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1 ENGAGEMENT
 1.1
    
    The commencement date of your employment with Telstra under this
Agreement is 1 July 2005.1.2
    
    You shall exercise the powers and perform the duties consistent with the
office of Chief Executive Officer as may be delegated or assigned to you by
the Board from time to time. The Board will not delegate or assign to you
powers or duties that are materially inconsistent with the status of the office
of Chief Executive Officer.1.3
    
    You will report directly to the Board and must provide prompt and full
information of your conduct of the business and affairs of Telstra to the
Board and conform and comply at all times in all material respects with the
reasonable directions given to you by the Board.1.4
    
    A close and constructive relationship with the Chairman of the Board will be
critical to your success in this role. The Chairman will be your principal point
of contact and referral between Board meetings.1.5
    
    You will comply in all material respects with Company policy, Telstra
Business Principles and the Telstra Code of Conduct.1.6
    
    This offer of employment is conditional upon you having, during your
employment with Telstra, a valid and current working visa as issued by the Department of
Immigration and Multicultural and Indigenous Affairs to live and work in Australia and fulfil
the duties of your position and your obligations under this Agreement.




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2 RELOCATION
  3 PERFORMANCE
 3.1
    
    You are required to perform your role in a proper and efficient manner. You will be
expected to devote your time, attention and energy to the performance of your duties and
achieving your accountabilities and to use your best endeavours to promote and enhance the
interests of the Telstra Group, in a manner that is consistent with the Telstra Values.3.2
    
    Following your appointment, the Board will, following consultation with you, establish Key
Performance Indicators (KPI) for your role. The Board may review the KPIs from time to time,
following consultation with you.3.3
    
    Except with the written consent of the Chairman of the Board which will not be unreasonably
withheld, you must not undertake, be employed in connection with or have any interest in any
other business or profession during your employment under this Agreement, other than by way
of holding any shares or other securities which are publicly listed or in a private family
company or otherwise available to the general public by way of investment.
 4 TOTAL PACKAGE
  LTIP
  5 SIGN ON ARRANGEMENTS
  (a)
    
    In
recognition of the disruption to you involved in accepting the employment and the
opportunities you will forgo as a result, Telstra will pay you a once-off sign-on bonus of
AUD1,000,000.00 (less taxation deductions as required by law); and(b)
    
    Telstra will pay you
a sign-on incentive in the amount of 50% of your maximum benefit under the STIP in respect
of your participation in the STIP for the 2005/2006 financial year
(AUD1,500,000.00 less taxation deductions as required by law). An amount equivalent to this
sign-on incentive will be deducted from the benefit you would otherwise receive




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under the STIP at the conclusion of that year. However, you will not be required
to repay the sign-on incentive in the event that it exceeds the amount payable to you
under the STIP.
 6 SUPERANNUATION
   7 LEAVE
 7.1
    
    You will accrue annual leave and long service leave in accordance with Telstra policy. Leave
can be taken at a time agreed between you and the Board.7.2
    
    Sick leave will be by agreement with the Board.
 8 TERMINATION OF YOUR EMPLOYMENT
 8.1
    
    Your employment may be terminated by either party giving thirty (30) days written notice to
the other party or such other period as may be agreed by the parties in writing.8.2
    
    If the Board terminates your employment on notice, you may be required to remain in Telstras
service for all or part of the notice period; be paid at your Fixed Remuneration rate in lieu
of all or part of the notice period; or be paid at your Fixed Remuneration rate for the
notice period but not required to attend for work during all or part of the notice period.
This will be determined by the Board following consultation with you.8.3
    
    The Board may terminate your employment if:
 (a)
    
    you commit any act of serious misconduct, which includes a material breach of the written
policies of Telstra generally applicable to senior executives and which have been communicated to
you, or Telstras Code of Conduct, or gross negligence; or(b)
    
    you engage in any conduct that in
the reasonable good faith opinion of the Board materially adversely affects the reputation of the
Company.
  8.4
    
    If the Board terminates your employment for any reason other than in accordance with clause
8.3, or if you terminate your employment for Good Reason, you will receive, in addition to
any payment in lieu of notice:
 (a)
    
    a termination payment of
 (1)
    
    twenty four (24) months Fixed Remuneration if the termination occurs within the
first twelve (12) months of your employment; or




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(2)
    
    twelve (12) months Fixed Remuneration, if the termination occurs after the
first twelve (12) months of your employment.
 (b)
    
    a pro-rata payment in respect of your participation in the STIP for the year in which
your termination occurs in accordance with the design of the STIP as varied from time to
time. As the employment relationship has ceased, you will not be eligible to pro-rata rights
to shares in respect of that year. However, you will receive the equivalent value of this
benefit in cash based on achievement of the STIP targets. Further, any rights to shares previously provided under the STIP not vested to you at the time
of the termination will be vested to you upon termination of your employment;(c)
    
    your allocation
of rights to shares as a result of your participation in the LTIP up to the time of your
termination, which will vest in accordance with the performance hurdles and timetable for the
exercise of such rights under the terms of the LTIP as at the time of allocation to you.(d)
    
    any California tax penalties or interest on taxes due to an early return to California
will be reimbursed and grossed up by Telstra.(e)
    
    In this clause 8.4, Good Reason means:
 (1)
    
    except where agreed between the parties, any material diminution of title, authority,
status, duties or responsibilities contemplated by this agreement;(2)
    
    any change in
reporting relationship as a result of which you report to any person other than to the
Board or its Chairman;(3)
    
    any material failure by the Company to comply with the
provisions of clause 4, including any failure to pay the Fixed Remuneration, STIP, LTIP or
any other amounts when due; or(4)
    
    any material breach by the Company of its obligations
under this Agreement.
 You acknowledge and agree that in part the payments in clause 8.4(a), (b) and (c) are to
compensate you for the restraint agreed to in Clause 9.
 8.5
    
    On commencement of your employment, and from time-to-time as requested by the Company, you are
required to seek advice from a mutually agreed upon taxation adviser (whose reasonable costs
shall be paid by the Company) with respect to your Californian taxation obligations and to
take all reasonable actions in accordance with this advice to ensure the arrangements in
clause 8.4(d) do not incur unnecessary cost to the Company.8.6
    
    If your employment terminates as a result of disability, death or by you reaching retirement
as defined by the rules of the STIP and LTIP, you (or your estate) will receive the benefits
under clause 8.4(b) and 8.4(c) above.8.7
    
    Subject to clause 8.8 below, if you terminate your
employment in accordance with clause 8.1:
 (a)
    
    within three years of your commencement date:
 (1)
    
    you will not be eligible to receive any payment or other benefit in respect of the
STIP for the year in which your termination occurs; and




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(2)
    
    you will receive a pro-rata allocation of rights to shares as a result of
your participation in the LTIP up to the date of your termination in accordance with
the rules of the LTIP.
 (b)
    
    after three years of your commencement date:
 (1)
    
    you will receive a pro-rata payment in respect of your participation in the STIP for the
year in which your termination occurs in accordance with clause 8.4(b) above; and(2)
    
    you
will receive your allocation of rights to shares as a result of your participation in the
LTIP up to the time of your termination, which
will vest in accordance with the performance hurdles and timetable for the exercise of such
rights under the terms of the LTIP as at the time of the allocation to you.
 8.8
    
    If you terminate your employment under clause 8.1 as a result of a Change of Control of the
Company, within six months of such Change of Control, then you will receive the benefits set
out in clause 8.4 as if the Board had elected to terminate your employment in accordance with
that clause. For the purposes of this clause, Change of Control means any entity, other
than the Commonwealth of Australia or an entity created or controlled by the Commonwealth of
Australia, gaining a controlling interest of the Company in accordance generally accepted
Australian accounting standards.
 9 FUTURE EMPLOYMENT
 9.1
    
    For the purposes of this clause, the expression the business of Telstra includes any
telecommunications business or any business of a like nature to that conducted by Telstra and
which operates in the Australian and/or New Zealand markets.9.2
    
    If your employment with Telstra ceases for any reason you must not (without the prior written
consent of Telstra) be employed by, or provide services as an agent, independent contractor
or in any other capacity to any business that is directly competitive with the business of
Telstra in a material way, whether in Australia or New Zealand, for a period of six months
from the date of the termination of your employment with the Company. For the purposes of
this sub-clause 9.2, the parties acknowledge that at the time of entering into this
Agreement, material competitors of Telstra are Optus, Telecom New Zealand, Vodafone Australia
and New Zealand and Hutchison Australia.9.3
    
    The parties acknowledge that part of the remuneration and benefits, including, but not limited to, the notice and termination payments set out in clause 8,
provided to you by Telstra is specifically referable to this obligation and your
agreement to this term is an acknowledgment that this term is reasonable and goes no further
than is necessary to protect the interests and Confidential Information of Telstra and its
Related Bodies Corporate.9.4
    
    It is intended by the parties that the restraints contained in this
clause will operate to the maximum extent. Further, the parties agree that if any court were
to find any aspect of this clause to be void or unenforceable but that it would be valid if
part of the wording was deleted or the period or the area was reduced, the restraints will
apply with such modifications as may be necessary to make it valid and effective.
 10 BENEFITS
 10.1
    
    You will be provided with telecommunications and related products, services and equipment for
business, personal and domestic use. In addition, Telstra




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will pay for the travel and accommodation of your spouse in accordance with normal
Telstra policy when travelling with you on Company business.10.2
    
    You will be provided with health insurance in accordance with Telstra Policy.10.3
    
    The Company will reimburse you for all appropriate business expenses in accordance with the
terms of the Companys policies and procedures in effect from time to time.
 11 INDEMNITY
 As you are appointed to positions of statutory responsibility and accountability in
companies formed or acquired by Telstra, the Telstra Directors and Officer Liability
Policy will apply.
 12 CONFIDENTIALITY
 12.1
    
    Confidential Informationmeans any information in respect of the Company or the Companys
business (including, but not limited to, any idea, concept, process or know-how) which is not
in the public domain (other than as a result of a breach of the Companys confidence).12.2
    
    You must:
 (a)
    
    keep any Confidential Information of which you become aware during the course
of your employment secret and confidential, except to the extent that you are required by law to
disclose it;(b)
    
    take all reasonable and necessary precautions to maintain the secrecy and prevent
the disclosure of any Confidential Information; and(c)
    
    not, except in the ordinary and proper
course of employment with the Company, disclose Confidential Information to any third party without
the prior written consent of the Board.
 12.3
    
    Your obligations under this clause survive the termination of your employment
 13 INTELLECTUAL PROPERTY
 13.1
    
    Intellectual Propertymeans all present and future rights to intellectual property including
any inventions and improvements, trade marks (whether registered or common law trade marks),
designs, copyright, any corresponding property rights under the laws of any jurisdiction and
any rights in respect of an invention, discovery, trade secret, secret process, know-how,
concept, idea, information, process, data or formula.13.2
    
    Subject to any express written agreement to the contrary, all Intellectual Property created
by you in the course of your employment with the Company automatically vests in the Company.13.3
    
    You must do all things necessary or desirable to vest in the Company ownership of any
Intellectual Property created by you in the course of your employment with the Company,
including executing any documents which are reasonably required by the Company to give effect
to clause 13.1.13.4
    
    You must disclose to the Company any discovery, invention, secret process,
system or improvement made or discovered by you during the course of your employment with the
Company in connection with or in any way affecting or relating to the Companys business or
capable of being used or adapted for use by the Company or in connection with its business.13.5
    
    Your obligations under this clause survive the termination of this agreement.




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14 AUSTRALIAN TAXATION EQUALISATION
 14.1
    
    The Australian Government has announced in the 2005 Budget that it proposes to grant an
exemption for temporary residents from Australian taxation on most of their foreign source
income. More specifically, the measure will:
 (a)
    
    Exempt foreign source income of temporary residents for four years;(b)
    
    Ensure that no capital
gain or loss would arise on the disposal of foreign assets by temporary residents for four years;(c)
    
    Remove interest withholding tax obligations of temporary residents for four years; and(d)
    
    Extend the existing four year exemption from the foreign investment fund rules for temporary
residents.
 If the legislation to give effect to this measure is not passed with effect from 1 July 2005,
the Company will provide you with taxation equalisation so that the net Australian taxation
result for you will be the same as if the legislation had been passed to give effect to this
measure with effect from 1 July 2005.14.2
    
    If the legislation is not passed, or is not passed with
effect from 1 July 2005, you are required to seek advice from a mutually agreed upon taxation
adviser (whose reasonable costs shall be paid by the Company) with respect to your foreign
source income and to take all reasonable actions in accordance with this advice to ensure
these arrangements do not incur unnecessary cost to the Company.14.3
    
    The above taxation equalisation arrangement does not apply to taxation differentials which
would apply irrespective of whether or not the proposed legislation is passed. In addition,
you should be aware that under the proposed legislation you would lose the benefit of this
measure if you apply for permanent residency in Australia.
 15 ENTIRE AGREEMENT




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Donald McGauchie
Chairman, Telstra Corporation.
  Solomon Trujillo
    
    Date




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Attachment 1
 REMUNERATION PACKAGE FRAMEWORK
  Fixed Remuneration
 Short Term Incentive Plan (STIP)
 rd rd rd
 Long Term Incentive Plan (LTIP) 1/3
 Total Package
 NOTES:




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