Senior Vice President-International Ventures - Employment Agreement - John Polumbo

September 7, 2001


Mr. John Polumbo


Dear John,


This letter will confirm the terms and conditions of your transfer from Concert to AT&T Corp. (the "Company")


ASSUMPTION OF DUTIES: Effective on or about September 15, 2001 you will assume the position of Senior Vice President-International Ventures and Enterprise Marketing in the AT&T Business Services organization. You will report to David Dorman. Your work location will be San Francisco, California. It is agreed and understood that this assignment will require frequent travel to our headquarters in New Jersey, especially during the initial six to twelve months of the assignment.


BASE SALARY: Your initial base salary will be $395,200 per year. Specific salary treatment will be reviewed again in March 2002.


ANNUAL BONUS: The Annual Bonus for Senior Managers in the AT&T Business Services organization is currently based on financial measures of the unit's performance as well as other personal achievement measures. The 2001 target (not actual) Annual Bonus for your position will be 60% of your salary or $237,120 and will be prorated for your time on AT&T payroll during the performance year. AT&T cannot make any representations regarding the future format of the Annual Bonus or the size of individual awards.


2001 CONCERT BONUS: Your 2001 prorated Concert Annual Bonus based on your service at Concert in 2001 will be determined and payable at the time the AT&T 2001 Annual Bonus is payable in the first quarter of 2002.


AT&T LONG TERM INCENTIVES: You will be eligible to receive AT&T Long Term Incentives for the year 2001 and for future years to the extent that this plan is in place for Senior Managers at your level. Your target award for 2001 is 300% of base salary. Historically, the Long Term Incentive awards have been in the form of performance shares and stock options, and for 2001, the value of the award will be 70% in AT&T stock options and 30% in performance shares as described below.


AT&T PERFORMANCE SHARES: Effective on the last trading day of the month of
your transfer, you will receive a grant of 16,200 AT&T Performance Shares
covering the 2001-2003 performance period (payout, if any, is in the first
quarter of 2004). J. Polumbo


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Assuming continued Company employment, payout of from 0% to 200% of
such Performance Shares is made in the form of cash and AT&T shares
at the end of the performance period based on a measures of AT&T
financial performance as determined by the AT&T Board of Directors.
The measures for 2001 will be AT&T Total Revenue and Total Net
Income vs. Budget. The measures for 2002 and 2003 have yet to be
determined.


Dividend equivalents are paid quarterly on all undistributed
Performance Shares.


AT&T STOCK OPTIONS: For 2001 you will be granted options for 63,900 shares
of AT&T Common Stock. These options will be granted on the last trading
day of the month of your month of transfer (or on the last trading day of
the month following your month of transfer in the event your date of
transfer is after the 15th of the transfer month). For stock options
granted under this paragraph 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 the date of grant. The stock option
price of the grant shall be the fair market value of AT&T Common Stock on
the date of grant.


As with the Annual Bonus, Long Term Incentives are closely linked with the Company's strategy to meet the challenges of an ever-changing marketplace. Accordingly, other than the initial grant, the Company cannot guarantee continuation of the Long Term Incentive Plan in its current format, nor can it guarantee annual grant levels to individual participants.


OTHER LONG TERM INCENTIVES: If AT&T Corp. issues a separate stock tracking the performance of AT&T Consumer Services ("Consumer Tracking Stock"), then, to the extent other similarly situated executives receive a special one-time equity grant in the Consumer Tracking Stock you will be provided an award which is consistent with awards provided other such executives.


CONCERT FOUNDERS GRANT AND LTIP RETENTION:


- Your Concert Founder's Grant of $593,000 will be payable by the last
business day of February, 2002, contingent upon your continued Company
employment through the payment date.


- Your Concert LTIP retention of $2,280,000 which was to be paid in cash in
October, 2002, will be replaced by the following:


- Restricted Shares: The Chairman will be asked to approve a special
one-time award of 114,000 AT&T Restricted Shares which will vest
100% on December 31, 2002. These restricted shares will vest
contingent upon continued Company employment (there are no
performance criteria). Dividends are currently paid J. Polumbo


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each quarter as part of the normal company dividend. The Restricted
Share agreement prohibits certain activities which are detrimental
to the Company, including but not limited to, employment with a
competitor, raiding of Company employees and litigation against the
Company, both during your employment and for twenty-four (24) months
following the termination of your employment with the Company.
Detrimental conduct either during your employment or within
twenty-four (24) months thereafter will result in forfeiture of the
entire Restricted Share grant.


SPECIAL INDIVIDUAL PENSION ARRANGEMENT: The Company will honor the terms and conditions of your Special Individual Pension Arrangement attached as Exhibit B to your June 17, 1999 employment agreement with AT&T/Concert (Attached herein as Exhibit A). Provided however, instead of vesting on 7/1/2004, such Special Individual Pension Arrangement will vest on the last day of the month which contains the six month anniversary of your date of transfer to AT&T under this letter agreement.


BENEFITS AND SPECIAL MID-CAREER BENEFITS: You will, of course, be eligible for the benefit programs available to all AT&T Senior Managers as indicated on Attachment A.

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