January 26, 2001


Mr. Charles Noski

Dear Chuck,

         Pursuant to the terms of your  employment  agreement  dated December 8,
1999, in the event that your 1998-2000 AT&T Seasoned Performance Shares pays out
an amount  less than the target  award of your  previous  employer  for the same
performance  period,  you will be entitled to an additional amount to offset the
difference.  In such event AT&T will  establish  a special  individual  deferred
account  ("Deferred  Account") in your name for such additional  amount, if any.
The  maintenance,  vesting and distribution of this Deferred Account shall be in
accordance  with the  terms  and  conditions  set  forth  below  in this  letter
("Agreement").

         As of February  20,  2001,  (hereinafter  the  "Effective  Date"),  the
Company shall credit the Deferred  Account with an initial  balance equal to the
additional amount, if any, as described above.

         Commencing as of the Effective  Date, the Company shall credit interest
to the Deferred  Account,  compounded as of the end of each calendar  quarter at
the rate of the sum of (x)  one-quarter  (1/4) of the average rate applicable to
the 10-year Treasury Note for the prior calendar quarter, plus (y) .50%.

         The Deferred Account will be maintained as a bookkeeping account on the
records of the Company and you will have no present  ownership right or interest
in the Deferred  Account,  or in any assets of the Company with respect thereto.
You shall not have any right to receive any payment with respect to the Deferred
Account,  except as expressly  provided below.  The Deferred  Account may not be
assigned, pledged or otherwise alienated by you and any attempt to do so, or any
garnishment, execution or levy of any kind with respect to the Deferred Account,
will not be recognized.

         The Deferred  Account  shall vest 100%  immediately  upon the effective
date. The vested Deferred Account,  including interest, shall be paid in one (1)
lump  sum  as  soon  as  administratively   feasible  in  the  calendar  quarter
immediately following your retirement/termination date from AT&T.

         In the event of Long Term Disability or your death, prior to receipt of
the Deferred  Account  balance,  the entire amount then credited to the Deferred
Account shall be distributed to you or your named beneficiary (or your estate if
no  beneficiary  has  been  named),  in a lump  sum as soon as  administratively
feasible in the calendar quarter  immediately  following the calendar quarter in
which your death, or Long Term Disability occurs.

           Since the amount  credited  to the  Deferred  Account is  immediately
vested as of the  Effective  Date,  it is subject to FICA taxes at vesting under
current IRS  regulations.  You will be notified of the amount of FICA taxes due.
Payments from the Deferred  Account are subject to payroll tax  withholding  and
reporting,  and  are  in  addition  to and  not in  lieu  of  any  qualified  or
non-qualified pension, savings, or other retirement plan, program or arrangement
covering you.  Amounts  credited to the Deferred Account are not included in the
base for  calculating  benefits under the employee  benefit  plans,  programs or
practices of the Company or its affiliates.
<PAGE>
           The December 8, 1999 employment  agreement,  as amended herein, shall
remain in full force and effect.

         This  Agreement  may not be amended or waived,  unless the amendment or
waiver is in a writing,  signed by you and AT&T's  Executive  Vice  President  -
Human Resources.

         It is agreed and  understood  that you will not  disclose  the specific
terms of this letter or any fact concerning its  negotiation or  implementation,
except in compliance  with legal process,  prior to the  information  being made
public by the  Company.  You may,  however,  discuss the contents of this letter
with your spouse, legal and/or financial counselor and the forfeiture provisions
with any potential future employer.

         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,


                                       /s/ Mirian Graddick-Weir
                                       --------------------------
                                           Mirian Graddick-Weir
                                           Executive Vice President


/s/  Charles Noski                                 March 29, 2001
-------------------------------             ----------------------------
Acknowledged and agreed to                             Date
Charles Noski