STOCK OPTION AGREEMENT, dated as of the 4th day of January, 1998 (this
"Agreement"), between Southern New England Telecommunications Corporation, a
Connecticut corporation ("Issuer"), and SBC Communications Inc., a Delaware
corporation ("Grantee").
RECITALS
(a) The Merger Agreement. Prior to the entry into this Agreement and
prior to the grant of the Option (as defined in Section 1(a)), Grantee, SBC
(CT), Inc., a wholly-owned subsidiary of Grantee ("Merger Sub"), and Issuer have
entered into an Agreement and Plan of Merger, dated as of the date hereof (the
"Merger Agreement"), pursuant to which Grantee and Issuer intend to effect a
merger of Merger Sub with and into Issuer (the "Merger").
(b) The Option Agreement. As an inducement and condition to Grantee's
and Merger Sub's willingness to enter into the Merger Agreement, and in
consideration thereof, the board of directors of Issuer has approved the grant
to Grantee of the Option pursuant to this Agreement; provided, that such grant
was expressly conditioned upon, and made of no effect until after, execution and
delivery by Issuer, Grantee and Merger Sub of the Merger Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
1. The Option. (a) Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms hereof, up
to 13,266,587 fully paid and nonassessable shares of common stock, having a par
value of one dollar per share ("Common Stock"), of Issuer at a price per share
in cash equal to $65.00 (the "Option Price"); provided, however, that in no
event shall the number of shares for which the Option is exercisable exceed
19.9% of the shares of Common Stock issued and out standing at the time of
exercise (without giving effect to the shares of Common Stock issued or issuable
under the Option) (the "Maximum Applicable Percentage"). The number of shares of
Common Stock purchasable upon exercise of the Option and the Option Price are
subject to adjustment as set forth herein.
(b) In the event that any additional shares of Common Stock are issued
or otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement), the aggregate number of shares of Common Stock
purchasable upon exercise of the Option (inclusive of shares, if any, previously
purchased upon exercise of the Option) shall automatically be increased (without
any further action on the part of Issuer or Grantee being neces sary) so that,
after such issuance, it equals the Maximum Applicable Percentage. Any such
increase shall not affect the Option Price.
2. Exercise; Closing;. (a) Conditions to Exer cise; Termination.
Grantee or any other person that shall become a holder of all or a part of the
Option in accordance with the terms of this Agreement (each such person being
referred to herein as the "Holder") may exercise the Option, in whole or in
part, by delivering a written notice thereof as provided in Section 2(d) within
90 days of the occurrence of a Triggering Event (as defined in Section 2(b))
unless prior to such Triggering Event the Effective Time (as defined in the
Merger Agreement) shall have occurred. The Option shall terminate upon either
(i) the occurrence of the Effective Time or (ii) the close of business on the
earlier of (x) the day 90 days after the date that Grantee becomes entitled to
receive the Termination Fee (as defined in the Merger Agreement) and (y) the
date that Grantee is no longer potentially entitled to receive the Termination
Fee, in each case under Section 8.5(b) of the Merger Agreement.
(b) Triggering Event. A "Triggering Event" shall have occurred if the
Merger Agreement is terminated and Grantee then or thereafter becomes entitled
to receive the Termination Fee pursuant to Section 8.5(b) of the Merger
Agreement.
(c) Notice of Trigger Event by Issuer. Issuer shall notify Grantee
promptly in writing of the occurrence of any Triggering Event, it being
understood that the giving of such notice by Issuer shall not be a condition to
the right of the Holder to exercise the Option.
(d) Notice of Exercise by Grantee. If a Holder shall be entitled to and
wishes to exercise the Option, it shall send to Issuer a written notice (the
date of which is referred to herein as the "Notice Date") specifying (i) the
total number of shares that the Holder will purchase pursu ant to such exercise
and (ii) a place and date (a "Closing Date") not earlier than three business
days nor later than
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60 business days from the Notice Date for the closing of such purchase (a
"Closing"); provided, that if a filing is required under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), or prior
notification to or approval of the FCC, the CDPUC or any other regulatory
authority is required in connection with such purchase, the Holder or Issuer, as
required, promptly after the giving of such notice shall file the required
notice or application for approval and shall expeditiously process the same and
the period of time referred to in clause (ii) shall commence on the date on
which the Holder furnishes to Issuer a supplemental written notice setting forth
the Closing Date, which notice shall be furnished as promptly as practicable
after all required notification periods shall have expired or been terminated
and all required approvals shall have been obtained and all requisite waiting
periods shall have passed. Each of the Holder and the Issuer agrees to use all
reasonable efforts to cooperate with and provide information to Issuer or
Holder, as the case may be, for the purpose of any required notice or
application for approval.
(e) Payment of Purchase Price. At each Closing, the Holder shall pay to
Issuer the aggregate purchase price for the shares of Common Stock purchased
pursuant to the exercise of the Option in immediately available funds by a wire
transfer to a bank account designated by Issuer; provided, that failure or
refusal of Issuer to designate such a bank account shall not preclude the Holder
from exercising the Option, in whole or in part.
(f) Delivery of Common Stock. At such Closing, simultaneously with the
payment of the purchase price by the Holder, Issuer shall deliver to the Holder
a certificate or certificates representing the number of shares of Common Stock
purchased by the Holder and, if the Option shall be exercised in part only, a
new Option evidencing the rights of the Holder to purchase the balance (as
adjusted pursuant to Section 1(b)) of the shares then purchasable hereunder.
(g) Restrictive Legend. Certificates for Common Stock delivered at a
Closing may be endorsed with a restric tive legend that shall read substantially
as follows:
"The transfer of the shares represented by this certificate is subject
to certain provisions of an agreement between the registered holder hereof
and Issuer, a copy of which agreement is on file at the principal office of
Issuer, and to resale restrictions arising under the Securities
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Act of 1933, as amended. A copy of the aforemen tioned agreement will be
mailed to the holder hereof without charge promptly after receipt by Issuer
of a written request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "Securities Act"), in the above
legend shall be removed by delivery of substitute certificate(s) without such
reference if the Holder shall have delivered to Issuer a copy of a letter from
the staff of the Securities and Exchange Commission, or a written opinion of
counsel, in form and substance reasonably satisfactory to Issuer, to the effect
that such legend is not required for purposes of the Securities Act; (ii) the
reference to the provisions of this Agreement in the above legend shall be
removed by delivery of substitute certificate(s) without such reference if the
shares have been sold or transferred in compliance with the provisions of this
Agreement and under circumstances that do not require the retention of such
reference; and (iii) the legend shall be removed in its entirety if the
conditions in the preceding clauses (i) and (ii) both are satisfied. In
addition, such certificates shall bear any other legend as may be required by
applicable law.
(h) Ownership of Record; Tender of Purchase Price; Expenses. Upon the
giving by the Holder to Issuer of a written notice of exercise referred to in
Section 2(e) and the tender of the applicable purchase price in immediately
available funds, the Holder shall be deemed to be the holder of record of the
shares of Common Stock issuable upon such exercise, notwithstanding that the
stock transfer books of Issuer shall then be closed or that certificates repre
senting such shares of Common Stock shall not have been delivered to the Holder.
Issuer shall pay all expenses, and any and all United States federal, state and
local taxes and other charges that may be payable in connection with the
preparation, issue and delivery of stock certificates under this Section 2 in
the name of the Holder or its assignee, transferee or designee.
3. Covenants of Issuer. In addition to its other agreements and
covenants herein, Issuer agrees:
(a) Shares Reserved for Issuance. To maintain, free from preemptive
rights, sufficient authorized but unissued or treasury shares of Common Stock so
that the Option may be fully exercised without additional authoriza tion of
Common Stock after giving effect to all other
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options, warrants, convertible securities and other rights of third parties to
purchase shares of Common Stock from Issuer, or to issue the appropriate number
of shares of Common Stock pursuant to the terms of this Agreement;
(b) No Avoidance. Not to avoid or seek to avoid (whether by charter
amendment or through reorganization, consolidation, merger, issuance of rights,
dissolution or sale of assets, or by any other voluntary act) the observance or
performance of any of the covenants, agreements or conditions to be observed or
performed hereunder by Issuer; and
(c) Further Assurances. Promptly after the date hereof to take all
actions as may from time to time be required (including (i) complying with all
applicable premerger notification, reporting and waiting period requirements
under the HSR Act and (ii) in the event that prior approval of or notice to the
FCC, the CDPUC or any other regulatory authority is necessary under any
applicable federal, state or local law before the Option may be exercised,
cooperating fully with the Holder in preparing and processing the required
applications or notices) in order to permit each Holder to exercise the Option
and purchase shares of Common Stock pursuant to such exercise and to take all
action necessary to protect the rights of the Holder against dilution.
4. Representations and Warranties of Issuer. Issuer hereby makes each
of the representations and warranties contained in Sections 5.1(b)(ii), 5.2(a)
and 5.2(b) of the Merger Agreement as they relate to this Agreement as if such
representations and warranties were set forth herein. Issuer hereby further
represents and warrants to Grantee that all shares of Common Stock, upon
issuance pursuant to the Option, will be delivered free and clear of all claims,
liens, encumbrances, and security interests (other than those created by this
Agreement) and not subject to any preemptive rights.
5. Representations and Warranties of Grantee. Grantee hereby represents
and warrants to Issuer that Grantee has all requisite corporate power and
authority and has taken all corporate action necessary in order to execute,
deliver and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby; this Agreement has been duly and validly
executed and delivered by Grantee and constitutes a valid and binding agreement
of Grantee enforceable against Grantee in
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accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affect ing creditors' rights and to general equity principles.
6. Exchange; Replacement. This Agreement and the Option granted hereby
are exchangeable, without expense, at the option of the Holder, upon
presentation and surrender of this Agreement at the principal office of Issuer,
for other Agreements providing for Options of different denominations entitling
the holder thereof to purchase in the aggregate the same number of shares of
Common Stock purchasable at such time hereunder, subject to corresponding
adjustments in the number of shares of Common Stock purchasable upon exercise so
that the aggregate number of such shares under all Stock Option Agreements
issued in respect of this Agreement shall not exceed the Maximum Applicable
Percentage. Unless the context shall require otherwise, the terms "Agreement"
and "Option" as used herein include any Stock Option Agreements and related
Options for which this Agreement (and the Option granted hereby) may be
exchanged. Upon (i) receipt by Issuer of evidence reason ably satisfactory to it
of the loss, theft, destruction, or mutilation of this Agreement, (ii) receipt
by Issuer of reasonably satisfactory indemnification in the case of loss, theft
or destruction and (iii) surrender and cancellation of this Agreement in the
case of mutilation, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by any person other than the holder of the new Agreement.
7. Adjustments. In addition to the adjustment to the total number of
shares of Common Stock purchasable upon exercise of the Option pursuant to
Section 1(b), the total number of shares of Common Stock purchasable upon the
exercise hereof and the Option Price shall be subject to adjustment from time to
time as follows:
(a) In the event of any change in the outstanding shares of Common
Stock by reason of stock dividends, split-ups, mergers, recapitalizations,
combinations, subdivisions, conversions, exchanges of shares or the like, the
type and number of shares of Common Stock purchasable upon
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exercise of the Option shall be appropriately adjusted, and proper provision
shall be made in the agreements governing any such transaction, so that (i) any
Holder shall receive upon exercise of the Option the number and class of shares,
other securities, property or cash that such Holder would have received in
respect of the shares of Common Stock purchas able upon exercise of the Option
if the Option had been exercised and such shares of Common Stock had been issued
to such Holder immediately prior to such event or the record date therefor, as
applicable; and (ii) in the event any additional shares of Common Stock are to
be issued or otherwise become outstanding as a result of any such change (other
than pursuant to an exercise of the Option), the number of shares of Common
Stock purchasable upon exercise of the Option shall be increased so that, after
such issuance and together with shares of Common Stock previously issued
pursuant to the exercise of the Option (as adjusted on account of any of the
foregoing changes in the Common Stock), the number of shares so purchasable
equals the Maximum Applicable Percentage of the number of shares of Common Stock
issued and outstanding immediately after the consummation of such change; and
(b) Whenever the number of shares of Common Stock purchasable upon
exercise hereof is adjusted as provided in this Section 7, the Option Price
shall be adjusted by multiplying the Option Price by a fraction, the numerator
of which is equal to the number of shares of Common Stock purchasable prior to
the adjustment and the denominator of which is equal to the number of shares of
Common Stock purchasable after the adjustment.
8. Registration. (a) Upon the occurrence of a Triggering Event prior to
an Exercise Termination Event, Issuer shall, at the request of Grantee delivered
in the written notice of exercise of the Option provided for in Section 2(e), as
promptly as practicable prepare, file and keep current a shelf registration
statement under the Securities Act covering any or all shares issued and
issuable pursuant to the Option and shall use its best efforts to cause such
registration statement to become effective and remain current in order to permit
the sale or other disposition of any shares of Common Stock issued upon total or
partial exercise of the Option ("Option Shares") in accordance with any plan of
disposition requested by Grantee; provided, however, that Issuer may postpone
filing a registration statement relating to a registration request by Grantee
under this Section 8 for a period of time (not in excess of 30 days) if in its
judgment such filing would require the disclosure of material information that
Issuer has a bona fide business purpose for preserving as confidential. Issuer
will use its best efforts to cause
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such registration statement first to become effective and then to remain
effective for 270 days from the day such registration statement first becomes
effective or until such earlier date as all shares registered shall have been
sold by Grantee. In connection with any such registration, Issuer and Grantee
shall provide each other with representa tions, warranties, indemnities and
other agreements customarily given in connection with such registrations. If
requested by Grantee in connection with such registration, Issuer shall become a
party to any underwriting agreement relating to the sale of such shares, but
only to the extent of obligating Issuer in respect of representations,
warranties, indemnities, contribution and other agreements customarily made by
issuers in such underwriting agreements.
(b) In the event that Grantee so requests, the closing of the sale or
other disposition of the Common Stock or other securities pursuant to a
registration statement filed pursuant to Section 8(a) shall occur substantially
simultaneously with the exercise of the Option.
9. Repurchase of Option and/or Shares. (a) Repurchase; Repurchase
Price. Upon the occurrence of a Triggering Event prior to an Exercise
Termination Event, (i) at the request of a Holder, delivered in writing within
180 days of such occurrence (or such later period as pro vided in Section 2(e)
with respect to any required notice or application or in Section 10), Issuer
shall repurchase the Option from the Holder, in whole or in part, at a price
(the "Option Repurchase Price") equal to the number of shares of Common Stock
then purchasable upon exercise of the Option (or such lesser number of shares as
may be designated in the Repurchase Notice (as defined below)) multiplied by the
amount by which the market/offer price (as defined below) exceeds the Option
Price and (ii) at the request of a Holder or any person who has been a Holder
(for purposes of this Section 9 only, each such person being referred to as a
"Holder"), delivered in writing within 180 days of such occurrence (or such
later period as provided in Section 2(e) with respect to any required notice or
application or in Section 10), Issuer shall repurchase such number of Option
Shares from such Holder as the Holder shall designate in the Repurchase Notice
at a price (the "Option Share Repurchase Price") equal to the number of shares
designated multiplied by the market/offer price. The term "market/offer price"
shall mean the highest of (x) the price per share of Common Stock at which a
tender or exchange offer for Common Stock has been made, (y) the price per share
of Common Stock to be paid by any third party pursuant to an agreement with
Issuer
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and (z) the highest closing price for shares of Common Stock on the NYSE (or, if
the Common Stock is not then listed on the NYSE, any other national securities
exchange or auto mated quotation system on which the Common Stock is then listed
or quoted) within the six-month period immediately preceding the delivery of the
Repurchase Notice. In the event that a tender or exchange offer is made for the
Common Stock or an agreement is entered into for a merger, share exchange,
consolidation or reorganization involving consid eration other than cash, the
value of the securities or other property issuable or deliverable in exchange
for the Common Stock shall be determined in good faith by a nationally
recognized investment banking firm selected by Issuer.
(b) Method of Repurchase. A Holder may exercise its right to require
Issuer to repurchase the Option, in whole or in part, and/or any Option Shares
then owned by such Holder pursuant to this Section 9 by surrendering for such
purpose to Issuer, at its principal office, this Agreement or certificates for
Option Shares, as applicable, accompanied by a written notice or notices stating
that the Holder elects to require Issuer to repurchase the Option and/or such
Option Shares in accordance with the provisions of this Section 9 (each such
notice, a "Repurchase Notice"). Within two business days after the surrender of
the Option and/or certificates representing Option Shares and the receipt of the
Repurchase Notice relating thereto, Issuer shall deliver or cause to be
delivered to the Holder the applicable Option Repurchase Price and/or the Option
Share Repurchase Price or, in either case, the portion thereof that Issuer is
not then prohibited under applicable law and regulation from so delivering. In
the event that the Repurchase Notice shall request the repurchase of the Option
in part, Issuer shall deliver with the Option Repurchase Price a new Stock
Option Agreement evidencing the right of the Holder to purchase that number of
shares of Common Stock purchasable pursuant to the Option at the time of
delivery of the Repurchase Notice minus the number of shares of Common Stock
represented by that portion of the Option then being repurchased.
(c) Effect of Statutory or Regulatory Restraints on Repurchase. To the
extent that, upon or following the delivery of a Repurchase Notice, Issuer is
prohibited under applicable law or regulation from repurchasing the Option (or
portion thereof) and/or any Option Shares subject to such Repurchase Notice (and
Issuer hereby undertakes to use its reasonable best efforts to obtain all
required regula-
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tory and legal approvals and to file any required notices as promptly as
practicable in order to accomplish such repur chase), Issuer shall immediately
so notify the Holder in writing and thereafter deliver or cause to be delivered,
from time to time, to the Holder the portion of the Option Repurchase Price and
the Option Share Repurchase Price that Issuer is no longer prohibited from
delivering, within 2 business days after the date on which it is no longer so
prohibited; provided, however, that upon notification by Issuer in writing of
such prohibition, the Holder may, within 5 days of receipt of such notification
from Issuer, revoke in writing its Repurchase Notice, whether in whole or to the
extent of the prohibition, whereupon, in the latter case, Issuer shall promptly
(i) deliver to the Holder that portion of the Option Repurchase Price and/or the
Option Share Repurchase Price that Issuer is not prohibited from delivering; and
(ii) deliver to the Holder, as appropriate, (A) with respect to the Option, a
new Stock Option Agreement evidencing the right of the Holder to purchase that
number of shares of Common Stock for which the surrendered Stock Option
Agreement was exercisable at the time of delivery of the Repurchase Notice less
the number of shares as to which the Option Repurchase Price has theretofore
been delivered to the Holder, and/or (B) with respect to Option Shares, a
certificate for the Option Shares as to which the Option Share Repurchase Price
has not theretofore been delivered to the Holder. Notwithstanding anything to
the contrary in this Agreement, including, without limitation, the time
limitations on the exercise of the Option, the Holder may exercise the Option
for 180 days after a notice of revocation has been issued pursuant to this
Section 9(c).
(d) Acquisition Transactions. In addition to any other restrictions or
covenants, Issuer hereby agrees that, in the event that a Holder delivers a
Repurchase Notice, it shall not enter or agree to enter into any Acquisition
Transaction unless the other party or parties thereto agree to assume in writing
Issuer's obligations under Section 9(a) and, notwithstanding any notice of
revocation delivered pursuant to the proviso to Section 9(c), a Holder may
require such other party or parties to perform Issuer's obligations under
Section 9(a) unless such party or parties are pro hibited by law or regulation
from such performance, in which case such party or parties shall be subject to
the obliga tions of the Issuer under Section 9(c).
10. Extension of Exercise Periods. The 180-day periods for exercise of
certain rights under Sections 2 and 9 shall be extended in each such case at the
request of the
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Holder to the extent necessary to avoid liability by the Holder under Section
16(b) of the Exchange Act by reason of such exercise.
11. Assignment. Neither party hereto may assign any of its rights or
obligations under this Agreement or the Option to any other person without the
express written consent of the other party except that, in the event that a
Triggering Event shall have occurred, Grantee may assign the Option, in whole or
in part. Any attempted assignment in contravention of the preceding sentence
shall be null and void.
12. Filings; Other Actions. Each of Grantee and Issuer will use its
best efforts to make all filings with, and to obtain consents of, all third
parties and govern mental authorities necessary for the consummation of the
transactions contemplated by this Agreement.
13. Specific Performance. The parties hereto acknowledge that damages
would be an inadequate remedy for a breach of this Agreement by either party
hereto and that the obligations of the parties hereto shall be specifically
enforceable through injunctive or other equitable relief.
14. Severability; Etc. If any term, provision, covenant, or restriction
contained in this Agreement is held by a court or a federal or state regulatory
agency of compe tent jurisdiction to be invalid, void, or unenforceable, the
remainder of the terms, provisions, covenants, and restric tions contained in
this Agreement shall remain in full force and effect, and shall in no way be
affected, impaired, or invalidated. If for any reason such court or regulatory
agency determines that the Holder is not permitted to acquire, or Issuer is not
permitted to repurchase pursuant to Section 9, the full number of shares of
Common Stock provided in Section 1(a) hereof (as adjusted pursuant to Sections
1(b) and 7 hereof), it is the express intention of Issuer to allow the Holder to
acquire or to require Issuer to repurchase such lesser number of shares as may
be permissible, without any amendment or modification hereof.
15. Notices. All notices, requests, instruc tions, or other documents
to be given hereunder shall be in writing and shall be deemed given (i) three
business days following sending by registered or certified mail, postage
prepaid, (ii) when sent if sent by facsimile, provided that the fax is promptly
confirmed by telephone confirmation thereof, (iii) when delivered, if delivered
personally to
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the intended recipient, and (iv) one business day later, if sent by overnight
delivery via a national courier service, in each case at the respective
addresses of the parties set forth in the Merger Agreement.
16. GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN
ALL RESPECTS SHALL BE INTER PRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE
WITH THE LAW OF THE STATE OF DELAWARE, WITHOUT REGARD TO THE CONFLICT OF LAW
PRINCIPLES THEREOF, EXCEPT TO THE EXTENT THAT THE CONNECTICUT BUSINESS
CORPORATION ACT IS APPLICABLE HERETO.
17. Expenses. Except as otherwise expressly pro vided herein or in the
Merger Agreement, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated by this Agreement shall be paid by
the party incurring such expense, including fees and expenses of its own
financial consultants, investment bankers, accountants, and counsel.
18. Entire Agreement, Etc. This Agreement and the Merger Agreement
constitute the entire agreement, and supersede all other prior agreements,
understandings, representations and warranties, both written and oral, between
the parties, with respect to the subject matter hereof. The terms and conditions
of this Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns. Nothing in this
Agreement, expressed or implied, is intended to confer upon any party, other
than the parties hereto, and their respective successors and permitted assigns,
any rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein.
19. Limitation on Profit. (a) Notwithstanding any other provision of
this Agreement, in no event shall the Grantee's Total Profit (as hereinafter
defined) plus any Termination Fee paid to Grantee pursuant to Section 8.5(b) of
the Merger Agreement exceed in the aggregate $175 million and, if it otherwise
would exceed such amount, the Grantee, at its sole election, shall either (i)
reduce the number of shares of Common Stock subject to this Option, (ii) deliver
to the Issuer for cancellation Option Shares previously purchased by Grantee,
(iii) pay cash to the Issuer, or (iv) any combination thereof, so that Grantee's
realized Total Profit, when aggregated with such Termination Fee so paid to
Grantee shall not exceed $175 million after taking into account the foregoing
actions.
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(b) Notwithstanding any other provision of this Agreement, this Option
may not be exercised for a number of shares as would, as of the date of
exercise, result in a Notional Total Profit (as defined below) which, together
with any Termination Fee theretofore paid to Grantee would exceed $175 million;
provided, that nothing in this sentence shall restrict any exercise of the
Option permitted hereby on any subsequent date.
(c) As used herein, the term "Total Profit" shall mean the aggregate
amount (before taxes) of the following: (i) (x) the amount received by Grantee
pursuant to Issuer's repurchase of the Option (or any portion thereof) or any
Option Shares pursuant to Section 9, less, in the case of any repurchase of
Option Shares, (y) the Grantee's purchase price for such Option Shares, as the
case may be, (ii) (x) the net cash amounts received by Grantee pursuant to the
sale of Option Shares (or any other securities into which such Option Shares are
converted or exchanged) to any unaffiliated party, less (y) the Grantee's
purchase price of such Option Shares, and (iii) the net cash amounts received by
Grantee on the transfer of the Option (or any portion thereof) to any
unaffiliated party.
(d) As used herein, the term "Notional Total Profit" with respect to
any number of shares as to which Grantee may propose to exercise this Option
shall be the Total Profit determined as of the date of such proposal assuming
that this Option were exercised on such date for such number of shares and
assuming that such shares, together with all other Option Shares held by Grantee
and its affiliates as of such date, were sold for cash at the closing market
price for the Common Stock as of the close of business on the preceding trading
day (less customary brokerage commissions).
20. Captions. The Article, Section and paragraph captions herein are
for convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of the parties hereto as of the date first
written above.
SOUTHERN NEW ENGLAND
TELECOMMUNICATIONS CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chairman of the Board and
Chief Executive Officer
SBC COMMUNICATIONS INC.
By: /s/ Xxxxxx X. Xxxxxxxx, Xx.
---------------------------------
Name: Xxxxxx X. Xxxxxxxx, Xx.
Title: Chairman of the Board and
Chief Executive Officer
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