SBC COMMUNICATIONS INC
2001 INCENTIVE PLAN
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<TYPE>EX-10
<SEQUENCE>14
<FILENAME>exhibit10u.htm
<DESCRIPTION>2001 INCENTIVE PLAN
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 <p ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SBC Communications Inc.
</FONT></p>









 <H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2001 INCENTIVE PLAN
</FONT></H1>





         <p ALIGN=right><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Plan Effective:&nbsp;&nbsp;&nbsp;&nbsp;April 27, 2001<br>
           Revisions Effective:  January 31, 2003 </FONT></p>


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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>TABLE OF
CONTENTS</FONT></H1>

<PRE>
Article 1    Establishment and Purpose...............................................1

   1.1    Establishment of the Plan..................................................1
   1.2    Purpose of the Plan........................................................1
   1.3    Effective Date of the Plan.................................................1

Article 2    Definitions.............................................................1

Article 3    Administration..........................................................4

   3.1    The Committee..............................................................4
   3.2    Authority of the Committee.................................................5

Article 4    Shares Subject to the Plan..............................................6

   4.1    Number of Shares...........................................................6
   4.2    Lapsed Awards..............................................................7
   4.3    Adjustments in Authorized Plan Shares......................................7

Article 5    Eligibility and Participation...........................................7

   5.1    Eligibility................................................................7
   5.2    Actual Participation.......................................................7

Article 6    Stock Options...........................................................7

   6.1    Grant of Options...........................................................7
   6.2    Form of Issuance...........................................................8
   6.3    Exercise Price.............................................................8
   6.4    Duration of Options........................................................8
   6.5    Vesting of Options.........................................................8
   6.6    Exercise of Options........................................................9
   6.7    Payment....................................................................9
   6.8    Termination of Employment.................................................10
   6.9    Employee Transfers........................................................12
   6.10   Restrictions on Exercise and Transfer of Options..........................12
   6.11   Competition and Solicitation..............................................12

Article 7    Restricted Stock.......................................................13

   7.1    Grant of Restricted Stock.................................................13
   7.2    Restricted Stock Agreement................................................13
   7.3    Transferability...........................................................13
   7.4    Restrictions..............................................................13
   7.5    Removal of Restrictions...................................................14
   7.6    Voting Rights, Dividends and Other Distributions..........................14
   7.7    Termination of Employment Due to Death or Disability......................14
   7.8    Termination of Employment for Other Reasons...............................14
   7.9    Employee Transfers........................................................15

Article 8    Performance Units and Performance Shares...............................15

   8.1    Grants of Performance Units and Performance Shares........................15
   8.2    Value of Performance Shares and Units.....................................15
   8.3    Performance Period........................................................16
   8.4    Performance Goals.........................................................16
   8.5    Dividend Equivalents on Performance Shares................................17
   8.6    Form and Timing of Payment of Performance Units and Performance Shares....17
   8.7    Termination of Employment Due to Death or Disability......................18
   8.8    Termination of Employment for Other Reasons...............................19
   8.9    Termination of Employment for Cause.......................................19
   8.10   Nontransferability........................................................19

Article 9    Beneficiary Designation................................................19

Article 10   Deferrals..............................................................19

Article 11   Employee Matters.......................................................19

   11.1   Employment Not Guaranteed.................................................19
   11.2   Participation.............................................................20

Article 12   Change in Control......................................................20

Article 13   Amendment, Modification, and Termination...............................20

   13.1   Amendment, Modification, and Termination..................................20
   13.2   Awards Previously Granted.................................................20

Article 14   Withholding............................................................20

   14.1   Tax Withholding...........................................................20
   14.2   Share Withholding.........................................................21

Article 15   Successors.............................................................21

Article 16   Legal Construction.....................................................21

   16.1   Gender and Number.........................................................21
   16.2   Severability..............................................................21
   16.3   Requirements of Law.......................................................22
   16.4   Errors....................................................................22
   16.5   Elections and Notices ....................................................22
   16.6   Govering Law..............................................................22
   16.7   Venue22
</PRE>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SBC
COMMUNICATIONS INC.<br>

2001 INCENTIVE PLAN</FONT></H1>

<p ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Article 1
<u>Establishment and Purpose.</u></FONT></p>


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<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1.1</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> <u>Establishment of the Plan.</u>
SBC Communications Inc., a Delaware corporation (the &#147;Company&#148; or &#147;SBC&#148;),
hereby establishes an incentive compensation plan (the &#147;Plan&#148;), as set
forth in this document.</FONT></td>
</tr>
</table><br>


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<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1.2</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> <u>Purpose of the Plan</U>. The purpose of the Plan is to promote the success
and enhance the value of the Company by linking the personal interests of
Participants to those of the Company&#146;s shareowners, and by providing
Participants with an incentive for outstanding performance. </FONT></td>
</tr>
</table><br>


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<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1.3</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> <u>Effective Date of the Plan</U>. The Plan shall become effective on
April&#160;27, 2001; however, grants may be made before that time subject to
becoming effective on or after that date. </FONT></td>
</tr>
</table>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Article
2 <U>Definitions</U>. Whenever used in the Plan, the following terms shall have
the meanings set forth below and, when the meaning is intended, the initial
letter of the word is capitalized: </FONT></P>
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<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (a)      "Award" means, individually or collectively, a grant or award under this Plan
                           of Stock Options, Restricted Stock, Performance Units, or Performance Shares.
</FONT></td>
</tr>
</table><br>
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<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (b)      "Award Agreement" means an agreement which may be entered into by each
                           Participant and the Company, setting forth the terms and provisions applicable to
                           Awards granted to Participants under this Plan.
</FONT></td>
</tr>
</table><br>
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<TR VALIGN=TOP>
<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (c)      "Board" or "Board of Directors" means the SBC Board of Directors.
</FONT></td>
</tr>
</table><br>
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<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (d)      "Cause" shall mean willful and gross misconduct on the part of an Employee
                           that is materially and demonstrably detrimental to the Company or any Subsidiary as
                           determined by the Company in its sole discretion.
</FONT></td>
</tr>
</table><br>
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<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (e)      "Change in Control" shall be deemed to have occurred if (i) any "person" (as
                           such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than a
                           trustee or other fiduciary holding securities under an employee benefit plan of the
                           Company or a corporation owned directly or indirectly by the shareowners of the
                           Company in substantially the same proportions as their ownership of stock of the
                           Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under said
                           Act), directly or indirectly, of securities of the Company representing twenty percent
                           (20%) or more of the total voting power represented by the Company's then outstanding
                           voting securities, or (ii) during any period of two (2) consecutive years, individuals
                           who at the beginning of such period constitute the Board of Directors of the Company
                           and any new Director whose election by the Board of Directors or nomination for
                           election by the Company's shareowners was approved by a vote of at least two-thirds
                           (2/3) of the Directors then still in office who either were Directors at the beginning
                           of the period or whose election or nomination for election was previously so approved,
                           cease for any reason to constitute a majority thereof, or (iii) the 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 eighty percent (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.
</FONT></td>
</tr>
</table><br>
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<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (f)      "Code" means the Internal Revenue Code of 1986, as amended from time to time.
</FONT></td>
</tr>
</table><br>
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<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (g)      "Committee" means the committee or committees of the Board of Directors given
                           authority to administer the Plan as provided in Article 3.
</FONT></td>
</tr>
</table><br>
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<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (h)      "Director" means any individual who is a member of the SBC Board of Directors.
</FONT></td>
</tr>
</table><br>
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<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (i)      "Disability" shall mean absence of an Employee from work under the relevant
                           Company or Subsidiary disability plan.
</FONT></td>
</tr>
</table><br>
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<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (j)      "Employee" means any employee of the Company or of one of the Company's
                           Subsidiaries.  "Employment" means the employment of an Employee by the Company or one
                           of its Subsidiaries.  Directors who are not otherwise employed by the Company shall
                           not be considered Employees under this Plan.
</FONT></td>
</tr>
</table><br>
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<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (k)      "Exchange Act" means the Securities Exchange Act of 1934, as amended from time
                           to time, or any successor Act thereto.
</FONT></td>
</tr>
</table><br>
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<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (l)      "Exercise Price" means the price at which a Share may be purchased by a
                           Participant pursuant to an Option, as determined by the Committee.
</FONT></td>
</tr>
</table><br>
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<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (m)      "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.
</FONT></td>
</tr>
</table><br>
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<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (n)      "Insider" shall mean an Employee who is, on the relevant date, an officer,
                           director, or ten percent (10%) beneficial owner of the Company, as those terms are
                           defined under Section 16 of the Exchange Act.
</FONT></td>
</tr>
</table><br>
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<TR VALIGN=TOP>
<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (o)      "Key Executive Officer Short Term Award" or "KEO Award" means a Performance
                           Unit.
</FONT></td>
</tr>
</table><br>
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<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (p)      "Option" means an option to purchase Shares from SBC.
</FONT></td>
</tr>
</table><br>
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<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (q)      "Participant" means an Employee or former Employee who holds an outstanding
                           Award granted under the Plan.
</FONT></td>
</tr>
</table><br>
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<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (r)      "Performance Unit" and "Performance Share" shall each mean an Award granted to
                           an Employee pursuant to Article 8 herein.
</FONT></td>
</tr>
</table><br>
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<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (s)      "Plan" means this 2001 Incentive Plan.  The Plan may also be referred to as
                           the "SBC 2001 Incentive Plan" or as the "SBC Communications Inc. 2001 Incentive Plan."
</FONT></td>
</tr>
</table><br>
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<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (t)      "Restricted Stock" means an Award of Stock granted to an Employee pursuant to
                           Article 7 herein.
</FONT></td>
</tr>
</table><br>
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<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (u)      "Retirement" or to "Retire" shall mean the Participant's Termination of
                           Employment for any reason other than death, Disability or for Cause, on or after the
                           earlier of the following dates, or as otherwise provided by the Committee: (1) for
                           Officer Level Employees (Participants deemed officer level Employees for compensation
                           purposes as indicated on the records of SBC), the date the Participant attains age 55
                           (individuals who become Officer Level Employees on or after January 1, 2002, must also
                           have five (5) years of service); or (2) the date the Participant has attained one of
                           the following combinations of age and service, except as otherwise indicated below:
</FONT></td>
</tr>
</table><br>
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<TR VALIGN=TOP>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><u>Net Credited Service </u></font></td>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><u>Age</u></font></td>
</tr>
<TR VALIGN=TOP>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10 Years or more</font></td>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>65 or older</font></td>
</tr>
<TR VALIGN=TOP>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>20 Years or more</font></td>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>55 or older</font></td>
</tr>
<TR VALIGN=TOP>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>25 Years or more</font></td>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>50 or older</font></td>
</tr>
<TR VALIGN=TOP>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>30 Years or more</font></td>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Any age</font></td>
</tr>
</table>

<BR>


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<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
In
determining whether a Participant&#146;s Termination of Employment under the
Enhanced Pension and Retirement Program (&#147;EPR&#148;) is a Retirement as
defined above, 5 years shall be added to each of Age and Net Credited Service.</FONT></TD>
</TR>
</TABLE>
<BR>
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<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (v)      "Rotational Work Assignment Company" ("RWAC") shall mean any entity with which
                           SBC Communications Inc. or any of its Subsidiaries may enter into an agreement to
                           provide an employee for a rotational work assignment.
</FONT></TD>
</TR>
</TABLE>
<BR>
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<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (w)      "Shares" or "Stock" means the shares of common stock of the Company.
</FONT></TD>
</TR>
</TABLE>
<BR>
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<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (x)      "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.
</FONT></TD>
</TR>
</TABLE>
<BR>
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<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (y)      "Termination of Employment" or a similar reference shall mean the event where
                           the Employee is no longer an Employee of the Company or of any Subsidiary, including
                           but not limited to where the employing company ceases to be a Subsidiary.
</FONT></TD>
</TR>
</TABLE>
<BR>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Article 3 <u>Administration.</u></font></p>


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<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.1</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> <u>The Committee.</u>  Administration of the Plan shall be as follows:</FONT></td>
</tr>
</table><br>

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<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (a)      With respect to Insiders, the Plan and all Awards hereunder shall be
                           administered by the Human Resources Committee of the Board or such other Committee as
                           may be appointed by the Board for this purpose (each of the Human Resources Committee
                           and such other committee is the "Disinterested Committee"), where each Director on
                           such Disinterested Committee is a "Non-Employee Director", as that term is used in
                           Rule 16b-3 under the Exchange Act (or any successor designation for determining who
                           may administer plans, transactions or awards exempt under Section 16(b) of the
                           Exchange Act), as that rule may be modified from time to time.
</FONT></TD>
</TR>
</TABLE>
<BR>
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<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (b)      The Disinterested Committee and such other Committee as the Board may create,
                           if any, to administer the Plan with respect to non-Insiders (such other Committee
                           shall be the "Non-Insider Committee") shall each have full authority to administer the
                           Plan and all Awards hereunder with respect to all persons who are not Insiders, except
                           as otherwise provided herein or by the Board.  Any Committee may be replaced by the
                           Board at any time.
</FONT></TD>
</TR>
</TABLE>
<br>
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<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.2</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Authority of the Committee</U>. The Committee shall have full power, except
as limited by law and subject to the provisions herein, in its sole and
exclusive discretion: to grant Awards; to select the recipients of Awards; to
determine the eligibility of a person to participate in the Plan or to receive a
particular Award; to determine the sizes and types of Awards; to determine the
terms and conditions of such Awards in a manner consistent with the Plan; to
construe and interpret the Plan and any agreement or instrument entered into
under the Plan; to establish, amend, or waive rules and regulations for the
Plan&#146;s administration; and (subject to the provisions of Article 13 herein)
to amend the terms and conditions of any outstanding Award to the extent such
terms and conditions are within the discretion of the Committee as provided in
the Plan. Further, the Committee shall make all other determinations in its
discretion, which may be necessary or advisable for the administration of the
Plan.</FONT></TD>
</TR>
</TABLE>
<BR>

 <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No Award other than Restoration Options may be made under
the Plan after April 2, 2011.</font></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;References
to determinations or other actions by SBC or the Company, herein, shall mean
actions authorized by the Committee, the Chairman of the Board of SBC, 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. </FONT>
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
determinations and decisions made by SBC pursuant to the provisions of the Plan
and all related orders or resolutions of the Board shall be final, conclusive,
and binding on all persons, including the Company, its stockholders, Employees,
Participants, and their estates and beneficiaries. </FONT>
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject
to the terms of this Plan, the Committee is authorized, and shall not be limited
in its discretion, to use any of the Performance Criteria specified herein in
its determination of any Award under this Plan. </FONT>
</TD>
</TR>
</TABLE>
<BR>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Article 4 <u>Shares Subject to the Plan.</u></font></p>


<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.1</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Number of Shares</U>. Subject to adjustment as provided in Section 4.3
herein, the number of Shares available for issuance under the Plan shall not
exceed 60 million Shares of Stock. No more than 10% of the Shares approved for
issuance under this Plan may be Shares of Restricted Stock. No more than 40% of
the Shares approved for issuance under this Plan may be issued to Participants
as a result of Performance Share and Restricted Stock Awards. The Shares granted
under this Plan may be either authorized but unissued or reacquired Shares. The
Disinterested Committee shall have full discretion to determine the manner in
which Shares available for grant are counted in this Plan.</FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Without
limiting the discretion of the Committee under this section, unless otherwise
provided by the Committee, the following rules will apply for purposes of the
determination of the number of Shares available for grant under the Plan or
compliance with the foregoing limits: </FONT>
</TD>
</TR>
</TABLE>
<BR>
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=15% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (a)      The grant of a Stock Option or a Restricted Stock Award shall reduce the
                           Shares available for grant under the Plan by the number of Shares subject to such
                           Award.  However, to the extent the Participant uses previously owned Shares to pay the
                           Exercise Price or any taxes, or Shares are withheld to pay taxes, these Shares shall
                           be available for regrant under the Plan.
</FONT>
</TD>
</TR>
</TABLE>
<BR>
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=15% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (b)      With respect to Performance Shares, the number of Performance Shares granted
                           under the Plan shall be deducted from the number of Shares available for grant under
                           the Plan. The number of Performance Shares which cannot be, or are not, converted into
                           Shares and distributed (including deferrals) to the Participant or deferred through
                           another plan following the end of the Performance Period, or which are withheld for
                           taxes, shall increase the number of Shares available for regrant under the Plan by an
                           equal amount.
</FONT>
</TD>
</TR>
</TABLE>
<BR>
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=15% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (c)      With respect to Performance Units representing a fixed dollar amount that may
                           only be settled in cash, the Performance Units Award shall not affect the number of
                           Shares available under the Plan.
</FONT>
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.2</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Lapsed Awards</U>. If any Award granted under this Plan is canceled,
terminates, expires, or lapses for any reason, Shares subject to such Award
shall be again available for the grant of an Award under the Plan.</FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.3</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Adjustments in Authorized Plan Shares</U>. In the event of any merger,
reorganization, consolidation, recapitalization, separation, liquidation, Stock
dividend, split-up, Share combination, or other change in the corporate
structure of the Company affecting the Shares, an adjustment shall be made in
the number and class of Shares which may be delivered under the Plan (including
individual limits), and in the number and class of and/or price of Shares
subject to outstanding Awards granted under the Plan, and/or the number of
outstanding Options, Shares of Restricted Stock, and Performance Shares
constituting outstanding Awards, as may be determined to be appropriate and
equitable by the Disinterested Committee, in its sole discretion, to prevent
dilution or enlargement of rights.</FONT></TD>
</TR>
</TABLE>
<BR>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Article 5 <u>Eligibility and Participation.</u></font></p>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5.1</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<u>Eligibility.</u>  All management Employees are eligible to receive Awards under this Plan.</FONT></TD>
</TR>
</TABLE>
<BR>


<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5.2</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Actual Participation</U>. Subject to the provisions of the Plan, the
Committee may, from time to time, select from all eligible Employees, those to
whom Awards shall be granted and shall determine the nature and amount of each
Award. No Employee is entitled to receive an Award unless selected by the
Committee.</FONT></TD>
</TR>
</TABLE>
<BR>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Article 6 <u>Stock Options.</u></font></p>


<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6.1</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Grant of Options</U>. Subject to the terms and provisions of the Plan,
Options may be granted to Employees at any time and from time to time, and under
such terms and conditions, as shall be determined by the Committee. In addition,
the Committee may, from time to time, provide for the payment of dividend
equivalents on Options, prospectively and/or retroactively, on such terms and
conditions as the Committee may require. The Committee shall have discretion in
determining the number of Shares subject to Options granted to each Employee;
provided, however, that the maximum number of Shares subject to Options which
may be granted to any single Employee during any calendar year shall not exceed
2% of the Shares approved for issuance under this Plan. The Committee may not
grant Incentive Stock Options, as described in Section 422 of the Code, under
this Plan. The Committee may authorize the automatic grant of additional Options
(&#147;Restoration Options&#148;) when a Participant exercises already
outstanding Options, or options granted under a prior option plan of the
Company, on such terms and conditions as it shall determine. Unless otherwise
provided by the Committee, the number of Restoration Options granted to a
Participant with respect to the exercise of an option (including an Option under
this Plan) shall not exceed the number of Shares delivered by the Participant in
payment of the Exercise Price of such option, and/or in payment of any tax
withholding resulting from such exercise, and any Shares which are withheld to
satisfy withholding tax liability arising out of such exercise. A Restoration
Option shall have an Exercise Price of not less than 100% of the per Share Fair
Market Value on the date of grant of such Restoration Option, and shall be
subject to all the terms and conditions of the original grant, including the
expiration date, and such other terms and conditions as the Committee in its
sole discretion shall determine.</FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6.2</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Form of Issuance</U>. Each Option grant may be issued in the form of an Award
Agreement and/or may be recorded on the books and records of the Company for the
account of the Participant. If an Option is not issued in the form of an Award
Agreement, then the Option shall be deemed granted as determined by the
Committee. The terms and conditions of an Option shall be set forth in the Award
Agreement, in the notice of the issuance of the grant, or in such other
documents as the Committee shall determine. Such terms and conditions shall
include the Exercise Price, the duration of the Option, the number of Shares to
which an Option pertains (unless otherwise provided by the Committee, each
Option may be exercised to purchase one Share), and such other provisions as the
Committee shall determine.</FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6.3</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Exercise Price</U>. Unless a greater Exercise Price is determined by the
Committee, the Exercise Price for each Option Awarded under this Plan shall be
equal to one hundred percent (100%) of the Fair Market Value of a Share on the
date the Option is granted. </FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6.4</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Duration of Options</U>. Each Option shall expire at such time as the
Committee shall determine at the time of grant (which duration may be extended
by the Committee); provided, however, that no Option shall be exercisable later
than the tenth (10th) anniversary date of its grant. In the event the Committee
does not specify the expiration date of an Option, then such Option will expire
on the tenth (10<SUP>th</SUP>) anniversary date of its grant, except as
otherwise provided herein. </FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6.5</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Vesting of Options</U>. Options shall vest at such times and under such terms
and conditions as determined by the Committee; provided, however, unless another
vesting period is provided by the Committee at or before the grant of an Option,
one-third of the Options will vest on each of the first three anniversaries of
the grant; if one Option remains after equally dividing the grant by three, it
will vest on the first anniversary of the grant, if two Options remain, then one
will vest on each of the first two anniversaries. The Committee shall have the
right to accelerate the vesting of any Option; however, the Chairman of the
Board or the Senior Executive Vice President-Human Resources, or their
respective successors, or such other persons designated by the Committee, shall
have the authority to accelerate the vesting of Options for any Participant who
is not an Insider.</FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6.6</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Exercise of Options</U>. Options granted under the Plan shall be exercisable
at such times and be subject to such restrictions and conditions as the
Committee shall in each instance approve, which need not be the same for each
grant or for each Participant. Exercises of Options may be effected only on days
and during the hours that the New York Stock Exchange is open for regular
trading. The Company may change or limit the times or days Options may be
exercised. If an Option expires on a day or at a time when exercises are not
permitted, then the Options may be exercised no later than the immediately
preceding date and time that the Options were exercisable.</FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Options
shall be exercised by providing notice to the designated agent selected by the
Company (if no such agent has been designated, then to the Company), in the
manner and form determined by the Company, which notice shall be irrevocable,
setting forth the exact number of Shares with respect to which the Option is
being exercised and including with such notice payment of the Exercise Price.
When Options have been transferred, the Company or its designated agent may
require appropriate documentation that the person or persons exercising the
Option, if other than the Participant, has the right to exercise the Option. No
Option may be exercised with respect to a fraction of a Share. </FONT>
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6.7</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Payment</U>. The Exercise Price shall be paid in full at the time of
exercise. No Shares shall be issued or transferred until full payment has been
received therefor. </FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Payment may be made:
</font></td>
</tr>
</table>
<br>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (a)      in cash, or
</FONT>
</TD>
</TR>
</TABLE>
<BR>
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (b)      unless otherwise provided by the Committee at any time, and subject to such
                           additional terms and conditions and/or modifications as the Committee or the Company
                           may impose from time to time, and further subject to suspension or termination of this
                           provision by the Committee or Company at any time, by:
</FONT>
</TD>
</TR>
</TABLE>
<BR>
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=15% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                                    (i)     delivery of Shares 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 the Company that the Stock tendered to the Company must have
                                    been held by the Participant for a minimum of six (6) months preceding the
                                    tender; or
</FONT>
</TD>
</TR>
</TABLE>
<BR>
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=15% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                                    (ii)    if the Company has designated a stockbroker to act as the Company's
                                    agent to process Option exercises, issuance of an exercise notice together
                                    with instructions to such stockbroker irrevocably instructing the
                                    stockbroker:  (A) to immediately sell (which shall include an exercise notice
                                    that becomes effective upon execution of a sale order) a sufficient portion of
                                    the Shares to be received from the Option exercise to pay the Exercise Price
                                    of the Options being exercised and the required tax withholding, and (B) to
                                    deliver on the settlement date the portion of the proceeds of the sale equal
                                    to the Exercise Price and tax withholding to the Company.  In the event the
                                    stockbroker sells any Shares on behalf of a Participant, the stockbroker shall
                                    be acting solely as the agent of the Participant, and the Company disclaims
                                    any responsibility for the actions of the stockbroker in making any such
                                    sales.  No Stock shall be issued until the settlement date and until the
                                    proceeds (equal to the Option Price and tax withholding) are paid to the
                                    Company.
</FONT>
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=15%>&nbsp;</TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
payment is made by the delivery of Shares of Stock, the value of the Shares
delivered shall be equal to the Fair Market Value of the Shares on the day
preceding the date of exercise of the Option.</FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=15%>&nbsp;</TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Restricted Stock
may not be used to pay the Option Price.</FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6.8</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<u>Termination of Employment.</u>  Unless otherwise provided by the Committee, the following
limitations on exercise of Options shall apply upon Termination of Employment:</FONT></TD>
</TR>
</TABLE>
<BR>
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (a)      <u>Termination by Death or Disability</u>.  In the event of the Participant's
                           Termination of Employment by reason of death or Disability, all outstanding Options
                           granted to that Participant shall immediately vest as of the date of Termination of
                           Employment and may be exercised, if at all, no more than three (3) years from the date
                           of the Termination of Employment, unless the Options, by their terms, expire earlier.
                           However, in the event the Participant was eligible to Retire at the time of
                           Termination of Employment, notwithstanding the foregoing, the Options may be
                           exercised, if at all, no more than five (5) years from the date of the Termination of
                           Employment, unless the Options, by their terms, expire earlier.
</FONT></TD>
</TR>
</TABLE>
<BR>
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (b)      <u>Termination for Cause</u>.  In the event of the Participant's Termination of
                           Employment by the Company for Cause, all outstanding Options held by the Participant
                           shall immediately be forfeited to the Company and no additional exercise period shall
                           be allowed, regardless of the vested status of the Options.
</FONT></TD>
</TR>
</TABLE>
<BR>
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (c)      <u>Retirement  or  Other   Termination  of   Employment</u>.   In  the  event  of  the
                           Participant's  Termination  of  Employment  for any reason  other than the  reasons  set
                           forth in (a) or (b), above:
</FONT>
</TD>
</TR>
</TABLE>
<BR>
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=15% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                                    (i)     If upon the Participant's Termination of Employment, the Participant
                                    is not an EPR Terminee (as that term is defined in the SBC Pension Benefit
                                    Plan or the Ameritech Management Pension Plan), but is eligible to Retire (and
                                    if the Participant is an officer level employee for compensation purposes as
                                    determined by SBC, the employee must also be age 55 or older at Termination of
                                    Employment), then all outstanding unvested Options granted to that Participant
                                    shall immediately vest as of the date of the Participant's Termination of
                                    Employment; provided, however, this vesting provision shall not apply to
                                    Options granted prior to September 28, 2001, unless and except for those
                                    Options outstanding as of September 27, 2001, that have an Exercise Price
                                    equal to or more than the Fair Market Value of Stock on such date;
</FONT>
</TD>
</TR>
</TABLE>
<BR>
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=15% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                                    (ii)     All outstanding Options which are vested as of the effective date of
                                    Termination of Employment may be exercised, if at all, no more than five (5)
                                    years from the date of Termination of Employment if the Participant is
                                    eligible to Retire, or three (3) months from the date of the Termination of
                                    Employment if the Participant is not eligible to Retire, as the case may be,
                                    unless in either case the Options, by their terms, expire earlier; and
</FONT>
</TD>
</TR>
</TABLE>
<BR>
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=15% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                                    (iii)    In the event of the death of the Participant after Termination of
                                    Employment, this paragraph (c) shall still apply and not paragraph (a), above.
</FONT>
</TD>
</TR>
</TABLE>
<BR>
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (d)      O<u>ptions not Vested at Termination</u>.  Except as provided in paragraph (a),
                           above, all Options held by the Participant which are not vested on or before the
                           effective date of Termination of Employment shall immediately be forfeited to the
                           Company (and shall once again become available for grant under the Plan).
</FONT>
</TD>
</TR>
</TABLE>
<BR>
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (e)      Notwithstanding the foregoing, the Committee may, in its sole discretion,
                           establish different terms and conditions pertaining to the effect of Termination of
                           Employment, but no such modification shall shorten the terms of Options issued prior
                           to such modification.
</FONT>
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6.9</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Employee Transfers</U>. For purposes of the Plan, transfer of employment of a
Participant between the Company and any one of its Subsidiaries (or between
Subsidiaries) or between the Company or a Subsidiary and a RWAC, to the extent
the period of employment at a RWAC is equal to or less than five (5) years,
shall not be deemed a Termination of Employment. Provided, however, for purposes
of this Article 6, termination of employment with a RWAC without a concurrent
transfer to the Company or any of its Subsidiaries shall be deemed a Termination
of Employment as that term is used herein. Similarly, termination of an
entity&#146;s status as a Subsidiary or as a RWAC shall be deemed a Termination
of Employment of any Participants employed by such Subsidiary or RWAC. </FONT></td>
</tr>
</table>
<br>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6.10</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<u>Restrictions on Exercise and Transfer of Options.</u>  Unless otherwise provided by the Committee:</FONT></td>
</tr>
</table>
<br>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (a)      During the Participant's lifetime, the Participant's Options shall be
                           exercisable only by the Participant or by the Participant's guardian or legal
                           representative.  After the death of the Participant, except as otherwise provided by
                           SBC's Rules for Employee Beneficiary Designations, an Option shall only be exercised
                           by the holder thereof (including, but not limited to, an executor or administrator of
                           a decedent's estate) or his or her guardian or legal representative.
</FONT></TD>
</TR>
</TABLE>
<BR>
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (b)      No Option shall be transferable except: (i) in the case of the Participant,
                           only upon the Participant's death and in accordance with the SBC Rules for Employee
                           Beneficiary Designations; and (ii) in the case of any holder after the Participant's
                           death, only by will or by the laws of descent and distribution.
</FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6.11</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Competition and Solicitation</U>. In the event a Participant directly or
indirectly, engages in competitive activity, or has become associated with,
employed by, controls, or renders service to any business that is engaged in
competitive activity, with (i) the Company, (ii) any Subsidiary, or (iii) any
business in which any of the foregoing have a substantial interest, or if the
Participant attempts, directly or indirectly, to induce any employee of the
Company or a Subsidiary to be employed or perform services elsewhere without the
permission of the Company, then the Company may (i) cancel any Option granted to
such Participant, whether or not vested, in whole or in part; and/or (ii)
rescind any exercise of the Participant&#146;s Options that occurred on or after
that date six months prior to engaging in such activity, in which case the
Participant shall pay the Company the gain realized or received upon such
exercise of Options. &#147;Has become associated with&#148; shall include, among
other things, beneficial ownership of 1/10 of 1% or more of a business engaged
in competitive activity. The determination of whether a Participant has engaged
in any such activity and whether to cancel Options and/or rescind the exercise
of Options shall be made by SBC, and in each case such determination shall be
final, conclusive and binding on all persons. </FONT></TD>
</TR>
</TABLE>
<BR>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Article 7 <u> Restricted Stock.</u></font></p>


<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7.1</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Grant of Restricted Stock</U>. Subject to the terms and provisions of the
Plan, the Committee, at any time and from time to time, may grant Shares of
Restricted Stock to eligible Employees in such amounts and upon such terms and
conditions as the Committee shall determine. In addition to any other terms and
conditions imposed by the Committee, vesting of Restricted Stock may be
conditioned upon the attainment of Performance Goals based on Performance
Criteria in the same manner as provided in Section 8.4, herein, with respect to
Performance Shares. No Employee may receive, in any calendar year, in the form
of Restricted Stock more than one-third of 1% of the Shares approved for
issuance under this Plan. </FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7.2</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Restricted Stock Agreement</U>. The Committee may require, as a condition to
an Award, that a recipient of a Restricted Stock Award enter into a Restricted
Stock Award Agreement, setting forth the terms and conditions of the Award. In
lieu of a Restricted Stock Award Agreement, the Committee may provide the terms
and conditions of an Award in a notice to the Participant of the Award, on the
Stock certificate representing the Restricted Stock, in the resolution approving
the Award, or in such other manner as it deems appropriate.</FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7.3</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Transferability</U>. Except as otherwise provided in this Article 7, and
subject to any additional terms in the grant thereof, Shares of Restricted Stock
granted herein may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated until fully vested.</FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7.4</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Restrictions</U>. The Restricted Stock shall be subject to such vesting terms
as may be determined by the Committee. The Committee may impose such other
conditions and/or restrictions on any Shares of Restricted Stock granted
pursuant to the Plan as it may deem advisable including, without limitation, a
requirement that Participants pay a stipulated purchase price for each Share of
Restricted Stock and/or restrictions under applicable Federal or state
securities laws; and may legend the certificates representing Restricted Stock
to give appropriate notice of such restrictions.</FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company shall also have the right to retain the certificates representing Shares
of Restricted Stock in the Company&#146;s possession until such time as the
shares are fully vested and all conditions and/or restrictions applicable to
such Shares have been satisfied. </FONT>
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7.5</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Removal of Restrictions</U>. Except as otherwise provided in this Article 7
or otherwise provided in the grant thereof, Shares of Restricted Stock covered
by each Restricted Stock grant made under the Plan shall become freely
transferable by the Participant after completion of all conditions to vesting,
if any. However, the Committee, in its sole discretion, shall have the right to
immediately vest the shares and waive all or part of the restrictions and
conditions with regard to all or part of the Shares held by any Participant at
any time.</FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7.6</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Voting Rights, Dividends and Other Distributions</U>. Participants holding
Shares of Restricted Stock granted hereunder may exercise full voting rights and
shall receive all regular cash dividends paid with respect to such Shares.
Except as provided in the following sentence, in the sole discretion of the
Committee, other cash dividends and other distributions paid to Participants
with respect to Shares of Restricted Stock may be subject to the same
restrictions and conditions as the Shares of Restricted Stock with respect to
which they were paid. If any such dividends or distributions are paid in Shares,
the Shares shall be subject to the same restrictions and conditions as the
Shares of Restricted Stock with respect to which they were paid.</FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7.7</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Termination of Employment Due to Death or Disability</U>. In the event of the
Participant&#146;s Termination of Employment by reason of death or Disability,
all restrictions imposed on outstanding Shares of Restricted Stock held by the
Participant shall immediately lapse and the Restricted Stock shall immediately
become fully vested as of the date of Termination of Employment.</FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7.8</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Termination of Employment for Other Reasons</U>. In the event of the
Participant&#146;s Termination of Employment for any reason other than those
specifically set forth in Section 7.7 herein, all Shares of Restricted Stock
held by the Participant which are not vested as of the effective date of
Termination of Employment immediately shall be forfeited and returned to the
Company. </FONT></td>
</tr>
</table>
<br>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7.9</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Employee Transfers</U>. For purposes of the Plan, transfer of employment of a
Participant between the Company and any one of its Subsidiaries (or between
Subsidiaries) or between the Company or a Subsidiary and a RWAC, to the extent
the period of employment at a RWAC is equal to or less than five (5) years,
shall not be deemed a Termination of Employment. Provided, however, for purposes
of this Article, termination of employment with a RWAC without a concurrent
transfer to the Company or any of its Subsidiaries shall be deemed a Termination
of Employment as that term is used herein. Similarly, termination of an
entity&#146;s status as a Subsidiary or as a RWAC shall be deemed a Termination
of Employment of any Participants employed by such Subsidiary or RWAC. </FONT></td>
</tr>
</table>
<br>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Article 8 <u> Performance Units and Performance Shares.</u></font></p>


<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8.1</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Grants of Performance Units and Performance Shares</U>. Subject to the terms
of the Plan, Performance Shares and Performance Units may be granted to eligible
Employees at any time and from time to time, as determined by the Committee. The
Committee shall have complete discretion in determining the number of
Performance Units and/or Performance Shares Awarded to each Participant.</FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8.2</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<u>Value of Performance Shares and Units.</u></FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (a)      A Performance Share is equivalent in value to a Share of Stock.  In any
                           calendar year, no individual may be Awarded Performance Shares having a potential
                           payout of Shares of Stock exceeding two-thirds of 1% of the Shares approved for
                           issuance under this Plan.</FONT></TD>
</TR>
</TABLE>
<BR>
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (b)      A Performance Unit shall be equal in value to a fixed dollar amount determined
                           by the Committee.  In any calendar year, no individual may be Awarded Performance
                           Units having a potential payout equivalent exceeding the Fair Market Value of
                           two-thirds of 1% of the Shares approved for issuance under this Plan.  The number of
                           Shares equivalent to the potential payout of a Performance Unit shall be determined by
                           dividing the maximum cash payout of the Award by the Fair Market Value per Share on
                           the effective date of the grant.  The Committee may denominate a Performance Unit
                           Award in dollars instead of Performance Units.  A Performance Unit Award may be
                           referred to as a "Key Executive Officer Short Term Award" or "KEO Award".
</FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8.3</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Performance Period</U>. The Performance Period for Performance Shares and
Performance Units is the period over which the Performance Goals are measured.
The Performance Period is set by the Committee for each Award; however, in no
event shall an Award have a Performance Period of less than one year.</FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8.4</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Performance Goals</U>. For each Award of Performance Shares or Performance
Units, the Committee shall establish performance objectives (&#147;Performance
Goals&#148;) for the Company, its Subsidiaries, and/or divisions of any of
foregoing, based on the Performance Criteria and other factors set forth in (a)
through (d), below. Performance Goals shall include payout tables, formulas or
other standards to be used in determining the extent to which the Performance
Goals are met, and, if met, the number of Performance Shares and/or Performance
Units which would be converted into Stock and/or cash (or the rate of such
conversion) and distributed to Participants in accordance with Section&#160;8.6.
All Performance Shares and Performance Units which may not be converted under
the Performance Goals or which are reduced by the Committee under Section 8.6 or
which may not be converted for any other reason after the end of the Performance
Period shall be canceled at the time they would otherwise be distributable. When
the Committee desires an Award to qualify under Section 162(m) of the Code, as
amended, the Committee shall establish the Performance Goals for the respective
Performance Shares and Performance Units prior to or within 90 days of the
beginning of the service relating to such Performance Goal, and not later than
after 25% of such period of service has elapsed. For all other Awards, the
Performance Goals must be established before the end of the respective
Performance Period.</FONT></TD>
</TR>
</TABLE>
<BR>
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (a)      The Performance Criteria which the Committee is authorized to use, in its sole
                           discretion, are any of the following criteria or any combination thereof:
</FONT></TD>
</TR>
</TABLE>
<BR>
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=15% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
(1)      Financial performance of the Company (on a consolidated basis), of one or more of its Subsidiaries,
                                            and/or a division of any of the foregoing.  Such financial
                                            performance may be based on net income, Value Added (after-tax cash
                                            operating profit less depreciation and less a capital charge), EBITDA
                                            (earnings before interest, taxes, depreciation and amortization),
                                            revenues, sales, expenses, costs, market share, volumes of a
                                            particular product or service or category thereof, including but not
                                            limited to the product's life cycle (for example, products introduced
                                            in the last 2 years), return on net assets, return on assets, return
                                            on capital, profit margin, operating revenues, operating expenses,
                                            and/or operating income.
</FONT></TD>
</TR>
</TABLE>
<BR>
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=15% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
(2)      Service performance of the Company (on a consolidated basis), of one or more of its Subsidiaries, and/or
                                            of a division of any of the foregoing.  Such service performance may
                                            be based upon measured customer perceptions of service quality.
</FONT></TD>
</TR>
</TABLE>
<BR>
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=15% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
(3)      The Company's Stock price, return on shareholders' equity, total shareholder return (Stock price
                                            appreciation plus dividends, assuming the reinvestment of dividends),
                                            and/or earnings per share.
</FONT></TD>
</TR>
</TABLE>
<BR>
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (b)      Except to the extent otherwise provided by the Committee in full or in part,
                           if any of the following events occur during a Performance Period and would directly
                           affect the determination of whether or the extent to which Performance Goals are met,
                           the effects of such events shall be disregarded in any such computation: changes in
                           accounting principles; extraordinary items; changes in tax laws affecting net income
                           and/or Value Added; natural disasters, including floods, hurricanes, and earthquakes;
                           and intentionally inflicted damage to property which directly or indirectly damages
                           the property of the Company or its Subsidiaries.  No such adjustment shall be made to
                           the extent such adjustment would cause the Performance Shares or Performance Units to
                           fail to satisfy the performance based exemption of Section 162(m) of the Code.
</FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8.5</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Dividend Equivalents on Performance Shares</U>. Unless reduced or eliminated
by the Committee, a cash payment in an amount equal to the dividend payable on
one Share will be made to each Participant for each Performance Share held by a
Participant on the record date for the dividend. </FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8.6</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Form and Timing of Payment of Performance Units and Performance Shares</U>.
As soon as practicable after the applicable Performance Period has ended and all
other conditions (other than Committee actions) to conversion and distribution
of a Performance Share and/or Performance Unit Award have been satisfied (or, if
applicable, at such other time determined by the Committee at or before the
establishment of the Performance Goals for such Performance Period), the
Committee shall determine whether and the extent to which the Performance Goals
were met for the applicable Performance Units and Performance Shares. If
Performance Goals have been met, then the number of Performance Units and
Performance Shares to be converted into Stock and/or cash and distributed to the
Participants shall be determined in accordance with the Performance Goals for
such Awards, subject to any limits imposed by the Committee. Unless the
Participant has elected to defer all or part of his Performance Units or
Performance Shares as provided in Article&#160;10, herein, payment of
Performance Units and Performance Shares shall be made in a single lump sum, as
soon as reasonably administratively possible following the determination of the
number of Shares or amount of cash to which the Participant is entitled.
Performance Units will be distributed to Participants in the form of cash.
Performance Shares will be distributed to Participants in the form of 50% Stock
and 50% Cash, or at the Participant&#146;s election, 100% Stock or 100% Cash. In
the event the Participant is no longer an Employee at the time of the
distribution, then the distribution shall be 100% in cash, provided the
Participant may elect to take 50% or 100% in Stock. At any time prior to the
distribution of the Performance Shares and/or Performance Units (or if
distribution has been deferred, then prior to the time the Awards would have
been distributed), unless otherwise provided by the Committee, the Committee
shall have the authority to reduce or eliminate the number of Performance Units
or Performance Shares to be converted and distributed or to mandate the form in
which the Award shall be paid (i.e., in cash, in Stock or both, in any
proportions determined by the Committee).</FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unless
otherwise provided by the Committee, any election to take a greater amount of
cash or Stock with respect to Performance Shares must be made in the calendar
year prior to the calendar year in which the Performance Shares are distributed
(or if distribution has been deferred, then in the year prior to the year the
Performance Shares would have been distributed absent such deferral). </FONT>
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
the purpose of converting Performance Shares into cash and distributing the same
to the holders thereof (or for determining the amount of cash to be deferred),
the value of a Performance Share shall be the Fair Market Value of a Share on
the date the Committee authorizes the payout of Awards. Performance Shares to be
distributed in the form of Stock will be converted at the rate of one (1) Share
of Stock per Performance Share. </FONT>
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8.7</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Termination of Employment Due to Death or Disability</U>. In the event of the
Participant&#146;s Termination of Employment by reason of death or Disability,
the Participant shall receive a lump sum payout of all outstanding Performance
Units and Performance Shares calculated as if all unfinished Performance Periods
had ended with 100% of the Performance Goals achieved, payable in the year
following the date of Termination of Employment.</FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8.8</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Termination of Employment for Other Reasons</U>. In the event of the
Participant&#146;s Termination of Employment for other than a reason set forth
in Section 8.7 (and other than for Cause), if the Participant is not Retirement
eligible at Termination of Employment, the Participant may receive no more than
a prorated payout of all Performance Units and Performance Shares, based on the
number of months the Participant worked at least one day during the respective
Performance Period divided by the number of months in the Performance Period.</FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8.9</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Termination of Employment for Cause</U>. In the event of the
Participant&#146;s Termination of Employment of a Participant by the Company for
Cause, all Performance Units and Performance Shares shall be forfeited by the
Participant to the Company.</FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8.10</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Nontransferability</U>. Performance Units and Performance Shares may not be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than in accordance with the SBC Rules for Employee Beneficiary
Designations. </FONT></TD>
</TR>
</TABLE>
<BR>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Article 9 <U>Beneficiary Designation</U>. In the event of the death of a Participant,
distributions or Awards under this Plan, other than Restricted Stock, shall pass
in accordance with the SBC Rules for Employee Beneficiary Designations, as the
same may be amended from time to time. Beneficiary Designations of a Participant
received by SBC prior to November 16, 2001, that were applicable to awards under
the 1996 Stock and Incentive Plan will also apply to awards under this Plan
unless and until the Participant provides to the contrary. </FONT></p>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Article 10 <U>Deferrals</U>.
Unless otherwise provided by the Committee, a Participant
may, as permitted by the Stock Savings Plan or the Salary and Incentive Award
Deferral Plan, defer all or part of Awards made under this Plan in accordance
with and subject to the terms of such plans. </FONT></p>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Article 11 <u> Employee Matters.</u></font></p>


<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>11.1</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Employment Not Guaranteed</U>. Nothing in the Plan shall interfere with or
limit in any way the right of the Company or any Subsidiary to terminate any
Participant&#146;s Employment at any time, nor confer upon any Participant any
right to continue in the employ of the Company or one of its Subsidiaries. </FONT></TD>
</TR>
</TABLE>
<BR>


<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>11.2</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Participation</U>. No Employee shall have the right to be selected to receive
an Award under this Plan, or, having been so selected, to be selected to receive
a future Award. </FONT></TD>
</TR>
</TABLE>
<BR>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Article 12 <u> Change in Control.</u></font></p>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Upon the occurrence of a Change in Control:
</font></td>
</tr>
</table>
<br>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>

                           (a)      Any and all Options granted hereunder immediately shall become vested and
                           exercisable;
</font></td>
</tr>
</table>
<br>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (b)      Any Restriction Periods and all restrictions imposed on Restricted Shares
                           shall lapse and they shall immediately become fully vested;
</font></td>
</tr>
</table>
<br>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=10% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</font></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
                           (c)      The 100% Performance Goal for all Performance Units and Performance Shares
                           relating to incomplete Performance Periods shall be deemed to have been fully achieved
                           and shall be converted and distributed in accordance with all other terms of the Award
                           and this Plan; provided, however, notwithstanding anything to the contrary in this
                           Plan, no outstanding Performance Unit or Performance Share may be reduced.
</font></td>
</tr>
</table>
<br>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Article 13 <u> Amendment, Modification, and Termination.</u></font></p>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>13.1</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<u>Amendment, Modification, and Termination.</u>  The Board or the Disinterested Committee may at any
                  time and from time to time, alter or amend the Plan in whole or in part or suspend or terminate
                  the Plan in whole or in part.</font></td>
</tr>
</table>
<br>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>13.2</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Awards Previously Granted</U>. No termination, amendment, or modification of
the Plan shall adversely affect in any material way any Award previously granted
under the Plan, without the written consent of the Participant holding such
Award.</FONT></TD>
</TR>
</TABLE>
<BR>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Article 14 <u> Withholding.</u></font></p>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>14.1</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Tax Withholding</U>. The Company shall deduct or withhold an amount
sufficient to satisfy Federal, state, and local taxes (including the
Participant&#146;s employment tax obligations) required by law to be withheld
with respect to any taxable event arising or as a result of this Plan
(&#147;Withholding Taxes&#148;).</FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>14.2</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Share Withholding</U>. Upon the exercise of Options, the lapse of
restrictions on Restricted Stock, the distribution of Performance Shares in the
form of Stock, or any other taxable event hereunder involving the transfer of
Stock to a Participant, the Company shall withhold Stock equal in value, using
the Fair Market Value on the date determined by the Company to be used to value
the Stock for tax purposes, to the Withholding Taxes applicable to such
transaction. </FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any
fractional Share of Stock payable to a Participant shall be withheld as
additional Federal withholding, or, at the option of the Company, paid in cash
to the Participant. </FONT>
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unless
otherwise determined by the Committee, when the method of payment for the
Exercise Price is from the sale by a stockbroker pursuant to Section 6.7(b)(ii),
herein, of the Stock acquired through the Option exercise, then the tax
withholding shall be satisfied out of the proceeds. For administrative purposes
in determining the amount of taxes due, the sale price of such Stock shall be
deemed to be the Fair Market Value of the Stock. </FONT>
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
permitted by the Committee, prior to the end of any Performance Period a
Participant may elect to have a greater amount of Stock withheld from the
distribution of Performance Shares to pay withholding taxes; provided, however,
the Committee may prohibit or limit any individual election or all such
elections at any time. </FONT>
</TD>
</TR>
</TABLE>
<BR>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Article 15 <u> Successors.</u></font></p>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
obligations of the Company under the Plan, with respect to Awards granted
hereunder, shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company. </FONT>
</TD>
</TR>
</TABLE>
<BR>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Article 16 <u> Legal Construction.</u></font></p>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>16.1</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Gender and Number</U>. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural. </FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>16.2</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Severability</U>. 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.</FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>16.3</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Requirements of Law</U>. The granting of Awards and the issuance of Shares
under the Plan shall be subject to all applicable laws, rules, and regulations,
and to such approvals by any governmental agencies or national securities
exchanges as may be required. </FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>16.4</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Errors</U>. At any time SBC may correct any error made under the Plan without
prejudice to SBC. Such corrections may include, among other things, changing or
revoking an issuance of an Award. </FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>16.5</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Elections and Notices</U>. 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 the General Counsel, Secretary or Assistant Secretary, or
their respective delegates or shall be made in such other manner as permitted or
required by SBC 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 SBC (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. SBC may limit the time an election may be made in advance of
any deadline. </FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Where
any notice or filing required or permitted to be given to SBC under the Plan, it
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. </FONT>
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notice
to the Participant shall be deemed given when mailed (or sent by telecopy) to
the Participant&#146;s work or home address as shown on the records of SBC or,
at the option of SBC, to the Participant&#146;s e-mail address as shown on the
records of SBC. It is the Participant&#146;s responsibility to ensure that the
Participant&#146;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&#146; work locations. </FONT>
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>16.6</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Governing Law</U>. To the extent not preempted by Federal law, the Plan, and
all awards and agreements hereunder, and any and all disputes in connection
therewith, shall be governed by and construed in accordance with the substantive
laws of the State of Texas, without regard to conflict or choice of law
principles which might otherwise refer the construction, interpretation or
enforceability of this Plan to the substantive law of another jurisdiction. </FONT>
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5% align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>16.7</font></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Venue</U>.  Because awards under the Plan are granted in Texas,
records relating to the Plan and awards thereunder are located in Texas, and the
Plan and awards thereunder are administered in Texas, the Company and the
Participant to whom an award under this Plan is granted, for themselves and
their successors and assigns, irrevocably submit to the exclusive and sole
jurisdiction and venue of the state or federal courts of Texas with respect to
any and all disputes arising out of or relating to this Plan, the subject matter
of this Plan or any awards under this Plan, including but not limited to any
disputes arising out of or relating to the interpretation and enforceability of
any awards or the terms and conditions of this Plan. To achieve certainty
regarding the appropriate forum in which to prosecute and defend actions arising
out of or relating to this Plan, and to ensure consistency in application and
interpretation of the Governing Law to the Plan, the parties agree that (a) sole
and exclusive appropriate venue for any such action shall be an appropriate
federal or state court in 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 <I>forum non conveniens</I>. </FONT>
</TD>
</TR>
</TABLE>
<BR>

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