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                                                            EXHIBIT 10(III)(A)36

                              EMPLOYMENT AGREEMENT

     This Agreement, dated as of April, 26, 2004, by and between William J.
Hannigan ("the Executive") and AT&T Corp., a New York corporation (the
"Company")

                                WITNESSETH THAT

     WHEREAS, the Company has offered the Executive, and the Executive has
accepted, employment on the terms and conditions set forth in this Agreement;
and

     WHEREAS, the Company and the Executive wish to set forth such terms and
conditions in a binding written agreement;

     NOW, THEREFORE, in consideration of the mutual covenants set forth in this
Agreement, it is hereby agreed as follows:

          1.  Term of Employment.  The term of the Executive's employment under
     this Agreement (the "Term") shall begin on December 2, 2003 (the "Effective
     Date") and end on December 1, 2006; provided, that the Term shall be
     extended by successive periods of one (1) year, effective as of each
     Renewal Date (as defined in the next sentence), unless, before any Renewal
     Date, the Company shall have notified the Executive or the Executive shall
     have notified the Company that no such extension shall take place (a
     "Notice of Nonrenewal"); and provided, further, that the Term shall in any
     event end upon a Termination, as set forth in Section 7 below. "Renewal
     Date" means each December 1 that occurs during the Term, beginning with
     December 1, 2006.

          2.  Position, Duties and Location.

          (a) Position.  The Executive shall serve as President of AT&T Corp.,
     with the duties and responsibilities customarily assigned to that position
     and such other duties and responsibilities as the Board of Directors of the
     Company (the "Board") shall from time to time assign to the Executive. The
     Executive shall report directly to the Chief Executive Officer of AT&T
     Corp.

          (b) Duties.  During the Term, the Executive shall devote his full
     business attention and time to the business and affairs of the Company and
     shall use his reasonable best efforts to carry out such responsibilities
     faithfully and efficiently. It shall not be considered a violation of the
     foregoing for the Executive to serve on corporate, civic or charitable
     boards or committees, and manage personal investments, so long as such
     activities do not materially interfere with the performance of the
     Executive's responsibilities as an employee of the Company in accordance
     with this Agreement or otherwise violate the Executive's obligations
     hereunder. The Executive shall be subject to the AT&T Non-Competition
     Guideline, as the same may be amended from time to time, and to any
     successor policy that may hereafter be adopted (such Guideline and any
     successor policy thereto, the "Non-Competition Guideline"). The Executive
     hereby acknowledges that he has received a copy of the Non-Competition
     Guideline, and that he understands that compensation and benefits otherwise
     payable to him under this Agreement may be subject to forfeiture if he
     violates the Non-Competition Guideline. Notwithstanding the second sentence
     of this Section 2(b), the Executive shall not serve on any corporate, civic
     or chari-table boards or committees without first disclosing such proposed
     service to the Corporate Secretary of Company (the "Corporate Secretary")
     and obtaining the consent of the Corporate Secretary to such service, and
     in any event he shall not serve on any board or committee of an entity that
     is a competitor of the Company within the meaning of the Non-Competition
     Guideline. The Executive hereby represents to the Company that he has
     previously informed the Corporate Secretary of the boards and committees on
     which he presently serves, and has obtained the Corporate Secretary's
     consent to him remaining a member of such boards and committees.

          (c) Location.  The Executive's services shall be performed primarily
     at the Company's current offices in Bedminster, N.J.

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          (d) Nothing in this Agreement shall prevent the Company from
     reassigning the Executive's job duties on a temporary basis during any
     period during which the Executive is absent under the Company's applicable
     sick leave policy or short-term disability benefits plan, until such time
     as the Executive returns to work full-time.

          3.  Compensation.

          (a) Base Salary.  During the Term, the Executive shall receive a base
     salary (the "Base Salary") at an annual rate of not less than nine hundred
     twenty-five thousand dollars ($925,000), payable at such times and
     intervals as the Company customarily pays the base salaries of other
     members of the Company's Executive Committee or any comparable successor
     group of senior executives (hereinafter, the "Other Senior Executives").
     The Base Salary shall be reviewed on or about April 1, 2005 and annually
     thereafter during the Term for possible increase in accordance with the
     Company's normal practices for the Other Senior Executives. The Base Salary
     shall not be reduced after any such increase, and the term "Base Salary"
     shall thereafter refer to the Base Salary as so increased.

          (b) Annual Bonus.  The Executive shall be eligible to earn an annual
     bonus (the "Annual Bonus") based on individual and Company performance,
     under the terms and conditions applicable to the Other Senior Executives.
     For 2004, the Executive's target Annual Bonus shall be a composite of one
     hundred twenty-five percent (125%) of the Earned Base Salary for fiscal
     year 2004. For each subsequent year, the Executive's target Annual Bonus
     shall be one hundred twenty-five (125%) of the Executive's Base Salary
     during the fiscal year in question, subject to review by the Board for
     possible increase.

          (c) Long Term Incentive Compensation.

          (i) During the Term, the Executive shall be eligible to receive awards
     under the Company's 1997 Long Term Incentive Program or any successor
     thereto (collectively, the "LTIP") under the terms and conditions
     applicable to the Other Senior Executives. For 2004, the value of the grant
     will not be less than $6.3 Million, as determined on the date that the
     Board approves such grant.

          (ii) Without limiting the generality of the foregoing, all Long Term
     Incentive Compensation shall be subject to the Non-Competition Guidelines
     and the Company's Senior Officer Separation Plan or any successor thereto
     (the "Severance Plan").

          (d) Cash Hiring Bonus.  The Company shall make a payment of One
     Million Dollars ($1,000,000) cash hiring bonus to Executive on November 15,
     2004, provided that the Executive is continuously employed by the Company
     from December 2, 2003 through the payment date.

          (e) Supplemental Executive Retirement Plan ("SERP").  The Company
     shall provide Executive with SERP benefits under the provisions of an
     individual non-qualified pension arrangement (Individual Pension) as
     specified in Attachment A to this Agreement.

          4.  Restitution for Certain Forfeitures.  In order to address certain
     forfeitures associated with Executive leaving his prior employer, and to
     incent Executive to join the Company, the Company shall provide to
     Executive the following hiring bonuses:

             (a) Replacement for Restricted Stock.  The Company shall provide
        Executive with a cash payment and AT&T Restricted Stock Units (RSUs) to
        compensate Executive for the loss of his unvested restricted stock
        grants at his prior company, payable in the following increments:

                (i) Cash Payment.  The Company shall pay Executive One Million,
           Fifty-One Thousand, Seven Hundred Dollars ($1,051,700) in cash with
           50% payable on January 31, 2004 and 50% payable on July 31, 2004,
           contingent upon continued Company employment on such payment dates.

                (ii) Restricted Stock Units.  The Company shall provide
           Executive with 150,000 AT&T Restricted Stock Units on January 5, 2004
           which shall vest 35% on January 31, 2005, 25% on November 30, 2005,
           20% on January 31, 2006 and 20% on January 31, 2007.

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          (b) Stock Options.  The Company shall provide Executive with an
     initial stock option grant of 730,000 AT&T stock options on January 5, 2004
     to replace vested stock options from his prior employer, which will be
     cancelled. The AT&T stock options shall vest 25% per year beginning on the
     first anniversary of the grant date.

          (c) 2003 Annual Bonus.  The Company shall provide Executive with a
     cash payment equal to the target 2003 bonus at his prior employer of seven
     hundred and ten thousand dollars ($710,000). Such bonus shall be paid to
     Executive on or about March 31, 2004.

          5.  Other Compensation

          (a) Relocation: The Company shall provide Executive with relocation
     benefits under the AT&T Management Relocation Plan (Plan B) as specified in
     Attachment B of this Agreement, excluding the provisions relating to an
     Exploratory Trip and Interim Living Expenses.

             (i) The Company shall pay, as a special cash payment, the
        difference between the sales price of the Executive's existing home and
        the purchase price of a comparable New Jersey home (with a capped
        payable amount of $1,500,000), plus a Federal and state tax allowance.

             (ii) The Company shall provide Executive with a Special Temporary
        Living Allowance ("TLA") of $3,000 (plus a Federal and state tax
        allowance) per month until the sale of his current home occurs, but in
        no event shall such TLA be paid beyond May 31, 2004. Such payment will
        be payable at the end of each month under the payment schedule which
        applies to his regular base salary.

          (b) Perquisites.  During Executive's employment under this Agreement,
     the Company shall provide Executive with the perquisites of employment as
     are commonly provided to Other Senior Executives, and shall reimburse
     Executive for reasonable and necessary business expenses.

          (c) Corporate Aircraft.  Executive shall be entitled to use the
     Company provided corporate airplanes for his business and personal use
     pursuant to current authorizations.

          (d) Financial Counseling.  The Company shall authorize payment to a
     financial counselor of the Executive's choice 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 payment 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, and will be subject to the dollar limits under the AT&T
     Senior Management Financial Counseling Program. The Company shall pay
     Executive a federal tax allowance on the authorized fees, calculated in
     accordance with Company practices applicable to other Company executives.

          (e) Certain Payments Not Benefit-Bearing.  The following amounts will
     not be included in the calculation of the Executive's benefits under any
     employee benefit plans and perquisite programs made available by the
     Company to its management and senior management employees (the "Employee
     Benefit Plans"): (i) the Cash Hiring Bonus specified above in Section 3(d);
     (ii) any Restitution payments specified above in Sections 4(a)-4(c); and
     (iii) the Relocation Payments specified above in Section 5. Notwithstanding
     the foregoing, in the event of a conflict between this Agreement and a
     particular plan or program regarding the inclusion or exclusion of payments
     under this paragraph, such plan and not this Agreement shall control.

          6.  Benefits.

          (a) Expenses.  The Executive shall be entitled to receive prompt
     reimbursement for all reasonable expenses that he incurs during the Term in
     carrying out his duties under this Agreement, provided that he complies
     with the policies, practices and procedures of the Company for submission
     of expense reports, receipts, or similar documentation of such expenses as
     in effect from time to time.

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          (b) Benefits Generally.  During the Term, the Executive shall be
     entitled to participate in the Employee Benefit Plans, on the same terms
     and conditions as apply to the Other Senior Executives, as the same may be
     in effect from time to time.

          7.  Termination.

          (a) Consequences of Termination.  If the Executive's employment with
     the Company is terminated for any reason other than voluntary resignation
     or Cause, as that term is defined in the Severance Plan, before the end of
     the Term of this Agreement, including without limitation as a result of the
     end of the Term pursuant to the Executive's or the Company's Notice of
     Nonrenewal, by action of the Company or the Executive or by reason of the
     Executive's death or disability (as defined in Section 7(d) below) (a
     "Termination"), the Term shall end on the date of the Termination, and the
     Company and the Executive shall have no further obligations under this
     Agreement, except as provided in this Section 7. The Executive (or, in the
     case of his death, the Executive's estate and/or beneficiaries) shall be
     entitled following a Termination: (i) to receive the Base Salary through
     the date of the Termination; (ii) to payment of the Annual Bonus in the
     target amount for the year in which the termination occurs, prorated to
     reflect his length of service during that year and paid when normally paid
     to Other Senior Executives; and (iii) to all other compensation and
     benefits that may be provided under the terms and conditions of the
     Employee Benefit Plans.

          (b) Severance.  Without limiting the generality of the foregoing, upon
     a Termination of the Executive's employment by the Company without Cause or
     by the Executive for Good Reason (as those terms are defined in the
     Severance Plan, except that a termination upon the Company's Notice of
     Nonrenewal shall also be considered without Cause), the Executive shall be
     entitled to such severance pay and benefits, if any, upon such Termination
     as may be provided for in, and subject to the terms and conditions
     (including the execution of any required release or other documentation or
     agreement) of, the Severance Plan as in effect at the time of the
     Termination (including, if applicable, any change in control severance pay
     or benefits); provided, that such pay shall not duplicate any pay or
     benefits provided for under Section 7(a) above. The SERP benefits will vest
     and be payable in accordance with the terms and conditions specified in
     Attachment A of this Agreement. Notwithstanding the terms of the January 5,
     2004 grant of AT&T Restricted Stock Units specified above in Paragraph
     4(a)(ii), the Restricted Stock Units shall immediately vest upon a
     company-initiated termination, other than for Cause, or in the event of a
     Good Reason termination as such terms are defined in the Severance Plan.

          (c) Termination Due to Death.  In the event of a Termination as a
     result of the Executive's death during the Term, his estate or his
     beneficiaries, as the case may be, shall be entitled to the following
     benefits in addition to, but not duplicative of, those provided for in
     Section 7(a) above: (i) a cash payment equal to the amount of the
     Executive's target Annual Bonus for the year of the Termination, pro-rated
     to reflect the portion of the performance year that occurs before the
     Termination payable in a single installment as soon as practicable
     following the Termination; (ii) financial counseling for one year following
     the Termination, including without limitation preparation of the
     Executive's final individual income tax returns, together with a tax
     allowance for any federal income tax imposed on the Executive's
     beneficiary(ies) as a result of receiving such counseling, calculated in
     accordance with Company practices applicable to Other Senior Executives.
     All outstanding equity, e.g. stock options, Restricted Stock Units and
     Performance Shares, if applicable, will be administered in accordance with
     the terms and conditions under such applicable grants. The SERP benefits
     will vest and be payable in accordance with the terms and conditions
     specified in Attachment A of this Agreement.

          (d) Termination Due to Disability.  The Company shall have the right
     to terminate Executive's employment as a result of his inability to perform
     his duties under this Agreement by reason of any physical or mental
     impairment, which inability is expected to continue for more than twelve
     (12) months ("Disability"). In the event that Executive's employment is
     terminated during the Term due to his Disability, he shall be entitled to
     the following benefits in addition to, but not duplicative of, those
     provided for in Section 7(a) above: (i) disability benefits in accordance
     with the disability program then in effect for Other Senior Executives (and
     the terms of such disability program shall govern exclusively

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     the Executive's rights to benefits thereunder); (ii) financial counseling
     for one year following the Termination, including without limitation
     preparation of the Executive's individual income tax returns for the year
     of termination, together with a tax allowance for any federal income tax
     imposed on the Executive as a result of receiving such counseling,
     calculated in accordance with Company practices applicable to Other Senior
     Executives. All outstanding equity, e.g. stock options, Restricted Stock
     Units and Performance Shares, if applicable, will be administered in
     accordance with the terms and conditions under such applicable grants. The
     SERP benefits will vest and be payable in accordance with the terms and
     conditions specified in Attachment A of this Agreement. Nothing in this
     Agreement shall prevent the Company from reassigning the Executive's job
     duties to another individual on a temporary basis during any period during
     which 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 as a result of Disability, and such a temporary
     reassignment of duties shall not constitute Good Reason, as that term is
     defined under the Severance Plan.

          (e) No Damages or Other Relief.  In no event shall a Termination be
     considered a breach of this Agreement, nor shall the Company or the
     Executive be entitled to any damages, injunctive relief or other relief or
     compensation beyond that set forth in this Section 7, as a result of any
     Termination.

          (f) Termination by Voluntary Resignation or for Cause.  Should the
     Executive resign or should the Company terminate the Executive's employment
     for Cause, then the Executive shall be entitled to nothing further under
     this Agreement and all Long Term Incentive Compensation previously promised
     or awarded shall be cancelled in accordance with the terms of the
     applicable grant as of the termination date.

          8.  Confidentiality of Trade Secrets and Business Information.  The
     Executive agrees that he will not, at any time during his employment with
     the Company or thereafter, disclose or use any trade secret, proprietary or
     confidential information of the Company or any subsidiary or affiliate of
     the Company (collectively, "Confidential Information"), obtained during the
     course of such employment, except for disclosures and uses 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 the Executive receives notice that any
     party will seek to compel him by process of law to disclose any
     Confidential Information, he shall promptly notify the Company and
     cooperate with the Company in seeking a protective order against such
     disclosure.

          9.  Return of Information.  The Executive agrees that at the time of
     any 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 (including electronic) matter containing Confidential Information
     and other information relating to the business of the Company or any
     subsidiary or affiliate of the Company which are in his possession, except
     as otherwise consented in writing by the Company at the time of such
     termination. The foregoing shall not prevent the Executive from retaining
     copies of personal contact information to the extent such copies do not
     contain any Confidential Information.

          10.  Covenants of the Executive.

          (a) Noncompetition.  In consideration for the compensation payable to
     the Executive under this Agreement, the Executive agrees that he will not,
     during his employment with the Company and for a period of one (1) year
     after any Termination, regardless of the reason therefore, 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 on the Effective
     Date by the AT&T Non-Competition Guideline (hereinafter referred to as a
     "Competitive Activity"). The 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
     any Termination, regardless of whether the Termination is at the instance
     of the Company or the Executive, and regardless of whether the Executive

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     is entitled to severance pay as a result thereof. The foregoing shall not
     prohibit the Executive from being a passive owner of not more than one
     percent (1%) of the outstanding common stock, capital stock and/or equity
     of any publicly traded entity so long as the Executive has no active
     participation in the management of business of such firm, corporation or
     enterprise.

          (b) Noninterference.  During the Executive's employment with the
     Company and for a period of one (1) year following any Termination, the
     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 the Executive's employment with the Company and for a
     period of one (1) year following any Termination, the Executive agrees not
     to directly or indirectly solicit any customer or business partner of the
     Company to terminate, alter or modify its relationship with 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.

          (c) Forfeiture.  Notwithstanding any other provision of this Agreement
     or of any Employee Benefit Plan or other plan, policy, arrangement or
     agreement, the Company may, in its discretion, determine to cause the
     Executive to forfeit any and all payments and benefits from the Company and
     its affiliates (except those made from Company-sponsored tax-qualified
     pension or welfare plans) to which Executive may otherwise be entitled,
     whether under this Agreement or otherwise, if Executive violates any of his
     obligations under the Non-Competition Guideline (including, without
     limitation, as specified in the Non-Competition Guideline, engaging in
     employment for a competitor, making disparaging comments or violating the
     non-solicitation provisions for a period of two (2) years from the date of
     termination); provided, that before imposing such forfeiture, the Company
     shall first give the Executive written notice of the violation and its
     intent to cause such forfeiture, and an opportunity to cure such violation;
     and provided, further, that no such notice shall be required if either (i)
     the Company had previously notified the Executive that the conduct or
     proposed conduct in question violated or would violate his obligations
     under the Non-Competition Guideline, or (ii) such conduct is not capable of
     being cured.

          11.  Enforcement.  The Executive acknowledges and agrees that: (i) the
     purpose of the covenants set forth in Sections 8 through 10 above is to
     protect the goodwill, trade secrets and other confidential information of
     the Company; (ii) because of the nature of the business in which the
     Company and its subsidiaries and affiliates are engaged and because of the
     nature of the Confidential Information to which the Executive has access,
     it would be impractical and excessively difficult to determine the actual
     damages of the Company and the Affiliated Companies in the event the
     Executive breached any such covenants; (iii) remedies at law (such as
     monetary damages) for any breach of the Executive's obligations under
     Sections 8 through 10 would be inadequate; and (iv) even the threat of any
     misuse of the Confidential Information of the Company would be irreparably
     harmful because of the importance of that Confidential Information. The
     Executive therefore agrees and consents that if he commits any breach of a
     covenant under Sections 8 through 10 or threatens to commit any such
     breach, the Company shall have the right (in addition to, and not in lieu
     of, any other right or remedy that may be available to it) to temporary and
     permanent injunctive relief from a court of competent jurisdiction, without
     posting any bond or other security and without the necessity of proof of
     actual damage. If any portion of Sections 8 through 10 is hereafter
     determined to be invalid or unenforceable in any respect, such
     determination shall not affect the remainder thereof, which shall be given
     the maximum effect possible and shall be fully enforced, without regard to
     the invalid portions. In particular, without limiting the generality of the
     foregoing, if the covenants set forth in Section 10 are found by a court or
     an arbitrator to be unreasonable, the Executive and the Company agree that
     the maximum period, scope or geographical area that is found to be
     reasonable shall be substituted for the stated period, scope or area, and
     that the court or arbitrator shall revise the restrictions contained herein
     to cover the maximum period, scope and area permitted by law. If any of the
     covenants of Sections 8 through 10 are determined to be wholly or partially
     unenforceable in any jurisdiction, such determination shall not be a bar to
     or in any way diminish the Company's right to enforce any such covenant in
     any other jurisdiction.

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          12.  Cooperation After Termination of Employment.  Following the
     termination of his employment for any reason, the Executive shall
     reasonably cooperate with the Company with respect to the prosecution or
     defense of a matter in which the Company is a party. The Executive's
     obligation to cooperate pursuant to this Section 12 shall continue until
     such legal proceedings are concluded or his services as a witness or
     consultant are no longer required. The Company shall reimburse the
     Executive for his time (at an hourly rate based on his last Base Salary),
     plus all travel and other out-of-pocket expenses required by his
     obligations under this Section 12.

          13.  Resolution of Disputes.  Any disputes arising under or in
     connection with this Agreement, other than Sections 8 through 10 above, may
     first be addressed by third-party mediation and, if such mediation fails to
     resolve such dispute within sixty days, by binding arbitration, to be held
     in New Jersey. The arbitration shall be conducted according to 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 attorneys' fees of the Executive; provided,
     however, that the Company shall authorize payment for the Executive for
     attorneys' fees if the Executive prevails in such arbitration on any
     material issue. If the dispute is resolved without the need for a third
     party mediation or arbitration, the Company may, at its sole discretion,
     authorize payment for the Executive's attorneys' fees.

          14.  The Executive's Representations.  The Executive hereby represents
     and warrants that the Executive has the right to enter into this Agreement
     with the Company and to grant the rights contained in this Agreement, and
     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. The Executive acknowledges that before signing this Agreement, he
     was given the opportunity to read it, evaluate it and discuss it with his
     personal advisors and attorney and with representatives of the Company. The
     Executive further acknowledges that the Company has not provided him with
     any legal advice regarding this Agreement.

          15.  Change in Control.  In the event of a Change in Control of the
     Company, severance payments to Executive shall be governed by the Change in
     Control provisions of the applicable Severance Plan in effect at the time
     of the Change in Control.

          16.  Notices.  All notices and other communications required or
     permitted hereunder shall be in writing and shall be deemed given when
     delivered (a) personally, (b) by facsimile with evidence of completed
     transmission, 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.
        One AT&T Way
        Room 5A106
        Bedminster, N.J. 07921
        Attention: Executive Vice President, Human Resources

        If to the Executive:

        William J. Hannigan
        One AT&T Way
        Room 5A112
        Bedminster, New Jersey 07921

          17.  Assignment and Successors.

          (a) The Executive.  This Agreement is personal to the Executive and,
     without the prior written consent of the Company, shall not be assignable
     by the Executive otherwise than by will or the laws of descent and
     distribution. This Agreement shall inure to the benefit of and be
     enforceable by the Executive's legal representatives.

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          (b) The Company.  This Agreement shall inure to the benefit of and be
     binding upon the Company and its successors and assigns. 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. As used in this
     Agreement, "Company" shall mean both the Company as defined above and any
     such successor to which this Agreement is assigned or that assumes this
     Agreement by operation of law or otherwise.

          18.  Governing Law Amendment.  This Agreement shall be governed by,
     and construed in accordance with, the laws of New Jersey, without reference
     to principles of conflict of laws. This Agreement may not be amended or
     modified except by a written agreement executed by the Executive and the
     Company or their respective successors and legal representatives.

          19.  Severability.  The invalidity or unenforceability of any
     provision of this Agreement shall not affect the validity or enforceability
     of any other provision of this Agreement. If any provision of this
     Agreement shall be held invalid or unenforceable in part, the remaining
     portion of such provision, together with all other provisions of this
     Agreement, shall remain valid and enforceable and continue in full force
     and effect to the fullest extent consistent with law.

          20.  Tax Withholding.  Notwithstanding any other provision of this
     Agreement, the Company may withhold from amounts payable under this
     Agreement all federal, state, local and foreign taxes that are required to
     be withheld by applicable laws or regulations.

          21.  Costs Associated with Agreement.  The Company shall authorize
     payment for the costs incurred by the Executive for financial counseling
     and attorneys' fees associated with negotiation and preparation of this
     Agreement, (not to exceed a cap of $20,000) plus a Federal and state tax
     allowance.

          22.  No Waiver.  The Executive's or the Company's failure to insist
     upon strict compliance with any provision of, or to assert any right under,
     this Agreement shall not be deemed to be a waiver of such provision or
     right or of any other provision of or right under this Agreement.

          23.  Headings.  The Section headings contained in this Agreement are
     for convenience only and in no manner shall be construed as part of this
     Agreement.

          24.  Entire Agreement.  This Agreement constitutes the entire
     agreement of the parties with respect to the subject matter hereof and
     shall supersede all prior agreements, whether written or oral, with respect
     thereto, including without limitation any term sheet.

          25.  Counterparts.  This Agreement may be executed simultaneously in
     two or more counterparts, each of which shall be deemed an original but all
     of which together shall constitute one and the same instrument.

                                        8
<PAGE>

     IN WITNESS WHEREOF, the Executive has hereunto set his hand and, pursuant
to the authorization of its Board of Directors, the Company has caused this
Agreement to be executed in its name on its behalf, all as of the day and year
first above written.

                                                /s/ WILLIAM J. HANNIGAN
                                          --------------------------------------
                                                   William J. Hannigan

                                          AT&T CORP.

                                          By:  /s/ MIRIAN M. GRADDICK-WEIR
                                            ------------------------------------
                                                  Mirian M. Graddick-Weir
                                                  Executive Vice-President
                                                      Human Resources

                                        9
<PAGE>

                                                                    ATTACHMENT A

     This attachment ("the Attachment") will establish an individual
non-qualified pension arrangement ("Individual Pension"), which, subject to the
terms and conditions below, will provide the Executive a benefit payable from
AT&T Corp. (the "Company") operating assets upon the Executive's retirement from
the Company, and supercedes all other oral and written communication on the
subject. This Individual Pension will vest on December 2, 2008 contingent upon
continued employment with the Company, provided, however, that the Individual
Pension will immediately vest for Company-initiated terminations for other than
"Cause" (as defined in the Senior Officer Separation Plan), for terminations due
to death, disability, or Good Reason (as defined in the Senior Officer
Separation Plan), or if the Company is subject to a Change in Control ("CIC"),
as defined in the AT&T 1997 Long Term Incentive Program. Only for termination
for Cause or in the event of the Executive's voluntary termination prior to
vesting will this Individual Pension be null and void in its entirety. In the
event of the Executive's involuntary termination within two years following a
CIC, for reasons other than for Cause or if the Executive terminates employment
for Good Reason within two years following a CIC, the Executive's benefit under
this Individual Pension will be calculated by accelerating the Individual
Pension schedule below 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 the Executive's actual termination
year. Further, in the event of a CIC prior to 2007, the cash compensation used
in calculating the final three-year average cash compensation will exclude
pre-2005 compensation. 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 the
Executive's 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:

<Table>
<Caption>
                                                                PERCENTAGE OF FINAL
                                                                  3 YEAR AVERAGE
                                                              TOTAL CASH COMPENSATION
                                                               (BASE PAY PLUS ACTUAL
YEAR OF RETIREMENT/TERMINATION                                  BONUS PAID IN YEAR)
------------------------------                                -----------------------
<S>                                                           <C>
2004........................................................          10.00%
2005........................................................          12.00%
2006........................................................          14.00%
2007........................................................          16.00%
2008........................................................          18.00%
2009........................................................          20.00%
2010........................................................          22.00%
2011........................................................          24.00%
2012........................................................          26.00%
2013........................................................          28.00%
2014........................................................          30.00%
2015........................................................          32.00%
2016........................................................          34.00%
2017........................................................          36.00%
2018........................................................          38.00%
2019........................................................          40.00%
2020........................................................          42.00%
2021........................................................          44.00%
2022........................................................          46.00%
2023........................................................          48.00%
2024........................................................          50.00%
</Table>

                                        1
<PAGE>

          (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 the Executive's death, whether the
Executive's death occurs as an active employee or following the Executive's
termination, and calculation of the compensation used in the Individual Pension
will be governed by the administrative guidelines applicable to this Attachment.

                                        2
<PAGE>

                                                                    ATTACHMENT B

                  AT&T MANAGEMENT RELOCATION PLAN B -- SUMMARY

     This summary describes most assistance available to eligible management
employees relocating under the terms of the AT&T Management Relocation Plan B
(Plan B). More detailed information is provided in Plan B. In the event there is
a conflict between statements in this summary and the provisions of the current
Plan B, the current Plan B will control and govern operation of the Plan.

ELIGIBILITY REQUIREMENTS         Distance from current principal residence to
                                 new work location is 25 or more straight line
                                 miles and (for existing employees) this
                                 distance also represents at least a 5 straight
                                 line mile increase over the distance from the
                                 current residence to the former AT&T work
                                 location.

ONE-MOVE ZONE                    Only one relocation at Company expense will be
                                 authorized when the work location is within a
                                 "One-Move Zone." (Details regarding one-move
                                 zones will be provided by the Relocation
                                 Counselor.)

REIMBURSEMENTS AND ALLOWANCES    Lump Sum Payment -- Issued following receipt of
                                 approved authorization form. (If you are a New
                                 Hire, after you are on the "active" payroll).
                                 The payment includes transportation, lodging,
                                 meals and miscellaneous expenses for a:

                                 - 7 day Exploratory Trip for employee and
                                   spouse.

                                 - 45 day (homeowner) or 30 day (renter) Interim
                                   Living period for employee only. (Round trip
                                   allowance: 3 trips/homeowner and 2/renter.)
                                   Car rental 14 days.

                                 Note:  If commute is under 50 straight line
                                 miles, lump sum details will be provided by
                                 your Relocation Counselor.

                                 Miscellaneous Household Allowance

                                 Based on status at new location:

                                 - Homeowner: Greater of 5% of Annual Salary or
                                   $3,000

                                 - Renter: Greater of 3% of Annual Salary or
                                   $1,500. If renting in HHCA designated
                                   area -- greater of 5% of Annual Salary or
                                   $3,000.

                                 Not tax assisted.

                                 Day of Move Expenses -- Reimbursement (based on
                                 receipts) includes transportation, lodging,
                                 meals and miscellaneous expenses for employee
                                 and dependent family members enroute from old
                                 to new location.

HOME SALE ASSISTANCE             Eligibility for home sale assistance is
                                 restricted to the principal residence: one or
                                 two family house, townhouse or condominium
                                 unit. (Co-ops are not included.) Employee must
                                 hold a good and marketable title in his/her
                                 name.

                                 To be eligible for this program in addition to
                                 the home having to meet eligibility
                                 requirements, you must:

                                 - List with a "registered" broker and utilize
                                   the marketing program established for the
                                   home

                                        1
<PAGE>

                                 - Market for a minimum total period of 90 days.
                                   Once Company Offer is established must list
                                   within 108% of Appraised Value for a minimum
                                   of 60 days.

                                 If you choose not to comply with all of the
                                 above items, your home will become ineligible
                                 for the home sale program. Homes not eligible
                                 for the home sale program may be sold via
                                 Option III, Private Sale.

                                 If eligible, the home may be sold via one of
                                 three options:

                                 - Direct Sale (Option I) to an AT&T designated
                                   Relocation Company.

                                 - Amended Value Sale (Option II) based on a
                                   bona fide offer from a buyer.

                                 - Private Sale (Option III) to a buyer without
                                   assistance from the Relocation Company.

                                 Home Sale Incentive Payment -- 1% of sales
                                 price under Option II only. Not tax assisted.

                                 Capital Loss -- If you experience a loss, you
                                 may be eligible for the following
                                 reimbursement:

                                 - 90% of "Calculated Loss" capped at $25,000
                                   under Homesale Option II -- Amended Value.

                                 - 80% of "Calculated Loss" capped at $25,000
                                   under Homesale Option I -- Direct Sale or
                                   Option III -- Private Sale.

                                 Not tax assisted. No improvements included in
                                 "calculated loss".

LEASE PENALTY                    AT&T may reimburse for certain penalty payments
                                 to cancel a lease. The employee should make
                                 every effort to minimize this expense.

NEW RESIDENCE

- Home/Rental                    AT&T will provide home/rental assistance (where
                                 available).

- Security Deposit/Advance
Rental
  Payment                        In areas where a security deposit/advance
                                 rental payment is customary, the transferee
                                 will not be reimbursed by AT&T for the expense.

- Home Purchase Closing Cost     Reimbursement of reasonable and customary
                                 expenses. (Includes maximum 2% of mortgage for
                                 Loan Origination/Discount Points). Use of a
                                 Company "registered" broker is required in
                                 order to be eligible for this reimbursement.

MORTGAGE BUY-DOWN                If you finance your home with one of our
                                 preferred lenders, you may be eligible for a
                                 mortgage buy-down in designated High Housing
                                 Cost Areas. (Based on where you live, not where
                                 you work).

SHIPMENT OF HOUSEHOLD GOODS      AT&T will arrange for the packing, shipping of
                                 goods/automobiles (max 2 if over 300 miles one
                                 way) and unpacking. Storage of goods only (90
                                 days maximum) will be authorized, if required.

                                        2
<PAGE>

TAX ASSISTANCE                   Certain taxable, non-deductible Relocation
                                 payments will include "tax assistance" dollars.
                                 In other words, these payments have already
                                 been grossed up. No further gross up or
                                 adjustment will be made. When Relocation
                                 reimbursements/allowances are paid, taxes will
                                 be withheld appropriately.

                                        3