FORM OF EMPLOYMENT AGREEMENT
 
2003 Amendment
 
2002 Amended Agreement
 
                                                          Exhibit (10)(iii)(A)35
 
 
 
                              EMPLOYMENT AGREEMENT
 
This Agreement, effective December 1, 2000, by and between David Dorman
("Executive") and AT&T Corp., a New York Corporation with its principal place of
business at 295 N. Maple Avenue, Basking Ridge New Jersey ("Company")
(collectively "the Parties"):
 
WHEREAS, Executive seeks employment with the Company; and
 
WHEREAS, the Company seeks to secure Executive's services on the terms provided
herein;
 
NOW THEREFORE, in consideration of the mutual covenants set forth below, the
Parties agree as follows:
 
Term of Employment. Effective December 1, 2000 ("Effective Date"), the Company
will hire Executive on a full time basis to render exclusive services to the
Company and its affiliates under the terms set forth in this Agreement. The
Executive accepts this employment and will render services as required by the
Company using the Executive's best efforts and will report to the Company's
Chief Executive Officer ("CEO"). Employment under this Agreement shall terminate
December 31, 2002; provided, however, that on December 31, 2002, and on each
December 31 thereafter ("Extension Date"), Employment under this Agreement shall
extend automatically for one additional year unless either the Company or the
Executive provides the other written notice of its or his desire to terminate
the Agreement no less than sixty (60) days prior to the Extension Date.
 
Title of Executive. At Effective Date, Executive's title shall be President of
AT&T Corp. In the event that AT&T Wireless and AT&T Broadband become independent
companies from the entity referred to on Effective Date as AT&T Corp., then
Executive's title shall become President and Chief Operating Officer of AT&T
Corp.'s remaining business units. For purposes of this paragraph, "independent
companies" shall mean that AT&T Wireless and AT&T Broadband have undergone a
divestiture from AT&T Corp. and are no longer subject to ownership or control by
AT&T Corp.
 
Compensation and Benefits.
 
Base Salary. The Executive shall receive salary compensation ("Base Salary")
from the Company in payment for all of Executive's services under this Agreement
at an annual rate of Nine Hundred Fifty Thousand ($950,000.00) dollars per year,
subject to review by the Company's compensation committee on an annual basis
with regard to the possibility of an increase in Base Salary. The Company shall
pay Executive the Base Salary in monthly installments.
 
Annual Bonus. The Annual Bonus ("Annual Bonus") for Company executives is based
on measures of Company and individual performance. The Company makes no
representations under the terms of this Agreement regarding criteria for or
amounts of bonuses paid during the term of this Agreement. However, Executive
shall be entitled to receive an annual bonus during the term of this Agreement
under the same terms and conditions of other Company executives. The target
amount for Executive's Annual Bonus shall be one hundred percent of base salary,
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Nine Hundred Fifty Thousand ($950,000.00) Dollars, subject to review by the
Company's compensation committee on an annual basis with regard to the
possibility of an increased Annual Bonus. Executive shall become eligible for a
bonus under this paragraph beginning in 2002 for performance year 2001 and for
each March thereafter during the term of this Agreement.
 
AT&T Long Term Incentive Compensation. All compensation under this Paragraph 4
shall be subject to the terms of the AT&T 1997 Long Term Incentive Program and
the AT&T Non-Competition Guideline, attached to this Agreement as Attachments A
and B, respectively.
 
2000 AT&T Performance Shares. On the Effective Date, Company will grant
Executive Fifty Thousand Five Hundred (50,500) AT&T Performance Shares covering
the 2000-2002 performance period. Payment for Performance Shares awarded under
this paragraph 4(a) are contingent upon the Company's attainment of financial
performance measurements determined by the Company's Board of Directors. Payout,
if any, for shares awarded under this paragraph shall be made during the first
quarter of 2003 or as otherwise determined by the Company's Board of Directors.
 
2000 AT&T Stock Options. On the Effective Date, Company will grant Executive
options for Three Hundred Fifty Six Thousand Seven Hundred (356,700) shares of
AT&T Common Stock. For stock options granted under this paragraph 4(b), the term
of the stock option grant is ten years and the stock options will vest
Twenty-Five percent (25%) annually beginning on the first anniversary of
Effective Date. The stock option price shall be Nineteen and 7813/10000 Dollars
($19.7813) per share, the fair market value of AT&T Common Stock on December 1,
2000.
 
2001 Long Term Incentive Grants. In 2001, the Company shall make a grant to
Executive of a long term incentive award as determined by the Company's Board of
Directors valued at Nine Million Five Hundred Thousand Dollars ($9,500,000.00).
Executive's award shall be issued at the same time, valued in the same manner,
and contain the same components in the same ratio as the awards made to other
members of the Operations Group. The valuation and conditions of payment for
Executive's award under this paragraph 4(c) shall be determined by the Company's
Board of Directors at the time such award is made to Executive and other members
of the Operations Group.
 
Special Retention Bonus. The Company shall issue Executive in 2001 a Special
Retention Bonus of Restricted Stock Units equal at the time issued to an amount
four times Executive's Base Salary as defined in paragraph 3(a) of this
Agreement or Three Million Eight Hundred Thousand Dollars ($3,800,000.00).
Restricted Stock Units issued to Executive under this paragraph 4(d) are subject
to the vesting provisions and all other conditions applicable to other members
of the Company's Operations Group, as will be determined by the Company's Board
of Directors in January 2001.
 
Special Stock Option Grant. If AT&T Corp. issues a separate stock tracking the
performance of AT&T Consumer Services ("Consumer Tracking Stock"), then
Executive shall receive a stock option grant for Consumer Tracking Stock in an
amount that, based on ratio of tracking stock to Long Term Incentive payments,
is consistent with Consumer Tracking Stock
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provided to the CEO and other members of the Company's Operations Group and
subject to the same terms as any stock option grant for Consumer Tracking Stock
made to the Company's CEO and Operations Group.
 
Restitution for Concert Forfeitures. In order to address certain forfeitures
associated with Executive leaving Concert, and to incent Executive to join the
Company, Executive will be provided with the following incentive compensation.
The AT&T Non-Competition Guideline shall be applicable to all compensation
awarded to Executive under this paragraph 5, except that Executive shall be
prohibited from engaging in Competitive Activity, as that term in defined in the
Non-Competition Guideline, for one (1) year for purposes of compensation under
this paragraph 5. Any payment to Executive by the Company made under this
paragraph 5 shall be reduced by the amount of the payment, if any, made to
Executive by Concert for any item set forth in this paragraph.
 
March 2001 Bonus. The Company shall pay Executive in or about March 2001 a bonus
for performance year 2000 in the amount of Eight Hundred Thousand Dollars
($800,000.00). To the extent that Executive would have received more than this
amount from Concert Global Networks USA L.L.C. ("Concert") for performance
during 2000, then the Company shall pay Executive the amount he would have
received from Concert had he remained employed at Concert through March 2001.
 
Restricted Shares. On the Effective Date, the Company shall award the Executive
a one-time award of Thirty Five Thousand Nine Hundred Fifty-Six (35,956)
Restricted Shares to vest on April 1, 2002. Restricted Shares awarded under this
paragraph 5(b) shall replace phantom restricted stock units of the Company and
British Telecommunications P.L.C. ("BT") granted on April 1, 1999 according to
the terms of the offer letter given to Executive at the outset of his employment
with the global venture between the Company and BT later referred to as Concert
(the "Concert Offer Letter"). The Concert Offer Letter is attached to this
Agreement as Attachment C.
 
Special Deferral Account. The Company shall be responsible for Concert's 2000
payment of Five Hundred Thousand Dollars ($500,000.00), with interest credited
effective April 1, 2000, to Executive under the terms of Concert's retention
package applicable to Executive. Concert's payment under this paragraph 5(c)
shall be placed by the Company into a deferral account ("Special Deferral
Account") previously established and containing the Company's 1999 payment of
Five Hundred Thousand Dollars ($500,000.00) made on Executive's behalf per the
terms of the Concert Offer Letter. On April 1, 2001, the Company shall place an
additional Five Hundred Thousand Dollars ($500,000.00) in the Special Deferral
Account. The terms and conditions of the original payment made in 1999,
including the interest amount, shall continue for the original payment and the
payments made under this paragraph 5(c).
 
Conversion of Concert Long Term Incentive Program. The Company shall pay
Executive under this paragraph 5(d) as follows in lieu of amounts Executive
would have been entitled to receive under Concert's Long Term Incentive Program:
(i) on Effective Date, the Company shall provide to Executive Five Hundred Forty
Thousand Five Hundred Forty (540,540) Restricted Shares to vest on April 1,
2002; and (ii) a cash payment in April 2003 in the
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amount of Three Million Eighty Thousand Dollars ($3,080,000.00). The cash
payment outlined in this paragraph 5(d) is subject to Executive's employment
through December 31, 2002, subject to Paragraph 14 relating to Company Initiated
Termination or Good Reason Termination. If Executive wishes to make an election
under Section 83(b) for payments made to him under this paragraph 5(d), then the
Company will loan Executive Three Million, Seven Hundred Ninety Thousand, Five
Hundred Twenty and 99/100 Dollars ($3,790,520.99) for Executive to pay federal
and state taxes, with an additional loan to Executive in April 2001 for the
payment of any additional federal taxes resulting from this election; provided,
however, that Executive shall repay the Company the full amount of the loans by
December 31, 2002. Interest on the loan under this paragraph for the payment of
taxes shall be forgiven by the Company; provided, however, that the short-term
interest rate set forth in Section 1274(d) of the United States Internal Revenue
Code shall be in effect for each month in which there is an unpaid balance on
this loan and this interest rate shall result in imputed income to Executive.
Taxes for such imputed income are payable by Executive.
 
Point Cast Stock Price Indemnification Payment. The Company shall not be
responsible for the Point Cast stock price indemnification payment of One
Million Four Hundred Thousand Dollars ($1,400,000.00).
 
Repayment of Outstanding Loan. On January 2, 2001, the Company shall demand
repayment of a loan made to Executive on or about March 19, 1999 in the amount
of Two Million Dollars ($2,000,000.00). The interest on this loan is forgiven by
the Company; provided, however, that the interest on this loan from the
inception of this loan through December 31, 2000 shall be imputed income to
Executive for 2000 and Executive agrees that the taxes on the forgiven interest
shall be his responsibility. The interest on this loan for January 1 and 2, 2001
shall be imputed income to the Executive for 2001 and shall be his
responsibility. The interest rate for this loan shall be the short-term interest
rate set forth in Section 1274(d) of the United States Internal Revenue Code.
 
Company Issuance of New Loan. On January 2, 2001, the Company shall issue a loan
to Executive in the amount of Two Million Dollars ($2,000,000.00). The Company
shall forgive all interest charges on the loan under this paragraph; provided,
however, that the short-term interest rate set forth under Section 1274(d) of
the United States Internal Revenue Code shall be in effect for each month in
which there is an unpaid balance on this loan and this interest rate shall
result in imputed income to Executive and the taxes on this imputed income are
payable by Executive. Executive shall repay the Company for this loan in full on
April 1, 2002.
 
Other Compensation.
 
Perquisites. During Executive's employment under this Agreement, the Company
shall provide Executive with the perquisites of employment as are commonly
provided to other Company executives and shall reimburse Executive for
reasonable and necessary business expenses.
 
Benefits. During Executive's employment under this Agreement, the Company shall
provide to Executive coverage under benefit programs in accordance with those
Executive, mid-career hire and Senior Management benefit plans as are generally
made available to other Company executives.
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Attachment D outlines the benefits available on the Effective Date. The Company
reserves the right to modify and/or eliminate any benefit plan applicable to
Executive; provided, however, that any modification or deletion of a benefit
plan shall not affect Executive to any greater or lesser extent than any other
Company executive.
 
Special Temporary Living Allowance. Executive shall work in Atlanta, Georgia
through December 31, 2000 and in New Jersey thereafter. Executive's travel
between Atlanta, Georgia and New Jersey for December 2000 shall be reimbursed as
a business expense. Beginning January 1, 2001 and continuing until Executive
moves his residence to the New Jersey area, the Company shall pay Executive Six
Thousand Dollars ($6,000.00) per month as a Special Temporary Living Allowance
to compensate Executive for his temporary housing in New Jersey and trips to his
Atlanta home. The Company shall gross-up for tax purposes the Special Temporary
Living Allowance. The Company's obligation to pay Executive a Special Temporary
Living Allowance shall terminate the earlier of December 31, 2002 or termination
of Executive's employment with the Company.
 
Relocation. The Company shall pay for Executive's relocation under the terms of
AT&T Relocation Plan B. The terms and conditions of AT&T Relocation Plan B shall
apply, including but not limited to the requirement that Executive use a
registered real estate broker approved by the relocation firm assigned to
Executive. The Company shall not reimburse Executive for any relocation expense
incurred after the earlier of December 31, 2002 or Executive's last date of
employment with the Company. All requests for reimbursement under this paragraph
6(d) shall be submitted to the Company by the earlier of March 31, 2003 or
thirty (30) days after Executive's last day of employment with the Company
 
Financial Counseling. The Company shall reimburse Executive for financial
counseling fees paid to his personal financial counselor during his employment
with the Company. Executive will not be required to use one of the three AT&T
approved financial counseling firms. Fees subject to reimbursement shall include
fees for individual financial counseling, preparation of federal and state
income tax returns and preparation of Executive's will and other estate planning
documents. The Company shall pay Executive a federal tax allowance on the
reimbursed fees.
 
Costs Associated with this Agreement. The Company shall reimburse Executive for
costs incurred by Executive for attorney review and financial counseling
associated with negotiation and execution of this Agreement. The Company shall
gross-up for tax purposes reimbursement to Executive under this paragraph 6(f).
 
Company Airplane. Executive shall have the authority to use Company-owned
aircraft for business and personal travel during his employment with the
Company. In the event that use by the Executive of the Company-owned aircraft
during his employment results in income imputed to Executive, the Company will
provide a gross-up to Executive of his compensation to offset Executive's tax
obligation for imputed income resulting from this paragraph 6(g).
 
Special Individual Pension Arrangement. Attachment E sets forth the terms of
Executive's Special Individual Pension Arrangement. Attachment E replaces the
former Special Individual Pension Arrangement implemented per the Concert Offer
Letter which shall no longer apply.
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Impact of Company Restructuring on Restricted Stock Units, Restricted Shares,
Stock Options and Performance Shares. In the event that AT&T Wireless and AT&T
Broadband become independent companies from AT&T Corp. through a divestiture,
sale or some similar means, all grants made under this Agreement in the form of
Restricted Stock Units, Restricted Shares, Stock Options and Performance Shares
based on AT&T Corp. stock shall be apportioned among AT&T Corp., AT&T Wireless
and AT&T Broadband stock according to a plan which shall be developed and
approved by the Company's Board of Directors and applicable to Executive and
other Company executives.
 
Change in Control. In the event of a Change in Control of the Company, Section
11 of the AT&T 1997 Long Term Incentive Program (and any and all amendments
thereto by the Company's Board of Directors) shall apply to all Stock Options,
Restricted Shares, Restricted Stock Units and Performance Shares awarded to
Executive under this Agreement prior to and not including January 1, 2001. All
Stock Options, Restricted Shares, Restricted Stock Units and/or Performance
Shares awarded after January 1, 2001 shall be governed exclusively by the Change
in Control provisions contained therein. Severance payments to Executive shall
be governed by the Change in Control provisions approved by the Company's Board
of Directors at its October 22-23, 2000 meeting.
 
Confidentiality of Trade Secrets and Business Information.
 
Executive agrees that he will not, at any time during his employment or
thereafter, disclose or use any trade secret, proprietary or confidential
information of the Company or any subsidiary or affiliate of the Company,
obtained during the course of his employment, except as required in the course
of such employment or with the written permission of the Company or, as
applicable, any subsidiary or affiliate of the Company or as may be required by
law, provided that, if Executive receives legal process with regard to
disclosure of such information, he shall promptly notify the Company and
cooperate with the Company in seeking a protective order.
 
Executive agrees that at the time of the termination of his employment with the
Company, whether at the instance of the Executive or the Company, and regardless
of the reasons therefore, he will deliver to the Company, and not keep or
deliver to anyone else, any and all notes, files, memoranda, papers and, in
general, any and all physical matter containing information, including any and
all documents significant to the conduct of the business of the Company or any
subsidiary or affiliate of the Company which are in his possession, except for
any documents for which the Company or any subsidiary or affiliate of the
Company has given written consent to removal at the time of the termination of
the Executive's employment and his personal rolodex, phone book and similar
items.
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Non-competition.
 
In consideration for payments made under this Agreement, including but not
limited to paragraphs 3(a) and 3(b), Executive agrees that he will not, for a
period of One (1) year after his Employment with the Company, establish a
relationship with a competitor (including but not limited to an employment or
consulting relationship) or engage in any activity which is in conflict with or
adverse to the interest of the Company, as defined by the AT&T Non-Competition
Guideline (hereinafter referred to as a "Competitive Activity"). Executive
recognizes that this obligation includes, and is not limited to, an agreement
that he shall not work for a competitor of AT&T Corp. as an executive,
consultant, independent contractor or in any other capacity for a period of One
(1) year following the termination of his employment with the Company,
regardless of whether Executive or the Company terminates the employment
relationship.
 
In addition to Executive's obligations outlined in paragraph 10(a) of this
Agreement, any and all payments (except those made from Company-sponsored
tax-qualified pension or welfare plans), benefits or other entitlements to which
the Executive may be eligible in accordance with the terms hereof, may be
forfeited, whether or not in pay status, at the discretion of the Company, if
Executive engages in Competitive Activity for a period of Two (2) years
following termination of his Employment from the Company, regardless of whether
Executive or the Company terminates the employment relationship. The payments,
benefits and other entitlements hereunder are being made in part in
consideration of the obligations of this paragraph 10 and in particular the
post-employment payments, benefits and other entitlements are being made in
consideration of, and dependent upon compliance with this paragraph. This
paragraph shall apply notwithstanding any other provision of this Agreement;
provided, however, that compensation awarded to Executive under paragraph 5
shall preclude Executive from Competitive Activity for One (1) year following
the termination of his employment.
 
No forfeiture or cancellation shall take place under paragraph 10(b) with
respect to any payments, benefits or entitlements hereunder or under any other
award agreement, plan or practice unless the Company shall have first given
Executive written notice of its intent to so forfeit, or cancel or pay out and
Executive has not, within thirty (30) calendar days of giving such notice,
ceased such unpermitted Competitive Activity, provided that the foregoing prior
notice procedure shall not be required with respect to either: (i) a Competitive
Activity which Executive initiated after the Company had informed the Executive
in writing that it believed such Competitive activity violated this paragraph 10
or the AT&T Non-Competition Guideline; or (ii) any Competitive Activity
regarding wireless local, regional or long distance telephone services or other
products or services, including broadband services, which are part of a line of
business which represents more than five percent (5%) of the Company's
consolidated gross revenues for its most recent completed fiscal year prior to
the commencement of the Competitive Activity.
 
Nothing in this Section 10 shall prohibit the Executive from being a passive
owner of not more than one percent (1%) of the outstanding common
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stock, capital stock and equity of any firm, corporation or enterprise so long
as the Executive has no active participation in the management of business of
such firm, corporation or enterprise.
 
Nothing in this Section 10 or the Non-Competition Guideline shall preclude
Executive from serving on the Board of Directors of a start-up Company ("NewCo")
during the two (2) year period immediately following his last day of employment
with the Company provided that no active and significant competitor of the
Company is an active participant in the management of such NewCo. For purposes
of this Agreement a Company shall cease being a NewCo should its annual revenue
exceed 500 million dollars. Should the annual revenue of NewCo exceed 500
million dollars Executive's relationship with NewCo shall be subject to the Non
Competition Guideline. Nothing in this paragraph shall be deemed to diminish or
reduce the obligations of Executive not to use or disclose the Company's
confidential and proprietary information.
 
If the restrictions stated herein are found by a court to be unreasonable, the
Parties agree that the maximum period, scope or geographical area reasonable
under such circumstances shall be substituted for the stated period, scope or
area and that the court shall revise the restrictions contained herein to cover
the maximum period, scope and area permitted by law.
 
Resolution of Disputes. Any disputes arising under or in connection with this
Agreement shall be resolved by third party mediation of the dispute and, failing
that, by binding arbitration, to be held in New Jersey, in accordance with the
rules and procedures of the American Arbitration Association. Judgment upon the
award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof. The Company shall pay the costs of the arbitrator or the
mediator but not the legal fees of Executive; provided, however, that the
Company shall bear all such costs if Executive prevails in such arbitration on
any material issue.
 
Non-Interference. During Executive's employment and for a period of Two (2)
years following the effective date of Executive's termination, for any reason,
from the Company, Executive agrees not to directly or indirectly recruit,
solicit or induce, any employees, consultants or independent contractors of the
Company to terminate, alter or modify their employment or other relationship
with the Company. During Executive's employment and for a period of Two (2)
years following the effective date of Executive's termination, for any reason,
from the Company, Executive agrees not to directly or indirectly solicit any
customer or business partner of the Company or interfere with the Company's
relationships with any of its customers or business partners on behalf of any
enterprise that directly or indirectly competes with the Company.
 
Injunction. If Executive commits a breach of any of the provisions of Sections 8
through 12 or any part thereof, the Company shall have the right and remedy to
have the provisions of this Agreement specifically enforced by way of
preliminary and/or permanent injunction by any court having jurisdiction, it
being acknowledged and agreed by Executive and Company that any such breach will
cause irreparable injury to the Company and that money damages will not provide
an adequate remedy to the Company. Furthermore, this Agreement is intended to
protect the proprietary rights of
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the Company in important ways, and even the threat of any misuse of the
technology or other confidential information of the Company would be irreparably
harmful because of the importance of that technology and confidential
information. In light of these considerations, Executive agrees that a court of
competent jurisdiction should immediately enjoin any breach or threatened breach
of paragraphs 8 through 12 of this Agreement, upon Company's request, and the
Company is released from the requirement of posting any bond in connection with
temporary or preliminary injunctive relief, to the extent permitted by law. Such
right to injunctive relief shall be in addition to, and not in lieu of, any
other rights and remedies available to the Company under law or in equity.
 
Company Initiated Termination of Employment or Good Reason Termination. Should
the Company terminate Executive's employment without Cause or should Executive
terminate his employment for Good Reason, Executive will receive a payment
equivalent to payments to which other similarly situated Company executives
would be entitled at the time of the termination of his employment under the
terms of the Senior Officer Separation Plan. This payment shall be payable to
Executive within ninety (90) days of his last day of employment with the
Company. For termination by Executive for Good Reason or by the Company without
Cause, Executive shall also be entitled to the following: (a) accelerated
vesting of Stock Options, Restricted Shares and Restricted Stock Units in
accordance with the terms under which the grants were made; (b) payment of
Annual Bonus in the target amount for the year in which the termination occurs,
prorated to reflect length of employment during that year; (c) outstanding
Performance Shares shall continue to vest; (d) immediate vesting of the Special
Deferral Account set forth in paragraph 5(c); (e) payment to Executive of any
unpaid hiring bonus under paragraphs 5(c) and 5(d)(ii) of this Agreement; (f)
payment of the Special Individual Pension Arrangement in accordance with its
terms and reflecting the amount accrued as of the date of termination of
Executive's employment; (g) coverage for himself and eligible dependents under
the Senior Management Separation Medical Plan; (h) continuation of Senior
Management Universal Life Insurance; and (i) financial counseling for one year,
including income tax return preparation for year of termination and a federal
tax allowance to Executive for the cost of the financial counseling.
 
Termination for Cause and Good Reason. For purposes of this Agreement, "Cause"
and "Good Reason" shall be defined as follows:
 
                  (a) Cause shall mean: (1) conviction (including a plea of
         guilty or nolo contendere) of a felony or any crime or theft,
         dishonesty or moral turpitude; or (2) gross omission or gross
         dereliction of any statutory or common law duty of loyalty to the
         Company; or (3) violation of AT&T's Code of Conduct.
 
                  (b) "Good Reason" shall mean any termination of Executive's
         Company employment, initiated by Executive, resulting from any of the
         following events without Executive's express written consent, which are
         not cured by the Company within twenty (20) days of Executive giving
         the Company written notice thereof:
 
                  (i) Executive's demotion to a position which is not of a rank
                  and responsibility comparable to members of the
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                  current Operations Group or those of a successor governance
                  body; provided, however, that the Company's decision not to
                  continue an Operations Group shall not be Good Reason, and
                  provided, further, that (1) changes in reporting relationships
                  shall not, alone, constitute Good Reason, unless such change
                  results in the Executive reporting to someone other than the
                  Company's Chief Executive Officer (or similar office), and/or
                  (2) a reduction in the Company's budget or employee head
                  count, without more, do not constitute Good Reason, or
 
                  (ii) A reduction in Executive's "Total Annual Compensation"
                  (defined as the sum of Executive's Annual Base Salary Rate,
                  Target Annual Incentive and "Target Annual Long Term Incentive
                  Grants") for any calendar or fiscal year, as applicable, to an
                  amount that is less than the Total Annual Compensation that
                  existed in the prior calendar or fiscal year, as applicable.
                  For purposes of this Paragraph the dollar value of the "Target
                  Annual Long Term Incentive Grants" shall exclude the value of
                  any special one-time or periodic long-term incentive grants,
                  and shall be determined by valuing Performance Shares, Stock
                  Units, Restricted Stock and stock options, Restricted Stock
                  Units at the market share price utilized in valuing the annual
                  Senior Management compensation structures in the materials
                  presented to the Compensation and Employee Benefits Committee
                  of the Company's Board of Directors ("the Committee") when
                  authorizing such grants, and assuming 100% performance
                  achievement if such grants include performance criteria. Stock
                  Options and Stock Appreciation Rights will be valued by the
                  Black-Scholes methodology (and related share price) as
                  utilized in the materials presented to the Committee when
                  authorizing such grants.
 
Termination Without Good Reason or For Cause. Should Executive leave his
employment without Good Reason ("Voluntary Termination"), Executive shall
receive nothing further under this Agreement except for (i) Stock Options,
Performance Shares, Restricted Shares and Restricted Stock Units already vested
and (ii) benefits in the then-applicable Senior Management Separation Medical
Plan but only if Voluntary Termination occurs after December 31, 2002. In the
event of a Voluntary Termination, Executive's Stock Options, Performance Shares,
Restricted Shares and Restricted Stock Units awarded but not vested shall be
cancelled. If Executive is terminated for Cause at any time during this
Agreement, he shall receive nothing further from the Company as of the date of
his termination and all Stock Options, Performance Shares, Restricted Shares and
Restricted Stock Units vested but not exercised shall be cancelled.
 
Special Voluntary Termination. If Executive resigns after December 31, 2002 and,
at the time of resignation, C. Michael Armstrong is no longer the Chief
Executive Officer of the Company and Executive has not been appointed to
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the position of Chief Executive Officer ("Special Voluntary Termination"),
Executive shall be entitled to the benefits set forth in paragraph 16 as well as
an accelerated vesting of Stock Options, Restricted Shares and Restricted Stock
Units in accordance with terms applicable to terminations under a Company force
management program. Outstanding Performance Shares awarded as of the date of
Executive's Special Voluntary Termination will continue to vest as if Executive
was still employed by the Company.
 
Death and Long Term Disability.
 
Termination Due to Death. In the event that the Executive's employment is
terminated due to his death, his estate or his beneficiaries, as the case may
be, shall be entitled to the following benefits: (i) vesting of the Special
Individual Pension Arrangement in an amount through the date of the termination
of Executive's employment and payment of the special survivor benefit according
to the express terms thereunder; (ii) Annual Bonus at target level for such year
prorated for the time worked in the performance year, payable in a single
installment as soon as practicable following Executive's death; (iii) all
outstanding options, whether or not then exercisable, shall become exercisable
and shall remain exercisable in accordance with the terms of the grants
applicable to death; (iv) lapse of the restrictions on Restricted Stock Units
and Restricted Stock; (v) payout at target for each Performance Share cycle in
which the Executive was participating at the time of his death, prorated for the
amount of time worked in the applicable three year cycle; (vi) vesting of the
Special Deferral Account under Paragraph 5(c); (vii) payment of any unpaid cash
hiring bonus under paragraph 5(d)(ii); and (viii) financial counseling for one
year including individual tax return preparation for Executive and spouse for
the year of death with a federal tax allowance for the cost of the financial
counseling.
 
Termination Due to Disability. The Company shall have the right to terminate
Executive's employment due to his Disability. In the event that the Executive's
employment is terminated due to his Disability, he shall be entitled to the
following benefits: (i) disability benefits in accordance with a disability
program then in effect for senior executives of the Company; (ii) the Special
Individual Pension Arrangement shall fully vest according to its terms and based
upon the amount accrued through the termination date of Executive's employment
offset by any Company-provided disability benefits; (iii) Annual Bonus at target
level for such year prorated for the time worked in the performance year,
payable in a single installment as soon as practicable after termination due to
Disability; (iv) all outstanding options, whether or not then exercisable, shall
become exercisable and shall remain exercisable in accordance with the terms of
the grants applicable to Disability; (v) lapse of the restrictions on Restricted
Stock Units and Restricted Stock; (vi) payout at target for each Performance
Share cycle in which the Executive was participating at the time of his
Disability, prorated for the amount of time worked in the applicable three year
cycle; (vii) vesting of the Special Deferral Account under paragraph 5(c);
(viii) payment of any unpaid cash hiring bonus under paragraph 5(d)(ii); and
(ix) financial counseling for one year including individual tax return
preparation for Executive for the year of termination due to Disability, with a
federal tax allowance for the cost of the financial counseling. For purposes of
this paragraph 18, "Disability" shall mean the
<PAGE>
                                       12
 
 
inability of Executive to perform his duties under this Agreement by reason of
any physical or mental impairment that is expected to prevent Executive from
performing his duties for a period exceeding twelve (12) months. Provided,
however, that nothing in this paragraph or this Agreement shall prevent the
Company from reassigning Executive's job duties on a temporary basis during any
period in which the Executive is receiving benefits under the Company's
applicable short-term disability benefits plan until the Executive returns to
work full-time or is terminated due to Disability.
 
Loan Repayment. Upon death, disability or termination of employment, for any
reason, Executive or Executive's estate must repay all outstanding loans within
ninety (90) days of the last day of employment.
 
Membership on Boards. Executive may continue to serve on the Boards of Directors
or Advisory Committees of other companies in positions held prior to the
Execution Date assuming that the other company is not a competitor of the
Company as determined by the Secretary of the Company's Board of Directors.
Executive agrees to provide a list, as soon a practicable following the
Execution Date, of such Board and Committee memberships so that the Company may
make such determination.
 
Other Terms.
 
 This Agreement shall be governed by and construed and enforced in accordance
with the laws of the State of New Jersey, without regard to conflict of law
rules. If any provision of this Agreement is hereafter construed to be invalid
or unenforceable in any respect, the same shall not affect the remaining
provisions of this Agreement, without regard to the invalid portion, and any
such invalid provisions shall be reformed and construed to the extent necessary
to permit their enforceability so as to reflect the intent of the parties
hereto.
 
 Executive hereby represents and warrants that (i) Executive has the right to
enter into this Agreement with the Company and to grant the rights contained in
this Agreement, and (ii) the provisions of this Agreement do not violate any
other contracts or agreements that the Executive has entered into with any other
individual or entity.
 
Executive agrees that the terms of this Agreement are reasonable and properly
required for the protection of the Company's legitimate business interests. If
any of the covenants or provisions contained in this Agreement, or any part
thereof, is hereafter construed to be invalid or unenforceable in any respect,
the same shall not affect the remainder of the covenant, covenants or provisions
which shall be given the maximum effect possible without regard to the invalid
portions and the remainder shall then be fully enforceable.
 
The article headings contained herein are for reference purposes only and shall
not in any way affect the meaning or interpretation of this Agreement.
 
This Agreement sets forth the entire agreement and understanding of the Parties
relating to the subject matter hereof, and supersedes all prior agreements,
arrangements and understandings, written or oral, relating to the subject matter
hereof.
<PAGE>
                                       13
 
 
This Agreement may not be amended, modified, superseded or waived, except by a
written instrument executed by both Parties hereto, or, in the case of a waiver,
by the party waiving compliance. The failure of either Party at any time or
times to require performance of any provision hereof shall in no manner affect
the right at a later time to enforce the same. No waiver by either Party of the
breach of any term or covenant contained in this Agreement whether by conduct or
otherwise, in any one or more instances, shall be deemed to be, or construed as,
a further or continuing waiver of any such breach, or a waiver of the breach of
any other term or covenant contained in this Agreement.
 
Duration of Terms. The respective rights and obligations of the parties
hereunder shall survive any termination of Executive's employment or this
Agreement to the extent necessary to the intended preservation of such rights
and obligations.
 
Acknowledgment. Executive acknowledges that before signing this Agreement,
Executive was given the opportunity to read it, evaluate it and discuss it with
Executive's personal advisors, Executive's attorney and with representatives of
the Company. Executive further acknowledges that the Company has not provided
Executive with any legal advice regarding this Agreement.
 
Assignment. The Company specifically reserves the right to assign the terms of
this Agreement to any successor, whether the successor is the result of any
sale, purchase, merger, consolidation, asset sale, divestiture or spin-off or
any form or combination thereof. No sale, purchase, merger, consolidation, asset
sale, divestiture or spin-off or any form or combination thereof shall be
construed as a termination of Executive's employment and will not trigger the
Company's obligations under paragraphs 14, 16 or 17 of this Agreement.
 
Release for Severance Payments. The Company shall be required to pay Executive
payments upon the termination of his employment as provided under this Agreement
only if Executive executes a release upon his termination releasing the Company
from any liability arising from his employment or termination thereof. This
release shall include, but not be limited to, claims for breach of contract or
those arising under state and federal employment statutes, including but not
limited to, the Civil Rights Act of 1964, as amended ("Title VII"), and the Age
Discrimination in Employment Act.
 
Notices. All notices and other communications required or permitted hereunder
shall be in writing and shall be deemed given when (a) delivered personally, (b)
sent by certified mail, postage prepaid, return receipt requested or (c)
delivered by overnight courier; to the Party concerned at the address indicated
below or to such changed address as such Party may subsequently give such notice
of:
 
If to the Company:         AT&T Corp.
                           295 North Maple Avenue
                           Basking Ridge, NJ  07920
<PAGE>
                                       14
 
 
                           Attention:  Executive Vice President
                                       Human Resources
 
If to the Executive:       Mr. David Dorman
                           c/o AT&T Corp.
                           295 North Maple Avenue
                           Basking Ridge, NJ  07920
<PAGE>
                                       15
 
 
IN WITNESS WHEREOF, the Parties have executed this Agreement.
 
--------------------------                  ------------------------------------
Dated                                       David Dorman
 
--------------------------                  ------------------------------------
Dated                                       AT&T Corp.
 
                                            By:   Mirian Graddick Weir
                                                  Executive Vice President -
                                                  Human Resources
<PAGE>
         The construction, interpretation and performance of this Agreement
shall be governed by the laws of the State of New Jersey, without regard to its
conflict of laws rule.
 
         If you agree with the terms and conditions detailed above, please sign
in the space provided below and return the executed copy to me.
 
 
                                                    Sincerely,
 
 
 
                                                    Mirian Graddick-Weir
                                                    Executive Vice President
 
 
 
 
-------------------------------                     ----------------------------
Acknowledged and agreed to                          Date
Charles Noski
 
 
 
 
 
 
 
 
 
 
 
Exhibit 10(iii)(A)7
 
                                                                   July 29, 2003
 
 
Mr. David Dorman
 
Dear Dave:
 
     This letter agreement ("the Agreement") completely replaces Attachment E of
your  employment  agreement  dated  December  1,  2000  detailing  your  special
individual  non-qualified  pension agreement,  and supercedes all other oral and
written communication on the subject.
 
     This  Agreement  will   establish  an  individual   non-qualified   pension
arrangement  ("Individual Pension"),  which, subject to the terms and conditions
below,  will  provide  you a benefit  payable  from AT&T Corp.  (the  "Company")
operating assets upon your retirement from the Company.  This Individual Pension
will be  immediately  vested and only for  termination  for "Cause" (as defined)
will this Individual Pension be null and void in its entirety. In addition, this
Individual  Pension  is subject to the  provisions  of the AT&T  Non-Competition
Guideline.
 
     With respect to the amount  payable under this  Individual  Pension at your
retirement/termination,  the single life annual  annuity  amount payable will be
determined as (a) minus (b) as set forth in the charts below:
 
     (a)  the  single  life  annual  pension  annuity  benefits   calculated  in
          accordance with the table set forth below:
 
-------------------------------------------------------------------
Year of Retirement/ Termination     Percentage of Final 3 Year
                                 Average Total Cash Compensation
                                 (Base Pay plus Actual Bonus Paid
                                             in Year)
-------------------------------------------------------------------
 
-------------------------------------------------------------------
                           2003                             27.50%
-------------------------------------------------------------------
                           2004                             31.10%
-------------------------------------------------------------------
                           2005                             34.70%
-------------------------------------------------------------------
                           2006                             38.30%
-------------------------------------------------------------------
                           2007                             41.90%
-------------------------------------------------------------------
                           2008                             45.50%
-------------------------------------------------------------------
                           2009                             49.10%
-------------------------------------------------------------------
                           2010                             52.70%
-------------------------------------------------------------------
                           2011                             56.30%
-------------------------------------------------------------------
                           2012                             60.00%
-------------------------------------------------------------------
                           2013                             60.00%
-------------------------------------------------------------------
                           2014                             60.00%
-------------------------------------------------------------------
                           2015                             60.00%
-------------------------------------------------------------------
                           2016                             60.00%
-------------------------------------------------------------------
                           2017                             60.00%
-------------------------------------------------------------------
                           2018                             60.00%
-------------------------------------------------------------------
                           2019                             60.00%
-------------------------------------------------------------------
 
 
     (b)  any single  life  annual  annuity  benefits  payable  from AT&T,  i.e.
          pension  benefits under the AT&T  Management  Pension Plan  (AT&TMPP),
          AT&T Non Qualified  Pension Plan  (AT&TNQPP),  AT&T Excess Benefit and
          Compensation Plan (AT&TEBCPP),  minimum retirement  benefits under the
          AT&T Senior  Management Long Term  Disability and Survivor  Protection
          Plan  (AT&TSMLTD&SPP)  if applicable,  as well as by any qualified and
          nonqualified pension benefits from prior employers.
 
Joint and  survivor  benefits on your  death,  whether  your death  occurs as an
active  employee  or  following  your  termination,  will  be  governed  by  the
administrative guidelines applicable to this Agreement.
 
     In the event of your involuntary  termination  within two years following a
Change in  Control  ("CIC"),  as  defined  in the AT&T 1997 Long Term  Incentive
Program,  for reasons  other than for Cause or if you terminate  employment  for
Good Reason (as defined)  within two years  following a CIC,  your benefit under
this  Individual  Pension will be  calculated  by  accelerating  the  Individual
Pension  schedule  above  by  adding  three  years  to the  schedule,  i.e.  the
applicable   percentage   will  be   that   associated   with   the   "Year   of
Retirement/Termination"  three  years  from your  actual  termination  year.  In
addition, the cash compensation used in calculating the final three year average
cash  compensation will not use cash compensation for years in which you did not
hold the position of Chief Executive Officer.
 
     For purposes of this Agreement:
 
     a)  "Cause" shall mean:
 
          i.   your conviction  (including a plea of guilty or nolo  contendere)
               of a crime including theft, fraud, dishonesty or moral turpitude;
 
          ii.  violation   by  you  of  the   Company's   Code  of   Conduct  or
               Non-Competition Guideline;
 
          iii. gross omission or gross dereliction of any statutory,  common law
               or other duty of loyalty to the Company or any of its affiliates;
               or
 
          iv.  repeated failure to carry out the duties of your position despite
               specific instruction to do so.
 
     b)   "Good  Reason" prior to a CIC shall mean the  occurrence  without your
          express written consent of any of the following events:
 
          i.   Your  demotion  to  a  position  which  is  not  of  a  rank  and
               responsibility  comparable  to members of the current  Operations
               Group or those of a similar/replacing  governance body; provided,
               however,   that  the  Company's  decision  not  to  continue  the
               Operations Group shall not be Good Reason, and provided, further,
               that (1) changes in  reporting  relationships  shall not,  alone,
               constitute  Good Reason  and/or (2) a reduction in your  business
               unit's budget or a reduction of your business  unit's head count,
               by themselves, do not constitute Good Reason; or
 
          ii.  A reduction in your "Total Annual  Compensation"  (defined as the
               sum of your Annual Base Salary Rate,  Target Annual Incentive and
               "Target Annual Long Term  Incentive  Grants") for any calendar or
               fiscal year,  as  applicable,  to an amount that is less than the
               Total Annual  Compensation  that existed in the prior calendar or
               fiscal  year,  as  applicable.  For  purposes  of this  Paragraph
               (b)(ii)  the  dollar  value  of  the  "Target  Annual  Long  Term
               Incentive Grants" shall exclude the value of any special one-time
               or periodic  long-term  incentive grants, and shall be determined
               by valuing  Performance  Shares,  Stock Units,  Restricted Stock,
               Restricted Stock Units,  etc., at the market share price utilized
               in valuing the annual Senior Management  compensation  structures
               in the  materials  presented  to the  Compensation  and  Employee
               Benefits  Committee of the  Company's  Board of  Directors  ("the
               Committee")  when  authorizing  such grants,  and  assuming  100%
               performance   achievement  if  such  grants  include  performance
               criteria.  Stock  Options and Stock  Appreciation  Rights will be
               valued by the Black-Scholes methodology (and related share price)
               as utilized in the  materials  presented  to the  Committee  when
               authorizing such grants.
 
          c)   "Good  Reason"  within  two  years  following  a CIC  shall be in
               accordance with the October 23, 2000 CIC Board Resolutions, which
               include  reduction in authority or  responsibility,  reduction in
               compensation,   and  business   relocation  beyond  a  reasonable
               commuting distance.
 
          Notwithstanding  the foregoing,  the Company may require you to change
          to  an  equivalent   executive   position   within  the  Company  with
          substantially  similar  levels of duties or  responsibilities  without
          causing Good Reason to occur.
 
          You must notify the Company within 60 days  following  knowledge of an
          event you believe  constitutes  Good  Reason,  or such event shall not
          constitute Good Reason hereunder.
 
 
     This agreement may not be amended or waived, unless the amendment or waiver
is in a writing signed by you and the Company's  Executive Vice  President-Human
Resources.
 
     It is understood and agreed that you will not talk about,  write about,  or
otherwise  publicize  the  terms  or  existence  of this  Agreement  or any fact
concerning its execution or implementation  unless required by law or to enforce
the terms of this Agreement.  You may,  however,  discuss its contents with your
spouse, legal and/or financial counselor,  provided that you advise them of your
obligations of confidentiality  and that any disclosures made by any of them may
be  treated by the  Company  as  disclosures  made by you for  purposes  of this
provision.
 
     THIS AGREEMENT IS NOT AN EMPLOYMENT CONTRACT AND SHOULD NOT BE CONSTRUED OR
INTERPRETED AS CONTAINING ANY GUARANTEE OF CONTINUED EMPLOYMENT.  THE EMPLOYMENT
RELATIONSHIP WITH THE COMPANY IS BY MUTUAL CONSENT ("EMPLOYMENT-AT-WILL").  THIS
MEANS THAT  EMPLOYEES HAVE THE RIGHT TO TERMINATE  THEIR  EMPLOYMENT AT ANY TIME
FOR ANY REASON.  LIKEWISE,  THE COMPANY  RESERVES THE RIGHT TO DISCONTINUE  YOUR
EMPLOYMENT WITH OR WITHOUT CAUSE AT ANY TIME AND FOR ANY REASON.
 
     You understand  that the terms of this Agreement shall apply to the Company
and its successors.  The Company  specifically  reserves the right to assign the
terms of this Agreement to any successor, whether the successor is the result of
a sale, purchase, merger, consolidation,  asset sale, divestiture or spin-off or
any combination or form thereof. No sale, purchase, merger, consolidation, asset
sale,  divestiture or spin-off or any combination or form thereof by the Company
shall  be  construed  as a  termination  of  your  employment  and  will  not be
considered a termination for purposes of this Agreement.
 
     The construction, interpretation and performance of this Agreement shall be
governed by the laws of the State of New Jersey,  without regard to its conflict
of laws rule.
 
     In addition,  all of the benefits provided under this Agreement are subject
to forfeiture if you violate the AT&T Non-Competition Guideline, a copy of which
has been previously provided to you.
 
     Dave,  I am happy to present this special  pension  arrangement  to you. It
recognizes  the  extraordinary  contributions  that we expect you to continue to
make to our business. If you agree with the terms and conditions detailed above,
sign and date  this  Agreement  in the  spaces  provided  below and  return  the
original executed copy to me.
 
                                  Sincerely,
 
 
Acknowledged and Agreed to:
 
/s/ Dave Dorman                 July 30, 2003
-------------------------       -------------------
Dave Dorman                     Date

 

 

 

 

FORM OF EMPLOYMENT AGREEMENT
 
2003 Amendment
 
                                                          Exhibit (10)(iii)(A)35
 
 
 
                              EMPLOYMENT AGREEMENT
 
This Agreement, effective December 1, 2000, by and between David Dorman
("Executive") and AT&T Corp., a New York Corporation with its principal place of
business at 295 N. Maple Avenue, Basking Ridge New Jersey ("Company")
(collectively "the Parties"):
 
WHEREAS, Executive seeks employment with the Company; and
 
WHEREAS, the Company seeks to secure Executive's services on the terms provided
herein;
 
NOW THEREFORE, in consideration of the mutual covenants set forth below, the
Parties agree as follows:
 
Term of Employment. Effective December 1, 2000 ("Effective Date"), the Company
will hire Executive on a full time basis to render exclusive services to the
Company and its affiliates under the terms set forth in this Agreement. The
Executive accepts this employment and will render services as required by the
Company using the Executive's best efforts and will report to the Company's
Chief Executive Officer ("CEO"). Employment under this Agreement shall terminate
December 31, 2002; provided, however, that on December 31, 2002, and on each
December 31 thereafter ("Extension Date"), Employment under this Agreement shall
extend automatically for one additional year unless either the Company or the
Executive provides the other written notice of its or his desire to terminate
the Agreement no less than sixty (60) days prior to the Extension Date.
 
Title of Executive. At Effective Date, Executive's title shall be President of
AT&T Corp. In the event that AT&T Wireless and AT&T Broadband become independent
companies from the entity referred to on Effective Date as AT&T Corp., then
Executive's title shall become President and Chief Operating Officer of AT&T
Corp.'s remaining business units. For purposes of this paragraph, "independent
companies" shall mean that AT&T Wireless and AT&T Broadband have undergone a
divestiture from AT&T Corp. and are no longer subject to ownership or control by
AT&T Corp.
 
Compensation and Benefits.
 
Base Salary. The Executive shall receive salary compensation ("Base Salary")
from the Company in payment for all of Executive's services under this Agreement
at an annual rate of Nine Hundred Fifty Thousand ($950,000.00) dollars per year,
subject to review by the Company's compensation committee on an annual basis
with regard to the possibility of an increase in Base Salary. The Company shall
pay Executive the Base Salary in monthly installments.
 
Annual Bonus. The Annual Bonus ("Annual Bonus") for Company executives is based
on measures of Company and individual performance. The Company makes no
representations under the terms of this Agreement regarding criteria for or
amounts of bonuses paid during the term of this Agreement. However, Executive
shall be entitled to receive an annual bonus during the term of this Agreement
under the same terms and conditions of other Company executives. The target
amount for Executive's Annual Bonus shall be one hundred percent of base salary,
<PAGE>
                                       2
 
 
Nine Hundred Fifty Thousand ($950,000.00) Dollars, subject to review by the
Company's compensation committee on an annual basis with regard to the
possibility of an increased Annual Bonus. Executive shall become eligible for a
bonus under this paragraph beginning in 2002 for performance year 2001 and for
each March thereafter during the term of this Agreement.
 
AT&T Long Term Incentive Compensation. All compensation under this Paragraph 4
shall be subject to the terms of the AT&T 1997 Long Term Incentive Program and
the AT&T Non-Competition Guideline, attached to this Agreement as Attachments A
and B, respectively.
 
2000 AT&T Performance Shares. On the Effective Date, Company will grant
Executive Fifty Thousand Five Hundred (50,500) AT&T Performance Shares covering
the 2000-2002 performance period. Payment for Performance Shares awarded under
this paragraph 4(a) are contingent upon the Company's attainment of financial
performance measurements determined by the Company's Board of Directors. Payout,
if any, for shares awarded under this paragraph shall be made during the first
quarter of 2003 or as otherwise determined by the Company's Board of Directors.
 
2000 AT&T Stock Options. On the Effective Date, Company will grant Executive
options for Three Hundred Fifty Six Thousand Seven Hundred (356,700) shares of
AT&T Common Stock. For stock options granted under this paragraph 4(b), the term
of the stock option grant is ten years and the stock options will vest
Twenty-Five percent (25%) annually beginning on the first anniversary of
Effective Date. The stock option price shall be Nineteen and 7813/10000 Dollars
($19.7813) per share, the fair market value of AT&T Common Stock on December 1,
2000.
 
2001 Long Term Incentive Grants. In 2001, the Company shall make a grant to
Executive of a long term incentive award as determined by the Company's Board of
Directors valued at Nine Million Five Hundred Thousand Dollars ($9,500,000.00).
Executive's award shall be issued at the same time, valued in the same manner,
and contain the same components in the same ratio as the awards made to other
members of the Operations Group. The valuation and conditions of payment for
Executive's award under this paragraph 4(c) shall be determined by the Company's
Board of Directors at the time such award is made to Executive and other members
of the Operations Group.
 
Special Retention Bonus. The Company shall issue Executive in 2001 a Special
Retention Bonus of Restricted Stock Units equal at the time issued to an amount
four times Executive's Base Salary as defined in paragraph 3(a) of this
Agreement or Three Million Eight Hundred Thousand Dollars ($3,800,000.00).
Restricted Stock Units issued to Executive under this paragraph 4(d) are subject
to the vesting provisions and all other conditions applicable to other members
of the Company's Operations Group, as will be determined by the Company's Board
of Directors in January 2001.
 
Special Stock Option Grant. If AT&T Corp. issues a separate stock tracking the
performance of AT&T Consumer Services ("Consumer Tracking Stock"), then
Executive shall receive a stock option grant for Consumer Tracking Stock in an
amount that, based on ratio of tracking stock to Long Term Incentive payments,
is consistent with Consumer Tracking Stock
<PAGE>
                                       3
 
 
provided to the CEO and other members of the Company's Operations Group and
subject to the same terms as any stock option grant for Consumer Tracking Stock
made to the Company's CEO and Operations Group.
 
Restitution for Concert Forfeitures. In order to address certain forfeitures
associated with Executive leaving Concert, and to incent Executive to join the
Company, Executive will be provided with the following incentive compensation.
The AT&T Non-Competition Guideline shall be applicable to all compensation
awarded to Executive under this paragraph 5, except that Executive shall be
prohibited from engaging in Competitive Activity, as that term in defined in the
Non-Competition Guideline, for one (1) year for purposes of compensation under
this paragraph 5. Any payment to Executive by the Company made under this
paragraph 5 shall be reduced by the amount of the payment, if any, made to
Executive by Concert for any item set forth in this paragraph.
 
March 2001 Bonus. The Company shall pay Executive in or about March 2001 a bonus
for performance year 2000 in the amount of Eight Hundred Thousand Dollars
($800,000.00). To the extent that Executive would have received more than this
amount from Concert Global Networks USA L.L.C. ("Concert") for performance
during 2000, then the Company shall pay Executive the amount he would have
received from Concert had he remained employed at Concert through March 2001.
 
Restricted Shares. On the Effective Date, the Company shall award the Executive
a one-time award of Thirty Five Thousand Nine Hundred Fifty-Six (35,956)
Restricted Shares to vest on April 1, 2002. Restricted Shares awarded under this
paragraph 5(b) shall replace phantom restricted stock units of the Company and
British Telecommunications P.L.C. ("BT") granted on April 1, 1999 according to
the terms of the offer letter given to Executive at the outset of his employment
with the global venture between the Company and BT later referred to as Concert
(the "Concert Offer Letter"). The Concert Offer Letter is attached to this
Agreement as Attachment C.
 
Special Deferral Account. The Company shall be responsible for Concert's 2000
payment of Five Hundred Thousand Dollars ($500,000.00), with interest credited
effective April 1, 2000, to Executive under the terms of Concert's retention
package applicable to Executive. Concert's payment under this paragraph 5(c)
shall be placed by the Company into a deferral account ("Special Deferral
Account") previously established and containing the Company's 1999 payment of
Five Hundred Thousand Dollars ($500,000.00) made on Executive's behalf per the
terms of the Concert Offer Letter. On April 1, 2001, the Company shall place an
additional Five Hundred Thousand Dollars ($500,000.00) in the Special Deferral
Account. The terms and conditions of the original payment made in 1999,
including the interest amount, shall continue for the original payment and the
payments made under this paragraph 5(c).
 
Conversion of Concert Long Term Incentive Program. The Company shall pay
Executive under this paragraph 5(d) as follows in lieu of amounts Executive
would have been entitled to receive under Concert's Long Term Incentive Program:
(i) on Effective Date, the Company shall provide to Executive Five Hundred Forty
Thousand Five Hundred Forty (540,540) Restricted Shares to vest on April 1,
2002; and (ii) a cash payment in April 2003 in the
<PAGE>
                                       4
 
 
amount of Three Million Eighty Thousand Dollars ($3,080,000.00). The cash
payment outlined in this paragraph 5(d) is subject to Executive's employment
through December 31, 2002, subject to Paragraph 14 relating to Company Initiated
Termination or Good Reason Termination. If Executive wishes to make an election
under Section 83(b) for payments made to him under this paragraph 5(d), then the
Company will loan Executive Three Million, Seven Hundred Ninety Thousand, Five
Hundred Twenty and 99/100 Dollars ($3,790,520.99) for Executive to pay federal
and state taxes, with an additional loan to Executive in April 2001 for the
payment of any additional federal taxes resulting from this election; provided,
however, that Executive shall repay the Company the full amount of the loans by
December 31, 2002. Interest on the loan under this paragraph for the payment of
taxes shall be forgiven by the Company; provided, however, that the short-term
interest rate set forth in Section 1274(d) of the United States Internal Revenue
Code shall be in effect for each month in which there is an unpaid balance on
this loan and this interest rate shall result in imputed income to Executive.
Taxes for such imputed income are payable by Executive.
 
Point Cast Stock Price Indemnification Payment. The Company shall not be
responsible for the Point Cast stock price indemnification payment of One
Million Four Hundred Thousand Dollars ($1,400,000.00).
 
Repayment of Outstanding Loan. On January 2, 2001, the Company shall demand
repayment of a loan made to Executive on or about March 19, 1999 in the amount
of Two Million Dollars ($2,000,000.00). The interest on this loan is forgiven by
the Company; provided, however, that the interest on this loan from the
inception of this loan through December 31, 2000 shall be imputed income to
Executive for 2000 and Executive agrees that the taxes on the forgiven interest
shall be his responsibility. The interest on this loan for January 1 and 2, 2001
shall be imputed income to the Executive for 2001 and shall be his
responsibility. The interest rate for this loan shall be the short-term interest
rate set forth in Section 1274(d) of the United States Internal Revenue Code.
 
Company Issuance of New Loan. On January 2, 2001, the Company shall issue a loan
to Executive in the amount of Two Million Dollars ($2,000,000.00). The Company
shall forgive all interest charges on the loan under this paragraph; provided,
however, that the short-term interest rate set forth under Section 1274(d) of
the United States Internal Revenue Code shall be in effect for each month in
which there is an unpaid balance on this loan and this interest rate shall
result in imputed income to Executive and the taxes on this imputed income are
payable by Executive. Executive shall repay the Company for this loan in full on
April 1, 2002.
 
Other Compensation.
 
Perquisites. During Executive's employment under this Agreement, the Company
shall provide Executive with the perquisites of employment as are commonly
provided to other Company executives and shall reimburse Executive for
reasonable and necessary business expenses.
 
Benefits. During Executive's employment under this Agreement, the Company shall
provide to Executive coverage under benefit programs in accordance with those
Executive, mid-career hire and Senior Management benefit plans as are generally
made available to other Company executives.
<PAGE>
                                       5
 
 
Attachment D outlines the benefits available on the Effective Date. The Company
reserves the right to modify and/or eliminate any benefit plan applicable to
Executive; provided, however, that any modification or deletion of a benefit
plan shall not affect Executive to any greater or lesser extent than any other
Company executive.
 
Special Temporary Living Allowance. Executive shall work in Atlanta, Georgia
through December 31, 2000 and in New Jersey thereafter. Executive's travel
between Atlanta, Georgia and New Jersey for December 2000 shall be reimbursed as
a business expense. Beginning January 1, 2001 and continuing until Executive
moves his residence to the New Jersey area, the Company shall pay Executive Six
Thousand Dollars ($6,000.00) per month as a Special Temporary Living Allowance
to compensate Executive for his temporary housing in New Jersey and trips to his
Atlanta home. The Company shall gross-up for tax purposes the Special Temporary
Living Allowance. The Company's obligation to pay Executive a Special Temporary
Living Allowance shall terminate the earlier of December 31, 2002 or termination
of Executive's employment with the Company.
 
Relocation. The Company shall pay for Executive's relocation under the terms of
AT&T Relocation Plan B. The terms and conditions of AT&T Relocation Plan B shall
apply, including but not limited to the requirement that Executive use a
registered real estate broker approved by the relocation firm assigned to
Executive. The Company shall not reimburse Executive for any relocation expense
incurred after the earlier of December 31, 2002 or Executive's last date of
employment with the Company. All requests for reimbursement under this paragraph
6(d) shall be submitted to the Company by the earlier of March 31, 2003 or
thirty (30) days after Executive's last day of employment with the Company
 
Financial Counseling. The Company shall reimburse Executive for financial
counseling fees paid to his personal financial counselor during his employment
with the Company. Executive will not be required to use one of the three AT&T
approved financial counseling firms. Fees subject to reimbursement shall include
fees for individual financial counseling, preparation of federal and state
income tax returns and preparation of Executive's will and other estate planning
documents. The Company shall pay Executive a federal tax allowance on the
reimbursed fees.
 
Costs Associated with this Agreement. The Company shall reimburse Executive for
costs incurred by Executive for attorney review and financial counseling
associated with negotiation and execution of this Agreement. The Company shall
gross-up for tax purposes reimbursement to Executive under this paragraph 6(f).
 
Company Airplane. Executive shall have the authority to use Company-owned
aircraft for business and personal travel during his employment with the
Company. In the event that use by the Executive of the Company-owned aircraft
during his employment results in income imputed to Executive, the Company will
provide a gross-up to Executive of his compensation to offset Executive's tax
obligation for imputed income resulting from this paragraph 6(g).
 
Special Individual Pension Arrangement. Attachment E sets forth the terms of
Executive's Special Individual Pension Arrangement. Attachment E replaces the
former Special Individual Pension Arrangement implemented per the Concert Offer
Letter which shall no longer apply.
<PAGE>
                                       6
 
 
Impact of Company Restructuring on Restricted Stock Units, Restricted Shares,
Stock Options and Performance Shares. In the event that AT&T Wireless and AT&T
Broadband become independent companies from AT&T Corp. through a divestiture,
sale or some similar means, all grants made under this Agreement in the form of
Restricted Stock Units, Restricted Shares, Stock Options and Performance Shares
based on AT&T Corp. stock shall be apportioned among AT&T Corp., AT&T Wireless
and AT&T Broadband stock according to a plan which shall be developed and
approved by the Company's Board of Directors and applicable to Executive and
other Company executives.
 
Change in Control. In the event of a Change in Control of the Company, Section
11 of the AT&T 1997 Long Term Incentive Program (and any and all amendments
thereto by the Company's Board of Directors) shall apply to all Stock Options,
Restricted Shares, Restricted Stock Units and Performance Shares awarded to
Executive under this Agreement prior to and not including January 1, 2001. All
Stock Options, Restricted Shares, Restricted Stock Units and/or Performance
Shares awarded after January 1, 2001 shall be governed exclusively by the Change
in Control provisions contained therein. Severance payments to Executive shall
be governed by the Change in Control provisions approved by the Company's Board
of Directors at its October 22-23, 2000 meeting.
 
Confidentiality of Trade Secrets and Business Information.
 
Executive agrees that he will not, at any time during his employment or
thereafter, disclose or use any trade secret, proprietary or confidential
information of the Company or any subsidiary or affiliate of the Company,
obtained during the course of his employment, except as required in the course
of such employment or with the written permission of the Company or, as
applicable, any subsidiary or affiliate of the Company or as may be required by
law, provided that, if Executive receives legal process with regard to
disclosure of such information, he shall promptly notify the Company and
cooperate with the Company in seeking a protective order.
 
Executive agrees that at the time of the termination of his employment with the
Company, whether at the instance of the Executive or the Company, and regardless
of the reasons therefore, he will deliver to the Company, and not keep or
deliver to anyone else, any and all notes, files, memoranda, papers and, in
general, any and all physical matter containing information, including any and
all documents significant to the conduct of the business of the Company or any
subsidiary or affiliate of the Company which are in his possession, except for
any documents for which the Company or any subsidiary or affiliate of the
Company has given written consent to removal at the time of the termination of
the Executive's employment and his personal rolodex, phone book and similar
items.
<PAGE>
                                       7
 
 
Non-competition.
 
In consideration for payments made under this Agreement, including but not
limited to paragraphs 3(a) and 3(b), Executive agrees that he will not, for a
period of One (1) year after his Employment with the Company, establish a
relationship with a competitor (including but not limited to an employment or
consulting relationship) or engage in any activity which is in conflict with or
adverse to the interest of the Company, as defined by the AT&T Non-Competition
Guideline (hereinafter referred to as a "Competitive Activity"). Executive
recognizes that this obligation includes, and is not limited to, an agreement
that he shall not work for a competitor of AT&T Corp. as an executive,
consultant, independent contractor or in any other capacity for a period of One
(1) year following the termination of his employment with the Company,
regardless of whether Executive or the Company terminates the employment
relationship.
 
In addition to Executive's obligations outlined in paragraph 10(a) of this
Agreement, any and all payments (except those made from Company-sponsored
tax-qualified pension or welfare plans), benefits or other entitlements to which
the Executive may be eligible in accordance with the terms hereof, may be
forfeited, whether or not in pay status, at the discretion of the Company, if
Executive engages in Competitive Activity for a period of Two (2) years
following termination of his Employment from the Company, regardless of whether
Executive or the Company terminates the employment relationship. The payments,
benefits and other entitlements hereunder are being made in part in
consideration of the obligations of this paragraph 10 and in particular the
post-employment payments, benefits and other entitlements are being made in
consideration of, and dependent upon compliance with this paragraph. This
paragraph shall apply notwithstanding any other provision of this Agreement;
provided, however, that compensation awarded to Executive under paragraph 5
shall preclude Executive from Competitive Activity for One (1) year following
the termination of his employment.
 
No forfeiture or cancellation shall take place under paragraph 10(b) with
respect to any payments, benefits or entitlements hereunder or under any other
award agreement, plan or practice unless the Company shall have first given
Executive written notice of its intent to so forfeit, or cancel or pay out and
Executive has not, within thirty (30) calendar days of giving such notice,
ceased such unpermitted Competitive Activity, provided that the foregoing prior
notice procedure shall not be required with respect to either: (i) a Competitive
Activity which Executive initiated after the Company had informed the Executive
in writing that it believed such Competitive activity violated this paragraph 10
or the AT&T Non-Competition Guideline; or (ii) any Competitive Activity
regarding wireless local, regional or long distance telephone services or other
products or services, including broadband services, which are part of a line of
business which represents more than five percent (5%) of the Company's
consolidated gross revenues for its most recent completed fiscal year prior to
the commencement of the Competitive Activity.
 
Nothing in this Section 10 shall prohibit the Executive from being a passive
owner of not more than one percent (1%) of the outstanding common
<PAGE>
                                       8
 
 
stock, capital stock and equity of any firm, corporation or enterprise so long
as the Executive has no active participation in the management of business of
such firm, corporation or enterprise.
 
Nothing in this Section 10 or the Non-Competition Guideline shall preclude
Executive from serving on the Board of Directors of a start-up Company ("NewCo")
during the two (2) year period immediately following his last day of employment
with the Company provided that no active and significant competitor of the
Company is an active participant in the management of such NewCo. For purposes
of this Agreement a Company shall cease being a NewCo should its annual revenue
exceed 500 million dollars. Should the annual revenue of NewCo exceed 500
million dollars Executive's relationship with NewCo shall be subject to the Non
Competition Guideline. Nothing in this paragraph shall be deemed to diminish or
reduce the obligations of Executive not to use or disclose the Company's
confidential and proprietary information.
 
If the restrictions stated herein are found by a court to be unreasonable, the
Parties agree that the maximum period, scope or geographical area reasonable
under such circumstances shall be substituted for the stated period, scope or
area and that the court shall revise the restrictions contained herein to cover
the maximum period, scope and area permitted by law.
 
Resolution of Disputes. Any disputes arising under or in connection with this
Agreement shall be resolved by third party mediation of the dispute and, failing
that, by binding arbitration, to be held in New Jersey, in accordance with the
rules and procedures of the American Arbitration Association. Judgment upon the
award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof. The Company shall pay the costs of the arbitrator or the
mediator but not the legal fees of Executive; provided, however, that the
Company shall bear all such costs if Executive prevails in such arbitration on
any material issue.
 
Non-Interference. During Executive's employment and for a period of Two (2)
years following the effective date of Executive's termination, for any reason,
from the Company, Executive agrees not to directly or indirectly recruit,
solicit or induce, any employees, consultants or independent contractors of the
Company to terminate, alter or modify their employment or other relationship
with the Company. During Executive's employment and for a period of Two (2)
years following the effective date of Executive's termination, for any reason,
from the Company, Executive agrees not to directly or indirectly solicit any
customer or business partner of the Company or interfere with the Company's
relationships with any of its customers or business partners on behalf of any
enterprise that directly or indirectly competes with the Company.
 
Injunction. If Executive commits a breach of any of the provisions of Sections 8
through 12 or any part thereof, the Company shall have the right and remedy to
have the provisions of this Agreement specifically enforced by way of
preliminary and/or permanent injunction by any court having jurisdiction, it
being acknowledged and agreed by Executive and Company that any such breach will
cause irreparable injury to the Company and that money damages will not provide
an adequate remedy to the Company. Furthermore, this Agreement is intended to
protect the proprietary rights of
<PAGE>
                                       9
 
 
the Company in important ways, and even the threat of any misuse of the
technology or other confidential information of the Company would be irreparably
harmful because of the importance of that technology and confidential
information. In light of these considerations, Executive agrees that a court of
competent jurisdiction should immediately enjoin any breach or threatened breach
of paragraphs 8 through 12 of this Agreement, upon Company's request, and the
Company is released from the requirement of posting any bond in connection with
temporary or preliminary injunctive relief, to the extent permitted by law. Such
right to injunctive relief shall be in addition to, and not in lieu of, any
other rights and remedies available to the Company under law or in equity.
 
Company Initiated Termination of Employment or Good Reason Termination. Should
the Company terminate Executive's employment without Cause or should Executive
terminate his employment for Good Reason, Executive will receive a payment
equivalent to payments to which other similarly situated Company executives
would be entitled at the time of the termination of his employment under the
terms of the Senior Officer Separation Plan. This payment shall be payable to
Executive within ninety (90) days of his last day of employment with the
Company. For termination by Executive for Good Reason or by the Company without
Cause, Executive shall also be entitled to the following: (a) accelerated
vesting of Stock Options, Restricted Shares and Restricted Stock Units in
accordance with the terms under which the grants were made; (b) payment of
Annual Bonus in the target amount for the year in which the termination occurs,
prorated to reflect length of employment during that year; (c) outstanding
Performance Shares shall continue to vest; (d) immediate vesting of the Special
Deferral Account set forth in paragraph 5(c); (e) payment to Executive of any
unpaid hiring bonus under paragraphs 5(c) and 5(d)(ii) of this Agreement; (f)
payment of the Special Individual Pension Arrangement in accordance with its
terms and reflecting the amount accrued as of the date of termination of
Executive's employment; (g) coverage for himself and eligible dependents under
the Senior Management Separation Medical Plan; (h) continuation of Senior
Management Universal Life Insurance; and (i) financial counseling for one year,
including income tax return preparation for year of termination and a federal
tax allowance to Executive for the cost of the financial counseling.
 
Termination for Cause and Good Reason. For purposes of this Agreement, "Cause"
and "Good Reason" shall be defined as follows:
 
                  (a) Cause shall mean: (1) conviction (including a plea of
         guilty or nolo contendere) of a felony or any crime or theft,
         dishonesty or moral turpitude; or (2) gross omission or gross
         dereliction of any statutory or common law duty of loyalty to the
         Company; or (3) violation of AT&T's Code of Conduct.
 
                  (b) "Good Reason" shall mean any termination of Executive's
         Company employment, initiated by Executive, resulting from any of the
         following events without Executive's express written consent, which are
         not cured by the Company within twenty (20) days of Executive giving
         the Company written notice thereof:
 
                  (i) Executive's demotion to a position which is not of a rank
                  and responsibility comparable to members of the
<PAGE>
                                       10
 
 
                  current Operations Group or those of a successor governance
                  body; provided, however, that the Company's decision not to
                  continue an Operations Group shall not be Good Reason, and
                  provided, further, that (1) changes in reporting relationships
                  shall not, alone, constitute Good Reason, unless such change
                  results in the Executive reporting to someone other than the
                  Company's Chief Executive Officer (or similar office), and/or
                  (2) a reduction in the Company's budget or employee head
                  count, without more, do not constitute Good Reason, or
 
                  (ii) A reduction in Executive's "Total Annual Compensation"
                  (defined as the sum of Executive's Annual Base Salary Rate,
                  Target Annual Incentive and "Target Annual Long Term Incentive
                  Grants") for any calendar or fiscal year, as applicable, to an
                  amount that is less than the Total Annual Compensation that
                  existed in the prior calendar or fiscal year, as applicable.
                  For purposes of this Paragraph the dollar value of the "Target
                  Annual Long Term Incentive Grants" shall exclude the value of
                  any special one-time or periodic long-term incentive grants,
                  and shall be determined by valuing Performance Shares, Stock
                  Units, Restricted Stock and stock options, Restricted Stock
                  Units at the market share price utilized in valuing the annual
                  Senior Management compensation structures in the materials
                  presented to the Compensation and Employee Benefits Committee
                  of the Company's Board of Directors ("the Committee") when
                  authorizing such grants, and assuming 100% performance
                  achievement if such grants include performance criteria. Stock
                  Options and Stock Appreciation Rights will be valued by the
                  Black-Scholes methodology (and related share price) as
                  utilized in the materials presented to the Committee when
                  authorizing such grants.
 
Termination Without Good Reason or For Cause. Should Executive leave his
employment without Good Reason ("Voluntary Termination"), Executive shall
receive nothing further under this Agreement except for (i) Stock Options,
Performance Shares, Restricted Shares and Restricted Stock Units already vested
and (ii) benefits in the then-applicable Senior Management Separation Medical
Plan but only if Voluntary Termination occurs after December 31, 2002. In the
event of a Voluntary Termination, Executive's Stock Options, Performance Shares,
Restricted Shares and Restricted Stock Units awarded but not vested shall be
cancelled. If Executive is terminated for Cause at any time during this
Agreement, he shall receive nothing further from the Company as of the date of
his termination and all Stock Options, Performance Shares, Restricted Shares and
Restricted Stock Units vested but not exercised shall be cancelled.
 
Special Voluntary Termination. If Executive resigns after December 31, 2002 and,
at the time of resignation, C. Michael Armstrong is no longer the Chief
Executive Officer of the Company and Executive has not been appointed to
<PAGE>
                                       11
 
 
the position of Chief Executive Officer ("Special Voluntary Termination"),
Executive shall be entitled to the benefits set forth in paragraph 16 as well as
an accelerated vesting of Stock Options, Restricted Shares and Restricted Stock
Units in accordance with terms applicable to terminations under a Company force
management program. Outstanding Performance Shares awarded as of the date of
Executive's Special Voluntary Termination will continue to vest as if Executive
was still employed by the Company.
 
Death and Long Term Disability.
 
Termination Due to Death. In the event that the Executive's employment is
terminated due to his death, his estate or his beneficiaries, as the case may
be, shall be entitled to the following benefits: (i) vesting of the Special
Individual Pension Arrangement in an amount through the date of the termination
of Executive's employment and payment of the special survivor benefit according
to the express terms thereunder; (ii) Annual Bonus at target level for such year
prorated for the time worked in the performance year, payable in a single
installment as soon as practicable following Executive's death; (iii) all
outstanding options, whether or not then exercisable, shall become exercisable
and shall remain exercisable in accordance with the terms of the grants
applicable to death; (iv) lapse of the restrictions on Restricted Stock Units
and Restricted Stock; (v) payout at target for each Performance Share cycle in
which the Executive was participating at the time of his death, prorated for the
amount of time worked in the applicable three year cycle; (vi) vesting of the
Special Deferral Account under Paragraph 5(c); (vii) payment of any unpaid cash
hiring bonus under paragraph 5(d)(ii); and (viii) financial counseling for one
year including individual tax return preparation for Executive and spouse for
the year of death with a federal tax allowance for the cost of the financial
counseling.
 
Termination Due to Disability. The Company shall have the right to terminate
Executive's employment due to his Disability. In the event that the Executive's
employment is terminated due to his Disability, he shall be entitled to the
following benefits: (i) disability benefits in accordance with a disability
program then in effect for senior executives of the Company; (ii) the Special
Individual Pension Arrangement shall fully vest according to its terms and based
upon the amount accrued through the termination date of Executive's employment
offset by any Company-provided disability benefits; (iii) Annual Bonus at target
level for such year prorated for the time worked in the performance year,
payable in a single installment as soon as practicable after termination due to
Disability; (iv) all outstanding options, whether or not then exercisable, shall
become exercisable and shall remain exercisable in accordance with the terms of
the grants applicable to Disability; (v) lapse of the restrictions on Restricted
Stock Units and Restricted Stock; (vi) payout at target for each Performance
Share cycle in which the Executive was participating at the time of his
Disability, prorated for the amount of time worked in the applicable three year
cycle; (vii) vesting of the Special Deferral Account under paragraph 5(c);
(viii) payment of any unpaid cash hiring bonus under paragraph 5(d)(ii); and
(ix) financial counseling for one year including individual tax return
preparation for Executive for the year of termination due to Disability, with a
federal tax allowance for the cost of the financial counseling. For purposes of
this paragraph 18, "Disability" shall mean the
<PAGE>
                                       12
 
 
inability of Executive to perform his duties under this Agreement by reason of
any physical or mental impairment that is expected to prevent Executive from
performing his duties for a period exceeding twelve (12) months. Provided,
however, that nothing in this paragraph or this Agreement shall prevent the
Company from reassigning Executive's job duties on a temporary basis during any
period in which the Executive is receiving benefits under the Company's
applicable short-term disability benefits plan until the Executive returns to
work full-time or is terminated due to Disability.
 
Loan Repayment. Upon death, disability or termination of employment, for any
reason, Executive or Executive's estate must repay all outstanding loans within
ninety (90) days of the last day of employment.
 
Membership on Boards. Executive may continue to serve on the Boards of Directors
or Advisory Committees of other companies in positions held prior to the
Execution Date assuming that the other company is not a competitor of the
Company as determined by the Secretary of the Company's Board of Directors.
Executive agrees to provide a list, as soon a practicable following the
Execution Date, of such Board and Committee memberships so that the Company may
make such determination.
 
Other Terms.
 
 This Agreement shall be governed by and construed and enforced in accordance
with the laws of the State of New Jersey, without regard to conflict of law
rules. If any provision of this Agreement is hereafter construed to be invalid
or unenforceable in any respect, the same shall not affect the remaining
provisions of this Agreement, without regard to the invalid portion, and any
such invalid provisions shall be reformed and construed to the extent necessary
to permit their enforceability so as to reflect the intent of the parties
hereto.
 
 Executive hereby represents and warrants that (i) Executive has the right to
enter into this Agreement with the Company and to grant the rights contained in
this Agreement, and (ii) the provisions of this Agreement do not violate any
other contracts or agreements that the Executive has entered into with any other
individual or entity.
 
Executive agrees that the terms of this Agreement are reasonable and properly
required for the protection of the Company's legitimate business interests. If
any of the covenants or provisions contained in this Agreement, or any part
thereof, is hereafter construed to be invalid or unenforceable in any respect,
the same shall not affect the remainder of the covenant, covenants or provisions
which shall be given the maximum effect possible without regard to the invalid
portions and the remainder shall then be fully enforceable.
 
The article headings contained herein are for reference purposes only and shall
not in any way affect the meaning or interpretation of this Agreement.
 
This Agreement sets forth the entire agreement and understanding of the Parties
relating to the subject matter hereof, and supersedes all prior agreements,
arrangements and understandings, written or oral, relating to the subject matter
hereof.
<PAGE>
                                       13
 
 
This Agreement may not be amended, modified, superseded or waived, except by a
written instrument executed by both Parties hereto, or, in the case of a waiver,
by the party waiving compliance. The failure of either Party at any time or
times to require performance of any provision hereof shall in no manner affect
the right at a later time to enforce the same. No waiver by either Party of the
breach of any term or covenant contained in this Agreement whether by conduct or
otherwise, in any one or more instances, shall be deemed to be, or construed as,
a further or continuing waiver of any such breach, or a waiver of the breach of
any other term or covenant contained in this Agreement.
 
Duration of Terms. The respective rights and obligations of the parties
hereunder shall survive any termination of Executive's employment or this
Agreement to the extent necessary to the intended preservation of such rights
and obligations.
 
Acknowledgment. Executive acknowledges that before signing this Agreement,
Executive was given the opportunity to read it, evaluate it and discuss it with
Executive's personal advisors, Executive's attorney and with representatives of
the Company. Executive further acknowledges that the Company has not provided
Executive with any legal advice regarding this Agreement.
 
Assignment. The Company specifically reserves the right to assign the terms of
this Agreement to any successor, whether the successor is the result of any
sale, purchase, merger, consolidation, asset sale, divestiture or spin-off or
any form or combination thereof. No sale, purchase, merger, consolidation, asset
sale, divestiture or spin-off or any form or combination thereof shall be
construed as a termination of Executive's employment and will not trigger the
Company's obligations under paragraphs 14, 16 or 17 of this Agreement.
 
Release for Severance Payments. The Company shall be required to pay Executive
payments upon the termination of his employment as provided under this Agreement
only if Executive executes a release upon his termination releasing the Company
from any liability arising from his employment or termination thereof. This
release shall include, but not be limited to, claims for breach of contract or
those arising under state and federal employment statutes, including but not
limited to, the Civil Rights Act of 1964, as amended ("Title VII"), and the Age
Discrimination in Employment Act.
 
Notices. All notices and other communications required or permitted hereunder
shall be in writing and shall be deemed given when (a) delivered personally, (b)
sent by certified mail, postage prepaid, return receipt requested or (c)
delivered by overnight courier; to the Party concerned at the address indicated
below or to such changed address as such Party may subsequently give such notice
of:
 
If to the Company:         AT&T Corp.
                           295 North Maple Avenue
                           Basking Ridge, NJ  07920
<PAGE>
                                       14
 
 
                           Attention:  Executive Vice President
                                       Human Resources
 
If to the Executive:       Mr. David Dorman
                           c/o AT&T Corp.
                           295 North Maple Avenue
                           Basking Ridge, NJ  07920
<PAGE>
                                       15
 
 
IN WITNESS WHEREOF, the Parties have executed this Agreement.
 
--------------------------                  ------------------------------------
Dated                                       David Dorman
 
--------------------------                  ------------------------------------
Dated                                       AT&T Corp.
 
                                            By:   Mirian Graddick Weir
                                                  Executive Vice President -
                                                  Human Resources
<PAGE>
         The construction, interpretation and performance of this Agreement
shall be governed by the laws of the State of New Jersey, without regard to its
conflict of laws rule.
 
         If you agree with the terms and conditions detailed above, please sign
in the space provided below and return the executed copy to me.
 
 
                                                    Sincerely,
 
 
 
                                                    Mirian Graddick-Weir
                                                    Executive Vice President
 
 
 
 
-------------------------------                     ----------------------------
Acknowledged and agreed to                          Date
Charles Noski
 
 
 
 
 
 
 
 
 
 
 
Exhibit 10(iii)(A)7
 
                                                                   July 29, 2003
 
 
Mr. David Dorman
 
Dear Dave:
 
     This letter agreement ("the Agreement") completely replaces Attachment E of
your  employment  agreement  dated  December  1,  2000  detailing  your  special
individual  non-qualified  pension agreement,  and supercedes all other oral and
written communication on the subject.
 
     This  Agreement  will   establish  an  individual   non-qualified   pension
arrangement  ("Individual Pension"),  which, subject to the terms and conditions
below,  will  provide  you a benefit  payable  from AT&T Corp.  (the  "Company")
operating assets upon your retirement from the Company.  This Individual Pension
will be  immediately  vested and only for  termination  for "Cause" (as defined)
will this Individual Pension be null and void in its entirety. In addition, this
Individual  Pension  is subject to the  provisions  of the AT&T  Non-Competition
Guideline.
 
     With respect to the amount  payable under this  Individual  Pension at your
retirement/termination,  the single life annual  annuity  amount payable will be
determined as (a) minus (b) as set forth in the charts below:
 
     (a)  the  single  life  annual  pension  annuity  benefits   calculated  in
          accordance with the table set forth below:
 
-------------------------------------------------------------------
Year of Retirement/ Termination     Percentage of Final 3 Year
                                 Average Total Cash Compensation
                                 (Base Pay plus Actual Bonus Paid
                                             in Year)
-------------------------------------------------------------------
 
-------------------------------------------------------------------
                           2003                             27.50%
-------------------------------------------------------------------
                           2004                             31.10%
-------------------------------------------------------------------
                           2005                             34.70%
-------------------------------------------------------------------
                           2006                             38.30%
-------------------------------------------------------------------
                           2007                             41.90%
-------------------------------------------------------------------
                           2008                             45.50%
-------------------------------------------------------------------
                           2009                             49.10%
-------------------------------------------------------------------
                           2010                             52.70%
-------------------------------------------------------------------
                           2011                             56.30%
-------------------------------------------------------------------
                           2012                             60.00%
-------------------------------------------------------------------
                           2013                             60.00%
-------------------------------------------------------------------
                           2014                             60.00%
-------------------------------------------------------------------
                           2015                             60.00%
-------------------------------------------------------------------
                           2016                             60.00%
-------------------------------------------------------------------
                           2017                             60.00%
-------------------------------------------------------------------
                           2018                             60.00%
-------------------------------------------------------------------
                           2019                             60.00%
-------------------------------------------------------------------
 
 
     (b)  any single  life  annual  annuity  benefits  payable  from AT&T,  i.e.
          pension  benefits under the AT&T  Management  Pension Plan  (AT&TMPP),
          AT&T Non Qualified  Pension Plan  (AT&TNQPP),  AT&T Excess Benefit and
          Compensation Plan (AT&TEBCPP),  minimum retirement  benefits under the
          AT&T Senior  Management Long Term  Disability and Survivor  Protection
          Plan  (AT&TSMLTD&SPP)  if applicable,  as well as by any qualified and
          nonqualified pension benefits from prior employers.
 
Joint and  survivor  benefits on your  death,  whether  your death  occurs as an
active  employee  or  following  your  termination,  will  be  governed  by  the
administrative guidelines applicable to this Agreement.
 
     In the event of your involuntary  termination  within two years following a
Change in  Control  ("CIC"),  as  defined  in the AT&T 1997 Long Term  Incentive
Program,  for reasons  other than for Cause or if you terminate  employment  for
Good Reason (as defined)  within two years  following a CIC,  your benefit under
this  Individual  Pension will be  calculated  by  accelerating  the  Individual
Pension  schedule  above  by  adding  three  years  to the  schedule,  i.e.  the
applicable   percentage   will  be   that   associated   with   the   "Year   of
Retirement/Termination"  three  years  from your  actual  termination  year.  In
addition, the cash compensation used in calculating the final three year average
cash  compensation will not use cash compensation for years in which you did not
hold the position of Chief Executive Officer.
 
     For purposes of this Agreement:
 
     a)  "Cause" shall mean:
 
          i.   your conviction  (including a plea of guilty or nolo  contendere)
               of a crime including theft, fraud, dishonesty or moral turpitude;
 
          ii.  violation   by  you  of  the   Company's   Code  of   Conduct  or
               Non-Competition Guideline;
 
          iii. gross omission or gross dereliction of any statutory,  common law
               or other duty of loyalty to the Company or any of its affiliates;
               or
 
          iv.  repeated failure to carry out the duties of your position despite
               specific instruction to do so.
 
     b)   "Good  Reason" prior to a CIC shall mean the  occurrence  without your
          express written consent of any of the following events:
 
          i.   Your  demotion  to  a  position  which  is  not  of  a  rank  and
               responsibility  comparable  to members of the current  Operations
               Group or those of a similar/replacing  governance body; provided,
               however,   that  the  Company's  decision  not  to  continue  the
               Operations Group shall not be Good Reason, and provided, further,
               that (1) changes in  reporting  relationships  shall not,  alone,
               constitute  Good Reason  and/or (2) a reduction in your  business
               unit's budget or a reduction of your business  unit's head count,
               by themselves, do not constitute Good Reason; or
 
          ii.  A reduction in your "Total Annual  Compensation"  (defined as the
               sum of your Annual Base Salary Rate,  Target Annual Incentive and
               "Target Annual Long Term  Incentive  Grants") for any calendar or
               fiscal year,  as  applicable,  to an amount that is less than the
               Total Annual  Compensation  that existed in the prior calendar or
               fiscal  year,  as  applicable.  For  purposes  of this  Paragraph
               (b)(ii)  the  dollar  value  of  the  "Target  Annual  Long  Term
               Incentive Grants" shall exclude the value of any special one-time
               or periodic  long-term  incentive grants, and shall be determined
               by valuing  Performance  Shares,  Stock Units,  Restricted Stock,
               Restricted Stock Units,  etc., at the market share price utilized
               in valuing the annual Senior Management  compensation  structures
               in the  materials  presented  to the  Compensation  and  Employee
               Benefits  Committee of the  Company's  Board of  Directors  ("the
               Committee")  when  authorizing  such grants,  and  assuming  100%
               performance   achievement  if  such  grants  include  performance
               criteria.  Stock  Options and Stock  Appreciation  Rights will be
               valued by the Black-Scholes methodology (and related share price)
               as utilized in the  materials  presented  to the  Committee  when
               authorizing such grants.
 
          c)   "Good  Reason"  within  two  years  following  a CIC  shall be in
               accordance with the October 23, 2000 CIC Board Resolutions, which
               include  reduction in authority or  responsibility,  reduction in
               compensation,   and  business   relocation  beyond  a  reasonable
               commuting distance.
 
          Notwithstanding  the foregoing,  the Company may require you to change
          to  an  equivalent   executive   position   within  the  Company  with
          substantially  similar  levels of duties or  responsibilities  without
          causing Good Reason to occur.
 
          You must notify the Company within 60 days  following  knowledge of an
          event you believe  constitutes  Good  Reason,  or such event shall not
          constitute Good Reason hereunder.
 
 
     This agreement may not be amended or waived, unless the amendment or waiver
is in a writing signed by you and the Company's  Executive Vice  President-Human
Resources.
 
     It is understood and agreed that you will not talk about,  write about,  or
otherwise  publicize  the  terms  or  existence  of this  Agreement  or any fact
concerning its execution or implementation  unless required by law or to enforce
the terms of this Agreement.  You may,  however,  discuss its contents with your
spouse, legal and/or financial counselor,  provided that you advise them of your
obligations of confidentiality  and that any disclosures made by any of them may
be  treated by the  Company  as  disclosures  made by you for  purposes  of this
provision.
 
     THIS AGREEMENT IS NOT AN EMPLOYMENT CONTRACT AND SHOULD NOT BE CONSTRUED OR
INTERPRETED AS CONTAINING ANY GUARANTEE OF CONTINUED EMPLOYMENT.  THE EMPLOYMENT
RELATIONSHIP WITH THE COMPANY IS BY MUTUAL CONSENT ("EMPLOYMENT-AT-WILL").  THIS
MEANS THAT  EMPLOYEES HAVE THE RIGHT TO TERMINATE  THEIR  EMPLOYMENT AT ANY TIME
FOR ANY REASON.  LIKEWISE,  THE COMPANY  RESERVES THE RIGHT TO DISCONTINUE  YOUR
EMPLOYMENT WITH OR WITHOUT CAUSE AT ANY TIME AND FOR ANY REASON.
 
     You understand  that the terms of this Agreement shall apply to the Company
and its successors.  The Company  specifically  reserves the right to assign the
terms of this Agreement to any successor, whether the successor is the result of
a sale, purchase, merger, consolidation,  asset sale, divestiture or spin-off or
any combination or form thereof. No sale, purchase, merger, consolidation, asset
sale,  divestiture or spin-off or any combination or form thereof by the Company
shall  be  construed  as a  termination  of  your  employment  and  will  not be
considered a termination for purposes of this Agreement.
 
     The construction, interpretation and performance of this Agreement shall be
governed by the laws of the State of New Jersey,  without regard to its conflict
of laws rule.
 
     In addition,  all of the benefits provided under this Agreement are subject
to forfeiture if you violate the AT&T Non-Competition Guideline, a copy of which
has been previously provided to you.
 
     Dave,  I am happy to present this special  pension  arrangement  to you. It
recognizes  the  extraordinary  contributions  that we expect you to continue to
make to our business. If you agree with the terms and conditions detailed above,
sign and date  this  Agreement  in the  spaces  provided  below and  return  the
original executed copy to me.
 
                                  Sincerely,
 
 
Acknowledged and Agreed to:
 
/s/ Dave Dorman                 July 30, 2003
-------------------------       -------------------
Dave Dorman                     Date