ex10u.htm


    Exhibit
10-u

    


    


    


    


    


    


    


    


    


    


    


    


    


    


    PACIFIC
TELESIS GROUP

    


    1996 EXECUTIVE DEFERRED
COMPENSATION PLAN

    


    (Amended
Effective November 20, 2008)

    


    


    


    


    


    


    


    


    


    


    


    


    


     

    
      
         


      

      
         


        
          

        

      

      
         


      

    


    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.