Shareowner Dividend Reinvestment and Stock Purchase Plan
The Shareowner Dividend Reinvestment and Stock Purchase Plan ("Plan") provides
owners of common shares of AT&T Corp. ("AT&T") with a convenient method of
purchasing additional shares.
Cash dividends on shares held in a participant's Plan account may be
automatically reinvested to purchase additional common shares. Under the Plan,
additional shares may also be purchased with supplemental cash.
At the option of AT&T, shares purchased by reinvestment of dividends or with
supplemental cash under the Plan may be purchased in the open market by an
independent agent, may be newly issued shares, or a combination of both.
The price of common shares purchased from AT&T will be the average of the daily
high and low sale prices of shares traded on the New York Stock Exchange
("NYSE") for the period of five trading days ending on the purchase date. The
price of common shares purchased in the open market will be the average price
paid by the independent agent to obtain them.
AT&T trades on the NYSE under the ticker symbol "T".
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIESCOMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED
UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATON TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Dated May 1, 1998
Table of Contents
The Company i
Summary of Plan 1
Features & Benefits 2
Provisions of the Plan 3
Plan Forms 3
How to Enroll 3
Dividend Reinvestment Options 3
Cash Purchase Options 6
Price of Shares 10
Certificate Issuance 12
Statement of Account 13
Withdrawal of Shares 14
Sale or Transfer of Shares 15
Change of Address 18
Tax Consequences 19
Where You Can Find More Information 21
Incorporation of Documents
by Reference 22
Use of Proceeds 24
Description of Common Shares of AT&T 25
Certain Preferential Rights of Holders
of Preferred Shares 25
Legal Opinion 26
Indemnification of Directors and Officers 26
AT&T was incorporated in 1885 under the laws of the State of New York and has
its principal executive offices at 32 Avenue of the Americas, New York, New York
10013-2412, telephone number 212-387-5400.
How To Reach Us
For information about the Plan, to request Plan forms or copies of this
prospectus visit the AT&T website at http://www.att.com/ir
or call Boston EquiServe toll free:
Outside the continental United States,
call collect 781-575-3777
Persons using a telecommunications device for the deaf (TDD),
All correspondence concerning the Plan should be mailed to:
c/o Boston EquiServe
P.O. Box 8035
Boston, MA 02266-8035
Please include your account number on all correspondence, checks or money
orders, together with a telephone number where you can be reached during
To remit supplemental cash payments:
Send a check or money order payable to AT&T in U.S. dollars to:
c/o Boston EquiServe
P.O. Box 370042
Boston, MA 02241-0742
SUMMARY OF THE PLAN
This prospectus describes the AT&T Shareowner Dividend Reinvestment and Stock
Purchase Plan, including amendments that are effective June 1, 1998. The Plan is
available to shareowners who own shares of AT&T common stock registered directly
If your AT&T shares are being held by your broker, you may enroll in the Plan by
having your shares transferred from your broker to you. If you do not own AT&T
shares at this time, you would need to purchase your initial shares from a
broker and have the shares transferred to you.
The Plan offers convenient reinvestment options you may select to automatically
increase the number of AT&T common shares you own, including the investment of
interest and dividends paid on other AT&T securities. As a Plan participant, you
may also purchase additional shares with cash. In either case you automatically
receive, at the discretion of AT&T, newly issued shares, shares purchased in the
open market by an independent agent, or a combination of both.
AT&T may change, suspend or terminate the Plan at any time. You will receive
written notification of any significant changes as long as you are enrolled in
AT&T has designated its shareowner services agent, Boston EquiServe Trust
Company, N.A., as Plan Administrator to keep records, send statements of your
account and perform other duties relating to the Plan.
Participation in the Plan is voluntary. You may enroll or end your participation
any time you wish. Please read the information in this prospectus carefully and
keep it for future reference.
Features and Benefits
Reinvest all or part of your dividends, conveniently and economically
- - Purchase additional shares with cash, as often as weekly ($100 min. - $250,000
- - Utilize electronic funds transfer from your bank account for automatic
monthly purchases of shares
- - Sell your shares with a simple phone call
- - Deposit share certificates in safekeeping (for shares enrolled in the Plan)
- - Track your purchases with simple statements
- - Enroll or change your Plan options by phone
- - Pay no brokerage commissions on share purchases
- - Start your participation with as little as one share
- - Build your investment systematically
PROVISIONS OF THE PLAN
The following is a statement of the provisions of the Plan.
All required forms are available on the AT&T website at http://www.att.com/ir or
from the Plan Administrator by calling 1-800-348-8288.
Please refer to page ii for additional contact information.
1. How do I enroll in the Plan?
How to Enroll
If you own at least one share* of AT&T common stock, you are eligible to
participate in the Plan. Complete and sign an Enrollment Authorization Form and
mail it along with your certificate(s) for safekeeping to the address on page
ii, or call the Plan Administrator. If you prefer, you may retain your
certificate(s). You will receive an enrollment confirmation at the option of
*Shares registered in your name and not in the name of a broker or bank.
2. What dividend reinvestment options are available to me?
Dividend Reinvestment Options
You may acquire additional common shares under the Plan by participating in one
of the following reinvestment options:
Full dividend reinvestment
The Plan provides the opportunity to purchase additional AT&T shares by
investing the dividends on all the shares you own. Instead of sending you a
dividend check, the Plan Administrator will use your dividend to purchase
additional shares of common stock and credit whole shares and any fractional
share to your account. Future dividends will be calculated on your total
holdings of both whole shares and any fractional share, for as long as you
participate in the Plan.
Partial Dividend Reinvestment
You may reinvest dividends on a partial number of the shares you own by
enrolling some shares in the Plan and continuing to receive cash dividends on
the remaining shares.
3. When will the reinvestment of my dividends begin?
When Reinvestment Begins
Your dividends will be reinvested with the first dividend payment following your
enrollment, provided there is sufficient time for processing prior to the
dividend record date. Historically, dividend record dates have been the last
business day of March, June, September and December. Otherwise, your dividend
reinvestment participation will be deferred until the next dividend payment
4. When will shares purchased with reinvested dividends be credited to my
Crediting of Plan Accounts
When shares are purchased from AT&T, shares will be credited to your account on
the dividend payment date. When shares are purchased in the open market by an
independent agent, shares will be credited to your account on the dividend
payment date, or on the date the independent agent notifies the Plan
Administrator that the purchase of shares is completed, if the purchase period
extends beyond the dividend payment date. The date that shares are credited to
your account is considered the purchase date.
The independent agent will be obligated to purchase shares promptly. However,
purchases may be made beginning on the 5th trading day preceding any dividend
payment date and will be completed by the 10th trading day following the
dividend payment date.
5. How do I change my options?
To Change Options
You may change your reinvestment option at anytime by submitting a new
Enrollment Authorization Form, or by calling the Plan Administrator.
6. How can I purchase additional shares?
Cash Purchase Options
In addition to your dividend reinvestment options, you may purchase additional
shares under the Plan with cash. This can be done by:
oMailing a check or money order for at least $100 at any time -- purchases will
be made during the following week oAuthorizing monthly electronic funds
transfers from your bank account oReinvesting interest or dividends on other
Specific instructions for each option are described in questions 7, 8 and 9.
Minimum and Maximum Investment
Each check, money order or electronic funds transfer must be at least $100, and
the total amount of any optional payments must not be more than $250,000 during
any calendar year. The calendar year limitation is based on when the Plan
Administrator receives the cash payments and not when they are used to purchase
shares. Cash payments in excess of $250,000 or less than $100 will be refunded
or returned, without interest.
If the Plan Administrator receives a cash payment that is returned due to
insufficient funds, any shares purchased in anticipation of receiving the funds
will be removed from your account and sold. If the net proceeds from the sale of
the shares are insufficient to satisfy the balance of uncollected amounts, the
Plan Administrator may sell additional shares from your account as needed to
satisfy the uncollected balance. In addition, an insufficient funds fee of
$25.00 will be charged. The Plan Administrator may place a hold on your Plan
account until the fee is received from you, or may sell shares from your account
to satisfy the amount.
7. How do I purchase shares with a cash payment?
You may send a check or money order, payable to AT&T in U.S. dollars, along with
a signed authorization or Supplemental Payment Form to the Plan Administrator. A
statement for each cash payment will be sent to you together with a Supplemental
Payment Form you may use to make another payment. Please be sure to indicate
your account number on the face of the check or money order.
Checks or money orders must be mailed to AT&T, c/o Boston EquiServe, P. O. Box
370042, Boston, MA 02241-0742. Delivery to any other address and/or failure to
use the proper form will not be considered a valid delivery. Neither AT&T nor
the Plan Administrator is responsible for cash payments mailed to another
address. Please note that postdated checks cannot be accepted toward the
purchase of shares. All checks will be processed as they are received and
interest will not be paid on cash held prior to the purchase date.
8. How can I take advantage of electronic funds transfer of cash to purchase
Electronic Funds Transfer
You may make monthly cash payments for share purchases via electronic funds
transfer by instructing the Plan Administrator to arrange for automatic
deductions from your account at a qualified financial institution in the United
States. Simply complete, sign and return an Automatic Debit Authorization Form
to the Plan Administrator. Automatic debits must be at least $100 per payment
and cannot exceed $250,000 in a calendar year. Your bank account will be debited
on the 25th of each month (or the preceding business day if the 25th is not a
business day). The purchase and crediting of your account will be made in
accordance with the weekly cash purchase schedule (see Question 10).
You can change or stop the automatic payments by completing and returning a new
9. How do I use interest or dividends on other AT&T securities to purchase
Reinvestment of Interest & Dividends on Other AT&T Securities
If you are enrolled in the Plan and are a holder of record of AT&T debentures,
bonds, notes or preferred shares (if such shares are issued in the future) you
may automatically reinvest the interest and dividends paid on these securities
to acquire additional AT&T common shares. Simply return the completed Interest
Payment Dividend Reinvestment Form and/or Preferred Dividend Reinvestment Form
to the Plan Administrator.
Interest or preferred dividends are considered cash payments and, as such, are
subject to the $100 minimum and $250,000 yearly maximum investment limits.
Interest and preferred share dividends, payable on the first day of the month,
will be reinvested during the next week's purchase schedule. Purchases will be
shown on your next Statement of Account.
10. If I choose to acquire additional shares with cash payments when will these
shares be purchased and credited to my account?
Timing of Shares Purchased with Cash
Funds received by Friday of each week will be used to purchase shares the
following week. The shares purchased each week will be credited to your account
on the third trading day following the purchase date. When shares are purchased
from AT&T, the purchase date will be each Tuesday. When shares are purchased in
the open market, an independent agent may purchase the shares over a period
beginning each Tuesday (or the next trading day if the NYSE is closed on
Tuesday) and ending on Friday of the same week. In this case, the purchase date
will be the last date shares are purchased by the independent agent.
11. At what price will common shares be purchased under the Plan?
Price of Shares
The price of common shares purchased in market transactions under either the
dividend reinvestment or cash purchase option will be the average price paid by
the independent agent to obtain them.
The price of shares purchased from AT&T under the Plan will be the average of
the daily high and low sale prices for AT&T common shares traded on the NYSE for
five trading days ending on the purchase date (or a period of five trading days
immediately preceding the purchase date if the NYSE is closed on that date). If
there is no trading of the shares on the NYSE for a substantial period of time
during any trading day in the period, AT&T will determine the price based on
market quotations it believes are appropriate. No shares will be sold by AT&T
under the Plan for less than the par value of each share.
12. Are there any costs involved to participate in the Plan?
Depending on the option you select, the following transaction fees are deducted
from the amount to be invested (in the case of dividend reinvestment or cash
purchases) or from the proceeds of any sale of shares: oDividend Reinvestment -
$1.00 or 10% of the total investment you make, whichever is less oCash purchase
of additional shares- $5.00 per purchase oFor each sale of shares held in the
Plan, there is a fee of $20.00 per sale. This fee applies to the sale of a
portion or all of the shares held in the Plan
AT&T pays all brokerage commissions for purchases of shares. However, the
Internal Revenue Service considers such fees to be dividend income to
13. How many common shares will I receive?
Number of Shares Purchased
The number of whole shares and any fractional share (computed to three decimal
places) credited to your account will be based on how much you are investing,
minus applicable fees, divided by the purchase price of the shares. This
calculation applies to shares purchased with cash or reinvested dividends.
14. Will I be sent certificates for the additional common shares purchased under
For your convenience and to protect against loss, destruction, or theft,
certificates will not be issued automatically for shares purchased under the
However, if you wish, you may request certificates for any number of whole
shares held in your Plan account. Certificates will be issued within two weeks
after receipt of a telephone or written request, signed by you (or, if a joint
registration, by at least one person). Any remaining whole shares and fractional
share will continue to be held in your account. A certificate for a fractional
share will not be issued under any circumstances.
Shares held in a Plan account may not be pledged as security for payment of a
debt or other obligation. If you wish to pledge shares, you must request that a
certificate be issued in your name.
An institution that is required by law to maintain physical possession of
certificates may make special arrangements regarding the issuance of
certificates. Such requests should be mailed to the Plan Administrator.
15. In whose name will certificates be registered when issued?
Unless you request a change, certificates will be registered in the name of the
person(s) enrolled in the Plan. To change the name(s) on the certificate, please
call the Plan Administrator, or access the AT&T website for transfer
16. How will I keep track of my account activities?
Statement of Account
A Statement of Account will be sent to you periodically by the Plan
Administrator showing amounts invested, purchase prices, shares purchased, fees
and other information for the year to date. An additional statement will also be
issued if you purchase shares with cash payments, withdraw shares or terminate
your participation in the Plan during a month in which a periodic statement is
not issued. All shares held in the Plan, in certificate form or in safekeeping
with the Plan Administrator, or its nominee, will be shown on your Statement of
Other materials you will receive include the Plan prospectus, plus
communications sent to every registered shareowner, including the AT&T Annual
Report, Notice of Annual Meeting and Proxy Statement, as well as periodic
reports that AT&T may issue. If you do not wish to receive these additional
materials please contact
the Plan Administrator.
17. Do I need to keep my statements?
Yes. The statements you receive reflect the purchase price of your shares. This
price is needed to determine your tax basis. It is important to retain the
statements for income tax purposes.
18. If I wish to withdraw some of my shares from the Plan, may I continue to
participate in the Plan?
Withdrawal of Shares From the Plan
Yes. You may request a withdrawal of any number of whole shares from the Plan,
at any time, by simply notifying the Plan Administrator by telephone or in
writing. Without cost to you, a certificate will be issued for the number of
whole shares requested. The remaining whole shares and any fractional share will
be retained in your account as long as you participate in the Plan. To remain in
the Plan you must keep at least one whole share enrolled in the Plan.
19. Can I sell or transfer some of my shares while participating in the Plan?
Sale or Transfer of Shares
Yes. You can sell or transfer some of the shares you have accumulated in the
Plan by calling or by sending a written request to the Plan Administrator.
However, you must leave at least one whole share in the Plan if you wish to
continue your participation. AT&T will continue to reinvest the dividends on the
remainder of the shares enrolled in the Plan and you may continue to make
supplemental cash purchases. If you wish to transfer shares, you need to obtain
and complete transfer instructions and mail them to the Plan Administrator. If
you wish to sell, the Plan Administrator will sell your shares, using an
independent broker, as soon as is practicable after receipt of your request.
If you are selling your shares, you should be aware that share prices might fall
during the period between the request for sale, its receipt by the Plan
Administrator and the ultimate sale on the open market. This is risk borne
solely by you and should be carefully evaluated.
Please understand that the Plan Administrator is not a broker and, therefore,
cannot accept instructions to sell on a particular day or at a particular price.
If you prefer to have control over the exact price and timing of your sale, you
will need to withdraw the shares you wish to sell and conduct that transaction
through a broker of your choice.
A fee will be deducted to cover processing costs for the sale of shares (see
20. How do I terminate my participation in the Plan?
When you wish to terminate your participation in the Plan, you may call or send
a written request to the Plan Administrator who will issue, at no cost, a
certificate for whole shares held in your account. A check will be issued to you
for any fractional share and your Plan account will be closed.
To terminate your participation prior to a specific dividend payment, the Plan
Administrator must receive your request not later than the last business day
preceding the dividend payment date.
Termination and Sale
You may also instruct the Plan Administrator to terminate your participation in
the Plan, sell your shares and send the proceeds to you. See Question 19 for
If your termination or termination and sale request is received during a
dividend payment cycle, your request will be processed after your dividend
shares are credited to your Plan account. Terminations of either type will not
be processed between the dividend payment date and the date your dividend shares
are credited to your account. Normally, this period does not exceed five
business days; however, it may be as many as ten business days.
21. If AT&T has a rights offering, how will my entitlement be computed?
Your entitlement will be based on your total holdings. However, a rights
certificate will be issued for the number of whole shares only. Rights based on
a fraction of a share will be sold and a check for the net proceeds will be sent
22. How will my Plan account be affected if AT&T declares a stock split or stock
Stock Split or Stock Dividend
If your shares are being held in safekeeping by the Plan Administrator, Dividend
your account will be credited with the appropriate number of shares distributed
as a result of a stock dividend or stock split on the distribution date. If you
hold share certificates, additional certificates will be mailed to you for the
23. How will I vote my shares at shareowners meetings?
One card will be mailed to you covering all shares held by the Plan
Administrator, as well as any other shares for which you hold a certificate(s).
This card will be either a proxy voting card for certificate shares, or a voting
instruction card for shares held by the Plan Administrator. Whole shares will be
voted in accordance with instructions given on the proxy voting/instruction
card. A fractional share will not be voted in any case.
You may vote your shares by mail, by telephone or on the Internet. If you do not
return your card or vote by telephone or Internet, your shares will not be
24. Might the Plan be changed or discontinued?
AT&T may change, suspend or terminate the Plan at any time. You will receive
notification of any significant changes as long as you participate in the Plan.
25. Who do I notify if my address changes?
Change of Address
The Plan Administrator should be notified immediately of any change of address.
You may also change your address on the AT&T website.
Most states have laws regarding abandoned property that require the Plan
Administrator, on behalf of AT&T, to turn over to the states all Plan account
holdings of owners who cannot be located. It is your responsibility to have your
current address on file with the Plan Administrator.
26. What are the Federal income tax consequences relating to my participation in
AT&T believes that the following summarizes the U.S. Federal income tax
consequences of participation in the Plan. You are urged to consult your own tax
advisor to determine the particular tax consequences of your participation in
the Plan and the subsequent sale of your shares.
Taxable Dividend Income
In the case of shares purchased in open market transactions with reinvested
dividends, you will have reportable dividend income in an amount equal to the
cash dividend declared plus any brokerage fees paid by AT&T.
In the case of shares purchased from AT&T with reinvested dividends, you will
have reportable dividend income in an amount equal to the fair market value of
the shares you receive. For these purposes, the fair market value will generally
be the average of the high and low price of the shares traded on the NYSE on the
dividend payment date.
If additional shares are purchased in open market transactions with cash,
interest from debt securities or preferred shares dividends, you will have
reportable dividend income in an amount equal to the brokerage fees paid by
AT&T. If such consideration is used to purchase shares from AT&T, you may have
additional reportable dividend income to the extent the fair market value of the
shares on the date of purchase exceeds the actual cost of purchase.
Your tax basis in shares acquired with reinvested dividends will generally equal
the amount treated as a dividend. Your tax basis in shares acquired with cash,
interest from debt securities, or preferred shares dividends will generally
equal the amount invested in the shares, increased by any additional dividend
amount recognized on the purchase of such shares.
Your holding period for shares acquired under the Plan will begin on the day
such shares are credited to your account.
Gain or Loss on Sale of Shares
You will generally not realize gain or loss upon withdrawal of shares from the
Plan in certificate form. Gain or loss will generally be realized on the sale of
shares in the Plan in an amount equal to the difference between the proceeds of
the sale and the tax basis in such shares.
In the case of certain foreign shareowners and Plan participants whose dividends
are subject to backup withholding, the tax required to be withheld will reduce
the amount available for reinvestment.
27. What are the responsibilities of AT&T and the Plan Administrator under the
Neither AT&T nor the Plan Administrator is liable for any action taken in good
faith or for failure to act in good faith. This includes, without limitation,
any claim of liability arising from failure to terminate an account prior to
receipt of a notice in writing of a participant's death.
Please be aware that neither AT&T nor the Plan Administrator can assure you of a
profit or protect you against a loss on shares purchased under the Plan.
Although the Plan contemplates the continuation of quarterly dividend payments,
the payment of future dividends will depend upon future earnings, the financial
condition of AT&T and other factors.
WHERE YOU CAN FIND MORE INFORMATION
AT&T files annual, quarterly and special reports, proxy statements and other
information with the Securities Exchange Commission ("SEC"). You may read and
copy any reports, statements or other information that AT&T files with the SEC
at the SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. These SEC filings are also available to the
public from commercial document retrieval services and at the Internet website
maintained by the SEC at http://www.sec.gov/. Reports, proxy statements and
other information should also be available for inspection at the offices of the
INCORPORATION OF DOCUMENTS BY REFERENCE
The SEC allows AT&T to "incorporate by reference" information into this
prospectus, which means that AT&T can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is considered part of this prospectus, except for any
information superseded by information contained directly in this prospectus, or
in later filed documents incorporated by reference in this prospectus.
This prospectus incorporates by reference the documents set forth below that
AT&T has previously filed with the SEC (File No. 1-1105). These documents
contain important information about AT&T and its finances. Some of these filings
have been amended by later filings, which are also listed.
Filings Period or Date of Report
Annual Report on Year ended
Form 10-K December 31, 1997
Current Reports January 8 and
on Form 8-K March 2, 1998
This prospectus also incorporates by reference additional documents that may be
filed with the SEC after the date of this prospectus and during the period that
AT&T continues the Plan. These include periodic reports, such as Annual Reports
on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as
well as proxy statements. Any document listed above or subsequently filed by
AT&T in each year during which AT&T operates the Plan prior to the filing by
AT&T of its Annual Report on Form10-K covering such year is no longer
incorporated by reference in, or considered part of this prospectus, after the
filing of such Annual Report on Form 10-K.
AT&T may have sent you some of the documents incorporated by reference in this
prospectus, but you can obtain any of them through AT&T, the SEC or the SEC's
Internet website as described above. Documents incorporated by reference are
available from AT&T without charge, excluding all exhibits, except that if AT&T
has specifically incorporated by reference an exhibit in this prospectus, the
exhibit will also be available without charge. You may obtain documents
incorporated by reference in this prospectus from the AT&T website at
http://www.att.com/ir or from AT&T, c/o Boston EquiServe, P.O. Box 8035, Boston,
MA 02266-8035 (telephone number 800-348-8288).
You should rely only on the information contained or incorporated by reference
in this prospectus. AT&T has not authorized anyone to provide you with
information that is different from what is contained in this prospectus.
This prospectus is dated May 1, 1998. You should not assume that the information
contained in this prospectus is accurate as of any date other than that date.
Neither the mailing of this prospectus to you nor the issuance of AT&T common
shares under the Plan creates any implication to the contrary.
This prospectus does not constitute an offer or solicitation by anyone in any
jurisdiction in which such offer or solicitation is not authorized or in which
the person making such offer or solicitation is not qualified to do so or to
anyone to whom it is unlawful to make such offer or solicitation.
USE OF PROCEEDS
AT&T does not know either the number of shares, if any, that it ultimately will
issue under the Plan or the prices at which shares will be sold. When shares are
purchased from AT&T, proceeds from such sales are intended to be used for
capital expenditures, advances to subsidiary companies, equity investment in
such companies, toward repayment of debt and for general corporate purposes.
DESCRIPTION OF COMMON SHARES OF AT&T
The following descriptions are summarized from the provisions of the certificate
of incorporation of AT&T, as amended.
All common shares (par value $1 per share) of AT&T are entitled to participate
equally in dividends. Each shareowner has one vote for each share registered in
the shareowner's name. All common shares would rank equally on liquidation, and
common shares including common shares offered under the Plan are fully paid and
nonassessable by AT&T. Holders of common shares have no pre-emptive rights.
AT&T is authorized to issue new common shares under the Plan and various
employee benefit plans of AT&T and its subsidiaries.
CERTAIN PREFERENTIAL RIGHTS OF HOLDERS OF PREFERRED SHARES
AT&T's authorized capital includes a class of 100,000,000 preferred shares,
issuable in series, cumulative as to dividends and having an authorized maximum
liquidation preference of $8,000,000,000. The preferred shares rank prior to the
common shares both as to dividends and on liquidation. There are no preferred
shares issued and outstanding. AT&T's Board of Directors is authorized to
establish the number of shares, designations, relative rights, preference and
limitations, including voting and conversion rights, of any future series of
The consolidated financial statements and consolidated financial statement
schedules of AT&T and its subsidiaries incorporated by reference or included in
the Annual Report on Form 10-K for the year ended December 31,1997, have been
incorporated herein in reliance on the reports of Coopers & Lybrand, independent
auditors, given on the authority of that firm as experts in accounting and
The legality of the AT&T common shares to be issued under the Plan is being
passed upon for AT&T by Marilyn Wasser, Vice President Law and Secretary of AT&T
who as of March 31, 1998, owned 2,171 common shares of AT&T and had rights to
acquire 70,093 additional common shares of AT&T.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Pursuant to the statutes of the State of New York, a director or officer of a
corporation is entitled, under specified circumstances, to indemnification by
the corporation against reasonable expenses, including attorney's fees, incurred
by him in connection with the defense of a civil or criminal proceeding to which
he has been made, or threatened to be made, a party by reason of the fact that
he was such director or officer. In certain circumstances, indemnity is provided
against judgments, fines and amounts paid in settlement. In general,
indemnification is available where the director or officer acted in good faith,
for a purpose he reasonably believed to be in the best interests of the
corporation. Specific court approval is required in some cases. The foregoing
statement is subject to the detailed provisions of Sections 715, 717, and 721 -
725 of the New York Business Corporation Law ("BCL").
The AT&T By-laws provide that AT&T is authorized, by (i) a resolution of
shareholders, (ii) a resolution of directors or (iii) an agreement providing for
such indemnification, to the fullest extent permitted by applicable law, to
provide indemnification and to advance expenses to its directors and officers in
respect of claims, actions, suits or proceedings based upon, arising from,
relating to or by reason of the fact that any such director or officer serves or
served in such capacity with AT&T or at the request of AT&T in any capacity with
any other enterprise.
AT&T has entered into contracts with its officers and directors, pursuant to the
provisions of BCL Section 721, by which it will be obligated to indemnify such
persons, to the fullest extent permitted by the BCL, against expenses, fees,
judgments, fines and amounts paid in settlement in connection with any present
or future threatened, pending or completed action, suit or proceeding based in
anyway upon or related to the fact that such person was an officer or director
of AT&T or, at the request of AT&T, an officer, director or other partner,
agent, employee or trustee of another enterprise. The contractual
indemnification so provided will not extend to any situation where a judgment or
other final adjudication adverse to such person establishes that his acts were
committed in bad faith or were the result of active and deliberate dishonesty or
that the reinured to such person a financial profit or other advantage.
Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended, (the "Act") may be permitted to directors and officers of AT&T
pursuant to the foregoing BCL provisions, the indemnity contract, or otherwise,
AT&T has been advised that in the opinion of the SEC such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
The directors and officers of AT&T are covered by insurance policies
indemnifying against certain liabilities arising under the Act, which might be
incurred by them in such capacities.
(C) AT&T 1998
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