Exhibit 10-u

PACIFIC TELESIS GROUP

1996 EXECUTIVE DEFERRED COMPENSATION PLAN

(Amended Effective November 20, 2008)

 
 
 

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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.

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

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

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

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

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

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

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

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

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

 
(D)
Any other similar unforeseeable emergency that is caused by an 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.

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

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

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

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

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

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

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

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

7.6.5   Distributions Upon Income Inclusion Under Code Section
409A.  Distributions to an employee may commence at any time the Plan fails to
meet the requirements of Code Section 409A and the regulation issued thereunder,
as applicable to and with respect to such employee; provided, however, the
amount of such distribution shall exceed the amount required to be included in
income as a result of the failure to comply with such requirements.

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

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            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.