1995 MANAGEMENT STOCK OPTION PLAN

1.1

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

1.2

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

(b)

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

 (c)

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

 (d)

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

 (e)

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

 (f)

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

(g)

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

(h)

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

 (i)

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

 (j)

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

 (k)

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

1.3

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

2.1

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

3.1

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

3.2

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

3.3

Adjustments in Authorized Shares .  In the event of a merger, reorganization, consolidation, recapitalization, separation, liquidation, stock dividend, stock split, share combination, or other change in the corporate structure of the Company affecting the Shares, such adjustment shall be made in the number and class of Shares which may be delivered under the Plan, and in the number and class of and/or price of Shares subject to outstanding Options granted under the Plan, as may be determined to be appropriate and equitable by the Committee, in its sole discretion, to prevent dilution or enlargement of rights; and provided that the number of Shares subject to any Option shall always be a whole number.

4.1

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

4.2

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

4.3

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

4.5

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

4.6.

Exercise of Options .  Options granted under the Plan shall be exercisable at such times and be subject to such restrictions and conditions as the Committee or the Board shall in each instance approve, which need not be the same for each grant or for each Participant. Exercises of Options may be effected only on days and during the hours that the New York Stock Exchange is open for regular trading.  The Company may further change or limit the times or days Options may be exercised.  If an Option expires on a day or at a time when exercises are not permitted, then the Options may be exercised no later than the immediately preceding date and time that the Options were exercisable.

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

4.7

Payment .  The Option Price shall be paid in full at