Document:

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                                                                    EXHIBIT 10.2

                  AMENDED AND RESTATED TAX SHARING AGREEMENT

            AMENDED AND RESTATED TAX SHARING AGREEMENT (the "Agreement") entered
into as of May 2, 2000, amended and restated as of June 4, 2001, by and among
AT&T Corp., a New York corporation ("AT&T"), AWG LLC, a Delaware limited
liability company ("AWG"), AT&T Wireless Services, Inc., a Delaware corporation
("Wireless"), AT&T Wireless PCS, LLC, a Delaware limited liability company
("Wireless PCS"), each other entity that is a signatory hereto (the "Other
Signatories"), any entities which become parties hereto pursuant to Section 21
hereof and each of the Subsidiaries of AWG, Wireless, Wireless PCS and the Other
Signatories.

            WHEREAS Wireless desires to be included, and AWG, Wireless, Wireless
PCS and the Other Signatories desire that their Subsidiaries be included in the
filing of consolidated federal income Tax returns on behalf of the AT&T
Affiliated Group;

            WHEREAS AT&T, AWG, Wireless, Wireless PCS, the Other Signatories,
and their respective Subsidiaries wish to allocate and settle among themselves
in an equitable manner the consolidated federal income Tax liability of the AT&T
Affiliated Group;

            WHEREAS Wireless desires, to the extent required by applicable
state, local or foreign law to be included, and AWG, Wireless, Wireless PCS and
the Other Signatories desire that their Subsidiaries be included, in combined,
consolidated and unitary state, local and foreign Tax returns on behalf of the
AT&T Affiliated Group;

            WHEREAS AT&T, AWG, Wireless, Wireless PCS, the Other Signatories and
their respective Subsidiaries wish to allocate and settle among themselves in an
equitable manner the state, local or foreign Tax liability in connection with
such combined, consolidated and unitary state, local and foreign Tax returns;
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            WHEREAS AT&T and Wireless have entered into a Separation and
Distribution Agreement, dated June 4, 2001, providing for the separation of the
Wireless Group from AT&T (the "Separation and Distribution Agreement");

            WHEREAS pursuant to the terms of the Separation and Distribution
Agreement, (i) AT&T will contribute all of the assets and liabilities of the
Wireless Group not currently held by Wireless or any of its Subsidiaries to
Wireless, (ii) all the issued and outstanding shares of AT&T Wireless Group
Tracking Stock will be redeemed in exchange for shares of common stock of
Wireless (the "Exchange") and (iii) AT&T's remaining interest in Wireless will
be distributed pro rata to holders of AT&T Common Stock (the "Distribution");

            WHEREAS, for federal income Tax purposes, it is intended that the
transfer of assets by AT&T to Wireless, the Exchange and the Distribution
(collectively, the "Separation Transactions") constitute a tax-free spin-off
under the provisions of Sections 355, 361(c) and 368(a)(1)(D) of the Internal
Revenue Code of 1986, as amended (the "Code");

            WHEREAS, at the end of the day on which the Distribution occurs (the
"Distribution Date"), the taxable year of Wireless and its Subsidiaries shall
close for U.S. federal income Tax purposes;

            WHEREAS AT&T, AWG, Wireless, Wireless PCS, the Other Signatories and
their respective Subsidiaries wish to provide for the principles and
responsibilities of the parties to this Agreement regarding future Adjustments
with respect to Taxes, Tax Proceedings and other related Tax matters; and

            NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereby agree as follows:

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      1. Definitions.  For purposes of this Agreement, the following terms
shall be defined as follows:

      1.1. "Adjustment" shall mean the deemed increase or decrease in a Tax,
determined on an issue-by-issue or transaction-by-transaction basis, as
appropriate, and using the assumptions set forth in the next sentence, resulting
from an adjustment made or proposed by a Governmental Authority with respect to
any amount reflected or required to be reflected on any Tax Return relating to
such Tax. For purposes of determining such deemed increase or decrease in a Tax,
the following assumptions will be used: (a) in the case of any income Tax, the
highest marginal Tax rate or, in the case of any other Tax, the highest
applicable Tax rate, in each case in effect with respect to that Tax for the
taxable period or any portion of the taxable period to which the adjustment
relates; and (b) such determination shall be made without regard to whether any
actual increase or decrease in such Tax will in fact be realized with respect to
the Tax Return to which such adjustment relates. A "Adjustment" shall also mean
a change in one or more apportionment factors used for determining any state or
local consolidated, combined or unitary income or franchise Taxes which are
required to be reported on a Joint Return.

      1.2. "Agreement" shall have the meaning set forth in the first paragraph
hereof.

      1.3.  "Allocated Taxable Income (Loss)" shall mean, with respect to the
Common Stock Group or the Wireless Group, the amount equal to (i) such Group's
contribution to the gross income of the Hypothetical Common Stock/Wireless
Affiliated Group, net of (ii) the aggregate of all losses, deductions and other
Tax attributes of such Group to the extent the same may be used by any member of
the Hypothetical Common Stock/Wireless Affiliated Group. For purposes of the
federal alternative minimum Tax ("AMT"), Allocated Taxable Income (Loss) shall
mean, with respect to the Common Stock Group or the Wireless Group, the amount
equal to

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(i) such Group's contribution to the gross income for AMT purposes of the
Hypothetical Common Stock/Wireless Affiliated Group, net of (ii) the aggregate
of all losses, deductions and other Tax attributes for AMT purposes of such
Group to the extent the same may be used by any member of the Hypothetical
Common Stock/Wireless Affiliated Group. In the case of any state or local
consolidated, combined or unitary income or franchise Taxes which are required
to be reported on a Joint Return, the amount of Allocated Taxable Income (Loss)
of the Common Stock Group or the Wireless Group shall be equal to the product of
such Group's income (loss) and the apportionment factors (property, payroll,
sales), calculated on a consolidated basis, unless such amount is determined
pursuant to another allocation method that is agreed with or mandated by a
specific jurisdiction. For purposes of the preceding sentence, the apportionment
factors shall be determined for each taxable period.

      1.4.  "AMT" shall have the meaning set forth in the definition of
"Allocated Taxable Income (Loss)."

      1.5.  "AMTI" shall have the meaning set forth in Section 3.2(d) hereof.

      1.6.  "AMTL" shall have the meaning set forth in Section 3.2(d) hereof.

      1.7.  "Associated" shall have the meaning set forth in Section 2 hereof.

      1.8.  "AT&T" shall have the meaning set forth in the first paragraph
hereof.

      1.9. "AT&T Affiliated Group" shall mean (i) the affiliated group, within
the meaning of Section 1504(a) of the Code, consisting of AT&T and its
Subsidiaries, (ii) any combined, consolidated or unitary group for state, local
or foreign Tax purposes that includes AT&T or any of its Subsidiaries and (iii)
for any taxable period, any True Legal Entity that files Joint Returns for such
taxable period.

      1.10. "AT&T Charter" shall mean the Amended Certificate of
Incorporation of AT&T.

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      1.11. "AT&T Common Stock" shall mean the common stock, par value $1.00
per share, of AT&T.

      1.12. "AT&T Wireless Group Tracking Stock" shall have the meaning ascribed
to such term in the Proxy Statement.

      1.13. "AWG" shall have the meaning set forth in the first paragraph
hereof.

      1.14. "Code" shall have the meaning set forth in the recitals hereto.

      1.15. "Common Stock Group" shall mean (i) the Hypothetical Legal Entity
Associated with AT&T pursuant to Section 2(c) and (ii) each of the other Legal
Entities that were at any time owned directly or indirectly by AT&T
(Hypothetical Legal Entities Associated with any Mixed Entity other than AT&T
being treated for this purpose as owned directly or indirectly by AT&T) other
than any member of the Liberty Group or the Wireless Group.

      1.16. "Common Stock Indemnitee" shall mean each Legal Entity that is a
member of the Common Stock Group and their respective directors, officers,
employees, affiliates, agents, successors and assigns.

      1.17. "Controlling Party" shall mean AT&T or any other member of the
Common Stock Group or Wireless or any other member of the Wireless Group, as the
case may be, that filed or, if no such Tax Return has been filed, was required
to file, a Tax Return that is the subject of any Tax Proceeding, or any
successor and/or assign of any of the foregoing; provided, however, that in the
case of any consolidated or combined return, the person that actually filed such
consolidated or combined return (or any successor and/or assign of such person)
will be the Controlling Party.

      1.18. "Designated Rate" shall mean the underpayment rate as defined in
Section 6621 of the Code.

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      1.19. "Disputed Adjustment" shall have the meaning set forth in Section
9(d)(ii) hereof.

      1.20. "Distribution" shall have the meaning set forth in the recitals
hereto.

      1.21. "Distribution Date" shall have the meaning set forth in the
recitals hereto.

      1.22. "Exchange" shall have the meaning set forth in the recitals
hereto.

      1.23. "Federal CNOL" shall have the meaning set forth in Section
3.2(a)(ii) hereof.

      1.24. "Federal Tax Allocation Agreement" shall mean the Federal Tax
Allocation Agreement dated as of February 1, 1996, by and among AT&T and each of
its subsidiaries.

      1.25. "Final Determination" shall mean a closing agreement with the
Internal Revenue Service or the relevant state or local Governmental
Authorities, an agreement contained in Internal Revenue Service Form 870-AD or
other comparable form, an agreement that constitutes a determination under
Section 1313(a)(4) of the Code, a claim for refund which has been allowed, a
deficiency notice with respect to which the period for filing a petition with
the Tax Court or the relevant state or local tribunal has expired or a decision
of any court of competent jurisdiction that is not subject to appeal or as to
which the time for appeal has expired.

      1.26. "Governmental Authority" shall have the meaning set forth in the
definition of "Tax."

      1.27. "Group" shall mean any of the Common Stock Group, the Wireless
Group and the Liberty Group.

      1.28. "Hypothetical Common Stock/Wireless Affiliated Group" shall have
the meaning set forth in Section 3.2(a)(i) hereof.

      1.29. "Hypothetical Legal Entity" shall mean a hypothetical corporation,
partnership, limited liability company or other legal entity.

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      1.30. "Inconsistent Position" shall have the meaning set forth in
Section 11(b)(ii) hereof.

      1.31. "Independent Third Party" means a nationally recognized law firm
or any of the following accounting firms or their successors: Arthur Andersen
& Co.; Ernst & Young; KPMG Peat Marwick; Deloitte & Touche; and
PricewaterhouseCoopers.

      1.32. "Initial Determination" shall have the meaning set forth in
Section 9(e)(ii)(I).

      1.33. "Interested Party" shall mean AT&T or any other member of the Common
Stock Group or Wireless or any other member of the Wireless Group (including any
successor and/or assign of any of each of the foregoing), as the case may be, to
the extent (a) such person is not the Controlling Party with respect to a Tax
Proceeding; and (b) such person (i) may be liable for, or required to make, any
indemnity payment, reimbursement or other payment pursuant to the provisions of
this Agreement with respect to such Tax Proceeding; or (ii) may be entitled to
receive any indemnity payment, reimbursement or other payment pursuant to the
provisions of this Agreement with respect to such Tax Proceeding; provided,
however, that in no event shall a member of either the Common Stock Group or the
Wireless Group, as the case may be, be an Interested Party in a Tax Proceeding
in which another member of its Group is the Controlling Party with respect to
the Tax Proceeding. For the avoidance of doubt, (i) in no event shall a member
of the Common Stock Group be an Interested Party with respect to any Tax
Proceeding relating to the Wireless Group (or any member thereof) with respect
to a Post-Distribution Taxable Period and (ii) in no event shall a member of the
Wireless Group be an Interested Party with respect to any Tax Proceeding
relating to the Common Stock Group (or any member thereof) with respect to a
Post-Distribution Taxable Period.

      1.34. "Interested Party Notice" shall have the meaning set forth in
Section 9(d)(ii).

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      1.35. "Interests" shall have the meaning set forth in Section 3.2(e)(i)
hereof.

      1.36. "Issue Date" shall mean the date on which AT&T Wireless Group
Tracking Stock was initially issued.

      1.37. "Joint Return" shall mean any Tax Return that includes information
related to at least two Legal Entities, of which one Legal Entity is a member of
the Wireless Group and the other Legal Entity is a member of a different Group.

      1.38. "Legal Entity" shall mean a True Legal Entity or a Hypothetical
Legal Entity.

      1.39. "Liberty AMT Sharing Payment" shall have the meaning set forth in
Section 3.2(d)(ii) hereof.

      1.40. "Liberty Federal Tax Sharing Payment" shall have the meaning set
forth in Section 3.2(a)(ii) hereof.

      1.41. "Liberty Group" shall mean the Legal Entities that own or owned the
assets, and are or were primarily responsible for the liabilities, (a) tracked
(or to be tracked) by Liberty Media Group Tracking Stock or (b) otherwise
included (or to be included) in the Liberty Media Group (as defined in the AT&T
Charter) under the AT&T Charter, including any Legal Entity that owned such
assets and was primarily responsible for such liabilities on or prior to the
Issue Date.

      1.42. "Liberty Media Group Tracking Stock" shall have the meaning ascribed
to such term in the Proxy Statement.

      1.43. "Liberty State, Local or Foreign Tax Sharing Payment" shall have the
meaning set forth in Section 3.2(b)(ii) hereof.

      1.44. "Losses" shall mean costs, expenses, fees, liabilities,
obligations and losses.

      1.45. "Mixed Entity" shall have the meaning set forth in Section 2
hereof.

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      1.46. "Non-Income Taxes" shall mean all Taxes (as defined in Section 1.59
hereof) other than any Tax which is based upon, measured by, or calculated with
respect to (i) net income or profits (including, but not limited to, any capital
gains, gross receipts, value added or minimum Tax) or (ii) multiple bases
(including, but not limited to, corporate franchise, doing business or
occupation Taxes) if one or more of the bases upon which such Tax may be based,
by which it may be measured, or with respect to which it may be calculated is
described in clause (i) hereof. For the avoidance of doubt, Non-Income Taxes
shall include, but not be limited to, sales, use, real property gains, real or
personal property, transfer or similar Taxes.

      1.47. "Other Signatories" shall have the meaning set forth in the first
paragraph hereof.

      1.48. "Post-Distribution Taxable Period" shall mean a taxable period that,
to the extent it relates to a member of the Wireless Group, begins after the
Distribution Date and the portion beginning after the Distribution Date of any
taxable period that includes (but does not end) on such day.

      1.49. "Pre-Closing Taxable Period" for any Legal Entity shall mean any
taxable period that ends, with respect to such entity, on or prior to the Issue
Date.

      1.50. "Pre-Distribution Taxable Period" shall mean a taxable period that,
to the extent it relates to a member of the Wireless Group, ends after the Issue
Date and on or prior to the Distribution Date and the portion ending on the
Distribution Date of any taxable period that includes (but does not end) on such
day.

      1.51. "Proxy Statement" shall mean the Proxy Statement/Prospectus of
AT&T dated January 26, 2000.

      1.52. "R&E" shall have the meaning set forth in Section 3.2(c) hereof.

      1.53. "Separate Return" shall mean any Tax Return that is not a Joint
Return.

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      1.54. "Separation and Distribution Agreement" shall have the meaning
set forth in the recitals hereto.

      1.55. "Separation Transactions" shall have the meaning set forth in the
recitals hereto.

      1.56. "State and Local Income Tax Allocation Agreement" shall mean the
State and Local Income Tax Allocation Agreement dated as of the first day of the
combined return taxable year beginning January 1, 1995 by and among AT&T and
each of its subsidiaries.

      1.57. "State, Local or Foreign CNOL" shall have the meaning set forth
in Section 3.2(b)(ii) hereof.

      1.58. "Subsidiary" shall mean, with respect to any True Legal Entity, any
other True Legal Entity of which at least (i) 50% of the equity and (ii) 50% of
the voting interests are owned, directly or indirectly, by such first True Legal
Entity.

      1.59. "Tax" shall mean all forms of taxes, fees, imposts, levies or other
assessments whenever created or imposed, and whether of the United States or
elsewhere, and whether imposed by a local, municipal, governmental, state,
foreign, federation or other body (a "Governmental Authority"), and, without
limiting the generality of the foregoing, shall include income, gross receipts,
business and occupation, property, sales, use, license, excise, franchise,
capital stock, employment, payroll, unemployment insurance, social security,
stamp, environmental, value added, Telecom Pass Through Tax, alternative or
added minimum, ad valorem, trade, recording, withholding, occupation or transfer
tax, custom or duty or other like governmental assessment or charge of any kind
whatsoever, whether computed on a separate, consolidated, unitary, combined or
any other basis, together with any related interest, penalties and additions
imposed by any Governmental Authority.

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      1.60. "Tax Item" shall mean any item of income, gain, loss, deduction,
credit, recapture of credit or any other item which increases or decreases Taxes
(including Non-Income Taxes) paid or payable, including an adjustment under Code
Section 481 resulting from a change in accounting method.

      1.61. "Tax Proceeding" shall mean any Tax audit, examination, controversy
or litigation with or against any Governmental Authority.

      1.62. "Tax Return" shall mean any report, return or other information
(including any attached schedules or any amendments to such report, return or
other information) required to be supplied to or filed with a Governmental
Authority with respect to any Tax, including an information return, claim for
refund, amended return or declaration or estimated Tax return.

      1.63. "Telecom Pass Through Taxes" shall mean federal excise Taxes on
telecommunications services, and those state, local and municipal Taxes which
are passed through to end-user customers, including but not limited to gross
receipts taxes, 911 excise Taxes, utility user Taxes, sales and use Taxes,
street utility business charges, telephone device for deaf and hearing impaired
charges or Taxes and universal lifeline telephone service Taxes, or any other
Taxes or charges imposed by public utility commissions and other similar
governmental agencies.

      1.64. "Treasury Regulations" shall mean the Treasury Regulations
promulgated under the Code.

      1.65. "True Legal Entity" shall mean a corporation, partnership, limited
liability company or other entity under state or other applicable organizational
law, other than a disregarded entity (i.e., such term shall mean an entity under
state or other applicable

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organizational law other than an entity that is not treated as an entity
separate from its owner under Section 301.7701-3 of the Treasury Regulations).

      1.66. "Ultimate Determination" shall have the meaning set forth in
Section 9(e)(ii)(III) hereof.

      1.67.  "Wireless" shall have the meaning set forth in the first
paragraph hereof.

      1.68. "Wireless Group" shall mean the Legal Entities that own or owned the
assets, and are or were primarily responsible for the liabilities, (a) tracked
(or to be tracked) by the AT&T Wireless Tracking Stock or (b) otherwise included
(or to be included) in the Wireless Group (as defined in the AT&T Charter) under
the AT&T Charter, including any Legal Entity that owned such assets and was
primarily responsible for such liabilities on or prior to the Issue Date

      1.69. "Wireless Inconsistent Position" shall have the meaning set forth
in Section 11(b)(ii) hereof.

      1.70. "Wireless Indemnitee" shall mean each Legal Entity that is a member
of the Wireless Group and their respective directors, officers, employees,
affiliates, agents, successors and assigns.

      1.71. "Wireless Parties" shall have the meaning set forth in Section 10
hereof.

      1.72. "Wireless PCS" shall have the meaning set forth in the first
paragraph hereof.

      2. Treatment of Legal Entities That Would be Members of More Than One
Group. In the event that a True Legal Entity which is a member of the AT&T
Affiliated Group would otherwise be a member of both the Wireless Group and
another Group (a "Mixed Entity"), (a) each of the assets and liabilities of the
True Legal Entity tracked by AT&T Wireless Group Tracking Stock (and related Tax
attributes) shall be assigned to one Hypothetical Legal Entity, (b) each of the
assets and liabilities of the True Legal Entity tracked by Liberty Media Group

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Tracking Stock (and related Tax attributes) shall be assigned to a second
Hypothetical Legal Entity and (c) the remaining assets, liabilities and Tax
attributes shall be assigned to a third Hypothetical Legal Entity (such
Hypothetical Legal Entities being referred to herein as the Hypothetical Legal
Entities "Associated" with the Mixed Entity). Each Hypothetical Legal Entity
shall be treated as owning the assets, being primarily responsible for the
liabilities, and having the Tax attributes of, and the Tax and legal personality
comparable to those of, the Mixed Entity with which the Hypothetical Legal
Entity is Associated. The stock in a Hypothetical Legal Entity shall be treated
as represented by the stock in the Mixed Entity with which the Hypothetical
Legal Entity is Associated. In the event that an asset, liability or Tax
attribute cannot be Associated with the business or investments of a single
Group, it shall be reasonably allocated between the Hypothetical Legal Entities
taking into account the nature of the asset, liability or Tax attribute.

      3. Wireless Tax Sharing Payments.
            3.1. In General. In determining a party's liability and/or
obligation to make, or the right to receive, any indemnity payment,
reimbursement or other payment in respect of any Tax under this Agreement, any
taxable period or portion of a taxable period that includes the Distribution
Date shall be deemed to include and end on such Distribution Date, and no party
shall have any liability and/or obligation to make, or right to receive any
indemnity payment, reimbursement or other payment in respect of any Tax under
this Agreement with respect to any taxable period or portion of a taxable period
that begins or is deemed to begin after the Distribution Date.

      3.2.  Tax Sharing Payments with respect to Pre-Distribution Taxable
Periods.
            (a)   Federal Income Taxes (other than AMT).

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                  (i) If the hypothetical affiliated group consisting of the
Common Stock Group and the Wireless Group (the "Hypothetical Common
Stock/Wireless Affiliated Group") has consolidated federal taxable income for
such taxable period, then (I) if the Wireless Group has Allocated Taxable
Income, Wireless, as agent for the Wireless Group, shall pay AT&T the federal
income Tax on the Wireless Group's Allocated Taxable Income for the taxable
period and (II) if the Wireless Group has an Allocated Taxable Loss for the
taxable period, AT&T shall pay Wireless, as agent for the Wireless Group, the
amount by which the Hypothetical Common Stock/Wireless Affiliated Group's
federal income Taxes would be reduced for the taxable period by reason of the
Wireless Group's Allocated Taxable Loss.

                  (ii) If the Hypothetical Common Stock/Wireless Affiliated
Group has a consolidated NOL for federal income Tax purposes ("Federal CNOL")
for such taxable period, then (I) if the Common Stock Group and the Wireless
Group each have Allocated Taxable Losses, the federal income Tax refund or other
Tax benefit arising from the Federal CNOL (and any payment from Liberty Group in
respect of Liberty Group federal taxable income with respect to such taxable
period (a "Liberty Federal Tax Sharing Payment")) shall be shared between the
Common Stock Group and the Wireless Group in proportion to their respective
Allocated Taxable Losses for the taxable period, (II) if the Wireless Group has
an Allocated Taxable Loss and the Common Stock Group has Allocated Taxable
Income, then AT&T shall pay Wireless, as agent for the Wireless Group, the
amount by which the Hypothetical Common Stock/Wireless Affiliated Group's
federal income Taxes for the taxable period would be reduced by reason of the
Wireless Group's Allocated Taxable Loss and the federal income Tax refund or
other Tax benefit arising from the Federal CNOL and any Liberty Federal Tax
Sharing Payment shall be allocated to the Wireless Group and (III) if the
Wireless Group has Allocated Taxable Income

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and the Common Stock Group has an Allocated Taxable Loss, then Wireless, as
agent for the Wireless Group, shall pay AT&T the amount by which the
Hypothetical Common Stock/Wireless Affiliated Group's Taxes for the taxable
period would be reduced by reason of the Common Stock Group's Allocated Taxable
Loss and the Common Stock Group shall retain the federal income Tax refund or
other Tax benefit arising from the Federal CNOL (and any Liberty Federal Tax
Sharing Payment).

                  (iii) If Section 3.2(a)(ii)(I) applies, then AT&T shall first
carry back the Federal CNOL of the Hypothetical Common Stock/Wireless Affiliated
Group for the taxable period, to the extent permitted by applicable law, and
then shall carry forward such CNOL. Such carryback or carryforward, as the case
may be, shall be treated as applied (a) for each applicable taxable period in
proportion to the respective Allocated Taxable Losses of the Common Stock Group
and the Wireless Group for the taxable period of the Federal CNOL and (b)
beginning with the earliest taxable period permitted by applicable law. To the
extent AT&T obtains a Tax refund or other Tax benefit arising from such
carryback or carryforward (or a Liberty Federal Tax Sharing Payment), AT&T shall
compensate the Wireless Group for the Tax refund or other Tax benefit received
(and any Liberty Federal Tax Sharing Payment) in an amount which is
proportionate to the Wireless Group's Allocated Taxable Loss included in the
Federal CNOL so applied within ten (10) days of AT&T's receipt of such Tax
refund (or Liberty Federal Tax Sharing Payment) or within ten (10) days of
AT&T's filing the Tax return with respect to which it claims such other Tax
benefit. For the avoidance of doubt, if AT&T obtains no Tax refund or other Tax
benefit with respect to a Federal CNOL described in this paragraph (and no
Liberty Federal Tax Sharing Payment), AT&T shall make no payment to Wireless in
respect of the Wireless Group's Allocated Taxable Loss for the taxable period of
the CNOL.

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                  (b) Consolidated State, Local and Foreign Taxes. With respect
to a Joint Return for a state, local or foreign jurisdiction:

                  (i) If the Hypothetical Common Stock/Wireless Affiliated Group
has consolidated, combined or unitary taxable income in such jurisdiction for
such taxable period, then (I) if the Wireless Group has Allocated Taxable Income
for the taxable period, Wireless, as agent for the Wireless Group, shall pay
AT&T the Tax on the Wireless Group's Allocated Taxable Income for the taxable
period and (II) if the Wireless Group has an Allocated Taxable Loss for the
taxable period, AT&T shall pay Wireless, as agent for the Wireless Group, the
amount by which the Hypothetical Common Stock/Wireless Affiliated Group's Taxes
would be reduced for the taxable period by reason of the Wireless Group's
Allocated Taxable Loss.

                  (ii) If the Hypothetical Common Stock/Wireless Affiliated
Group has a consolidated, combined or unitary NOL in such jurisdiction ("State,
Local or Foreign CNOL") for such taxable period, then (I) if the Common Stock
Group and the Wireless Group each have Allocated Taxable Losses, the Tax refund
or other Tax benefit arising from the State, Local or Foreign CNOL (and any
payment from Liberty Group in respect of Liberty Group taxable income in such
jurisdiction calculated on a stand-alone basis with respect to such taxable
period (a "Liberty State, Local or Foreign Tax Sharing Payment")) shall be
shared between the Common Stock Group and the Wireless Group in proportion to
their respective Allocated Taxable Losses for the taxable period, (II) if the
Wireless Group has an Allocated Taxable Loss and the Common Stock Group has
Allocated Taxable Income, then AT&T shall pay Wireless, as agent for the
Wireless Group, the amount by which the Hypothetical Common Stock/Wireless
Affiliated Group's Taxes for the taxable period would be reduced by reason of
the Wireless Group's Allocated Taxable Loss and the Tax refund or other Tax
benefit arising from the State,

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Local or Foreign CNOL (and any Liberty State, Local or Foreign Tax Sharing
Payment) shall be allocated to the Wireless Group and (III) if the Wireless
Group has Allocated Taxable Income and the Common Stock Group has an Allocated
Taxable Loss, then Wireless, as agent for the Wireless Group, shall pay AT&T the
amount by which the Hypothetical Common Stock/Wireless Affiliated Group's Taxes
for the taxable period would be reduced by reason of the Common Stock Group's
Allocated Taxable Loss and the Common Stock Group shall retain the Tax refund or
other Tax benefit arising from the State, Local or Foreign CNOL (and any Liberty
State, Local or Foreign Tax Sharing Payment).

                  (iii) If Section 3.2(b)(ii)(I) applies, then AT&T shall first
carry back the State, Local or Foreign CNOL of the Hypothetical Common
Stock/Wireless Affiliated Group for the taxable period, to the extent permitted
by applicable law, and then shall carry forward such CNOL. Such carryback or
carryforward, as the case may be, shall be treated as applied (a) for each
applicable taxable period in proportion to the respective Allocated Taxable
Losses of the Common Stock Group and the Wireless Group for the taxable period
of the State, Local or Foreign CNOL and (b) beginning with the earliest taxable
period permitted by applicable law. To the extent AT&T obtains a Tax refund or
other Tax benefit arising from such carryback or carryforward (or a Liberty
State, Local or Foreign Tax Sharing Payment), AT&T shall compensate the Wireless
Group for the Tax refund or other Tax benefit received (and any Liberty State,
Local or Foreign Tax Sharing Payment) in an amount which is proportionate to the
Wireless Group's Allocated Taxable Loss included in the State, Local or Foreign
CNOL so applied within ten (10) days of AT&T's receipt of such Tax refund (or
Liberty State, Local or Foreign Tax Sharing Payment) or within ten (10) days of
AT&T's filing the Tax return with respect to which it claims such other Tax
benefit. If the Hypothetical Common Stock/Wireless

                                      -17-
<PAGE>   18
Affiliated Group has a State, Local or Foreign CNOL in a particular jurisdiction
for more than one taxable period, then the foregoing shall apply to each such
CNOL, beginning with the CNOL in the earliest such taxable period. For the
avoidance of doubt, if AT&T obtains no Tax refund or other Tax benefit with
respect to a State, Local or Foreign CNOL described in this paragraph (and no
Liberty State, Local or Foreign Tax Sharing Payment), AT&T shall make no payment
to Wireless in respect of the Wireless Group's Allocated Taxable Loss for the
taxable period of the CNOL.

                  (c) Consolidated Tax Credits. Except as set forth below with
respect to the research and experimentation ("R&E") Tax credit and except as set
forth in paragraph (d)(iii) hereof with respect to consolidated federal AMT
credits, Tax credits will be allocated to each of the Wireless Group and the
Common Stock Group contributing to the credit on a pro rata basis in an amount
equal to such Group's contribution to each consolidated Tax credit determined to
be available to the Hypothetical Common Stock/Wireless Affiliated Group for each
taxable period, except to the extent that the Code or Treasury Regulations
require a different allocation. The contribution of the Wireless Group and the
Common Stock Group to each consolidated Tax credit generally will be determined
without regard to the amount of Tax credit that would have been allowed if a
Separate Return had been filed. In the case of the R&E Tax credit, however, the
total available R&E Tax credit for a taxable period (determined without regard
to any carryovers and carrybacks of R&E tax credits from other taxable periods)
shall be allocated pro rata between the Common Stock Group and the Wireless
Group based on the amount of qualified research expenditures that each such
Group generates during such taxable period and without regard to whether (i)
such Group would have generated a R&E Tax credit on a Separate Return basis; and
(ii) such Group would have been able to utilize a R&E Tax credit on a Separate
Return

                                      -18-
<PAGE>   19
basis. Any Tax credit allocated to the Wireless Group or the Common Stock Group
under subparagraph (c) or subparagraph (d) hereof shall be taken into account in
determining the amount of any payment to be made by the Wireless Group or the
Common Stock Group under Section 3.2 or Section 3.3 hereof.

                  (d) Alternative Minimum Tax.

                  (i) If the Hypothetical Common Stock/Wireless Affiliated Group
has a consolidated federal AMT liability for such taxable period, then (I) if
the Wireless Group has Allocated Taxable Income for AMT purposes ("AMTI"),
Wireless, as agent for the Wireless Group, shall pay AT&T the AMT attributable
to the Wireless Group's AMTI for the taxable period and (II) if the Wireless
Group has an Allocated Taxable Loss for AMT purposes ("AMTL"), AT&T shall pay
Wireless, as agent for the Wireless Group, the amount by which the Hypothetical
Common Stock/Wireless Affiliated Group's AMT liability would be reduced for the
taxable period by reason of the Wireless Group's AMTL.

                  (ii) If the Hypothetical Common Stock/Wireless Affiliated
Group has an NOL for consolidated federal AMT purposes ("AMT NOL") for such
taxable period, then (I) if the Common Stock Group and the Wireless Group each
have AMTLs, the federal AMT refund or other Tax benefit arising from the
consolidated federal AMT NOL (and any payment from the Liberty Group in respect
of Liberty Group alternative minimum taxable income with respect to such taxable
period (a "Liberty AMT Sharing Payment")) shall be shared between the Common
Stock Group and the Wireless Group in proportion to their respective AMTLs for
the taxable period, (II) if the Wireless Group has an AMTL and the Common Stock
Group has AMTI, then AT&T shall pay Wireless, as agent for the Wireless Group,
the amount, if any, by which the Hypothetical Common Stock/Wireless Affiliated
Group's consolidated federal AMT for the

                                      -19-
<PAGE>   20
taxable period would be reduced by reason of the Wireless Group's AMTL and the
federal AMT refund or other Tax benefit arising from the AMT NOL and any Liberty
AMT Sharing Payment shall be allocated to the Wireless Group and (III) if the
Wireless Group has AMTI and the Common Stock Group has an AMTL, then Wireless,
as agent for the Wireless Group, shall pay AT&T the amount, if any, by which the
Hypothetical Common Stock/Wireless Affiliated Group's consolidated federal AMT
for the taxable period would be reduced by reason of the Common Stock Group's
AMTL and the Common Stock Group shall retain the AMT refund or other Tax benefit
arising from the AMT NOL (and any Liberty AMT Sharing Payment).

                  (iii) Any Tax benefit arising from a utilization by the
Hypothetical Common Stock/Wireless Affiliated Group of a consolidated federal
AMT credit shall be allocated to the Group which paid the AMT that generated
such AMT credit. The AMT credit will be treated as used on a "FIFO" basis.

                  (iv) The principles set forth in subparagraphs (i)-(iii) above
shall apply, mutatis mutandis, with respect to any Joint Return for a state,
local or foreign jurisdiction that imposes an AMT, unless otherwise agreed with
or mandated by a specific jurisdiction.

                  (e) Special Rules.

                  (i) Treatment of Certain Preferred Stock and Debt. The $3
billion of 9% cumulative preferred interests issued by AWG to AT&T, the $1.9
billion of AWG indebtedness held by the Common Stock Group and any preferred
stock resulting from a conversion of any portion of such indebtedness (such debt
and preferred, the "Interests") will, for federal, state and local income tax
purposes, be treated as intercompany debt instruments, each with an issue price
equal to its face amount. Notwithstanding the fact that Interests may be
disregarded for U.S. tax purposes, for all purposes of this Agreement (including
the calculation of gain or loss with

                                      -20-
<PAGE>   21
respect to such Interests), such Interests shall be considered assets of the
Common Stock Group and liabilities of the Wireless Group. For the avoidance of
doubt, dividend payments on the preferred stock and interest payments on the
debt will be treated as interest expense to the Wireless Group and interest
income to the Common Stock Group.

                  (ii) Final Adjustment of Intercompany Account; Final
Post-Distribution Tax-Sharing True-Ups. Prior to the Distribution Date, AT&T
shall adjust the intercompany account between AT&T and the Wireless Group to
reflect either party's liability for or right to receive (as the case may be)
any unpaid amount determined under this Agreement with respect to (a) any
taxable period ending on the Distribution Date (such determination to be based
on an accrual, consistent with past practice under Section 3.2 hereof, of the
federal and state income Tax on the Wireless Group's Allocated Taxable Income
(Loss) through the Distribution Date) and (b) any other Pre-Distribution Taxable
Period and any resulting balance in the intercompany account shall be paid. No
later than sixty (60) days after the date that the Tax Return of the AT&T
Affiliated Group that includes a Pre-Distribution Taxable Period is due
(including extensions), (I) AT&T shall determine the differences, if any,
between the taxable income or loss used to calculate any amounts described in
clause (a) of the preceding sentence and the Wireless Group's Allocated Taxable
Income (Loss) determined in connection with filing the consolidated federal
income Tax Return of the AT&T Affiliated Group that includes such
Pre-Distribution Taxable Period, and (II) final tax sharing true-up payments
shall be made by AT&T to the Wireless Group or by the Wireless Group to AT&T, as
the case may be, to reflect the amount of such differences. For the avoidance of
doubt, amounts payable or receivable hereunder shall not include or be impacted
by any amounts treated for financial reporting purposes (i.e., US GAAP and FAS
109) as a deemed equity transaction in order to reconcile the Wireless Group's
tax

                                      -21-
<PAGE>   22
liability to the stand alone tax provision reflected in the Wireless Group
separate company US GAAP financial statements.

                  (iii) Liability for Spin-Off Disqualification. Notwithstanding
anything in this Agreement to the contrary, Wireless' obligation to indemnify
AT&T for any "Tax-Related Losses" as a result of a "Spin-Off Disqualification"
(as those terms are defined in Section 7.2(b) and (d) of the Separation and
Distribution Agreement) shall be determined exclusively under the provisions of
the Separation and Distribution Agreement.

                  (iv) Employee Compensation. The allocation of Tax Items
related to employee compensation and employee benefits between the Common Stock
Group and the Wireless Group shall be determined exclusively under the
provisions of the Employee Benefits Agreement by and between the parties hereto
dated as of the date hereof.

                  (v) Certain Items for Wireless' Account. Any Tax Item
resulting from, arising out of, relating to, in the nature of or caused by any
asset or other interest tracked by the AT&T Wireless Group Tracking Stock shall
be for the account of the Wireless Group as provided hereunder. Without
limitation, and for the avoidance of any doubt, Tax Items arising out of or
relating to the following shall be part of the Allocated Taxable Income (Loss)
of the Wireless Group or, in the case of Non-Income Taxes, shall give rise to a
Non-Income Tax liability for the account of the Wireless Group: (A) the
transactions contemplated by that certain Agreement and Plan of Merger, dated as
of March 3, 2000, by and between AT&T, AT&T Wireless Acquisition I, Inc.,
Comcast Corporation and Comcast WCS Communications, Inc., or any other agreement
entered into in connection therewith, (B) the transactions contemplated by that
certain Investment Agreement, dated as of April 25, 1999, among British
Telecommunications plc, BT (Netherlands) Holdings B.V., AT&T and Japan Telecom
Co., Ltd.

                                      -22-
<PAGE>   23
and the ownership interest in Froghall B.V. arising as a result of that
transaction (limited, in the case of this clause (B) to 50 percent of any such
Tax, as the remainder of Froghall B.V. is an asset of the Common Stock Group),
(C) the treatment of AT&T Wireless Group Tracking Stock as anything other than
common stock of AT&T, (D) the actual or deemed disposition of the Wireless Group
or of the stock or assets of any Legal Entity which is a member of the Wireless
Group arising out of or relating to the issuance of AT&T Wireless Group Tracking
Stock, (E) any distribution of the stock of any company the assets of which are
tracked by the AT&T Wireless Group Tracking Stock or, notwithstanding any other
provision in this Agreement, any transaction undertaken in connection therewith,
(F) the attribution and/or transfer to the Wireless Group of all or a portion
of, as the case may be, AT&T's indirect interests in Binariang SDN BHD, Atlantic
West BV, PT Aria West International, MediaOne BPL JV, Japan Telecom Co., Ltd.,
AT&T BT Canada JV II, Birla Communications Ltd., and any other assets which are
attributed and/or transferred to the Wireless Group, and (G) any transfer of
assets (including interests in entities) or liabilities to Wireless or between
entities that are members of the Wireless Group in a Pre-Distribution Taxable
Period.

                  (vi) Certain Items for AT&T's Account. Any Tax Item resulting
from, arising out of, relating to, in the nature of or caused by any asset or
other interest which is not tracked by the AT&T Wireless Group Tracking Stock
shall be for the account of AT&T. Without limitation, and for the avoidance of
any doubt, Tax Items arising out of or relating to the following shall be part
of the Allocated Taxable Income (Loss) of the Common Stock Group or, in the case
of Non-Income Taxes, shall give rise to a Non-Income Tax liability for the
account of AT&T: (A) a transfer by the Wireless Group of the investment in
Phone.com, Inc., (B) a transfer

                                      -23-
<PAGE>   24
by the Wireless Group of the investment in Metromedia Fiber Network Inc., and
(C) a transfer by the Wireless Group of the investment in Metrocall, Inc.

                  (vii) Other Transactions. Except as otherwise provided in
(iii), (iv), (v) and (vi) hereof, in the case of any other transaction involving
the assets of the Wireless Group or the Common Stock Group, respectively,
undertaken to facilitate a transaction of the Common Stock Group or the Wireless
Group, respectively, AT&T and Wireless shall in good faith negotiate the
appropriate allocation of Tax Items arising in connection with such transaction.

                  (viii) For the avoidance of doubt, any AT&T Common Stock, AT&T
Wireless Tracking Stock or AT&T Liberty Media Group Stock that is outstanding
for Tax purposes and is an asset of the Common Stock Group, the Liberty Media
Group or the Wireless Group (each as defined in the AT&T Charter) under the AT&T
Charter shall be treated as an asset of, and held by a Legal Entity that is a
member of, the Common Stock Group, the Liberty Group or the Wireless Group,
respectively, for purposes of this Agreement.

         3.3. Wireless Tax Sharing Payments with respect to Pre-Closing Taxable
Periods. Except as set forth below, with respect to Pre-Closing Taxable Periods,
Wireless will be responsible for all Taxes attributable to the Wireless Group as
determined under the principles set forth in Section 3.2. The responsibility of
Wireless to pay AT&T for consolidated income Taxes attributable to the Wireless
Group, and AT&T's responsibility to pay Wireless for Tax benefits attributable
to the Wireless Group, will be considered to have been settled for Pre-Closing
Taxable Periods; provided, however, that the principles of this Agreement
(including, without limitation, Sections 3.2(a) and 3.2(b)) shall apply (A) to
the extent that the taxable income or loss used to calculate the consolidated
income Tax asset or liability accruals for Taxes currently payable set forth on
the financial statements of the Wireless Group differ from the

                                      -24-
<PAGE>   25
Wireless Group taxable income or loss reflected in the 1999 income Tax Return of
the AT&T Affiliated Group and (B) to the extent set forth in Section 5 hereof.

         3.4. Wireless Tax Sharing Payments with respect to Post-Distribution
Taxable Periods. With respect to Post-Distribution Taxable Periods, Wireless
will be responsible for all Taxes attributable to the Wireless Group.

         4. Time of Payment; Joint and Several Liability.

                  (a) The payments required pursuant to Section 3.2 or Section
3.3 shall be made on an estimated basis no later than the fifth day after the
date an estimated Tax payment is due (including extensions), and a true-up
payment shall be made no later than sixty (60) days after the date that the Tax
Return for the taxable period is due (including extensions).

                  (b) Every member of the Wireless Group shall be jointly and
severally liable for all obligations of any member of the Wireless Group arising
under this Agreement, and every member of the Common Stock Group shall be
jointly and severally liable for all obligations of any member of the Common
Stock Group arising under this Agreement.

         5. Adjustments.

                  (a) In the event of any redetermination of the consolidated
federal income Tax liability of the AT&T Affiliated Group for any taxable period
(or of a Tax liability with respect to any Joint Return for any taxable period)
as the result of an audit by the Internal Revenue Service (or the relevant
state, local or foreign Governmental Authority), a claim for refund or
otherwise, the Liberty Federal Tax Sharing Payment, the Liberty State, Local or
Foreign Tax Sharing Payment, and the Wireless Group's and Common Stock Group's
respective shares of the Hypothetical Common Stock/Wireless Affiliated Group's
Taxes, shall be recomputed for such taxable period and any prior and subsequent
taxable periods to take into account such

                                      -25-
<PAGE>   26
redetermination, and payments due pursuant to Section 3.2 or Section 3.3 hereof
shall be appropriately adjusted. Notwithstanding anything in this Section to the
contrary, in the event of a redetermination of an income Tax liability reflected
on a state or local combined, consolidated or unitary income or franchise Tax
Return that is a Joint Return for a Pre-Closing Taxable Period, including a
determination that any or all of the members of the Wireless Group or the Common
Stock Group are not entitled to file a Joint Return, such Group's respective
shares of the Hypothetical Common Stock/Wireless Affiliated Group's Taxes, shall
be recomputed under the provisions of the State and Local Income Tax Allocation
Agreement to take into account such redetermination, and payments pursuant to
such agreement shall be appropriately adjusted. For the avoidance of doubt, in
the event of a redetermination of an income Tax liability reflected on a state
or local combined, consolidated or unitary income or franchise Tax Return that
is a Joint Return for a taxable period other than a Pre-Closing Taxable Period
and that results from an adjustment to one or more apportionment factors
(whether arising from an adjustment to the factors of the Wireless Group, the
Common Stock Group or both groups), the liability of both the Common Stock Group
and the Wireless Group shall be recalculated using the revised apportionment
factors (property, payroll, sales), calculated on a consolidated basis.

                  (b) Any payment by AT&T or Wireless required by such
adjustment shall be paid within thirty (30) days after the date of a Final
Determination with respect to such redetermination or as soon as such adjustment
can practicably be calculated, if later.

                  (c) For all Tax purposes, except as otherwise mandated by
applicable law, the parties hereto agree to treat, and to cause their respective
affiliates to treat (i) any payment to a party required by this Agreement as
either a contribution by AT&T to Wireless or a distribution by Wireless to AT&T,
as the case may be, occurring immediately prior to the Distribution and

                                      -26-
<PAGE>   27
(ii) any payment of interest (or non-federal income Taxes) by or to the Internal
Revenue Service (or the relevant state, local or foreign Governmental Authority)
as taxable or deductible, as the case may be, to the party entitled under this
Agreement to retain such payment or required under this Agreement to make such
payment; provided, that in the event it is determined as a result of a Final
Determination that any such treatment described in clause (i) hereof is not
permissible, the payment in question shall be adjusted to place the parties in
the same after-tax position they would have enjoyed absent such Final
Determination.

         6. Separate Returns. Any Separate Return that includes only members of
the Wireless Group and any Taxes with respect to such Separate Return shall be
the responsibility of the Wireless Group, provided, however, that in the event
that the Wireless Group does not timely file such Separate Returns or pay the
Taxes due with respect thereto for any Pre-Distribution Taxable Period, Wireless
shall indemnify AT&T with respect to such Separate Return as provided in Section
8 and, notwithstanding any other provision hereof, AT&T shall be entitled to
file (or cause to be filed) such Separate Return in any manner it chooses in its
sole discretion. For the avoidance of doubt, Wireless shall be responsible for
(i) preparing and filing or causing to be prepared and filed all Tax Returns and
exemption certificates required to be filed by Wireless or any member of the
Wireless Group for any Post-Distribution Taxable Period and (ii) paying the Tax
liability due with respect to such Tax Returns. For the further avoidance of
doubt any liability or overpayment of Non-Income Taxes arising from an audit
conducted by a Governmental Authority with respect to the business activities of
the Wireless Group or the Common Stock Group, respectively, for any
Pre-Distribution Taxable Period, including any liability arising from the
failure to properly collect and remit Telecom Pass Through Taxes, shall be for
the account of the Wireless Group or the Common Stock Group, as the case may be.

                                      -27-
<PAGE>   28
         6A. Carrybacks and Apportionment of Tax Attributes.

             (a) Except to the extent otherwise consented to by AT&T or
prohibited by applicable law, the Wireless Group shall relinquish, waive or
otherwise forego all carrybacks of a Tax attribute (including, without
limitation, a net operating loss, a net capital loss or a Tax credit) by a
member of the Wireless Group from a Post-Distribution Taxable Period to a
Pre-Distribution Taxable Period; provided, however, that A&T will not
unreasonably withhold its consent to a carryback of a significant net operating
loss of the Wireless Group (provided further that the cost of any such carryback
be borne by the Wireless Group)..

             (b) AT&T shall provide to the Wireless Group (i) no later than 90
days prior to the due date for filing (including extensions) the federal income
Tax Return of the AT&T Affiliated Group for the taxable period that includes the
Distribution Date, a schedule setting forth an estimate of all federal, state,
or local consolidated or combined losses, credits and other Tax attributes
allocable to the Wireless Group for Post-Distribution Taxable Periods, and (ii)
no later than 90 days after filing the relevant federal income Tax Return, a
final copy of such schedule, after considering in good faith all comments of the
Wireless Group on the schedule provided pursuant to clause (i). The allocation
of Tax attributes set forth in such schedule shall be binding on the Wireless
Group and, except as otherwise required pursuant to a Final Determination,
neither Wireless nor any member of the Wireless Group shall take a position on
any Tax Return for a Post-Distribution Taxable Period that is inconsistent with
the information contained in such schedule. Wireless shall prepare or cause to
be prepared and file or cause to be filed all income Tax Returns for which it is
responsible under this Agreement so as to take into account, to the extent
permitted by applicable law, any Tax attribute apportioned to Wireless or any
member of the Wireless Group hereunder. Until such time as any such Tax
attribute has

                                      -28-
<PAGE>   29
been utilized by Wireless or any member of the Wireless Group, Wireless shall,
in connection with each income Tax Return filed by or on behalf of a member of
the Wireless Group, provide AT&T with a statement setting forth in reasonable
detail a calculation of the extent to which any such Tax attribute was utilized
on such income Tax Return.

         7. Interest on Unpaid Amounts. In the event that any party fails to pay
any amount owed to another party pursuant to this Agreement on the date when
due, interest shall accrue on any unpaid amount, from the due date until such
amounts are fully paid, at the Designated Rate in effect during that time.

         8.   Indemnification.

                  (a) From and after the Issue Date, each Legal Entity that is a
member of the Wireless Group shall indemnify and hold harmless each Common Stock
Indemnitee from and against (i) any Taxes with respect to a Pre-Distribution
Taxable Period which such member of the Wireless Group is required to pay to a
Governmental Authority (without any right of reimbursement from any Legal Entity
that is not a member of the Wireless Group) or in respect of which Wireless is
required to make a payment to AT&T and (ii) any Losses incurred by any Common
Stock Indemnitee by reason of a breach by any member of the Wireless Group of
its obligations or covenants hereunder.

                  (b) From and after the Issue Date, each Legal Entity that is a
member of the Common Stock Group shall indemnify and hold harmless each Wireless
Indemnitee from and against (i) any Taxes with respect to a Pre-Distribution
Taxable Period which such member of the Common Stock Group is required to pay to
a Governmental Authority (without any right of reimbursement from any Legal
Entity that is not a member of the Common Stock Group) or in respect of which
AT&T is required to make a payment to Wireless and (ii) any Losses incurred

                                      -29-
<PAGE>   30
by any Wireless Indemnitee by reason of a breach by any member of the Common
Stock Group of its obligations or covenants hereunder.

         9.   Tax Proceedings.

                  (a) Notification of Tax Proceedings. The Controlling Party
shall notify all Interested Parties within ten (10) business days of (i) the
commencement of any Tax Proceeding pursuant to which such Interested Parties may
be required to make or entitled to receive an indemnity payment, reimbursement
or other payment under this Agreement; and (ii) as required and specified in
Section 9(d) hereof, any Final Determination made with respect to any Tax
Proceeding pursuant to which such Interested Parties may be required to make or
entitled to receive any indemnity payment, reimbursement or other payment under
this Agreement. The failure of a Controlling Party to timely notify any
Interested Party as specified in the preceding sentence shall not relieve any
such Interested Party of any liability and/or obligation which it may have to
the Controlling Party under this Agreement except to the extent that the
Interested Party was prejudiced by such failure, and in no event shall such
failure relieve the Interested Party from any other liability or obligation
which it may have to such Controlling Party.

                  (b) Tax Proceeding Settlement Rights. The Controlling Party
shall have the sole right to contest, litigate, compromise and settle any
Adjustment that is made or proposed in a Tax Proceeding without obtaining the
prior consent of any Interested Party; provided, however, that unless waived by
the parties in writing, the Controlling Party shall, in connection with any
proposed or assessed Adjustment in a Tax Proceeding for which an Interested
Party may be required to make or entitled to receive an indemnity payment,
reimbursement or other payment under this Agreement (i) keep all such Interested
Parties informed in a timely manner of all actions taken or proposed to be taken
by the Controlling Party; and (ii) provide all such

                                      -30-
<PAGE>   31
Interested Parties with copies of any correspondence or filings submitted to any
Governmental Authority or judicial authority, in each case in connection with
any contest, litigation, compromise or settlement relating to any such
Adjustment in a Tax Proceeding. The failure of a Controlling Party to take any
action as specified in the preceding sentence with respect to an Interested
Party shall not relieve any such Interested Party of any liability and/or
obligation which it may have to the Controlling Party under this Agreement
except to the extent that the Interested Party was prejudiced by such failure,
and in no event shall such failure relieve the Interested Party from any other
liability or obligation which it may have to such Controlling Party. The
Controlling Party may, in its sole discretion, take into account any suggestions
made by an Interested Party with respect to any such contest, litigation,
compromise or settlement of any Adjustment in a Tax Proceeding and shall act in
good faith as if it were the only party in interest. All costs of any Tax
Proceeding are to be borne by the Controlling Party; provided, however, that (x)
any costs related to an Interested Party's attendance at any meeting with a
Governmental Authority or hearing or proceeding before any judicial authority
pursuant to Section 9(c) hereof, and (y) the costs of any legal or other
representatives retained by an Interested Party in connection with any Tax
Proceeding that is subject to the provisions of this Agreement, shall be borne
by such Interested Party.

                  (c) Tax Proceeding Participation. Unless waived by the parties
in writing, the Controlling Party shall provide an Interested Party with written
notice reasonably in advance of, and such Interested Party shall have the right
to attend, any formally scheduled meetings with Governmental Authorities or
hearings or proceedings before any judicial authorities in connection with any
contest, litigation, compromise or settlement of any proposed or assessed
Adjustment that is the subject of any Tax Proceeding pursuant to which such
Interested Party

                                      -31-
<PAGE>   32
may be required to make or entitled to receive an indemnity payment,
reimbursement or other payment under this Agreement. In addition, unless waived
by the parties in writing, the Controlling Party shall provide each such
Interested Party with draft copies of any correspondence or filings to be
submitted to any Governmental Authority or judicial authority with respect to
such Adjustments for such Interested Party's review and comment. The Controlling
Party shall provide such draft copies reasonably in advance of the date that
they are to be submitted to the Governmental Authority or judicial authority and
the Interested Party shall provide its comments, if any, with respect thereto
within in a reasonable time before such submission. The failure of a Controlling
Party to provide any notice, correspondence or filing as specified in this
Section 9(c) to an Interested Party shall not relieve any such Interested Party
of any liability and/or obligation which it may have to the Controlling Party
under this Agreement except to the extent that the Interested Party was
prejudiced by such failure, and in no event shall such failure relieve the
Interested Party from any other liability or obligation which it may have to
such Controlling Party.

                  (d) Tax Proceeding Waiver.

                  (i) The Controlling Party shall promptly provide written
notice, sent postage prepaid by United States mail, certified mail, return
receipt requested, to all Interested Parties in a Tax Proceeding (A) that a
Final Determination has been made with respect to such Tax Proceeding; and (B)
enumerating the amount of the Interested Party's share of each Adjustment
reflected in such Final Determination of the Tax Proceeding for which such
Interested Party may be required to make or entitled to receive an indemnity
payment, reimbursement or other payment under this Agreement.

                                      -32-
<PAGE>   33
                  (ii) Within ninety (90) days after an Interested Party
receives the notice described in Section 9(d)(i) hereof from the Controlling
Party, such Interested Party shall execute a written statement giving notice to
the Controlling Party (A) that the Interested Party agrees with each Adjustment
(and its share thereof) enumerated in the notice described in Section 9(d)(i)
hereof except with respect to those Adjustments (and/or its shares thereof)
that, in the good faith judgment of the Interested Party, it disagrees with and
has specifically enumerated its disagreement with, including the amount of such
disagreement, in the statement (each such disagreed Adjustment (and/or share
thereof) hereinafter referred to as a "Disputed Adjustment"); and (B) that the
Interested Party thereby waives its right to a determination by an Independent
Third Party pursuant to the provisions of Section 9(e) hereof with respect to
all Adjustments to which it agrees with its share (the "Interested Party
Notice"). The failure of an Interested Party to provide the Interested Party
Notice to the Controlling Party within the ninety (90) day period specified in
the preceding sentence shall be deemed to indicate that such Interested Party
agrees with its share of all Adjustments enumerated in the notice described in
Section 9(d)(i) hereof and that such Interested Party waives its right to a
determination by an Independent Third Party with respect to all such Adjustments
(and its shares thereof) pursuant to Section 9(e) hereof.

                  (iii) During the ninety (90) day period immediately following
the Controlling Party's receipt of the Interested Party Notice described in
Section 9(d)(ii) above, the Controlling Party and the Interested Party shall in
good faith confer with each other to resolve any disagreement over each Disputed
Adjustment that was specifically enumerated in such Interested Party Notice. At
the end of the ninety (90) day period specified in the preceding sentence,
unless otherwise extended in writing by the mutual consent of the parties, the
Interested Party shall be deemed to agree with all Disputed Adjustments that
were specifically enumerated in the

                                      -33-
<PAGE>   34
Interested Party Notice and waive its right to a determination by an Independent
Third Party pursuant to Section 9(e) hereof with respect to all such Disputed
Adjustments unless, and to the extent that, at any time during such ninety (90)
day (or extended) period, either the Controlling Party or the Interested Party
has given the other party written notice that it is seeking a determination by
an Independent Third Party pursuant to Section 9(e) hereof regarding the
propriety of any such Disputed Adjustment.

                  (e) Tax Proceeding Dispute Resolution.

                  (i) In the event that either a Controlling Party or an
Interested Party has given the other party written notice as required in Section
9(d)(iii) hereof that it is seeking a determination by an Independent Third
Party pursuant to this Section 9(e) with respect to any Disputed Adjustment that
was enumerated in an Interested Party Notice, then the parties shall, within ten
(10) days after a party has received such notice, jointly select an Independent
Third Party to make such determination. In the event that the parties cannot
jointly agree on an Independent Third Party to make such determination within
such ten (10) day period, then the Controlling Party and the Interested Party
shall each immediately select an Independent Third Party and the Independent
Third Parties so selected by the parties shall jointly select, within ten (10)
days of their selection, another Independent Third Party to make such
determination.

                  (ii) In making its determination as to the propriety of any
Disputed Adjustment, the Independent Third Party selected pursuant to Section
9(e)(i) above shall assume that the Interested Party is not required or entitled
under applicable law to be a member of any consolidated return. In addition, the
Independent Third Party shall make its determination according to the following
procedure:

                                      -34-
<PAGE>   35
                            (I) The Independent Third Party shall first analyze
each Disputed Adjustment for which a determination is sought pursuant to this
Section 9(e) on a stand alone basis to determine whether the actual outcome
reached with respect to such Disputed Adjustment as reflected in the Final
Determination of the Tax Proceeding was fair and appropriate taking into account
the following exclusive criteria: (A) the facts relating to such Adjustment; (B)
the applicable law, if any, with respect to such Adjustment; (C) the position of
the applicable Governmental Authority with respect to compromise, settlement or
litigation of such Adjustment; (D) the strength of the factual and legal
arguments made by the Controlling Party in reaching the outcome with respect to
such Adjustment as reflected in the Final Determination of the Tax Proceeding;
and (E) the strength of the factual and legal arguments being made by the
Interested Party for the alternative outcome being asserted by such Interested
Party (including the availability of facts, information and documentation to
support such alternative outcome). Based on this analysis, the Independent Third
Party shall determine what is the fair and appropriate outcome (hereinafter
referred to as the "Initial Determination") with respect to each such Disputed
Adjustment.

                           (II) The Interested Party shall not be entitled to
modification of its share of a Disputed Adjustment under this Section 9(e) if,
as the case may be, either (A) the amount that would be paid by the Interested
Party under the Initial Determination with respect to such Disputed Adjustment
is 80% or more than the amount that would be paid by the Interested Party with
respect to such Disputed Adjustment under the actual outcome reached with
respect to such Disputed Adjustment; or (B) the amount that would be received by
the Interested Party under the Initial Determination with respect to such
Disputed Adjustment is 120% or less than the amount that the Interested Party
would receive with respect to such Disputed Adjustment

                                      -35-
<PAGE>   36
under the actual outcome reached with respected to such Disputed Adjustment. The
Independent Third Party will provide notice to the Controlling Party and the
Interested Party in the event the Interested Party is not entitled to
modification of its share of the Disputed Adjustment pursuant to this paragraph
(II).

                           (III) If the modification of an Interested Party's
share of a Disputed Adjustment under this Section 9(e) is not prohibited
pursuant to paragraph (II) above, then the independent Third Party shall
determine what is the fair and appropriate outcome (hereinafter referred to as
the "Ultimate Determination") to the Interested Party with respect to such
Disputed Adjustment in the context of the entire Tax Proceeding as it relates to
the Interested Party. In making this determination, the Independent Third Party
shall consider the Disputed Adjustment as if it were raised in an independent
audit of the Interested Party by the appropriate Governmental Authority and the
Independent Third Party shall take into account and give appropriate weight in
its sole discretion to the following exclusive criteria: (A) the strength of the
legal and factual support for other potential, non-frivolous Adjustments with
respect to matters that were actually raised and contested by the applicable
Governmental Authority in the Tax Proceeding for which the Interested Party
could have been liable under this Agreement but which were eliminated or reduced
as a result of the Controlling Party agreeing to the Disputed Adjustment as
reflected in the Final Determination of the Tax Proceeding; (B) the effect of
the actual outcome reached with respect to the Disputed Adjustment on other
Taxable periods and on other positions taken or proposed to be taken in Returns
filed or proposed to be filed by the Interested Party; (C) the realistic
possibility of avoiding examination of potential, non-frivolous issues for which
the Interested Party could be liable under this Agreement and that were
contemporaneously identified in writings by the party or parties during the
course of the Tax

                                      -36-
<PAGE>   37
Proceeding but which had not been raised and contested by the applicable
Governmental Authority in the Tax Proceeding; and (D) the benefits to the
Interested Party in reaching a Final Determination, and the strategy and
rationale with respect to the Interested Party's Disputed Adjustment that the
Controlling Party had for agreeing to such Disputed Adjustment in reaching the
Final Determination, in each case that were contemporaneously identified in
writings by the party or parties during the course of the Tax Proceeding.

                           (IV) The Interested Party shall only be entitled to
modification of its share of a Disputed Adjustment under this Section 9(e) if,
as the case may be, either (A) the amount that would be paid by the Interested
Party under the Ultimate Determination with respect to such Disputed Adjustment
is less than 80% of the amount that would be paid by the Interested Party with
respect to such Disputed Adjustment under the actual outcome reached with
respect to such Disputed Adjustment; or (B) the amount that would be received by
the Interested Party under the Ultimate Determination with respect to such
Disputed Adjustment is more than 120% of the amount that the Interested Party
would receive with respect to such Disputed Adjustment under the actual outcome
reached with respect to such Disputed Adjustment. If an Interested Party is
entitled to modification of its share of any Disputed Adjustment under the
preceding sentence, the amount the Interested Party is entitled to receive, or
is required to pay, as the case may be, with respect to such Disputed Adjustment
shall be equal to the amount of the Ultimate Determination of such Disputed
Adjustment. The Independent Third Party will provide notice to the Controlling
Party and the Interested Party stating whether the Interested Party is entitled
to modification of its share of the Disputed Adjustment pursuant to this
paragraph (IV) and, if the Interested Party is entitled to such modification,
the amount as determined in the preceding

                                      -37-
<PAGE>   38
sentence that the Interested Party is entitled to receive from, or required to
pay to, the Controlling Party with respect to such Disputed Adjustment.

                  (iii) Any determination made or notice given by an Independent
Third Party pursuant to this Section 9(e) shall be (A) in writing; (B) made
within sixty (60) days following the selection of the Independent Third Party as
set forth in Section 9(e)(i) of this Agreement unless such period is otherwise
extended by the mutual consent of the parties; and (C) final and binding upon
the parties. The costs of any Independent Third Party retained pursuant to this
Section 9(e) shall be shared equally by the parties. The Controlling Party and
the Interested Party shall provide the Independent Third Party jointly selected
pursuant to Section 9(e)(i) hereof with such information or documentation as may
be appropriate or necessary in order for such Independent Third Party to make
the determination requested of it. Upon issuance of an Independent Third Party's
notice under Section 9(e)(ii)(II) or Section 9(e)(ii)(IV) hereof, the
Controlling Party or the Interested Party, as the case may be, shall pay as
specified in Section 5 of this Agreement, the amount, if any, of the Disputed
Adjustment to the appropriate party.

         10. Appointment of AT&T as Agent. Each of AWG, Wireless, Wireless PCS,
the Other Signatories, each of their respective Subsidiaries and any entities
which become parties hereto pursuant to Section 21 hereof (collectively, the
"Wireless Parties") hereby appoints AT&T (or its designee) as its agent for the
purpose of filing consolidated federal income Tax returns and for making any
election or application or taking any action in connection with any such return
on behalf of any of the Wireless Parties for any Pre-Distribution Taxable Period
consistent with the terms of this Agreement. Each of the Wireless Parties hereby
appoints AT&T (or its designee) as its agent for the purpose of filing any
combined, consolidated or unitary state, local or foreign Tax returns that
includes any Legal Entity that is a member of the Wireless Group, and for

                                      -38-
<PAGE>   39
making any election or application or taking any action in connection with any
such return on behalf of any of the Wireless Parties for any Pre-Distribution
Taxable Period consistent with the terms of this Agreement. Each of the Wireless
Parties hereby consents to the filing of such consolidated federal income Tax
returns and combined, consolidated or unitary state, local or foreign Tax
Returns, and to the making of such elections and applications. Each of the
Wireless Parties agrees that each of the Wireless Parties that is or becomes a
corporation for federal income Tax purposes shall be included in the filing of
consolidated federal income Tax Returns on behalf of the AT&T Affiliated Group
for each Pre-Distribution Taxable Period during which such Wireless Party is a
corporation for federal income Tax purposes.

         11.  Cooperation, Exchange of Information and Payment of Tax.

                  (a) Cooperation. The parties shall cooperate with one another
in all matters relating to Taxes.

                  (b) Exchange of Information.

                  (i) The Wireless Group shall, at its sole cost and expense,
provide AT&T with such cooperation and information as is necessary in order to
enable AT&T to satisfy its Tax, accounting and other legitimate requirements
with respect to Pre-Distribution Taxable Periods. Such cooperation and
information by the Wireless Group shall include making available its respective
knowledgeable employees during normal business hours, providing the information
required by AT&T's customary Tax and accounting practices, including
questionnaires (at the times and in the format required by AT&T or its
Subsidiaries), providing complete Tax Return work papers and supporting
documentation prepared in a manner that is reasonably consistent with AT&T's
past practice, maintaining such books and records and providing such information
as may be necessary or useful in the filing of Joint Returns and

                                      -39-
<PAGE>   40
Separate Returns, and executing any documents and taking any actions which AT&T
may reasonably request in connection therewith. With respect any
Pre-Distribution Taxable Period, the Wireless Group shall provide the
information required hereunder no later than 120 days after the Distribution
Date.

                  (ii) In the event the Wireless Group desires to take any
position on a Joint Return for a Pre-Distribution Taxable Period with respect to
a specific Tax Item that is directly inconsistent with a position taken on a
previously filed Tax Return of or which included a member of the Wireless Group
for a Pre-Distribution Taxable Period (an "Inconsistent Position") it shall
notify AT&T of that desire. If the Inconsistent Position solely relates to the
Wireless Group's line of business and is not relevant for the Common Stock Group
(a "Wireless Inconsistent Position"), the Wireless Group shall provide to AT&T,
at least (90) days prior to the due date (with extensions) of the relevant Joint
Return, information sufficient to establish that such Wireless Inconsistent
Position would have a likelihood of success under the law that is at least
33-1/3 percent (the "Reporting Standard"). Within thirty (30) business days of
receipt of such information, AT&T shall notify the Wireless Group in writing (a)
if such information is not reasonably satisfactory to AT&T or (b) if AT&T, in
its sole discretion, determines that the Wireless Inconsistent Position could
reasonably be expected to have an adverse effect on AT&T. The item will be
reported by AT&T in accordance with AT&T's past practice unless, within ten
business days of receipt of the written notice described in clause (a) of the
preceding sentence, the Wireless Group provides AT&T with an opinion of a
nationally recognized law firm confirming, in form and substance reasonably
satisfactory to AT&T, that the Wireless Inconsistent Position would meet the
Reporting Standard. Any expenses related to obtaining such an opinion shall be
borne by the Wireless Group. For the avoidance of doubt, if the

                                      -40-
<PAGE>   41
Wireless Group requests that AT&T take an Inconsistent Position (which is not a
Wireless Inconsistent Position) with respect to a Wireless Group item, AT&T may
determine in its sole discretion (and without regard to the procedures in this
subsection (ii)) whether to report any Wireless Group Tax Item which is an
Inconsistent Position (and not a Wireless Inconsistent Position) in accordance
with the request of the Wireless Group

                  (iii) In any Tax Return for a Post-Distribution Taxable
Period, the Wireless Group agrees to act in good faith in reporting its Tax
Items and not to claim any deduction, refund or credit which has been claimed
(or which in accordance with past practice will be claimed) on a Tax Return of
or which included a member of the Wireless Group for a Pre-Distribution Taxable
Period , except as required as a result of a Final Determination.

                  (iv) AT&T, at its election and expense, shall be permitted to
retain an Independent Third Party to review the information provided by the
Wireless Group pursuant to subsection (b)(i) or (b)(ii), as the case may be, for
completeness and accuracy, and to determine whether such information is
consistent with AT&T's past practice or, to the extent it relates to a Wireless
Inconsistent Position, sufficient to satisfy the Reporting Standard. The
Wireless Group shall cooperate fully with such third-party review and shall make
available any of the information described in subsection (b)(i) or (b)(ii), as
the case may be, as reasonably requested by AT&T or its representatives.

                  (v) AT&T shall provide Wireless, upon request, with copies of
relevant portions of relevant Joint Returns (or, at AT&T's discretion, pro
formas of such Joint Returns showing only Wireless Group Tax Items) filed by
AT&T that include any member of the Wireless Group promptly after such Joint
Returns are filed.

                                      -41-
<PAGE>   42
                  (c) Payment of Tax. For each Pre-Distribution Taxable Period,
AT&T shall (i) prepare and file, or cause to be prepared and filed and (ii)
timely pay or discharge, or cause to be timely paid or discharged, the
consolidated Federal income Tax liability of the AT&T Affiliated Group for such
taxable period and the combined state, local or foreign Tax liability shown on
any Joint Return that AT&T or any other member of the Common Stock Group elects
or is required to file.

         12. Resolution of Disputes. Except as otherwise expressly provided
herein, any dispute concerning the calculation or basis of determination of any
payment provided for hereunder, including payments under Section 15 hereof,
shall be resolved by an Independent Third Party selected in a manner similar to
the procedure set forth in Section 9(e) (i), whose judgment shall be conclusive
and binding upon the parties, in the absence of mathematical error.

         13. Binding Effect; Successors and Assigns. This Agreement shall be
binding upon AT&T and the Wireless Parties. This Agreement shall inure to the
benefit of, and be binding upon, any successors or assigns of the parties hereto
(including, without limitation, any Subsidiary that becomes a party hereto
pursuant to Section 21). AT&T, Wireless, and each other party hereto may assign
their right to receive payments under this Agreement but may not assign or
delegate their obligations hereunder.

         14. Interpretation. This Agreement is intended to calculate and
allocate certain Federal, state, local and foreign Tax liabilities of the
members of the AT&T Affiliated Group, the Common Stock Group, and the Wireless
Group, and any situation or circumstance concerning such calculation and
allocation that is not specifically contemplated hereby or provided for herein
shall be dealt with in a manner consistent with the underlying principles of
calculation and allocation in this Agreement.

                                      -42-
<PAGE>   43
         15. Legal and Accounting Fees. Except as otherwise provided in Section
11 hereof, any fees or expenses for legal, accounting or other professional
services rendered in connection with the preparation of a Joint Return or the
conduct of any Tax Proceeding shall be allocated between AT&T and Wireless in a
manner resulting in AT&T and Wireless, respectively, bearing a reasonable
approximation of the actual amount of such fees or expenses hereunder reasonably
related to, and for the benefit of, their respective Groups.

         16. Effect of the Agreement. This Agreement shall determine the
liability of AT&T, Wireless and the members of their respective Groups to each
other as to the matters provided for herein, whether or not such determination
is effective for purposes of the Code or of state, local or foreign Tax laws, or
for financial reporting purposes or for any other purposes.

         17.  Entire Agreement.

                  (a) This Agreement embodies the entire understanding among the
parties relating to its subject matter and supersedes and terminates any prior
agreements and understandings among the parties with respect to such subject
matter. Any and all prior correspondence, conversations and memoranda are merged
herein and shall be without effect hereon. No promises, covenants or
representations of any kind, other than those expressly stated herein, have been
made to induce either party to enter into this Agreement. This Agreement,
including this provision against oral modification, shall not be modified or
terminated except by a writing duly signed by each of the parties hereto, and no
waiver of any provisions of this Agreement shall be effective unless in a
writing duly signed by the party sought to be bound.

                  (b) Notwithstanding Section 17(a), (i) the State and Local
Income Tax Allocation Agreement shall remain fully in effect with respect to any
Adjustments under Section 5 of this Agreement that relates to a state or local
combined, consolidated or unitary income or franchise

                                      -43-
<PAGE>   44
Tax Return that is a Joint Return for any Pre-Closing Taxable Period, (ii) the
Federal Tax Allocation Agreement and the State and Local Income Tax Allocation
Agreement shall remain fully in effect with respect to all Legal Entities that
are members of the Common Stock Group, (iii) the Tax Sharing Agreement by and
among AT&T, Lucent Technologies Inc. and NCR Corporation dated as of February 1,
1996, shall remain fully in effect, (iv) the Tax Sharing Agreement between AT&T
and Liberty Media Corporation dated as of March 9, 1999, as amended, shall
remain fully in effect and (v) the Separation and Distribution Agreement shall
remain fully in effect.

         18. Code References. Any references to the Code or Treasury Regulations
shall be deemed to refer to the relevant provisions of any successor statute or
regulation and shall refer to such provisions as in effect from time to time.

         19. Notices. Any payment, notice or communication required or permitted
to be given under this Agreement shall be in writing (including telecopy
communication) and mailed, telecopied or delivered:

                  If to AT&T:

                  AT&T Corp.
                  295 North Maple Avenue
                  Basking Ridge, New Jersey 07920
                  Attention: Vice President--Law and Secretary

                  If to Wireless:

                  AT&T Wireless Services, Inc.
                  7277 164th Avenue NE
                  Redmond, Washington 98052
                  Attention: General Counsel

or to any other address as a AT&T or Wireless shall furnish in writing to one
another. All such notices and communications shall be effective when received.

                                      -44-
<PAGE>   45
         20. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.

         21. New Members. Each of the parties to this Agreement recognizes that
from time to time, new Subsidiaries of AT&T, AWG, Wireless, Wireless PCS or the
Other Signatories may be added to the Wireless Group. Each of the parties agrees
that any such new Subsidiary shall, without the express written consent of the
other parties, become a party to this Agreement for all purposes of this
Agreement with respect to taxable periods ending after such Subsidiary was added
to the Wireless Group, and, with respect to Separate Returns, prior taxable
periods.

         22. Nature of Obligations. Each of AT&T and Wireless acknowledges and
agrees that its respective obligations under this Agreement shall not be
affected by any impossibility, illegality, impracticability, frustration of
purpose, force majeure, act of government, bankruptcy or insolvency of any party
to this Agreement, failure or refusal of any party to this Agreement to perform
its obligations hereunder, dispute, setoff or counterclaim, change in amount,
composition or terms of the assets, liabilities or equity of AT&T or Wireless or
any other party to this Agreement, or any other defense or right which AT&T or
Wireless or any other party to this Agreement has or may have that might have
the effect of releasing AT&T or Wireless or any other party to this Agreement as
the case may be, from such obligations.

         23. Parent Restructuring. Wireless recognizes and agrees, for itself
and on behalf of the members of the Wireless Group, that the Parent Group (as
defined in the Separation and Distribution Agreement) contemplates a
Restructuring (as defined below) in a series of transactions. In connection with
the Restructuring or any part thereof, notwithstanding anything herein to the
contrary, Parent shall be entitled to assign all or any portion of its rights
and

                                      -45-
<PAGE>   46
obligations under this Agreement to any other entity resulting from the
Restructuring or any part thereof, provided however that, at the time of such
assignment, Parent reasonably determines that the assignee is operationally and
financially capable of performing the assigned obligations. In each case, the
applicable entity or entities will assume the related obligations set forth in
this Agreement. In the case of any of the foregoing, effective upon any such
assumption, and without any further action required by the parties hereto,
Parent and the applicable members of the Parent Group shall automatically be
fully released and discharged with respect to the assigned obligations. Parent
will give Wireless written notice of the terms of any assignment pursuant to
this Section at least 10 days prior to the effectiveness thereof. For purposes
hereof, the term "Restructuring" shall mean the various restructuring plans
announced by Parent on October 25, 2000 and thereafter, and any amendments,
modifications or adjustments thereto, whereby generally Parent would split-off
the AT&T Wireless Group from Parent; distribute all the stock it holds in
Liberty Media Corporation in exchange for all the outstanding shares of Liberty
Media Group Tracking Stock; fully separate, or issue separate tracking stocks
intended to reflect the financial performance and economic value of, each of
Parent's other major units: AT&T Broadband, AT&T Business Services and AT&T
Consumer Services; and engage in a number of related activities in connection
therewith, including any potential combinations with one or more third parties
involving any of the entities resulting from the foregoing (which third parties
shall be deemed entities resulting from the Restructuring for purposes hereof)
and including any of the deleveraging activities such as the disposition of
AT&T's ownership interests in various cable properties and investments. In the
event that either Parent or Wireless desires to make any other assignment of all
or any portion of its obligations (or the obligations of any member of its
Group) under this Agreement, neither party may do so without the consent of

                                      -46-
<PAGE>   47
the other, such consent not to be unreasonably withheld. In any such event,
effective upon any such assumption, and without any further action required by
the parties hereto, the applicable assignor and the applicable members of its
Group shall automatically be fully released and discharged with respect to the
assigned obligations.

         24. Termination. This Agreement shall terminate at such time as all
obligations and liabilities of the parties hereto have been satisfied. The
obligations and liabilities of the parties arising under this Agreement shall
continue in full force and effect until all such obligations have been met and
such liabilities have been paid in full, whether by expiration of time,
operation of law, or otherwise. The obligations and liabilities of each party
are made for the benefit of, and shall be enforceable by, the other parties and
their successors and permitted assigns.

                                      -47-
<PAGE>   48
                  IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed by its respective duly authorized officer as of the
date first set forth above.

                              AT&T CORP.

                              By: ____________________________________
                              Name:
                              Title:

                              AWG LLC

                              By: ____________________________________
                              Name:
                              Title:

                              AT&T WIRELESS SERVICES, INC.
                                on behalf of itself and each of its Subsidiaries

                              By:____________________________________
                              Name:
                              Title:

                              AT&T WIRELESS PCS, LLC
                               on behalf of itself and each of its Subsidiaries

                              By:____________________________________
                              Name:
                              Title:

                                      -48-
<PAGE>   49
                              AT&T CELLULAR SERVICES, INC.
                                on behalf of itself and each of its Subsidiaries

                              By: ____________________________________
                              Name:
                              Title:

                              AT&T WIRELESS ACQUISITIONS 1, INC.
                                on behalf of itself and each of its Subsidiaries

                              By:____________________________________
                              Name:
                              Title:

                              AT&T WIRELESS INTERESTS, INC.
                                on behalf of itself and each of its Subsidiaries

                              By:____________________________________
                              Name:
                              Title:

                              LOUISIANA MOBILE SYSTEMS, INC.
                                on behalf of itself and each of its Subsidiaries

                              By:____________________________________
                              Name:
                              Title:

                              MCCAW CELLULARCOMMUNICATIONS, INC.
                                on behalf of itself and each of its Subsidiaries

                              By:____________________________________
                              Name:
                              Title:

                              NEVADA COUNTY CELLULAR CORPORATION
                                on behalf of itself and each of its Subsidiaries

                              By:____________________________________
                              Name:
                              Title:

                              WINSTON, INC.
                                on behalf of itself and each of its Subsidiaries

                                      -49-
<PAGE>   50
                              By:____________________________________
                              Name:
                              Title:

                              AT&T WIRELESS ASSET MANAGEMENT, LLC
                                on behalf of itself and each of its Subsidiaries

                              By:____________________________________
                              Name:
                              Title:

                              AWS NATIONAL ACCOUNTS, LLC
                                on behalf of itself and each of its Subsidiaries

                              By:____________________________________
                              Name:
                              Title:

                                      -50-<PAGE>   1
                                                                    EXHIBIT 10.3

                           EMPLOYEE BENEFITS AGREEMENT

                                 BY AND BETWEEN

                                   AT&T CORP.

                                       AND

                          AT&T WIRELESS SERVICES, INC.

                                   DATED AS OF
                                  JUNE 7, 2001
<PAGE>   2
                                TABLE OF CONTENTS

ARTICLE I     DEFINITIONS....................................................  1
   1.1        Affiliate......................................................  1
   1.2        Agreement......................................................  1
   1.3        AT&T...........................................................  1
   1.4        AT&T Broadband Pension Plans...................................  2
   1.5        AT&T Closing Stock Value.......................................  2
   1.6        AT&T Common Stock..............................................  2
   1.8        AT&T Employee..................................................  2
   1.9        AT&T Entity....................................................  2
   1.10       AT&T Executive.................................................  2
   1.11       AT&T Executive Benefit Plans...................................  2
   1.12       AT&T Force Management Program..................................  2
   1.13       AT&T Long Term Incentive Plan..................................  2
   1.14       AT&TMPP........................................................  3
   1.15       AT&T Opening Stock Value.......................................  3
   1.16       AT&T Pension Plans.............................................  3
   1.17       AT&TPP.........................................................  3
   1.18       AT&T Savings Plan..............................................  3
   1.19       AT&T Toll Discount Program.....................................  3
   1.20       AT&T Transferees...............................................  3
   1.21       Auditing Party.................................................  3
   1.22       Award..........................................................  4
   1.23       AWE............................................................  4
   1.5        AT&T Closing Stock Value.......................................  4
   1.24       AWE Common Stock...............................................  4
   1.25       Close of the Disposition Date..................................  4
   1.26       COBRA..........................................................  4
   1.27       Code...........................................................  4
   1.28       Disposition Date...............................................  4
   1.29       Disposition Year...............................................  4
   1.30       Distribution Ratio.............................................  5
   1.31       EBLIP..........................................................  5
   1.32       Eligible Wireless Service......................................  5
   1.33       ERISA..........................................................  5
   1.34       Excluded Liability.............................................  5
   1.35       Health and Welfare Plans.......................................  5
   1.36       HIPAA..........................................................  5
   1.37       Immediately after the Disposition Date.........................  5
   1.39       Intrinsic Value................................................  6
   1.40       IRS............................................................  6
   1.41       Liabilities....................................................  6
   1.42       Non-parties....................................................  6
   1.43       NYSE...........................................................  6

                                      -i-
<PAGE>   3
   1.44       Option........................................................   6
   1.45       Participating Company.........................................   7
   1.46       Person........................................................   7
   1.47       Plan..........................................................   7
   1.48       Retirement-Related Benefit Plans..............................   7
   1.49       Separation and Disposition Agreement..........................   7
   1.50       Separation Transactions.......................................   7
   1.51       SMULIP........................................................   7
   1.52       Subsidiaries..................................................   8
   1.53       SVULIP........................................................   8
   1.54       Transferred Individual........................................   8
   1.55       Transition Period.............................................   8
   1.56       U.S...........................................................   8
   1.57       Wireless Common Stock.........................................   8
   1.58       Wireless Dividend.............................................   8
   1.59       Wireless Dividend Date........................................   8
   1.60       Wireless Exchange Date........................................   8
   1.61       Wireless 401(k) Plan..........................................   8
   1.63       Wireless Services.............................................   8
   1.62       Wireless Services Adjustment Plan.............................   8
   1.64       Wireless Services Entity......................................   8
   1.65       Wireless Severance Plan.......................................   8
   1.66       Wireless Stock Value..........................................   9

ARTICLE II    GENERAL PRINCIPLES............................................   9
   2.1        Wireless Services Assumption of Liabilities...................   9
   2.2        Wireless Services Participation in AT&T Plans.................   9
   2.3        Sponsorship of Wireless Services Plans........................   9
   2.4        Terms of Participation by AT&T Transferees in
              Wireless Services Plans.......................................  10
   2.5        Service Recognition...........................................  10
   2.6        Approval by AT&T as Sole Shareholder..........................  11

ARTICLE III   DEFINED CONTRIBUTION AND DEFINED BENEFIT PLANS................  11
   3.1        Wireless 401(k) Plan..........................................  11
              (a)   401(k) Plan Trust.......................................  11
              (b)   Assumption of Liabilities and Transfer of
                    Assets..................................................  11
   3.2        AT&T ESOP.....................................................  12
   3.3        AT&T Pension Plans............................................  12

ARTICLE IV    HEALTH AND WELFARE PLANS......................................  13
   4.1        Assumption of Health and Welfare Plan Liabilities.............  13
   4.2        Health and Welfare Plan Transitional Coverage Rules...........  14
   4.3        HCRA/CECRA Post-Disposition Transitional Rules................  15
              (a)   AT&T Health Care Reimbursement Account Plan.............  15
              (b)   AT&T Child/Elder Care Reimbursement Account
                    Plan....................................................  15
   4.4        Workers' Compensation Liabilities.............................  15

                                      -ii-
<PAGE>   4
   4.5        Payroll Taxes and Reporting of Compensation...................  16
   4.6        AT&T Retirement-Related Benefits..............................  16
   4.7        COBRA and HIPAA Compliance....................................  16
   4.8        Direct Pay Arrangements.......................................  17

ARTICLE V     EXECUTIVE BENEFITS AND OTHER BENEFITS.........................  17
   5.1        Individual Agreements - Assumption of Liabilities
              and Consents..................................................  17
   5.2        AT&T Short Term Incentive Plan and AT&T Bonus Plan
              Award.........................................................  18
   5.3        AT&T Long Term Incentive Plans................................  18
              (a)   AT&T Options............................................  18
              (b)   AWE Options.............................................  22
              (c)   Vesting and Exercisability of Options...................  23
              (d)   Restricted Stock and Restricted Stock Units.............  24
              (e)   Performance Shares and Stock Units......................  24
              (e)   Performance Shares and Stock Units......................  26
              (f)   Partial Interests in Shares or Stock Units..............  26
              (g)   Incentive Stock Options; Foreign Grants/Awards..........  26
   5.4        AT&T Employee Stock Purchase Plan.............................  27
   5.5        Savings Clause................................................  27
   5.6        Registration Requirements.....................................  27
              (a)   AT&T Non-Competition Guideline..........................  27
              (b)   Wireless Services Non-Competition Guideline.............  28
              (c)   Confidentiality and Proprietary Information.............  29
   5.9        AT&T Nonqualified Pension Plans and Arrangements..............  29
   5.10       Life Insurance Programs.......................................  29
              (a)   AT&T Senior Management Universal Life
                    Insurance Program.......................................  29
              (b)   AT&T Executive Basic Life Insurance Program.............  30
              (c)   AT&T Estate Enhancement Program.........................  30
              (d)   AT&T Supplemental Variable Universal Life
                    Insurance Program.......................................  30
   5.11       Financial Counseling..........................................  30
   5.12       Toll Discount Program.........................................  31
   5.13       Relocation Plan...............................................  31
   5.14       Senior Manager Car Allowances.................................  31
   5.15       Taxable Fringe Benefits.......................................  31

ARTICLE VI    GENERAL AND ADMINISTRATIVE....................................  32
   6.1        Payment of Liabilities........................................  32
   6.2        Sharing of Participant Information............................  32
   6.3        Non-Termination of Employment; No Third-Party
              Beneficiaries.................................................  32
   6.4        Audit Rights with Respect to Information Provided.............  33
   6.5        Fiduciary Matters.............................................  33
   6.6        Collective Bargaining.........................................  33
   6.7        Consent of Third Parties......................................  34

ARTICLE VII   MISCELLANEOUS.................................................  34

                                     -iii-
<PAGE>   5
   7.1        Effect If Disposition Does Not Occur..........................  34
   7.2        Relationship of Parties.......................................  34
   7.3        Affiliates....................................................  34
   7.4        Incorporation of Separation and Distribution
              Agreement Provisions..........................................  34
   7.5        Governing Law.................................................  34

SIGNATURES OF THE PARTIES...................................................  35

SCHEDULE 1.20 LIST OF AT&T TRANSFEREES......................................  36

SCHEDULE 2.3  WIRELESS SERVICES PLANS SPONSORED BY AT&T OR AN AT&T ENTITY...  37

SCHEDULE 5.3(a)   STOCK OPTION ADJUSTMENT ILLUSTRATION......................  39

SCHEDULE 5.3(e)   PERFORMANCE SHARE ADJUSTMENT ILLUSTRATION.................  40

SCHEDULE 5.9   INDIVIDUAL NONQUALIFIED PENSION ARRANGEMENTS.................  41

                                      -iv-
<PAGE>   6
                           EMPLOYEE BENEFITS AGREEMENT

      This EMPLOYEE BENEFITS AGREEMENT, dated as of June 7, 2001 (the "Effective
Date"), is by and between AT&T Corp., a New York corporation ("AT&T"), and AT&T
Wireless Services, Inc., a Delaware corporation and wholly owned subsidiary of
AT&T ("Wireless Services").

      Capitalized terms used herein (other than the formal names of AT&T Plans
and Wireless Services Plans and related trusts of AT&T and Wireless Services)
and not otherwise defined shall have the respective meanings assigned to them in
Article I hereof or as assigned to them in the Separation and Distribution
Agreement (as defined below).

      WHEREAS, the Board of Directors of AT&T has determined that it is in the
best interests of AT&T and its shareholders to separate Wireless Services from
AT&T's existing businesses and provide for it to be an independent business;

      WHEREAS, in furtherance of the foregoing, AT&T and Wireless Services have
entered into a Separation and Distribution Agreement, dated as of even date
hereof (the "Separation and Distribution Agreement"), and other specific
agreements that will govern certain matters relating to the Separation
Transactions (as defined in the Separation and Distribution Agreement) and the
relationship of AT&T, Wireless Services, and their respective Subsidiaries
following the Disposition Date; and

      WHEREAS, pursuant to the Separation and Distribution Agreement, AT&T and
Wireless Services have agreed to enter into this Agreement allocating assets,
Liabilities, and responsibilities with respect to certain employee compensation
and benefit plans and programs between and among them.

      NOW, THEREFORE, the parties, intending to be legally bound, agree as
follows:

                                    ARTICLE I
                                   DEFINITIONS

      For purposes of this Agreement the following terms shall have the
following meanings:

      1.1   AFFILIATE has the meaning given that term in the Separation and
Distribution Agreement.

      1.2   AGREEMENT means this Employee Benefits Agreement, including all the
Schedules hereto.

      1.3   AT&T is defined in the recitals to this Agreement.
<PAGE>   7
      1.4   AT&T BROADBAND PENSION PLANS means nonqualified and qualified
pension plans, including the MediaOne Group Pension Plan (renamed as the AT&T
Broadband Pension Plan effective January 1, 2001), in effect as of the time
relevant to the applicable provision of this Agreement.

      1.5   AT&T CLOSING STOCK VALUE means the closing per-share price of the
AT&T Common Stock as listed on the NYSE as of 4:00 P.M., Eastern Standard Time
or Eastern Daylight Time (whichever shall then be in effect) on the Wireless
Dividend Date; provided, however, that if the Wireless Dividend occurs at a time
when the NYSE is open for trading, AT&T Closing Stock Value shall mean the price
at which AT&T Common Stock last trades immediately before the Wireless Dividend;
provided further, that if the Wireless Dividend occurs prior to the first trade
of AT&T Common Stock on the Wireless Dividend Date, the AT&T Closing Stock Value
shall mean the price at which AT&T Common Stock last trades on the trading day
immediately preceding the Wireless Dividend Date.

      1.6   AT&T COMMON STOCK means common shares, par value of $1.00 per share,
of AT&T denoted as "Common Stock" in Part A, Article Third of the Certificate of
Incorporation of AT&T.

      1.7   AT&T EMPLOYEE means any individual who, as of the Close of the
Disposition Date, is either actively employed by or then on a leave of absence
from AT&T or an AT&T Entity, but does not include any Transferred Individual.

      1.8   AT&T ENTITY means any Person that is, at the time relevant to the
applicable provision of this Agreement, an Affiliate of AT&T, except that, for
periods beginning after the Disposition Date, the term "AT&T Entity" shall not
include Wireless Services or a Wireless Services Entity.

      1.9   AT&T EXECUTIVE means an employee or former employee, at salary grade
level "E" or above (or comparable positions) of AT&T, an AT&T Entity, Wireless
Services or a Wireless Services Entity, who immediately before the Close of the
Disposition Date is eligible to participate in or receive a benefit under any
AT&T Executive Benefit Plan.

      1.10  AT&T EXECUTIVE BENEFIT PLANS means the executive benefit and
nonqualified plans, programs, and arrangements (exclusive of Individual
Agreements) established and sponsored by AT&T, to the extent maintained, agreed
upon, or assumed by AT&T or an AT&T Entity (other than Wireless Services or a
Wireless Services Entity) for the benefit of employees and former employees of
AT&T or an AT&T Entity (other than Wireless Services or a Wireless Services
Entity) before the Close of the Disposition Date.

      1.11  AT&T FORCE MANAGEMENT PROGRAM means the AT&T Separation Plan, the
AT&T Senior Management Separation Plan, the AT&T Special Executive Separation
Plan, and the AT&T Senior Officer Separation Plan in effect as of the time
relevant to the applicable provision of this Agreement.

      1.12  AT&T LONG TERM INCENTIVE PLAN means any of the AT&T 1987 Long Term
Incentive Program, the AT&T 1997 Long Term Incentive Program, and such other
stock-based incentive plans assumed by AT&T by reason of merger, acquisition, or
otherwise, including

                                      -2-
<PAGE>   8
incentive plans of NCR Corporation, Teradata Corporation, Lin Broadcasting
Corporation, MediaOne Group Inc., McCaw Cellular Communications, Inc., Teleport
Communications Group, Inc., ACC Corp., and Tele-Communications Inc. and any
other incentive plan identified by AT&T before the Close of the Disposition
Date, all as in effect as of the time relevant to the applicable provisions of
this Agreement.

      1.13  AT&TMPP means the AT&T Management Pension Plan in effect as of the
time relevant to the applicable provision of this Agreement.

      1.14  AT&T OPENING STOCK VALUE means the opening per-share price of the
AT&T Common Stock as listed on the NYSE as of 9:30 A.M., Eastern Standard Time
or Eastern Daylight Time (whichever shall then be in effect) on the first
trading day after the Wireless Dividend Date; provided, however, that if the
Wireless Dividend occurs at a time when the NYSE is open for trading, AT&T
Opening Stock Value shall mean the price at which AT&T Common Stock first trades
immediately after the Wireless Dividend; provided further, that if the Wireless
Dividend occurs prior to the first trade of AT&T common Stock on the Wireless
Dividend Date, the AT&T Opening Stock Value shall mean the price at which AT&T
Common Stock first trades on the Wireless Dividend Date..

      1.15  AT&T PENSION PLANS means the AT&TMPP, the AT&TPP, the AT&T Excess
Benefit and Compensation Plan, and the AT&T Non-Qualified Pension Plan in effect
as of the time relevant to the applicable provision of this Agreement.

      1.16  AT&TPP means the AT&T Pension Plan in effect as of the time relevant
to the applicable provision of this Agreement.

      1.17  AT&T RABBI TRUST means the AT&T Corp. Benefits Protection Trust, as
amended from time to time.

      1.18  AT&T SAVINGS PLANS means the AT&T defined contribution plans, in
effect as of the time relevant to the applicable provision of this Agreement,
participating in the AT&T Savings Plan Group Trust, other than the Wireless
401(k) Plan.

      1.19  AT&T TOLL DISCOUNT PROGRAM means the AT&T Senior Manager Telephone
Discount Program and the AT&T Toll Discount Program in effect as of the time
relevant to the applicable provisions of this Agreement.

      1.20  AT&T TRANSFEREES means Transferred Individuals who, immediately
prior to the Close of the Disposition Date, performed services for Wireless
Services as employees of AT&T or an AT&T Entity (other than Wireless Services or
a Wireless Services Entity) and who became employees of Wireless Services or a
Wireless Services Entity in connection with the Separation Transactions, as
listed on Schedule 1.20 hereto, as such Schedule may be amended from time to
time by the mutual written consent of AT&T and Wireless Services.

      1.21  AUDITING PARTY is defined in Section 6.4(a).

                                      -3-
<PAGE>   9
      1.22  AWARD, when immediately preceded by "AT&T," means an award under the
AT&T Long Term Incentive Plan. When immediately preceded by "Wireless Services,"
Award means an award under the Wireless Services Adjustment Plan.

      1.23  AWE shall mean the "Wireless Group" as that term is defined in Part
C, Article Third, of the Certificate of Incorporation of AT&T.

      1.24  AWE CLOSING STOCK VALUE means the closing per-share price of the AWE
Common Stock as listed on the NYSE as of 4:00 P.M., Eastern Standard Time or
Eastern Daylight Time (whichever shall then be in effect) on the Wireless
Dividend Date; provided, however, that if the Wireless Dividend occurs at a time
when the NYSE is open for trading, AT&T Closing Stock Value shall mean the price
at which AT&T Common Stock last trades immediately before the Wireless Dividend.

      1.25  AWE COMMON STOCK means common shares, par value of $1.00 per share,
of AT&T denoted as "Wireless Group Common Stock" in Part A, Article Third, of
the Certificate of Incorporation of AT&T.

      1.26  CLOSE OF THE DISPOSITION DATE means 11:59:59 P.M., Eastern Standard
Time or Eastern Daylight Time (whichever shall then be in effect), on the
Disposition Date.

      1.27  COBRA means the continuation coverage requirements for "group health
plans" under Title X of the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended, and as codified in Code Section 4980B and ERISA Sections 601
through 608.

      1.28  CODE means the Internal Revenue Code of 1986, as amended, or any
successor federal income tax law. Reference to a specific Code provision also
includes any proposed, temporary, or final regulation in force under that
provision.

      1.29  DISPOSITION DATE means the last date as of which Wireless Services
is a member of AT&T's controlled group of corporations within the meaning of
Section 414 of the Code.

      1.30  DISPOSITION YEAR means the calendar year during which the
Disposition Date occurs.

      1.31  DISTRIBUTION shall have the meaning set forth in the Separation and
Distribution Agreement.

      1.32  DISTRIBUTION NUMBER shall be the denominator of the Wireless Group
Allocation Fraction (as defined in the Separation and Distribution Agreement,
defined below) as of the close of business on the Record Date (which for
purposes of clarification shall include shares of AWE Common Stock issuable upon
conversion of the AT&T Wireless Group Preferred Stock ("AWG Preferred Stock")
outstanding on the Record Date) minus the sum of (w) the number of shares of AWE
Common Stock outstanding on the Record Date, (x) 12,577,650, which represents
the number of shares of Wireless Common Stock reserved by Wireless for issuance
upon the exercise of certain outstanding options,(y) the number of Retained
Shares and (z) the number of shares of AWE Common Stock into which the shares of
AWG Preferred Stock outstanding on the Record Date are convertible.

                                      -4-
<PAGE>   10
      1.33  DISTRIBUTION RATIO means a fraction the numerator of which shall be
the Distribution Number and the denominator of which is the number of shares of
AT&T Common Stock outstanding at the close of business on the Record Date.

      1.34  EBLIP means the AT&T Executive Basic Life Insurance Program in
effect as of the time relevant to the applicable provisions of this Agreement.

      1.35  ELIGIBLE WIRELESS SERVICE means a Transferred Individual's service
with Wireless Services or a Wireless Services Entity after the Disposition Date,
as evidenced by the Wireless Services Entity's own internal records, to the
extent that such service, in AT&T's sole determination, would have been service
credited under the AT&TMPP as "Term of Employment" if the Transferred Individual
had been employed by a Participating Company in the AT&TMPP at the time of such
service.

      1.36  ERISA means the Employee Retirement Income Security Act of 1974, as
amended. Reference to a specific provision of ERISA also includes any proposed,
temporary, or final regulation in force under that provision.

      1.37  EXCLUDED LIABILITY has the meaning given that term in the Separation
and Distribution Agreement.

      1.38  HEALTH AND WELFARE PLANS, when immediately preceded by "AT&T," means
the health and welfare plans established and sponsored by AT&T, to the extent
maintained, agreed upon, or assumed by AT&T for the benefit of employees and
retirees of AT&T and certain AT&T Entities (other than Wireless Services or a
Wireless Services Entity), and such other health and welfare plans or programs
as may apply to such employees and retirees as of the Disposition Date. When
immediately preceded by "Wireless Services," Health and Welfare Plans means the
health and welfare plans sponsored and maintained by Wireless Services or a
Wireless Services Entity.

      1.39  HIPAA means the health insurance portability and accountability
requirements for "group health plans" under the Health Insurance Portability and
Accountability Act of 1996, as amended.

      1.40  IMMEDIATELY AFTER THE DISPOSITION DATE means 12:00 A.M., Eastern
Standard Time or Eastern Daylight Time (whichever shall then be in effect), on
the day after the Disposition Date.

                                      -5-
<PAGE>   11
      1.41  INDIVIDUAL AGREEMENT means an individual contract or agreement
(whether written or unwritten), other than an Individual Deferral Agreement as
defined below, entered into between AT&T, an AT&T Entity, Wireless Services, or
a Wireless Services Entity and an AT&T Executive that establishes the right of
such individual to special executive compensation or benefits, including a
supplemental pension benefit, deferred compensation, severance, hiring bonus,
loan, guaranteed payment, special allowance, tax equalization or disability
benefit, or a share units grant (payable in the form of cash or otherwise) under
individual phantom share agreements. An Individual Agreement does not include
any individual contract, application or agreement entered into or by AT&T or an
AT&T Entity and an AT&T Executive (or his or her assignee) that relates to the
provision of nonqualified pension benefits (calculated using the defined benefit
formula), eligibility for coverage under any Retirement-Related Benefit Plan, or
life insurance coverage for the AT&T Executive under the EBLIP, the SMULIP, the
SVULIP, or the AT&T Corp. Estate Enhancement Program (including the AT&T Corp.
Alternative Death Benefit Program and the AT&T Corp. Special Death Benefit
Program).

      1.42  INDIVIDUAL DEFERRAL AGREEMENT means an agreement entered into prior
to the Close of the Disposition Date by AT&T and an AT&T Transferee for the
deferral of compensation (other than a deferral election made by an AT&T
Transferee under the AT&T Deferral Plan) and with respect to which all events
have occurred and all conditions have been satisfied entitling such individual
to payment of such deferred compensation other than termination of employment or
the mere passage of time.

      1.43  INTRINSIC VALUE means, with respect to an Option, as defined below,
the result obtained by multiplying (a) times (b) where "(a)" equals the result
obtained by subtracting the exercise price per share of the Option from (i) the
AT&T Closing Stock Value or (ii) the AT&T Opening Stock Value or (iii) the
Wireless Stock Value, whichever is applicable, as specified in Section
5.3(a)(ii), and "(b)" equals the number of shares of stock subject to such
Option, as specified in Section 5.3(a)(ii). In cases where the exercise price
per share of an Option exceeds (i) the AT&T Closing Stock Value or (ii) the AT&T
Opening Stock Value or (iii) the Wireless Stock Value, whichever is applicable,
Intrinsic Value shall be a negative number.

      1.44  IRS means the Internal Revenue Service.

      1.45  LIABILITIES has the meaning given that term in the Separation and
Distribution Agreement.

      1.46  NON-PARTIES is defined in Section 6.4(b).

      1.47  NYSE means the New York Stock Exchange.

      1.48  OPTION, when immediately preceded by "AT&T," means an option (either
nonqualified or incentive) to purchase shares of AT&T Common Stock pursuant to
an AT&T Long Term Incentive Plan. When immediately preceded by "Wireless,"
Option means an option (either nonqualified or incentive) to purchase shares of
Wireless Common Stock pursuant to the Wireless Services Adjustment Plan. When
preceded by "AWE," Option means an option (either nonqualified or incentive) to
purchase shares of AWE Common Stock.

                                      -6-
<PAGE>   12
      1.49  PARTICIPATING COMPANY means (a) AT&T, (b) any Person (other than an
individual) that AT&T has approved for participation in, and which is
participating in, a Plan sponsored by AT&T or an AT&T Entity, and (c) any Person
(other than an individual) which, by the terms of such a Plan, participates in
such Plan or any employees of which, by the terms of such Plan, participate in
or are covered by such Plan.

      1.50  PERSON has the meaning given that term in the Separation and
Distribution Agreement.

      1.51  PLAN, when immediately preceded by "AT&T," means any plan, policy,
program, payroll practice, on-going arrangement, contract, trust, insurance
policy or other agreement or funding vehicle, to the extent amended from time to
time, for which the eligible classes of participants include employees or former
employees of AT&T or an AT&T Entity. When immediately preceded by "Wireless
Services," Plan means any plan, policy, program, payroll practice, on-going
arrangement, contract, trust, insurance policy or other agreement or funding
vehicle, to the extent amended from time to time, for which the eligible classes
of participants are limited to employees or former employees of Wireless
Services or a Wireless Services Entity, but no other AT&T Entity.

      1.52  RESTRUCTURING PLAN means AT&T's spin-off of its business and
consumer units pursuant to the plan of corporate restructuring approved in
principal by the AT&T Board of Directors on October 23, 2000.

      1.53  RETAINED SHARES means a number of shares of Wireless Common Stock
(rounded to the nearest share) equal to $3 billion divided by the closing share
price of the AWE Common Stock on The New York Stock Exchange on the record date
for determining holders of AT&T common stock entitled to receive the
Distribution (without giving effect to any extended-hours trading).

      1.54  RETIREMENT-RELATED BENEFIT PLANS means the AT&T Medical Expense Plan
for Retired Employees, the AT&T Dental Expense Plan for Retired Employees, the
AT&T Group Life Insurance Plan, the AT&T Supplementary Life Insurance Plan
(provided, that in the case of the life insurance plans, the applicable
Transferred Individual was enrolled for coverage as an active employee under the
corresponding active-employee life insurance plans at the time of his or her
termination of employment), the AT&T Toll Discount Program,. For purposes of
this Agreement, the EBLIP,, the SMULIP, the SVULIP, the AT&T Corp. Estate
Enhancement Program (including the AT&T Corp. Alternative Death Benefit Program
and the AT&T Corp. Special Death Benefit Program), and any other plans,
programs, or arrangements not expressly identified in this Section 1.48 shall
not be considered Retirement-Related Benefit Plans.

      1.55  SEPARATION AND DISTRIBUTION AGREEMENT is defined in the recitals to
this Agreement.

      1.56  SEPARATION TRANSACTIONS has the meaning given that term in the
Separation and Distribution Agreement.

      1.57  SMULIP means the AT&T Senior Management Universal Life Insurance
Program in effect as of the time relevant to the applicable provisions of this
Agreement.

                                      -7-
<PAGE>   13
      1.58  SUBSIDIARIES has the meaning given that term in the Separation and
Distribution Agreement.

      1.59  SVULIP means the AT&T Supplemental Variable Universal Life Insurance
Program in effect as of the time relevant to the applicable provisions of this
Agreement.

      1.60  TRANSFERRED INDIVIDUAL means any individual who, as of the Close of
the Disposition Date, is either (a) then actively employed by, or then on a
leave of absence from, Wireless Services or a Wireless Services Entity, or (b)
is designated by mutual written agreement of AT&T and Wireless Services as a
Transferred Individual. Nothing contained in this Agreement shall permit any
non-employee of AT&T, Wireless Services, an AT&T Entity, or a Wireless Services
Entity to participate, at any time, in any AT&T Plan or Wireless Services Plan.

      1.61  TRANSFER REQUEST means a written request made by Wireless Services
to AT&T pursuant to Section 5.8(d) for the transfer from AT&T to Wireless
Services of certain Liabilities under the AT&T Deferral Plan relating to AT&T
Deferral Plan Participants.

      1.62  TRANSITION PERIOD has the meaning set forth in Section 2.5.

      1.63  U.S. means the 50 United States and the District of Columbia.

      1.64  WIRELESS COMMON STOCK has the meaning given that term in the
Separation and Distribution Agreement.

      1.65  WIRELESS DIVIDEND shall mean the distribution by AT&T of Wireless
Common Stock to AT&T shareholders with respect to their AT&T Common Stock in
consummation of the split-off of Wireless Services described in the Separation
and Distribution Agreement.

      1.66  WIRELESS DIVIDEND DATE means the date on which the Wireless Common
Stock held by AT&T is distributed to AT&T shareholders with respect to their
AT&T Common Stock.

      1.67  WIRELESS EXCHANGE DATE means the date on which AWE Common Stock is
redeemed in exchange for Wireless Common Stock.

      1.68  WIRELESS 401(K) PLAN means the AT&T Wireless Services 401(k)
Retirement Plan.

      1.69  WIRELESS SERVICES is defined in the recitals to this Agreement.

      1.70  WIRELESS SERVICES ADJUSTMENT PLAN means the long term incentive plan
or program to be established by Wireless Services, effective immediately prior
to the Wireless Dividend Date, in connection with the treatment of Options as
described in Article V.

      1.71  WIRELESS SERVICES ENTITY means Wireless Services and any Person that
is, at the relevant time, a Subsidiary of Wireless Services or is otherwise
controlled, directly or indirectly, by Wireless Services.

      1.72  WIRELESS SEVERANCE PLAN means the AT&T Wireless Services Severance
Pay Plan.

                                      -8-
<PAGE>   14
      1.73  WIRELESS STOCK VALUE means the opening per-share price of Wireless
Common Stock as listed on the NYSE as of 9:30 A.M., Eastern Standard Time or
Eastern Daylight Time (whichever shall then be in effect) on the first trading
day after the Wireless Dividend Date; provided, however, that if the Wireless
Dividend occurs at a time when the NYSE is open for trading, WIRELESS STOCK
VALUE shall mean the price at which Wireless Common Stock trades as of the
moment after the Wireless Dividend; provided further, that if the Wireless
Dividend occurs prior to the first trade of Wireless Common Stock on the
Wireless Dividend Date, the Wireless Stock Value shall mean the price at which
Wireless Common Stock first trades on the Wireless Dividend Date..

                                   ARTICLE II
                               GENERAL PRINCIPLES

      2.1   ASSUMPTION AND RETENTION OF LIABILITIES. Wireless Services hereby
assumes and agrees to pay, perform, fulfill, and discharge, except as expressly
provided in this Agreement, (i) all Liabilities under Wireless Services Plans,
(ii) all employment-related liabilities with respect to all Transferred
Individuals other than AT&T Transferees, and other employees or former employees
of Wireless Services or a Wireless Services Entity (including any individual who
is, or was, an independent contractor, temporary employee, temporary service
worker, consultant, freelancer, agency employee, leased employee, on-call
worker, incidental worker, or nonpayroll worker of Wireless Services or a
Wireless Services Entity or in any other employment, non-employment, or retainer
arrangement, or relationship with Wireless Services or a Wireless Services
Entity), and their dependents and beneficiaries, for periods from and after the
date such individuals became employees of, or performed services for Wireless
Services or a Wireless Services Entity, as the case may be, (iii) all
employment-related liabilities with respect to all AT&T Transferees for periods
of service with Wireless Services or a Wireless Services Entity after the
Disposition Date and (iv) any AT&T Liabilities expressly transferred to Wireless
Services or a Wireless Services Entity under this Agreement. AT&T shall retain
Liabilities to or relating to Transferred Individuals, and their dependents and
beneficiaries, arising out of or resulting from employment by AT&T or an AT&T
Entity for periods on or before the Disposition Date (including without
limitation such Liabilities remaining under AT&T Plans) or that are expressly
retained by AT&T in this Agreement or any other written agreement between
Wireless Services and AT&T. Notwithstanding the foregoing, Wireless Services
shall not, by virtue of any provision of this Agreement or the Separation and
Distribution Agreement, be deemed to have assumed any Excluded Liability.

      2.2   WIRELESS SERVICES PARTICIPATION IN AT&T PLANS. Effective as of the
Close of the Disposition Date, Wireless Services and each Wireless Services
Entity shall cease to be a Participating Company in any AT&T Plan, and AT&T and
Wireless Services and each Wireless Services Entity shall take all necessary
action before the Disposition Date to effectuate such cessation as a
Participating Company.

      2.3   SPONSORSHIP OF WIRELESS SERVICES PLANS. Effective no later than
Immediately after the Disposition Date, Wireless Services shall assume, or shall
cause a Wireless Services Entity to

                                      -9-
<PAGE>   15
assume, sponsorship of (a) the Wireless 401(k) Plan, and (b) each other Wireless
Services Plan sponsored by AT&T or an AT&T Entity that is identified in Schedule
"2.3" hereto.

      2.4   SEVERANCE BENEFITS. Effective no later than Immediately after the
Disposition Date, Wireless Services shall provide to AT&T Transferees who become
eligible to receive severance benefits under the Wireless Severance Plan at any
time prior to the first anniversary of the Disposition Date, severance payments
in an amount not less than the greater of (i) the severance payment amounts that
such AT&T Transferees would have received under the AT&T Force Management
Program or (ii) the severance payment amounts otherwise payable to AT&T
Transferees under the Wireless Services severance plan. The determination of
severance benefits under either the AT&T Force Management Program or the
Wireless Severance Plan shall take into account prior AT&T service and Eligible
Wireless Services service. Effective Immediately after the Disposition Date,
Wireless Services agrees to enter into 'change in control' agreements with AT&T
Transferees who are also AT&T Executives and to amend Wireless Services Plans,
as appropriate, to provide change in control benefits to AT&T Transferees in the
event of a change in control of Wireless after (but not as a result of) the
Wireless Dividend which are substantially similar in the aggregate and in form
to the benefits they would have received from AT&T or an AT&T Entity if a change
in control of AT&T or severance had occurred immediately prior to the
Disposition Date.

      2.5   TERMS OF PARTICIPATION BY TRANSFERRED INDIVIDUALS IN WIRELESS
SERVICES PLANS. AT&T and Wireless Services shall adopt, or cause to be adopted,
all reasonable and necessary Plan amendments and procedures to prevent
Transferred Individuals from receiving duplicative benefits from the AT&T Plans
and the Wireless Services Plans. In particular, only compensation paid by a
Wireless Services Entity to a Transferred Individual shall be taken into account
in determining allocations of profit sharing contributions under the Wireless
401(k) Plan. With respect to Transferred Individuals, each Wireless Services
Plan shall provide that all service, all compensation, and all other
benefit-affecting determinations that, as of the Close of the Disposition Date,
were recognized under the corresponding AT&T Plan shall, as of Immediately after
the Disposition Date, receive full recognition, credit, and validity and be
taken into account under such Wireless Services Plan, except to the extent that
duplication of benefits would result.

      2.6   SERVICE RECOGNITION. AT&T and Wireless Services and their respective
Subsidiaries shall (i) mutually credit service recognized by the other under the
terms of their respective benefit plans and programs where appropriate (but not
for purposes of benefit accruals under any pension plan), (ii) transfer of
accounts between the AT&T Savings Plans and the Wireless 401(k) Plan, and (iii)
provide coverage and benefits relating to health and welfare plans in a manner
consistent with the provisions of Sections 4.1, 4.2, 4.3 and 4.5, with respect
to individuals who cease employment with AT&T or an AT&T Entity and who
immediately become employees of Wireless Services or a Wireless Services Entity
and Transferred Individuals who cease employment with Wireless Services or a
Wireless Services Entity and who immediately become employees of AT&T or an AT&T
Entity, in each case within a period not to exceed nine months in duration after
the Disposition Date (the "Transition Period") The service crediting described
above shall be subject to any applicable "service bridging" or "break in
service" rules under the AT&T Plans and the Wireless Services Plans.

                                      -10-
<PAGE>   16
      2.7   APPROVAL BY AT&T AS SOLE SHAREHOLDER. Prior to the Wireless Exchange
Date, AT&T shall cause Wireless Services to adopt the Wireless Services
Adjustment Plan and the AT&T Wireless Services, Inc. 2001 Long Term Incentive
Plan, which shall have terms and conditions that are substantially similar to
the AT&T 1997 Long Term Incentive Plan, and the Wireless Services Employee Stock
Purchase Plan which plans shall be approved prior to the Wireless Exchange Date
by AT&T as Wireless Services' sole shareholder. If Wireless Services adopts any
other Wireless Services Plan, one or more benefit plans for non-employee
directors of Wireless Services, or "change in control" compensation and benefit
provisions, or enters into or assumes any employment agreements with executives
of Wireless Services or a Wireless Services Entity, while Wireless Services or
the Wireless Services Entity is a wholly owned subsidiary of AT&T, and the plan,
plans, provisions, or agreements are reasonably acceptable to AT&T, and the
parties mutually agree that shareholder approval is legally required or
advisable, then AT&T shall cooperate in obtaining such shareholder approval
before the Disposition Date of any such Wireless Services Plan, non-employee
director plan, "change in control" provision, or employment agreement.

      2.8   EMPLOYMENT OF AT&T TRANSFEREES. Immediately prior to the Wireless
Dividend, all AT&T Transferees shall be deemed to have terminated their
employment with AT&T or an AT&T Entity and shall be deemed to be employees of
Wireless Services or a Wireless Services Entity.

                                   ARTICLE III
                 DEFINED CONTRIBUTION AND DEFINED BENEFIT PLANS

      3.1   WIRELESS 401(K) PLAN.

            (a)   401(K) PLAN TRUST. Effective Immediately after the Disposition
Date, the trust established and forming part of the Wireless 401(k) Plan shall
cease to be a participating trust in the AT&T Savings Plan Group Trust. AT&T and
Wireless Services shall adopt or cause to be adopted any amendments to any trust
agreements or plan documents reasonably necessary to transfer settlor
responsibility and control of such trust from AT&T to Wireless Services.

            (b)   ASSUMPTION OF LIABILITIES AND TRANSFER OF ASSETS. AT&T and
Wireless Services shall adopt, or cause to be adopted, all reasonable and
necessary Plan amendments and procedures by which each Transferred Individual
who has an account under the AT&T Savings Plans may make a one-time election to
have such account transferred to the Wireless 401(k) Plan as soon as practicable
after April 15 of the year following the Disposition Year or such earlier date
as AT&T and Wireless Services shall mutually determine, or to have such account
remain in the AT&T Savings Plans until the Transferred Individual receives a
distribution from the AT&T Savings Plans in accordance with the terms of the
AT&T Savings Plans and applicable law; provided, however, that such transfer
shall not occur if AT&T, Wireless Services or any other AT&T or Wireless
Services savings plan fiduciary reasonably believes that the transfer could
result in the failure of any AT&T Savings Plan or the Wireless 401(k) Plan to
qualify under Code Section 401(a). As of the Close of the Disposition Date, all
account balances of Transferred Individuals in the AT&T Savings Plans shall be
immediately vested. AT&T agrees to provide to Wireless Services, as soon as
practicable after the Disposition Date, a list of the Transferred Individuals
who were participants in or are otherwise entitled to benefits under the

                                      -11-
<PAGE>   17
AT&T Savings Plan, including descriptions of their respective account balances
and the protected benefits (within the meaning of Section 411(d)(6) of the Code)
attached to their accounts. Except as otherwise specifically provided above
regarding plan qualification. As soon as practicable after April 15 of the year
following the Disposition Year: (i) AT&T shall cause the accounts (including any
outstanding loan balances) of the Transferred Individuals who elect a transfer
under the AT&T Savings Plans to be transferred to the Wireless 401(k) Plan and
its related trust in cash or such other assets as mutually agreed by AT&T and
Wireless Services; (ii) Wireless Services (or any successor Wireless Services
Entity) and the Wireless 401(k) Plan shall assume and be solely responsible for
all Liabilities under each of the AT&T Savings Plans to or relating to
Transferred Individuals who elect a transfer of their accounts (to the extent
assets related to those accounts are transferred from the AT&T Savings Plans);
and (iii) Wireless Services shall cause such transferred accounts to be accepted
by the Wireless 401(k) Plan and its related trust and shall cause the Wireless
401(k) Plan to satisfy all protected benefit requirements under the Code and
applicable law with respect to the transferred accounts. In determining whether
a Transferred Individual is vested in his or her account under the Wireless
401(k) Plan, the Wireless 401(k) Plan shall credit each Transferred Individual
with all the Transferred Individual's service credited under the AT&T Savings
Plan, whether or not the Transferred Individual elects a transfer of his or her
accounts under the AT&T Savings Plans to the Wireless 401(k) Plan. AT&T shall
make a one-time payment directly to the Transferred Individuals, in the year
following the Disposition Year, of the amount of "lost savings plan matching
contributions," if any, to which they would have been entitled under existing
AT&T practices with respect to compensation earned on or before the Disposition
Date that is in excess of the annual limits imposed by Code Section 401(a)(17).
As soon as practicable following the Disposition Date, AT&T shall contribute to
the AT&T Savings Plans all matching contributions, if any, due to the
Transferred Individuals pursuant to the terms and conditions of such Plans.

      3.2   AT&T ESOP. Effective Immediately after the Disposition Date, and
thereafter, Transferred Individuals shall be entitled to receive a distribution
of their accounts under the AT&T Employee Stock Ownership Plan in accordance
with the terms of such plan as they may be amended from time to time.

      3.3   AT&T PENSION PLANS. Effective as of the Close of the Disposition
Date, the AT&T Pension Plans shall be amended to provide that:

            (a)   each Transferred Individual who is a participant in the
AT&TMPP or the AT&TPP shall be vested, as of after the Close of the Disposition
Date, in his or her accrued benefit under the AT&T Pension Plans;

            (b)   all unbridged net credited service of each Transferred
Individual who transferred, or was reassigned, to Wireless Services, or one of
its Subsidiaries, on or after September 19, 1994 from a Participating Company in
the AT&TMPP or the AT&TPP shall be bridged, provided that the unbridged net
credited service would have been eligible for bridging under the bridging rules
of the AT&TMPP or the AT&TPP in the event that the Transferred Individual had
continued to be employed as an "Employee" under the AT&TMPP or the AT&TPP and
satisfied the applicable bridging rules under those plans; and

                                      -12-
<PAGE>   18
            (c)   each Transferred Individual who transferred, or was
reassigned, to Wireless Services, or one of its Subsidiaries, on or after
September 19, 1994 from a Participating Company in the AT&TMPP or the AT&TPP who
has a portion of his or her accrued benefit under a prior formula under the AT&T
Pension Plans that has not yet been converted to cash balance shall be deemed to
have completed any minimum period of net credited service that is required for
such conversion.

                                   ARTICLE IV
                            HEALTH AND WELFARE PLANS

      4.1   ASSUMPTION OF HEALTH AND WELFARE PLAN LIABILITIES.

            (a)   All Liabilities relating to, arising out of, or resulting from
health and welfare coverage or claims incurred by or on behalf of Transferred
Individuals or their covered dependents (other than Liabilities relating to
health and welfare coverage or claims incurred under the Wireless Services
Health and Welfare Plans, if such Transferred Individuals participate in the
Wireless Services Health and Welfare Plans on or before the Disposition Date)
under the AT&T Health and Welfare Plans on or before the Disposition Date shall
remain Liabilities of AT&T, and, except as provided in Section 4.1(b), all
Liabilities relating to health and welfare coverage or claims incurred by or on
behalf of Transferred Individuals or their covered dependents after the
Disposition Date shall be Liabilities of Wireless Services under the
corresponding Wireless Services Health and Welfare Plans. Except as provided in
Section 4.1(b), a claim or Liability (i) for medical and dental benefits shall
be deemed to be incurred upon the rendering of health services giving rise to
the obligation to pay such benefits; (ii) for life insurance and accidental
death and dismemberment insurance benefits shall be deemed to be incurred upon
the occurrence of the event giving rise to the entitlement to such benefits; and
(iii) for disability benefits shall be deemed to be incurred upon the effective
date of an individual is deemed to be disabled, giving rise to the entitlement
to such benefits.

            (b)   AT&T shall be responsible for all Liabilities under the
applicable AT&T Health and Welfare Plan that relate to, arise out of, or result
from any hospitalization of a Transferred Individual or his or her covered
dependent which begins on or before the Disposition Date; under an AT&T Health
and Welfare Plan and continues after the Disposition Date; provided, however,
that AT&T shall not be responsible for Liabilities relating to, arising out of,
or resulting from the portion of any such hospitalization (i) for a medical
condition that extends beyond 120 consecutive days of confinement (with respect
to Liabilities following such 120-day period), or (ii) for a mental
health/chemical dependency condition that extends beyond 30 consecutive days of
confinement (with respect to Liabilities following such 30-day period). AT&T
also shall be responsible for all Liabilities under the applicable AT&T Health
and Welfare Plan that relate to, arise out of, or result from any denture work,
bridge work, crown installation, or root canal therapy for a Transferred
Individual or his or her covered dependent for which preparatory dental services
have been rendered under an AT&T Health and Welfare Plan on or before the
Disposition Date and such dental treatment continues after the Disposition Date,
provided that such dental treatment is concluded within allowable time
limitations under the applicable AT&T Health and Welfare Plan. Coverage for any
such hospitalization or dental services shall be provided after the Disposition
Date without interruption under the appropriate AT&T Health and Welfare Plan
until such hospitalization or treatment for such condition is

                                      -13-
<PAGE>   19
concluded or discontinued subject to applicable plan rules and limitations. The
corresponding Wireless Services Health and Welfare Plan that covers the
Transferred Individual or his or her covered dependent after the Disposition
Date shall be secondarily liable (for purposes of coordination of benefits) in
accordance with its terms and conditions with respect to any such
hospitalization or dental treatment.

      4.2   HEALTH AND WELFARE PLAN TRANSITIONAL COVERAGE RULES.

            (a)   Transferred Individuals who were employees of Wireless
Services or a Wireless Services Entity and were participants in the Wireless
Services Health and Welfare Plans as of the Close of the Disposition Date shall
continue to participate in the Wireless Services Health and Welfare Plans after
the Close of the Disposition Date, subject to the terms and conditions of such
Plans. Subject to the agreement of any applicable insurer, all compensation,
periods of service, benefit elections, deductible payments, payments toward the
applicable out-of-pocket maximums, and other benefit-affecting determinations
affecting Transferred Individuals that, as of the Close of the Disposition Date,
were recognized under the AT&T Health and Welfare Plans shall receive full
recognition, credit, and validity and be taken into account under the Wireless
Services Health and Welfare Plans Immediately after the Disposition Date in the
same manner and subject to the same terms and conditions as in effect
immediately before the Disposition Date.

            (b)   To the extent that any Transferred Individual participates in
an AT&T Health and Welfare Plan immediately before the Close of the Disposition
Date, such Transferred Individual shall be (i) treated in the same manner under
the AT&T Health and Welfare Plans as any other similarly situated employee of
AT&T or an AT&T Entity with the same years of service and age who may otherwise
terminate his or her employment with AT&T and all AT&T Entities on the
Disposition Date; and (ii) entitled to have his or her net credited service with
AT&T or an AT&T Entity on or before the Disposition Date recognized by the
Wireless Services Health and Welfare Plans for purpose of determining
eligibility to participate in the Wireless Services Health and Welfare Plans,
effective Immediately after the Disposition Date.

            (c)   Any Transferred Individual who participates in an AT&T Health
and Welfare Plan immediately before the Close of the Disposition Date and who,
after the recognition of net credited service provided for in Section 4.2(b)(ii)
satisfies the eligibility requirements under the Wireless Services Health and
Welfare Plans, shall be (i) entitled to enroll, effective Immediately after the
Disposition Date, as a newly-eligible employee of Wireless Services or a
Wireless Services Entity, in the Wireless Services Health and Welfare Plans then
available to similarly situated employees of Wireless Services or a Wireless
Services Entity, whichever is applicable; and (ii) eligible to elect such
coverages and benefit options as may then be available or provided under the
terms of the Wireless Services Health and Welfare Plans to new employees of
Wireless Services or a Wireless Services Entity.

            (d)   With respect to any Transferred Individual and his or her
dependents (if any) who were covered under an AT&T Health and Welfare Plan
immediately before the Close of the Disposition Date, Wireless Services shall
take the appropriate actions reasonably necessary to ensure that the proof of
insurability requirements (if any) and the preexisting condition exclusions (if
any) applicable to new enrollees under the corresponding Wireless

                                      -14-
<PAGE>   20
Services Health and Welfare Plan (if any) are waived with respect to such
Transferred Individual and his or her dependents, provided that such Transferred
Individual or his or her dependents enroll for coverage in the corresponding
Wireless Services Health and Welfare Plan within no more than 31 days after the
last day of the month in which the Disposition Date occurs.

            (e)   The transfer of employment from AT&T or an AT&T Entity to
Wireless Services or a Wireless Services Entity as of the Close of the
Disposition Date shall neither constitute nor be treated as a "status change"
with respect to any Transferred Individual under the AT&T Health and Welfare
Plans or the Wireless Services Health and Welfare Plans.

      4.3   HCRA/CECRA POST-DISPOSITION TRANSITIONAL RULES.

            (a)   AT&T HEALTH CARE REIMBURSEMENT ACCOUNT PLAN. To the extent any
Transferred Individual made contributions to the AT&T Health Care Reimbursement
Account Plan ("AT&T HCRA Plan") during the Disposition Year, such Transferred
Individual shall be permitted to file claims for reimbursement for qualifying
health care expenses incurred during the Disposition Year through the Close of
the Disposition Date, for a total amount not to exceed the amount elected by
such Transferred Individual for that year. Such claims may be filed at any time
on or before April 15 of the year following the Disposition Year in the manner
permitted under the AT&T HCRA Plan. Account balances, whether positive or
negative, shall not be transferred or assigned from AT&T or an AT&T Entity to
Wireless Services or a Wireless Services Entity.

            (b)   AT&T CHILD/ELDER CARE REIMBURSEMENT ACCOUNT PLAN. To the
extent any Transferred Individual made contributions to the AT&T Child/Elder
Care Reimbursement Account Plan ("AT&T CECRA Plan") during the Disposition Year
and such Transferred Individual has a positive account balance in his or her
"Child/Elder Care Reimbursement Account" under the AT&T CECRA Plan as of the
Close of the Disposition Date, such Transferred Individual shall be entitled to
file claims for reimbursement for qualifying child and elder care expenses
incurred at any time during the Disposition Year for a total amount not to
exceed the amount of such Transferred Individual's positive account balance
determined as of the Close of the Disposition Date. A Transferred Individual
shall be considered to have a "positive account balance" in the AT&T CECRA Plan
if, as of the determination date, (i) the total amount he or she actually
contributed to the AT&T CECRA Plan for the Disposition Year, minus (ii) the
total amount of reimbursements paid to such Transferred Individual for
qualifying child care and elder care expenses incurred at any time during the
Disposition Year, is a positive number. Such claims may be filed at any time on
or before April 15 of the year following the Disposition Year, in the manner
permitted under the AT&T CECRA Plan. Account balances shall not be transferred
or assigned from AT&T or an AT&T Entity to Wireless Services or a Wireless
Services Entity.

      4.4   WORKERS' COMPENSATION LIABILITIES. Except as provided below, all
workers' compensation Liabilities relating to, arising out of, or resulting from
any claim by a Transferred Individual that results from an accident or from an
occupational disease which becomes manifest on or before the Disposition Date
and while such Transferred Individual was employed by AT&T or an AT&T Entity
shall be retained by AT&T. Wireless Services and each Wireless Services Entity
shall assume and be solely responsible for all workers' compensation Liabilities

                                      -15-
<PAGE>   21
relating to, arising out of, or resulting from any claim incurred for a
compensable injury sustained (i) by Wireless Services' and each Wireless
Services Entity's employees at any time; and (ii) by a Transferred Individual
after the Disposition Date. For purposes of this Agreement, a compensable injury
shall be deemed to be sustained upon the occurrence of the event giving rise to
eligibility for workers' compensation benefits or an occupational disease
becomes manifest, as the case may be. AT&T and Wireless Services and each
Wireless Services Entity shall cooperate with respect to any notification to
appropriate governmental agencies of the disposition and the issuance of new, or
the transfer of existing, workers' compensation insurance policies and claims
handling contracts.

      4.5   PAYROLL TAXES AND REPORTING OF COMPENSATION. AT&T, Wireless
Services, and each Wireless Services Entity agrees to take such action as may be
reasonably necessary or appropriate in order to minimize Liabilities related to
payroll taxes of AT&T, Wireless Services and each Wireless Services Entity after
the Disposition Date, as described in clauses 5.3(a)(vi) through (x). AT&T,
Wireless Services and each Wireless Services Entity shall each bear its
responsibility for payroll tax obligations and for the proper reporting to the
appropriate governmental authorities of compensation earned by their respective
employees after the Disposition Date, including compensation related to the
exercise of Options, as described in clauses 5.3(a) (vii) through (x)

      4.6   AT&T RETIREMENT-RELATED BENEFITS. AT&T shall amend the
Retirement-Related Benefit Plans, to be effective Immediately after the
Disposition Date, to provide that each Transferred Individual who was an AT&T
management employee and was transferred or reassigned to a Wireless Services
Entity on or after September 19, 1994, after attaining at least ten years of net
credited service shall be eligible to participate in the Retirement Related
Benefit Plans provided that the sum of such Transferred Individual's age and net
credited service (both expressed in days), determined as of the Disposition Date
is no less than 23,725 days (which equals the product of 65 years and 365 days
per year) (referred to as the "Rule of 65").

While a Transferred Individual who is eligible to participate in the
Retirement-Related Benefits Plans is covered as an active employee of Wireless
Services or a Wireless Services Entity under the Wireless Services Health and
Welfare Plans, the coverage provided to such Transferred Individual and his or
her covered dependents (if any) under the AT&T Medical Expense Plan for Retired
Employees and the AT&T Dental Expense Plan for Retired Employees shall be
secondary to the coverage provided under the Wireless Services Health and
Welfare Plans.

      4.7   COBRA AND HIPAA COMPLIANCE. AT&T shall be responsible for
administering compliance with the health care continuation requirements of
COBRA, the certificate of credible coverage requirements of HIPAA, and the
corresponding provisions of the AT&T Health and Welfare Plans with respect to
Transferred Individuals and their covered dependents who incur a COBRA
qualifying event or loss of coverage under the AT&T Health and Welfare Plans at
any time on or before the Disposition Date. Effective Immediately after the
Disposition Date, Wireless Services or a Wireless Services Entity shall be
responsible for administering compliance with the health care continuation
requirements of COBRA, the certificate of credible coverage requirements of
HIPAA, and the corresponding provisions of the Wireless Services Health and
Welfare Plans with respect to Transferred Individuals and their covered
dependents

                                      -16-
<PAGE>   22
who incur a COBRA qualifying event or loss of coverage under the Wireless
Services Health and Welfare Plans at any time after the Close of the Disposition
Date.

      4.8   DIRECT PAY ARRANGEMENTS. AT&T shall take, or cause its third-party
vendor or insurer to take, all such actions as are or may be reasonably
necessary to enable any Transferred Individual and his or her eligible family
members covered under either the AT&T Long-Term Care Plan for Management
Employees or the AT&T Long-Term Care Plan for Occupational Employees as of the
Disposition Date, to continue such coverage on a direct pay basis after the
Close of the Disposition Date.

                                    ARTICLE V
                      EXECUTIVE BENEFITS AND OTHER BENEFITS

      5.1   INDIVIDUAL AGREEMENTS - ASSUMPTION OF LIABILITIES AND CONSENTS.

            (a)   AT&T has been providing compensation and benefits, subject to
reimbursement from a Wireless Services Entity, to AT&T Transferees, during the
period those AT&T Transferees have been providing services on a substantially
full-time basis to a Wireless Services Entity. AT&T shall continue to provide
such compensation and benefits through the Disposition Date, and be entitled to
reimbursement from a Wireless Services Entity, in accordance with established
practice.

            (b)   Certain plans and programs of AT&T, including but not limited
to the AT&T Senior Officer Separation Plan (the "SSOSP"), the AT&T Senior
Management Separation Plan (the "SMSP") and the AT&T Special Executive
Separation Plan (the "SESP"), as well as certain Individual Agreements, provide
for the payment of certain compensation and benefits in the event of the
termination of employment of the individual covered by the terms of such plans
or Individual Agreements. A termination of an AT&T Transferee's employment from
AT&T in connection with or in anticipation of the consummation of the
transactions contemplated by the Separation and Distribution Agreement shall not
be deemed to be a termination of employment for purposes of the SSOSP, the SMSP,
the SESP or other similar plans and programs. A termination of employment from
AT&T in connection with or in anticipation of the consummation of the
transactions contemplated by the Separation and Distribution Agreement of an
AT&T Transferee who is a party to an Individual Agreement, the obligations of
which are assumed by Wireless pursuant to the provisions of Section 5.1(d) of
this Agreement shall not be deemed to be a termination of employment for
purposes of administering benefits under such Individual Agreement, the payment
or vesting of which is conditioned upon termination of employment.

            (c)   AT&T shall retain liabilities with respect to any Individual
Deferral Agreement and with respect to any benefits which are or become payable
for periods after termination of employment as a result of an AT&T Transferee's
meeting the requirements of the Rule of 65.

                                      -17-
<PAGE>   23
            (d)   Effective Immediately after the Disposition Date, except as
otherwise expressly provided in Section 5.1(c), Wireless Services shall assume
all liability with respect those Individual Agreements and other matters set
forth on Schedule 5.1 to this Agreement in consideration of and with respect to
services rendered to Wireless after the Disposition Date, including payment of
any compensation or benefit which is not yet due and payable pursuant to the
terms of such Individual Agreement.

      5.2   AT&T SHORT TERM INCENTIVE PLAN AND AT&T BONUS PLAN AWARD. Wireless
Services shall be responsible for determining all Awards that would otherwise be
payable under the AT&T Short Term Incentive Plan to AT&T Transferees who are
Senior Managers, or pursuant to the AT&T Bonus Plan Award to AT&T Transferees
who are not Senior Managers, for the Disposition Year. Wireless Services shall
also determine for AT&T Transferees (a) the extent to which established
performance criteria (as interpreted by Wireless Services, in its sole
discretion, after taking into account the effects of the Separation
Transactions) have been met, and (b) the payment level for each AT&T Transferee.
Wireless Services shall assume all Liabilities with respect to any such Awards
payable to AT&T Transferees for the Disposition Year and thereafter.

      5.3   AT&T LONG TERM INCENTIVE PLANS. AT&T and Wireless Services shall use
their reasonable best efforts to take all actions necessary or appropriate so
that each outstanding Award granted under any AT&T Long Term Incentive Plan held
by any individual who is either a current or former employee of AT&T or an AT&T
Entity (as determined by AT&T) and any Transferred Individual shall be adjusted
as set forth in this Article V and as illustrated in Schedules 5.3(a) and
Schedule 5.3(e) hereto.

            (a)   AT&T OPTIONS.

                  (i)   As determined by the Committee (as that term is defined
in the AT&T 1997 Long Term Incentive Program) pursuant to its authority under
any of the AT&T Long Term Incentive Plans, each AT&T Option granted prior to
January 1, 2001 outstanding under any AT&T Long Term Incentive Plan as of the
Wireless Dividend Date shall be adjusted so that each individual who is the
holder of an AT&T Option will have such option converted, immediately prior to
the Wireless Dividend, and in the case of AT&T Transferees, immediately prior to
the termination of their employment with AT&T pursuant to the terms of Section
2.8 hereof, into adjusted AT&T Options ("adjusted AT&T Options") under the
applicable AT&T Long Term Incentive Plan and Wireless Options under the Wireless
Services Adjustment Plan, whereby the combined Intrinsic Value of all the
adjusted AT&T Options and all the Wireless Options held by such individual
immediately after the Wireless Dividend equals the Intrinsic Value of all AT&T
Options held by such individual immediately before the Wireless Dividend.

                  (ii)  The adjustment set forth in Section 5.3(a)(i) shall be
made as follows:

            EXERCISE PRICE OF ADJUSTED AT&T OPTIONS. The exercise price per
      share of AT&T Common Stock subject to an adjusted AT&T Option will be
      equal to the product obtained by multiplying (a) times (b) where "(a)"
      equals the exercise price per share of the AT&T Option with respect to
      which an adjustment is being made immediately before

                                      -18-
<PAGE>   24
      the Wireless Dividend, and "(b)" equals the quotient obtained by dividing
      the AT&T Opening Stock Value by the AT&T Closing Stock Value.

            EXERCISE PRICE OF WIRELESS OPTION. The exercise price per share of
      Wireless Common Stock subject to a Wireless Option issued pursuant to
      Section 5.3(a)(i) will be equal to the product obtained by multiplying (c)
      times (d) where "(c)" equals the exercise price per share of the AT&T
      Option with respect to which the Wireless Option is granted immediately
      before the Wireless Dividend and "(d)" equals the quotient obtained by
      dividing the Wireless Stock Value by the AT&T Closing Stock Value.

            NUMBER OF WIRELESS OPTIONS. The number of shares of Wireless Common
      Stock subject to a Wireless Option granted pursuant to Section 5.3(a)(i)
      will equal the product obtained by multiplying the number of shares of
      AT&T Common Stock subject to an AT&T Option outstanding as of the day
      before the Wireless Dividend Date times the Distribution Ratio.

            NUMBER OF ADJUSTED AT&T OPTIONS. The number of shares of AT&T Common
      Stock subject to an adjusted AT&T Option will equal the product obtained
      by dividing (a) by (b) where "(a)" equals (i) the Intrinsic Value of the
      AT&T Option with respect to which an adjustment is being made, based on
      the AT&T Closing Stock Value and the exercise price per share of such AT&T
      Option, minus (ii) the Intrinsic Value of the Wireless Option for the
      number of shares of Wireless Common Stock determined by application of the
      preceding paragraph based on the Wireless Stock Value, and "(b)" equals
      the Intrinsic Value of an Option to purchase one share of AT&T Common
      Stock based on the AT&T Opening Stock Value and the exercise price of such
      adjusted AT&T Option as set forth above.

                  (iii) As determined by the Committee pursuant to its authority
under Section 4(e) of the AT&T 1997 Long Term Incentive Program, each AT&T
Option granted on or after January 1, 2001 (an "AT&T 2001 Option") outstanding
under any AT&T Long Term Incentive Plan as of the Wireless Dividend Date shall
be adjusted so that each individual who is the holder of such an AT&T 2001
Option will receive, immediately prior to the Wireless Dividend, adjusted AT&T
2001 Options ("adjusted AT&T 2001 Options") under the applicable AT&T Long Term
Incentive Plan whereby the Intrinsic Value of the adjusted AT&T 2001 Option held
by such individual immediately after the Wireless Dividend equals the Intrinsic
Value of the AT&T 2001 Option held by such individual immediately before the
Wireless Dividend with respect to which the adjustment is being made.

      The adjustment set forth in Section 5.3(a)(iii) shall be made as follows:

            EXERCISE PRICE OF ADJUSTED AT&T 2001 OPTIONS. The exercise price per
      share of AT&T Common Stock subject to an adjusted AT&T 2001 Option will be
      equal to the product obtained by multiplying (a) times (b) where "(a)"
      equals the exercise price per share of the AT&T 2001 Option with respect
      to which an adjustment is being made immediately before the Wireless
      Dividend, and "(b)" equals the quotient obtained by dividing the AT&T
      Opening Stock Value by the AT&T Closing Stock Value.

                                      -19-
<PAGE>   25
            NUMBER OF ADJUSTED AT&T 2001 OPTIONS. The number of shares of AT&T
      Common Stock subject to an adjusted AT&T 2001 Option immediately after the
      Wireless Dividend will equal the product obtained by dividing (a) by (b)
      where "(a)" equals the Intrinsic Value of the AT&T 2001 Option with
      respect to which an adjustment is being made, based on the AT&T Closing
      Stock Value and the exercise price per share of such AT&T 2001 Option, and
      "(b)" equals the Intrinsic Value of an Option to purchase one share of
      AT&T Common Stock based on the AT&T Opening Stock Value and the exercise
      price of such adjusted AT&T 2001 Option as set forth above.

                  (iv)  AT&T and Wireless Services acknowledge that, in the
context of the Separation Transactions, the adjustment to AT&T Options as set
forth in Section 5.3(a)(ii) will be implemented by the issuance of Wireless
Options under the terms of the Wireless Services Adjustment Plan. Accordingly,
it is intended that, to the extent of the issuance of such Wireless Options in
connection with the adjustments set forth in Section 5.3(a)(ii), the Wireless
Services Adjustment Plan shall be considered a successor to the AT&T Long Term
Incentive Plan and to have assumed the obligation of the AT&T Long Term
Incentive Plan to make the adjustment of AT&T Options as set forth in Section
5.3(a)(ii).

                  (v)   After the Disposition Date, AT&T Options, including
adjusted AT&T Options and adjusted AT&T 2001 Options, regardless of by whom
held, shall be settled by AT&T pursuant to the terms of the AT&T Long Term
Incentive Plan, and Wireless Options, regardless of by whom held, shall be
settled by Wireless Services pursuant to the terms of the Wireless Services
Adjustment Plan.

                  (vi)  Except as provided pursuant to a separate agreement
between AT&T and Qwest Communications International, Inc. (the "Qwest
Agreement") AT&T shall claim the benefit of federal, state, and local tax
deductions related to the exercise of all AT&T Options, including adjusted AT&T
Options and adjusted AT&T 2001 Options, after the Disposition Date and Wireless
Services shall not claim any such tax deductions. Except as otherwise provided
pursuant to the Qwest Agreement, after the Disposition Date, AT&T shall be
responsible for the proper payroll tax treatment and the proper reporting to the
appropriate governmental authorities of compensation relating to all option
exercises by AT&T Employees and by persons, other than Transferred Individuals,
who as of the date of exercise are no longer employed by AT&T or one of its
Subsidiaries, but whose last employment with AT&T or one of its subsidiaries was
with AT&T or with a subsidiary of AT&T other than a Wireless Services Entity, of
Wireless Options, adjusted AT&T Options and adjusted AT&T 2001 Options provided,
however, that Wireless Services shall promptly reimburse AT&T for an amount
equal to the Hospital Insurance tax under Section 3111(b) of the Code (the "HI
Tax") upon the exercise of such Wireless Services Options (such reimbursement to
be treated as deductible by Wireless Services and as taxable income to AT&T,
which shall deduct the HI Tax as incurred).

                  (vii) Except with respect to Wireless Options granted pursuant
to Section 5.3(a)(i) with respect to options subject to the Qwest Agreement, a
Wireless Services Entity shall claim the benefit of federal, state and local tax
deductions related to the exercise of Wireless Options after the Disposition
Date and AT&T shall not claim any such tax deductions. Except with respect to
Wireless Options granted pursuant to Section 5.3(a)(i) with respect to options
subject to the Qwest Agreement, after the Disposition Date, a Wireless Services
Entity

                                      -20-
<PAGE>   26
shall be responsible for the proper payroll tax treatment and the proper
reporting to the appropriate governmental authorities of compensation relating
to all option exercises by Transferred Individuals and by persons who as of the
date of exercise are no longer employed by a Wireless Services Entity, but whose
last employment with any of AT&T, its subsidiaries, or any Wireless Services
Entity, was with a Wireless Services Entity, of Wireless Options, adjusted AT&T
Options and adjusted AT&T 2001 Options; provided, however, that AT&T shall
promptly reimburse Wireless Services for an amount equal to the HI Tax upon the
exercise of such AT&T Options (such reimbursement to be treated as deductible by
AT&T and as taxable income to Wireless Services, which shall deduct the HI Tax
as incurred).

                  (viii) With respect to any Wireless Option held by an AT&T
Employee and by persons, other than Transferred Individuals, who as of the date
of exercise are no longer employed by AT&T or one of its Subsidiaries, but whose
last employment with AT&T or one of its subsidiaries was with AT&T or with a
Subsidiary of AT&T other than a Wireless Services Entity, and with respect to
any adjusted AT&T Option and any adjusted AT&T 2001 Option held by a Transferred
Individual and by persons who as of the date of exercise are no longer employed
by a Wireless Services Entity, but whose last employment with any of AT&T, its
subsidiaries, or any Wireless Services Entity, was with a Wireless Services
Entity, (each, a "Crossover Option"), Salomon Smith Barney or such other entity
as mutually designated by AT&T and Wireless Services shall act as the
recordkeeper for the Crossover Options. If the exercise of Crossover Options is
made pursuant to a broker-assisted cashless exercise through the recordkeeper in
accordance with the regulations of the Federal Reserve Board, then immediately
after such exercise, the recordkeeper shall sell the number of shares necessary
to remit the following payments (which may be all the shares): (i) to the issuer
of the option, the exercise price; and (ii) to the employer of the option
holder, the employee's share of income and payroll taxes. The recordkeeper shall
thereafter remit to the Option holder (i) the balance of the proceeds from the
sale of all shares or (ii) the remaining whole shares and cash for any
fractional shares, as applicable.

                  (ix)  AT&T and Wireless Services agree to act (or to take such
action) with respect to such federal, state, or local tax deductions, and with
respect to fulfilling the payroll tax and reporting obligations on compensation,
consistent with (v) through (viii) above, as are reasonably necessary or
appropriate to achieve, maintain and/or preserve such tax results. Any amounts
required to be reimbursed by one party to another under subparagraphs (vii) and
(viii) shall be paid within 30 days of invoice.

                  (x)   If (a) as a result of a determination (as defined in
Section 1313 of the Code) or (b) in the opinion of nationally recognized tax
counsel to AT&T or Wireless Services, which opinion and tax counsel are
reasonably acceptable to the other party hereto, as a result of final or pending
Treasury Regulations, Internal Revenue Service announcement or otherwise, in
each case, there is a substantial likelihood that the tax deductions related to
the exercise of Options under this Agreement and/or the payroll tax and
reporting obligations related to the exercise of Options, will be inconsistent
with all or any part of (vi) through (viii) above, the parties shall negotiate
in good faith to restructure the arrangements set forth herein so that (I) if,
pursuant to the determination or opinion, a party gets a tax deduction it was
not entitled to claim under the terms of this Agreement, that party shall pay
over to the party entitled to claim the deduction under the terms of this
Agreement, as if and for the tax year(s) recognized through

                                      -21-
<PAGE>   27
a reduction in taxes due and/or the receipt of a refund an amount equal to the
lesser of (x) its tax benefit and (y) the benefit otherwise available to the
party entitled to such deduction under the terms of this Agreement, as if and
for the tax year(s) when such deduction would have resulted in a reduction in
taxes due and/or the receipt of a refund and (II) the reporting and financial
burden of the payroll taxes are, to the extent practicable, as described above.
Any such amounts shall be payable within 30 days of the filing of the return in
which the benefit described in (x) or (y), of the preceding sentence, whichever
is later, is reflected. If the parties are unable to reach an agreement on how
to restructure the arrangements set forth herein within 90 days of such
determination or the receipt of the opinion of counsel described in the first
sentence of this subparagraph (x) such disagreement shall be resolved by a
nationally recognized law firm or accounting firm ("Independent Third Party"),
selected in a manner similar to the procedure set forth in Section 9(e)(i) of
the Amended and Restated Tax Sharing Agreement, whose judgment shall be
conclusive and binding upon the parties. The cost of any Independent Third Party
shall be shared equally between the parties.

            (b)   AWE OPTIONS. Each AWE Option outstanding under any AT&T Long
Term Incentive Plan as of the Wireless Exchange Date shall be converted on the
Wireless Exchange Date, but prior to the Wireless Dividend, into Wireless
Options ("converted Wireless Options") under the Wireless Services Adjustment
Plan. The number of shares of Wireless Common Stock and the exercise price per
share of Wireless Common Stock subject to the Wireless Option will be determined
as follows:

            EXERCISE PRICE OF CONVERTED WIRELESS OPTIONS. The exercise price per
      share of Wireless Common Stock subject to a converted Wireless Option will
      be equal to the product obtained by multiplying (a) times (b) where "(a)"
      equals the exercise price per share of the AWE Option with respect to
      which the conversion is being made, determined immediately before the
      Wireless Dividend, and "(b)" equals the quotient obtained by dividing the
      Wireless Stock Value by the AWE Closing Stock Value.

            NUMBER OF CONVERTED WIRELESS OPTIONS. The number of shares of
      Wireless Common Stock subject to a converted Wireless Option immediately
      after the Wireless Dividend will equal the product obtained by dividing
      (a) by (b) where "(a)" equals the Intrinsic Value of the AWE Option with
      respect to which a conversion is being made, based on the AWE Closing
      Stock Value and the exercise price per share of such AWE Option, and "(b)"
      equals the Intrinsic Value of an Option to purchase one share of Wireless
      Common Stock based on the Wireless Stock Value and the exercise price of
      such converted Wireless Option as set forth above.

                                      -22-
<PAGE>   28
            (c)   VESTING AND EXERCISABILITY OF OPTIONS. Each adjusted AT&T
Option and each adjusted AT&T 2001 Option issued to a Transferred Individual as
part of the adjustment to AT&T Options and AT&T 2001 Options pursuant to Section
5.3(a) shall be fully vested and shall continue to be exercisable and
non-forfeitable after the Wireless Dividend Date for the remaining scheduled
term of the original AT&T Option or AT&T 2001 Option with respect to which the
Adjusted AT&T Option and the adjusted AT&T 2001 Option was issued.

      Each adjusted AT&T Option and each adjusted AT&T 2001 Option issued to an
AT&T Employee as part of the adjustment to AT&T Options and AT&T 2001 Options
pursuant to Section 5.3(a) shall be subject to the same terms and conditions
regarding term, vesting, and other provisions regarding exercise as set forth in
the original AT&T Option or AT&T 2001 Option with respect to which the Adjusted
AT&T Option or the adjusted AT&T 2001 Option was issued..

      Each Wireless Option issued to a Transferred Individual as part of the
adjustment to AT&T Options pursuant to Section 5.3(a) shall be subject to the
same terms and conditions regarding term, vesting, and other provisions
regarding exercise as set forth in the original AT&T Option with respect to
which the Wireless Option was received.

      Each Wireless Option issued to an AT&T Employee as part of the adjustment
to AT&T Options pursuant to Section 5.3(a) shall be fully vested and shall
continue to be exercisable and non-forfeitable after the Wireless Dividend Date
for the remaining scheduled term of the original AT&T Option with respect to
which the Wireless Option was received.

      Each converted Wireless Option issued to an AT&T Employee in exchange for
an AWE Option shall be fully vested and shall continue to be exercisable and
non-forfeitable after the Wireless Dividend Date for the remaining scheduled
term of the original AWE Option for which the Wireless Option was exchanged.

      Each converted Wireless Option issued to a Transferred Individual in
exchange for an AWE Option shall be subject to the same terms and conditions
regarding term, vesting, and other provisions regarding exercise as set forth in
the original AWE Option from which the Wireless Option was converted.

      Notwithstanding the foregoing, the adjusted AT&T Options, adjusted AT&T
2001 Options and Wireless Options shall not be exercisable until the AT&T
Opening Stock Value or Wireless Stock Value, as the case may be, is determined
immediately after the Wireless Dividend.

                                      -23-
<PAGE>   29
            (d)   RESTRICTED STOCK AND RESTRICTED STOCK UNITS. As determined by
the Committee (as that term is defined in the AT&T 1997 Long Term Incentive
Program) pursuant to its authority under any of the AT&T Long Term Incentive
Plans, each restricted share of AT&T Common Stock or restricted stock unit
relating to shares of AT&T Common Stock that is outstanding under any AT&T Long
Term Incentive Plan as of the Wireless Dividend Date shall be adjusted so that
each AT&T Employee who is the holder of an AT&T restricted share or restricted
stock unit will receive, immediately prior to the Wireless Dividend Date, an
adjusted number of AT&T restricted shares or restricted stock units under the
applicable AT&T Long Term Incentive Plan whereby the resulting number of AT&T
restricted shares or restricted stock units shall be determined by multiplying
the number of AT&T restricted shares or restricted stock units held by each AT&T
Employee immediately before the Wireless Dividend Date by the quotient of the
AT&T Closing Stock Value divided by the AT&T Opening Stock Value. Each
Transferred Individual who is the holder of an AT&T restricted share or
restricted stock unit will receive, immediately prior to the Wireless Dividend
Date and in the case of AT&T Transferees, immediately prior to the termination
of their employment with AT&T pursuant to the terms of Section 2.8 hereof,,
exchange for each such AT&T restricted share or restricted stock unit, Wireless
Services restricted shares or restricted stock units under the Wireless Services
Adjustment Plan whereby the resulting number of Wireless Services restricted
shares or restricted stock units shall be determined by multiplying the number
of AT&T restricted shares or restricted stock units held by each Transferred
Individual immediately before the Wireless Dividend Date by the quotient of the
AT&T Closing Stock Value divided by the Wireless Opening Stock Value. Each
Transferred Individual will continue to vest in his or her Wireless Services
Award under the Wireless Services Adjustment Plan during his or her employment
with Wireless Services or a Wireless Services Entity. Each AT&T Employee shall
continue to vest in his or her AT&T Award under the AT&T Long Term Incentive
Plan during his or her employment with AT&T and its Affiliates and shall
continue to be subject to the same terms and conditions which applied to the
original award. Each Wireless Services Award shall have the same terms and
conditions as were applicable to the corresponding AT&T Award as of the close of
the Wireless Dividend Date, except that references to AT&T and its Affiliates
shall be modified to refer to Wireless Services and its Affiliates and dividend
equivalent payments, if any, shall be payable after the Disposition Date with
reference to dividends on Wireless Common Stock, if any.

            (e)   PERFORMANCE SHARES AND STOCK UNITS. As determined by the
Committee (as that term is defined in the AT&T 1997 Long Term Incentive Program)
pursuant to its authority under any of the AT&T Long Term Incentive Plans:

                  (i)   each AT&T Employee who is the holder of an AT&T Award
granted prior to January 1, 2001 consisting of AT&T performance shares or AT&T
stock units that is outstanding as of the Wireless Dividend Date shall receive,
immediately prior to the Wireless Dividend:

                        (A)   an award under the applicable AT&T Long Term
Incentive Plan for the number of stock units determined by multiplying the
number of AT&T performance shares held as of the Wireless Dividend Date by the
Distribution Ratio; and

                                      -24-
<PAGE>   30
                        (B)   an adjusted award of AT&T performance shares or
AT&T stock units under the applicable AT&T Long Term Incentive Plan for a number
of AT&T performance shares determined by dividing (a) by (b) where "(a)" equals
the value of AT&T performance shares held as of the Wireless Dividend Date
reduced by the value of the adjusted stock units awarded pursuant to Section 5.3
(e)(i), and "(b)" equals the value of a single AT&T performance share based on
the AT&T Opening Stock Value.

                  (ii)  Each Transferred Individual holding an AT&T Award
consisting of AT&T performance shares for any open cycle granted prior to
January 1, 2001, that is outstanding as of the Wireless Dividend Date will
receive immediately prior to the Wireless Dividend, and in the case of an AT&T
Transferee, immediately prior to the termination of their employment with AT&T
pursuant to the terms of Section 2.8 hereof,:

                        (A)   an award under the Wireless Services Adjustment
Plan for a number of adjusted Wireless stock units determined by multiplying the
number of AT&T performance shares held as of the Wireless Dividend Date by the
Distribution Ratio; and

                        (B)   an award of under the Wireless Services Adjustment
Plan for a number of adjusted stock units determined by dividing (a) by (b)
where "(a)" equals the value of AT&T performance shares held as of the Wireless
Dividend Date reduced by the value of the adjusted stock units awarded pursuant
to Section 5.3 (e)(i), and "(b)" equals the value of a single AT&T performance
share based on the AT&T Opening Stock Value.

                  (iii) Each Transferred Individual will continue to vest or
satisfy service requirements with respect to his or her Award of adjusted stock
units under the Wireless Services Adjustment Plan in accordance with the terms
and conditions of the original AT&T Performance Share Award with respect to
which the adjusted stock units are issued, and the value and performance
criteria of adjusted stock units held by a Transferred Individual will continue
to be based on the underlying value of a share of AT&T Common Stock and AT&T
performance measures as determined by the Compensation and Employee Benefits
Committee of the AT&T Board of Directors from time to time, and the performance
criteria for each such adjusted Wireless stock unit issued pursuant to
5.3(e)(ii)(A) above shall be deemed earned at 100% of target and shall otherwise
be paid pursuant to the terms of the original Award.

                  (iv)  Each AT&T Employee shall vest or satisfy service
requirements with respect to his or her stock units issued under the AT&T Long
Term Incentive Plan Each such stock unit shall be deemed earned at 100% of
target and the value of such stock unit shall be determined by reference to the
underlying value of a share of Wireless Common Stock. The performance criteria
of each adjusted AT&T Performance Share held by an AT&T Employee will continue
to be based on AT&T measures as determined by the Compensation and Employee
Benefits Committee of the AT&T Board of Directors from time to time and shall
otherwise be paid pursuant to the terms of the original Award.

                  (v)   Except with respect to satisfaction of performance
criteria, the payment of AT&T Performance Shares or stock units under either the
AT&T Long Term Incentive Plan or the Wireless Services Adjustment Plan shall
continue to be subject to the terms and conditions of the AT&T Long Term
Incentive Plan and the Wireless Services Adjustment

                                      -25-
<PAGE>   31
Plan, as in effect from time to time, except that, with respect to stock units
the value of which is determined by reference to the underlying value of
Wireless Common Stock, shall be payable after the Disposition Date with
reference to dividends on Wireless Common Stock, if any.

            (f)   POST-2000 PERFORMANCE SHARES. As determined by the Committee
(as that term is defined in the AT&T 1997 Long Term Incentive Program) pursuant
to its authority under any of the AT&T Long Term Incentive Plans, each AT&T
Performance Share granted on or after January 1, 2001, that is outstanding as of
the Wireless Dividend Date shall be adjusted so that each AT&T Employee who is
the holder of an AT&T Award will receive, immediately prior to the Wireless
Dividend Date, an adjusted number of AT&T Performance Shares under the
applicable AT&T Long Term Incentive Plan whereby the resulting number of AT&T
Performance Shares shall be determined by multiplying the number of AT&T
Performance Shares by each AT&T Employee immediately before the Wireless
Dividend Date by the quotient of the AT&T Closing Stock Value divided by the
AT&T Opening Stock Value. Each Transferred Individual who is the holder of an
AT&T Performance Shares will receive, immediately prior to the Wireless Dividend
Date, and in the case of AT&T Transferees, immediately prior to the termination
of their employment with AT&T pursuant to the terms of Section 2.8 hereof, in
exchange for such AT&T Performance Shares, Wireless Services stock units under
the Wireless Services Adjustment Plan whereby the resulting number of Wireless
Services stock units shall be determined by multiplying the number of AT&T
Performance Shares held by each Transferred Individual immediately before the
Wireless Dividend Date by the quotient of the AT&T Closing Stock Value divided
by the Wireless Opening Stock Value. Each such stock unit shall be deemed earned
at 100% of target and the value of such stock unit shall be determined by
reference to the underlying value of a share of Wireless Common Stock. Each
Transferred Individual will continue to vest in his or her Wireless Services
stock units under the Wireless Services Adjustment Plan during his or her
employment with Wireless Services or a Wireless Services Entity. Each AT&T
Employee shall continue to vest in his or her AT&T Performance Shares under the
AT&T Long Term Incentive Plan during his or her employment with AT&T and its
Affiliates and will continue to be based on AT&T measures as determined by the
Compensation and Employee Benefits Committee of the AT&T Board of Directors from
time to time as remains applicable to AT&T employees, and shall continue to be
subject to the same terms and conditions which applied to the original award.
Each Wireless Services Award shall have the same terms and conditions as were
applicable to the corresponding AT&T Award as of the close of the Wireless
Dividend Date, except that references to AT&T and its Affiliates shall be
modified to refer to Wireless Services and its Affiliates and dividend
equivalent payments, if any, shall be payable after the Disposition Date with
reference to dividends on Wireless Common Stock, if any.

            (g)   PARTIAL INTERESTS IN SHARES OR STOCK UNITS. To the extent that
any adjustment in stock options, performance shares, stock units, restricted
stock, or restricted stock units results in any fractional interest in shares
(or stock units), such fractional interest shall be rounded down to the nearest
whole share or unit. No fractional interests in shares or stock units shall be
payable in cash or otherwise.

            (h)   INCENTIVE STOCK OPTIONS; FOREIGN GRANTS/AWARDS. AT&T and
Wireless Services agree to use their best efforts to preserve the value and tax
treatment accorded incentive stock options awarded under the AT&T Long Term
Incentive Plan, and to preserve the

                                      -26-
<PAGE>   32
value and tax treatment accorded grants/awards provided to non-U.S. employees
under any domestic or foreign equity-based incentive program sponsored by AT&T
or an AT&T Entity or Wireless Services or a Wireless Services Entity. The
parties delegate to the AT&T Executive Vice President-Human Resources, for
periods before the Disposition Date, the authority to determine an appropriate
methodology for adjusting such grants or awards in a manner that is, to the
extent possible, consistent with the treatment of such awards and grants for
U.S. employees.

      5.4   AT&T EMPLOYEE STOCK PURCHASE PLAN. In accordance with the AT&T
Employee Stock Purchase Plan, AT&T shall cause (a) all amounts credited to each
Transferred Individual's "Periodic Deposit Account" under the AT&T Employee
Stock Purchase Plan to be applied on the next exercise date coincident with or
next following the Disposition Date (the "Next Exercise Date") toward the
purchase of AT&T Common Stock, and then (b) stock certificates with respect to
whole shares of all AT&T Common Stock and any other stock held by the
recordkeeper, and cash with respect to fractional shares of AT&T Common Stock
and any other stock held by the recordkeeper to be distributed as soon as
practicable after the Next Exercise Date, and then (c) the recordkeeping
accounts of all Transferred Individuals to be terminated under the AT&T Stock
Purchase Plan.

      5.5   SAVINGS CLAUSE. Notwithstanding any other provision of Section 5.3,
if and to the extent AT&T shall determine in its reasonable judgment that any
action required to be taken by AT&T or Wireless Services under such Section may
not comply with all applicable laws or the terms of any applicable AT&T Long
Term Incentive Plan or the Wireless Services Adjustment Plan or does not
properly address all relevant financial accounting concerns or that any such
action is otherwise inappropriate or inadvisable, AT&T shall be entitled to
require that Wireless Services or AT&T instead shall take such other action that
AT&T determines in its reasonable judgment is necessary or appropriate in order
to comply with such laws or AT&T Long Term Incentive Plan or Wireless Services
Adjustment Plan or is otherwise appropriate or advisable, and any such
determination by AT&T shall be final and shall not be subject to question,
dispute, or objection by Wireless Services.

      5.6   REGISTRATION REQUIREMENTS. As soon as possible following the time as
of which the Form 10 or Form 8-A, as the case may be, is declared effective by
the Securities and Exchange Commission but in any case before the Wireless
Dividend Date and before the date of issuance or grant of any Wireless Option
and/or shares of Wireless Common Stock pursuant to this Article V, Wireless
Services agrees that it shall file a Form S-8 Registration Statement with
respect to and cause to be registered pursuant to the Securities Act of 1933, as
amended, the shares of Wireless Common Stock authorized for issuance under the
Wireless Services Adjustment Plan as required pursuant to such Act and any
applicable rules or regulations thereunder.

      5.7   NON-COMPETITION GUIDELINES

            (a)   AT&T NON-COMPETITION GUIDELINE. Effective as of the Close of
the Disposition Date, AT&T shall cause the AT&T Non-Competition Guideline, to be
amended to provide that any Transferred Individual, AT&T Transferee, and any
other AT&T Employee, who terminates employment with AT&T and becomes employed by
Wireless Services or a Wireless Services Entity at any time prior to the end of
the twenty-fourth calendar month that ends after

                                      -27-
<PAGE>   33
the Close of the Disposition Date, shall not be subject to the AT&T
Non-Competition Guideline while such individual is employed by Wireless Services
or a Wireless Services Entity; provided, however, that nothing in this Section
5.7(a) shall relieve any person including, but not limited to, Transferred
Individuals, from any obligation under the AT&T Non-Competition Guideline with
respect to engaging in conduct (e.g., recruitment or solicitation of employees
or criticism of AT&T) that is "in conflict with or adverse to the interests of"
AT&T, as such terms are defined in the AT&T Non-Competition Guideline.
Notwithstanding the foregoing, no Transferred Individual, AT&T Transferee or
other Wireless employee shall be deemed to have violated the AT&T
Non-Competition Guideline as a result of the recruitment or solicitation of any
AT&T Employee to the extent that the hiring of any AT&T employee conforms to
procedures set forth in the People Movement Guideline attached to this Agreement
as Exhibit 5.7(a). Notwithstanding the foregoing, a Transferred Individual, AT&T
Transferee, or any other AT&T Employee, who terminates employment with AT&T and
becomes employed by Wireless Services or a Wireless Services Entity at any time
prior to the end of the twenty-fourth calendar month that ends after the Close
of the Disposition Date shall be deemed to be employed by a competitor of AT&T
for purposes of determining compliance with the provisions of the AT&T
Non-Competition Guideline only if within the twenty-four month period following
such individual's termination of employment with AT&T and before the end of the
twenty-fourth calendar month that ends after the Close of the Disposition Date,
such Transferred Individual, AT&T Transferee, or other AT&T Employee becomes
employed by a company that is an active and significant competitor of AT&T. For
purposes of this paragraph, during the twenty-four month period following the
Close of the Disposition Date, "active and significant competitor" means a
company in competition with AT&T in a line of business which represents more
than five percent (5%) of the AT&T's consolidated gross revenues (excluding
Wireless revenues) for its most recently completed fiscal year. After the
twenty-four month period following the Close of the Disposition Date, whether an
employer is a competitor of AT&T will be determined pursuant to AT&T's usual and
customary practice in administering the AT&T Non-Competition Guideline.

            (b)   WIRELESS SERVICES NON-COMPETITION GUIDELINE. In the event
Wireless Services shall adopt or maintain a non-competition guideline effective
for periods after the Disposition Date, such guideline shall expressly provide
that no employee of a Wireless Services Entity who terminates employment with a
Wireless Services Entity and becomes employed by AT&T or an AT&T Entity at any
time prior to the end of the twenty-fourth calendar month that ends after the
Close of the Disposition Date, shall be treated as being employed by a
competitor of a Wireless Services Entity for purposes of determining compliance
with the non-competition provisions of such Wireless Services non-competition
guideline while such individual remains employed by AT&T or an AT&T Entity;
provided, however, that nothing in this Section 5.7(b) shall relieve any person
from any obligation under such Wireless Services non-competition guideline with
respect to engaging in conduct (e.g., recruitment or solicitation of employees
or criticism of Wireless Services) that is "in conflict with or adverse to the
interests of" Wireless Services, as such terms are defined in such guideline.
Notwithstanding the foregoing, no AT&T Employee shall be deemed to have violated
such guideline as a result of the recruitment or solicitation of any employee of
Wireless Services to the extent that the hiring of any employee of Wireless
Services conforms to procedures set forth in the People Movement Guidelines
attached to this Agreement as Exhibit 5.7(b). At the conclusion of such
twenty-four calendar month period, Wireless Services may deem employment, other
than continuing employment of a then

                                      -28-
<PAGE>   34
current employee of AT&T or an AT&T Entity, by AT&T or an AT&T Entity to be a
violation of such Wireless Services non-competition guideline.

            (c)   CONFIDENTIALITY AND PROPRIETARY INFORMATION.

      No provision of the Separation and Distribution Agreement or this
Agreement shall be deemed to release any individual for any violation of the
AT&T Non-Competition Guideline or such Wireless Services non-competition
guideline pertaining to confidential or proprietary information or any agreement
or policy pertaining to confidential or proprietary information of AT&T or any
of its Affiliates or of Wireless Services or any of its Affiliates,
respectively, or otherwise relieve any individual of his or her obligations
under such guideline or any such agreements or policies.

      5.8   AT&T NONQUALIFIED PENSION PLANS AND ARRANGEMENTS. For periods after
the Disposition Date, AT&T shall retain all Liabilities relating to Transferred
Individuals under the AT&T Non-Qualified Pension Plan, the AT&T Excess Benefit
and Compensation Plan, the AT&T Mid-Career Pension Plan, the AT&T Senior
Management Long Term Disability and Survivor Protection Plan, and any individual
nonqualified pension arrangements identified in Schedule "5.9" hereto as of the
Close of the Disposition Date, and shall make benefit payments to Transferred
Individuals at such times and in such manner as is provided for under the terms
of the respective nonqualified pension plans and arrangements.

      5.9   LIFE INSURANCE PROGRAMS.

            (a)   AT&T SENIOR MANAGEMENT UNIVERSAL LIFE INSURANCE PROGRAM. The
life insurance amount under the SMULIP shall be frozen (the "frozen SMULIP
coverage") as of the Close of the Disposition Date for any Transferred
Individual who is a SMULIP participant as of the Close of the Disposition Date
and who either (i) is then eligible to participate in the Retirement-Related
Benefit Plans; or (ii) may be eligible to participate in the Retirement-Related
Benefit Plans pursuant to the provisions of Section 4.6. AT&T shall allow such
Transferred Individual to continue to participate in the SMULIP until the
earlier of (1) the Transferred Individual's attainment of his or her "normal
termination date" under the terms of the SMULIP as such terms exist on the date
of this Agreement; or (2) the Transferred Individual's termination of employment
from Wireless Services and all Wireless Services Entities before becoming
eligible to participate in the Retirement-Related Benefit Plans pursuant to the
provisions of Section 4.6. During the Transferred Individual's participation in
the SMULIP after the Disposition Date, AT&T shall pay the premiums determined to
be due under the applicable life insurance policy (and any tax adjustment
payments, determined in accordance with the terms of the SMULIP as they exist on
the date of this Agreement) to provide the frozen SMULIP coverage amount. The
participation of all other Transferred Individuals who participate in the SMULIP
shall terminate as of the Close of the Disposition Date, and the life insurance
policy covering the life of such Transferred Individuals under the SMULIP may be
allowed to lapse, surrendered for its cash surrender value, or continued with
premium payments being made from the Transferred Individual's (or his or her
assignee's) personal assets.

                                      -29-
<PAGE>   35
            (b)   AT&T EXECUTIVE BASIC LIFE INSURANCE PROGRAM. The life
insurance amount under the EBLIP shall be frozen (the "frozen EBLIP coverage")
as of the Close of the Disposition Date for any Transferred Individual who is an
EBLIP participant as of the Close of the Disposition Date and who either (i) is
then eligible to participate in the Retirement-Related Benefit Plans; or (ii)
may be eligible to participate in the Retirement-Related Benefit Plans pursuant
to the provisions of Section 4.6. AT&T shall allow such Transferred Individual
to continue to participate in the EBLIP until the earlier of (1) the Transferred
Individual's attainment of his or her "normal termination date" under the terms
of the EBLIP as such terms exist on the date of this Agreement or (2) the
Transferred Individual's termination of employment from Wireless Services and
all Wireless Services Entities before becoming eligible to participate in the
Retirement-Related Benefit Plans pursuant to the provisions of Section 4.6.
During the Transferred Individual's period of continued participation in the
EBLIP, AT&T shall pay the premiums determined to be due under the applicable
life insurance policy to provide the frozen EBLIP coverage. Notwithstanding any
provision of this Section 5.10(b) to the contrary, after any Transferred
Individual who continues to participate in the EBLIP attains age 66, the
participant's frozen EBLIP coverage shall be reduced according to the benefit
schedule of the EBLIP for participants age 66 and older as such schedule exists
on the date of this Agreement. The participation of all other Transferred
Individuals who participate in the EBLIP shall terminate as of the Close of the
Disposition Date, and AT&T shall transfer ownership of the life insurance policy
covering the Transferred Individual ("EBLIP Policy") (after withdrawing the
total cash surrender value from the life insurance policy) to the Transferred
Individual (or his or her assignee). Following transfer of the EBLIP Policy,
AT&T shall have no further obligation with respect to the EBLIP Policy and the
Transferred Individual (or his or her assignee) may allow the EBLIP Policy to
lapse or continue the coverage under the EBLIP Policy with premium payments
being made from the Transferred Individual's (or his or her assignee's) personal
assets.

            (c)   AT&T ESTATE ENHANCEMENT PROGRAM. For periods immediately after
the Disposition Date, Transferred Individuals who are eligible to participate in
the AT&T Corp. Estate Enhancement Program, including the AT&T Corp. Alternative
Death Benefit Program and the AT&T Corp. Special Death Benefit Program, as of
the Disposition Date may continue to participate in the AT&T Estate Enhancement
Program (subject to all existing terms and conditions of the respective
programs) with respect to deferred compensation balances in the AT&T Deferral
Plan as of the Close of the Disposition Date.

            (d)   AT&T SUPPLEMENTAL VARIABLE UNIVERSAL LIFE INSURANCE PROGRAM.
The participation of all Transferred Individuals in the SVULIP shall terminate
as of the Close of the Disposition Date. Affected Transferred Individuals may,
in their sole discretion, continue, on a direct-pay basis, part or all of the
coverage previously provided to them under the SVULIP.

      5.10  FINANCIAL COUNSELING.

            (a)   AT&T shall provide financial counseling program benefits
(including preparation of income tax returns for the Disposition Year) for one
year following the Disposition Date for those AT&T Transferees who immediately
before the Close of the Disposition Date were (i) receiving financial counseling
program benefits under either the AT&T Senior Management Financial Counseling
Program or the AT&T Executive Financial Counseling Program, and (ii) eligible to
participate in the AT&T Retirement-Related Benefit

                                      -30-
<PAGE>   36
Plans. To the extent the provision of any such benefit by AT&T is taxable income
to the AT&T Transferee, AT&T shall make a tax adjustment payment to such AT&T
Transferee in accordance with AT&T's tax "gross-up" policies for similarly
situated retiring employees at the senior manager or executive salary grade
level ("E-level"), as applicable. AT&T financial counseling benefits will
terminate for all other AT&T Transferees as of the Close of the Disposition
Date.

            (b)   Except as provided in Section 5.12(a), effective Immediately
after the Disposition Date, Wireless Services shall assume all costs relating
to, arising out of, or resulting from the provision of financial counseling
services, from and after the Close of the Disposition Date to any individual who
otherwise would have been eligible for financial counseling services under the
AT&T Senior Management Financial Counseling Program and the AT&T Executive
Financial Counseling Program.

      5.11  TOLL DISCOUNT PROGRAM. Any Transferred Individual who is eligible to
participate in the Retirement-Related Benefit Plans as of the Close of the
Disposition Date shall be entitled to continue to receive toll reimbursements in
accordance with the terms of the applicable AT&T Toll Discount Program. AT&T
shall discontinue making toll reimbursements to all AT&T Transferees under the
AT&T Toll Discount Program effective as of the earlier of (a) the Close of the
Disposition Date; or (b) the date on which the AT&T Transferee would no longer
be in an eligible class of employees under the applicable AT&T Toll Discount
Program.

      5.12  RELOCATION PLAN. Wireless Services shall be responsible for all
Liabilities with respect to the relocation expenses of any Transferred
Individuals related to their employment by Wireless Services or a Wireless
Services Entity. AT&T shall be responsible for all Liabilities with respect to
the relocation expenses authorized by AT&T for any employees who, before the
Close of the Disposition Date, leave the employment of Wireless Services, a
Wireless Services Entity, or the Wireless Group to become employees of AT&T or
any AT&T Entity other than Wireless Services or a Wireless Services Entity.

      5.13  SENIOR MANAGER CAR ALLOWANCES. AT&T shall discontinue making car
allowance payments to AT&T Transferees under the AT&T Senior Manager Ground
Transportation Program effective as of the earlier of (a) the Close of the
Disposition Date, or (b) the date on which the AT&T Transferees would no longer
be in an eligible class of employees under that program.

      5.14  TAXABLE FRINGE BENEFITS. AT&T shall discontinue providing benefits
to AT&T Transferees under the AT&T Taxable Fringe Benefit Program effective as
of the earlier of (a) the Close of the Disposition Date or (b) the date on which
the AT&T Transferees would no longer be in an eligible class of employees under
that program.

                                      -31-
<PAGE>   37
                                   ARTICLE VI
                           GENERAL AND ADMINISTRATIVE

      6.1   PAYMENT OF LIABILITIES. Wireless Services shall pay directly, or
reimburse AT&T promptly for, all compensation payable to AT&T Transferees for
services rendered to the Wireless Group while in the employ of AT&T or an AT&T
Entity on or before the Disposition Date to the extent not already reimbursed.
To the extent the amount of such Liabilities is not yet determinable because the
status of individuals as AT&T Transferees is not yet determined, except as
otherwise specified herein or in another Ancillary Agreement with respect to
particular Liabilities, Wireless Services shall make such payments or
reimbursements based upon AT&T's reasonable estimates of the amounts thereof,
and when such status is determined, Wireless Services shall make additional
reimbursements or payments, or AT&T shall reimburse Wireless Services, to the
extent necessary to reflect the actual amount of such Liabilities.

      6.2   SHARING OF PARTICIPANT INFORMATION. AT&T and Wireless Services shall
share, AT&T shall cause each applicable AT&T Entity to share, and Wireless
Services shall cause each applicable Wireless Services Entity to share, with
each other and their respective agents and vendors (without obtaining releases)
all participant information necessary for the efficient and accurate
administration of each of the AT&T Plans and the Wireless Services Plans. AT&T
and Wireless Services and their respective authorized agents shall, subject to
applicable laws on confidentiality, be given reasonable and timely access to,
and may make copies of, all information relating to the subjects of this
Agreement in the custody of the other party, to the extent necessary for such
administration. Until the Close of the Disposition Date, all participant
information shall be provided in the manner and medium applicable to
Participating Companies in the AT&T Plans generally, and thereafter until
December 31, 2002, all participant information shall be provided in a manner and
medium that are compatible with the data processing systems of AT&T as in effect
as of the Close of the Disposition Date, unless otherwise agreed to by AT&T and
Wireless Services.

      6.3   NON-TERMINATION OF EMPLOYMENT; NO THIRD-PARTY BENEFICIARIES. Except
as expressly provided in this Agreement, no provision of this Agreement or the
Separation and Distribution Agreement shall be construed to create any right, or
accelerate entitlement, to any compensation or benefit whatsoever on the part of
any Transferred Individual or other future, present, or former employee of AT&T,
an AT&T Entity, Wireless Services, or a Wireless Services Entity under any AT&T
Plan or Wireless Services Plan or otherwise. Without limiting the generality of
the foregoing: (i) except as expressly provided in this Agreement or with
respect to the AT&T Pension Plans and the AT&T Retirement-Related Benefit Plans,
neither the occurrence of the Close of the Disposition Date nor the termination
of the Participating Company status of Wireless Services or a Wireless Services
Entity shall cause any employee to be deemed to have incurred a termination of
employment which entitles such individual to the commencement of benefits under
any of the Wireless Services Plans or any of the Individual Agreements; (ii)
except as expressly provided in this Agreement, nothing in this Agreement shall
preclude Wireless Services or any Wireless Services Entity, at any time after
the Close of the Disposition Date, from amending, merging, modifying,
terminating, eliminating, reducing, or otherwise altering in any respect any
Wireless Services Plan, any benefit under any Plan or any trust, insurance
policy or funding vehicle related to any Wireless Services Plan; and (iii)
except as expressly provided in this Agreement, nothing in this Agreement shall
preclude AT&T or any

                                      -32-
<PAGE>   38
AT&T Entity, at any time after the Close of the Disposition Date, from amending,
merging, modifying, terminating, eliminating, reducing, or otherwise altering in
any respect any AT&T Plan, any benefit under any Plan or any trust, insurance
policy or funding vehicle related to any AT&T Plan.

      6.4   AUDIT RIGHTS WITH RESPECT TO INFORMATION PROVIDED.

            (a)   Each of AT&T and Wireless Services, and their duly authorized
representatives, shall have the right to conduct audits with respect to all
information provided to it by the other party. The party conducting the audit
(the "Auditing Party") shall have the sole discretion to determine the
procedures and guidelines for conducting audits and the selection of audit
representatives under this Section 6.4(a). The Auditing Party shall have the
right to make copies of any records at its expense, subject to the
confidentiality provisions set forth in the Separation and Distribution
Agreement, which are incorporated by reference herein. The party being audited
shall provide the Auditing Party's representatives with reasonable access during
normal business hours to its operations, computer systems and paper and
electronic files, and provide workspace to its representatives. After any audit
is completed, the party being audited shall have the right to review a draft of
the audit findings and to comment on those findings in writing within five
business days after receiving such draft.

            (b)   The Auditing Party's audit rights under this Section 6.4(b)
shall include the right to audit, or participate in an audit facilitated by the
party being audited, of any Subsidiaries and Affiliates of the party being
audited and of any benefit providers and third parties with whom the party being
audited has a relationship, or agents of such party, to the extent any such
persons are affected by or addressed in this Agreement (collectively, the
"Non-parties"). The party being audited shall, upon written request from the
Auditing Party, provide an individual (at the Auditing Party's expense) to
supervise any audit of a Non-party. The Auditing Party shall be responsible for
supplying, at the Auditing Party's expense, additional personnel sufficient to
complete the audit in a reasonably timely manner. The responsibility of the
party being audited shall be limited to providing, at the Auditing Party's
expense, a single individual at each audited site for purposes of facilitating
the audit.

      6.5   FIDUCIARY MATTERS. AT&T and Wireless Services each acknowledge that
actions required to be taken pursuant to this Agreement may be subject to
fiduciary duties or standards of conduct under ERISA or other applicable law,
and no party shall be deemed to be in violation of this Agreement if it fails to
comply with any provisions hereof based upon its good faith determination that
to do so would violate such a fiduciary duty or standard. Each party shall be
responsible for taking such actions as are deemed necessary and appropriate to
comply with its own fiduciary responsibilities and shall fully release and
indemnify the other party for any Liabilities caused by the failure to satisfy
any such responsibility.

      6.6   COLLECTIVE BARGAINING. To the extent any provision of this Agreement
is contrary to the provisions of any collective bargaining agreement to which
AT&T or any Affiliate of AT&T is a party, the terms of such collective
bargaining agreement shall prevail. Should any provisions of this Agreement be
deemed to relate to a topic determined by an appropriate authority to be a
mandatory subject of collective bargaining, AT&T or Wireless Services may be
obligated to bargain with the union representing affected employees concerning
those subjects.

                                      -33-
<PAGE>   39
      6.7   CONSENT OF THIRD PARTIES. If any provision of this Agreement is
dependent on the consent of any third party (such as a vendor or a union) and
such consent is withheld, AT&T and Wireless Services shall use their reasonable
best efforts to implement the applicable provisions of this Agreement to the
full extent practicable. If any provision of this Agreement cannot be
implemented due to the failure of such third party to consent, AT&T and Wireless
Services shall negotiate in good faith to implement the provision in a mutually
satisfactory manner. The phrase "reasonable best efforts" as used herein shall
not be construed to require the incurrence of any non-routine or unreasonable
expense or liability or the waiver of any right.

                                   ARTICLE VII
                                  MISCELLANEOUS

      7.1   EFFECT IF DISPOSITION DOES NOT OCCUR. If the Close of the
Disposition Date does not occur, then all actions and events that are, under
this Agreement, to be taken or occur effective immediately prior to or as of the
Close of the Disposition Date, or Immediately after the Disposition Date, or
otherwise in connection with the Separation Transactions, shall not be taken or
occur except to the extent specifically agreed by Wireless Services and AT&T.

      7.2   RELATIONSHIP OF PARTIES. Nothing in this Agreement shall be deemed
or construed by the parties or any third party as creating the relationship of
principal and agent, partnership or joint venture between the parties, it being
understood and agreed that no provision contained herein, and no act of the
parties, shall be deemed to create any relationship between the parties other
than the relationship set forth herein.

      7.3   AFFILIATES. Each of AT&T and Wireless Services shall cause to be
performed, and hereby guarantees the performance of, all actions, agreements and
obligations set forth in this Agreement to be performed by an AT&T Entity or a
Wireless Services Entity, respectively.

      7.4   INCORPORATION OF SEPARATION AND DISTRIBUTION AGREEMENT PROVISIONS.
The following provisions of the Separation and Distribution Agreement are hereby
incorporated herein by reference, and unless otherwise expressly specified
herein, such provisions shall apply as if fully set forth herein (references in
this Section 7.4 to an "Article" or "Section" shall mean Articles or Sections of
the Separation and Distribution Agreement, and, except as expressly set forth
below, references in the material incorporated herein by reference shall be
references to the Separation and Distribution Agreement): Article VI (relating
to Mutual Releases and Indemnification); Article VIII (relating to Exchange of
Information and Confidentiality); Article IX (relating to Further Assurances and
Additional Covenants); Article X (relating to Termination); and Article XI
(relating to Miscellaneous).

      7.5   GOVERNING LAW. To the extent not preempted by applicable federal
law, this Agreement shall be governed by, construed and interpreted in
accordance with the laws of the State of New York, irrespective of the choice of
laws principles of the State of New York as to all matters, including matters of
validity, construction, effect, performance and remedies.

      7.6   REFERENCES. Except as provided in Section 7.4, all references to
Sections, Articles or Schedules contained herein mean Sections, Articles or
Schedules of or to this Agreement, as the case may be, unless otherwise stated.

                                      -34-
<PAGE>   40
      IN WITNESS WHEREOF, the parties have caused this Employee Benefits
Agreement to be duly executed as of the day and year first above written.

                                    AT&T CORP.

                                    By:_________________________________
                                    Name:
                                    Title:

                                    AT&T WIRELESS SERVICES, INC.

                                    By:_________________________________
                                    Name:
                                    Title:

                                      -35-

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