credit) shall receive a service benefit reduced by one-quarter percent (0.25%) for each calendar month or part thereof by which the commencement of benefits under this Plan precedes the Participant’s 62nd birthday. With respect to Participants who terminate employment and receive benefits under the Merger Severance Plan, the preceding sentence shall be applied by substituting “twenty-eight (28) or more” for the words “thirty (30) or more.” Further, with respect to a Participant who retires during 2006, in no event shall the amount by which such Participant’s benefit is reduced pursuant to this provision be greater than the amount by which such benefit would have been reduced pursuant to this provision had the Participant retired on December 31, 2005.

(ii) The deferred vested benefit amount, determined in accordance with the provisions of this Section 4, for each Participant who is granted a deferred vested benefit, shall be reduced (after the offset for benefits under the Pension Plan) by an actuarially equivalent amount, using mortality rates and other assumptions then in effect under the Pension Plan, for each calendar month or part thereof by which the commencement of benefits under this Plan precedes the Participant’s 65th birthday.

 (d) Survivor/Death Benefits for Participant Deaths occurring prior to January 1, 2007.

                         (i)                 Benefit Payable Before Benefit Commencement.

If a Participant who has not made a valid lump sum election with respect to his or her Pre-2005 Benefit dies prior to termination of employment (or commencement of benefits for Participant’s with a deferred benefit) and leaves a surviving spouse at the time of his death, a pre-retirement survivor benefit is payable to the surviving spouse as an immediate life annuity equal to 100% of the service benefit or deferred benefit that the Participant would have received with respect to his or her Pre-2005 Benefit had he survived and terminated employment on the date of his death and commenced benefit payments. In addition, with respect to the Participant’s Post-2004 Benefit, such benefit shall be paid to the surviving spouse as soon as administratively feasible following the Participant’s death in a single sum payment calculated in accordance with Section 5 of this Article IV. If such Participant does not have a surviving spouse at the time of his death, the entire survivor benefit described in this paragraph shall be paid to the Participant’s estate as soon as administratively feasible following the Participant’s death (even if the Participant was a Band BB officer or above) in the form of a single sum payment calculated in accordance with the provisions of Section 5 of this Article IV.

                       (ii)                 Benefit Payable After Benefit Commencement.

If the Participant was receiving benefits in the form of an annuity with respect to his Pre-2005 Benefit (or was eligible to receive benefits in the form of an annuity because of termination of employment), and leaves a surviving spouse at the time of his/her death, then such surviving spouse shall automatically receive a survivor annuity for life equal to 50% of the net pension benefit that the Participant was receiving (or eligible to receive) just prior to his death. If the Participant was eligible to receive payment of his Post-2004 Benefit but had not yet received such payment, then his Post-2004 Benefit shall be paid in the form of a single lump sum payment calculated in accordance with the provisions of Section 5 of this Article IV.

                       (iii)              Lump Sum Election.

In the event of the death of a Participant who has made a valid lump sum election under the Plan with respect to his or her Pre-2005 Benefit, his surviving spouse (or his estate if there is no surviving spouse) shall be entitled to receive 100% of the lump sum payment that would have been payable to the Participant had he survived and terminated employment on the date of his death (including the lump sum payment of the Participant’s Post-2004 Benefit), and such lump sum shall be payable as soon as administratively feasible following the Participant’s death (even if the Participant was an Executive designated as a Band BB officer or above).

                       (iv)           Lump Sum Settlement.

If a Participant has already received a lump sum settlement of his entire benefit under the Plan, then no further benefits are payable under this subparagraph (d).

 (e) Survivor/Death Benefits for Participant Deaths occurring on or after January 1, 2007.

                      (i)           Benefit Payable Before Benefit Commencement.

If a Participant dies prior to termination of employment and leaves a surviving spouse at the time of his death, a pre-retirement survivor benefit is payable to the surviving spouse in the same form as elected by the Participant for payment of his benefit (i.e., single lump sum, 10 year installments, or single life annuity) in an amount equal to 100% of the service benefit or deferred benefit that the Participant would have received with respect to his benefit had he survived and terminated employment on the date of his death and commenced benefit payments; provided, if the survivor benefit is payable in a single life annuity, there will be no payment of an additional survivor annuity upon the surviving spouse’s death. If such Participant does not have a surviving spouse at the time of his death, the entire survivor benefit described in this paragraph shall be paid to the Participant’s estate as soon as administratively feasible following the Participant’s death (even if the Participant was a “specified employee” as defined under Code Section 409A) in the form of a single sum payment calculated in accordance with the provisions of Section 5 of this Article IV.

                      (ii)           Benefit Payable After Benefit Commencement.

(A) Life Annuity. If the Participant leaves a surviving spouse and was receiving benefits in the form of an annuity (or was eligible to receive benefits in the form of an annuity because of termination of employment and because the Participant had elected an annuity form of payment in accordance with Section 5 of this Article IV), then such surviving spouse shall automatically receive a survivor annuity for life equal to 50% of the net pension benefit that the Participant was receiving (or eligible to receive) just prior to his death. If the Participant does not leave a surviving spouse and was receiving benefits in the form of an annuity (or was eligible to receive benefits in the form of an annuity because of termination of employment and because the Participant had elected an annuity form of payment in accordance with Section 5 of this Article IV), then no further benefits will be payable after the Participant’s death.

(B) 10-Year Installments. If the Participant leaves a surviving spouse and was receiving benefits in the form of 10-year installments, then the remaining installments shall continue to be paid to the surviving spouse. If the Participant was receiving benefits in the form of 10-year installments and does not leave a surviving spouse, then the remaining installments shall be paid in the form of a single lump sum payable to his estate.

(C) Lump Sum Payment. If the Participant was eligible to receive a single lump sum payment of his Plan benefit but dies prior to the payment being made, then the single lump sum payment shall be made to his surviving spouse, if applicable, and otherwise to his estate.

                      (iii)           Lump Sum Settlement.

If a Participant has already received a lump sum settlement of his entire benefit under the Plan, then no further benefits are payable under this subparagraph (e).

           (f)           Special Increases

Service and disability benefit payments, as determined under this Section 4(a) and (b) of this Article IV, of retired Participants shall be increased by the same percentage and pursuant to the same terms and conditions as are set forth in the Pension Plan.

5.           Form of Benefit Payments  

   (a)   Rules Applicable to Participants who terminate Employment Prior to January 1, 2007

(i)         Annuity Payments. With respect to a Participant who has not made a valid lump sum election in accordance with subparagraph (ii) hereof, such Participant’s Pre-2005 Benefit shall be paid in monthly disbursements or at such other periods as the Committee may determine in each case. Notwithstanding the foregoing, if at the time of the Participant’s termination of employment, the present value of the benefit of a Participant, whether payable as a service benefit, a deferred benefit, or a survivor’s benefit, is less than $20,000, such benefit shall be paid in the form of a single lump sum payment, calculated in accordance with subparagraph (iii) hereof.

                      (ii)         Lump Sum Benefit Payment.

(1) Pre-2005 Benefit. A Participant may elect to receive his Pre-2005 Benefit hereunder, whether payable as a service benefit, a deferred benefit or a survivor’s benefit, paid in the form of a single lump sum payment, calculated in accordance with the provisions of Paragraph (c) hereof; provided, any such election must be made in accordance with procedures established by the Company and must be on file with the Company, or its designee, for at least 12 consecutive calendar months prior to the Participant’s termination of employment or death in order to be valid and in effect.

(2) Post-2004 Benefit. All Post-2004 Benefits, whether payable as a service benefit or a deferred benefit shall be paid in the form of a single lump sum payment, calculated in accordance with the provisions of Paragraph (c) hereof.

(b)Rules Applicable to Participants who terminate Employment on or after January 1, 2007

(i) Lump Sum Benefit Payment. Absent an election to the contrary in accordance with subparagraph (iv) hereof, a Participant’s entire benefit under the Plan, whether payable as a service benefit or a deferred benefit, shall be paid in the form of a single lump sum payment, calculated in accordance with the provisions of Paragraph (c) hereof.

(ii) 10-year installments. If a Participant made a valid election for 10-year installments under subparagraph (iv) hereof, such Participant’s entire benefit under the Plan, whether payable as a service benefit or a deferred benefit, shall be paid in the form of annual installments payable over a period of 10 years. The amount of the annual installments shall be determined by calculating the Participant’s benefit under the Plan as a single lump sum in accordance Paragraph (c) hereof and then paying 1/10th of the amount each year plus interest annually at the rate then specified under the Pension Plan.

(iii) Life Annuity. If a Participant made a valid election for a life annuity under subparagraph (iv) hereof, such Participant’s entire benefit under the Plan, whether payable as a service benefit or a deferred benefit, shall be paid in the form of monthly payments payable over the life of the Participant. The amount of the monthly payments shall equal the Participant’s annualized benefit determined under Section 4(a)(i)(A) of Article IV divided by 12.

                      (iv)         Election Opportunity.

(1) Initial Election. Participant’s who are participating in the Plan as of September 30, 2006 (or become newly eligible during October 2006) may elect a single lump sum payment, 10-year installments or a life annuity during the period between October 1, 2006 and November 30, 2006. Participants who first become Participants in the Plan on or after November 1, 2006 may elect a single lump sum, 10-year installments or a life annuity; provided such election must be made within 30 days of the Participant’s initial participation in the Plan.

(2) Subsequent Elections. Participants may elect to change the form of payment (and the timing of payment) during a time other than that specified under subparagraph (1) above; however, such election must comply with the requirements of Code Section 409A and applicable regulations thereunder, which means that the subsequent election will only be effective if made at least one year prior to the time at which the distribution would be made absent the subsequent election AND if the first payment under the form of payment elected is delayed for at least a five year period.

(v) De Minimis Cash-Out. Notwithstanding any election made under subparagraph (iv) hereof, if at the time of the Participant’s termination of employment, the present value of the benefit of a Participant, whether payable as a service benefit or a deferred benefit, is less than $20,000, such benefit shall be paid in the form of a single lump sum payment, calculated in accordance with Paragraph (c) hereof.

            (c)            Lump Sum Calculation.

Benefits payable in a single lump sum in accordance with the Plan shall be the amount that is the actuarial present value of the Participant’s benefit, or applicable portion thereof, expressed as a single life annuity and shall be determined using (i) the applicable interest rate then in effect under the Pension Plan, and (ii) the applicable mortality table then in effect under the Pension Plan.

6.            Timing of Payment of Benefits

Except for the reasons specified below, benefits granted under this Plan shall commence on the day following the date of termination of employment from the Company and all Affiliates.

           (a)           For Terminations of Employment Occurring prior to January 1, 2007.

(i) An Executive who is a Band BB officer or above and who has made a valid lump sum election shall receive the lump sum payment (including interest accrued annually at the applicable interest rate in effect under the Pension Plan) as soon as administratively feasible following the date that is 2 years following his date of retirement or other termination of employment.

(ii) Participants eligible for a deferred vested benefit will have their Post-2004 benefit commence at such time as the individual otherwise elects to commence payment of benefits under the Pension Plan.

(iii) Participants who have a Post-2004 Benefit and who are Executives or otherwise considered specified employees under Code Section 409A at the time of his or her termination of employment shall receive the lump sum payment (including interest accrued annually at the applicable interest rate in effect under the Pension Plan) as soon as administratively feasible following the date that is 6 months following his or her date of retirement or other termination of employment.

           (b)           For Terminations of Employment On or After January 1, 2007.

(i) Participants electing a single lump sum payment or 10-year installment payments and who are Executives or otherwise considered specified employees under Code Section 409A at the time of his or her termination of employment shall receive the single lump sum payment or the first installment under the 10-year installment form of benefit (each including interest accrued annually at the applicable interest rate in effect under the Pension Plan) as soon as administratively feasible following the date that is 6 months following his or her date of retirement or other termination of employment.

(ii) Participants electing a life annuity payment form and who are Executives or otherwise considered specified employees under Code Section 409A shall receive the first annuity payment as soon as administrative feasible following the date that is 6 months following his or her retirement date or other termination of employment and this first payment shall equal 7 monthly annuity payments.

7.            Treatment During Subsequent Employment

Employment with any Participating Company or Affiliate for which a Participant is an eligible employee, subsequent to retirement or termination of employment with entitlement to any type of benefits described heretofore shall result in the permanent suspension of the benefit for the period of such employment or reemployment. Upon termination of such subsequent employment, the full benefit payable hereunder shall be recalculated and then offset by any amounts previously paid to the Participant using assumptions set forth under the Pension Plan. The benefit will commence following the subsequent termination of employment but shall be subject to the provisions set forth in Section 6 of this Article IV regarding the timing of payment of benefits.

8.            Employment with Cingular

Individuals who were Participants as of December 23, 2001 and who transferred to Cingular Wireless, LLC on or before December 23, 2001 pursuant to the Contribution Agreement by and between BellSouth Corporation and AT&T Inc. (formerly SBC Communications, Inc.) continue to be actively employed by the Company for all purposes of this Plan through December 31, 2006 and thereafter will continue to be considered to be employed by the Company for all purposes except for the accrual of future benefits (i.e., final average pay and Vesting Service Credit freezes but Net Credited Service continues to accrue) until such time as the Participant terminates employment with Cingular Wireless, or a successor company, and all its affiliated companies.

ARTICLE V. DEATH BENEFITS

1.           Eligibility and Administration

All individuals who became eligible to participate in the Plan prior to January 1, 2006 shall be eligible for death benefits under this Plan. With respect to individuals who become eligible to participate in the Plan on or after January 1, 2006, no death benefits shall be payable pursuant to this Article V. Death benefits described herein are in addition to death benefits payable under the Pension Plan but shall be subject to the same terms and conditions of, and administered in the same manner as, corresponding death benefit provisions of the Pension Plan.

2.            Amount of Death Benefit.

For an Executive, the benefit equals the annual base salary plus two times the Standard Annual Bonus. The above stated amounts of base salary and Standard Annual Bonus are those amounts in effect at the earlier of retirement or death including those amounts previously deferred pursuant to other plans. For all other Participants, the benefit equals the Standard Annual Bonus in effect at the earlier of retirement or death. In addition, the death benefit for all Participants will include the amount of death benefit, if any, that would otherwise have been payable under the Pension Plan had there been no deferral of compensation under any plan of the Company. The benefit amount will also include the amount of death benefit, if any, that would otherwise have been payable under the Pension Plan had the restriction on the amount of compensation that may be taken into account under Code Section 401(a)(17) not been applicable.

3.            Death Benefits After 2005.

Notwithstanding the provisions of Section 2 of this Article V preceding, with respect to each Participant in the Plan on December 31, 2005, the amount of any death benefit payable pursuant to Section 1 of this Article V shall in no event be based on base salary and/or Standard Award amounts greater than such Participant’s base salary and the Standard Award applicable with respect to such Participant on December 31, 2005.

4.           Form and Source of Payments

All death benefits payable pursuant to this Article V of the Plan shall be paid in a single lump sum as soon as administratively feasible following the death of the Participant and shall be paid from Company or Participating Company's operating expenses, or through the purchase of insurance from an Insurance Company as the Company may determine.

ARTICLE VI. GENERAL PROVISIONS

1.            Effective Date

This Plan was originally effective January 1, 1984 and this restatement of the Plan is effective January 1, 2005.

2.            Rights to Benefit

There is no right to any benefit under this Plan except as may be provided by the Company or each Participating Company. Participants have the status of general, unsecured creditors of the Participating Company and the Plan constitutes a mere promise by the Participating Company to make benefit payments in the future. A Participant shall have only a contractual right to receive the benefits provided for hereunder if and when he complies with all of the conditions set forth herein. Nothing contained in this Plan and no action taken pursuant to the provisions of this Plan shall create or be construed to create a trust of any kind. The Plan is intended to be "unfunded" for purposes of the Pension Act and the Code. If any payment is made to a Participant, his or her surviving spouse or other beneficiary with respect to benefits described in this Plan from any source arranged by the Company or a Participating Company including the Rabbi Trust Agreements and also including, without limitation, any other 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 Company or Participating Company under this Plan to the extent of such payment as if such payment had been made directly by the Company or Participating Company; and (ii) if any payment from a source described in clause (i) above shall be made, in whole or in part, prior to the time payment would be made under the terms of this Plan, such payment shall be deemed to satisfy the obligation of the Company or Participating Company 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. In determining the benefits satisfied by a payment described in clause (ii), Plan benefits, as they become payable, shall be discounted to their value as of the date such actual payment was made using an interest rate equal to the valuation interest rate for deferred annuities as last published by the Pension Benefit Guaranty Corporation prior to the date of such actual payment. If the benefits which actually become payable under this Plan, after applying the discount described in the preceding sentence, are less than the amount of the payment described in clause (ii), any such shortfall shall not be collected from or enforced against the Participant as a claim by the Company or Participating Company.

3.            Liability for Payment of Benefits

Where a Participant's period of service includes service in more than one Participating Company or in a company that is not a Participating Company, the last Participating Company to employ him or her immediately prior to his or her retirement or termination of employment with entitlement to a benefit hereunder shall be responsible for the full benefit under this Plan.

4.            Governing Law

The Company intends that this Plan be an unfunded deferred compensation plan maintained primarily for a select group of management and highly compensated employees exempt from Parts 2, 3 and 4 of Title I of the Pension Act by reason of the exemptions set forth in Sections 201(a), 301(a) and 401(a) of the Pension Act and from Part 1 of the Pension Act by reason of the exemption set forth in Section 2520.104-23 of applicable United States Department of Labor regulations. This Plan shall be interpreted and administered accordingly. This Plan shall be construed in accordance with the laws of the State of Georgia to the extent such laws are not preempted by the Pension Act. Notwithstanding any provision to the contrary in this Plan, each provision of this Plan shall be interpreted to permit the deferral of compensation and the payment of deferred amounts in accordance with Code Section 409A and any provision that would conflict with such requirements shall not be valid or enforceable.

5.            Assignment or Alienation

Benefits payable, and rights to benefits, under this Plan may not in any manner be anticipated, sold, transferred, assigned (either at law or in equity), alienated, pledged, encumbered or subject to attachment, garnishment, levy, execution or other legal or equitable process.

6.            Employment at Will

Nothing contained in this Plan shall be construed as conferring upon a Participant the right to continue in the employ of the Company.

7.            Savings Clause

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.

8.            Payments to Others

Benefits payable to a former employee or retiree unable to execute a proper receipt may be paid to other person(s) in accordance with the standards and procedures set forth in the Pension Plan.

9.            Plan Termination

Subject to the limitations described below, the Company retains the right to terminate, in whole or in part, and each Participating Company retains the right to withdraw from this Plan, at any time, for any reason, with or without notice. The Company will continue to make payments, in accordance with the terms and conditions of the Plan, to all Participants who were either retired or terminated prior to Plan termination, and will also continue to recognize its obligation to the surviving spouse of the aforementioned individuals. Additionally, Participants who have satisfied the service requirements for a deferred vested pension under the Pension Plan on the date of Plan termination shall receive benefits under the terms of the Plan as in effect immediately prior to its termination, the amount of such benefit to be calculated as if the Participant retired (or otherwise terminated employment) on the termination date of the Plan, it being the Company's intent that termination of the Plan shall not adversely affect any entitlement to such benefits and any amendment, modification or termination of this Plan inconsistent with this expression of intent shall be null and void.

ARTICLE VII. INTERCHANGE OF BENEFIT OBLIGATION

The same transfer of service credit provisions contained in interchange agreements presently in existence under the Pension Plan, or as they may be amended from time to time, by and between the Company, on behalf of all Participating Companies, and any Interchange Company shall apply to the transfer of service credit for purposes of this Plan.

ARTICLE VIII. PLAN MODIFICATION

The Company may, in its sole discretion, from time to time make any changes in the Plan as it deems appropriate, provided, that no such action shall accelerate or postpone the time or schedule of payment of any Plan benefit except as may be permitted under Code Section 409A and regulations thereunder; and provided further, such modifications shall not result in a reduction of benefits to either: (i) those participants or their surviving spouses already receiving benefits under this Plan, or (ii) those participants who have satisfied the service requirements for a deferred vested pension under the Pension Plan. Specifically, no Plan modification shall have the effect of reducing a Participant's benefits under the Plan to which he or she would be entitled under the terms of the Plan as in effect in immediately prior to its modification, the amount of such benefit to be calculated as if the Participant retired (or otherwise terminated employment) on the date the Plan was modified, it being the Company's intent that any modification of the Plan shall not adversely affect any entitlement to such benefits and any amendment, modification or termination of this Plan inconsistent with this expression of intent shall be null and void. In addition, the Company may authorize the execution of agreements providing retirement benefits subject generally to the terms and conditions of the Plan and benefits under such agreements shall be deemed provided hereunder, and any such amendments authorized prior to the amendment and restatement of the Plan shall be incorporated herein by reference.

EX-10.ZZ_I

Exhibit 10-zz(i)

AMENDMENT TO THE BELLSOUTH CORPORATION

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

THIS AMENDMENT is made to the BellSouth Corporation Supplemental Executive Retirement Plan (the "Plan"), effective as of December 31, 2005.

WITNESSETH:

WHEREAS, BellSouth Corporation (the "Company") sponsors the Plan, which was amended and restated effective November 1, 1997; and

WHEREAS, the Board of Directors of the Company has delegated to the Executive Nominating and Compensation Committee of the Board of Directors (the "Compensation Committee") authority to approve amendments to existing executive compensation plans or programs, other than amendments involving significant policy considerations or as otherwise appropriate; and

WHEREAS, the Plan has previously been amended pursuant to actions of the Compensation Committee at its November 24, 2003 and June 28, 2004 meetings; and

WHEREAS, the Compensation Committee, at its November 28, 2005 meeting and at its special meeting on January 10, 2006, approved further amendments to the Plan to provide for capping the amount of lump sum death benefits under Section 5 of the Plan for current Plan Participants at the amount that would have been payable had a Participant died on December 31, 2005 and, for all future Plan Participants, to eliminate altogether death benefits described in Section 5 of the Plan; and

WHEREAS, the Compensation Committee authorized appropriate officers of the Company to do such further acts and to execute such documents as may be necessary or advisable to effectuate the purposes of its resolutions adopting such Plan amendments;

NOW, THEREFORE, pursuant to the authority delegated by the Compensation Committee, the undersigned officer approves the following revisions to the Plan document:

Section 5 of the Plan shall be amended by inserting, immediately following Section 5.1, a new Section 5.1A which shall read as follows:

1A.  Death Benefits After 2005.

Notwithstanding the provisions of Section 5.1 preceding:

(i) with respect to each Participant in the Plan on December 31, 2005, the amount of any death benefit payable pursuant to Section 5.1 shall in no event be based on base salary and/or Standard Award amounts greater than such Participant's base salary and the Standard Award applicable with respect to such Participant on December 31, 2005; and

(ii) with respect to individuals who become eligible to participate in the Plan on or after January 1, 2006, no death benefits shall be payable pursuant to this Section 5.

Any other provisions of the Plan not amended herein shall remain in full force and effect.

January 19, 2006	/s/ Richard D. Sibbernsen
Date	Vice President-Human Resources

EX-10.AAA

Exhibit 10-aaa

BELLSOUTH SUPPLEMENTAL LIFE INSURANCE PLAN

PLAN DOCUMENT

This section includes a general information summary (first 3 pages) and the plan document for the BellSouth Supplemental Life Insurance Plan. The plan document and the general information summary together are intended to serve as both the full text of the BellSouth Supplemental Life Insurance Plan as well as a summary plan description of such plan.

GENERAL INFORMATION ABOUT THE BELLSOUTH

SUPPLEMENTAL LIFE INSURANCE PLAN

NAME OF PLAN: BellSouth Supplemental Life Insurance Plan

NAME AND ADDRESS OF EMPLOYER

Various BellSouth companies participate in this Plan. BellSouth Corporation's address is:

1155 Peachtree Street, N.E.

Suite 13C09

Atlanta, Georgia 30309

EMPLOYER IDENTIFICATION NUMBER:        58-1533433

PLAN NUMBER: 589

TYPE OF PLAN

This Plan is a welfare benefit plan in which participants are given the opportunity to receive life insurance coverage purchased with a combination of employer and employee contributions.

TYPE OF ADMINISTRATION

Benefits are provided through insurance contracts purchased under the terms of the Plan. The Plan is administered by BellSouth Corporation.

CLAIMS PROCEDURE

Claims for insurance benefits under the Plan are handled by and should be directed to the Plan Administrator.

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PLAN YEAR

The Plan Year is the period beginning each January 1 and ending each December 31 during which the Plan is in effect.

END OF YEAR FOR FISCAL YEAR PURPOSES:                                                                                                                          December 31

NAME, BUSINESS ADDRESS AND TELEPHONE NUMBER OF PLAN ADMINISTRATOR

BellSouth Corporation

1155 Peachtree Street, N.E.

Atlanta, Georgia 30309-3610

Attn.: Director Executive Benefits

(404) 249-2228

SERVICE OF LEGAL PROCESS

Service of legal process may be made upon the Plan Administrator.

EFFECTIVE DATE

The Effective Date of the Plan is January 1, 1998 and was amended and restated April 1, 2004.

PARTICIPANT'S RIGHTS UNDER ERISA

Participants in the Plan are entitled to certain rights and protections under the Employee Retirement Income Security Act of 1974 ("ERISA"). ERISA provides that each Plan participant may:

(1)        Examine, without charge, all Plan documents, and copies of all documents files by the Plan with the U.S. Department of Labor, such as detailed annual reports and Plan descriptions, if applicable.

(2)        Obtain copies of all Plan documents and other Plan information upon written request to the Plan Administrator. The Administrator may make a reasonable charge for copies;

(3)        Receive a summary of the Plan's annual financial report. The Plan Administrator is required by law to furnish each participant with a copy of this summary annual report;

You should also be aware of the following protections afforded by ERISA:

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(1)The people who operate the Plan, called "fiduciaries," must act prudently and in the interest of you and other Plan participants and beneficiaries.

(2)No one may interfere with the exercise of any rights which you have under the Plan or ERISA.

(3)If your claim for a benefit is denied in whole or in part, you must receive a written explanation of the reason for denial.

(4)You have the right to have the Plan Administrator review and reconsider your claim.

Under ERISA, there are steps you can take to enforce the above rights. If you request materials from the Plan and do not receive them within 30 days, you may choose to file suit in a federal court. If the court finds that you are entitled to receive those materials, it may require the Plan Administrator to provide the materials and pay you a daily penalty until you receive them. However, if the documents were not  sent because of reasons beyond the control of the Plan Administrator, he will not be penalized. If you have a claim for benefits which is denied or ignored, in whole or in part, you may choose to file suit in a state or federal court. If it should happen that Plan fiduciaries misuse the Plan's money, or if you are discriminated against for asserting your rights, you may seek assistance from the U. S. Department of Labor, or you may file suit in a federal court. The court will decide who should pay court costs and legal fees. If you lose, the court may order you to pay these costs and fees, if, for example, it finds your claim frivolous.

If you have any questions about this statement or about your rights under ERISA, you should contact the nearest Area Office of the U.S. Labor --Management Services Administration Department of Labor.

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BELLSOUTH SUPPLEMENTAL LIFE INSURANCE PLAN

AMENDED AND RESTATED APRIL 1, 2004

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.

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 EFFECTIVE DATE" means the Policy Date as determined by the Insurer.

2.03  "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.

2.04  "DISABILITY" means that the Participant is receiving disability benefits under any long-term disability plan sponsored by the Employer or an affiliated entity.

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.

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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.

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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  "PLAN EFFECTIVE DATE" means the effective date of the Plan, which is January 1, 1998.

2.17  "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.

2.18  "POLICY OWNER" means the Participant or that person or entity to whom the Participant has assigned his interest in the Policy.

2.19  "POLICY YEAR" means the twelve month period (and each successive twelve month period) beginning on the Coverage Effective Date.

2.20  "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.

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2.21  "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.

2.22  "SINGLE LIFE COVERAGE" means life insurance coverage on the life of the Participant.

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  "TOTAL 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 Plan Effective Date shall be eligible to participate in the Plan as of the Plan Effective Date. Each Employee subsequently satisfying such eligibility requirements shall be eligible to participate in the Plan effective as of the first day of January following the date on which such eligibility requirements 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.

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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 2.03. However, within sixty (60) days of the distribution of the enrollment materials, 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 January 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.

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4.04  OTHER.  Notwithstanding any provision herein to the contrary, any benefits payable under the Plan shall be limited to those provided by the applicable Policy and all the terms of such Policy (including, but not limited to, any requirements of insurability) shall apply under the Plan. Under no circumstances will the Employer be liable for any amount claimed to be due under any Policy or for any Coverage amount or Coverage Level and any benefits due under the Plan shall be limited to those provided by the Insurer under the Policy.

4.05  EXCLUSIONS.  If a Participant commits suicide within two years of policy issue, or if a Participant makes any material misstatement of information (smoker and/or employment status) and dies within two years of policy issue, then no benefits will be paid to the beneficiary of such Participant.

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, except Section 16 insiders, 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.

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.

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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.

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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.

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.

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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, ATTENTION: 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 ANDSUCCESSORS

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.

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9.02  TERMINATION.  The Board of Directors of BellSouth Corporation may terminate the Plan without the consent of the Participants or Employees.

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;

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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:

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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.

15

EX-10.BBB

Exhibit 10-bbb

BELLSOUTH

COMPENSATION DEFERRAL PLAN

(As Amended and Restated Effective as of January 1, 2005)

      

        58149v19      

    

BELLSOUTH COMPENSATION DEFERRAL PLAN

(As Amended and Restated Effective as of January 1, 2005)

TABLE OF CONTENTS

BACKGROUND AND PURPOSE		1
ARTICLE I – DEFINITIONS		2
1.1	“Account”	2
1.2	“Affiliate”	2
1.3	“Base Salary”	2
1.4	“BellSouth”	2
1.5	“Beneficiary”	2
1.6	“Board”	2
1.7	“Business Day”	2
1.8	“Code”	2
1.9	“Company Stock”	2
1.10	“Compensation”	3
1.11	“Credited Interest Rate”	3
1.12	“Deferral Contributions”	3
1.13	“Deferral Election”	3
1.14	“Effective Date”	3
1.15	“Election Deadline”	3
1.16	“Election Package”	3
1.17	“Eligible Employee”	3
1.18	“ERISA”	4

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1.19	“Interest Income Option”	4
1.20	“Interest Income Subaccount”	4
1.21	“Investment Election”	4
1.22	“Investment Options”	4
1.23	“Merger”	4
1.24	“Participant”	4

1.25	“Participating Company”	4
1.26	“Plan”	4
1.27	“Plan Administrator”	4
1.28	“Plan Year”	5
1.29	“Rabbi Trust Agreements”	5
1.30	“Section 409A”	5
1.31	“Senior Manager”	5
1.32	“Short Term Bonus Plan”	5
1.33	“Stock Unit”	5
1.34	“Stock Unit Option”	5
1.35	“Stock Unit Subaccount”	5
1.36	“Valuation Date”	5
ARTICLE II – ELIGIBILITY AND PARTICIPATION		6
2.1	Annual Participation	6
2.2	Election Procedures	6
2.3	Cessation of Eligibility	6
2.4	Limitations on New Elections	6

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ARTICLE III – PARTICIPANTS’ ACCOUNTS; DEFERRAL CONTRIBUTIONS			7
3.1	Participants’ Accounts		7
	(a)	Establishment of Accounts	7
	(b)	Nature of Contributions and Accounts	7
	(c)	Several Liabilities	7
	(d)	General Creditors	7
3.2	Deferral Contributions		7
	(a)	Effective Date	7
	(b)	Term	8
	(c)	Deferral Election Amount	8
	(d)	Revocation	8
	(e)	Crediting of Deferred Compensation	8
3.3	Deferral Elections and Multiple Participating Companies		8
3.4	Vesting		9
3.5	Debiting of Distributions		9
ARTICLE IV - DETERMINATION AND CREDITING OF INVESTMENT RETURN			10
4.1	General Investment Parameters		10
4.2	Participant Direction of Deemed Investments		10
	(a)	Nature of Participant Direction	10
	(b)	Investment of Contributions	10
	(c)	Investment of Existing Account Balances	10
	(d)	Investment Subaccounts	10
4.3	Stock Unit Option		11
	(a)	Stock Unit Subaccount	11
	(b)	Cash Dividends	11
	(c)	Adjustments	11
4.4	Interest Income Option		12
	(a)	Interest Income Subaccount	12
	(b)	Crediting of Deemed Interest	12
		(i)   Amount Invested	12
		(ii)  Determination of Amount	12
4.5	Good Faith Valuation Binding		12
4.6	Errors and Omissions in Accounts		12

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ARTICLE V - PAYMENT OF ACCOUNT BALANCES			13
5.1	Benefit Amounts		13
	(a)	Benefit Entitlement	13
	(b)	Valuation of Benefit	13
	(c)	Conversion of Stock Units into Dollars	13
5.2	Elections of Timing and Form		13
	(a)	Timing	13
	(b)	Form of Distribution	13
	(c)	Multiple Selections	14
5.3	Benefit Payments to a Participant		14
	(a)	Timing	14
	(b)	Form of Distribution	14
	(c)	Valuation of Single Lump-Sum Payments	14
	(d)	Valuation of Installment Payments	14
	(e)	One-Time Modification of Certain Elections	14
	(f)	Distributions to Section 409A Specified Employees	15
5.4	Death Benefits		15
	(a)	General	15
	(b)	Valuation	15
5.5	Beneficiary Designation		15
	(a)	General	15
	(b)	No Designation or Designee Dead or Missing	16
	(c)	Death of Beneficiary	16
5.6	Taxes		16
ARTICLE VI – CLAIMS			17
6.1	Initial Claim		17
6.2	Appeal		17
6.3	Satisfaction of Claims		17
ARTICLE VII – SOURCE OF FUNDS			18
ARTICLE VIII - PLAN ADMINISTRATION			19
8.1	Action by the Plan Administrator		19
	(a)	Individual Administrator	19
	(b)	Administrative Committee	19

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8.2	Rights and Duties of the Plan Administrator		19
8.3	Bond; Compensation		20
8.4	Post-Merger Plan Administration		20
ARTICLE IX - AMENDMENT AND TERMINATION			21
9.1	Amendments		21
9.2	Termination of Plan		21
9.3	Limitation on Authority		21
	(a)	Plan Amendments	21
	(b)	Plan Termination	21
	(c)	Opinions of Counsel	22
ARTICLE X - MISCELLANEOUS			23
10.1	Taxation		23
10.2	Withholding		23
10.3	No Employment Contract		23
10.4	Headings		23
10.5	Gender and Number		23
10.6	Assignment of Benefits		23
10.7	Legally Incompetent		23
10.8	Entire Document		23
10.9	Governing Law		24
10.10	Plan to Comply with Code Section 409A		24
EXHIBIT A			A-1

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BELLSOUTH COMPENSATION DEFERRAL PLAN

(As Amended and Restated Effective as of January 1, 2005)

Effective as of the 1st day of January, 1997, BellSouth Corporation (“BellSouth”) established the BellSouth Compensation Deferral Plan (the “Plan”), and the Plan was subsequently amended from time to time.  The Plan is now amended and restated effective as of January 1, 2005, and as so amended and restated is intended to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, with respect to all benefits under the Plan that are subject to Section 409A.  Also, the Plan as restated, among other things, provides that no further elections to defer compensation may be made under the Plan after December 31, 2006, and coordinates Plan administration provisions applicable after the planned merger of BellSouth and AT&T Inc. with provisions of BellSouth’s Rabbi Trust Agreements.

BACKGROUND AND PURPOSE

A.           Goal.  BellSouth desires to provide its designated key management employees, and those of its affiliated companies that participate in the Plan, with an opportunity (i) to defer the receipt and income taxation of a portion of such employees’ compensation; and (ii) to receive an investment return on those deferred amounts based on the return of BellSouth stock, an indexed rate of interest, or a combination of the two.

B.           Purpose.  The purpose of the Plan is to set forth the terms and conditions pursuant to which these deferrals may be made and deemed invested and to describe the nature and extent of the employees’ 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 this Plan to its Plan Participants, and such payments are not an obligation of any other Participating Company.

D.           No Deferrals after 2006.  Notwithstanding anything to the contrary herein, no Deferral Elections will be permitted under the Plan after December 31, 2006.

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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           “Base Salary” shall mean, with respect to each Eligible Employee for a specified Plan Year, the gross regular, periodic base salary earned by the Eligible Employee during such Plan Year, including any of the Eligible Employee’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.

1.4           “BellSouth” shall mean BellSouth Corporation, a Georgia corporation, or any successor entity.

1.5           “Beneficiary” shall mean, with respect to a Participant, the person(s) determined in accordance with Section 5.5 to receive any death benefits that may be payable under the Plan upon the death of the Participant.

1.6           “Board” shall mean the Board of Directors of BellSouth.

1.7           “Business Day” shall mean each day on which the New York Stock Exchange operates and is open to the public for trading.

1.8           “Code” shall mean the Internal Revenue Code of 1986, as amended.

1.9           “Company Stock” shall mean the $1.00 par value per share voting common stock of BellSouth; provided that, after the Merger, “Company Stock” shall mean the $1.00 par value per share voting common stock of AT&T Inc.

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1.10         “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.  Notwithstanding the foregoing, the Plan Administrator, in its sole discretion, may specify a date or dates other than November 15 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.

1.11         “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.

1.12         “Deferral Contributions” shall mean, for each Plan Year, that portion of a Participant’s Base Salary deferred under the Plan pursuant to Section 3.2.

1.13         “Deferral Election” shall mean an election form provided by the Plan Administrator on which an Eligible Employee may elect to defer under the Plan a portion of such Eligible Employee’s Base Salary.

1.14         “Effective Date” shall mean January 1, 2005, the date as of which this most recent amendment and restatement of the Plan is effective, except to the extent that the Plan expressly provides a different effective date with respect to specific Plan provisions.

1.15         “Election Deadline” shall mean 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 a Plan Year.  Notwithstanding the foregoing, with the approval of the Plan Administrator, “Election Deadline” may mean 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.

1.16         “Election Package” shall mean a package consisting of a Deferral Election, an Investment Election and such other forms and documents distributed to such Eligible Employee by the Plan Administrator for the purpose of allowing such Eligible Employee to elect to actively participate in the Plan for a Plan Year.

1.17         “Eligible Employee” 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 a Senior Manager for the Plan Year, or is otherwise designated by the Plan Administrator as eligible to participate in the Plan for such Plan Year.

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1.18         “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

1.19         “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.

1.20         “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.

1.21         “Investment Election” shall mean an in such form as is provided by the Plan Administrator on which an Eligible Employee may elect to have Deferral Contributions for a Plan Year (and all investment earnings attributable thereto) deemed invested in either the Stock Unit Option and/or the Interest Income Option.

1.22         “Investment Options” shall mean the Stock Unit Option and the Interest Income Option.

1.23         “Merger” shall mean the planned merger, pursuant to the Agreement and Plan of Merger dated as of March 4, 2006 (the “Merger Agreement”), by and among BellSouth, AT&T Inc. (“AT&T”), and ABC Consolidation Corp., a Georgia corporation and wholly-owned subsidiary of AT&T (“Merger Sub”), pursuant to which, at the “Effective Time” (as defined in the Merger Agreement), BellSouth will be merged with and into the Merger Sub.

1.24         “Participant” shall mean any person participating in the Plan pursuant to the provisions of Article II, and shall include executive officers of BellSouth who participated in the Plan for Plan Years prior to 2002, for so long as each such individual has an Account hereunder.

1.25         “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.

1.26         “Plan” shall mean the BellSouth Compensation Deferral Plan, as contained herein and all amendments hereto.

1.27         “Plan Administrator” shall mean the person(s) determined under Section 8.4 to the extent said Section is applicable, and otherwise 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.

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1.28         “Plan Year” shall mean the calendar year.

1.29         “Rabbi Trust Agreements” shall mean each and all of the: (i) BellSouth Corporation Trust Under Executive Benefit Plan(s); (ii) BellSouth Telecommunications, Inc. Trust Under Executive Benefit Plan(s); (iii) BellSouth Enterprises, Inc. Trust Under Executive Benefit Plan(s); (iv) BellSouth Corporation Trust Under Executive Benefit Plan(s) for Mobile Systems Executives; (v) BellSouth Corporation Trust Under Executive Benefit Plan(s) for Advertising and Publishing Executives; and (vi) Trust Under Executive Benefit Plan(s) for Certain BellSouth Companies; in each case, as amended from time to time.

1.30         “Section 409A” shall mean Code Section 409A and the Treasury regulations or other authoritative guidance issued thereunder.  Whenever the terms “subject to Section 409A” or “to the extent permitted by Section 409A” (or any such similar reference so as to indicate that a Plan provision is subject to Section 409A) are used, such terms shall be interpreted to mean that the applicable Plan provision shall be effective only if and to the extent such provision would not trigger penalty taxes or interest under Section 409A.

1.31         “Senior Manager” shall mean an employee of a Participating Company who, for purposes of this Plan for a Plan Year, is designated by the Plan Administrator as a “senior manager.”

1.32         “Short Term Bonus Plan” shall mean the annual bonus plan(s) or program(s) in which one or more Senior Managers participate for a Plan Year, in all cases as determined by the Plan Administrator.

1.33         “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.

1.34         “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.

1.35         “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.

1.36         “Valuation Date” shall mean December 31 (or, if December 31 is not a Business Day, the last Business Day immediately preceding December 31), and each other day declared by the Plan Administrator to be a Valuation Date.

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ARTICLE II

ELIGIBILITY AND PARTICIPATION

2.1           Annual Participation.  Each individual who is an Eligible Employee 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 Employee’s Base Salary, 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 Employee properly and timely completes the election procedures described in Section 2.2.

2.2           Election Procedures.  Each Eligible Employee may elect to defer a portion of such Eligible Employee’s Base Salary, and thereby become an active Participant for a Plan Year, by delivering a completed 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 Employee at the time the individual delivers the completed Deferral Election and Investment Election to the Plan Administrator.  The Plan Administrator may also require the Eligible Employee to complete other forms and provide other data, as a condition of participation in the Plan.

2.3           Cessation of Eligibility.  An Eligible Employee’s active participation in the Plan shall terminate, and the Eligible Employee shall not be eligible to make any additional Deferral Contributions, for any portion of a Plan Year following the date the Eligible Employee’s employment with BellSouth and all Participating Companies terminates (unless such individual is reemployed as an Eligible Employee 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 Employee 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 Employee 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.

2.4           Limitations on New Elections.  Notwithstanding anything to the contrary herein, (i) after December 31, 2006, no Deferral Elections will be permitted under the Plan, and (ii) after December 31, 2005, no Investment Elections into the Stock Unit Option may be made under the Plan.

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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 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 executed by Eligible Employees with, and while employed by, such Participating Company.

   (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 Participating Company.

3.2           Deferral Contributions.  Each Eligible Employee may irrevocably elect to have Deferral Contributions made on his or her behalf for a Plan Year by completing in a timely manner a Deferral Election and an Investment Election, and following other election procedures as provided in Section 2.2.  Subject to any modifications, additions or exceptions that the Plan Administrator, in its sole discretion, deems necessary, appropriate or helpful and that are made in compliance with Section 409A, the following terms shall apply to such Deferral Elections:

   (a)           Effective Date.  A Deferral Election made by a Participant shall be effective beginning with the first regular, periodic paycheck earned and paid with respect to the Participant in such Plan Year.  To be effective, a Participant’s Deferral Election must be made by the Election Deadline.  If an Eligible Employee fails to deliver a Deferral Election, or to complete any of the other requisite election procedures for a Plan Year, in a timely manner, the Eligible Employee shall be deemed to have elected not to participate in the Plan for that Plan Year.

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   (b)           Term.  Each Deferral Election for a Plan Year that is made by an Eligible Employee shall remain in effect with respect to the specified portion of all Base Salary paid or payable during such Plan Year, but shall not apply to any subsequent Plan Year.

        (c)           Deferral Election Amount.  Each Eligible Employee’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 earned and paid for such year.  Notwithstanding the foregoing, the Plan Administrator, in its sole discretion, may allow an Eligible Employee 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 earned and paid or payable for each payroll period, with the amount of such deferral to vary as the Eligible Employee’s Base Salary changes.  The maximum amount of Base Salary that an Eligible Employee may defer for any Plan Year shall be fifteen percent (15%) of the Eligible Employee’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 Employee’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 Employee 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 Employee (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)           Revocation.  Once made for a Plan Year, a Participant may not revoke a Deferral Election for such Plan Year.

   (e)           Crediting of Deferred Compensation.  The Plan Administrator shall credit to each Participant’s Account for a Plan Year, as of the first day of such Plan Year, the entire amount of the Participant’s Deferral Contributions reflected in his or her Deferral Election for such Plan Year; provided, that the Participant’s Account shall be automatically adjusted, retroactively to the first day of such Plan Year, to reflect the amount of Deferral Contributions actually made from Base Salary (or pursuant to Section 3.4, if applicable) during the Plan Year if for any reason the entire amount of the Participant’s Deferral Contributions so reflected is not made.

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3.3           Deferral Elections and Multiple Participating Companies.  Any Deferral Election which is timely executed and delivered to the Plan Administrator shall be effective to defer Base Salary 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 is effective.  In particular, a Participant (i) who timely executes and delivers a 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 that is paid or payable to such Participant by both Participating Companies reduced under the terms of the 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 attributable to any portion of the Plan Year during which such Participant is not receiving Base Salary as an Eligible Employee of a Participating Company.

3.4           Vesting.  A Participant shall at all times be fully vested in the Participant’s Deferral Contributions and all investment earnings attributable thereto.

3.5           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.

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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 the manner in which his or her Deferral Contributions for each Plan Year shall be deemed invested in and between the Stock Unit Option and/or the Interest Income Option, in accordance with the following terms:

   (a)           Nature of Participant Direction.  A Participant’s election of the Stock Unit Option and/or Interest Income Option 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 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 a Deferral Election for a Plan Year, an Eligible Employee shall complete an Investment Election prescribing the whole percentages of such Eligible Employee’s Deferral Contributions for such Plan Year to be deemed to be invested in the Stock Unit Option and/or the Interest Income Option; provided, that the combined percentages allocated to the Stock Unit Option and the Interest Income Option shall equal one hundred percent (100%).  Notwithstanding anything to the contrary herein, no Investment Elections into the Stock Unit Option may be made after December 31, 2005.

   (c)           Investment of Existing Account Balances.  A Participant may not make an Investment Election changing the percentage of an existing Account balance that will be deemed to be invested in the Stock Unit Option and/or the Interest Income Option.  Once an Investment Election is made with respect to an Account, it shall continue to apply with respect to such Account until all amounts in such Account are distributed.

   (d)           Investment Subaccounts.  For the sole purpose of tracking a Participant’s Investment Elections and calculating 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 and an Interest Income Subaccount, as necessary, the total of which shall equal such Participant’s Account for such Plan Year.

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4.3           Stock Unit Option.

   (a)           Stock Unit Subaccount.  To the extent an Eligible Employee makes an Investment Election in accordance with Section 4.2 to have all or a portion of 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(e), if applicable), as of the first day of such Plan Year, 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 Employee’s Deferral Contributions elected for such Plan Year 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 a cash dividend has been paid on Company Stock, the number of Stock Units credited to a Participant’s Stock Unit Subaccount for each Plan Year 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 as of such dividend payment date, divided by (ii) the average of the daily high and low sales prices of one share of Company Stock on the New York Stock Exchange for the period of five (5) Business Days ending on such dividend payment date (or the period of five (5) Business Days ending on the immediately preceding Business Day if such date was not a Business Day).

   (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.

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4.4           Interest Income Option.

   (a)           Interest Income Subaccount.  To the extent that an Eligible Employee makes an Investment Election in accordance with Section 4.2 to have all or a portion of 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(e), if applicable), as of the first day of such Plan Year, with such portion of the Eligible Employee’s Deferral Contributions elected for such Plan Year.

   (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 for the Plan Year, such Participant’s Deferral Contributions credited to such Participant’s Interest Income Subaccount for such Plan Year; 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, 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           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.

4.6           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.

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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 (i) the total amount of all of such Participant’s Deferral Contributions credited thereto; plus (ii) all deemed investment earnings attributable thereto; minus (iii) the total amount of all benefit payments previously made therefrom.

   (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 for each Plan Year, an Eligible Employee shall select the timing and form of the distribution that will apply to the Account for such Eligible Employee’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 the second January 1 following the end of the Plan Year for which the deferral is made, or (ii) later than the twentieth 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.

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   (c)           Multiple Selections.  An Eligible Employee 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.  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); and

   (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.

    (e)           One-Time Modification of Certain Elections.  Each active executive officer of BellSouth who is a Participant in this Plan and who is eligible to participate in the BellSouth Officer Compensation Deferral Plan (the “Officer Plan”) during the 2002 Plan Year, may make a one-time election to delay the payment (or commencement) of any of his or her Accounts hereunder, and may make a one-time election to increase the number of payments applicable to his or her Accounts, as and to the extent provided in the Officer Plan.

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    (f)            Distributions to Section 409A Specified Employees.  Notwithstanding any provision of this Plan to the contrary, with respect to any Participant who is a “specified employee” for purposes of Section 409A, no payment of any portion of such Participant’s benefit amount which is occasioned by the Participant’s separation from service shall be made before the date that is six (6) months after the date of such Participant’s separation from service.

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 5.5, 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        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; provided that, after December 31, 2007, no changes may be made to the form or timing of payment of death benefits on a previously submitted Beneficiary Designation (although the Beneficiary(ies) designated may be changed consistent with rules prescribed by the Plan Administrator).  Prior to January 1, 2008, any such changes may be made only to the extent permitted by and consistent with Section 409A.

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  (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 5.5(c).

5.6        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.  Notwithstanding the foregoing, no such withholding will be made with respect to a benefit under the Plan that is subject to Section 409A unless (i) such benefit is currently distributable to the Participant, (ii) such benefit is includible in the gross income of the Participant due to a violation of Section 409A, or (iii) such withholding is for purposes of FICA tax or federal income tax with respect to such benefit.

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 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.

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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.

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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

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 (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.

8.4        Post-Merger Plan Administration.  Notwithstanding anything to the contrary in this Plan, following the Merger, responsibility for administration of the Plan shall be determined under the terms of the Rabbi Trust Agreements.  As provided in the Rabbi Trust Agreements, claims for benefits, appeals of benefit denials and Plan interpretations shall be made by a “Trust Contractor” or “Independent Fiduciary” (as such terms are defined in the Rabbi Trust Agreements), as the case may be.  At any time during which a Trust Contractor or Independent Fiduciary shall, under the terms of the Rabbi Trust Agreements, have such Plan administrative responsibilities, the term “Plan Administrator” as used in this Plan shall refer to such Trust Contractor or Independent Fiduciary.

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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.  Notwithstanding the foregoing, no such action shall accelerate or postpone the time or schedule of payment of any Plan benefits except as may be permitted under Section 409A and regulations thereunder.

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 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.

 (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 tax consequences of the Plan described in Sections 10.1 and 10.10, (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 (including but not limited to taxation, penalty taxes, interest or other adverse tax consequences under Section 409A) 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 in 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; provided, no benefit under the Plan that is subject to Section 409A shall be distributed prior to the earliest date such distribution would be permitted under Section 409A.  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.

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(c)           Opinions of Counsel.  In each case in which an opinion of counsel is contemplated in this Section 9.3, any such opinion shall be in writing and delivered to the Board, rendered by a nationally recognized law firm selected or approved by the Board.

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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.

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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.

10.10    Plan to Comply with Code Section 409A.  Notwithstanding any provision to the contrary in this Plan, each provision of this Plan shall be interpreted to permit the deferral of compensation and the payment of deferred amounts in accordance with Code Section 409A and any provision that would conflict with such requirements shall not be valid or enforceable.

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EXHIBIT A

Participating Companies

(as of January 1, 2005)

Participating Company Names	Effective Date
BellSouth Advertising & Publishing Corporation	January 1, 1997
BellSouth Accounts Receivable Management, Inc.	October 1, 1999
BellSouth Affiliate Services Corporation	January 1, 2000
BellSouth Billing, Inc.	January 1, 1999
BellSouth Business Systems, Inc.	January 1, 1997
BellSouth Communication Systems, LLC	January 1, 1997
BellSouth Corporation	January 1, 1997
BellSouth Credit and Collections Management, Inc.	October 1, 1999
BellSouth Cellular Services LLC	October 1, 2000
BellSouth D.C., Inc.	January 1, 1997
BellSouth Entertainment, Inc.	January 1, 1997
BellSouth Intellectual Property Management Corporation	January 1, 1999
BellSouth Intellectual Property Marketing Corporation	January 1, 1999
BellSouth International ACCESS, Inc.	January 1, 1999
BellSouth International, Inc.	January 1, 1997
BellSouth Long Distance, Inc.	January 1, 1997
BellSouth Resources, Inc.	January 1, 1997
BellSouth Technology Group	July 1, 2001
BellSouth Telecommunications, Inc.	January 1, 1997
Berry Network, Inc.	January 1, 2001
Intelligent Media Ventures, LLC	January 1, 1997
Intelleprop, Inc.	January 1, 1999
L.M. Berry and Company	January 1, 1997
Stevens Graphics, Inc.	January 1, 1997
Sunlink Corporation	January 1, 1997

58149.19

Exhibit A

A-1

EX-10.CCC

Exhibit 10-ccc

CINGULAR WIRELESS BLS TRANSITION EXECUTIVE BENEFIT PLAN

WHEREAS, Cingular Wireless Corporation is the manager of Cingular Wireless LLC (the "Company"); and

WHEREAS, BellSouth Corp. ("BellSouth" or "BLS") maintains, for the benefit of certain highly compensated and key management employees, the BellSouth Supplemental Life Insurance Plan, the BellSouth Split-Dollar Life Insurance Plan (collectively hereinafter the "Life Insurance Plans") and the BellSouth Supplemental Disability Plan (all three plans referred to hereinafter as the "BLS Plans") (copies of the BLS Plans are attached hereto as Exhibit A); and

WHEREAS, certain former BLS employees, who have been contributed to the Company or an affiliate of the Company, were eligible to participate and receive benefits under the BLS Plans (the "Transition Executives"); and

WHEREAS, the Transition Executives are identified by name and the BLS Plan(s) in which they participated on Exhibit B hereto; and

WHEREAS, the Company desires to adopt the provisions and benefits of the BLS Plans into a new Company plan for the Transition Executives, so that they may continue to benefit from the provisions of the BLS Plans following their contribution to the Company; and

WHEREAS, the new plan shall be known as the Cingular Wireless BLS Transition Executive Benefit Plan (the "Cingular Plan"); and

WHEREAS, the terms of the Cingular Plan shall incorporate by reference the terms of the BLS Plans and shall be the same terms as in effect for the BLS Plans on December 31, 2001, including any amendments adopted through such date, unless otherwise provided in these resolutions or in Exhibit C hereto; and

WHEREAS, the benefits provided to the Transition Executives under the Cingular Plan shall be in lieu of the benefits such employees would have been entitled to receive under the BLS Plans and shall be offset against any benefits payable under the BLS Plans for any reason; and

WHEREAS, the Transition Executives, as identified in Exhibit B, shall be the only employees of the Company and its affiliates eligible to participate and receive benefits under the Cingular Plan and no other employees of the Company or its affiliates shall be permitted to participate in the Cingular Plan;

NOW, THEREFORE, BE IT RESOLVED, that the Cingular Plan, as described herein, is hereby approved and adopted as presented to the Board; provided, the Senior Vice President of Human Resources of the Company is hereby authorized to approve and execute a plan document for the Cingular Plan as he deems appropriate based on the advice of counsel;

FURTHER RESOLVED, that with regard to the Life Insurance Plans, the Company is authorized to receive an assignment of all of BellSouth's obligations, rights and interests in the Life Insurance Plans and any underlying policies of insurance, including the obligation to administer the plans and pay any required company contributions;

FURTHER RESOLVED, that the Cingular Plan shall be administered by the Senior Vice President - Human Resources of the Company and his delegates; provided, however, that the Senior Vice President - Human Resources shall be permitted to appoint third party administrators to assist in the administration of the Cingular Plan;

FURTHER RESOLVED, that the Company reserves the unilateral right to modify, amend or terminate the Cingular Plan at any time for any reason, including the right to merge the Cingular Plan or any benefit under it into another Company benefit plan that may provide for different benefits than the Cingular Plan;

FURTHER RESOLVED, that the Chief Operating Officer, the Chief Financial Officer, and the Senior Vice President of Human Resources of the Company are hereby authorized to approve amendments to the Cingular Plan from time to time as they deem necessary or appropriate consistent with the Company's employee benefit policies and based on the input of the Human Resources division, Finance division and other applicable divisions within the Company; provided, no such amendment which is reasonably expected to result in an increase in annual plan expense shall be effective without the approval of the Board;

FURTHER RESOLVED, that the appropriate officers of the Company and its affiliates are hereby authorized to execute such other documents and to take such actions as they may deem necessary or appropriate to implement the Cingular Plan and to carry out the intent and purposes of the foregoing resolutions as shall be necessary to comply with the requirements of the Internal Revenue Code, the Employee Retirement Income Security Act and all other applicable laws; and

RESOLVED, all prior actions taken by any officer of the Corporation and any officers of the Company in connection with the foregoing resolutions are hereby ratified.

EXHIBIT A

BellSouth Supplemental Life Insurance Plan

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.

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                 "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.

2.23                 "Total 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 11, April I, 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 11, April 11, 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.

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 2.23 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.

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 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, ATTENTION: 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, AND SUCCESSORS CONSTRUCTION

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.

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 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 sha11 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.

General Information About The BellSouth

Supplemental Life Insurance Plan

NAME OF PLAN

BellSouth Supplemental Life Insurance Plan

NAME AND ADDRESS OF EMPLOYER

Various BellSouth companies participate in this Plan. BellSouth

Corporation's address is: 1155 Peachtree Street, N.E. Atlanta, Georgia 30309

EMPLOYER IDENTIFICATION NUMBER

58-1533433

PLAN NUMBER

589

TYPE OF PLAN

This Plan is a welfare benefit plan in which participants are given the opportunity to receive life insurance coverage purchased with a combination of employer and employee contributions.

TYPE OF ADMINISTRATION

Benefits are provided through insurance contracts purchased under the terms of the Plan. The Plan is administered by BellSouth Corporation.

CLAIMS PROCEDURE

Claims for insurance benefits under the Plan are handled by and should be directed to the Plan Administrator.

PLAN YEAR

The Plan Year is the period beginning each January 1 and ending each December 31 during which the Plan is in effect.

END OF YEAR FOR FISCAL YEAR PURPOSES

December 31

NAME, BUSINESS ADDRESS AND TELEPHONE NUMBER OF PLAN ADMINISTRATOR

BellSouth Corporation

1155 Peachtree Street, N.E.

Atlanta, Georgia 30309-3610

Attn.: Director Executive Benefits

(404) 249-2228

SERVICE OF LEGAL PROCESS

Service of legal process may be made upon the Plan Administrator.

EFFECTIVE DATE

The Effective Date of the Plan is January 1, 1998.

PARTICIPANT'S RIGHTS UNDER ERISA

Participants in the Plan are entitled to certain rights and protections under the Employee Retirement Income Security Act of 1974 ("ERISA"). ERISA provides that each Plan participant may:

(1)              Examine, without charge, all Plan documents, and copies of all documents files by the Plan with the U.S. Department of Labor, such as detailed annual reports and Plan descriptions, if applicable.

(2)              Obtain copies of all Plan documents and other Plan information upon written request to the Plan Administrator. The Administrator may make a reasonable charge for copies;

(3)              Receive a summary of the Plan's annual financial report. The Plan Administrator is required by law to furnish each participant with a copy of this summary annual report;

You should also be aware of the following protections afforded by ERISA:

(1)              The people who operate the Plan, called "fiduciaries," must act prudently and in the interest of you and other Plan participants and beneficiaries.

(2)              No one may interfere with the exercise of any rights which you have under the Plan or ERISA.

(3)              If your claim for a benefit is denied in whole or in part, you must receive a written explanation of the reason for denial.

(4)              You have the right to have the Plan Administrator review and reconsider your claim.

Under ERISA, there are steps you can take to enforce the above rights. If you request materials from the Plan and do not receive them within 30 days, you may choose to file suit in a federal court. If the court finds that you are entitled to receive those materials, it may require the Plan Administrator to provide the materials and pay you a daily penalty until you receive them. However, if the documents were not sent because of reasons beyond the control of the Plan Administrator, he will not be penalized. If you have a claim for benefits which is denied or ignored, in whole or in part, you may choose to file suit in a state or federal court. If it should happen that Plan fiduciaries misuse the Plan's money, or if you are discriminated against for asserting your rights, you may seek assistance from the U. S. Department of Labor, or you may file suit in a federal court. The court will decide who should pay court costs and legal fees. If you lose, the court may order you to pay these costs and fees, if, for example, it finds your claim frivolous.

If you have any questions about this statement or about your rights under ERISA, you should contact the nearest Area Office of the U.S. Labor Management Services Administration Department of Labor.

BELLSOUTH SPLIT-DOLLAR LIFE INSURANCE PLAN

1.              PURPOSE

The purpose of the BellSouth Split-Dollar Life Insurance Plan (the “Plan”) is to provide a split-dollar insurance arrangement under which BellSouth Corporation and its subsidiaries and affiliates can assist key employees in acquiring and financing life insurance coverage. This Plan incorporates the provisions of the BellSouth Corporation Executive Life Insurance Plan and the BellSouth Corporation Senior Manager Life Insurance Plan, as amended as of the effective date of this Plan (the "Prior Plans”), and, as of such effective date, shall be deemed to constitute a complete restatement of both Prior Plans, as amended (except to the extent otherwise specifically provided in Section 3.01 of this Plan).

2.              DEFINITIONS

For purposes of this Plan, the following terms have the meanings set forth below:

2.01              "Agreement" means the agreement executed between the Employer and a Participant implementing the terms of this Plan, substantially in the form attached hereto as Exhibit A.

2.02              "Assignment" means the collateral assignment executed by the Policy Owner, substantially in the form attached hereto as Exhibit B.

2.03              "Coverage Amount" means the face amount of the insurance death benefit provided to a Participant under the Plan, as specified in the Participant's Agreement.

2.04              "Disability" means that the Participant is receiving disability benefits under any long-term disability plan sponsored by the Employer or an affiliated entity.

2.05              "Effective Date" means the effective date of the Plan, which is January 1, 1998.

2.06              "Employee" means an employee or former employee of the Employer who is eligible to participate in the Plan.

2.07              "Employer" means BellSouth Corporation and any subsidiary or affiliate of BellSouth Corporation which is authorized by the Plan Administrator to participate in this Plan.

2.08              "Employer Account" means, with respect to a Participant's Policy, a bookkeeping entry maintained by the Employer pursuant to Section 6 of the Plan, equal to the lesser of (1) the cash value of the Policy, or (2) the amount of Policy premiums paid by the Employer (and not collected from the Participant). With respect to a Replacement Policy, the amount of Policy premiums paid by the Employer shall be deemed to include the total of all such premiums paid on the Replacement Policy and the Replaced Policy, reduced by an amount equal to that portion of the Replaced Policy Cash Value, if any, paid to the Employer at the time the Replacement Policy is issued.

2.09              "Employer Premium" means, with respect to a Participant's Policy, the total Policy premium payable for the Policy Year by the Company as specified in the Participant's Agreement, less the portion of the premium to be paid by the Participant pursuant to Section 5.01 of the Plan.

2.10              "Enrollment Age" means the Participant's age at the time of enrollment in the Prior Plans as to the Participant's initial Coverage Amount, and it means the Participant's age at a subsequent enrollment for an increased Coverage Amount as to the increased Coverage Amount; provided, however, that with respect to a Replacement Policy, the age at enrollment shall mean the age at the time of enrollment for the Replaced Policy.

2.11              "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 as of the time of the Participant's enrollment in the Prior Plan(s), 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 smoked cigarettes at any time during the twelve month period immediately preceding the Participant's enrollment; a nonsmoker rate shall be used for all other Participants. However, notwithstanding the previous sentence, if a Replacement Policy is issued for a Participant and the Participant qualifies as a nonsmoker for the Replacement Policy, the nonsmoker rate shall thereafter be used to determine the Insurance Cost for the Participant. 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).

2.12              "Insurer" means, with respect to a Participant's Policy, the insurance company issuing the insurance policy or group policy certificate on the Participant's life (or on the joint lives of the Participant and the Participant's spouse) pursuant to the provisions of the Plan.

2.13              "Participant" means an Employee who is participating in the Plan.

2.14              "Participant Account" means, with respect to a Participant's Policy, a bookkeeping entry maintained by the Employer pursuant to Section 6 of the Plan, equal to the excess, if any, of the cash value of the Policy over the Employer Account.

2.15              "Participant Premium" means, with respect to each Policy Year (or portion thereof) for a Participant, the greater of (1) the Participant's Insurance Cost; or (2) the one year term cost for the Policy Year  (or portion thereof) determined based on the Participant's age at the beginning of the Policy Year, the Insurer's published one year term rates in effect at the beginning of the Policy Year, and the Participant's Coverage Amount under the Plan. The one year term cost amount shall be determined pursuant to the guidelines set forth in Revenue Ruling 66-110, 1966-1 C.B. 12, and Revenue Ruling 67-154, 1967-1 C.B. 11, and shall be conclusively determined by the Plan Administrator.

2.16              "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, following a withdrawal by the Employer of all amounts to which it is entitled pursuant to Section 8.02e or Section 8.03. A determination as to whether a Policy is at a given, time a Permanent Policy shall be made by the Plan Administrator, and shall be 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 of the Employer withdrawal made pursuant to Section 8.02e or Section 8.03, the projections shall reflect the actual Policy interest crediting rate in effect for such year ( 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 in the tenth Policy Year following the Policy Year in which the Employer withdrawal occurs will be five percent (5%). For all successive Policy Years, the projections shall reflect a five percent (5%) Policy interest crediting rate. Notwithstanding the foregoing, if the actual Policy interest crediting rate in effect when the determination is made is less than five percent (5%), the projections shall reflect such lower rate for the Policy Year of the Employer withdrawal and all subsequent Policy Years.

2.17              "Plan" means the BellSouth Split-Dollar Life Insurance Plan. Except as otherwise provided in Section 3.01, with respect to each Participant who participated in the BellSouth Corporation Executive Life Insurance Plan, the Plan shall be construed and interpreted as a restatement of the provisions of such plan, as amended; and, with respect to each Participant who participated in the BellSouth Corporation Senior Manager Life Insurance Plan, the Plan shall be construed and interpreted as a restatement of such plan, as amended.

2.18              "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.

2.19              "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) by the Participant or other Policy Owner, which may be issued as a separate insurance policy or a certificate under a group policy.

2.20              "Policy Owner" means the Participant or that person or entity to whom the Participant has assigned his interest in the Policy. In the case of a Replacement Policy issued to replace a Policy for which the Policy Owner is other than the Participant, the Policy Owner of the Replacement Policy shall be the same as the Policy Owner of the Policy being replaced, unless elected otherwise by such Policy Owner.

2.21              "Policy Year" means the twelve month period (and each successive twelve month period) beginning on the effective date of the Agreement.

2.22              "Premium Payment Years" means, with respect to a Participant's Policy, the number of consecutive Policy Years (including, for a Replacement Policy, the number of Policy Years during which the Replaced Policy was in force), beginning with the first Policy Year, during which the Employer is required to pay a Policy premium, as specified in the Participant's Agreement.

2.23              "Replaced Policy" means a Policy which has been replaced by a Replacement Policy. If a Participant's Policy has been replaced more than one time, then the term Replaced Policy shall include all prior Policies.

2.24              "Replaced Policy Cash Value" means the cash value of the Replaced Policy on the Effective Date.

2.25              "Replacement Policy" means a Policy issued to replace a Policy previously issued under the Plan.

2.26              "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.

2.27              "Single Life Coverage" means life insurance coverage on the life of the Participant.

2.28              "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.

2.29              "Terminated for Cause" means, with respect to a Participant, the termination of the Participant's employment with the Employer due to: (i) fraud, misappropriation, embezzlement, or intentional material damage to the property or business of the Employer; (ii) commission of a felony involving moral turpitude of which the Participant is finally adjudicated guilty; or (iii) continuance of either willful and repeated failure or grossly negligent and repeated failure by the Participant to materially perform his duties.

3.              ELIGIBILITY

3.01              General. Each Employee with a Prior Plan Agreement in effect on the day preceding the Effective Date 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) executes an Agreement consenting to the terms of this Plan, as amended, and completes such other forms as the Plan Administrator shall require. Any Employee eligible to participate who fails to execute (or secure execution of) an Agreement consenting to the terms of this Plan, as amended, by August 31, 1998, shall not be eligible for coverage under the Plan, but shall remain subject to the terms and conditions of the Prior Plan(s) in which such Employee participates as in effect on the day preceding the Effective Date, as amended thereafter from time to time.

3.02              Type of Coverage. The type(s) of coverage for a Participant on the Effective Date shall be the type(s) of coverage in place on the day preceding the Effective Date pursuant to the Participant's Agreement(s) under the Prior Plan(s). Provided, however, that the Policy Owner may make a one-time election to exchange Survivorship Coverage for Single Life Coverage (equal to fifty percent (50%) of the Participant's Survivorship Coverage Amount), or to exchange Single Life Coverage for Survivorship Coverage (equal to two hundred percent (200%) of the Participant's Single Life Coverage Amount), subject to any proof of insurability required by the Insurer. Such an election must be made by August 31, 1998. If an unmarried Participant enrolls for Single Life Coverage and subsequently marries, then, subject to the approval of the Plan Administrator, the Participant (or other Policy Owner) shall have the right to make an election, exercisable no later than one hundred eighty (180) days following the marriage, to convert (subject to any proof of insurability required by the Insurer) the Single Life Coverage to Survivorship Coverage (with the Coverage Amount equal to two hundred percent (200%) of the Single Life Coverage Amount). If a married Participant enrolls for Survivorship Coverage and subsequently divorces, then, subject to the approval of the Plan Administrator, the Participant (or other Policy Owner) shall have the right to make an election, exercisable no later than one hundred eighty (180) days following the finalization of the divorce, to convert (subject to any proof of insurability required by the Insurer) the Survivorship Coverage to Single Life Coverage (with the Coverage Amount equal to fifty percent (50%) of the Survivorship Coverage Amount). Under no other circumstances shall a Participant (or other Policy Owner) have any right to change an election as to type of coverage after the coverage becomes effective. Any Insurer charges or tax liability resulting from a conversion shall be borne by the Participant or other Policy Owner.

4.              AMOUNT OF COVERAGE

The Coverage Amount for a Participant shall be the amount specified in the Participant's Agreement.

5.              PAYMENT OF PREMIUMS; PAYMENT OF CERTAIN TAXES

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 agreed to between the Plan Administrator and the Participant. 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, and no Participant Premium shall be required after termination of the Participant's Agreement pursuant to Section 8.01.

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. However, no Employer Premium shall be required: (1) after the Participant's Agreement terminates pursuant to Section 8.01; or, (2) for a Policy Year if the Employer withdrawal and release of Assignment under Section 8.03 would have occurred at the end of the prior Policy year but for the requirement in Section 8.03 that the Policy not constitute a Modified Endowment Contract following such withdrawal. Also, if the payment of the Employer Premium for a Policy year would cause the Participant's Policy to constitute a Modified Endowment Contract (as such term is defined in Section 7702A of the Internal Revenue Code), then the Employer Premium amount for such Policy year shall be reduced to the largest such amount that can be paid without causing the Policy to constitute a Modified Endowment Contract. The Employer may, but shall not be required to, make additional premium payments with respect to a Participant's Policy after the last Premium Payment Year.

5.03              Additional Employer Payments

a.              If, during any year which is not a Premium Payment Year, participation in the Plan results in the recognition of income for tax purposes by the Participant for the economic benefit to the Participant as described in, e.g., Revenue Ruling 64-328, 1964-2 C.8.11, the Employer shall pay to the Participant an amount determined by the Plan Administrator which is designed to approximate the (1) 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). Any payment to be made under this subsection a. shall be made no later than April 1 of the year following the year to which the payment relates.

b.              If, with respect to Survivorship Coverage after the death of the Participant, participation in the Plan results in the recognition of income for tax purposes by the Participant's spouse or other Policy Owner for the economic benefit to the Participant's spouse or other Policy Owner as described in, e.g., Revenue Ruling 64-328, 1964-2 C.8.11, 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 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, on the income so recognized. Any payment, to be made under this subsection b. shall be made no later than April 1 of the year following the year to which the payment relates.

c.              If the termination of the Employer's interest in a Participant's Policy pursuant to Section 8.03 of the Plan results in the recognition of income for tax purposes by the Participant, the Employer shall pay to the Participant 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 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, attributable to such termination. Such payment shall be made immediately following the termination of the Employer's interest in the Policy or, if later, at such time as a determination is made that such a tax is payable.

d.              For purposes of this Section 5.03, 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.

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.

6.              ACCOUNTS

With respect to each Policy covered by an Agreement made under this Plan, the Employer shall maintain bookkeeping entries reflecting the Employer Account and Participant Account values.

7.              POLICY OWNERSHIP

7.01              Ownership. Except as otherwise provided in this Plan, 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 including, but not limited to, the right to designate the beneficiary or beneficiaries to receive payment of the portion of the death benefit under the Policy equal to the Coverage Amount, and the right to assign any part or all of the Policy Owner's interest in the Policy (subject to the Employer's rights, the terms and conditions of the Assignment specified in Section 7.02 of the Plan, and the terms and conditions of this Plan) to any person, entity or trust by the execution of a written instrument delivered to the Employer.

7.02              Employer's Rights. In exchange for the Employer's agreement to pay the amounts described in Sections 5.02 and 5.03 of this Plan, the Policy Owner shall execute an Assignment to the Employer of the rights provided to the Employer under this Plan. The Employer shall have the right to direct the Policy Owner in writing to take any action required consistent with these rights, and upon the receipt of such written direction from the Employer, the Policy Owner shall promptly take such action as is necessary to comply therewith. The Employer agrees that it shall not exercise any rights assigned to it in the Assignment in any way that might impair or defeat the rights and interest of the Policy Owner under this Plan. The Employer shall have the right to assign any part or all of its interest in the Policy (subject to the Policy Owner's rights and the terms and conditions of this Plan) to any person, entity or trust by the execution of a written instrument delivered to the Policy Owner.

7.03              Possession of Policy. The Employer shall keep possession of the Policy. The Employer agrees to make the Policy available to the Policy Owner or to the Insurer from time to time for the purposes of endorsing or filing any change of beneficiary on the Policy or exercising any other rights as the owner of the Policy, but the Policy shall promptly be returned to the Employer.

7.04              Policy Loans. Except as otherwise specifically provided for in Section 8 of this Plan, neither the Employer nor the Policy Owner may borrow against the Policy cash values.

7.05              Withdrawals and Surrender. Except as otherwise specifically provided for in Section 8 of this Plan, neither the Employer nor the Policy Owner may withdraw Policy cash values or surrender all or a portion of the Policy. Provided, however, that a cancellation or exchange of a Replaced Policy in connection with the acquisition of a Replacement Policy shall not be deemed a withdrawal from or surrender of the Replaced Policy.

8.              TERMINATION OF AGREEMENT

8.01              Termination Events. Notwithstanding anything herein to the contrary, the Participant's Agreement, the Employer's obligation to pay premiums with respect to the Participant's Policy acquired pursuant to the Agreement, 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.              Termination of the Participant's Agreement by mutual agreement of the Participant and the Employer.

c.              A unilateral election by the Participant to terminate the Participant's Agreement; provided, however, that such an election may be made by a Participant only within sixty (60) days following the end of the last Premium Payment Year for the Participant's Policy.

d.              The written notice by the Employer to the Participant following a resolution by the Board of Directors of BellSouth Corporation to terminate this Plan and all Agreements made under the Plan.

e.              As to Single Life Coverage only, the death of the Participant.

f.              As to Survivorship Coverage only, the death of the last survivor of the Participant and the Participant's spouse.

g.              After the release of Assignment pursuant to Section 8.03.

8.02              Disposition of Policy

a.              In the event of a termination of a Participant's Agreement under Section 8.01 a or b of the Plan, the Policy owner shall be entitled to acquire the Employer's rights under the Participant's Policy by paying to the Employer an amount equal to the Employer Account; alternatively, the Policy Owner can require the Employer to withdraw a portion of the cash values from the Participant's Policy, partially surrender the Policy, or borrow a portion of the cash values from the Participant's Policy, with the amount to be specified by the Policy Owner, and the Policy Owner's required payment to the Employer under this Section shall thereby be reduced to an amount equal to the excess of the Employer Account over the amount withdrawn, received upon partial surrender, or borrowed by the Employer (for these purposes, the amount withdrawn, received upon partial surrender, or borrowed shall refer to the amount

actually received by the Employer after the application of any charges, such as surrender charges, applicable to the withdrawal, partial surrender, or borrowing). The Policy Owner may exercise this right to acquire the Employer's interest in the Policy by so notifying the Employer within ninety (90) days after an event of termination under Section 8.01a or b of this Plan has occurred. Within thirty (30) days after receipt of such notice, the Employer shall make any required withdrawal, partial surrender, or policy loan and the Policy Owner shall pay the Employer the applicable payment, if any. Upon receipt of payment from the Policy Owner, or immediately following the withdrawal, partial surrender, or policy loan if no payment is required, the Employer shall release the Assignment and the Policy Owner shall have all rights, title, and interest in the Policy free of all provisions and restrictions of the Assignment, the Agreement and this Plan.

b.              Notwithstanding the provisions of Section 8.02a, if the Participant is Terminated for Cause by the Employer, then the Policy Owner shall have no right to acquire the Employer's interest in the Policy.

c.              If the Policy Owner fails to exercise his right to acquire the Employer's interest in the Policy pursuant to Section 8.02a or is precluded from exercising such right pursuant to Section 8.02b, the Policy Owner shall transfer title to the Policy to the Employer, free of all provisions and restrictions of the Assignment, the Participant's Agreement and this Plan.

d.              In the event of a termination of a Participant's Agreement pursuant to the Participant's election under Section 8.01 c, the Employer shall receive from the Participant's Policy an amount equal to the Employer Account, with such amount to be received through a withdrawal, partial surrender, policy loan, or some combination thereof, as determined by the Employer. Immediately thereafter, the Employer shall release the Assignment and the Policy Owner shall have all rights, title and interest in the Policy free of all provisions and restrictions of the Assignment, the Participant's Agreement, and this Plan.

e.              Notwithstanding the provisions of Section 2.08 to the contrary, in the event of a termination of a Participant's Agreement under Section 8.01d, prior to the application of Section 8.02, the Employer Account shall be reduced to an amount equal to the excess, if any, of the cash values of the Policy over the amount of cash value necessary in order for such Policy to immediately qualify as a Permanent Policy after withdrawal of such excess amount. The Employer shall receive from the Policy the reduced Employer Account value and, with such amount to be received through a withdrawal, partial surrender, policy loan, or some combination thereof, as determined by the Employer, and shall, within thirty (30) days of the Plan termination, release the Assignment and the Policy Owner shall have all rights, title, and interest in the Policy free of all provisions and restrictions of the Assignment, the Agreement and this Plan.

8.03              Release of Assignment. At the end of each Policy Year for a Participant's Policy, the Plan Administrator shall determine whether a withdrawal from the Policy by the Employer of an amount equal to the Employer Account, and a release of the Assignment, shall occur with respect to the Participant's Policy. Such withdrawal and release shall be made within ninety (90) days after the end of the first Policy Year as of the end of which: (1) the Participant's Policy would qualify as a Permanent Policy following such withdrawal by the Employer; and, (2) the Participant's Policy would not constitute a Modified Endowment Contract (as such term is defined in Section 7702A of the Internal Revenue Code) following such withdrawal. The Employer withdrawal shall be made though a withdrawal, partial surrender, or policy loan, or some combination thereof, as determined by the Employer. Immediately after receiving the proceeds of the withdrawal, partial surrender, or policy loan, the Employer shall release the Assignment and the Policy Owner shall have all rights, title and interest in the Policy free of all provisions and restrictions of the Assignment, the Participant's Agreement and this Plan.

8.04              Allocation of Death Benefit. In the event of a termination under Section 8.01e or 8.01f of the Plan, the death benefit under the Participant's Policy shall be divided as follows:

a.              The beneficiary or beneficiaries of the Policy Owner shall be entitled to receive an amount equal to the Coverage Amount.

b.              The Employer shall be entitled to receive the balance of the death benefit.

8.05              Employer Undertakings. Upon the death of the Participant (or, in the case of Survivorship Coverage, the death of the last survivor of the Participant and the Participant's spouse) while the Participant's Agreement is in force, the Employer agrees to take such action as may be necessary to obtain payment from the Insurer of the death benefit to the beneficiaries, including, but not limited to, providing the Insurer with an affidavit as to the amount to which the Employer is entitled under the Agreement and this Plan.

9.              GOVERNING LAWS AND NOTICES

9.01              Governing Law. This Plan shall be governed by and construed in accordance with the laws of the State of Georgia.

9.02              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, ATTENTION: Human Resources-Director Executive Benefits. Any notice to the Employee shall be addressed to the Employee at the address following such party's signature on his Agreement. 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.

10.              NOT A CONTRACT OF EMPLOYMENT

This Plan and any Agreement executed hereunder 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.

11.              AMENDMENT, TERMINATION, ADMINISTRATION, CONSTRUCTION AND SUCCESSORS

11.01            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.

11.02            Termination. The Board of Directors of BellSouth Corporation may terminate the Plan without the consent of the Participants or Employees. Provided, however, in the event of a termination of the Plan by the Employer, the Participants will have those rights specified in Section 8.02e of the Plan.

11.03            Interpretation. As to the provisions of the Assignment, the Agreement and the Plan, the provisions of the Assignment shall control. As between the Agreement and the Plan, the provisions of the Agreement shall control.

11.04            Successors. The terms and conditions of this Plan shall endure 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.

12.              PLAN ADMINISTRATION

12.01            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.

12.02            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 shall not participate in any decision which solely affects his 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.

12.03            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

c.              records regarding Participants' benefits hereunder;

d.  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;

e.              to authorize all disbursements pursuant to the Plan;

f.              to maintain all the necessary records of the administration of the Plan;

g.              to make and publish such rules and procedures for the regulation of the Plan as are not inconsistent with the terms hereof.

h.              to designate to other individuals or entities from time to time the performance of any of its duties or responsibilities hereunder; and

i.              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.

12.04           Bond; Compensation. The Plan Administrator and (if applicable) its members shall serve as such without bond and without compensation for services hereunder.

13.              CLAIMS PROCEDURE

13.01            Named Fiduciary. The Plan Administrator is hereby designated as the named fiduciary under this Plan.

13.02            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 9.02 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 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 "A"

BellSouth Split-Dollar Life Insurance Plan

Agreement

This Agreement is made effective as of January l' 1998, by and between the Employer and ______________ (the "Participant").

WHEREAS, the Employer and the Participant executed an agreement (the 'Prior Agreement') under the [BellSouth Corporation Executive life Insurance Plan] [BellSouth Corporation Senior Manager Life Insurance Plan] (the Prior Plan): and

WHEREAS, the Prior Plan has been amended and restated as the BellSouth Split-Dollar Life Insurance Plan (the "Plan"): and

WHEREAS, in exchange for coverage under the Plan as amended and restated, the Participant consents and agrees to the terms of the Plan, as amended and restated:

NOW THEREFORE, in consideration of the promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Employer and the Participant hereby mutually covenant and agree as follows:

1.           This Agreement shall constitute an amendment and restatement of the Prior Agreement and, as of the effective date of this Agreement, the Prior Plan and Prior Agreement shall be tent1inated and replaced by the Plan and this Agreement

2.           The Policy subject to this Agreement is Policy number ________________, issued by Pacific Life Insurance Company (the  Replacement Policy, which replaces the Replaced Policy. As of the effective date of this Agreement, no further benefits will be provided to the Participant or Employer under the Replaced Policy, and such Policy will be canceled.

3           The Replaced Policy Cash Value shall be transferred directly to the Replacement Policy as of the effective date of this Agreement

4.           The Coverage Amount shall be $ __________ of [Single Life] [Survivorship] Coverage.

5           The Premium Payment Years shall be consecutive Policy Years.

6.           For each Policy Year beginning after 1998, the total Policy premium for each year which is a Premium Payment Year shall be $ ______________, and the Employer Premium shall equal such total Policy premium reduced by the Participant Premium payable by the Participant for such Policy Year.

7.           The Policy Owner for the Replacement Policy shall be the same as the Policy Owner for the Replaced Policy.

8.           The Participant agrees to pay the Participant Premium contribution as specified in the Plan, and consents to paying such amount to the Employer through regular payroll (or retirement income) deductions.

9           The Participant has read and understands the provisions of the Plan, and agrees that all of the terms and conditions specified in the Plan are hereby incorporated by reference herein and form a part of this Agreement

10           Subject to the terms of the Plan, this Agreement shall not be amended or modified without the written consent of the Participant and the Employer.

11.           This Agreement shall be governed by the laws of the State of Georgia.

_________________________                  _________________________

Date                                                                    For the Employer

_________________________                  _________________________

Date                                                                    Signature of Participant

      _________________________

      _________________________

      _________________________

 Address of Participant

This Assignment is made by the undersigned Policy Owner effective January 1,

1998.

DEFINITIONS:

ASSIGNEE:                                               BellSouth Corporation

PARTICIPANT:

POLICY OWNER:

INSURED(S):

INSURER:                                                                    Pacific life Insurance Company

POLICY:                                                                       Policy # __________ issued by the insurer

REPLACED POLICY:                                                 Policy # __________ issued by the Insurer

SPLIT-DOLLAR LIFE INSURANCE                        That certain Agreement executed

PLAN AGREEMENT (THE "AGREEMENT")        to be effective on January 1, 1998,

 between the Participant and the

 Assignee.

COVERAGE AMOUNT That portion of the death benefit

coverage under the Policy equal to

$_______________

RECITALS:

1.           The benefits provided to the Policy Owner under the Policy replace those previously provided under the Replaced Policy.

2.           Under the Agreement, the Assignee has agreed to assist the Policy Owner in the payment of premiums on the Policy issued by the Insurer.

3.           In consideration of such premium payments by the Assignee, the undersigned Policy Owner intends to grant the Assignee certain limited interests in the Policy.

THEREFORE, for value received, it is agreed:

1.           ASSIGNMENT. The Policy Owner hereby assigns, transfers, and sets over to the Assignee, its successors and assigns, the following specific rights in the Policy and subject to the following tenT1S and conditions:

a.           the sole right to make withdrawals or borrow against the cash value of the Policy, as provided in Sections 8.02a, 8.02d, 8.02e and 8.03 of the Plan;

b.           the right to receive from the Insurer upon the death of the Insured(s) the proceeds of the Policy in excess of the Coverage Amount;

c.           the sole right to surrender all or a portion of the Policy and receive the surrender value thereof, as provided in Sections 8.02a, 8.02d, 8.02e and 8.03 of the Plan.

2.           RETAINED RIGHTS. Except as expressly provided in Section 1, the Policy Owner retains all rights under the Policy including but not limited to:

a.           the right to designate and change the beneficiary; and

b.           the right to elect any optional mode of settlement entitled by the Policy or Insurer, subject only to the Assignee's right in Section 1.(b).

3.           AUTHORIZATION. For purposes of Sections 1 and 2, the signature of either the Assignee or the Policy Owner shall be sufficient Both the Assignee and the Policy Owner acknowledge that between themselves, they are bound by the limitations of this Assignment and that the Insurer will recognize the signature of either.

4.           INSURER. The Insurer is hereby authorized to recognize, and is fully protected in recognizing the claims of the Assignee to rights hereunder, without investigating the reasons for such action by the Assignee, or the validity or the amount of such claims, nor giving notice to the Policy Owner of such claims of rights or interest to exercise such rights. Insurer reserves the right to require signatures of both the Assignee and the Policy Owner to exercise any or all ownership rights, as is their normal procedure.

5.           DEATH PROCEEDS. The Insurer shall pay to the Assignee that portion of the death benefit to which it is entitled. Payment by the Insurer of any or all of the death proceeds to the Assignee in reliance upon a signed authorization by any officer of the Assignee as to the share of death proceeds due it shall be a full discharge of the Insurer for such share and shall be binding on all parties claiming any interest in the Policy.

6.           RELEASE OF ASSIGNMENT. Upon payment to the Assignee of those amounts due to it under the terms of the Agreement, the Assignee shall execute a written release of this Assignment to the Insurer who may then treat the Policy Owner of the Policy as the sole Policy Owner for all purposes.

7.           ASSIGNMENT CONTROLS. In the event of any conflict between the provisions of this Assignment and provisions of the Agreement with respect to the Policy or rights of collateral assignment therein, the provisions of this Assignment shall prevail.

8.           CANCELLATION OF REPLACED POLICY. The Policy Owner agrees that no further benefits will be provided under the Replaced Policy, and that benefits provided under the Policy are in lieu of the benefits previously provided under the Replaced Policy.

IN TESTIMONY WHEREOF, the Policy Owner has executed this Assignment to be effective January 1, 1998.

________________________

Signature of Policy Owner

________________________

Date

BELLSOUTH CORPORATION

EXECUTIVE LONG TERM DISABILITY

AND

SURVIVOR PROTECTION PLAN

BELLSOUTH CORPORATION

EXECUTIVE LONG TERM DISABILITY

AND

SURVIVOR PROTECTION PLAN

TABLE OF CONTENTS

Section 1	Definition	1
Section 2	Disability Allowance	1
Section 3	Group Life Insurance Benefit	10
Section 4	Medical Expense Benefit	11
Section 5	Claims and Appeals	11
Section 6	General Provision	11

BellSouth Corporation

Executive Long Term Disability and

Survivor Protection Plan

Section 1.                                         Definitions

1.           "Plan" shall mean the BellSouth Corporation's Executive Long Term Disability and Survivor Protection Plan.

2.           "Company" shall mean the BellSouth Corporation, a Georgia corporation, or its successors.

3.           "Pension Plan" shall mean the BellSouth Personal Retirement Account Pension Plan.

4.           "Disability Benefit Plan" shall mean the Company's Short Term Disability Plan and Long-Term Disability Plan.

5.           "Supplemental Executive Retirement Plan" shall mean the BellSouth Supplemental Executive Retirement Plan.

6.           "Short Term Plan" shall mean the Company's Short Term Incentive Plan.

7.           "Committee" shall mean the Employee's Benefit Committee, appointed by the Company, which shall administer the Plan.

8.           (a)           "Participant," for purposes of the disability allowance under section 2, shall mean an employee on the active rolls of the Company on or after the effective date of the plan and who holds a position that the Company's Board of Directors has designated to be within the Company's Executive Group.

(b)           "Participant," for purposes of the BellSouth Group Life Plan benefit under Section 3, shall mean a former employee of the Company who was a participant under a paragraph 8(a) above on the last day of employment, if such former employee is eligible to receive a disability allowance under Section 2, or is eligible to receive a Minimum Retirement Benefit under the Supplemental Executive Retirement Plan.

(c)           "Participant," for purposes of the medical benefits under Section 4, shall mean a former employee of the Company who was a participant under paragraph 8(a) above on the last day of employment, if such former employee is eligible to receive a Disability Allowance under Section 2.

(d)           For purposes of paragraphs 8(b), and 8(c), above, a former employee shall be considered to be eligible to receive Disability Allowance under Section 2 or a Minimum Retirement Benefit under the Supplemental Executive Retirement Plan if he has met the conditions specified in Section 2 or the Supplemental Executive Retirement Plan, even though the receipt of other benefits by such former employee precludes his receipt of any benefits under Section 2 or the Supplemental Executive Retirement Plan.

9.           "Term of Employment" shall have the same meaning as the meaning assigned to such expression in the Pension Plan.

10.           (a)           "Annual Basic Pay," shall mean the participant's annual base salary rate (including those amounts previously deferred pursuant to other plans) as determined by the Company on the last day the participant was on the active payroll plus an amount determined was on the active payroll plus an amount determined with reference to the Short Term Incentive Plan, but excluding all other payments and all cash payments and distributions made under the BellSouth Executive Long Term Incentive Plan or Shareholder Return Cash Plan. The amount determined with reference to the Short Term Incentive Plan shall be the lesser of the participant's standard short term award in effect on the last day the participant was on the active payroll or 60% of the participant's annual base salary rate (including those amounts previously deferred pursuant to other plans) on the last day participant was on active payroll.

11.           The use of personal pronouns of the masculine and feminine genders.

Section 2.                                         Disability Allowance

1.             (a)           Participant shall be considered to be a "disabled" at any time during the first twenty-six week period following the onset of a physical or mental impairment, if such impairment prevents the participant from meeting the performance requirements of the position held immediately preceding the onset of the physical or mental impairment.

(b)           A participant shall be considered to be "disabled" after the first twenty-six week period following the onset of a physical or mental impairment if such impairment prevents the participant from meeting the performance requirements of (1) the position held immediately preceding the onset of the physical or mental impairment, (2) a similar position, or (3) any appropriate portion within the Company which the participant would otherwise be capable of performing by reason of the participant's background and experience.

(c)           The Committee shall make the determination of whether a participant is disabled within the meaning of paragraphs (a) and (b) above and its determinations shall be final and conclusive.

2.           A participant who is disabled during a period described in paragraph 1(a) shall be eligible to receive a monthly disability allowance equal to 100 percent of the participant's monthly base salary rate (including those amounts previously deferred pursuant to other plans) on the last day the participant was on the active payroll, reduced by any amounts described in paragraph 5(a) of this Section 2 which are attributable to the period for which benefits are provided under this paragraph.

3.           A participant who is disabled during a period described in paragraph 1(b) shall, prior to his sixty-fifth birthday, be eligible to receive a monthly disability allowance equal to the greater of (i) sixty percent or (ii) the percentage determined by adding ten percentage points to participant's income replacement percentage under the basic Company-sponsored long-term disability coverage, of the participant's monthly base salary rate (including those amounts previously deferred pursuant to other plans) on the last day the participant was on the active payroll, reduced by any amounts described in paragraph 5(b) of this Section 2 which are attributable to the period for which benefits are provided under this paragraph.

4.           A participant who is disabled during a period described in paragraph 1(b) shall commencing with his sixty-fifth birthday or the start of the period described in paragraph 1(b), if later, be eligible to receive a monthly disability allowance equal to the greater of:

(i)           one and one-quarter percent of the participant's annual basic pay, as defined in paragraph 10 of Section 1, on the last day the participant was on the active payroll, or

(ii)           if the participant's term of employment has been five years or more, ninety percent of the sum of (a) the monthly pension the participant would have been entitled to receive commencing at age sixty-five under the Company's Pension Plan as in effect on the last day the participant was on the active payroll, but ignoring any minimum service requirements for eligibility to a service pension, if the period after the last day the participant's sixty-fifth birthday had been included in the participant's term of employment under the Pension Plan, plus (b) the monthly pension the participant would have been entitled to receive commencing at age 65 under the Supplemental Executive Retirement Plan as in effect on the last day the participant was on the active payroll, but ignoring any minimum service requirements for eligibility to a pension if the period after the last day the participant was on the active payroll and prior to the participant's sixty-fifth birthday had been included in the participant's term of employment under the Supplemental Executive Retirement Plan, reduced by any amounts described in paragraph 5(c) of this Section 2 which are attributable to the period for which benefits are provided under this paragraph.

5.           (a)           The disability allowance determined for any period under paragraph 2 of this Section 2 shall be reduced by the sum of the following benefits received by the participant which are attributable to the period for which such disability allowance is provided; a service, deferred vested, or disability pension under the Pension Plan or the Supplemental Executive Retirement Plan, a disability benefit under the disability benefit plan, any worker's compensation benefit, plus any other benefit payments required by law on account of the participant's disability. However, no reduction shall be made on account of any pension under the Pension Plan or the Supplemental Executive Retirement Plan at a rate greater than the rate of such pension on the date the participant first received such pension after his disability.

(b)           The disability allowance determined for any period under paragraph 3 of this Section 2 shall be reduced by the sum of the following benefits received by the participant which are attributable to the period for which such disability allowance is provided; a service, deferred vested, or disability pension under the Pension Plan or the Supplemental Executive Retirement Plan, a disability benefit under the disability benefit plan, any other retirement income payments from the Company, any worker's compensation benefit, plus any Social Security Insurance Benefit.

However, no reduction shall be made on account of any pension under the Pension Plan or the Supplemental Executive Retirement Plan at a rate greater than the rate of such pension on the date the participant first received such pension after his disability, and no reduction shall be made on account of any Social Security Benefit at a rate greater than the rate which the participant would have first been eligible to receive after his disability and as if no other member of his family were eligible for any Social Security Benefit.

Furthermore, the Board of Directors of the Company, in its discretion, may reduce the disability allowance by the amount of outside compensation or earnings of the participant for work performed by the participant during the period for which such disability allowance is provided.

(c)           The disability allowance determined for any period under paragraph 4 of this Section 2 shall be reduced by the sum of the following benefits received by the participant which are attributable to the period for which such disability allowance is provided; a service, deferred vested, or disability pension under the Pension Plan or the Supplemental Executive Retirement Plan, a disability benefit under the disability benefit plan, any other retirement income payments from the Company, plus any worker's compensation benefit. However, no reduction shall be made on account of any pension under the Pension Plan or the Supplemental Executive Retirement Plan at a rate greater than the rate of such pension on the date the participant first received such pension after his disability.

6.           For purposes of paragraphs 1(a) and 1(b) of this Section 2, the measurement of time following the onset of a physical or mental impairment shall coincide with the measurement of time used to calculate periods of disability benefits under the disability benefit plan. Successive periods of physical or mental impairment shall be counted together in computing the periods during which the participant shall be entitled to the benefits provided under paragraph 2 or paragraph 3 of this Section 2, except that any disability absence after the participant has been continuously engaged in the performance of duty for thirteen weeks shall be considered to commence a new period of physical or mental impairment under paragraph 1(a), so that such participant shall be entitled during such new period to the benefits provided under paragraph 2 of this Section 2.

7.           With respect to a participant not subject to mandatory retirement at age 65 under the Age Discrimination in Employment Act (29 U.S.C. 6721 et. seq.), the period of eligibility for the disability allowance provided in paragraph 3 of this section 2 and the period of eligibility for the disability allowance provided in paragraph 4 of this section 2, shall be the period described in paragraph 3, and the period described in paragraph 4, respectively, or such other period as is required under the Age Discrimination in Employment Act or under any applicable governing regulations or interpretations thereunder.

Section 3                                         Group Life Insurance Benefit

A participant described in paragraph 8(b) of Section 1 who has not retired on a service or a disability pension under the Pension Plan, shall be entitled to the same rights and benefits under the BellSouth Group Life Plan as if the employee had retired on a service pension or a disability pension under the Pension Plan. Benefits provided by this section shall be in lieu of any other rights to continued coverage which a participant may have under the BellSouth Group Life Plan.

Section 4                                         Medical Expense Benefits

A participant described in paragraph 8(c) of Section 1 who has not retired on a service pension or a disability pension under the Pension Plan, shall be entitled to the same rights and benefits under the Company's medical plan and dental plan as an employee who retired on a service pension or a disability pension under the Pension Plan.

Section 5                                         Claims and Appeals

Any claim under the Plan by a Participant or anyone claiming through a Participant shall be presented to the Committee. Any person whose claim under the Plan has been denied may, within 60 days after receipt of notice of denial, submit to the Compensation Committee of the Company's Board of Directors a written request for review of the decision denying the claim. The Compensation Committee of the Company's Board of Directors shall determine conclusively for all parties all questions arising in the administration of the Plan.

Section 6                                         General Provisions

1.           The Plan shall be effective on January 1, 1984.

2.            The rights of the participant or his spouse to benefits under the Plan shall not be subject to assignment or alienation.

3.           All costs of providing the benefits under the Plan shall be charged to the operating expense accounts of the Company when and as paid.

4.           The Company may from time to time make changes in the Plan and the Company may terminate the Plan. In addition, the Company's senior human resources officer with the concurrence of the Company's general counsel shall be authorized to make minor or administrative changes to the Plan, as well as changes dictated by the requirements of federal or state statutes applicable to the Company or authorized or made desirable by such statutes. Such changes or termination shall not affect the rights of any participant or surviving spouse, without his consent, to any benefit under the Plan to which such participant or surviving spouse may have previously become entitled as a result of a disability, death or termination of employment which occurred prior to the effective date of such change or termination.

5.           In the case of accident resulting in injury to or death of a participant which entitles the participant or his surviving spouse to benefits under the Plan, the participant or his surviving spouse may elect to accept such benefits or to prosecute such claims at law as the participant or the surviving spouse may have against the Company. If election is made to accept the benefits under the Plan, such election shall be in writing and shall release the Company from all claims and demands which the participant or his surviving spouse may have against it, otherwise than under this Plan or under any other Plan maintained by the Company, on account of such accident. The Committee, in its discretion, may require that election described above shall release any other company connected with the accident, including any company participating in the Pension Plan. The right of the Participant to a disability allowance under Section 2 of the Plan shall lapse if election to accept such benefits, as above provided, is not made within sixty days after injury, or within such greater time as the Committee shall, by resolution duly entered on its records, fix for the making of such election.

6.           Should claim other than under this Plan or under any other plan maintained by the Company be presented or suit brought against the Company, against any other company participating in the Pension Plan or against any other company for which arrangements have been made, directly or indirectly, for interchange of benefit obligations, as described in the Pension Plan, for damages on account of injury or death of a participant, nothing shall be payable under this Plan on account of such injury or death as provided in paragraph 7 of this Section 6; provided however, that the Committee may, in its discretion and upon such terms as it may prescribe waive this provision if such claims be withdrawn or if such suit be discontinued.

7.           In case any judgment is recovered against the company or any settlement is made of any claim or suit on an account of the injury or death of a participant, and the total amount which would otherwise have been payable under the Plan and under any other Plan maintained by the Company is greater than the amount paid on account of such judgment or settlement, the lessor of (1) difference between such two amounts, or (2) the amount which would otherwise have been payable under this Plan, may in the discretion of the committee, be distributed to the beneficiaries who would have received benefits under the Plan.

8.           All benefits provided under the Plan with respect to a participant shall be forfeited and canceled in their entirely if the participant, without the consent of the Company and while employed by the Company or after termination of such employment, becomes associated with, becomes employed by or renders services to or owns interest in any business (other than as a shareholder with a non-substantial interest in such business) that is competitive with the Company or with any business with which a subsidiary or affiliated company has a substantial interest, as determined by the Committee. All benefits provided under the Plan with respect to a participant shall be forfeited and canceled in their entirety if the participant is discharged by the Company for cause or the participant engages in misconduct in connection with the participant's employment.

EXHIBIT C

CINGULAR WIRELESS BLS EXECUTIVE TRANSITION SUPPLEMENTAL LIFE INSURANCE PLAN

1.           Section 1 "Purpose" shall be restated as follows: "The purpose of the Cingular Wireless BLS Executive Transition Supplemental Life Insurance Plan is to provide an insurance arrangement under which Cingular Wireless LLC and its subsidiaries and affiliates can assist key employee in acquiring and financing life insurance coverage. The Cingular Wireless BLS Executive Transition Supplemental Life Insurance Plan is intended as a follow on and continuation of the BellSouth Supplemental Life Insurance Plan, as such Plan was in effect as of December 23, 2001. The terms of the BellSouth Supplemental Life Insurance Plan in effect on December 23, 2001, except as herein amended, are incorporated by reference and made a part of the Plan."

2.           All references in the Plan to BellSouth Corporation shall be deemed to reference to Cingular Wireless.

3.           Eligibility and Participation. Participation in the Plan shall be limited to those former executives who (a) were eligible to participate in the BellSouth Supplemental Life Insurance Plan, (b) were contributed to Cingular Wireless as part of the formation of Cingular Wireless LLC on or before December 31, 2001 and (c) are identified by name as eligible to continue participation in this Plan on Appendix B, hereto. No other Cingular Wireless employees are eligible to participate in or receive benefits from the plans.

4.           Section 2.01 "Coverage Amount" means the existing coverage levels as set forth in the BellSouth Supplemental Life Insurance Plan's Participant's Policy in effect at the employee's contribution to Cingular Wireless. Increased coverage levels will not be available under the Cingular Wireless BLS Executive Transition Supplemental Life Insurance Plan pursuant to Section 4.02.

5.           Section 2.06 "Employer" means Cingular Wireless LLC and any subsidiary or affiliate of Cingular Wireless LLC that is authorized by Cingular Wireless to participate in the Plan.

6.           Section 2.14 "Plan" means the Cingular Wireless BLS Executive Transition Supplemental Life Insurance Plan.

7.           Section 2.15 "Plan Administrator" means the Senior Vice President – Human Resources of the Employer and any individual or committee he designates to act on his behalf with respect to any or all of his responsibilities hereunder. Pursuant to Section 9, the Senior Vice President – Human Resources shall be authorized to modify or terminate the plan at any time.

8.           Section 4.02 "Promotions" shall be restated as follows: "No additional coverage amounts will be provided with respect to promotions or any other event."

9.           Section 7.02 is amended to insert Cingular's address in the place of BellSouth's: Glenridge Highlands Two, Suite 760 Executive Director-Executive Benefits, 5565 Glenridge Connector, Atlanta, GA 30342.

10.           Any references to the Board of Directors of BellSouth Corporation shall be deemed to be a reference to the Board of Directors/Strategic Review Committee of Cingular Wireless Corporation.

CINGULAR WIRELESS BLS EXECUTIVE TRANSITION SPLIT DOLLAR LIFE INSURANCE PLAN

1.           Section 1. "Purpose" shall be restated as follows: "The purpose of the Cingular Wireless BLS Executive Transition Split-Dollar Life Insurance Plan is to provide a split-dollar insurance arrangement under which Cingular Wireless LLC and its subsidiaries and affiliates can assist key employee in acquiring and financing life insurance coverage. The Cingular Wireless BLS Executive Transition Split-Dollar Life Insurance Plan is intended as a follow on and continuation of the BellSouth Split-Dollar Life Insurance Plan, as such Plan was in effect as of December 23, 2001. The terms of the BellSouth Split-Dollar Life Insurance Plan in effect on December 23, 2001, except as herein amended, are incorporated by reference and made a part of the Plan."

2.           All references in the Plan to BellSouth Corporation shall be deemed to be a reference to Cingular Wireless LLC.

3.           Eligibility and Participation. Participation in the Plans shall be limited to those former executives who (a) were eligible to participate in the BellSouth Split-Dollar Life Insurance Plan, (b) were contributed to Cingular Wireless as part of the formation of Cingular Wireless LLC on or before December 31, 2001, and (c) are identified by name as eligible to continue participation in this Plan on Appendix B, hereto. No other Cingular Wireless employees are eligible to participate in or receive benefits from the plan.

4.           Section 2.07 "Employer" means Cingular Wireless LLC and any subsidiary or affiliate of Cingular Wireless LLC that is authorized by Cingular Wireless to participate in the Plan.

5.           Section 2.17 "Plan" means the Cingular Wireless BLS Executive Transition Split-Dollar Life Insurance Plan. The remaining provisions of Section 2.17 of the BellSouth Split-Dollar Life Insurance Plan remain in effect.

6.           Section 2.18 "Plan Administrator" means the Senior Vice President - Human Resources of the Employer and any individual or committee he designates to act on his behalf with respect to any or all of his responsibilities hereunder. Pursuant to Section 11, the Senior Vice President - Human Resources shall be authorized to modify or terminate the plan at any time.

7.           Coverage levels will be based on existing coverage levels as set forth in the BellSouth Split Dollar Life Insurance Plan Agreement in effect at the employee's contribution to Cingular Wireless.

8.           Section 7.02 is amended to insert Cingular's address in the place of BellSouth's: Glenridge Highlands Two, Suite 760 Executive Director-Executive Benefits, 5565 Glenridge Connector, Atlanta, GA 30342

9.           Any references to the Board of Directors of BellSouth Corporation shall be deemed to be a reference to the Board of Directors/Strategic Review Committee of Cingular Wireless Corporation.

CINGULAR WIRELESS BLS EXECUTIVE TRANSITION LONG TERM DISABILITY PLAN

1.           Section 1.1 "Plan" shall be mean the Cingular Wireless BLS Executive Transition Long Term Disability Plan. The purpose of this plan is to provide supplemental disability coverage to the group disability plan. The Cingular Wireless BLS Executive Transition Long Term Disability Plan is intended as a follow on and continuation of the BellSouth Corporation Executive Long Term Disability and Survivor Protection Plan, as such Plan was in effect as of December 31, 2001. The terms of the BellSouth Corporation Executive Long Term Disability and Survivor Protection Plan in effect on December 31, 2001, except as herein amended, are incorporated by reference and made a part of the Plan.

2.           Any reference to BellSouth Corporation shall be deemed to reference Cingular Wireless LLC. Any reference to BellSouth shall be deemed to reference Cingular Wireless.

3.           Section 1.2 "Company" shall be amended to insert Cingular Wireless in the place of BellSouth Corporation.

4.           Section 1.3 "Pension Plan" shall mean the Cingular Wireless Pension Plan.

5.           Section 1.5 "Supplemental Executive Retirement Plan" shall mean the BellSouth Supplemental Executive Retirement Plan.

6.           Section 1.6 "Short Term Plan" shall mean short term incentive awards granted under the comparable Cingular Wireless plan, if any.

7.           Section 1.7 "Committee" shall be amended to mean the Cingular Wireless Benefit Committee appointed by the Senior Vice President – Human Resources.

8.           Eligibility and Participation. Participation in the plan shall be limited to those former BLS executives who (a) previously participated in BellSouth Corporation Executive Long Term Disability and Survivor Protection Plan, (b) were contributed to Cingular Wireless as part of the formation of Cingular Wireless on or before December 31, 2001, and (c) are specifically identified on Appendix B, hereto. No other Cingular Wireless employees are eligible to participate in or receive benefits from the Cingular Wireless BLS Executive Transition Long Term Disability Plan.

9.           Section 1.10 "Annual Basic Pay" shall be amended to replace the BellSouth Executive Long Term Incentive Plan with the comparable Cingular Wireless plan, if any, and to delete any reference to the Shareholder Return Cash Plan.

10.           Section 2.5(b) The Board of Directors shall mean the Cingular Wireless Board of Directors.

11.           The Plan shall be administered by the Senior Vice President – Human Resources of the Employer and any individual or committee he designates to act on his behalf with respect to any or all of his responsibilities hereunder. Pursuant to Section 6.4, the Senior Vice President - Human Resources shall be authorized to modify or terminate the plan at any time.

EX-10.DDD

Exhibit 10-ddd

CINGULAR WIRELESS SBC TRANSITION EXECUTIVE BENEFIT PLAN

WHEREAS, Cingular Wireless Corporation is the manager of Cingular Wireless LLC (the "Company"); and

WHEREAS, SBC Communications, Inc. ("SBC") maintains, for the benefit of certain highly compensated and key management employees, the (1) the Supplemental Retirement Income Plan ("SRIP"), (2) the Pension Make Up Plan, (3) the Supplemental Life Insurance Plan, (3) the Salary and Incentive Award Deferral Plan ("SIAD"), (4) the Senior Management Long Term Disability Plan and (5) the Executive Health Plan (collectively the "SBC Plans") (copies of such plans are attached as Exhibit A hereto); and

WHEREAS, certain former SBC employees, who have been contributed to the Company or an affiliate of the Company, were eligible to participate and receive benefits under the SBC Plans (the "Transition Executives"); and

WHEREAS, the Transition Executives are identified by name and the SBC Plan(s) in which they participated on Exhibit B hereto; and

WHEREAS, the Company desires to adopt the provisions and benefits of the SBC Plans into a new Company plan for the Transition Executives, so that they may continue to benefit from the provisions of the SBC Plans following their contribution to the Company; and

WHEREAS, the new plan shall be known as the Cingular Wireless SBC Transition Executive Benefit Plan (the "Cingular Plan"); and

WHEREAS, the terms of the Cingular Plan shall incorporate by reference the terms of the SBC Plans and shall be the same terms as in effect for the SBC Plans on October 28, 2001, including any amendments adopted through such date, unless otherwise provided in these resolutions or in Exhibit C hereto; and

WHEREAS, the benefits provided to the Transition Executives under the Cingular Plan shall be in lieu of the benefits such employees would have been entitled to receive under the SBC Plans and shall be offset against any benefits payable under the SBC Plans for any reason; and

WHEREAS, the Transition Executives, as identified in Exhibit B, shall be the only employees of the Company and its affiliates eligible to participate and receive benefits under the Cingular Plan and no other employees of the Company or its affiliates shall be permitted to participate in the Cingular

Plan;

NOW, THEREFORE, BE IT RESOLVED, that the Cingular Plan, as described herein, is hereby approved and adopted as presented to the Board; provided, the Senior Vice President of Human Resources of the Company is hereby authorized to approve and execute a plan document for the Cingular Plan as he deems appropriate based on the advice of counsel;

FURTHER RESOLVED, that with regard to the Supplemental Life Insurance Plan, the Company is authorized to receive an assignment of all of SBC's obligations, rights and interests in the Supplemental Life Insurance Plan and any underlying policies of insurance, including the obligation to administer the plan and pay any required company contributions;

FURTHER RESOLVED, that the Cingular Plan shall be administered by the Senior Vice President - Human Resources of the Company and his delegates; provided, however, that the Senior Vice President - Human Resources shall be permitted to appoint third party administrators to assist in the administration of the Cingular Plan;

FURTHER RESOLVED, that the Company reserves the unilateral right to modify, amend or terminate the Cingular Plan at any time for any reason, including the right to merge the Cingular Plan or any benefit under it into another Company benefit plan that may provide for different benefits than the Cingular Plan;

FURTHER RESOLVED, that the Chief Operating Officer, the Chief Financial Officer, and the Senior Vice President of Human Resources of the Company are hereby authorized to approve amendments to the Cingular Plan from time to time as they deem necessary or appropriate consistent with the Company's employee benefit policies and based on the input of the Human Resources division, Finance division and other applicable divisions within the Company; provided, no such amendment which is reasonably expected to result in an increase in annual plan expense shall be effective without the approval of the Board;

FURTHER RESOLVED, that the appropriate officers of the Company and its affiliates are hereby authorized to execute such other documents and to take such actions as they may deem necessary or appropriate to implement the Cingular Plan and to carry out the intent and purposes of the foregoing resolutions as shall be necessary to comply with the requirements of the Internal Revenue Code, the Employee Retirement Income Security Act and all other applicable laws; and

RESOLVED, all prior actions taken by any officer of the Corporation and any officers of the Company in connection with the foregoing resolutions are hereby ratified.

EXHIBIT A

SBC Communications Inc.

SUPPLEMENTAL RETIREMENT INCOME PLAN

Effective: January 1, 1984

Revisions Effective: October 1, 2000

Attachment (Agreement)

1.           PURPOSE.  The purpose of the Supplemental Retirement Income Plan ("Plan") is to provide Eligible Employees with retirement benefits to supplement benefits payable pursuant to SBC's qualified group pension plans.

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

ADMINISTRATIVE COMMITTEE.  "Administrative Committee" means a Committee consisting of the Senior Executive Vice President-Human Resources and two or more other members designated by the Senior Executive Vice President-Human Resources who shall administer the Plan.

AGREEMENT.  "Agreement" means the written agreement (substantially in the form attached to this Plan) that shall be entered into between SBC by the Senior Executive Vice President-Human Resources and a Participant to carry out the Plan with respect to such Participant.  Entry into a new Agreement shall not be required upon amendment of the Plan or upon an increase in a Participant's Retirement Percent (which increase shall nevertheless be utilized to determine the Participant's benefits hereunder even though not reflected in the Participant's Agreement), except entry into a new Agreement shall be required in the case of an amendment which alters, to the detriment of a Participant, the benefits described in this Plan as applicable to such Participant (See Section 6.5).  Such new Agreement shall operate as the written consent required by Section 6.5 of the Participant to such amendment.

BENEFICIARY.  "Beneficiary" shall mean any beneficiary or beneficiaries designated by the Eligible Employee pursuant to the SBC Rules for Employee Beneficiary Designations as may hereafter be amended from time-to-time ("Rules").

CHAIRMAN.  "Chairman" shall mean the Chairman of the Board of SBC Communications Inc.

DISABILITY.  "Disability" means any Termination of Employment prior to being Retirement Eligible that the Administrative Committee, in its complete and sole discretion, determines is by reason of a Participant's total and permanent disability.  The Administrative Committee may require that the Participant submit to an examination by a competent physician or medical clinic selected by the Administrative Committee.  On the basis of such medical evidence, the determination of the Administrative Committee as to whether or not a condition of total and permanent disability exists shall be conclusive.

EARNINGS.  "Earnings" means for a given calendar year the Participant's: (1) bonus made as a short term award during the calendar year but not exceeding 200% of the target amount of such bonus (or such other portion of the bonus as may be determined by the Human Resources Committee of the Board of SBC), plus (2) base salary before reduction due to any contribution pursuant to any deferred compensation plan or agreement provided by SBC, including but not limited to compensation deferred in accordance with Section 401(k) of the Internal Revenue Code.

ELIGIBLE EMPLOYEE.  "Eligible Employee" means an Officer or a non-Officer employee of any SBC company who is designated by the Chairman as eligible to participate in the Plan.  Effective on and after July 1, 1994, only an Officer may become an Eligible Employee.

FINAL AVERAGE EARNINGS.  "Final Average Earnings" means the average of the Participant's Monthly Earnings for the thirty-six (36) consecutive months out of the one hundred twenty (120) months next preceding the Participant's Termination of Employment which yields the highest average earnings.  If the Participant has fewer than thirty-six (36) months of employment, the average shall be taken over his or her period of employment.

IMMEDIATE ANNUITY VALUE.  "Immediate Annuity Value" means the annual amount of annuity payments that would be paid out of a plan on a single life annuity basis if payment of the plan's benefit was commenced immediately upon Termination of Employment, notwithstanding the form of payment of the plan's benefit actually made to the Participant (i.e., joint and survivor annuity, lump sum, etc.) and notwithstanding the actual commencement date of the payment of such benefit.

MID-CAREER HIRE.  "Mid-Career Hire" means an individual hired or rehired at age 35 or older (i) into a position eligible for benefits under this Plan or (ii) who is subsequently promoted to a position eligible for benefits under this Plan.

MONTHLY EARNINGS.  "Monthly Earnings" means one-twelfth (1/12) of Earnings.

OFFICER.  "Officer" shall mean an individual who is designated by the Chairman as eligible to participate in the Plan who is an elected officer of SBC or of any SBC subsidiary (direct or indirect).

PARTICIPANT.  A "Participant" means an Eligible Employee who has entered into an Agreement to Participate in the Plan.

RETIREMENT.  "Retirement" shall mean the Termination of Employment of an Eligible Employee for reasons other than death, on or after the earlier of the following dates: (1) the date the Eligible Employee is Retirement Eligible or (2) the date the Eligible Employee has attained one of the following combinations of age and service at Termination of Employment on or after April 1, 1997, except as otherwise indicated below:

Net Credited Service	Age
10 years or more	65 or older
20 years or more	55 or older
25 years or more	50 or older
30 years or more	Any age

With respect to an Eligible Employee who is granted an EMP Service Pension under and pursuant to the provisions of the SBC Pension Benefit Plan - Nonbargained Program ("SBCPBP") upon Termination of Employment, the term "Retirement" shall include such Eligible Employee's Termination of Employment.

RETIREMENT ELIGIBLE.  "Retirement Eligible" or "Retirement Eligibility" means that a Participant has attained age 55; provided, however, if (1) the Participant is, or has been within the one year period immediately preceding the relevant date, an Officer with 30 or more Years of Service and has not attained age 55, or (2) the Participant has 15 or more Years of Service and has not attained age 55 and is, or has been within the one year period immediately preceding the relevant date, the Chairman or a Direct Reporting Officer as such term is defined in SBC's Schedule of Authorizations, he shall nevertheless be deemed to be Retirement Eligible.  Note: Any reference in any other SBC plan to a person being eligible to retire with an immediate pension pursuant to the SBC Supplemental Retirement Income Plan shall be interpreted as having the same meaning as the term Retirement Eligible.

RETIREMENT PERCENT.  "Retirement Percent" means the percent specified in the Agreement with the Participant which establishes a Target Retirement Benefit (see Section 3.1) as a percentage of Final Average Earnings.

SBC.  "SBC" means SBC Communications Inc.

SERVICE FACTOR.  "Service Factor" means, unless otherwise agreed in writing by the Participant and SBC, either (a) a deduction of 1.43 percent, or .715 percent for Mid-Career Hires, multiplied by the number by which (i) thirty-five (or thirty in the case of an Officer) exceeds (ii) the number of Years of Service of the Participant, or (b) a credit of 0.71 percent multiplied by the number by which (i) the number of Years of Service of the Participant exceeds (ii) thirty-five (or thirty in the case of an Officer).  For purposes of the above computation, a deduction shall result in the Service Factor being subtracted from the Retirement Percent whereas a credit shall result in the Service Factor being added to the Retirement Percent.

TERMINATION OF EMPLOYMENT.  "Termination of Employment" means the ceasing of the Participant's employment from the SBC controlled group of companies for any reason whatsoever, whether voluntarily or involuntarily.

YEAR.  A "Year" is a period of twelve (12) consecutive calendar months.

YEAR OF SERVICE.  "Year of Service" means each complete Year of continuous, full-time service as an employee beginning on the date when a Participant first began such continuous employment with any SBC company and on each anniversary of such date, including service prior to the adoption of this Plan.

3.           PLAN ("SRIP") BENEFITS.

3.1           TERMINATION OF EMPLOYMENT/VESTING.  With respect to (1) a person who becomes a Participant prior to January 1, 1998, or (2) a person who prior to January 1, 1998 is an officer of a Pacific Telesis Group ("PTG") company and becomes a Participant after January 1, 1998, upon such a Participant's Termination of Employment, SBC shall pay to such Participant a monthly SRIP Benefit in accordance with Section 3.3.  The amount of such monthly SRIP Benefit is calculated as follows:

Final Average Earnings:

Revised Retirement Percentage

Target Retirement Benefit

Immediate Annuity Value of any SBC/PTG Qualified Pensions

Immediate Annuity Value of any other SBC/PTG Non-Qualified Pensionsother than SRIP

Target Benefit

Age Discount

SRIP Benefit immediately payable upon Termination of Employment

With respect to a person who is appointed an Officer and becomes a Participant on or after January 1, 1998, upon such a Participant's Termination of Employment, SBC shall pay to such Participant a monthly SRIP Benefit in accordance with Section 3.3.  The amount of such monthly SRIP Benefit is calculated as follows:

Final Average Earnings

Revised Retirement Percentage

Target Retirement Benefit

Age Discount

Discounted Target Benefit

Immediate Annuity Value of any SBC/PTG Qualified Pensions

Immediate Annuity Value of any SBC/PTG Non-Qualified Pensions, other than SRIP

SRIP Benefit immediately payable upon Termination of Employment

Where in both of the above cases the following apply:

(a)           Revised Retirement Percentage = Retirement Percent + Service Factor.

(b)           For purposes of determining the Service Factor, the Participant's actual Years of Service as of the date of Termination of Employment, to the day, shall be used.

(c)           For purposes of determining the Final Average Earnings, the Participant's Earnings history as of the date of Termination of Employment shall be used.

(d)           Age Discount means the Participant's SRIP Benefit shall be decreased by five-tenths of one percent (.5%) for each month that the date of the commencement of payment precedes the date on which the Participant will attain age 60.

Notwithstanding the foregoing, if at the time of Termination of Employment the Participant (1) is, or has been within the one year period immediately preceding Participant's Termination of Employment, an Officer with 30 or more years of Service or (2) has 15 or more Years of Service and is, or has been within the one year period immediately preceding Participant's Termination of Employment, the Chairman or a Direct Reporting Officer, such Participant's Age Discount shall be zero.

Except to true up for an actual short term award paid following Termination of Employment, there shall be no recalculation of a Participant's monthly SRIP Benefit following Participant's Termination of Employment.

If a Participant who has commenced payment of his or her SRIP Benefit dies, his or her Beneficiary shall be entitled to receive the remaining installments of such SRIP Benefit, if any, which are payable in accordance with Section 3.3.  If a Participant dies while in active service, Section 4 shall apply.

Notwithstanding any other provision of this Plan, upon any Termination of Employment of the Participant for a reason other than death or Disability, SBC shall have no obligation to the Participant under this Plan if the Participant has less than 5 Years of Service at the time of Termination of Employment.

3.2           DISABILITY.  Upon a Participant's Disability and application for benefits under the Social Security Act as now in effect or as hereinafter amended, the Participant will continue to accrue Years of Service during his or her Disability until the earliest of his or her:

(a)           Recovery from Disability,

(b)           Retirement, or

(c)           Death.

Upon the occurrence of either (a) Participant's recovery from Disability prior to his or her Retirement Eligibility if Participant does not return to employment, or (b) Participant's Retirement, the Participant shall be entitled to receive a SRIP Benefit in accordance with Section 3.1.

For purposes of calculating the foregoing benefit, the Participant's Final Average Earnings shall be determined using his or her Earnings history as of the date of his or her Disability.

If a Participant who continues to have a Disability dies prior to his or her Retirement Eligibility, the Participant will be treated in the same manner as if he or she had died while in employment (See Section 4.1).

3.3           BENEFIT PAYOUT ALTERNATIVES.  The normal form of a Participant's benefits hereunder shall be a Life with 10-Year Certain Benefit as described in Section 3.3(a).  However, a Participant may elect in his or her Agreement to convert his or her benefits hereunder, into one of the Alternative Benefits described in Section 3.3(b) and (c).

(a)           LIFE WITH A 10-YEAR CERTAIN BENEFIT.  An annuity payable during the longer of (i) the life of the Participant or (ii) the 10-year period commencing on the date of the first payment and ending on the day next preceding the tenth anniversary of such date (the "Life With 10-Year Certain Benefit").  If a Participant who is receiving a Life with 10-Year Certain Benefit dies prior to the expiration of the 10-year period described in this Section 3.3(a), the Participant's Beneficiary shall be entitled to receive the remaining Life With 10-Year Certain Benefit installments which would have been paid to the Participant had the Participant survived for the entire such 10-year period.

(b)           JOINT AND 100% SURVIVOR BENEFIT.  A joint and one hundred percent (100%) survivor annuity payable for life to the Participant and at his or her death to his or her Beneficiary, in an amount equal to one hundred percent (100%) of the amount payable during the Participant's life, for life (the "Joint and 100% Survivor Benefit").

(c)           JOINT AND 50% SURVIVOR BENEFIT.  A joint and fifty percent (50%) survivor annuity payable for life to the Participant and at his or her death to his or her Beneficiary, in an amount equal to fifty percent (50%) of the amount payable during the Participant's life, for life (the "Joint and 50% Survivor Benefit").

The Benefit Payout Alternatives described in Section 3.3(b) and 3.3(c) shall be the actuarially determined equivalent (as determined by the Administrative Committee in its complete and sole discretion) of the Life With 10-Year Certain Benefit that is converted by such election.

Any election made pursuant to this Section 3.3 shall be made in the Participant's Agreement and once made shall be irrevocable.  Notwithstanding the foregoing, a Participant may elect in his or her Agreement to defer the time by which he or she is required to elect one of the foregoing forms of Benefit Payout Alternatives.  Any such deferred election must be made by the Participant in writing to the Administrative Committee no later than the last day of the calendar year preceding the calendar year in which Participant's Retirement takes place or other benefit payment under this Plan commences.

If a Participant's Agreement fails to show an election of a Benefit Payout Alternative, or if the Participant having chosen to defer his or her benefit election, fails to make a timely election of benefits, such Participant's form of benefit shall be the Life With 10-Year Certain Benefit which is described in Section 3.3(a).

Notwithstanding the foregoing, in the event of the death of a designated annuitant during the life of the Participant, the Participant's election to have a Benefit Payout Alternative described in Section 3.3(b) or 3.3(c) shall be deemed to be revoked, in which event, subject to the conditions and limitations specified in the immediately preceding paragraph, or within the ninety-day period following the death of the annuitant if such period would end later than the time allowed for an election by the immediately preceding paragraph, the Participant may elect to have his or her benefit, or remaining benefit, under the Plan, as the case may be, paid in any of the forms described in this Section 3.3.  In the event the Participant's designated annuitant predeceases the Participant and the Participant fails to make a timely election in accordance with the provisions of the immediately preceding sentence, the Participant's benefit, or remaining benefit, as the case may be, shall be paid or reinstated, as the case may be, in the form of a Life With 10-Year Certain Benefit as described in Section 3.3(a).  Any conversion of benefit from one form to another pursuant to the provisions of this paragraph shall be subject to actuarial adjustment (as determined by the Administrative Committee in its complete and sole discretion) such that the Participant's new benefit is the actuarial equivalent of the Participant's remaining prior form of benefit.  Payments pursuant to Participant's new form of benefit shall be effective commencing with the first monthly payment for the month following the death of the annuitant.

Notwithstanding any other provision of this Plan to the contrary, payment in the form of a Benefit Payout Alternative described in Section 3.3(b) or 3.3(c), with a survivor annuity for the benefit of the Participant's spouse as Beneficiary, may be waived by the annuitant with the consent of the Participant in the event of the divorce (or legal separation) of said annuitant from said Participant. In such event, the Participant's benefit shall be reinstated to the remainder of the Life with 10-Year Certain Benefit as described in Section 3.3(a) (i.e., the 10-Year period as described in Section 3.3(a) shall be the same 10-year period as if such form of benefit was the form of benefit originally selected and the expiration date of such period shall not be extended beyond its original expiration date) effective commencing with the first monthly payment following receipt of the waiver and Participant consent in a form acceptable to the Administrative Committee.  A waiver of the type described in this paragraph shall be irrevocable.

4.  DEATH BENEFITS

4.1           Death.  If a Participant dies prior to his or her Retirement, a pre-retirement death benefit will be calculated and paid as though the Participant had retired on the day prior to the date of death.  Notwithstanding the provisions of Section 3.3, if a Participant's Agreement fails to show an election of a Benefit Payout Alternative, or if the Participant, having chosen to defer his benefit election, failed to make a timely election of benefits prior to his death, the form of the pre-retirement death benefit shall, at the option of the Participant's Beneficiary, be either the Life With 10-Year Certain Benefit form of the Participant's benefit or a Beneficiary Life Annuity (as such term is hereinafter described) based on the life expectancy of the Beneficiary.  If paid as a Beneficiary Life Annuity based on the Life of the Beneficiary, such benefit shall be the actuarially determined equivalent (as determined by the Administrative Committee in its complete and sole discretion) of the Life With 10-Year Certain Benefit; provided, however, should the Beneficiary die prior to the payment to the Beneficiary of the total dollar amount of the Life with 10-Year Certain Benefit, the remaining dollar balance of such Life With 10-Year Certain Benefit shall be paid in accordance with the Participant's beneficiary designation and the Rules at the same monthly rate of payment as would have been the monthly payment pursuant to the 10-year payment schedule had the Life With 10-Year Certain Benefit been selected.

4.2           Disability.  In the event that a Participant terminates employment prior to Retirement by reason of a Disability that entitles the Participant to continue to accrue Years of Service until Retirement Eligibility pursuant to Section 3.2 and thereafter dies after attaining Retirement Eligibility, the Employer shall pay to the Participant's Beneficiary the Death Benefit specified in Section 4.1 based on the Participant's Monthly Earnings for the twelve (12) months preceding his or her Disability.  No death benefit shall be payable if the Participant dies prior to attaining Retirement Eligibility.

4.3           Termination of Employment. If a Participant terminates employment other than by reason of Disability prior to Retirement Eligibility, no death benefit shall be payable to the Participant's Beneficiary.

5.           PAYMENT.

5.1           Commencement of Payments.  Commencement of payments under this Plan shall begin not later than sixty (60) days following the occurrence of an event with entitles a Participant (or a Beneficiary) to payments under this Plan.

5.2           Withholding, Unemployment Taxes.  To the extent required by the law in effect at the time payments are made, any taxes required to be withheld by the Federal or any state or local government shall be withheld from payments made hereunder.

5.3           Recipients of Payments; Designation of Beneficiary.  All payments to be made under the Plan shall be made to the Participant during his or her lifetime, provided that if the Participant dies prior to the completion of such payments, then all subsequent payments under the Plan shall be made to the Participant's Beneficiary or Beneficiaries.

In the event of the death of a Participant, distributions/benefits under this Plan shall pass to the Beneficiary(ies) designated by the Participant in accordance with the Rules.

5.4           Additional Benefit.  The reduction of any benefits payable under the SBC Pension Plan ("SBCPBP"), which results from participation in the SBC Senior Management Deferred Compensation Program of 1988, will be restored under this Plan.

5.5           No Other Benefits.  No benefits shall be paid hereunder to the Participant or his or her Beneficiary except as specifically provided herein.

5.6           Small Benefit.  Notwithstanding any election made by the Participant, the Administrative Committee in its sole discretion may pay any benefit in the form of a lump sum payment if the lump sum equivalent amount is or would be less than $10,000 when payment of such benefit would otherwise commence.

5.7           Special Increases.

5.7.1                               1990 Special Increase.  Notwithstanding any other provision of this Plan to the contrary:

(a)           Effective July 1, 1990, the monthly pension benefit amount then being paid hereunder to a retired Participant whose Plan payments began before January 1990 shall be increased by 1/30 of 5.0% for each month from and including January 1998 or the month in which said Participant's pension payments began, whichever is later, through and including June 1990, inclusive.

(b)           Effective July 1, 1990, the present and/or future monthly payment hereunder of a surviving annuitant of a Participant whose Plan payments began before January 1990 or of a Participant who died in active service before January 1990, shall be increased by the same percentage as the related pension was or would have been increased under the provisions of Paragraph (a) of this Section 5.7.1.

5.7.2                               Enhanced Management Pension (EMP) Flow-Through For Participant Receiving Other Than an SBCPBP "Cash Balance" Benefit.  Notwithstanding any other provision of this Plan to the contrary.

(a)           Effective December 30, 1991, a Participant who as of the date of his or her Retirement satisfies the requirements for a service pension under the terms of the SBCPBP as it existed prior to December 30, 1991, shall have his or her SRIP Benefit determined without subtracting any increase in his or her SBCPBP (or successor plan) pension amount attributable to the Enhanced Management Pension ("EMP") provisions thereof, i.e., EMP benefits will "flow-through" to the Participant; provided, however, such additional benefit amounts corresponding to term of employment extending beyond age 65 through application of the EMP provisions shall be subtracted.

(b)           EMP flow-through shall not apply in the case of any person who becomes an Eligible Employee after December 31, 1997.

5.7.3                               1993 Special Increase and Subsequent Special Increases. Notwithstanding any other provisions of this Plan to the contrary:

(a)           Effective July 1, 1993, the monthly pension benefit amount then being paid hereunder to (1) all retired Participants whose Plan payments began before July 1, 1993, (2) then current and contingent annuitants of such retired Participants who elected one of the Plan's survivor annuities and (3) then current annuitants of employees who before  July 1, 1993 died in active service shall be increased in the same percentages as the SBCPBP ad hoc pension increase percentages effective July 1, 1993.

(b)           Any time after July 1, 1993 that SBCPBP is amended to provide for an ad hoc pension increase for SBCPBP nonbargained participants, the same percentage increase shall apply to Plan benefit amounts.

6.           CONDITIONS RELATED TO BENEFITS.

6.1           Administration of Plan.  The Administrative Committee shall be the sole administrator of the Plan and will administer the Plan, interpret, construe and apply its provisions in accordance with its terms.  The Administrative Committee shall further establish, adopt or revise such rules and regulations as it may deem necessary or advisable for the administration of the Plan.  All decisions of the Administrative Committee shall be final and binding unless the Board of Directors should determine otherwise.

6.2           No Right to SBC Assets.  Neither a Participant nor any other person shall acquire by reason of the Plan any right in or title to any assets, funds or property of any SBC company whatsoever including, without limiting the generality of the foregoing, any specific funds or assets which SBC, in its sole discretion, may set aside in anticipation of a liability hereunder, nor in or to any policy or policies of insurance on the life of a Participant owned by SBC.  No trust shall be created in connection with or by the execution or adoption of this Plan or any Agreement, and any benefits which become payable hereunder shall be paid from the general assets of SBC.  A Participant shall have only a contractual right to the amounts, if any, payable hereunder unsecured by any asset of SBC.

6.3           Trust Fund.  SBC shall be responsible for the payment of all benefits provided under the Plan.  At its discretion, SBC may establish one or more trusts, for the purpose of providing for the payment of such benefits.  Such trust or trusts may be irrevocable, but the assets thereof shall be subject to the claims of SBC's creditors.  To the extent any benefits provided under the Plan are actually paid from any such trust, SBC shall have no further obligation with respect thereto, but to the extent not so paid, such benefits shall remain the obligation of, and shall be paid by SBC.

6.4           No Employment Rights.  Nothing herein shall constitute a contract of continuing employment or in any manner obligate any SBC company to continue the service of a Participant, or obligate a Participant to continue in the service of any SBC company and nothing herein shall be construed as fixing or regulating the compensation paid to a Participant.

6.5           Modification or Termination of Plan.  This Plan may be modified or terminated at any time in accordance with the provisions of SBC's Schedule of Authorizations.  A modification may affect present and future Eligible Employees.  SBC also reserves the sole right to terminate at any time any or all Agreements.  In the event of termination of the Plan or of a Participant's Agreement, a Participant shall be entitled to benefits hereunder, if prior to the date of termination of the Plan or of his or her Agreement, such Participant has attained 5 Years of Service, in which case, regardless of the termination of the Plan/Participant's Agreement, such Participant shall be entitled to benefits at such time as provided in and as otherwise in accordance with the Plan and his or her Agreement, provided, however, Participant's benefit shall be computed as if Participant had terminated employment as of the date of termination of the Plan or of his or her Agreement; provided further, however, Participant's service subsequent to Plan/Agreement termination shall be recognized for purposes of reducing or eliminating the Age discount provided for by Section 3.1(d).  No amendment, including an amendment to this Section 6.5, shall be effective, without the written consent of a Participant, to alter, to the detriment of such Participant, the benefits described in this Plan as applicable to such Participant as of the effective date of such amendment.  For purposes of this Section 6.5, an alteration to the detriment of a Participant shall mean a reduction in the amount payable hereunder to a Participant to which such Participant would be entitled if such Participant terminated employment at such time, or any change in the form of benefit payable hereunder to a Participant to which such Participant would be entitled if such Participant terminated employment at such time.  Any amendment which reduces Participant's benefit hereunder to adjust for a change in his or her pension benefit resulting from an amendment to any company-sponsored defined benefit pension plan which changes the pension benefits payable to all employees, shall not require the Participant's consent.  Written notice of any amendment shall be given to each Participant.

6.6           Offset.  If at the time payments or installments of payments are to be made hereunder, a Participant or his Beneficiary or both are indebted to any SBC company, then the payments remaining to be made to the Participant or his Beneficiary or both may, at the discretion of the Board of Directors, be reduced by the amount of such indebtedness; provided, however, that an election by the Board of Directors not to reduce any such payment of payments shall not constitute a waiver of such SBC company's claim for such indebtedness.

6.7           Change in Status.  In the event of a change in the employment status of a Participant to a status in which he is no longer an Eligible Employee, the Participant shall immediately cease to be eligible for any benefits under this Plan except such benefits as had previously vested.  Only Participant's Years of Service and Earnings history prior to the change in his employment status shall be taken into account for purposes of determining Participant's vested benefits hereunder.

7.           MISCELLANEOUS.

7.1           Nonassignability.  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 of the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are, expressly declared to be unassignable and non-transferable.  No part of the amounts payable shall, prior to actual payment, 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.

7.2           Non-Competition.  Notwithstanding any other provision of this Plan, all benefits provided under the Plan with respect to a Participant shall be forfeited and canceled in their entirety if the Participant, without the consent of SBC and while employed by SBC or any subsidiary thereof or within three (3) years after termination of such employment, engages in competition with SBC or any subsidiary thereof or with any business with which SBC or a subsidiary or affiliated company has a substantial interest (collectively referred to herein as "Employer business") and fails to cease and desist from engaging in said competitive activity within 120 days following receipt of written notice from SBC to Participant demanding that Participant cease and desist from engaging in said competitive activity.  For purposes of this Plan, engaging in competition with any Employer business shall mean engaging by the Participant in any business or activity in the same geographical market where the same or substantially similar business or activity is being carried on as an Employer business.  Such term shall not include owning a nonsubstantial publicly traded interest as a shareholder in a business that competes with an Employer business.  However, engaging in competition with an Employer business 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. Accordingly, benefits shall not be provided under this Plan if, within the time period and without the written consent specified, Participant either engages directly in competitive activity or in any capacity in any location becomes employed by, associated with, or renders service to any company, or parent or affiliate thereof, or any subsidiary of any of them, if any of them is engaged in competition with an Employer business, regardless of the position or duties the Participant takes and regardless of whether or not the employing company, or the company that Participant becomes associated with or renders service to, is itself engaged in direct competition with an Employer business.

7.3           Notice.  Any notice required or permitted to be given to the Administrative Committee under the Plan shall be sufficient if in writing and hand delivered, or sent by certified mail, to the principal office of SBC, directed to the attention of the Senior Vice President-Human Resources.  Any notice required or permitted to be given to a Participant shall be sufficient if in writing and hand delivered, or sent by certified mail, to Participant at Participant'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.

7.4           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.

7.5           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").

7.6           Plan Provisions in Effect Upon Termination of Employment.  The Plan provisions in effect upon a Participant's termination of employment shall govern the provision of benefits to such Participant.  Notwithstanding the foregoing sentence, the benefits of a Participant whose Retirement occurred prior to February 1, 1989, shall be subject to the provisions of Section 3.3 hereof.

SBC COMMUNICATIONS INC.

PENSION BENEFIT MAKE UP PLAN #1

Effective:  January 1, 1995

Revisions Effective: December 1, 1998

Section 1.                                         Purpose:  The purpose of the SBC Communications Inc. ("SBC") Pension Benefit Make Up Plan #1 ("Plan"), formerly named the SBC Pension Benefit Make Up Plan, is to recognize, for pension computation purposes, certain compensation being excluded in the determination of retirement benefits under SBC's qualified SBC Pension Benefit Plan or other qualified pension plan(s) of any subsidiary of SBC ("Pension Plan").  Recognition of such compensation by this Plan will make up benefits to eligible employees that would otherwise be lost because such compensation is not recognized in the determination of retirement benefits under the Pension Plan.

Section 2.                                         Background:  The Omnibus budget Reconciliation Act of 1993 reduced the amount of annual compensation recognized under the Pension Plan from $235,840 to $150,000 (as indexed) effective for plan years beginning January 1, 1994, i.e., for pension calculations using the January 1, 1989 to December 31, 1993 pay base averaging period.  As a result, compensation in excess of $150,000 (as indexed) may not be recognized in the determination of the Pension Plan's retirement benefits.  Further, compensation paid pursuant to the SBC Communications Inc. Short Term Incentive Plan ("STIP") is not recognized in the determination of Pension Plan retirement benefits, but is recognized in the determination of retirement benefits provided under the SBC Communications Inc. Supplemental Retirement Income Plan ("SRIP").  Since 1994, newly promoted senior managers have not been made eligible for SRIP benefits (SRIP benefits have been limited to only officer level promotions).  As a result, STIP compensation for newly promoted senior managers receiving such compensation is not recognized in the determination of their retirement benefits.  This is inconsistent with the treatment afforded all other managers who have either their STIP award or TEAM award, as applicable, recognized for purposes of determining their retirement benefits.  Also, limiting the compensation of these newly promoted senior managers and of other eligible managers that may be recognized for purposes of determining retirement benefits to $150,000 (as indexed) is inconsistent with other senior managers who are eligible for SRIP benefits and other managers, respectively, whose recognizable compensation is not limited in this manner.

Finally, effective December 1, 1998, the Plan is revised to modify its rules for making payouts.

Section 3.                                         Eligibility:  Participation in this Plan is limited to General Management level (i.e., former third/fourth level) or above (or equivalent) Pension Plan participants in any subsidiary of SBC, ("Subsidiary") who meet one or both of the following: (1) who are not eligible for SRIP benefits and who receive a STIP award; (2) who are not eligible for SRIP benefits and whose annual compensation exceeds the compensation recognizable by the Pension Plan pursuant to Section 401 (a) (17) of the Internal Revenue Code ("IRC"). Eligibility for this Plan shall be interpreted in the broadest possible sense in order that this Plan can recognize all base salary and annual incentive type awards, whenever earned, for the purpose of making up any benefit that would otherwise be lost due to the fact that the Pension Plan is unable to recognize any such compensation in determining retirement benefits.

Section 4.                                         Benefits/Payout Alternatives:  The benefits payable pursuant to the Plan, hereinafter the "Make Up Benefit", is equal to the amount that would be payable under the Pension Plan determined without regard to the IRS Section 401(a)(17) limit and without regard to deferrals under any SBC non-qualified plan, and including STIP compensation as compensation recognized in the determination of benefits, less the amount actually payable as a qualified plan benefit under the Pension Plan (including Section 415 excess amounts), and less the amount payable as a Pension Plan make up amount under any other non-qualified plan sponsored by SBC, other than the SBC Mid Career Hire Plan (see Attachment for example calculation).  If the benefit payable as a Pension Plan make up amount under any other non-qualified plan is not payable in the same form and manner as are pension payments from the Pension Plan, the reduction for such benefit shall be based on the benefit that would have been payable under such other non-qualified plan had it been payable in the same form and manner.  If such form and manner is not available under such plan, such reduction will be actuarially determined, based on factors in effect under the Pension Plan for converting one optional form of benefit to another.  The payment of the Make Up Benefit pursuant to this Plan shall be made by the Subsidiary which last employed the eligible employee entitled to benefits under this Plan.

This Plan shall be applied with respect to employees in active service on or after January 1, 1995.  The Plan will provide Make Up Benefits to make up benefits for such persons that would otherwise have been lost on or after January 1, 1994 resulting because of the retroactive application of the IRC Section 401 (a) (17) limit.

Notwithstanding the preceding provisions of this Section, if all or a portion of the Make Up Benefit is paid or becomes payable pursuant to the Pension Plan, SRIP, or any other non-qualified plan, then such amount shall not be payable pursuant to this Plan.

Make Up Benefits under the Plan shall be excluded in determining benefits under any pension, retirement, savings, disability, death or other benefit plans of SBC or any Subsidiary, except where required by law.

All applicable federal, state and local taxes required by law to be withheld shall be deducted from Make Up Benefits paid under this Plan.

If any overpayment is made by the Plan for any reason, the Plan shall have the right to recover such overpayment.  The participant shall cooperate fully with the Plan to recover any overpayment and provide any necessary information and required documents.  Any overpayments may be deducted from future benefits payable to or on behalf of the participant from this or any other non-qualified SBC plan.

Payments of an individual's Make Up Benefit shall be made coincident with and in the same form and manner as are pension payments from the Pension Plan, i.e., such payments shall be made in the same lump sum, single life or joint and survivor annuity form of payment as are payments from the Pension Plan (including payments to the survivor annuitant in the event of the participant's death) and shall be subject to any other reductions applicable to the individual's Pension Plan payments.

Notwithstanding the foregoing, if a participant elects a lump sum payment from the Pension Plan and the present value of the total of all non-qualified Pension Plan make up payments exceeds $50,000, the Make Up Benefit will be paid in monthly installments over 10 years.  The monthly installment payments shall be calculated in the same way that a financial institution would calculate the monthly payments for a 10-year fixed interest loan.  The interest rate used in the calculations shall be equal to the Pension Plan's Interest Rate in effect on the participant's Benefit Commencement Date for payments under the Pension Plan.

A participant may designate a beneficiary(ies) to receive any remaining payments for which the participant has the right to designate a beneficiary if the participant dies before all payments are made.

Section 5.                                         Administration:  The Senior Executive Vice President-Human Resources ("SEVP-HR") or the SEVP-HR's successor shall be the sole administrator of the Plan and will administer the Plan, interpret, construe and apply its provisions in accordance with its terms.  The SEVP-HR shall further establish, adopt or revise such rules and regulations as the SEVP-HR may deem necessary or advisable for the administration of the Plan. All decisions of the SEVP-HR shall be final and binding.

Section 6.                                         Small Distribution:  Notwithstanding any other provision of this Plan, the Subsidiary paying a Make Up Benefit to an individual hereunder may distribute such benefit in the form of a lump sum distribution if the present value of such distribution is less than $10,000 when such distribution would otherwise commence.

Section 7.                                         Loss Of Eligibility:  In the event that any participant ceases to be an eligible employee by reason of a change to an employment status which is not eligible to participate in this Plan, such participant shall nevertheless continue to be eligible to receive benefits under this Plan however, no additional benefits shall be accrued under this Plan.  Notwithstanding the preceding sentence of this Section, if a participant ceases to be eligible for this Plan and becomes eligible to receive the equivalent of his/her Make Up Benefit or a portion thereof pursuant to another non-qualified plan sponsored by SBC, to the extent such Make Up Benefit is paid pursuant to such other plan, no duplication of such payment shall be made pursuant to this Plan.

Section 8.                                         Ineligible Participant:  Notwithstanding any other provision of this Plan to the contrary, if any participant in this Plan is determined not to be "in a select group of management or highly compensated employees" within the meaning of the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended, or regulations thereunder, such participant will not be eligible to continue to participate in this Plan and shall receive an immediate lump sum distribution of the Make Up Benefits payable pursuant to this Plan.  Such Make Up Benefits shall be determined as though the participant had terminated employment on the date such participant is deemed to be ineligible. Upon such payment, no other distribution shall thereafter be payable under this Plan.

Section 9.                                         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 SBC or any Subsidiary.  No assets shall be held under any trust for the benefit of employees, their beneficiaries, heirs, successors, or assigns, or held in any way as collateral security for the fulfilling of the obligations under this Plan.  Any and all of SBC's or any Subsidiary's assets shall be, and remain, the general, unpledged, unrestricted assets of SBC or any such Subsidiary.  SBC's or any Subsidiary's obligation under the Plan shall be merely that of an unfunded and unsecured promise of SBC or any such Subsidiary to distribute cash under the Plan in the future.

Section 10.                                         Nonassignability:  Neither a participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage, or otherwise encumber, hypothecate or convey in advance of actual receipt, any part or all of the amounts payable hereunder, which are and all rights to which are, expressly declared to be nonassignable and nontransferable.  No such amounts shall be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separation 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.  Any such attempted assignments to transfer shall be void.

Section 11.                                         Employment Not Guaranteed:  Nothing contained in this Plan nor any action taken hereunder shall be constructed as a contract of employment or as giving any employee any right to be retained in the employ of SBC or any Subsidiary.

Section 12.                                         Applicable Law:  This Plan shall be governed by and interpreted in accordance with ERISA.  Further, the Plan shall be construed, administered, and enforced according to the applicable laws of the State of Texas to the extent such laws are not preempted by ERISA.  Nothing herein shall be construed as waiving any preemption of the application of state law to the Plan to the extent such preemption is provided under ERISA.

Section 13.                                         Amendment:  The Plan may at any time be amended or terminated in accordance with the provisions of SBC's Schedule of Authorizations , but such changes or termination shall not adversely effect the rights of any eligible employee, without his or her written consent, to any Make Up Benefit payable under the Plan to which such employee may have previously become entitled prior to the effective date of such change or termination.

Section 14.                                         Beneficiary(ies):  The SBC Rules for Employee Beneficiary Designations as may hereafter be amended from time to time ("Rules"), which Rules are incorporated herein by this reference, shall apply hereunder to the extent that a participant shall have the right to designate a beneficiary to receive any benefits hereunder.  For purposes of this Plan, "beneficiary" shall thus mean any beneficiary or beneficiaries designated by the participant pursuant to the Rules, or otherwise determined pursuant to such Rules if the participant fails to designate a beneficiary.

Section 15.                                         Special Increases:  Notwithstanding any other provisions of this Plan to the contrary, at any time that a Pension Plan is amended to provide for an ad hoc increase in the monthly pension amount then payable under that Pension Plan to a participant or beneficiary hereunder, then the same percentage increase shall apply to this Plan's benefit amount then being paid in the form of a monthly single life annuity, monthly joint and survivor annuity, or monthly survivor annuity.

PENSION BENEFIT MAKE UP PLAN #1

EXAMPLE BENEFIT CALCULATION

Employee:                                            John Doe

Retirement Date:                                 July 1, 1999

Years Service:                                      30

Current Base Salary:                           $181,000

Short Term  (STIP) Award:                $  46,000

$ 8,263  QUALIFIED PENSION-Maximum Potential monthly benefit determined AS IF

1) no non-qualified plan deferrals

2) all STIP awards included

3) no $150,000 (as indexed) compensation limit

less  $ 4,507  QUALIFIED PENSION-Actual monthly benefit determined by

1) excluding non-qualified plan deferrals

2) excluding STIP awards

        3) excluding compensation in excess of $150,000 (as indexed) compensation limit

less  $ 1,698  NON-QUALIFIED DEFERRAL PLAN(S)- Actual monthly amount received as a Pension Plan make up benefit

equals   $ 2,058  PENSION BENEFIT MAKE UP PLAN - Actual monthly Make Up Benefit

SBC Communications Inc.

SUPPLEMENTAL LIFE INSURANCE PLAN

Effective:  January 1, 1986

Revisions Effective:  September 29, 2000

1.Purpose.  The purpose of the Supplemental Life Insurance Plan ("Plan") is to allow for provision of additional survivor benefits for Eligible Employees.

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

ANNUAL BASE SALARY OR ANNUAL SALARY OR SALARY.  "Annual Base Salary" or "Annual Salary" or "Salary" shall mean an Eligible Employee's annual base salary rate determined by SBC, excluding (1) all differentials regarded as temporary or extra payments and (2) all payments and incentive awards and distributions made either as a long term award or as a short term award; and such Salary shall be as before reduction due to any contribution pursuant to any deferred compensation plan or agreement provided by SBC, including but not limited to compensation deferred in accordance with Section 401(k) of the Internal Revenue Code. Annual Salary or Salary shall mean an annualized amount determined from an Eligible Employee's Annual Base Salary rate.

BENEFICIARY.  "BENEFICIARY" shall mean any beneficiary or beneficiaries designated by the Eligible Employee pursuant to the SBC Rules for Employee Beneficiary Designations as may hereafter be amended from time-to-time ("Rules").

CHAIRMAN.  "Chairman" shall mean the Chairman of the Board of SBC Communications Inc.

COMMITTEE.  "Committee" shall mean the Human Resources Committee of the Board of SBC Communications Inc.

ELIGIBLE EMPLOYEE.  "Eligible Employee" shall mean an Officer or a non-Officer employee of any SBC company who is designated by the Chairman as eligible to participate in the Plan.

INSURANCE CONTRACT.  "Insurance Contract" shall mean a contract(s) of life insurance insuring the life of the Eligible Employee entered into by SBC.

OFFICER.  "Officer" shall mean an individual who is designated by the Chairman as eligible to participate in the Plan who is an elected officer of SBC or of any SBC subsidiary (direct or indirect).

RETIREMENT.  "Retirement" shall mean the termination of an Eligible Employee's employment with SBC or any of its subsidiaries, for reasons other than death, on or after the earlier of the following dates: (1) the date the Eligible Employee is Retirement Eligible as term is defined in the SBC Supplemental Retirement Income Plan ("SRIP"); or (2) the date the Eligible Employee has attained one of the following combinations of age and service at termination of employment on or after April 1, 1997, except as otherwise indicated below:

Net Credited Service                                                      Age

10 years or more                                                      65 or older

20 years or more                                                      55 or older

25 years or more                                                      50 or older

30 years or more                                                      Any age

With respect to an Eligible Employee who is granted an EMP Service Pension under and pursuant to the provisions of the SBC Pension Benefit Plan - Nonbargained Program ("SBCPBP") upon termination of Employment, the term  Retirement" shall include such Eligible Employee's termination of employment.

TERMINATION UNDER EPR.  In determining whether an Eligible Employee's termination of employment under the Enhanced Pension and Retirement Program ("EPR") is a Retirement for purposes of this Plan, five years shall be added to each of age and net credited service ("NCS").  If with such additional age and years of service, (1) an Eligible Employee upon such termination of employment under EPR is Retirement Eligible according to the SBC Supplemental Retirement Income Plan ("SRIP") or (2) the Eligible Employee upon such termination of employment under EPR has attained one of the following combinations of age and service,

Actual NCS + 5 Years                                             Actual Age + 5 Years

10 years or more                                                      65 or older

20 years or more                                                      55 or older

25 years or more                                                      50 or older

30 years or more                                                      Any age

then such termination of employment shall be a Retirement for all purposes under this Plan and the Eligible Employee shall be entitled to the treatment under this Plan afforded in the case of a termination of employment which is a Retirement.

SBC.  "SBC" shall mean SBC Communications Inc.

3.           Eligibility.  Each Eligible Employee shall be eligible to participate in the Plan

4.           Pre-Retirement Benefits and Post-Retirement Benefits.

Basic Death Benefit

While this plan is in effect, the Beneficiary who is designated by the Eligible Employee shall be entitled to receive as a Basic Death Benefit from the proceeds of the Insurance Contract an amount equal to the result of multiplying the Eligible Employee's Annual Salary rounded to the next higher $1,000 by the following amounts:

Chief Executive Officer                                                                                               3

Direct Reporting Officer as such term                                                                      2

is defined in SBC's Schedule of Authorizations

Other Eligible Employees                                                                                            1

This amount shall be reduced (but not below zero) by any amount payable under any group term life insurance covering the Eligible Employee which is maintained by SBC, which amount of group term life insurance will be limited to a maximum of $50,000.

The amount of Basic Death Benefit payable hereunder will automatically increase if pay increases.

At Retirement, the pre-retirement benefit converts to a post-retirement benefit. This benefit is equal to one times Salary rounded to the next higher $1,000 (at the time of retirement) and shall be reduced (but not below zero) by any amount payable under any group term life insurance covering the Eligible Employee which is maintained by SBC, which amount of group term life insurance will be limited to a maximum of $50,000; provided, however, for an executive who first becomes a Plan participant on or after January 1, 1998, this post-retirement death benefit shall be reduced by 10% of its original post-retirement amount each year for five years beginning at the later of the date the Eligible Employee attains age 65 or Retirement.

Optional Supplementary Benefit

Subject to the limitations in the remaining paragraphs in this section describing optional supplementary benefits, each Eligible Employee may also purchase optional supplementary pre-retirement life insurance coverage from SBC in an amount equal to one times the Eligible Employee's Annual Salary rounded to the next higher $1,000, and an additional amount of such insurance in an amount equal to another one times such amount (for a total of two times the Annual Salary rounded to the next higher $1,000), which insurance shall be payable from the proceeds of the Insurance Contract. Each such amount of insurance ("one times salary") continued until such employee reaches age 65, by continuing to contribute for it, shall entitle the beneficiary under the Insurance Contract to receive an amount from the proceeds of such Insurance Contract equal to one times the Eligible Employee's final Annual Salary rounded to the next higher $1,000, when such Eligible Employee dies after Retirement.

To elect this optional supplementary coverage, the Eligible Employee must complete an enrollment form on which he or she specifies the amount of coverage he or she wishes to purchase and authorizes his or her employing company to deduct his or her contributions for coverage from his or her salary.

An Eligible Employee may not elect this coverage while receiving disability benefits under any Company disability benefit plan.

An Eligible Employee must make his or her election to purchase optional supplementary coverage within three calendar months of being declared eligible to participate in the Plan; except any Eligible Employee who was declared an Eligible Employee before October 1, 1997, shall have until December 31, 1997 to enroll for such optional supplementary coverage or to increase such coverage.

The optional supplementary life insurance is effective upon SBC's binding of life insurance coverage for the Eligible Employee pursuant to an Insurance Contract.

Effective January 1, 1998, once an Eligible Employee enrolls for optional supplementary coverage, he or she can later decrease or terminate such coverage but never increase or reinstate such coverage.

Regardless of the amount of coverage elected, the amount in force will automatically increase if Salary increases.  The cost for this coverage will increase accordingly.

This optional supplementary life insurance is paid for on a contributory basis by those Eligible Employees who enroll in the coverage.  The cost of coverage, and therefore, how much an Eligible Employee contributes, depends on age and the amount of coverage and shall be as determined by SBC.  There will be no periodic waiver of premium payments.

In the event of death, the Eligible Employee's optional supplementary life insurance benefit will be paid to the Eligible Employee's Beneficiary or Beneficiaries in a lump sum, unless the Salary Continuation Death Benefit form of payment was elected on the Eligible Employee's enrollment form.  The option to elect other than a lump sum payment is limited to an Eligible Employee who became an Eligible Employee on or before January 1, 1998.  If the Eligible Employee has no surviving beneficiaries, the benefit will be paid in a lump sum in accordance with the Rules.

The optional supplementary life insurance coverage hereunder will automatically continue while an Eligible Employee is receiving disability benefits under any SBC disability benefit plan, provided the Eligible Employee continues his or her contributions.  If an Eligible Employee terminates employment with SBC or any of its subsidiaries for any reason other than Retirement, this coverage will stop at the end of the month of termination; provided, however, Eligible Employees who are 65 at the time of their termination will continue to have non-contributory unreduced coverage after age 65.

Alternate Death Benefit

Alternate death benefit coverage shall only be available to an Eligible Employee who became an Eligible Employee before January 1, 1998.  Such Eligible Employees shall be entitled to elect to receive alternate death benefit life insurance coverage; provided such election is made before January 1, 1998.

Under such coverage, an Eligible Employee's Beneficiary or Beneficiaries will be entitled to receive from the proceeds of the Insurance Contract a payment equal to the Eligible Employee's final Annual Salary upon his or her death.  This benefit will not be rounded to the next higher $1,000.  The amount of insurance in force will automatically increase if salary increases.  Coverage applies to death from any cause, except with respect to an on-the-job accident for which an Eligible Employee is protected while an active employee by any Accident Death Benefit feature of the SBCPBP.

By enrolling in this coverage, an Eligible Employee automatically waives his or her eligibility for any Sickness Death Benefit and Pensioner Death Benefits otherwise payable under the SBCPBP.

The coverage provided by the alternate death benefit life insurance coverage will continue after Retirement.

To elect this coverage, an Eligible Employee must complete an irrevocable enrollment and waiver form.

SBC pays the full cost of the alternate death benefit life insurance coverage.

The insurance benefit provided under this alternate death benefit life insurance will be paid in a lump sum, unless otherwise elected on the Eligible Employee's enrollment form.

Alternate death benefit coverage ceases upon an Eligible Employee's Termination of Employment other than a Retirement.  This alternate death benefit life insurance may not be converted to an individual policy.

Salary Continuation Death Benefit.

The salary continuation death benefit shall only be available under the conditions specified hereunder, to an Eligible Employee who became an Eligible Employee before January 1, 1998.

By a written election filed with SBC before January 1, 1998, an Eligible Employee may terminate his or her rights to a Basic Death Benefit and/or to Optional Supplementary Coverage (if any) and/or to an Alternate Death Benefit (if any).

If such an election is filed, and the Eligible Employee dies on or after the first day of the calendar year following the year in which such election is filed and prior to the termination of coverage pursuant to Section 7, the Eligible Employee's Beneficiary or Beneficiaries theretofore named shall be paid by SBC an amount per annum for ten (10) years which amounts, in the aggregate, have a net present value, using an eleven percent (11%) discount rate, equal to one hundred eight-five percent (185%) of the (i) Basic Death Benefit amount and/or (ii) the amount elected as Optional Supplementary coverage(if any) and/or (iii) the amount elected as an Alternate Death Benefit (if any) which would be payable to his or her Beneficiary or Beneficiaries as of the date of the Eligible Employee's death, and no other benefit shall be payable hereunder as either a Basic Death Benefit, Optional Supplementary Coverage or Alternate Death Benefit.  Such payment(s) shall commence no later than sixty (60) days following the date of the Eligible Employee's death.

On or after January 1, 1998, an Eligible Employee who has elected death benefits in the form of salary continuation pursuant to this Section may cancel such election and have his or her Beneficiaries receive death benefits as insurance in a lump-sum but, an Eligible Employee who cancels his or her salary continuation election may not thereafter re-elect such option.

Survivor Annuity Equivalent

Additionally, each Eligible Employee who is not eligible for the Immediate Automatic Pre-retirement Survivor Annuity of the SBCPBP (or equivalent thereof) shall be eligible hereunder for a Survivor Annuity Equivalent benefit of one times salary payable to the surviving spouse of such Eligible Employee.  Such benefit shall be paid as follows: an amount per annum for ten (10) years shall be paid to the Eligible Employee's surviving spouse which amounts, in the aggregate, shall have a net present value, using an eleven percent (11%) discount rate, equal to one hundred eighty-five percent (185%) of one times the Eligible Employee's salary at the time of his or her death; provided, however, no such Survivor Annuity Equivalent payments will be made on or after the date of death of the surviving spouse. Such payments shall commence no later than sixty (60) days following the date of the Eligible Employee's death.

For the purposes of the Survivor Annuity Equivalent, the Eligible Employee's surviving spouse means a spouse legally married to the Eligible Employee at the time of the Eligible Employee's death.

Eligibility for the Survivor Annuity Equivalent shall automatically cease on the date of termination of the Eligible Employee's employment.  If the Eligible Employee becomes totally disabled prior to Retirement, the Eligible Employee shall continue to be eligible for the Survivor Annuity Equivalent until the expiration of disability benefits.  If the Eligible Employee is granted a leave of absence, other than for military service of more than four weeks, the Eligible Employee shall continue to be eligible for the Survivor Annuity Equivalent during such leave of absence.

The Eligible Employee shall cease to be eligible for the Survivor Annuity Equivalent at the conclusion of the day immediately preceding the date the Eligible Employee becomes eligible for the Immediate Automatic Pre-retirement Survivor Annuity of the SBCPBP.

5.           Incidents of Ownership.  SBC will be the owner and hold all the incidents of ownership in the Insurance Contract, including the right to dividends, if paid.  The Eligible Employee may specify in writing to SBC, the Beneficiary or Beneficiaries and the mode of payment for any death proceeds not in excess of the amounts payable under this Plan.  Upon receipt of a written request from the Eligible Employee, SBC will immediately take such action as shall be necessary to implement such Beneficiary appointment.  Any balance of proceeds from the Insurance Contract not paid as either a Basic Death Benefit or otherwise pursuant to the Plan shall be paid to SBC.

6.           Premiums.  All premiums due on the Insurance Contract shall be paid by SBC.  However, the Eligible Employee agrees to reimburse SBC by January 31 following the date of each premium payment in an amount such that, for Federal Income Tax purposes the reimbursement for each year is equal to the amount which would be required to be included in the Eligible Employee's income for Federal Income Tax purposes by reasons of the "economic benefit" of the Insurance Contract provided by SBC; provided, however, that SBC, in its sole discretion, may decline to accept any such reimbursement and require the inclusion of such "economic benefit" in the Eligible Employee's income.  In its discretion SBC may deduct the Eligible Employee's portion of the premiums from the Eligible Employee's pay.

7.           Termination of Coverage.  An Eligible Employee's coverage under this Plan shall terminate immediately when the Eligible Employee realizes an "Event of Termination" which shall mean any of the following:

(a)           Termination of an Eligible Employee's employment with his or her employing company for any reason other than (i) death, (ii) Disability as such term is defined in the SRIP, or (iii) Retirement.

(b)           In the case of an Eligible Employee who terminates employment by reason of a disability but who does not realize an Event of Termination because of Section 7a(ii) above, a termination of the Eligible Employee's total Disability that is not accompanied by either a return to employment with his or her employing company or the Eligible Employee's death or Retirement.

(c)           Except in the case of an Eligible Employee who has theretofore terminated employment for a reason described in Section 7a(ii) or (iii) above, SBC elects to terminate the Eligible Employee's coverage under the Plan by a written notice to that effect given to the Eligible Employee.  SBC shall have no right to amend the Plan or terminate the Eligible Employee's coverage under the Plan with respect to an Eligible Employee who has theretofore terminated employment for a reason described in Section 7a(ii) or (iii) above without the written consent of the Eligible Employee.

8.           Non-Competition.  Notwithstanding any other provision of this Plan, no coverage shall be provided under this Plan with respect to any Eligible Employee who shall, without the written consent of SBC, and while employed by SBC or any subsidiary thereof, or within three (3) years after termination of employment from SBC or any subsidiary thereof, engage in competition with SBC or any subsidiary thereof or with any business with which a subsidiary of SBC or an affiliated company has a substantial interest (collectively referred to herein as "Employer business").  For purposes of this Plan, engaging in competition with any Employer business shall mean engaging by Eligible Employee in any business or activity in the same geographical market where the same or substantially similar business or activity is being carried on as an Employer business.  Such term shall not include owning a nonsubstantial publicly traded interest as a shareholder in a business that competes with an Employer business.  However, engaging in competition with an Employer business 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.  Accordingly, coverage shall not be provided under this Plan if, within the time period and without the written consent specified, Eligible Employee either engages directly in competitive activity or in any capacity in any location becomes employed by, associated with, or renders service to any company, or parent or affiliate thereof, or any subsidiary of any of them, if any of them is engaged in competition with an Employer business, regardless of the position or duties the Eligible Employee takes and regardless of whether or not the employing company, or the company that Eligible Employee becomes associated with or renders service to, is itself engaged in direct competition with an Employer business.

9.           Restriction on Assignment.  The Eligible Employee may assign all or any part of his or her right, title, claim, interest, benefits and all other incidents of ownership which he or she may have in the Insurance Contract to any other individual or trustee, provided that any such assignment shall be subject to the terms of this Plan; except neither the Eligible Employee 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 the amounts, if any, payable as a Salary Continuation Death Benefit hereunder, which are, and all rights to which are, expressly declared to be unassignable and non-transferable.  No part of the amounts payable as a Salary Continuation Death Benefit hereunder shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by the Eligible Employee or any other person, nor be transferable by operation of law in the event of the Eligible Employee's or any other person's bankruptcy or insolvency.  Except as provided in this Section 8, no assignment or alienation of any benefits under the Plan will be permitted or recognized.

10.           Unsecured General Creditor.  Except to the extent of rights with respect to the Insurance Contract in the absence of an election to receive benefits in Salary Continuation Death Benefit form, the Eligible Employee and his or her Beneficiaries, heirs, successors and assigns shall have no legal or equitable rights, interest or claims in any property or assets of SBC, nor shall they be beneficiaries, or have any rights, claims or interests in, any life insurance policies, annuity contracts or the proceeds there from owned or which may be acquired by SBC ("Policies"); such Policies or other assets of SBC shall not be held under any trust for the benefit of the Eligible Employee, his or her designated beneficiaries, heirs, successors or assigns, or held in any way as collateral security for the fulfilling of the obligations of SBC under this Agreement; any and all of SBC's assets and Policies shall be, and remain, the general, unpledged, unrestricted assets of SBC; SBC shall have no obligation to acquire any Policies or any other assets; and SBC's obligations under this Agreement shall be merely that of an unfunded and unsecured promise of SBC to pay money in the future.

11.           Employment Not Guaranteed.  Nothing contained in this Plan nor any action taken hereunder shall be construed as a contract of employment or as giving the Eligible Employee any right to be retained in the employ of any SBC company.

12.           Protective Provisions.  The Eligible Employee will cooperate with SBC by furnishing any and all information requested by SBC, in order to facilitate the payment of benefits hereunder, taking such physical examinations as SBC may deem necessary and taking such other relevant action as may be requested by SBC, in order to facilitate the payment of benefits hereunder.  If the Eligible Employee refuses so to cooperate, the Eligible Employee's participation in the Plan shall terminate and SBC shall have no further obligation to the Eligible Employee or his or her designated Beneficiary hereunder.  If the Eligible Employee commits suicide during the two-year period beginning on the date of eligibility under the Plan, or if the Eligible Employee makes any material misstatement of information or nondisclosure of medical history, then no benefits will be payable by reason of this Plan to the Eligible Employee or his or her designated Beneficiary, or in SBC's sole discretion, benefits may be payable in a reduced amount.

13.           Change in Status.  In the event of a change in the employment status of an Eligible Employee to a status in which he or she is no longer an Eligible Employee under the Plan, such Eligible Employee shall immediately cease to be eligible for any benefits under this Plan; provided, however, such survivor benefits as would be available to such employee by reason of his or her new status but which do not automatically become effective upon attainment of such new status shall continue to be provided under this Plan until such benefits become effective or until such employee has had reasonable opportunity to effectuate such benefits but has failed to take any requisite action necessary for such benefits to become effective.

14.           Named Fiduciary.  If this Plan is subject to the Employee Retirement Income Security Act of 1974 (ERISA), SBC is the "named fiduciary" of the Plan.

15.           Applicable Law.  This Plan and the rights and obligations hereunder shall be governed by and construed in accordance with the laws of the State of Texas to the extent such law is not preempted by ERISA.

16.           Administration of the Plan.  The Committee shall be the sole administrator of the Plan and will administer the Plan, interpret, construe and apply its provisions in accordance with its terms.  The Committee shall further establish, adopt or revise such rules and regulations as it may deem necessary or advisable for the administration of the Plan.  All decisions of the Committee shall be binding.

17.           Relation to Prior Plans.  This Plan supersedes and replaces prior Senior Management Survivor Benefit, Senior Management Supplementary Life Insurance, and Senior Management Alternate Death Benefit Life Insurance Plans as in effect prior to January 1, 1986, except such plans shall continue to apply to Eligible Employees who retired before January 1, 1986; provided, however, that with respect to those Eligible Employees who retired during calendar year 1986 by reason of the fact of attaining age 65, the Post-Retirement Benefit provided pursuant to the Senior Management Survivor Benefit Plan as in effect prior to January 1, 1986, shall continue to apply and the post-retirement benefit provided under the Basic Death Benefit portion hereof shall not apply.

18.           Amendments and Termination.  This Plan may be modified or terminated at any time in accordance with the provisions of SBC's Schedule of Authorizations. A modification or Plan termination may affect present and future Eligible Employees; provided, however, that no modification shall be made to this Plan with respect to an Eligible Employee who terminates employment for reason of disability or Retirement), nor shall a termination of the Plan operate so as to be applicable to such an individual, without the written consent of the Eligible Employee.

SBC Communications Inc.

SALARY AND INCENTIVE AWARD DEFERRAL PLAN

Effective:  January 1, 1984

As amended through September 29, 2000

ARTICLE 1 - - STATEMENT OF PURPOSE

The purpose of the Salary and Incentive Award Deferral Plan ("Plan") is to provide a select group of management employees consisting of Eligible Employees of SBC Communications Inc. ("SBC" or the "Company") and its Subsidiaries with a means for deferring the receipt of income.

ARTICLE 2 - - DEFINITIONS

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

BASE COMPENSATION.  The following types of cash-based compensation, in each case as determined by SBC, 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 Internal Revenue Code, as amended ("Code"):

                      (a)           annual base salary.

Payments by an Employer under a Disability plan made in lieu of any compensation described in (a) above, shall be deemed to be a part of the compensation it replaces for purposes of this definition.  Base Compensation does not include the TEAM Award (the annual award determined to be the "Team Award" by SBC together with the individual award determined by SBC to be the Individual Discretionary Award made in connection therewith) or comparable awards, if any, determined by SBC to be used in lieu of these awards, commissions or 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.

BUSINESS DAY.  Any day during regular business hours that SBC is open for business.

CHAIRMAN.  The Chairman of the Board of Directors of SBC Communications Inc.

COMMITTEE.  The Human Resources Committee of the Board of Directors of SBC Communications Inc.

DECLARED RATE.  The interest rate for each calendar year as determined by the Senior Executive Vice President-Human Resources, with the concurrence of the Senior Executive Vice President, Chief Financial Officer and Treasurer and announced on or before January 1 of the applicable calendar year.  However, in no event will the Declared Rate for any calendar be less than the Moody's Corporate Bond Yield Average-Monthly Average Corporates as published by Moody's Investor's Service, Inc. (or any successor thereto) for the month of September before the calendar year in question, or, if such yield is no longer published, a substantially similar average selected by the Senior Executive Vice President-Human Resources or his or her successor.

DISABILITY.  Absence of an Employee from work with an Employer under the relevant Employer's disability plan, not only while such Employee is deemed by the Employer to be an Employee of such Employer.

ELIGIBLE EMPLOYEE.  An Employee who:

(a)           is a full time, salaried Employee of SBC or an Employer and who is on active duty, Disability or Leave of Absence;

(b)           is, as determined by SBC, a member of Employer's "select group of management or highly compensated employees" within the meaning of the Employment Retirement Income Security Act of 1974, as amended, and regulations thereunder ("ERISA"); and

(c)           is (i) an Officer or (ii) a non-Officer Employee who has been approved by the chairman to be eligible to participate in this Plan.

Notwithstanding the foregoing, SBC 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 considered Eligible Employees during a particular time for any reason, that individual shall not be an Eligible Employee for purposes of the Plan for the period of time prior to such determination.

EMPLOYEE.  Any person employed by an Employer, 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 SBC.  For purposes of this Plan, a person on Leave of Absence who otherwise would be an Employee shall be deemed to be an Employee.

EMPLOYER.  SBC Communications Inc. or any of its Subsidiaries.

EXECUTIVE OFFICER.  A person identified as an "executive officer" of SBC in the then most recent SBC Form 10-K containing such information that was filed with the United States Securities and Exchange Commission or who subsequent to such filing was notified by SBC's General Counsel to be an executive officer of SBC.

INCENTIVE AWARD.  A cash award paid by an Employer (and not by a non-Employer, such as state disability payments) as either a short term or long term award under the Short Term Incentive Plan or the 1996 Stock and Incentive Plan the Key Executive Officer Short Term Award paid under the 1996 Stock and Incentive Plan; or any other award that the Committee designates as a short term or long term incentive award specifically for purposes of this Plan (regardless of the purpose of the award) including an award which would otherwise be paid in stock, other than stock of SBC.

LEAVE OF ABSENCE.  Where a person is absent from employment with an Employer on a formally granted leave of absence (i.e., the absence is with formal permission in order to prevent a break in the continuity of term of employment, which permission is granted (and not revoked) in conformity with the rules of the Employer which employs the individual, as adopted from time to time).  For purposes of this Plan, a Leave of Absence shall be deemed to also include a transfer of a person to an entity by an Employer for a rotational work assignment.  In the event a transfer to such an entity lasts more than 5 years or the entity's rotational work assignment status is canceled by SBC, it shall be deemed a Termination of Employment with the Employer at that time for purposes of this Plan.  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 on termination of the rotational work assignment.

OFFICER.  An individual who is designated as an officer level employee for salary purposes on the records of SBC.

PARTICIPANT.  An Eligible Employee or former Eligible Employee who participates in this Plan.

PRE-TAX ACCOUNT.  The account maintained on a pre-tax basis on the books of account of SBC for each Participant.

RETIREMENT OR RETIRE.  The Termination of Employment for reasons other than death, on or after the earlier of the following dates: (1) the date the Employee is eligible to retire with an immediate pension pursuant to the SBC Supplemental Retirement Income Plan ("SRIP"); or (2) the date the Employee has attained one of the following combinations of age and service at Termination of Employment, except as otherwise indicated below:

Net Credited Service                                                                Age

10 years or more                                                                       65 or older

20 years or more                                                                       55 or older

25 years or more                                                                       50 or older

30 years or more                                                                       Any age

With respect to an Employee who is granted an EMP Service Pension under and pursuant to the provisions of the SBC Pension Benefit Plan - Nonbargained Program upon Termination of Employment, the term "Retirement" shall include such Employee's Termination of Employment.

SUBSIDIARY.  Any corporation, partnership, venture or other entity in which SBC holds, directly or indirectly, a 50% or greater ownership interest. SBC may, at its sole discretion, designate any other corporation, partnership, venture or other entity a Subsidiary for the purpose of participating in this Plan.

TERMINATION OF EMPLOYMENT.  References herein to "Termination of Employment," "Terminate Employment" or a similar reference, shall mean the event where the Employee ceases to be an Employee of any Employer, including but not limited to where the employing company ceases to be an Employer.

TERMINATION UNDER EPR.  In determining whether an Eligible Employee's termination of employment under the Enhanced Pension and Retirement Program ("EPR") is a Retirement for purposes of this Plan, five years shall be added to each of age and net credited service ("NCS").  If with such additional age and years of service, (1) an Eligible Employee upon such termination of employment under EPR is Retirement Eligible according to the SBC Supplemental Retirement Income Plan ("SRIP") or (2) the Eligible Employee upon such termination of employment under EPR has attained one of the following combinations of age and service,

Actual NCS + 5 Years                                                      Actual Age + 5 Years

10 years or more                                                                       65 or older

20 years or more                                                                       55 or older

25 years or more                                                                       50 or older

30 years or more                                                                       Any age

then such termination of employment shall be a Retirement for all purposes under this Plan and the Eligible Employee shall be entitled to the treatment under this Plan afforded in the case of a termination of employment which is a Retirement.

ARTICLE 3 - - ADMINISTRATION OF THE PLAN

The Committee shall be the administrator of the Plan and will administer the Plan, interpret, construe and apply its provisions in accordance with its terms. The Committee may further establish, adopt or revise such rules and regulations as it may deem necessary or advisable for the administration of the Plan.  References to determinations or other actions by SBC, herein, shall mean actions authorized by the Committee, the Chairman, the Senior Executive Vice President of SBC in charge of Human Resources, or their respective successors or duly authorized delegates, in each case in the discretion of such person; except that with respect to Executive Officers, only the Committee may take such action.  All decisions by SBC shall be final and binding.

ARTICLE 4 - - CONTRIBUTIONS

4.1           ELECTION TO MAKE CONTRIBUTIONS.

(a)  An Eligible Employee may elect to participate in the Plan through payroll deductions contributed to the Plan as follows (such contributions to the Plan are "Employee Contributions"):

(i)  An Eligible Employee may elect to contribute up to 50% (in whole percentage increments) of his or her monthly Base Compensation, as the same may change from time to time; provided, however, any Base Compensation deferral hereunder is conditioned upon a 30% Base Compensation deferral election being in effect in the Stock Savings Plan.

(ii)  An Eligible Employee may elect to contribute up to 100% (in whole percentage increments or a specified dollar amount) of an Incentive Award.

(b)  An Eligible Employee may only make an election, change an election, or terminate an election to make Employee Contributions as follows:

(i)  An Employee who is an Eligible Employee as of September 30 may make an election on or prior to the last Business Day of the immediately following November with respect to the contribution of Base Compensation and/or Incentive Awards paid on or after the immediately following January 1.

(ii)  An Employee who was not an Eligible Employee as of September 30 but who is an Eligible Employee the immediately following December 31 (or such later date chosen by SBC, but not later than April 30) may make an election on or prior to the last Business Day of the immediately following May with respect to the contribution of Base Compensation and/or Incentive Awards paid on or after the immediately following July 1.

SBC may refuse or terminate any election to make Employee Contributions at any time.

4.2           CONTRIBUTIONS TO PRE-TAX ACCOUNT; INTEREST/DIVIDENDS.

(a)  Employee Contributions shall be made solely pursuant to a proper election and only during the Employee's lifetime and while the Employee remains an Eligible Employee (if the Employee ceases to be an Eligible Employee, his or her election to make Employee Contributions shall be cancelled); provided, however, Termination of Employment of an Eligible Employee shall not constitute loss of eligibility solely with respect to contribution of Base Compensation earned prior to termination but paid within 60 days thereafter or with respect to an Incentive Award paid after Retirement (and such person shall be deemed an Eligible Employee for such contributions).

(b)  Employee Contributions shall be credited to the Participant's Pre-Tax Account in accordance with the provisions of Section 4.2(e) shall bear interest at the applicable Declared Rate on the balance from month-to-month in such account.  The interest will be credited monthly to the account at one-twelfth of the annual Declared Rate for that calendar year compounded quarterly.

(c)  In addition, if the Participant's account under the Bell System Senior Management Incentive Award Deferral Plan ("Predecessor Plan") was transferred to this Plan as of January 1, 1984, the effective date of this Plan, then the Participant's Pre-Tax Account under this Plan shall be credited as of such date with the amount credited to the Participant's account under the Predecessor Plan as of December 31, 1983, and such amount shall bear interest in accordance with the terms of this Plan.

(d)  Deferred amounts related to Incentive Awards which would otherwise have been distributed in shares of stock other than shares of common stock of SBC shall be credited to the Participant's Pre-Tax Account as deferred shares.  The Participant's Pre-Tax Account shall also be credited on each dividend payment date with an amount equivalent to the dividend payable on the number of such shares equal to the number of deferred shares in the Participant's Pre-Tax Account on the record date for such dividend.  Such amount shall then be converted to a number of additional deferred shares determined by dividing such amount by the closing price of such shares on the New York Stock Exchange on such date, or if not listed on such exchange, then on the principal market for such shares.  If not traded on such exchange on such date, then the closing price on the next preceding day the stock was so traded shall be utilized.

In the event of a merger, reorganization, consolidation, recapitalization, separation, liquidation, stock dividend, stock split, share combination, or stock dividend, stock split or other change in the corporate structure of the issuer of stock described in the preceding paragraph, affecting such stock, the Committee shall make an adjustment to the number and class of shares of deferred stock, in its discretion, to avoid any dilution or enlargement of rights.

(e)  Contributions to the Plan shall be deemed contributed when the compensation would have otherwise actually been paid (using the "check date" of the payment or contribution) were it not for an election under this Plan.  For example, a contribution from a payment of Base Compensation, delayed for any reason, shall be deemed contributed when the delayed payment is made.

ARTICLE 5 - - DISTRIBUTIONS

5.1           DISTRIBUTIONS FROM PRE-TAX ACCOUNT.

(a)  Retirement.  Beginning March 10 (or such other date as determined by SBC) of the first (1st) calendar year following the calendar year of the Retirement of a Participant and on March 10 (or such other date as determined by SBC) of each of the successive 14 calendar years, SBC shall distribute to the Participant that portion of the Participant's Pre-Tax Account that is equal to the total dollar amount of the Participant's Pre-Tax Account (and/or number of deferred shares then held in the Participant's Pre-Tax Account) divided by the number of remaining installments.  Notwithstanding the foregoing, if the Participant Retires prior to 2001, then any undistributed portion of the Participant's Pre-Tax Account will be distributed in a lump sum on March 10 of the fifteenth (15th) calendar year following the calendar year of the Retirement of the Participant.

(b)  Non-Retirement Termination of Employment.  Beginning March 10 (or such other date as determined by SBC) of the calendar year following the calendar year of Termination of Employment which is not a Retirement and on March 10 (or such other date as determined by SBC) of each of the successive 2 calendar years, SBC shall distribute that portion of the Participant's Pre-Tax Account that is equal to the total dollar amount of the Participant's Pre-Tax Account (and/or number of deferred shares held in the Participant's Pre-Tax Account) divided by the number of remaining installments.

(c)  Death.  Notwithstanding (a) or (b) above to the contrary, in the event of the death of a Participant, any amounts remaining in the Participant's Pre-Tax Account (and/or number of deferred shares then held in the Participant's Pre-Tax Account) shall be promptly distributed to the Participant's beneficiary designated in accordance with the SBC Rules for Employee Beneficiary Designations, as the same may be amended from time to time ("Rules").  If no designation has been made or if all designated beneficiaries predecease the Participant, the Participant's Pre-Tax Account shall be distributed according to the Rules.

Notwithstanding any other provision of this Plan, if a surviving beneficiary of a Plan participant disclaims in whole or in part, that beneficiary's interest or share in the distribution of the Plan participant's Plan proceeds, and such disclaimer satisfies the requirements of Section 2518(b) of the Internal Revenue Code (or any successor provision) and any applicable state law, such disclaimer shall not constitute an assignment, transfer or alienation by any method of such interest or share or proceeds and the portion of such proceeds subject to such disclaimer shall be distributed as if that beneficiary had predeceased the Plan participant.

(d)  Discharge for Cause/Non Competition.  Notwithstanding any other provision of this Plan to the contrary, all amounts (including deferred shares) then credited to the Participant's Pre-Tax Account shall be paid immediately in a single payment if a Participant is discharged for cause by his or her Employer, or if a Participant otherwise ceases to be employed by his or her Employer and engages in competition with SBC or any direct or indirect Subsidiary thereof or with any business with which a Subsidiary of SBC or an affiliated company has a substantial interest (collectively referred to herein as an "Employer Business"), or becomes employed by a governmental agency having jurisdiction over the activities of SBC or any of its Subsidiaries.  For purposes hereof, engaging in competition with any Employer business shall mean engaging by the Participant in any business or activity in the same geographical market where the same or substantially similar business or activity is being carried on as an Employer business.  Such term shall not include owning a nonsubstantial publicly traded interest as a shareholder in a business that competes with an Employer business.  However, engaging in competition with an Employer business 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 in a judicial, regulatory, legislative or administrative proceeding.  Further, engaging in competition with an Employer business would result if the Participant either engages directly in competitive activity or in any capacity in any location becomes employed by, associated with, or renders service to any company, or parent or affiliate thereof, or any subsidiary of any of them, if any of them is engaged in competition with an Employer business, regardless of the position or duties the Participant takes and regardless of whether or not the employing company, or the company that the Participant becomes associated with or renders service to, is itself engaged in direct competition with an Employer business.

(e)  Deferred amounts held pending distribution shall continue to be credited with interest or additional deferred shares, as applicable, determined in accordance with Section 4.2(b) or 4.2 (d), as applicable.

(f)  The obligation to make distribution of deferred amounts credited to a Participant's Pre-Tax Account during any calendar year, plus the additional amounts credited on such deferred amounts pursuant to Section 4.2(b) or 4.2(d), as applicable, shall be borne by SBC or the applicable Employer which otherwise would have paid the related award currently.  However, the obligation to make distributions with respect to deferred amounts which are related to amounts credited to a Participant's Pre-Tax Account as of the effective date of the Plan pursuant to Section 4.2(c), and with respect to which no SBC company would otherwise have paid the related award currently, shall be borne by the Employer which employed the Participant on the effective date of the Plan.

(g)  For the purpose of this Plan, a beneficiary designation like that described in Section 5.1(c) that was made under the comparable provisions of the Predecessor Plan shall be considered as a beneficiary designation made under Section 5.1(c).

(h)  Notwithstanding the other provisions of this Section 5.1 to the contrary, but subject to the provisions of Section 5.2(b), a Participant who was a Participant on, and made contributions to the Plan prior to, September 1, 2000, may request that receipt of the cash portion of Participant's Pre-Tax Account be deferred to Participant's death, or to be received earlier if accelerated in accordance with the provisions of 5.2(a). Approval of such request shall be in SBC's sole discretion.

5.2           ACCELERATED DISTRIBUTION.

(a)  On or before the last Business Day of a calendar year, a Participant may elect to receive a distribution of all or a portion of the Participant's Pre-Tax Account.  Such distribution shall be made March 10 (or such other date as determined by SBC) of the immediately following calendar year.  This distribution shall be in addition to the portion of the Pre-Tax Account to be distributed at the same time under Section 5.1, which distribution shall be calculated without regard to an election under this section.

(b)  In the event the Participant Terminates Employment for reasons other than Retirement, SBC may, at its sole discretion, accelerate the distribution of all or a portion of a Participant's Pre-Tax Account to the date of SBC's choosing, without notice to, or the consent of, the Participant.

5.3           SMALL DISTRIBUTION.

Notwithstanding any election made by the Participant, after the Termination of Employment of the Participant for any reason, if at the time the total value of the Participant's Pre-Tax Account is less than $10,000, SBC may, in its discretion, distribute all of such account in the form of a lump sum distribution.

5.4 DETERMINATION BY INTERNAL REVENUE SERVICE.

In the event that a final determination shall be made by the Internal Revenue Service or any court of competent jurisdiction that a Participant has recognized gross income for Federal income tax purposes in excess of the portion of Participant's Pre-Tax Account actually distributed by SBC, SBC shall promptly distribute to the Participant that portion of Participant's Pre-Tax Account to which such additional gross income is attributable.

5.5 EMERGENCY DISTRIBUTION.

In the event that SBC, upon written petition of the Participant, determines in its sole discretion that the Participant has suffered an unforeseeable financial emergency, SBC shall distribute to the Participant, as soon as practicable following such determination, that portion of Participant's Pre-Tax Account determined by SBC to meet the emergency (the "Emergency Distribution).  For purposes of this Plan, an unforeseeable financial emergency is an unexpected need for cash arising from an illness, casualty loss, sudden financial reversal, or other such unforeseeable occurrence.  Cash needs arising from foreseeable events such as the purchase of a house or education expenses for children shall not be considered to be the result of an unforeseeable financial emergency.  Upon such distribution, 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.

5.6 INELIGIBLE PARTICIPANT.

Notwithstanding any other provisions of this Plan to the contrary, if SBC receives an opinion from counsel selected by SBC, 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 is not, or was not at the time of his or her making Employee Contributions to this Plan, to be a member of Employer's "select group of management or highly compensated employees" within the meaning of ERISA, then such person will not be eligible to participate in this Plan and shall receive an immediate lump sum distribution of the Participant's Pre-Tax Account.  Upon such payment no other distribution shall thereafter be payable under this Plan either to the individual or any beneficiary of the individual, except as provided under Section 8.1 Additional Benefit.

ARTICLE 6 - - TRANSITION PROVISIONS

The transition rules of this Article 6 shall supercede all other terms of this Plan.

6.1 EFFECTIVE DATES.

Except as otherwise provided herein, the amendments to this Plan made September 1, 2000 (the "2000 Amendments") shall be effective September 1, 2000, and no election regarding the further deferral of a distribution of contributions to this Plan may be made on or after September 1, 2000.

6.2           COMBINATION OF EXISTING CONTRIBUTIONS.

(a)  Effective January 1, 2001, all prior contributions made to the Plan by a Participant shall be combined into Participant's single Pre-Tax Account.

(b)  To the extent any Participant who retires before 2001 would, were it not for the 2000 Amendments, under valid elections made prior to September 1, 2000, receive a distribution that would extend the Participant's distributions beyond 2015, then the contributions so affected shall not be combined with other contributions and shall be distributed in accordance with such elections.  Notwithstanding the foregoing, the Participant may, with the consent of SBC, elect to have all of Participant's contributions to the Plan governed by this Plan as in effect after September 1, 2000.

(c)  In the event a Participant dies prior to 2001, the Participant's accounts shall not be combined with and shall be distributed in accordance with the Plan as it existed immediately prior to September 1, 2000.

6.3           TERMINATION OF ELECTIONS.

(a)  Distributions from the Plan that would be made in the year 2000 under the Plan as it existed immediately prior to September 1, 2000, based on elections made before September 1, 2000, shall continue to be made in the year 2000 as provided in the Plan immediately prior to September 1, 2000. All other distribution elections are cancelled, including but not limited to distributions which have already commenced, but only to the extent such elections call for distributions after the year 2000.  All amounts (or shares) remaining undistributed after such distributions shall be held and distributed in accordance with the terms of the Plan as in effect after September 1, 2000.

(b)  Contributions to the Plan that would be made in the year 2000 under the Plan as it existed immediately prior to September 1, 2000, based on elections made before September 1, 2000, shall continue to be made in the year 2000 as provided in the Plan immediately prior to September 1, 2000. Elections to participate in the Plan shall not automatically be renewed for the year 2001.  Each Eligible Employee must make a new election after September 1, 2000, in order to make Employee Contributions after 2000. Provided, however, valid elections made prior to September 1, 2000, to contribute Incentive Awards in 2001 shall be valid elections under this Plan.

6.4 ANNUAL BASE SALARY CONTRIBUTION TRANSITION.

Annual base salary earned prior to January 1, 2001, shall be contributed when earned, while annual base salary earned on or after such date shall be contributed when paid. In order to avoid any double contribution of annual base salary, that part of annual base salary earned in the year 2000 shall not be included in any determination of contributions to the Plan in a later calendar year, even though paid in such calendar year.

ARTICLE 7 - - DISCONTINUATION, TERMINATION, AMENDMENT.

7.1 SBC'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/dividend equivalents and shall continue to receive all distributions under this Plan at such time as provided in and pursuant to the terms and conditions of this Plan at the time of the Plan's termination.

7.2   AMENDMENT.

This Plan may be modified or terminated at any time in accordance with the provisions of SBC's Schedule of Authorizations; 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, the distributions described in this Plan as applicable to the Participant or to decrease such Participant's Pre-Tax Account.  For purposes of this section, an alteration to the material detriment of a Participant shall mean a material reduction in the period of time over which Participant's Pre-Tax Account may be distributed to a Participant or a reduction in the amounts then credited to a Participant's Pre-Tax Account.  Any such consent may be in a writing, telecopy, or e-mail or in another electronic format.  An election to make Employee Contributions and the failure to terminate an election to make Employee Contributions when able to do so shall each be conclusively deemed to be the consent of the Participant to any and all amendments to the Plan prior to such election or failure to terminate an election, and such consent shall be a condition to making any election with respect to Employee Contributions.

ARTICLE 8 - - MISCELLANEOUS

8.1   ADDITIONAL BENEFIT.

The reduction of any benefit payable under the SBC Pension Benefit Plan (or comparable plan identified by SBC as a replacement therefore), which results from participation in this Plan, will be restored as an additional benefit ("make-up piece") under this Plan.  The Participant shall elect prior to commencement of payment of the make-up piece whether to receive such benefit in cash in a lump sum (consisting of the present value equivalent of the pension retirement benefit (life annuity) make-up piece) or such benefit in an annuity form of payment.  Notwithstanding the proceeding provisions of this section, if all or a portion of the make-up piece is paid pursuant to SRIP or another non-qualified plan, then such amount shall not be payable pursuant to this Plan.

8.2   TAX WITHHOLDING.

Upon a distribution from Participant's Pre-Tax Account, SBC shall withhold such amount (or shares) as determined by SBC to satisfy the minimum amount of Federal, state, and local taxes required by law to be withheld as a result of such distribution, or such greater amount as specified by the Participant.

8.3   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 SBC or made in such other manner as permitted or required by SBC, including through electronic means, over the Internet or otherwise.  An election shall be deemed made when received by SBC, which may waive any defects in form.  Unless made irrevocable by the electing person, each election with regard to making Employee Contributions or distributions under the Plan shall become irrevocable at the close of business on the last day to make such election. SBC may limit the time an election may be made in advance of any deadline.

Any notice or filing required or permitted to be given to SBC under the Plan shall be delivered to the principal office of SBC, directed to the attention of the Senior Executive Vice President-Human Resources of SBC 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 SBC or, at the option of SBC, to the Participant's e-mail address as shown on the records of SBC.  It is the Participant's responsibility to ensure that the Participant's addresses are kept up to date on the records of SBC.  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 SBC may provide any documents required or permitted under the Federal or state securities laws, including but not limited to the Securities Act of 1933 and the Securities Exchange Act of 1934 by e-mail, by e-mail attachment, or by notice by e-mail of electronic delivery through SBC'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 SBC to make distributions under, and in accordance with the terms of, the Plan.

8.5   OFFSET.

SBC may offset against the amount (or shares) otherwise distributable to a Participant, any amounts due an Employer by a Participant, including but not limited to overpayments under any compensation or benefit plans.

8.6   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 amounts (or shares) distributable under the Plan, or any part thereof, which are, and all rights to which are, expressly declared to be unassignable and non-transferable.  No part of the amount (or shares) 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.

8.7   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.

8.8   ERRORS.

At any time SBC may correct any error made under the Plan without prejudice to SBC.  Such corrections may include, among other things, refunding contributions to a Participant with respect to any period he or she made Employee Contributions while not an Eligible Employee, or canceling the enrollment of a non-Eligible Employee.

8.9   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.

8.10          GOVERNING LAW.

To the extent not preempted by ERISA, this Plan shall be governed by and construed in accordance with the substantive laws of the State of Texas, excluding any conflicts or choice of law, rule or principle that might otherwise refer construction or interpretation of this Plan to provisions of the substantive law of any jurisdiction other than the State of Texas.  Any actions seeking to enforce the rights of an employee, former employee or person who holds such rights through, from or on behalf of such employee or former employee under this plan may be brought only in a federal or state court located in Bexar County, Texas.

8.11   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.

8.12   SUCCESSORS AND ASSIGNS.

This Plan shall be binding upon SBC and its successors and assigns.

SBC Communications Inc.

SENIOR MANAGEMENT LONG TERM DISABILITY PLAN

Plan Effective:  January 1, 1984

Section 1.             Definitions

1.Plan shall mean the SBC Communications Inc. Senior Management Long Term Disability Plan.

2.           Employer shall mean SBC Communications Inc. or any of its subsidiaries that participate in the Plan.

3.           Pension Plan shall mean the SBC Communications Inc. Management Pension Plan.

4.           Disability Benefit Plan shall mean the SBC Communications Inc. Sickness and Accident Disability Benefit Plan.

5.           Mid-Career Pension Plan shall mean the SBC Communications Inc. Mid-Career Pension Plan.

6.           Short Term Plan shall mean the SBC Communications Inc. Short Term Incentive Plan.

7.           Committee shall mean the Administrative Committee appointed by the Vice President-Human Resources.  It shall consist of three managers, one of whom will be a Senior Manager.

8(a)       Participant, for purpose of the Disability Allowance under Section 2, shall mean a Senior Manager on the active rolls of an Employer on or after the effective date of the Plan.

8(b)       Participant, for purposes of the Senior Management survivor Benefit under Section 3, shall mean a former employee of an Employer who was a Participant under paragraph 8(a) above on the last day of employment, if such former employee is eligible to receive a Disability Allowance under Section 2.

8(c)       Participant, for purposes of the Medical Expense Benefit under Section 6, shall mean a former employee of an Employer who was a Participant under paragraph 8(a) above the last day of Employment, if such former employee is eligible to receive a Disability Allowance under Section 2.

8(d)       For purposes of paragraph 8(b) and 8(c) above, a former employee shall be considered to be eligible to receive a Disability Allowance under Section 2 if he has met the conditions specified in Section 2, even though the receipt of other benefits by such former employee precludes his receipt of any benefits under Section 2.

9.           Term of Employment. shall have the same meaning as the meaning assigned to such expression in the Pension Plan.

10.         Annual Basic Pay shall mean the Participant's annual base salary rate (as determined by the Employer) on the last day the Participant was on the active payroll, but excluding all differentials regarded as temporary or extra payments and all cash payments and distributions made under the Short Term Plan and the SBC Communications Inc. Long Term Incentive Plan.  The base salary rate in Section 2, paragraph 3, shall be the base salary amount prior to any reduction as a result of the Senior Management Deferred Compensation Plan.

11.          The use of personal pronouns of the masculine gender in the Plan is intended to include both masculine and feminine genders.

Section 2.              Disability Allowance.

1(a)         A participant shall be considered to be "disabled" at any time during the first fifty-two week period following the onset of a physical or mental impairment if such impairment prevents the Participant from meeting the performance requirements of the position held immediately preceding the onset of the physical or mental impairment.

1(b)         A Participant shall be considered to be "disabled" after the first fifty-two week period following the onset of a physical or mental impairment if such impairment prevents the Participant from meeting the performance requirements of (1) the position held immediately preceding the onset of the physical or mental impairment, (2) a similar position, or (3) any appropriate position which the Participant would otherwise be capable of performing by reason of the Participant's background and experience.

1(c)         The Committee shall make the determination of whether a Participant is disabled within the meaning of paragraphs 1(a) and 1(b) above.

2.           A Participant who is disabled during a period described in paragraph 1(a) of this Section 2 shall be eligible to receive a monthly disability allowance equal to 100 percent of the Participant's monthly base salary rate on the last day the Participant was on the active payroll, reduced by any amounts described in paragraph 5(a) of this Section 2 which are attributable to the period for which benefits are provided under this paragraph.

3.           A Participant who is disabled during a period described in paragraph 1(b) shall, prior to his sixty-fifth birthday, be eligible to receive a monthly disability allowance equal to eighty percent of the Participant's monthly base salary rate, prior to any deferral amount under the Senior Management Deferred Compensation Plan, on the last day the Participant was on the active payroll, reduced by any amounts described in paragraph 4(b) of this Section 2 which was attributable to the period for which benefits are provided under this paragraph.

4(a)           The disability allowance determined for any period under paragraph 2 of this Section 2 shall be reduced by the sum of the following benefits received by the Participant which are attributable to the period for which such disability allowance is provided: a service pension, deferred vested pension, or disability pension under the Pension plan, a pension under the Mid-Career Pension Plan, an accident disability benefit or sickness disability benefit under the Disability Benefit Plan, any Workers' Compensation Benefit, plus any other benefit payments required by law on account of the Participant's disability.  However, no reduction shall be made on account of any pension under the Pension Plan, or the Mid-Career Pension Plan at a rate greater than the rate of such pension on the date the Participant first received such pension after his disability.

4(b)           The disability allowance determined for any period under paragraph 3 of this Section 2 shall be reduced by the sum of the following benefits received by the Participant which are attributable to the period for which such disability allowance is provided: a service pension, deferred vested pension or disability pension under the Pension Plan, a pension under the Mid-Career Pension Plan, an accident disability benefit under the Disability Benefit Plan, any other retirement income payments from the employee's Employer, plus any Worker's Compensation Benefit.  However, no reduction shall be made on account of any pension under the Pension Plan, or the Mid-Career Pension Plan at a rate greater than the rate of such pension on the date the Participant first received such pension after his disability.

Furthermore, the Board of Directors of the employee's Employer in its discretion may reduce the disability allowance by the amount of outside compensation or earnings of the Participant for work performed by the Participant during the period for which such disability allowance is provided.

5.           For purposes of paragraphs 1(a) and 1(b) of this Section 2, the measurement of time following the onset of a physical or mental impairment shall coincide with the measurement of time used to calculate the period of Sickness and Disability Benefit Plan.  Successive periods of physical or mental impairment shall be counted together in computing the periods during which the Participant shall be entitled to the benefits provided under paragraph 2 or paragraph 3 of this Section 2, except that any disability absence after the Participant has been continuously engaged in the performance of duty for thirteen weeks shall be considered to commence a new period of physical or mental impairment under paragraph 1(a), so that such Participant shall be entitled during such new period to the benefits provided under paragraph 2 of this Section 2.

Section 3             Life Insurance Benefits.  A Participant described in paragraph 8(b) of Section 1, who has not retired on a service pension or a disability pension under the Pension Plan, shall be entitled to the same rights and benefits under the SBC Communications Inc. Senior Management Survivor Benefit Plan, and under the Supplementary Life Insurance Plan, as if the employee had retired on a service pension or a disability pension under the Pension Plan and had elected the Alternate Death Benefit under the Senior Management Survivor Benefit Plan.

Section 4             Medical Expense Benefits.  A Participant described in paragraph 8(c) of Section 1, who has not retired on a service pension or a disability pension under the Pension Plan, shall be entitled to the same rights and benefits under the SBC Communications Inc. Medical Expense Plan, and Dental Expense Plan as an employee who retired on a service or a disability pension under the Pension Plan.

Section 5             Claims and Appeals.  Any claim under the Plan by a Participant, or by anyone claiming through a Participant, shall be presented to the Committee.  Any person whose claim under the Plan has been denied may (and must for the purpose of seeking any further review of a decision or determining any entitlement to a benefit under the Plan), within 60 days after receipt of notice of denial, submit to the Human Resources Committee of the SBC Communications Inc. Board of Directors a written request for review of the decision denying the claim.  The Human Resources Committee shall determine conclusively for all parties all questions arising in the administration of the Plan.

Section 6              General Provisions.

1.The Plan shall be effective on January 1, 1984.

2.           The rights of a Participant or his spouse to benefits under the Plan shall not be subject to assignment or alienation.

3.           SBC Communications Inc. may from time to time make changes in the Plan and may terminate the Plan.  In addition, the Vice President-Human Resources of the SBC Communications Inc. (or any successor to the officer's responsibilities), shall be authorized to make minor or administrative changes to the Plan, as well as changes dictated by the requirement of Federal or state statutes or authorized or made desirable by such statutes.  Such changes or termination shall not affect the rights of any Participant, without his consent, to any benefit under the Plan to which such Participant may have previously become entitled as a result of a disability, death or termination of Employment which occurred prior to the effective date of such change or termination.

4.           In case of accident resulting in injury to or death of a Participant which entitles the Participant to benefits under the Plan, the Participant may elect to accept such benefits or to prosecute such claims at law as the Participant may have against the Employer.  If election is made to accept the benefits under the Plan, such election shall be in writing and shall release the Employer from all claims and demands which the Participant may have against it, otherwise than under this Plan or under any other plan maintained by the Employer, on account of such accident.  The Committee, in its discretion, may require that the election described above shall release any other company connected with the accident, including any company participating in the Pension Plan.  The right of the Participant to a disability allowance under Section 2 of the Plan shall lapse if election to accept such benefits, as above provided, is not made within sixty days after injury, or within such greater time as the Committee shall, by resolution duly entered on its records, fix for the making of such election.

5.           Should claim, other than under this Plan or under any other plan maintained by the Employer, by presented or suit brought against the Employer, or against any other company participating in the Pension Plan, for damages on account of injury or death of a Participant, nothing shall by payable under this Plan on account of such injury or death except as provided in paragraph 6 of this Section 6; provided however, that the Committee may, in its discretion and upon such terms as it may prescribe waive this provision if such claims be withdrawn or if such suit be discontinued.

6.           In case any judgment is recovered against the Employer or any settlement is made of any claim or suit on account of the injury or death of a Participant, and the total amount which would otherwise have been payable under the Plan and under any other plan maintained by the Employer is greater than the amount paid on account of such judgment or settlement, the lesser of (1) the difference between such two amounts, or (2) the amount which would otherwise have been payable under this Plan, may in the discretion of the Committee be distributed to the beneficiaries who would have received benefits under this Plan.

7.           All benefits provided under the Plan with respect to a Participant shall be forfeited and cancelled in their entirety if the Participant, without the consent of the Employer and while employed by the Employer or after termination of such Employment, becomes associated with, becomes employed by or renders service to, or owns an interest in any business (other than as a shareholder with a nonsubstantial interest in such business) that is competitive with the Employer or with any business with which a subsidiary or affiliated Company has a substantial interest, as determined by the Employer's Board of Directors. All benefits provided under the Plan with respect to a Participant shall be forfeited and cancelled in their entirety if the Participant is discharged by the Employer for cause or the Participant engages in misconduct in connection with the Participant's Employment.

8.           Each Employer, the Committee, and the Human Resources Committee of the SBC Communications Inc.'s Board of Directors is each a named fiduciary as that term is used in ERISA with respect to the particular duties and responsibilities herein provided to be allocated to each of them, respectively.

9.           All benefits authorized under the Plan shall be a charge to the operating expense accounts of the Participant's Employer when and as paid.

10.         The expenses of administering the Plan shall be borne by the Employers in such proportions as shall be mutually agreed upon by such Employers.

SBC Communications Inc.

SUPPLEMENTAL HEALTH PLAN

Effective:  January 1, 1987

Revisions Effective:  March 19, 2001

EXECUTIVE HEALTH PLAN

1.   Purpose.  The Supplemental Health Plan ("Plan") provides Eligible

Employees and their eligible dependents with supplemental medical, dental and

vision benefits.

2.   Definitions.  For purposes of this Plan, the following words and

phrases shall have the meanings indicated, unless the context clearly indicates

otherwise:

CHAIRMAN.  "Chairman" shall mean the Chairman of the Board of SBC Communications Inc.

COMMITTEE.  "Committee" shall mean the Human Resources Committee of the Board of SBC Communications Inc.

ELIGIBLE EMPLOYEE.  "Eligible Employee" shall mean an Officer.

OFFICER.  "Officer" shall mean an individual who is designated by the Chairman as eligible to participate in the Plan who is an elected officer of SBC or of any SBC subsidiary (direct or indirect).

RETIREMENT.  "Retirement" shall mean the termination of an Eligible Employee's employment with SBC or any of its subsidiaries, for reasons other than death, on or after the earlier of the following dates: (1) the date the Eligible Employee is Retirement Eligible as such term is defined in the SBC Supplemental Retirement Income Plan ("SRIP"); or (2) the date the Eligible Employee has attained one of the following combinations of age and service at termination of employment on or after April 1, 1997, except as otherwise indicated below:

Net Credited Service                                     Age

10 years or more                                           65 or older

20 years or more                                           55 or older

25 years or more                                           50 or older

30 years or more                                           Any age

With respect to an Eligible Employee who is granted an EMP Service Pension under and pursuant to the provisions of the SBC Pension Benefit Plan - Nonbargained Program ("SBCPBP") upon termination of Employment, the term "Retirement" shall include such Eligible Employee's termination of employment.

TERMINATION UNDER EPR.  In determining whether an Eligible Employee's termination of employment under the Enhanced Pension and Retirement Program ("EPR") is a Retirement for purposes of this Plan, five years shall be added to each of age and net credited service ("NCS").  If with such additional age and years of service, (1) an Eligible Employee upon such termination of employment under EPR is Retirement Eligible according to the SBC Supplemental Retirement Income Plan ("SRIP") or (2) the Eligible Employee upon such termination of employment under EPR has attained one of the following combinations of age and service,

Actual NCS + 5 Years                                  Actual Age + 5 Years

10 years or more                                           65 or older

20 years or more                                           55 or older

25 years or more                                           50 or older

30 years or more                                           Any age

then such termination of employment shall be a Retirement for all purposes under this Plan and the Eligible Employee shall be entitled to the treatment under this Plan afforded in the case of a termination of employment which is a Retirement.

SBC.  "SBC" shall mean SBC Communications Inc.

3           Eligibility.  Each Eligible Employee shall be eligible to participate in this Plan along with his or her eligible dependents.  Eligible dependents are those covered under the Eligible Employee's SBC company's basic managed care medical, dental, and vision care plans ("Basic Plans").

Provisions of this Plan will continue in effect during Retirement for each Eligible Employee who became an Eligible Employee on or after January 1, 1987 but before January 1, 1999.  Dependent coverage will also continue during the Retirement period for an Eligible Employee who became an Eligible Employee on or after January 1, 1987 but before January 1, 1999.  An Eligible Employee who becomes an Eligible Employee after December 31, 1998 shall not be eligible hereunder for coverage during Retirement.

Eligible Employees as of October 1, 1998 must elect to continue coverage effective January 1, 1999 by December 31, 1998.  An Eligible Employee who becomes an Eligible Employee after October 1, 1998 shall have 90 days after becoming an Eligible Employee to elect coverage under this Plan.  Coverage will remain in effect as long as the applicable contribution is paid by the Eligible Employee.  However, once an Eligible Employee terminates coverage he or she may not reinstate such coverage.

4.           (a)           Coverage.  Subject to the limitations in this Section, this Plan provides 100% coverage of all medical, dental and vision expenses not covered by the Eligible Employee's Basic Plans provided such expenses for such services would qualify as deductible medical expenses for federal income tax purposes, whether deducted or not.  Notwithstanding any other provision of the Plan to the contrary, an employee who first becomes an Eligible Employee mid-year and who is enrolled in SBC sponsored medical plans other than his or her company's Basic Plans (e.g., HMO) will be allowed to participate in the Plan for the remainder of the calendar year along with his or her dependents who are enrolled in such other SBC sponsored Plans, as if he or she was participating in his or her company's Basic Plans.  Thereafter, to participate in the Plan, the Eligible Employee, as well as his or her dependents for whom coverage is desired under this Plan, must be enrolled in the Basic Plans to have coverage hereunder.  Expenses incurred by any Eligible Employee or any of his or her eligible dependents under this Plan shall not exceed $50,000 per year per individual.  Effective January 1, 1998, expenses incurred by any Eligible Employee and his or her eligible dependents under this Plan shall not exceed $100,000 total per Plan year (i.e., January 1 through December 31).  Expenses covered by the Basic Plans will not be included in these limits.

Claims will be applied against the various health plans in the following order:

(1)           Medicare if participant is eligible for same,

(2)           Group Health Plans,

(3)           CarePlus if elected and applicable,

(4)           Long Term Care Plan if elected and applicable,

(5)           this Plan.

(b)           Substitute Basic Coverage.  Notwithstanding any other provision of this Plan to the contrary, if upon Retirement, an Eligible Employee is eligible for coverage under this Plan during Retirement, but not eligible for coverage under the Basic Plans, this Plan shall provide all medical, dental and vision expenses as if such Eligible Employee had been eligible for Non-Network coverage under the Basic Plans (hereinafter, "Substitute Basic Coverage").  Such Substitute Basic Coverage shall be subject to the same terms and conditions, including monthly retiree contributions, copays, etc. (if any), as would be applicable to the Eligible Employees and dependents if provided under the Basic Plans and shall constitute such Eligible Employee's Basic Plans for all purposes under this Plan.  The costs of Substitute Basic Coverage (except for any monthly contributions, copays, etc.) shall be borne by SBC and shall not be included in the determination of any Eligible Employee's annual Plan contribution amount as provided in Section 5.

5.           Costs.  Except as provided below in this Section, costs and expenses incurred in the operation and administration of this Plan will be borne by SBC; and each subsidiary will be required to reimburse SBC for applicable costs and expenses attributable to Eligible Employees employed by it:

Effective January 1, 1999, an Eligible Employee electing coverage under the Plan will pay for coverage under the Plan while in active service.  Such Eligible Employee's annual contribution amount will be equal to 10% of SBC's actual costs per Eligible Employee for the prior Plan year.

Effective with respect to a retirement occurring on or after January 1, 1999, an Eligible Employee who became an Eligible Employee before January 1, 1999 and who elects retirement coverage under the Plan will pay for coverage under the Plan during retirement. Such Eligible Employee's annual contribution amount during retirement will be equal to a percentage of SBC's actual costs per Eligible Employee for the prior Plan year according to the following:

The contribution percentage to be used shall be the lower of the Annual Contribution Percentage determined using each Eligible Employee's Age or Years Until Retirement as of December 31, 1997:

Age	Annual Contribution Percentage	OR	Years Until Retirement	Annual Contribution Percentage
if age 55 or older	10%		if retirement eligible	10%
if age 50 or older but less than 55	25%		if not retirement eligible	10% plus 5% for each whole year* until retirement eligibility(not to exceed 50%)
if less than age 50	50%

*in the event an Eligible Employee is less than one whole year from retirement eligibility, the Annual Contribution Percentage shall be determined as if one whole year from retirement eligibility

Coverage will remain in effect as long as the applicable contribution is paid by the Retiree.  However, once a Retiree terminates coverage he or she may not reinstate such coverage.

6.           Non-Competition.  Notwithstanding any other provision of this Plan, no coverage shall be provided under this Plan with respect to any Eligible Employee who shall, without the written consent of SBC, and while employed by SBC or any subsidiary thereof, or within three (3) years after termination of employment from SBC or any subsidiary thereof, engage in competition with SBC or any subsidiary thereof or with any business with which a subsidiary of SBC or an affiliated company has a substantial interest (collectively referred to herein as "Employer business").  For purposes of this Plan, engaging in competition with any Employer business shall mean engaging by Eligible Employee in any business or activity in the same geographical market where the same or substantially similar business or activity is being carried on as an Employer business.  Such term shall not include owning a nonsubstantial publicly traded interest as a shareholder in a business that competes with an Employer business.  However, engaging in competition with an Employer business 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.  Accordingly, coverage shall not be provided under this Plan if, within the time period and without the written consent specified, Eligible Employee either engages directly in competitive activity or in any capacity in any location becomes employed by, associated with, or renders service to any company, or parent or affiliate thereof, or any subsidiary of any of them, if any of them is engaged in competition with an Employer business, regardless of the position or duties the Eligible Employee takes and regardless of whether or not the employing company, or the company that Eligible Employee becomes associated with or renders service to, is itself engaged in direct competition with an Employer business.

7.           Administration.  Subject to the terms of the Plan, the Chairman shall establish such rules as are deemed necessary for the proper administration of the Plan.  SBC will compute a "gross-up" allowance which will be paid to an Eligible Employee to offset income tax liabilities incurred as a result of receiving benefits under this Plan.

8.           Amendments and Termination.  This Plan may be modified or terminated at any time in accordance with the provisions of SBC's Schedule of Authorizations.

SUPPLEMENTAL HEALTH PLAN ADMINISTRATIVE GUIDELINES

1.General.  The purpose of these guidelines is to list the procedures to be followed in administering the Supplemental Health Plan ("SHP").

The Senior Vice President - Human Resources will establish internal procedures and group insurance policies with health carrier(s) as appropriate to carry out the provisions of the Plan.

2.Coverage Considerations.

Eligible Employees:

Coverage is provided only for an Eligible Employee covered by a subsidiary's basic medical plan ("basic plan"), except as otherwise provided for in Section 4 of the Plan.

Coverage continues during periods of disability and during retirement in certain circumstances as described in the Plan.  Coverage during such periods shall be the same as provided to active Eligible Employees.

Coverage for a new Eligible Employee is effective the first day of the month in which the employee is declared to be eligible to participate in the Plan by the Chairman.

Coverage will cease on the last day of the month in which one of the following conditions exist:

      (a)   Eligible Employee is no longer a participant in the Basic Plan

(b)termination of Eligible Employee from active service for reasons other than disability or the retirement of an Eligible Employee who became an Eligible Employee before January 1, 1999

                (c)death of Eligible Employee (unless surviving dependents continue coverage under basic plan)

                (d)demotion of Eligible Employee so as to no longer be eligible to participate in the Plan

                (e)transfer to a subsidiary that will not bear expenses for the Eligible Employee to participate in the Plan

(f)Eligible Employee engages in competitive activity

(g)discontinuance of the Plan by SBC or a subsidiary

Dependents:

Coverage is provided for dependents of a covered Eligible Employee if the dependents are covered by the basic plan.

If coverage for a dependent ceases under the basic plan, coverage under this Plan will cease with the same effective date.

If coverage for the Eligible Employee under this Plan ceases for any reason, dependent coverage will cease with the same effective date except where employee coverage ceases due to death of the Eligible Employee, the Plan will continue in effect for surviving dependents as long as the dependents are covered under the basic plan (through automatic coverage or through payment of basic premiums) and are paying any applicable premiums under this Plan.

3.Enrollment.  Upon approval as an Eligible Employee, enrollment in the basic plan and payment of any applicable premium under this Plan, the Eligible Employee and current dependents (provided they are also enrolled in the basic plan) shall be covered under the Plan.  The Executive Compensation Administration (ECA) contact will forward a portfolio to the Eligible Employee including the following:

(a)           Blank claim forms (5 to 10 copies)

(b)           Blue return envelopes (5 to 10)

(c)Filing instructions

(d)Cards with Eligible Employee's name imprinted (for use for Eligible Employee, spouse, and eligible dependents)

As a matter of convenience for the Eligible Employee, the ECA contact will advise the appropriate payroll office regarding the enrollment and withholding of basic coverage premiums for class II or sponsored dependents not already enrolled in the basic plan.  The premium paid for dependents is at the rate specified for basic coverage only.  There is no additional premium to be paid for SHP coverage for the dependent. Withholding of dependent basic premiums for retired Eligible Employees, where applicable, shall be handled in the same manner as other withholding arrangements for retired executives.

Each month, the ECA contact will provide the SHP carrier and subsidiary benefit administration groups with a list of Eligible Employees currently enrolled in the Plan.  The ECA contact will provide updated dependent information to the carrier whenever new or revised Dependent Enrollment Forms are received from Eligible Employees.

4.Eligible Charges.  Charges for medical care will be eligible under this Plan if they are also eligible medical expenses as defined in the Internal Revenue Code.  In general, medical expenses are defined to include any amounts paid for the diagnosis, cure, mitigation, treatment or prevention of disease or for the purpose of affecting any structure or function of the body, and transportation for and essential to medical care.  Amounts paid for illegal operations or treatments are not eligible medical expenses.  In addition, expenses incurred which are merely beneficial to the general health of an individual are also not considered eligible medical expenses unless they are for the primary purpose of curing a particular disease or ailment and prescribed by a doctor.

Eligible Employees are encouraged to use basic plan cost management features, including pre-certification, continued stay, second surgical opinion and designation of Primary Care Physician.  Use of these features is optional for Eligible Employees.

5.Annual Limits.  The annual limits for charges which will be paid under the Plan are specified in the Plan.  Expenses incurred under provisions of basic medical, dental and vision plans are not counted against the Plan's limits.  The Plan's limits apply to the following eligible charges:

(a)           Medical expenses not paid under a basic medical expense plan (deductibles, co-pay amounts, excluded charges, etc., but not premiums to enroll dependents in the basic plan); plus

(b)           Dental expenses not paid under basic dental plan (deductibles, co-pay amounts, excluded charges etc., but not premiums to enroll dependents in the basic plan); plus

(c)All vision expenses not covered by basic vision plan, but not premiums to enroll dependents in the basic plan.

When an Eligible Employee or dependent or the Eligible Employee's family exhausts annual coverage, the Eligible Employee will be notified by the carrier.

6.           Claims Processing.  Eligible Employees or their Providers (Doctors, Hospitals, etc.) should submit all basic medical, dental and vision plan and SHP claims to the SHP carrier (UnitedHealthcare).  In no case should claims be submitted for processing under the procedures of the basic medical, dental and vision plans.  UnitedHealthcare will coordinate processing for both basic and SHP claims to reduce administrative efforts for Eligible Employees.  Retired Eligible Employees who are eligible for coverage under the Plan and who are eligible for Medicare should file with Medicare first. See Medicare Section below.

To submit a claim, Eligible Employees or their Providers should use a claim form (see Attachment 1) and one of the blue envelopes provided in the enrollment portfolio.  Documentation of service provided should be attached to the claim form.  Additional forms and envelopes are available from the carrier.

The carrier will receive completed forms, verify participation and make payment to the Eligible Employee or to the Provider as appropriate.  The Explanation of Benefits statement will be forwarded to the Eligible Employee when payments are made.

Medical and Dental Claims.  The carrier will allocate claim charges to either basic medical or dental plan coverage, SHP coverage or non-covered charges.  The Eligible Employee or the Eligible Employee's Provider will be reimbursed for all charges except those not eligible under either a basic medical or dental plan or SHP.  The carrier will use the separation of charges between plans to produce reports and to track against annual limits.

Vision Claims.  The carrier will allocate claim charges to either basic vision plan coverage, SHP coverage or non-covered charges.  The Eligible Employee or the Eligible Employee's Provider will be reimbursed for all charges except those not eligible under either a basic vision plan or SHP.  The carrier will use the separation of charges between plans to produce reports and to track against annual limits.  Eligible Employees should not submit vision claims to carriers other than the SHP carrier.

Medicare.  Any retired Eligible Employee eligible for coverage under the Plan or his or her dependents any of whom are eligible for Medicare shall file claims with Medicare first.  Expenses not reimbursed by Medicare should then be filed with UnitedHealthcare using the Supplemental Health Plan Claim Form.

Coordination by Administrators.  The ECA contact will instruct claims administrators for basic plans (vision, dental, medical) to forward all Eligible Employee claims to the SHP carrier for processing.

Release of Information.  If requested by a Provider, it will be necessary for the Eligible Employee to sign a form to authorize the carrier to obtain additional information from a Provider.  In those cases, the carrier will forward an information release form directly to the Eligible Employee.

7.           I. D. Cards.  Each enrollment portfolio includes I.D. cards which should be signed on the back by the Eligible Employee except for the Eligible Employee's spouses card which should be signed by the spouse.  The dependent's name will be shown on the dependent's card.

Blank cards can be obtained from the carrier and imprinted locally by the ECA

Group.

Each card will contain a carrier telephone number dedicated to the SHP.  This number is also on the claim forms.

8.           Prescriptions.  Participants in the SHP should use the Mail Service Prescription Drug Program or purchase prescriptions from a pharmacy, as appropriate.  The Eligible Employee should attach his/her receipt for any amount not covered by the basic Plan to a claim form, and forward to the carrier for full reimbursement.  Only prescription medicines are eligible for reimbursement.  Over-the-counter medicines (cold tablets, aspirin, etc.) and hygienic supplies (contact lens solution, eye drops, etc.) are not covered under the plan.

9.           Billing.  The carrier will issue insurance premium bills at the beginning of each quarter to the following SBC entities:

     (a)SBC ECA Group (for corporate staff Eligible Employees)

(b)Each subsidiary's Human Resources/Personal Administration Group (for subsidiary Eligible Employees).

Quarterly payments are due to the carrier by the end of the first month in the quarter.

Bills will provide sufficient detail to show the following:

(a)   Amounts above that allocated to basic medical, dental and vision plans

(b)   SHP premiums

(c)   Other SHP charges/credits

(d)   SBC code

(e)   State code

      (f)Individual bills for each Eligible Employee as requested by the employing subsidiary.

10.           Reports.  The carrier will issue quarterly reports to the SBC ECA contact.  These will include claim-to-premium reconciliation data for use in forecasting end-of-year true-ups and determining whether or not accruals will be required.

11.           Accruals.  If claim-to premium reconciliation data indicates claims are significantly exceeding premiums during a quarter, accruals should be considered during the year.  At the end of the year, an accrual is generally required unless a year-end true-up bill is not expected.

12.           Taxes.  If receipt of coverage/benefits under this Plan results in taxable income, an Eligible Employee's income will be grossed-up.

EXHIBIT C

Cingular Wireless SBC Executive Transition Plan

CINGULAR WIRELESS SBC EXECUTIVE

TRANSITION SUPPLEMENTAL RETIREMENT INCOME PLAN (SRIP)

1.Section 1.  "Purpose" shall be restated as follows:  "The purpose of the Cingular Wireless SBC Executive Transition Supplemental Retirement Income Plan is provide eligible employees with retirement benefits to supplement benefits payable pursuant to Cingular's qualified pension plan. The Cingular Wireless SBC Executive Transition Supplemental Retirement Income Plan is intended as a follow on and continuation of the SBC Supplemental Retirement Income Plan, as such Plan was in effect as of October 28, 2001.  The terms of the SBC Supplemental Retirement Income Plan in effect on October 28, 2001, except as herein amended, are incorporated by reference and made a part of the Plan."

2.           Any reference to SBC shall be deemed to reference Cingular Wireless LLC.  Any reference to the SBC Pension Benefit Plan - Nonbargained Program ("SBCPBP") shall be deemed to reference to the Cingular Wireless Pension Plan.

3.           The Plan shall be administered by the Senior Vice President - Human Resources of the Employer and any individual or committee he designates to act on his behalf with respect to any or all of his responsibilities hereunder.  Pursuant to Section 6.5, the Senior Vice President - Human Resources shall be authorized to modify or terminate the plan at any time.

4.           Eligibility and Participation.  Participation in the plan shall be limited to those former SBC executives who (a) previously participated in the SBC SRIP, (b) were contributed to Cingular Wireless as part of the formation of Cingular Wireless on or before December 31, 2001, and (c) are specifically identified on Appendix B, hereto.  No other Cingular Wireless employees are eligible to participate in or receive benefits from the Cingular Wireless SRIP.

5.           Freeze of Benefit Accruals.  Participants will continue to accrue  benefits under the Cingular Wireless SRIP until the earlier of (i) December 31, 2006, (ii) the termination of their employment; and (iii) the termination of Cingular Wireless SRIP or other cessation of benefit accruals under Cingular Wireless SRIP.

6.           The term "Retirement Eligible" shall be restated as follows:  "Retirement Eligible or Retirement Eligibility means that a Participant has attained age 55; provided, however, if the Participant is, or has been within the one year period immediately preceding the relevant date, an Officer with 30 or more Years of Service and has not attained age 55, he shall be deemed to be Retirement Eligible. Note:  Any reference in any other Cingular Wireless plan to a person being eligible to retire with an immediate pension pursuant to the Cingular SRIP shall be interpreted as having the same meaning as the term Retirement Eligible."

7.           Section 7.5 is amended to insert Georgia in the place of Texas.

CINGULAR WIRELESS SBC EXECUTIVE

TRANSITION PENSION MAKE UP PLAN

1.           Section 1 shall be amended as follows:  "The purpose of the Cingular Wireless SBC Executive Transition Pension Make Up Plan is to recognize, for pension computation purposes, certain compensation being excluded in the determination of retirement benefits under Cingular's qualified Cingular Wireless Pension Plan or other qualified pension plan(s) of any subsidiary of Cingular Wireless LLC.  The Cingular Wireless SBC Executive Transition Pension Make Up Plan is intended as a follow on and continuation of the SBC Pension Make Up #1 Plan, as such Plan was in effect as of October 28, 2001.  The terms of SBC Pension Make Up #1 Plan in effect on October 28, 2001, except as herein amended, are incorporated by reference and made a part of the Plan."

2.           Any reference to SBC shall be deemed to reference Cingular Wireless LLC. Any reference to the SBC Pension Benefit Plan - Nonbargained Program ("SBCPBP") shall be deemed a reference to the Cingular Wireless Pension Plan.  Any reference to the SBC Communications Inc. Supplemental Retirement Income Plan ("SRIP") shall be deemed to reference to the Cingular Wireless SBC Executive Transition Supplemental Retirement Income Plan.  Any reference to the SBC STIP shall be a reference to the comparable Cingular Wireless plan.  Any reference to the SBC TEAM award shall be a reference to the comparable Cingular Wireless plan.

3.           Eligibility and Participation.  Participation in the plan shall be limited to those former SBC employees who (a) were contributed to Cingular Wireless as part of the formation of Cingular Wireless on or before December 31, 2001, (b) had an accrued benefit under the SBC Pension Make Up #1 Plan as of December 31, 2002, and (c) otherwise meet the eligibility requirements of Section 3 of the Plan.  No other Cingular Wireless employees are eligible to participate in or receive benefits from the Cingular Wireless SBC Executive Transition Pension Make Up.

4.           Section 4 is amended to delete any reference to the SBC Mid Career Hire Plan.  In addition, Section 4, Paragraph 8 is deleted in its entirety to eliminate installment payments when the lump sum payment option is elected in the Cingular Wireless Pension Plan.

5.           The Plan shall be administered by the Senior Vice President - Human Resources of the Employer and any individual or committee he designates to act on his behalf with respect to any or all of his responsibilities hereunder.  Pursuant to Section 13, the Senior Vice President - Human Resources shall be authorized to modify or terminate the plan at any time.

6.           Freeze of Benefit Accruals.  Participants will continue to accrue benefits under the Plan until the earlier of (i) December 31, 2006, (ii) the termination of their employment; and (iii) the termination of the Plan or other cessation of benefit accruals under the Plan.

7.           Section 12 is amended to insert Georgia in the place of Texas.

CINGULAR WIRELESS SBC EXECUTIVE

TRANSITION LIFE INSURANCE PLAN

1.           Section 1.  "Purpose" shall be restated as follows:  "The purpose of the Cingular Wireless SBC Executive Transition Life Insurance Plan is to allow for provision of additional survivor benefits for Eligible Employees.  The Cingular Wireless SBC Executive Transition Life Insurance Plan is intended as a follow on and continuation of the SBC Supplemental Life Insurance Plan, as such Plan was in effect as of October 28, 2001.  The terms of the SBC Life Insurance Plan in effect on October 28, 2001, except as herein amended, are incorporated by reference and made a part of the Plan."

2.           All references in the Plan to SBC or SBC Communications, Inc. shall be deemed to be a reference to Cingular Wireless LLC.

3.           Eligibility and Participation.  Participation in the plan shall be limited to those former SBC executives who (a) were eligible to participate in the SBC Supplemental Life Insurance Plan, (b) were contributed to Cingular Wireless as part of the formation of Cingular Wireless on or before December 31, 2001, and (c) are specifically identified on Appendix B, hereto.  No other Cingular Wireless employees are eligible to participate in or receive benefits from the Cingular Wireless SLIP.

4.           The Plan shall be administered by the Senior Vice President - Human Resources of the Employer and any individual or committee he designates to act on his behalf with respect to any or all of his responsibilities hereunder.  Pursuant to Section 18, the Senior Vice President - Human Resources shall be authorized to modify or terminate the plan at any time.

5.           Coverage levels will be based on existing coverage levels and employee titles in effect at the employee's contribution to Cingular Wireless. Where coverages are based on a multiplier of eligible salary, coverages will automatically continue to increase.

6.           Section 4 - Alternate Death Benefit is amended as follows:  delete last sentence of paragraph two and delete paragraph 3 in its entirety, to eliminate reference to benefits payable under the SBC Pension Benefit Plan - Nonbargained Program.

7.           Section 15 is amended to insert Georgia in the place of Texas.

8.           Any references to the Board of Directors of SBC Communications, Inc. shall be deemed to be a reference to the Board of Directors/Strategic Review Committee of Cingular Wireless Corporation.

CINGULAR WIRELESS SBC EXECUTIVE TRANSITION SALARY

AND INCENTIVE AWARD DEFERRAL PLAN (SIAD)

1.           Article 1 -- "Statement of Purpose" shall be restated as follows: "The purpose of the Cingular Wireless SBC Executive Transition Salary and Incentive Award Deferral Plan is provide a select group of management employees consisting of eligible employees with a means of deferring the receipt of income.  The Cingular Wireless SBC Executive Transition Salary and Incentive Award Deferral Plan is intended as a follow on and continuation of the SBC Salary and Incentive Award Deferral Plan, as such Plan was in effect as of October 28, 2001.  The terms of the Salary and Incentive Award Deferral Plan in effect on October 28, 2001, except as herein amended, are incorporated by reference and made a part of the Plan."

2.           Any reference to SBC Communications Inc. shall be deemed to reference Cingular Wireless LLC.  Any reference to SBC shall be deemed to reference Cingular Wireless.  Any reference to the SBC Pension Benefit Plan - Nonbargained Program ("SBCPBP") shall be deemed to reference to the Cingular Wireless Pension Plan.

3.           Eligibility and Participation.  Participation in the plan shall be limited to those former SBC executives who (a) previously participated in the SBC SIAD, (b) were contributed to Cingular Wireless as part of the formation of Cingular Wireless on or before December 31, 2001, and (c) are specifically identified on Appendix B, hereto.  No other Cingular Wireless employees are eligible to participate in or receive benefits from the Cingular Wireless SIAD.  With respect to Article 4 -- Contributions, no additional contributions will be allowed under the Cingular Wireless SBC Executive Transition Salary and Incentive Award Deferral Plan.  Distributions pursuant to Article 5 will be based on contributions made prior to October 28, 2001 plus accrued interest determined in accordance with Section 4.2(b).

4.           The reference to "Chairman" under Article 2 -- Definitions is deleted, as is any reference to Chairman throughout the plan.

5.           "Employer" means Cingular Wireless LLC and any subsidiary or affiliate of Cingular Wireless LLC that is authorized by Cingular Wireless to participate in the Plan.

6.           "Incentive Award" is amended to insert "the short term or long term award payable by Cingular" in place of the awards payable under specified SBC plans.

7.           The definition of "Termination Under EPR" within Article 2 -- Definitions is deleted in its entirety.

8.           The Plan shall be administered by the Senior Vice President -- Human Resources of the Employer and any individual or committee he designates to act on his behalf with respect to any or all of his responsibilities hereunder.  Pursuant to Section 7.2, the Senior Vice President -- Human Resources shall be authorized to modify or terminate the plan at any time.

9.           Section 8.10 is amended to insert Georgia in the place of Texas.

CINGULAR WIRELESS SBC EXECUTIVE

TRANSITION LONG TERM DISABILITY PLAN

1.           Section 1.1  "Plan" shall be mean:  The Cingular Wireless SBC Executive Transition Long Term Disability Plan.  The purpose of this plan is to provide supplemental disability coverage to the group disability plan.  The Cingular Wireless SBC Executive Transition Long Term Disability Plan is intended as a follow on and continuation of the SBC Senior Management Long Term Disability Plan, as such Plan was in effect as of October 28, 2001.  The terms of the SBC Senior Management Long Term Disability Plan in effect on October 28, 2001, except as herein amended, are incorporated by reference and made a part of the Plan.

2.           Any reference to SBC Communications Inc. shall be deemed to reference Cingular Wireless LLC.  Any reference to SBC shall be deemed to reference Cingular Wireless.  Any reference to the SBC Pension Benefit Plan -- Nonbargained Program ("SBCPBP") shall be deemed to reference to the Cingular Wireless Pension Plan.

3.           Section 1.2  Employer shall mean Cingular Wireless or any of its subsidiaries or affiliates, which participate in the Plan.

4.           Section 1.4  Disability Benefit Plan shall mean the Disability Program of the Cingular Wireless Health and Welfare Benefits Plan for Nonbargained Employees.

CINGULAR WIRELESS SBC EXECUTIVE

TRANSITION LONG TERM DISABILITY PLAN

1.           Section 1.1  "Plan" shall be mean:  The Cingular Wireless SBC Executive Transition Long Term Disability Plan.  The purpose of this plan is to provide supplemental disability coverage to the group disability plan.  The Cingular Wireless SBC Executive Transition Long Term Disability Plan is intended as a follow on and continuation of the SBC Senior Management Long Term Disability Plan, as such Plan was in effect as of October 28, 2001.  The terms of the SBC Senior Management Long Term Disability Plan in effect on October 28, 2001, except as herein amended, are incorporated by reference and made a part of the Plan.

2.           Any reference to SBC Communications Inc. shall be deemed to reference Cingular Wireless LLC.  Any reference to SBC shall be deemed to reference Cingular Wireless.  Any reference to the SBC Pension Benefit Plan - Nonbargained Program ("SBCPBP") shall be deemed to reference to the Cingular Wireless Pension Plan.

3.           Section 1.2  Employer shall mean Cingular Wireless or any of its subsidiaries or affiliates, which participate in the Plan.

4.           Section 1.4  Disability Benefit Plan shall mean the Disability Program of the Cingular Wireless Health and Welfare Benefits Plan for Nonbargained Employees.

5.           Section 1.5  Mid-Career Pension Plan shall be deleted in its entirety.  Any reference to this plan shall be deleted.

6.           Section 1.6  Short Term Plan shall mean short term incentive awards granted under the comparable Cingular Wireless plan, if any.

7.           Section 1.7  Committee shall be amended to delete the last sentence in its entirety.

8.           Eligibility and Participation.  Participation in the plan shall be limited to those former SBC executives who (a) previously participated in the SBC Senior Management Long Term Disability Plan, (b) were contributed to Cingular Wireless as part of the formation of Cingular Wireless on or before December 31, 2001, and (c) are specifically identified on Appendix B, hereto.  No other Cingular Wireless employees are eligible to participate in or receive benefits from the Cingular Wireless SBC Executive Transition Long Term Disability Plan.

9.           Section 1.8(b) shall be deleted in its entirety. Any reference to this plan shall be deleted.

10.           Section 1.10 Annual Basic Pay shall be amended insert the Cingular Wireless Cash Deferral Plan in the place of the Senior Management Deferred compensation Plan and to replace the SBC Communications Inc. Long Term Incentive Plan with the comparable Cingular Wireless plan, if any.

11.           Section 2.1(a) shall be amended to insert "first twenty-six week period" in the place of "first fifty-two week period."

12.           Section 2.1(b) shall be amended to insert "first twenty-six week period" in the place of "first fifty-two week period."

13.           Section 2.4(b) The Board of Directors shall mean the Cingular Wireless Board of Directors.

14.           Section 4 Medical Expense Benefits shall be amended to insert the Medical Program of the Cingular Wireless Health and Welfare Benefits Plan for Nonbargained Employees and the Dental Program of the Cingular Wireless Health and Welfare Benefits Plan for Nonbargained Employees in place of the SBC Communications Inc. Medical Expense Plan and Dental Expense Plan, respectively.

15.           The Plan shall be administered by the Senior Vice President - Human Resources of the Employer and any individual or committee he designates to act on his behalf with respect to any or all of his responsibilities hereunder.  Pursuant to Section 6.3, the Senior Vice President - Human Resources shall be authorized to modify or terminate the plan at any time.

CINGULAR WIRELESS SBC EXECUTIVE

TRANSITION EXECUTIVE HEALTH PLAN

1.           Section 1 Purpose shall be amended as follows:  "The purpose of the Cingular Wireless SBC Executive Transition Executive Health Plan is to provide eligible employees and their eligible dependents with supplemental medical, dental and vision benefits.  The Cingular Wireless SBC Executive Transition Executive Health Plan is intended as a follow on and continuation of the SBC Executive Health Plan, as such Plan was in effect as of October 28, 2001.  The terms of the SBC Executive Health Plan in effect on October 28, 2001, except as herein amended, are incorporated by reference and made a part of the Plan."

2.           Any reference to SBC shall be deemed to reference Cingular Wireless LLC.  Any reference to the SBC Pension Benefit Plan - Nonbargained Program ("SBCPBP") shall be deemed a reference to the Cingular Wireless Pension Plan.  Any reference to the SBC Communications Inc. Supplemental Retirement Income Plan ("SRIP") shall be deemed to reference to the Cingular Wireless SBC Executive Transition Supplemental Retirement Income Plan.

3.           Eligibility and Participation.  Participation in the plan shall be limited to those former SBC executives who (a) previously participated in the SBC Executive Health Plan, (b) were contributed to Cingular Wireless as part of the formation of Cingular Wireless on or before December 31, 2001, and (c) are specifically identified on Appendix B, hereto.  No other Cingular Wireless employees are eligible to participate in or receive benefits from the Cingular Wireless SBC Executive Transition Executive Health Plan.

4.           Chairman shall mean the Senior Vice President - Human Resources.

5.           Committee shall mean the Cingular Wireless Benefits Committee as designated by the Senior Vice President - Human Resources.

6.           Section 2 Termination Under EPR is deleted in its entirety.

7.           The Plan shall be administered by the Senior Vice President - Human Resources of the Employer and any individual or committee he designates to act on his behalf with respect to any or all of his responsibilities hereunder.  Pursuant to Section 8, the Senior Vice President - Human Resources shall be authorized to modify or terminate the plan at any time.

EX-10.EEE

Exhibit 10-eee

BELLSOUTH NONQUALIFIED DEFERRED INCOME PLAN

(As amended and restated effective January 1, 1999)

BELLSOUTH NONOUALIFIED DEFERRED INCOME PLAN

(As amended and restated effective January 1, 1999)

BellSouth Corporation ("BellSouth") established on the first (1st) day of September, 1985, the BellSouth Nonqualified Deferred Income Plan ("Plan") for certain employees of BellSouth and its subsidiaries. The Plan is hereby amended and restated effective as of the 1st day of January, 1999, and, subject to the limitations contained in Article 2 of the Plan, the Plan as so amended and restated shall hereafter apply to all Deferral Agreements, including those executed before this effective date, under the Plan.

ARTICLE I

DEFINITIONS

1.1          "Base Salary" means the gross salary of the Participants, including the amount of any before-tax basic and supplemental contributions to the BellSouth Retirement Savings Plan or similar contributions to a comparable plan maintained by a Participating Company and the amount of any other deferrals from gross salary under any nonqualified deferred compensation plans which may be maintained by a Participating Company from time to time.

1.1(A)                    "CEO" means the Chief Executive Officer of BellSouth.

1.1(B)                    "Code" means the Internal Revenue Code of 1986, as amended.

1.2            "Compensation" means Net Gross Monthly Salary.

1.3            "Compensation Rate" means the cash compensation of a Participant, including (i) annual Base Salary rate in effect on the date the Deferral Agreement is executed, and (ii) standard lump-sum award amount(s) in effect under incentive compensation programs on the date the Deferral Agreement is executed. For Participants employed by Participating Companies whose compensation structures do not readily fit within this definition, Compensation Rate means cash compensation as defined by the CEO.

1.4            "Deferral Agreement" means an agreement pursuant to which deferral elections under this Plan are made and includes a standard Deferral Agreement, substantially in the form of Exhibit A hereto, a Deferral Agreement for deferral of certain lump-sum payments, substantially in the form of Exhibit B hereto, and other agreements approved from time to time for use in connection with this Plan as described in Article 2.

1.5            "Employer" means (i) BellSouth and (ii) any subsidiary of BellSouth authorized by BellSouth to enter into Deferral Agreements pursuant to this Plan.

1.5(A)  "ERISA" means the Employee Retirement Income Security Act of 1974, as amended.

1.6            "Net Gross Monthly Salary" means the amount of a Participant's Base Salary which actually is paid to him or her in any month, net of all withholding, allotments, and deductions other than any reduction as a result of participation in this Plan.

1.7            "Participant" means an employee who is authorized by the CEO or his delegated representative to participate in the Plan and to execute a Deferral Agreement.

1.7(A)  "Plan Administrator" shall mean the CEO and any individual or committee he designates to act on his behalf with respect to any or all of his responsibilities hereunder; provided, the CEO may designate any other person or committee to serve as the Plan Administrator with respect to any or all of the administrative responsibilities hereunder.

1.8            "Plan Year" means (i) January 1, 1986 through December 31, 1986 and (ii) each and every calendar year thereafter through 1996. For certain Participants designated by the CEO, "Plan Year" also means calendar year 1997 or calendar year 1998.

1.8(A) "Responsible Officer" means the officer elected by the Employer's Board of Directors (or similar governing body) responsible for human resources matters for the Employer.

1.9            "Retirement" means any termination by a Participant who is eligible for a pension, other than a deferred vested pension, under the terms and conditions of the BellSouth Personal Retirement Account Pension Plan, as amended from time to time, or comparable plan maintained by the Participating Company employing the Participant.

With respect to any Participant who, at the time eligibility for Retirement is determined, is not eligible to participate in either the BellSouth Personal Retirement Account Pension Plan or a comparable plan maintained by the Participating Company employing the Participant, "Retirement" means the termination of employment by the Participant if at such time (A) the sum of (i) plus (ii) equals or exceeds seventy-five (75) years where (i) is the Participant's whole years and whole months of age and (ii) is the Participant's whole years and whole months of Net Credited Service, and (B) the Participant's Net Credited Service is at least ten (10) years (the "Rule of 75"). For purposes of the Rule of 75, Net Credited Service shall include the Participant's period of service with any Subsidiary both prior to and after the time such Subsidiary became a Subsidiary.

Additionally, "Retirement" means (i) any termination by a Participant who is eligible for a service benefit under terms and conditions of the BellSouth Corporation Supplemental Executive Retirement Plan, (ii) any termination by a Participant who has attained age 62 or older and whose Net Credited Service is ten (10) years or more at the time of employment termination, (iii) any termination by a Participant who separates from service under the BellSouth Career Transition Assistance Plan (CTAP), the BellSouth Enterprises Employee Career Transition Plan (ECTP), the BellSouth Telecommunications, Inc. Career Transition Assistance Plan (BST CTAP), the BellSouth Telecommunications, Inc. Career Transition Assistance Plan-Professional (BST CTAP-P), the BellSouth Telecommunications, Inc. Employee Separation Assistance Plan (ESAP), the BellSouth Telecommunications, Inc. Competitive Management Restaffing Plan (CMRP), the BellSouth Telecommunications, Inc. Leadership Repositioning Plan (LRP), the BellSouth Telecommunications, Inc. Competitive Sourcing Transition Assistance Plan - Information Technology (CSTAP-IT), the BellSouth Advertising & Publishing Corporation Voluntary Management Separation Pay Plan (VMSPP), or a designated successor to any such plan, or other severance arrangement approved by the CEO as applicable to this Plan, and (iv) any termination by a Participant who separates from service under the BellSouth Voluntary Transition Incentive Plan (VTIP) and whose Net Credit Service is ten years or more at the time of such separation.

1.10      "Disability" means a condition as that term is defined in the BellSouth Long Term Disability Plan for Salaried Employees, as amended from time to time, or comparable plan maintained by the Participating Company employing the Participant. In the absence of a comparable Participating Company sponsored disability plan, the condition is based upon certification by the Board of Directors of the Participating Company employing the Participant that the Participant is disabled.

         1.11      "Participating Company" means (i) BellSouth and (ii) any corporate Subsidiary at least eighty percent (80%)of the capital stock of which is owned by BellSouth or by one or more eighty percent (80%) owned Subsidiaries, which has been designated by BellSouth for participation in this Plan.

1.12      "Net Credited Service" shall have the same meaning as is given such term in the BellSouth Personal Retirement Account Pension Plan.

1.13      "Subsidiary" means any corporation other than BellSouth which is a member of the same controlled group of corporations, within the meaning of Code Section 414(b), as BellSouth and any trade or business (whether or not incorporated) which is under common control with BellSouth, within the meaning of Code Section 414(c).

ARTICLE 2

TERM; AMENDMENT

This Plan shall be effective until terminated by the CEO. This Plan originally provided for 1986 through 1998 with Plan specifications and interest rates being established by the CEO for each separate Plan Year. Notwithstanding the foregoing, no deferrals will be permitted under the Plan except with respect to the Plan Years described in Section 1.8 and then only to the extent authorized by the CEO.

This Plan may be amended, renewed, or restated by the CEO. Notwithstanding the foregoing, no contractual right created by and under any Deferral Agreement on the date of termination or amendment shall be abrogated by the termination or amendment of this Plan unless the Participant who executed such Deferral Agreement consents. Participants have no other right or interest in the continuance of this Plan in any form.

ARTICLE 3

ADMINISTRATION; INTERPRETATION

3.1            Claims Procedure.

(a)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.

(b)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 claim. The claimant (or his 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 3.1(a). 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.

3.2             Interpretation. The Plan Administrator shall have the exclusive responsibility and complete discretionary authority to control the operation and administration of the Plan, with all powers necessary to properly carry out such responsibility, including without limitation the full and exclusive power (i) to interpret the terms of this Plan and any Deferral Agreement, including the power to construe ambiguous or uncertain terms (ii) to establish reasonable procedures with which Participants must comply to exercise any right established under the Plan or any Deferral Agreement, (iii) to determine status, coverage, eligibility for and the amount of benefits, and all questions arising in connection therewith, and (iv) to resolve all questions that arise in the operation and administration of this Plan. The rights and duties of Participants and other persons and entities are subject to, and governed by, such acts of administration, interpretations, procedures, and delegations. All actions or determinations of the Plan Administrator or its delegates under this Article 3 shall be final, conclusive and binding on all persons.

ARTICLE 4

DEFERRAL AGREEMENT

4.1             Election to Defer. As hereinafter provided and subject to acceptance by an Employer, (a) a Participant may elect to reduce the amount of Compensation which will be paid to him or her during any Plan Year by executing and delivering to his or her Employer in a timely fashion a standard Deferral Agreement, substantially in the form of Exhibit A hereto, and (b) a Participant may elect to reduce the amount of a lump-sum payment to which he or she may become entitled prior to 1997 in connection with separation under the BellSouth Career Transition Assistance Plan (CTAP), the BellSouth Enterprises Employee Career Transition Plan (ECTP), the BellSouth Telecommunications, Inc. Career Transition Assistance Plan (BST CTAP), the BellSouth Telecommunications, Inc. Career Transition Assistance Plan Professional (BST CTAP-P), the BellSouth Telecommunications, Inc. Employee Separation Assistance Plan (ESAP), the BellSouth Telecommunications, Inc. Competitive Management Restaffing Plan (CMRP), the BellSouth Telecommunications, Inc. Leadership Repositioning Plan (LRP), the BellSouth Advertising & Publishing Corporation Voluntary Management Separation Pay Plan (VMSPP), the BellSouth Voluntary Transition Incentive Plan (VTIP) or a designated successor to any such plan, or other severance arrangement approved by the CEO as applicable to this Plan, by executing and delivering to his or her Employer in a timely fashion a Deferral Agreement, substantially in the form of Exhibit B hereto; provided that subsection (b) of this Section 4.1 shall apply to a Participant separating under the BellSouth Voluntary Transition Incentive Plan (VTIP) only if the Participant's Net Credited Service is ten (10) years or more at the time of such separation.

4.2            Creation of Contractual Obligation. An Employer which accepts a properly executed and timely delivered Deferral Agreement agrees to pay to the Participant or his or her Designated Beneficiary, as defined in Section 6.1, the benefits described in Article 5, which shall be calculated based upon (i) the amount deferred by each Participant, (ii) interest rate established for each Plan Year by the CEO or his delegate and applied to that amount annually, (iii) the time which elapses between the Plan Year of deferral and the date of benefit payments, and (iv) other factors established in this Plan and by the CEO or his delegate.

An Employer's senior executive officer or Responsible Officer is authorized to accept and approve a properly executed Deferral Agreement on behalf of that Employer under Section 4.2.

4.3             Timing of Election. A Participant may execute and deliver to his or her Employer a standard Deferral Agreement, substantially in the form of Exhibit A hereto, on or before November 30 of any calendar year to reduce the Participant's Compensation only for the next subsequent Plan Year. In addition, a Participant may execute and deliver to his or her Employer a Deferral Agreement, substantially in the form of Exhibit B hereto, in connection with a lump-sum payment described in Section 4.1(b) of this Plan within the time period prescribed by his or her Employer, but in no event later than the day preceding the day on which individuals are selected for separation under such program by the Employer.

Notwithstanding any other provisions of this Plan or any Deferral Agreement, no Deferral Agreement shall be effective to defer Compensation (or other amounts) which is earned by any Participant on or before the date upon which the Deferral Agreement is properly executed and timely delivered to the Participant's Employer.

4.4          Amount of Deferral. (a) A Participant may elect to defer during any Plan Year a dollar amount which is less than or equal to a specified percent of his or her Compensation Rate applicable to the Plan Year rounded to the next highest one thousand dollars. The CEO shall establish the specified percent of the Compensation Rate applicable to each Plan Year. Notwithstanding any provision of a Deferral Agreement or this Plan to the contrary, the Deferral Agreement of a Participant, with regard to a deferral described in this paragraph (a) shall be modified automatically if necessary such that all actual reductions pursuant to his or her Deferral Agreement are made from his or her Net Gross Monthly Salary.

(b)          A Participant may elect to defer a portion of a lump-sum payment to which he or she may become entitled as described in Section 4.1(b) in an amount not to exceed (i) a dollar amount which is less than or equal to the maximum deferral, if any, which such Participant could elect under paragraph (a) of this Section 4.4 at the time of election, and (ii) the dollar amount by which any election of deferrals under paragraph (a) of this Section 4.4 for the Plan Year in which the Participant terminates employment have not been satisfied at the time of termination of employment, except as may be otherwise approved by the CEO.

ARTICLE 5

PAYMENT OF BENEFITS

5.1           Retirement Benefit. (a) If a Participant terminates employment with his or her Employer and is not immediately reemployed by another Employer and such termination constitutes a Retirement, then the Employer shall pay to the Participant the annual Retirement benefit stated in his or her Deferral Agreements on those dates specified in each Deferral Agreement. The Employer shall also make any Retirement benefit payment to a Participant who has remained employed with the Employer (or with another Employer) through the date specified for such payment in his or her Deferral Agreement. Except as hereinafter provided, the Retirement benefit payment(s) which will be stated in a Participant's Deferral Agreement shall be a number of payments equal to the lesser of (i) fifteen (15) and (ii) the remainder of eighty (80) minus the age at which Retirement benefit payments commence pursuant to this Section. The Retirement benefit shall be paid as soon as administratively practicable after the first (1st) day of January following the calendar year in which the Participant attains age sixty-five (65). Any such Deferral Agreement executed by a Participant which defers amounts which would otherwise be payable to the Participant in or after the Plan Year in which he or she attains age sixty-five (65), however, shall provide that the first Retirement benefit payable shall be paid as soon as administratively practicable after the first (1st) day of January following the later of (i) the fifth (5th) anniversary of the date upon which the Deferral Agreement is accepted by the Employer or (ii) his or her Retirement, and that the number of Retirement benefit payments shall equal the remainder of (i) eighty (80) minus (ii) the age at which Retirement benefit payments commence pursuant to this Section.

(b)Notwithstanding the provisions of paragraph (a) of this Section 5.1, to the extent authorized in terms and conditions approved for a Plan Year by the CEO pursuant to Article 2 of this Plan, the Employer shall pay to the Participant the annual Retirement benefit specified in his or her Deferral Agreements on those dates specified in each Deferral Agreement which may differ from those specified in Section 5.1(a).

(c)If a Participant is, on the date of termination, or becomes thereafter a proprietor, officer, partner, or employee of, or otherwise is or becomes affiliated with (i) any business that is in competition with any Employer or (ii) any government agency having regulatory jurisdiction over the business activities of any Employer, then, upon that date, no further benefit payments shall be made to the Participant, or any other person with respect to the Participant's participation in this Plan, under any provision or Section of this Plan, except that, the Participant shall be paid in lump-sum as soon as administratively practicable after the first (1st) day of January following that date an amount equal to (i) the amount deferred pursuant to each of his or her Deferral Agreements, (ii) plus interest on each such amount (adjusted to take into account all payments described in clause (iii) below) credited separately at a rate equal to the rate paid on ten (10) year United States Treasury obligations on each date for which interest is credited, compounded quarterly, for each Plan Year between the Plan Year to which the Deferral Agreement applies and the Plan Year in which the act occurs or status is first attained, inclusive, (iii) minus the amount of all Interim Distributions and any other payments hereunder. If the above calculation results in a negative amount, such amount shall not be collected from, or enforced against the Participant as a claim by his or her Employer.

5.2             Interim Distributions. A Participant shall be paid the benefits stated in Paragraph 3 of his or her standard Deferral Agreements on those dates stated in that paragraph of each such Deferral Agreement (herein referred to as "Interim Distributions"). However, no Interim Distribution shall be stated in a Deferral Agreement or paid to any Participant as a result of the Deferral Agreement if the Participant is age fifty-five (55) or older on any day during the Plan Year to which the Deferral Agreement applies. Except as may be otherwise specified by the CEO, no Interim Distribution shall be paid to a Participant on or after the date upon which the Participant or his or her Designated Beneficiary receives any benefit or payment under any other Section of this Plan or any other paragraph of his or her Deferral Agreement. No Interim Distribution shall be paid in connection with any Deferral Agreement which does not specifically provide for such benefits.

5.3             Death Benefit. If a Participant dies on or before the date upon which he or she is eligible for Retirement, then his or her Designated Beneficiary, as defined in Section 6.1, shall be paid in a lump-sum as soon as administratively practicable after the first day of January following his or her date of death an amount equal to: (i) the amount deferred pursuant to each of his or her Deferral Agreements, (ii) plus interest on each such amount (adjusted to take into account all payments described in clause (iii) below) credited separately at the rate approved for and applicable to his or her participation in each Plan Year for which he or she executed accepted Deferral Agreements, such rates to be compounded quarterly for each Plan Year between the Plan Year to which the Deferral Agreement applies and the Plan Year in which his or her death occurs, inclusive, (iii) minus the amount of all Interim Distributions, if any, received by the Participant or to which the Participant is entitled on or before the date of his or her death. If the above calculation results in a negative amount, such amount shall not be collected from, or enforced against the Participant as a claim by his or her Employer.

If a Participant dies on or after the date upon which he or she is eligible for Retirement (as defined in Section 1.9), whether or not he or she has in fact terminated employment, prior to commencing receipt of benefits, or having received all benefits, as the case may be, payable in accordance with the duly authorized Deferral Agreement under this Plan, except as provided under Section 5.4, then his or her Designated Beneficiary, as defined in Section 6.1, shall receive all benefits, or continue to receive the remaining benefits, as the case may be, in accordance with that Deferral Agreement.

If the Participant's Designated Beneficiary receives or is entitled to receive a benefit hereunder, then no person or persons shall receive or be entitled to receive any benefit or payment under any other Section or this Plan or under any Deferral Agreement, notwithstanding any other provision of this Plan or any Deferral Agreement.

5.4         Pre-Retirement Disability Benefit. If a Participant suffers a Disability or becomes Disabled (as defined in Section 1.10) prior to the date upon which he or she receives or is entitled to receive a benefit under Section 5.1 or Section 5.3, then he or she shall be paid by the Employer in a lump-sum as soon as administratively practicable after the first (1st) day of January following the Plan Year in which the Disability occurs an amount equal to: (i) the amount deferred pursuant to each of his or her Deferral Agreements, (ii) plus interest on each such amount (adjusted to take into account all payments described in clause (iii) below) credited separately at the rate approved for and applicable to his or her participation in each Plan Year for which he or she executed accepted Deferral Agreements, such rates to be compounded annually for each Plan Year between the Plan Year to which the Deferral Agreement applies and the Plan Year in which his or her Disability occurs, inclusive, (iii) minus the amount of all Interim Distributions, if any, received by the Participant or to which the Participant is entitled on or before the date of onset of Disability. If the above calculation results in a negative amount, such amount shall not be collected from, or enforced against the Participant as a claim by his or her Employer. If the Participant receives or is entitled to receive a benefit hereunder, then no person or persons shall receive or be entitled to receive any benefit or payment under any other section of this Plan or under any Deferral Agreement, notwithstanding any other provisions of this Plan or any Deferral Agreement.

5.5            Termination of Employment Prior to Retirement orDisability. If a Participant terminates employment with his or her Employer, and is not immediately reemployed by another Employer, prior to death, Disability or Retirement, then a benefit amount shall be paid to the Participant, either in a lump-sum or in five (5) annual installments, at the election of the CEO, payable as soon as administratively practicable after the first (1st) day of January following his or her date of termination (and anniversaries thereof in case of installments), which amount equals (i) the amount deferred pursuant to each of his or her Deferral Agreements, (ii) plus interest on each such amount (adjusted to take into account all payments described in clause (iii) below) credited separately at a rate equal to the rate on ten (10) year United States Treasury obligations on each date for which interest is to be credited, compounded quarterly, for each Plan Year between the Plan Year to which the Deferral Agreement applies and the Plan Year in which the termination occurs, inclusive, (iii) minus the amount of all Interim Distributions, if any, received by the Participant or to which the Participant is entitled on or before the date of his or her termination. Notwithstanding the foregoing, with respect to each Participant described in the preceding sentence who terminates employment under a severance plan or arrangement approved by the Employer's Responsible Officer (or the Plan Administrator) for purposes of this Section 5.5, the rate of interest described in clause (ii) of the preceding sentence shall be the rate approved for and applicable to his or her participation in each Plan Year for which he or she executed accepted Deferral Agreements, and such interest shall be compounded annually. If the above calculation results in a negative amount, such amount shall not be collected from, or enforced against the Participant as a claim by his or her Employer. If the Participant receives or is entitled to receive a benefit hereunder, then no person or persons shall then or thereafter receive any benefit or payment under any other Section of this Plan or any Deferral Agreement, notwithstanding any other provision of this Plan or any Deferral Agreement.

5.6             Certain Rotational Assignments. In the event that a Participant is transferred to Bellcore or to any other subsidiary of BellSouth that is not a Participating Company, and under circumstances where it is expected that such Participant will return to employment with BellSouth or another Employer, then (1) such transfer will not be considered a termination of employment under Section 5.5, (2) such Participant's Compensation deferrals shall cease as of the date of such transfer and (3) his Deferral Agreement in effect for the year of transfer shall automatically be amended by his Employer to reduce his Retirement benefits and Interim Distributions to equal the percentage of such payments equal to the percentage that his actual Compensation deferrals made for the year of transfer are of his elected Compensation deferrals for such year. Such a Participant shall be deemed to have terminated employment under Section 5.5 if, and as of the date, that he terminates employment with Bellcore or such other applicable company and fails to return to employment with BellSouth or other Employer, or he otherwise fails to meet the terms of his rotational assignment.

ARTICLE 6

MISCELLANEOUS

6.1             Beneficiary Designation. If a Participant dies and, on the date of his or her death, any benefit or benefits remain to be paid to the Participant under the terms and conditions of this Plan, the remaining benefit or benefits shall be paid to that person or persons designated by the Participant ("Designated Beneficiary") on the form provided from time to time to the Participant by his or her Employer in accordance with the Deferral Agreement. If the Designated Beneficiary dies prior to completion of all payments under the Deferral Agreement, the estate of the Designated Beneficiary shall be paid by the Employer in a lump-sum as soon as administratively practicable after the first (1st) day of January following the year in which the Designated Beneficiary died. The amount of the lump-sum will be equal to (i) the amount deferred pursuant to each of the Participant's Deferral Agreements, (ii) plus interest on each such amount (adjusted to take into account all payments described in clauses (iii) and (iv) below) credited separately at the rate approved for and applicable to the Participant's participation in each Plan Year from which he or she executed accepted Deferral Agreements, such rates to be terminated employment under Section 5.5 if, and as of the date, that he terminates employment with Bellcore or such other compounded quarterly for each Plan Year between the Plan Year to which the Deferral Agreement applies and the Plan Year in which the Designated Beneficiary's death occurs, inclusive, (iii) minus the amount of all Interim Distributions, if any received by the Participant or Designated Beneficiary, (iv) minus the Retirement benefits paid to the Participant or Designated Beneficiary pursuant to the Deferral Agreement(s). If the above calculation results in a negative amount, such amount shall not be collected from, or enforced against the estate of the Designated Beneficiary. If no Designated Beneficiary has been chosen by the Participant or if the Designated Beneficiary is not living on the date of the Participant's death, the estate of the Participant shall be paid by the Employer in a lump-sum as soon as administratively practicable after the first (1st) day of January following the year in which the Participant died. The amount of the lump-sum shall be determined in the manner described previously in this Section 6.1.

6.2            Obligations of Employers Not the Obligations of BellSouth. The duties and obligations of each Employer hereunder are several but not joint, each Employer is only liable to its own employees who are Participants hereunder, and BellSouth is not liable for the actions, omissions, duties or obligations of any other Employer hereunder.

6.3             Recalculation Events; Treatment of this Plan under Applicable Federal Income Tax Laws. The adoption and maintenance of the Plan is strictly conditioned upon (i) the applicability of Code Section 451(a) to the Participant's recognition of gross income as a result of his or her participation, (ii) the fact that Participants will not recognize gross income as a result of participation in this Plan until and to the extent that benefits are received, (iii) the applicability of Code Section 404(a)(5) to the deductibility of the amounts paid to Participants hereunder, (iv) the fact that an Employer will not receive a deduction for amounts credited to any accounting reserve created as a result of this Plan until and only to the extent that benefits are paid, and (v) the inapplicability of Parts 2, 3, and 4 of Title I of ERISA to this Plan by reason of the exemptions set forth in ERISA Sections 201(a), 301(a) and 401(a) and Part 1 of ERISA by reason of the exemption set forth in Section 2520.104-23 of applicable United States Department of Labor regulations. If the Internal Revenue Service, the Department of Labor or any court determines or finds as a fact or legal conclusion that any of the above conditions is untrue and issues or intends to issue an assessment, determination, opinion or report stating such, or if the opinion of the legal counsel of BellSouth based upon legal authorities then existing is that any of the above assumptions is incorrect, then, if the CEO so elects within one year of such finding, determination, or opinion, a Recalculation Event shall be deemed to have occurred.

If a Recalculation Event occurs under this Section 6.3, Section 6.4, or any other Section of this Plan, then each Participant who has not attained the age of fifty-five (55) years on the date on which the CEO takes official action to elect the occurrence of a Recalculation Event shall thereafter be paid benefits in accordance with the election made irrevocably in connection therewith in the Deferral Agreement. For each such Participant the amount of Retirement benefit stated in the Deferral Agreement shall be recalculated and restated using a rate of interest equal to the rate of interest on ten (10) year United States Treasury obligations on each date upon which interest should have been or will be calculated, compounded quarterly, instead of the interest rate assumed in originally calculating the benefit, as referenced in Section 4.2.

Notwithstanding anything to the contrary contained in this Plan or a Deferral Agreement, the benefits payable with respect to any Participant who shall have either (i) attained the age of fifty-five (55) years or (ii) died, on or prior to the date on which the CEO takes official action to elect the occurrence of a Recalculation Event under either Sections 6.3 or 6.4 of this Plan, shall not be recalculated and restated in the manner described in such Sections or in any other way affected by such action. If such Participant or Designated Beneficiary receives or is entitled to receive a benefit as result of the occurrence of a Recalculation Event, then no person or persons shall receive or be entitled to receive any benefit or payment under any other Section of this Plan or under any Deferral Agreement, notwithstanding any other provision of this Plan or the Deferral Agreement.

6.4              Changes in the Internal Revenue Code of 1954. The adoption and maintenance of this Plan also is strictly conditioned upon the existence and continuation of the percentage tax rates for corporations stated in Section 11(b) of the Internal Revenue Code of 1954, as amended through August 13,1981 but not thereafter (the "1954 Code"). In particular, the adoption and maintenance of this Plan is strictly conditioned upon the rate of tax stated in Section 1 l (b)(5) of the 1954 Code, that is, "46 percent of so much of the taxable income as exceeds $100,000." If (1) 1954 Code Section 11(b) is deleted or amended or a surtax or other addition to tax is imposed and, as a result thereof, the rate of federal income tax imposed on taxable income of corporations in excess of One Hundred Thousand Dollars ($100,000) is reduced below such rate in effect immediately before reduction and is less than forty percent (40%), (2) a tax is imposed by the federal government on income, sales, consumption, or the value of goods and services which is not currently contained in the Code, or (3) the Code is amended or restated so extensively that in the opinion of the legal counsel of BellSouth the tax treatment of this Plan to the Employer has materially changed to the detriment of the Employer, then, if the CEO so elects within one year after the enactment of the legislation causing such event, a Recalculation Event shall be deemed to have occurred and a benefit will be payable only as described in Section 6.3.

6.5       Governing Law. This Plan and the Deferral Agreements shall be construed in accordance with the laws of the State of Georgia to the extent such laws are not preempted by ERISA.

6.6            Successors, Mergers, Consolidations. The terms and conditions of this Plan and each Deferral Agreement shall inure to the benefit of and bind BellSouth, the other Employers, the Participants, their successors, assigns, and personal representatives. If substantially all of the assets of any Employer are acquired by another corporation or entity or if an Employer is merged into, or consolidated with, another corporation or entity, then the obligations created hereunder and as a result of the Employer's acceptance of Deferral Agreements shall be obligations of the successor corporations or entity.

6.7            Discharge of Employer's Obligation. The payment by the Employer of the benefits due under each and every Deferral Agreement to the Participant or to the person or persons specified in Section 6.1 discharges the Employer's obligations hereunder, and the Participant has no further rights under this Plan or the Deferral Agreements upon receipt by the appropriate person of all benefits. In addition, (i) if any payment is made to a Participant or his or her Designated Beneficiary with respect to benefits described in this Plan from any source arranged by the Employer 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 Employer under this Plan and the Deferral Agreements to the extent of such payment as if such payment had been made directly by the Employer; and (ii) if any payment from a source described in clause (i) above shall be made, in whole or in part, prior to the time payment would be made under the terms of this Plan and the Deferral Agreement, such payment shall be deemed to satisfy the Employer's obligation to pay Plan benefits beginning with the benefit which would next become payable under the Plan and the Deferral Agreement and continuing in the order in which benefits are so payable, until the payment from such other source is fully recovered. In determining the benefits satisfied by a payment described in clause (ii), Plan benefits, as they become payable, shall be discounted to their value as of the date such actual payment was made using an interest rate equal to the valuation interest rate for deferred annuities as last published by the Pension Benefit Guaranty Corporation prior to the date of such actual payment. If the benefits which actually become payable under this Plan, after applying the discount described in the preceding sentence, are less than the amount of the payment(s) described in clause (ii), any such shortfall shall not be collected from or enforced against the Participant as a claim by the Employer.

6.8             Social Security and Income Tax Withholding. Each Participant agrees as a condition of participation hereunder that his or her Employer may withhold federal, state, and local income taxes and Social Security taxes from any distribution or benefit paid hereunder.

6.9       Notice; Delivery of Deferral Agreement. Any notice required to be delivered hereunder and any Deferral Agreement is properly delivered to the Employer when personally delivered to, or actually received from the United States mail, postage prepaid, by Executive Compensation and Benefits Group, Room 13J08, BellSouth Corporation, 1155 Peachtree St., N.E., Atlanta, Georgia 30309-3610.

6.10     Nature of Obligations Created Hereunder. The Participants agree as a condition of participation hereunder that:

(a)             Participants have the status of general, unsecured creditors of the Employer and the Plan and the Deferral Agreements constitute the mere promise by the Employer to make benefit payments in the future;

(b)             nothing contained in this Plan or any Deferral Agreement shall create or be construed to create a trust of any kind between BellSouth, any Employer, and any Participant;

(c)benefits payable, and rights to benefits under, this Plan and Deferral Agreements may not be anticipated, sold, assigned (either at law or in equity), transferred, pledged, encumbered or subject to attachment, garnishment, levy, execution or other legal or equitable process.

The Plan is intended to be unfunded for purposes of ERISA and the Code.

6.11     No Modification of Employment Agreement. Neither this Plan nor any Deferral Agreement constitutes a modification of any employment agreement which may exist between the Participant and the Participating Company employing the Participant, and no right to continued employment is created by this Plan or the Deferral Agreement.

6.12     Liability of Employers for Individual Participants Employed by More than One Employer; Applicability of Deferral Agreement Filed with One Employer to Subsequent Employers. Any Deferral Agreement which is timely executed and delivered to an Employer shall be effective to defer Compensation earned by the Participant from that Employer or any other Employer during the period in which the Deferral Agreement is effective. The execution and delivery of a Deferral Agreement by a Participant constitutes an election by the Participant to defer Compensation earned from any Employer under the terms of this Plan. A Participant who timely executes and delivers a Deferral Agreement to one Employer and who subsequently transfers to another Employer or otherwise terminates employment and becomes employed by another Employer shall have the Compensation which is paid to him or her by both Employers reduced under the terms of the Deferral Agreement and this Plan as if the transfer or termination and reemployment had not occurred. The Employer which accepts an executed, timely delivered Deferral Agreement is liable to the Participant for all benefits which may be payable under, and as a result of, that Deferral Agreement notwithstanding the transfer of a Participant to or from another Employer, or the termination and reemployment of a Participant by another Employer. If a Participant timely executes and delivers Deferral Agreements to more than one Employer, each Employer is singly and not jointly liable for the Deferral Agreement or Deferral Agreements which it accepted. Any provision of this Plan which refers to a benefit or payment which is payable as a result of more than one (1) Deferral Agreement shall be construed to apply only to the Deferral Agreements delivered by that Participant and accepted by each separate Employer of that Participant, and not to all Deferral Agreements executed and timely delivered by one Participant or all Participants to all Employers, each Deferral Agreement which incorporates the terms of this constituting a separate contractual obligation of a single Employer.

Exhibit A

DEFERRAL AGREEMENT

FOR THE BELLSOUTH NONQUALIFIED DEFERRED INCOME PLAN

1.Amount of Deferral. I,                                                             , hereby agree to participate in the BellSouth Nonqualified Deferred Income Plan ("Plan"). I have read the Plan in its entirety and agree to its terms and conditions, which are incorporated herein by reference. Pursuant to the terms of the Plan, I elect to defer from my compensation to be paid to me in Plan Year ______ the sum of ______________ Dollars. I understand that my Compensation which ordinarily would be paid to me in that Plan Year will be reduced by the amount of my deferral, and that such reduction will be made only from my gross monthly salary, not from any bonus or incentive award which may be payable to me.

2.Retirement Benefits. In consideration for my deferral, my Employer shall pay to me the following benefits on the dates specified, if I am entitled to these benefits under the terms and conditions of the Plan:

3.Interim Distributions. In consideration for my deferral, my Employer shall pay to me the following benefits on the dates specified, if I am entitled to these benefits under the terms and conditions of the Plan:

4.Recalculation Event. If a Recalculation Event applicable to me occurs, my Employer shall pay to me benefits in an amount determined in accordance with the terms and conditions of paragraph 6.3 of the Plan paid in accordance with the terms elected below. The undistributed balance of the recalculated amount will continue to accumulate at the reduced rate specified in paragraph 6.3 of the Plan.

- Recalculated amount paid in a LUMP-SUM in the year following the Recalculation Event.

- Recalculated amount paid in FOUR ANNUAL PAYMENTS beginning in the year following the Recalculation Event.

- Recalculated amount paid in SAME NUMBER of payments beginning  on the same date as specified in paragraph 2 of this Agreement.

(All amounts are to be paid as on as administratively practicable after the first of the specified year.)

5.Election Irrevocable. This election is irrevocable after November 30 immediately preceding the Plan Year to which this Agreement pertains.

6.Primacy of Plan. I recognize that I am entitled to benefits hereunder and that this Agreement is subject to the terms and conditions of the Plan.

Participant:                                                   Accepted by Employer:

Name (Print)                                                Name of Employer

          By:

Signature                                                      Its:

                                                                                      Title

Date                                                               Date

Exhibit B

DEFERRAL AGREEMENT

FOR THE BELLSOUTH NONQUALIFIED DEFERRED INCOME PLAN

(For Deferral of Lump-Sum Payments)

THIS AGREEMENT is made this ____ day of __________, 19__, by and

between                                                 (the "Company") and                                                                       (the "Employee");

WITNESSETH:

WHEREAS, the Employee may separate from service with the Company under the terms of an eligible separation plan or arrangement sponsored by the Company (hereinafter, the "Separation Plan"); and

WHEREAS, the BellSouth Nonqualified Deferred Income Plan (the "Plan") permits the Employee to elect irrevocably to defer a portion of the lump-sum separation allowance to which he may become entitled thereunder, and the Employee desires to make such deferral;

NOW, THEREFORE, it is mutually agreed as follows:

1.

PLAN PROVISIONS CONTROL

The Plan, including all terms, conditions, restrictions and limitations contained therein, is hereby incorporated by reference and made a part of this Agreement for all purposes. The terms and conditions applicable to the plan year of the Plan in which the Employee separates from service shall apply to deferrals hereunder. In interpreting the Plan for purposes of this Agreement, the lump-sum separation allowance payable under the Separation Plan shall not be included in the Employee's "Compensation Rate" as that term is used in the Plan.

2.

CONDITIONAL DEFERRAL

The deferral election contained herein shall be irrevocable by the Employee upon its submission to the Company but shall be expressly conditioned upon the Employee's separation from service under the Separation Plan. If the Employee does not separate from service under the Separation Plan, this Agreement shall be null and void. Neither the Company's offering of this deferral opportunity to the Employee, the Company's acceptance of the Employee's deferral election contained in this Agreement, nor any other provision hereof shall in any way be construed as conferring upon the Employee any right or entitlement to any payment under the Separation Plan.

3.

DEFERRAL ELECTION(S)

(a)Subject to the Plan's limitations, the Employee hereby irrevocably elects to defer from the lump-sum separation allowance payable under the Separation Plan ___________________________ Dollars ($_________).*

*NOTE: Amount may not exceed __% of the sum of your current annual base salary and lump-sum awards received in the previous twelve (12) months.

YES  __                         NO  __

(b)The Employee hereby irrevocably elects to defer from the lump-sum separation allowance payable under the Separation Plan the dollar amount by which any election of deferrals from base salary under the Plan for the plan year of the Plan in which the Employee separates from service has not been satisfied by the time the Employee separates.

YES                    NO

Such amounts shall be subject to the terms of the original Deferral Agreement to which they relate.

I understand that the lump-sum separation allowance payable under the Separation Plan which would otherwise have been paid to me will be reduced by the amount of my deferral(s).

4.

RETIREMENT BENEFITS

In consideration of my deferral described in section 3(a) above, if any, the Company shall pay to me the following benefits on the dates specified, if I am entitled to these benefits under the terms and conditions of the Plan:

Any distributions attributable to deferral(s) under Schedule B of the Plan shall be made beginning on in annual payments.

5.

INTERIM DISTRIBUTIONS

In consideration for my deferral described in section 3(a) above, if any, the Company shall pay to me the following benefits on the dates specified, if I am entitled to these benefits under the terms and conditions of the Plan:

6.

RECALCULATION EVENT

If a Recalculation Event occurs, the Company shall pay to me benefits in an amount determined in accordance with the terms and conditions of paragraph 6.3 of the Plan paid in accordance with the terms elected below. The undistributed balance of the recalculated amount will continue to accumulate at the reduced rate specified in paragraph 6.3 of the Plan.

- Recalculated amount paid in a lump-sum as soon as administratively practicable after the first day of the year following the date of the Recalculation Event.

- Recalculated amount paid in four annual payments beginning as soon as administratively practicable after the first day of the year following the date of the Recalculation Event.

- Recalculated amount paid in same number of payments beginning on the same date as specified in paragraph 4 of this Agreement.

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed in its corporate name by a duly authorized officer, and the Employee has hereunto set his hand, as of the date set forth above.

EMPLOYEE:                                                         THE COMPANY:

Name (Print)                                                         Name of Company

                  By:

Signature                                                                                   Signature

                      Title

EX-10.EEE_I

Exhibit 10-eee(i)

FIRST AMENDMENT

TO THE

BELLSOUTH NONQUALIFIED DEFERRED INCOME PLAN

THIS FIRST AMENDMENT to the BellSouth Nonqualified Deferred Income Plan (the "Plan'), is made effective as of January 1, 2006;

WITNESSETH:

WHEREAS, BellSouth Corporation established the Plan on September 1, 1985;

WHEREAS, the Plan was most recently amended and restated effective as of January 1, 1999; and

WHEREAS, Article 2 of the Plan provides that the Plan may be amended by the Chief Executive Officer of BellSouth Corporation;

NOW, THEREFORE, the Plan is hereby amended as follows:

1.

Article 5 of the Plan is amended by adding, following Section 5.5, a new Section 5.5A which shall read as follows:

5.5A   Termination of Employment Under TPPS: Prior to Retirement or Disability. If a Participant terminates employment with his or her Employer under the BellSouth Corporation Transition Payment Plan for Senior Management: Voluntary ("TPPS:V") during calendar year 2006, prior to death, Disability or Retirement, the Participant shall be permitted to make a new payment election with respect to the Participant's Plan benefits to have his or her benefits paid as if the Participant's termination of employment constituted a Retirement for all purposes of the Plan. Each Participant who elects to participate in TPPS:V, and who terminates employment under the provisions of TPPS:V and satisfies all requirements of TPPS:V, will be deemed to have made this new payment election with respect to his or her NQDIP benefits. Notwithstanding anything to the contrary in this Plan, the new payment election described above shall in no event change payment elections with respect to benefits that otherwise would have been paid in 2006, or to cause payments to be made in 2006. No new payment election may be made pursuant to this Section 5.5A after December 31, 2006.

Any other provisions of the PIan not amended herein shall remain in full force and effect.

                                              By:  __________________________

                                                     Chairman of the Board and

                                                     Chief Executive Officer

EX-10.FFF

Exhibit 10-fff

AT&T Mobility 2005 Cash Deferral Plan

Effective :  January 1, 2005

Article 1 – History; Statement of Purpose

In 2001, Cingular Wireless adopted the Cingular Wireless Cash Deferral Plan (the “Prior Plan”).  Following the enactment of the American Jobs Creation Act of 2004, Cingular Wireless froze the Prior Plan, effective December 31, 2004.  Following that date, no additional deferrals were permitted under the Prior Plan.  Participant accounts in the Prior Plan as of December 31, 2004 continue to be credited with interest pursuant to Section 4.3 of the Prior Plan and remain subject to all provisions of the Prior Plan and elections made by Participants under such Prior Plan.

Cingular Wireless (now AT&T Mobility) created a new plan to govern and hold cash deferrals, company match contributions, company contributions (and associated earnings) made by or for Eligible Employees on or after January 1, 2005.  The new plan, entitled the AT&T Mobility 2005 Cash Deferral Plan (the “Plan”), is effective January 1, 2005 and its terms are set forth herein in this document.  The Plan is intended to comply with the provisions of 409A of the Code and the applicable guidance thereunder.

No Participant Contributions or Matching Contributions with respect to Base Salary, Bonus Awards or Long-Term Incentive Awards shall be made to or permitted under the Plan after 2008.  Participant Contribution Accounts as of December 31, 2008 shall continue to be credited with interest pursuant to Section 4.3 and shall remain subject to the provisions of the Plan, as it may be amended from time to time.

The purpose of the Plan is to provide a select group of management employees of AT&T Mobility LLC (“AMLLC”) and affiliate companies that participate in the Plan with an opportunity (i) to defer the receipt and income taxation of a portion of such individual’s compensation; and (ii) to receive an investment return on those deferred amounts.

Article 2 - Definitions

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

Administrator.  The Board or Committee, if such Committee is appointed, as determined by the Board.  The Board/Committee may delegate administrative authority to the Chief Executive Officer, the senior Human Resources division officer or another individual.  Provided, however, effective on and after January 18, 2007, the Administrator shall be the Senior Executive Vice President – Human Resources of AT&T Inc. or his delegate(s).  The Administrator may select an outside third party as the recordkeeper of the Plan.

Affiliate.  Any corporation, partnership, venture or other entity in which AT&T Mobility or AMLLC holds, directly or indirectly, a 10% or greater ownership interest.  The Administrator may, in its sole discretion, designate any other corporation, partnership, venture or other entity an Affiliate for the purpose of allowing it to participate in the Plan.

AMLLC.  AT&T Mobility LLC, a Delaware limited liability company, of which AT&T Mobility is the manager.

AT&T Mobility. AT&T Mobility Corporation.

Base Salary.  The annual base salary, as determined by the Administrator, paid by an Employer, 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 deferred arrangement under Section 401(k) of the Code.

Base Salary 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 deemed to be contributed to this Plan.

Board.  The Board of Directors of AT&T Mobility.

Bonus Award.  An incentive award based on an assessment of performance, payable by the Employer to a Participant with respect to the Participant’s services during a given fiscal year of the Employer.  For purposes of the Plan, “Bonus Award” shall not include incentive awards which relate to a period exceeding one (1) fiscal year.

Code.  The Internal Revenue Code of 1986, as amended.

Committee.  The Compensation Committee of the Board of Directors of AT&T Mobility, if such committee is appointed, or other committee with responsibility for oversight of the compensation and benefit programs.

Contribution Account. The accounting entry as to each Participant showing the amount of such Participant’s Contributions, interest credits and Matching Contributions credited to such account.

Eligible Employee.  An Employee who:

(a) is a full time, salaried Employee who is on active duty or Leave of Absence,

(b) is, as determined by the Administrator, a member of the Employer's "select group of management or highly compensated employees" such that the Plan will qualify for treatment as a “Top Hat” plan within the meaning of ERISA,

(c) has an employment status which has been approved by the Administrator to be eligible to participate in this Plan and

(d) has been notified in writing by the Administrator that he is eligible to participate in the Plan.

Notwithstanding the foregoing, the Administrator 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 considered Eligible Employees during a particular time for any reason, that individual shall not be an Eligible Employee for purposes of the Plan for the period of time prior to such determination.

           Employee.  Any person classified as an “employee” according to the payroll and personnel records of an Employer, 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 Administrator.Individuals classified as leased employees or independent contractors according to an Employer’s payroll and personnel records shall not be eligible to participate.  For purposes of this Plan, a person on Leave of Absence who otherwise would be an Employee shall be deemed to be an Employee.

Employer.  AMLLC or any Affiliates that adopt the Plan with the consent of the Chief Executive Officer.

ERISA.  The Employee Retirement Income Security Act of 1974, as amended.

Executive.  An Employee who is in a position that is eligible to participate in the Employer’s Executive Compensation Programs as determined by the Administrator.

Leave of Absence.  Where a person is absent from employment with an Employer on a formally granted leave of absence (i.e., the absence is with formal permission in order to prevent a break in the continuity of term of employment, which permission is granted (and not revoked) in conformity with the rules of the Employer which employs the individual, as adopted from time to time).  For purposes of this Plan, a Leave of Absence shall be deemed to also include a transfer of an individual to an entity that is not an Affiliate by an Employer for a rotational work assignment.

Long-Term Incentive Award. An incentive award, based on an assessment of performance over a period greater than one (1) year, payable by the Employer to a Participant.

Matching Contributions.  The contributions credited to a Participant’s Contribution Account pursuant to Section 4.4.

Participant.  An Eligible Employee or former Eligible Employee who participates in the Plan.

Participant Contributions.  The amounts Eligible Employees are deemed to contribute, by deferring amounts otherwise payable to them, pursuant to Sections 4 of the Plan.

Plan.  AT&T Mobility 2005 Cash Deferral Plan.

Retirement or Retire.  The Termination of Employment for reasons other than death, on or after the date on which the Employee is first eligible, upon terminating employment, for retiree health coverage in accordance with the terms of the Employer’s health plan.

Specified Employee.  A Participant who is a “specified employee,” within the meaning of Section 409A(2)(B)(i) of the Code, as determined under the AT&T Inc. compensation guidelines and provisions.

Termination of Employment. References herein to “Termination of Employment,” "Terminate Employment" or a similar reference, shall mean the event where the Employee ceases to be an Employee of any Employer.

Article 3 - Administration of the Plan

3.1   The Administrator.

The Administrator will administer the Plan, interpret, construe and apply its provisions in accordance with its terms.  The Administrator may further establish, adopt or revise such rules and regulations as such person may deem necessary or advisable for the administration of the Plan.   References to determinations or other actions by the Administrator, herein, shall mean actions authorized by such person or his respective successors or duly authorized delegates, in each case in the discretion of such person.  All decisions by the Administrator shall be final and binding.

3.2   Claims Procedure.

If a request for benefits by a Participant or beneficiary is wholly or partially denied, the Administrator will provide such claimant written notice setting forth the denial.  A review procedure is available upon written request by the claimant to the Administrator within 90 days after the date of the Administrator’s written notice of the denial of the claim, and includes the right to examine pertinent documents and submit issues and comments in writing to the Administrator.  The decision on review will be made within 90 days after receipt of the request for review, unless circumstances warrant an extension of time not to exceed an additional 90 days, and shall be in writing.  If a decision on review is not made within such period, the Participant’s claims shall be deemed denied.

3.3   Decisions Binding.

The Administrator shall have the sole and exclusive discretion to administer, construe and interpret the Plan and make all determinations hereunder, including any determinations on review of a denied claim.  All determinations and decisions of the Administrator, including but not limited to factual determinations and questions of construction and interpretation, shall be final, conclusive and binding on all parties and shall be subject to the fullest discretion afforded by law.

Article 4 - Contributions

4.1   Employee Election to Make Contributions.

(a)   Each year, an Eligible Employee may make an election to make Participant Contributions with respect to Base Salary paid during the immediately following calendar year.  No elections with respect to Base Salary shall be permitted after 2007.  As permitted by the Administrator, an Eligible Employee may also make an election to make Participant Contributions with respect to Bonus Awards; provided, however, the election with respect to such awards must be made by the Participant prior to the year preceding the year in which such awards are regularly scheduled to be paid.  No elections with respect to Bonus Awards shall be permitted after 2006.  The enrollment period for making such elections shall be established by the Administrator.  Any such election is irrevocable.

(b)   An Eligible Employee may elect to contribute from 6% to 30% (in whole percentage increments) of Base Salary and Bonus Awards (in either one or separate elections as determined by the Administrator), as the same may change from time to time, and such Participant Contributions shall be credited to his/her Contribution Account.

(c)   An Eligible Employee who is an Executive may elect to contribute up to an additional 20% (in whole percentage increments) of Base Salary and/or up to an additional 45% of Bonus Awards, as the same may change from time to time, and such Participant Contributions shall be credited to his/her Contribution Account.

(d)   An Eligible Employee who is an Executive may elect to contribute up to 75% (in whole percentage increments) of any Long-Term Incentive Award paid by AT&T Mobility, as the same may change from time to time, and such Participant Contributions shall be credited to his/her Contribution Account.  Elections with respect to Long-Term Incentive Awards must be made by the Participant prior to the year preceding the year in which such Award is regularly scheduled to be paid.  No elections under this subsection (d) shall be permitted after 2006.

4.2   Duration and Crediting of Participant Contributions.

(a)   Participant Contributions (as well as any corresponding Matching Contributions) shall be made solely pursuant to a proper election and only during the Participant’s lifetime and while the Participant remains an Eligible Employee (if the Participant ceases to be an Eligible Employee, his or her election to make Employee Contributions shall be cancelled); provided, however, Termination of Employment of an Eligible Employee shall not constitute loss of eligibility solely with respect to contribution of  Base Salary or Bonus Awards earned prior to termination but paid within 60 days thereafter or with respect to a Bonus or Long-Term Incentive Award paid after Retirement (and such person shall be deemed an Eligible Employee for such contributions).

(b)   Participant Contributions shall be credited to a Contribution Account when the compensation would have otherwise actually been paid were it not for an election under this Plan. A contribution from any eligible payment that is delayed for any reason shall be credited when the delayed payment is made.

 4.3   Crediting of Interest.

Interest is to be credited to the Participant’s Contribution Account pursuant to the provisions of this Section 4.3 and the procedures adopted by the Administrator for crediting interest.    The annual interest rate for each calendar year shall be a reasonable rate of interest as determined by the Vice President and Treasurer with the concurrence of the Chief Financial Officer.  However, in no event will the interest rate for any calendar year be less than the Moody’s Corporate Bond Yield Average as published by Moody’s Investor Services, Inc. (or any successor thereto) for the month ending two months prior to the month in which Eligible Employees make their annual deferral elections under the Plan.  Effective January 1, 2009, the interest rate shall equal the Moody’s Long-Term Corporate Bond Yield Average for the month of September preceding the calendar year during which the interest rate will apply or such other interest rate determined by the Administrator.

      4.4     Matching Contributions.

When an Eligible Employee makes a Participant Contribution, his/her Contribution Account shall be credited with an amount found by multiplying the matching contribution rate provided in the Cingular Wireless 401(k) plan, including any special transition rates, by:

(a)   6% (or such other percentage as approved by the Committee) of the Participant Contributions;  plus,

(b)   6% of any eligible compensation, excluding the Participant Contribution, that is in excess of the Code Section 401(a)(17) limits.

Compensation paid in the form of a Long-Term Incentive Award is not eligible for Matching Contributions.

4.5   Freeze of Plan.

No Participant Contributions or Matching Contributions with respect to Base Salary, Bonus Awards or Long-Term Incentive Awards shall be made to or permitted under the Plan after 2008.  Participant Contribution Accounts as of December 31, 2008 shall continue to be credited with interest pursuant to Section 4.3 and shall remain subject to the provisions of the Plan, as it may be amended from time to time.

Article 5  - RESERVED–

Article 6 - Distributions

6.1           Employee Elections.

Eligible Employees shall designate the time for a distribution and form of payment from their Participant Contribution Accounts at the same time contribution elections are made in Article 4.  Eligible Employees may elect to receive a distribution: (a) following Termination of Employment or (b) prior to Termination of Employment.

(a) Employee Elections to Receive Distributions from Participant Accounts Following Termination of Employment.

Participants may elect, during the applicable enrollment period under Article 4, to receive a distribution from their account following their Termination of Employment.  Participants, who are eligible for Retirement at the time of their Termination of Employment, may elect, during the applicable enrollment period under Article 4, to receive their distributions in 1 to 10 payments beginning in March of the year following Termination of Employment.

Participants, who are not eligible for Retirement at the time of Termination of Employment, may elect, during the applicable enrollment period under Article 4, to receive their distributions in 1 to 3 payments beginning in March of the year following Termination of Employment.

If Participants do not have a valid election on file, distributions will be made in a single lump sum payment.

(b)           Employee Elections to Receive Distributions from Participant Contribution Accounts Prior to Termination of Employment.

In lieu of an election to receive a distribution at Termination of Employment, Eligible Employees may elect, during the applicable enrollment period under Article 4, to receive a distribution from their Contribution Accounts prior to Termination of Employment.  Such election must be made during the applicable enrollment period determined by Article 4.  Eligible Employees may elect to receive an “in-service” distribution according to the following guidelines:

Participants may elect to receive an in-service distribution in any year of an 8 year period beginning in the third year following the year of the deferrals.  For example, for deferrals in 2005, in-service distributions can be elected in 2008 through 2015.

All in-service distributions will be paid in March of the year of the requested distribution.  The total value, consisting of Participant and Company Match Contributions plus accrued interest as of March 1 (the Valuation Date) related to the specific deferral, will be paid in a single payment.

Notwithstanding any of the provisions of this paragraph 6.2, if a Participant incurs a Termination of Employment in a year prior to the year of a scheduled in-service distribution, the value of the Employee’s Contribution Account will be distributed in accordance with the guidelines for a distribution at Termination of Employment.

6.2            Distributions from Participant Accounts.

     (a)Notwithstanding any elections made by a Participant, but subject to the provisions of (b) through (e) below and the last paragraph of Section 6.1(b) of the Plan, a Participant’s account shall be distributed following the first to occur of the following events (and no sooner):

(i)           The Participant’s Termination of Employment;

(ii)           The date of the Participant’s death; or

(iii)           The date specified in an election made pursuant to Section 6.1(b).

(b)All distributions will be based on the value of the Employee’s Contribution Account as of March 1 of the year of the distribution.  Generally, Participants shall receive distribution payments within 30 workdays following the applicable March 1.

(c)Multi-year distributions will be based on the Value of the Employee’s Contribution Account as of March 1 of each year.  Distributions are to be equal to the Participant’s Contribution Account balance divided by the number of remaining distributions.

(d)Notwithstanding the provisions of (a) or (b) above or any provision in the Plan, if the Value of the Employee’s Contribution Account is (1) less than $50,000 as of March 1 of the year of the initial distribution payment, the number of multi-year payments can not exceed three, or (2) less than $10,000 of the year of the initial distribution, the total Contribution Account balance will be paid in a single payment.

(e)All distributions are subject to Section 6.6 of the Plan.

6.3           Revoked or Amended Elections.

A Participant, who has previously elected to receive a distribution prior to Termination of Employment pursuant to Section 6.1(b), may revoke such election during the time period specified by the Administrator.  Generally, the period for revoking such elections will be a period that occurs prior to the year preceding the year of the distribution.  If an election to receive a distribution prior to Termination of Employment is revoked, the value of the distribution will remain in the Employee’s Contribution Account and will be distributed following the later of (i) Termination of Employment or (ii) the date which is five (5) years from the date such payment would have been made had such election not been revoked by the Participant, and no further changes may be elected at any time.

A Participant, who has elected to receive a distribution at Termination of Employment pursuant to Section 6.1(a), may amend that election to increase the number of distribution payments to be received following a Termination of Employment. Provided, however, the first distribution shall not occur until the date which is five (5) years from the date such distributions would have commenced had such election not been changed by the Participant.  To be valid, a revised election must be submitted during the time period established by the Administrator which shall occur prior to the year preceding the year the distribution was originally scheduled to occur.  No election to decrease the number of payments or accelerate the time for payments will be permitted by a Participant under any circumstances.

6.4           Designation of Beneficiary; Distributions at Death.

Each Participant may designate a beneficiary or beneficiaries (who may be named contingently or successively) who, upon the Participant’s death, will receive the amounts that otherwise would have been paid to the Participant under the Plan.  All designations shall be signed by the Participant, and shall be in such form as prescribed by the Administrator.  Each designation shall be effective as of the date received from the Participant.

Participants may change their designations of beneficiary on a form prescribed by the Administrator.  The payment of amounts deferred under the Plan shall be in accordance with the last unrevoked written designation of beneficiary that has been signed by the Participant and delivered by the Participant to the Administrator or a designated third party.

In the event that all the beneficiaries named by a Participant pursuant to this Section 6.4 predecease the Participant, the deferred amounts that would have been paid to the Participant or the Participant’s beneficiaries shall be paid to the Participant’s estate.

In the event a Participant does not designate a beneficiary, or for any reason such designation is ineffective, in whole or in part, the amounts that otherwise would have been paid to the Participant or the Participant’s beneficiaries under the Plan shall be paid to the Participant’s estate.

In the event of death, payments shall commence beginning in March of the year following the date of the Participant’s death.  The Participant’s Contribution Account will be paid in 1 to 10 payments, as specified by the Participant on the Beneficiary Designation Form, subject to the rules contained in Section 6.2(b), (c) or (d).  If no Beneficiary Designation Form is on file, payments will be made in a single lump sum payment.

6.5 Distribution Process.

As to a Participant’s  deferrals of cash compensation, the payment of which would have been deductible by an Employer under Section 162(m) of the Code, regardless of the size of the cash compensation, shall be deemed to be distributed first.

6.6           Payments to Specified Employees Following Termination of Employment

Notwithstanding any provision of this Plan to the contrary, effective on or after December 29, 2006, payments to Participants following a Termination of Employment who are Specified Employees as of their Termination of Employment shall not be made before the date which is 6 months after the Participant’s Termination of Employment (or, if earlier, the date of the Participant’s death).

Article 7 - Discontinuation, Termination, Amendment.

AMLLC hereby reserves the right to amend, modify or terminate the Plan at any time by action of the Board of Directors.  Notwithstanding the foregoing, the Senior Vice President of Human Resources may make ministerial amendments to the plan to conform the plan to the intent of the Administrator.

The Plan is intended to be an unfunded plan maintained primarily to provide deferred compensation benefits for a select group of “management or highly compensated” within the meaning of Sections 201, 301 and 401 of ERISA, and therefore be exempt from the provisions of Parts 2, 3 and 4 of Title I of ERISA.  Accordingly, the Board may terminate the Plan and commence termination payout for all or certain Participants, or remove certain employees as Participants, if it is determined by the United States Department of Labor or a court of competent jurisdiction that the Plan constitutes an employee pension benefit plan within the meaning of Section 3(2) of ERISA which is not so exempt.  If payout is commenced pursuant to the operation of this Article 7, the payment of such amounts shall be made in a lump sum regardless of the manner selected by each Participant under Article 6 herein as applicable.

Article 8 - Miscellaneous

8.1   Tax Withholding.

Upon distribution the Administrator shall withhold amounts required to satisfy the  Federal, state, and local taxes required by law to be withheld as a result of such distribution.

8.2           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 the Administrator or made in such other manner as permitted or required by the Administrator, including through electronic means, over the Internet or otherwise.  An election shall be deemed made when received by the Administrator, which may waive any defects in form.  Unless made irrevocable by the electing person, each election with regard to making Participant contributions or distributions shall become irrevocable at the close of business on the last day to make such election. The Administrator may limit the time an election may be made in advance of any deadline.

Any notice or filing required or permitted to be given to AMLLC under the Plan shall be delivered to the principal office of AMLLC, directed to the attention of the Senior Executive Vice President-Human Resources of AMLLC 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 AMLLC or, at the option of the Administrator, to the Participant's e-mail address as shown on the records of AMLLC.   It is the Participant's responsibility to ensure that the Participant's addresses are kept up to date on the records of AMLLC. In the case of notices affecting multiple Participants, the notices may be given by general distribution at the Participants’ work locations.

8.3           Rights of Participants; Unsecured General Creditor.

The Plan shall create a contractual obligation on the part of AMLLC to make payments from the Participant’s accounts when due.  Payment of account balances shall be made out of the general funds of the AMLLC.

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 AMLLC to distribute amounts deferred and interest theron under the Plan.

AMLLC may establish one or more trusts, with such trustee(s) as the Administrator may approve, for the purpose of providing for the payment of deferred amounts.  Any such trust created by the AMLLC will conform to the terms of the model trust approved by the Internal Revenue Service pursuant to Revenue Procedure 92-64, or any amendment thereof or successor to the claims of the AMLLC’s general creditors.  To the extent any deferred amounts under the Plan are actually paid from any trust, the AMLLC shall have no further obligation with respect thereto, but to the extent not so paid, such deferred amounts shall remain the obligation of, and shall be paid by, AMLLC.

8.4           Offset.

The Administrator may offset against the Contribution Account otherwise distributable to a Participant, any amounts due an Employer by a Participant, including but not limited to overpayments under any compensation or benefit plans.

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  of such amounts 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 Participant’s Contribution Account, 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.

8.7           Errors.

At any time the Administrator may correct any error made under the Plan without prejudice to AMLLC, AT&T Mobility or any Affiliates.  Such corrections may include, among other things, refunding contributions to a Participant with respect to any period he or she made Participant Contributions while not an Eligible Employee, or canceling the enrollment of a non-Eligible Employee.

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 ERISA, this Plan shall be governed by and construed in accordance with the substantive laws of the State of Texas, excluding any conflicts or choice of law rule or principle that might otherwise refer constructive or interpretation of this Plan to provisions of the substantive law of any jurisdiction other than the State of Texas. Any action seeking to enforce the rights of an employee, former employee or person who holds such rights through, from or on behalf of such employee or former employee under this Plan may be brought only in a Federal or state court located in Bexar County, Texas.

8.10           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.

8.11           Successors and Assigns.

This Plan shall be binding upon AMLLC and Affiliates that have adopted the Plan, and their successors and assigns.

EX-10.GGG

Exhibit 10-ggg

AT&T CORP. EXECUTIVE DISABILITY PLAN

PROGRAM SUMMARY FOR AT&T OFFICERS AND DIRECTORS

FEBRUARY 2004

ABOUT THIS SUMMARY

This Summary describes key features of the AT&T Corp. Executive Disability Plan ("Plan") as they apply beginning April 1, 2004, to active employees of AT&T Corp. ("AT&T") who are classified at either (i) a salary grade level of "E-band", or its equivalent, in a banded environment, or a level of "Manager 5", or its equivalent, in a non-banded environment ("Directors"); or (ii) a salary grade level above "E-band", or its equivalent, in a banded environment, or a level above "Manager 5", or its equivalent, in a non-banded environment, also referred to as "Senior Managers" from time to time ("Officers").

As a summary, this document is not intended to cover all of the details of the Plan. More details about the Plan can be found in the official Plan document and the insurance policies (for the insured portion of the Plan), which legally govern all aspects of the Plan. If there are any conflicts between the terms of the Plan document and the description in this Summary, the Plan document and insurance policies, as applicable, will control and govern the operation of the Plan.

PRIOR DISABILITY PROGRAMS

Effective April 1, 2004, eligible Officers and Directors will no longer be covered under the AT&T Short-Term Disability Benefit Plan for Management Employees and the AT&T Long-Term Disability Plan for Management Employees (including the "Additional 10% of Pay Option" or "High Option"). That coverage is being replaced by the coverage provided under the Plan. Officers will continue to be eligible to participate in the AT&T Senior Management Long-Term Disability and Survivor Protection Plan with respect to certain benefits that remain in effect under that plan.

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HOW THE PLAN WORKS

COMPOSITION OF THE PLAN:   The Plan is comprised of three disability benefit programs:

-   Short-Term Disability Benefit Program

-   Base LTD Benefit Program, and

-   Supplemental Disability Income Program ("SDIP")

ENROLLMENT:   All Officers and Directors are automatically enrolled for coverage under the Short-Term Disability Benefit Program and the Base LTD Benefit Program. If you wish to enroll for coverage under the SDIP during the initial enrollment period, you should complete and return the enrollment materials that accompany this Summary by the indicated deadline. If you decline to enroll in the SDIP during the initial enrollment period, you will be able to enroll with evidence of insurability during future annual open enrollment periods.

SHORT-TERM DISABILITY BENEFIT PROGRAM:   The Short-Term Disability Benefit Program will provide you with weekly short-term disability benefits equal to the weekly equivalent of 100 percent of your annual base salary. The short-term disability benefit will commence on the eighth consecutive day of your absence from work due to disability (as defined in the Plan document). Short-term disability benefits will continue until the earlier of (i) the date you are no longer considered disabled; or (ii) the last day of the 26th week after commencement of you short-term disability benefits under the Plan. All short-term disability benefits are reduced by certain payments made under other AT&T-sponsored benefit plans.

BASE LTD BENEFIT PROGRAM:   If, after receiving 26 weeks of short-term disability benefits, you continue to be disabled (as defined in the Plan document), regardless of your length of service with AT&T, you will be eligible to receive base long-term disability ("LTD") benefits equal to 60 percent of your eligible compensation, reduced by benefit payments from certain other AT&T benefit plans as specified in the Plan document. This benefit entitlement arises if your disability is due to the same physical or mental impairment for which you received short-term disability benefits. Your base LTD benefits will continue until the earlier of (i) the time you are no longer disabled; or (ii) your 65th birthday.

SUPPLEMENTAL DISABILITY INCOME PROGRAM ("SDIP"):   The Plan also offers supplemental long-term disability income protection to you under the SDIP. To be eligible for this fully-insured supplemental disability coverage, you must enroll (as described in the enclosed materials) in one of the following coverage options and pay the applicable premiums:

OPTION 1:   Additional 10% of your monthly base salary (and two-year average commission, if applicable)

OPTION 2:   Up to 70% of the monthly equivalent of your two-year average annual bonus

OPTION 3:   Up to an additional 10% of your monthly base salary (and two-year average commission, if applicable), plus up to 70% of the monthly equivalent of your two-year average annual bonus

If your disability (as defined in the SDIP insurance policy) continues more than 180 days, you will be eligible for the monthly supplemental disability income benefits provided under your SDIP coverage option. The maximum amount of monthly SDIP benefits you may receive under any of the three options will be the lesser of (i) $7,500 per month; or (ii) the benefit amount which, when combined with your base LTD benefit and any other disability coverage in force, provides you with a disability benefit of $50,000 per month.

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One of the significant advantages of the SDIP is that your insurance coverage is "portable", i.e., you will be able to maintain the coverage after your employment with AT&T terminates. Another advantage is that the SDIP benefits will not be subject to offset by payments under other AT&T benefit programs. See the enclosed enrollment materials for more information concerning the SDIP.

COST OF COVERAGE

AT&T pays the full cost of your coverage under the Short-Term Disability Benefit Program and the Base LTD Benefit Program. If you enroll in the SDIP, you will pay the applicable premiums through payroll deductions while you are employed by AT&T, and thereafter, on a direct-pay basis with the insurer.

FUNDING AND POLICY OWNERSHIP

Under the Plan, the short-term disability and base LTD benefits will be self-insured by AT&T. The SDIP coverage is fully-insured through a contract underwritten by MetLife. If you enroll in the SDIP, you will receive a MetLife policy for your coverage under that portion of the Plan.

FEDERAL INCOME TAX IMPLICATIONS

Your Short-Term Disability Benefit Program and Base LTD Benefit Program coverage will be provided to you by AT&T on a pre-tax basis. Therefore, any short-term disability benefits or base LTD benefits you receive under the Plan will be considered taxable income to you (based on current federal income tax law).

If you enroll in the SDIP, all of your premium payments will be made on an after-tax basis. Therefore, any benefits you receive under the SDIP will not be considered taxable income to you.

CONSULTATION WITH FINANCIAL ADVISORS

You may wish to speak with your financial counselor regarding this Plan, including your disability income replacement needs and the advisability of enrolling in the SDIP.

INSURANCE CARRIER

Metropolitan Life Insurance Company (MetLife) is the insurance carrier that underwrites the coverage under the SDIP and is responsible for paying the applicable supplemental disability income benefits under the Plan.

FUTURE PROGRAM CHANGES

The Board of Directors at AT&T Corp. (or its delegate) reserves the right to modify, suspend, change or terminate the Plan at any time. Nothing contained in this Summary, the Plan document or any related document (including any insurance policy) shall create a contract of employment with any employee or a participant.

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EX-10.HHH

Exhibit 10-hhh

AT&T CORP.

SENIOR MANAGEMENT

UNIVERSAL LIFE INSURANCE PROGRAM

Effective October 1, 1999

Purpose

The purpose of the AT&T Corp. Senior Management Universal Life Insurance Program is to provide  life  insurance  benefits to certain  executives  who  contribute materially to the continued  growth,  development,  and future  business of AT&T Corp.

Section  1.

Definitions

The following words and phrases,  as used in this Plan,  shall have the meanings set forth below unless a clearly different meaning is required by the context in which the word or phrase is used.

1.0      Administrator.  "Administrator"  means the Executive  Vice  President - Human  Resources  of the Company (or any  successor  to such  position) having  responsibility for personnel  matters,  or his or her designee.  The Administrator shall manage and administer the Program in accordance with its terms and conditions.

1.1      Assignee. "Assignee" means the person, trust, entity or organization to whom or to which a Policyholder  makes an irrevocable  assignment on or after October 1, 1999, of all his or her rights, title, interest, and incidents  of  ownership,  both  present and future,  to the  Insurance Policy  and any  other  assignable  rights  to the  benefits  under the Program.

1.2      Beneficiary.   "Beneficiary" means the person, trust, entity, organization or the estate of a  Policy holder  designated  pursuant to Section  5.4 that is  entitled to receive  benefits  from an  Insurance Policy upon the death of a Participant.

1.3      Benefit Amount. "Benefit Amount" means the amount of the life insurance benefit under the Insurance Policy for which premiums are payable by the Company under the Program.  The "Benefit Amount" for a Participant shall be determined in accordance with Section 5.2.

1.4      Board.  "Board" means the Board of Directors of the Company.

1.5      Company.  "Company" means AT&T Corp., a New York corporation, and any successors to such entity.

1.6      Eligible Executive.  "Eligible  Executive"  means either (a) an active employee of an Employer  who, on September  30, 1999,  is covered as an insured under one or more life insurance policies that are subject to a collateral  assignment  agreement with the Company under one or both of the Prior Programs; or (b) any other regular, full-time employee of the Company  who, on or after  October 1, 1999,  is  classified  as a U.S. salary-based senior manager of the Company (or equivalent salary grade, as determined by the Company in accordance with its payroll  practices) and is determined by the Administrator,  in his or her sole discretion, to be eligible for participation in the Program.

1.7      Employer.  "Employer" means the Company and certain of its subsidiaries and affiliates, as determined by the Company in its sole discretion.

1.8      ERISA.  "ERISA" means the Employee Retirement Income Security Act of 1974, as amended.

1.9      Insurance Policy.  "Insurance Policy" means one or more life insurance contracts issued by the Insurer on the life of an Eligible Executive.

1.10     Insurer.  "Insurer" means the insurance company or companies to which the Company shall apply for insurance on an Eligible Executive's life, and which issues an Insurance Policy.

1.11     Normal Termination Date. "Normal Termination Date" means the latest of (a) the date a Participant is eligible for retirement-related benefits from  the Company as described in Section 2.2; (b) the date a Participant attains age 65; (c) the date as of which a Participant has been covered for a combined  total of at least 15 years under the Prior Programs  and the Program (for an Eligible  Executive  who had coverage under both of the Prior Programs, this 15-year period of coverage shall be measured beginning from  the later of his or her coverage commencement  dates under the respective  Prior  Programs);  or (d) the date the Insurance Policy has sufficient  cash value, as determined by the Company in its sole discretion, to provide life insurance coverage for the Participant's remaining life expectancy.

1.12     Participant.   "Participant" means an Eligible Executive who has satisfied all of the eligibility and enrollment conditions in Section 2.0 and with respect to whom an Insurance Policy has been procured pursuant to Section 3.0 through Section 3.3.  For purposes of this Section 1.12, "Participant" shall include (a) a Participant who subsequently becomes disabled and satisfies the requirements of Section 2.1; and (b) a Participant who retires from active employment with the Company and is then eligible for retirement-related benefits as described in Section 2.2.

1.13     Policyholder.   "Policyholder" means the person, trust, entity or organization determined in accordance with Section 4.0 to be the owner of the Insurance Policy on an Eligible Executive's life.

1.14     Prior Programs. "Prior Programs" means the AT&T Senior Management Basic Life Insurance Program and the AT&T Senior Management Individual Life Insurance Program as in effect on September 30, 1999.  The Prior Programs shall be terminated effective as of September 30, 1999, and replaced by the Program.

1.15     Program.  "Program" means the AT&T Corp. Senior Management Universal Life Insurance Program, which shall be evidenced by this plan document, as amended from time to time.

Section 2.

Eligibility and Participation

2.0      Eligibility Conditions.  Upon becoming an Eligible Executive, an individual may become a Participant by:

         (a)      Completing, executing, and returning all of the enrollment applications and other documents required under the Program in the form approved by the Administrator;

         (b)      Cooperating with the Company in obtaining the Insurance Policy on his or her life as required by Sections 3.0 and 3.1; and

         (c)      Complying with such further conditions as may be established by the Administrator from time to time.

         Subject to the provisions of Sections 2.1, 2.2, 3.3 and 4.1, an Eligible Executive shall be eligible to continue to participate in the Program until the occurrence of any event described in Section 6.0 that causes the termination of his or her participation in the Program.

2.1      Disability Prior to Normal Termination Date. In the event that (a) a Participant  becomes  disabled (as determined under the AT&T Long Term Disability Plan for Management Employees),  and (b) the Participant continues to be disabled until his or her Normal Termination Date (without regard to whether the Participant continues to  receive payments  under  the AT&T Long Term Disability Plan for Management Employees through  such date),  the  Participant shall be eligible to continue  to  participate in the  Program until his or her  Normal Termination  Date.  If, for any reason, the Participant ceases to be disabled (as  determined  under  the  terms of the AT&T Long Term Disability Plan for Management Employees) prior to reaching his or her Normal Termination Date and the  Participant  does not resume  active employment with the Employer, the  Participant's  participation in the Program shall  terminate as of the date of cessation of such disability status.

2.2      Retirement Prior to Normal Termination Date.  In the event  that a Participant  (a)  terminates  employment  prior  to his  or her  Normal Termination Date, and (b) is eligible for  retirement-related  benefits from the  Company,  the  Participant  shall be  eligible to continue to participate  in the Program until his or her Normal  Termination  Date.  Notwithstanding the foregoing, the Participant's participation in the Program may cease prior to his or her Normal  Termination Date upon the occurrence of another  event  described in Section 6.0. For purposes of this Program, a Participant shall be  considered   eligible  for  retirement-related  benefits if he or she has satisfied the eligibility conditions  for receipt of  postretirement  medical  benefits under the AT&T Medical Expense Plan for Retired Employees, as then in effect.

2.3      Recommencement of Participation.  Once a Participant's participation in the Program has  terminated  as provided in Section 6.0 (other than due to the  occurrence  of an event  described in Sections  6.0(a),  (b) or (c)), he or she may  recommence  participation  in the Program if he or she (a) is an  Eligible  Executive  at the  time  participation  is to recommence;   and  (b)   satisfies   any  and  all   requirements for recommencement of participation established by the Administrator in his or her sole discretion.

Section  3.

Procurement of Insurance Policy

3.0      Insurance  Application  Requirements.  The  Company  shall apply to the Insurer for an Insurance Policy on the life of each Eligible  Executive in an amount  determined by the Company to be sufficient to provide the applicable Benefit Amount for the Eligible Executive.

3.1      Cooperation  Requirement for Eligible Executive.  An Eligible Executive shall reasonably cooperate with the Company in its efforts to apply for and obtain the Insurance Policy on his or her life by:

         (a)      Furnishing such information as the Insurer may require for completion of the insurance application and related forms and documents;

         (b)      Taking such physical examinations and supplying medical history as may be requested by the Insurer;

         (c)      Signing the application for the Insurance Policy as the insured; and

         (d)      Doing any other act to comply with the underwriting and policy issuance requirements which may reasonably be requested by the Insurer or the Administrator.

3.2      Cooperation   Requirement for Policyholder.   A Policyholder shall reasonably cooperate with the Company in its efforts to apply for and obtain the Insurance Policy on the life of an Eligible Executive by:

         (a)      Furnishing such information  as the  Insurer may require for  completion of the insurance  application and related forms and documents;

         (b)      Signing the application for the Insurance Policy as the proposed policy owner; and

         (c)      Doing any other act to comply with the underwriting and policy issuance requirements which may reasonably be requested by the Insurer or the Administrator.

3.3      Consequences of Failure to Cooperate.  The Company shall have no obligation to the Eligible Executive, the Policyholder or the Policyholder's Beneficiary under the Program and the Eligible Executive's participation in the Program shall become null, void and of no force or effect if:

         (a)      The Administrator,  in his or her sole discretion,  determines that  an  Eligible  Executive  or  the  Policyholder  has  not adequately   cooperated   in  the  process  of  procuring  the Insurance Policy on the Eligible  Executive's life as required by Section 3.1 and Section 3.2, respectively; or

         (b)      The Company is, for any reason,  unable to obtain insurance in the  specified  amount  on an  Eligible  Executive's  life  at standard rates or rates otherwise acceptable to the Company.

Section  4.

Incidents of Ownership

4.0      Policy  Ownership.  The Insurance  Policy shall, at all times, be owned solely and  absolutely by the  Policyholder,  except in the event of an assignment  to an Assignee as provided  for in Section 4.2. The person, trust,  entity  or  organization  that  will be the  Policyholder  with respect to a Participant shall be determined as follows:

         (a)      Eligible  Executive Who  Participated  in Prior  Programs with Single Policy Owner.  If on September 30, 1999 (i) an Eligible Executive  was  covered as an  insured  under one or more life insurance policies that are subject to a collateral assignment with the Company under one or both of the Prior Programs,  and (ii) all such life  insurance  policies were owned by a single policy owner (or  assignee),  such policy owner (or  assignee) shall  be the  Eligible  Executive's  Policyholder  under  the Program.

         (b)      Eligible  Executive Who  Participated  in Prior  Programs with Multiple  Policy  Owners.  If on  September  30,  1999  (i) an Eligible Executive was covered as an insured under one or more life  insurance  policies  that are  subject  to a  collateral assignment agreement with the Company under one or both of the Prior Programs, and (ii) all such life insurance policies were owned by two or more different  policy owners (or  assignees), the Eligible Executive's  Policyholder under the Program shall be the person,  trust, entity or organization that all of such policy owners or assignees  (excluding the Eligible  Executive if he or  she is one of the  policy  owners)  agree  upon  and designate  as the  Policyholder  with  respect to the Eligible Executive.  If, for any reason, an agreement among such policy owners  (or  assignees)  cannot be reached by October 1, 1999, and/or no  designation  of  Policyholder  is  received  by the Administrator by October 1, 1999, the Eligible Executive shall be the Policyholder  unless the  Administrator,  in his or her sole  discretion,  determines  that one or more other persons,  trusts,  entities or organizations  should be the Policyholder with  respect  to  the   Insurance   Policy  on  the  Eligible Executive's life.

         (c)      Eligible  Executive  Who  Did  Not  Participate  in the  Prior Programs.  If on September 30, 1999, an Eligible Executive was not  covered  as an insured  under one or more life  insurance policies issued under one or both of the Prior  Programs,  the Eligible  Executive's  Policyholder under the Program shall be the person (including the Eligible  Executive),  trust, entity or organization that the Eligible  Executive  designates to be his or her  Policyholder in the Eligible  Executive's  written enrollment  application for participation in the Program.  If, for any reason, an Eligible  Executive who did not participate in either of the Prior Programs on September 30, 1999 fails to designate  a  Policyholder  under the  Program,  the  Eligible Executive  shall  be  the  Policyholder  with  respect  to the Insurance Policy on his or her life.

4.1      Rights of Policyholder  and Company.  Prior to a  Participant's  Normal Termination Date, the Policyholder or his or her Assignee shall control all  incidents  of  ownership  with  respect  to the  Insurance  Policy including all policy cash values and death benefits under the Insurance Policy  on  the  Participant's   life.   However,   in  the  event  the Policyholder  or his or her Assignee  surrenders the Insurance  Policy, withdraws  any cash value from the  Insurance  Policy or obtains a loan from the  Insurance  Policy,  the  Participant's  participation  in the Program shall  immediately  cease and the Company will not be obligated to continue to make any further premium payments as provided by Section 5.1 for the Insurance Policy.

4.2      Assignment of Insurance  Policy by Policyholder.  A Policyholder  shall have the right, at any time, to absolutely and  irrevocably  assign his or her rights,  title,  interest,  and incidents of ownership in and to the Insurance Policy and any other assignable  rights to benefits under this  Program  to  any  person,  trust,  entity  or  organization.  Any assignment  shall be subject to the  consent of the  Insurer.  Any such assignment shall be on a form approved by the Insurer. No assignment by a Policyholder  shall be effective until acknowledged in writing by the Insurer. A copy of the written  acknowledgment shall be returned to the Policyholder  and the  Assignee.  Once the  assignment of the Insurance Policy has been  acknowledged by the Insurer,  the  Policyholder  shall have no further rights, title, interest or incidents of ownership, both present and future,  in or under the  Insurance  Policy or to any other rights to benefits under the Program covered by the assignment, and the Assignee  shall have all such assigned  rights,  title,  interest, and incidents of  ownership,  both present and future,  under the Insurance Policy and the Program.

4.3      Beneficiary  Elections and Settlement Options. A Policyholder or his or her Assignee, if any, may exercise (a) the right to designate or change  the Beneficiary of life insurance  proceeds under the Insurance  Policy  pursuant to Section 5.4;  and (b) the right to elect any optional  mode of  settlement  with  respect  to such life  insurance  proceeds.  Upon request of a Policyholder  or  his  or  her  Assignee,  if  any,  the applicable  form for any  designation  or change of  Beneficiary or any election  of  an  optional  mode  of  settlement  shall  be  sent  to a Policyholder, an Assignee or a Beneficiary, as appropriate.

4.4      No Ownership Interest by the Company. No provision in the Program shall be construed or  interpreted  to permit or provide the Company with any rights,  title,  interest or  incidents of  ownership, both present or future, to the Insurance Policy.

Section  5.

Payment of Benefits

5.0      Source of Benefits. The sole benefit under the Program to a Participant shall  be the  premium  payments  made by the  Company  to the  Insurer pursuant to Section 5.1 to maintain the Insurance  Policy on his or her life  and  the  tax   adjustment   made  pursuant  to  Section  5.3.  A Beneficiary's  sole source of benefits  under the Program  shall be the Insurance Policy under which the Policyholder,  or his or her Assignee, designates  a  Beneficiary  to  receive   benefits   payable  upon  the Participant's death.

5.1      Payment of Insurance Premiums.  When the Company submits an application for the Insurance Policy on the life of an Eligible  Executive,  or as soon  thereafter  as is required by the Insurer,  the Company shall pay the initial premium on the Insurance Policy to the Insurer. Thereafter, the  Company  shall  annually  (or more  frequently  as required by the Insurer)  pay the  premiums  determined  to be due under the  Insurance Policy.  While the Eligible  Executive is a Participant,  the amount of the premiums paid by the Company shall be sufficient,  as determined by the Company in its sole discretion, to maintain life insurance coverage on the  life  of the  Participant  equal  to the  Benefit  Amount.  The Company's  obligation to make premium  payments on the Insurance Policy covering the life of a Participant  shall cease upon the termination of the Participant's participation, as provided for in Section 6.0.

5.2      Benefit Amount.

        (a)       The  Benefit  Amount  under  the  Program  with  respect  to a Participant  who is  actively  employed  by an Employer at any time on or  after  October  1,  1999  shall be  determined  as follows:

                  (i)      Prior to Age 65: The Benefit Amount for a Participant prior to age 65 shall be equal to 250  percent of the Participant's annual base salary (determined based on the  Employer's  records) paid to the  Participant by the  Employer,  rounded  up to the next  $1,000.  Any salary  increase  will be  reflected  in the  Benefit Amount as soon as administratively  practicable after the salary increase becomes effective.

                  (ii)     Age  65  and  Older:   The   Benefit   Amount  for  a Participant  age 65 or  older  will be  equal  to the Participant's Benefit Amount at age 64.

         (b)      Any Participant who is eligible for continued participation in the Program  pursuant to the  provisions of either Section 2.1 or  Section  2.2 due to  retirement  or  disability  prior  to attainment of his of her Normal  Termination  Date will have a Benefit Amount as described  under Section  5.2(a)(i) and (ii) above,  whichever is applicable,  throughout the Participant's period of continued  participation  in the Program  (under the terms of Section 2.1 or Section 2.2, as applicable); provided, however,  that for purposes of determining such  Participant's Benefit  Amount,   the  Participant's   "annual  base  salary" referred to in Section  5.2(a)(i)  shall be the  Participant's final  "annual  base  salary"  on  the  date  of  his  or  her retirement or disability.

5.3      Tax Adjustment. The Company shall make a tax adjustment with respect to each premium payment made to the Insurer pursuant to Section 5.1 on the Insurance  Policy  covering the life of a  Participant.  The amount and frequency of each tax  adjustment,  as determined by the Company in its sole  discretion,  is intended to be  sufficient to cover the estimated amount of federal  income taxes and FICA taxes that will be incurred by the  Participant  on the  sum of  the  premium  payment  plus  the  tax adjustment itself. Each tax adjustment shall be equal to the sum of two amounts that are described below and referred to herein respectively as the "tax withholding portion" and the "excess portion":

         (a)      Tax Withholding Portion of Tax Adjustment: The tax withholding portion of each tax adjustment  shall be equal to the combined total amount of federal  income taxes and FICA taxes  required to be withheld  with respect to (i) each premium  payment made by the Company; and (ii) each corresponding tax adjustment.

         (b)      Excess Portion of Tax  Adjustment:  The excess portion of each tax   adjustment   shall  be  equal  to  the   applicable  tax adjustment,  reduced by the related tax withholding portion of such tax  adjustment  determined  under  Section  5.3(a)  with  respect to the premium payment and the related tax adjustment.

         The  tax  withholding  portion  of  each  tax  adjustment  payment,  as described  in  Section  5.3(a)  (above),  shall be paid by the  Company directly to the applicable federal tax authorities.  The excess portion of each tax adjustment payment, as described in Section 5.3(b) (above), shall be paid in cash to the  Participant  (or if he or she is not then living,  to his or her estate).  The  Company's  obligation to make tax  adjustment  payments with respect to a Participant shall cease upon the termination of the Participant's  participation in the Program pursuant to the provisions of Section 6.0.

5.4      Beneficiary  Designations.  A Policyholder  or, if the Policyholder has  assigned the Insurance Policy pursuant to Section 4.2, the Assignee may designate a Beneficiary  to receive life  insurance  proceeds under the Insurance  Policy upon the death of the  Participant,  or may change an existing  designation  of the  Beneficiary  to receive  such  insurance proceeds.  Any  designation  of Beneficiary or change in the designated Beneficiary  shall be  accomplished  in accordance  with the applicable terms of the Insurance Policy using forms approved by the Insurer.  If, for any reason,  no valid  Beneficiary  designation is on file with the Insurer  at the time of the  Participant's  death,  the life  insurance proceeds payable under the Insurance Policy shall be paid in accordance with the terms of the Insurance Policy.

5.5      No Company or  Employer  Obligation.  Neither the Company nor any other Employer  shall  have any  obligation  of any  nature  whatsoever  to a Policyholder  or his or her Assignee or Beneficiary  under this Program if  the  circumstances  of  the  Participant's  death,  the  terms  and conditions of this Program,  or any other reason,  precludes payment of life  insurance  proceeds  or any other  benefits  under the  Insurance Policy or Program.

5.6      No Affect on Other Company Benefits:  No portion of any premium payment on any Insurance Policy or any tax adjustment payment made with respect to a  Participant  as provided  in this  Section 5 shall be included or otherwise taken into  consideration as pay,  compensation or income for purposes  of any other  "employee  welfare  benefit  plan"  (within the meaning of Section 3(1) of ERISA),  any "employee pension benefit plan" (within  the  meaning  of  Section   3(2)  of  ERISA),   or  any  other compensation  or benefit plan,  program or  arrangement of any Employer covering the Participant  unless  expressly  provided for in such plan, program or arrangement.

Section  6.

Termination of Participation

6.0      Events  that  Cause  Termination  of  Participation.   A  Participant's participation  in the Program shall  terminate when the first of any of the following events occurs:

         (a)      The death of the Participant;

         (b)      The Participant attains his or her Normal Termination Date;

         (c)      The Board (or its delegate) terminates the Program pursuant to Section 8.1;

         (d)      The  termination  of the  Participant's  employment  with  the Company,  for any reason  (other  than  death,  disability  as described in Section 2.1 or retirement with retirement-related benefits as  described  in Section  2.2),  prior to his or her Normal  Termination  Date (unless  otherwise  agreed to by the Company in writing);

         (e)      Cessation of the Participant's  disability prior to his or her Normal  Termination  Date  under  circumstances  described  in Section  2.1,  when  the   Participant   does  not  recommence employment with the Employer;

         (f)      Voluntary  termination of the  Participant's  participation in the Program initiated by the Participant giving written notice to the  Administrator  prior to his or her Normal  Termination  Date;

         (g)      The Policyholder or his or her Assignee,  if any, takes any of the  actions described  in  Section  4.1  (e.g., loans or withdrawals)  that  cause  termination  of  the Participant's participation in the Program;

         (h)      Demotion  of  the  Participant  to  a  position  that  is  not classified  or  otherwise  treated  by the  Company as being a senior manager-level position (or equivalent salary grade), as determined by the Administrator; or

         (i)      The   Participant   is  determined   by  the  Executive   Vice President-Human  Resources of the Company,  in his or her sole discretion,  to have engaged in any competitive  activity that violates the provisions of the AT&T Non-Competition Guideline, as  amended  from time to time,  or any other  non-competition commitment of the Participant to any Employer.

         Termination of a  Participant's  participation  in the Program upon the occurrence  of any of the events  described  in this  Section 6.0 shall have the consequences  described in Sections 6.1, 6.2 or 6.3, whichever is applicable.

6.1      Death of Participant Prior to Normal Termination Date. If a Participant continues to participate in the Program until his or her  participation terminates  due to death  (as  provided  in  Section  6.0(a))  prior to attainment of his or her Normal  Termination Date, then effective as of the date of death:

         (a)      The  Company  shall  have no  further  obligation  to make any premium  payments with respect to the Insurance  Policy on the Participant's life pursuant to Section 5.1.

         (b)      The  Policyholder's  Beneficiary  shall be entitled to receive the life  insurance  benefit  payable by the Insurer under the Insurance Policy,  subject to any binding  settlement  options elected by the Policyholder prior to the Participant's death.

         (c)      The  restrictions  in  Section  4.1  on  the  Policyholder  or Assignee  pertaining  to the exercise of certain  incidents of ownership of the Insurance  Policy on the  Participant's  life (e.g., loans and withdrawals) shall no longer apply.

6.2      Attainment of Normal  Termination  Date. If a Participant  continues to participate in the Program until his or her participation terminates by reason of his or her  attainment  of the  Normal  Termination  Date (as provided  in  Section  6.0(b)),  then  effective  as  of  the  date of termination of participation:

         (a)      The  Company  shall  have no  further  obligation  to make any premium  payments with respect to the Insurance  Policy on the Participant's life pursuant to Section 5.1.

         (b)      The  Insurance  Policy will have  sufficient  cash  value,  as determined using reasonable  actuarial  assumptions  chosen by the Company in its sole discretion,  to provide life insurance coverage   throughout   the   Participant's   remaining   life expectancy.

         (c)      The  restrictions  in  Section  4.1  on  the  Policyholder  or Assignee  pertaining  to the exercise of certain  incidents of ownership of the Insurance  Policy on the  Participant's  life  (e.g., loans and withdrawals) shall no longer apply.

6.3      Discontinuance of Participation  Prior to Normal Termination Date. If a Participant's  participation  in  the  Program  terminates  due  to the occurrence  of any of the events  described in Section  6.0(c)  through Section  6.0(i),  inclusive,  then  effective  as of the  date  of such termination of participation:

         (a)      The  Company  shall  have no  further  obligation  to make any premium  payments with respect to the Insurance  Policy on the Participant's life pursuant to Section 5.1.

         (b)      The Participant,  Policyholder, and any Assignee shall have no further rights under the Program and shall only be entitled to  the Insurance  Policy cash value as of the date of termination of  participation  in the Program.  The Company  shall have no obligation  to pay  additional  premiums or increase  the cash value so as to provide cash values  sufficient to continue any level of coverage  under the Insurance  Policy  throughout the Participant's   remaining  life   expectancy.   The  Insurance  Policy's  cash value  (whether  above or below any  estimates,  projections or  illustrations)  shall be limited solely to the cash  value  of  the  Insurance  Policy  on  the  date  of the Participant's termination of participation in the Program.

         (c)      The  restrictions  in  Section  4.1  on  the  Policyholder  or Assignee  pertaining  to the exercise of certain  incidents of ownership of the Insurance  Policy on the  Participant's  life (e.g., loans and withdrawals) shall no longer apply.

Section  7.

Claims and Appeals

7.0      Claims.  A person who believes that he or she is being denied a benefit  to which he or she is entitled under this Program (hereinafter referred to as a  "Claimant")  may file a written  request for such benefit with  the Company's Executive Human Resources  Department,  setting forth his or her claim. The request must be addressed to the Company's  Executive Human  Resources  Department at its then  principal  place of business.   Notwithstanding  the foregoing,  any Beneficiary's claim for payment of  life  insurance  proceeds from an Insurance  Policy on a  Participant's life shall not be  considered a claim for benefits  under this Program.  Any such  claim for life  insurance  proceeds  should be filed with the  Insurer in accordance  with the terms and  provisions of the applicable Insurance Policy.

7.1      Claim Decision.  Upon receipt of a claim, the Company's Executive Human  Resources  Department  shall advise the  Claimant  that a reply will be forthcoming  within ninety (90) days and shall,  in fact,  deliver such reply within such  period.  The  Company's  Executive  Human  Resources Department  may,  however,  extend  the  reply  period  for  up  to  an additional ninety (90) days for reasonable cause.

         If the claim is  denied  by the Company's  Executive  Human  Resources  Department,  in  whole  or  in  part,  the  Company's  Executive  Human  Resources  Department  shall provide a written  response using language calculated to be understood by the Claimant and setting forth:  (a) the  specific reason or reasons for such denial; (b) specific  references to pertinent provisions of this Program on which such denial is based; (c) 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;  (d) appropriate information as to the steps to be taken if the Claimant  wishes to submit the claim for  review;  and (e) the time  limits for  requesting  a review  under Section 7.2 and for review under Section 7.3.

7.2      Request  for  Review.  Within  sixty (60) days after the receipt by the Claimant of the written  opinion  described  above,  the  Claimant  may  request in writing that the  Administrator  review the determination of  the Company's Executive Human Resources  Department.  Such request must  be addressed to the  Administrator  at the address for giving notice to the Administrator designated in Section 9.3. The Claimant or his or her  duly authorized  representative may, but need not, review the pertinent  documents and submit  issues and comments in writing for  consideration  by the Administrator.  If the Claimant does not request a review of the  Company's Executive Human Resources  Department's  determination by the Administrator  within such sixty (60) day period, the Claimant shall be  barred and estopped from challenging the determination of the Company's Executive Human Resources Department.

7.3      Review of Decision.  Within  sixty (60) days after the  Administrator's receipt of a request  for  review,  the  Administrator  will review the determination  of the Company's  Executive Human Resources  Department.  After  considering  all  materials  presented  by  the  Claimant,   the Administrator  will  render  a  written  opinion,  written  in a manner designed to be understood  by the Claimant,  setting forth the specific reasons for the  decision and  containing  specific  references  to the  pertinent provisions of this Program on which the decision is based. If special  circumstances  require  that the sixty (60) day time period be  extended, the Administrator will so notify the Claimant and will render  the decision as soon as possible,  but no later than one hundred twenty (120) days after receipt of the request for review.

         The  Administrator  shall serve as the final review committee under the  Program and shall have sole and  complete  discretionary  authority  to determine  conclusively  for all parties,  and in  accordance  with the  terms of the documents or  instruments  governing the Program,  any and all  questions   arising  from   administration   of  the  Program  and interpretation  of  all  Program   provisions,   determination  of  all  questions   relating  to  participation  of  Eligible   Executives  and eligibility  for benefits,  determination  of all relevant  facts,  the  amount and type of  benefits  payable to any  Participant,  Assignee or  Beneficiary,  and  the  construction  of  all  terms  of  the  Program.  Decisions by the  Administrator  shall be conclusive and binding on all parties and not subject to further review.

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

Section  8.

Amendment and Termination

8.0      Continuation   of  Program.   The  Company  does  not   guarantee   the  continuation of the Program or any benefits during  employment or at or during retirement, nor does the Company guarantee any specific level of  benefits.  Benefits  are  provided  under the Program at the  Company's  discretion  and do not create a contract  of  employment.  Neither  the establishment  nor the  continuance  of the Plan shall be  construed as conferring  any legal rights upon any  Eligible  Executive or any other  person for continuation of employment,  nor shall such establishment or  continuance  interfere  with the right of the Company to discharge  any  Eligible Executive without regard to the existence of the Program.  The Company  intends to continue  the Program  indefinitely;  however,  the  Board  reserves the right to amend or terminate the Program at any time  pursuant to Section 8.1.

8.1      Amendment or Termination. The Board or pursuant to delegated authority,  the  Chairman  of the  Board  (or in his  absence  the  Executive  Vice  President - - Human Resources)  ("Delegate"),  may amend, modify, suspend  or  change  the  Program  from  time to  time,  and the  Board  (or its  Delegate) may terminate the Program at any time. Program amendments may include,  but are not limited to, elimination or reduction in the level or type of benefits provided to any class or classes of employees.

Section  9.

General Provisions

9.0      Named Fiduciary.  The  Administrator is hereby designated as the "named  fiduciary" under this Program. The named fiduciary shall have authority  to control and manage the operation and administration of this Program.

9.1      Effective  Date. The effective date of this Program shall be October 1, 1999.

9.2      Calendar  Year  Program.  All Program  records shall be maintained on a calendar-year basis, beginning January 1 and ending December 31, except that Program  records  for the year 1999 shall be maintained for the period beginning October 1, 1999 and ending December 31, 1999.

9.3      Notice Under  Program.  Any notice to be given under this Program shall be in  writing  and  shall be either delivered  in person or mailed by United States Mail,  first-class  postage pre-paid.  If notice is to be given to the  Administrator  by mail, such notice shall be addressed as indicated  below  and  mailed  to the  Administrator  at the  following address:

Executive Vice President - Human Resources

AT&T Corp.

295 North Maple Avenue

Basking Ridge NJ 07920

         If notice is to be given to a Participant,  Policyholder or Assignee by United States Mail, such notice shall be addressed to the address shown  as such  Participant's,  Policyholder's  or Assignee's  address then on  file with the Company's Executive Human Resources Department. Any party  may  change  the  address  to which  notices  shall be mailed by giving written notice of such change of address.

9.4      Binding  Effect.  This  Program  shall be  binding  upon the  Company's successors and assigns, and upon the Participants, the Policyholders, and their Assignees, Beneficiaries,  heirs, executors, and administrators.

9.5      Welfare Plan Under ERISA.  The Program is intended to constitute an "employee welfare benefit plan" within the meaning of Section 3(1) of ERISA, covering a select group of management or highly compensated employees.

9.6      Plan Document.  This Program document is the plan document required by ERISA.  The  information   contained  herein  provides  the  final  and  exclusive  statement  of the  terms of the  Program.  Unless  otherwise  authorized by the Board or its delegate,  no amendment or  modification to this Program shall be effective until reduced to writing and adopted pursuant to Section 8.1. This document legally governs the operation of  the Program,  and any claim of right or  entitlement  under the Program shall be determined  solely in accordance with its provisions  pursuant  to the  provisions  of  Section  7. To the  extent  that  there are any inconsistencies  between  the  terms  of the  Insurance  Policy  or any related  materials  and the terms of this  document,  the terms of this document  shall  control and govern the  operation of the  Program. No other evidence, whether written or oral, shall be taken into account in determining  the  right of an  Eligible  Executive,  a  Participant, a Policyholder,  a  Beneficiary  or an Assignee,  as  applicable,  to any benefit of any type provided under the Program.

9.7      Governing  Law. To the extent not preempted by applicable  federal law, the Program  shall be  governed by and  construed  and  interpreted  in accordance  with the laws of the State of New Jersey  (irrespective  of the choice of laws principles of the State of New Jersey).

9.8      Severability.  If any  provision  of this  Program  or the  application thereof  to any  person  or  circumstance  shall  be held by a court of competent  jurisdiction  to  be  invalid  or  unenforceable under any applicable law, such event  shall not affect or render invalid or unenforceable  he remainder  of the  Program and shall not affect the application  of any  provision  of the Program to any other  person or circumstance.

9.9      Headings.  The headings and subheadings preceding the Sections of this Program have been  inserted solely as a matter of convenience and reference, and shall not, in any manner, define or limit the scope or intent of any provision of this Program.

9.10     Procedural Rules. The Administrator shall establish rules, forms and procedures for the administration of this Program from time to time.

9.11     Construction.  The use of the singular form herein shall be deemed to include the plural form, and vice versa, as appropriate. All references to Sections contained herein refer to Sections of this Program, unless otherwise stated. The use of the words "hereof," "herein," "hereunder," and words of similar import shall refer to this entire Program, and not to any  particular  Section,  subsection,  clause,  paragraph  or other subdivision  of this  Program,  unless the  context  clearly  indicates otherwise.  The word "or" shall not be exclusive;  "may  not"  is prohibitive and not permissive.

EX-10.HHH_I

Exhibit hhh(i)

AT&T CORP.

SENIOR MANAGEMENT

UNIVERSAL LIFE INSURANCE PROGRAM

(amended July 28, 2003)

Section   8.                             Amendment and Termination

* * * *

8.2  Continued  Maintenance of Program After Change in Control.  Notwithstanding any other  provision  of the Program to the  contrary  (including,  but not limited to the  provisions  of Section 8.0 and Section 8.1), if a Change in Control occurs,  the Company (or its successor)  shall continue to maintain the  Program  in  accordance  with its  terms and  conditions  prior to the occurrence  of the Change in Control  (including,  but not  limited to, the provisions  in Section 5.1 and Section 5.2 that require the Company to make applicable premium payments and tax adjustment payments,  respectively, and any amendment to such terms and  conditions  that was duly adopted prior to the occurrence of the Change in Control), without any material reduction in any Program benefits, features or Participant or Policyholder rights, for a minimum of two (2) years after the Change in Control occurs.

8.3  Prohibition  on  Amendments  After Change in Control.  Notwithstanding  any other provision of the Program to the contrary (including,  but not limited to, the  amendment  provisions  set forth in Section 8.0 and Section  8.1), unless  required by  applicable  law,  after the  occurrence of a Change in Control, no amendment shall be made by the Board (or the successor board of directors),  a delegate, the Company (or the successor of the Company), any committee,  any officer,  any employee of the Company (or the  successor of the Company) or by any other party,  to suspend,  modify,  or eliminate the Program  continuation  provisions set forth in Section 8.2, or to eliminate the  restrictions  contained in this Section 8.3, and no such  amendment to the Program  made in  violation  of this  Section  8.3 shall be  effective.  Nothing in Section 8.2 or this  Section 8.3 shall be  construed to preclude the  Company  (or the  successor  of the  Company)  from  implementing  any amendment to the Program that was duly adopted  prior to the  occurrence of the Change in Control, but does not become effective until after the Change in Control occurs.

* * * *

EX-10.III

Exhibit 10-iii

AT&T Corp. NON-QUALIFIED PENSION PLAN

As Amended and Restated effective January 1, 1995

 AT&T NON-QUALIFIED PENSION PLAN

ARTICLE 1

PURPOSE

This AT&T Non-Qualified Pension Plan (the "Plan") is an Amendment and Restatement of predecessor programs sponsored by the Company that where first adopted on October 1, 1980, to provide supplemental pension, disability and death benefits to certain employees of the Company. The Plan is intended to constitute an unfunded plan of deferred compensation for a select group of management or highly compensated employees for purposes of Title I of ERISA.

ARTICLE 2

DEFINITIONS

Whenever used herein, the terms set forth below have the following meanings unless a different meaning is clearly required by the context:

2.01. "Active  Service" means the period of active employment but excluding any time the individual is absent on account of disability and receiving or eligible to receive sickness or accident disability benefits under the Company's Sickness and Accident Disability Benefit Plan.

2.02. "ADEA" means the Age Discrimination in Employment Act of 1967, as it may be amended from time to time.

2.03. "Adjusted Career Average Pay" as used in the Alternate Formula described in Section 4.02(b), means (i) in the case of an Officer, the sum of A and B below divided by such Officer's Term of Employment and (ii) in the case of an E-band Employee, the amount described in B below divided by such E-band Employee's Term of Employment:

A. the sum of (1) the average of an Officer's annual Short Term Incentive Awards and any salary amounts deferred under the AT&T Senior Management Incentive Award Deferral Plan includable in the 1989 Base Period multiplied by his or her Term of Employment as of December 31, 1989 and (2) his or her Short Term Incentive  Awards  includable under the Basic Formula and any salary amounts deferred under the AT&T Senior Management Incentive Award Deferral Plan for the period from January 1, 1990 to the date of retirement.

B. the sum of (a) the product of (i) the Participant's average annual "Compensation" as defined in the Pension Plan for the 1992 Base Period and (ii) the Participant's Term of Employment as of December 31, 1992 and (b) the Participant's "Compensation" for the period from January 1, 1993 to the last day of his or her Term of Employment.

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2.04. "Administrator" means the person identified as the Pension Plan Administrator under the Pension Plan or such other person or entity designated by the Company.

2.05. "Affiliated Corporation" means any corporation or other entity of which 50 percent or more of the voting stock is owned directly or indirectly by AT&T.

2.06. "AT&T" or "Company" means AT&T Corp. (formerly American Telephone and Telegraph Company), a New York Corporation, or its successors.

2.07.              "1989 Base Period" means the period from January 1, 1987, to December  31, 1989.

2.08.              "1992 Base Period" means the period from January 1, 1990, to December 31, 1992.

2.09.              "Board" means the Board of Directors of AT&T.

2.10. "Committee" means the Employees' Benefit Committee appointed by the Company to administer the Pension Plan.

2.11. "Covered Compensation Base" means an amount which is the average of the maximum wage amounts on which an employee's liability for Social Security taxes were  determined for each year beginning with January 1, 1958 and ending with the year in which the calculation is made.

2.12. "Delegate" means the Board's authorized representative designated pursuant to a delegation of authority by the Board to act on behalf of or to perform one or more administrative responsibilities under the Plan.

2.13. "E-band Employee" means any employee of a Participating Company employed in a position evaluated or classified as an "E-band" or equivalent position by the Company, except that no employee who is assigned to such a position on a temporary basis after being notified in writing of the temporary status of such assignment shall be an "E-band Employee" for any purpose under this Plan.

2.14. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time.

2.15. "Long Term Disability Plan" means the AT&T Senior Management Long Term Disability and Survivor Protection Plan.

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2.16. "Normal Retirement Age" means the Normal Retirement Age determined under the Pension Plan.

2.17. "Officer" means any employee of a Participating Company holding a position evaluated or classified above the "E-band" level by the Company, except that no employee who is assigned to such a position on a temporary basis after being notified in writing of the temporary status of such assignment shall be an "Officer" for any purpose under this Plan.

2.18. "Participant" means an Officer who is eligible for a service pension, deferred vested pension or disability pension under the terms of the Pension Plan or an E-band Employee who is eligible for a  service pension under the terms of the Pension Plan.

2.19. "Participating Company" means AT&T and any Affiliated Corporation which has elected, with the approval of the Committee as required by Section 8.01, to participate in the Plan.

2.20. "Pension Plan" means the AT&T Management Pension Plan, as amended from time to time.

2.21. "Pension Plan Benefit" means the annual pension benefit determined under the Pension Plan without regard to the limitations on covered compensation under Section 401(a)(17) of the Internal Revenue Code of 1986, or the limitations on benefit accruals and payments under Section 415 of the Internal Revenue Code of 1986, and before any reduction in such pension benefit for the cost of a survivor annuity or for early retirement.

2.22. "Plan" means this AT&T Non-Qualified Pension Plan, as set forth herein and as amended from time to time.

2.23. "Position Rate" means an amount established periodically by the Company for each Officer position upon which base salaries are administered.

2.24. "Short Term Incentive Award" means the actual amount awarded (including any amounts deferred pursuant to the AT&T Senior Management Incentive Award Deferral Plan) annually to an Officer pursuant to the AT&T Short Term Incentive Plan or predecessor short term incentive plans. Short Term Incentive Awards shall, for purposes of this Plan, be considered to be awarded on the last day of the performance period with respect to which they are earned.

2.25. "Standard Award" means an amount determined periodically for each Position Rate under the AT&T Short Term Incentive Plan or predecessor short term incentive plans.

2.26. "Successor Plan Sponsor" means Lucent Technologies Inc. and any other corporation or entity that enters into an agreement or agreements providing for the assumption of liabilities arising under this Plan comparable to the Management Interchange Agreement dated as of April 8, 1996, and the Employee Benefits Agreement dated February 1, 1996, and amended and restated as of March 29, 1996, between AT&T and Lucent Technologies Inc.

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2.27. "Term of Employment" means the period of employment described in Section 2.38 of the Pension Plan and, unless expressly limited by the context, shall also mean the number of full or partial calendar years comprising Years of Service as defined in Section 2.39 of the Pension Plan.

2.28. "Total Compensation" As used in the Alternate Minimum Formula described in Section 4.02(c) means the sum of (i) the elements of Compensation as defined in Section 4.2(f) of the Pension Plan, (ii) salary amounts deferred under the AT&T Senior Management Incentive Award Deferral Plan, and (iii) Short Term Incentive Awards.

2.29. "Transition Participant" means a Participant as to  whom the responsibility and liability for the payment of benefits accrued or payable under this Plan has been assumed by a Successor Plan Sponsor.

ARTICLE 3

PARTICIPATION AND ELIGIBILITY

3.01.              Participation.

All Officers and E-band Employees who meet the criteria set forth in Section 2.18 shall be eligible to participate in this Plan.

3.02.              Eligibility.

(a) Service Benefit. Each Participant who is eligible for a service pension pursuant to the terms of the Pension Plan (excluding for purposes of this Section 3.02(a) the effect of any management pension enhancement pursuant to Section 4.2(h) of the Pension Plan) and who meets the relevant requirements of Article 4 shall be eligible for a service benefit pursuant to this Plan.

(b)        Deferred Benefit.

(i) Except as otherwise specified in Sections 4.04 and 4.05, an Officer who is eligible for a deferred vested pension pursuant to the terms and conditions of the Pension Plan is eligible for a deferred benefit pursuant to this Plan.

(ii) An Officer who leaves the service of a Participating Company and who has elected to have his or her deferred vested pension payable early in reduced amounts pursuant to the terms and conditions of the Pension Plan shall be deemed to have elected to have his or her deferred benefits under this Plan payable early in reduced amounts under the same terms and conditions as set forth in the Pension Plan. In the event of such an election, the amount of deferred benefit otherwise payable at Normal Retirement Age under this Plan to such participant shall be reduced in accordance with the same formulas  as are set forth in the Pension Plan for the discounting of the deferred vested pension.

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(iii) The Committee, the Administrator or a Delegate, as appropriate, shall notify each Officer who leaves the employment of such Participating Company (except to take employment without a break in service with another Participating Company or other Affiliated Corporation) of his or her eligibility, if any, for a deferred benefit by mailing, within a reasonable time after his or her leaving, a notice to his or her last known address as shown on the Participating Company's records.

(c) Disability Benefit. A Participant who, while an Officer, has become eligible for a Disability Pension pursuant to Section 4.1(c) of the Pension  Plan shall be eligible for a Disability Benefit hereunder. Should the Disability Pension be discontinued (other than by reason of conversion to a Service Pension) pursuant to the terms of the Pension Plan, the Disability Benefit hereunder shall be discontinued as well.

(d)        Contingent Benefits.

(i) An Officer who, on or after January 1, 1986, is reassigned to a position evaluated below the E-band level for reasons other than unsatisfactory performance, and who has satisfied the vesting requirements of Section 3.02(a) or Section 3.02(b) of this Plan as of the reassignment date, will be eligible for Officer benefits upon his or her termination of employment provided he or she is then eligible for either a service pension under Section 4.1(a) or a deferred vested pension under Section 4.1(b) of the Pension Plan. The determination of the amount of such former Officer's benefits will be based on his or her Term of Employment completed as of the reassignment date and shall be computed in accordance with Section 4.02(a) in effect on such date.

(ii) An Officer who, on or after January 1, 1986, is reassigned to a position evaluated below the E-band, and who has not satisfied the vesting requirements of this Plan as of the reassignment date, will not be eligible for benefits under this Plan upon his or her termination of employment.

(iii) An Officer who, on or after January 1, 1986, is reassigned to a position evaluated at the E-band level for reasons other than unsatisfactory performance, and who has satisfied the vesting requirements of Section 3.02(a) or Section 3.02(b) of this Plan as of the reassignment date shall be eligible for a benefit (A) under Section 3.02(a), if such Officer is eligible for a service pension under Section 4.1(a) of the Pension Plan on the last day of his or her Term of Employment or (B) under Section 3.02(b), if such Officer is not eligible for a service pension under Section 4.1(a) of the Pension Plan on the last day of his or her Term of Employment. The benefit of any reassigned Officer described in this Section 3.02(d)(iii)(A) shall be computed based on his or her Term of Employment and in accordance with Section 4.02(b) in effect on the last day of such Term of Employment. The benefit of any reassigned Officer described in this Section 3.02(d)(iii)(B) shall be computed based on his or her Term of Employment completed as of the last day of the year in which his or her job is reclassified and in accordance with Section 4.02(a) in effect as of the date of such reassignment.

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(iv) A Participant, other than an Officer whose job is classified or reclassified during or after 1986 to a level below E-band will be eligible for the service benefit described in Section 3.02(a) and computed in accordance with Section 4.02(b) based on his or her Term of Employment completed as of the last day of 1988 or if later, the last day of the year in which his or her job is reclassified and based on the provisions of the Plan in effect on such day, provided he or she is then eligible for a service pension under the Pension Plan, and further provided he or she is not demoted subsequent to such day because of unsatisfactory job performance prior to retiring under the Pension Plan.

ARTICLE 4

PENSION BENEFITS

4.01.              Benefit Eligibility.

(a) Officers. The following provisions govern the eligibility for benefits of Officers whose retirement date is on or after December 31, 1993.

(i) The benefit of an Officer who had at least five Years of Service as an Officer as of December 31, 1993 will be the greater of the annual benefit amounts determined under the Basic Formula, the Alternate Formula or the Alternate Minimum Formula described in Sections 4.02(a), (b) and (c) respectively.

(ii) The benefit of an Officer who is not described in Section 4.01(a)(i) but who is eligible for a service pension under Section 4.1(a) of the Pension Plan as of the last day of his or her Term of Employment will be the greater of the annual benefit amounts under the Basic Formula or the Alternate Formula described in Sections 4.02(a) and (b) respectively.

(iii) The benefit of an Officer who is not described in Sections 4.01(a)(i) or (ii) but who is eligible for a deferred vested pension under Section 4.1(b) or a disability pension under Section 4.1(c) the Pension Plan as of the last day of his or her Term of Employment will be the amount determined under the Basic Formula described in Section 4.02(a).

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(iv) The benefit payable to the surviving lawful spouse of an Officer shall be determined in accordance with Section 4.02(d)(i), if the Officer is an employee at the time of death and in accordance with Sections 4.02(d)(ii) and (iii), if the Officer is not an employee at the time of death.

(b) E-band Employees. The annual service benefit of an E-band Employee whose retirement date is on or after October 19, 1993, will be the amount computed under the Alternate Formula described in Section 4.02(b). The benefit payable to the surviving lawful spouse of an E-band Employee shall be determined in accordance with Section 4.02(d)(i), if the E-band Employee is an employee at the time of death. The formulas for computing the pension benefits of an E-band Employee whose employment terminated prior to October 19, 1993, are shown in Appendix A.

4.02.              Benefit Formulas.

(a) Basic Formula. The annual service or disability benefit under the Basic Formula shall be determined by adding (A) the product of one and five-tenths percent (1.5%) of the average annual Short Term Incentive Awards for the 1989 Base Period and the Officer's Term of Employment as of December 31, 1989, and (B) the sum of one and six-tenths percent (1.6%) of the Short Term Incentive Award for each successive full or partial calendar year of employment following 1989.

(i) Early Retirement Discount. The monthly service benefit, determined in accordance with the Basic Formula of this Section 4.02(a), for each Officer who is granted a service benefit for reasons other than total disability as a result of sickness or injury, shall be reduced by one-half percent (0.5%) for each calendar month or part thereof by which his or her age at time benefits are first paid under this Plan is less than fifty-five (55) years, except that each Officer retired with thirty (30) or more years of service shall receive a monthly benefit allowance reduced by one-quarter percent (0.25%) for each calendar month or part thereof by which such Officer's age at the time benefits are first paid under this Plan is less than fifty-five (55) years.

(ii) Deferred Benefit Amount. The monthly benefit for each Officer eligible for a deferred benefit under the provisions of Section 3.02(b)  shall be calculated exclusively in accordance with the provisions specified as applicable to those receiving a benefit under this Section 4.02(a) effective as of the date such Officer leaves the service of a Participating Company.

(iii) An Officer who leaves the service of a Participating Company with eligibility for a deferred benefit in accordance with Section 3.02(b) but who is not entitled to any other class of pension or benefit under this Plan shall not be considered a retiree pursuant to the Pension Plan or a retired Officer.

(b) Alternate Formula. The annual benefit under the Alternate Formula shall be the excess of B over A, where A equals the Participant's Pension Plan Benefit and B equals the product of one and seven-tenths percent (1.7%) of the Participant's Adjusted Career Average Pay, less eight-tenths of one percent (0.8%) of the Participant's Covered Compensation Base, and the Participant's Term of Employment. The service benefit under this Alternate Formula will be reduced in case of retirement before age 60 by applying the appropriate reduction factor from the Table of such factors shown in Appendix C to such benefit.

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(c) Alternate Minimum Formula. The annual benefit under the Alternate Minimum Formula in this Section 4.02(c) shall be an amount equal to (A) the product of the greater of the amount determined under Formula A or the amount determined under Formula B, multiplied by the applicable factor set forth in Appendix B, less (B) the amount of the Officer's Pension Plan Benefit.

(i) Formula A. For purposes of the Alternate Minimum Formula in this Section 4.02(c), Formula A means the sum of (a) the product of one and five tenths percent (1.5%) of average calendar year Total Compensation for the 1992 Base Period and the Term of Employment as of December 31, 1992 and (b) one and six tenths percent (1.6%)of Total Compensation for the calendar year 1993 actuarially reduced in case of retirement before age 55 by applying the appropriate reduction factor set forth in Section 4.02(a)(i).

(ii) Formula B. For purposes of this Alternate Minimum Formula in this Section 4.02(c), Formula B means the product of (a) the excess of one and seven tenths percent (1.7%) of Adjusted Career Average Pay, over eight tenths of one percent (0.8%) of the Covered Compensation Base, and (b) the Officer's Term of Employment at December 31, 1993, reduced in case of retirement before age 60 by applying the appropriate reduction factor set forth in Appendix C.

(d)        Automatic Survivor Annuities.

(i) Before-Retirement. In the event of the death of an active Participant whose Term of Employment includes at least fifteen years or who is eligible for a service benefit under Section 4.02(a) at the time of his or her death and who leaves a surviving lawful spouse, such surviving lawful spouse shall receive, effective on the day following the date of death, a survivor annuity in the amount of forty five percent (45%) of the benefit which would have been payable had such Participant retired with a service benefit, regardless of his or her actual eligibility therefor, on the date of his or her death. For purposes of the automatic survivor annuity provided in this Section 4.02(d)(i), the early retirement discounts in Sections 4.02(a)(i) and 4.02 (b)(i) shall not apply.

(ii) Post-Retirement. Upon the death of an Officer receiving a service or disability benefit under this Plan who retired on or after December 31, 1986 or retired prior to that date but had not reached age 55 on or before December 31, 1983, a survivor annuity in the amount of 45% of such retired Officer's monthly benefit amount will be payable beginning on the day following the date of his or her death to the surviving lawful spouse of such retired Officer.

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(iii) Post-Retirement Transition Cases. In the case of a deceased Officer who retired prior to December 31, 1987, the survivor annuity payable under Section 4.02(d)(ii) above, shall be increased by the amount required, if any, to bring the total monthly survivor annuity payable under this Plan to an amount computed by multiplying the product of the average of such Officer's Standard Awards for a maximum of six (6) years prior to his or her retirement year and sixty-five hundredths percent (0.65%) by his or her Term of Employment, and dividing the result by twelve (12); the Standard Awards includable in this computation cannot exceed sixty percent (0.60%) of such Officer's Position Rate.

(e) Special Increases. Service and disability benefit payments, as determined under Sections 4.02(a) and (b), of retired Officers and service benefit payments, as determined under Section 4.02(b), of retired E-band Employees, and survivor annuities in pay status under Sections 4.02(d)(i), (d)(ii), and (d)(iii) shall be increased by the same percentage and pursuant to the same terms and conditions as are set forth for comparable payments, from time to time, in the Pension Plan.

4.03.              Monthly Payments.

The annual benefit  determined under this Article 4 shall be divided by twelve (12) and shall be payable monthly or at such other periods as the Committee or the Administrator, as applicable, may determine in each case.

4.04.              Commencement and Duration of Payments

(i) Subject to the exception set forth in paragraph (ii) herein, benefits granted under this Plan shall commence on the date the benefits under the Pension Plan are first paid to the Participant and shall, except for the reasons specified in Sections 3.02(c), 4.05 and 9.12, continue to the death of the recipient.

(ii) Any benefit payable to an Officer pursuant to Section 4.02(c) who had at least five Years of Service as an Officer as of December 31, 1993 and as to whom the sum of his or her attained age and Term of Employment equaled or exceeded seventy (70) as of that date shall be payable as of the last day of his or her Term of Employment and shall, except for the reasons specified in Section 4.05 and Section 9.12, continue to his or her death.

  (iii) Benefit amounts accrued and payable under this Article 4 but not actually paid at the time of death of a Participant shall be paid in accordance with the standards and procedures set forth in the Pension Plan.

4.05.              Treatment During Subsequent Employment.

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When a Participant's Term of Employment includes service with more than one Participating Company or with a company that is not a Participating Company, the last Participating Company to employ him or her immediately prior to his or her retirement or termination of employment with entitlement to a benefit hereunder shall be responsible for the full benefit under this Plan. Employment with any Participating Company subsequent to retirement or termination of employment with entitlement to any type of benefit under this Plan shall result in the permanent suspension of the benefit for the period of such employment or reemployment to the extent and in a manner consistent with the terms and conditions applicable to the suspension of benefit payments under the Pension Plan. Payment of a Participant's benefit under this Plan shall resume simultaneously with the recommencement of his or her benefits under the Pension Plan. Following recommencement of payment under this Plan, the Participant (or surviving lawful spouse) shall not be eligible to receive any payments under this Plan that would otherwise have been payable but for the suspension.

4.06.              Method and Form of Payment.

Payments under this Article 4 shall be made in the same manner as set forth under the Pension Plan.

ARTICLE 5

DEATH BENEFITS

5.01.              Participation.

Upon the death of an active Officer or an Officer who, on or after August 10, 1980, retires on a service or disability pension under the Pension Plan (excluding for purposes of this Section 5.01 the effect of any management pension enhancement pursuant to Section 4.2(h) of the Pension Plan) or who terminates employment with eligibility to receive payments under the Long Term Disability Plan, a Death Benefit shall be provided under this Article 5. The Death Benefits under this Article 5 are in addition to the accident, sickness and pensioner death benefits under the Death Benefit Plan in the Pension Plan and shall be paid to the same beneficiary or beneficiaries and administered in the same manner as such benefits under the Pension Plan.

5.02.              Death Benefits.

(a) Primary Death Benefit.  In the case of the death of an Officer described in Section 5.01 a benefit equal to one year's wages shall be paid.

(i) Death Prior to June 1, 1991. For purposes of determining the benefit payable under this Section 5.02(a) with respect to an Officer who dies on or after August 10, 1980 but prior to June 1, 1991, one year's wages is defined as the lesser of the Officer's Standard Award in effect as of the earlier of his or her retirement date, termination date or date of death, or the percentage shown below of his or her Position Rate as of the earlier of such dates:

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Percentage

Retirement, Termination or Death:                                                                                        of Position Rate

On or After September 30, 1983 through May 31, 1991     60%

October 31, 1981 through September 29, 1983                                                                             50%

August 10, 1980 through October 30, 1981                                                                                  15%

(ii) Death On or After June 1, 1991. For purposes of determining the benefit payable under this  Section 5.02(a) with respect to an Officer who dies on or after June 1, 1991, one year's wages is defined as the greater of (A) his or her Short Term Award for the calendar year preceding the earlier of his or her date of death or date of retirement, or (B) the Officer's Short  Term Award payable with respect to any later partial calendar year period of service.

b) Other Post-Retirement Death Benefits. An additional death benefit described in this Section 5.02(b) shall be provided under this Plan in the case of an Officer who retires on a service or disability Pension under the Pension Plan after December 31, 1986, or before such date provided he or she did not attain age 55 on or before December 31, 1983. The death benefits under Section 5.02(b)(ii) are provided also in the case of an Officer who terminates employment with entitlement to Long Term Disability Plan payments.

(i) Group Life Differential. Upon the death of an Officer age 66 or older who retired after December 31, 1986, and before October 1, 1990, the difference between the amount of his or her Basic Group Life Insurance under the Company's Group Life Insurance Program which was in effect on the day before his or her sixty-sixth (66) birthday and the amount of such insurance in effect on the date of his or her death shall be paid in a lump sum to a beneficiary or beneficiaries designated by the Officer, or, if there is no such beneficiary, to the Officer's Estate.

(ii) Tax Differential. An individual who is the beneficiary of a deceased retired Officer or an Officer who terminated employment with entitlement to Long Term Disability payments and who receives one or more of the benefits listed below, shall be eligible to receive, under this Section 5.02(b)(ii), a tax differential payment related to the difference between the beneficiary's assumed Federal Income tax liability on such benefit or benefits and the beneficiary's assumed Federal Income Tax liability had such benefit or benefits been funded by the proceeds of a life insurance policy on the life of the retired Officer:

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   (A)            Post-Retirement Survivo Annuity described in Section 4.02(d)(ii),

(B)            Pensioner Death Benefit described in Section 5.02(a),

(C)           Group Life Differential Death Benefit described in Section 5.02(b)(i),

(D) Pensioner Death Benefit described in Paragraph 3 of Section 5 of the Pension Plan, and

(E)         The Death Benefit described in Section 5 of the Long Term Disability Plan.

Federal Estate Tax and state and local inheritance or income taxes shall not be considered in computing the tax differential payment under this Section 5.02(b)(ii).

ARTICLE 6

SOURCE OF PAYMENT

6.01.              Source of Payments.

AT&T may establish a trust to hold assets to be used to make benefit payments under the terms of this Plan, provided such trust does not cause the Plan to be "funded" within the meaning of ERISA. Funds invested hereunder shall, for purposes of this Plan, be considered to be part of the general assets of the Participating Company which invested the funds, and no Participant, beneficiary or lawful spouse shall have any interest or right in such funds. To the extent trust assets are available, they may be used to pay benefits arising under this Plan and all costs, charges and expenses relating thereto. To the extent that the funds held in the trust are insufficient to pay such benefits, costs, charges and expenses, AT&T or the responsible Participating Company shall pay such benefits, costs, charges and expenses from its general assets. In addition, AT&T may, in its sole discretion, direct that payments required under this Plan to any Participant or surviving lawful spouse be made through the purchase and distribution of one or more nontransferable annuity contracts or cause the trustee of the trust to purchase and distribute such annuity contracts. Any such purchase and distribution of an annuity contract shall be a full and complete discharge of the Plan's, AT&T's and the Participating Companies' liability for payments assumed by the issuer of the annuity contract. Further, the Senior Vice President, Human Resources, may determine, in his sole discretion, to pay additional sums to any Senior Manager, from the Company's general assets or from the trust, if any, to reimburse the Senior Manager for additional federal and state income taxes estimated to be incurred by reason of the distribution of any such annuity contracts. The Senior Vice President, Human Resources shall establish a methodology or methodologies for determining the amount of such additional sums. The methodology or methodologies selected shall be those that the Senior Vice President, Human Resources determines, in his sole discretion, to be the most effective and administratively feasible for the purpose of producing after tax periodic benefit payments that approximate the after tax periodic benefit payments that would have been received by Senior Managers in the absence of the distribution of the annuity contract.

13

6.02.              Unfunded Status.

The Plan at all times shall be entirely unfunded for purposes of the Internal Revenue Code of 1986 and ERISA, and, except as provided in Section 6.01, no provision shall at any time be made with respect to segregating any assets of a Participating Company for payment of any benefits hereunder. The Plan constitutes a mere promise by the Participating Company to make payments, if any, in the future. No Participant, surviving lawful spouse or any other person shall have any interest in any particular assets of a Participating Company by reason of the right to receive a benefit under the Plan and to the extent the Participant, surviving lawful spouse or any other person acquires a right to receive benefits under this Plan, such right shall be no greater than the right of any unsecured general creditor of a Participating Company.

ARTICLE 7

ADMINISTRATION OF THE PLAN

7.01.              Administration and Authorities.

The Plan shall be administered by the Company and it shall have full discretionary authority to manage and control the operation and administration of the Plan, including the power to interpret provisions of the Plan, make determinations of fact, promulgate rules and regulations, determine benefit eligibility of individual and classes of Participants (including, without limitation, determinations of a Participant's applicable Term of Employment, Position Rate and rate of pay), delegate its powers and duties hereunder to the Committee, the Administrator or others and take such other action as it shall find necessary and appropriate to implement the provisions of the Plan. The Committee and the Administrator may retain attorneys, consultants, accountants or other persons (who may be employees of the Company or an Affiliated Corporation)  to render advice and assistance and may delegate any of the authorities conferred on it to such persons as it shall determine to be appropriate to effect the discharge of its duties hereunder. The Company, the Affiliated Corporations and any of their Officers and E-band Employees shall be entitled to rely upon the advice, opinions, and determinations of any such persons. Any exercise of the authorities  set forth in this Section, whether by the Company, the Committee or its Delegate, or the Administrator, shall be final and binding upon the Company, its Affiliated Corporations, their officers, directors and affected Participants and beneficiaries.

7.02.              Committee.

14

The Company has delegated to the Committee authority to make the final determination to grant or deny claims for benefits under the Plan with respect to Participants, surviving lawful spouses, and other beneficiaries and to authorize disbursements according to the terms of the Plan.

7.03.              Indemnification.

No member of the Board, the Committee or the Administrator shall be personally liable by reason of any contract or other instrument executed by such individual or on his or her behalf in his or her capacity as a member of the Board, Committee or the Administrator nor for any mistake of judgment made in good faith, and AT&T shall indemnify and hold harmless each member of the Board, each member of the Committee, the Administrator and each other employee, officer, or director of AT&T or any Participating Company to whom any duty or power relating to the administration or interpretation of the Plan may be allocated or delegated, against any cost or expense (including attorneys' fees) or liability (including any sum paid in settlement of a claim) arising out of any act or omission to act in connection with the Plan unless arising out of such person's own fraud or bad faith.

7.04.              Benefit Claims and Appeals

(a) Benefit Claims. All claims for benefit payments under the Plan shall be submitted in writing by Participants to the person designated by the Company to make determinations as to eligibility for benefits under the Plan and such person shall notify the Participant in writing within 90 days after receipt as to whether the claim has been granted or denied. This period may be extended for up to an additional 90 days in unusual cases provided that written notice of the extension is furnished to the claimant prior to the commencement of the extension. In the event the claim is denied, such notice shall (i) set forth the specific reason or reasons for denial, (ii) make reference to the pertinent Plan provisions on which the denial is based, (iii) describe any additional material or information necessary before the Participant's request may be acted upon favorably, and (iv) explain the procedure for appealing the adverse determination.

(b)   Benefit Appeals. A Participant whose claim for benefits has been denied may, within 60 days of receipt of any adverse benefit determination, appeal such denial to the Committee. All appeals shall be in the form of a written statement and shall (i) set forth all of the reasons in support of favorable action on the appeal, (ii) identify those provisions of the Plan upon which the claimant is relying, and (iii) include copies of any other documents or materials which may support favorable consideration of the claim. The Committee shall decide the issues presented within 60 days after receipt of such request, but this period may be extended for up to an additional 60 days in unusual cases provided that written notice of the extension is furnished to the claimant prior to the commencement of the extension. The decision of the Committee shall be set forth in writing, include specific reasons for the decision, refer to pertinent Plan provisions on which the decision is based, and shall be final and binding on all persons affected thereby.

15

ARTICLE 8

Adoption, Amendment and Termination

8.01.              Adoption of Plan.

Any Affiliated Corporation that participates in the Pension Plan may, with the consent of the Committee, elect to participate in the Plan. Such Affiliated Corporation shall become a Participating Company as of the date specified by the Committee in its resolution approving the participation of the Affiliated Corporation in the Plan.

8.02. Amendment and Termination.

AT&T is the Sponsor of the Plan and the Board or its Delegate, may from time to time amend, modify or change the Plan as set forth in this document, and the Board or its Delegate (acting pursuant to the Board's delegations of authority then in effect) may terminate the Plan at any time. Plan amendments may include, but are not limited to, elimination or reduction in the level or type of benefits provided to any class or classes of Participant (and surviving lawful spouses). Any and all Plan amendments may be made without the consent of any Participant, surviving lawful spouse or beneficiary. Notwithstanding the foregoing, no such amendment, suspension or termination shall retroactively impair or otherwise adversely affect the rights of any Participant or surviving lawful spouse to benefits under the Plan to which they have previously become entitled as a result of a Participant's satisfaction of the vesting schedule of this Plan which is the same as and never will be greater than the vesting schedule under the Pension Plan.

8.03.              Sale, Spin-Off, or Other Disposition of Participating Company.

(a) Subject to Section 9.01 of this Plan, in the event AT&T sells, spins off, or otherwise disposes of an Affiliated Corporation, or disposes of all or substantially all of the assets of an Affiliated Corporation such that one or more Participants terminate employment for the purposes of accepting employment with the purchaser of such stock or assets, any person employed by such Affiliated Corporation who ceases to be an employee of the Company or an Affiliated Corporation as a result of the sale, spin-off, or disposition shall be deemed to have terminated his or her employment with a Participating Company for all relevant purposes under this Plan.

(b) Notwithstanding the foregoing provisions of this Section 8.03, and subject to Section 9.01 of this Plan, if the sale, spin-off, or other disposition of the stock or assets of an Affiliated Corporation is to a Successor Plan Sponsor with the effect that a Participant is or becomes a Transition Participant, the Successor Plan Sponsor shall be solely liable for the payment of the pension and death benefits described in this Plan, and the entitlement of the Transition Participant or his or her surviving lawful spouse or beneficiary to benefits under this Plan shall terminate. A Transition Participant shall not be considered to have terminated his or her employment with AT&T or a Participating Company for any purpose under this Plan.

16

ARTICLE 9

GENERAL PROVISIONS

9.01.              Binding Effect.

The Plan shall be binding upon and inure to the benefit of each Participating Company and its successors and assigns, and each Participant, employee, his or her successors, assigns, designees, spouse, and estate. The Plan shall also be binding upon any successor corporation or organization succeeding to substantially all of the assets and business of AT&T, but nothing in the Plan shall preclude AT&T from merging or consolidating into or with, or transferring all or substantially all of its assets to, another corporation which assumes the Plan and all obligations of AT&T hereunder. AT&T agrees that it will make appropriate provision for the preservation of the rights of Participants, employees and surviving lawful spouses under the Plan in any agreement or plan or reorganization into which it may enter to effect any merger, consolidation, reorganization or transfer of assets. Upon such a merger, consolidation, reorganization, or transfer of assets and assumption that results in a Participant continuing to be employed by the Company or an Affiliated Corporation, the term "Participating Company" shall refer to such other corporation and the Plan shall continue in full force and effect as to that Participant and his or her lawful spouse or other beneficiary.

9.02. Fiduciary Relationship.

Nothing contained in the Plan, and no action taken pursuant to the provisions of the Plan, shall create or be construed to create a trust or contract of any kind, or a fiduciary relationship between or among AT&T, any other Participating Company, any Affiliated Corporation, the Board, the Administrator, the Committee, any Participant, employee, any surviving lawful spouse or any other person.

9.03.              No Guarantee of Employment.

Neither the Plan nor any action taken hereunder shall be construed as (i) a contract of employment or deemed to give any employee the right to be retained in the employment of a Participating Company, the right to any level of compensation, or the right to future participation in the Plan; or (ii) affecting the right of the Participating Company to discharge or dismiss any employee at any time.

9.04.              Tax Withholding.

17

AT&T shall withhold all federal, state, local or other taxes required by law to be withheld from payments or accruals under the Plan.

9.05.              Assignment of Benefits.

The benefits payable hereunder or the right to receive future benefits under the Plan may not be anticipated, alienated, sold, transferred, assigned, pledged, executed upon, encumbered, or subjected to any charge or legal process; no interest or right to receive a benefit may be taken, either voluntarily or involuntarily, for the satisfaction of the debts of, or other obligations or claims against, such person or entity, including without limitation, any judgment or claim for alimony, support or separate maintenance pursuant to a domestic relations order within the meaning of Section 206(d)(3) of ERISA and claims in bankruptcy proceedings. Any such attempted disposition shall be null and void.

9.06. Facility of Payment.

If the Administrator shall find that any person to whom any amount is or was payable under the Plan is unable to care for his or her affairs because of illness or accident, then any payment, or any part thereof, due to such person (unless a prior claim therefor has been made by a duly appointed legal representative), may, if the Administrator so directs AT&T, be paid to the same person or institution that the benefits with respect to such person are paid under the Pension Plan if applicable, or to the Participant's surviving lawful spouse, a child, a relative, an institution maintaining or having custody of such person, or to any other person deemed by the Administrator to be a proper recipient on behalf of such person otherwise entitled to payment. Any such payment shall be in complete discharge of the liability of AT&T, the Board, the Committee, the Administrator, and the Participating Company therefor. If any payment to which a Participant or beneficiary is entitled under this Plan is unclaimed or otherwise not subject to payment to the person or persons so entitled, such amounts representing such payment or payments shall be forfeited after a period of two years from the date the first such payment was payable and shall not escheat to any state or revert to any party; provided, however, that any such payment or payments shall be restored if any person otherwise entitled to such payment or payments makes a valid claim.

9.07. Severability.

If any section, clause, phrase, provision or portion of this Plan or the application thereof to any person or circumstance shall be invalid or unenforceable under any applicable law, such event shall not affect or render invalid or unenforceable the remainder of this Plan and shall not affect the application of any section, clause, provision, or portion hereof to other persons or circumstances.

9.08. Effective Date.

18

This Plan first became effective for Officers actively employed on or after October 1, 1980 and for E-band Employees actively employed on or after on January 1, 1984 and is amended and restated effective January 1, 1995.

9.09. Plan Year.

For purposes of administering the Plan, the plan year shall begin on January 1 and end on December 31.

9.10. Headings.

The captions of the preceding sections and articles hereof have been inserted solely as a matter of convenience and shall not in any manner define or limit the scope or intent of any provision of the Plan.

9.11.            Governing Law.

To the extent such laws are not preempted by the laws of the United States of America, the Plan shall be governed by the laws of the State of New Jersey, except as to its principles of conflict of laws.

9.12.            Forfeiture of Benefits.

Except as provided in this  Section 9.12 and Section 3.02, benefits previously awarded may not be canceled and, upon attaining the right under the Plan for an immediate service benefit or deferred benefit or for an automatic survivor annuity, such right shall be nonforfeitable. Notwithstanding any eligibility or entitlement to benefits of an individual arising or conferred under any other provision or paragraph of this Plan, all benefits for which a Participant would otherwise be eligible hereunder may be forfeited, at the discretion of the Board or the Committee, if an individual without the Company's consent establishes a relationship with a competitor of the Company or engages in activity in conflict with or adverse to the interests of the Company under the standards of the AT&T Non-Competition Guideline and as determined by the Board or the Committee in its sole discretion.

9.13. Option During Disability.

If an employee who has left the service of a Participating Company has elected to continue receiving disability benefits which he or she had been receiving prior to his or her termination and to defer receiving pension payments under the Pension Plan to which he or she is eligible, benefits under the Plan shall be deferred until such time as the employee begins to receive payments under the Pension Plan.

9.14.            Special Classification.

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For purposes of the Plan, the determination of those causes of death not classified as due to accident shall be accomplished in the same manner as set forth in the Pension Plan.

9.15.            Claims Release.

In case of accident resulting in the death of a Participant which entitles his or her beneficiaries or his or her annuitant to death benefits under the Plan, such beneficiaries or annuitant shall, prior to the payment of any such benefits, sign a release, releasing the Company or other Participating Companies, as applicable, from all claims and demands which the deceased had and which his or her beneficiaries or his or her annuitant may have against them, otherwise than under the Plan, on account of such accident. If any persons other than the beneficiaries under this Plan might legally assert claims against a Participating Company on account of the death of the individual, no part of the death benefit under the Plan shall be due or payable until there have also been delivered to the Committee or the Administrator, as applicable, good and sufficient releases of all claims, arising from or growing out of the death of the individual, which such other persons might legally assert against any Participating Company. The Committee or the Administrator, as applicable, in its discretion, may require that the releases described above shall release any other company connected with the accident, including the Company or any other Participating Company, as applicable. This requirement of a release or releases shall not apply in the case of Survivor Annuities as described in Section 4.02(d).

9.16.            Damage Claims or Suits.

Should a claim other than under the Plan be presented or suit brought against the Company or any Participating Company for damages on account of death of a Participant, nothing shall be payable under the Plan on account of such death except as provided in Section 9.17; provided, however, that the Committee or the Administrator, as applicable, may, in its discretion and upon such terms as it may prescribe, waive this provision if such claim be withdrawn or if such suit be discontinued; and provided further that this provision shall not preclude the payment of Survivor Annuities as described in Section 4.02(d).

9.17. Judgment or Settlement.

In case any judgment is recovered against any Participating Company or any settlement is made of any claim or suit on account of the death of a Participant, and the amount paid to the beneficiaries who would have received benefits under the Plan is less than what would otherwise have been payable under the Plan, the difference between the two amounts may, in the discretion of the Committee or the Administrator, as applicable, be distributed to such beneficiaries.

9.18.            Payment under Law.

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In the case of any benefit (which the Committee or the Administrator, as applicable, shall determine to be of the same general character as a payment provided by the Plan)that is payable to any Participant, to his or her beneficiaries, his or her estate or his or her annuitant under any law now in force or hereafter enacted, only the excess, if any, of the amount prescribed in the Plan above the amount of such payment prescribed by law shall be payable under the Plan; provided, however, that no benefit payable under the Plan shall be reduced by reason of any governmental benefit or pension payable on account of military service or by reason of any benefit which the recipient would be entitled to receive under the Social Security Act or Railroad Retirement Act. In those cases where, because of differences in the beneficiaries or in the time or methods of payment or otherwise, the determination of any such excess is not ascertainable by mere comparison but adjustments are necessary, the Committee or the Administrator, as applicable, shall, in its discretion, determine whether or not in fact any such excess exists and make the adjustments necessary to carry out in a fair and equitable manner the spirit of the provision for the payment of any such excess. Further, in determining whether or not there is an excess, to the extent any payments under any law are considered in determining whether there is any excess payable to an employee under any other comparable plan sponsored by the Company, the amount of such payments under law shall not be considered under this Plan.

9.19.            Entire Plan.

This written Plan document is the final and exclusive statement of the terms of this Plan, and any claim of right or entitlement under the Plan shall be determined in accordance with its provisions pursuant to the procedures described in Article 7. Unless otherwise authorized by the Board or its delegate, no amendment or modification to this Plan shall be effective until reduced to writing and adopted pursuant to Section 8.02.

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Appendix A

Prior Pension Formulas

The pension formulas in effect for retirements between the period from August 10, 1980 to April 14, 1991, inclusive, are outlined below. The Basic Formula shown in Part 1. applies solely to Officers; the Alternate Formula in Part 2. applies to all participants for service benefit purposes only, and an Officer is entitled to the greater benefit provided under either the Basic Formula or Alternate Formula.

Part 1 - Basic Formula:

The product of one and six tenths percentum (1.6%) and an Officer's Adjusted Career Income. The early retirement discounts shown is Paragraphs 3(b)(ii) and 4(b)(i) of Section 4 of the Plan apply to pension benefits under this Formula.

 "Adjusted Career Income" is calculated in two steps:

Step 1 - Determine the average of the amount of short term  incentive awards or standard awards up to a permitted maximum amount which were paid or effective during a specified pay base period and multiply this average amount by Term of Employment completed as of the end of the pay base period;

Step 2 - Total the amount of the applicable awards after the pay base period to retirement and add this amount to the amount calculated under Step 1.

The components of the adjusted career income calculation are shown below:

		Type of Award	Type of Award	Limitation on Amount
Date of	Pay Base	Includable in	Includable after	of Award Includable in
Retirement	Period	Pay Base Period*	Pay Base Period*	Pension Computation
8-10-80 to	1-1-75 to	Actual Short Term	Actual Short Term	15% of Position Rate
1-30-82	12-31-79	Incentive Award	Incentive Award
1-31-82 to	10-1-76 to	Actual	Actual for 1981 and	50% of Position Rate
9-29-83	9-30-81		1982	;

9-30-83 to	10-1-77 to	Actual	Actual for 1982;	60% of Position Rate
1-30-86	9-30-82		Standard for 1983
			and after
1-31-86 to	7-1-79 to	Actual to 1-1-83;	Standard	60% of Position Rate
5-30-88	6-30-85	Standard for 1983
		and after
5-31-88 to	1-1-84 to	Standard	Standard	60% of Position Rate
4-14-91		6-30-85

* Awards for partial years during and after the Pay Base Period and for the year of retirement are prorated. In addition, no award is includable for the year of retirement if an Officer does not complete at least 3 months of Active Service during such year.

23

Appendix A

Part 2 - Alternate Formula:

Provisions applicable from January 2, 1984 through May 30, 1988

The following Alternate Formula was effective for retirements on or after January 2, 1984 through May 30. 1988:

A. The product of one and two-tenths percentum (1.2%) and Adjusted Career Average Pay,

PLUS

B. Ten dollars ($10.) and the product of five-hundredths percentum (.05%) and the difference between the Covered Compensation Base for the year of retirement and the Adjusted Career Average Pay.

TIMES

C.        Term of employment at retirement,

MINUS

D. Annual Service pension payable under the Pension Plan before reduction for a Survivor Annuity or early retirement.

The early retirement discount described in Appendix C of this Plan applies to the amounts computed under the Alternate Formula.

"Adjusted Career Average Pay" in the case of an Officer is calculated by dividing the sum of the total Adjusted Career Income under the Basic Formula of this Plan in effect at retirement and the total Adjusted Career Income under the Pension Plan formula in effect at retirement by such Officer's Term of Employment at retirement.

"Adjusted Career Average Pay" for an E-band Employee is Calculated by dividing the total Adjusted Career Income under the Pension Plan formula in effect at retirement by such employee's Term of Employment at retirement.

Provisions applicable from May 31, 1988 through October 18, 1993

The following Alternate Formula was effective for retirements on or after May 31, 1988 through October 18. 1993:

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A. The product of one and seven-tenths percentum (1.7%) and Adjusted Career Average Pay,

MINUS

B.        The product of eight-tenths (0.8%) and the Covered Compensation Base,

TIMES

C.        Term of employment at retirement,

MINUS

D. Annual Service pension payable under the Pension Plan before reduction for a Survivor Annuity or early retirement.

The early retirement discount described in Appendix C of this Plan applies to the amounts computed under the Alternate Formula.

"Adjusted Career Average Pay" is calculated by dividing the sum of the total Adjusted Career Income under the Basic Formula of this Plan in effect at retirement and the total Adjusted Career Income under the Pension Plan formula in effect at retirement by such Officer's Term of Employment at retirement.

Part 3 - Waiver of Death Benefit

Waiver of the Death Benefit. If an Officer is deemed to have waived the death benefit under the Pension Plan, he or she will be deemed to have waived such death benefits pursuant to this Plan as well, provided he or she either died before January 1, 1987 or he or she retired or terminated employment before December 31, 1986 and had attained age 55 on or before December 31, 1983; if a prior waiver by an Officer of death benefits under the Pension Plan is deemed rescinded under the Pension Plan, such waiver is deemed rescinded under this Plan effective December 31, 1986.

25

APPENDIX B

Section 4.02(c) Alternate Minimum Formula - Table of Factors

              Age

              50 or less  51     52     53     54     55     56     57     58     59     60     61     62     63     64     65

Service

  20 or less  1.33        1.33   1.33   1.36   1.43   1.47   1.43   1.38   1.33   1.28   1.25   1.20   1.15   1.10   1.05   1.00

  21          1.38        1.32   1.32   1.35   1.42   1.46   1.42   1.37   1.32   1.27   1.24   1.19   1.14   1.09   1.05   1.00

  22          1.42        1.37   1.31   1.34   1.41   1.45   1.41   1.36   1.30   1.26   1.23   1.18   1.14   1.09   1.05   1.00

  23          1.47        1.41   1.36   1.33   1.40   1.44   1.40   1.35   1.29   1.25   1.22   1.17   1.13   1.09   1.04   1.00

  24          1.52        1.46   1.40   1.39   1.39   1.43   1.39   1.34   1.29   1.24   1.21   1.17   1.12   1.08   1.04   1.00

  25          1.58        1.51   1.45   1.43   1.45   1.42   1.38   1.33   1.28   1.23   1.20   1.16   1.12   1.08   1.04   1.00

  26          1.57        1.50   1.44   1.42   1.44   1.41   1.37   1.32   1.27   1.22   1.19   1.15   1.11   1.08   1.04   1.00

  27          1.57        1.49   1.43   1.42   1.43   1.40   1.36   1.31   1.26   1.21   1.18   1.15   1.11   1.07   1.04   1.00

  28          1.56        1.48   1.42   1.41   1.43   1.39   1.36   1.31   1.25   1.21   1.18   1.14   1.11   1.07   1.04   1.00

  29          1.55        1.48   1.42   1.40   1.42   1.39   1.35   1.30   1.25   1.20   1.17   1.14   1.10   1.07   1.03   1.00

  30          1.38        1.36   1.33   1.35   1.39   1.38   1.34   1.29   1.24   1.19   1.17   1.13   1.10   1.07   1.03   1.00

  31          1.38        1.35   1.33   1.34   1.39   1.37   1.34   1.29   1.24   1.19   1.16   1.13   1.10   1.06   1.03   1.00

  32          1.37        1.35   1.32   1.34   1.38   1.37   1.33   1.28   1.23   1.18   1.16   1.12   1.09   1.06   1.03   1.00

  33          1.37        1.34   1.32   1.34   1.38   1.36   1.33   1.28   1.23   1.18   1.15   1.12   1.09   1.06   1.03   1.00

  34          1.36        1.34   1.31   1.33   1.37   1.36   1.32   1.27   1.22   1.17   1.15   1.12   1.09   1.06   1.03   1.00

  35 or more  1.36        1.33   1.31   1.33   1.37   1.35   1.32   1.27   1.22   1.17   1.14   1.11   1.09   1.06   1.03   1.00

APPENDIX C

Section 4.02(b) Alternate Formula

Early Retirement Factors Based Upon Attained Years and Months of Age

Attained Age

YearsMonths

           0       1          2        3         4         5        6        7        8         9       10       11      12

 50     .29      .29     .30      .30      .31      .31    .32     .32      .32     .33     .33     .34

 51     .34      .34     .35      .35      .36      .36    .37     .37      .37     .38     .38     .39

 52     .39      .40     .40      .41      .42      .42    .43     .44      .44     .45     .46     .46

 53     .47      .48     .48      .49      .50      .50    .51     .52      .52     .53     .54     .54

 54     .55      .56     .57      .57      .58      .59    .60     .60      .61     .62     .63     .63

 55     .64      .64     .66      .66      .66      .66    .67     .67      .67     .67     .69     .69

 56     .69      .69     .71      .71      .71      .72    .72     .72      .74     .74     .74     .76

 57     .76      .76     .78      .78      .78      .79    .79     .79      .81     .81     .81     .83

 58     .83      .83     .84      .84      .86      .86    .88     .88      .88     .90     .90     .91

 59     .91      .91     .93      .93      .95      .95    .97     .97      .97     .98     .98    1.00

 60    1.00

EX-10.III_I

Exhibit 10-iii(i)

DIRECTORS

AT&T CORP.

April 16, 1997

The regular monthly meeting of the Board of Directors of AT&T Corp. was held at the Company's office, 32 Avenue of the Americas, New York, New York, on Wednesday, April 16, 1997, at 10:00 o'clock in the forenoon.

Present: Robert E. Allen, Kenneth T. Derr, M. Kathryn Eickhoff, Walter Y. Elisha, Belton K. Johnson, Ralph S. Larsen, Donald F. McHenry, Michael I. Sovern, John R. Walter, Joseph D. Williams and Thomas H. Wyman. John D. Zeglis, General Counsel and Senior Executive Vice President Corporate Affairs, and Maureen B. Tart, Vice President and Controller, also attended. The Chairman of the Board presided. Marilyn J. Wasser acted as Secretary of the meeting.

* * *

Mr Wyman stated that the Committee had reviewed proposed changes to the AT&T Non-Qualified Pension Plan (the "NQPP") and the AT&T Mid-Career Pension Plan (the "MCPP"). These changes include: (1) updating existing benefits under both plans for those plan participants who, as of January 1, 1997, were on the active roll of an AT&T Management Pension Plan (AT&TMPP) participating company. (2) changing the NQPP to a new cash balance design effective January 1, 1998 for plan participants who are on the active roll of participating companies on or after that date, and (3) limiting the amount of, and eligibility for, primary death benefits.

Mr. Wyman stated that the Committee had recommended that the Board of Directors approve all such proposed changes to such plans. Whereupon, on motion it was

RESOLVED: that, the AT&T Non-Qualified Pension Plan (the "NQPP") and the AT&T Mid-Career Pension Plan (the "MCPP") be amended to provide that an employee shall be eligible (eligible employee) to be considered an eligible executive for purposes of these resolutions if, (1) in the case of eligibility for applicable benefits described below under the NQPP, he or she was a participant in the NQPP on January 1, 1997 and, (2) in the case of eligibility for applicable benefits described below under the MCPP, he or she would have been considered a participant in the MCPP if he or she had terminated employment immediately before January 1, 1997;

RESOLVED: that, effective August 1, 1997, the NQPP be amended to provide that the monthly NQPP benefit under the basic formula for eligible executives who are Officers (as defined in the NQPP), payable at age sixty-five (or such earlier age in accordance with plan provisions), equal one-twelfth of one and sixth-tenths percent of the eligible executive's average annual eligible short term incentive award earned for the -period from January 1, 1994 through December 31, 1996, multiplied by the lesser of (1) one plus the eligible executive's net credited service ("term of employment as defined in the NQPP") as of December 31, 1996 or (2) one hundred and five percent of such net credited service;

RESOLVED: that, effective August 1, 1997, the NQPP be amended to provide that, for purposes of calculating an eligible executive's benefit under the alternate formula, (1) an eligible executive's net credited service shall be replaced by the lesser of (a) one plus the eligible executive's net credited service as of December 31, 1996 or (b) one hundred five percent of such net credited service and (2) "adjusted career average pay" means (a) in the case of an Officer (as defined in the NQPP), the sum of (i) his or her average annual short term incentive award and any salary deferrals earned for the period from January 1, 1994 through December 31, 1996, and (ii) his or her average annual compensation as defined in the AT&TMPP for the period from January 1, 1994 through December 31, 1996, and (b) in the case of an E-band employee (as defined in the NQPP), his or her average annual compensation as defined in the AT&TMPP for the period_. from January 1, 1994 through December 31, 1996;

RESOLVED: that, effective August 1, 1997, the MCPP be amended to provide that the MCPP benefit of an eligible executive equal the amount accrued under applicable plan provisions for each such individual computed for both the portion of the benefit derived from the AT&TMPP and from the NQPP as follows: (1) mid-career pension credits shall be computed as if the eligible employee had terminated employment as of December 31, 1996, (2) January 1, 1994 through December 31, 1996 shall be the base period, and (3) the lesser of (a) one plus the eligible executive's net credited service ("term of employment" as defined in the MCPP) as of December 31, 1996 or (b) one hundred five percent of such net credited service shall be used;

RESOLVED: that the NQPP be amended to provide that no service or pay (including short-term awards and salary deferrals) after December 31, 1996 would be taken into account in determining the basic or alternate benefit (as described above) of an eligible executive under the NQPP;

RESOLVED: that, effective January 1, 1998, the NQPP be amended to provide for the establishment of hypothetical cash balance accounts for Officers (as defined in the NQPP) who are participants in the NQPP on the active roll of a participating company on or after January 1, 1998 ("cash balance participants");

RESOLVED: that, effective January 1, 1998, the monthly benefit under the MCPP with respect to eligible executives who are cash balance participants be determined as if those individuals had terminated employment as of December 31, 1997_.(and assuming, solely for eligibility purposes, that those individuals had at least five years of net credit service at E-band or above) and liability for that monthly benefit shall be transferred to the NQPP provided, however, this benefit shall be actually payable only if the eligible executive has completed the requisite five years of net credited service at E-band or above at actual termination of employment;

RESOLVED: that, effective January 1, 1998, the NQPP shall be amended to provide that a cash balance participant's nonqualified special update benefit equal the sum of the monthly benefit determined under the basic formula as amended above and the cash balance participant's monthly benefit transferred from the MCPP;

RESOLVED: that, effective January 1, 1998, the MCPP be amended to provided that, other than eligible employees who are not cash balance participants, no other present or future employee shall be eligible to participate in the MCPP;

RESOLVED: that, effective August 1, 1997, the NQPP and the MCPP be amended to provide that a benefit be payable upon an eligible executive's termination of employment from the Company's controlled group of corporations, provided that if the benefit (in the case of the NQPP, solely with respect to the basic formula) commences before the former eligible executive attains age fifty-five, it is reduced by one-half percent (one-quarter percent for participants with at least thirty years of net credited service) for each full or partial month that the benefit commences before age fifty-five and provided further that nothing in these resolutions shall be deemed to change the manner in which discounts are determined for early commencement of benefits under the alternate formula under the NQPP and provided further that nothing in these resolutions shall be deemed to change the eligibility requirements for receipt of retiree health benefits or any other post-retirement benefit;

RESOLVED: that, effective January 1, 1998, the NQPP be amended to provide that, for each cash balance participant who is on the active roll of a participating company on January 1, 1998, the initial credit to his or her cash balance account is determined by multiplying the cash balance participant's nonqualified special update benefit by the same initial conversion factor used in determining the individual's initial credit to his or her cash balance account under the AT&TMPP;

RESOLVED: that, effective January 1, 1998, the NQPP be amended to provide that each eligible cash balance participant shall have credited to his or her cash balance account, effective December 31, 1998 and each December 31 thereafter (or as of the last day of the month immediately before termination of employment, if earlier), an annual award credit in an amount determined by multiplying his or her short-term incentive award paid in that year by two times the applicable factor for that individual's annual pay credit for that year under the AT&TMPP;

RESOLVED: that, effective January 1, 1998, the NQPP be amended to provide that each cash balance participant shall have credited to his or her cash balance account, effective December 31, 1998 and each December 31 thereafter (or as of the last day of the month immediately before pension commencement, if earlier), an interest credit in an amount determined by multiplying his or her cash account balance as of the first day of chat year by the effective annual interest rate, which shall equal a base rate of four percent and, for 1998 and 1999, a bonus rate of three percent;

RESOLVED: that, effective January 1, 1998, the NQPP be amended to provide that each cash balance participant as of that date shall have credited to his or her cash balance account an initial annual award credit based on his or her short-term incentive award paid in 1997, if any, and an interest credit at the effective annual interest rate of seven percent (four percent base and three percent bonus) with respect to his or her initial cash balance credit based on his or her nonqualified special update benefit, if any;

RESOLVED: that, effective January 1, 1998, the NQPP be amended to provide that, for each cash balance participant who terminates employment on or after January 1, 1998, the cash balance participant's NQPP benefit with respect to his or her cash balance account shall be payable in the same form as the cash balance participant elected with respect to his or her cash balance account under the AT&TMPP (except that if a cash balance participant elects to receive his or her pension under the AT&TMPP in the form of the cash payment option (and his or her entire pension under the AT&TMPP is paid in a lump sum), the cash balance participant's NQPP cash balance account benefit shall be payable in the form of a single life annuity or joint and 50% survivor annuity, if married) and that the amount of payment under each optional form shall be determined in the same manner as under the AT&TMPP;

RESOLVED: that, effective January 1, 1998, the NQPP be amended to provide that the amount of a participant's single life annuity will equal the greater of the single life annuity payable with respect to his or her cash balance account or the participant's monthly benefit then payable under the basic, alternate, or alternate minimum formula, as applicable;

RESOLVED: that, effective January 1, 1998, the NQPP be amended to provide that eligibility for primary death benefits under Article 5 be limited to (1) participants in the NQPP who before that date had terminated employment with eligibility for a service pension or a disability pension and (2) participants in the NQPP on January 1, 1998 who are on the active roll of a participating company as of that date and who terminate employment before January 1, 2008 after satisfying the minimum age and service requirements as currently specified in the AT&TMPP for service pension eligibility;

RESOLVED: that, effective January 1, 1998, the NQPP be amended to provide that the amount of any primary death benefit payable under Article 5 on or after January 1, 1998 be limited to the amount that would be payable as of December 31, 1997;

RESOLVED: that, notwithstanding anything to the contrary in the resolutions of the Board adopted at its meeting held on November 17, 1993, the funding of the American Telephone and Telegraph Company Benefits Protection Trust for any increase in liability for plan amendments described in these and/or future resolutions shall be amortized over the future working lifetime of plan participants or some other period considered appropriate by the Enrolled Actuary for the AT&TMPP; and

RESOLVED: that the Senior Vice President, Compensation and Benefits (or his delegate), with the advice of the Law Department, is authorized, without further Board approval, to:

(1)   incorporate appropriate language in the AT&TMPP, the Excess Plan, the NQPP, and the MCPP to reflect properly the intent of the foregoing resolutions;

(2)   make such other administrative amendments necessary or appropriate to implement the foregoing resolutions and that are consistent with the intent of the cash balance design presented to the Board;

(3)   make such other amendments to the AT&TMPP, the Excess Plan, NQPP, and the MCPP as may be necessary or appropriate to apply the cash balance, survivor annuity, death benefit, and related provisions to employees who return from leave of absence and to former employees who return to the active roll of a participating company;

(4)   amend, terminate, or make such other changes to the MCPP in order to treat eligible executives in an equitable manner consistent with the general intent of the MCPP and, in the case of cash balance participants, the transition to cash balance;

(5)   amend such other plans or programs of the Company as would be appropriate to reflect that disability pensions and service pensions due to disability are no longer payable under the AT&TMPP and to reflect that pensions under the AT&TMPP and the Excess Plan are payable under the cash payment option; and

(6)   take such further action as he considers necessary or appropriate to implement such amendments.

The meeting adjourned at 12:42 P.M.

Attest:

MBRILYN J. WASSER

Secretary.

EX-10.III_II

Exhibit 10-iii(ii)

AT&T NON-QUALIFIED PENSION PLAN

AT&T

and

such of its Subsidiary Companies that are

Participating Companies

Amendment dated July 28, 2003

ARTICLE 9.

GENERAL PROVISIONS

* * * *

9.18              CIC Provision

(a)              Applicability

This Section 9.18 applies only to an individual who, as of the date a Change in Control ("CIC") occurs (as defined in the Pension Plan), is an employee of a Participating Company and a Participant in this Plan.

(b)              Nonforfeitable Benefits

Notwithstanding any other provisions of this Plan, on and after the date a CIC occurs, solely for purposes of determining entitlement to benefits from this Plan, an individual described in Section 9.18(a) shall be deemed to be vested under the Pension Plan, whether or not such Participant is otherwise entitled to a vested benefit from the Pension Plan.

(c)              Amendments to CIC Provisions

Notwithstanding the provisions of Section 8.02, or any other provision of the Plan, unless required by applicable law, this Section 9.18 may not be amended in any manner adverse to the interests of Participants without their consent and, further, upon the occurrence of a CIC, no amendment may be made to this Section 9.18 by the Board, the Company, (including any successor to the Company), any committee, any officer, or any other party to suspend, modify, or eliminate any benefit provisions that are applicable upon occurrence of a CIC.

EX-10.JJJ

Exhibit 10-jjj

AT&T EXCESS BENEFIT AND COMPENSATION PLAN

AT&T Corp.

and

Such of its Subsidiary Companies which are

Participating Companies

Effective October 1, 1996

ADMINISTRATION OF THE PLAN

AT&T EXCESS BENEFIT AND COMPENSATION PLAN

AMENDED and RESTATED effective October 1, 1996

Article 1 – Background and Purpose

The AT&T Excess Benefit Plan was established to provide eligible management and occupational employees of AT&T Corp. (formerly American Telephone and Telegraph Company) ("AT&T") and its subsidiaries that became Participating Companies with certain benefits which would have been payable under the AT&T Management Pension Plan or the AT&T Pension Plan, respectively, but for the limitations placed on benefits payable under the AT&T Management Pension Plan or the AT&T Pension Plan by section 415 of the Internal Revenue Code of 1986, as amended (and its predecessor, the Internal Revenue Code of 1954, as amended) ("Code").  Effective January 1, 1989, AT&T established an additional plan to provide eligible management employees with certain benefits which would have been payable under the AT&T Management Pension Plan but for the limitations placed on eligible compensation by Code Section 401(a)(17).  The aforementioned plans are intended to encompass those plans identified in AT&T's December 28, 1992 filing with the Pension and Welfare Benefits Administration ("PWBA") in response to the PWBA's September 21, 1992 Notice (Extension of Grace Period for Assessment of Civil Penalties for Failure to File Timely Annual Return Reports; Top Hat Plans and Pre-Grace Period Late Filers).  These plans are amended and restated, effective January 1, 1994, and shall hereinafter be referred to collectively as the "AT&T Excess Benefit and Compensation Plan" or "Plan."

The Plan is intended to constitute an unfunded "excess benefit plan" as defined in section 3(36) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), to the extent it provides benefits that would be paid under the AT&T Management Pension Plan or the AT&T Pension Plan but for the limitations imposed by Code Section 415, and an "unfunded plan of deferred compensation for a select group of management or highly compensated employees" for purposes of Title I of ERISA, to the extent it provides other benefits.

Except as expressly provided below, this amended and restated plan document applies only to employees who terminate employment on or after October 1, 1996.  For former employees who terminated employment before October 1, 1996, the provisions of the AT&T Excess Benefit and Compensation Plan in effect at termination of the former employee's employment governs.

Effective October 1, 1996, Lucent Technologies Inc. established the Lucent Technologies Inc. Excess Benefit and Compensation Plan as a successor to the AT&T Excess Benefit and Compensation Plan, in effect as of September 30, 1996, with respect to Transferred Individuals (as defined in Article 2).  Accordingly, the AT&T Excess Benefit and Compensation Plan relinquished to the Lucent Technologies Inc. Excess Benefit and Compensation Plan all liabilities as of September  30, 1996 relating to Transferred Individuals, and the Lucent Technologies Inc. Excess Benefit and Compensation Plan assumed and is solely responsible for all such liabilities.  Except to the extent required by law or Article 5 of this Plan, the Plan shall not recognize service and compensation before October 1, 1996 with respect to Transferred Individuals.  Effective as of the date an individual becomes a "Transition Individual" (as defined in Section 1.38(a) or (d) of the Management Interchange Agreement or Section 1.30(a) or (d) of the Occupational Interchange Agreement), the Plan shall also assume and be solely responsible for all liabilities relating to such Transition Individuals.

Article 2 – Definitions

Unless the context clearly indicates otherwise, the following terms have the meanings described  below when used in this Plan and references to a particular Article or Section shall mean the Article or Section so delineated in this Plan.

2.1.           Administrator

With respect to individuals covered by the AT&T Management Pension Plan, the Pension Plan Administrator under the AT&T Management Pension Plan and, with respect to individuals covered by the AT&T Pension Plan, the Pension Plan Administrator under the AT&T Pension Plan.

2.2.           Affiliated Corporation

Any corporation of which more than 50 percent of the voting stock is owned directly or indirectly by AT&T.

2.3.           AT&T

AT&T Corp. (formerly the American Telephone and Telegraph Company), a New York corporation, or its successor.

2.4.           Beneficiary

Any person entitled to an Excess Death Benefit pursuant to Section 4.9.

2.5.           Benefit Limitation

The maximum benefit payable to a Participant under the AT&T Management Pension Plan or the AT&T Pension Plan in accordance with Code Section 415, but after application of the Compensation Limitation, if any, under the AT&T Management Pension Plan or the AT&T Pension Plan.

2.6.           Board

The Board of Directors of AT&T.

2.7.           Code

The Internal Revenue Code of 1986, as amended from time to time.  Any reference to a particular section of the Code includes any applicable regulations promulgated under that section.

2.8.           Committee

The AT&T Employees Benefit Committee.

2.9.           Compensation Limitation

The maximum amount of annual compensation under Code Section 401(a)(17) that may be taken into account in any Plan Year for benefit accrual purposes under the AT&T Management Pension Plan or for purposes of calculating an Accident Death Benefit, Sickness Death Benefit or Pensioner Death Benefit under the AT&T Management Pension Plan.

2.10.           EBA

The Employee Benefits Agreement between AT&T and Lucent Technologies Inc. as of February 1, 1996, as amended.

2.11.           ERISA

The Employee Retirement Income Security Act of 1974, as amended from time to time.  Any reference to a particular section of ERISA includes any applicable regulations promulgated under that section.

2.12.           Excess Retirement Benefit

The benefit, if any, described in Article 4 which is payable to a Participant or a Surviving Spouse under the terms of the Plan.

2.13.           Executive

An individual who is considered to be within "a select group of management or highly compensated employees" for purposes of Title I of ERISA and whose annual compensation in any year exceeds the Compensation Limitation.

2.14.         Participant

An individual and/or an Executive who has satisfied the eligibility requirements in Section 3.1 for accrual of an Excess Retirement Benefit.

2.15.         Participating Company

AT&T and any Affiliated Corporation which is a Participating Company under the AT&T Management Pension Plan or the AT&T Pension Plan.

2.16.        Plan

This AT&T Excess Benefit and Compensation Plan.

2.17.         Subsidiary

Any corporation of which more than 80% of the voting stock is owned directly or indirectly by AT&T.

2.18.         Surviving Spouse

A deceased Participant's surviving spouse who is eligible to receive a survivor annuity benefit under the AT&T Management Pension Plan or the AT&T Pension Plan.

2.19.         Term of Employment

"Term of Employment" within the meaning of the AT&T Management Pension Plan or the AT&T Pension Plan, as applicable, for purposes of calculating the amount of a Participant's benefit.

2.20.         Transferred Individual

A "Transferred Individual" within the meaning of the EBA.

Article 3 – Eligibility

3.1.           Participation

(i) Each individual who becomes eligible or is eligible for a deferred vested pension, a disability pension or a service pension, under the terms and conditions of either the AT&T Management Pension Plan or the AT&T Pension Plan, shall be eligible to participate in this Plan, and/or (ii) each Executive who, in any year, has annual compensation in excess of the Compensation Limitation and who becomes or is eligible for a deferred vested pension, a disability pension or a service pension, under the terms and conditions of the AT&T Management Pension Plan, shall be eligible to participate in this Plan.

3.2.           Surviving Spouse Benefit

Each Surviving Spouse of a Participant shall be eligible to receive an Excess Retirement Benefit under the Plan, if eligible as provided in Section 4.1 of the Plan.

3.3.           Relationship To Other Plans

The Excess Retirement Benefit and Excess Death Benefit payable under the Plan shall be in addition to any other benefits provided, directly or indirectly, to a Participant, Surviving Spouse or Beneficiary by any the Participating Company.  Participation in the Plan shall not preclude or limit the participation of the Participant in any other benefit plan sponsored by a Participating Company for which such Participant would otherwise be eligible.  The Excess Retirement Benefit and Excess Death Benefit payable to a Participant, Surviving Spouse or Beneficiary under this Plan shall not duplicate benefits payable to such Participant, Surviving Spouse or Beneficiary under any other plan or arrangement of a Participating Company or any Affiliated Corporation.

3.4.           Forfeiture of Benefits

If any Participant who otherwise would be entitled to an Excess Retirement Benefit under this Plan is discharged for cause due to conviction of a felony related to his or her employment, the rights of such Participant to an Excess Retirement Benefit under this Plan, including the rights of the Participant's spouse to an Excess Retirement Benefit as a Surviving Spouse and/or the rights of a Beneficiary to an Excess Death Benefit, shall be forfeited.

Article 4 – Retirement and Death Benefits

4.1.           Excess Retirement Benefits

If the benefit payable to a Participant or a Surviving Spouse under the AT&T Management Pension Plan or the AT&T Pension Plan is limited by reason of the application of the Benefit Limitation and/or, for an Executive or a Surviving Spouse of an Executive, the Compensation Limitation, an Excess Retirement Benefit shall be paid as provided in this Article 4 to the Participant or the Surviving Spouse.

4.2.           Amount of Excess Retirement Benefit

The amount, if any, of the Excess Retirement Benefit payable monthly to a Participant or a Surviving Spouse shall be equal to the difference between (i) and (ii) where:

(i)           is the amount of the monthly pension benefit which would be provided to the Participant or Surviving Spouse under the AT&T Management Pension Plan or the AT&T Pension Plan, without regard to the Benefit Limitation and/or for an Executive, or a Surviving Spouse of an Executive, without regard to the Compensation Limitation under the AT&T Management Pension Plan, based upon the AT&T Management Pension Plan or the AT&T Pension Plan formula, as applicable, in effect as of the date of termination of employment or death; and

(ii)           is the amount of the monthly pension benefit actually payable to such Participant or Surviving Spouse under the AT&T Management Pension Plan or the AT&T Pension Plan.

The amount of the Excess Retirement Benefit payable as a result of the application of the Benefit Limitation under the AT&T Management Pension Plan or the AT&T Pension Plan shall be determined or redetermined, based upon the AT&T Management Pension Plan or the AT&T Pension Plan formula, as applicable, in effect as of the date of termination of employment or termination of reemployment pursuant to Section 4.7 or death, (a) as of the date when benefits are to commence pursuant to Section 4.3 or recommence pursuant to Section 4.7; (b) as of the effective date of any subsequent increases and/or decreases in the Benefit Limitation, and/or (c) as of the effective date of any special increases in the monthly benefit payable, prior to application of the Benefit Limitation, as a result of amendments to the AT&T Management Pension Plan and/or the AT&T Pension Plan, whichever is applicable.  Further, the amount of the Excess Retirement Benefit shall be reduced for commencement of the Excess Retirement Benefit prior to age 55 and/or for the cost of the survivor annuity, if any, in the same manner as is set forth in the AT&T Management Pension Plan or the AT&T Pension Plan, as applicable.

4.3.           Commencement and Form of Benefits Payable to Participant or Surviving Spouse

The Excess Retirement Benefit provided under this Plan payable to either the Participant or the Surviving Spouse (a) shall commence at the same time, (b) shall be paid for as long as (subject to Section 4.2) and (c) shall be paid in the same benefit form as the Participant's or Surviving Spouse's benefits are paid under the AT&T Management Pension Plan or the AT&T Pension Plan; whichever is applicable, provided, however, that the Committee shall have the right to approve the Participant's election of the form of the Excess Retirement Benefit payable to the Participant.

4.4.           No Surviving Spouse

If a Participant dies before the date as of which his or her benefit commences under the AT&T Management Pension Plan or the AT&T Pension Plan, and he or she does not have a Surviving Spouse on his or her date of death, no Excess Retirement Benefit shall be paid after the death of the Participant with respect to the Participant.

4.5.           Future Benefit Adjustments

a)           If a Participant has commenced receiving a service or disability pension under the AT&T Management Pension Plan or the AT&T Pension Plan in the form of a joint and 50 percent survivor annuity and his or her designated annuitant subsequently predeceases him or her, the Participant's Excess Retirement Benefit under this Plan shall be calculated in accordance with Section 4.02 and thereafter paid, prospectively, by restoring the original cost of the joint and 50 percent survivor annuity form of benefit under the AT&T Management Pension Plan or the AT&T Pension Plan, whichever is applicable.  Such adjustment shall be effective as of the first day of the first month following the death of the Participant's surviving annuitant.

(b)           In the event that, following commencement of benefits to a Participant under the Plan, the AT&T Management Pension Plan benefit is subsequently adjusted to include any payments considered Compensation under the AT&T Management Pension Plan paid after commencement of the AT&T Management Pension Plan benefit, the Excess Retirement Benefit to the Participant under this Plan shall be recalculated as soon as practicable after the AT&T Management Pension Plan benefit is adjusted and shall be paid retroactively to the date the AT&T Management Pension Plan benefit commences, if the AT&T Management Pension Plan benefit is adjusted retroactively to such date.

(c)           In the event that, following commencement of benefits to a Participant or Surviving Spouse under the Plan, the AT&T Management Pension Plan or AT&T Pension Plan benefit is subsequently increased as a result of a successful claim for benefits under the AT&T Management Pension Plan or AT&T Pension Plan, the Excess Retirement Benefit to the Participant or Surviving Spouse under this Plan shall be recalculated as soon as practicable after the AT&T Management Pension Plan or the AT&T Pension Plan benefit is adjusted.

4.6.           Determination of Benefits

Excess Retirement Benefit payments and Excess Death Benefit payments under this Plan shall be calculated in accordance with the rules, procedures, and assumptions utilized under the AT&T Management Pension Plan or the AT&T Pension Plan, whichever is applicable.  Thus, whenever it is necessary to determine whether one benefit is less than, equal to, or larger than another, or to determine the equivalent actuarial value of any benefit, whether or not such form of benefit is provided under this Plan, such determination shall be made, at the Administrator's discretion, by AT&T's enrolled actuary, using mortality, interest and other assumptions normally used at the time in determining actuarial equivalence under the AT&T Management Pension Plan or AT&T Pension Plan, whichever is applicable.

4.7.           Suspension and Recommencement of Benefit Payments

A Participant's employment or reemployment subsequent to retirement or termination of employment with entitlement to an Excess Retirement Benefit under this Plan shall result in the permanent suspension of payment of the Excess Retirement Benefit to the Participant for the period of such employment or reemployment to the extent and in a manner consistent with the terms and conditions applicable to the suspension of benefit payments under the AT&T Management Pension Plan or the AT&T Pension Plan, whichever is applicable.  A Participant's Excess Retirement Benefit shall recommence simultaneously with the recommencement of his or her benefits under the AT&T Management Pension Plan or the AT&T Pension Plan.  The amount of the Participant's Excess Retirement Benefit upon recommencement shall be adjusted to reflect adjustments, if any, in the amount of the Participant's pension benefit under the AT&T Management Pension Plan or the AT&T Pension Plan resulting from the period of reemployment, pursuant to Section 4.2.  Following recommencement of payment under this Plan, the Participant (or Surviving Spouse) shall not be eligible to receive any Excess Retirement Benefit payments that would otherwise have been payable but for the suspension.

4.8.           Mandatory Portability Agreement

A Participant (a) who is employed by an "Interchange  Company", as that term is defined under the Mandatory Portability Agreement ("MPA"), subsequent to retirement or termination of employment from AT&T, its subsidiaries or any Affiliated Company, (b) who is covered under the terms and conditions of the MPA, and (c) for whom assets and liabilities are transferred from the AT&T Management Pension Plan or the AT&T Pension Plan, shall forfeit his rights to an Excess Retirement Benefit under this Plan, including the rights of the Participant's spouse to an Excess Retirement Benefit as a Surviving Spouse and the rights of Beneficiary to an Excess Death Benefit.

4.9.           Excess Death Benefit

(a)           If the actual Accident Death Benefit, Sickness Death Benefit or Pensioner Death Benefit ("Death Benefit") payable to any person as a result of the death of a Participant under the terms of the AT&T Management Pension Plan is reduced or limited by reason of the Compensation Limitation, an Excess Death Benefit shall be paid as provided in this Section 4.9 to the beneficiary otherwise entitled to receive the Death Benefit under the terms and conditions of the AT&T Management Pension Plan.

(b)           The amount, if any, of the Excess Death Benefit payable shall be equal to the difference between (i) and (ii) where:

(i)           is the amount of the Death Benefit which would be provided to the beneficiary under the AT&T Management Pension Plan without regard to the Compensation Limitation under the AT&T Management Pension Plan in effect as of the date of death; and

(ii)           is the amount of the Death Benefit actually payable to such beneficiary under the AT&T Management Pension Plan.

(c)           The Excess Death Benefit provided under this Plan (i) shall commence at the same time, (ii) shall be paid for as long as, and (iii) shall be paid in the same benefit form as the Committee or its delegate has determined with respect to the Death Benefit payable under the AT&T Management Pension Plan.

Article 5 – Disposition of Participating Company

5.1.           Sale, Spin-Off, or Other Disposition of Participating Company

(a)           Subject to Sections 4.8 and 9.1, in the event AT&T sells, spins off, or otherwise disposes of a Subsidiary or an Affiliated Corporation, or disposes of all or substantially all of the assets of a Subsidiary or an Affiliated Corporation such that one or more Participants terminate employment for the purpose of accepting employment with the purchaser of such stock or assets, any person employed by such Subsidiary or Affiliated Corporation who ceases to be an employee as a result of the sale, spin-off, or disposition shall be deemed to have terminated his or her employment with a Participating Company and be eligible for an Excess Retirement Benefit commencing at the same time as his or her benefit, if any, commences under the AT&T Management Pension Plan or the AT&T Pension Plan.  Further, if the Participant dies after termination of employment as described in this Section 5.1, his or her Surviving Spouse may be entitled to an Excess Retirement Benefit, if eligible as provided in Section 4.1, and/or his or her Beneficiary may be entitled to an Excess Death Benefit, if eligible as provided in Section 4.9.

(b)           Notwithstanding the foregoing provisions of this Section 5.1, and subject to Section 9.1, if, as part of the sale, spin-off, or other disposition of the stock or assets of a Subsidiary or Affiliated Corporation, the Subsidiary or Affiliated Corporation, its successor owner, or any other party agrees in writing to assume the liability for the payment of the Excess Retirement Benefit and/or the Excess Death Benefit to which the Participant, Surviving Spouse and/or Beneficiary would have been entitled under the Plan but for such sale, spin-off, or other disposition, then the entitlement of the Participant or his or her Surviving Spouse to an Excess Retirement Benefit and/or any Beneficiary to an Excess Death Benefit under this Plan shall terminate.  Any subsequent entitlement of the former Participant or his or her Surviving Spouse or Beneficiary to the Excess Retirement Benefit and/or the Excess Death Benefit shall be the sole responsibility of the assuming party.  Upon the assumption of the liability for the payment of an Excess Retirement Benefit and Excess Death Benefit by Lucent Technologies Inc. pursuant to Section 6.1 of the EBA, the entitlement of a Transferred Individual (as defined in the EBA), and/or his or her Surviving Spouse or Beneficiary, to an Excess Retirement Benefit and/or an Excess Death Benefit under this Plan shall terminate.  Upon the assumption of the liability for the payment of an Excess Retirement Benefit and Excess Death Benefit by Lucent Technologies Inc. pursuant to Section 7.1 of the Management Interchange Agreement or Section 3.1 of the Occupational Interchange Agreement, both dated as of April 8, 1996, between AT&T and Lucent Technologies Inc., the entitlement of a Transition Individual (as defined in Section 1.38(b) or (c) of the Management Interchange Agreement or Section 1.30(b) or (c) of the Occupational Interchange Agreement), and/or his or her Surviving Spouse or Beneficiary, to an Excess Retirement Benefit and/or an Excess Death Benefit under this Plan shall terminate.

Article 6 – Source of Payment

6.1.           Source of Payments

Benefits arising under this Plan and all costs, charges, and expenses relating thereto will be payable from the Company's general assets.  The Company may, however, establish a trust to pay such benefits and related expenses, provided such trust does not cause the Plan to be "funded" within the meaning of ERISA.  To the extent trust assets are available, they may be used to pay benefits arising under this Plan and all costs, charges, and expenses relating thereto.  To the extent that the funds held in the trust, if any, are insufficient to pay such benefits, costs, charges and expenses, the Company shall pay such benefits, costs, charges, and expenses from its general assets.  In addition, the Company may, in its sole discretion, purchase and distribute one or more commercial annuity contracts, or cause the trustee of the trust to purchase and distribute one or more commercial annuity contracts, to make benefit payments required under this Plan, to any Senior Manager, as defined in the AT&T Non-Qualified Pension Plan, or the Surviving Spouse of any Senior Manager, provided, however, that the purchase and distribution of any such annuity contracts shall be no sooner than the expiration of any forfeiture provisions applicable to the Senior Manager under the AT&T Non-Competition Guidelines.  Such annuity contracts may be purchased from a commercial insurer acceptable to the Executive Vice President - Human Resources.  Further, the Executive Vice President - Human Resources, may determine,  in his sole discretion, to pay additional sums to any Senior Manager, from the Company's general assets or from the trust, if any, to reimburse the Senior Manager for additional federal and state income taxes estimated to be incurred by reason of the distribution of any such annuity contracts.  The Executive Vice President Human Resources shall establish a methodology or methodologies for determining the amount of such additional sums.  The methodology or methodologies selected shall be those that the Executive Vice President - Human Resources determines, in his sole discretion, to be the most effective and administratively feasible for the purpose of producing after tax periodic benefit payments that approximate the after tax periodic benefit payments that would have been received by Senior Managers in the absence of the distribution of the annuity contract.

6.2.           Unfunded Status

The Plan at all times shall be entirely unfunded for purposes of the Code and ERISA and no provision shall at any time be made with respect to segregating any assets of a Participating Company for payment of any benefits hereunder.  Funds that may be invested through a trust described in Section 6.1 shall continue for all purposes to be part of the general assets of the Participating Company which invested the funds.  The Plan constitutes a mere promise by AT&T and the Participating Companies to make Excess Retirement Benefit payments and Excess Death Benefit payments, if any, in the future.  No Participant, Surviving Spouse or any other person shall have any interest in any particular assets of a Participating Company by reason of the right to receive a benefit under the Plan and to the extent the Participant, Surviving Spouse or any other person acquires a right to receive benefits under this Plan, such right shall be no greater than the right of any unsecured general creditor of a Participating Company.

6.3.           Fiduciary Relationship

Nothing contained in the Plan, and no action taken pursuant to the provisions of the Plan, shall create or be construed to create a trust or a fiduciary relationship between or among AT&T, any other Participating Company, the Board, the Administrator, the Committee, any Participant, any Surviving Spouse, or any other person, except as provided in Section 7.4.

Article 7 – Administration of the Plan

7.1.           Administration

AT&T shall be the "plan administrator" of the Plan as that term is defined in ERISA.

7.2.           Indemnification

Neither the Administrator, any member of the Board or of the Committee, nor each other officer to whom any duty or power relating to the administration or interpretation of the Plan may be allocated or delegated, shall be personally liable by reason of any contract or other instrument executed by such individual or on his or her behalf in his or her capacity as the Administrator or as a member of the Board or of the Committee, nor for any mistake of judgment made in good faith, and AT&T shall indemnify and hold harmless the Administrator, each member of the Board, each member of the Committee, and each other employee or officer to whom any duty or power relating to the administration or interpretation of the Plan may be allocated or delegated, against any cost or expense (including attorneys' fees) or liability (including any sum paid in settlement of a claim) arising out of any act or omission to act in connection with the Plan unless arising out of such person's own fraud or bad faith.

7.3.           Claims Procedure

(a)           All claims for benefit payments under the Plan shall be submitted in writing by the Participant, Surviving Spouse, Beneficiaries, or any individual duly authorized by them ("Claimant" for purposes of Section 7.3), to the Administrator.  The Administrator shall notify the Claimant in writing within 90 days after receipt as to whether the claim has been granted or denied.  This period may be extended for up to an additional 90 days in unusual cases provided that written notice of the extension is furnished to the Claimant prior to the commencement of the extension.  In the event the claim is denied, such notice shall (i) set forth the specific reasons for denial, (ii) make reference to the pertinent Plan provisions on which the denial is based, (iii) describe any additional material or information necessary before the Claimant's request may be acted upon, and (iv) explain the procedure for appealing the adverse determination.

(b)           Any Claimant whose claim for benefits has been denied, in whole or in part, may, within 60 days of receipt of any adverse benefit determination, appeal such denial to the Committee.  All appeals shall be in the form of a written statement and shall (i) set forth all of the reasons in support of favorable action on the appeal, (ii) identify those provisions of the Plan upon which the Claimant is relying, and (iii) include copies of any other documents or materials which may support favorable consideration of the claim.  The Committee shall decide the issues presented within 60 days after receipt of such request, but this period may be extended for up to an additional 60 days in unusual cases provided that written notice of the extension is furnished to the Claimant prior to the commencement of the extension.  The decision of the Committee shall be set forth in writing, include specific reasons for the decision, refer to pertinent Plan provisions on which the decision is based, and shall be final and binding on all persons affected thereby.

Any Claimant whose claim for benefits has been denied shall have such further rights of review as are provided in ERISA Section 503, and the Committee and Administrator shall retain such right, authority, and discretion as is provided in or not expressly limited by ERISA Section 503.

(c)           The Committee shall serve as the final review committee, under the Plan and ERISA, for the review of all appeals by Claimants whose initial claims for benefits have been denied, in whole or in part, by the Administrator.  The Committee shall have the authority to determine conclusively for all parties any and all questions arising from administration of the Plan, and shall have sole and complete discretionary authority and control to manage the operation and administration of the Plan, including, but not limited to, authorizing disbursements according to the Plan, the determination of all questions relating to eligibility for participation and benefits, interpretation of all Plan provisions, determination of the amount and kind of benefits payable to any Participant, Surviving Spouse or Beneficiary, and the construction of disputed and doubtful terms.  Such decisions by the Committee shall be conclusive and binding on all parties and not subject to further review.

7.4.           Named Fiduciaries

AT&T, the Committee, the Pension Plan Administrator(s) and each Participating Company is each a named fiduciary as that term is used in ERISA with respect to the particular duties and responsibilities herein provided to be allocated to each of them.

7.5.           Role of the Committee

(a)           The Committee shall have the specific powers elsewhere herein granted to it and shall have such other powers as may be necessary in order to enable it to administer the Plan, except for powers herein granted or provided to be granted to others.

(b)           The procedures for the adoption of by-laws and rules of procedure and for the employment of a secretary and assistants shall be the same as are set forth in AT&T Management Pension Plan or the AT&T Pension Plan.

7.6.           Allocation of Responsibilities

AT&T may allocate responsibilities for the operation and administration of the Plan consistent with the Plan's terms, including allocation of responsibilities to the Committee and the other Participating Companies.  AT&T and other named fiduciaries may designate in writing other persons to carry out their respective responsibilities under the Plan, and may employ persons to advise them with regard to any such responsibilities.

7.7.           Multiple Capacities

Any person or group of persons may serve in more than one fiduciary capacity with respect to the Plan.

Article 8 – Amendment and Termination

8.1.           Amendment and Termination

Pursuant to ERISA Section 402(b)(3), the Board or its delegate (acting pursuant to the Board's delegations of authority then in effect) may from time to time amend, suspend, or terminate the Plan at any time. Plan amendments may include, but are not limited to, elimination or reduction in the level or type of benefits provided prospectively to any class or classes of Participants (and Surviving Spouses and Beneficiaries).  Any and all Plan amendments may be made without the consent of any Participant, Surviving Spouse or Beneficiary.  Notwithstanding the foregoing, no such amendment, suspension, or termination shall retroactively impair or otherwise adversely affect the rights of any Participant, Surviving Spouse, or other person to benefits under the Plan, the AT&T Management Pension Plan or the AT&T Pension Plan which have arisen prior to the date of such action.

Article 9 – General Provisions

9.1.           Binding Effect

The Plan shall be binding upon and inure to the benefit of each Participating Company and its successors and assigns, and to each Participant, his or her successors, designees, Beneficiaries, designated annuitants, and estate.  The Plan shall also be binding upon any successor corporation or organization succeeding to substantially all of the assets and business of AT&T.  Nothing in the Plan shall preclude AT&T from merging or consolidating into or with, or transferring all or substantially all of its assets to, another corporation which assumes the Plan and all obligations of AT&T hereunder.  AT&T

agrees that it will make appropriate provision for the preservation of the rights of Participants, Surviving Spouses and Beneficiaries under the Plan in any agreement or plan or reorganization into which it may enter to effect any merger, consolidation, reorganization, or transfer of assets.  Upon such a merger, consolidation, reorganization, or transfer of assets, the term "Participating Company" shall refer to such other corporation and the Plan shall continue in full force and effect.

9.2.           No Guarantee of Employment

Neither the Plan nor any action taken hereunder shall be construed as (i) a contract of employment or deemed to give any Participant the right to be retained in the employment of a Participating Company, the right to any level of compensation, or the right to future participation in the Plan; or (ii) affecting the right of a Participating Company to discharge or dismiss any Participant at any time.

9.3.           Tax Withholding

AT&T or a Participating Company, as applicable, shall withhold all federal, state, local, or other taxes required by law to be withheld from Excess Retirement Benefit payments under the Plan.  AT&T shall also withhold all FICA taxes required by law to be withheld on an Executive's Excess Retirement Benefits under the Plan.

9.4.           Assignment of Benefits

No Excess Retirement Benefit or Excess Death Benefit under this Plan or any right or interest in such Excess Retirement Benefit or Excess Death Benefit shall be assignable or subject in any manner to anticipation, alienation, sale, transfer, claims of creditors, garnishment, pledge, execution, attachment or encumbrance of any kind, including, but not limited to, pursuant to any domestic relations order (within the meaning of ERISA Section 206(d)(3)  and Code Section 414(p)(1)(B)) or judgment or claims for alimony, support, separate maintenance, and claims in bankruptcy proceedings, and any such attempted disposition shall be null and void.

9.5.           Facility of Payment

If the Administrator shall find that any person to whom any amount is or was payable under the Plan is unable to care for his or her affairs because of illness or accident, then any payment, or any part thereof, due to such person (unless a prior claim therefore has been made by a duly appointed legal representative), may, if the Administrator so directs AT&T, be paid to the same person or institution that the benefit with respect to such person is paid or to be paid under the AT&T Management Pension Plan or AT&T Pension Plan, if applicable, or the Participant's lawful spouse, a child, a relative, an institution maintaining or having custody of such person, or any other person deemed by the Administrator to be a proper recipient on behalf of such person otherwise entitled to payment.  Any such payment shall be in complete discharge of the liability of AT&T, the Board, the Committee, the Administrator, and the Participating Company therefore.  If any payment to which a Participant, Surviving Spouse or Beneficiary is entitled under this Plan is unclaimed or otherwise not subject to payment to the person or persons so entitled, such amounts representing such payment or payments shall be forfeited after a period of two years from the date the first such payment was payable and shall not escheat to any state or revert to any party; provided, however, that any such payment or payments shall be restored if any person otherwise entitled to such payment or payments makes a valid claim.

9.6.           Severability

If any section, clause, phrase, provision, or portion of this Plan or the application thereof to any person or circumstance shall be invalid or unenforceable under any applicable law, such event shall not affect or render invalid or unenforceable the remainder of this Plan and shall not affect the application of any section, clause, provision, or portion hereof to other persons or circumstances.

9.7.           Plan Year

For purposes of administering the Plan, each plan year shall begin on January 1 and end on December 31.

9.8.           Headings

The captions preceding the sections and articles hereof have been inserted solely as a matter of convenience and shall not in any manner define or limit the scope or intent of any provisions of the Plan.

9.9.           Governing Law

The Plan shall be governed by the laws of the State of New Jersey (other than its conflict of laws provisions) from time to time in effect, except to the extent such laws are preempted by the laws of the United States of America.

9.10.           Entire Plan

This written Plan document is the final and exclusive statement of the terms of this Plan, and any claim of right or entitlement under the Plan shall be determined in accordance with its provisions pursuant to the procedures described in Article 7.  Unless otherwise authorized by the Board or its delegate, no amendment or modification to this Plan shall be effective until reduced to writing and adopted pursuant to Section 8.1.

EX-10.JJJ_I

Exhibit 10-jjj(i)

Amendment to

AT&T EXCESS BENEFIT AND COMPENSATION PLAN

Dated July 28, 2003

AT&T

and

such of its Subsidiary Companies that are

Participating Companies

ARTICLE 4

RETIREMENT AND DEATH BENEFITS

* * * *

4.9.    Change in Control Provisions

     (a) In  accordance  with the  preceding  provisions  of  Article 3 and this Article 4,  following  the  occurrence of a "change in control," as that term is defined in the AT&T Management Pension Plan, the benefit determined  pursuant to Section 4.2 and/or  Section 4.3 for a "CIC  eligible  employee," as that term is defined in the AT&T  Management  Pension Plan,  shall be determined  taking into account  the change in control  provisions  of such plan.  Pursuant to the Board resolution  of January 21,  1998,  the Company may elect to pay a  Participant's benefit from this Plan in a single sum payment.

     (b)  Notwithstanding  the provisions of Section 9.1, or any other provision of the Plan,  unless  required by  applicable  law,  this Section 4.9 may not be amended in any manner  adverse to the  interests of  Participants  without their consent and, further,  upon the occurrence of a CIC, no amendment may be made to this Section 4.9 by the Board,  the  Company,  (including  any  successor to the Company), any committee,  any officer, or any other party to suspend, modify, or eliminate any benefit provisions that are applicable upon occurrence of a CIC.

EX-10.KKK

Exhibit 10-kkk

BELLSOUTH SPLIT-DOLLAR LIFE INSURANCE PLAN

AS AMENDED AND RESTATED

EFFECTIVE AS OF NOVEMBER 24, 2003

1. PURPOSE

      The purpose of the BellSouth Split-Dollar Life Insurance Plan (the "Plan") is to provide a split-dollar insurance arrangement under which BellSouth Corporation and its subsidiaries and affiliates can assist key employees in acquiring and financing life insurance coverage. This Plan incorporates the provisions of the BellSouth Corporation Executive Life Insurance Plan and the BellSouth Corporation Senior Manager Life Insurance Plan, as amended as of the effective date of this Plan (the "Prior Plans"), and, as of such effective date, shall be deemed to constitute a complete restatement of both Prior Plans, as amended (except to the extent otherwise specifically provided in Section 3.1 of this Plan).

2. DEFINITIONS

      For purposes of this Plan, the following terms have the meanings set forth below:

      2.1   "AGREEMENT" means the agreement executed between the Employer and a Participant implementing the terms of this Plan, substantially in the form attached hereto as Exhibit "A".

      2.2   "ASSIGNMENT" means the collateral assignment executed by the Policy Owner, substantially in the form attached hereto as Exhibit "B".

      2.3   "COVERAGE AMOUNT" means the face amount of the insurance death benefit provided to a Participant under the Plan, as specified in the Participant's Agreement.

      2.4   "DISABILITY" means that the Participant is receiving disability benefits under any long-term disability plan sponsored by the Employer or an affiliated entity.

      2.5   "EFFECTIVE DATE" means the effective date of the Plan, which is January 1, 1998.

      2.6   "EMPLOYEE" means an employee or former employee of the Employer who is eligible to participate in the Plan.

      2.7   "EMPLOYER" means BellSouth Corporation and any subsidiary or affiliate of BellSouth Corporation which is authorized by the Plan Administrator to participate in this Plan.

      2.8   "EMPLOYER ACCOUNT" means, with respect to a Participant's Policy, a bookkeeping entry maintained by the Employer pursuant to Section 6 of the Plan, equal to the lesser of (1) the cash value of the Policy, or (2) the amount of Policy premiums paid by the Employer (and not collected from the Participant). With respect to a Replacement Policy, the amount of Policy premiums paid by the Employer shall be deemed to include the total of all such premiums paid on the Replacement Policy and the Replaced Policy, reduced by an amount equal to that portion of the Replaced Policy Cash Value, if any, paid to the Employer at the time the Replacement Policy is issued.

      2.9   "EMPLOYER PREMIUM" means, with respect to a Participant's Policy, the total Policy premium payable for the Policy Year by the Company as specified in the Participant's Agreement, less the portion of the premium to be paid by the Participant pursuant to Section 5.1 of the Plan.

      2.10  "ENROLLMENT AGE" means the Participant's age at the time of enrollment in the Prior Plans as to the Participant's initial Coverage Amount, and it means the Participant's age at a subsequent enrollment for an increased Coverage Amount as to the increased Coverage Amount; provided, however, that with respect to a Replacement Policy, the age at enrollment shall mean the age at the time of enrollment for the Replaced Policy.

      2.11  "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 as of the time of the Participant's enrollment in the Prior Plan(s), 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 smoked cigarettes at any time during the twelve month period immediately preceding the Participant's enrollment; a nonsmoker rate shall be used for all other Participants. However, notwithstanding the previous sentence, if a Replacement Policy is issued for a Participant and the Participant qualifies as a nonsmoker for the Replacement Policy, the nonsmoker rate shall thereafter be used to determine the Insurance Cost for the Participant.

            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).

      2.12  "INSURER" means, with respect to a Participant's Policy, the insurance company issuing the insurance policy or group policy certificate on the Participant's life (or on the joint lives of the Participant and the Participant's spouse) pursuant to the provisions of the Plan.

      2.13  "PARTICIPANT" means an Employee who is participating in the Plan.

      2.14  "PARTICIPANT ACCOUNT" means, with respect to a Participant's Policy, a bookkeeping entry maintained by the Employer pursuant to Section 6 of the Plan, equal to the excess, if any, of the cash value of the Policy over the Employer Account.

      2.15  "PARTICIPANT PREMIUM" means, with respect to each Policy Year (or portion thereof) for a Participant, the greater of (1) the Participant's Insurance Cost; or (2) the one year term cost for the Policy Year (or portion thereof) determined based on the Participant's age at the beginning of the Policy Year, the Insurer's published one year term rates in effect at the beginning of the Policy Year, and the Participant's Coverage Amount under the Plan.  The one year term cost amount shall be determined pursuant to the guidelines set forth in Revenue Ruling 66-110, 1966-1 C.B. 12, and Revenue Ruling 67-154, 1967-1 C.B. 11, and shall be conclusively determined by the Plan Administrator.

      2.16  "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, following a withdrawal by the Employer of all amounts to which it is entitled pursuant to Section 8.2e or Section 8.3. A determination as to whether a Policy is at a given time a Permanent Policy shall be made by the Plan Administrator, and shall be 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 of the Employer withdrawal made pursuant to Section 8.2e or Section 8.3, the projections shall reflect the actual Policy interest crediting rate in effect for such year (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 in the tenth Policy Year following the Policy Year in which the Employer withdrawal occurs will be five percent (5%). For all successive Policy Years, the projections shall reflect a five percent (5%) Policy interest crediting rate. Notwithstanding the foregoing, if the actual Policy interest crediting rate in effect when the determination is made is less than five percent (5%), the projections shall reflect such lower rate for the Policy Year of the Employer withdrawal and all subsequent Policy Years.

      2.17  "PLAN" means the BellSouth Split-Dollar Life Insurance Plan. Except as otherwise provided in Section 3.1, with respect to each Participant who participated in the BellSouth Corporation Executive

Life Insurance Plan, the Plan shall be construed and interpreted as a restatement of the provisions of such plan, as amended; and, with respect to each Participant who participated in the BellSouth Corporation Senior Manager Life Insurance Plan, the Plan shall be construed and interpreted as a restatement of such plan, as amended.

      2.18  "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.

      2.19  "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) by the Participant or other Policy Owner, which may be issued as a separate insurance policy or a certificate under a group policy.

      2.20  "POLICY OWNER" means the Participant or that person or entity to whom the Participant has assigned his interest in the Policy. In the case of a Replacement Policy issued to replace a Policy for which the Policy Owner is other than the Participant, the Policy Owner of the Replacement Policy shall be the same as the Policy Owner of the Policy being replaced, unless elected otherwise by such Policy Owner.

      2.21  "POLICY YEAR" means the twelve month period (and each successive twelve month period) beginning on the effective date of the Agreement.

      2.22  "PREMIUM PAYMENT YEARS" means, with respect to a Participant's Policy, the number of consecutive Policy Years (including, for a Replacement Policy, the number of Policy Years during which the Replaced Policy was in force), beginning with the first Policy Year, during which the Employer is required to pay a Policy premium, as specified in the Participant's Agreement.

      2.23  "REPLACED POLICY" means a Policy which has been replaced by a Replacement Policy. If a Participant's Policy has been replaced more than one time, then the term Replaced Policy shall include all prior Policies.

      2.24  "REPLACED POLICY CASH VALUE" means the cash value of the Replaced Policy on the Effective Date.

      2.25  "REPLACEMENT POLICY" means a Policy issued to replace a Policy previously issued under the Plan.

      2.26  "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.

      2.27  "SINGLE LIFE COVERAGE" means life insurance coverage on the life of the Participant.

      2.28  "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.

      2.29  "TERMINATED FOR CAUSE" means, with respect to a Participant, the termination of the Participant's employment with the Employer due to: (i) fraud, misappropriation, embezzlement, or intentional material damage to the property or business of the Employer; (ii) commission of a felony involving moral turpitude of which the Participant is finally adjudicated guilty; or (iii) continuance of either willful and repeated failure or grossly negligent and repeated failure by the Participant to materially perform his duties.

3. ELIGIBILITY

      3.1   GENERAL. Each Employee with a Prior Plan Agreement in effect on the day preceding the Effective Date 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) executes an Agreement consenting to the terms of this Plan, as amended, and completes such other forms as the Plan Administrator shall require. Any Employee eligible to participate who fails to execute (or secure execution of) an enrollment form consenting to the terms of this Plan, as amended, within the time period prescribed by the Plan Administrator, shall not be eligible for coverage under the Plan, but shall remain subject to the terms and conditions of the Prior Plan(s) in which such Employee participates as in effect on the day preceding the Effective Date, as amended thereafter from time to time. Effective November 24, 2003, any Employee who is, or becomes, an executive officer or director of BellSouth Corporation (as such terms are used in Section 402 of the Sarbanes-Oxley Act of 2002) shall be ineligible to participate in the Plan and any Agreement previously executed by such Employee shall be terminated pursuant to Section 8 of the Plan.

      3.2   TYPE OF COVERAGE. The type(s) of coverage for a Participant on the Effective Date shall be the type(s) of coverage in place on the day preceding the Effective Date pursuant to the Participant's Agreement(s) under the Prior Plan(s). Provided, however, that the Policy Owner may make a one-time election to exchange Survivorship Coverage for Single Life Coverage (equal to fifty percent (50%) of the Participant's Survivorship Coverage Amount), or to exchange Single Life Coverage for Survivorship Coverage (equal to two hundred percent (200%) of the Participant's Single Life Coverage Amount), subject to any proof of insurability required by the Insurer. Such an election must be made within the time period prescribed by the Plan Administrator. If an unmarried Participant enrolls for Single Life Coverage and subsequently marries, then, subject to the approval of the Plan Administrator, the Participant (or other Policy Owner) shall have the right to make an election, exercisable no later than one hundred eighty (180) days following the marriage, to convert (subject to any proof of insurability required by the Insurer) the Single Life Coverage to Survivorship Coverage (with the Coverage Amount equal to two hundred percent (200%) of the Single Life Coverage Amount). If a married Participant enrolls for Survivorship Coverage and subsequently divorces, then, subject to the approval of the Plan Administrator, the Participant (or other Policy Owner) shall have the right to make an election, exercisable no later than one hundred eighty (180) days following the finalization of the divorce, to convert (subject to any proof of insurability required by the Insurer) the Survivorship Coverage to Single Life Coverage (with the Coverage Amount equal to fifty percent (50%) of the Survivorship Coverage Amount). Under no other circumstances shall a Participant (or other Policy Owner) have any right to change an election as to type of coverage after the coverage becomes effective. Any Insurer charges or tax liability resulting from a conversion shall be borne by the Participant or other Policy Owner.

4.    AMOUNT OF COVERAGE

      The Coverage Amount for a Participant shall be the amount specified in the Participant's Agreement.

5.    PAYMENT OF PREMIUMS; PAYMENT OF CERTAIN TAXES

      5.1   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 agreed to between the Plan Administrator and the Participant. 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, and no Participant Premium shall be required after termination of the Participant's Agreement pursuant to Section 8.1.

      5.2   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. However, no Employer Premium shall be required: (1) after the Participant's Agreement terminates pursuant to Section 8.1; or, (2) for a Policy Year if the Employer withdrawal and release of Assignment under Section 8.3 would have occurred at the end of the prior Policy year but for the requirement in Section 8.3 that the Policy not constitute a Modified Endowment Contract following such withdrawal. Also, if the payment of the Employer Premium for a Policy year would cause the Participant's Policy to constitute a Modified Endowment Contract (as such term is defined in Section 7702A of the Internal Revenue Code), then the Employer Premium amount for such Policy year shall be reduced to the largest such amount that can be paid without causing the Policy to constitute a Modified Endowment Contract. The Employer may, but shall not be required to, make additional premium payments with respect to a Participant's Policy after the last Premium Payment Year.

5.3         Additional Employer Payments.

            a.    If, during any year participation in the Plan results in the recognition of income for tax purposes by the Participant as a result of BellSouth's election to treat premium payments as loans for federal tax purposes and to impute interest thereon to affected Participants, the Employer shall pay to the Participant an amount determined by the Plan Administrator which is designed to approximate the (1) sum of the total federal and state income taxes and additional 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 additional income so recognized for the year, plus (2) the total federal and state income taxes and additional payroll taxes which would be payable by the Participant on the payment described in clause (1). Any payment to be made under this subsection a. shall be made no later than April 1 of the year following the year to which the payment relates.

            b.    If, with respect to Survivorship Coverage after the death of the Participant, participation in the Plan results in the recognition of income for tax purposes by the Participant's spouse or other Policy Owner as a result of BellSouth's election to treat premium payments as loans for federal tax purposes and to impute interest thereon to affected Participants, 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 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, on the income so recognized. Any payment to be made under this subsection b. shall be made no later than April 1 of the year following the year to which the payment relates.

            c.    If the termination of the Employer's interest in a Participant's Policy pursuant to Section 8.3 of the Plan results in the recognition of income for tax purposes by the Participant, the Employer shall pay to the Participant 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 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, attributable to such termination. Such payment shall be made immediately following the termination of the Employer's interest in the Policy or, if later, at such time as a determination is made that such a tax is payable.

            d.    For purposes of this Section 5.3, 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.

            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.

6.    ACCOUNTS

      With respect to each Policy covered by an Agreement made under this Plan, the Employer shall maintain bookkeeping entries reflecting the Employer Account and Participant Account values.

7.    POLICY OWNERSHIP

      7.1   OWNERSHIP. Except as otherwise provided in this Plan, 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 including, but not limited to, the right to designate the beneficiary or beneficiaries to receive payment of the portion of the death benefit under the Policy equal to the Coverage Amount, and the right to assign any part or all of the Policy Owner's interest in the Policy (subject to the Employer's rights, the terms and conditions of the Assignment specified in Section 7.2 of the Plan, and the terms and conditions of this Plan) to any person, entity or trust by the execution of a written instrument delivered to the Employer.

      7.2   EMPLOYER'S RIGHTS. In exchange for the Employer's agreement to pay the amounts described in Sections 5.2 and 5.3 of this Plan, the Policy Owner shall execute an Assignment to the Employer of the rights provided to the Employer under this Plan. The Employer shall have the right to direct the Policy Owner in writing to take any action required consistent with these rights, and upon the receipt of such written direction from the Employer, the Policy Owner shall promptly take such action as is necessary to comply therewith. The Employer agrees that it shall not exercise any rights assigned to it in the Assignment in any way that might impair or defeat the rights and interest of the Policy Owner under this Plan. The Employer shall have the right to assign any part or all of its interest in the Policy (subject to the Policy Owner's rights and the terms and conditions of this Plan) to any person, entity or trust by the execution of a written instrument delivered to the Policy Owner.

      7.3   DELIVERY AND POSSESSION OF POLICY. Any Policy issued pursuant to an Agreement under the Plan shall be delivered by the Insurer directly to the Employer, and the Employer shall accept delivery of any such Policy on behalf of the Participant or other Policy Owner and shall have the authority to execute any forms or procedures required by the Insurer in order to complete the issue and delivery of such Policy. Thereafter, the Employer shall keep possession of the Policy as long as there is an Assignment in effect with respect to the Policy. The Employer agrees to make the Policy available to the Policy Owner or to the Insurer from time to time for the purposes of endorsing or filing any change of beneficiary on the Policy or exercising any other rights as the owner of the Policy, but the Policy shall promptly be returned to the Employer.

      7.4   POLICY LOANS. Except as otherwise specifically provided for in Section 8 of this Plan, neither the Employer nor the Policy Owner may borrow against the Policy cash values.

      7.5   WITHDRAWALS AND SURRENDER. Except as otherwise specifically provided for in Section 8 of this Plan, neither the Employer nor the Policy Owner may withdraw Policy cash values or surrender all or a portion of the Policy. Provided, however, that a cancellation or exchange of a Replaced Policy in connection with the acquisition of a Replacement Policy shall not be deemed a withdrawal from or surrender of the Replaced Policy.

8. TERMINATION OF AGREEMENT

      8.1   TERMINATION EVENTS. Notwithstanding anything herein to the contrary, the Participant's Agreement, and the Employer's obligation to pay premiums with respect to the Participant's Policy acquired pursuant to the Agreement, 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; or upon termination of a disabled Participant's Disability prior to the Participant's death for reasons other than Retirement or return to active status.

            b.    Termination of the Participant's Agreement by mutual agreement of the Participant and the Employer.

            c.    A unilateral election by the Participant to terminate the Participant's Agreement; provided, however, that such an election may be made by a Participant only within sixty (60) days following the end of the last Premium Payment Year for the Participant's Policy.

            d.    The written notice by the Employer to the Participant following a resolution by the Board of Directors of BellSouth Corporation to terminate this Plan and all Agreements made under the Plan.

            e.    As to Single Life Coverage only, the death of the Participant.

            f.    As to Survivorship Coverage only, the death of the last survivor of the Participant and the Participant's spouse.

            g.    After the release of Assignment pursuant to Section 8.3.

            h.    Upon becoming an executive officer or director of BellSouth Corporation (as such terms are used in Section 402 of the Sarbanes-Oxley Act of 2002).

      8.2 DISPOSITION OF POLICY

            a.    In the event of a termination of a Participant's Agreement under Section 8.1a or b of the Plan, the Policy Owner shall be entitled to acquire the Employer's rights under the Participant's Policy by paying to the Employer an amount equal to the Employer Account; alternatively, the Policy Owner can require the Employer to withdraw a portion of the cash values from the Participant's Policy, partially surrender the Policy, or borrow a portion of the cash values from the Participant's Policy, with the amount to be specified by the Policy Owner, and the Policy Owner's required payment to the Employer under this Section shall thereby be reduced to an amount equal to the excess of the Employer Account over the amount withdrawn, received upon partial surrender, or borrowed by the Employer (for these purposes, the amount withdrawn, received upon partial surrender, or borrowed shall refer to the amount actually received by the Employer after the application of any charges, such as surrender charges, applicable to the withdrawal, partial surrender, or borrowing). The Policy Owner may exercise this right to acquire the Employer's interest in the Policy by so notifying the Employer within ninety (90) days after an event of termination under Section 8.1a or b of this Plan has occurred. Within thirty (30) days after receipt of such notice, the Employer shall make any required withdrawal, partial surrender, or policy loan and the Policy Owner shall pay the Employer the applicable payment, if any. Upon receipt of payment from the Policy Owner, or immediately following the withdrawal, partial surrender, or policy loan if no payment is required, the Employer shall release the Assignment and the Policy Owner shall have all rights, title, and interest in the Policy free of all provisions and restrictions of the Assignment, the Agreement and this Plan.

            b.    Notwithstanding the provisions of Section 8.2a, if the Participant is Terminated for Cause by the Employer, then the Policy Owner shall have no right to acquire the Employer's interest in the Policy.

            c.    If the Policy Owner fails to exercise his right to acquire the Employer's interest in the Policy pursuant to Section 8.2a or is precluded from exercising such right pursuant to Section 8.2b, the Policy Owner shall transfer title to the Policy to the Employer, free of all provisions and restrictions of the Assignment, the Participant's Agreement and this Plan.

            d.    In the event of a termination of a Participant's Agreement pursuant to the Participant's election under Section 8.1c, the Employer shall receive from the Participant's Policy an amount equal to the Employer Account, with such amount to be received through a withdrawal, partial surrender, policy loan, or some combination thereof, as determined by the Employer. Immediately thereafter, the Employer shall release the Assignment and the Policy Owner shall have all rights, title and interest in the Policy free of all provisions and restrictions of the Assignment, the Participant's Agreement, and this Plan.

            e.    Notwithstanding the provisions of Section 2.8 to the contrary,in the event of a termination of a Participant's Agreement under Section 8.1d, prior to the application of Section 8.2,the Employer Account shall be reduced to an amount equal to the excess, if any, of the cash values of the Policy over the amount of cash value necessary in order for such Policy to immediately qualify as a Permanent Policy after withdrawal of such excess amount. The Employer shall receive from the Policy the reduced Employer Account value and, with such amount to be received through a withdrawal, partial surrender, policy loan, or some combination thereof, as determined by the Employer, and shall, within thirty (30) days of the Plan termination, release the Assignment and the Policy Owner shall have all rights, title, and interest in the Policy free of all provisions and restrictions of the Assignment, the Agreement and this Plan.

            f.    In the event of a termination of a Participant's Agreement  under Section 8.1h of this Plan, the Employer Account shall be  reduced to an amount equal to the excess, if any, of the cash  values of the Policy over the amount of cash value necessary  in order for such Policy to immediately qualify as a Permanent  Policy after withdrawal of such excess amount. The Employer  shall receive from the Policy the reduced Employer Account  value and, with such amount to be received through a  withdrawal, partial surrender, policy loan, or some  combination thereof, as determined by the Employer, and shall  release the Assignment and the Policy Owner shall have all rights, title and interest in the Policy free of all

 provisions and restrictions of the Assignment, the Agreement  and this Plan.

      8.3   RELEASE OF ASSIGNMENT. At the end of each Policy Year for a Participant's Policy, the Plan Administrator shall determine whether a withdrawal from the Policy by the Employer of an amount equal to the Employer Account, and a release of the Assignment, shall occur with respect to the Participant's Policy. Such withdrawal and release shall be made within ninety (90) days after the end of the first Policy Year as of the end of which: (1) the Participant's Policy would qualify as a Permanent Policy following such withdrawal by the Employer; and, (2) the Participant's Policy would not constitute a Modified Endowment Contract (as such term is defined in Section 7702A of the Internal Revenue Code) following such withdrawal. The Employer withdrawal shall be made though a withdrawal, partial surrender, or policy loan, or some combination thereof, as determined by the Employer. Immediately after receiving the proceeds of the withdrawal, partial surrender, or policy loan, the Employer shall release the Assignment and the Policy Owner shall have all rights, title and interest in the Policy free of all provisions and restrictions of the Assignment, the Participant's Agreement and this Plan.

       8.4   ALLOCATION OF DEATH BENEFIT. In the event of a termination under Section 8.1e or 8.1f of the Plan, the death benefit under the Participant's Policy shall be divided as follows:

            a.    The beneficiary or beneficiaries of the Policy Owner shall be entitled to receive an amount equal to the Coverage Amount.

            b.    The Employer shall be entitled to receive the balance of the death benefit.

      8.5   EMPLOYER UNDERTAKINGS. Upon the death of the Participant (or, in the case of Survivorship Coverage, the death of the last survivor of the  Participant and the Participant's spouse) while the Participant's  Agreement is in force, the Employer agrees to take such action as may be necessary to obtain payment from the Insurer of the death benefit to the beneficiaries, including, but not limited to, providing the Insurer with an affidavit as to the amount to which the Employer is entitled under the Agreement and this Plan.

9. GOVERNING LAWS AND NOTICES

      9.1   GOVERNING LAW. This Plan shall be governed by and construed in accordance with the laws of the State of Georgia.

      9.2   NOTICES. All notices hereunder shall be in writing and sent by first class mail with postage prepaid. Any notice to the Employer shall be ddressed to BellSouth Corporation at its office at 1155 Peachtree Street, N.E., Atlanta, GA 30367-6000, ATTENTION: Human Resources-Director Executive Benefits. Any notice to the Employee shall be addressed to the Employee at the address following such party's signature on his Agreement. 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.

10. NOT A CONTRACT OF EMPLOYMENT

      This Plan and any Agreement executed hereunder 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.

11.   AMENDMENT, TERMINATION, ADMINISTRATION, CONSTRUCTION AND SUCCESSORS

      11.1  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.

      11.2  TERMINATION. The Board of Directors of BellSouth Corporation may terminate the Plan without the consent of the Participants or Employees. Provided, however, in the event of a termination of the Plan by the Employer, the Participants will have those rights specified in Section 8.2e of the Plan.

      11.3  INTERPRETATION. As to the provisions of the Assignment, the Agreement and the Plan, the provisions of the Assignment shall control. As between the Agreement and the Plan, the provisions of the Agreement shall control.

      11.4  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.

12.   PLAN ADMINISTRATION

      12.1  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.

      12.2  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 shall not participate in any decision which solely affects his 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.

      12.3  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.

      12.4  BOND; COMPENSATION. The Plan Administrator and (if applicable) its members shall serve as such without bond and without compensation for services hereunder.

13.   CLAIMS PROCEDURE

      13.1  NAMED FIDUCIARY. The Plan Administrator is hereby designated as the named fiduciary under this Plan.

      13.2  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 9.2 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 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 "A"

                   BELLSOUTH SPLIT-DOLLAR LIFE INSURANCE PLAN

                                    AGREEMENT

This Agreement is made effective as of January 1, 1998, by and between the Employer and _______________________ (the "Participant").

WHEREAS, the Employer and the Participant executed an agreement (the "Prior Agreement") under the [BellSouth Corporation Executive Life Insurance Plan] [BellSouth Corporation Senior Manager Life Insurance Plan] (the "Prior Plan"); and

WHEREAS, the Prior Plan has been amended and restated as the BellSouth Split-Dollar Life Insurance Plan (the "Plan"); and

WHEREAS, in exchange for coverage under the Plan as amended and restated, the Participant consents and agrees to the terms of the Plan, as amended and restated;

NOW, THEREFORE, in consideration of the promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Employer and the Participant hereby mutually covenant and agree as follows:

1.    This Agreement shall constitute an amendment and restatement of the Prior Agreement and, as of the effective date of this Agreement, the Prior Plan and Prior Agreement shall be terminated and replaced by the Plan and this Agreement.

2.    The Policy subject to this Agreement is Policy number ______________, issued by Pacific Life Insurance Company (the "Replacement Policy"), which replaces the Replaced Policy. As of the effective date of this Agreement, no further benefits will be provided to the Participant or Employer under the Replaced Policy, and such Policy will be canceled. 3. The Replaced Policy Cash Value shall be transferred directly to the Replacement Policy as of the effective date of this Agreement.

4.    The Coverage Amount shall be $ __________ of [Single Life] [Survivorship] Coverage.

5.    The Premium Payment Years shall be _______ consecutive Policy Years.

6.    For each Policy Year beginning after 1998, the total Policy premium for each year which is a Premium Payment Year shall be $__________, and the Employer Premium shall equal such total Policy premium reduced by the Participant Premium payable by the Participant for such Policy Year.

7.    The Policy Owner for the Replacement Policy shall be the same as the Policy Owner for the Replaced Policy.

8.    The Participant agrees to pay the Participant Premium contribution as specified in the Plan, and consents to paying such amount to the Employer through regular payroll (or retirement income) deductions.

9.    The Participant has read and understands the provisions of the Plan, and agrees that all of the terms and conditions specified in the Plan are hereby incorporated by reference herein and form a part of this Agreement.

10.   Subject to the terms of the Plan, this Agreement shall not be amended or modified without the written consent of the Participant and the Employer.

11.   This Agreement shall be governed by the laws of the State of Georgia.

______________________________    ____________________________________

DATE                                                               FOR THE EMPLOYER

______________________________    ____________________________________

DATE                                                               SIGNATURE OF PARTICIPANT

                                                                ____________________________________

                                                                ____________________________________

                                                                ____________________________________

                                                               ADDRESS OF PARTICIPANT

                                   EXHIBIT "B"

                   BELLSOUTH SPLIT-DOLLAR LIFE INSURANCE PLAN

                                   ASSIGNMENT

This Assignment is made by the undersigned Policy Owner effective January 1, 1998.

DEFINITIONS:

ASSIGNEE:                     BellSouth Corporation

PARTICIPANT:            _________________________________________________________

POLICY OWNER:          _________________________________________________________

INSURED(S):                  _________________________________________________________

                                         _________________________________________________________

INSURER:                                                       Pacific Life Insurance Company

POLICY:                                                          Policy #                    issued by the Insurer.

REPLACED POLICY:                                    Policy #                    issued by the Insurer.

SPLIT-DOLLAR LIFE                                   That certain Agreement executed to be effective on

INSURANCE PLAN AGREEMENT            January 1, 1998, between the Participant and the Assignee.

(THE "AGREEMENT"):

COVERAGE AMOUNT:                              That portion of the death benefit coverage under the Policy

                                                                         equal to $___________________.

RECITALS:

1.    The benefits provided to the Policy Owner under the Policy replace those previously provided under the Replaced Policy.

2.    Under the Agreement, the Assignee has agreed to assist the Policy Owner in the payment of premiums on the Policy issued by the Insurer.

3.    In consideration of such premium payments by the Assignee, the undersigned Policy Owner intends to grant the Assignee certain limited interests in the Policy.

THEREFORE, for value received, it is agreed:

1.    ASSIGNMENT. The Policy Owner hereby assigns, transfers, and sets over to the Assignee, its successors and assigns, the following specific rights in the Policy and subject to the following terms and conditions:

      a.    the sole right to make withdrawals or borrow against the cash value of the Policy, as provided in Sections 8.2a, 8.2d, 8.2e and 8.3 of the Plan;

      b.    the right to receive from the Insurer upon the death of the Insured(s) the proceeds of the Policy in excess of the Coverage Amount;

      c.    the sole right to surrender all or a portion of the Policy and receive the surrender value thereof, as provided in Sections 8.2a, 8.2d, 8.2e and 8.3 of the Plan.

2.    RETAINED RIGHTS. Except as expressly provided in Section 1, the Policy Owner retains all rights under the Policy including but not limited to:

      a.    the right to designate and change the beneficiary; and

      b.    the right to elect any optional mode of settlement permitted by the Policy or Insurer, subject only to the Assignee's right in Section 1.(b).

3.    AUTHORIZATION. For purposes of Sections 1 and 2, the signature of either the Assignee or the Policy Owner shall be sufficient. Both the Assignee and the Policy Owner acknowledge that between themselves, they are bound by the limitations of this Assignment and that the Insurer will recognize the signature of either.

4.    INSURER. The Insurer is hereby authorized to recognize, and is fully protected in recognizing the claims of the Assignee to rights hereunder, without investigating the reasons for such action by the Assignee, or the validity or the amount of such claims, nor giving notice to the Policy Owner of such claims of rights or interest to exercise such rights. Insurer reserves the right to require signatures of both the Assignee and the Policy Owner to exercise any or all ownership rights, as is their normal procedure.

5.    DEATH PROCEEDS. The Insurer shall pay to the Assignee that portion of the death benefit to which it is entitled. Payment by the Insurer of any or all of the death proceeds to the Assignee in reliance upon a signed authorization by any officer of the Assignee as to the share of death proceeds due it shall be a full discharge of the Insurer for such share and shall be binding on all parties claiming any interest in the Policy.

6.    RELEASE OF ASSIGNMENT. Upon payment to the Assignee of those amounts due  to it under the terms of the Agreement, the Assignee shall execute a  written release of this Assignment to the Insurer who may then treat the  Policy Owner of the Policy as the sole Policy Owner for all purposes.

7.    ASSIGNMENT CONTROLS. In the event of any conflict between the provisions  of this Assignment and provisions of the Agreement with respect to the  Policy or rights of collateral assignment therein, the provisions of this  Assignment shall prevail.

8.    CANCELLATION OF REPLACED POLICY. The Policy Owner agrees that no further benefits will be provided under the Replaced Policy, and that benefits provided under the Policy are in lieu of the benefits previously provided under the Replaced Policy.

IN TESTIMONY WHEREOF, the Policy Owner has executed this Assignment to be effective January 1, 1998.

                                                ________________________________

                                                SIGNATURE OF POLICY OWNER

                                                ________________________________

                                                DATE

EX-10.LLL

Exhibit 10-lll

PACIFIC TELESIS GROUP

EXECUTIVE SUPPLEMENTAL CASH BALANCE PLAN

(Amended as of July 1, 1996)

SECTION 1                            INTRODUCTION AND PURPOSE

Section 1.1                             Introduction

The Pacific Telesis Group Executive Supplemental Pension Plan (the "Executive Plan") was adopted as of July 1, 1995 to merge the Pacific Telesis Group Executive Non-Salaried Pension Plan (a "Predecessor Plan") and the Pacific Telesis Group Supplemental Executive Retirement Plan (a "Predecessor Plan") into a single plan and to include the minimum pension and related welfare and surviving spouse benefits previously provided by the Pacific Telesis Group Senior Management Long Term Disability and Survivor Protection Plan (a "Predecessor Plan"). The benefits provided by the Executive Plan are substantially similar to the benefits provided by the Predecessor Plans. The Board of Directors of the Company adopted resolutions on March 22, 1996, authorizing the incorporation of a cash balance formula and renaming the Executive Plan the Pacific Telesis Group Executive Supplemental Cash Balance Plan. The terms of the Executive Plan, as amended, apply to each Participant whose Termination of Employment occurs on or after March 22, 1996. Capitalized terms are defined in Section 12.

Section 1.2                             Purpose

The purpose of the Executive Plan is to assist Participating Companies in attracting and retaining highly competent senior managers by providing certain unfunded pension benefits to eligible Executives. The benefits provided by the Executive Plan, when aggregated with the benefits provided by the Salaried Pension Plan, are intended to provide the Executive with approximately the same benefit that the Executive would have been entitled to receive under the Salaried Pension Plan if the Salaried Pension Plan (i) recognized total base pay (whether or not deferred) and short term incentive awards as compensation for purposes of benefit calculation and (ii) were not subject to any legal limitations on the amount of benefits that could be paid under such plan. In addition, the Executive Plan provides minimum pensions and welfare benefits to certain eligible Executives.

SECTION 2                            ELIGIBILITY

Section 2.1                             Participation

An Executive or a former Executive who is a Participant in the Executive Plan on March 22, 1996 shall be an Existing Participant in the Executive Plan as amended. Any other Employee who is designated as eligible to participate in the Executive Plan after June 30, 1996 shall become a Participant immediately upon being so designated. Participation shall cease at the Participant's Termination of Employment unless the Participant is then eligible for benefits under the Executive Plan.

Section 2.2                             Mandatory Retirement

Each Participant subject to a Mandatory Retirement Age shall cease to be eligible for continued employment by a Participating Company no later than the last day of the month in which such Participant attains the Mandatory Retirement Age.

Section 2.3                             Eligibility For Executive Pension

2.3 (a) Requirements. A Participant shall be eligible for an Executive Pension:

(1) at Termination of Employment, if the Participant is eligible for a pension under the Salaried Pension Plan without regard to any minimum benefits or early retirement window benefits which change the usual eligibility requirements for pensions under the Salaried Pension Plan;

(2) at Termination of Employment, if the Participant is eligible for an Officer Minimum Benefit under Section 3.4; or

(3) before Termination of Employment, but only if a Participant who is not subject to the Mandatory Retirement Age requirements becomes eligible for an in-service pension under the Salaried Pension Plan. In such a case, the Participant's Executive Pension shall be redetermined upon Termination of Employment, under procedures applicable to the Participant's Qualified Pension Benefit as provided under the Salaried Pension Plan.

2.3 (b) Prior Participants. All Participants who were retired or terminated former Executives as of the initial Effective Date of the Executive Plan shall continue to be entitled to receive the benefits they were receiving or entitled to receive under the terms of the Predecessor Plans. Each other Participant who retired or terminated employment on or after the initial Effective Date, but before March 22, 1996, shall continue to be entitled to receive the benefits he or she was receiving or entitled to receive under the terms of the Executive Plan as in effect at such Participant's Termination of Employment.

Section 2.4                              CFEP Executive

A Participant who is a Select Officer will become a CFEP Executive as of the date of such Participant's Termination of Employment, provided:

(a) the Participant executes an acknowledgment within the applicable election period defined in the acknowledgment, as that may be amended, confirming the Participant's intent to defer Termination of Employment to the Intended Termination Month specified in the acknowledgment;

(b) the Participant terminates employment in the Intended Termination Month or dies while an Employee prior to the Intended Termination Month;

(c) the cashout value of the Total Benefit determined by using the CFEP Factor under the Basic Benefit formula in Section 3.3, the Officer Minimum Benefit formula under Section 3.4, or the Officer Supplemental Benefit formula under Section 3.6, whichever is the greatest, is greater than the balance of the Participant's Executive Account at the Participant's Termination of Employment; and

(d) the Participant (or surviving spouse, in the event of the Participant's  death) elects to receive a cashout payment of the accelerated transition benefit payable under the Salaried Pension Plan.

SECTION 3                            EXECUTIVE PENSION

Section 3.1                             Amount

The Executive Pension payable to a Participant at the Participant's Annuity Start Date shall be equal to the Participant's Total Benefit determined under Section 3.2 below, reduced by the Participant's Qualified Pension Benefit. The Executive Pension payable to the surviving spouse of a Participant who dies before his or her Annuity Start Date shall be equal to the surviving spouse's Total Benefit determined under Section 6 below, reduced by the surviving spouse's Qualified Pension Benefit. If a Participant who dies before his or her Annuity Start Date does not leave a surviving spouse, the Executive Pension attributable to such Participant shall be equal to the excess, if any, of the Participant's Executive Account over his or her Account under the Salaried Pension Plan, determined at the distribution date, and shall be payable to the Participant's estate.

Section 3.2                             Applicable Formula for Total Benefit

The Total Benefit of a Participant who is an Executive at Termination of Employment shall be computed as follows:

3.2(a)                            Participant on March 22, 1996.

(1) The Total Benefit of an Existing Participant payable at the Participant's Annuity Start Date shall be determined under whichever of the following formulas would provide the greatest benefit when expressed as a monthly pension for the Participant's life commencing at the Participant's Termination of Employment:

(A) the Basic Benefit under Section 3.3, if eligible therefor;

(B) the Officer Minimum Benefit under Section 3.4, if eligible therefor;

(C)           the Cash Balance Benefit under Section 3.5; or

(D)           the Officer Supplemental Benefit under Section 3.6.

(2) If an Existing Participant other than a Participant described in paragraph (1) above is also a CFEP Executive, the Total Benefit payable at the Participant's Annuity Start Date shall be determined under whichever of the following formulas would provide the greatest cashout value at the Participant's Termination of Employment determined by using the CFEP Factor:

(A)          the Basic Benefit under Section 3.3, if eligible therefor;

(B) the Officer Minimum Benefit under Section 3.4, if eligible therefor; or

(C)          the Officer Supplemental Benefit under Section 3.6.

(3) The Total Benefit determined under Section 3.3 or 3.4 shall be reduced for early payment as provided in the applicable section. A Participant's Qualified Pension Benefit shall be reduced for early payment to the extent provided under the Salaried Pension Plan. A Participant's Executive Pension shall be paid in the form and at the time provided in Section 4 and may be subject to special increases as described in Section 3.7 below.

3.2(b) Participation Commences after Effective Date. The Total Benefit payable at the Annuity Start Date of an Employee who becomes a Participant after June 30, 1996 shall be the Cash Balance Benefit determined under Section 3.5 at the Participant's Annuity Start Date.

3.2(c) Participant Not An Executive At Retirement. If a Participant is not an Executive at his or her Termination of Employment, but was an Executive during some previous period, the Participant's Total Benefit shall be determined as set forth in this Section 3.2, except that, to the extent applicable, (i) the Years of Credited Service under the Basic Benefit shall be determined as though the Participant's Termination of Employment occurred on the date that he or she ceased serving as an Executive, (ii) the Participant shall not be eligible for the Officer Minimum Benefit or the Officer Supplemental Benefit, and (iii) the Executive Pension shall not be subject to special increases under Section 3.7 below. The Participant's actual service and age shall be used under Section 3.3(c) to determine the appropriate early payment discount for the Regular Basic Benefit.

Section 3.3                     Basic Benefit

The Basic Benefit is the sum of the Participant's Regular Basic Benefit and his or her Imputed Basic Benefit.

3.3(a) Eligibility for Regular Basic Benefit. An Employee who is or was an Executive shall be eligible for a Regular Basic Benefit if the Participant is eligible for a Qualified Pension Benefit.

3.3(b) Amount of Regular Basic Benefit. A Participant's Regular Basic Benefit shall be a monthly pension equal to:

(1) two percent (2%) of the sum of the Participant's Final Average Monthly Base Pay determined over the 60-month period ending June 30, 1996 or, if earlier, the Participant's Termination of Employment during the period beginning March 22, 1996 and ending June 30, 1996, and his or her Final Average Monthly STIP Awards determined over the 60-month period ending June 30, 1996 or, if earlier, the Participant's Termination of Employment during the period beginning March 22, 1996 and ending June 30, 1996; multiplied by

(2) the Participant's Years of Credited Service as of June 30, 1996 or, if earlier, as of the Participant's Termination of Employment during the period beginning March 22, 1996 and ending June 30, 1996. A Participant's Regular Basic Benefit shall be adjusted for early payment under Section 3.3(c) below.

3.3(c) Adjustments to Regular Basic Benefit. A Participant's Regular Basic Benefit shall be adjusted as follows based on the Participant's service at his or her Termination of Employment.

(1) Early Payment. A discount equal to 1/12th of 2% will apply for each full or partial month down to age 50 prior to the month in which the Participant is at least 55 with a Term of Employment of not less than 20 years or, if earlier, the date on which the Employee is at least 65 with a Term of Employment of not less than five years. If the Participant is less than 50 at his or her Annuity Start Date, an additional discount equal to 1/12th of 4% will apply for each full or partial month down to age 45 prior to the month in which the Participant is 50. If the Participant is less than 45 at his or her Annuity Start Date, a further additional discount equal to 1/12th of 8% will apply to each full or partial month down the Participant's age at his or her Annuity Start Date prior to the month in which the Participant is 45.

(2) Exceptions. No adjustment shall be made if the Participant has at least 10 Years of  Officer Service and if, at the time of his or her Termination of Employment, the Participant is at least 55 years of age and is an Officer. In addition, no adjustment shall be made if the Participant's Term of Employment is at least 30 years; the Participant is at least 55 with a Term of Employment of not less than 20 years; or the Participant is at least 65 and vested under the Salaried Pension Plan.

(3) Minimum and Window Benefits. A Participant's Regular Basic Benefit shall not be increased for any minimum or early retirement window benefit that may be available under the Salaried Pension Plan unless the Executive Plan is amended accordingly. In no event shall a Participant's Regular Basic Benefit at his or her Annuity Start Date be less than the Regular Basic Benefit accrued under the Executive Plan at any earlier time, determined as though the Participant had terminated employment at the earlier time and as though the Executive Plan had always been in existence.

3.3(d) Eligibility for Imputed Basic Benefit. A Participant who was a PacTel Employee before the Separation Date shall be eligible for an Imputed Basic Benefit if he or she received allocations of basic, variable or transition contributions under the PacTel Retirement Plan while deferring compensation under the Pacific Telesis Group Executive Deferral Plan.

3.3(e) Amount of Imputed Basic Benefit. A Participant's Imputed Basic Benefit shall be a monthly pension whose Present Value at the Participant's Annuity Start Date is equal to:

(1) the sum of the amounts actually deferred under the Pacific Telesis Group Executive Deferral Plan attributable to base salary and Short Term Incentive Plan awards for each year between January 1, 1987, and the Separation Date multiplied by the sum of the basic, variable and transition contribution rates in effect under the PacTel Retirement Plan for each of those years; plus

(2) Interest on such contributions to the Participant's Annuity Start Date.

Section 3.4                      Officer Minimum Benefit

The Officer Minimum Benefit provides a monthly pension to certain Executives who serve as Officers.

3.4(a) Eligibility for Officer Minimum Benefit. A Participant is eligible for an Officer Minimum Benefit if:

(1) the Participant became an Officer on or before January 24, 1992;

(2) the Participant completes at least 10 Years of Officer Service at his or her Termination of Employment;

(3) at the time of his or her Termination of Employment, the Participant is at least 55 years of age and is an Officer; and

(4) in the case of a Participant whose Years of Officer Service were interrupted for any period of longer than six (6) months, the Participant thereafter completes at least 5 Years of Officer Service.

3.4(b) Amount of Officer Minimum Benefit. An eligible Participant's Officer Minimum Benefit shall be a monthly pension equal to:

(1) 45% of the sum of the Officer's Final Average Monthly Base Pay and Final Average Monthly STIP Award determined over the 60-month period ending June 30, 1996 or, if earlier, the Participant's Termination of Employment during the period beginning March 22, 1996, but ending June 30, 1996; reduced by

(2) the sum of the Officer's PacTel Account Benefit, if any, and PacTel Pension Benefit, if any.

The percentage in paragraph (1) above shall be increased by 1% (up to a maximum of 50% for 15 or more Years of Officer Service) for each whole Year of Officer Service that an Officer has completed as of June 30, 1996 in excess of 10 Years of Officer Service. The percentage in paragraph (1) shall not be increased beyond 45% for any Years of Officer Service completed after June 30, 1996.

Section 3.5                      Cash Balance Benefit

The Cash Balance Benefit of a Participant shall be a monthly pension payable for the Participant's life determined by dividing the Participant's Executive Account described in subsection (a) below at the applicable determination date by the product of the Standard Factor based on the Participant's age and 12. For purposes of determining which benefit formula provides the largest Total Benefit under Section 3.2(a)(1), the applicable determination date shall be the Participant's Termination of Employment. If a Participant's Total Benefit at the Annuity Start Date is determined under the cash balance benefit formula, the applicable determination date for computing the amount payable shall be the Participant's Annuity Start Date.

3.5(a) Executive Account. A hypothetical Executive Account shall be established for each Employee who is a Participant on or after March 22, 1996. As of any determination date, the value of a Participant's Executive Account shall be equal to the sum of:

(1) the Pay-based credits allocated to the Participant's Executive Account under subsection (b) below:

(2) to the extent the Participant is eligible, the opening account balance credited under subsection (c) below;

(3) any benefit in the nature of a cash balance benefit that is transferred to the Executive Plan from the Mid-Career Plan or the Excess Plan that is credited under subsection (e) on behalf of an Employee who becomes a Participant; and

(4)                Cash Balance Interest credited under subsection (d).

3.5(b) Pay-based Credits. As of the end of each month after June 1996, a Participant's Executive Account shall be credited with an amount equal to the sum of the Participant's Basic Rate and Supplementary Rate times the Participant's Pay for such month to the extent such Pay represents compensation for services performed as an Executive.

3.5(c) Opening Balance. An opening balance will be established as of the Effective Date for each Existing Participant. The amount of the opening balance will be the sum of (w) times (z) and (x) times (y) times (z) where:

(w) is the percentage factor from the Accumulation Table in Appendix A to the Salaried Pension Plan based on the Participant's service as of June 30, 1996;

(x)                is the Participant's Supplementary Rate;

(y) is the percentage factor from the Accumulation Table in Appendix B based on the Participant's service as of June 30, 1996, which shall include any service that could be bridged (as that term is described under the Salaried Pension Plan) as of June 30, 1996; and

(z)                is the Participant's Cash Balance Conversion Pay.

3.5(d) Interest Credits. As of the end of each month after June 1996, a Participant's Executive Account shall be credited with Cash Balance Interest on the balance in such account at the beginning of such month.

3.5(e)           Transferred Benefits.

(1) Mid-Career Plan Participant. An Employee who is appointed to an Officer position while a participant in the Mid-Career Plan shall cease participation in such plan as of the effective date of the appointment and immediately become a Participant in the Executive Plan. The Executive Account established for such a Participant shall be credited with the sum of the Participant's Mid-Career Account under the Mid-Career Plan and the Participant's Total Account under the Excess Plan as of the date the Employee becomes covered under the Executive Plan. Benefits payable at the Participant's Termination of Employment shall be paid under the Executive Plan and the Salaried Pension Plan, and the Participant shall have no further right to benefits under the Mid-Career Plan or the Excess Plan.

(2) Other Promoted Employees. If an Employee who is not a participant in the Mid-Career Plan is designated as an eligible Executive, such Employee shall become a Participant in the Executive Plan as of the effective date of the designation. The Executive Account established for such an Employee shall be credited with the balance of the Employee's Total Account under the Excess Plan as of the date the Employee becomes covered under the Executive Plan. Benefits payable at the Participant's Termination of Employment shall be paid under the Executive Plan and the Salaried Pension Plan, and the Participant shall have no further right to benefits under the Excess Plan.

3.5(f)           Service Proration.

(1) A Participant's Executive Account shall be reduced under paragraph (2) below at the Participant's Termination of Employment prior to determining the applicable formula and the benefit payable if the Participant:

(A)         is an Existing Participant, or

  (B) was a participant in the Mid-Career Plan on March 22, 1996 or after March 22, 1996, but before July 1, 1996, and subsequently becomes a Participant in the Executive Plan, and the Participant's Termination of Employment occurs before the Participant attains age 55 and completes not less than 10 Years of Officer Service or has a Term of Employment of not less than 20 years or, if earlier, occurs before the Participant attains age 65 and has a Term of Employment of not less than five years.

(2) The Executive Account of a Participant described in paragraph (1) above, to the extent attributable to the application of the Participant's Supplementary Rate, shall be reduced by multiplying such portion by a fraction determined under (x) or (y) below, whichever produces the lower reduction, where:

(x) is a fraction, the numerator of which is the Participant's actual Years of Officer Service at Termination of Employment, and the denominator of which is the number of Years of Officer Service the Participant would have completed if the Participant had remained in service until attaining age 55 and completing 10 Years of Officer Service; and

(y) is a fraction, the numerator of which is the Participant's actual years and months in his or her Term of Employment at Termination of Employment, and the denominator of which is the number of years and months that the Participant would have completed if the Participant had remained in service until attaining age 55 and having a Term of Employment of not less than 20 years.

Section 3.6                      Officer Supplemental Benefit

The Officer Supplemental Benefit provides a monthly pension to certain Executives who serve as Officers.

3.6(a) Eligibility. A Participant is eligible for a Officer Supplemental Benefit if the Participant:

(1)                is an Existing Participant;

(2) completes not less than 10 Years of Officer Service or has a Term of Employment of not less than 20 years; and

(3) at the time of his or her Termination of Employment, the Participant is not less than 55 years of age and is an Officer.

3.6(b) Amount. An eligible Participant's Officer Supplemental Benefit shall be a fixed dollar amount that restores a certain percentage of the monthly pension, determined as of July 1, 1996, that would have been payable under the Salaried Pension Plan and the Executive Plan as in effect at March 21, 1996 as of the date the Participant attained age 55 and completed not less than 10 Years of Officer Service or a Term of Employment of not less than 20 years.

Section 3.7                      Special Increases

Unless the Committee determines otherwise, an Executive Pension payable as a monthly pension shall be increased by the same percentage and pursuant to the same terms and conditions as set forth in the Salaried Pension Plan for ad hoc increases to monthly pensions for retired Participants or their joint annuitants.

SECTION 4.                            DISTRIBUTION

Section 4.1                     Pensions

4.1(a) Time of Payment. A Participant's Executive Pension shall be paid or commence as of the Participant's Annuity Start Date, subject to the Committee's discretion to determine another time or times of payment.

4.1(b) Form of Payment. Subject to the Committee's discretion to determine another form of payment, a Participant may elect, prior to his or her Termination of Employment, one of the payment forms listed in paragraphs (1) through (3) for his or her Executive Pension.

(1) A single life annuity providing monthly payments over the Participant's life in the amount determined under Section 3, including any adjustment for early payment.

(2) A joint and survivor annuity providing monthly payments equal to 90% of the amount payable under paragraph (1) above over the Participant's life, with a survivor benefit to the surviving spouse equal to 50% of the monthly pension payable during the Participant's lifetime. If the spouse dies during the Participant's lifetime, the Participant's monthly pension shall be increased to 100% of the single life annuity payable under paragraph (1) above as of the month following the month in which the spouse dies.

(3) 120 equal monthly payments. The amount of the monthly payment shall be determined by dividing the cashout value determined under subsection (d) below (using the Standard Factor or the CFEP Factor, as applicable) by a conversion factor supplied by the actuaries of the Executive Plan. If the Participant dies before receiving all payments, the monthly payments shall continue to be paid to the Participant's surviving spouse unless the surviving spouse makes a written election to receive the present value of the remaining payments in a lump sum payment and the Committee consents. If no spouse survives, the present value of the remaining payments (determined by using the Applicable Interest Rate as of the effective date of the payment) shall be paid to the Participant's estate as soon as practicable after the Participant's death.

4.1(c) Committee's Final Determination. If the Participant does not elect one of the alternative forms of payment listed in subsection (b) above before his or her Termination of Employment, or if the Committee does not consent to the form of payment elected by the Participant, then the Committee shall determine, in its sole discretion, the form of payment for the Participant's Executive Pension and the appropriate adjustment to its amount.

4.1(d) Lump Sum Determination. If the Committee, in its sole discretion, determines that a Participant's Executive Pension shall be paid in a lump sum, the amount of such benefit shall be calculated as follows:

(1) If the Participant's Total Benefit is determined under the Cash Balance Benefit formula, the Executive Pension payable as a lump sum shall equal the excess of the Participant's Executive Account over the Participant's Account under the Salaried Pension Plan.

(2) If the Participant's Total Benefit is determined under the Basic Benefit formula, the Officer Minimum Benefit formula or the Officer Supplemental Benefit formula, and the Participant is not a CFEP Executive, the Executive Pension payable as a lump sum shall equal the Present Value of the Participant's Total Benefit under the applicable formula determined by using the Standard Factor for the Participant's age at the Annuity Start Date less the Participant's Qualified Pension Benefit. If the Participant is a CFEP Executive, the Executive Pension payable as a lump sum shall equal the Present Value of the Participant's Total Benefit under the applicable formula determined by using the CFEP Factor at the Annuity Start Date less the Participant's Qualified Pension Benefit.

4.1(e) Limitation. Notwithstanding subsection (b) above, if a Participant receives his or her Qualified Pension Benefit as a lump sum, and the lump sum value of his or her benefits under all nonqualified pension plans sponsored by the Company, including the Executive Plan, is less than $50,000 at the Participant's Annuity Start Date, the Participant's Executive Pension shall be paid to the Participant in a lump sum at the same time as the Participant's Qualified Pension Benefit.

Section 4.2                      Notification Of and Application For Benefits

The Plan Administrator may notify the Participant of the amount of his or her Executive Pension and may require the Participant to apply for benefits under the Executive Plan.

Section 4.3                      Deferred Payment Date

If a Participant's Qualified Pension Benefit is payable as an accelerated transition benefit, and the Participant fails to consent to an immediate distribution as of his or her Annuity Start Date, the commencement of his or her Executive Pension also shall be delayed, and any unpaid monthly benefits under this Executive Plan from the Annuity Start Date to the date that the Executive Pension actually starts shall be paid to the Participant in a single sum without interest when payment commences.

Section 4.4                     Death Following Annuity Start Date

If a Participant dies before the Executive Pension commences, but after his or her Annuity Start Date (so that a surviving spouse benefit is not payable under Section 6), the Participant's Executive Pension shall be paid in the form previously elected, or deemed elected under Section 4.1(b) as soon as practicable after the Participant's death, unless the Committee determines another time and form of payment. If the Participant had elected a life annuity, unpaid monthly benefits from the Participant's Annuity Start Date to the date of death shall be payable to the Participant's estate or to such other person or persons as are entitled to the Participant's property under applicable law. If the Participant had elected a joint and survivor annuity, unpaid monthly benefits from the Participant's Annuity Start Date to the date of death shall be payable to the Participant's joint annuitant and the survivor portion of such annuity shall be payable to the joint annuitant as of the date of the Participant's death.

SECTION 5                    WELFARE BENEFITS FOR CERTAIN PARTICIPANTS

Section 5.1                      Eligibility

A Participant is eligible for benefits under this section after his or her Termination of Employment if he or she is not eligible for retiree welfare benefit coverage under the Company's group welfare benefit plans but is:

(a) at least 62 years of age at Termination of Employment and has a Term of Employment of at least 5 years; or

(b) at least 55 years of age and an Officer at Termination of Employment and has at least 10 Years of Officer Service.

Section 5.2                      Benefits

An eligible Participant under Section 5.1 above shall be entitled to life insurance benefits which are equivalent to the benefits which would have been provided to the Participant under the Company's group life insurance plans if he or she had been eligible for a service pension under the Salaried Pension Plan as in effect at March 21, 1996. In addition, an eligible Participant under Section 5.1(b) above shall be entitled to medical and dental benefits which are equivalent to the benefits which would have been provided to the Participant under the Company's group medical and dental benefit plans if he or she had been eligible for a service pension under the Salaried Pension Plan as in effect at March 21, 1996.

SECTION 6                    DISTRIBUTION AT PARTICIPANT'S DEATH

Section 6.1                     Dies After Annuity Start Date

If the Participant cashed out his or her Executive Pension before death, no additional benefits shall be payable under the Executive Plan at the Participant's death except as provided in Section 7, to the extent applicable. If the Participant was receiving his or her Executive Pension in the form of a monthly pension under a single life annuity at his or her death, all payment shall cease as of the end of the month in which the Participant's death occurs. If the Participant was receiving his or her Executive Pension as a joint and survivor annuity, or under the 120 monthly payment option at death, payment of the Executive Pension shall continue as provided in Section 4.1(b)(2).

Section 6.2                     Dies Before Annuity Start Date

6.2(a) Existing Participants. If an Existing Participant dies before his or her Annuity Start Date, the Total Benefit of the surviving spouse shall be determined as provided in this subsection (a).

(1) Amount. If an Existing Participant was not a Select Officer described in subparagraph (2) below at his or her death, the Total Benefit at the surviving spouse's Annuity Start Date shall be the Regular Surviving Spouse Benefit under Section 6.3(a) below if such benefit, determined at the Participant's death, is greater than the Surviving Spouse Cash Balance Benefit under Section 6.4(a) when expressed as a monthly pension payable for the life of the surviving spouse, commencing at the Participant's death. The Total Benefit at the surviving spouse's Annuity Start Date shall be the Surviving Spouse Cash Balance Benefit under Section 6.4(a) if such benefit, determined at the Participant's death, is greater than the Regular Surviving Spouse Benefit under Section 6.3(a) when expressed as a monthly pension payable for the life of the surviving spouse, commencing at the Participant's death.

(2) Select Officer Benefit. If an Existing Participant was a Select Officer at his or her death, had executed the required acknowledgment described in Section 2.4 within the applicable period, but died prior to the Intended Termination Month, the Participant shall be deemed a CFEP Executive. In that case, the Total Benefit of the surviving spouse of such a Participant at the surviving spouse's Annuity Start Date shall be the cashout value of Regular Surviving Spouse Benefit under Section 6.3(a), determined at the Participant's death by using the CFEP Factor, if such amount is greater than the balance of the Existing Participant's Executive Account at the Participant's death. Otherwise, the Total Benefit at such spouse's Annuity Start Date shall be the Surviving Spouse Cash Balance Benefit under Section 6.4.

6.2(b) New Hires. If a Participant, other than an Existing Participant, dies before his or her Annuity Start Date, the Total Benefit payable at the surviving spouse's Annuity Start Date shall be the Surviving Spouse Cash Balance Benefit under Section 6.4(a), provided such spouse is eligible for a Qualified Plan Benefit.

6.2(c) No Surviving Spouse. If no spouse survives a Participant, an amount equal to the excess of the Participant's Executive Account over his or her Account under the Salaried Pension Plan, determined as of the date of distribution, shall be paid to the Participant's estate as soon as practicable after the Participant's death.

Section 6.3                     Regular Surviving Spouse Benefit

6.3(a) Amount. The Regular Surviving Spouse Benefit determined at the applicable date shall be equal to the survivor portion of the joint and survivor annuity that would have been payable under the Basic Benefit formula, the Officer Minimum Benefit formula, or the Officer Supplemental Benefit formula, as applicable, if the Participant had started receiving such benefit in the form of a joint and survivor annuity on the day of his or her death and then immediately died. For this purpose, the joint and survivor annuity shall be deemed to be 90% of the monthly pension payable over the Participant's life under Section 3.3, 3.4 or 3.6, as applicable. A Participant's pension determined under Section 3.3 (Basic Benefit) shall be adjusted for early payment to the extent applicable under Section 3.3(c)(1) except if, at the time of his or her death, the Participant was an Employee and (i) had attained age 65 and was vested in his or her Qualified Pension Benefit or (ii) had a Term of Employment of not less than 15 years. For purposes of determining the applicable formula for computing the surviving spouse benefit of an Existing Participant at the spouse's Annuity Start Date, the applicable determination date shall be the day of the Participant's death. For purposes of determining the amount of the surviving spouse benefit payable at the spouse's Annuity Start Date, the applicable determination date shall be the surviving spouse's Annuity Start Date.

6.3(b) Special Increases. Unless the Committee determines otherwise, a surviving spouse benefit payable as a monthly pension under this Section 6.3 shall be increased by the same percentage and pursuant to the same terms and conditions set forth in the Salaried Pension Plan for ad hoc benefit increases to surviving spouses, provided the surviving spouse would be entitled to an automatic survivor annuity under the terms of the Salaried Pension Plan as in effect at March 21, 1996.

Section 6.4                     Surviving Spouse Cash Balance Benefit

6.4(a) Amount. The Surviving Spouse Cash Balance Benefit determined at the applicable date shall be a monthly pension for the life of the surviving spouse of a Participant, determined by dividing the Participant's Executive Account by the product of the Standard Factor for the surviving spouse's age at the Participant's death and 12. For purposes of determining the applicable formula for computing the surviving spouse benefit of a Participant at the spouse's Annuity Start Date, the applicable determination date shall be the day of the Participant's death. For purposes of determining the surviving spouse benefit payable at the spouse's Annuity Start Date, the applicable determination date is the surviving spouse's Annuity Start Date.

6.4(b) Special Increases. Unless the Committee determines otherwise, the surviving spouse benefit payable as a monthly pension under this Section 6.4 shall be increased by the same percentage and pursuant to the same terms and conditions set forth in the Salaried Pension Plan for ad hoc benefit increases to the monthly pensions of surviving spouses, provided the surviving spouse would be entitled to an automatic survivor annuity under the terms of the Salaried Pension Plan as in effect at March 21, 1996.

Section 6.5                      Form and Time of Payment

6.5(a) General  Rule. The Executive Pension payable to a surviving spouse shall be equal to the Regular Surviving Spouse Benefit or the Surviving Spouse Cash Balance Benefit, as applicable, reduced by the surviving spouse's Qualified Pension Benefit. Subject to the Committee's discretion to determine another time and form of payment, such Executive Pension shall be payable as a monthly pension for the life of the surviving spouse, commencing as of the surviving spouse's Annuity Start Date.

6.5(b) Exception. Notwithstanding the general rule in subsection (a) above, a surviving spouse of a Participant who dies prior to his or her Annuity Start Date may elect, within the election period that applies to payment of his or her benefits under the Salaried Pension Plan, to receive his or her Executive Pension in 120 equal monthly payments, subject to the Committee's discretion to determine another form. The amount of the monthly payment under the 120 payment option shall be determined by dividing the cashout value of the Executive Pension, determined by using the Standard Factor or CFEP Factor, as applicable (with respect to an Executive Pension based on a Regular Surviving Spouse Benefit) or the excess of the Participant's Executive Account over the Participant's Account under the Salaried Pension Plan (with respect to an Executive Pension based on a Surviving Spouse Cash Balance Benefit) by a conversion factor, which shall be provided by the actuaries of the Executive Plan. If the surviving spouse dies before receiving all payments, the present value of the remaining payments will be paid to the spouse's estate in a lump sum.

6.5(c) Limitation. Notwithstanding subsection (a) above, if a surviving spouse receives his or her Qualified Pension Benefit as a lump sum, and the lump sum value of his or her benefits under all nonqualified pension plans sponsored by the Company, including the Executive Plan, is less than $50,000 at the surviving spouse's Annuity Start Date, the surviving spouse's Executive Pension shall be paid to the surviving spouse in a lump sum at the same time as the surviving spouse's Qualified Pension Benefit.

6.5(d) Lump Sum Determination. If the Committee, in its sole discretion, determines that a surviving spouse's Executive Pension shall be paid in a lump sum, the amount of such benefit shall be calculated as follows:

(1) If the Executive Pension payable at the surviving spouse's Annuity Start Date is based on the Surviving Spouse Cash Balance Benefit, the lump sum amount shall equal the excess of the Participant's Executive Account over the Participant's Account under the Salaried Pension Plan at such date.

(2) If the Executive Pension payable at the surviving spouse's Annuity Start Date is based on the Regular Surviving Spouse Benefit, and the Participant is not deemed a CFEP Executive at death, the lump sum amount shall equal the Present Value of such benefit, reduced by the Present Value of the surviving spouse's Qualified Plan Benefit, both determined by using the Standard Factor for the surviving spouse's age at the Annuity Start Date. If the Participant is deemed a CFEP Executive at his or her death, the lump sum amount shall equal the Present Value of such benefit, reduced by the Present Value of the surviving spouse's Qualified Plan Benefit, both determined by using the CFEP Factor for the surviving spouse's age at the Annuity Start Date.

SECTION 7                     DEATH BENEFITS

Section 7.1                      Eligibility and Waiver

The beneficiary of a Participant who dies as an Executive, or who dies after Termination of Employment if the Participant was an Executive at the time of his or her Termination of Employment, shall be eligible for a death benefit under the Executive Plan if the beneficiary is eligible for death benefits under the Salaried Pension Plan. If a Participant is deemed to have waived a sickness or pensioner death benefit under the Salaried Pension Plan, then the associated death benefit under the Executive Plan also shall be deemed to have been waived.

Section 7.2                      Benefits

Except as otherwise provided in this section (or elsewhere in the Executive Plan), the death benefits provided by the Executive Plan shall be determined and administered in the same manner and subject to the same terms and conditions as the accident, sickness and pensioner death benefits provided under the Salaried Pension Plan.

7.2(a) Determination of Amount. The amount of a sickness, accident or pensioner death benefit provided by the Executive Plan shall be equal to one times the Participant's Final Annual Pay, reduced by the sickness, accident or pensioner death benefit payable with respect to the Participant under the Salaried Pension Plan, as applicable. In the case of a pensioner death benefit payable under the Executive Plan, the amount based on the Participant's Final Annual Pay shall be subject to the same reductions, if any, which are applied to the Participant's pensioner death benefit under the Salaried Pension Plan.

7.2(b) Form and Time of Payment. The Committee shall determine, in its sole discretion, the time and form of payment for any death benefit paid under the Executive Plan.

7.2(c) Beneficiary. The Participant's beneficiary for purposes of this Section 7 shall be the beneficiary under the Salaried Pension Plan.

SECTION 8                     RIGHTS TO BENEFITS

Section 8.1                      Entitlement to Benefits.

A Participant's Executive Pension shall be based on the terms of the Executive Plan in effect at the Participant's Termination of Employment. Entitlement to a surviving spouse benefit under Section 6 or a death benefit under Section 7 shall accrue on the date such benefit becomes payable. Except as otherwise provided in the Executive Plan, entitlement to other benefits described in the Executive Plan shall accrue on the date of the Participant's Termination of Employment.

8.1(a) Assignment or Alienation. Except to the extent consistent with the requirements of section 206(d)(3) of ERISA relating to qualified domestic relations orders, no assignment or alienation of pensions or other benefits under the Executive Plan will be permitted or recognized.

8.1(b) Payments to Others. Benefits payable to an individual unable to execute a proper receipt may be paid to another person in accordance with the standards and procedures established under the Salaried Pension Plan.

Section 8.2                      Effect of Reemployment

If a former Executive who is receiving an Executive Pension again becomes an Employee of any Participating Company, the monthly pension otherwise payable under the Executive  Plan during the period of reemployment shall be suspended and forfeited. At the Executive's subsequent Termination of Employment, his or her Executive Pension shall be recalculated, as determined by the Committee, in the manner prescribed under the Salaried Pension Plan and the Excess Plan for redetermining pensions following reemployment and for adjusting such pensions for prior Executive Plan payments.

Section 8.3                      Forfeiture for Misconduct

Notwithstanding any other provision of the Executive Plan, all or a portion of the benefits that a Participant or his or her surviving spouse, joint annuitant or beneficiaries would otherwise be eligible to receive under the Executive Plan may be forfeited, in the sole discretion of the Company's Board of Directors, if the Participant is discharged by a Participating Company for cause or a determination is made by the board of directors of a Participating Company that the Participant engaged in misconduct in connection with his or her employment by that Participating Company.

Section 8.4                      Waiver in Absence of Claims Release

In case of an accident resulting in the death of a Participant which entitles his or her beneficiaries to death benefits under the Executive Plan, the beneficiaries shall, prior to the payment of any death benefits, sign a release releasing the Company or other Participating Company, as applicable, from all claims and demands which the Participant and the beneficiaries had or may have against it on account of the accident, other than claims for benefits under the Executive Plan or under any other plan maintained by the Company or a Participating Company. If any persons other than the beneficiaries under the Executive Plan might legally assert claims against a Participating Company on account of the death of the Participant, no death benefit shall be due or payable until there have also been delivered to the Committee good and sufficient releases of all claims, arising from or growing out of the death of the Participant, which such other persons might legally assert against the Participating Company. The Committee, in its discretion, may require that the releases described above also release any other company connected with the accident, including any company participating in the Executive Plan or the Salaried Pension Plan, and any company with which arrangements have been made, directly or indirectly, for the interchange of benefit obligations as described in the Salaried Pension Plan. The determination of whether or not a death is due to accident for purposes of this Section 8.4 shall be made by the Committee in the manner provided in the Salaried Pension Plan.

Section 8.5                      Waiver by Damage Claims or Suits

Should a claim be presented or suit brought against the Company or any Participating Company, other than under the Executive Plan, for damages on account of the death of an individual who was at any time a Participant in the Executive Plan, no death benefits shall be payable under the Executive Plan except as provided in Section 8.6 below or unless the Committee, in its sole discretion and upon such terms as it may prescribe, waives this provision after withdrawal of the claim or dismissal of the suit.

Section 8.6                      Offset for Judgment or Settlement

In case any judgment is recovered against any Participating Company or any settlement is made of any claim or suit on account of the death of an individual who was at any time a Participant in the Executive Plan, and the amount paid to the beneficiaries who would have received death benefits under the Executive Plan is less than what would otherwise have been payable under the Executive Plan, the difference between the two amounts may, in the sole discretion of the Committee, be distributed to the beneficiaries.

Section 8.7                      Offset for Payments Under Law

If any benefit becomes payable to a Participant or his or her surviving spouse, joint annuitant or beneficiaries under any law now in force or hereafter enacted, and if the Committee determines that it is of the same general character as a benefit provided by the Executive Plan, then only the excess, if any, of the amount prescribed in the Executive Plan above the amount of the payment prescribed by law shall be payable under the Executive Plan. In those cases where the existence of an excess is not ascertainable by mere comparison because of such factors as differences in the beneficiaries or the time or methods of payment, the Committee shall have sole discretion to determine whether or not any excess exists and to make any adjustments necessary to carry out in a fair and equitable manner the spirit of this provision. Notwithstanding the foregoing, no benefit payable under the Executive Plan shall be reduced by reason of any governmental benefit or pension payable on account of military service, or by reason of any benefit provisions of the Social Security Act other than those related to disability.

SECTION 9                     SOURCE OF BENEFIT PAYMENTS

Section 9.1                      Participating Company Liability

Where a Participant's Term of Employment includes service with more than one Participating Company, or with one or more Participating Companies and one or more non-participating corporations or partnerships, the last Participating Company to employ the Participant as an Executive prior to his or her Termination of Employment with entitlement to a benefit hereunder shall be primarily liable for the full benefit payable under the Executive Plan. However, if for any reason the primarily liable Participating Company fails to make timely payment of an amount due to or on behalf of a Participant, the Company shall be secondarily liable for the obligation to pay the amount due. A Participating Company's withdrawal from participation shall not affect that company's liability hereunder. In addition, the liability of a Participating Company shall not be affected by any action or inaction (on the part of the Participant, his or her surviving spouse, joint annuitant or beneficiaries, or any company) with respect to amounts owed, including but not limited to the granting of extensions of time or other indulgences, the failure to make timely demand, the failure to make timely payment or the failure to give notices of any type, other than as prescribed in Section 10.4.

Section 9.2                     All Benefits Unfunded

All benefits payable under the Executive Plan shall be paid from the Company's or Participating Company's operating expenses, through the purchase of insurance from an insurance company, or through a trust established by the Company and/or the other Participating Companies for this purpose, as the Company may determine.

Section 9.3                      No Right to Company Assets

Neither an Executive nor any other person shall acquire by reason of the Executive Plan any right in or title to any assets, funds or property of the Company or any other Participating Company, including, without limiting the generality of the foregoing, any specific funds, trust accounts or assets which any Participating Company, in its sole discretion, may earmark or set aside in anticipation of a liability under the Executive Plan. A Participating Company's obligation to pay any amounts under the Executive Plan shall be unfunded as to the Executive whose rights shall be those of a general unsecured creditor.

SECTION 10                  ADMINISTRATION

Section 10.1                   Plan Sponsor

The Company shall be the sponsor of the Executive Plan as that term is defined in ERISA.

Section 10.2                   Plan Administrator

The Executive Vice President-Human Resources of the Company shall be the Plan Administrator as that term is defined in ERISA. The Plan Administrator shall have the specific powers granted to him elsewhere in the Executive Plan and shall also have such other powers as may be necessary in order to administer the Executive Plan in his sole discretion, except for those powers granted or provided to be granted to others by the Executive Plan. The Plan Administrator shall determine conclusively for all parties all questions arising in the administration of the Executive Plan and, insofar as permitted by applicable law, any decision of the Plan Administrator shall not be subject to further review. The Plan Administrator, acting in his or her absolute discretion, shall have the duty and authority to interpret and construe the provisions of the Executive Plan and to decide all questions which may arise or be raised under the Executive Plan by any Executive, Participant, former Participant, beneficiary or any other person including, but not limited to all questions relating to eligibility to participate in the Executive Plan, the amount of service accrued by the Participant and the amount of the Executive Pension to which a Participant or his or her beneficiary may be entitled.

Section 10.3                    Procedure To Approve and Deny Claims

The Committee shall have sole discretion to determine the rights of Participants (or their surviving spouses, joint annuitants or other beneficiaries) to benefits under the Executive Plan, and to authorize disbursements under the Executive Plan. In all questions relating to age and service for eligibility for any benefit under the Executive Plan, or relating to service and rates of pay for determining benefits payable under the Executive Plan, the decisions of the Committee, based upon the Executive Plan and upon the records of the Participating Companies employing the individual, shall be final insofar as permitted by applicable law. The Committee may adopt such rules of procedure as it may find appropriate. A claim for benefits under the Executive Plan shall be deemed denied unless the decision of the Committee is sent within 90 days of its receipt of the claim (or within 180 days, if the Committee extends the time by notifying the claimant in writing of the special circumstances requiring an extension and the date by which the decision is expected). If a claim is denied in whole or part by the Committee, it shall send a written decision stating (i) the specific reasons for the denial, making specific reference to pertinent provisions of the Executive Plan; (ii) what additional information, if any, would help perfect the claim for benefits; and (iii) what steps the claimant must take to submit the claim for review.

Section 10.4                    Review Procedure

The Board of Directors of the Company shall serve as the final review committee, under the Executive Plan and ERISA, for the review of all claims appealed by Participants (or their surviving spouses, joint annuitants or other beneficiaries) whose initial claims for benefits have been denied, in whole or in part, by the Committee. Within 60 days after the date of a denial by the Committee, the claimant may file a written request for the Board of Directors of the Company to review the denial. Such request for review must be made in a timely manner for the purpose of seeking any further review of a decision or determining any entitlement to a benefit under the Executive Plan. In such a case, the Board of Directors of the Company shall conduct a full and fair review of the Committee's decision and notify the claimant in writing of the review decision, specifying the reasons for the decision and the provisions of the Executive Plan on which it is based. A claim shall be deemed denied unless the decision on appeal is sent within 60 days (or within 120 days, if the Board of Directors of the Company extends the time to respond by notifying the claimant in writing of the special circumstances requiring an extension of time).

Section 10.5                   Further ERISA Rights

Any Participant (or surviving spouse, joint annuitant or other beneficiary) whose claim for benefits has been denied upon review shall have such further rights as are provided in section 503 of ERISA and the regulations thereunder. The Company, the Board of Directors of the Company, the Committee and the Executive Vice President-Human Resources of the Company shall retain such rights, authority and discretion as are provided or not expressly limited by section 503 of ERISA and the regulations thereunder.

Section 10.6                   Named Fiduciaries

The Company, each Participating Company, the Board of Directors of the Company, the Committee and the Executive Vice President-Human Resources of the Company are each a named fiduciary to the Executive Plan as that term is used in ERISA with respect to the particular duties and responsibilities allocated to each of them. Any person or group of persons may serve in more than one fiduciary capacity with respect to the Executive Plan.

Section 10.7                    Allocation of Responsibilities

The Company, the Committee, the Executive Vice President-Human Resources of the Company and each Participating Company may designate in writing other persons to carry out their respective responsibilities under the Executive Plan and may employ persons to advise them with regard to any such responsibilities.

Section 10.8                   Administrative Expenses

The expenses of administering the Executive Plan shall be apportioned among the Participating Companies, as determined by the Plan Administrator.

SECTION 11                  AMENDMENT AND TERMINATION

Section 11.1                    Plan Amendment

The Company may from time to time make any changes in the Executive Plan which it deems appropriate, with or without notice to Participants, by appropriate action of its Board of Directors. In addition, the Plan Administrator, with the approval of the Executive Vice President—Human Resources and General Counsel of the Company, shall be authorized to make minor or administrative changes to the Executive Plan, as well as changes dictated by the requirements of federal or state statutes applicable to the Company or authorized or made desirable by such statutes. However, in recognition of the reliance placed upon the Executive Plan and its contractual nature in inducing the change in position caused by retirement, any such change or modification shall not result in the cessation or reduction of benefits to retired individuals or their surviving spouses or joint annuitants, nor shall such modification affect the rights of any individual to any benefit to which he or she may have previously become entitled under the Executive Plan.

Section 11.2                    Plan Termination

At any time, for any reason, and with or without notice to Participants, the Company retains the right to terminate the Executive Plan in whole or in part by appropriate action of its Board of Directors, and each Participating Company retains the right to withdraw from the Executive Plan. Neither termination of the Executive Plan nor withdrawal by a Participating Company shall result the cessation or reduction of benefits to any retired Participant (or his or her surviving spouse, joint annuitant or other beneficiary), or affect the rights of any individual to any benefit to which he or she may have previously become entitled under the Executive Plan. A Participating Company's withdrawal from participation shall not affect that company's liability to provide benefits to a Participant as described in Section 9.1 of the Executive Plan.

SECTION 12                   DEFINITIONS

"Annuity Start Date" means the date as of which the Participant's or surviving spouse's Qualified Pension Benefit commences or is paid.

"Applicable Interest Rate" has the same meaning as under the Salaried Pension Plan.

"Basic Benefit" means the Total Benefit determined under the Basic Benefit formula, as set forth in Section 3.3.

"Basic Rate" means the uniform percentage (5%) of a Participant's Pay or Cash Balance Conversion Pay (as applicable) that is used in conjunction with a Participant's Supplementary Rate to determine the ongoing monthly Pay-based allocations credited to a Participant's Executive Account and to construct the opening balance of a Participant's Executive Account.

"Cash Balance Benefit" means the Total Benefit determined under the cash balance benefit formula, as set forth in Section 3.5.

"Cash Balance Conversion Pay" means a Participant's base pay for the 12 months ending June 30, 1996 (or, if earlier, the Participant's Termination of Employment after March 22, 1996, but before July 1, 1996), whether or not deferred, plus the Participant's Final Average Monthly STIP Awards for the 12 months ending June 30, 1996 (or, if earlier, the Participant's Termination of Employment after March 22, 1996, but before July 1, 1996), whether or not deferred. Any changes in the rate of base pay during the applicable computation period shall be taken into account.

"Cash Balance Interest" means the monthly rate of interest which, when compounded, equals the effective annual rate of interest applicable to 30-year Constant Maturity Treasury securities for the second calendar month preceding the calendar quarter containing the relevant month, provided that in no event shall the annualized rate exceed 9% in any year through the end of the year 2000.

"Cashout Factor" has the same meaning as under the Salaried Pension Plan.

"CFEP Executive" means a Select Officer who meets the requirements of Section 2.4.

"CFEP Factor" means the Cashout Factor that would have applied if the CFEP Executive had terminated employment as of December 30, 1996, but based on such Participant's age at his or her Annuity Start Date.

"Committee" means the Compensation and Personnel Committee of the Board of Directors of the Company.

"Company" means Pacific Telesis Group, a Nevada corporation, or its successors.

"Effective Date" means, with respect to the initial adoption of the Executive Plan,  July 1, 1995. The Effective Date of this amendment and restatement is July 1, 1996.

"Employee" has the same meaning as under the Salaried Pension Plan.

"Employer Group" has the same meaning as under the Salaried Pension Plan.

"ERISA" means the Employee Retirement Income Security Act of 1974, as it may be amended from time to time.

"Excess Plan" means the Pacific Telesis Group Excess Benefit Plan.

"Executive" means an Officer of any Participating Company or any other Employee who is designated by the Committee to be within a Participating Company's executive group for purposes of the Executive Plan.

"Executive Account" means the unfunded bookkeeping account established for each Participant to record the opening account balance, Pay-based allocations and Cash Balance Interest credits determined under Section 3.5. An account shall be maintained solely for record keeping purposes and

without segregation of any assets.

"Executive Pension" means the pension determined under Section 3.1.

"Executive Plan" means the Pacific Telesis Group Executive Supplemental Cash Balance Plan.

"Existing Participant" means an Executive who was a Participant on March 22, 1996, or who became a Participant after March 22 1996, but on or before June 30, 1996.

"Final Annual Pay," which is used in determining the death benefit in Section 7.2(a)(1), means the Participant's annual rate of base pay (whether or not deferred) on the last day he or she was on the active payroll of a Participating Company plus the Participant's annual Standard Award as determined under the Short Term Incentive Plan on the last day he or she was on the active payroll.

"Final Average Monthly Base Pay," which is used in determining the Regular Basic Benefit in Section 3.3(b)(1) and the Officer Minimum Benefit in Section 3.4(b)(1), means the average of the Participant's monthly rates of base pay, whether or not deferred, for the applicable period.

"Final Average Monthly STIP Award," as used in Section 3.3(b)(1) and Section 3.4(b)(1) means the average of the Participant's Monthly STIP Awards for the applicable period.

"Intended Termination Month" means the month specified by the Committee following the close of the merger between the Company and SBC Communications Inc., as it may be amended by agreement of the parties.

"Interest" means hypothetical earnings on an account balance, which shall be calculated in the manner determined by the Committee in its sole discretion. The Committee may, but is not required to, calculate Interest based on the interest rate used to calculate the Present Value of a Participant's Executive Pension as of a Participant's Annuity Start Date.

"Joint Venture Employer" has the meaning set forth in the Salaried Pension Plan.

"Mandatory Retirement Age" means age 65 for those Participants who meet the requirements of section 12(c)(1) of the Age Discrimination in Employment Act of 1967, as amended ("ADEA"); or as permitted under the ADEA, for those Participants for whom age is a bona fide occupational qualification within the meaning of section 4(f)(1) of the ADEA. There shall be no Mandatory Retirement Age for other Participants, if any.

"Mid-Career Account" means the hypothetical unfunded bookkeeping account established for a participant in the Mid-Career Plan.

"Mid-Career Plan" means the hypothetical unfunded bookkeeping account established for a participant in the Mid-Career Plan.

"Mid-Career Plan" means the Pacific Telesis Group Mid-Career Cash Balance Plan.

"Monthly STIP Award" means, for any month in a calendar year, 1/12 of the Participant's annual Standard Award (whether or not deferred) as set forth under the Short Term Incentive Plan for that calendar year. In the case of Participants who were Employees on the Separation Date and who had participated in the PacTel Corporation Short Term Incentive Plan, the Monthly STIP Award for any month before April 1, 1994, during such participation means 1/12 of the Participant's annual standard award under the PacTel Corporation Short Term Incentive Plan, as adjusted for changes in position rate.

"Officer" means an individual elected or appointed to, and serving in, one or more of the following positions:

(1) a position with the Company described in the bylaws of the Company as that of an officer, other than an assistant officer position;

(2) a position with Pacific Bell described in the bylaws of Pacific Bell as that of an officer, other than an assistant officer position; or

(3) a position with any Participating Company for which there is in effect a specific designation by the Committee that the position shall be considered to be that of an Officer for purposes of the benefit and retirement plans.

An Officer also means a named Employee of any Participating Company for which there is in effect a specific designation by the Committee that the named Employee shall be included in the definition of "Officer" for purposes of the benefit and retirement plans.

"Officer Minimum Benefit" means the Total Benefit determined under the Officer Minimum Benefit formula, as set forth in Section 3.3.

"Officer Supplemental Benefit" means the Total Benefit determined under the Officer Supplemental Benefit formula, as set forth in Section 3.6.

"PacTel Account Benefit," which is used to reduce the Officer Minimum Benefit in Section 3.4(b),means a monthly pension, commencing as of the Participant's Annuity Start Date, whose Present Value equals the sum of the following amounts:

(1) the value of the Basic Account under the PacTel Retirement Plan on the Separation Date, plus Interest to the Annuity Start Date;

(2) the value of the Variable Account under the PacTel Retirement Plan on the Separation Date, plus Interest to the Annuity Start Date;

(3) the value of the Transition Account under the PacTel Retirement Plan on the Separation Date, plus Interest to the Annuity Start Date;

(4) the amount of all withdrawals and distributions made from the Basic, Variable and Transition Accounts under the PacTel Retirement Plan prior to the Separation Date, plus Interest from the date of withdrawal to the Annuity Start Date; and

(5) the value of the Participant's accounts attributable to Company contributions under the PacTel Corporation Excess Benefit Plan and the PacTel Corporation Deferred Compensation Plan as of the Separation Date, other than Company "matching" contributions, plus Interest to the Annuity Start Date. (As of the Separation Date, assets and liabilities attributable to these plans were transferred to the AirTouch Communications Excess Benefit Plan.)

"PacTel Employee" means a Participant who was employed by PacTel Corporation or any of its subsidiaries (if  such subsidiary was a participating company in the PacTel Corporation Employees Pension Plan) before the Separation Date.

"PacTel Pension Benefit," which is used to reduce the Officer Minimum Benefit in Section 3.4(b), means the sum of the pensions payable at age 65 that were accrued as of the Separation Date under the AirTouch Communications Employees Pension Plan (other than any pension payable under Supplements A, B and C of that plan) and the AirTouch Communications Supplemental Executive Pension Plan, except that each pension shall be adjusted for early payment, under the terms of its plan in effect at the Separation Date, as if the Participant's annuity under the plan commenced on the Participant's Annuity Start Date under those plans, if received as a service pension, or on the Annuity Start Date under this Plan, if received as a vested pension.

"PacTel Retirement Plan" means the defined contribution plan maintained by the Company before the Separation Date for the benefit of employees of PacTel Corporation and its subsidiaries. Its formal name was the PacTel Corporation Retirement Plan. (As of the Separation Date, assets and liabilities attributable to this plan were transferred to the AirTouch Communications Retirement Plan).

"Participant" means an Employee described in Section 2.1 of the Executive Plan and, to the extent that other Employees who participated in the Executive Plan or a Predecessor Plan are specifically included, such other Employees.

"Participating Companies" mean the Company and each other corporation or partnership that both (a) participates in the Salaried Pension Plan and (b) has determined, with the concurrence of the Company's Board of Directors, to participate in this Plan.

"Pay" means a Participant's base pay, whether or not deferred, plus the Participant's Standard Award, whether or not deferred. For purposes of determining the ongoing Pay-based allocations under Section 3.5, the Standard Award shall be taken into account in the month in which it is paid.

"Plan Administrator" means the Executive Vice President-Human Resources of the Company, as set forth in Section 10.2.

"Predecessor Plans" mean the Pacific Telesis Group Executive Non-Salaried Pension Plan, the  Pacific Telesis Group Supplemental Executive Retirement Plan, and the minimum pension and related welfare and surviving spouse benefit provisions of the Pacific Telesis Group Executive Disability and Survivor Protection Plan (formerly called the Pacific Telesis Group Senior Management Long Term Disability and Survivor Protection Plan). It also means the predecessor plan to those plans, i.e., the Bell System Senior Management Non-Salaried Pension Plan.

"Present Value" means a single sum which is actuarially equivalent to a monthly pension commencing as of a specified date and payable for the Participant's life determined by using Standard Factors.

"Qualified Pension Benefit" means the part of a Participant's Total Benefit payable from the pension fund associated with the Salaried Pension Plan. Such benefit shall be adjusted for early payment if applicable and further adjusted for any additional pension actually payable after the Annuity Start Date due to increased limits under section 415 of the Internal Revenue Code. However, if a Participant is not an Executive at his or her Termination of Employment and if nonqualified pension benefits are payable under the Excess Plan due to limits under sections 401(a)(17) and 415 of the Internal Revenue Code, then the term Qualified Pension Benefit, for purposes of determining the appropriate offset, shall include the nonqualified pension benefits payable under the Excess Plan. Any ad hoc or other increases payable under the Salaried Pension Plan after the Annuity Start Date (other than increases due to section 415 limits) shall not be included in the amount of the Participant's Qualified Pension Benefit.

"Regular Surviving Spouse Benefit" means the Total Benefit of the surviving spouse of an Existing Participant determined under the formula set forth in Section 6.3.

"Salaried Pension Plan" means the Pacific Telesis Group Cash Balance Pension Plan for Salaried Employees.

"Select Officer" means a Participant designated by the Committee or its delegate as providing services in the position then held by the Participant that are critical to the efficient operation of the Company through, and continuing after, the merger of the Company and SBC Communications Inc.

"Separation Date" means April 1, 1994, the date as of which occurred the total and complete separation of the ownership of PacTel Corporation from the Company.

"Short Term Incentive Plan" means the Pacific Telesis Group Short Term Incentive Plan and its predecessor plan.

"Standard Award" shall have the meaning set forth in the Short Term Incentive Plan, which includes adjustments for changes in position rate.

"Standard Factor" has the same meaning as under the Salaried Pension Plan.

"Supplementary Rate" means the rate used to construct a Participant's opening account balance under Section 3.5(c) and to make ongoing Pay-based allocations to the Participant's Executive Account or Mid-Career Account. The Supplementary Rate of a Participant hired on or after July 1, 1996 shall be the percentage specified in Appendix A based on the Participant's age at hire, subject to any inconsistent or overriding provision in an employment agreement between the Participant and the Company. The Supplementary Rate of an Existing Participant shall be the rate that, in combination with the Participant's Basic Rate, is designed to provide a projected Total Benefit under the Executive Plan payable at age 65 that is a specified percentage of the projected Total Benefit that would have been payable to the Participant under the terms of the Salaried Pension Plan, Mid-Career Plan and Executive Plan as in effect at March 21, 1996. The Supplementary Rate of each Existing Participant is defined in an administrative document held by Executive Compensation and Benefits, the provisions of which are effective as of July 1, 1996, and not subject to amendment thereafter.

"Surviving Spouse Cash Balance Benefit" means the Total Benefit of the surviving spouse of a Participant determined under the cash balance benefit formula in Section 6.4.

"Term of Employment" means the number of years and months credited to the Participant as of the applicable determination date. A Participant's Term of Employment (i) includes all periods that the Participant was employed by the Company, other companies participating in the Salaried Pension Plan, certain Joint Venture Employers, and certain predecessor employers; (ii) does not include service before a break in service until such service is "bridged" as provided in the Salaried Pension Plan; and (iii) excludes any period of employment which was transferred from the Salaried Pension Plan to the PacTel Corporation Employees Pension Plan effective before the Separation Date and was included in the Participant's service recognized by that plan as of the Separation Date.

"Termination of Employment" has the same meaning as under the Salaried Pension Plan.

"Total Account" means the hypothetical unfunded bookkeeping account established for each participant in the Excess Plan.

"Total Benefit" means the benefit payable to a Participant (or surviving spouse, in the event of a Participant's death) under the Salaried Pension Plan and the Executive Plan.

"Years of Credited Service" means the number of whole and partial years credited to the Participant for purposes of calculating the monthly pension under the Salaried Pension Plan except that, as provided in Section 3.2(c) above, if a Participant is not an Executive at his or her Termination of Employment, the years so credited under the Salaried Pension Plan after the Participant ceased serving as an Executive shall be disregarded. As provided under the Salaried Pension Plan as in effect at March 21, 1996, a Participant's Years of Credited Service (i) reflect an adjustment for part- time employment; (ii) do not include periods of service with a non-Participating Company without a transfer of assets and corresponding liabilities; (iii) do not include periods that the Participant was employed by PacTel Corporation (and its subsidiaries) between January 1, 1987, and the Separation Date unless the Participant was an Employee on the Separation Date and had been a full accrual participant under the PacTel Corporation Employees Pension Plan before the Separation Date; (iv) do not include periods of service before a break in service until such service is "bridged" as provided in the Salaried Pension Plan (provided, however, that for purposes of determining a Participant's Basic Benefit, Years of Credited Service shall include any service that could be bridged as of June 30, 1996); and (v) are limited to the greater of 30 years or the actual years accrued as of December 31, 1994.

"Years of Officer Service" means the number of whole and partial 365-day periods during which the Participant was continuously employed as an Officer of a Participating Company. In addition, Years of Officer Service include periods of service with other members of the Employer Group or Joint Venture Employers (non-Participating Companies) if such service is included in the Participant's Term of Employment and if the position in which the Participant served at the non-Participating Company is designated by the Committee to be the equivalent of an Officer position for purposes of this Plan. Such service with non-Participating Companies shall not be considered a break in the continuity of Years of Officer Service for purposes of Sections 3.3(a) and (b). If a Participant has a break in the continuity of Years of Officer Service which does not exceed six months, service before and after the break shall be included in the Participant's Years of Officer Service. However, if a Participant is reemployed after a break of more than six (6) months in the continuity of Years of Officer Service, the Participant's service before the break shall not be included in his or her Years of Officer Service until the Participant completes 5 Years of Officer Service after reemployment. Subject to these break-in-service rules, service as an Officer with a company that participated in a Predecessor Plan before the Separation Date (including PacTel Corporation) shall be included in the Participant's Years of Officer Service, regardless of whether or not such service is included in the Participant's Term of Employment after the Separation Date.

APPENDIX A -- SUPPLEMENTARY RATE

                                          Percentage of Pay

                   Age at Hire       Allocation

                   -----------            -----------------

                       40                      2.9%

                       41                      3.4%

                       42                      3.9%

                       43                      4.5%

                       44                      5.1%

                       45                      5.8%

                       46                      6.6%

                       47                      7.3%

                       48                      7.9%

                       49                      8.1%

                       50                      8.3%

                       51                      8.6%

                       52                      8.8%

                       53                      9.1%

                       54                      9.3%

                       55                      9.6%

                       56                      9.8%

                       57                     10.1%

                       58                     10.3%

                       59                     10.6%

                       60                     10.9%

APPENDIX B -- OPENING BALANCE FACTORS

Opening Balance Factors Under 1%/8% Cash Balance Plan

(Based on Final Year's Pay and Service as of 6/30/96)

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 Months

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Years     0         1           2               3           4              5             6         7  8   9         10           11

- - ------------------------------------------------------------------------------------------------------------------------------------------

  0  0.0000    0.0009    0.0017    0.0026    0.0035    0.0043    0.0052    0.0061    0.0069    0.0078    0.0087    0.0095

  1  0.0104    0.0113    0.0122    0.0131    0.0140    0.0149    0.0158    0.0166    0.0175    0.0184    0.0193    0.0202

  2  0.0211    0.0220    0.0229    0.0239    0.0248    0.0257    0.0266    0.0275    0.0284    0.0294    0.0303    0.0312

  3  0.0321    0.0331    0.0340    0.0350    0.0359    0.0369    0.0379    0.0388    0.0398    0.0407    0.0417    0.0426

  4  0.0436    0.0446    0.0456    0.0466    0.0475    0.0485    0.0495    0.0505    0.0515    0.0525    0.0534    0.0544

  5  0.0554    0.0564    0.0574    0.0585    0.0595    0.0605    0.0615    0.0625    0.0635    0.0646    0.0656    0.0666

  6  0.0676    0.0687    0.0697    0.0708    0.0718    0.0729    0.0739    0.0750    0.0760    0.0771    0.0781    0.0792

  7  0.0802    0.0813    0.0824    0.0835    0.0846    0.0857    0.0868    0.0878    0.0889    0.0900    0.0911    0.0922

  8  0.0933    0.0944    0.0956    0.0967    0.0978    0.0989    0.1001    0.1012    0.1023    0.1034    0.1046    0.1057

  9  0.1068    0.1080    0.1091    0.1103    0.1114    0.1126    0.1138    0.1149    0.1161    0.1172    0.1184    0.1195

 10  0.1207    0.1219    0.1231    0.1243    0.1255    0.1267    0.1279    0.1291    0.1303    0.1315    0.1327    0.1339

 11  0.1351    0.1363    0.1376    0.1388    0.1401    0.1413    0.1426    0.1438    0.1450    0.1463    0.1475    0.1488

 12  0.1500    0.1513    0.1526    0.1539    0.1551    0.1564    0.1577    0.1590    0.1603    0.1616    0.1628    0.1641

 13  0.1654    0.1667    0.1681    0.1694    0.1707    0.1720    0.1734    0.1747    0.1760    0.1773    0.1787    0.1800

 14  0.1813    0.1827    0.1840    0.1854    0.1868    0.1881    0.1895    0.1909    0.1922    0.1936    0.1950    0.1963

 15  0.1977    0.1991    0.2005    0.2020    0.2034    0.2048    0.2062    0.2076    0.2090    0.2105    0.2119    0.2133

 16  0.2147    0.2162    0.2176    0.2191    0.2206    0.2220    0.2235    0.2250    0.2264    0.2279    0.2294    0.2308

 17  0.2323    0.2338    0.2353    0.2368    0.2383    0.2398    0.2414    0.2429    0.2444    0.2459    0.2474    0.2489

 18  0.2504    0.2520    0.2535    0.2551    0.2566    0.2582    0.2598    0.2613    0.2629    0.2644    0.2660    0.2675

 19  0.2691    0.2707    0.2723    0.2740    0.2756    0.2772    0.2788    0.2804    0.2820    0.2837    0.2853    0.2869

 20  0.2885    0.2902    0.2919    0.2935    0.2952    0.2969    0.2986    0.3002    0.3019    0.3036    0.3053    0.3069

 21  0.3086    0.3103    0.3120    0.3138    0.3155    0.3172    0.3189    0.3206    0.3223    0.3241    0.3258    0.3275

 22  0.3292    0.3310    0.3328    0.3346    0.3363    0.3381    0.3399    0.3417    0.3435    0.3453    0.3470    0.3488

 23  0.3506    0.3524    0.3543    0.3561    0.3580    0.3598    0.3617    0.3635    0.3653    0.3672    0.3690    0.3709

 24  0.3727    0.3746    0.3765    0.3784    0.3803    0.3822    0.3842    0.3861    0.3880    0.3899    0.3918    0.3937

 25  0.3956    0.3976    0.3995    0.4015    0.4035    0.4054    0.4074    0.4094    0.4113    0.4133    0.4153    0.4172

APPENDIX B -- OPENING BALANCE FACTORS (Cont'd.)

Opening Balance Factors Under 1%/8% Cash Balance Plan

(Based on Final Year's Pay and Service as of 6/30/96)

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 Months

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Years     0          1             2            3             4             5              6              7             8            9           10           11

- - ------------------------------------------------------------------------------------------------------------------------------------------

 26  0.4192    0.4212    0.4233    0.4253    0.4273    0.4294    0.4314    0.4334    0.4355    0.4375    0.4395    0.4416

 27  0.4436    0.4457    0.4478    0.4499    0.4520    0.4541    0.4562    0.4583    0.4604    0.4625    0.4646    0.4667

 28  0.4688    0.4710    0.4732    0.4753    0.4775    0.4797    0.4819    0.4840    0.4862    0.4884    0.4906    0.4927

 29  0.4949    0.4971    0.4994    0.5016    0.5039    0.5061    0.5084    0.5106    0.5128    0.5151    0.5173    0.5196

 30  0.5218    0.5241    0.5265    0.5288    0.5311    0.5334    0.5358    0.5381    0.5404    0.5427    0.5451    0.5474

 31  0.5497    0.5521    0.5545    0.5569    0.5593    0.5617    0.5641    0.5664    0.5688    0.5712    0.5736    0.5760

 32  0.5784    0.5809    0.5834    0.5859    0.5883    0.5908    0.5933    0.5958    0.5983    0.6008    0.6032    0.6057

 33  0.6082    0.6108    0.6133    0.6159    0.6184    0.6210    0.6236    0.6261    0.6287    0.6312    0.6338    0.6363

 34  0.6389    0.6416    0.6442    0.6469    0.6495    0.6522    0.6548    0.6575    0.6601    0.6628    0.6654    0.6681

 35  0.6707    0.6734    0.6762    0.6789    0.6816    0.6844    0.6871    0.6898    0.6926    0.6953    0.6980    0.7008

 36  0.7035    0.7063    0.7092    0.7120    0.7148    0.7176    0.7205    0.7233    0.7261    0.7289    0.7318    0.7346

 37  0.7374    0.7403    0.7433    0.7462    0.7491    0.7520    0.7550    0.7579    0.7608    0.7637    0.7667    0.7696

 38  0.7725    0.7755    0.7785    0.7816    0.7846    0.7876    0.7906    0.7936    0.7966    0.7997    0.8027    0.8057

 39  0.8087    0.8118    0.8149    0.8181    0.8212    0.8243    0.8274    0.8305    0.8336    0.8368    0.8399    0.8430

 40  0.8461    0.8493    0.8526    0.8558    0.8590    0.8622    0.8655    0.8687    0.8719    0.8751    0.8784    0.8816

 41  0.8848    0.8881    0.8915    0.8948    0.8981    0.9015    0.9048    0.9081    0.9115    0.9148    0.9181    0.9215

 42  0.9248    0.9283    0.9317    0.9352    0.9386    0.9421    0.9455    0.9490    0.9524    0.9559    0.9593    0.9628

 43  0.9662    0.9698    0.9733    0.9769    0.9804    0.9840    0.9876    0.9911    0.9947    0.9982    1.0018    1.0053

 44  1.0089    1.0126    1.0163    1.0199    1.0236    1.0273    1.0310    1.0346    1.0383    1.0420    1.0457    1.0493

 45  1.0530    1.0568    1.0606    1.0644    1.0682    1.0720    1.0759    1.0797    1.0835    1.0873    1.0911    1.0949

 46  1.0987    1.1026    1.1066    1.1105    1.1144    1.1183    1.1223    1.1262    1.1301    1.1340    1.1380    1.1419

 47  1.1458    1.1499    1.1539    1.1580    1.1621    1.1661    1.1702    1.1743    1.1783    1.1824    1.1865    1.1905

EX-10.MMM

Exhibit 10-mmm

PACIFIC TELESIS GROUP

1996 EXECUTIVE DEFERRED COMPENSATION PLAN

(Adopted Effective December 1, 1995)

SECTION 1.                    Purpose.

The Pacific Telesis Group 1996 Executive Deferred Compensation Plan (the "Plan") provides certain Officers of the Company with an opportunity to defer compensation and accrue earnings on a pre-tax basis and with an opportunity to receive employer matching contributions that cannot be provided to them under the Pacific Telesis Group Supplemental Retirement and Savings Plan for Salaried Employees ("the Savings Plan") because of the limitations imposed by section 401(a)(17) of the Internal Revenue Code of 1986, as amended (the "Code").

SECTION 2.                    Eligibility to Participate.

The following employees are eligible to participate in the Plan:

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

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

SECTION 3.                 Plan Accounts.

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

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

SECTION 4.                  Deferred Compensation.

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

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

(B) STIP. An employee may elect to defer all or part, but not less than $5,000, of his or her awards under the Pacific Telesis Group Short-Term Incentive Plan, or a similar or successor incentive compensation plan or program of Pacific Telesis Group or an Affiliate ("STIP"), for services performed in a calendar year and otherwise payable in the calendar year following such calendar year. Such election may be made with respect to services to be performed (i) in the remainder of the year in which the employee first becomes eligible to participate in the Plan, provided the election is made prior to October 1st of such year, which election shall become effective for STIP earned with respect to services performed beginning with the payroll period immediately subsequent to the election, or (ii) in the next following calendar year, which election on shall become effective on the first day of the calendar year to which the election applies in all other cases. An election related to the STIP award for services performed in a calendar year shall become irrevocable (x) in the case of an election made within 30 days of first becoming eligible to participate in the Plan, on the last day before the applicable payroll period for which the election becomes effective, or (y) in all other cases, on the last day prior to the beginning of such calendar year.

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

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

Notwithstanding the foregoing, in no event shall deferrals under the Plan include that portion of Compensation required for all applicable tax, Social Security and employee benefit plan withholding, whether or not such withholding requirement is related to this Plan.

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

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

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

SECTION 5.                Company Match.

5.1 Eligibility for Company Match. An employee who (A) elects to defer Compensation under the Plan for a calendar year, and (B) has made the maximum elective deferral under the Savings Plan permitted by section 402(g) of the Code for such calendar year (except to the extent that a further limitation is required by section 401(k)(3) and/or section 415 of the Code), shall be eligible to have additional amounts based on Compensation deferred pursuant to this Plan ("Company  Match") credited to his or her account hereunder.

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

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

(B) the percentage in effect for that calendar year at which the  employee's Basic Contributions to the Savings Plan are matched by employing Company contributions; provided, however, that the maximum Company Match credited to the employee's account under this Plan shall not exceed

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

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

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

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

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

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

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

SECTION 6.               Earnings on Accounts.

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

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

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

6.4 Dividends and Adjustments for Pacific Telesis Group Shares. An employee's account credited with deferred Pacific Telesis Group shares shall be credited on each subsequent dividend payment date for Pacific Telesis Group shares with an amount equivalent to the dividend payable on the number of Pacific Telesis Group common shares equal to the number of deferred Pacific Telesis Group shares in the employee's account on the record date for such dividend. Such amount shall then be converted to a number of additional deferred Pacific Telesis Group shares, determined by dividing such amount by the Price of Pacific Telesis Group common shares on the dividend payment date. In the event of any change in outstanding Pacific Telesis Group common shares by reason of any stock dividend or split, recapitalization, merger, consolidation, combination or exchange of shares or other similar corporate change, the Committee shall make such adjustments, if any, that it deems appropriate in the number of deferred Pacific Telesis Group shares then credited to an employee's account. Any and all such adjustments shall be conclusive and binding upon all parties concerned.

SECTION 7.              Distribution.

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

7.2 Options for Distribution During Life. An employee may elect to receive the amounts credited to the employee's Plan account with respect to a deferral election made pursuant to Section 4.1 (a) in one payment, or (b) in a number of annual installments over a period of 5, 10, or 15 years, calculated in accordance with procedures established by the Plan Administrator. As specified by the employee, distributions shall commence as soon as practicable after

(A) the first day of the calendar year next following the employee's Separation;

(B) the first day of the fifth calendar year next following the employee's Separation; or

(C) the first day of the calendar year next following the employee's attainment of a specified age between 59 1/2 and 70.

All amounts credited to an employee's Plan account with respect to which he or she has elected distribution in the same form and commencing at the same time shall be aggregated as a single Distribution Account. Notwithstanding the employee's election under this Section 7.2 with respect to the time and form of distribution for each such Distribution Account, if the aggregate of all amounts credited to an employee's Distribution Account is less than $50,000 at the time of such employee's Separation, such Distribution Account shall be distributed in a single payment as soon as practicable after the first day of the calendar year next following the employee's Separation.

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

(A) in one payment, paid as soon as practicable after the first day of the calendar year next following the year of the employee's death;

(B) in 10 annual installments, calculated in accordance with procedures established by the Plan Administrator, commencing as soon as practicable after the first day of the calendar year next following the year of the employee's death, provided that if the aggregate of all amounts credited to an employee's Plan Account is less than $50,000 at the time of such employee's death, such Distribution Account shall be distributed in a single payment as soon as practicable after the first day of the calendar year next following the employee's death; or

(C) by a continuation of the distribution times and forms elected under Section 7.2 (in the case of an employee who dies before commencement of distributions, using as any specified age the date the employee would have attained that age if he or she had continued to live), subject to the single payment distribution of a Distribution Account credited with less than $50,000 at the time of the employee's death, as set forth in Section 7.2.

If no election has been made under this Section 7.3, the balance of the employee's deferred account shall be distributed in one payment as soon as practicable after the first day of the calendar year next following the year of the employee's death. If no beneficiary designation has been made, distribution shall be made to the estate of the employee.

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

7.5 Form and Timing of Distribution. Amounts credited to an employee's Plan account as cash plus accumulated interest, less applicable withholding taxes, shall be distributed in cash. Amounts credited as deferred Pacific Telesis Group shares, less applicable withholding taxes, shall be distributed in the form of whole Pacific Telesis Group common shares, plus cash for any fractional share. Installment distributions subsequent to the first installment shall be paid on or about the anniversary date of the first annual installment until the entire balance of the employee's Plan account is paid. Account balances held pending distribution shall continue to be credited with interest or additional deferred Pacific Telesis Group shares, as applicable, determined in accordance with Section 6.

7.6 Distributions Not in Accordance with Elections.

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

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

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

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

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

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

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

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

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

SECTION 8.            Administration; Claims and Review Procedures.

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

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

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

SECTION 9.             Amendment and Termination.

9.1 9.1 Amendment. The PTG Board of Directors may at any time make changes in the Plan, but such amendment shall have prospective effect only and shall not adversely affect the rights of any employee, without his or her consent, to any benefit under the Plan to which such employee was entitled prior to the effective date of amendment. Changes in the interest rate applied to Plan account balances as determined by the Committee from time to time in accordance with Section 6.2 of the Plan shall not be deemed to be Plan amendments, notwithstanding that they apply to Compensation previously earned and deferred. The Executive Vice President - Human Resources of Pacific Telesis Group, with the approval of the Executive Vice President and General Counsel of Pacific Telesis Group, shall be authorized to make minor or administrative changes to the Plan.

9.2 Termination. The PTG Board of Directors may at any time terminate the Plan. Any termination of the Plan shall not terminate the deferral of Compensation previously deferred into a Plan account, but may prevent the deferral of Compensation not yet earned notwithstanding the employee's prior election to defer such Compensation.

SECTION 10.            Definitions.

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

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

10.2 "PTG Board of Directors" or "PTG Board" means the Board of Directors of Pacific Telesis Group.

10.3 "Code" means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated thereunder.

10.4 "Committee" means the Compensation and Personnel Committee of the Board of Directors of Pacific Telesis Group.

10.5 "Company" shall mean Pacific Telesis Group, Pacific Bell or any other corporation which is an Affiliate of Pacific Telesis Group.

10.6 "Officer" means an officer of a Company, as determined by the Plan Administrator, but the term shall not include Assistant Secretary, Assistant Treasurer, Assistant Comptroller or any other assistant officer.

10.7 "Price" with respect to Pacific Telesis Group common shares as of a particular date means the average of the daily high and low sale prices of Pacific Telesis Group common shares on the New York Stock Exchange ("NYSE") for the period of five trading days ending on such date, or the period of five trading days immediately preceding such date if the NYSE is closed on the date.

10.8 "Savings Plan" means the Pacific Telesis Group Supplemental Retirement and Savings Plan for Salaried Employees.

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

10.10 "Separation" means retirement or termination from all employment with Pacific Telesis Group or its Affiliates.

EX-10.NNN

Exhibit 10-nnn

PACIFIC TELESIS GROUP

EXECUTIVE DEFERRAL PLAN

(Restated as of November 1, 1994)

SECTION 1.  PURPOSE.

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

SECTION 2.  ELIGIBILITY TO PARTICIPATE.

The following employees are eligible to participate in the Plan:

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

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

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

SECTION 3.  PLAN ACCOUNTS.

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

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

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

SECTION 4.  DEFERRED COMPENSATION.

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

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

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

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

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

      Notwithstanding the  foregoing, in  no event  shall deferrals  under the Plan include that  portion of  Compensation required for  all applicable  tax, Social Security and  employee benefit  plan withholding, whether  or not  such withholding requirement is related to this Plan.

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

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

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

SECTION 5.  COMPANY MATCH.

      5.1  ELIGIBILITY FOR COMPANY MATCH.  An employee who (A) elects to defer

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

      5.2  AMOUNT  OF COMPANY  MATCH.    The  Company  Match  credited  to  an employee s  account  under this  Plan  with respect  to  Compensation deferred during a calendar year shall be equal to

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

           (B)  the percentage in effect  for that calendar year at  which the employee's Basic Contributions  to the Savings Plan  are matched by employing  Company  contributions;  provided,  however,   that  the maximum Company Match credited to the employee s account shall  not exceed

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

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

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

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

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

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

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

SECTION 6.  EARNINGS ON ACCOUNTS.

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

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

      6.3    RETROACTIVE  LIMITATION OF  INTEREST  ACCRUAL  IN  CASE OF EARLY SEPARATION.   Notwithstanding Section 6.2, an employee whose Separation occurs before he or  she attains age 55  will receive interest  on all deferred  cash Compensation and Company Match based on the average 10-Year Treasury note rate for all  years of participation in this Plan, rather than the rate of interest established by the Committee for any particular calendar year.

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

SECTION 7.  DISTRIBUTION.

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

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

           (A)  Separation;

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

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

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

      7.3  OPTIONS  FOR DISTRIBUTION IN THE EVENT  OF DEATH.  An  employee may elect that, in the  event the employee should  die before full payment of  all amounts  credited to  the  employee's account,  the  balance of  the  deferred account shall be distributed to the beneficiary or beneficiaries designated by the employee

           (A)  in one payment;

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

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

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

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

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

      7.6  DISTRIBUTION NOT IN ACCORDANCE WITH ELECTIONS.

      7.6.1   POSTPONEMENT OF PAYMENT.   With respect to Plan account balances accrued pursuant to elections filed after February 17, 1993, the Committee may postpone  payment of Plan  benefits to an  employee (A) who, in  the year Plan benefits  would otherwise be payable, is a  "covered employee" for purposes of the $1 million limitation  on deductible compensation under Section  162(m) of the Internal  Revenue Code, and (B)  whose compensation for the  year in which Plan benefits would  otherwise be  payable would, but  for such  postponement, exceed the $1 million limit on deductibility.

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

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

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

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

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

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

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

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

SECTION 8.  ADMINISTRATION; CLAIMS AND REVIEW PROCEDURES.

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

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

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

SECTION 9.  AMENDMENT AND TERMINATION.

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

SECTION 10.  DEFINITIONS.

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

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

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

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

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

      10.5 "EFFECTIVE DATE" means January  1, 1985, the effective date  of the Plan.

      10.6 "OFFICER" means an  officer of a Company, as determined by the Plan Administrator, but the term  shall not include Assistant  Secretary, Assistant Treasurer, Assistant Comptroller or any other assistant officer.

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

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

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

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

EX-12

													EXHIBIT 12
AT&T, INC.
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
Dollars in millions
				2007			2006			2005			2004		2003
Earnings:
	Income from continuing operations before income taxes*		$	18,204		$	10,881		$	5,718		$	7,165	$	8,716
	Equity in net income of affiliates included above			(692	)		(2,043	)		(609	)		(873)		(1,253)
	Fixed Charges			4,536			2,209			1,680			1,238		1,390
	Distributed income of equity affiliates			395			97			158			331		288
	Interest capitalized			(171	)		(73	)		(36	)		(31)		(37)
		Earnings, as adjusted	$	22,276		$	11,071		$	6,911		$	7,830	$	9,104
Fixed Charges:
	Interest expense		$	3,507		$	1,843		$	1,456		$	1,023	$	1,191
	Interest capitalized			171			73			36			31		37
	Dividends on preferred securities			3			3			31			24		22
	Portion of rental expense representative of interest factor			855			290			157			160		140
		Fixed Charges	$	4,536		$	2,209		$	1,680		$	1,238	$	1,390
	Ratio of Earnings to Fixed Charges			4.91			5.01			4.11			6.32		6.55
*All periods presented exclude undistributed earnings on investments accounted for under the equity method as well as “Income From Discontinued 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.

EX-13

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 Dollars in millions except per share amounts

Selected Financial and Operating Data
Dollars in millions except per share amounts
At December 31 or for the year ended:	2007				2006	2		2005	3	2004			2003
Financial Data 1
Operating revenues	$	118,928		$	63,055		$	43,764		$	40,733		$	40,498
Operating expenses	$	98,524		$	52,767		$	37,596		$	34,832		$	34,214
Operating income	$	20,404		$	10,288		$	6,168		$	5,901		$	6,284
Interest expense	$	3,507		$	1,843		$	1,456		$	1,023		$	1,191
Equity in net income of affiliates	$	692		$	2,043		$	609		$	873		$	1,253
Other income (expense) – net	$	615		$	393		$	397		$	1,414		$	2,370
Income taxes	$	6,253		$	3,525		$	932		$	2,186		$	2,857
Income from continuing operations	$	11,951		$	7,356		$	4,786		$	4,979		$	5,859
Income from discontinued operations, net of tax 4	$	-		$	-		$	-		$	908		$	112
Income before extraordinary item and
cumulative effect of accounting changes	$	11,951		$	7,356		$	4,786		$	5,887		$	5,971
Net income 5	$	11,951		$	7,356		$	4,786		$	5,887		$	8,505
Earnings per common share:
Income from continuing operations	$	1.95		$	1.89		$	1.42		$	1.50		$	1.77
Income before extraordinary item and
cumulative effect of accounting changes	$	1.95		$	1.89		$	1.42		$	1.78		$	1.80
Net income 5	$	1.95		$	1.89		$	1.42		$	1.78		$	2.56
Earnings per common share – assuming dilution:
Income from continuing operations	$	1.94		$	1.89		$	1.42		$	1.50		$	1.76
Income before extraordinary item and
cumulative effect of accounting changes	$	1.94		$	1.89		$	1.42		$	1.77		$	1.80
Net income 5	$	1.94		$	1.89		$	1.42		$	1.77		$	2.56
Total assets	$	275,644		$	270,634		$	145,632		$	110,265		$	102,016
Long-term debt	$	57,255		$	50,063		$	26,115		$	21,231		$	16,097
Construction and capital expenditures	$	17,717		$	8,320		$	5,576		$	5,099		$	5,219
Dividends declared per common share 6	$	1.47		$	1.35		$	1.30		$	1.26		$	1.41
Book value per common share	$	19.09		$	18.52		$	14.11		$	12.27		$	11.57
Ratio of earnings to fixed charges		4.91			5.01			4.11			6.32			6.55
Debt ratio		35.7	%		34.1	%		35.9	%		40.0	%		32.0	%
Weighted-average common shares
outstanding (000,000)		6,127			3,882			3,368			3,310			3,318
Weighted-average common shares
outstanding with dilution (000,000)		6,170			3,902			3,379			3,322			3,329
End of period common shares
outstanding (000,000)		6,044			6,239			3,877			3,301			3,305
Operating Data
Wireless customers (000) 7		70,052			60,962			54,144			49,132			24,027
In-region network access lines in service (000) 8		61,582			66,469			49,413			52,356			54,683
Broadband connections (000) 9		14,156			12,170			6,921			5,104			3,515
Number of employees		309,050			304,180			189,950			162,700			168,950

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 Our financial statements reflect results from our sold directory advertising business in Illinois and northwest Indiana as discontinued operations. The operational results and the gain associated with the sale of that business are presented in “Income from discontinued operations, net of tax.”

5 Amounts include the following extraordinary item and cumulative effect of accounting changes: 2003, extraordinary loss of $7 related to the adoption of FIN 46 “Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51” and the cumulative effect of accounting changes of $2,541, which includes a $3,677 benefit related to the adoption of SFAS No. 143, “Accounting for Asset Retirement Obligations” and a $1,136 charge related to the January 1, 2003 change in the method in which we recognize revenues and expenses related to publishing directories from the “issue basis” method to the “amortization” method.

6 Dividends declared per common share in 2003 included three additional dividends totaling $0.25 per share above our regular quarterly dividend payout.

7 The number presented represents 100% of AT&T Mobility cellular/PCS customers. The 2004 number includes customers from the acquisition of AT&T Wireless Services, Inc.

8	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.
9	Broadband connections include in-region DSL lines, in-region U-verse high-speed Internet access and satellite broadband.

1 

Management’s Discussion and Analysis of Financial Condition and Results of Operations, continued

Dollars in millions except per share amounts

For ease of reading, AT&T Inc. is referred to as “we,” “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 2008 in the “Operating Environment and Trends of the Business” section.

We completed our acquisition of BellSouth Corporation (BellSouth) on December 29, 2006. We thereby acquired BellSouth’s 40% economic interest in AT&T Mobility LLC (AT&T Mobility), formerly Cingular Wireless LLC (Cingular), resulting in 100% ownership of AT&T Mobility. Our consolidated results in 2006 include BellSouth’s and AT&T Mobility’s operational results for the final two days of the year. Prior to the acquisition, we reported the income from our 60% share of AT&T Mobility as equity in net income. We completed our acquisition of AT&T Corp. (ATTC) on November 18, 2005 and have included ATTC results during 2006 and for the 43-day period ended December 31, 2005. In accordance with U.S. generally accepted accounting principles (GAAP), operating results from BellSouth, AT&T Mobility and ATTC prior to their respective acquisition dates are excluded.

							Percent Change
							2007 vs.			2006 vs.
	2007		2006		2005		2006			2005
Operating revenues	$	118,928	$	63,055	$	43,764		88.6	%		44.1	%
Operating expenses		98,524		52,767		37,596		86.7			40.4
Operating income		20,404		10,288		6,168		98.3			66.8
Income before income taxes		18,204		10,881		5,718		67.3			90.3
Net income		11,951		7,356		4,786		62.5			53.7
Diluted earnings per share		1.94		1.89		1.42		2.6			33.1

Overview

Operating income  As noted above, 2007 revenues and expenses reflect the addition of BellSouth’s and AT&T Mobility’s results while our 2006 results only include two days of their results. Additionally, 2006 revenues and expenses reflect the addition of ATTC’s results while our 2005 results include only 43 days. Accordingly, the following discussion of changes in our revenues and expenses is significantly affected by these acquisitions.

Our operating income increased $10,116, or 98.3%, in 2007 and $4,120, or 66.8%, in 2006. Our operating income margin increased from 14.1% in 2005 to 16.3% in 2006 and to 17.2% in 2007. Operating income in 2007 increased primarily due to the acquisition of BellSouth and increased in 2006 primarily due to the acquisition of ATTC. The increased operating margins reflect expense reductions through merger synergies, the addition of the higher-margined wireline operations at BellSouth in 2007 and operational improvements partially offset by additional amortization expense on those intangibles identified at the time of our acquisitions and by non-merger severance. As we amortize several merger-related intangible assets using the sum-of-the-months-digits method, amortization expense decreases as the amount of time we hold the asset increases.

Our operating income was slightly offset by the continued decline of our retail access lines due to increased competition, as customers continued to disconnect both primary and additional lines and switched to competitors’ wireless, Voice over Internet Protocol (VoIP) and cable offerings for voice and data. While we lose the wireline voice revenues, we have the opportunity to increase wireless service revenue should customers choose AT&T Mobility as their alternative provider.

2

Management’s Discussion and Analysis of Financial Condition and Results of Operations, continued

Dollars in millions except per share amounts

Operating revenues increased $55,873, or 88.6%, in 2007 and $19,291, or 44.1%, in 2006. These increases were primarily due to our acquisitions and to an increased demand for data products. The increases were slightly offset by continued pressure on voice revenues, reflecting access line decreases, and by decreased demand for local wholesale services.

Operating expenses increased $45,757, or 86.7%, in 2007 and $15,171, or 40.4%, in 2006, primarily due to our acquisitions. Operating expenses included merger integration costs of $1,272 in 2007 and $774 in 2006, and amortization expense on intangible assets identified at the time of acquisition of $5,921 in 2007 and $943 in 2006. We are amortizing these intangibles using the sum-of-the-months-digits method, which means that we will record higher expenses in earlier periods. Partially offsetting these increases were merger synergies of approximately $3,000 in 2007 and $1,000 in 2006, reflecting progress with the integration of BellSouth, AT&T Mobility and ATTC, workforce reductions and other cost-reduction initiatives.

Interest expense increased $1,664, or 90.3%, in 2007 and $387, or 26.6%, in 2006. The increase in 2007 was primarily due to higher average debt balances resulting from the inclusion of BellSouth and AT&T Mobility outstanding debt on our consolidated balance sheet. The increase in 2006 was primarily due to recording a full year of interest expense on ATTC outstanding debt.

Equity in net income of affiliates Investments in partnerships, joint ventures and less-than-majority-owned subsidiaries where we have significant influence are accounted for under the equity method. Prior to the December 29, 2006 BellSouth acquisition (see Note 2), we accounted for our 60% economic interest in AT&T Mobility under the equity method since we shared control equally with BellSouth. AT&T Mobility is now a wholly-owned subsidiary of AT&T, and wireless results are reflected in operating revenues and expenses in our consolidated statements of income.

Equity in net income of affiliates decreased $1,351 in 2007. The decrease in 2007 was a result of the change in accounting for AT&T Mobility to a wholly-owned subsidiary, partially offset by improved results from our investments in América Móvil S.A. de C.V. (América Móvil) and Teléfonos de México, S.A. de C.V. (Telmex). Equity in net income of affiliates increased $1,434 in 2006. The increase in 2006 was primarily due to AT&T Mobility’s improved results, of which $1,308 was our proportionate share.

Other income (expense) – net  We had other income of $615 in 2007, $393 in 2006 and $397 in 2005. Results for 2007 included gains of $409 related to a wireless spectrum license exchange, $166 in interest income, $148 from the sale of administrative buildings and other non-strategic assets and $88 from other non-operating activities. These gains were partially offset by $196 in minority interest expense.

Other income for 2006 included interest income of $377. There were no individually significant other income or expense transactions during 2006. Results for 2005 primarily included interest income of $383, a gain of $108 on the sales of shares of Amdocs Limited, American Tower Corp. (American Tower) and Yahoo! Inc. and other miscellaneous gains. These gains were partially offset by other 2005 expenses of $126 to reflect an increase in value of a third-party minority holder’s interest in an AT&T subsidiary’s preferred stock and other miscellaneous expenses.

Income taxes increased $2,728, or 77.4%, in 2007 and $2,593 in 2006. The increase in income taxes in 2007 was primarily due to higher operating income in 2007 reflecting the addition of BellSouth’s and its share of AT&T Mobility’s operating results. Our effective tax rate in 2007 was 34.4%, compared to 32.4% in 2006 and 16.3% in 2005. The increase in our effective tax rate for 2007 was primarily due to the consolidation of AT&T Mobility and an increase in income before income taxes. Prior to the consolidation of AT&T Mobility, our income before income taxes included our equity in AT&T Mobility’s after-tax net income. With consolidation, the AT&T Mobility income tax expense that was previously netted in income before income taxes is now included in our consolidated income tax expense.

The increase in income tax expense in 2006 compared to 2005 was primarily due to the higher income before income taxes in 2006 and our agreement in December 2005 with the Internal Revenue Service (IRS) to settle certain claims principally related to the utilization of capital losses and tax credits for tax years 1997 – 1999. The settlement reduced income tax expense by $902 in 2005, which also lowered our effective tax rate for 2005. (See Note 10)

3

Management’s Discussion and Analysis of Financial Condition and Results of Operations, continued

Dollars in millions except per share amounts

Supplemental Information

To provide improved comparability versus previous results, below is a supplemental table providing pro forma consolidated operating revenues for 2005 and 2006, assuming the closing date for the BellSouth and ATTC acquisitions was January 1, 2005.

Supplemental Consolidated Operating Revenues Information

							Percent Change
	Actual		Pro Forma		Pro Forma		2007 vs.			2006 vs.
	2007		2006		2005		2006			2005
Segment operating revenues
Voice	$	40,798	$	43,505	$	46,849		(6.2	)%		(7.1	)%
Data		23,206		22,173		21,326		4.7			4.0
Wireless service		38,568		33,692		30,673		14.5			9.8
Directory		4,806		5,823		5,689		(17.5	)		2.4
Other		11,550		11,861		12,268		(2.6	)		(3.3	)
Total Operating Revenues	$	118,928	$	117,054	$	116,805		1.6	%		0.2	%

The pro forma voice revenue decline is consistent with trends and is due to access line declines reflecting competition and substitution of alternative technologies, pricing pressures due to competition, anticipated shifts of traffic by major consolidated carriers to their own networks and a continuing decline in the number of ATTC’s mass-market customers, which represent consumer and small business.

Pro forma data growth was led by an increase in Internet Protocol (IP) data revenues of 13.3% in 2007 and 14.1% in 2006, with strength in high-speed Internet, managed Internet, Virtual Private Network (VPN) and hosting services. Data transport service revenues were up 0.7% in 2007 and 3.3% in 2006, and packet-switched data revenues, which include frame relay and asynchronous transfer mode (ATM) services, were down 7.0% and 12.5%, respectively, consistent with the industry trend of customers switching to IP-based services from traditional circuit-based services.

Pro forma wireless service growth was driven by subscriber growth and strong increases in data usage, including increased messaging, browsing, downloads, media bundles and laptop and smartphone connectivity. We have historically discussed our wireless segment results on a basis that included 100% of AT&T Mobility results, and a detailed wireless service revenue discussion can be found in our “Wireless Segment Results” section.

Directory results were lower in 2007 due to the purchase accounting treatment of directories delivered by BellSouth’s advertising and publishing businesses in the 12 months prior to the merger (see Note 4). In accordance with GAAP, the deferred revenues from these books were not included in the opening balance sheet and are therefore not included in the 2007 consolidated directory revenues. Had those deferred revenues been included in 2007, directory revenues would have increased by $964. The pro forma revenues for 2005 and 2006 do not reflect this purchase accounting treatment of deferred directory revenues.

Pro forma other revenues decreased in 2007 and 2006 due to our decision to de-emphasize sales of lower-margin, stand-alone customer premises equipment.

4

Management’s Discussion and Analysis of Financial Condition and Results of Operations, continued

Dollars in millions except per share amounts

Segment Results

Our segments are strategic business units that offer different products and services and are managed accordingly. As a result of our acquisitions of BellSouth and ATTC, we revised our segment reporting to represent how we now manage our business, restating prior periods to conform to the current segments. 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 (see Note 4). 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 & publishing and (4) other.

The wireless segment accounted for approximately 35% of our 2007 total segment operating revenues as compared to 37% in 2006 and 32% of our 2007 total segment income as compared to 27% in 2006. This segment offers wireless voice and data communications services across the United States, providing cellular and PCS services. This segment reflects 100% of the results reported by AT&T Mobility, which was our wireless joint venture with BellSouth prior to the December 29, 2006 acquisition and is now a wholly-owned subsidiary of AT&T. Prior to the acquisition, although we analyzed AT&T Mobility’s revenues and expenses under the wireless segment, we eliminated the wireless segment in our consolidated financial statements. In our 2006 and prior consolidated financial statements we reported our 60% proportionate share of AT&T Mobility’s results as equity in net income of affiliates.

The wirelinesegment accounted for approximately 59% of our 2007 total segment operating revenues as compared to 57% in 2006 and 55% of our 2007 total segment income as compared to 47% in 2006. This segment provides both retail and wholesale landline communications services, including local and long-distance voice, switched access, IP and Internet access data, messaging services, managed networking to business customers, AT&T U-verseSM TV service (U-verse) and satellite television services through our agency agreements with EchoStar Communications Corp. (EchoStar) and the DIRECTV Group, Inc. (DIRECTV). With the BellSouth acquisition, we now provide local service in 22 states (“in-region”).

The advertising & publishing segment accounted for approximately 5% of our 2007 total segment operating revenues as compared to 4% in 2006 and 9% of our 2007 total segment income as compared to 12% in 2006. This segment includes our directory operations, which publish Yellow and White Pages directories and sell directory and Internet-based advertising. This segment also includes the results of our Internet-based advertising business, YELLOWPAGES.COM (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 from consolidated reporting purposes as under Statement of Financial Accounting Standards No. 141, “Business Combinations” (FAS 141), 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 (typically 12 months). Thus, our advertising & publishing segment results for 2007 include revenues 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 our consolidated results (see Note 4).

The other segment accounted for approximately 1% of our 2007 total segment operating revenues as compared to 2% in 2006 and 4% of our 2007 total segment income as compared to 14% in 2006. This segment includes results from Sterling Commerce, Inc. (Sterling), customer information services, payphone, and all corporate and other operations. Additionally, this segment includes our portion of the results from our international equity investments. Prior to December 29, 2006, this segment also included our results from AT&T Mobility as equity in net income of affiliates, as discussed above.

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.”

5 

Management’s Discussion and Analysis of Financial Condition and Results of Operations, continued

Dollars in millions except per share amounts

Wireless

Segment Results

										Percent Change
										2007 vs.			2006 vs.
	2007			2006			2005			2006			2005
Segment operating revenues
Service	$	38,678		$	33,788		$	30,673			14.5	%		10.2	%
Equipment		4,006			3,749			3,795			6.9			(1.2	)
Total Segment Operating Revenues		42,684			37,537			34,468			13.7			8.9
Segment operating expenses
Cost of services and equipment sales		15,991			15,057			14,388			6.2			4.6
Selling, general and administrative		12,594			11,446			11,645			10.0			(1.7	)
Depreciation and amortization		7,079			6,462			6,608			9.5			(2.2	)
Total Segment Operating Expenses		35,664			32,965			32,641			8.2			1.0
Segment Operating Income		7,020			4,572			1,827			53.5			-
Equity in Net Income (Loss) of Affiliates		16			40			(11	)		(60.0	)		-
Minority Interest 1		(198	)		(169	)		(103	)		(17.2	)		(64.1	)
Segment Income	$	6,838		$	4,443		$	1,713			53.9	%		-

1 Minority interest is recorded as “Other Income (Expense) – Net” in the consolidated statements of income.

Accounting for AT&T Mobility

The wireless segment reflects 100% of the results reported by AT&T Mobility (formerly Cingular), which was our wireless joint venture with BellSouth prior to the December 29, 2006 acquisition, at which time it became a wholly-owned subsidiary of AT&T. Prior to the BellSouth acquisition (see Note 2), we accounted for our 60% economic interest in AT&T Mobility under the equity method since we shared control equally with BellSouth. This means that our consolidated results in 2006 and 2005 included our 60% share of AT&T Mobility’s results in “Equity in net income of affiliates” in our consolidated statements of income. Following the BellSouth acquisition, AT&T Mobility became a wholly-owned subsidiary and AT&T Mobility’s results are included as operating revenues and expenses in our consolidated statements of income. Accordingly, results from this segment for the last two days of 2006 were included in our operating revenues and expenses and not in the “Equity in net income (loss) of affiliates” line. However, for all the periods presented, the wireless segment reflects 100% of the results reported by AT&T Mobility based on the management of the business.

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 with a population covered of more than 12.6 million people. Dobson was incorporated into our wireless operations subsequent to our acquisition. Our 2007 results included net revenue of $141 and expense of $109 from Dobson.

Wireless Customer and Operating Trends

As of December 31, 2007, we served 70.1 million wireless customers, compared to 61.0 million at December 31, 2006 and 54.1 million at December 31, 2005. Approximately 70% of our wireless customer net additions in 2007 were retail customer additions, and 75% of these additions were postpaid customer additions. Contributing to our net additions and retail customer growth was improvement in customer turnover (customer churn) levels due to our strong network performance and attractive products and services offerings, including the Apple iPhone, which were partially offset by a slowing growth rate of new wireless users reflecting a maturing domestic wireless industry. The improvement in churn levels benefited from network and customer service improvements and continued high levels of advertising. Also contributing to the increase in net additions was a significant increase in prepaid gross additions. Gross customer additions were 20.1 million in 2007, 19.2 million in 2006 and 18.5 million in 2005. Postpaid customer gross additions declined primarily due to higher postpaid market penetration and market maturation, as well as lower industry postpaid churn.

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 handsets and will attract customers from other providers, as well as on our ability to minimize customer churn. Average service revenue per user/customer (ARPU) increased 2.2% compared to 2006 primarily due to increased data services ARPU growth. In 2007, data services ARPU grew 46.9% compared to 2006. The continued increase in data revenue was related to increased use of text messaging, Internet access, e-mail and other data services, which we expect to grow as we continue expanding our third-generation (3G) services. The growth in data ARPU was partially offset by a decline in voice service ARPU of 4.1% compared to 2006, reflecting a higher percentage of prepaid and reseller customers, which provide significantly lower ARPU than postpaid customers, and continued shifts to all-inclusive rate plans that offer lower monthly charges. We expect continued pressure on voice service ARPU.

6 

Management’s Discussion and Analysis of Financial Condition and Results of Operations, continued

Dollars in millions except per share amounts

ARPU declined 1.1% in 2006 due to decreases in local service, net roaming and other revenue per customer mostly offset by a 44.8% increase in data ARPU and increased long-distance revenue per customer. In 2006, local service revenue per customer declined primarily due to the two reasons discussed above as well as free mobile-to-mobile plans that allow our wireless customers to call other AT&T Mobility customers at no charge and, to a lesser extent, Rollover® minutes. An increase in customers on Rollover plans tends to lower ARPU, since unused minutes (and associated revenue) are deferred until subsequent months for up to one year.

The effective management of customer churn also is 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 1.7% in 2007, down from 1.8% in 2006 and 2.2% in 2005. The churn rate for postpaid customers was 1.3% in 2007, down from 1.5% in 2006 and 1.9% in 2005. The decline in postpaid churn reflects higher network quality, more affordable rate plans and broader network coverage as well as exclusive devices and free mobile-to-mobile calling among our wireless customers. Churn levels were slightly negatively impacted by ongoing transition of customers from our older analog and Time Division Multiple Access (TDMA) platforms to our advanced Global System for Mobile Communication (GSM) network. We plan to cease operating our analog and TDMA networks in early 2008. The increasing mix of prepaid and reseller customers in our customer base are also expected to pressure churn rates in the future.

Wireless Operating Results

Our wireless segment operating income margin was 16.4% in 2007, 12.2% in 2006 and 5.3% in 2005. The higher margin in 2007 was primarily due to revenue growth of $5,147, which exceeded our increase in operating expenses of $2,699. The higher margin in 2006 was primarily due to revenue growth of $3,069, which exceeded our increase in operating expenses of $324.

Service revenues are comprised of local voice and data services, roaming, long-distance and other revenue. Service revenues increased $4,890, or 14.5%, in 2007 and $3,115, or 10.2%, in 2006 and consisted of:

·   Data revenue increases of $2,692, or 63.3%, in 2007 and $1,579, or 59.0%, in 2006. The increase in 2007 is primarily due to the increased number of data users and an increase in data ARPU of 46.9%, which primarily resulted from increased use of text messaging, e-mail, data access and media bundling services. Our significant data growth also reflects an increased number of subscribers using our 3G network. The increase in 2006 was related to increased use of text messaging and Internet access services, which resulted in an increase in data ARPU of 44.8%. Data service revenues represented approximately 18.0% of our wireless segment service revenues in 2007 and 12.6% in 2006.

·   Voice revenue increases of $2,135, or 7.3%, in 2007 and $1,592, or 5.8%, in 2006. The increase in 2007 was primarily due to an increase in the number of average wireless customers of approximately 12.1%, partially offset by a decline in voice ARPU of 4.1%. The increase in 2006 was primarily due to an increase in the average number of wireless customers of 11.5%, partially offset by competitive pricing pressures and the impact of various all-inclusive calling and prepaid plans. Included in voice revenues for both periods were increases in long-distance and net roaming revenue due to increased international usage.

Equipment revenues increased $257, or 6.9%, in 2007 and decreased $46, or 1.2%, in 2006. The increase in 2007 was due to higher handset revenues reflecting increased gross customer additions and customer upgrades to more advanced handsets, partially offset by increased equipment discounts and rebate activity. The slight decrease in 2006 was due to a decline in handset revenues as a result of increased rebates and equipment return credits and lower priced handsets, mostly offset by increased sales of handset units, handset upgrades and accessories.

Cost of services and equipment sales expenses increased $934, or 6.2%, in 2007 and $669, or 4.6%, in 2006. The 2007 increase was primarily due to increased equipment sales expense of $1,140 due to the overall increase in sales as well as an increase in sales of higher-cost 3G devices, the introduction of the Apple iPhone handset and an increase in the number and per-unit cost of handset accessory sales. Total equipment costs continue to be higher than equipment revenues due to the sale of handsets below cost, through direct sales sources, to customers who committed to one-year or two-year contracts or in connection with other promotions.

7

Management’s Discussion and Analysis of Financial Condition and Results of Operations, continued

Dollars in millions except per share amounts

Cost of services declined $206 in 2007. This decline was due to lower interconnect, roaming and long-distance expenses related to network and systems integration and cost-reduction initiatives, as well as cost reductions from the continued migration of network usage from the T-Mobile USA (T-Mobile) network in California and Nevada to our networks in these states. Our remaining purchase commitment to T-Mobile for this transition period was $51 at December 31, 2007. These decreases were partially offset by higher network usage, with increases in total system minutes of use (MOU) of 13.5%, and associated network system expansion and increased network equipment costs.

Expenses increased in 2006 primarily due to increases in network usage and associated network system expansion. Cost of services increased $492, or 5.3%, in 2006 due to the following:

·   Increases in network usage with a total system MOU increase of 20.6% related to the increase in customers. Additionally, average MOUs per customer increased 8.2%.

·   Higher roaming and long-distance costs, partially offset by a decline in reseller expenses. The reseller decrease resulted from a decrease in MOUs on the T-Mobile network of more than 50% for 2006.

·   Integration costs, primarily for network integration, of $229.

Equipment sales expenses increased $177, or 3.5%, in 2006 due to increased handset upgrades of 11.2% and an increase in the average cost per upgrade and accessory sold, partially offset by a decline in the average cost per handset sold to new customers.

Selling, general and administrative expenses increased $1,148, or 10.0%, in 2007 and decreased $199, or 1.7%, in 2006.

The increase in selling, general and administrative expenses in 2007 was due to the following:

·   Increases in selling expenses of $572 due to increases in sales and advertising expenses and Apple iPhone-related costs, partially offset by a decrease in net commission expense, which was consistent with the increase in prepaid plan sales as a percentage of total retail sales.

·   Increases of $572 in customer service and other expenses primarily due to increased bad-debt expense of $338 and other support costs of $234, partially offset by a decline of $191 in billing expenses, lower information technology (IT) costs and customer service expenses.

·   Increases in upgrade commission and residual expenses of $195 due to increased prepaid plan costs and higher handset upgrade activity.

The decline in selling, general and administrative expenses in 2006 was due to the following:

·   Decreases in billing and bad-debt expense of $378 primarily due to fewer account write-offs and cost-savings related to transitioning to one billing system.

·   Decreases in other administrative expense of $106 due to a decline in legal-related expenses, lower employee costs and employee-related benefits due to a decrease in the number of employees, lower IT and other professional services expense and a federal excise tax refund accrual.

·   Decreases in customer service expense of $87 due to a decline in the number of outsourced call center professionals and lower billing expenses.

·   Increases of $147 primarily related to increased prepaid card replenishment costs and higher migration and upgrade transaction costs.

·   Increases in other expense of $129 due to higher warranty, refurbishment and freight costs.

·   Increases in selling expense of $96 due to an increase in sales expense, partially offset by a decrease in net commission expenses. The decline in net commission expense was due to reductions in average activation and agent branding expense, partially offset by an increase in direct commission expense.

The expenses above also include merger integration costs of $123 in 2006, such as employee-termination costs, rebranding and advertising and customer service and systems integration costs.

Depreciation and amortization increased $617, or 9.5%, in 2007 and decreased $146, or 2.2%, in 2006. The increase in 2007 was primarily due to an increase of $1,522 in amortization of identifiable intangible assets related to our acquisition of BellSouth’s 40% ownership interest, partially offset by declining amortization of identifiable AT&T Wireless Services, Inc. (AWE) intangible assets acquired by AT&T Mobility in 2004, which are principally amortized using the sum-of-the-months-digits method of amortization. Expenses also increased due to accelerated depreciation on TDMA assets and ongoing capital spending for network upgrades and expansion. The 2007 increase was partially offset by decreases in depreciation expense of $905 in 2007 due to certain network assets becoming fully depreciated and purchase accounting adjustments on certain network assets related to acquiring BellSouth’s 40% ownership interest of AT&T Mobility.

8

Management’s Discussion and Analysis of Financial Condition and Results of Operations, continued

Dollars in millions except per share amounts

The decline in 2006 was due to a decline in amortization expenses of $449 attributable to the AWE intangible assets mentioned above, which are amortized using an accelerated method of amortization. This decline was partially offset by an increase in depreciation expense of $303 in 2006 primarily due to depreciation associated with the property, plant and equipment related to ongoing capital spending for our GSM network, which was slightly offset by expense declines due to equipment that had become fully depreciated in 2006.

Wireline

Segment Results

							Percent Change
							2007 vs.			2006 vs.
	2007		2006		2005		2006			2005
Segment operating revenues
Voice	$	41,630	$	33,714	$	24,180		23.5	%		39.4	%
Data		24,075		18,317		10,783		31.4			69.9
Other		5,872		5,447		3,491		7.8			56.0
Total Segment Operating Revenues		71,577		57,478		38,454		24.5			49.5
Segment operating expenses
Cost of sales		30,214		26,693		17,464		13.2			52.8
Selling, general and administrative		16,180		13,185		9,875		22.7			33.5
Depreciation and amortization		13,411		9,676		7,426		38.6			30.3
Total Segment Operating Expenses		59,805		49,554		34,765		20.7			42.5
Segment Income	$	11,772	$	7,924	$	3,689		48.6	%		-

Operating Margin Trends

Our wireline segment operating income margin was 16.4% in 2007, compared to 13.8% in 2006 and 9.6% in 2005. Our wireline segment operating income increased $3,848, or 48.6%, in 2007 and $4,235 in 2006 primarily reflecting the addition of BellSouth’s operating results in 2007 and ATTC’s operating results in 2006. Results for 2007 reflect lower expenses as a result of merger synergies and the addition of higher-margined operations of BellSouth, partially offset by merger-related charges and additional amortization expense on those intangibles identified at the time of our acquisitions of BellSouth and ATTC. Our operating income continued to be pressured by access line declines due to increased competition, as customers disconnected both primary and additional lines and switched to alternative technologies, such as wireless, VoIP and cable for voice and data. Our strategy is to offset these line losses by increasing non-access-line-related revenues from customer connections for data, video and voice. For example, we have the opportunity to increase wireless segment revenues if customers choose AT&T Mobility as an alternative provider.

Operating income and margins increased in 2006 primarily due to lower expenses as a result of merger synergies partially offset by additional amortization expense on those intangibles identified at the time of our acquisition of ATTC and lower voice revenue as a result of continued in-region access line declines due to the reasons mentioned above.

9 

Management’s Discussion and Analysis of Financial Condition and Results of Operations, continued

Dollars in millions except per share amounts

Voice revenues increased $7,916, or 23.5%, in 2007 and $9,534 or 39.4%, in 2006 primarily due to the acquisitions of BellSouth and ATTC. 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 increased $6,831, or 38.4%, in 2007 and $826, or 4.9%, in 2006. The increase in 2007 was primarily due to the acquisition of BellSouth, which increased local voice revenues approximately $8,040. Local voice revenues also increased in 2007 due to pricing increases for regional telephone service, custom calling features and inside wire maintenance agreements. Local voice revenues in 2007 and 2006 were negatively impacted by expected declines in revenues from ATTC’s mass-market customers to which no proactive marketing occurs and from customer demand-related declines for calling features and inside wire agreements. We expect our local voice revenue to continue to be negatively affected by increased competition, including customers shifting to competitors’ alternative technologies and the disconnection of additional lines for DSL service and other reasons.

·   Long-distance revenues increased $761, or 5.3%, in 2007 primarily due to the acquisition of BellSouth, which increased long-distance revenues approximately $2,075 and $9,256 in 2006, primarily due to the acquisition of ATTC. Contributing to the revenue increases in 2007 and 2006 were continuing higher long-distance penetration levels in our original 13-state region. These increases were primarily offset by a continuing decrease in demand for long-distance service, mostly due to an expected decline in ATTC’s mass-market customers. Our long-distance revenue increase was also partially offset by competitive pricing for large-business customers and a decrease in demand for prepaid calling cards.

·   Local wholesale revenues increased $324, or 20.9%, in 2007 and decreased $548, or 26.1%, in 2006. The increase in 2007 was primarily due to the acquisition of BellSouth, which increased local wholesale revenues approximately $615. Wholesale revenue decreased in 2007 and 2006 due to industry consolidation as certain customers moved more traffic to their own networks. We expect this trend to stabilize during 2008, absent additional consolidation.

Data revenues increased $5,758, or 31.4%, in 2007 primarily due to the acquisition of BellSouth, which increased data revenues approximately $5,230, and increased $7,534, or 69.9%, in 2006 primarily due to the acquisition of ATTC. Data revenues accounted for approximately 34% of our wireline operating revenues in 2007, 32% in 2006 and 28% in 2005. Data revenues include transport, IP and packet-switched data services.

IP data revenues increased $3,080, or 47.6%, in 2007 primarily due to the acquisition of BellSouth, which increased IP data approximately $2,235, and increased $3,044, or 88.7%, in 2006 primarily due to the acquisition of ATTC. Included in IP data revenues are DSL, dedicated Internet access, VPN and other hosting services. VPN, hosting and dedicated Internet access services contributed to IP data growth in 2007 and 2006 due to continued growth in the customer base and migration from other traditional circuit-based products.

Our transport services, which include DS1s and DS3s (types of dedicated high-capacity lines) and SONET (a dedicated high-speed solution for multisite businesses), increased $2,640, or 29.7%, in 2007 almost entirely due to the acquisition of BellSouth, which increased transport services revenues $2,730. In 2007, SONET and other transport data revenues increased due to continuing high-speed volume growth. These increases were almost entirely offset by DS1 and DS3 revenue decreases due to continuing industry pricing pressures and higher levels of customer adjustments. In 2006, transport services revenues increased $2,362, or 36.3%, primarily due to the acquisition of ATTC.

Our packet-switched services include frame relay, ATM and managed packet services and increased $38, or 1.3%, in 2007 primarily due to the acquisition of BellSouth, which increased packet-switched service revenues $265. This increase was almost entirely offset by both competitive pricing and lower demand as customers continue to shift to IP-based technology. We expect these services to continue to decline as a percentage of our overall data revenues. Packet-switched services increased $2,128 in 2006 primarily due to the acquisition of ATTC.

Other operating revenues increased $425, or 7.8%, in 2007 and $1,956, or 56.0%, in 2006. The increases were due to incremental revenue from our acquisitions of BellSouth in 2007 and ATTC in 2006. Major items included in other operating revenues are integration services and customer premises equipment, government-related services, outsourcing and state and municipal fees, which account for more than 67% of total revenue for all periods. Equipment sales and related network integration and management services decreased $274 in 2007 and $176 in 2006 primarily due to less emphasis on the sale of lower-margin equipment. Revenue also decreased by $70 in 2007 due to the recognition of intellectual property license fees in 2006 that did not recur in 2007.

10

Management’s Discussion and Analysis of Financial Condition and Results of Operations, continued

Dollars in millions except per share amounts

Cost of sales expenses increased $3,521, or 13.2%, in 2007 and $9,229, or 52.8%, in 2006. The increases were primarily due to incremental expenses resulting from our acquisitions of BellSouth in 2007 and ATTC in 2006. Cost of sales consists of costs we incur in order 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 related to elements of our network. Pension and postretirement costs, net of amounts capitalized as part of construction labor, are also included to the extent that they are associated with these employees.

In addition to the impact of the BellSouth acquisition, cost of sales in 2007 increased due to the following:

·   Higher nonemployee-related expenses, such as contract services, agent commissions and materials and supplies costs, of $605.

·   Higher expenses of $225 in 2007 due to a 2006 change in our policy regarding the timing for earning vacation days, which reduced expense in 2006.

·   Salary and wage merit increases and other bonus accrual adjustments of $165.

Partially offsetting these increases, cost of sales in 2007 decreased due to:

·   Lower traffic compensation expenses (for access to another carrier’s network) of $831 primarily due to migration of long-distance calls onto our network and a lower volume of calls from ATTC’s declining national mass-market customer base.

·   Lower net pension and postretirement cost of $398, primarily due to changes in our actuarial assumptions, including the increase of our discount rate from 5.75% to 6.00% (a decrease to expense) and favorable investment returns on plan assets resulting in a decrease in the recognition of net losses from prior years.

·   Lower cost of equipment sales and related network integration services of $300, primarily due to less emphasis on sales of lower-margin equipment. Costs associated with equipment for large-business customers (as well as DSL) typically are greater than costs associated with services that are provided over multiple years.

·   Lower expenses of $163 in 2007 due to the discontinuance of DSL Universal Service Fund fees in the third quarter of 2006.

In addition to the impact of the ATTC acquisition, cost of sales in 2006 increased due to the following:

·   Higher nonemployee-related expenses, such as contract services, agent commissions and materials and supplies costs, of $163.

·   Higher benefit expenses, consisting primarily of our combined net pension and postretirement cost, increased expense $159, primarily due to changes in our actuarial assumptions, which included the reduction of our discount rate from 6.00% to 5.75% (which increases expense), and amortization of net losses on plan assets in prior years.

·   Higher traffic compensation expenses (for access to another carrier’s network) of $109 primarily due to increased volume of local traffic (telephone calls) terminating on competitor networks and wireless customers.

Partially offsetting these increases, cost of sales in 2006 decreased due to:

·   A reduction in equipment sales and related network integration services of $418, primarily due to lower demand and as a result of the September 2005 amendment of our agreement for our co-branded AT&T | DISH Network satellite TV service. Prior to restructuring our relationship with EchoStar in September 2005, we had been recording both revenue and expenses for AT&T | DISH Network satellite TV customers, resulting in relatively high initial customer-acquisition costs.

·   Lower employee levels, which decreased expenses, primarily salary and wages, by $296.

·   A change made during 2006 in our policy regarding the timing for earning vacation days decreased expenses $225.

·   Merger severance expenses in 2005 were higher than in 2006 by $176.

·   In-region weather-related repair costs incurred in 2005 that did not recur in 2006, which decreased expenses $100 in 2006.

·   Non-merger-related severance expenses in 2005, which were higher than in 2006 by $73.

11

Management’s Discussion and Analysis of Financial Condition and Results of Operations, continued

Dollars in millions except per share amounts

Selling, general and administrative expenses increased $2,995, or 22.7%, in 2007 and $3,310, or 33.5%, in 2006. The increases were primarily due to incremental expenses resulting from our acquisitions of BellSouth in 2007 and ATTC in 2006. Selling, general and administrative expenses consist of our provision for uncollectible accounts; advertising costs; sales and marketing functions, including our retail and wholesale customer service centers; centrally managed real estate costs, including maintenance and utilities on all owned and leased buildings; credit and collection functions; and corporate overhead costs, such as finance, legal, human resources and external affairs. Pension and postretirement costs are also included to the extent that they relate to those employees.

In addition to the impact of the BellSouth acquisition, selling, general and administrative expenses in 2007 increased due to the following:

·   Salary and wage merit increases and other bonus accrual adjustments of $102.

·   Higher expenses of $96 in 2007 due to a 2006 change in our policy regarding the timing for earning vacation days, which reduced expense in 2006.

·   Higher provision for uncollectible accounts of $80.

Partially offsetting these increases, selling, general and administrative expenses in 2007 decreased due to:

·   Lower net pension and postretirement cost of $243, primarily due to changes in our actuarial assumptions, including the increase of our discount rate from 5.75% to 6.00% (a decrease to expense) and favorable investment returns on plan assets resulting in a decrease in the recognition of net losses from prior years.

·   Lower employee levels, which decreased expenses, primarily salary and wages, by $222.

·   Lower nonemployee-related expenses, such as contract services, agent commissions and materials and supplies costs, of $148.

In addition to the impact of the ATTC acquisition, selling, general and administrative expenses in 2006 also increased due to the following:

·   Other wireline segment costs of $809 primarily due to advertising costs related to promotion of the AT&T brand name. In addition, other advertising expenses increased $117.

·   Higher nonemployee-related expenses, such as contract services, agent commissions and materials and supplies costs of $103.

·   Higher benefit expenses, consisting primarily of our combined net pension and postretirement cost, increased expense $73, primarily due to changes in our actuarial assumptions, which included the reduction of our discount rate from 6.00% to 5.75% (which increases expense) and net losses on plan assets in prior years.

Partially offsetting these increases, selling, general and administrative expenses in 2006 decreased due to:

·   ATTC merger-related asset impairment charges of $349 and merger-related severance expense of $107 during 2005, which resulted in lower expenses in 2006.

·   Lower employee levels, which decreased expenses, primarily salary and wages, by $239.

·   A charge of $236 in 2005 to terminate existing agreements with WilTel Communications due to our acquisition of ATTC.

·   A change made during 2006 in our policy regarding the timing for earning vacation days, which decreased expenses $96.

·   Our provision for uncollectible accounts decreased $87, as we experienced fewer losses from our retail customers and a decrease in bankruptcy filings by our wholesale customers.

Depreciation and amortization expenses increased $3,735, or 38.6%, in 2007 and $2,250, or 30.3%, in 2006 primarily due to higher depreciable and amortizable asset bases as a result of the BellSouth acquisition in 2006 and the ATTC acquisition in 2005.

12

Management’s Discussion and Analysis of Financial Condition and Results of Operations, continued

Dollars in millions except per share amounts

Supplemental Information

Access Line, Broadband Connections and Video Connections Summary

Our in-region switched access lines at December 31, 2007, 2006, and 2005 are shown below and access line trends are addressed throughout this segment discussion. Because our acquisition of BellSouth has a significant effect on comparative information, we have included pro-forma amounts below as of 2006 for comparative purposes, as if the companies had been combined.

Wireline In-Region 1
(in 000s)	Actual			Pro Forma			Actual			Actual
	2007			2006			2006			2005
Switched Access Lines
Retail Consumer		35,047			37,120			25,308			26,683
Retail Business 2		22,754			23,295			16,714			16,871
Retail Subtotal 2		57,801			60,415			42,022			43,554
Percent of total switched access lines		93.9	%		90.9	%		90.7	%		88.1	%
Sold to ATTC		242			1,293			1,044			1,638
Sold to other CLECs2,3		3,288			4,431			2,991			3,886
Wholesale Subtotal 2		3,530			5,724			4,035			5,524
Percent of total switched access lines		5.7	%		8.6	%		8.7	%		11.2	%
Payphone (Retail and Wholesale) 4		251			330			250			335
Percent of total switched access lines		0.4	%		0.5	%		0.6	%		0.7	%
Total Switched Access Lines		61,582			66,469			46,307			49,413
Total Broadband Connections 2,5		14,156			12,170			8,538			6,921
Satellite service 2,6		2,116			1,507			689			513
U-verse video		231			3			3			-
Video Connections		2,347			1,510			692			513

 1  Wireline in-region represents access lines served by AT&T's incumbent local exchange companies (ILECs).

 2   Prior period amounts restated to conform to current period reporting methodology.

 3 Competitive local exchange carriers (CLECs).

 4 Payphone lines are presented above as previously reported. Revenue from these lines is reported in the Other segment.

 5  Broadband connections include DSL, U-verse high-speed Internet access and satellite broadband.

 6 Satellite service includes connections under our agency and resale agreements with EchoStar and DIRECTV.

13

Management’s Discussion and Analysis of Financial Condition and Results of Operations, continued

Dollars in millions except per share amounts

Advertising & Publishing

Segment Results

									Percent Change
									2007 vs.			2006 vs.
	2007		2006			2005			2006			2005
Total Segment Operating Revenues	$	5,851	$	3,685		$	3,684			58.8	%		-
Segment operating expenses
Cost of sales		1,733		1,121			1,104			54.6			1.5
Selling, general and administrative		1,333		616			581			-			6.0
Depreciation and amortization		924		3			5			-			(40.0	)
Total Segment Operating Expenses		3,990		1,740			1,690			-			3.0
Segment Operating Income		1,861		1,945			1,994			(4.3	)		(2.5	)
Equity in Net Income (Loss) of Affiliates		-		(17	)		(5	)		-			-
Segment Income	$	1,861	$	1,928		$	1,989			(3.5	)%		(3.1	)%

Ingenio Acquisition

In December 2007, we acquired Ingenio®, a provider of Pay Per Call® technology. Ingenio will be integrated with YPC and will allow us to better serve business directory and local search customers across our entire advertising and publishing portfolio.

Accounting Impacts From the BellSouth Acquisition

Prior to the BellSouth acquisition (see Note 2), we accounted for our 66% economic interest in YPC under the equity method since we shared control equally with BellSouth. Following the BellSouth acquisition, YPC became a wholly-owned subsidiary of AT&T and its results are reflected in operating revenues and expenses in our consolidated statement of income.

For segment disclosure purposes, we have carried forward deferred revenue and deferred cost balances for BellSouth in order to reflect how the segment is managed. This is different from consolidated reporting purposes as under FAS 141 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 (see Note 4). For management reporting purposes, we continued to amortize these balances over the life of the directory (typically 12 months). Thus, our advertising & publishing segment results include revenue of $964 and expenses of $308 in 2007 related to directories published in the Southeast region during 2006, prior to our acquisition of BellSouth.

Operating Results

Our advertising & publishing segment operating income margin was 31.8% in 2007, 52.8% in 2006 and 54.1% in 2005. The decrease in the segment operating income margin in 2007 was primarily due to the addition of BellSouth’s operating results, including the amortization of BellSouth’s customer lists acquired as a part of the acquisition. The decrease in the segment operating income margin in 2006 was primarily the result of increased operating expenses.

Operating revenues increased $2,166, or 58.8%, in 2007, primarily due to the addition of BellSouth’s operating results, which increased operating revenues approximately $2,220 in 2007. The increase was largely driven by print advertising revenue of $1,859 and Internet advertising revenue of $200. Operating revenues in 2006 remained relatively unchanged.

Operating expenses increased $2,250 in 2007 compared to $50, or 3.0%, in 2006 primarily due to the addition of BellSouth’s operating results, which increased total operating expenses by approximately $2,110 in 2007. The increase in 2006 was primarily due to higher costs for Internet traffic, brand advertising and employee benefits.

Cost of sales increased $612, or 54.6%, in 2007 compared to $17, or 1.5%, in 2006, primarily due to the addition of BellSouth’s operating results, which increased cost of sales by approximately $550 in 2007. Publishing, commissions, paper and printing costs represent the majority of cost of sales expenses in 2007. The increase in 2006 was primarily due to higher costs for Internet traffic.

Selling, general and administrative expenses increased $717 in 2007 compared to $35, or 6.0%, in 2006 primarily due to the addition of BellSouth’s operating results, which increased selling, general and administrative expenses by approximately $645 in 2007. Employee, uncollectible and advertising-related expenses represent the majority of selling, general and administrative expenses in 2007. Increased expenses in 2006 were primarily due to increases in other advertising & publishing segment costs, including brand advertising and employee benefits of $102, partially offset by lower bad-debt expense of $74.

14

Management’s Discussion and Analysis of Financial Condition and Results of Operations, continued

Dollars in millions except per share amounts

Depreciation and amortization expenses increased $921 in 2007, resulting from the amortization of customer lists acquired as a part of the BellSouth acquisition, which increased expenses by $915 in 2007. Depreciation and amortization expenses in 2006 remained relatively unchanged.

Other

Segment Results

									Percent Change
									2007 vs.			2006 vs.
	2007			2006			2005		2006			2005
Total Segment Operating Revenues		$	2,234		$	1,878	$	1,731		19.0	%		8.5	%
Total Segment Operating Expenses			1,827			1,485		1,248		23.0			19.0
Segment Operating Income			407			393		483		3.6			(18.6	)
Equity in Net Income of Affiliates			676			2,020		629		(66.5	)		-
Segment Income		$	1,083		$	2,413	$	1,112		(55.1	)%		-

Our other segment operating results consist primarily of Sterling, customer information services, corporate and other operations. Sterling provides business-integration software and services. In late 2007, we announced our intention to cease our retail payphone operations by the end of 2008, which is reflected in the operating revenues and expenses discussion below.

Operating revenues increased $356, or 19.0%, in 2007 and $147, or 8.5%, in 2006. The increase in 2007 was primarily due to the addition of BellSouth’s other operations and increased operating revenue at Sterling, partially offset by decreased revenues from our retail payphone operations. The increase in 2006 was primarily due to increased intercompany revenue from our captive insurance company (shown as intersegment revenue in Note 4) and improved operating revenue at Sterling, partially offset by a decrease in revenue as a result of the sale of our paging subsidiary in November 2005.

Operating expenses increased $342, or 23.0%, in 2007 and $237, or 19.0%, in 2006. The increase in 2007 was primarily due to the addition of BellSouth’s other operations and increased operating expenses at Sterling, partially offset by decreased expenses from our retail payphone operations. The increase in 2006 was primarily due to increased operating expenses at Sterling and at our captive insurance company, partially offset by management fees paid in 2005 that did not recur in 2006.

Prior to the December 29, 2006 close of the BellSouth acquisition, our other segment included our 60% proportionate share of AT&T Mobility results as equity in net income of affiliates. As a result of the BellSouth acquisition, we own 100% of AT&T Mobility and its results for the final two days of 2006 and for the year 2007 have been excluded from equity in net income of affiliates in this segment and in our consolidated statements of income.

15

Management’s Discussion and Analysis of Financial Condition and Results of Operations, continued

Dollars in millions except per share amounts

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 GAAP, which include adjustments for the purchase 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:

	2007		2006		2005
América Móvil	$	381	$	274	$	198
Telmex		265		222		212
AT&T Mobility		-		1,508		200
Other		30		16		19
Other Segment Equity in Net Income of Affiliates	$	676	$	2,020	$	629

Equity in net income of affiliates decreased $1,344 in 2007 primarily due to a change in accounting for AT&T Mobility, the results of which are no longer included in equity in net income of affiliates in 2007 due to the acquisition of BellSouth. This decrease was partially offset by an increase of $150 from América Móvil and Telmex primarily due to improved operating results. Equity in net income increased $1,391 in 2006, primarily due to the improved operating results at AT&T Mobility.

Operating Environment and Trends of the Business

2008 Revenue Trends  We expect continued expansion of our operating revenues in 2008, reflecting continuing growth in our wireless and broadband/data services. We expect our primary driver of growth to be wireless and that all our major customer categories will continue to increase their use of Internet-based broadband/data services. For our enterprise (largest) business customers, we achieved positive growth in recurring service revenues beginning in the third quarter of 2007 and expect total enterprise revenues to grow throughout 2008. Revenue growth will also reflect the increased information and technology services to be provided for under our agreements with IBM. We also expect continued revenue growth from our small and medium business customers. We expect modest growth in our consumer wireline revenues with continuing declines in traditional access lines being offset by growth in broadband and video services. We expect solid growth in broadband revenues with improvement in ARPU as customers continue to choose higher-speed services. We expect to continue to expand our U-verse service offerings with the goal of exceeding one million subscribers in service by the end of 2008.

2008 Expense Trends  Acquisition and related merger costs and the costs involved in providing services under the IBM agreements will adversely affect expenses in 2008. We expect that our operating income margin, adjusted to exclude these costs, will expand in 2008 due primarily to expected improvement in our revenues and continued cost-control measures. In particular, we expect to continue net workforce reductions and other previously identified merger synergies and to begin new cost-control initiatives in network operations, information technology and customer care. Expenses related to growth initiatives (see “Expected Growth Areas”) will apply some pressure to our operating income margin.

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 burdensome regulation. Since the Telecom Act was passed, the Federal Communications Commission (FCC) and some state regulatory commissions have maintained many of the extensive regulatory requirements applicable to our traditional wireline subsidiaries. We are actively pursuing additional legislative and regulatory measures to reduce or eliminate regulatory requirements that inhibit our ability to provide the full range of services demanded by our customers. For example, we are supporting regulatory and legislative efforts that would offer a streamlined process for new video service providers to compete with traditional cable television providers. In March 2007, the FCC released an order adopting rules that prohibit municipalities from making unnecessary and unreasonable demands on competitive video service providers, and which require prompt action by such localities on cable franchise applications by new entrants. In addition, states representing a majority of our local service access lines have adopted legislation that enables new video entrants to acquire a statewide or state-approved (as opposed to municipal-approved) franchise to offer video services. We also are supporting efforts to update regulatory treatment for retail services. Passage of legislation is uncertain and depends on many factors.

16

Management’s Discussion and Analysis of Financial Condition and Results of Operations, continued

Dollars in millions except per share amounts

Our wireless operations 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. 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. Additionally, we have noted our opposition to proposals to impose “net neutrality” access regulation on wireless providers. We believe that the wireless industry is characterized by innovation, differentiation and competition among handset manufacturers, carriers and applications and that additional broadband regulation and new wholesale requirements are unnecessary given the state of competition and may be appropriate only in the case of market failure.

We expect that our capital expenditures will continue to be in the midteens as a percentage of total revenues in 2008. This amount includes capital for U-verse services, wireless high-speed networks and merger-integration projects (discussed in “Expected Growth Areas”). Despite a more positive regulatory outlook and these broadband opportunities, increasing competition and the growth of alternative technologies such as cable, wireless and VoIP have created significant challenges for our business.

Expected Growth Areas

We expect our wireless services and primary 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 at the beginning of the wireless data growth curve 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 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, 2007, we served more than 70 million customers and are the 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 innovative services that will encourage existing customers to upgrade their services, either by adding additional or new services, such as data enhancements, or through equipment upgrades, and will attract customers from other providers, as well as our ability to 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 the Apple iPhone 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.

U-verse Services  We are continuing to expand our deployment of U-verse high-speed broadband and TV services. As of December 31, 2007, we have passed approximately 8 million living units (constructed housing units as well as platted housing lots) and are marketing the services to almost 50 percent of those units. Our deployment strategy is to enter each market on a limited basis in order to ensure that all operating and back-office systems are functioning successfully and then expand within each market as we continue to monitor these systems. In these market expansions, we expect to continue to use contracted outside labor in addition to our employees as installers; our rate of expansion will be slowed if we cannot hire and train an adequate number of qualified contractors and technicians to keep pace with customer demand or 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. See our “Liquidity & Capital Resources” discussion for an update on our U-verse capital spending.

17

Management’s Discussion and Analysis of Financial Condition and Results of Operations, continued

Dollars in millions except per share amounts

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 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. 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, 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 2007. 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 those 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 RegulationA summary of significant 2007 federal regulatory developments follows.

Wireless

Wireless Broadband Order In March 2007, the FCC adopted a declaratory ruling stating that wireless broadband Internet access services are information services. The FCC’s decision thus places wireless broadband Internet access service on the same largely-deregulated footing as cable and wireline broadband services.

Order on Recommendations of the Hurricane Katrina Panel In October 2007, the FCC issued an order revising its previously adopted rule that was designed to improve the reliability, interoperability and recovery of telecommunications in future disasters. The original order required carriers to maintain backup power, for a specified number of hours, at certain points in the network, such as cell sites and remote terminals. The FCC revised the backup power rule due to numerous concerns raised by providers about feasibility of compliance with the original rule. Although compliance with the new rule will still require substantial effort by AT&T, it gives us additional flexibility to meet our backup power obligations by gauging compliance with reference to the original design parameters of assets, exempting assets from the backup power requirements where compliance is infeasible and permitting us to satisfy our obligations by creating a disaster recovery plan that relies on portable generators and other backup power sources.

E911 Order  In September 2007, the FCC adopted an order (the E911 Order) that would substantially increase accuracy requirements in connection with providing the location of a caller to 911 to dispatchers of emergency services. The E911 Order will become effective in April 2008. Under FCC rules, carriers are required to attempt to deliver location data to Public Safety Answering Points (PSAPs) when callers dial 911. We use a network-based location solution that employs triangulation to estimate the location of the caller. Location data for this network-based solution must be accurate within 300 meters on 95 percent of all calls and within 100 meters on 67 percent of all calls. The current rules permit these percentages to be calculated based on all calls, network-wide, for purposes of measuring location accuracy. The E911 Order would require wireless carriers to achieve E911 location accuracy measured in each of the local areas served by the approximately 6,000 PSAPs across the country. Carriers would have until September 2012 to achieve PSAP-level accuracy, and would have to demonstrate compliance with certain incremental location accuracy benchmarks in 2008 and 2010. The PSAP-level accuracy requirement in the E911 Order is not attainable throughout our wireless network using currently available commercial technology.

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Dollars in millions except per share amounts

We are considering all avenues for review of the E911 Order, including through an appeal or a petition for reconsideration. Depending on technological developments, the interpretation of the final order and the resolution of any appeals, we could be required to make significant capital expenditures to implement and maintain compliance with this order.

Wireless Universal Service  Our wireless subsidiary, AT&T Mobility, is currently an Eligible Telecommunications Carrier (ETC) for purposes of receiving federal universal service support in certain states. To maintain these designations, the state must certify that the carrier is entitled to receive the funds for the subsequent calendar year based on federal and applicable state ETC requirements. We are certified for each relevant state for 2008. In May 2007, the Federal-State Joint Board on Universal Service recommended applying a funding cap to the amount of universal service support received by competitive ETCs. Moreover, in order to obtain approval for our acquisition of Dobson, we agreed to a voluntary cap on our receipt of federal universal service high-cost support. The cap will be set at the amount of wireless universal service support we received as of June 30, 2007, which was approximately $225. Additionally, the FCC is considering an order that would adopt the Joint Board’s recommendation to cap all competitive ETC high-cost funding. If the FCC adopts such an order, we anticipate that our company-specific cap on high-cost support will be replaced with that industrywide cap.

Wireline

Video Service Order  In March 2007, the FCC issued an order adopting rules to implement the Cable Act’s prohibition against local franchising authorities unreasonably refusing to award competitive franchises for the delivery of cable services, which it found had created unreasonable barriers to entry that impede the goals of increasing competition and promoting broadband deployment. This order should facilitate our entry into the video market by reducing or removing entry barriers posed by municipalities that have refused us permission to use our existing right-of-ways to deploy or activate our U-verse-related services and products. This order does not preempt state laws that streamline the franchising process by, for example, establishing state-wide cable franchises. Such laws have been enacted in over half of the states in which we operate.

Video Program Access Order  In October 2007, the FCC released an order and Further Notice of Proposed Rule Making addressing video programming issues. The order extends for five years the exclusive contract prohibition of the Communications Act, which bans exclusive contracts for satellite cable programming and satellite broadcast programming between vertically integrated programming vendors and cable operators. The order also improves the FCC’s program access complaint procedures by strengthening the discovery rules and requiring production of information necessary to adjudicate a complaint.

Special Access  In January 2005, the FCC commenced a broad examination of the regulatory framework applicable to interstate special access services provided by price-capped local exchange carriers. In a July 2007 notice, the FCC invited interested parties to update the record in that proceeding in light of industry developments since 2005. If the FCC were to modify this regulatory framework (such as by mandating further reductions in special access rates), it might negatively impact our operating results.

Broadband Forbearance Order  In October 2007, the FCC adopted an order eliminating some regulations and certain “Computer Inquiry” rules previously applicable to optical and packet-switched broadband transmission services provided by our operating companies. Consequently, our operating companies will no longer be subject to, among other things, the FCC’s tariff filing requirements or price cap rules for Frame Relay, ATM, Ethernet, Remote Network Access, SONET, Optical Network or Wave-based broadband services. This order gives us substantial flexibility to offer individually tailored contractual arrangements that better meet our customers’ needs while enabling us to reduce costs and operate more efficiently.

Long-Distance Non-Dominance Order  In August 2007, the FCC adopted an order granting regulatory relief to AT&T, Verizon Communications Inc. (Verizon) and Qwest Communications International Inc. and their independent incumbent local exchange carrier affiliates (e.g., AT&T Connecticut). This relief allows us to provide interstate long-distance services free from both structural separation requirements and dominant carrier regulation (e.g., tariffing and price cap requirements), subject to certain limited conditions. As a result of the FCC’s order, our business units will be able to integrate functions across organizations and jointly plan business operations more efficiently than previously possible. We anticipate that this relief will lower our administrative costs and improve our responsiveness to customers. In addition, the FCC eliminated the equal access scripting requirement, which had required AT&T’s customer service representatives to inform new local telephone service customers of the availability of long-distance service from other carriers and to read a list of such carriers to the customer upon request.

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Dollars in millions except per share amounts

State Regulation  A summary of significant 2007 state regulatory developments follows.

Video Service Legislation  A number of states in which we operate have adopted legislation or issued clarifying opinions that will make it easier for telecommunications companies to offer video service.

California High Cost Fund  In June 2006, the California Public Utilities Commission (CPUC) opened a rulemaking to review the California High Cost Fund B (CHCF-B). The CHCF-B program was established in 1996 and was designed to support universal service goals by ensuring that basic telephone service remains affordable in high-cost areas within the service territories of the state’s major incumbent local exchange carriers, such as our AT&T subsidiaries. In September 2007, the CPUC adopted a decision that changed how the CHCF-B was calculated, which we estimate will reduce our payments from the CHCF-B by approximately $160 in 2008 and $260 in 2009. In the same decision, the CPUC stated that AT&T and other carriers could recover lost payments from the fund by exercising pricing flexibility to increase rates for services other than the basic residential rate (such as bundles), authorized an increase in the basic residential rate by the Consumer Price Index in 2008 and a lifting of the existing rate cap on the basic residential rate in 2009. In a December 2007 decision in the same proceeding, the CPUC established a $100 California Advanced Services Fund to encourage the deployment of broadband facilities to unserved and underserved areas of California to become effective sometime in 2008. We are unable at this time to determine the extent to which AT&T might be able to qualify for payments from this fund.

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 regulation of comparable alternatives (e.g., cable, wireless and VoIP providers) has lowered costs for 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 the wireless communications industry. 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 markets, which results in the 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.

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.

We are an eligible bidder in the FCC 700 MHz spectrum auctions that began in January 2008, and in 2007, we agreed to purchase additional spectrum licenses covering 196 million people in the 700 MHz frequency band. (See “Wireless Spectrum” discussed in “Other Business Matters”). The availability of this additional spectrum from the auctions could increase competition, the effectiveness of existing competition, or result in new entrants in the wireless arena.

Wireline

Our wireline subsidiaries expect continued competitive pressure in 2008 from multiple providers in various markets, including wireless, cable and other VoIP providers, interexchange carriers and resellers. 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 market 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, broadband and long-distance service.

In most markets, we compete with large cable companies, such as Comcast Corporation, Cox Communications, Inc. and Time Warner Inc., for local, high-speed Internet and video services customers and other smaller telecommunications companies for both long-distance and local services customers. Substitution of wireless and Internet-based services for traditional local service lines also continues to increase.

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Dollars in millions except per share amounts

Our wireline subsidiaries 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 comparable voice and data services. 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.

Recently, 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 non-basic 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 rates in certain states, some of these state actions have been challenged by certain parties and are pending court review.

In addition to these wholesale rate 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 and subsequently 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, DSL, 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 AT&T 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, CLECs, 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 & Publishing

Our advertising & publishing subsidiaries face competition from approximately 100 publishers of printed directories in their operating areas. Direct and indirect competition also exists from other advertising media, including newspapers, radio, television and direct-mail providers, as well as from directories offered over the Internet. We actively compete on the Internet through our wholly-owned subsidiary, YPC.

Accounting Policies and Standards

Significant 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 policies below are presented in the order in which the topics appear in our consolidated statements of income.

Allowance for Uncollectibles  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, 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 $140.

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Dollars in millions except per share amounts

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 8.5% for the year ended December 31, 2007. This assumption will remain unchanged for 2008. If all other factors were to remain unchanged, we expect that a 1% decrease in the expected long-term rate of return would cause 2008 combined pension and postretirement cost to increase $814 over 2007. The 10-year return on our pension plan assets was 9.18% through 2007. 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 significant additional effect on our 2007, 2006 or 2005 combined net pension and postretirement costs. 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, 2007. 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 between approximately $1,810 and $1,860 in our 2008 depreciation expense and that a one-year decrease would result in an increase of between $2,230 and $2,330 in our 2008 depreciation expense.

Asset Valuations and Impairments  We account for acquisitions using the purchase method as required by FAS 141. Under FAS 141, 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 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, not of valuation, 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 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 is not amortized but is tested for impairment in accordance with Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” (FAS 142). We review goodwill, indefinite-lived intangibles and other long-lived assets for impairment under FAS 142 or Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” either annually or 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.

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Dollars in millions except per share amounts

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.

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 results from the final review of our tax returns by federal, state or foreign tax authorities. We have considered these potential changes and, for years prior to 2007, have provided amounts within our deferred tax assets and liabilities that reflect our judgment of the probable outcome of tax contingencies (see Note 10). In 2007, we adopted Financial Accounting Standards Board Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (FIN 48) and began accounting for uncertain tax positions under the provisions of FIN 48 (see Note 1). As required by FIN 48, 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

FAS 141(R) In December 2007, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 141 (revised 2007), “Business Combinations” (FAS 141(R)). FAS 141(R) is a revision of FAS 141 and requires that costs incurred to effect the acquisition (i.e., acquisition-related costs) be recognized separately from the acquisition. In addition, in accordance with FAS 141, 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. FAS 141(R) requires the acquirer to recognize those costs separately from the business combination. We are currently evaluating the impact that FAS 141(R) has on our accounting for acquisitions prior to the effective date of the first fiscal year beginning after December 15, 2008.

FAS 159  In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (FAS 159). FAS 159 permits companies to choose to measure many financial instruments and certain other items at fair value, thereby providing the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. FAS 159 is effective for fiscal years beginning after November 15, 2007. We elected not to adopt the fair value option for valuation of those assets and liabilities which are eligible, therefore there is no impact on our financial position and results of operations.

FAS 160  In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51” (FAS 160). FAS 160 requires noncontrolling interests held by parties other than the parent in subsidiaries be clearly identified, labeled, and presented in the consolidated statement of financial position within equity, but separate from the parent’s equity. FAS 160 is effective for fiscal years beginning after December 15, 2008. We are currently evaluating the impact FAS 160 will have on our financial position and results of operations.

EITF 06-4 In March 2007, the Emerging Issues Task Force (EITF) ratified the consensus on EITF 06-4, “Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements” (EITF 06-4). EITF 06-4 covers endorsement 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 Statement of Financial Accounting Standards No. 106, “Employers’ Accounting for Postretirement Benefits Other Than Pensions.” EITF 06-4 is effective for fiscal years beginning after December 15, 2007. We are currently evaluating the impact EITF 06-4 will have on our financial position and results of operations.

EITF 06-11  In June 2007, the EITF ratified the consensus on EITF 06-11, “Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards” (EITF 06-11). EITF 06-11 provides that a realized income tax benefit from dividends or dividend equivalents that are charged to retained earnings and are paid to employees for nonvested equity-classified share-based awards and equity-classified outstanding share options should be recognized as an increase to additional paid-in capital rather than a reduction of income tax expense. EITF 06-11 applies prospectively to the income tax benefits that result from dividends on equity-classified employee share-based payment awards that are declared in fiscal periods beginning after December 15, 2007. EITF 06-11 will not have a material impact on our financial position and results of operations.

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Other Business Matters

Spectrum Licenses  In October 2007, we agreed to purchase spectrum licenses covering 196 million people in the 700 MHz frequency band from Aloha Partners, L.P. for $2,500. The spectrum covers many major metropolitan areas, including 72 of the top 100 and all of the top 10 markets in the U.S. We closed this transaction in February 2008. Additionally, we are an eligible bidder in the FCC wireless spectrum auctions which began in January 2008.

Spectrum Sale  In February 2007, we agreed to sell to Clearwire Corporation (Clearwire), a national provider of wireless broadband Internet access, education broadband service spectrum and broadband radio service spectrum valued at $300. The transaction received the necessary regulatory approvals and closed in May 2007. Sale of this spectrum was required as a condition to the approval of our acquisition of BellSouth.

Antitrust Litigation In 2002, two consumer class-action antitrust cases were filed in the United States District Court for the Southern District of New York (District Court) against SBC Communications Inc., Verizon, BellSouth and Qwest Communications International Inc. alleging that they have violated federal and state antitrust laws by agreeing not to compete with one another and acting together to impede competition for local telephone services (Twombly v. Bell Atlantic Corp., et al.). In October 2003, the District Court granted the joint defendants’ motion to dismiss and the plaintiffs appealed. In October 2005, the United States Court of Appeals for the Second Circuit Court (Second Circuit) reversed the District Court, thereby allowing the cases to proceed. In June 2006, the Supreme Court of the United States (Supreme Court) announced its decision to review the case. In May 2007, the Supreme Court reversed the Second Circuit’s decision and remanded the case to the Second Circuit for further proceedings consistent with its opinion; we are awaiting formal dismissal of the case.

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 the Employee Retirement Income Security Act of 1974, as amended (ERISA). On October 3, 2006, the Court certified two classes. The issue of whether the concession is an ERISA pension plan was tried before the judge the week of November 26, 2007. The court has rendered no decision. We believe that an adverse outcome having a material effect on our financial statements in this case is unlikely, but will continue to evaluate the potential impact of this suit on our financial results as it progresses.

NSA Litigation  There are 24 pending lawsuits that allege 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 allege that the defendants have disclosed and are currently disclosing to the U.S. Government content and call records concerning communications to which Plaintiffs were a party. Plaintiffs seek 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, 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 either dismiss the complaint or issue a summary judgment in favor of the defendants. The Court denied the Motions to Dismiss of both parties. Specifically, the Court ruled that the state secrets privilege does not prevent AT&T from asserting any statutory defense it may have, as appropriate, regarding allegations that it assisted the government in monitoring communication content. However, with regard to the calling records allegations, the Court noted that it would not require AT&T to disclose what relationship, if any, it has with the government. We and the U.S. government filed interlocutory appeals in July 2006. The case was argued before a panel of the U.S. Court of Appeals for the Ninth Circuit on August 15, 2007. We are awaiting a decision. Management believes these actions are without merit and intends to vigorously defend these matters.

Prepaid Calling Card Patent Litigation On September 14, 2007, a jury in Texas found that ATTC willfully infringed two patents owned by TGIP Inc. (TGIP) relating to point-of-sale prepaid cards sold by ATTC and awarded TGIP $156 in damages. (TGIP Inc. v. AT&T Corp. et al., U.S. District Court for the Eastern District of Texas). The jury’s finding of willfulness also entitled TGIP to ask the judge to award additional damages up to treble the jury verdict. On September 28, 2007, AT&T filed a motion requesting that the Court overturn the jury’s verdict as a matter of law. On October 29, 2007, the Court overturned the jury’s finding of infringement, the jury’s $156 award of damages and the jury’s finding of willfulness. TGIP has appealed the Court's decision and oral argument on their appeal is likely to be held later in the third quarter of 2008.

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Dollars in millions except per share amounts

Broadcom Patent Dispute  A number of our handsets, as well as those provided by other wireless carriers, are subject to a patent dispute at the U.S. International Trade Commission (ITC) between Broadcom Corporation and Qualcomm Incorporated (Qualcomm). Currently, the U.S. ITC’s exclusion order applicable to certain Qualcomm technology is stayed pending a decision by the appeals court. We anticipate a decision will not occur before late in the second quarter of 2008. We continue to take steps to mitigate the effects on us. However, if no resolution were to occur, future costs and availability of handsets using Qualcomm chips could be adversely affected.

Liquidity and Capital Resources

We had $1,970 in cash and cash equivalents available at December 31, 2007. Cash and cash equivalents included cash of $889 and money market funds and other cash equivalents of $1,081. Cash and cash equivalents decreased $448 since December 31, 2006. During 2007, cash inflow was primarily provided by cash receipts from operations, the issuance of long-term debt, net cash received from dispositions of non-strategic real estate and the sale of marketable securities and other assets. These inflows were offset by cash used to meet the needs of the business including, but not limited to, payment of operating expenses, funding capital expenditures, repurchase of common shares, the repayment of debt, dividends to stockholders and payment of interest on debt. We discuss many of these factors in detail below.

Cash Provided by or Used in Operating Activities

During 2007, cash provided by operating activities was $34,072 compared to $15,615 in 2006. Operating cash flows increased primarily due to an increase in operating income reflecting additional cash provided by the BellSouth acquisition and our success in achieving merger synergies and operational efficiencies, partially offset by increased interest payments of approximately $1,800 and tax payments of $1,200. During 2007, tax payments were higher due primarily to a $1,000 deposit related to the IRS examination of our 2000 – 2002 income tax returns. The timing of cash payments for income taxes, which is governed by the IRS and other taxing jurisdictions, will differ from the timing of recording tax expense and deferred income taxes, which are reported in accordance with GAAP.

During 2006, our primary source of funds was cash from operating activities of $15,615 compared to $12,974 in 2005. Operating cash flows increased primarily due to an increase in net income of more than $2,500 and additional cash provided by the ATTC acquisition, partially offset by increased tax payments of $739 in 2006. Tax payments were higher primarily due to increased income before income taxes. Tax payments in 2006, include a refund from the completion of the ATTC federal income tax audit covering 1997 – 2001.

Cash Used in or Provided by Investing Activities

During 2007, cash used in investing activities consisted of:

·   $17,717 in construction and capital expenditures.

·   $2,200, net of cash acquired, related to the acquisition of Dobson, a provider of rural and suburban wireless communications services.

·   $579 for investments in debt and equity securities.

·   $316 related to the acquisition of Ingenio, a provider of Pay Per Call search and directory solutions, and Interwise, a provider of voice, Web and video conferencing services.

·    $190 to satisfy an obligation to Alaska Native Wireless, LLC to acquire wireless spectrum and the acquisition of an additional ownership interest in Cellular Communications of Puerto Rico.

·   $136 related to the acquisition of wireless and media rights, intellectual property and other strategic assets.

In October 2007, we agreed to purchase spectrum licenses in the 700 MHz frequency band from Aloha Partners, L.P. for approximately $2,500. We closed this transaction in February 2008. Additionally, we are an eligible bidder in the FCC wireless spectrum auctions which began in January 2008.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations, continued

Dollars in millions except per share amounts

Net cash provided by investing activities for 2007 was $2,663 and consisted of net proceeds of $1,594 from dispositions of non-strategic assets, $1,033 from the sale of marketable and equity securities and $36 related to other activities. Proceeds from dispositions included the following:

·   $1,137 from the sale of properties and other non-strategic assets.

·   $301 from the sale of spectrum to Clearwire Corporation, which includes interest.

·   $156 related to T-Mobile’s exercise of its option to purchase an additional 10 MHz of spectrum in the San Diego market, the sale of cost investments and the sale of wireless towers.

To provide high-quality communications services to our customers, we must make significant investments in property, plant and equipment. The amount of capital investment is influenced by demand for services and products, continued growth and regulatory considerations. Capital expenditures in the wireline segment, which represented approximately 77% of our capital expenditures, increased 68% in 2007, reflecting the acquisition of BellSouth. Our capital expenditures are primarily for our wireline subsidiaries’ networks, our U-verse services, merger-integration projects and support systems for our long-distance service. Because of opportunities made available by the continued changing regulatory environment and our acquisitions of ATTC and BellSouth, we expect that our capital expenditures for 2008, which include wireless network expansion and U-verse services, will be in the midteens as a percentage of consolidated revenue. We expect to fund 2008 capital expenditures for our wireline and wireless segments, including international operations, using cash from operations and incremental borrowings depending on interest rate levels and overall market conditions.

During 2007, we spent $3,745 in the wireless segment primarily for Universal Mobile Telecommunications System/High-Speed Packet Access (UMTS/HSPA) network expansion, GSM/EDGE (Enhanced Data Rates for Global Evolution) network capacity expansion and upgrades, as well as for IT and other support systems for our wireless service. The network capacity requirements and expansion of our UMTS/HSPA wireless networks will continue to require substantial amounts of capital through 2008. In 2008, our wireless capital expenditures should be in the lower double-digit range as a percent of our wireless revenues for the integration and expansion of our networks and the installation of UMTS/HSPA technology in a number of markets.

We spent approximately $2,500 on our U-verse services in 2007 and expect spending to be approximately $2,500 in 2008 for capital expenditures on our U-verse services for initial network-related deployment costs. We expect to pass approximately 30 million living units by the end of 2010. Additional customer activation capital expenditures are not included in this capital spending forecast. We expect that the business opportunities made available, specifically in the data/broadband area, will allow us to expand our products and services (see “U-verse Services” discussed in “Expected Growth Areas”).

The other segment capital expenditures were less than 1.5% of total capital expenditures for 2007. 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 & publishing segment capital expenditures using cash from operations.

Cash Used in or Provided by Financing Activities

We plan to fund our 2008 financing activities through a combination of debt issuances and cash from operations. Our financing activities include funding share repurchases and the repayment of debt. We will continue to examine opportunities to fund our activities by issuing debt at favorable rates and with cash from the disposition of certain other non-strategic investments.

On March 4, 2006, our Board of Directors authorized the repurchase of up to 400 million shares of AT&T common stock. During 2007, we repurchased 267 million shares at a cost of $10,390. Share repurchases under this plan totaled approximately 351 million shares at a cost of $13,068. On December 10, 2007, our Board of Directors authorized a new share repurchase plan of 400 million shares, which replaces our previous share repurchase authorization. This new authorization represents approximately 6.6 percent of AT&T's shares outstanding at December 31, 2007 and expires at the end of 2009. We have repurchased, and intend to continue to repurchase, a portion of the shares pursuant to plans that comply with the requirements of Rule 10b5-1(c) under the Securities Exchange Act of 1934. We will fund our additional share repurchases through a combination of cash from operations, borrowings dependent upon market conditions, and cash from the disposition of certain non-strategic investments.

26

Management’s Discussion and Analysis of Financial Condition and Results of Operations, continued

Dollars in millions except per share amounts

We paid dividends of $8,743 in 2007, $5,153 in 2006 and $4,256 in 2005, reflecting the issuance of additional shares for the BellSouth and ATTC acquisitions and dividend increases. In December 2007, our Board of Directors approved a 12.7% increase in the quarterly dividend from $0.355 to $0.40 per share. This increase recognizes our strong growth and positive outlook and follows a 6.8% dividend increase approved by AT&T's Board in December 2006. Dividends declared by our Board of Directors totaled $1.465 per share in 2007, $1.35 per share in 2006 and $1.30 per share in 2005. 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.

At December 31, 2007, we had $6,860 of debt maturing within one year, which included $4,939 of long-term debt maturities and $1,921 of commercial paper borrowings and other borrowings. All of our commercial paper borrowings are due within 90 days. We continue to examine our mix of short- and long-term debt in light of interest rate trends.

During 2007, we received net proceeds of $11,367 from the issuance of $11,499 in long-term debt. Debt proceeds were used for general corporate purposes and parts of the proceeds were used for repurchases of our common stock. Long-term debt issuances consisted of:

·   $2,000 of 6.3% global notes due in 2038.

·   $2,000 of 6.5% global notes due in 2037.

·   €1.25 billion of 4.375% notes due in 2013 (equivalent to U.S. $1,641 when issued).

·   $1,500 of floating-rate notes due in 2010.

·   $1,200 of 6.375% retail notes due in 2056.

·   £600 million of 5.5% notes due in 2027 (equivalent to U.S. $1,158 when issued).

·   $1,000 of 4.95% global notes due in 2013.

·   $500 of 5.625% notes due in 2016.

·   $500 of zero-coupon puttable notes due in 2022.

In February 2008, we received net proceeds of $3,972 from the issuance of $4,000 in long-term debt. The long-term debt issued consisted of the following:

·   $2,500 of 5.5% global notes due in 2018.

·   $750 of 4.95% global notes due in 2013.

·   $750 of 6.3% global notes due in 2038.

Beginning in May 2009, the $500 zero-coupon puttable note may be presented for redemption by the holder at specified dates but not more frequently than annually, excluding 2011. If the note is held to maturity in 2022, the redemption amount will be $1,030.

We entered into fixed-to-fixed cross-currency swaps on our two foreign-currency-denominated debt instruments to hedge our exposure to changes in foreign currency exchange rates. These hedges also include interest rate swaps of a fixed foreign-denominated rate to a fixed U.S.-denominated interest rate, which results in a U.S.-denominated rate of 5.31% on our Euro-denominated notes and 5.97% on our British pound sterling-denominated notes.

During 2007, debt repayments totaled $10,183 and consisted of:

·   $3,871 related to debt repayments with a weighted-average interest rate of 6.1%, which included the early redemption of debt related to a put exercise on $1,000 of our 4.2% Puttable Reset Securities and called debt of $500 with an interest rate of 7.0%.

·   $3,411 related to repayments of commercial paper and other short-term bank borrowings.

·   $1,735 related to the early redemption of Dobson debt acquired with a par value of $1,599 and a weighted-average interest rate of 9.1%.

·   $904 related to the early repayment of a Dobson long-term credit facility.

·   $218 related to the early redemption of a convertible note held by Dobson.

·   $44 related to scheduled principal payments on other debt and repayments of other borrowings.

27

Management’s Discussion and Analysis of Financial Condition and Results of Operations, continued

Dollars in millions except per share amounts

We have a five-year $10,000 credit agreement with a syndicate of investment and commercial banks, which we have the right to increase up to an additional $2,000, 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 pledge 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, 2007, we had no borrowings outstanding under this agreement. (See Note 8)

During 2007, proceeds of $1,986 from the issuance of treasury shares were related to the exercise of stock-based compensation.

During 2007, we paid $190 to minority interest holders and $47 to terminate interest rate swaps with notional amounts totaling $1,800 acquired as a result of our acquisition of BellSouth.

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 35.7%, 34.1% and 35.9% at December 31, 2007, 2006 and 2005. The debt ratio is affected by the same factors that affect total capital. Total capital increased $4,146 in 2007 compared to more than $90,000 in 2006. The 2007 total capital increase was due to an increase in debt of $4,319 related to our financing activities. Our stockholders’ equity balance was down $173 and included our increase in net income and current adjustments for unrealized pension and postretirement gains, which were more than offset by our increased share repurchase activity and dividend distributions.

The primary factor contributing to the decline in our 2006 debt ratio was the acquisition of BellSouth, which increased our stockholders’ equity approximately 105% and our total long-term debt by 96%. The 2006 total capital increase was primarily due to the purchase of BellSouth (see Note 2). For 2006, our common stock outstanding and capital in excess of par value increased by $60,850 and our current and long-term debt increased by $29,226. The increase in total debt was primarily due to acquired debt from BellSouth and AT&T Mobility of $28,321, an increase in commercial paper and other short-term borrowings of $3,649 and debt issuances of $1,500, partially offset by long-term debt repayments of $4,242 during 2006. Stockholders’ equity also increased due to our net income and was partially offset by dividend payments and our repurchases of common shares through our stock repurchase program.

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 (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, 2007, 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.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations, continued

Dollars in millions except per share amounts

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 have been excluded from the table due to the immaterial value at December 31, 2007. 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 $24,939; postemployment benefit obligations (see Note 11) of $24,011; and other noncurrent liabilities of $14,648, which included deferred lease revenue from our agreement with American Tower of $539 (see Note 5).

	Payments Due By Period
Contractual Obligations	Total		Less than 1 Year		1 - 3 Years		3 - 5 Years		More than 5 Years
Long-term debt obligations 1	$	59,856	$	4,926	$	9,731	$	12,428	$	32,771
Interest payments on long-term debt		54,835		3,582		6,562		5,151		39,540
Commercial paper obligations		1,859		1,859		-		-		-
Other short-term borrowings		62		62		-		-		-
Operating lease obligations		15,147		2,088		3,479		2,622		6,958
Unrecognized tax benefits 2		6,579		685		-		-		5,894
Purchase obligations 3, 4		6,366		2,461		2,237		1,197		471
Other long-term obligations 5		429		188		228		13		-
Total Contractual Obligations	$	145,133	$	15,851	$	22,237	$	21,411	$	85,634

1 The impact of premiums/discounts and derivative instruments included in debt amounts on the balance sheet are excluded from the table.

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 have contractual obligations to utilize network facilities from local exchange carriers with terms greater than one year. Since the contracts have no minimum volume requirements and are based on an interrelationship of volumes and discounted rates, we assessed our minimum commitment based on penalties to exit the contracts, assuming that we had exited the contracts on December 31, 2007. At December 31, 2007, the penalties we would have incurred to exit all of these contracts would have been $703. These termination fees could be $374 in 2008, $132 in the aggregate for 2009 and 2010 and $4 for 2011, assuming that all contracts are exited. These 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.

4 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 $642 in 2008, $720 in the aggregate for 2009 and 2010, $257 in the aggregate for 2011 and 2012 and $137 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.

5 Other long-term obligations include commitments with local exchange carriers for dedicated leased lines.

Market Risk

We are exposed to market risks primarily from changes in interest rates and foreign currency exchange rates. In managing exposure to these fluctuations, we may engage in various hedging transactions that have been authorized according to documented policies and procedures. On a limited basis, we use certain derivative financial instruments, including foreign currency exchange contracts and combined interest rate foreign currency contracts, to manage these risks. We do not use derivatives for trading purposes, to generate income or to engage in speculative activity. Our capital costs are directly linked to financial and business risks. We seek to manage the potential negative effects from market volatility and market risk. The majority of our financial instruments are medium- and long-term fixed rate notes and debentures. Fluctuations in market interest rates can lead to significant fluctuations in the fair value of these notes and debentures. 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. Where appropriate, we will take actions to limit the negative effect of interest and foreign exchange rates, liquidity and counterparty risks on stockholder value.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations, continued

Dollars in millions except per share amounts

We enter into foreign currency contracts to minimize our exposure to risk of adverse changes in currency exchange rates. We are subject to foreign exchange risk for foreign currency-denominated transactions, such as debt issued, recognized payables and receivables and forecasted transactions. At December 31, 2007, our foreign currency exposures were principally Euros, British pound sterling, Danish krone and Japanese yen.

Quantitative Information About Market Risk

In order to determine the changes in fair value of our various financial instruments, we use certain financial modeling techniques. We apply rate-sensitivity changes directly to our interest rate swap transactions and forward rate sensitivity to our foreign currency-forward contracts.

The changes in fair value, as discussed below, assume the occurrence of certain market conditions, which could have an adverse financial impact on AT&T and do not represent projected gains or losses in fair value that we expect to incur. Future impacts would be based on actual developments in global financial markets. We do not foresee any significant changes in the strategies used to manage interest rate risk, foreign currency rate risk or equity price risk in the near future.

Interest Rate Sensitivity  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. Following are our interest rate derivatives, subject to interest rate risk as of December 31, 2007. The interest rates illustrated in the interest rate swaps section of the table below refer to the average expected rates we would receive and the average expected rates we would pay based on the contracts. The notional amount is the principal amount of the debt subject to the interest rate swap contracts. The net fair value asset (liability) represents the amount we would receive or pay if we had exited the contracts as of December 31, 2007.

	Maturity
																				Fair
																After				Value
	2008			2009			2010			2011			2012			2012		Total		12/31/07
Interest Rate Derivatives
Interest Rate Swaps:
Receive Fixed/Pay Variable
Notional Amount		-			-			-		$	1,250		$	2,000			-	$	3,250	$	88
Variable Rate Payable 1		4.6	%		4.4	%		5.1	%		5.4	%		5.3	%		-
Weighted-Average Fixed
Rate Receivable		6.0	%		6.0	%		6.0	%		6.0	%		5.9	%		-

1 Interest payable based on current and implied forward rates for Three or Six Month LIBOR plus a spread ranging between approximately 64 and 170 basis points.

We had fair value interest rate swaps with a notional value of $3,250 at December 31, 2007, and $5,050 at December 31, 2006, with a net carrying and fair value asset of $88 and liability of $80, respectively. The net fair value liability at December 31, 2006, was comprised of a liability of $86 and an asset of $6. Included in the fair value interest rate swap notional amount for 2006 were interest rate swaps with a notional value of $1,800, which were acquired as a result of our acquisition of BellSouth on December 29, 2006. These swaps were unwound in January 2007.

Foreign Exchange Forward Contracts  The fair value of foreign exchange contracts is subject to changes in foreign currency exchange rates. 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% change in the value of foreign currencies (negative change in the value of the U.S. dollar), assuming no change in interest rates. See Note 9 to the consolidated financial statements for additional information relating to notional amounts and fair values of financial instruments.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations, continued

Dollars in millions except per share amounts

For foreign exchange forward contracts outstanding at December31, 2007, assuming a hypothetical 10% depreciation of the U.S. dollar against foreign currencies from the prevailing foreign currency exchange rates, the fair value of the foreign exchange forward contracts (net liability) would have decreased approximately $29. 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.

The risk of loss in fair values of all other financial instruments resulting from a hypothetical 10% change in market prices was not significant as of December31, 2007.

Qualitative Information About Market Risk

Foreign Exchange Risk  From time to time, we make investments in businesses in foreign countries, are paid dividends and receive proceeds from sales or borrow funds in foreign currency. Before making an investment, or in anticipation of a foreign currency receipt, we often will enter into forward foreign exchange contracts. The contracts are used 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. We do not speculate in foreign exchange markets.

Interest Rate Risk  We issue debt in fixed and floating rate instruments. Interest rate swaps are used for the purpose of controlling interest expense by managing the mix of fixed and floating rate debt. Interest rate forward contracts are utilized to hedge interest expense related to debt financing. We do not seek to make a profit from changes in interest rates. We manage interest rate sensitivity by measuring potential increases in interest expense that would result from a probable change in interest rates. When the potential increase in interest expense exceeds an acceptable amount, we reduce risk through the issuance of fixed-rate (in lieu of variable-rate) instruments and the purchase of derivatives.

Issuer Equity Repurchases

On March 4, 2006, our Board of Directors authorized the repurchase of up to 400 million shares of AT&T common stock. During the fourth quarter of 2007, we repurchased 37 million shares at a cost of $1,478. Share repurchases under this plan totaled approximately 351 million shares at a cost of $13,068. On December 10, 2007, our Board of Directors authorized a new share repurchase plan of 400 million shares, which replaces our previous share repurchase authorization. This new authorization represents approximately 6.6% of AT&T's shares outstanding at December 31, 2007 and expires at the end of 2009. We have repurchased, and intend to continue to repurchase, a portion of the shares pursuant to plans that comply with the requirements of Rule 10b5-1(c) under the Securities Exchange Act of 1934. We will fund our share repurchases through a combination of cash from operations, borrowings dependent upon market conditions, and cash from the disposition of certain non-strategic investments.

Purchase Period	Total Number of Shares Purchased	Average Price Paid per Share1	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs 2
October 1, 2007 – October 31, 2007	11,500,000	$          41.94	11,500,000	74,708,783
November 1, 2007 –November 30, 2007	23,500,000	$          39.13	23,500,000	51,208,783
December 3, 2007 –December 5, 2007	2,000,000	$          37.81	2,000,000	49,208,783
Total	37,000,000	$          39.93	37,000,000	49,208,783

1 Average Price Paid per Share excludes transaction costs.

2  Replaced by new authorization on December 10, 2007.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations, continued

Dollars in millions except per share amounts

Stock Performance Graph

The comparison above assumes $100 invested on December 31, 2002, 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 on a quarterly basis.

Certification by the Chief Executive Officer

As required under the rules of the New York Stock Exchange (NYSE), our chief executive officer has timely submitted to the NYSE his annual certification that he is not aware of any violation by the company of NYSE corporate governance standards. Also as required under the rules of the NYSE, readers are advised that the certifications required under Section 302 of the Sarbanes-Oxley Act of 2002 are not included in this report but instead are included as exhibits to our Annual Report on Form 10-K for 2007.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations, continued

Dollars in millions except per share amounts

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 to predict an outcome. Accordingly, we have organized them by first addressing general factors, then industry factors and, finally, items specifically applicable to us.

Adverse changes in the U.S. economy could materially hamper our customers’ abilities to purchase our products and services.

We provide services and products to consumers and large and small businesses in the United States and to larger businesses throughout the world. While our wireless customers are located throughout the United States, our wireline consumer and small business customers are located in the 22 states in which we provide local exchange services. Adverse changes in the U.S. economy are likely to adversely affect these customers’ ability to pay for existing services and to decrease their interest in purchasing new services. Should this customer pullback occur, we likely would experience both a decrease in revenues and an increase in certain expenses, including expenses relating to bad debt. We are also likely to experience pressure on pricing and margins as we continue to compete for customers who would have less discretionary income. While our large-business customers are less likely to be affected by adverse changes in any particular economy, a lengthy U.S. or a global recession would tend to affect them 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 required 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.

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 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. The adoption of new regulations or changes to existing regulations could significantly increase our costs, which either would reduce our operating margins or potentially increase customer turnover should we attempt to increase prices to cover our increased costs. In addition, the development of new technologies, such as IP-based services, 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.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations, continued

Dollars in millions except per share amounts

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) 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 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 intense industry competition and market saturation may cause the wireless industry’s customer growth rate to moderate in comparison with historical growth rates. We expect that the availability of additional 700 MHz spectrum to be licensed through the FCC’s ongoing spectrum auction could increase competition, the effectiveness of existing competition, or result in new entrants in the wireless arena. 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.

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.

34

Management’s Discussion and Analysis of Financial Condition and Results of Operations, continued

Dollars in millions except per share amounts

The impact of our year-end 2006 acquisition of BellSouth, including the risk that the businesses will not be integrated successfully; the risk that the cost-savings and any other synergies from the acquisition may take longer to realize than expected or may not be fully realized; and disruption from the acquisition may make it more difficult to maintain relationships with customers, employees or suppliers.

We acquired BellSouth in order to streamline the ownership and operations of AT&T Mobility and to combine the AT&T Mobility, BellSouth and AT&T IP networks into a single IP network; to speed the deployment, and at lower cost, of next-generation IP video and other services; to provide business customers with the benefits of combining AT&T’s national and international networks and services with BellSouth’s local exchange and broadband services; and to create potential cost-savings, technological development and other benefits. Achieving these results will depend in part on successfully integrating three large corporations, which could involve significant management attention and create uncertainties for employees. To date, this integration has proceeded on schedule and within our budget assumptions. We have not experienced any significant customer or supplier disruptions. However, this process is lengthy and we expect that it will continue to involve significant management attention. We also expect to incur substantial expenses related to the integration of these companies. We must integrate a large number of systems, both operational and administrative. These integration expenses may result in our taking significant charges against earnings, both cash and noncash, primarily from the amortization of intangibles. Delays in this process could have a material adverse effect on our revenues, expenses, operating results and financial condition. In addition, events outside of our control, including changes in state and federal regulation and laws as well as economic trends, also could adversely affect our ability to realize the expected benefits from this acquisition.

35

Management’s Discussion and Analysis of Financial Condition and Results of Operations, continued

Dollars in millions except per share amounts

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 changes in the markets served by us or in countries in which we have significant investments.

·   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.

·   The final outcome of Federal Communications Commission proceedings and reopenings of such proceedings and judicial review, if any, of such proceedings, including issues relating to access charges, broadband deployment, unbundled loop and transport elements 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, 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.

·   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 (our Lightspeed initiative); 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.

·   The outcome of pending or threatened litigation including patent claims by or against third parties.

·   The impact on our networks and business of major equipment failures, severe weather conditions, natural disasters or terrorist attacks.

·   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 access to additional spectrum; network upgrades and technological advancements.

·   The impact of our acquisition of BellSouth, including the risk that the businesses will not be integrated successfully; the risk that the cost savings and any other synergies from the acquisition may take longer to realize than expected or may not be fully realized; and disruption from the acquisition may make it more difficult to maintain relationships with customers, employees or suppliers.

·   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.

36

AT&T Inc.
Consolidated Statements of Income
Dollars in millions except per share amounts
	2007			2006			2005
Operating Revenues
Voice	$	40,798		$	33,714		$	24,180
Data		23,206			18,317			10,783
Wireless service		38,568			223			35
Directory		4,806			3,634			3,625
Other		11,550			7,167			5,141
Total operating revenues		118,928			63,055			43,764
Operating Expenses
Cost of services and sales (exclusive of depreciation and
amortization shownseparately below)		46,055			28,542			19,173
Selling, general and administrative		30,892			14,318			10,780
Depreciation and amortization		21,577			9,907			7,643
Total operating expenses		98,524			52,767			37,596
Operating Income		20,404			10,288			6,168
Other Income (Expense)
Interest expense		(3,507	)		(1,843	)		(1,456	)
Equity in net income of affiliates		692			2,043			609
Other income (expense) – net		615			393			397
Total other income (expense)		(2,200	)		593			(450	)
Income Before Income Taxes		18,204			10,881			5,718
Income taxes		6,253			3,525			932
Net Income	$	11,951		$	7,356		$	4,786
Basic Earnings Per Share	$	1.95		$	1.89		$	1.42
Diluted Earnings Per Share	$	1.94		$	1.89		$	1.42
The accompanying notes are an integral part of the consolidated financial statements.

37

AT&T Inc.
Consolidated Balance Sheets
Dollars in millions except per share amounts
	December 31,
	2007		2006
Assets
Current Assets
Cash and cash equivalents	$	1,970	$	2,418
Accounts receivable – net of allowances for uncollectibles of $1,364 and $1,276		16,185		16,194
Prepaid expenses		1,524		1,477
Deferred income taxes		2,044		3,034
Other current assets		2,963		2,430
Total current assets		24,686		25,553
Property, Plant and Equipment – Net		95,890		94,596
Goodwill		70,713		67,657
Licenses		37,985		34,252
Customer Lists and Relationships – Net		14,505		18,922
Other Intangible Assets – Net		5,912		6,566
Investments in Equity Affiliates		2,270		1,995
Postemployment Benefit		17,291		14,228
Other Assets		6,392		6,865
Total Assets	$	275,644	$	270,634

Liabilities and Stockholders’ Equity
Current Liabilities
Debt maturing within one year	$	6,860		$	9,733
Accounts payable and accrued liabilities		21,399			22,106
Advanced billing and customer deposits		3,571			3,402
Accrued taxes		5,027			3,026
Dividends payable		2,417			2,215
Total current liabilities		39,274			40,482
Long-Term Debt		57,255			50,063
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes		24,939			27,406
Postemployment benefit obligation		24,011			28,901
Unamortized investment tax credits		150			181
Other noncurrent liabilities		14,648			8,061
Total deferred credits and other noncurrent liabilities		63,748			64,549
Stockholders’ Equity
Common shares ($1 par value, 7,000,000,000 authorized: issued
6,495,231,088 at December 31, 2007 and 2006)		6,495			6,495
Capital in excess of par value		91,638			91,352
Retained earnings		33,297			30,375
Treasury shares (451,685,839 at December 31, 2007
and 256,484,793 at December 31, 2006, at cost)		(15,683	)		(7,368	)
Accumulated other comprehensive loss		(380	)		(5,314	)
Total stockholders’ equity		115,367			115,540
Total Liabilities and Stockholders’ Equity	$	275,644		$	270,634
The accompanying notes are an integral part of the consolidated financial statements.

38

AT&T Inc.
Consolidated Statements of Cash Flows
Dollars in millions, increase (decrease) in cash and cash equivalents
	2007			2006			2005
Operating Activities
Net income	$	11,951		$	7,356		$	4,786
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		21,577			9,907			7,643
Undistributed earnings from investments in equity affiliates		(297	)		(1,946	)		(451	)
Provision for uncollectible accounts		1,617			586			744
Amortization of investment tax credits		(31	)		(28	)		(21	)
Deferred income tax benefit		(240	)		(87	)		(658	)
Net gain on sales of investments		(11	)		(10	)		(135	)
Gain on license exchange		(409	)		-			-
Changes in operating assets and liabilities:
Accounts receivable		(1,491	)		519			(94	)
Other current assets		(1,020	)		30			34
Accounts payable and accrued liabilities		672			(2,213	)		74
Stock-based compensation tax benefit		(173	)		(18	)		(3	)
Other – net		1,927			1,519			1,055
Total adjustments		22,121			8,259			8,188
Net Cash Provided by Operating Activities		34,072			15,615			12,974
Investing Activities
Construction and capital expenditures		(17,717	)		(8,320	)		(5,576	)
Net investments in affiliates		-			(1,104	)		2,436
Dispositions		1,594			756			526
Acquisitions, net of cash acquired		(2,873	)		368			1,504
Proceeds from sale of marketable securities		471			-			-
Proceeds from sale of debt and equity securities		562			-			-
Investments in debt and equity securities		(579	)		-			-
Maturities of held-to-maturity securities		-			-			99
Proceeds from note repayment		-			-			37
Other		36			7			-
Net Cash Used in Investing Activities		(18,506	)		(8,293	)		(974	)
Financing Activities
Net change in short-term borrowings with original maturities of three months or less		(3,411	)		3,649			(4,119	)
Issuance of long-term debt		11,367			1,491			1,973
Repayment of long-term debt		(6,772	)		(4,242	)		(2,682	)
Purchase of treasury shares		(10,390	)		(2,678	)		(1,843	)
Issuance of treasury shares		1,986			589			432
Repurchase of preferred shares of subsidiaries		-			-			(728	)
Dividends paid		(8,743	)		(5,153	)		(4,256	)
Stock-based compensation tax benefit		173			18			3
Other		(224	)		198			(6	)
Net Cash Used in Financing Activities		(16,014	)		(6,128	)		(11,226	)
Net increase (decrease) in cash and cash equivalents from continuing operations		(448	)		1,194			774
Net Cash Used in Operating Activities From Discontinued Operations		-			-			(310	)
Net increase (decrease) in cash and cash equivalents		(448	)		1,194			464
Cash and cash equivalents beginning of year		2,418			1,224			760
Cash and Cash Equivalents End of Year	$	1,970		$	2,418		$	1,224

The accompanying notes are an integral part of the consolidated financial statements.

39

AT&T Inc.
Consolidated Statements of Stockholders’ Equity
Dollars and shares in millions except per share amounts
	2007						2006							2005
	Shares			Amount			Shares			Amount			Shares			Amount
Common Stock
Balance at beginning of year		6,495		$	6,495			4,065		$	4,065			3,433		$	3,433
Issuance of shares		-			-			2,430			2,430			632			632
Balance at end of year		6,495		$	6,495			6,495		$	6,495			4,065		$	4,065
Capital in Excess of Par Value
Balance at beginning of year				$	91,352					$	27,499					$	13,350
Issuance of shares					225						63,637						14,087
Stock-based compensation					61						216						62
Balance at end of year				$	91,638					$	91,352					$	27,499
Retained Earnings
Balance at beginning of year				$	30,375					$	29,106					$	28,806
Net income ($1.94, $1.89 and $1.42 per share)					11,951						7,356						4,786
Dividends to stockholders ($1.47, $1.35 and $1.30 per share)					(8,945	)					(6,079	)					(4,480	)
Adoption of FIN 48					(50	)					-						-
Other					(34	)					(8	)					(6	)
Balance at end of year				$	33,297					$	30,375					$	29,106
Treasury Shares
Balance at beginning of year		(256	)	$	(7,368	)		(188	)	$	(5,406	)		(132	)	$	(4,535	)
Purchase of shares		(267	)		(10,390	)		(84	)		(2,678	)		(76	)		(1,843	)
Issuance of shares		72			2,075			16			716			20			972
Balance at end of year		(451	)	$	(15,683	)		(256	)	$	(7,368	)		(188	)	$	(5,406	)
Additional Minimum Pension Liability Adjustment
Balance at beginning of year				$	-					$	(218	)				$	(190	)
Required adjustments, net of tax $6 and $(17)					-						10						(28	)
Adoption of FAS 158					-						208						-
Balance at end of year				$	-					$	-					$	(218	)
Accumulated Other Comprehensive Income (Loss), net of tax
Balance at beginning of year				$	(5,314	)				$	(356	)				$	(360	)
Foreign currency translation adjustments,
net of taxes of $10, $9 and $27					19						17						50
Net unrealized gains (losses) on securities:
Unrealized gains, net of taxes of $35, $7 and $3					65						13						5
Less reclassification adjustment realized in net income,
net of taxes of $(19), $(4) and $(30)					(35	)					(8	)					(56	)
Net unrealized gains (losses) on cash flow hedges:
Unrealized gains (losses), net of taxes of $(38), $2 and $(1)					(71	)					2						(1	)
Less reclassification adjustment realized in net income,
net of taxes of $9, $8 and $3					17						15						7
Defined benefit postretirement plans (see Note 11):
Net actuarial gains and prior service cost arising during period, net of taxes of $3,411					4,734						-						-
Amortization of net actuarial loss and prior service benefit included in net income, net of taxes of $125					206						-						-
Other					(1	)					2						(1	)
Other comprehensive income					4,934						41						4
Adoption of FAS 158, net of tax					-						(4,999	)					-
Balance at end of year				$	(380	)				$	(5,314	)				$	(356	)
Total Comprehensive Income
Net income				$	11,951					$	7,356					$	4,786
Additional minimum pension liability adjustments per above					-						10						(28	)
Other comprehensive income per above					4,934						41						4
Total Comprehensive Income				$	16,885					$	7,407					$	4,762
The accompanying notes are an integral part of the consolidated financial statements.

40

Notes to Consolidated Financial Statements

Dollars in millions except per share amounts

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 include the accounts of the Company and our majority-owned subsidiaries and affiliates. Our subsidiaries and affiliates operate in the communications services industry throughout the U.S. and internationally, providing wireless and wireline telecommunications services and equipment as well as directory advertising and publishing services. On December 29, 2006, we acquired 100% of the outstanding common shares of BellSouth Corporation (BellSouth). BellSouth is a wholly-owned subsidiary and the results of BellSouth’s operations have been included in our consolidated financial statements after the December 29, 2006 acquisition date. For a detailed discussion of our acquisition, see Note 2.

All significant intercompany transactions are eliminated in the consolidation process. Investments in partnerships, joint ventures, and less-than-majority-owned subsidiaries where we have significant influence are accounted for under the equity method. Prior to the closing of the BellSouth acquisition on December 29, 2006, we accounted for our joint ventures with BellSouth under the equity method since we shared control equally. Thus, for 2006 we recorded as equity income our proportionate share of economic ownership in these joint ventures, namely, 60% of AT&T Mobility LLC (AT&T Mobility), formerly Cingular Wireless LLC, and 66% of YELLOWPAGES.COM (YPC). AT&T Mobility and YPC became wholly-owned subsidiaries of AT&T on December 29, 2006. 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.

FAS 159  In February 2007, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (FAS 159). FAS 159 permits companies to choose to measure many financial instruments and certain other items at fair value, providing the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. FAS 159 is effective for fiscal years beginning after November 15, 2007. We elected not to adopt the fair value option for valuation of those assets and liabilities which are eligible, therefore there is no impact on our financial position and results of operations.

FAS 160  In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160, “Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51” (FAS 160). FAS 160 requires noncontrolling interests held by parties other than the parent in subsidiaries be clearly identified, labeled, and presented in the consolidated statement of financial position within equity, but separate from the parent’s equity. FAS 160 is effective for fiscal years beginning after December 15, 2008. We are currently evaluating the impact FAS 160 will have on our financial position and results of operations.

FAS 141(R) In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141 (revised 2007), “Business Combinations” (FAS 141(R)). FAS 141(R) is a revision of FAS 141 and requires that costs incurred to effect the acquisition (i.e., acquisition-related costs) be recognized separately from the acquisition. In addition, in accordance with Statement of Financial Accounting Standards No. 141, “Business Combinations” (FAS 141), 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. FAS 141(R) requires the acquirer to recognize those costs separately from the business combination. We are currently evaluating the impact that FAS 141(R) will have on our accounting for acquisitions prior to the effective date of the first fiscal year beginning after December 15, 2008.

FIN 48 We adopted FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (FIN 48) on January 1, 2007. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes.” The Interpretation prescribes a threshold for the financial statement recognition and measurement of a tax position taken or expected to be taken within an income tax return. For each tax position, the enterprise must determine whether it is more likely than not that the position will be sustained upon examination based on the technical merits of the position, including resolution of any related appeals or litigation. A tax position that meets the more likely than not recognition threshold is then measured to determine the amount of benefit to recognize within the financial statements. No benefits may be recognized for tax positions that do not meet the more likely than not threshold. As required by FIN 48, on January 1, 2007, we reclassified deferred income tax liabilities of $6,225 from our “Deferred income taxes” for unrecognized tax benefits, of which $6,100 was included in “Other noncurrent liabilities” and $175 was included in “Accrued taxes” on our consolidated balance sheets and the remaining $50 was recorded as a reduction to the beginning-of-year retained earnings to reflect the cumulative effect of adoption of FIN 48 in the first quarter. In May 2007, the FASB issued further guidance on whether a tax position is effectively settled, the adoption of which did not have a material impact on our financial position.

41

Notes to Consolidated Financial Statements, continued

Dollars in millions except per share amounts

EITF 06-11  In June 2007, the Emerging Issues Task Force (EITF) ratified the consensus on EITF 06-11, “Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards.” EITF 06-11 provides that a realized income tax benefit from dividends or dividend equivalents that are charged to retained earnings and are paid to employees for nonvested equity-classified share-based awards and equity-classified outstanding share options should be recognized as an increase to additional paid-in capital rather than a reduction of income tax expense. EITF 06-11 applies prospectively to the income tax benefits that result from dividends on equity-classified employee share-based payment awards that are declared in fiscal periods beginning after December 15, 2007. EITF 06-11 will not have a material impact on our financial position and results of operations.

Reclassifications  We have reclassified certain amounts in prior-period financial statements to conform to the current period’s presentation. Included among these, as a result of integration activities following our December 2006 acquisition of BellSouth, we revised our segment reporting in 2007 (see Note 4).

Income Taxes  As discussed previously in this footnote, we adopted FIN 48 on January 1, 2007. Prior to our adoption of FIN 48, we provided deferred income taxes for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. With our adoption of FIN 48, we provide deferred income taxes for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the tax basis of assets and liabilities computed pursuant to FIN 48. Under FIN 48, the tax bases of assets and liabilities are based on amounts that meet the FIN 48 recognition threshold and are measured pursuant to the measurement requirement in FIN 48. 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.

Investment tax credits earned prior to their repeal by the Tax Reform Act of 1986 are amortized as reductions in income tax expense over the lives of the assets, which gave rise to the credits. Additionally, we report taxes imposed by governmental authorities on revenue-producing transactions between us and our customers in the income statement on a net basis.

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, 2007, we held $889 in cash and $1,081 in money market funds and other cash equivalents.

Investment Securities  Investments in securities principally consist of available-for-sale instruments. Short-term and long-term investments in money market securities are carried as held-to-maturity securities. Available-for-sale securities consist of various debt and equity securities that are long term in nature. Unrealized gains and losses, net of tax, on available-for-sale securities are recorded in accumulated other comprehensive income. 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.

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.

42

Notes to Consolidated Financial Statements, continued

Dollars in millions except per share amounts

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. 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 where we provide customers with an indefeasible right to use network capacity, we recognize revenue ratably over the stated life of the agreement.

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 Uncollectibles  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 reserves 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 bad-debt allowances are adjusted accordingly.

Inventory  Inventories are included in “Other current assets” on our consolidated balance sheet and were $1,119 and $756 at December 31, 2007 and 2006, respectively. Wireless handsets and accessories, which are valued at the lower of cost or market value (determined using current replacement cost) amount to $836 and $467 for the years 2007 and 2006. 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 purchase 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 carryingamount 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.

43

Notes to Consolidated Financial Statements, continued

Dollars in millions except per share amounts

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 amortized but are tested at least annually for impairment. We have completed our annual impairment testing for 2007 and determined that no impairment exists. The significant increase in the carrying amount of our goodwill in 2006 primarily resulted from our acquisition of BellSouth.

Intangible assets that have finite useful lives are amortized over their useful lives, a weighted average of 7.4 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, 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 an indefinite-lived intangible asset under the provisions of Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets.”

In accordance with EITF No. 02-7, “Unit of Accounting for Testing Impairment of Indefinite-Lived Intangible Assets,”we test FCC licenses for impairment on an aggregate basis, consistent with the management of the business on a national scope. We utilize a fair value approach, incorporating discounted cash flows, to complete the test. This approach determines the fair value of the FCC licenses and, accordingly, incorporates cash flow assumptions regarding the investment in a network, the development of distribution channels and other inputs for making the business operational. As these inputs are included in determining free cash flows of the business, the present value of the free cash flows is attributable to the licenses. The discount rate applied to the cash flows is consistent with our weighted-average cost of capital. During the fourth quarter of 2007, we completed the annual impairment tests for indefinite-lived FCC licenses. These annual impairment tests resulted in no impairment of indefinite-lived FCC licenses.

Advertising Costs  Advertising costs for advertising products and services or for promoting our corporate image are expensed as incurred.

Foreign Currency Translation  Our foreign investments and foreign subsidiaries 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. Gains and losses resulting from exchange-rate changes on transactions denominated in a currency other than the local currency are included in earnings as incurred.

We have also entered into foreign currency contracts to minimize our exposure to risk of adverse changes in currency exchange rates. We are subject to foreign exchange risk for foreign currency-denominated transactions, such as debt issued, recognized payables and receivables and forecasted transactions. At December 31, 2007, our foreign currency exposures were principally Euros, British pound sterling, Danish krone and Japanese yen.

44

Notes to Consolidated Financial Statements, continued

Dollars in millions except per share amounts

Derivative Financial Instruments  We record derivatives on the balance sheet at fair value. We do not invest in derivatives for trading purposes. We use derivatives from time to time as part of our strategy to manage risks associated with our contractual commitments. These 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). Our derivative financial instruments primarily include interest rate swap agreements and foreign currency exchange contracts. For example, we use interest rate swaps to manage our exposure to changes in interest rates on our debt obligations (see Note 9). We account for our interest rate swaps using mark-to-market accounting and include gains or losses from interest rate swaps when paid or received in interest expense in our consolidated statements of income. Amounts paid or received on interest rate forward contracts are amortized over the period of the related interest payments.

All other derivatives are not formally designated for accounting purposes (undesignated). These derivatives, although undesignated for accounting purposes, are entered into to hedge economic risks.

We record changes in the fair value of fair value hedges, along with the changes in the fair value of the hedged asset or liability that is attributable to the hedged risk. Gains or losses upon termination of our fair value hedges are recognized as interest expense when the hedge instrument is settled.

We record changes in the fair value of cash flow hedges, along with the changes in the fair value of the hedged asset or liability that is attributable to the hedged risk, in “Accumulated other comprehensive income,” which is a component of Stockholders' Equity. The settlement gains or costs on our cash flow hedges are amortized as interest expense over the term of the interest payments of the related debt issuances.

Changes in the fair value of undesignated derivatives are recorded in other income (expense), net, along with the change in fair value of the underlying asset or liability, as applicable.

Cash flows associated with derivative instruments are presented in the same category on the consolidated statements of cash flows as the item being hedged.

When hedge accounting is discontinued, the derivative is adjusted for changes in fair value through other income (expense), net. For fair value hedges, the underlying asset or liability will no longer be adjusted for changes in fair value, and any asset or liability recorded in connection with the hedging relationship (including firm commitments) will be removed from the balance sheet and recorded in current-period earnings. For cash flow hedges, gains and losses that were accumulated in other comprehensive income 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.

Employee Separations  In accordance with Statement of Financial Accounting Standards No. 112, “Employers’ Accounting for Postemployment Benefits,” (FAS 112) we establish 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, 2007, we had severance accruals under FAS 112 of $153, of which $99 was established as merger-related severance accruals. At December 31, 2006, we had severance accruals of $286.

Pension and Postretirement Benefits  See Note 11 for a comprehensive discussion of our pension and postretirement benefit expense, including a discussion of the actuarial assumptions.

45

Notes to Consolidated Financial Statements, continued

Dollars in millions except per share amounts

NOTE 2. ACQUISITIONS, DISPOSITIONS, VALUATION AND OTHER ADJUSTMENTS

Acquisitions

Dobson  In November 2007, we acquired Dobson Communications Corporation (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 includes the preliminary valuation of the fair value of Dobson’s assets and liabilities, including goodwill of $2,623, licenses of $2,230, customer lists of $517 and other intangible assets totaling $8 associated with this transaction. The values of the assets and liabilities are subject to adjustment as additional information becomes available. When finalized, material adjustments to goodwill may result.

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 with a population covered of more than 12.6 million people. Dobson’s operations were incorporated into our wireless operations following the date of acquisition.

BellSouth Corporation  In December 2006, we acquired BellSouth, issuing 2.4 billion shares. BellSouth was the leading communications service provider in the southeastern U.S., providing wireline communications services, including local exchange, network access, long-distance services and Internet services to substantial portions of the population across nine states. BellSouth also provided long-distance services to enterprise customers throughout the country.

We and BellSouth jointly owned AT&T Mobility and the Internet-based publisher YPC. In the AT&T Mobility joint venture, we held a 60% economic interest and BellSouth held a 40% economic interest, and in the YPC joint venture, we held a 66% economic interest and BellSouth held a 34% economic interest. For each joint venture, control was shared equally. We and BellSouth each accounted for the joint ventures under the equity method of accounting, recording the proportional share of AT&T Mobility’s and YPC’s income as equity in net income of affiliates on the respective consolidated statements of income and reporting the ownership percentage of AT&T Mobility’s net assets as “Investments in and Advances to AT&T Mobility” and the ownership percentage of YPC’s net assets as “Investments in Equity Affiliates” on the respective consolidated balance sheets. After the BellSouth acquisition, BellSouth, AT&T Mobility and YPC became wholly-owned subsidiaries of AT&T, and the operational results of these companies have been included in our consolidated financial statements since the December 29, 2006 acquisition date.

Under the purchase method of accounting, the transaction was valued, for accounting purposes, at approximately $66,800. We conducted an appraisal of the assets and liabilities of BellSouth and AT&T Mobility for inclusion in the balance sheet, adjusting 100% of BellSouth’s and 40% of AT&T Mobility’s values. Long-lived assets such as property, plant and equipment reflect a value of replacing the assets, which takes into account changes in technology, usage, and relative obsolescence and depreciation of the assets, sometimes referred to as a “Greenfield approach.” This approach often results in differences, sometimes material, from recorded book values even if, absent the acquisition, the assets would not be impaired. In addition, assets and liabilities that would not normally be recorded in ordinary operations (i.e., customer relationships) were recorded at their acquisition values. Debt instruments and investments were valued in relation to current market conditions and other assets and liabilities were valued based on the acquiring company’s estimates. After all values were assigned to assets and liabilities, the remainder of the purchase price was recorded as goodwill.

46

Notes to Consolidated Financial Statements, continued

Dollars in millions except per share amounts

The following table summarizes the preliminary estimated fair values of the BellSouth assets acquired and liabilities assumed and related deferred income taxes as of the acquisition date and final adjustments made thereto.

	BellSouth Purchase Price Allocation
	As of					As of
	12/31/06		Adjustments			12/29/07
Assets acquired
Current assets	$	4,875	$	6		$	4,881
Property, plant and equipment		18,498		225			18,723
Intangible assets not subject to amortization:
Trademark/name		330		-			330
Licenses		214		100			314
Intangible assets subject to amortization:
Customer lists and relationships		9,230		(25	)		9,205
Patents		100		-			100
Trademark/name		211		-			211
Investments in AT&T Mobility		32,759		2,039			34,798
Other investments		2,446		(3	)		2,443
Other assets		11,211		(168	)		11,043
Goodwill		26,467		(1,554	)		24,913
Total assets acquired		106,341		620			106,961
Liabilities assumed
Current liabilities, excluding current portion of long-term debt		5,288		(427	)		4,861
Long-term debt		15,628		(4	)		15,624
Deferred income taxes		10,318		(89	)		10,229
Postemployment benefit obligation		7,086		163			7,249
Other noncurrent liabilities		1,223		941			2,164
Total liabilities assumed		39,543		584			40,127
Net assets acquired	$	66,798	$	36		$	66,834

Adjustments were primarily related to finalization of participant count estimates used in the opening balance sheet valuation for the pension and postretirement plans, a gain on a contingency related to an insurance claim recovery for Hurricane Katrina damages, AT&T Mobility’s purchase accounting adjustments and tax impacts related thereto, the valuation of certain licenses and a decrease in the estimate of relative obsolescence of property, plant and equipment resulting in an increase in value and longer average remaining economic life. Deferred tax adjustments are associated with the above-mentioned items.

47

Notes to Consolidated Financial Statements, continued

Dollars in millions except per share amounts

BellSouth’s 40% economic ownership of AT&T Mobility was recorded above as “Investment in AT&T Mobility,” and was eliminated on our consolidated balance sheets. We recorded the consolidation of AT&T Mobility as a step acquisition, retaining 60% of AT&T Mobility’s prior book value and adjusting the remaining 40% to fair value. The following table summarizes the preliminary estimated fair values (40%) and historical book values (60%) of the AT&T Mobility assets acquired and liabilities assumed and related deferred income taxes as of the acquisition date and final adjustments made thereto.

	Fair Value Adjustments AT&T Mobility
	As of					As of
	12/31/06		Adjustments			12/29/07
Assets acquired
Current assets	$	6,988	$	(1	)	$	6,987
Property, plant and equipment		19,687		(569	)		19,118
Intangible assets not subject to amortization:
Licenses		33,979		887			34,866
Intangible assets subject to amortization:
Customer lists and relationships		7,583		479			8,062
Trademark/names		343		(127	)		216
Other		176		(44	)		132
Other assets		1,086		13			1,099
Goodwill		27,429		1,989			29,418
Total assets acquired		97,271		2,627			99,898
Liabilities assumed
Current liabilities, excluding current portion of long-term debt		7,014		647			7,661
Intercompany debt		9,043		-			9,043
Long-term debt		12,559		-			12,559
Deferred income taxes		5,459		(1	)		5,458
Postemployment benefit obligation		301		93			394
Other noncurrent liabilities		2,007		(106	)		1,901
Total liabilities assumed		36,383		633			37,016
Net assets acquired	$	60,888	$	1,994		$	62,882

Adjustments were primarily related to valuation estimates that, due to the proximity of the merger to year-end, were based on data from periods prior to the close of the December 29, 2006 acquisition. Using the December 29, 2006 data, purchase price allocations decreased the opening balance sheet values of property, plant and equipment, trademark/names and other intangibles, offset by an increased value of licenses and customer lists and relationships acquired. Deferred tax adjustments are associated with the above-mentioned items.

Substantially all of the licenses acquired have an indefinite life, and accordingly, are not subject to amortization. The majority of customer relationship intangible assets are being amortized over a weighted-average period of 6.4 years using the sum-of-the-months-digits method. This method best reflects the estimated pattern in which the economic benefits will be consumed. Other intangible assets and other noncurrent liabilities include lease and sublease contracts, which are amortized over the remaining terms of the underlying leases and have a weighted-average amortization period of 6.4 years.

AT&T Corp.  In November 2005, we acquired ATTC in a transaction accounted for under FAS 141, issuing 632 million shares. ATTC was one of the nation’s leading business service communications providers, offering a variety of global communications services, including large domestic and multinational businesses, small and medium-size businesses and government agencies, and operated one of the leading telecommunications networks in the U.S. ATTC also provided domestic and international long-distance and usage-based-communications services to consumer customers. ATTC is now a wholly-owned subsidiary of AT&T and the results of ATTC’s operations have been included in our consolidated financial statements after the November 18, 2005 acquisition date.

48

Notes to Consolidated Financial Statements, continued

Dollars in millions except per share amounts

Under the purchase method of accounting, the transaction was valued, for accounting purposes, at $15,517 and the assets and liabilities of ATTC were recorded at their respective fair values as of the date of the acquisition.

Other Acquisitions  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.

During 2006, we acquired Comergent Technologies, Nistevo Corporation and USinternetworking, Inc., for a combined $500, recording $333 in goodwill. The acquisitions of these companies are designed to enhance our service offerings for Web hosting and application management. In January 2005, we acquired Yantra Corporation (Yantra) for $169 in cash and recorded goodwill of $98. Yantra is a provider of distributed order management and supply-chain fulfillment services.

Dispositions

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.

Valuation and 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 2007, we recorded $9 in related goodwill reductions for ATTC and $33 for BellSouth.

Included in the current liabilities reported on our consolidated balance sheet are accruals established under EITF Issue No. 95-3, “Recognition of Liabilities in Connection with a Purchase Business Combination” (EITF 95-3). The liabilities include accruals for severance, lease terminations and equipment removal costs associated with our acquisitions of ATTC and BellSouth.

Included in the liabilities valued for the December 2006 acquisition of BellSouth was accrued severance of $535 for BellSouth employees and $44 for AT&T Mobility employees, all of which will be paid from company cash. In addition, we also reviewed, confirmed and developed plans affecting the integration of retail stores, administrative space and networks including those acquired in AT&T Mobility’s acquisition of AT&T Wireless Services, Inc. When these acquisition plans were finalized during 2007, we recorded additional accruals for severance, lease terminations and equipment removal costs at AT&T Mobility.

Following is a summary of the accruals recorded at December 31, 2006, cash payments made during 2007 and the purchase accounting adjustments thereto, for the acquisitions of ATTC and BellSouth.

	12/31/06		Cash			Additional					12/31/07
	Balance		Payments			Accruals		Adjustments			Balance
Severance accruals paid from:
Company funds	$	986	$	(417	)	$	42	$	(71	)	$	540
Pension and postemployment benefit plans		183		(54	)		-		-			129
Lease terminations		146		(149	)		422		6			425
Equipment removal and other related costs		117		(125	)		214		(45	)		161
Total	$	1,432	$	(745	)	$	678	$	(110	)	$	1,255

49

Notes to Consolidated Financial Statements, continued

Dollars in millions except per share amounts

NOTE 3. EARNINGS PER SHARE

A reconciliation of the numerators and denominators of basic earnings per share and diluted earnings per share for the years ended December 31, 2007, 2006 and 2005 are shown in the table below:

Year Ended December 31,	2007		2006		2005
Numerators
Numerator for basic earnings per share:
Net Income	$	11,951	$	7,356	$	4,786
Dilutive potential common shares:
Other stock-based compensation		8		7		10
Numerator for diluted earnings per share	$	11,959	$	7,363	$	4,796
Denominators (000,000)
Denominator for basic earnings per share:
Weighted-average number of common
shares outstanding		6,127		3,882		3,368
Dilutive potential common shares:
Stock options		24		4		1
Other stock-based compensation		19		16		10
Denominator for diluted earnings per share		6,170		3,902		3,379
Basic earnings per share	$	1.95	$	1.89	$	1.42
Diluted earnings per share	$	1.94	$	1.89	$	1.42

At December 31, 2007, 2006 and 2005, we had issued and outstanding options to purchase approximately 231 million, 309 million and 277 million shares of AT&T common stock. The exercise prices of options to purchase a weighted-average of 93 million, 201 million and 257 million shares in 2007, 2006, and 2005 exceeded 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, 2007, the exercise prices of 162 million share options were below market price.

50

Notes to Consolidated Financial Statements, continued

Dollars in millions except per share amounts

NOTE 4. SEGMENT INFORMATION

Our segments are strategic business units that offer different products and services and are managed accordingly. We analyze our various operating segments based on segment income before income taxes. Interest expense, interest income and other income (expense) – net are managed only on a total company basis and are, accordingly, reflected only in consolidated results. The wireless segment includes minority interest reported as other income (expense) – net in the consolidated statements of income. Therefore, these items are not included in the calculation of each segment’s percentage of our consolidated results. As a result of the December 29, 2006 acquisition of BellSouth we have revised our segment reporting to represent how we now manage our business, restating prior periods to conform to the current segments. 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 & publishing and (4) other.

The wireless segment provides voice, data and other wireless communications services, and includes 100% of the results of AT&T Mobility, which was our wireless joint venture with BellSouth prior to the December 29, 2006 acquisition and is now a wholly-owned subsidiary of AT&T. Prior to the acquisition, we analyzed AT&T Mobility’s revenues and expenses under the wireless segment, and we eliminated the wireless segment in our consolidated financial statements. In our 2006 and prior consolidated financial statements we reported our 60% proportionate share of AT&T Mobility’s results as equity in net income of affiliates.

The wireline segment provides both retail and wholesale landline communications services, including local and long-distance voice, switched access, Internet protocol and Internet access data, messaging services, managed networking to business customers, AT&T U-verseSM TV service (U-verse) and satellite television services through our agency agreements with EchoStar Communications Corp. (EchoStar) and the DIRECTV Group, Inc.

The advertising & publishing segment includes our directory operations, which publish Yellow and White Pages directories and sell directory and Internet-based advertising. This segment also includes the results of 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 as under FAS 141, 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 & publishing 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 consolidations and eliminations column in the reconciliation below.

The other segment includes results from Sterling Commerce, Inc., customer information services and all corporate and other operations. This segment includes our portion of the results from our international equity investments. Prior to December 29, 2006, this segment also included our results from AT&T Mobility as equity in net income of affiliates, as discussed above.

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 & Publishing 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, interest income and other income (expense) – net. This column also eliminates any intercompany transactions included in each segment’s results as well as the advertising & publishing revenue and expenses in 2007 related to directories published in the Southeast region during 2006, mentioned previously. In 2006, since our 60% share of the results from AT&T Mobility is already included in the Other column, the Wireless Elimination column removes the non-consolidated results shown in the wireless segment.

51

Notes to Consolidated Financial Statements, continued

Dollars in millions except per share amounts

Segment results, including a reconciliation to AT&T consolidated results, for 2007, 2006 and 2005 are as follows:

At December 31, 2007 or for the year ended
						Advertising &				Consolidation			Consolidated
	Wireless			Wireline		Publishing		Other		and Elimination			Results
Revenues from external customers	$	42,574		$	69,565	$	5,771	$	1,982	$	(964	)	$	118,928
Intersegment revenues		110			2,012		80		252		(2,454	)		-
Total segment operating revenues		42,684			71,577		5,851		2,234		(3,418	)		118,928
Operations and support expenses		28,585			46,394		3,066		1,664		(2,762	)		76,947
Depreciation and amortization expenses		7,079			13,411		924		163		-			21,577
Total segment operating expenses		35,664			59,805		3,990		1,827		(2,762	)		98,524
Segment operating income		7,020			11,772		1,861		407		(656	)		20,404
Interest expense		-			-		-		-		3,507			3,507
Equity in net income of affiliates		16			-		-		676		-			692
Minority interest		(198	)		-		-		-		198			-
Other income (expense) – net		-			-		-		-		615			615
Segment income before income taxes	$	6,838		$	11,772	$	1,861	$	1,083	$	(3,350	)	$	18,204
Segment assets	$	105,953		$	168,048	$	14,910	$	183,075	$	(196,342	)	$	275,644
Investment in equity method investees		13			-		-		2,257		-			2,270
Expenditures for additions to long-lived assets		3,745			13,693		25		254		-			17,717

At December 31, 2006 or for the year ended
						Advertising &					Consolidation			Wireless			Consolidated
	Wireless			Wireline		Publishing			Other		and Elimination			Elimination			Results
Revenues from external customers	$	37,537		$	57,473	$	3,634		$	1,702	$	-		$	(37,291	)	$	63,055
Intersegment revenues		-			5		51			176		(232	)		-			-
Total segment operating revenues		37,537			57,478		3,685			1,878		(232	)		(37,291	)		63,055
Operations and support expenses		26,503			39,878		1,737			1,318		(233	)		(26,343	)		42,860
Depreciation and amortization expenses		6,462			9,676		3			167		-			(6,401	)		9,907
Total segment operating expenses		32,965			49,554		1,740			1,485		(233	)		(32,744	)		52,767
Segment operating income		4,572			7,924		1,945			393		1			(4,547	)		10,288
Interest expense		-			-		-			-		1,843			-			1,843
Equity in net income (loss) of affiliates		40			-		(17	)		2,020		-			-			2,043
Minority interest		(169	)		-		-			-		4			165			-
Other income (expense) – net		-			-		-			-		393			-			393
Segment income before income taxes	$	4,443		$	7,924	$	1,928		$	2,413	$	(1,445	)	$	(4,382	)	$	10,881
Segment assets	$	98,563		$	166,178	$	14,791		$	166,187	$	(175,085	)	$	-		$	270,634
Investment in equity method investees		3			-		-			1,992		-			-			1,995
Expenditures for additions to long-lived assets		7,039			8,147		2			171		-			(7,039	)		8,320

52

Notes to Consolidated Financial Statements, continued

Dollars in millions except per share amounts

For the year ended December 31, 2005
						Advertising &					Consolidation			Wireless			Consolidated
	Wireless			Wireline		Publishing			Other		and Elimination			Elimination			Results
Revenues from external customers	$	34,468		$	38,454	$	3,625		$	1,650	$	-		$	(34,433	)	$	43,764
Intersegment revenues		-			-		59			81		(140	)		-			-
Total segment operating revenues		34,468			38,454		3,684			1,731		(140	)		(34,433	)		43,764
Operations and support expenses		26,033			27,339		1,685			1,066		(137	)		(26,033	)		29,953
Depreciation and amortization expenses		6,608			7,426		5			182		(2	)		(6,576	)		7,643
Total segment operating expenses		32,641			34,765		1,690			1,248		(139	)		(32,609	)		37,596
Segment operating income		1,827			3,689		1,994			483		(1	)		(1,824	)		6,168
Interest expense		-			-		-			-		1,456			-			1,456
Equity in net income (loss) of affiliates		(11	)		-		(5	)		629		-			(4	)		609
Minority interest		(103	)		-		-			-		2			101			-
Other income (expense) – net		-			-		-			-		397			-			397
Segment income before income taxes	$	1,713		$	3,689	$	1,989		$	1,112	$	(1,058	)	$	(1,727	)	$	5,718

53

Notes to Consolidated Financial Statements, continued

Dollars in millions except per share amounts

NOTE 5. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is summarized as follows at December 31:

	Lives (years)		2007		2006
Land		-	$	1,860	$	1,925
Buildings		35-45		23,670		23,481
Central office equipment		3-10		70,632		63,997
Cable, wiring and conduit		10-50		68,676		64,483
Other equipment		5-15		32,606		33,448
Software		3-5		9,298		11,678
Under construction		-		3,776		3,137
				210,518		202,149
Accumulated depreciation and amortization				114,628		107,553
Property, plant and equipment – net			$	95,890	$	94,596

Our depreciation expense was $15,625 in 2007, $8,874 in 2006 and $7,372 in 2005.

Certain facilities and equipment used in operations are leased under operating or capital leases. Rental expenses under operating leases were $2,566 for 2007, $869 for 2006, and $473 for 2005. The future minimum rental payments under noncancelable operating leases for the years 2008 through 2012 are $2,088, $1,850, $1,629, $1,399 and $1,223, with $6,958 due thereafter. 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 $539 in 2007, $568 in 2006, and $598 in 2005.

54

Notes to Consolidated Financial Statements, continued

Dollars in millions except per share amounts

NOTE 6. GOODWILL AND OTHER INTANGIBLE ASSETS

Changes in the carrying amounts of goodwill, by segment, for the years ended December 31, 2007 and 2006, are as follows:

	Wireless			Wireline			Advertising & Publishing			Other			Total
Balance as of January 1, 2006	$	-		$	12,795		$	8		$	1,252		$	14,055
Goodwill acquired:
BellSouth acquisition		27,429			20,939			5,528			-			53,896
Other		-			197			128			139			464
Goodwill adjustment related to ATTC acquisition		-			(989	)		-			-			(989	)
Other		681			-			-			(450	)		231
Balance as of December 31, 2006		28,110			32,942			5,664			941			67,657
Goodwill acquired		2,623			133			171			-			2,927
Goodwill adjustment related to BellSouth acquisition		1,989			(1,554	)		-			-			435
Settlement of IRS audit		-			(123	)		-			-			(123	)
Goodwill adjustments for prior-year acquisitions and FIN 48		-			(44	)		(51	)		(32	)		(127	)
Other		(9	)		(53	)		4			2			(56	)
Balance as of December 31, 2007	$	32,713		$	31,301		$	5,788		$	911		$	70,713

Goodwill is tested annually for impairment, with any impairments being expensed in that period’s income statement. Due to the proximity of our acquisition of BellSouth to year-end 2006, we originally recorded all BellSouth assets, including goodwill, in our other segment. In 2007, in conjunction with our segment realignment (see Note 4) we moved the initial BellSouth goodwill to our wireline and advertising & publishing segments. During our allocation period, we completed purchase accounting adjustments to the AT&T Mobility and BellSouth goodwill (see Note 2). Other changes to goodwill include adjustments totaling $42 for the tax effect of stock options exercised.

Our other intangible assets are summarized as follows:

	December 31, 2007				December 31, 2006
Other Intangible Assets	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Amortized intangible assets:
Customer lists and relationships:
AT&T Mobility	$	10,526	$	4,549	$	9,530	$	1,948
BellSouth		9,205		2,205		9,230		-
ATTC		3,050		1,653		3,050		1,082
Other		429		298		395		253
Subtotal		23,210		8,705		22,205		3,283
Other		1,873		1,191		1,973		714
Total	$	25,083	$	9,896	$	24,178	$	3,997
Indefinite life intangible assets not subject to amortization:
Licenses	$	37,985			$	34,252
Trade name		5,230				5,307
Total	$	43,215			$	39,559

55

Notes to Consolidated Financial Statements, continued

Dollars in millions except per share amounts

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 7.4 years (7.3 years for customer lists and relationships and 9.6 years for other). Amortization expense for definite-life intangible assets was $5,952, $1,033 and $271 for the years ended December 31, 2007, 2006 and 2005, respectively. Amortization expense is estimated to be $4,430 in 2008, $3,540 in 2009, $2,740 in 2010, $1,820 in 2011 and $1,200 in 2012.

Licenses include FCC licenses of $37,948 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, treat the FCC licenses as an indefinite-lived intangible asset.

NOTE 7. EQUITY METHOD INVESTMENTS

Investments in partnerships, joint ventures, and less-than-majority-owned subsidiaries where we have significant influence are accounted for under the equity method. Until our acquisition of BellSouth in December 2006 (see Note 2), we accounted for our 60% economic interest in AT&T Mobility under the equity method since we shared control equally with BellSouth, our 40% economic partner. We had equal voting rights and representation on the board of directors that controlled AT&T Mobility. As a result of the BellSouth acquisition, AT&T Mobility became a wholly-owned subsidiary of AT&T and is reported in our wireless segment and our consolidated statements of income.

AT&T Mobility  As of December 29, 2006, we report AT&T Mobility as a wholly-owned subsidiary.

The following table presents summarized operating results for AT&T Mobility prior to the December 29, 2006 BellSouth acquisition:

	2006		2005
Income Statements
Operating revenues	$	37,291	$	34,433
Operating income		4,547		1,824
Net income		2,513		333

Equity Method Investments  Our investments in equity affiliates include primarily international investments. As of December 31, 2007, our investments in equity affiliates included a 9.3% interest in Teléfonos de México, S.A. de C.V. (Telmex), Mexico’s national telecommunications company, and an 8.2% interest in América Móvil S.A. de C.V. (América Móvil), primarily a wireless provider in Mexico, with telecommunications investments in the United States and Latin America. 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., 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, Americas Telecom S.A. de C.V., has the right to appoint a majority of the directors of América Móvil. On November 14, 2007, Telmex’s board of directors approved a strategic initiative to divide the company into two separate companies. The initiative calls for Telmex to split off all of its Latin American businesses and its Mexican yellow pages business to a new holding company, Telmex Internacional. The spin-off was approved by shareholders on December 21, 2007. The proposed spin-off will be subject to compliance with the regulatory requirements in Mexico and other jurisdictions.

56

Notes to Consolidated Financial Statements, continued

Dollars in millions except per share amounts

The following table is a reconciliation of our investments in equity affiliates as presented on our consolidated balance sheets:

	2007			2006
Beginning of year	$	1,995		$	2,031
Additional investments		8			5
Equity in net income of affiliates		692			535
Dividends received		(395	)		(97	)
Currency translation adjustments		(18	)		(22	)
Other adjustments		(12	)		(457	)
End of year	$	2,270		$	1,995

Undistributed earnings from equity affiliates were $2,335 and $2,038 at December 31, 2007 and 2006, respectively. The currency translation adjustment for 2007 and 2006 primarily reflects the effect of exchange rate fluctuations on our investments in Telmex and América Móvil. “Other adjustments” for 2006 consisted primarily of $375 representing the consolidation of Cellular Communications of Puerto Rico, YPC and other domestic wireless investments as wholly-owned subsidiaries of AT&T as a result of the BellSouth acquisition and $75 representing purchase accounting revaluation of equity investments in ATTC.

The fair value of our investment in Telmex, based on the equivalent value of Telmex L shares at December 31, 2007, was $3,315. The fair value of our investment in América Móvil, based on the equivalent value of América Móvil L shares at December 31, 2007, was $8,808.

NOTE 8. DEBT

Long-term debt of AT&T and its subsidiaries, including interest rates and maturities, is summarized as follows at December 31:

						2007			2006
Notes and debentures
	Interest Rates			Maturities
		4.03%–5.98	%		2007 – 2054	$	23,324		$	18,571
		6.00%–7.88	%		2007 – 2097		29,282			24,685
		8.00%–9.10	%		2007 – 2031		7,114			8,626
Other							136			141
Fair value of interest rate swaps							88			(80	)
							59,944			51,943
Unamortized premium, net of discount							2,049			2,323
Total notes and debentures							61,993			54,266
Capitalized leases							201			211
Total long-term debt, including current maturities							62,194			54,477
Current maturities of long-term debt							(4,939	)		(4,414	)
Total long-term debt						$	57,255		$	50,063

On December 29, 2006, we included on our balance sheet $28,321 in long-term debt and capital leases related to our acquisition of BellSouth (see Note 2). The debt of AT&T Mobility was included in that amount since it is now a subsidiary of AT&T. BellSouth’s and AT&T Mobility’s long-term debt included both fixed and floating interest rates with a weighted-average rate of 6.7% (ranging from 4.2% to 8.8%) and had maturities ranging from 2007 to 2097. Included in our “Total notes and debentures” balance in the table above was the face value of acquired debt from BellSouth and AT&T Mobility of $25,234, which had a carrying amount of $26,968 at December 31, 2006.

Included in the table above at December 31, 2006, was $1,734 representing the remaining excess of the fair value over the recorded value of debt in connection with the acquisition of BellSouth and AT&T Mobility. The excess is amortized over the remaining lives of the underlying debt obligations.

We have debt instruments that may require us to repurchase the debt or which may alter the interest rate associated with that debt. We have $1,000 of Puttable Reset Securities (PURS) at 4.2% maturing in 2021 with an annual put option by the holder. If the holders of our PURS do not require us to repurchase the securities, the interest rate will be reset based on current market conditions. Since these securities can be put to us annually, the balance is included in current maturities of long-term debt in our balance sheet.

57

Notes to Consolidated Financial Statements, continued

Dollars in millions except per share amounts

Beginning in May 2009, our $500 zero-coupon puttable note may be presented for redemption by the holder at specified dates, but not more frequently than annually, excluding 2011. If the note is held to maturity in 2022, the redemption amount will be $1,030.

As of December 31, 2007 and 2006, 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 and the effect of interest rate swaps, the aggregate principal amounts of long-term debt and the corresponding weighted-average interest rate scheduled for repayment are as follows:

	2008			2009			2010			2011			2012			Thereafter
Debt repayments	$	4,926		$	5,965		$	3,766		$	7,534		$	4,894		$	32,771
Weighted-average interest rate		5.5	%		4.9	%		6.2	%		7.1	%		6.6	%		6.4	%

Financing Activities

Debt  During 2007, debt repayments totaled $10,183 and consisted of:

·   $3,871 related to debt repayments with a weighted-average interest rate of 6.1%, which included the early redemption of debt related to a put exercise on $1,000 of our 4.2% PURS and called debt of $500 with an interest rate of 7.0%.

·   $3,411 related to repayments of commercial paper and other short-term bank borrowings.

·   $1,735 related to the early redemption of Dobson debt acquired with a par value of $1,599 and a weighted-average interest rate of 9.1%.

·   $904 related to the early repayment of a Dobson long-term credit facility.

·   $218 related to the early redemption of a convertible note held by Dobson.

·   $44 related to scheduled principal payments on other debt and repayments of other borrowings.

During 2007, we received net proceeds of $11,367 from the issuance of $11,499 in long-term debt. Debt proceeds were used for general corporate purposes and parts of the proceeds were used for repurchases of our common stock. Long-term debt issuances consisted of:

·   $2,000 of 6.3% global notes due in 2038.

·   $2,000 of 6.5% global notes due in 2037.

·   €1.25 billion of 4.375% notes due in 2013 (equivalent to U.S. $1,641 when issued).

·   $1,500 of floating-rate notes due in 2010.

·   $1,200 of 6.375% retail notes due in 2056.

·   £600 million of 5.5% notes due in 2027 (equivalent to U.S. $1,158 when issued).

·   $1,000 of 4.95% notes due in 2013.

·   $500 of 5.625% notes due in 2016.

·   $500 of zero-coupon puttable notes due in 2022.

In February 2008, we received net proceeds of $3,972 from the issuance of $4,000 in long-term debt. The long-term debt issued consisted of the following:

·   $2,500 of 5.5% global notes due in 2018.

·   $750 of 4.95% global notes due in 2013.

·   $750 of 6.3% global notes due in 2038.

58

Notes to Consolidated Financial Statements, continued

Dollars in millions except per share amounts

Debt maturing within one year consists of the following at December 31:

	2007		2006
Commercial paper	$	1,859	$	5,214
Current maturities of long-term debt		4,939		4,414
Bank borrowings1		62		105
Total	$	6,860	$	9,733

  1 Primarily represents borrowings, the availability of which is contingent on the level of cash held by some of our foreign subsidiaries.

The weighted-average interest rate on commercial paper debt at December 31, 2007 and 2006 was 4.2% and 5.3%, respectively.

Credit Facility  We have a five-year $10,000 credit agreement with a syndicate of investment and commercial banks, which we have the right to increase up to an additional $2,000, 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 pledge 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. We had no borrowings outstanding under committed lines of credit as of December 31, 2007 or 2006.

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 money 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-of-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. 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:

	2007				2006
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Notes and debentures	$	61,993	$	62,544	$	54,266	$	54,566
Commercial paper		1,859		1,859		5,214		5,214
Bank borrowings		62		62		105		105
Available-for-sale equity securities		2,735		2,735		2,731		2,731
EchoStar note receivable		491		489		478		467

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.

59

Notes to Consolidated Financial Statements, continued

Dollars in millions except per share amounts

The fair value of our EchoStar note receivable was estimated based on a valuation. The carrying amount of this note was based on the present value of cash and interest payments, which will be accreted on the note up to the face value of $500 on a straight-line basis through August 2008.

Our available-for-sale equity securities are carried at fair value, and realized gains and losses on these equity securities were included in “Other income (expense) – net” in the consolidated statements of income. The fair value of our available-for-sale equity securities was principally determined based on quoted market prices, and the carrying amount of the remaining securities approximates fair value.

Our short-term investments, other short-term and long-term held-to-maturity investments and customer deposits are recorded at amortized cost, and the carrying amounts approximate fair values. We held other short-term marketable securities of $1 at December 31, 2007 compared to $477 at December 31, 2006.

Derivatives  We use interest rate swaps, interest rate forward contracts and foreign currency exchange contracts to manage our market risk changes in interest rates and foreign exchange rates. We do not use financial instruments for trading or speculative purposes. Each swap matches the exact maturity dates of the underlying debt to which they are related, allowing for perfectly-effective hedges. Each utilized forward contract matches the interest payments of the underlying debt to which they are related, allowing for perfectly-effective hedges.

Interest Rate SwapsWe had fair value interest rate swaps with a notional value of $3,250 at December 31, 2007, and $5,050 at December 31, 2006, with a net carrying and fair value asset of $88 and liability of $80, respectively. The net fair value liability at December 31, 2006 was comprised of a liability of $86 and an asset of $6. Included in the fair value interest rate swap notional amount for 2006 were interest rate swaps with a notional value of $1,800, which were acquired as a result of our acquisition of BellSouth on December 29, 2006. These swaps were unwound in January 2007.

Interest Rate Foreign Currency Swaps  We have combined interest rate foreign currency swap agreements for Euro-denominated debt and British pound sterling-denominated debt, which hedge our risk to both interest rate and currency movements. In March 2007, we entered into fixed-to-fixed cross-currency swaps on foreign-currency-denominated debt instruments with a U.S. dollar notional value of $2,799 to hedge our exposure to changes in foreign currency exchange rates. These hedges 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. These derivatives have been designated at inception and qualify as cash flow hedges with a net fair value of $114 at December 31, 2007. These swaps are valued using current market quotes, which were obtained from dealers.

In November 2006, we repaid the notional amount of a foreign currency swap of $636. Upon repayment we unwound our swap asset of $284. Additionally, we repaid the collateral associated with the swap contract of $150, which was received by us over the term of the swap agreement.

Interest Rate Locks  We entered into interest rate forward contracts to partially hedge interest expense related to our debt issuances. During 2008, we expect to reclassify into earnings net settlement expenses of approximately $8 to $9, net of tax. The following table summarizes our interest rate lock activity:

Rate Lock	Notional		Utilized Notional		Settlement Gain /			Settlement Gain /
Execution Period	Amount		Amount		(Cost)			(Cost) – net of tax
2007	$	1,800	$	1,800	$	(8	)	$	(5	)
2006		750		600		4			3
2005		500		500		(2	)		(1	)
2004		5,250		5,250		(302	)		(196	)

Foreign Currency Forward Contracts  We enter into foreign currency forward contracts to manage our exposure to changes in currency exchange rates related to foreign-currency-denominated transactions. At December 31, 2007 and 2006, our foreign exchange contracts consisted principally of Euros, British pound sterling, Danish krone and Japanese yen. At December 31, 2007, the notional amounts under contract were $345, of which none were designated as net investment hedges. At December 31, 2006, the notional amounts under contract were $440, of which $6 were designated as net investment hedges. The remaining contracts in both periods were not designated for accounting purposes. At December 31, 2007 and 2006, these foreign exchange contracts had a net carrying and fair value liability of less than $2. These contracts were valued using current market quotes, which were obtained from independent sources.

60

Notes to Consolidated Financial Statements, continued

Dollars in millions except per share amounts

NOTE 10. INCOME TAXES

Significant components of our deferred tax liabilities (assets) are as follows at December 31:

	2007			2006
Depreciation and amortization	$	17,004		$	21,016
Intangibles (nonamortizable)		1,990			2,271
Equity in foreign affiliates		231			515
Employee benefits		(6,121	)		(9,667	)
Currency translation adjustments		(287	)		(261	)
Allowance for uncollectibles		(388	)		(385	)
Net operating loss and other carryforwards		(2,838	)		(2,981	)
Investment in wireless partnership		13,997			12,580
Other – net		(1,763	)		300
Subtotal		21,825			23,388
Deferred tax assets valuation allowance		1,070			984
Net deferred tax liabilities	$	22,895		$	24,372
Net long-term deferred tax liabilities	$	24,939		$	27,406
Less: Net current deferred tax assets		(2,044	)		(3,034	)
Net deferred tax liabilities	$	22,895		$	24,372

At December 31, 2007, we had combined net operating and capital loss carryforwards (tax effected) for federal, and for state and foreign income tax purposes of $1,289 and $1,207, respectively, expiring through 2026. The federal net operating loss carryforward primarily relates to the acquisitions of AT&T Wireless Services, Inc. in 2004 and Dobson in 2007. Additionally, we had federal and state credit carryforwards of $100 and $242, respectively, expiring primarily through 2024.

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, 2006 and 2007 relate primarily to state net operating loss carryforwards. The net increase in the valuation allowance for 2007 results from the acquisition of Dobson and the generation of additional state net operating losses, the ultimate realization of which are not more-likely-than-not. Future adjustments (prior to the effective date of FAS 141(R)) to the valuation allowance attributable to the ATTC, BellSouth, AT&T Mobility, and Dobson opening balance sheet items may be required to be allocated to goodwill and other purchased intangibles. After the effective date of FAS 141(R), changes to these valuation allowances may be reflected in income tax expense.

61

Notes to Consolidated Financial Statements, continued

Dollars in millions except per share amounts

On January 1, 2007, we adopted FIN 48 (see Note 1) and, as required, we reclassified $6,225 from net deferred tax liabilities to unrecognized tax benefits. As a result of the implementation of FIN 48, we recognized a $50 increase in the liability for unrecognized tax benefits, which was accounted for as a reduction to the January 1, 2007 balance of retained earnings. A reconciliation of the change in our unrecognized tax benefits (UTB) balance from January 1, 2007 to December 31, 2007, is as follows:

	Federal, State and Foreign Tax			Accrued Interest and Penalties			Gross Unrecognized Income Tax Benefits			Deferred Federal and State Income Tax Benefits			Unrecognized Income Tax Benefits, Net of Deferred Federal and State Benefits
Balance at January 1, 2007	$	4,895		$	1,380		$	6,275		$	(846	)	$	5,429
Increases for tax positions related to the current year		429			-			429			(30	)		399
Increases for tax positions related to prior years		1,324			606			1,930			(315	)		1,615
Decreases for tax positions related to prior years		(478	)		(298	)		(776	)		93			(683	)
Settlements		(269	)		(10	)		(279	)		17			(262	)
Balance at December 31, 2007		5,901			1,678			7,579			(1,081	)		6,498
Less: tax attributable to timing items included above		(3,911	)		-			(3,911	)		189			(3,722	)
Less: UTB included above that relate to acquired entities that would impact goodwill if recognized		(623	)		(174	)		(797	)		216			(581	)
Total UTB that, if recognized, would impact the effective income tax rate as of December 31, 2007	$	1,367		$	1,504		$	2,871		$	(676	)	$	2,195

In the fourth quarter of 2007, we made a deposit of $1,000 related to the AT&T Inc. 2000 – 2002 IRS examination cycle. This deposit is not included in the reconciliation above but reduces our unrecognized tax benefits balance. Net of this deposit, our unrecognized tax benefits balance at December 31, 2007, was $6,579, of which $5,894 was included in “Other noncurrent liabilities” and $685 was included in “Accrued taxes” on our consolidated balance sheets. We expect to pay $685 within one year, but we cannot reasonably estimate the timing or amounts of additional cash payments, if any, at this time.

A portion of our unrecognized tax benefits relates to pre-acquisition uncertain tax positions of ATTC, BellSouth and AT&T Mobility. Future adjustments (prior to the effective date of FAS 141(R)) to these unrecognized tax benefits may be required to be allocated to goodwill and other purchased intangibles. After the effective date of FAS 141(R), adjustment of these unrecognized tax benefits may be reflected in income tax expense.

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 $1,380 and $1,678 as of January 1, 2007 and December 31, 2007, respectively. Interest and penalties included in our consolidated statements of income were $303 for both December 31, 2007 and 2006.

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 2002, and all audit periods prior to 1998 are closed for federal purposes. We were unable to reach agreement with the IRS on one issue related to our 1998 and 1999 tax returns and, as a result, we have filed a refund suit in U.S. District Court. We are engaged with the IRS Appeals Division (Appeals) in settling our 2000 – 2002 returns and may reach a resolution of this examination cycle during the next 12 months. At this time, we are not able to determine the impact that resolution may have on our unrecognized tax benefits. The IRS is currently examining the AT&T 2003 – 2005 tax returns, and we expect their fieldwork to be completed during 2008.

62

Notes to Consolidated Financial Statements, continued

Dollars in millions except per share amounts

The IRS has completed the examination of all acquired entity tax returns through 2003 (ATTC through 2004) and, with the exception of BellSouth, all years through 2001 are closed. We expect to settle the ATTC 2005 examination within the next 12 months with an immaterial impact on our unrecognized tax benefits. Appeals has issued BellSouth an assessment for years 1999 – 2001, which was paid during the second quarter, and we are reviewing our options with this case.

The components of income tax expense are as follows:

	2007			2006			2005
Federal:
Current	$	5,903		$	3,344		$	1,385
Deferred – net		(413	)		(139	)		(681	)
Amortization of investment tax credits		(31	)		(28	)		(21	)
		5,459			3,177			683
State, local and foreign:
Current		621			295			226
Deferred – net		173			53			23
		794			348			249
Total	$	6,253		$	3,525		$	932

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:

	2007			2006			2005
Taxes computed at federal statutory rate	$	6,371		$	3,809		$	2,001
Increases (decreases) in income taxes resulting from:
State and local income taxes – net of federal income tax benefit		549			234			176
Effects of international operations		(178	)		(200	)		(70	)
Medicare reimbursements		(120	)		(123	)		(95	)
Equity in net income of affiliates		-			(218	)		(35	)
Tax settlements		-			-			(902	)
Other – net		(369	)		23			(143	)
Total	$	6,253		$	3,525		$	932
Effective Tax Rate		34.4	%		32.4	%		16.3	%

In December 2005, we reached an agreement with the IRS to settle certain claims, principally related to the utilization of capital losses and tax credits for years 1997 – 1999. Included in the settlement was relief from previous assessments and agreement on multiple items challenged by the IRS in the course of routine audits. As we had previously paid the assessments in full and filed refund claims with the IRS, the settlement resulted in our recognition of approximately $902 of reduced income tax expense in 2005.

Effects of international operations include items such as foreign tax credits, sales of foreign investments and the effects of undistributed earnings from international operations. We do not provide deferred taxes on the undistributed earnings of subsidiaries operating outside the United States that have been or are intended to be permanently reinvested. The amount of undistributed earnings for which we have not recorded deferred taxes is not material.

NOTE 11. PENSION AND POSTRETIREMENT BENEFITS

Pension 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 and AT&T Mobility 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.

63

Notes to Consolidated Financial Statements, continued

Dollars in millions except per share amounts

In April 2007, we announced a one-time increase to certain retiree pension annuity payments, an average increase of 3.2% by group of retiree count. This pension adjustment is for pre-1996 retirees and is reflected below as a plan amendment.

At December 31, 2007, defined pension plans formerly sponsored by Ameritech Publishing Ventures and AT&T Mobility were merged in the AT&T Pension Benefit Plan. At December 31, 2006, certain defined pension plans formerly sponsored by ATTC and AT&T Mobility were also merged into the AT&T Pension Benefit Plan.

Postretirement Benefits

We 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.

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 that date.

In conjunction with the 2006 BellSouth acquisition, AT&T Mobility became a wholly-owned subsidiary. BellSouth and AT&T Mobility sponsored noncontributory defined benefit pension plans covering the majority of their U.S. employees. In accordance with GAAP, when an employer is acquired as part of a merger, any excess of projected benefit obligation over the plan assets is recognized as a liability and any excess of plan assets over the projected benefit obligation is recognized as a plan asset. The recognition of a new liability or a new asset by the acquirer, at the date of the merger, results in the elimination of any (a) previously existing unrecognized net gain or loss, (b) unrecognized prior service cost and (c) unrecognized net transition obligation. In addition, the accumulated postretirement benefit obligations are to be measured using actuarial assumptions and terms of the substantive plans, as determined by the purchaser. As such, and consistent with our practice, we did not account for the annual dollar value cap of medical and dental benefits in the value of the accumulated postretirement benefit obligation for the BellSouth or AT&T Mobility postretirement benefit plans (i.e., we assumed the cap would be waived in the future). All other significant weighted-average assumptions used were determined based on our policies that are discussed below in “Assumptions.”

Our December 31, 2006, obligations and funded status include benefit obligations of $11,013 for pension benefits and $11,461 for postretirement benefits, and plan assets of $17,628 and $5,269, respectively, related to BellSouth. Additionally, our December 31, 2006, obligations and funded status include benefit obligations of $635 for pension benefits and $209 for postretirement benefits, and plan assets of $548 and $0, respectively, related to AT&T Mobility.

64

Notes to Consolidated Financial Statements, continued

Dollars in millions except per share amounts

The following table presents this reconciliation and shows the change in the projected benefit obligation for the years ended December 31:

	Pension Benefits						Postretirement Benefits
	2007			2006			2007			2006
Benefit obligation at beginning of year	$	55,949		$	46,176		$	44,137		$	35,225
Service cost - benefits earned during the period		1,257			1,050			511			435
Interest cost on projected benefit obligation		3,220			2,507			2,588			1,943
Amendments		246			-			-			-
Actuarial loss (gain)		(2,044	)		(1,499	)		(4,752	)		(3,386	)
Special termination benefits		56			25			7			2
Settlements		(15	)		-			-			-
Benefits paid		(5,312	)		(3,958	)		(2,316	)		(1,772	)
Transferred from AT&T Mobility		-			635			-			209
Transferred from BellSouth		-			11,013			-			11,461
Other		165			-			210			20
Benefit obligation at end of year	$	53,522		$	55,949		$	40,385		$	44,137

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:

	Pension Benefits						Postretirement Benefits
	2007			2006			2007			2006
Fair value of plan assets at beginning of year	$	69,284		$	48,755		$	17,145		$	11,417
Actual return on plan assets		6,833			6,311			1,209			1,379
Benefits paid 1		(5,312	)		(3,958	)		(1,694	)		(920	)
Contributions		-			-			255			-
Transferred from AT&T Mobility		-			548			-			-
Transferred from BellSouth		-			17,628			-			5,269
Other		5			-			84			-
Fair value of plan assets at end of year	$	70,810		$	69,284		$	16,999		$	17,145
Funded (unfunded) status at end of year 2	$	17,288		$	13,335		$	(23,386	)	$	(26,992	)

  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 nor of our obligation to fund retirement trusts. Required pension funding is determined in accordance with ERISA regulations.

Amounts recognized on our consolidated balance sheets at December 31 are listed below:

	Pension Benefits				Postretirement Benefits
	2007		2006		2007			2006
Postemployment Benefit	$	17,288	$	13,335	$	-		$	772
Current portion of employee benefit obligation 1		-		-		(249	)		(973	)
Employee benefit obligation 2		-		-		(23,137	)		(26,791	)
Net amount recognized	$	17,288	$	13,335	$	(23,386	)	$	(26,992	)

1 Included in “Accounts payable and accrued liabilities.”

2 Included in “Postemployment benefit obligation.”

65

Notes to Consolidated Financial Statements, continued

Dollars in millions except per share amounts

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
	2007		2006		2007			2006
Net loss	$	661	$	4,271	$	1,125		$	6,124
Prior service cost (benefit)		722		624		(2,355	)		(2,669	)
Total	$	1,383	$	4,895	$	(1,230	)	$	3,455

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 $51,357 at December 31, 2007, and $53,662 at December 31, 2006.

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 $1,078, $1,635 and $1,336 for the years ended December 31, 2007, 2006 and 2005.

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

	Pension Benefits									Postretirement Benefits
	2007			2006			2005			2007			2006			2005
Service cost - benefits earned during the period	$	1,257		$	1,050		$	804		$	511		$	435		$	390
Interest cost on projected benefit obligation		3,220			2,507			1,725			2,588			1,943			1,496
Expected return on plan assets		(5,468	)		(3,989	)		(2,736	)		(1,348	)		(935	)		(781	)
Amortization of prior service cost
(benefit) and transition asset		142			149			186			(359	)		(359	)		(344	)
Recognized actuarial loss		241			361			156			294			473			440
Net pension and postretirement cost (benefit)1	$	(608	)	$	78		$	135		$	1,686		$	1,557		$	1,201

  1 During 2007, 2006 and 2005, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 reduced postretirement benefit cost by $342, $349 and $304. This effect is included in several line items above.

Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income

	Pension Benefits								Postretirement Benefits
	2007			2006			2005	1	2007			2006				2005	1
Net loss (gain)	$	(2,131	)	$	2,650	$	-		$	(2,525	)	$	3,404		$	-
Prior service cost (credit)		139			387		-			(28	)		(1,655	)		-
Amortization of net loss (gain)		154			-		-			181			-			-
Amortization of prior service cost		78			-		-			(223	)		-			-
Total recognized in net pension and postretirement cost and other comprehensive income	$	(1,760	)	$	3,037	$	-		$	(2,595	)	$	1,749		$	-

 1 FAS 158 required prospective application for fiscal years ending after December 15, 2006.

The estimated net loss and prior service cost for pension benefits that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year are $7 and $134, respectively. The estimated prior service benefit for postretirement benefits that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year is $360.

66

Notes to Consolidated Financial Statements, continued

Dollars in millions except per share amounts

Assumptions

In determining the projected benefit obligation and the net pension and postemployment benefit cost, we used the following significant weighted-average assumptions:

	2007			2006			2005
Discount rate for determining projected benefit obligation at December 31		6.50	%		6.00	%		5.75	%
Discount rate in effect for determining net cost (benefit) 1		6.00	%		5.75	%		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	%

  1 Discount rate in effect for determining net cost (benefit) of BellSouth and AT&T Mobility pension and postretirement plans for the two-day period ended December 31, 2006, was 6.00%. The discount rate in effect for determining net cost (benefit) of ATTC pension and postretirement plans for the 43-day period ended December 31, 2005 was 5.75%.

Approximately 10% of pension and postretirement costs are capitalized as part of construction labor, providing a small reduction in the net expense recorded. While we will continue our cost-control efforts, certain factors, such as investment returns, depend largely on trends in the U.S. securities markets and the general U.S. economy. In particular, uncertainty in the securities markets and U.S. economy could result in investment returns less than those assumed and a decline in the value of plan assets used in pension and postretirement calculations, which under GAAP we will recognize over the next several years. 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. Additionally, should actual experience differ from actuarial assumptions, combined net pension and postretirement cost would be affected in future years.

Discount Rate  Our assumed discount rate of 6.50% at December 31, 2007 reflects the hypothetical rate at which the projected benefit obligations could be effectively settled or paid out to participants on that date. We determined our discount rate based on a range of factors, including a yield curve comprised of the rates of return on high-quality, fixed-income corporate bonds available at the measurement date and the related expected duration for the obligations. For the year ended December 31, 2007, we increased our discount rate by 0.50%, resulting in a decrease in our pension plan benefit obligation of $2,353 and a decrease in our post-retirement benefit obligation of $2,492. For the year ended December 31, 2006, we increased our discount rate by 0.25%, resulting in a decrease in our pension plan benefit obligation of $1,040 and a decrease in our postretirement benefit obligation of $1,030. 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.

Expected Long-Term Rate of Return  Our expected long-term rate of return on plan assets of 8.50% for 2008 and 2007 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. 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 2008 combined pension and postretirement cost to increase $814 over 2007.

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. Additionally, to recognize the disproportionate growth in prescription drug costs, we have developed separate trend assumptions for medical and prescription drugs. 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 in recent years (e.g. increased co-pays and deductibles for prescription drugs and certain medical services), we continue to experience better than expected claims experience. The following table provides our assumed average health care cost trend based on the demographics of plan participants.

67

Notes to Consolidated Financial Statements, continued

Dollars in millions except per share amounts

	2008			2007
Health care cost trend rate assumed for current year
Retirees 64 and under		5.76	%		6.43	%
Retirees 65 and over		6.36	%		7.50	%
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

A one percentage-point change in the assumed combined medical and dental cost trend rate would have the following effects:

	One Percentage- Point Increase			One Percentage- Point Decrease
Increase (decrease) in total of service and interest cost components		$	438		$	(351	)
Increase (decrease) in accumulated postretirement benefit obligation			4,314			(3,583	)

For the majority of our labor contracts that contain an annual dollar value cap for the purpose of determining contributions required from nonmanagement retirees who retire during the term of the labor contract, we have waived the cap during the relevant contract periods and thus not collected contributions from those retirees, and we have similarly waived the cap for nonmanagement retirees who retired prior to inception of the labor contract. Therefore, in accordance with the substantive plan provisions required in accounting for postretirement benefits under GAAP, we do 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).

Plan Assets

Plan assets consist primarily of private and public equity, government and corporate bonds, and real estate. 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 a broadly diversified style. 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 for the pension plan is based on a study completed during 2007. The asset allocation policy for the VEBA assets is based on our legacy operations, and the pre-acquisition allocation policies of ATTC and BellSouth. It is our intention to complete an asset allocation study during 2008.

68

Notes to Consolidated Financial Statements, continued

Dollars in millions except per share amounts

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			2007			2006			Target			2007			2006
Equity securities
Domestic		35% – 45	%		39	%		38	%		38% – 58	%		49	%		51	%
International		13% – 23	%		18			19			7% – 27	%		24			22
Debt securities		22% – 32	%		27			26			13% – 23	%		17			18
Real estate		5% – 11	%		9			8			0% –10	%		2			2
Other		4% – 10	%		7			9			7% – 17	%		8			7
Total					100	%		100	%					100	%		100	%

At December 31, 2007, AT&T securities represented less than 0.5% of assets held by our pension plans and VEBA trusts.

Estimated Future Benefit Payments

Expected benefit payments are estimated using the same assumptions used in determining our benefit obligation at December 31, 2007. 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:

	Pension Benefits		Postretirement Benefits		Medicare Subsidy Receipts
2008	$	4,964	$	2,520	$	(120	)
2009		4,841		2,636		(130	)
2010		4,864		2,733		(140	)
2011		4,857		2,815		(150	)
2012		4,853		2,843		(164	)
Years 2013 – 2017		23,393		14,389		(1,047	)

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 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, 2007 and 2006 were $2,301 and $2,470, respectively.

The following table provides information for our supplemental retirement plans with accumulated benefit obligations in excess of plan assets:

	2007			2006
Projected benefit obligation	$	(2,301	)	$	(2,470	)
Accumulated benefit obligation		(2,155	)		(2,353	)
Fair value of plan assets		-			-

69

Notes to Consolidated Financial Statements, continued

Dollars in millions except per share amounts

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	2007		2006
Service cost - benefits earned during the period	$	16	$	15
Interest cost on projected benefit obligation		147		108
Amortization of prior service cost		6		4
Recognized actuarial loss		27		29
Net supplemental retirement pension cost	$	196	$	156

Other Changes Recognized in Other Comprehensive Income1	2007			2006
Net loss (gain)	$	(60	)	$	233
Prior service cost (credit)		11			7
Amortization of net loss (gain)		15			-
Amortization of prior service cost		3			-
Total recognized in net supplemental pension cost and other comprehensive income	$	(31	)	$	240

 1 FAS 158 required prospective application for fiscal years ending after December 15, 2006.

In addition to the net supplemental retirement pension cost in the table above, we recorded charges of $32 due to accelerated benefit expenses and settlement charges related to retirements during 2007.

The estimated net loss and 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 are $18 and $6, respectively.

Deferred compensation expense was $106 in 2007, $39 in 2006 and $46 in 2005. Our deferred compensation liability, included in “Other noncurrent liabilities,” was $1,116 at December 31, 2007 and $996 at December 31, 2006.

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. As described earlier and in accordance with FAS 87, we eliminated previously-existing unrecognized net gains or losses, unrecognized prior service costs and unrecognized net transition obligations. The following table provides the plans’ benefit obligations and fair value of assets and a statement of the funded status at December 31.

The net amounts recorded as “Postemployment benefit obligation” on our consolidated balance sheets at December 31, 2007 and 2006 were $(48) and $158, respectively.

	2007			2006
Benefit obligations at end of year	$	(1,016	)	$	(1,016	)
Fair value of plan assets		1,064			858
(Unfunded) benefit obligation	$	48		$	(158	)

The following table provides information for certain non-U.S. defined-benefit pension plans with accumulated benefit obligations in excess of plan assets:

	2007		2006
Projected benefit obligation	$	1,015	$	1,016
Accumulated benefit obligation		892		874
Fair value of plan assets		1,064		858

70

Notes to Consolidated Financial Statements, continued

Dollars in millions except per share amounts

In determining the projected benefit obligation for certain non-U.S. defined-benefit pension plans, we used the following significant weighted-average assumptions:

	2007			2006
Discount rate for determining projected benefit obligation at December 31		5.57	%		4.86	%
Discount rate in effect for determining net cost (benefit)		4.86	%		4.55	%
Long-term rate of return on plan assets		6.15	%		6.09	%
Composite rate of compensation increase for determining projected benefit obligation at December 31		4.25	%		4.36	%
Composite rate of compensation increase for determining net pension cost		4.36	%		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	2007			2006
Service cost - benefits earned during the period	$	25		$	27
Interest cost on projected benefit obligation		52			45
Expected return on assets		(54	)		(43	)
Amortization of prior service cost		(1	)		-
Net pension cost	$	22		$	29

Other Changes Recognized in Other Comprehensive Income1	2007			2006
Net loss (gain)	$	(105	)	$	40
Amortization of net loss (gain)		(2	)		-
Amortization of prior service cost		-			-
Total recognized in net pension cost and other comprehensive income	$	(107	)	$	40

 1 FAS 158 required prospective application for fiscal years ending after December 15, 2006.

The estimated net gain that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year is $3.

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 $633, $412 and $334 for the years ended December 31, 2007, 2006 and 2005.

71

Notes to Consolidated Financial Statements, continued

Dollars in millions except per share amounts

NOTE 12. STOCK-BASED COMPENSATION

We account for stock-based compensation using FAS 123(R). By using the modified retrospective method to adopt FAS 123(R), we increased the amount of excess tax benefits we had previously recorded on our consolidated balance sheets. Our accounting under FAS 123(R) may affect our ability to fully realize the value shown on our balance sheet 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 strike price plus the fair value of the option at the grant date. The provisions of FAS 123(R) do not allow a valuation allowance to be recorded unless the company’s 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 balance sheet. 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, 2007, we had various stock-based compensation plans, which are described below. The compensation cost recognized for those plans for the years ended December 31 was $720 in 2007, $301 in 2006 and $143 in 2005 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 stock-based compensation arrangements for the years ended December 31, 2007, 2006 and 2005 was $275, $116 and $54.

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, 2007 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. During 2006, we amended our stock option plan to vest upon the date of grant. 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. Performance stock units, which are nonvested stock units, are granted to key employees based upon the stock price at the date of grant and are awarded in the form of common stock and cash at the end of a three-year period, subject to the achievement of certain performance goals. Other nonvested stock units are valued at the market price of our stock at the date of grant and vest over a three- to five-year period. As of December 31, 2007, we were authorized to issue up to 133 million shares of 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.

The compensation cost that has been charged against income for our stock-based compensation plans is as follows:

	2007		2006		2005
Performance stock units	$	620	$	282	$	116
Restricted stock		68		6		6
Stock option expense		14		13		19
Other		18		-		2
Total	$	720	$	301	$	143

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 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:

	2007			2006			2005
Risk-free interest rate		5.01	%		4.94	%		4.15	%
Dividend yield		3.65	%		4.75	%		5.38	%
Expected volatility factor		20.75	%		21.79	%		22.47	%
Expected option life in years		7.00			8.00			8.00

72

Notes to Consolidated Financial Statements, continued

Dollars in millions except per share amounts

A summary of option activity as of December 31, 2007, and changes during the period then ended, is presented below (shares in millions):

Options	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value 1
Outstanding at January 1, 2007		309		$	37.96
Granted		2			38.99
Exercised		(68	)		29.76
Forfeited or expired		(12	)		45.00
Outstanding at December 31, 2007		231		$	40.03		3.10	$	1,266
Exercisable at December 31, 2007		229		$	40.04		3.05	$	1,261

 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 year ended December 31 was $7.71 in 2007, $4.78 in 2006 and $3.39 in 2005. The total intrinsic value of options exercised during the year was $667 in 2007, $134 in 2006 and $24 in 2005.

It is our policy to satisfy share option exercises using our treasury shares. The actual tax benefit realized for the tax deductions from option exercises from these arrangements for the years ended December 31, 2007, 2006 and 2005 totaled $77, $28 and $9.

A summary of the status of our nonvested stock units, which includes performance stock units as of December 31, 2007, and changes during the year then ended is presented as follows (shares in millions):

Nonvested Stock Units	Shares			Weighted-Average Grant-Date Fair Value
Nonvested at January 1, 2007		25		$	24.03
Granted		17			36.78
Vested		(14	)		25.00
Forfeited		(1	)		30.17
Other		9			24.68
Nonvested at December 31, 2007		36		$	29.49

As of December 31, 2007, there was $422 of total unrecognized compensation cost related to nonvested stock-based compensation arrangements granted. That cost is expected to be recognized over a weighted-average period of 1.58 years. The total fair value of shares vested during the years ended December 31, 2007, 2006 and 2005 was $345, $246 and $38.

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 will expire on December 31, 2009. As of December 31, 2007, we had not repurchased any shares under this program.

73

Notes to Consolidated Financial Statements, continued

Dollars in millions except per share amounts

NOTE 14. ADDITIONAL FINANCIAL INFORMATION

	December 31,
Balance Sheets	2007		2006
Accounts payable and accrued liabilities:
Accounts payable	$	7,059	$	6,919
Accrued rents and other		4,321		3,957
Accrued payroll and commissions		3,419		3,974
Deferred directory revenue		2,348		1,721
Accrued interest		1,149		915
Compensated future absences		637		759
Current portion of employee benefit obligation		249		973
Other		2,217		2,888
Total accounts payable and accrued liabilities	$	21,399	$	22,106
Deferred compensation (included in Other noncurrent liabilities)	$	2,141	$	2,064

Statements of Income	2007			2006				2005
Advertising expense	$	3,430		$	1,530		$	812
Interest expense incurred	$	3,678		$	1,916		$	1,492
Capitalized interest		(171	)		(73	)		(36	)
Total interest expense	$	3,507		$	1,843		$	1,456
Statements of Cash Flows	2007			2006				2005
Cash paid during the year for:
Interest	$	3,445		$	1,666		$	1,395
Income taxes, net of refunds		4,013			2,777			2,038

Statements of Stockholders’ Equity		2007		2006		2005
Accumulated other comprehensive income (loss) is comprised of the following components, net of taxes, at December 31:
Foreign currency translation adjustment	$	(469)	$	(488)	$	(505)
Unrealized gains on securities		375		345		340
Unrealized (losses) on cash flow hedges		(226)		(172)		(189)
Defined benefit postretirement plan		(59)		(4,999)		-
Other		(1)		-		(2)
Accumulated other comprehensive (loss)	$	(380)	$	(5,314)	$	(356)

No customer accounted for more than 10% of consolidated revenues in 2007, 2006 or 2005.

NOTE 15. TRANSACTIONS WITH AT&T MOBILITY

Prior to our December 29, 2006 acquisition of BellSouth (see Note 2), we and BellSouth, the two owners of AT&T Mobility, each made a subordinated loan to AT&T Mobility (shareholder loans) and entered into a revolving credit agreement with AT&T Mobility to provide short-term financing for operations. Following the BellSouth acquisition both our shareholder loan and revolving credit agreement with AT&T Mobility were consolidated and do not appear on our consolidated balance sheets at December 31, 2007 and 2006. The shareholder loan carries an annual 6.0% interest rate and we earned interest income on this loan of $246 during 2006 and $311 in 2005.

Prior to our BellSouth acquisition, we generated revenues of $1,466 in 2006 and $869 in 2005 for services sold to AT&T Mobility. These revenues were primarily from access and long-distance services sold to AT&T Mobility on a wholesale basis and commissions revenue related to customers added through AT&T sales sources.

74

Notes to Consolidated Financial Statements, continued

Dollars in millions except per share amounts

NOTE 16. 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 Statement of Financial Accounting Standards No. 5, “Accounting 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 $2,461 in 2008, $2,237 in total for 2009 and 2010, $1,197 in total for 2011 and 2012 and $471 in total for years thereafter.

NOTE 17. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

The following table represents our quarterly financial results:

											Stock Price
	Total						Basic		Diluted
Calendar	Operating		Operating		Net		Earnings		Earnings
Quarter	Revenues		Income		Income		Per Share1		Per Share1		High		Low		Close
2007
First	$	28,969	$	4,664	$	2,848	$	0.46	$	0.45	$	39.86	$	33.20	$	39.43
Second		29,478		4,944		2,904		0.47		0.47		41.54		38.38		41.50
Third		30,132		5,304		3,063		0.50		0.50		42.97		36.53		42.31
Fourth		30,349		5,492		3,136		0.52		0.51		42.79		36.25		41.56
Annual	$	118,928	$	20,404	$	11,951		1.95		1.94
2006
First	$	15,756	$	2,191	$	1,445	$	0.37	$	0.37	$	28.82	$	24.24	$	27.04
Second		15,770		2,604		1,808		0.47		0.46		28.03		24.72		27.89
Third		15,638		2,917		2,165		0.56		0.56		33.76		26.35		32.56
Fourth		15,891		2,576		1,938		0.50		0.50		36.21		31.57		35.75
Annual	$	63,055	$	10,288	$	7,356		1.89		1.89

  1 Quarterly earnings per share impacts may not add to full-year earnings per share impacts due to the difference in weighted-average shares for the quarters versus the weighted-average shares for the year.

75

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, 2007. 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, 2007, 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. The attestation report is included on Page 82.

/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

76

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, 2007 and 2006, and the related consolidated statements of income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2007. 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, 2007 and 2006, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2007, in conformity with U.S. generally accepted accounting principles.

As discussed in Note 1 to the consolidated financial statements, in 2007 the Company changed its method of accounting for income taxes.

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, 2007, 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 14, 2008 expressed an unqualified opinion thereon.

San Antonio, Texas

February 14, 2008

77

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, 2007, 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, 2007, based onthe 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, 2007 and 2006, and the related consolidated statements of income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2007, of the Company and our report dated February 14, 2008, expressed an unqualified opinion thereon.

San Antonio, Texas

February 14, 2008

78

EX-21

Exhibit 21

PRINCIPAL SUBSIDIARIES OF AT&T INC., AS OF DECEMBER 31, 2007
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 & Publishing
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

Legal Name	State of Incorporation/Formation	Conducts Business Under
AT&T Corp.	New York	AT&T Corp; AT&T; Conference Operator-AT&T; Connect N'Save; ACC Business; AT&T Worldnet Services; AT&T Worldnet; AT&T Wholesale; Lucky Dog Phone Co.; SmarTalk; GTI; prepaidserviceguide.com; ConQuest; CQTalk!; UnispeakSMService; AT&T Wholesale; AT&T Communications of Los Angeles; AT&T Communications of San Diego; AT&T Communications of San Francisco
AT&T Communications of California, Inc.	California	same
AT&T Communications of the Mountain States, Inc.	Colorado	Conquest; SmarTalk; CQTalk!
AT&T Communications of NJ, LP	Delaware	same
AT&T Communications of New York, Inc.	New York	same
AT&T Communications of Illinois, Inc.	Illinois	same
AT&T Communications of the Southern States, LLC	Delaware	ACC Business; SmarTalk; prepaidserviceguide.com; GTI; 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 Louisiana AT&T Kentucky AT&T Mississippi AT&T North Carolina AT&T South Carolina AT&T Tennessee

Exhibit 21

Legal Name	State of Incorporation/Formation	Conducts Business Under
AT&T Mobility LLC	Delaware	AT&T Mobility
Cingular Wireless II, LLC	Delaware	AT&T Mobility
New Cingular Wireless Services, Inc.	Delaware	AT&T Mobility
Dobson Communications Corporation	Oklahoma	same
Dobson Cellular Systems, Inc.	Oklahoma	Cellular One
American Cellular Corporation	Delaware	Cellular One

EX-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 14, 2008, 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 2007 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, 2008, 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 other certain 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 other certain 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; and

(10) Registration Statement (Form S-8 No. 333-141864) pertaining to the AT&T Inc. Savings Plan, AT&T Inc. Savings and Security Plan, AT&T Corp. Long Term Savings Plan for Management Employees, AT&T Corp. Long Term Savings and Security Plan, AT&T Corp. Retirement Savings and Profit Sharing Plan, AT&T of Puerto Rico, Inc. Long Term Savings Plan for Management Employees, and AT&T of Puerto Rico, Inc. Long Term Savings and Security Plan

of our reports dated February 14, 2008, 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, 2007.

/s/ Ernst & Young LLP

San Antonio, Texas

February 25, 2008

EX-24

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 San Antonio 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 1st day of February 2008.

/s/ Randall L. Stephenson

Randall L. Stephenson

Chairman of the Board

and Chief Executive Officer

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 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 San Antonio 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.

IN WITNESS WHEREOF, the undersigned executed this Power of Attorney the 1st day of February 2008.

/s/ Gilbert F. Amelio

Gilbert F. Amelio

Director

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 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 San Antonio 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.

IN WITNESS WHEREOF, the undersigned executed this Power of Attorney the 1st day of February 2008.

/s/ William F. Aldinger III

William F. Aldinger III

Director

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 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 San Antonio 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.

IN WITNESS WHEREOF, the undersigned executed this Power of Attorney the 1st day of February 2008.

/s/ Reuben V. Anderson

Reuben V. Anderson

Director

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 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 San Antonio 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.

IN WITNESS WHEREOF, the undersigned executed this Power of Attorney the 1st day of February 2008.

/s/ James H. Blanchard

James H. Blanchard

Director

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 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 San Antonio 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.

IN WITNESS WHEREOF, the undersigned executed this Power of Attorney the 1st day of February 2008.

/s/ August A. Busch III

August A. Busch III

Director

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 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 San Antonio 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.

IN WITNESS WHEREOF, the undersigned executed this Power of Attorney the 1st day of February 2008.

/s/ James P. Kelly

James P. Kelly

Director

 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 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 San Antonio 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.

IN WITNESS WHEREOF, the undersigned executed this Power of Attorney the 1st day of February 2008.

/s/ Jon C. Madonna

Jon C. Madonna

Director

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 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 San Antonio 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.

IN WITNESS WHEREOF, the undersigned executed this Power of Attorney the 1st day of February 2008.

/s/ John B. McCoy

John B. McCoy

Lead Director

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 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 San Antonio 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.

IN WITNESS WHEREOF, the undersigned executed this Power of Attorney the 1st day of February 2008.

/s/ Charles F. Knight

Charles F. Knight

Director

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 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 San Antonio 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.

IN WITNESS WHEREOF, the undersigned executed this Power of Attorney the 1st day of February 2008.

/s/ Lynn M. Martin

Lynn M. Martin

Director

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 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 San Antonio 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.

IN WITNESS WHEREOF, the undersigned executed this Power of Attorney the 1st day of February 2008.

/s/ Mary S. Metz

Mary S. Metz

Director

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 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 San Antonio 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.

IN WITNESS WHEREOF, the undersigned executed this Power of Attorney the 1st day of February 2008.

/s/ Toni Rembe

Toni Rembe

Director

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 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 San Antonio 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.

IN WITNESS WHEREOF, the undersigned executed this Power of Attorney the 1st day of February 2008.

/s/ Joyce M. Roché

Joyce M. Roché

Director

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 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 San Antonio 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.

IN WITNESS WHEREOF, the undersigned executed this Power of Attorney the 1st  day of February 2008.

/s/ Laura D'Andrea Tyson

Laura D'Andrea Tyson

Director

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 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 San Antonio 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.

IN WITNESS WHEREOF, the undersigned executed this Power of Attorney the 1st day of February 2008.

/s/ Patricia P. Upton

Patricia P. Upton

Director

EX-31.1

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 27, 2008

/s/ Randall Stephenson

Randall Stephenson

Chairman of the Board, Chief Executive Officer

and President

EX-31.2

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 27, 2008

/s/ Richard G. Lindner

Richard G. Lindner

Senior Executive Vice President

     and Chief Financial Officer

EX-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, 2007 (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 27, 2008                                                                               February 27, 2008

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.