SBC COMMUNICATIONS INC
SBC COMMUNICATIONS EMPLOYMENT CONTRACT - DALEY
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<FILENAME>exhibit10x.htm
<DESCRIPTION>SBC COMMUNICATIONS EMPLOYMENT CONTRACT - DALEY
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<title>Exhibit 10-x
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Exhibit 10-x</font></p>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>November 16, 2001</font></p>





<H2 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Private&#160;&amp;
Confidential</FONT></H2>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Mr. William M. Daley<br>
845 United Nations Plaza<br>
Apartment 22-A<br>
New York, NY 10027</font></p>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Dear Mr. Daley:</font></p>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>This letter
(&#147;Agreement&#148;) reflects our offer of full time employment for you to
join the SBC Communications Inc. companies (&#147;SBC&#148;) as an officer and
it outlines the compensation and other benefits you will receive as a full time
employee. Your position will be President, SBC Communications Inc., an officer
position reporting directly to the Chairman of the Board of SBC, and, as such,
you will be in charge of strategic planning, regulatory matters, legislative
initiatives and external affairs. Your annual compensation shall consist of the
Base Salary, Short Term Award and Long Term Share Grant as more fully described
herein. Your entitlement to all other benefits shall be consistent with the
terms and conditions of the plans under which such benefits are provided to
similarly situated officers of SBC and, subject to the terms of this Agreement,
as such plans may be amended from time-to-time. Your employment will be as a
full-time employee and you shall not perform any duties as an employee,
contractor, sub-contractor, agent or otherwise for any other person,
corporation, partnership or other entity during the term of this Agreement.
However, we understand that you plan to continue your service on certain
corporate, civic and charitable boards and other activities as separately
identified to us. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><u>Place of Employment and Effective Date</u></font></p>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>You will begin employment effective December 1, 2001, in San Antonio, Texas.</font></p>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><u>Special Incentives</u></font></p>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>As a special incentive to
restore valuable compensation that you will forfeit upon termination of your
current employment and as an inducement to join SBC, we will provide you the
following awards: (1) a cash award of $1,100,000, payable within 45 days after
your start date and (2) grant you 90,000 non-qualified stock options on or near
your start date. These options will be granted under and governed by the terms
and provisions of the SBC 2001 Incentive Plan (as most recently amended
effective November 16, 2001) and the terms hereof, a copy of which has been
provided to you. This option will vest in thirds on each of the first three
anniversaries of your employment. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Subsequent stock option
grants (&#147;Option Grants&#148;) under the SBC 2001 Incentive Plan (or
successor to such plan) shall be made in the discretion of the Board of
Directors of SBC or its delegates in a like manner taking into consideration
grants made to similarly situated officers of SBC. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><u>Annual Rate of Compensation (Base Salary, Short Term Award and Long Term Incentive</u></font></p>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Your starting base salary
for full time employment shall be at the annual rate of $600,000 (&#147;the Base
Salary&#148;). The level of your base salary will be subject to review as part
of our normal review process (review normally begins at the end of the calendar
year and adjustments, if any, are usually effective thereafter in March). Your
annual rate of base salary for full time employment shall not be less than
$600,000.00 during the term of this Agreement. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Your target award for 2002
and thereafter under the SBC Short Term Incentive Plan (or comparable plan) will
not be less than 100% of your Base Salary (the &#147;Target Short Term
Award&#148;). You shall be eligible for a target and maximum Short Term Award
opportunity consistent with similarly situated officers. Subject to the
foregoing provisions of this paragraph, the Short Term Award is subject to an
adjustment based on accomplishment of SBC financial performance and you will be
eligible to receive an individual discretionary adjustment based on your
individual performance. The foregoing to the contrary notwithstanding, you will
receive a Short Term Award payment of $60,000 for 2001 and your Short Term Award
for 2002 shall not be less than $600,000.00. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Performance share grants
are traditionally granted in January&#160;(the &#147;Long Term Share
Grant&#148;). You will be awarded a Long Term Share Grant under the SBC 2001
Incentive Plan in January&#160;2002 as hereafter provided. The performance
shares will have a three-year performance period associated with them and
corresponding corporate financial performance criterion applicable to similarly
situated officers of SBC. The Long Term Share Grant is subject to an adjustment
based on accomplishment of SBC financial performance. You will receive the
Actual Performance Shares Award granted (the &#147;Actual Performance Shares
Award&#148;) at the end of the three (3) year performance period associated with
each grant. The Performance Shares earn dividend equivalents during the
three-year actual performance period. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>At the discretion of the
Board, Stock Options may be granted to you as a part of your incentive
compensation. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Consistent with awards to
similarly situated officers, your 2002 annual Option Grant and 2002 annual
Target Long Term Share Grant shall, in the aggregate, have a value of not less
than 350% of your Base Salary (such value to be determined in the case of the
Option Grant using SBC&#146;s Black Scholes valuation methodology as
consistently applied for all executives and using the value of an equal number
of shares of SBC Communications Stock in the case of the Long Term Share Grant)
and shall be in the same proportion of Shares to Options as the proportions of
such grants made to such officers. On or before January 31, 2002, you also shall
be awarded a prorated Long Term Share Grant of performance shares for (i) a
one-year performance cycle ending December 31, 2002 (which shall be equal to
$280,000.00) and (ii) a two-year performance cycle ending December 31, 2003,
(which grant shall be equal to $560,000.00) provided that payment for each of
such awards shall be made at the same time as and under such terms and
conditions as are existing for Long Term Share Grants awarded to similarly
situated officers for the cycles ending on December 31, 2002 and December 31,
2003, as the case may be. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><u>Retirement Income</u></font></p>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>You will be eligible to
participate in the SBC Pension Benefit Plan Non-Bargained Program
(&#147;SBCPBP&#148;), which is a cash balance pension program that requires five
(5) years of vesting service before any benefit becomes payable. Subject to
limits imposed by the Internal Revenue Code, your annual benefit in the SBCPBP
is generally 5% of your compensation plus accrued interest. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>You shall also be eligible
to receive a Supplemental Retirement Income Plan (&#147;SRIP&#148;) benefit to
supplement SBC&#146;s qualified, cash balance pension benefit, all in accordance
with the terms of these plans. Your benefit under the SRIP (the &#147;SRIP
benefit&#148;) shall have a Retirement Percent (as defined in the SRIP) of 60%,
shall, except as otherwise described herein, vest upon completion of five (5)
years of service, and is targeted at a service adjusted percentage of your Final
Average Earnings (as defined under the SRIP) at the time you retire or resign.
As a mid-career hire, the Service Factor (as defined under the SRIP) is one-half
the standard discount and, for such purpose you shall be designated as an
&#147;Officer&#148; under the SRIP. You shall be entitled to an Equivalent SRIP
Benefit in lieu of your SRIP Benefit if your Equivalent SRIP Benefit is greater
than your SRIP Benefit. Your Equivalent SRIP Benefit shall be provided in
accordance with, and be governed in all respects by, the terms of the SRIP with
the following modifications: (i) &#147;Final Average Earnings&#148; shall not be
less than the sum of your initial Base Salary and your initial full year Target
Short Term Award, and (ii) if SBC terminates your employment without cause (as
defined below) prior to completion of five (5) years of service, then you shall
be vested in your Equivalent SRIP benefit upon such termination. The foregoing
provisions shall be reflected in a separate SRIP participation agreement. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><u>Asset Accumulation</u></font></p>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In addition to a
traditional 401(k) Plan, you shall be eligible to participate in SBC&#146;s two
non-qualified pre-tax deferral plans for both salary and incentive compensation
(the &#147;Deferral Plans&#148;) in accordance with the terms of those plans.
These Deferral Plans are generally described as follows: </FONT></P>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(1)</FONT></TD>
<TD WIDTH=95%><FONT SIZE=2>
stock based -- deferral of up to 30% of salary and 100% of short term awards; a
possibility of 80% stock match on first 6% of deferrals; 2-for-1 stock option
match for each share deemed purchased with employee base pay and Short Term
Target Award deferrals; and</FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(2)</FONT></TD>
<TD WIDTH=95%><FONT SIZE=2>
cash based -- deferral of up to 100% of short term and cash long-term awards, as
well as up to 50% of salary, with interest credits based on a Moody&#146;s
Corporate Bond Yield.</FONT></TD>
</TR>
</TABLE>
<BR>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><u>Health Benefits</u></font></p>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>At the present time, SBC
provides its similarly situated officers (including you) with supplemental
health coverage to its group health plans while they are actively employed. The
coverage for similarly situated officers and his or her eligible dependents is
100% of any medical, dental, vision, mental health, or other health expense that
meets the IRS definition of a deductible health expense on a federal income tax
return and that is not covered by SBC&#146;s basic managed care medical, dental
or vision care plans, limited to $50,000 per individual, per year and $100,000
per family, per year. The officer pays an annual contribution of 10% of
SBC&#146;s actual, per officer&#146;s cost of the entire plan for the prior plan
year. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The company also offers you
the option to purchase CarePlus medical coverage (covers the cost of certain
experimental medical treatments not covered by general group plans), and the
option to purchase long-term care insurance. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Except as provided in this
Agreement, SBC does not provide post-retirement medical benefits unless certain
conditions are satisfied, including the completion of at least ten years of
service as of the date of an employee&#146;s termination of employment. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><u>Income Protection</u></font></p>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>You will receive
company-paid life insurance equivalent to one time your Base Salary, with an
option to purchase supplemental group life insurance equal to a multiple of your
salary between one and six (inclusive). </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SBC also provides its
similarly situated officers (including you) with supplementary disability
coverage. The benefit is 100% of your monthly base salary, coordinated with
certain other income, for the first year of disability, and 80% thereafter prior
to age 65. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><u>Other Benefits</u></font></p>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>You will be eligible to
participate in the other plans and programs that SBC makes available to its
similarly situated officers from time-to-time on the same terms and conditions
as are generally applicable to such officers. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Your vacation entitlement
shall be five (5) weeks on an annual basis plus seven (7) personal days also on
an annual basis. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SBC will pay all
professional expenses incurred by you in connection with the negotiation and
preparation of this agreement. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>You will also be provided
the following benefits in accordance with and subject to the terms of SBC&#146;s
benefit plan including, without limitation: </FONT></P>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(1)</FONT></TD>
<TD WIDTH=95%><FONT SIZE=2>
Company paid initiation fee for one country club membership, monthly dues and
such other expenses as are provided under the SBC country club policy for
similarly situated officers;</FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(2) </FONT></TD>
<TD WIDTH=95%><FONT SIZE=2>    Financial counseling services;</FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(3) </FONT></TD>
<TD WIDTH=95%><FONT SIZE=2>    Company paid communications  services,  i.e., long distance, home telephone equipment,  cellular phone,
        etc.; and</FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(4) </FONT></TD>
<TD WIDTH=95%><FONT SIZE=2>    A monthly auto allowance plus all fuel and maintenance.</FONT></TD>
</TR>
</TABLE>
<BR>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><u>Relocation Assistance</u></font></p>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Your relocation to San
Antonio shall be handled under and be governed by the terms and provisions of
the SBC Management Relocation Plan A as if you were eligible for the benefits
provided by such plan whether or not you are actually eligible therefor
(including reasonable local temporary living expenses for at least six (6)
months and during such period all reasonable costs of travel between San Antonio
and your present residence). </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><u>Amendment</u></font></p>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>This Agreement may only be amended by the parties' mutual written agreement.</font></p>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><u>Change in Control Benefits</u></font></p>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>You will be entitled to all
benefits provided to participants under a SBC Severance Benefits-Change in
Control Agreement (&#147;Change in Control Agreement&#148;) consistent with
similarly situated officers of SBC in accordance with the terms thereof. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><u>Termination of Employment</u></font></p>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notwithstanding any other
provision of this Agreement, (i) your employment shall be employment at will and
(ii) in no event may your employment extend past your 65<SUP>th</SUP> birthday.
Your employment may be terminated with or without cause; provided, however, in
the event SBC terminates your employment other than for cause at any time prior
to your reaching your 65<SUP>th</SUP> birthday, you will be entitled to: (a) a
lump sum, payable in cash within thirty (30) days after such termination in an
amount equal to the sum of (x) your Base Salary (which shall not be less than
$600,000.00), and (y) the greater of your Target Short Term Award for the year
in which such termination occurs or the actual Short Term Award earned for the
year prior to such termination (which for this purpose shall not be less than
$600,000.00); and (b) payment within thirty (30) days following such termination
of your accrued and unpaid Base Salary, unpaid vacation and unreimbursed
expenses through the date of termination of your employment. If you are
terminated by SBC without cause on or before December 31, 2004 or your
employment is terminated by SBC or by you for any reason after December 31,
2004, such termination shall constitute a &#147;retirement&#148; and you shall
be deemed to be &#147;retirement eligible&#148; (and deemed to have attained at
least age 55) under all SBC plans, programs and benefits (other than the
qualified retirement plans, medical plans and other qualified group plans,
except as provided above); provided, however, in lieu of providing retiree
medical benefits resulting from such deemed retirement under SBC&#146;s group
medical plan, SBC shall provide equivalent retiree medical benefits outside of
its group medical plan. Your employment will also terminate upon your death,
disability, voluntary termination or termination by SBC for cause
(&#147;Termination of Employment&#148;), and in the event of your Termination of
Employment, your right to the Base Salary, Short Term Award, and Long Term Award
described in this Agreement shall cease upon such Termination of Employment
(other than amounts accrued and unpaid on such date or as otherwise provided
under the Short and Long Term Awards). Cause shall have the meaning set forth in
the Change in Control Plan. Disability shall mean your inability, due to your
physical or mental condition, to maintain or obtain gainful employment. In the
event you terminate your employment due to (i) a material reduction in your Base
Salary, Target Short Term Award opportunity or Target Long Term Share Grant
opportunity, (ii) a material adverse change in your title, duties or reporting
responsibilities, or (iii) a material breach of this Agreement by SBC (a
&#147;SBC Breach&#148;), such termination shall not be deemed
&#147;voluntary&#148; by you, but instead shall be a termination of your
employment by SBC without cause, provided that in the case of a SBC Breach, you
have given written notice of such breach to SBC and SBC has failed to cure such
breach within thirty (30) days of such notice, provided, further, however, that
you are not in material breach of this Agreement, or if in material breach
during the foregoing thirty (30) day cure period, you have cured such breach. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In no event shall you be
obligated to seek other employment or take any other action to mitigate the
amounts payable to you under any of the provisions of this Agreement, nor shall
the amount of any payment hereunder be reduced by any compensation earned as
result of your employment by another employer. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><u>General Information</u></font></p>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Summary descriptions of the
nonqualified plans are enclosed. Please be advised that the plan summaries do
not govern the operation of the plan and are not meant to replace the plan
documents. All rights of all employees under the plans are governed in all
respects by the plan documents establishing the benefits provided under each. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In the case of conflict
between the terms of this Agreement (the &#147;Terms&#148;) and the provisions
of any plan, policy, or practice of SBC as in effect from time to time (the
&#147;Provisions&#148;), your rights or SBC&#146;s obligations shall be
established by whichever of the Terms or Provisions would be more beneficial to
you. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SBC will maintain, for your
benefit, officer liability insurance in form at least as comprehensive as, and
in an amount that is at least equal to, that maintained by SBC on the effective
date of your employment. In addition, you will be indemnified by SBC against
liability as an officer and a director (if so elected) of SBC and any subsidiary
or affiliate of SBC to the maximum extent permitted by applicable law. Your
rights under this paragraph will continue so long as you may be subject to
liability, whether or not this Agreement may have terminated prior thereto. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Any questions you have
regarding your specific compensation and benefits may be directed to Duane Helm,
Vice President-Compensation, at 210-351-2420. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>I look forward to working
with you. Please call me if I can answer any questions. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Sincerely,</FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><u>/s/ James D. Ellis</u></FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Accepted and Agreed:</FONT></P>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><u>/s/ William M. Daley</u><br>
William M. Daley<br>
845 United Nations Plaza<br>
Apartment 22-A<br>
New York, NY 10027</FONT></P>


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