Document:

ex10m.htm

    

    Exhibit
10-m

     

    February 17, 2006

     

    Ronald
Spears

    767 5th
Avenue

    New York,
NY   10153

     

     

    
      	
               

            	
              Re:

            	
              Signing Bonus and
      Retention Award

            

    

     

    Dear
Ronald:

     

    Congratulations
on the successful closing of the merger between SBC Communications Inc. (now
known as AT&T Inc. “AT&T”) and AT&T Corp.
(“AT&T Corp.”) on
November 18, 2005 (the “Effective Date”).  The Company desires to
provide you with an incentive to remain employed with AT&T and its
affiliates (together, as constituted from time to time, the “Group”). This is your special
Retention
Agreement with AT&T Enterprise
Services, Inc. (the “Company”).

     

    1.  Special Signing
Bonus

     

    The
Company will pay you a special signing bonus of $401,280 (your
“Special Signing
Bonus”) as promptly as practicable after you sign and return this
Agreement.

     

    2.  Award

     

    (a)  Purpose.  Upon your
execution of this Agreement, you will receive a retention award in the form of
71,555 phantom
stock units (your “Retention
Award”).  Your Retention Award will be in addition to any other
compensation paid to you for your services.

     

    (b)  The Phantom Stock
Units.  Each phantom stock unit awarded to you under this
Agreement constitutes an unfunded and unsecured promise of the Company to pay
(or cause to be paid) to you on the applicable payment date the cash equivalent
of the fair market value of one share of AT&T common stock, par value $1.00
(“AT&T
Share”).  For purposes of this Agreement, the “fair market value” of one
AT&T Share will based on the average of the regular session per share
closing prices on the New York Stock Exchange for the five (5) consecutive
trading days ending on the day before the applicable vesting date or, if
applicable, your employment termination date.

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c)  Dividend
Equivalents.  Each outstanding phantom stock unit awarded to
you under this Agreement also entitles you to receive, if and when made, an
amount in cash equal to any regular dividend payment made in respect of an
AT&T Share.  Phantom stock units that are (i) vested and paid or
(ii) forfeited are immediately cancelled, and there shall be no further dividend
equivalents paid on such phantom stock units.

     

    (d)  Vesting.  You will
vest in your Retention Award in two installments.  One-third of your
phantom stock units will vest on November 18, 2006 (the “First Vesting Date”) and the
remaining two-thirds will vest on November 18, 2008 (the “Second Vesting
Date”).

     

    (e)  Certain Anti-Dilution
Adjustments.  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
AT&T affecting the AT&T Shares, an adjustment shall be made in the
number of the outstanding phantom stock units as determined to be appropriate
and equitable by AT&T in its sole discretion.

     

    3.  Payment of Retention
Award

     

    (a)  Payment of Retention Award on
Vesting Dates.  As promptly as practicable after the First
Vesting Date, the Company will pay (or cause to be paid) to you in a cash
lump-sum the value of one-third of your Retention Award provided you are in the
employ of the Group on the First Vesting Date.  As promptly as
practicable after the Second Vesting Date, the Company will pay (or cause to be
paid) to you in a cash lump-sum the value of the remaining two-thirds of your
Retention Award provided you are in the
employ of the Group on the Second Vesting Date.  Upon each payment,
the applicable phantom stock units, and the right to receive dividend
equivalents thereon, are automatically cancelled.

     

    (b)  Treatment on Termination of
Employment Prior to November 18, 2008.  If your employment
terminates prior to November 18, 2008, you will be accorded the treatment as
indicated in the following chart depending on the event that results in your
termination of employment:

     

    

     

    

     

    

     

    

     

    

     

    (the remainder of this page is
intentionally left blank)

     

    
      
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              Event

            	
              Treatment

            
	
              You
      Elect to Terminate Your Employment For ANY Reason On or After November 18,
      2006 and On or Before December 31, 2006 (the “Window Period”), and you
      Provide the Company a Termination Notice at Least Sixty (60) Days Prior to
      Your Termination Date

            	
               

              In
      lieu of any compensation or benefits under this Agreement that has not
      already been paid to you prior to the date of your termination of
      employment, you shall receive (i) the compensation, benefits and treatment
      as if you were eligible under the terms and conditions of the change in
      control provisions of the AT&T Officer Separation
      Plan (the “Separation Plan”) and (ii) any unpaid retention award
      granted to you from the Retention Bonus Pool as such term is defined in
      Section 6.8(f) of the Company Disclosure Letter delivered in connection
      with the Agreement and Plan of Merger dated as of January 30, 2005 among
      AT&T Corp., SBC Communications Inc. and Tau Merger Sub Corporation, in
      both cases as if your employment was involuntarily terminated by the
      Company without Cause; provided, however, any cash payment under
      the terms of such Separation Plan and/or the Retention Bonus Pool shall be
      reduced by the amount of your Special Signing Bonus and the dollar amount
      of your Retention Award previously paid to you under the terms of this
      Agreement, if any.

            
	
              The
      Company Terminates Your Employment Without Cause Prior to November 18,
      2007

            
	
              You
      Terminate Your Employment Without Good Reason (Except During the Window
      Period or Except as a Result of Your Death or Disability)

            	
              You
      forfeit the entire unpaid portion of your Retention Award, and no further
      benefits or payments shall be made.

            
	
              The
      Company Terminates Your Employment for Cause

            
	
              You
      Terminate Your Employment for Good Reason (Except During the Window
      Period)

            	
              The
      Company will pay (or cause to be paid) to you in a cash lump-sum the value
      equal to eighty percent (80%) of your Retention Award less the dollar
      amount of your Retention Award previously paid to you, if
      any.  Such payment shall be made as promptly as practicable
      after your employment termination date.

            
	
              The
      Company Terminates Your Employment Without Cause On or After November 18,
      2007

            	
              The
      Company will pay (or cause to be paid) to you (or, in the event of your
      death, your estate) in a cash lump-sum the value equal to the product of
      (A) one hundred percent (100%) less the Reduction Percentage, times (B)
      your Retention Award, less the dollar amount of your Retention Award
      previously paid to you, if any.  The Reduction Percentage shall
      be twenty percent (20%) multiplied by a fraction, the numerator of which
      is 1,095 minus the number of days between November 18, 2005 and your
      termination date and the denominator of which is 1,095.  Such
      payment shall be made as promptly as practicable after your employment
      termination date.

            
	
              Termination
      of Employment Due to Your Death or
Disability

            

    

     

    
 

    
      
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    (c)  Release.  As a
condition to making any payment described in Section 3(b), the Company may
require you to execute and deliver a general release in which you release all
claims that you may have against any member of the Group and any of their
respective past or present officers, directors, employees or agents other than
your rights under this Agreement.

     

    (d)  Withholding.  Your
Special Signing Bonus and Retention Award are subject to withholding for
applicable income and payroll taxes or otherwise as required by
law.

     

    4.  Early Termination

     

    (a)  Termination
Notice.  If you wish to terminate your employment during the
Window Period or for Good Reason, or the Company wishes to terminate you for
Cause, the terminating party must provide a Termination Notice to the
other.  A “TerminationNotice” is a written notice
that states the specific provision of this Agreement on which termination is
based, including, if applicable, the specific clause of the definition of Good
Reason or Cause and a reasonably detailed description of the facts that permit
termination under that clause.  (The failure to include any fact in a
Termination Notice that contributes to a showing of Good Reason or Cause does
not preclude either party from asserting that fact in enforcing its rights under
this Agreement.)

     

    (b)  Termination on Disability or
Death.  If the Company determines in good faith that your
Disability has occurred, it may give you a Termination Notice.  If,
within 30 days of the Termination Notice, you do not return to full-time
performance of your responsibilities, your employment will terminate (the “Disability Effective
Date”).  If you do return to full-time performance in that
30-day period, the Termination Notice will be cancelled.  Your
employment will terminate automatically on your death.

     

    (c)  Employment Termination
Date.  If your employment is terminated by the Company other
than for Disability or death or you terminate your employment for Good Reason,
your employment will end on the date specified in the Termination
Notice.  If you terminate your employment without Good Reason, your
employment will end 60 days after the Company receives the Termination Notice
(although the Company may in all events accelerate the end of your employment by
providing you with notice or, alternatively, may place you on paid leave during
such period).  If your employment is terminated by reason of your
death or Disability, your employment will end on the date of death or the
Disability Effective Date, as applicable.

     

    (d)  Effect of Early
Termination.  On termination of your employment in accordance
with this Section 4, your employment will end and the Group will have no further
obligations to you under this Agreement except as provided in Sections 3 and
5.

     

    5.  Excise Tax

     

    If any
element of your Special Signing Bonus or your Retention Award constitutes an
“excess parachute payment”, as that term is defined in Section 280G of the
Internal Revenue Code and the regulations thereunder, you shall be provided the
gross-up benefits set forth in Annex A.

     

     

    
      
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    6.  Effect on Other AT&T Corp.
Agreements

     

    (a)  Prior Employment and/or Retention
Agreements and Severance Rights.  Except as provided in Section 3(b) of
this Agreement and except for any retention award granted to you from the
Retention Bonus Pool as such term is defined in Section 6.8(f) of the Company
Disclosure Letter delivered in connection with the Agreement and Plan of Merger
dated as of January 30, 2005 among AT&T Corp., SBC Communications Inc. and
Tau Merger Sub Corporation, this Agreement will supersede any earlier employment
agreement, separation plan or understanding and any earlier severance,
change-in-control or similar rights you may have with AT&T Corp. or any of
its affiliates and you agree that you are not entitled to any severance,
change-in-control or similar rights under any such agreement, plan or
understanding (including, without limitation, the AT&T Senior Officer
Separation Plan, the AT&T Officer Separation Plan, the AT&T E-Band
Separation Plan and the AT&T Separation Plan).

     

    (b)  Entire Agreement. 
This
Agreement is the entire agreement between you and the Company with respect to
the matters contemplated by this Agreement and supersedes any earlier agreement,
written or oral, with respect to the subject matter of this Agreement,
including, but not limited to, any agreement to extend the period during which
you could claim “Good Reason” under your Separation Plan.  In entering
into this Agreement, no party has relied on or made any representation,
warranty, inducement, promise or understanding that is not in this
Agreement.

     

    7.  Certain
Obligations

     

    (a)  Violation Of the Group’s Code Of
Conduct Or the Group’s Non-Competition
Guideline.  Notwithstanding any other provision of this
Agreement, if it is determined by the Company that you have willfully violated
the Group's Code of Conduct or any other written Group policy, where said
violation causes significant harm to the Group, and/or violated the AT&T
Corp. Non-Competition Guideline (the “Guideline”), attached hereto
and incorporated herein as Annex C, you will be required to repay to the Company
an amount equal to the economic value of all benefits already provided to you
under this Agreement and you shall forfeit all unpaid benefits under this
Agreement.

     

    (b)  Future
Services.  You shall have a continuing obligation to cooperate
with the Company on a commercially reasonable basis, in any matter, and to
testify in any legal proceeding in which the Company is a party, in each case
relating to, or in connection with, your duties and responsibilities while you
were employed by the Company.

     

    8.  Disputes

     

    You agree
to the dispute resolution provisions, including mandatory arbitration, set forth
on Annex B, which is a
part of this Agreement.

     

    9.  General
Provisions

     

    (a)  Confidentiality.  Except
as required by law or regulation, you will not disclose the terms of your
Special Signing Bonus, Retention Award or this Agreement, provided that you may
disclose such terms to your financial and legal advisors and spouse, each of
whom shall be instructed to maintain the terms of your Special Signing Bonus,
Retention Award and this Agreement in strict confidence in accordance with the
terms hereof.

     

     

    
      
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    (b)  Definitions.  When used in
this Agreement, the following terms shall have the meanings ascribed to them
below:

     

    “Good Reason” means (A) any
reduction in your annual base salary rate or (B) any reduction in your target
annual bonus, in each case as in effect immediately prior to the Effective
Date.  However, (A) Good Reason will
not include any isolated, insubstantial and inadvertent failure by the Company
that is not in bad faith and is cured promptly on your giving the Company
notice, (B) if you do not give a Termination Notice to the Company within 60
days after you have knowledge that an event constituting Good Reason has
occurred, the event will no longer constitute Good Reason, and (C) an event will
not constitute Good Reason if you have consented to it in accordance with
Section 9(c).

     

    “Cause” means (A) commission
of a crime, or conviction of a crime, including by a plea of guilty or nolocontendere, involving theft,
fraud, dishonesty or moral turpitude, (B) intentional or grossly negligent
disclosure of confidential or trade secret information of the Group to anyone
not entitled to such information, which causes significant harm to the Group,
(C) gross omission or gross dereliction of any statutory or common law duty of
loyalty to the Group, which causes significant harm to the Group, or (D) willful
violation of the Group's Code of Conduct or any other written Group policy,
where said violation causes significant harm to the Group.

     

    “Disability” means your
absence from work under the relevant employer sponsored group long-term
disability plan applicable to you.

     

    (c)  Notices.  All
notices, requests, demands, consents and other communications under this
Agreement must be in writing and will be deemed given (1) on the business day sent,
when delivered by hand or facsimile transmission (with confirmation) during
normal business hours, (2)
on the business day after the business day sent, if delivered by a nationally
recognized overnight courier or (3) on the third business day
after the business day sent if delivered by registered or certified mail, return
receipt requested, in each case to the following address or number (or to such
other addresses or numbers as may be specified by notice that conforms to this
Section 9(c)):

     

    If to
you, to the address stated on the first page of this Agreement, and

     

    If to the
Company or any other member of the Group, to:

     

    Vice
President-Compensation

    175 East
Houston Street, Room 03-H-60

    San
Antonio, Texas 78205

     

    (d)  Not a Contract of Employment.
You and
the Company acknowledge that this Agreement does not constitute a contract of
employment and your employment with the Company is “at will” and may be
terminated by you or the Company at any time and for any reason.  Your
Retention Award and other benefits under this Agreement shall not count toward
or be considered in determining payments or benefits due under any other plan,
program, policy or arrangement with the Group.

     

    (e)  Successors.

     

    
      
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    (1)  This
Agreement is personal to you and without the prior written consent of the
Company shall not be assignable by you otherwise than by will or the laws of
descent and distribution.  This Agreement shall inure to the benefit
of and be enforceable by your legal representatives.

     

    (2)  This
Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns.

     

    (3)  The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.  As used
in this Agreement, “Company” shall mean the
Company as hereinbefore defined and any successor to its business and/or assets
as aforesaid.

     

    (f)  Amendments and
Waivers.  Any provision of this Agreement may be amended or
waived but only if the amendment or waiver is in writing and signed, in the case
of an amendment, by you and the Company or, in the case of a waiver, by the
party that would have benefited from the provision waived.

     

    (g)  Counterparts.  This
Agreement may be executed as counterparts, each of which will constitute an
original and all of which, when taken together, will constitute one
agreement.

     

    *                      *                      *

     

    

     

    Please
confirm your acceptance of the terms of this Agreement by signing where
indicated below.

     

    
 

    
      	 	 Karen
      E. Jennings
	 	 Executive
      Vice President-Human Resources
	 	 AT&T
      Enterprise Services, Inc.

    

     

     

     

     

    Accepted
and Agreed this ____ day of _______________, 200__:

     

    
      	 	 Ronald
      Spears
	 	 Vice
      President-Signature Client Group

    

    

     

     

    
      
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    Annex A

    Excise Tax

     

    (a)           If
any element of the Retention Award or other compensation or benefit provided to
you under the terms of this Agreement, or under any other plan, program, policy
or other arrangement (“Benefit”), either alone or in
combination with other elements of compensation and benefits paid or provided to
you, constitutes an “excess parachute payment”, as that term is defined in
Section 280G of the Internal Revenue Code and the regulations thereunder, and
subjects you to the excise tax pursuant to Section 4999 of the Internal Revenue
Code, and any interest and penalties thereon (collectively, the “Excise Tax”), then you shall
be entitled to an additional lump-sum cash payment from the Company (the “Excise Tax Adjustment
Payment”), subject to mandatory withholding, in an amount equal to the
Excise Taxes (including the Excise Tax attributable to the Excise Tax Adjustment
Payment related to the Benefit) plus any income and FICA taxes and any interest
and penalties thereon attributable to the Excise Tax Adjustment Payment. For
purposes of calculating an Excise Tax Adjustment Payment in any year, it shall
be assumed that you are subject to Federal and applicable state and local income
taxes at the highest marginal Federal and applicable state and local income tax
rates, respectively, for the year in which the Excise Tax Adjustment Payment is
paid.  Also, the Excise Tax Adjustment Payment to you shall reflect
the Federal tax benefits attributable to the deduction of applicable state and
local income taxes.

     

    (b)           Subject
to the provisions of (c) below, all determinations required to be made under
this Annex, including whether and when an Excise Tax Adjustment Payment is
required and the amount of such Excise Tax Adjustment Payment and the
assumptions utilized in arriving at such determinations, shall be made by an
independent accounting firm chosen by the Company (the “Accounting
Firm”).  The Accounting Firm shall provide detailed supporting
calculations to the Company and to you within thirty (30) business days of the
receipt of notice from the Company or you that there has been a Benefit provided
to which this Annex applies (or such earlier time as requested by the
Company).  Any Excise Tax Adjustment Payment, as determined pursuant
to this Section (b), shall be paid by the Company to you within fifteen (15)
business days of the receipt of the Accounting Firm's
determination.

     

    (c)           Underpayments
and Overpayments.

     

    (1)           If
it is established pursuant to a final determination of a court or an Internal
Revenue Service proceeding, or in the opinion of independent counsel agreed upon
by the Company and you, that the Excise Tax payable by you on the Benefit is
less than the amount initially taken into account under Section (a) for purposes
of calculating the Excise Tax Adjustment Payment related to such Benefit, the
Accounting Firm shall recalculate the Excise Tax Adjustment Payment to reflect
the actual Excise Tax related to such Benefit.  Within thirty (30)
business days following your receipt of notice of the results of such
recalculation from the Accounting Firm and/or the Company, you shall repay to
the Company the excess of the initial Excise Tax Adjustment Payment over the
recalculated Excise Tax Adjustment Payment.

     

    (2)           If
it is established pursuant to a final determination of a court or an Internal
Revenue Service proceeding, or in the opinion of an independent counsel agreed
upon by the Company and you, that the Excise Tax payable by you on the Benefit
is more than the amount initially taken into account under Section (a) for
purposes of calculating the Excise Tax Adjustment Payment, the Accounting Firm
shall recalculate the Excise Tax Adjustment Payment to reflect the actual Excise
Tax.  Within fifteen (15) business days following the Company's
receipt of notice of the results of such recalculation from the Accounting Firm,
the Company shall pay to you the excess of the recalculated Excise Tax
Adjustment Payment over the initial Excise Tax Adjustment Payment.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (d)           All
fees and expenses of the Accounting Firm shall be borne solely by the
Company.

     

    (e)           You
shall notify the Company in writing of any written claim by the Internal Revenue
Service that, if successful, would require the payment by the Company of an
Excise Tax Adjustment Payment or the recalculation of an Excise Tax Adjustment
Payment. The notification shall apprise the Company of the nature of such claim,
including (1) a copy of the written claim from the Internal Revenue Service, (2)
the identification of the element of compensation and/or benefit that is the
subject of such Internal Revenue Service claim, and (3) the date on which such
claim is requested to be paid.  Such notification shall be given as
soon as practicable but no later than ten (10) business days after you actually
receive notice in writing of such claim.

     

    Within
ten (10) business days following receipt of the notification of the Internal
Revenue Service written claim from you, the Company shall pay to you an Excise
Tax Adjustment Payment, or the excess of a recalculated Excise Tax Adjustment
Payment over the initial Excise Tax Adjustment Payment, as applicable, related
to the element of compensation and/or benefit which is the subject of the
Internal Revenue Service claim. Within ten (10) business days following such
payment to you, you shall provide to the Company written evidence that you have
paid the claim to the Internal Revenue Service (the United States
Treasury).

     

    Your
failure to properly notify the Company of the Internal Revenue Service claim (or
to provide any required information with respect thereto) shall not affect any
rights granted to you under this Annex, except to the extent that the Company is
materially prejudiced in the challenge to such claim as a direct result of such
failure.  If the Company notifies you in writing, within sixty (60)
business days following receipt from you of notification of the Internal Revenue
Service claim, that it desires to contest such claim, you shall:

     

    (1)           give
the Company any information reasonably requested by the Company relating to such
claim;

     

    (2)           take
such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time including, without limitation,
accepting legal representation with respect to such claim by an attorney
selected by the Company and reasonably acceptable to you;

     

    (3)           cooperate
with the Company in good faith in order to effectively contest such claim;
and

     

    (4)           permit
the Company to participate in any proceedings relating to such claim if the
Company elects not to assume and control the defense of such claim; provided,
however, that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold you harmless, on an after-tax basis, for
any Excise Tax, income tax and FICA tax (including interest and penalties with
respect thereto) imposed as a result of such representation and payment of costs
and expenses.  Without limitation on the foregoing provisions of this
Annex, the Company shall have the right, at its sole option, to assume the
control of all proceedings in connection with such contest, in which case it may
pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim, and may direct
you to sue for a refund or contest the claim in any permissible manner, and you
agree to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, that any extension of the
statute of limitations relating to payment of tax for your taxable year with
respect to which such contested amount is claimed to be due is limited solely to
such contested amount.  Furthermore, the Company's rights to assume
the control of the contest shall be limited to issues with respect to which an
Excise Tax Adjustment Payment would be payable hereunder, and you shall be
entitled to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.  To the extent
that the contest to the Internal Revenue Service claim is successful, the Excise
Tax Adjustment Payment related to the element of compensation and/or benefit
that was the subject of the claim shall be recalculated in accordance with the
provisions of Section (c)(ii).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Annex B

    Disputes.

     

    (a)  Employment Matter. 
This
Annex B applies to any controversy or claim between you and the Group arising
out of or relating to or concerning this Agreement or any aspect of your
employment with the Group or the termination of that employment (together, an
“Employment
Matter”).

     

    (b)  Mandatory Arbitration. 
Subject to the provisions of this
Annex B, any Employment Matter will be finally settled by arbitration in Bexar
County, Texas administered by the American Arbitration Association under its
Commercial Arbitration Rules then in effect.  However, the
rules will be modified in the following ways: (1) each arbitrator will agree
to treat as confidential evidence and other information presented to the same
extent as the information is required to be kept confidential under Annex B,
(2) the optional Rules for
Emergency Measures of Protections will apply, (3) you and the Group agree not
to request any amendment or modification to the terms of this Agreement except
as provided in Section (c), (4) a decision must be rendered
within 10 business days of the parties’ closing statements or submission of
post-hearing briefs and (5) the arbitration will be
conducted before a panel of three arbitrators, one selected by you within 10
days of the commencement of arbitration, one selected by the Company in the same
period and the third selected jointly by these arbitrators (or, if they are
unable to agree on an arbitrator within 30 days of the commencement of
arbitration, the third arbitrator will be appointed by the American Arbitration
Association; provided
that the arbitrator shall be a partner or former partner at a nationally
recognized law firm).

     

    (c)  Limitation on Damages. 
You and the Group agree that there
will be no punitive damages payable as a result of any Employment Matter and
agree not to request punitive damages.

     

    (d)  Injunctions and Enforcement of
Arbitration Awards.  You or
the Group may bring an action or special proceeding in a state or federal court
of competent jurisdiction sitting in Bexar County, Texas to enforce any
arbitration award under Section (b).  Also, the Group may bring such
an action or proceeding, in addition to its rights under Section (b) and whether
or not an arbitration proceeding has been or is ever initiated, to temporarily,
preliminarily or permanently enforce any part of Annex B.

     

    (e)  Jurisdiction and Choice of
Forum.  You and the Group irrevocably submit
to the exclusive jurisdiction of any state or federal court located in Bexar
County, Texas (the “Forum”) over any Employment Matter that is
not otherwise arbitrated or resolved according to Section
(b).  This includes any action or proceeding to compel
arbitration or to enforce an arbitration award.  Both you and the
Group (1) acknowledge that
the Forum has a reasonable relation to this Agreement and to the relationship
between you and the Group and that the submission to the Forum will apply even
if the forum chooses to apply non-Forum law, (2) waive, to the extent
permitted by law, any objection to personal jurisdiction or to the laying of
venue of any action or proceeding covered by this Section (e) in the Forum,
(3) agree not to commence
any such action or proceeding in any forum other than the Forum and (4) agree that, to the extent
permitted by law, a final and non-appealable judgment in any such action or
proceeding in any such court will be conclusive and binding on you and the
Group.  However, nothing in this Agreement precludes you or the Group
from bringing any action or proceeding in any court for the purpose of enforcing
the provisions of Section (b) and this Section (e).

     

    (f)  Waiver of Jury Trial. 
To the extent permitted by law, you
and the Group waive any and all rights to a jury trial with respect to any
Employment Matter.

     

    (g)  Governing Law. 
This Agreement will be governed by
and construed in accordance with the law of the State of Texas applicable to
contracts made and to be performed entirely within that
State.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
    

     

    
      
        
        

        

      

       

    

     

    AT&T Non-Competition
Guideline

    (as amended December 17, 1997, May
19, 2004, and October 5, 2005)

    

    SECTION 1.  STATEMENT OF
PURPOSE

     

    The
purpose of this AT&T Non-Competition Guideline is to provide a common set of
definitions and set forth the standards for evaluating activity in possible
violation of the non-competition clauses contained in various AT&T employee
incentive compensation and benefit plans, and in individual agreements or
arrangements.

     

    SECTION
2.  DEFINITIONS

     

    As used in this AT&T
Non-Competition Guideline the following terms have the meanings set forth
below:

     

    1.           The
word "Guideline" means this AT&T Non-Competition Guideline.

     

    2.           The
words "AT&T" or "Company" means collectively AT&T Corp., a New York
corporation, all of its subsidiaries, related entities, lines of business and
corporate successors and all business enterprises, including joint ventures, in
which it is a partner or has a substantial ownership interest.

     

    3.           The
term "Board of Directors" or "Board" means the Board of Directors of AT&T
Corp.

     

    4.           The
word "Plan" means any AT&T employee incentive compensation and/or benefit
plan that contains a non-competition clause, including but not limited to the
AT&T 1987, 1997, and 2004 Long Term Incentive Programs, the AT&T Short
Term Incentive Plan, the
AT&T Non-Qualified Pension Plan, the AT&T Senior Management Universal
Life Insurance Program, the Executive Life Insurance Program, the AT&T
Senior Management Basic and Individual Life Insurance Programs and the AT&T
Supplementary Variable Universal Life Insurance Program, the AT&T Senior
Management Long Term Disability and Survivor Protection Plan, the AT&T
Mid-Career Pension Plan, the AT&T Senior Management Incentive Award Deferral
Plan and any other employee incentive compensation and/or employee benefit plan
that the Board or the Executive Vice President-Human Resources shall deem appropriate
to make subject to the standards of this Guideline.  Notwithstanding
anything to the contrary contained in this Guideline or in the AT&T 1997
Long Term Incentive Program, the 1997 All Employee Stock Option Grant shall not
be forfeitable in the event an employee holding such grant engages in activity
deemed to be in competition with or adverse to the interests of the
Company.

     

    5.           The
word "Agreement" means any individual agreement or arrangement between AT&T
and any current or former employee which incorporates or references this
Guideline or which contains a non-competition clause.

     

    
      	 AT&T
      Non-Competition Guideline	
               1

            	
               October
      5, 2005

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    6.           The
word "benefit" means any payment or entitlement to payment conferred pursuant to
the terms of any or all of the Plans or Agreements, regardless of how, when or
in what form it is made or intended to be made.

     

    7.           The
term "affected employee" shall mean an individual who, as a former or present
employee, has received, is receiving or would be eligible to receive benefits or
payments under any Plan or Agreement.

     

    8.           The
phrase "non-competition clause" means any provision, paragraph, division or
portion of a Plan or Agreement which states in words or substance that an
affected employee will forfeit and relinquish entitlement to compensation and/or
benefits under such Plan or Agreement, or that such compensation or benefits
shall be reduced or otherwise modified, if such employee engages in activity
deemed to be in competition with or adverse to the interests of the
Company.

     

    9.           The
use in this Guideline of personal pronouns of the masculine gender is intended
to include both the masculine and feminine genders.  The use in this
Guideline of singular or plural nouns is intended to have individual or
collective meaning as applicable to the context as used therein and is in no way
to be construed narrowly or such as to limit the scope of this Guideline or any
of its provisions.

     

    SECTION
3.  RESPONSIBILITY

     

    Responsibility for interpreting and
implementing the standards and provisions of this Guideline is vested solely and
exclusively in the Executive Vice President-Human Resources of the Company, or
his/her successor, who is empowered to perform all functions necessary or
appropriate to fulfill his responsibilities in connection with the forfeiture of
compensation and/or benefits, making final determination that certain activity
is or is not competitive activity and that the compensation and/or benefits of
the affected employee who engages in such activity are or are not forfeited,
reduced or otherwise modified by such activity, respectively; and acting on the
Company's behalf and in its best interests in all matters relating to the issues
covered by this Guideline.  Notwithstanding the above the Executive
Vice President - Human Resources shall be authorized to delegate to other
Company employees the authority to perform such activities as may be appropriate
in connection with his implementation of the provisions of this Guideline,
including taking of such legal steps as are necessary to recover compensation
and/or benefits paid to an affected employee since the date on which he
commenced engaging in activity deemed to be competitive activity.

     

    SECTION 4.  COMPETITIVE
ACTIVITY

     

    1.           Finality.  The
Executive Vice President - Human Resources of the Company shall have authority
to interpret the provisions of this Guideline consistent with their spirit and
intent and to interpret the non-competition clause of any Plan or Agreement, and
each and every decision of the Executive Vice President - Human Resources shall,
with respect to all questions and matters relative to the subjects of forfeiture
and competition, be final; except, however, with respect to any award
outstanding under the AT&T 2004 Long Term Incentive Program.  The
Executive Vice President – Human Resources shall present his recommendation to
the Compensation and Employee Benefits Committee of the Board of Directors (the
“Committee”) for any action related to the forfeiture of such
awards.  The Committee shall then have final authority to cancel and
forfeit such awards.

     

    
       

      
        	 AT&T
      Non-Competition Guideline	
                2

              	
                 October
      5, 2005

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    2.           Definition.  For
purposes of this Guideline and the non-competition clauses contained in any Plan
or Agreement, an affected employee's activity is competitive activity (and any
or all of his compensation and/or benefits under the Plans or Agreements are
subject to forfeiture, reduction or other modification to the fullest extent
allowable by law), if such affected employee, during, or within 2 years after
the termination of, his employment with the Company, as more fully described
below, either (A) establishes a relationship with a competitor of the Company,
or, (B) engages in activity which is in conflict with or adverse to the
interests of the Company.

     

    a.           As
used above in Paragraph 2 of this Section 4, the phrase "establishes a
relationship with" shall mean, but shall not be limited to, founding,
organizing, establishing, becoming associated with, becoming employed by,
rendering services to, consulting or acting as consultant to, serving as
director for, being a partner in or owning a substantial interest in, as
shareholder or otherwise, such an interest to include, but not be limited to,
for example, an interest subject to the reporting requirements of Section 13(d)
of the Securities Exchange Act of 1934.

     

    b.           As
used above in Paragraph 2 of this Section 4, a "competitor of the
Company" is a person, business, entity or enterprise which either (A) designs,
develops, manufactures, produces, offers for sale or sells a product or service
which can be used as a substitute for, performs substantially the same function
as, is a practical alternative for or is generally intended to satisfy the same
customer or client needs for any product or service designed, developed,
manufactured, produced, offered for sale or sold by the Company, or (B) is a
person, business or activity which the Executive Vice President-Human Resources,
based upon review of the individual facts and circumstances and in its
discretion and judgment, determines, in order to protect the best interests of
the Company, to be a competitor within the spirit and intent of this Guideline
and the non-competition clauses.  Effective upon the close of the
merger between AT&T Corp. and SBC, the definition of a “competitor of the
Company” as used above in Paragraph 2 of this Section 4 shall mean a company, if
at least 10% of the aggregate revenue of such company for the fiscal year
preceding the year in which the employee ceases to be employed by AT&T is
derived from the provision of telecommunications products or services that
directly compete with telecommunications products or services provided or sold
by AT&T (without giving effect to the merger) as of the time the employee
ceases to be employed by AT&T.

     

    Thereafter,
and notwithstanding any provision of any plan, program, policy, agreement or
arrangement of the Company or any of its Subsidiaries to the contrary, the
restrictions set forth in this Guideline on establishing a relationship with a
competitor of the Company shall not apply to any employee or former employee of
the company or any of its Subsidiaries with a salary grade of D band or
lower.

     

    c.           As
used above in Paragraph 2 of the Section 4, conduct "in conflict with
or adverse to the interests of the Company" is conduct by which (1) an
affected employee criticizes, denigrates or otherwise speaks adversely, or
disclose negative information about, the operations, management or performance
of the Company, an affiliate of the Company, or about any director, officer,
employee or agent of any of the foregoing; or (2) an affected employee,
engages in the recruitment, solicitation or inducement of, or attempts to
induce, any employee or employees of the Company to terminate their employment
with, or otherwise cease their relationship with, the Company.

     

    
       

      
        	 AT&T
      Non-Competition Guideline	
                 3

              	
                 October
      5, 2005

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    SECTION 5.  EVALUATION AND
DETERMINATION OF COMPETITIVE ACTIVITY

     

    1.           Request for a
Determination.  An affected employee who is considering
engaging in an activity which an individual would reasonably believe to be
competitive activity as that term is used and defined in this Guideline and
which thus may be grounds for the Company's invoking the non-competition clause
of any Plan or Agreement may request, prior to engaging in such activity, that
it be evaluated as described in this Section 5 of the Guideline and that a
determination be made and an opinion rendered as to whether such activity is
deemed to violate such non-competition clauses.  Such affected
employee's request may be made to the Executive Vice President - Human
Resources, or such other Company employee as may be selected by the Executive
Vice President - Human Resources who will coordinate evaluation of the
activity.  To insure that the evaluation and determination are based
on all relevant facts and circumstances and thus are consistent with the spirit
and intent of this Guideline, such affected employee should accompany his
request with a full explanation in writing of whatever information he deems
pertinent as well as of a description of the contemplated activity, such
explanation to include, but not to be limited to, (A) his contemplated
relationship, including, as applicable, his proposed position, title,
responsibilities and the nature and extent of his ownership interest, (B) the
nature of the business, including, for example, all products and/or services
currently being or expected to be designed, developed, manufactured, produced,
offered for sale and sold by the business and (C) the most recently available
financial information on the business.

     

    2.           Company's Right to Initiate
an Evaluation.  The Company reserves the right to initiate an
evaluation of any activity of an affected employee which may be competitive
activity as that phrase is used and defined in this Guideline.  The
Executive Vice President - Human Resources of the Company shall notify the
affected employee in writing that such an evaluation has been initiated and that
he has the opportunity to submit in writing for consideration whatever
information he deems pertinent to a determination, including, but not limited
to, a full explanation of the activity as described above in items (A) through
(C), inclusive, of Paragraph 1 of this Section 5.

     

    3.           Evaluation.  Whether
an affected employee's contemplated or actual activity is or is not competitive
activity within the scope and intent of this Guideline shall be evaluated by the
Executive Vice President - Human Resources or such individuals as such officer
may designate as appropriate.

     

    4.           Determination.  Final
determination of whether an affected employee's activity is or is not
competitive activity and thus whether his incentive compensation and/or benefits
are or are not, respectively, subject to forfeiture shall be made by the
Executive Vice President - Human Resources; except, however, with respect to any
award outstanding under the AT&T 2004 Long Term Incentive
Program.  The Executive Vice President – Human Resources shall present
his recommendation to the Compensation and Employee Benefits Committee of the
Board of Directors (the “Committee”) for any action related to the forfeiture of
such awards.  The Committee shall then have final authority to cancel
and forfeit such awards.  After such determination, the Executive Vice
President - Human Resources, shall notify the affected employee in writing of
the decision.  If the determination is that an affected employee's
activity is not or would not be competitive activity, the Company reserves the
right to seek, at whatever intervals it deems appropriate, written assurance
from the affected employee that the facts and circumstances upon which the
activity was evaluated and the determination based have not
changed.

     

    
       

      
        	 AT&T
      Non-Competition Guideline	
                 4

              	
                 October
      5, 2005

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    5.           Notice of
Forfeiture.  If, after activity has been evaluated the
Executive Vice President - Human Resources determines that contemplated activity
would be competitive
activity, the Executive Vice President - Human Resources, will notify the
affected employee in writing of the determination and advise such affected
employee that his incentive compensation and/or benefits are at risk of
forfeiture, reduction or other modification.  An affected employee who
receives such notice and advice shall, within thirty business days of the date
of such notice and advice, provide the Company with written assurance that he
has not engaged and will not engage in such contemplated
activity.  If, after the expiration of the thirty business day period,
the Executive Vice President - Human Resources, has not received such assurance,
he shall notify the appropriate Payroll and Benefit organizations to terminate
immediately or not to initiate payments of incentive compensation and/or
benefits to the affected employee.  If the determination is that an
affected employee is currently engaging in competitive activity, the Executive
Vice President - Human Resources, shall so advise the affected employee, and
shall also direct the appropriate Payroll, Benefit and other affected
organizations of the Company to terminate immediately payments of benefits to
the affected employee and, in addition, may take such legal steps as are
necessary to recover from the affected employee all benefits paid by the Company
or on its behalf since the date when such competitive activity is deemed to have
commenced.

     

    6.           Opportunity to
Withdraw.  If, after activity has been evaluated and the
Executive Vice President-Human Resources determines that there are unusual or
special circumstances which mitigate against withdrawal of benefits from or
denial of benefits to an affected employee who is or has been engaging in
activity which is competitive activity within the spirit and intent of this
Guideline and the non-competition clauses, the Executive Vice President - Human
Resources may, in his discretion and judgment, withhold termination of benefits
and offer the affected employee in writing the opportunity to withdraw from the
competitive activity; provided, however, that any affected employee who is the
recipient of and accepts such an offer shall provide the Executive Vice
President - Human Resources, within a reasonable time of the date of such offer
as prescribed by such officer, written assurance that such withdrawal has been
accomplished.

     

    7.           Reevaluation and
Determination.  Notwithstanding prior evaluations and
regardless of a previous determination by the Executive Vice President - Human
Resources as described in this Guideline, the Company reserves the right,
without prior notice to the affected employee, to institute a reevaluation of
his activity if, in his discretion and judgment, the Executive Vice President -
Human Resources believes that under the facts and circumstances such
reevaluation is warranted.  In case of such reevaluation, the affected
employee shall be notified by the Executive Vice President - Human Resources,
that such reevaluation has been instituted and shall have   the
opportunity to submit in writing for consideration by the Executive Vice
President - Human Resources a full explanation of whatever information he deems
pertinent to the redetermination, such explanation to include, but not to be
limited to, a full explanation of the activity as described above in items (A)
through (C), inclusive, of Paragraph 1 of this
Section 5.  After such reevaluation, there shall be a
determination consistent with that described above in Paragraph 4 of this
Section 5.

     

    8.           Subsequent Competitive
Activity.  If an affected employee commences engaging in
activity which is not at the time of commencement considered competitive
activity as that phrase is used and defined in this Guideline but within a
reasonable period of time thereafter (such period, under ordinary circumstances
and unless the Executive Vice President - Human Resources determines otherwise,
to be two years) the activity becomes competitive activity as that phrase is
used and defined in this Guideline, then the affected employee so engaging in
such competitive activity should advise the Executive Vice President - Human
Resources.  Upon receipt of such advice, the Executive Vice President
- Human Resources, shall then offer such affected employee the opportunity to
withdraw without forfeiture of benefits under the terms of and consistent with
the provisions of such an opportunity as described in Paragraph 6 of this
Section 5.  If an affected employee engages in subsequent
competitive activity in a situation such as that described in the first sentence
of this Paragraph 8 of this Section 5 but such affected employee fails
to come forward and so advise the Company, then, notwithstanding anything herein
to the contrary, after evaluation or reevaluation and determination as described
above, benefits to such affected employee shall be immediately terminated and
the Company may take such steps as are necessary to recover any benefits paid
since the date on which such activity became competitive.  If an
affected employee commences engaging in activity which is not at the time of
commencement competitive with AT&T as that phrase is used and defined in
this Guideline but, subsequent thereto, AT&T designs, develops,
manufactures, produces, offers for sale or sells a product or service such as to
render the activity competitive, no question of forfeiture arises; provided,
however, that, if the affected employee, knew or had reason to know at the time
he commenced the activity that AT&T intended to design, develop,
manufacture, produce, offers for sale or sell such product or service, then the
Company may invoke the non-competition clauses.

     

    
       

      
        	 AT&T
      Non-Competition Guideline	
                 5

              	
                 October
      5, 2005

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    9.           Consent to
Compete.  In extraordinary circumstances and notwithstanding
that an affected employee's competitive activity would, under the provisions of
the Guideline, be grounds for invoking the non-competition clauses and
terminating payment of incentive compensation and/or benefits to such affected
employee, the Executive Vice President-Human Resources may consent to an
affected employee's engaging in such activity if, in his discretion and
judgment, he determines that, despite such activity's technical violation, the
facts are overwhelmingly compelling or it is otherwise in the Company's best
interest that relief from application of the non-competition clauses is
warranted.  In such a case, the Executive Vice President - Human
Resources, shall notify the affected employee of such consent; provided,
however, that, despite such consent, the Company reserves the right to withdraw
such   consent and to invoke the non-competition clauses within a
reasonable period of time thereafter (such period, under ordinary circumstances
and unless the Executive Vice President - Human Resources determines otherwise,
to be two years) and without prior notice if and when, in such officer's
discretion and judgment, the facts and circumstances
warrant it.

     

    10.           Waiver.  In
his discretion, the Executive Vice President-Human Resources may waive the
operation of this Guideline, in whole or part, as to an affected employee,
including under circumstances where such affected employee has executed a
non-competition agreement with the Company.

     

    SECTION 6.  GENERAL
PROVISIONS

     

    1.           Amendment.  Except
as provided in Paragraph 2 of this Section 6, only the Board or the Committee
shall have authority to amend or terminate this Guideline.

     

    2.           Guideline
Modifications.  The Executive Vice President - Human Resources,
in his discretion and judgment and without notice, may from time to time make
such minor changes in the Guideline as he deems required by law, by
administrative efficiency, by the introduction, or modification of any Plan or
Agreement or by changes in the Company structure.

     

    3.           Severability.  To
the extent that one or more of the provisions of this Guideline may be found to
be unenforceable in any federal or state jurisdiction, such provisions are
intended and are declared to be severable from the whole, and such a judgment
shall not jeopardize the enforceability of the balance of the
Guideline.

     

    4.           No Intent to Prejudice
Employee’s Rights.  This Guideline is intended to protect the
interest of the Company and its shareholders and is not intended to prejudice
any individual's right to consider, accept, continue or terminate employment, to
engage in any activity or to establish any kind of business relationship or
ownership interest with any enterprise which is consistent with the terms of
this Guideline.

    
       

      
        	 AT&T
      Non-Competition Guideline	
                 6

              	
                 October
      5, 2005ex10p.htm

    

     

    Exhibit
      10-p

     

    

     

    

    
 

     

    

     

    PACIFIC
      TELESIS GROUP

     

    DEFERRED
      COMPENSATION PLAN

    FOR

    NON-EMPLOYEE
      DIRECTORS

     

    (Restated
      as Amended as of November 17, 1995)

     

     

     

     

     

     

     

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      
        	
                 PAGE

              

      

    

     

    ELIGIBILITY
      1

    

    
      	 1.	 PARTICIPATION	
               1

            
	 2.	 DEFERRED
              ACCOUNTS	
               1

            
	 3.	 DISTRIBUTION	
               1

            
	 4.	 MISCELLANEOUS	
               3

            

    

     

     

     

     

     

                        

      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    1.  ELIGIBILITY

     

    Each
      member of the Board of Directors of Pacific Telesis Group ("PTG" or the
      "Company") who is not an employee of the Company, or any of its subsidiaries,
      is
      eligible to participate in a Deferred Compensation Plan for Non-Employee
      Directors ("Plan").

     

    2.  PARTICIPATION

     

    (a)  Prior
      to
      the beginning of any calendar year, commencing with the calendar year 1985,
      each
      eligible Director or designated Director may elect to participate in the Plan
      by
      directing that all or any part of the compensation which would otherwise have
      been payable currently for services as a Director (including fees
      payable for services as a member of a committee of the
      Board) during such calendar year and subsequent calendar years shall be credited
      to a deferred compensation account subject to the terms of the Plan.
      Notwithstanding the foregoing, no deferral election
      made under this Section 2 shall be effective with respect to compensation
      payable during any calendar year after 1995. [Last sentence added November
      17,
      1995.]

     

    (b)  An
      election to participate in the Plan shall be in the form
      of a document executed by the Director and filed with the Secretary of the
      Company. An election related to fees otherwise payable currently in any calendar
      year shall become irrevocable on the last day prior to the beginning of such
      calendar year. An election shall continue until a Director ceases to be a
      Director or until he or she terminates or modifies such election by written
      notice. Any such termination or modification shall become effective as of the
      end of the calendar year in which such notice is given with respect to all
      fees
      otherwise payable in subsequent calendar years.

     

    (c)  A
      Director who has filed a termination of election may thereafter again file
      an
      election to participate for any calendar year or years subsequent to the filing
      of such election.

     

    3.  DEFERRED
      ACCOUNTS

     

    Deferred
      amounts shall be credited to the Director's account and
      shall bear interest from the date such fees would otherwise have been paid.
      The
      interest credited to the account will be compounded annually at the end of
      each
      calendar year shall be determined by the PTG Board of Directors from time to
      time.

     

    4.  DISTRIBUTION

     

    (a)            At
      the time of election to participate in the Plan, a Director shall make an
      election with respect to the distribution of amounts deferred under the Plan
      plus accumulated interest. A Director may elect to receive such amounts in
      one
      payment or in some other number of approximately level annual installments
      (not
      exceeding 15). The amount of an annual installment shall be calculated by
      dividing the total amount, including interest, credited to the Director's
      account Immediately prior to such installment by the remaining number of
      installments. As specified by the Director, the first installment (or the single
      payment if the Director has so elected) shall be paid as soon as practicable
      after the first day of the calendar year following (i) the calendar year in
      which the Director ceases to be a Director of the Company or any of its
      subsidiaries; (ii) the calendar year in which the Director attains a specified
      age (between age 59-1/2 and 75), (iii) the earlier of a specified number of
      years (maximum of five) after the Director ceases to be a Director of the
      Company or any of its subsidiaries or the attainment of age 75, or (iv) the
      earlier of the attainment of a specified age (but not younger than 59-1/2)
      or
      the calendar year In which the Director ceases to be a Director of the Company
      or any of its subsidiaries. Subsequent installments shall be paid on the first
      day of each succeeding calendar year until the entire amount credited to the
      Director's account is paid. Amounts held pending distribution pursuant to this
      Item shall continue to accrue interest at the rate stated in Item
      3.

     

    
      
        1

      

      
         

        
          

        

      

      
         
(b)  The
        election with respect to the distribution of amounts deferred under the Plan
        plus accumulated interest shall be contained in the document, referred to
        in
        Item 2(b), executed by the Director and filed with the Secretary of the Company.
        Such an election related to fees otherwise payable currently in any calendar
        year shall become irrevocable on the last day prior to the beginning of such
        calendar year.

    

     

    (c)  Notwithstanding
      an election pursuant to Item 4(a), in the event a Director ceases to
      be a
      Director of the Company or any of its subsidiaries and becomes a proprietor,
      officer, partner, employee, or otherwise becomes affiliated with any business
      that is in competition with the Company or any of its subsidiaries, or becomes
      employed by any governmental agency having jurisdiction over the activities
      of
      the Company or any of its subsidiaries, the entire balance of deferred fees,
      including interest, shall be paid immediately in a single payment.

     

    (d)  A
      Director may elect that, in the event the Director should die before full
      payment of all amounts credited to the Director's account, the balance of the
      deferred amounts shall be distributed in one payment, or in a number of annual
      installments (not exceeding 10), or by a continuation of the installment
      distributions being made or to be made to the Director, to the beneficiary
      or
      beneficiaries designated
      in writing by the Director, or if no designation has been made, to the estate
      of
      the Director in a single payment. The first installment (or the single payment
      if the Director has so elected, shall be paid on or about the first day of
      the
      calendar quarter next following the month of death. The preceding sentence
      shall
      not apply if the beneficiary or the beneficiaries are to receive a continuation
      of installment distributions being made or to be made to the Director. [Entire
      of (d) amended December 18, 1992]

     

    (e)  For
      purposes of determining when a distribution shall be made under this Section
      4,
      a member of the Board of Directors of Pacific Telesis Group who becomes a member
      of the Board of Directors of PacTel Corporation on or before the total and
      complete separation of PacTel Corporation from Pacific Telesis Group shall
      not
      be considered to have ceased to be a Director of the Company or any of its
      subsidiaries until he or she ceases to be a member of the Board of Directors
      of
      PacTel Corporation. [Entire of (e) added February 25, 1994.]

     

    
      
        2

      

      
         

        
          

        

      

      
         

      

    

    5.           MISCELLANEOUS

     

    (a)  The
      rights of a Director to any deferred fees and/or interest thereon shall be
      those
      of a general creditor and shall not be subject in any manner to assignment
      by
      the Director.

     

    (b)  The
      Company shall not be required to reserve, or otherwise set aside, funds for
      the
      payment of its obligations hereunder. The Company's obligation to pay the
      deferred amounts shall be unfunded as to the Director.

     

    (c)  Copies
      of
      the Plan and any and all amendments thereto shall be made available at all
      reasonable times at the office of the Secretary of the Company to all
      Directors.

     

    (d)  The
      Executive Vice President, Human Resource Department of PTG, with the approval
      of
      the Executive Vice and General Counsel of PTG, shall be authorized to make
      minor
      or administrative changes to the Plan.

     

     

    3

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