EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
Among
SOUTHERN NEW ENGLAND TELECOMMUNICATIONS CORPORATION,
SBC COMMUNICATIONS INC.
and
SBC (CT), INC.
Dated as of January 4, 1998
Table of Contents
Page
RECITALS .............................................................. 1
ARTICLE I
The Merger; Closing; Effective Time................................. 2
1.1. The Merger................................................... 2
1.2. Closing...................................................... 2
1.3. Effective Time............................................... 2
ARTICLE II
Certificate of Incorporation and By-Laws
of the Surviving Corporation....................................... 3
2.1. The Certificate of Incorporation............................. 3
2.2. The By-Laws.................................................. 3
ARTICLE III
Officers, Directors and Management.................................. 3
3.1. Directors of Surviving Corporation........................... 3
3.2. Officers of Surviving Corporation............................ 3
3.3. Election to SBC's Board of Directors......................... 4
ARTICLE IV
Effect of the Merger on Capital Stock;
Exchange of Certificates............................................ 4
4.1. Effect on Capital Stock...................................... 4
(a) Merger Consideration..................................... 4
(b) Cancellation of Shares................................... 5
(c) Restricted Stock......................................... 5
(d) Merger Sub............................................... 5
4.2. Exchange of Certificates for Shares.......................... 6
(a) Exchange Procedures...................................... 6
(b) Distributions with Respect to Unexchanged
Shares; Voting........................................... 7
(c) Transfers................................................ 8
(d) Fractional Shares........................................ 8
(e) Termination of Exchange Period; Unclaimed
Stock.................................................... 8
(f) Lost, Stolen or Destroyed Certificates................... 9
(g) Affiliates............................................... 9
4.3. Dissenters' Rights........................................... 9
4.4. Adjustments to Prevent Dilution.............................. 10
4.5. Escrow Account for Payment of Dissenters'
Demands and Transfer Taxes................................... 10
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ARTICLE V
Representations and Warranties...................................... 11
5.1. Representations and Warranties of the Company,
SBC and Merger Sub........................................... 11
(a) Organization, Good Standing and
Qualification............................................ 11
(b) Governmental Filings; No Violations...................... 12
(c) Reports; Financial Statements............................ 14
(d) Absence of Certain Changes............................... 15
(e) Litigation and Liabilities............................... 15
(f) Accounting, Tax and Regulatory Matters................... 16
(g) Taxes.................................................... 16
(h) Compliance with Laws..................................... 17
5.2. Representations and Warranties of the Company................ 18
(a) Capital Structure........................................ 18
(b) Corporate Authority; Approval and
Fairness................................................. 19
(c) Employee Benefits........................................ 20
(d) Takeover Statutes........................................ 22
(e) Environmental Matters.................................... 22
(f) Labor Matters............................................ 23
(g) Rights Agreement......................................... 24
(h) Brokers and Finders...................................... 24
(i) Intellectual Property.................................... 24
(j) Severance Payments....................................... 25
5.3. Representations and Warranties of SBC and Merger Sub......... 25
(a) Capital Structure........................................ 25
(b) Corporate Authority; Approval and Fairness............... 27
(c) Brokers and Finders...................................... 27
ARTICLE VI
Covenants........................................................... 28
6.1. Interim Operations........................................... 28
6.2. Acquisition Proposals........................................ 31
6.3. Information Supplied......................................... 33
6.4. Shareholders Meeting......................................... 33
6.5. Filings; Other Actions; Notification......................... 34
6.6. Access; Consultation......................................... 36
6.7. Affiliates................................................... 37
6.8. Stock Exchange Listing and De-listing........................ 38
6.9. Publicity.................................................... 38
6.10. Benefits..................................................... 38
(a) Stock Options............................................ 38
(b) Employee Benefits........................................ 39
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6.11. Expenses..................................................... 40
6.12. Indemnification; Directors' and Officers'
Insurance.................................................... 40
6.13. Takeover Statute............................................. 42
6.14. Dividends.................................................... 42
6.15. Confidentiality.............................................. 42
6.16. Control of the Company's Operations.......................... 42
6.17. Tax Representation Letters................................... 43
6.18. Transfer Taxes............................................... 43
ARTICLE VII
Conditions.......................................................... 43
7.1. Conditions to Each Party's Obligation to Effect
the Merger................................................... 43
(a) Shareholder Approval..................................... 43
(b) NYSE Listing............................................. 43
(c) Governmental Consents.................................... 43
(d) Laws and Orders.......................................... 44
(e) S-4...................................................... 45
7.2. Conditions to Obligations of SBC and Merger Sub.............. 45
(a) Representations and Warranties........................... 45
(b) Performance of Obligations of the Company................ 45
(c) Tax Opinion.............................................. 45
(d) Dissenting Shares........................................ 46
(e) Accountants' Letter...................................... 46
7.3. Conditions to Obligation of the Company...................... 47
(a) Representations and Warranties........................... 47
(b) Performance of Obligations of SBC and Merger Sub......... 47
(c) Tax Opinion.............................................. 47
ARTICLE VIII
Termination......................................................... 48
8.1. Termination by Mutual Consent................................ 48
8.2. Termination by Either SBC or the Company..................... 48
8.3. Termination by the Company................................... 48
8.4. Termination by SBC........................................... 49
8.5. Effect of Termination and Abandonment........................ 50
ARTICLE IX
Miscellaneous and General........................................... 52
9.1. Survival..................................................... 52
9.2. Modification or Amendment.................................... 52
9.3. Waiver of Conditions......................................... 52
9.4. Counterparts................................................. 52
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9.5. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL................ 53
9.6. Notices...................................................... 54
9.7. Entire Agreement............................................. 55
9.8. No Third Party Beneficiaries................................. 55
9.9. Obligations of SBC and of the Company........................ 55
9.10. Severability................................................. 55
9.11. Interpretation............................................... 56
9.12. Assignment................................................... 56
EXHIBITS
A Stock Option Agreement A-1
B Amendments to Company By-laws B-1
C Form of Company Affiliate's Letter C-1
D Form of SBC Affiliate's Letter D-1
SCHEDULES
1 Subsidiaries of the Company
-iv-
Index of Defined Terms
Term Section
Acquiring Party................................................. 8.5(b)
Acquisition Proposal............................................ 6.2
Affiliate....................................................... 5.1(g)
Affiliates Letter............................................... 6.7
Agreement....................................................... preamble
Audit Date...................................................... 5.1(e)
Bankruptcy and Equity Exception................................. 5.2(b)
By-Laws......................................................... 2.2
CBCA............................................................ 1.1
Certificate..................................................... 4.1(a)
Certificate of Merger........................................... 1.3
Charter......................................................... 2.1
Closing......................................................... 1.2
Closing Date.................................................... 1.2
Code............................................................ recitals
Company......................................................... preamble
Company Affiliate's Letter...................................... 6.7(a)
Company Disclosure Letter....................................... 5.1
Company Option.................................................. 6.10(a)(i)
Company Required Consents....................................... 5.1(b)(i)
Company Requisite Vote.......................................... 5.2(b)
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Term Section
Company Shares.................................................. 4.1(a)
Compensation and Benefit Plans.................................. 5.2(c)(i)
Confidentiality Agreement....................................... 6.15
Contracts....................................................... 5.1(b)(ii)
Costs........................................................... 6.12
CPUC............................................................ 8.2(f)
Current Premium................................................. 6.12(c)
D&O Insurance................................................... 6.12(c)
Director Designee............................................... 3.3
Disclosure Letter............................................... 5.1
Dissenting Shares............................................... 4.1(a)
Dissenting Shareholders......................................... 4.1(a)
Effective Time.................................................. 1.3
Environmental Law............................................... 5.2(e)
ERISA........................................................... 5.2(c)(i)
ERISA Affiliate.................................................5.2(c)(iii)
ERISA Affiliate Plan............................................5.2(c)(iii)
Escrow Account.................................................. 4.5
Escrow Agent.................................................... 4.5
Escrow Agreement................................................ 4.5
Exchange Act.................................................... 5.1(b)(ii)
Exchange Agent.................................................. 4.2(a)
Exchange Ratio.................................................. 4.1(a)
Excluded Company Shares......................................... 4.1(a)
Extended Termination Date....................................... 8.2
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Term Section
FCC............................................................. 5.1(b)
Final Order..................................................... 7.1(c)
GAAP............................................................ 5.1(c)
Governmental Entity............................................. 5.1(b)(i)
Hazardous Substance............................................. 5.2(e)
HSR Act......................................................... 5.1(b)
Indemnified Parties............................................. 6.12(a)
Initial 15 Day Period........................................... 8.4
IRS............................................................. 5.2(c)(ii)
Laws............................................................ 5.1(h)
Litigation...................................................... 5.1(e)
Material Adverse Effect......................................... 5.1(a)
Merger.......................................................... recitals
Merger Consideration............................................ 4.1(a)
Merger Sub...................................................... preamble
NYSE............................................................ 6.8
Order........................................................... 7.1(d)
Owned Intellectual Property Rights..............................5.2(i)(ii)(B)
Pension Plan.................................................... 5.2(c)(ii)
Person.......................................................... 4.2(a)
Permits......................................................... 5.1(h)
Preference Shares............................................... 5.2(a)
Preference Shares............................................... 5.2(a)
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Term Section
Preferred Shares................................................ 5.2(a)
Prospectus/Proxy Statement...................................... 6.3
PUC............................................................. 5.1(b)
Reports......................................................... 5.1(c)
Registered Silver Shares........................................ 4.2(a)
Representatives................................................. 6.6(a)
Rights Agreement................................................ 5.2(a)
S-4 Registration Statement...................................... 6.3
SBC............................................................. preamble
SBC Affiliate's Letter.......................................... 6.7(a)
SBC Common Stock................................................ 4.1(a)
SBC Disclosure Letter........................................... 5.1
SBC Pooling Action.............................................. 7.2(c)
SBC Preferred Shares............................................ 5.3(a)
SBC Required Consents........................................... 5.1(b)
SBC Requisite Vote.............................................. 5.1(c)
SBC Rights...................................................... 4.1(a)
SBC Rights Agreement............................................ 5.3(a)
SBC Stock Plans................................................. 5.3(a)
SBC Voting Debt................................................. 5.1(b)(ii)
SEC............................................................. 5.1(c)
Securities Act.................................................. 5.1(b)(i)
Shareholders Meeting............................................ 6.4
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Term Section
Significant Subsidiaries........................................ 5.1(b)(ii)
Stock Option Agreement.......................................... recitals
Stock Plans..................................................... 5.2(a)
Subsidiary...................................................... 5.1(a)
Substitute Option............................................... 6.10(a)(i)
Superior Proposal............................................... 6.2
Surviving Corporation........................................... 1.1
Takeover Statute................................................ 5.2(d)
Tax............................................................. 5.1(g)
Taxes........................................................... 5.1(g)
Taxable......................................................... 5.1(g)
Tax Return...................................................... 5.1(g)
Termination Date................................................ 8.2
Termination Fee................................................. 8.5(b)
Third-Party Intellectual Property Right.........................5.2(i)(ii)(A)
Transfer Taxes.................................................. 6.18
Utilities Laws.................................................. 5.1(d)
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter called
this "Agreement"), dated as of January 0, 0000, xxxxx
Xxxxxxxx Xxx Xxxxxxx Telecommunications Corporation, a
Connecticut corporation (the "Company"), SBC Communications
Inc., a Delaware corporation ("SBC"), and SBC (CT), Inc., a
Connecticut corporation and a wholly-owned subsidiary of SBC
("Merger Sub").
RECITALS
WHEREAS, the respective boards of directors of each
of SBC, Merger Sub and the Company have approved the merger
of Merger Sub with and into the Company (the "Merger") and
adopted this Agreement;
WHEREAS, it is intended that, for federal income
tax purposes, the Merger shall qualify as a "tax-free"
reorganization under the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder (the "Code");
WHEREAS, for financial accounting purposes, it is
intended that the Merger shall be accounted for as a
"pooling-of-interests"; and
WHEREAS, as an inducement to the willingness of SBC
to enter into this Agreement, the board of directors of the
Company has approved the grant to SBC of an option to
purchase shares of common stock of the Company pursuant to a
stock option agreement, substantially in the form of Exhibit
A (the "Stock Option Agreement"), and each of the Company and
SBC have duly authorized, executed and delivered the Stock
Option Agreement; and
WHEREAS, the Company, SBC and Merger Sub desire to
make certain representations, warranties, covenants and
agreements in connection with this Agreement.
NOW, THEREFORE, in consideration of the premises,
and of the representations, warranties, covenants and
agreements contained herein, the parties hereto agree as
follows:
ARTICLE I
The Merger; Closing; Effective Time
1.1. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, at the Effective Time
(as defined in Section 1.3) Merger Sub shall be merged with
and into the Company and the separate corporate existence of
Merger Sub shall thereupon cease. The Company shall be the
surviving corporation in the Merger (sometimes hereinafter
referred to as the "Surviving Corporation") and shall
continue to be governed by the laws of the State of
Connecticut, and the Merger shall have the effects specified
in the Connecticut Business Corporation Act (the "CBCA").
1.2. Closing. The closing of the Merger (the
"Closing") shall take place (i) at the offices of Xxxxxxxx &
Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at 9:00
A.M. local time on the second business day after the date on
which the last to be fulfilled or waived of the conditions
set forth in Article VII (other than those conditions that by
their nature are to be satisfied at the Closing, but subject
to the fulfillment or waiver of those conditions) shall be
satisfied or waived in accordance with this Agreement or (ii)
at such other place and time and/or on such other date as the
Company and SBC may agree in writing (the "Closing Date").
1.3. Effective Time. As soon as practicable
following the Closing, the Company and SBC will cause a
certificate of merger (the "Certificate of Merger") to be
signed, acknowledged and delivered for filing with the
Secretary of the State of Connecticut as provided in Section
33-819 of the CBCA. The Merger shall become effective at the
time when the Certificate of Merger shall have become
effective in accordance with the CBCA (the "Effective Time").
ARTICLE II
Certificate of Incorporation and By-Laws
of the Surviving Corporation
2.1. The Certificate of Incorporation. The
certificate of incorporation of the Company as in effect
immediately prior to the Effective Time shall be the
certificate of incorporation of the Surviving Corporation
(the "Charter"), until duly amended as provided therein or by
applicable law, except that (i) Section 3 of the Charter
shall be amended to read in its entirety as follows: "The
authorized capital stock of the Corporation shall consist of
one thousand shares of common stock having a par value of one
dollar per share.", and (ii) Section 4 of the Charter shall
be amended to read in its entirety as follows: "The number of
directors of the Corporation shall be fixed from time to time
by the Board of Directors or the Shareholders in accordance
with the By-laws of the Corporation. A director shall hold
office until the next annual meeting of shareholders of the
Corporation following his election and until his successor
shall be elected and shall qualify."
2.2. The By-Laws. The by-laws of the Company in
effect at the Effective Time shall be the by-laws of the
Surviving Corporation (the "By-Laws"), until duly amended as
provided therein or by applicable law, except that the
By-Laws shall be amended as set forth in Exhibit B.
ARTICLE III
Officers, Directors and Management
3.1. Directors of Surviving Corporation. The
directors of Merger Sub at the Effective Time shall, from and
after the Effective Time, be the directors of the Surviving
Corporation until their successors shall have been duly
elected or appointed and shall have qualified or until their
earlier death, resignation or removal in accordance with the
Charter and the By-Laws.
3.2. Officers of Surviving Corporation. The
officers of the Company at the Effective Time shall, from and
after the Effective Time, be the officers of the Surviving
Corporation until their successors shall have been duly
elected or appointed and shall have qualified or until
their earlier death, resignation or removal in accordance
with the Charter and the By-Laws.
3.3. Election to SBC's Board of Directors. At the
Effective Time of the Merger, SBC shall increase the size of
its Board of Directors by one. The nominee for such
additional directorship shall be selected by the SBC Board of
Directors in consultation with the Chief Executive Officer
and Board of Directors of the Company from among the members
of the Company's Board of Directors (the "Director
Designee"), and the SBC Board of Directors shall appoint the
Director Designee to the SBC Board of Directors as of the
Effective Time, with such Director Designee to serve in the
director group determined in accordance with Article II of
the by-laws of SBC as in effect on the date hereof until his
or her successor shall have been duly elected or appointed
and shall have qualified or until his or her earlier death,
resignation or removal in accordance with the certificate of
incorporation and the by-laws of SBC.
ARTICLE IV
Effect of the Merger on Capital Stock;
Exchange of Certificates
4.1. Effect on Capital Stock. At the Effective
Time, as a result of the Merger and without any action on the
part of the holder of any capital stock of the Company:
(a) Merger Consideration. Each share of the common
stock, having a par value of one dollar per share (each a
"Company Share" and together the "Company Shares"), of the
Company issued and outstanding immediately prior to the
Effective Time (other than (i) Company Shares that are owned
by SBC or Merger Sub, (ii) Company Shares that are owned by
the Company, in each case (i) and (ii) not held on behalf of
third parties, or (iii) Company Shares ("Dissenting Shares")
that are owned by shareholders ("Dissenting Shareholders")
who satisfy all of the requirements to demand payment for
such shares in accordance with Sections 33-855 through 33-872
of the CBCA (collectively, "Excluded Company Shares")) shall
be converted into 0.8784 of a share (the "Exchange Ratio") of
Common Stock, par value $1 per share, of SBC ("SBC Common
Stock"), subject to adjustment as provided in Section 4.4
(the "Merger Consideration"). All references in this
agreement to SBC Common Stock to be issued pursuant to the
Merger shall be deemed to include the corresponding rights
("SBC Rights") to purchase shares of SBC Common Stock
pursuant to the SBC Rights Agreement (as defined in Section
5.3(a)), except where the context otherwise requires. At the
Effective Time, all Company Shares shall no longer be
outstanding, shall be cancelled and retired and shall cease
to exist, and each certificate (a "Certificate") formerly
representing any Company Shares (other than Excluded Company
Shares) shall thereafter represent only the right to the
Merger Consideration and the right, if any, to receive
pursuant to Section 4.2(d) cash in lieu of fractional shares
into which such Company Shares have been converted pursuant
to this Section 4.1(a) and any distribution or dividend
pursuant to Section 4.2(b), in each case without interest.
(b) Cancellation of Shares. Each Company Share
issued and outstanding immediately prior to the Effective
Time and owned directly by SBC, Merger Sub or the Company
(other than shares held for third parties) shall, by virtue
of the Merger and without any action on the part of the
holder thereof, no longer be outstanding, shall be cancelled
and retired without payment of any consideration therefor and
shall cease to exist. Dissenters' Shares shall be cancelled
and retired at the Effective Time and paid for in accordance
with Section 33-865 of the CBCA.
(c) Restricted Stock. Each Company Share issued and
outstanding immediately prior to the Effective Time that,
after giving effect to any provision in the plans referred to
below providing for the termination or lapse of any
restriction resulting from the transactions contemplated by
this Agreement, is restricted under the Company's 1995 Stock
Incentive Plan, Non-Employee Director Stock Plan or 1996
Non-Employee Director Stock Plan shall be converted into a
fraction of a share of SBC Common Stock equal to the Exchange
Ratio, having the same restrictions, terms and conditions as
were applicable to such Company Share of restricted stock.
(d) Merger Sub. At the Effective Time, each share
of common stock, par value $1.00 per share, of Merger Sub
issued and outstanding immediately prior to the Effective
Time shall be converted into one share of common stock of the
Surviving Corporation, and the Surviving Corporation shall be
a wholly-owned subsidiary of SBC.
4.2. Exchange of Certificates for Shares.
(a) Exchange Procedures. Promptly after the
Effective Time, the Surviving Corporation shall cause an
exchange agent selected by SBC with the Company's prior
approval, which shall not be unreasonably withheld (the
"Exchange Agent"), to mail to each holder of record of
Company Shares (other than holders of record of Excluded
Company Shares) (i) a letter of transmittal specifying that
delivery shall be effected, and that risk of loss and title
to the Certificates shall pass, only upon delivery of the
Certificates (or affidavits of loss in lieu thereof) to the
Exchange Agent, such letter of transmittal to be in such form
and have such other provisions as SBC and the Company may
reasonably agree, and (ii) instructions for surrendering the
Certificates in exchange for (A) uncertificated shares of SBC
Common Stock registered on the stock transfer books of SBC in
the name of such holder ("Registered SBC Shares") or, at the
election of such holder, certificates
representing shares of SBC Common Stock and (B) any unpaid
dividends and other distributions and cash in lieu of
fractional shares. Subject to Section 4.2(g), upon surrender
of a Certificate for cancellation to the Exchange Agent
together with such letter of transmittal, duly executed, the
holder of such Certificate shall be entitled to receive in
exchange therefor (x) Registered SBC Shares or, at the
election of such holder, a certificate, representing that
number of whole shares of SBC Common Stock that such holder
is entitled to receive pursuant to this Article IV, (y) a
check in the amount (after giving effect to any required tax
withholdings) of (A) any cash in lieu of fractional shares
plus (B) any unpaid non-stock dividends and any other
dividends or other distributions that such holder has the
right to receive pursuant to the provisions of this Article
IV, and the Certificate so surrendered shall forthwith be
cancelled. No interest will be paid or accrued on any amount
payable upon due surrender of the Certifi xxxxx. In the event
of a transfer of ownership of Company Shares that is not
registered in the transfer records of the Company, the
Registered SBC Shares or certificate, as the case may be,
representing the proper number of shares of SBC Common Stock,
together with a check for any cash to be paid upon due
surrender of the Certificate and any other divi dends or
distributions in respect thereof, may be issued and/or paid
to such a transferee if the Certificate formerly representing
such Company Shares is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect
such transfer and to evidence that any applicable stock
transfer taxes have been paid. If any Registered SBC Shares
or any certificate for shares of SBC Common Stock is to be
issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it shall be a
condition of such exchange that the Person (as defined below)
requesting such exchange shall pay any transfer or other
taxes required by reason of the issuance of Registered SBC
Shares or certificates for shares of SBC Common Stock in a
name other than that of the registered holder of the
Certificate surrendered, or shall establish to the
satisfaction of SBC or the Exchange Agent that such tax has
been paid or is not applicable.
For the purposes of this Agreement, the term
"Person" shall mean any individual, corporation (including
not-for-profit), general or limited partnership, limited
liability company, joint venture, estate, trust, association,
organization, Governmental Entity (as defined in Section
5.1(b)) or other entity of any kind or nature.
(b) Distributions with Respect to Unexchanged
Shares; Voting. (i) Whenever a dividend or other distribution
is declared by SBC in respect of SBC Common Stock, the record
date for which is at or after the Effective Time, that
declaration shall include dividends or other distributions in
respect of all shares issuable pursu ant to this Agreement.
No dividends or other distributions in respect of the SBC
Common Stock shall be paid to any holder of any unsurrendered
Certificate until such Certifi cate is surrendered for
exchange in accordance with this Article IV. Subject to the
effect of applicable laws, following surrender of any such
Certificate, there shall be issued and/or paid to the holder
of the Registered SBC Shares or certificates, as the case may
be, representing whole shares of SBC Common Stock issued in
exchange for such Certificate, without interest, (A) at the
time of such sur render, the dividends or other distributions
with a record date at or after the Effective Time and a
payment date on or prior to the date of issuance of such
whole shares of SBC Common Stock and not previously paid and
(B) at the appropriate payment date, the dividends or other
distribu tions payable with respect to such whole shares of
SBC Common Stock with a record date at or after the Effective
Time but with a payment date subsequent to surrender. For
purposes of dividends or other distributions in respect of
shares of SBC Common Stock, all shares of SBC Common Stock
to be issued pursuant to the Merger shall be deemed issued
and outstanding as of the Effective Time.
(ii) Holders of unsurrendered Certificates shall be
entitled to vote after the Effective Time at any meeting of
SBC stockholders with a record date at or after the Effective
Time the number of whole shares of SBC Common Stock
represented by such Certificates, regardless of whether such
holders have exchanged their Certificates.
(c) Transfers. After the Effective Time, there
shall be no transfers on the stock transfer books of the
Company of the Company Shares that were outstanding
immediately prior to the Effective Time.
(d) Fractional Shares. Notwithstanding any other
provision of this Agreement, no fractional shares of SBC
Common Stock will be issued and any holder of record of
Company Shares entitled to receive a fractional share of SBC
Common Stock but for this Section 4.2(d) shall be entitled to
receive an amount in cash (without interest) determined by
multiplying such fraction (rounded to the nearest one-
hundredth of a share) by the closing price of a share of SBC
Common Stock, as reported in The Wall Street Journal, New
York City edition, for the last trading day prior to the
Effective Time.
(e) Termination of Exchange Period; Unclaimed
Stock. Any shares of SBC Common Stock and any portion of the
cash, dividends or other distributions payable with respect
to the SBC Common Stock pursuant to Section 4.1, Section
4.2(b) and Section 4.2(d) (including the proceeds of any
investments thereof) that remains unclaimed by the
shareholders of the Company 180 days after the Effective Time
shall be paid to SBC. Any shareholders of the Company who
have not theretofore complied with this Article IV shall look
only to SBC for payment of their shares of SBC Common Stock
and any cash, dividends and other distributions in respect
thereof issuable and/or payable pursuant to Section 4.1,
Section 4.2(b) and Section 4.2(d) upon due surrender of their
Certificates (or affidavits of loss in lieu thereof), in each
case, without any interest thereon. Notwithstanding the
foregoing, none of SBC, the Surviving Corporation, the
Exchange Agent or any other Person shall be liable to any
former holder of Company Shares for any amount properly
delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(f) Lost, Stolen or Destroyed Certificates. In the
event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by
the Person claiming such Certificate to be lost, stolen or
destroyed and the posting by such Person of a bond in the
form customarily required by SBC as indemnity against any
claim that may be made against it with respect to such
Certificate, SBC will issue the shares of SBC Common Stock,
and the Exchange Agent will issue any unpaid dividends or
other distributions and any cash payment in lieu of a
fractional share in respect thereof, issuable and/or payable
in exchange for such lost, stolen or destroyed Certificate
pursuant to this Article IV upon due surrender of and
deliverable in respect of the Company Shares represented by
such Certificate pursuant to this Agreement, in each case,
without interest.
(g) Affiliates. Notwithstanding anything herein to
the contrary, Certificates surrendered for exchange by any
"affiliate" (as determined pursuant to Sec tion 6.7) of the
Company shall not be exchanged until SBC has received a
written agreement from such Person as provided in Section 6.7
hereof.
4.3. Dissenters' Rights. No Dissenting Shareholder
shall be entitled to shares of SBC Common Stock or cash in
lieu of fractional shares thereof or any dividends or other
distributions pursuant to this Article IV unless and until
the holder thereof shall have failed to perfect or shall have
effectively withdrawn or lost such holder's right to dissent
from the Merger under the CBCA, and any Dissenting
Shareholder shall be entitled to receive only the payment
provided by Section 33-856 of the CBCA with respect to
Company Shares owned by such Dissenting Shareholder. Unless
the obligation of the Company under Section 4.5 to establish
an Escrow Account has been waived by SBC, such payment shall
be made from the Escrow Account in accordance with Section
4.5. If any Person who would otherwise be deemed a Dissenting
Shareholder shall have failed properly to perfect or shall
have effectively withdrawn or lost the right to dissent with
respect to any Company Shares, such shares shall thereupon be
treated as though such shares had been converted into shares
of SBC Common Stock pursuant to Section 4.1 hereof and any
cash in lieu of fractional shares, dividends or other
distributions as provided in Section 4.2 hereof. The Company
shall give SBC (i) prompt written notice of any dissenters'
demands for payment, attempted withdrawals of such demands
and any other instruments served pursuant to applicable law
received by the Company relating to dissenters' rights and
(ii) the opportunity to direct all negotiations with respect
to dissenters under the CBCA. The Company shall not, without
the prior written consent of SBC, voluntarily make any
payment with respect to any demands for payment by Dissent
ing Shareholders, offer to settle or settle any such demands
or approve any withdrawal of such demands.
4.4. Adjustments to Prevent Dilution. In the event
that prior to the Effective Time there is a change in the
number of Company Shares or shares of SBC Common Stock or
securities convertible or exchangeable into or exercis able
for Company Shares or shares of SBC Common Stock issued and
outstanding as a result of a distribution, reclassifica tion,
stock split (including a reverse split), stock dividend or
distribution, or other similar transaction, the Exchange
Ratio shall be equitably adjusted to eliminate the effects of
such event.
4.5. Escrow Account for Payment of Dissenters'
Demands and Transfer Taxes. Pursuant to an escrow agreement
to be entered into by the Company with an escrow agent
selected by mutual agreement of the Company and SBC (the
"Escrow Agent"), in a form reasonably acceptable to SBC (the
"Escrow Agreement"), unless SBC shall elect, in its sole
discretion, to waive the Company's obligations
under this Section 4.5 and shall notify the Company of such
election, the Company shall, immediately prior to the
Effective Time, deposit in an account with the Escrow Agent
(the "Escrow Account") funds sufficient in the aggregate to
pay all Dissenting Shareholders who as of such time shall
have satisfied all applicable requirements under the CBCA to
demand payment for their Dissenting Shares the amounts the
Company estimates to be the fair value of such Dissenting
Shares plus accrued interest in accordance with Section 33-
865(a) of the CBCA, and any Transfer Taxes (as defined
herein) attributable to the Merger. These funds will be
released from the Escrow Account, upon certification by the
Company, (i) to make any payment to which a Dissenting
Shareholder shall then be entitled under the CBCA, whether
pursuant to the procedures specified in Part XIII thereof, a
final judgment of a court of competent jurisdiction or any
other agreement with such Dissenting Shareholder; (ii) to pay
any Transfer Taxes that become payable under any applicable
state, local, foreign or provincial law; or (iii) to the
Company, upon the Company's reasonable deter mination and
certification that the Company's obligations in respect of
the amounts specified in clause (i) (with respect to all
Dissenting Shareholders) and clause (ii) of this Section 4.5
have been fully satisfied. All payments pur suant to clause
(i) above shall include interest accrued since the Effective
Time in accordance with the CBCA. The Escrow Agreement shall
permit the Escrow Agent to invest the funds in the Escrow
Account as directed by the Company.
ARTICLE V
Representations and Warranties
5.1. Representations and Warranties of the Company,
SBC and Merger Sub. Except as set forth in the corresponding
sections or subsections of the disclosure letter, dated the
date hereof, delivered by the Company to SBC or by SBC to the
Company (each a "Disclosure Letter", and the "Company
Disclosure Letter" and the "SBC Disclosure Letter",
respectively), as the case may be, the Company (except for
references in subparagraphs (a), (b)(ii) and (c) below to
documents made available or disclosed by SBC to the Company)
hereby represents and warrants to SBC and Merger Sub, and SBC
(except for references in subparagraphs (a), (b)(ii) and (c)
below to documents made available or disclosed by the Company
to SBC), on behalf of itself and Merger Sub, hereby
represents and warrants to the Company, that:
(a) Organization, Good Standing and Qualifica tion.
Each of it and its Subsidiaries is a corporation duly
organized, validly existing and in good standing under the
laws of its respective jurisdiction of organization and has
all requisite corporate or similar power and authority to own
and operate its properties and assets and to carry on its
business as presently conducted and is qualified to do
business and is in good standing as a foreign corporation in
each jurisdiction where the ownership or operation of its
properties or conduct of its business requires such qualifi
cation, except where the failure to be so qualified or in
good standing is not, when taken together with all other such
failures, reasonably likely to have a Material Adverse Effect
(as defined below) on it. It has made available to SBC, in
the case of the Company, and to the Company, in the case of
SBC, a complete and correct copy of its certificate of
incorporation and by-laws, each as amended to date. Such
certificates of incorporation and by-laws as so made
available are in full force and effect.
As used in this Agreement, (i) the term
"Subsidiary" means, with respect to the Company, SBC or
Merger Sub, as the case may be, any entity, whether incor
porated or unincorporated, of which at least fifty percent of
the securities or ownership interests having by their terms
ordinary voting power to elect at least fifty percent of the
board of directors or other Persons performing similar
functions is directly or indirectly owned by such party or by
one or more of its respective Subsidiaries or by such party
and any one or more of its respective Subsidi aries, (ii) the
term "Material Adverse Effect" means, with respect to any
Person, a material adverse effect on the total enterprise
value of such Person and its Subsidiaries, taken as a whole,
other than effects or changes resulting from the execution of
this Agreement or the announcement thereof or relating to (I)
the telecommunications industry generally, (II) the national
economy generally or (A) with respect to SBC only, the
economy of the southwestern United States and California,
taken together, generally or (B) with respect to the Company
only, the economy of New England generally or (III) the
securities markets generally, and (iii) reference to "the
other party" means, with respect to the Company, SBC and
means, with respect to SBC, the Company.
(b) Governmental Filings; No Violations. (i) Other
than (A) the filings pursuant to Section 1.3, (B) the
notification under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), the
Exchange Act and the Securities Act of 1933, as amended (the
"Securities Act"), (C) the filings and/or notices to comply
with state securities or "blue-sky" laws, (D) the necessary
notices to and, if any, approvals of the Federal Communica
tions Commission ("FCC") pursuant to the Communications Act
of 1934, as amended, and (E) the necessary notices to and
necessary approvals, if any, of the state public utility
commissions or similar state regulatory bodies (each a "PUC")
identified in its respective Disclosure Letter pursuant to
applicable state laws regulating the telephone, mobile
cellular, paging, cable television or other telecom
munications business ("Utilities Laws") (such filings and/or
notices of SBC being the "SBC Required Consents" and of the
Company being the "Company Required Consents"), no notices,
reports or other filings are required to be made by it to or
with, nor are any consents, registrations, approvals, per
mits or authorizations required to be obtained by it from,
any governmental or regulatory authority, court, agency,
commission, body or other governmental entity ("Governmental
Entity"), in connection with the execution and delivery of
this Agreement and the Stock Option Agreement by it and the
consummation by it of the Merger and the other transactions
contemplated hereby and thereby, except those that the
failure to make or obtain are not, individually or in the
aggregate, reasonably likely to have a Material Adverse
Effect on it or to prevent, or materially impair its ability
to effect, the consummation by it of the transactions con
templated by this Agreement or the Stock Option Agreement.
(ii) The execution, delivery and
performance of this Agreement and the Stock Option
Agreement by it do not, and the consummation by it of the
Merger and the other transactions contemplated hereby and
thereby will not, constitute or result in (A) a breach or
violation of, or a default under, its certificate of
incorporation or by-laws or the comparable governing
instruments of any of its "Significant Subsidiaries", as
such term is defined in Rule 1.02(w) of Regulation S-X
promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), (B) a breach or violation
of, a default under, the acceleration of any obligations
or the creation of a lien, pledge, security interest or
other encumbrance on its assets or the assets of any of
its Subsidiaries (with or without notice, lapse of time or
both) pursuant to, any agreement, lease, contract, note,
mortgage, indenture, arrangement or other obligation
("Contracts") binding upon it or any of its Subsidiaries
or any Law (as defined in Section 5.1(h)) or governmental
or non-governmental permit or license to which it or any
of its Subsidiaries is subject or (C) any change in the
rights or obligations of any party under any of its
Contracts, except, in the case of clause (B) or (C) above,
for any breach, violation, default, acceleration, creation
or change that, individually or in the aggregate, is not
reasonably likely to have a Material Adverse Effect on it
or to prevent, or materially impair its ability to effect,
the consummation by it of the transactions contemplated by
this Agreement or the Stock Option Agreement. The Company
Disclosure Letter, with respect to the Company, and the
SBC Disclosure Letter, with respect to SBC, sets forth a
correct and complete list of all Contracts of it and its
Subsidi aries required to be filed as material contract
exhibits under the Exchange Act and pursuant to which
consents or waivers are or may be required prior to
consummation of the transactions contemplated by this
Agreement or the Stock Option Agreement (whether or not
subject to the exception set forth with respect to clauses
(B) and (C) above).
(c) Reports; Financial Statements. It has made
available to the other party each registration statement,
report, proxy statement or information statement prepared by
it since December 31, 1996 (the "Audit Date"), including its
Annual Report on Form 10-K for the year ended December 31,
1996 in the form (including exhibits, annexes and any amend
ments thereto) filed with the Securities and Exchange
Commission (the "SEC") (collectively, including any such
reports filed subsequent to the date hereof, its "Reports").
As of their respective dates, its Reports did not contain any
untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to
make the statements made therein, in the light of the
circumstances in which they were made, not misleading. Each
of the consolidated balance sheets included in or incor
porated by reference into its Reports (including the related
notes and schedules) fairly presents the consolidated
financial position of it and its Subsidiaries as of its date
and each of the consolidated statements of income and of cash
flows included in or incorporated by reference into its
Reports (including any related notes and schedules) fairly
presents the consolidated results of operations and cash
flows of it and its Subsidiaries for the periods set forth
therein (subject, in the case of unaudited statements, to
notes and normal year-end audit adjustments that will not be
material in amount or effect), in each case in accordance
with generally accepted accounting principles ("GAAP")
consistently applied during the periods involved, except as
may be noted therein. Since the Audit Date, it and each of
its Subsidiaries required to make filings under Utilities
Laws has filed with the applicable PUCs or the FCC, as the
case may be, all material forms, statements, reports and
documents (including exhibits, annexes and any amendments
thereto) required to be filed by them, and each such filing
complied in all material respects with all applicable laws,
rules and regulations, other than such failures to file and
non-compliance that are, individually or in the aggregate,
not reasonably likely to have a Material Adverse Effect on it
or to prevent, or materially impair its ability to effect,
the consummation by it of the transactions contem plated by
this Agreement or the Stock Option Agreement. To its
knowledge, as of the date hereof, no Person or "group"
"beneficially owns" 5% or more of its outstanding voting
securities, with the terms "beneficially owns" and "group"
having the meanings ascribed to them under Rule 13d-3 and
Rule 13d-5 under the Exchange Act.
(d) Absence of Certain Changes. Except as dis
closed in its Reports filed prior to the date hereof or as
expressly contemplated by this Agreement, since the Audit
Date it and its Subsidiaries have conducted their respective
businesses only in the ordinary and usual course of such
businesses, and there has not been (i) any change in the
financial condition, business or results of operations of it
and its Subsidiaries, except those changes that are not,
individually or in the aggregate, reasonably likely to have a
Material Adverse Effect on it; (ii) any damage, destruc tion
or other casualty loss with respect to any asset or property
owned, leased or otherwise used by it or any of its
Subsidiaries, whether or not covered by insurance, which
damage, destruction or loss is reasonably likely, individ
ually or in the aggregate, after taking into account any
insurance coverage, to have a Material Adverse Effect on it;
(iii) any declaration, setting aside or payment of any divi
dend or other distribution in respect of its capital stock,
except publicly announced regular quarterly cash dividends on
its common stock and, in the case of SBC, dividends in SBC
Common Stock; or (iv) any change by it in accounting
principles, practices or methods except as required by GAAP.
(e) Litigation and Liabilities. Except as dis
closed in its Reports filed prior to the date hereof, there
are no (i) civil, criminal or administrative actions, suits,
claims, hearings, investigations or proceedings ("Litiga
tion") pending or, to the actual knowledge of its executive
officers, threatened against it or any of its Affiliates (as
defined in Rule 12b-2 under the Exchange Act) or (ii) obli
gations or liabilities, whether or not accrued, contingent or
otherwise, including those relating to matters involving any
Environmental Law (as defined in Section 5.2(e)), that are
reasonably likely to result in any claims against or
obligations or liabilities of it or any of its Affiliates,
except for those that are not, individually or in the
aggregate, reasonably likely to have a Material Adverse
Effect on it or to prevent, or materially impair its ability
to effect, the consummation by it of the transactions con
templated by this Agreement or the Stock Option Agreement;
provided, that for purposes of this paragraph (e) no
Litigation arising after the date hereof shall be deemed to
have a Material Adverse Effect if and to the extent such
Litigation (or any relevant part thereof) is based on this
Agreement or the transactions contemplated hereby.
(f) Accounting, Tax and Regulatory Matters. As of
the date hereof, neither it nor any of its affiliates (as
determined in accordance with Section 6.7) has taken or
agreed to take any action, nor do its executive officers have
any actual knowledge of any fact or circumstance, that would
prevent SBC from accounting for the business combination to
be effected by the Merger as a "pooling-of- interests" or
prevent the Merger from qualifying as a "reorganization"
within the meaning of Section 368(a) of the Code.
(g) Taxes. It and each of its Subsidiaries have
prepared in good faith and duly and timely filed (taking into
account any extension of time within which to file) all
material Tax Returns (as defined below) required to be filed
by any of them and all such filed Tax Returns are complete
and accurate in all material respects and: (i) it and each of
its Subsidiaries have paid all Taxes (as defined below) that
are shown as due on such filed Tax Returns or that it or any
of its Subsidiaries is obligated to withhold from amounts
owing to any employee, creditor or third party, except with
respect to matters contested in good faith or for such
amounts that, alone or in the aggregate, are not reasonably
likely to have a Material Adverse Effect on it; (ii) as of
the date hereof, there are not pending or, to the actual
knowledge of its executive officers, threatened, in writing,
any audits, examinations, investigations or other proceedings
in respect of Taxes or Tax matters; and (iii) there are not,
to the actual knowl edge of its executive officers, any
unresolved questions or claims concerning its or any of its
Subsidiaries' Tax liability that are reasonably likely to
have a Material Adverse Effect on it. Neither it nor any of
its Subsidi aries has any liability with respect to income,
franchise or similar Taxes in excess of the amounts accrued
in respect thereof that are reflected in the financial
statements included in its Reports, except such excess
liabilities as are not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect on it.
As used in this Agreement, (x) the term "Tax"
(including, with correlative meaning, the terms "Taxes", and
"Taxable") includes all federal, state, local and foreign
income, profits, franchise, gross receipts, environmental,
customs duty, capital stock, severance, stamp, payroll,
sales, employment, unemployment, disability, use, property,
withholding, excise, production, value added, transfer,
occupancy and other taxes, duties or assessments of any
nature whatsoever, together with all interest, penalties and
additions imposed with respect to such amounts and any
interest in respect of such penalties and additions, and (y)
the term "Tax Return" includes all returns, amended returns
and reports (including elections, declarations, disclosures,
schedules, estimates and information returns) required to be
supplied to a Tax authority relating to Taxes.
(h) Compliance with Laws. Except as set forth in
its Reports filed prior to the date hereof, the busi nesses
of each of it and its Subsidiaries have not been, and are not
being, conducted in violation of any law, statute, ordinance,
regulation, judgment, order, decree, injunction, arbitration
award, license, authorization, opinion, agency requirement or
permit of any Governmental Entity or common law
(collectively, "Laws"), except for violations that are not,
individually or in the aggregate, reasonably likely to have a
Material Adverse Effect on it or to prevent, or materially
impair its ability to effect, the consummation by it of the
transactions contemplated by this Agreement or the Stock
Option Agreement. Except as set forth in its Reports filed
prior to the date hereof, as of the date hereof no
investigation or review by any Governmental Entity with
respect to it or any of its Subsidiaries is pending or, to
the actual knowledge of its executive officers, threatened,
nor has any Governmental Entity indicated an intention to
conduct the same, except for those the outcome of which are
not, individually or in the aggregate, reasonably likely to
have a Material Adverse Effect on it or to prevent, or
materially impair its ability
to effect, the consummation by it of the transactions
contemplated by this Agreement or the Stock Option Agreement.
To the actual knowledge of its executive officers, as of the
date hereof no material change is required in its or any of
its Subsidiaries' processes, properties or procedures in
connection with any such Laws, and it has not received any
notice or communication of any material noncompliance with
any such Laws that has not been cured as of the date hereof,
except for such changes and noncompliance that are not,
individually or in the aggregate, reasonably likely to have a
Material Adverse Effect on it or to prevent, or materially
impair its ability to effect, the consummation by it of the
transactions con templated by this Agreement or the Stock
Option Agreement. Each of it and its Subsidiaries has all
permits, licenses, franchises, variances, exemptions, orders
and other govern mental authorizations, consents and
approvals (collectively, "Permits") necessary to conduct
their business as presently conducted, except for those the
absence of which are not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect on it.
5.2. Representations and Warranties of the Company.
Except as set forth in the corresponding sections or
subsections of the Company Disclosure Letter, the Company
hereby represents and warrants to SBC and Merger Sub that:
(a) Capital Structure. The authorized capital
stock of the Company consists of 300,000,000 Company
Shares, of which 66,666,268 Company Shares were issued and
outstand ing and 2,230,586 Company Shares were held in
treasury as of the close of business on December 31, 1997;
2,000,000 shares of preferred stock, par value $50.00 per
share (the "Preferred Shares"), of which no shares were
outstanding as of the close of business on December 31,
1997; and 50,000,000 shares of preference stock, par value
$1.00 per share (the "Preference Shares"), of which no
shares were outstanding as of December 31, 1997. All of the
outstanding Company Shares have been duly authorized and
are validly issued, fully paid and nonassessable. Other
than 2,000,000 Preference Shares, designated "Series A
Junior Participating Preference Stock", reserved for
issuance pursuant to the Rights Agreement, dated as of
December 11, 1996, between the Company and State Street
Bank and Trust Company, as Rights Agent (the "Rights
Agreement"), Company Shares reserved for issuance pursuant
to the Stock Option Agreement and Company Shares reserved
for issuance as set forth below or which may be issued in
accordance with Section 6.1(a), the Company has no Company
Shares, Preferred Shares or Preference Shares reserved for
issuance. As of December 31, 1997, there were not more than
6,650,000 Com pany Shares reserved for issuance pursuant to
the Company's 1986 Stock Option Plan, 1995 Stock Incentive
Plan, Non- Employee Director Stock Plan, Incentive Award
Deferral Plan and 1996 Non-Employee Director Stock Plan
(collectively, the "Stock Plans"). Each of the outstanding
shares of capital stock or other securities of each of the
Company's Significant Subsidiaries is duly authorized,
validly issued, fully paid and nonassessable and owned by
the Company or a direct or indirect wholly-owned Subsidiary
of the Company, free and clear of any lien, pledge,
security interest, claim or other encumbrance. Except as
set forth above and except
for Company Shares and options to purchase Company Shares
which may be issued in accordance with Section 6.1(a),
neither the Company nor any of its Subsidiaries has any
obligation with respect to any preemptive or other outstand
ing rights (other than stock appreciation rights in respect
of not more than 40,000 Company Shares), options, warrants,
conversion rights, stock appreciation rights, redemption
rights, repurchase rights, agreements, arrangements or
commitments to issue or sell any shares of capital stock or
other securities of the Company or any of its Significant
Subsidiaries or any securities or obligations convertible or
exchangeable into or exercisable for, or giving any Person a
right to subscribe for or acquire, any securities of the
Company or any of its Significant Subsidiaries, and no
securities or obligations evidencing such rights are
authorized, issued or outstanding. The Company Shares
issuable pursuant to the Stock Option Agreement have been
duly reserved for issuance by the Company, and upon any
issuance of such Company Shares in accordance with the terms
of the Stock Option Agreement, such Company Shares will be
duly and validly issued and fully paid and nonassessable. The
Company does not have outstanding any bonds, debentures,
notes or other obligations the holders of which have the
right to vote (or convertible into or exercisable for
securities having the right to vote) with the shareholders of
the Company on any matter.
(b) Corporate Authority; Approval and Fairness. The
Company 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
the Stock Option Agreement and to consummate, subject only to
approval of this Agreement by the holders of two-thirds of
the outstanding Company Shares (the "Company Requisite Vote")
and the Company Required Consents, the Merger. Each of this
Agreement and the Stock Option Agree ment has been duly
executed and delivered by the Company and is a valid and
binding agreement of the Company enforceable against the
Company in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium
and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles
(the "Bankruptcy and Equity Exception"). The board of
directors of the Company (A) has adopted this Agreement and
approved the Merger and the other transactions contemplated
hereby, (B) has approved the execution and delivery of the
Stock Option Agreement and (C) has received the opinion of
its financial advisors, Xxxxxxx Xxxxx Xxxxxx Inc., in a
customary form and to the effect that the Merger
Consideration to be received by the holders of the Company
Shares in the Merger is fair to such holders from a financial
point of view.
(c) Employee Benefits.
(i) A copy of each bonus, deferred
compensation, pension, retirement, profit-sharing, thrift,
savings, employee stock ownership, stock bonus, stock
purchase, restricted stock, stock option, employment,
termination, severance, compensation, medical, health or
other material plan, agreement, policy or arrangement that
covers employees, directors, former employees or former
directors of it and its Subsidiaries (its "Compensation and
Benefit Plans") and any trust agreements or insurance
contracts forming a part of such Compensation and Benefit
Plans has been made available by the Company to SBC prior to
the date hereof and each such Compensation and Benefit Plan
is listed in Section 5.2(c) of the Company Disclosure Letter.
(ii) All of its Compensation and Benefit Plans
are in substantial compliance with all applicable law,
including the Code and the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") with the exception
of any instances of non-compliance that are not, individually
or in the aggregate, reasonably likely to have a Material
Adverse Effect on the Company. Each of its Compensation and
Benefit Plans that is an "employee pension benefit plan"
within the meaning of Section 3(2) of ERISA (a "Pension
Plan") and that is intended to be qualified under Section
401(a) of the Code has received a favorable determination
letter from the Internal Revenue Service (the "IRS"), and it
is not aware of any circumstances likely to result in
revocation of any such favorable determination letter. As of
the date hereof, there is no pending or, to the knowledge of
its executive officers, threatened in writing material
litigation relating to its Compensation and Benefit Plans.
Neither it nor any Subsidiary has engaged in a transaction
with respect to any of its Compensation and Benefit Plans
that, assuming the taxable period of such transaction expired
as of the date hereof, would subject it or any of its
Subsidiaries to a material tax or penalty imposed by either
Section 4975 of the Code or Section 502 of ERISA and that is
reasonably likely to have a Material Adverse Effect on the
Company.
(iii) As of the date hereof, no liability
under Subtitle C or D of Title IV of ERISA (other than the
payment of prospective premium amounts to the Pension
Benefit Guaranty Corporation in the normal course) has been
or is expected to be incurred by it or any Subsidiary with
respect to any ongoing, frozen or terminated "single-
employer plan", within the meaning of Section 4001(a)(15)
of ERISA, currently or formerly maintained by any of them,
or the single-employer plan of any entity which is
considered one employer with it under Section 4001 of ERISA
or Section 414 of the Code (its "ERISA Affiliate") (each
such single-employer plan, its "ERISA Affiliate Plan"). No
notice of a "reportable event", within the meaning of
Section 4043 of ERISA for which the 30-day reporting
requirement has not been waived, has been required to be
filed for any of its Pension Plans or any of its ERISA
Affiliate Plans within the 12-month period ending on the
date hereof or will be required to be filed in connection
with the transactions contemplated by this Agreement.
(iv) Neither any of its Pension Plans nor
any of its ERISA Affiliate Plans has an "accumulated
funding deficiency" (whether or not waived) within the
meaning of Section 412 of the Code or Section 302 of ERISA.
Neither it nor its Subsidiaries has provided, or is
required to provide, security to any of its Pension Plans
or to any of its ERISA Affiliate Plans pursuant to Section
401(a)(29) of the Code.
(v) The consummation of the Merger (or its
approval by its shareholders) and the other transactions
contemplated by this Agreement and the Stock Option
Agreement will not (x) entitle any of its employees or
directors or any employees of its Subsidiaries to severance
pay, directly or indirectly, upon termination of
employment, (y) accelerate the time of payment or vesting
or trigger any payment of compensation or benefits under,
increase the amount payable or trigger any other material
obligation pursuant to, any of its Compensation and Benefit
Plans or (z) result in any breach or violation of, or a
default under, any of its Compensation and Benefit Plans.
(vi) Since the Audit Date, except as
provided for herein, in the Company Disclosure Letter or as
disclosed in the Company's Reports filed prior to the date
hereof, there has not been any increase in the compensation
payable or that could become payable by it or any of its
Subsidiaries to officers or key employees or any amendment
of any of its Compensation and Benefit Plans other than
increases or amendments in the ordinary course.
(d) Takeover Statutes. The Board of Directors of
the Company, including a majority of the non-employee
directors of the Company, has duly adopted resolutions
approving the Merger, the Stock Option Agreement and the
transactions contemplated hereby and thereby and
specifically naming SBC and its existing and future
affiliates or associates (as such terms are defined under
Section 33-840 and 33-843 of the CBCA). Such resolutions
satisfy the requirements of Sections 33-842(c)(1) and 33-
844(a) of the CBCA, are by their terms irrevocable, and
have not been amended or modified in any manner. The
provisions of Sections 33-841 and 33-844 of the CBCA do not
and will not apply to the Merger or the other transactions
contemplated by this Agreement or the Stock Option
Agreement. No other "fair price," "moratorium," "control
share acquisition" or other similar anti-takeover statute
or regulation (each a "Takeover Statute") as in effect on
the date hereof or any anti-takeover provision in the
Company's certificate of incorporation and by-laws is
applicable to the Company, the Company Shares, the Merger
or the other transactions contemplated by this Agreement or
the Stock Option Agreement.
(e) Environmental Matters. Except as disclosed in
its Reports filed prior to the date hereof and except for
such matters that, individually or in the aggregate, are
not reasonably likely to have a Material Adverse Effect on
it: (i) each of it and its Subsidiaries has complied with
all applicable Environmental Laws (as defined below); (ii)
the properties currently owned or operated by it or any of
its Subsidiaries (including soils, any groundwater
underlying such properties, surface water, buildings or
other structures) are not contaminated with any Hazardous
Substances (as defined below) at levels that require
investigation or cleanup under applicable Environmental
Laws; (iii) the properties formerly owned or operated by it
or any of its Subsidiaries were not contaminated with
Hazardous Substances during the period of ownership or
operation by it or any of its Subsidiaries; (iv) neither it
nor any of its Subsidiaries has received written notice
that it is subject to liability for any Hazardous Substance
disposal or contamination on any third party property; (v)
neither it nor any Subsidiary has been responsible for any
release or threat of release of any Hazardous Substance;
(vi) as of the date hereof neither it nor any Subsidiary
has received any written notice, demand, letter, claim or
request for information alleging that it or any of its
Subsidiaries may be in violation of or liable under any
Environmental Law; and (vii) neither it nor any of its
Subsidiaries is subject to any binding orders, decrees,
injunctions or other arrangements with any Governmental
Entity or is subject to any indemnity or other agreement
with any third party relating to liability under any
Environmental Law or relating to Hazardous Substances.
As used herein, the term "Environmental Law"
means any Law relating to: (A) the protection,
investigation or restoration of the environment, health,
safety, or natural resources, (B) the handling, use,
presence, disposal, release or threatened release of any
Hazardous Substance or (C) noise, odor, wetlands,
pollution, contamination or any injury or threat of injury
to persons or property in connection with any Hazardous
Substance.
As used herein, the term "Hazardous Substance"
means any substance that is: listed, classified or
regulated pursuant to any Environmental Law, including any
petroleum product or by-product, friable
asbestos-containing material, lead-containing paint,
polychlorinated biphenyls, radioactive materials or radon.
(f) Labor Matters. As of the date hereof, neither
it nor any of its Subsidiaries is the subject of any
material proceeding asserting that it or any of its
Subsidiaries has committed an unfair labor practice or is
seeking to compel it to bargain with any labor union or
labor organization nor is there pending or, to the actual
knowledge of its executive officers, threatened, nor has
there been for the past five years, any labor strike,
dispute, walkout, work stoppage, slow-down or lockout
involving it or any of its Subsidiaries, except in each
case as is not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect on it.
(g) Rights Agreement. The Company has amended the
Rights Agreement to provide that neither SBC nor Merger Sub
shall be deemed to be an Acquiring Person (as defined in
the Rights Agreement) and the Distribution Date (as defined
in the Rights Agreement) shall not be deemed to occur and
that the Rights will not become separable, distributable,
unredeemable or exercisable as a result of entering into
this Agreement, the Stock Option Agreement or consummating
the Merger and/or the other transactions contemplated
hereby and thereby.
(h) Brokers and Finders. Neither it nor any of its
officers, directors or employees has employed any broker or
finder or incurred any liability for any brokerage fees,
commissions or finders' fees in connection with the Merger
or the other transactions contemplated in this Agreement and
the Stock Option Agreement except that the Company has
employed Xxxxxxx Xxxxx Xxxxxx Inc. as its financial advisor,
the arrangements with which have been disclosed to SBC prior
to the date hereof.
(i) Intellectual Property. (i) The Company and/or
each of its Subsidiaries owns, or is licensed or otherwise
possesses legally enforceable rights to use, all patents,
trademarks, trade names, service marks, copyrights, and any
applications therefor, technology, know-how, computer
software programs or applications, and tangible or
intangible proprietary information or materials that are
used in its or any of its Subsidiaries' businesses as
currently conducted, and to the actual knowledge of its
executive officers all patents, trademarks, trade names,
service marks and copyrights held by it and/or its
Subsidiaries are valid and subsisting, except for any
failures to so own, be licensed or possess or to be valid
and subsisting, as the case may be, that, individually or in
the aggregate, are not reasonably likely to have a Material
Adverse Effect on it.
(ii) Except as disclosed in its Reports filed
prior to the date hereof or as is not reasonably likely to
have a Material Adverse Effect on the Company:
(A) it and its Subsidiaries are not, nor will any
of them be as a result of the execution and
delivery of this Agreement or the performance of
its obligations hereunder, in violation of any
licenses, sublicenses and other agreements as to
which it or any of its Subsidiaries is a party and
pursuant to which it or any Subsidiary is
authorized to use any third-party patents,
trademarks, service marks, and copyrights ("Third-
Party Intellectual Property Right");
(B) to the actual knowledge of the Company, no
claims as of the date hereof with respect to (I)
the patents, registered and material unregistered
trademarks and service marks, registered
copyrights, trade names, and any applications
therefor owned by it or any its Subsidiaries (the
"Owned Intellectual Property Rights"); (II) any
trade secrets material to it; or (III) Third-Party
Intellectual Property Rights are currently pending
or, to the knowledge of its executive officers,
are threatened by any Person; and
(C) to the actual knowledge of its executive
officers, there is no unauthorized use,
infringement or misappropriation of any of the
Owned Intellectual Property Rights by any third
party, including any of its or any of its
Subsidiaries' employees or former employees.
(j) Severance Payments. No payments to be made to
any of the officers and employees of the Company or its
Subsidiaries as a result of the consummation of the Merger
will be subject to the deduction limitations under Section
280G of the Code.
5.3. Representations and Warranties of SBC and
Merger Sub. Except as set forth in the corresponding
sections or subsections of the SBC Disclosure Letter, SBC,
on behalf of itself and Merger Sub, hereby represents and
warrants to the Company that:
(a) Capital Structure. (i) The authorized capital
stock of SBC consists of 2,200,000,000 shares of SBC Common
Stock, of which 918,627,275 shares were issued and
outstanding and 13,831,028 shares were held in treasury as
of the close of business on December 30, 1997; and
10,000,000 shares of Preferred Stock, par value $1.00 per
share (the "SBC Preferred Shares"), of which no shares were
outstanding as of the close of business on December 31,
1997. All of the outstanding shares of SBC Common Stock have
been duly authorized and are validly issued, fully paid and
nonassessable. SBC has no shares of SBC Common Stock or SBC
Preferred Shares reserved for issuance except that SBC has
reserved no more than 10,000,000 SBC Preferred Shares for
issuance pursuant to the Rights Agreement, dated as of
January 27, 1989, between SBC and American Transtech, Inc.,
as Rights Agent, as amended by the Amendment of Rights
Agreement, dated as of August 5, 1992, between SBC and The
Bank of New York, as successor Rights Agent, and the Second
Amendment of Rights Agreement, dated as of June 15, 1994,
between SBC and The Bank of New York, as successor Rights
Agent (as amended, the "SBC Rights Agreement"). Each of the
outstanding shares of capital stock of each of SBC's
Significant Subsidiaries is duly authorized, validly issued,
fully paid and nonassessable and owned by SBC or a direct or
indirect wholly-owned subsidiary of SBC, free and clear of
any lien, pledge, security interest, claim or other
encumbrance. Except pursuant to SBC's Senior Management Long
Term Incentive Plan, Incentive Award Deferral Plan,
Non-Employee Directors Stock and Deferral Plan, Stock
Savings Plan, 1994 Stock Option Plan, 1996 Stock and
Incentive Plan, 1995 Management Stock Option Plan, Savings
Plan, Savings and Security Plan and stock plans assumed by
SBC pursuant to the merger of SBC Communications (NV), Inc.
with and into Pacific Telesis Group consummated on April 1,
1997 (collectively, the "SBC Stock Plans"), neither SBC nor
any of its Subsidiaries has any obligation with respect to
any preemptive or other outstanding rights, options,
warrants, conversion rights, stock appreciation rights,
redemption rights, repurchase rights, agreements,
arrangements or commitments to issue or to sell any shares
of capital stock or other securities of SBC or any of its
Significant Subsidiaries or any securities or obligations
convertible or exchangeable into or exercisable for, or
giving any Person a right to subscribe for or acquire, any
securities of the Company or any of its Significant
Subsidiaries, and no securities or obligation evidencing
such rights are authorized, issued or outstanding. SBC does
not have outstanding any bonds, debentures, notes or other
obligations the holders of which have the right to vote (or
convertible into or exercisable for securities having the
right to vote) with the stockholders of SBC on any matter.
(ii) The authorized capital stock of Merger
Sub consists of 1,000 shares of common stock, par value
$1.00 per share, all of which are validly issued and
outstanding. All of the issued and outstanding capital stock
of Merger Sub is, and at the Effective Time will be, owned
by SBC, and there are (i) no other shares of capital stock
or other voting securities of Merger Sub, (ii) no securities
of Merger Sub convertible into or exchangeable for shares of
capital stock or other voting securities of Merger Sub and
(iii) no options or other rights to acquire from Merger Sub,
and no obligations of Merger Sub to issue, any capital
stock, other voting securities or securities convertible
into or exchangeable for capital stock or other voting
securities of Merger Sub. Merger Sub has not conducted any
business prior to the date hereof and has no, and prior to
the Effective Time will have no, assets, liabilities or
obligations of any nature other than those incident to its
formation and pursuant to this Agreement and the Merger and
the other transactions contemplated by this Agreement.
(b) Corporate Authority; Approval and Fairness.
SBC and Merger Sub each has all requisite corporate power
and authority and each has taken all corporate action
necessary in order to execute, deliver and perform its
obligations under this Agreement and the Stock Option
Agreement and to consummate, subject only to the SBC
Required Consents, the Merger. Each of this Agreement and
the Stock Option Agreement has been duly executed and
delivered by SBC and Merger Sub and is a valid and binding
agreement of SBC and Merger Sub, enforceable against each of
SBC and Merger Sub in accordance with its terms, subject to
the Bankruptcy and Equity Exception. SBC has received the
opinion of its financial advisors, Lazard Freres & Co., in a
customary form and to the effect that the Merger
Consideration to be paid by SBC in the Merger is fair to SBC
from a financial point of view. The shares of SBC Common
Stock, when issued pursuant to this Agreement, will be
validly issued, fully paid and nonassessable, and no
stockholder of SBC will have any preemptive right of
subscription or purchase in respect thereof.
(c) Brokers and Finders. Neither it nor any of its
officers, directors or employees has employed any broker or
finder or incurred any liability for any brokerage fees,
commissions or finders' fees in connection with the Merger
or the other transactions contemplated in this Agreement and
the Stock Option Agreement except that SBC and Merger Sub
have employed Lazard Freres & Co. as their financial
advisor.
ARTICLE VI
Covenants
6.1. Interim Operations. (a) The Company covenants
and agrees as to itself and its Subsidiaries that, after the
date hereof and prior to the Effective Time (unless SBC
shall otherwise approve in writing, which approval shall not
be unreasonably withheld or delayed, and except as otherwise
expressly contemplated by this Agreement or the Stock Option
Agreement, in the Company Disclosure Letter or as required
by applicable Law):
(i) the business of it and its Subsidiaries
shall be conducted in the ordinary and usual course and, to
the extent consistent therewith, it and its Subsidiaries
shall use all reasonable efforts to preserve its business
organization intact and maintain its existing relations and
goodwill with customers, suppliers, regulators,
distributors, creditors, lessors, employees and business
associates;
(ii) it shall not (A) amend its certificate
of incorporation or by-laws or amend, modify or terminate
the Rights Agreement; (B) split, combine, subdivide or
reclassify its outstanding shares of capital stock; (C)
declare, set aside or pay any dividend payable in cash,
stock or property in respect of any capital stock, other
than per share regular quarterly cash dividends not in
excess of $0.44 per Company Share; or (D) repurchase, redeem
or otherwise acquire, or permit any of its Subsidiaries
(other than the Company's Employee Stock Ownership Plan) to
purchase or otherwise acquire, any shares of its capital
stock or any securities convertible into or exchangeable or
exercisable for any shares of its capital stock;
(iii) neither it nor any of its Subsidiaries
shall knowingly take any action that would prevent the
Merger from qualifying for "pooling of interests" accounting
treatment or as a tax-free "reorganization" within the
meaning of Section 368(a) of the Code or that would cause
any of its representations and warranties herein to become
untrue in any material respect;
(iv) neither it nor any of its Subsidiaries
shall terminate, establish, adopt, enter into, make any new
grants or awards under, amend or otherwise modify, any
Compensation and Benefit Plans or increase the salary, wage,
bonus or other compensation of any directors, officers or
employees except (A) for grants or awards to directors,
officers and employees of it or its Subsidiaries under
existing Compensation and Benefit Plans in such amounts and
on such terms as are consistent with past practice, (B) in
the normal and usual course of business (which shall include
normal periodic performance reviews and related compensation
and benefit increases and the provision of individual
Compensation and Benefit Plans consistent with past practice
for promoted or newly hired officers and employees and the
adoption of Compensation and Benefit Plans for employees of
new Subsidiaries in amounts and on terms consistent with
past practice) or (C) for actions necessary to satisfy
existing contractual obligations under Compensation and
Benefit Plans existing as of the date hereof;
(v) neither it nor any of its Subsidiaries
shall issue any preferred stock or incur any indebtedness
for borrowed money (other than indebtedness incurred solely
for the purpose of funding the Escrow Account or the
replacement or refinancing of existing short-term
indebtedness) or guarantee any such indebtedness if the
Company should reasonably anticipate that as a result of
such incurrence any of the Company's or any of its
Subsidiaries' outstanding senior indebtedness would be rated
lower than A by Standard & Poor's;
(vi) neither it nor any of its
Subsidiaries shall make any capital expenditures in any
calendar year in an aggregate amount in excess of the
aggregate amount reflected in the Company's capital
expenditure budget for such year, a copy of which has
been provided to SBC, plus $100 million;
(vii) except as contemplated by
Section 6.1(a)(iv), neither the Company nor any of its
Subsidiaries shall issue, deliver, sell, or encumber
shares of any class of its common stock or any securities
convertible into, or any rights, warrants or options to
acquire, any such shares except the option granted under
the Stock Option Agreement, options outstanding on the
date hereof under the Stock Plans, awards of options and
restricted stock granted hereafter under the Stock Plans
in the ordinary course of business in accordance with
this Agreement and shares issuable pursuant to such
options and awards;
(viii) neither it nor any of its
Subsidiaries shall spend in excess of $50 million in any
calendar year to acquire any business, whether by merger,
consolidation, purchase of property or assets or
otherwise (valuing any non-cash consideration at its fair
market value as of the date of the agreement for such
acquisition). For purposes of this clause (viii), the
amount spent with respect to any acquisition shall be
deemed to include the aggregate amount of capital
expenditures that the Company is obligated to make at any
time or plans to make as result of such acquisition
within two years after the date of acquisition;
(ix) neither it nor its Subsidiaries shall
enter any business other than the telecommunications
business and those businesses traditionally associated
with the telecommunications business or enter into or
extend any telecommunications business outside the
geographic areas served by it and its Subsidiaries as of
the date of this Agreement; and
(x) neither it nor any of its Subsidiaries
shall agree prior to the Effective Time to do any of the
foregoing after the Effective Time.
(b) SBC covenants and agrees as to itself and its
Subsidiaries that, after the date hereof and prior to the
Effective Time (unless the Company shall otherwise approve in
writing, which approval shall not be unreasonably withheld or
delayed, and except as otherwise expressly contemplated by
this Agreement or in the SBC Disclosure Letter or as required
by applicable Law):
(i) it shall not (A) amend its certificate of
incorporation or by-laws in any manner that
would prohibit or hinder, impede or delay in any material
respect the Merger or the consummation of the transactions
contemplated hereby; (B) declare, set aside or pay any
dividend or other distribution payable in cash or property
(other than SBC Common Stock) in respect of any capital
stock, other than per share regular quarterly cash dividends;
or (C) repurchase, redeem or otherwise acquire, or permit any
of its Subsidiaries to purchase or otherwise acquire, except
in open market transactions or in connection with the SBC
Stock Plans, any shares of its capital stock or any
securities convertible into or exchangeable for any shares of
its capital stock;
(ii) neither it nor any of its Subsidiaries
shall knowingly take any action that would prevent the Merger
from qualifying as a tax-free "reorganization" within the
meaning of Section 368(a) of the Code or that would cause any
of its representations and warranties herein to become untrue
in any material respect, provided, however, that nothing
contained herein shall limit the ability of SBC to exercise
its rights under the Stock Option Agreement; and
(iii) neither it nor any of its Subsidiaries
will authorize or enter into an agreement to do any of the
foregoing.
(c) SBC and the Company agree that any written
approval obtained under this Section 6.1 may be relied upon
by the other party if signed by the Chief Executive Officer,
Chief Financial Officer, chief legal officer or another
executive officer of the other party.
6.2. Acquisition Proposals. (a) The Company agrees
that neither it nor any of its Subsidiaries nor any of the
officers and directors of it or its Subsidiaries shall, and
that it shall direct and use its best efforts to cause its
and its Subsidiaries' Representatives not to, directly or
indirectly, initiate, solicit, encourage or otherwise
facilitate any inquiries or the making of any proposal or
offer with respect to a merger, reorganization, share
exchange, consolidation or similar transaction involving it,
or any purchase of, or tender offer for, 15% or more of the
equity securities of it or any of its Subsidiaries listed on
Schedule 1 or 15% or more of its and its Subsidiaries' assets
(based on the fair market value thereof) taken as a whole
(any such proposal or offer being hereinafter referred to as
an "Acquisition Proposal"). The Company further agrees that
neither it nor any of its Subsidiaries nor any of the
officers and directors of it or its Subsidiaries shall, and
that it shall direct and use its
best efforts to cause its Representatives not to, directly or
indirectly, have any discussions with or provide any
confidential information or data to any Person relating to an
Acquisition Proposal or engage in any negotiations concerning
an Acquisition Proposal, or otherwise facilitate any effort
or attempt to make or implement an Acquisition Proposal;
provided, however, that nothing contained in this Agreement
shall prevent the Company or its board of directors from (A)
complying with Rule 14e-2 promulgated under the Exchange Act
with regard to an Acquisition Proposal; (B) making any
disclosure to the Company's shareholders if, in the good
faith judgment of the board of directors of the Company,
failure so to disclose would be inconsistent with its
obligations under applicable law; (C) engaging in any
discussions or negotiations with or providing any information
to, any Person in response to a bona fide written Acquisition
Proposal by any such Person received after the date hereof
that was not solicited by the Company after the date hereof;
or (D) recommending such an Acquisition Proposal to the
shareholders of the Company if and only to the extent that,
in such case referred to in clause (C) or (D), the board of
directors of the Company concludes in good faith (after
consultation with its financial advisor) that such
Acquisition Proposal is reasonably capable of being
completed, taking into account all legal, financial,
regulatory and other aspects of the proposal and the Person
making the proposal, and would, if consummated, result in a
transaction more favorable to the Company's shareholders from
a financial point of view than the transaction contemplated
by this Agreement (any such more favorable Acquisition
Proposal being referred to in this Agreement as a "Superior
Proposal"). The Company agrees that it will immediately cease
and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted
heretofore with respect to any Acquisition Proposal. The
Company also agrees that it will promptly request each Person
that has heretofore executed a confidentiality agreement in
connection with its consideration of any Acquisition Proposal
to return all confidential information heretofore furnished
to such Person by or on behalf of it or any of its
Subsidiaries.
(b) The Company agrees that it will take the
necessary steps to promptly inform the individuals or
entities referred to in the first sentence hereof of the
obligations undertaken in this Section 6.2. The Company
agrees that it will notify SBC promptly if any such
inquiries, proposals or offers are received by, any such
information is requested from, or any such discussions or
negotiations are sought to be initiated or continued with,
any of the Company's Representatives indicating, in
connection with such notice, the name of such Person and the
material terms and conditions of any proposals or offers and
thereafter shall keep SBC informed, on a current basis, of
the status and material terms of any such proposals or offers
and the status of any such discussions or negotiations.
6.3. Information Supplied. The Company and SBC each
agrees, as to itself and its Subsidiaries, that none of the
information supplied or to be supplied by it or its
Subsidiaries for inclusion or incorporation by reference in
(i) the Registration Statement on Form S-4 to be filed with
the SEC by SBC in connection with the issuance of shares of
SBC Common Stock in the Merger (including the proxy statement
and prospectus (the "Prospectus/Proxy Statement")
constituting a part thereof) (the "S-4 Registration
Statement") will, at the time the S-4 Registration Statement
becomes effective under the Securities Act, and (ii) the
Prospectus/Proxy Statement and any amendment or supplement
thereto will, at the date of mailing to shareholders and at
the time of the Shareholders Meeting, in any such case,
contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading. If at any time prior to the Effective Time any
information relating to SBC or the Company, or any of their
respective affiliates, officers or directors, should be
discovered by SBC or the Company which should be set forth in
an amendment or supplement to any of the S-4 Registration
Statement or the Prospectus/Proxy Statement, so that any of
such documents would not include any misstatement of a
material fact or omit to state any material fact necessary to
make the statements therein, in the light of the
circumstances under which they were made, not misleading, the
party which discovers such information shall promptly notify
the other parties hereto and an appropriate amendment or
supplement describing such information shall be promptly
filed with the SEC and, to the extent required by law,
disseminated to the shareholders of the Company.
6.4. Shareholders Meeting. The Company will take,
in accordance with applicable law and its certificate of
incorporation and by-laws, all action necessary to convene a
meeting of holders of Company Shares (the "Shareholders
Meeting") as promptly as practicable after the S-4
Registration Statement is declared effective to consider and
vote upon the approval of this Agreement and the Merger.
Unless the board of directors of the Company determines in
good faith after consultation with outside legal counsel
that to do so would result in a failure to comply with its
fiduciary duties under applicable law, the Company's board of
directors shall recommend approval of this Agreement and the
Merger and shall take all lawful action to solicit such
approval.
6.5. Filings; Other Actions; Notification. (a) SBC
and the Company shall promptly prepare and file with the SEC
the Prospectus/Proxy Statement, and SBC shall prepare and
file with the SEC the S-4 Registration Statement as promptly
as practicable. SBC and the Company each shall use all
reasonable efforts to have the S-4 Registration Statement
declared effective under the Securities Act as promptly as
practicable after such filing, and promptly thereafter mail
the Prospectus/Proxy Statement to the shareholders of the
Company. SBC shall also use all reasonable efforts to obtain
prior to the effective date of the S-4 Registration Statement
all necessary state securities law or "blue sky" permits and
approvals required in connection with the Merger and to
consummate the other transactions contemplated by this
Agreement and will pay all expenses incident thereto.
(b) The Company and SBC each shall use all
reasonable efforts to cause to be delivered to the other
party and its directors (i) letters of its independent
auditors, dated (A) the date on which the S-4 Registration
Statement shall become effective and (B) the Closing Date,
and addressed to the other party and its directors, in form
and substance customary for "comfort" letters delivered by
independent public accountants in connection with registra
tion statements similar to the S-4 Registration Statement,
and (ii) a letter from its independent auditors addressed to
SBC and the Company, dated as of the Closing Date, stating
their opinion that the Merger will qualify for
pooling-of-interests accounting treatment.
(c) The Company and SBC shall cooperate with the
other and use (and shall cause their respective Subsidi aries
to use) their respective best efforts to take or cause to be
taken all actions, and do or cause to be done all things,
necessary, proper or advisable on its part under this
Agreement and the Stock Option Agreement and applicable Laws
to consummate and make effective the Merger and the other
transactions contemplated by this Agreement and the Stock
Option Agreement as soon as practicable, including preparing
and filing as promptly as practicable all documentation to
effect all necessary applications, notices, petitions,
filings and other documents and to obtain as promptly as
practicable all consents, registrations, approvals, permits
and authorizations necessary or advisable
to be obtained from any third party and/or any Governmental
Entity in order to consummate the Merger or any of the other
transactions contemplated by this Agreement or the Stock
Option Agreement; provided, however, that nothing in this
Section 6.5 shall require, or be construed to require, SBC or
the Company to proffer, or agree to, any concession to any
Governmental Entity if (i) such concession is reasonably
likely to have a Material Adverse Effect on the Company
following the Effective Time, (ii) such concession is
reasonably likely to have a Material Adverse Effect on SBC
following the Effective Time (it being understood that, for
this purpose, materiality shall be determined with reference
to the total enterprise value of the Company and its
Subsidiaries, taken as a whole, rather than that of SBC and
its Subsidiaries, taken as a whole, and taking into account
any material restrictions on the ability of SBC or any of its
Significant Subsidiaries to conduct its operations as
currently conducted or as proposed to be conducted by it).
Subject to applicable laws relating to the exchange of
information, SBC and the Company shall have the right to
review in advance, and to the extent practicable each will
consult the other on, all the information relating to SBC or
the Company, as the case may be, and any of their respective
Subsidiaries, that appears in any filing made with, or
written materials submitted to, any third party and/or any
Governmental Entity in connection with the Merger and the
other transactions contemplated by this Agreement or the
Stock Option Agreement. In exercising the foregoing right,
each of the Company and SBC shall act reasonably and as
promptly as practicable.
(d) Subject to applicable laws relating to the
exchange of information, the Company and SBC each shall, upon
request by the other, furnish the other with all information
concerning itself, its Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably
necessary or advisable in connection with the
Prospectus/Proxy Statement, the S-4 Registration Statement or
any other statement, filing, notice or application made by or
on behalf of SBC, the Company or any of their respective
Subsidiaries to any third party and/or any Governmental
Entity in connection with the Merger and the transactions
contemplated by this Agreement or the Stock Option Agreement.
(e) The Company and SBC each shall keep the other
apprised of the status of matters relating to comple tion of
the transactions contemplated hereby, including promptly
furnishing the other with copies of notices or other
communications received by SBC or the Company, as the case
may be, or any of its Subsidiaries, from any third
party and/or any Governmental Entity with respect to the
Merger and the other transactions contemplated by this
Agreement or the Stock Option Agreement. Each of the Company
and SBC shall give prompt notice to the other of any change
that is reasonably likely to result in a Material Adverse
Effect on it or of any failure of any of the conditions to
the other party's obligations to effect the Merger set forth
in Article VII.
6.6. Access; Consultation. (a) Upon reasonable
notice, and except as may otherwise be required by appli
cable law, the Company and SBC each shall (and shall cause
its Subsidiaries to) afford the other's and the other's
Subsidiaries' employees, agents and representatives
(including any investment banker, attorney or accountant
retained by the other or any of the other's
Subsidiaries)(such officers, directors, employees, agents and
representatives being referred to in this Agreement, with
respect to the Company or SBC, as the context requires, as
such party's "Representatives") reasonable access, during
normal business hours throughout the period prior to the
Effective Time, to its properties, books, contracts and
records and, during such period, each shall (and shall cause
its Subsidiaries to) furnish promptly to the other all
information concerning its business, properties and personnel
as may reasonably be requested, provided that no
investigation pursuant to this Section shall affect or be
deemed to modify any representation or warranty made by the
Company, SBC or Merger Sub hereunder, and provided, further,
that the foregoing shall not require the Company or SBC to
permit any inspection, or to disclose any information, that
in the reasonable judgment of the Company or SBC, as the case
may be, would violate applicable law or any of its
obligations with respect to confidentiality or would result
in the disclosure of any trade secrets of third parties if
the Company or SBC, as the case may be, shall have used all
reasonable efforts to obtain the consent of such third party
to such inspection or disclosure. All requests for
information made pursuant to this Section shall be directed
to an executive officer of the Company or SBC, as the case
may be, or such Person as may be designated by any such
executive officer, as the case may be. All information
provided pursuant to this Section 6.6 shall be governed by
the terms of the Confidentiality Agreement.
(b) Subject to the Confidentiality Agreement and to
Section 6.16, from the date hereof to the Effective Time, SBC
and the Company agree to consult with each other on a regular
basis on a schedule to be agreed with regard to their
respective operations.
(c) From the date hereof to the Effective Time, the
Company agrees to notify SBC in advance of any issuance by
the Company or any of its Subsidiaries of any long-term debt
or preferred stock.
6.7. Affiliates. (a) Each of the Company and SBC
shall deliver to the other a letter identifying all Persons
whom such party believes to be, at the date of the
Shareholders Meeting, "affiliates" of such party for purposes
of applicable interpretations regarding use of the
pooling-of-interests accounting method and, in the case of
"affiliates" of the Company, for purposes of Rule 145 under
the 1933 Act. Each of the Company and SBC shall use all
reasonable efforts to cause each Person who is identified as
an "affiliate" in the letter referred to above to deliver to
SBC prior to the date of the Shareholders Meeting a written
agreement, in the form attached hereto as Exhibit C, in the
case of affiliates of the Company (the "Company Affiliate's
Letter"), and Exhibit D, in the case of affiliates of SBC
(the "SBC Affiliate's Letter"). Prior to the Effective Time,
each of the Company and SBC shall use all reasonable efforts
to cause each additional Person who is identified as an
"affiliate" to execute the applicable written agreement as
set forth in this Section 6.7.
(b) If the Merger would otherwise qualify for
pooling-of-interests accounting treatment, shares of SBC
Common Stock issued to such affiliates of the Company in
exchange for Company Shares shall not be transferable until
such time as financial results covering at least 30 days of
combined operations of SBC and the Company shall have been
published within the meaning of Section 201.01 of the SEC's
Codification of Financial Reporting Policies, regardless of
whether each such affiliate has provided the written
agreement referred to in this Section, except to the extent
permitted by, and in accordance with, SEC Accounting Series
Release 135 and SEC Staff Accounting Bulletins 65 and 76. Any
Company Shares held by any such affiliate shall not be
transferable, regardless of whether such affiliate has
provided the applicable written agreement referred to in this
Section, if such transfer, either alone or in the aggregate
with other transfers by affiliates, would preclude SBC's
ability to account for the business combination to be
effected by the Merger as a pooling of interests. The Company
shall not register the transfer of any Certificate, unless
such transfer is made in compliance with the foregoing.
6.8. Stock Exchange Listing and De-listing. SBC
shall use its best efforts to cause the shares of SBC Common
Stock to be issued in the Merger to be approved for listing
on the NYSE, subject to official notice of issuance, prior to
the Closing Date. The Surviving Corporation shall use its
best efforts to cause the Company Shares to be de-listed from
the NYSE and the Pacific Exchange and de-registered under the
Exchange Act as soon as practicable following the Effective
Time.
6.9. Publicity. The initial press release with
respect to the Merger shall be a joint press release, and
thereafter the Company and SBC each shall consult with each
other prior to issuing any press releases or otherwise making
public announcements with respect to the Merger and the other
transactions contemplated by this Agreement and the Stock
Option Agreement and prior to making any filings with any
third party and/or any Governmental Entity (including any
national securities exchange) with respect thereto, except as
may be required by law or by obligations pursuant to any
listing agreement with or rules of any national securities
exchange.
6.10. Benefits.
(a) Stock Options.
(i) At the Effective Time, each outstanding
option to purchase Company Shares (a "Company Option") under
the Stock Plans, whether vested or unvested, shall be deemed
to constitute an option to acquire, on the same terms and
conditions as were applicable under such Company Option,
after giving effect to any provision requiring the vesting of
any Company Option as a result of the transactions
contemplated by this Agreement, the same number of shares of
SBC Common Stock as the holder of such Company Option would
have been entitled to receive pursuant to the Merger had such
holder exercised such Company Option in full immediately
prior to the Effective Time (rounded down to the nearest
whole number) (a "Substitute Option"), at an exercise price
per share (rounded up to the nearest whole cent) equal to (y)
the aggregate exercise price for the Company Shares otherwise
purchasable pursuant to such Company Option divided by (z)
the number of full shares of SBC Common Stock deemed
purchasable pursuant to such Company Option in accordance
with the foregoing. At or prior to the Effective Time, the
Company shall make all necessary arrangements with respect to
the Stock Plans, including any necessary amendments thereto,
to permit the assumption of the unexercised Company Options
by SBC pursuant to this Section and no later than five
business days after the Effective Time SBC shall register
under the Securities Act of 1933 on Form S-8 or other
appropriate form (and use its best efforts to maintain the
effectiveness thereof) shares
of SBC Common Stock issuable pursuant to all Substitute
Options. As promptly as practicable after the Effective Time,
the Company shall deliver to the participants in the Stock
Plans appropriate notices setting forth such participants'
rights pursuant to such assumed Company Options.
(ii) Effective at the Effective Time, SBC
shall assume each Company Option in accordance with the terms
of the Stock Plan under which it was issued and the stock
option agreement by which it is evidenced.
(b) Employee Benefits. SBC agrees that it shall
cause the Surviving Corporation for at least two years after
the Effective Time to provide or cause to be provided to
employees of the Company and its Subsidiaries compensation
and benefit plans that are no less favorable, in the
aggregate, than the Company's Compensation and Benefit Plans;
provided, however, if during this period SBC implements any
widespread increase or decrease in benefits under
compensation and benefit plans or in the cost thereof to
participants under compensation and benefit plans applicable
to employees of SBC and its Subsidiaries (other than the
Surviving Corporation and its Subsidiaries), the Surviving
Corporation shall proportionately adjust the benefits under
the Company's compensation and benefit plans or the cost
thereof to participants, and provided, further, with respect
to employees who are subject to collective bargaining, all
benefits shall be provided in accordance with the applicable
collective bargaining agreement. SBC shall, and shall cause
the Surviving Corporation to, honor, pursuant to their terms,
all employee benefit obligations to current and former
employees under the Compensation and Benefit Plans.
6.11. Expenses. Except as otherwise provided in
Section 6.18 or 8.5(b), whether or not the Merger is
consummated, all costs and expenses incurred in connection
with this Agreement and the Merger and the other transactions
contemplated by this Agreement shall be paid by the party
incurring such cost or expense, except that expenses incurred
in connection with the filing fee for the S-4 Registration
Statement and printing and mailing the Prospectus/Proxy
Statement and the S-4 Registration Statement and the filing
fee under the HSR Act shall be shared equally by SBC and the
Company.
6.12. Indemnification; Directors' and Officers'
Insurance. (a) From and after the Effective Time, SBC agrees
that it will indemnify and hold harmless each present and
former director and officer of the Company (when acting
in such capacity) determined as of the Effective Time (the
"Indemnified Parties"), against any costs or expenses
(including reasonable attorneys' fees), judgments, fines,
losses, claims, damages or liabilities (collectively,
"Costs") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of or pertain
ing to matters existing or occurring at or prior to the
Effective Time, whether asserted or claimed prior to, at or
after the Effective Time, to the fullest extent that the
Company would have been permitted under Connecticut law and
its certificate of incorporation or by-laws in effect on the
date hereof to indemnify such Person (and SBC shall also
advance expenses as incurred to the fullest extent permitted
under applicable law, provided the Person to whom expenses
are advanced provides an undertaking to repay such advances
if it is ultimately determined that such Person is not
entitled to indemnification).
(b) Any Indemnified Party wishing to claim
indemnification under paragraph (a) of this Section 6.12,
upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify SBC thereof, but the
failure to so notify shall not relieve SBC of any liability
it may have to such Indemnified Party if such failure does
not materially prejudice SBC. In the event of any such claim,
action, suit, proceeding or investigation (whether arising
before or after the Effective Time), (i) SBC or the Surviving
Corporation shall have the right to assume the defense
thereof and SBC shall not be liable to such Indemnified
Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemni fied Parties
in connection with the defense thereof, except that if SBC or
the Surviving Corporation elects not to assume such defense
or counsel for the Indemnified Parties advises that there are
issues which raise conflicts of interest between SBC or the
Surviving Corporation and the Indemnified Parties, the
Indemnified Parties may retain counsel satisfactory to them,
and SBC or the Surviving Corporation shall pay all reasonable
fees and expenses of such counsel for the Indemnified Parties
promptly as state ments therefor are received; provided,
however, that SBC shall be obligated pursuant to this
paragraph (b) to pay for only one firm of counsel for all
Indemnified Parties in any jurisdiction, (ii) the Indemnified
Parties will cooperate in the defense of any such matter, and
(iii) SBC shall not be liable for any settlement effected
without its prior written consent.
(c) SBC or the Surviving Corporation shall
maintain a policy of officers' and directors' liability
insurance for acts and omissions occurring prior to the
Effective Time ("D&O Insurance") with coverage in amount
and scope at least as favorable as the Company's existing
directors' and officers' liability insurance coverage for a
period of six years after the Effective Time; provided,
however, if the existing D&O Insurance expires, is
terminated or cancelled, or if the annual premium therefor
is increased to an amount in excess of 175% of the last
annual premium paid prior to the date hereof (the "Current
Premium"), in each case during such six year period, SBC or
the Surviving Corporation will use its best efforts to
obtain D&O Insurance in an amount and scope as great as can
be obtained for the remainder of such period for a premium
not in excess (on an annualized basis) of 175% of the
Current Premium.
(d) If SBC or the Surviving Corporation or any of
its successors or assigns (i) shall consolidate with or
merge into any other corporation or entity and shall not be
the continuing or surviving corporation or entity of such
consolidation or merger or (ii) shall transfer all or
substantially all of its properties and assets to any
individual, corporation or other entity, then and in each
such case, proper provisions shall be made so that the
successors and assigns of SBC or the Surviving Corporation,
as the case may be, shall assume all of the obligations set
forth in this Section.
(e) The provisions of this Section are intended
to be for the benefit of, and shall be enforceable by, each
of the Indemnified Parties, their heirs and their
representatives.
6.13. Takeover Statute. If any Takeover Statute
is or may become applicable to the Merger or the other
transactions contemplated by this Agreement or the Stock
Option Agreement, each party hereto and its board of
directors shall grant such approvals and take such actions
as are necessary so that such transactions may be consum
mated as promptly as practicable on the terms contemplated
by this Agreement or the Stock Option Agreement or by the
Merger and otherwise act to eliminate or minimize the
effects of such statute or regulation on such transactions.
6.14. Dividends. The Company shall coordinate
with SBC the declaration, setting of record dates and
payment dates of dividends on Company Shares so that
holders of Company Shares do not receive dividends on both
Company Shares and SBC Common Stock received in the Merger
in respect of any calendar quarter or fail to receive a
dividend on either Company Shares or SBC Common Stock
received in the Merger in respect of any calendar quarter.
6.15. Confidentiality. The Company and SBC each
acknowledges and confirms that it has entered into a
Confidentiality and Non-Disclosure Agreement, dated October
22, 1997 (the "Confidentiality Agreement"), and that the
Confidentiality Agreement shall remain in full force and
effect in accordance with its terms, whether or not the
Merger is consummated.
6.16. Control of the Company's Operations.
Nothing contained in this Agreement shall give SBC,
directly or indirectly, rights to control or direct the
Company's operations prior to the Effective Time. Prior to
the Effective Time, the Company shall exercise, consistent
with the terms and conditions of this Agreement, complete
control and supervision of its operations.
6.17. Tax Representation Letters. For purposes of
the tax opinions described in Sections 7.2(c) and 7.3(c) of
this Agreement, each of the Company and SBC shall provide
representation letters, in form and substance reasonably
satisfactory to the Company and SBC, each dated as of the
date that is two business days prior to the date the
Prospectus/Proxy Statement is first mailed to shareholders
of the Company and reissued as of the Closing Date.
6.18. Transfer Taxes. All state, local, foreign
or provincial sales, use, real property transfer, stock
transfer or similar Taxes (including any interest or
penalties with respect thereto) attributable to the Merger
(collectively, the "Transfer Taxes") shall be timely paid
by the Company, which payments, if any, shall be made from
the Escrow Account if required by Section 4.5.
ARTICLE VII
Conditions
7.1. Conditions to Each Party's Obligation to
Effect the Merger. The respective obligation of each party
to effect the Merger is subject to the satisfaction or
waiver at or prior to the Effective Time of each of the
following conditions:
(a) Shareholder Approval. This Agreement shall
have been duly approved by holders of Company Shares
constituting the Company Requisite Vote;
(b) NYSE Listing. The shares of SBC Common Stock
issuable to the Company shareholders pursuant to this
Agreement shall have been approved for listing on the NYSE
subject to official notice of issuance.
(c) Governmental Consents. The waiting period
applicable to the consummation of the Merger under the HSR
Act shall have expired or been terminated and all material
Company Required Consents and SBC Required Consents from or
with the FCC, the DPUC or any other Governmental Entity
shall have been made or obtained pursuant to a Final Order,
free of any conditions adverse to the Company or SBC (other
than for conditions that (i) are not reasonably likely,
individually or in the aggregate, to have a Material
Adverse Effect on the Company following the Effective Time,
or (ii) are not reasonably likely to have a Material
Adverse Effect on SBC following the Effective Time (it
being understood that, for this purpose, materiality shall
be determined with reference to the total enterprise value
of the Company and its Subsidiaries, taken as a whole,
rather than that of SBC and its Subsidiaries, taken as a
whole, and taking into account any material restrictions on
the ability of SBC or any of its Significant Subsidiaries
to conduct its operations as currently conducted or as
proposed to be conducted by it)). For the purposes of this
Agreement, "Final Order" means an action or decision that
has been granted as to which (a) no request for a stay or
any similar request is pending, no stay is in effect, the
action or decision has not been vacated, reversed, set
aside, annulled or suspended and any deadline for filing
such a request that may be designated by statute or
regulation has passed, (b) no petition for rehearing or
reconsideration or application for review is pending and
the time for the filing of any such petition or application
has passed, (c) none of the FCC, the DPUC or any other
Governmental Entity has the action or decision under
reconsideration on its own motion and the time within which
it may effect such reconsideration has passed and (d) no
appeal is pending (including other administrative or
judicial review) or in effect and any deadline for filing
any such appeal that may be specified by statute or rule
has passed, which in any such case (a), (b), (c) or (d) is
reasonably likely to result in vacating, reversing, setting
aside, annulling, suspending or modifying such action or
decision (in any such case in a manner which would have a
Material Adverse Effect on SBC or the Company following the
Effective Time).
(d) Laws and Orders. No Governmental Entity of
competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any Law (whether
temporary, preliminary or permanent) that is in effect and
restrains,
enjoins or otherwise prohibits consummation of the Merger
or the other transactions contemplated by this Agreement or
that is, individually or in the aggregate with all other
such Laws, reasonably likely to have a Material Adverse
Effect on SBC or the Company (collectively, an "Order"),
and none of the Department of Justice, the Federal Trade
Commission, the FCC or the DPUC shall have instituted any
proceeding or threatened in writing or publicly announced
its intention to institute any proceeding seeking any such
Order.
(e) S-4. The S-4 Registration Statement shall
have become effective under the Securities Act. No stop
order suspending the effectiveness of the S-4 Registration
Statement shall have been issued, and no proceedings for
that purpose shall have been initiated or be threatened by
the SEC.
7.2. Conditions to Obligations of SBC and Merger
Sub. The obligations of SBC and Merger Sub to effect the
Merger are also subject to the satisfaction or waiver by
SBC at or prior to the Effective Time of the following
conditions:
(a) Representations and Warranties. The
representations and warranties of the Company set forth in
this Agreement (i) to the extent qualified by Material
Adverse Effect shall be true and correct and (ii) to the
extent not qualified by Material Adverse Effect shall be
true and correct, except that this clause (ii) shall be
deemed satisfied so long as any failures of such
representations and warranties to be true and correct,
taken together, do not have a Material Adverse Effect on
the Company, in each case (i) and (ii), as of the date of
this Agreement and (except to the extent such
representations and warranties speak as of an earlier date)
as of the Closing Date as though made on and as of the
Closing Date, and SBC shall have received a certificate
signed on behalf of the Company by an executive officer of
the Company to such effect.
(b) Performance of Obligations of the Company.
The Company shall have performed all material obligations
required to be performed by it under this Agreement at or
prior to the Closing Date, and SBC shall have received a
certificate signed on behalf of the Company by an executive
officer of the Company to such effect.
(c) Tax Opinion. SBC shall have received the
opinion of Xxxxxxxx & Xxxxxxxx, special counsel to SBC,
dated the Closing Date, to the effect that the Merger will
be treated for Federal income tax purposes as a reorganiza
tion within the meaning of Section 368(a) of the Code, and
that each of SBC, Merger Sub and the Company will be a
party to that reorganization within the meaning of Section
368(b) of the Code; it being understood that in rendering
such opinion, such tax counsel shall be entitled to rely
upon representations provided by the parties hereto in the
representation letters referred to in Section 6.17.
(d) Dissenting Shares. The Dissenting Shares
shall not constitute more than 9% of the aggregate number
of Company Shares outstanding immediately prior to the
Effective Time provided, however, that this condition shall
be deemed to be waived by SBC if the condition set forth in
Section 7.2(e) is deemed waived by SBC pursuant to the
proviso to Section 7.2(e).
(e) Accountants' Letter. SBC shall have received
a letter from its independent public accounting firm to the
effect that the Merger will qualify for
"pooling-of-interests" accounting treatment; provided,
however, that this condition shall be deemed to be waived
by SBC if SBC's independent accounting firm shall have
failed to deliver such letter solely as a result of one or
more SBC Pooling Actions.
For purposes of this Section 7.2(e), "SBC Pooling
Action" shall mean (i) any action taken by SBC or any of
its Subsidiaries after the date hereof that would prevent
the Merger from qualifying for "pooling-of-interests"
accounting treatment if any of the executive officers of
SBC actually knew or, after appropriate inquiry, should
have known that such action would prevent the Merger from
qualifying for "pooling-of-interests" accounting treatment,
(ii) the escrow arrangements referred to in Section 4.5
hereof, if the Company's obligation to make such
arrangements has not been waived by SBC in accordance with
Section 4.5 and (iii) any condition existing on the date
hereof which, with reference only to SBC and its
Subsidiaries, would prevent the Merger from qualifying for
"pooling-of-interests" accounting treat ment under the
currently published and effective guidelines and
interpretations of the American Institute of Certified
Public Accountants, the Financial Accounting Standards
Board and the SEC relating to "pooling-of-interests"
accounting treatment.
7.3. Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger is also
subject to the satisfaction or waiver by the Company at or
prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The
representations and warranties of SBC and Merger Sub set
forth in this Agreement (i) to the extent qualified by
Material Adverse Effect shall be true and correct, and (ii)
to the extent not qualified by Material Adverse Effect
shall be true and correct, except that this clause (ii)
shall be deemed satisfied so long as any failures of such
representations and warranties to be true and correct,
taken together, do not have a Material Adverse Effect on
SBC, in each case (i) and (ii), as of the date of this
Agreement and (except to the extent such representations
and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date,
and the Company shall have received a certificate signed on
behalf of SBC by an executive officer of SBC to such
effect.
(b) Performance of Obligations of SBC and Merger
Sub. Each of SBC and Merger Sub shall have performed all
material obligations required to be performed by it under
this Agreement at or prior to the Closing Date, and the
Company shall have received a certificate signed on behalf
of SBC and Merger Sub by an executive officer of SBC to
such effect.
(c) Tax Opinion. The Company shall have received
the opinion of Cravath, Swaine & Xxxxx, counsel to the
Company, dated the Closing Date, to the effect that the
Merger will be treated for Federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the
Code, and that each of SBC, Merger Sub and the Company will
be a party to that reorganization within the meaning of
Section 368(b) of the Code; it being understood that in
rendering such opinion, such tax counsel shall be entitled
to rely upon representations provided by the parties hereto
in the representation letters referred to in Section 6.17.
ARTICLE VIII
Termination
8.1. Termination by Mutual Consent. This
Agreement may be terminated and the Merger may be abandoned
at any time prior to the Effective Time, whether before or
after the approval by shareholders of the Company referred
to in Section 7.1(a), by mutual written consent of the
Company and SBC, by action of their respective boards of
directors.
8.2. Termination by Either SBC or the Company.
This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time by action
of the board of directors of either SBC or the Company if
(i) the Merger shall not have been consummated by December
31, 1998, whether such date is before or after the date of
approval by the shareholders of the Company (the
"Termination Date"); provided, however, that if the Company
or SBC determines that additional time is necessary in
connection with obtaining a Company Required Consent or a
SBC Required Consent from or with the FCC, the DPUC or any
other Governmental Entity, the Termination Date may be
extended by the Company or SBC from time to time by written
notice to the other party to a date no later than June 30,
1999 (the "Extended Termination Date"), (ii) the approval
of the Company's shareholders required by Section 7.1(a)
shall not have been obtained at a meeting duly convened
therefor or at any adjournment or postponement thereof or
(iii) any Order permanently restraining, enjoining or
otherwise prohibiting consummation of the Merger shall
become final and non-appealable (whether before or after
the approval by the shareholders of the Company); provided,
that the right to terminate this Agreement pursuant to
clause (i) above shall not be available to any party that
has breached in any material respect its obligations under
this Agreement in any manner that shall have proximately
contributed to the failure of the Merger to be consummated.
8.3. Termination by the Company. This Agreement
may be terminated and the Merger may be abandoned at any
time prior to the Effective Time, whether before or after
the approval by shareholders of the Company referred to in
Section 7.1(a), by action of the board of directors of the
Company:
(a) If (i) the Company shall not have willfully
breached any of the terms of this Agreement in a manner
resulting in failure of a condition set forth in Section
7.2(a) or 7.2(b), (ii) the board of directors of the
Company approves entering into a binding written agreement
concerning a transaction that constitutes a Superior
Proposal and the Company notifies SBC in writing that the
Company wishes to enter into such agreement, (iii) SBC does
not make, within five business days of receipt of the
Company's written notification of its desire to enter into
a binding agreement for a Superior Proposal, an offer that
the board of directors of the Company believes, in good
faith after consultation with its financial advisors, is at
least as favorable, from a financial point of view, to the
shareholders of the Company as the Superior Proposal, and
that contains terms and conditions (other than with respect
to type or amount of consideration) that do not differ
materially from either the terms and conditions of this
Agreement or the terms and conditions of the proposed
agreement for such Superior Proposal and (iv) the Company
prior to such termination pays to SBC in immediately
available funds any fees required to be paid pursuant to
Section 8.5. The Company agrees to notify SBC promptly if
its desire to enter into a written agreement referred to in
its notification shall change at any time after giving such
notification.
(b) If there has been a breach by SBC or Merger
Sub of any representation, warranty, covenant or agreement
contained in this Agreement which (i) would result in a
failure of a condition set forth in Section 7.3(a) or
7.3(b) and (ii) cannot be cured prior to the Extended
Termination Date.
8.4. Termination by SBC. This Agreement may be
terminated and the Merger may be abandoned at any time
prior to the Effective Time by action of the board of
directors of SBC if (i) the board of directors of the
Company shall have withdrawn or adversely modified its
approval or recommendation of this Agreement or failed to
reconfirm its recommendation of this Agreement within ten
business days after a written request by SBC to do so,
provided that such a request is made after the board of
directors of the Company has taken any of the actions
specified in clause (C) or (D) of the proviso of Section
6.2 with respect to an Acquisition Proposal and such
Acquisition Proposal has not been rejected by such board of
directors or withdrawn, (ii) there has been a breach by the
Company of any representation, warranty, covenant or
agreement contained in this Agreement which (A) would
result in a failure of a condition set forth in Section
7.2(a) or 7.2(b) and (B) cannot be cured prior to the
Extended Termination Date or (iii) if the Company or any of
its Representatives shall take any of the actions that
would be proscribed by Section 6.2 but for the exception
therein allowing certain actions to be taken pursuant to
clause (C) or (D) of the proviso thereof (other than any
such actions taken pursuant to such clause (C) with respect
to any bona fide written Acquisition Proposal (received
after the date hereof that was not solicited by the Company
after the date hereof) taken during the ten calendar day
period following receipt of such Acquisition Proposal by
the Company if, and only if, the Company receives such
Acquisition Proposal during the Initial 15 Day Period). For
purposes of this Agreement, the "Initial 15 Day Period"
shall mean the 15 calendar day period commencing with the
first calendar day after which this Agreement shall have
been filed by SBC or the Company with the SEC as an exhibit
to a Current Report on Form 8-K under the Exchange Act.
8.5. Effect of Termination and Abandonment. (a)
In the event of termination of this Agreement and the
abandonment of the Merger pursuant to this Article VIII,
this Agreement (other than as set forth in Section 9.1)
shall become void and of no effect with no liability on the
part of any party hereto (or of any of its directors,
officers, employees, agents, legal or financial advisors or
other representatives); provided, however, except as
otherwise provided herein, no such termination shall
relieve any party hereto of any liability or damages
resulting from any willful and intentional breach of this
Agreement (in any such case in which SBC is not the
breaching party, to the extent any such liability or
damages exceed any Termination Fee which may have been paid
to SBC pursuant to Section 8.5(b)).
(b) In the event that (i) after the date hereof a
bona fide Acquisition Proposal with respect to the Company
or any Subsidiary of the Company that was not solicited by
the Company after the date hereof shall have been made to
the Company or any of its Subsidiaries and made known to
shareholders generally or has been made directly to
shareholders generally or any Person shall have publicly
announced an intention (whether or not conditional) to make
a bona fide Acquisition Proposal with respect to the
Company or any Subsidiary of the Company and such
Acquisition Proposal or announced intention shall not have
been withdrawn prior to the Shareholders Meeting and
thereafter this Agreement is terminated by either SBC or
the Company pursuant to Section 8.2(ii) and within nine
months after such termination the Company shall have
entered into an agreement to consummate a transaction that
would constitute an Acquisition Proposal if it were the
subject of a proposal, or (ii) this Agreement is terminated
(x) by the Company pursuant to Section 8.3(a) or (y) by SBC
pursuant to Section 8.4(i), (ii) (solely with respect to a
willful and intentional breach of Section 6.2) or (iii),
then the Company shall promptly, but in no event later than
two days after the date of such termination (except as
otherwise provided in Section 8.3(a)) or, in the case of a
termination pursuant to Section 8.2(ii), two days after the
relevant agreement is entered into, pay SBC a fee equal to
$125 million (the "Termination Fee"), which amount shall be
exclusive of any expenses to be paid pursuant to Section
6.11, payable by wire transfer of same day funds. The
Company acknowledges that the agreements contained in this
Section 8.5(b) are an integral part of the transactions
contemplated by this Agreement, and that, without these
agreements, SBC and Merger Sub would not enter into this
Agreement; accordingly, if the Company fails to promptly
pay the amount due pursuant to this Section 8.5(b), and, in
order to obtain such payment, SBC or Merger Sub commences a
suit which results in a judgment against the Company for
the fee set forth in this paragraph (b), the Company shall
pay to SBC or Merger Sub its costs and expenses (including
attorneys' fees) in connection with such suit, together
with interest on the amount of the fee at the prime rate of
Citibank N.A. in effect on the date such payment was
required to be made. Solely for purposes of Section
8.5(b)(i), the term "Acquisition Proposal" shall have the
meaning assigned to such term in Section 6.2(a) except that
references to "15%" in the definition of "Acquisition
Proposal" in Section 6.2(a) shall be deemed to be
references to 35% and the reference in such definition to
"or any of its Subsidiaries listed on Schedule 1" shall be
deemed to be a reference to "or the Southern New England
Telephone Company".
ARTICLE IX
Miscellaneous and General
9.1. Survival. This Article IX (other than
Sections 9.2 and 9.4) and the agreements of the Company,
SBC and Merger Sub contained in Sections 6.10 (Benefits),
6.11 (Expenses) and 6.12 (Indemnification; Directors' and
Officers' Insurance) shall survive the consummation of the
Merger. This Article IX (other than Section 9.2
(Modification or Amendment), Section 9.3 (Waiver of
Conditions) and Section 9.14 (Assignment)) and the
agreements of the Company, SBC and Merger Sub contained in
Section 6.11 (Expenses), Section 6.15 (Confidentiality) and
Section 8.5 (Effect of Termination and Abandonment) shall
survive the termination of this Agreement. All other
representations, warranties, covenants and agreements in
this Agreement shall not survive the consummation of the
Merger or the termination of this Agreement.
9.2. Modification or Amendment. Subject to the
provisions of applicable law, at any time prior to the
Effective Time, the parties hereto may modify or amend this
Agreement, by written agreement executed and delivered by
duly authorized officers of the respective parties.
9.3. Waiver of Conditions. (a) Any provision of
this Agreement may be waived prior to the Effective Time
if, and only if, such waiver is in writing and signed by
the party against whom the waiver is to be effective.
(b) No failure or delay by any party in
exercising any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or
privilege. Except as otherwise herein provided, the rights
and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
9.4. Counterparts. This Agreement may be executed
in any number of counterparts, each such counter part being
deemed to be an original instrument, and all such
counterparts shall together constitute the same agreement.
9.5. GOVERNING LAW AND VENUE; WAIVER OF JURY
TRIAL. (a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND
IN ALL RESPECTS SHALL BE INTERPRETED, 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 THAT THE MERGER SHALL BE GOVERNED BY AND IN
ACCORDANCE WITH THE CBCA, TO THE EXTENT APPLICABLE. The
parties hereby irrevocably submit to the jurisdiction of
the Federal courts of the United States of America located
in the State of Delaware solely in respect of the
interpreta tion and enforcement of the provisions of this
Agreement and of the documents referred to in this
Agreement, and in respect of the transactions contemplated
hereby and thereby, and hereby waive, and agree not to
assert, as a defense in any action, suit or proceeding for
the interpretation or enforcement hereof or of any such
document, that it is not subject thereto or that such
action, suit or proceeding may not be brought or is not
maintainable in said courts or that the venue thereof may
not be appropriate or that this Agreement or any such
document may not be enforced in or by such courts, and the
parties hereto irrevocably agree that all claims with
respect to such action or proceeding shall be heard and
determined in such a Federal court. The parties hereby
consent to and grant any such court jurisdiction over the
Person of such parties and over the subject matter of such
dispute and agree that mailing of process or other papers
in connection with any such action or proceeding in the
manner provided in Section 9.6 or in such other manner as
may be permitted by law, shall be valid and sufficient
service thereof.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY
TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE
EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY
OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH
SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS
OF THIS WAIVER, (iii) EACH SUCH PARTY MAKES THIS WAIVER
VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.5.
9.6. Notices. Notices, requests, instructions or
other documents to be given under this Agreement 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, and in each case, addressed to a party at
the following address for such party:
if to SBC or Merger Sub
SBC Communications Inc.
000 X. Xxxxxxx
Xxx Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
with copies to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxxx X. Xxxxxxxxx, Esq.
if to the Company
Southern New England Telecommunications
Corporation
000 Xxxxxx Xxxxxx
Xxx Xxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxxxx XxXxxxxx, Esq.
with copies to:
Cravath, Swaine & Xxxxx
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Xxxxxx X. Xxxxxxxx III, Esq.
or to such other Persons or addresses as may be designated
in writing by the party to receive such notice as provided
above.
9.7. Entire Agreement. This Agreement (includ ing
any exhibits hereto), the Stock Option Agreement, the
Confidentiality Agreement, the Company Disclosure Letter
and the SBC Disclosure Letter constitute the entire
agreement, and supersede all other prior agreements,
understandings, representations and warranties both written
and oral, among the parties with respect to the subject
matter hereof. EACH PARTY HERETO AGREES THAT, EXCEPT FOR
THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS
AGREEMENT AND THE STOCK OPTION AGREEMENT, NEITHER SBC AND
MERGER SUB NOR THE COMPANY MAKES ANY OTHER REPRESENTATIONS
OR WARRANTIES, AND EACH HEREBY DISCLAIMS ANY OTHER
REPRESENTATIONS OR WARRANTIES MADE BY ITSELF OR ANY OF ITS
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, FINANCIAL AND LEGAL
ADVISORS OR OTHER REPRESENTATIVES, WITH RESPECT TO THE
EXECUTION AND DELIVERY OF THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY, NOTWITHSTANDING THE
DELIVERY OR DISCLOSURE TO THE OTHER OR THE OTHER'S
REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION
WITH RESPECT TO ANY ONE OR MORE OF THE FOREGOING.
9.8. No Third Party Beneficiaries. Except as
provided in Section 6.12 (Indemnification; Directors' and
Officers' Insurance), this Agreement is not intended to
confer upon any Person other than the parties hereto any
rights or remedies hereunder.
9.9. Obligations of SBC and of the Company.
Whenever this Agreement requires a Subsidiary of SBC to
take any action, such requirement shall be deemed to
include an undertaking on the part of SBC to cause such
Subsidiary to take such action. Whenever this Agreement
requires a Subsidiary of the Company to take any action,
such require ment shall be deemed to include an undertaking
on the part of the Company to cause such Subsidiary to take
such action and, after the Effective Time, on the part of
the Surviving Corporation to cause such Subsidiary to take
such action.
9.10. Severability. The provisions of this
Agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the
validity or enforceability or the other provisions hereof.
If any provision of this Agreement, or the application
thereof to any Person or any circumstance, is invalid or
unenforceable, (a) a suitable and equitable provision shall
be substituted therefor in order to carry out, so far as
may be valid and enforceable, the intent and purpose of
such invalid or unenforceable provision and (b) the
remainder of
this Agreement and the application of such provision to
other Persons or circumstances shall not be affected by
such invalidity or unenforceability, nor shall such
invalidity or unenforceability affect the validity or
enforceability of such provision, or the application
thereof, in any other jurisdiction.
9.11. Interpretation. The table of contents and
headings 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. Where a reference in this Agreement is made to a
Section or Exhibit, such reference shall be to a Section of
or Exhibit to this Agreement unless otherwise indicated.
Whenever the words "include," "includes" or "including" are
used in this Agreement, they shall be deemed to be followed
by the words "without limitation."
9.12. Assignment. This Agreement shall not be
assignable by operation of law or otherwise; provided,
however, that SBC may designate prior to the Effective
Time, by written notice to the Company, another wholly
owned direct or indirect Subsidiary to be a party to the
Merger in lieu of Merger Sub, in which event all references
herein to Merger Sub shall be deemed references to such
other Subsidiary (except with respect to representations
and warranties made herein with respect to Merger Sub as of
the date hereof) and all representations and warranties
made herein with respect to Merger Sub as of the date
hereof shall be also made with respect to such other
subsidiary as of the date of such designation. Any
assignment in contravention of the preceding sentence shall
be null and void.
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
SBC (CT), INC.
By: /s/ Xxxxxx X. Xxxxxxxx, Xx.
__________________________
Name: Xxxxxx X. Xxxxxxxx, Xx.
Title: President
EXHIBIT A
Stock Option Agreement
EXHIBIT A
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
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
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
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 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
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
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.
(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
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
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
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.
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.
(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.
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:
___________________________________
Name:
Title:
SBC COMMUNICATIONS INC.
By:
___________________________________
Name:
Title:
EXHIBIT B
Amendments to Company By-laws
EXHIBIT B
Amendments to the By-laws of the Company
Article II and Article III of the By-laws of the Company shall be amended
at the Effective Time to read in their entirety as follows:
"ARTICLE II
BOARD OF DIRECTORS
The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors, subject to any limitation
set forth in the Certificate of Incorporation. The Board of Directors shall
consist of one or more members ("Directors"), the number thereof to be
determined from time to time by the Board or by the holders of shares of
the Corporation entitled to vote generally in the election of Directors,
except as a greater number may be required to give effect to the rights of
the holders of any class of preferred or preference stock or any series
thereof to elect additional Directors under specified circumstances.
Directors need not be shareholders and shall be elected and shall hold
office in accordance with the provisions of the Certificate of
Incorporation and these By-laws.
Subject to the rights of the holders of any class of preferred or
preference stock or any series thereof to elect additional Directors under
specified circumstances, vacancies in the Board resulting from any increase
in the number of directorships or any vacancies resulting from death,
resignation, disqualification, removal from office or other cause shall be
filled by a majority vote of the Directors then in office even though less
than a quorum of the Board, or by the sole remaining Director, and
Directors so chosen shall hold office until the next annual meeting of
shareholders following their election and until such Directors' successors
shall have been elected and qualified. A reduction of the number of
directorships shall not remove any Director in office or shorten his term.
Subject to the rights of the holders of any class of preferred or
preference stock or any series thereof to elect Directors under specified
circumstances, any Director may be removed from office at any time, but
only either (i) by the vote of the holders of a majority of the shares of
the
Corporation then entitled to vote generally in the election of Directors,
with or without cause, at a meeting called for the purpose of removing such
Director, the notice for which meeting must state that the purpose of the
meeting, or one of the purposes, is removal of the Director or (ii) by the
Board pursuant to a resolution approved by a majority of the entire Board,
upon not less than ten or more than sixty days' written notice of the
meeting at which said resolution is to be presented.
At the meeting of the Directors held immediately after the annual
meeting of the shareholders, or at any meeting of the Directors held in
lieu of such meeting, the Board shall elect a Chairman of the Board, a
President, a Secretary and other officers of the Corporation.
ARTICLE III
MEETINGS OF DIRECTORS
Regular meetings of the Directors may be held at such place within or
without the State of Connecticut and at such time as the Directors may from
time to time determine, and if so determined notice thereof need not be
given.
Special meetings of the Directors may be held at any time or place
whenever called by the Chairman of the Board, by the Chief Executive
Officer or by any two directors. A written or printed notice of the time
and place of every special meeting of the Board shall be given by the
Secretary by mailing such notice to each and every Director, addressed to
him at his usual place of business or such address as may appear on the
books of the Corporation, at least two days before the time named for the
meeting or by providing notice personally, telephonically or by telegram or
telecopy at least 24 hours before such meeting. Such notice need not
describe the purpose of the special meeting.
Except as otherwise provided by law, at all meetings of the Directors
one-third of the entire Board shall constitute a quorum. Except as
otherwise provided by law, the Certificate of Incorporation or these
By-laws, at any meeting of the Board at which a quorum is present at the
time, the act of a majority of the Directors present at the meeting shall
be the act of the Board."
EXHIBIT C
Company Affiliate's Letter
EXHIBIT C
Form of Company Affiliate's Letter
_______, 1998
SBC Communications Inc.
000 Xxxx Xxxxxxx
Xxx Xxxxxxx, Xxxxx 00000
Ladies and Gentlemen:
The undersigned is a holder of shares of Common Stock, par value $1.00 per
share ("SNET Common Stock"), of SOUTHERN NEW ENGLAND TELECOMMUNICATIONS
CORPORATION, a Connecticut corporation ("SNET"). Pursuant to the terms of
that certain Agreement and Plan of Merger, dated as of January 4, 1998,
among SNET, SBC Communications Inc., a Delaware corporation ("SBC"), and
SBC (CT), Inc., a Connecticut corporation and a wholly-owned subsidiary of
SBC ("Merger Sub"), Merger Sub will be merged with and into SNET and SNET
will become a wholly owned subsidiary of SBC (the "Merger"). In connection
with the Merger, the undersigned, as a holder of SNET Common Stock, will be
entitled to receive Common Stock, par value $1.00 per share, of SBC (the
"Securities") in exchange for the shares of SNET Common Stock held by the
undersigned at the effective time of the Merger.
The undersigned acknowledges that the undersigned may be deemed an
"affiliate" of SNET within the meaning of Rule 145 ("Rule 145") promulgated
under the Securities Act of 1933, as amended (the "Act"), and/or as such
term is used in and for purposes of Accounting Series Release Nos. 130 and
135, as amended, of the Securities and Exchange Commission (the
"Commission"), although nothing contained herein shall be construed as an
admission of such status.
If in fact the undersigned were an affiliate of SNET under the Act, the
undersigned's ability to sell, assign or transfer any Securities received
by the undersigned in exchange for any shares of SNET Common Stock pursuant
to the Merger may be restricted unless such transaction is registered under
the Act or an exemption from such registration is available. The
undersigned understands that
SBC Communications Inc.
_______, 1998
Page 2
such exemptions are limited and the undersigned has obtained advice of
counsel as to the nature and conditions of such exemptions, including
information with respect to the applicability to the sale of such
Securities of Rules 144 and 145(d) promulgated under the Act.
The undersigned hereby represents to and covenants with SBC that it will
not sell, assign or transfer any Securities received by the undersigned in
exchange for shares of SNET Common Stock pursuant to the Merger except (i)
pursuant to an effective registration statement under the Act, (ii) by a
sale made in conformity with the volume and other limitations of Rule 145
(and otherwise in accordance with Rule 144 under the Act, if the
undersigned is an affiliate of SBC and if so required at the time) or (iii)
in a transaction which, in the opinion of independent counsel reasonably
satisfactory to SBC or as described in a "no- action" or interpretive
letter from the Staff of the Commission, is not required to be registered
under the Act.
The undersigned understands that SBC is under no obligation to register the
sale, transfer or other disposition of the Securities by the undersigned or
on behalf of the undersigned under the Act or to take any other action
necessary in order to make compliance with an exemption from such
registration available solely as a result of the Merger.
In the event of a sale of Securities pursuant to Rule 145, the undersigned
will supply SBC with evidence of compliance with such Rule, in the form of
customary seller's and broker's Rule 145 representation letters or as SBC
may otherwise reasonably request. The undersigned understands that SBC may
instruct its transfer agent to withhold the transfer of any Securities
disposed of by the undersigned in a manner inconsistent with this letter.
The undersigned acknowledges and agrees that appropriate legends will be
placed on certificates representing Securities received by the undersigned
in the Merger or held by a transferee thereof, which legends will be
removed (i) by delivery of substitute certificates upon receipt of
SBC Communications Inc.
_______, 1998
Page 3
an opinion in form and substance reasonably satisfactory to SBC to the
effect that such legends are no longer required for the purposes of the Act
and the rules and regulations of the Commission promulgated thereunder or
(ii) in the event of a sale of the Securities which has been registered
under the Act or made in conformity with the provisions of Rule 145.
The undersigned further represents to and covenants with SBC that (i) the
undersigned will not, during the 30 days prior to the effective time of the
Merger sell, transfer or otherwise dispose of, or reduce any risk relative
to, any securities of SNET or SBC, and (ii) the undersigned will not sell,
transfer or otherwise dispose of, or reduce any risk relative to, the
Securities received by the undersigned in the Merger or any other shares of
the capital stock of SBC until after such time as financial results
covering at least 30 days of post-Merger operations of SBC (including the
combined operations of SNET and SBC) have been published by SBC in the form
of a quarterly earnings report, an effective registration statement filed
with the Commission, a report to the Commission on Form 10-K, 10-Q or 8-K,
or any other public filing or announcement which includes such results of
operations, except in the cases of clauses (i) and (ii) of this paragraph
to the extent permitted by, and in accordance with, SEC Accounting Series
Release 135 and SEC Staff Accounting Bulletins 65 and 76 if and to the
extent that such Release and Bulletins remain in full force and effect at
the relevant time.
I further understand and agree that this letter agreement shall apply to
all shares of SNET Common Stock and shares of SBC Common Stock that I am
deemed to beneficially own pursuant to applicable federal securities law.
The undersigned acknowledges that it has carefully reviewed this letter and
understands the requirements hereof and the limitations imposed upon the
distribution, sale, transfer or other disposition of Securities.
Sincerely,
SBC Communications Inc.
_______, 1998
Page 4
[NAME OF SNET AFFILIATE]
EXHIBIT D
Form of SBC Affiliate's Letter
EXHIBIT D
Form of SBC Affiliate's Letter
_______, 1998
SBC Communications Inc.
000 Xxxx Xxxxxxx
Xxx Xxxxxxx, Xxxxx 00000
Ladies and Gentlemen:
The undersigned is a holder of shares of Common Stock, par value $1.00 per
share (the "Securities"), of SBC COMMUNICATIONS INC., a Delaware
corporation ("SBC"). Pursuant to the terms of that certain Agreement and
Plan of Merger, dated as of January 4, 1998, among SOUTHERN NEW ENGLAND
TELECOMMUNICATIONS CORPORATION, a Connecticut corporation ("SNET"), SBC,
and SBC (CT) Inc., a Connecticut corporation and a wholly-owned subsidiary
of SBC ("Merger Sub"), Merger Sub will be merged with and into SNET and
SNET will become a wholly owned subsidiary of SBC (the "Merger").
The undersigned acknowledges that the undersigned may be deemed an
"affiliate" of SBC as such term is used in and for purposes of Accounting
Series Release Nos. 130 and 135, as amended, of the Securities and Exchange
Commission (the "Commission"), although nothing contained herein shall be
construed as an admission of such status.
The undersigned hereby represents to and covenants with SBC that the
undersigned will not, during the 30 days prior to the effective time of the
Merger sell, transfer or otherwise dispose of, or reduce any risk relative
to, the Securities or any other shares of the capital stock of SBC until
after such time as financial results covering at least 30 days of
post-Merger operations of SBC (including the combined operations of SNET
and SBC) have been published by SBC in the form of a quarterly earnings
report, an effective registration statement filed with the Commission, a
report to the Commission on Form 10-K, 10-Q or 8-K, or any other public
filing or announcement which includes such results of operations, except to
the extent permitted by, and in accordance with, SEC Accounting Series
Release 135 and SEC
SBC Communications Inc.
_______, 1998
Page 2
Staff Accounting Bulletins 65 and 76 if and to the extent that such Release
and Bulletins remain in full force and effect at the relevant time.
I further understand and agree that this letter agreement shall apply to
all Securities that I am deemed to beneficially own pursuant to applicable
federal securities law.
The undersigned acknowledges that it has carefully reviewed this letter and
understands the requirements hereof and the limitations imposed upon the
sale, transfer or other disposition of Securities.
Sincerely,
[NAME OF SBC AFFILIATE]
Schedule 0
Xxx Xxxxxxxx Xxx Xxxxxxx Telephone Company
SNET America, Inc.
SNET Information Services
Springwich Inc.
SNET Cellular, Inc.
SNET Personalvision, Inc.
