THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

AT&T Corp. (Retired) (T.X)

5/23/2005 Proxy Information

Mr. Eslambolchi received Special Retention Payments on January 10, 2001, and January 11, 2002, totaling $3,835,473.53 pursuant to the terms of his employment agreement (see page 132). If, prior to the fifth anniversary of Mr. Eslambolchi’s employment agreement (January 8, 2006), he voluntarily resigns his employment with us, other than for Good Reason (as defined), or is terminated for cause (as defined), Mr. Eslambolchi will be required to repay to AT&T the entire Special Retention Payment of $3,835,473.53 within 90 days of such termination of employment.

3/25/2004 Proxy Information

Indebtedness of Management

There was no outstanding indebtedness to us from any of our directors or executive officers during 2003.

Other Arrangements

We do not consider the following arrangements to constitute indebtedness but are disclosing them because they entail potential contingent obligations by executive officers to repay compensation amounts to us.

Mr. Eslambolchi received Special Retention Payments on January 10, 2001, and January 11, 2002, totaling $3,835,473.53 pursuant to the terms of his employment agreement (refer to page 45.) If, prior to the fifth anniversary of Mr. Eslambolchi's employment agreement (January 8, 2006), he voluntarily resigns his employment with us, other than for Good Reason (as defined), or is terminated for cause (as defined), Mr. Eslambolchi will be required to repay to us the entire Special Retention Payment of $3,835,473.53 within 90 days of such termination of employment.

Mr. Horton received a hiring bonus, totaling $1,050,000 pursuant to the terms of his employment agreement (refer to page 41.) If, prior to January 1, 2004, Mr. Horton had voluntarily resigned from us, other than for Good Reason (as defined), death or disability, or was terminated for cause (as defined), he would have been required to repay to us $750,000 of the hiring bonus. If, after January 1, 2004, but before January 1, 2005, Mr. Horton voluntarily resigns his employment with us, other than for Good Reason (as defined), or is terminated for cause (as defined), he is required to repay to us $375,000 of the hiring bonus.

4/17/2003 Proxy Information

On March 19, 1999, in connection with his employment agreement with AT&T and British Telecom to become Chief Executive Officer of the global venture formed by AT&T and British Telecom, AT&T loaned the amount of $2,000,000 to Mr. Dorman, who was subsequently elected President of AT&T on December 1, 2000. This loan was made for the purpose of permitting Mr. Dorman to repay loans made to him by a previous employer. Repayment of this loan was demanded and made in full in January 2001, and a new loan for the same purpose and the same amount was made by AT&T to Mr. Dorman in its place effective January 2, 2001. The new loan, originally to be repaid by the earliest of April 1, 2002, Mr. Dorman's termination of employment, or upon his death, was extended and repaid in full on June 6, 2002.

AT&T made additional loans to Mr. Dorman in the amounts of $3,790,520.99 on December 28, 2000, and $1,240,339.73 on April 13, 2001. The purpose of these loans was to provide funds for Mr. Dorman to pay federal withholding taxes resulting from his election under Section 83(b) of the Internal Revenue Code to include in his 2000 taxable wage base the fair market value of 715,999 restricted shares of AT&T common stock that were granted to Mr. Dorman at the time of his election as President of AT&T. These loans were to be repaid by the earliest of December 31, 2002, Mr. Dorman's termination of employment, or upon his death. A portion of the balance of the loans was repaid by Mr. Dorman on September 25, 2002, pursuant to an arrangement by which the Company applied the net after-tax proceeds of a special cash distribution, $685,491.77, in settlement of his deferred compensation balances equal to the cash equivalent of what he would have otherwise received had he participated in the Special Deferral Distribution payable in shares of AT&T common stock. (Refer to footnote 9 to the Summary Compensation Table for an explanation of the Special Deferral Distribution.) In addition, Mr. Dorman repaid the remaining balance of $4,345,368.95 on December 30, 2002. Mr. Dorman has no remaining outstanding loans from AT&T after December 30, 2002.

Interest on the above loans has been forgiven by AT&T. The forgiven interest, at the applicable federal short-term rate established by the IRS under Section 1274(d) of the Internal Revenue Code in effect for each month that there was an outstanding balance on each loan, results in imputed income to Mr. Dorman. Mr. Dorman is responsible for the payment of any income taxes resulting from all such imputed income.

Mr. Eslambolchi received Special Retention Payments on January 10, 2001, and January 11, 2002, totaling $3,835,473.53 pursuant to the terms of his employment agreement (refer to page 35). If, prior to the fifth anniversary of Mr. Eslambolchi's employment agreement, he voluntarily resigns from the Company or is terminated for cause, Mr. Eslambolchi will be required to repay to AT&T the entire Special Retention Payment of $3,835,473.53 within 90 days of such termination of employment. Following such termination AT&T would be permitted to apply to repayment of such amount any payments of compensation, including but not limited to salary and vacation pay unpaid as of Mr. Eslambolchi's termination of employment, Long-Term and Annual Incentive Awards related to Mr. Eslambolchi's employment, less any amounts required to be withheld for FICA, and for federal, state, and local income taxes, to the unpaid balance. Mr. Eslambolchi would continue to be obligated to repay any unpaid balance that remained after the application of such payments. If the entire amount were not repaid within 90 days following such termination of employment, Mr. Eslambolchi would also be required to pay interest on the unpaid balance for any period in which there is an unpaid balance, at the Prime Rate of interest as published in the Wall Street Journal on the first business day of each month.

Hostetter Transactions

AT&T, Meteor Acquisition Inc., and MediaOne Group, Inc. (MediaOne) entered into an Agreement and Plan of Merger dated May 6, 1999. Amos B. Hostetter, Jr., a significant shareowner of MediaOne, assisted AT&T in negotiating an agreement, to the extent permitted by his shareowner agreement with MediaOne. On July 21, 1999, Mr. Hostetter was elected to serve on the AT&T Board. The merger was consummated on June 15, 2000. Upon completion of the distribution of merger consideration by AT&T, Mr. Hostetter received 39,770,261 shares of AT&T common stock and a cash payment of $1,734,800,958.13. Mr. Hostetter also received, through a charitable foundation, a cash payment of $424,024,097.34 and 9,720,740 shares of AT&T common stock, for which he disclaims beneficial ownership.

Mr. Hostetter, indirectly through investment companies, holds a greater than 10% attributable ownership interest in one private company, Emperative, Inc., that may derive a significant percentage of its revenues from AT&T in 2003.