EXHBIT 4.1
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 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 notifica tion to or
approval of the FCC, the CDPUC or any other
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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 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
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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 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 observ ance 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 exer cised, 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 accordance
with its terms, subject to bankruptcy, insol vency, 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
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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 consti tute 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 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
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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 multi plying 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 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.
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(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 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
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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 xxxxxx xxxx 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
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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 pur suant 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 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
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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 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, repre sentations 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.
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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.
(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.
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(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
_______________________________________
Name: Xxxxxx X. Xxxxxxxx
Title: Chairman of the Board
and Chief Executive Officer
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