cent. shall not be paid on the second preferred stock, the deficiency shall not be paid upon such second preferred stock out of the surplus or net profits for any subsequent or preceding year. In the event of any liquidation, dissolution or winding up, whether voluntary or involuntary, of said consolidated corporation, the holders of the second preferred stock shall be entitled to be paid in full out of the assets of said consolidated corporation the par amount of their shares and all dividends thereon declared and unpaid before any amount shall be paid out of said assets to the holders of the common stock.

The second preferred stock shall be redeemable as an entirety at any time at the option of said consolidated corporation at the price of One Hundred Dollars ($100) per share, provided that published notice be given in a manner to be determined by the board of directors of said consolidated corporation, at least once a week for four successive weeks prior to the date of said redemption.

The holders of the second preferred stock may at any time prior to the call of the same for redemption, exchange the same for common stock of said consolidated corporation at par-that is to say, for each share of second preferred stock so exchanged one share of common stock.

Said second preferred stock shall have no further preference or priority over the common stock except as in this article provided.

Any second preferred stock which may be surrendered for exchange into common stock may be reissued as common stock, and the amount of authorized second preferred stock shall thereby be correspondingly reduced and the amount of authorized common stock correspondingly increased, but without reduction or increase of the total authorized capital stock of the consolidated corporation.

FROM THE CERTIFICATE OF INCORPORATION OF AMERICAN INTERNATIONAL CORPORATION

ILLUSTRATING MANAGERS' SHARES

THIRD. The amount of capital stock of the corporation is Fifty million Dollars ($50,000,000), of which One million Dollars ($1,000,000) is preferred stock (to be known as "Managers' Shares"), and Forty-nine million Dollars ($49,000,000) is common stock.

The preferred stock shall be entitled to receive, out of surplus profits, dividends at the same rate as that paid on the common stock, until dividends aggregating seven per cent. (7%) shall have been paid or declared on both classes of stock during any one year. Thereafter, the preferred stock shall be entitled to receive one-fifth (1/5th) of any further distribution of surplus during that year, and the common stock shall be entitled to receive fourfifths (4/5ths) thereof.

Upon the liquidation of the corporation and the distribution of its assets, the preferred stock shall be entitled to receive an amount equal to the amount paid thereon, before any distribution shall be made to the common stock, which shall be entitled to receive out of the assets then remaining an amount equal to the amount paid on such common stock; after which, the preferred stock shall be entitled to receive one-fifth (1/5th) of the assets, if any, then remaining undistributed, and the common stock shall be entitled to receive four-fifths (4/5ths) thereof.

FOURTH. The number of shares of which the capital stock shall consist is Five hundred thousand (500,000), of the par value of One hundred Dollars ($100) each. The corporation may issue the whole or any part of its capital stock as partly paid stock, subject to calls thereon until the whole thereof shall have been paid in.

The amount of capital with which the corporation will begin busi ness is Three thousand Dollars ($3,000).

STOCKHOLDERS' RIGHTS1

To the Stockholders:

BOSTON, MASS., June 20, 1911.

This Company hereby offers to its Stockholders shares of new stock for cash at par, one hundred dollars ($100) per share, as follows:Each Stockholder of record at the close of business on Friday, June 30, 1911, will be entitled to subscribe for such new stock in the proportion of one share for every five shares that he then holds; that is, a right will attach to each share of the then outstanding stock to subscribe for one-fifth of a share of new stock, but subscriptions must be for full shares.

This right to subscribe will expire at the close of business on Thursday, August 31, 1911.

Subscriptions under holdings that are not multiples of five shares may be adjusted by the purchase or sale of rights. Sellers of rights should not subscribe thereunder. The Company can neither buy nor sell rights.

Subscriptions and assignments will be received either at the office of the Treasurer in Boston, No. 125 Milk Street, or at his office in New York, No. 15 Dey Street.

Payment for shares subscribed for must be made to the Treasurer, as follows:

Twenty-five dollars per share on or before Wednesday, November 1, 1911.

Twenty-five dollars per share on or before Thursday, February 1,

1912.

Twenty-five dollars per share on or before Wednesday, May 1, 1912. Twenty-five dollars per share on or before Thursday, August 1,

1912.

For the convenience of subscribers these payments may be made either at the Treasurer's office in Boston, No. 125 Milk Street, or at his office in New York, No. 15 Dey Street.

Payments of the first three instalments will bear interest from the due dates thereof until July 1, 1912, at the rate of dividend paid on the stock of this Company for the same period, and the interest accrued in any dividend period will be paid on the same date the dividend is payable provided no default has been made in the payment of any instalment of the subscription. Checks for this interest will

Circular sent to stockholders of the American Telephone and Telegraph Company, offering them new stock at par at a time when the old stock was selling at a premium.

be mailed to the subscribers of record except those to whom negotiable receipts have been issued. Such negotiable receipts will be issued when requested and will entitle the person named or his assigns of record in the office of the Treasurer to the interest herein specified and to the shares of new stock named therein. The new stock will

participate in any dividend payable after August 1, 1912.

Subscribers wishing to prepay may pay in full on any one of the respective due dates for the payment of instalments, and will be paid interest on such prepayment at the rate of four per cent. per annum from such due date of payment to the date when each instalment so prepaid becomes payable.

Certificates of stock will be dated August 1, 1912, and will be delivered as soon thereafter as they can be prepared.

Warrants specifying the amount of stock for which stockholders are entitled to subscribe under this circular will be issued to each stockholder by the Treasurer as soon after June 30, 1911, as practicable, and must be returned to the Treasurer with the subscription endorsed thereon duly signed on or before August 31, 1911, otherwise the right to subscribe will be void and the warrants of no value.

Receipt of such warrants and subscriptions will be acknowledged by the Treasurer.

The rights specified in such warrants may be sold and transferred by assignment executed in the form prescribed and printed thereon.

Stockholders who may wish to subscribe for a portion of the stock covered by a warrant and dispose of the balance or who may wish to dispose of a portion to one person and the balance to another should return their warrants to the Treasurer at either of the above-named offices, to be exchanged for other warrants, specifying the number of warrants desired in exchange and the number of shares to be covered by each.

All correspondence relating to the foregoing should be addressed to the Treasurer, William R. Driver, 125 Milk Street, Boston, Mass.

By order of the Directors,
THEODORE N. VAIL,

President.

MEMORANDUM

The proceeds of this issue of capital stock will be mainly used to provide the associated companies of the Bell System outside of the State of New York with funds for current and ordinary construction. and extension of plant, and will be represented in the treasury of the

American Telephone and Telegraph Company by the share capital or the capital advance notes of such companies.

A part will be used for extensions to plant (Long Distance service) of the American Telephone and Telegraph Company outside of the State of New York, and a part to maintain the cash balances now being drawn upon for all the above purposes.

Reference to the Annual Report for 1910, end of page 7 and page 8, under head of "Depreciation," sets forth the great advantage and economy of advance construction. Advance construction must be planned and cared for, and the cash provided in advance, if it is to be done in the best and most economical way.

The charges of this proposed issue on this year's revenue will be hardly appreciable. As a matter of fact, the usual yearly dividend on the whole amount could be met out of this year's revenue and still leave a surplus.

The business of the current six months of this year will show a continuation of increases in gross and net, although the toll and longdistance business as usual shows the effect of business depression.

The increase of subscribers' stations directly connected with the systems of the associated companies shows an increase over any previous year. The year will probably show a greater increase of stations, including those of connected or sub-licensed independent companies, thar any previous year.

In any comparisons with the figures so far of the present year, consideration should be given to the fact that the year's surplus earnings will be reduced at least $150,000 by increased charges against it, due to conversion of bonds into stock, and also about $315,000 by the decrease of interest income, due to the exchange of capital advance notes of the associated companies held by the American Telephone and Telegraph Company into capital stock of such companies, upon which no dividends as yet have been credited.

All the above facts taken in connection with the growing and more favorable sentiment of the community, which is evidenced by the passage in some states, and general advocacy and favorable consideration in others, of bills allowing opposition telephone companies to merge, together with the very broad and exhaustive decisions in supporting our contentions in the very few cases where we have had to go to the courts for protection against adverse legislation, presage for the next and future years a continuation of our past prosperity.

THEODORE N. VAIL,

President.