FORM 8-A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
SOUTHERN NEW ENGLAND TELECOMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
Connecticut No. 06-1157778
(State of incorporation or organization) (IRS Employer
Identification No.)
227 Church Street
New Haven, Connecticut 06510
(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
Preference Share Purchase Rights New York Stock Exchange
Pacific Stock Exchange
Securities to be registered pursuant to Section 12(g) of the Act:
None
Item 1. Description of Registrant's Securities
On December 11, 1996, the Board of Directors of
Southern New England Telecommunications Corporation (the
"Company") declared a dividend of one preference share pur-
chase right (a "Right") for each outstanding share of common
stock, par value $1.00 per share (the "Common Shares"), of the
Company. The dividend is payable on January 27, 1997 (the
"Record Date") to the shareholders of record on that date.
Upon the earlier of (i) the expiration of rights
issued pursuant to the Rights Agreement dated as of February
11, 1987 between the Company and State Street Bank and Trust
Company (the "Prior Rights Agreement") or (ii) the redemption
of the rights as provided in the Prior Rights Agreement (the
earlier of such dates referred to as the "Effective Date"),
each Right shall entitle the registered holder to purchase
from the Company one one-hundredth of a share of Series A
Junior Participating Preference Stock, par value $1.00 per
share (the "Preference Shares"), of the Company at a price of
$180 (the "Purchase Price"), subject to adjustment. The
Rights are described in a Rights Agreement (the "Rights
Agreement") between the Company and State Street Bank and
Trust Company as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 days following
a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") have acquired ben-
eficial ownership of 20% or more of the outstanding Common
Shares or (ii) 10 business days (or such later date as may be
determined by action of the Board of Directors prior to such
time as any person or group of affiliated persons becomes an
Acquiring Person) following the commencement of, or announce
ment of an intention to make, a tender offer or exchange offer
the consummation of which would result in the beneficial
ownership by a person or group of 20% or more of the out
standing Common Shares (the earlier of such dates being called
the "Distribution Date"), the Rights will be evidenced, with
respect to any of the Common Share certificates outstanding as
of the Record Date, by such Common Share certificate with a
copy of this Summary of Rights attached.
-2-
The Rights Agreement provides that, until the Dis-
tribution Date (or earlier redemption or expiration of the
Rights), the Rights will be transferred only with the Common
Shares. Until the Distribution Date (or earlier redemption or
expiration of the Rights), new Common Share certificates
issued after the Record Date upon transfer or new issuance of
Common Shares will contain a reference incorporating the
Rights Agreement. Until the Distribution Date (or earlier
redemption or expiration of the Rights), the surrender for
transfer of any certificates for Common Shares outstanding as
of the Record Date, even without such notation or an attached
copy of this Summary of Rights, will also constitute the
transfer of the Rights associated with the Common Shares being
transferred. As soon as practicable following the Distribu-
tion Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the
Common Shares as of the close of business on the Distribution
Date and such separate Right Certificates alone will evidence
the Rights.
The Rights are not exercisable until the Distribu-
tion Date. The Rights will expire on February 11, 2007 (the
"Final Expiration Date"), unless the Final Expiration Date is
extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case, as described below.
The Purchase Price payable, and the number of
Preference Shares or other securities or property issuable,
upon exercise of the Rights are subject to adjustment from
time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification
of, the Preference Shares, (ii) upon the grant to holders of
the Preference Shares of certain rights or warrants to subscribe
for or purchase Preference Shares at a price, or securities
convertible into Preference Shares with a conversion price,
less than the then-current market price of the Preference Shares
or (iii) upon the distribution to holders of the Preference
Shares of evidences of indebtedness or assets (excluding regular
periodic cash dividends paid out of earnings or retained
earnings or dividends payable in Preference Shares) or of
subscription rights or warrants (other than those referred to
above).
The number of outstanding Rights and the number of
one one-hundredths of a Preference Share issuable upon exercise
of each Right are also subject to adjustment in the event of a
stock split of the Common Shares or a stock dividend on the
Common Shares payable in Common Shares or subdivisions,
consolidations or combinations of the Common Shares occurring,
in any such case, prior to the Distribution Date.
-3-
Preference Shares purchasable upon exercise of the
Rights will not be redeemable. Each Preference Share will be
entitled to a minimum preferential quarterly dividend payment
of $1 per share but will be entitled to an aggregate dividend
of 100 times the dividend declared per Common Share. In the
event of liquidation, the holders of the Preference Shares
will be entitled to a minimum preferential liquidation payment
of $100 per share but will be entitled to an aggregate payment
of 100 times the payment made per Common Share. Each
Preference Share will have 100 votes, voting together with the
Common Shares. Finally, in the event of any merger, consolidation
or other transaction in which Common Shares are exchanged, each
Preference Share will be entitled to receive 100 times the amount
received per Common Share. These rights are protected by customary
antidilution provisions.
Because of the nature of the Preference Shares' dividend,
liquidation and voting rights, the value of the one one-hundredth
interest in a Preference Share purchasable upon exercise of each
Right should approximate the value of one Common Share.
In the event that the Company is acquired in a merger or
other business combination transaction or 50% or more of its
consolidated assets or earning power are sold after a person or
group has become an Acquiring Person, proper provision will be made
so that each holder of a Right will there after have the right to
receive, upon the exercise thereof at the then current exercise
price of the Right, that number of shares of common stock of the
acquiring company which at the time of such transaction will have
a market value of two times the exercise price of the Right. In
the event that any person or group of affiliated or associated
persons becomes an Acquiring Person, proper provision shall be
made so that each holder of a Right, other than Rights beneficially
owned by the Acquiring Person (which will thereafter be void), will
thereafter have the right to receive upon exercise that number of
Common Shares having a market value of two times the exercise price
of the Right.
At any time after any person or group becomes an
Acquiring Person and prior to the acquisition by such person
or group of 50% or more of the outstanding Common Shares, the
Board of Directors of the Company may exchange the Rights
(other than Rights owned by such person or group which will
have become void), in whole or in part, at an exchange ratio
of one Common Share, or one one-hundredth of a Preference
Share (or of a share of a class or series of the Company's
preference stock having equivalent rights, preferences and
privileges), per Right (subject to adjustment).
-4-
With certain exceptions, no adjustment in the Purchase
Price will be required until cumulative adjustments require an
adjustment of at least 1% in such Purchase Price. No fractional
Preference Shares will be issued (other than fractions which are
integral multiples of one one-hundredth of a Preference Share,
which may, at the election of the Company, be evidenced by
depositary receipts) and in lieu thereof, an adjustment in cash
will be made based on the market price of the Preference Shares
on the last trading day prior to the date of exercise.
At any time prior to the acquisition by a person or
group of affiliated or associated persons of beneficial own
ership of 20% or more of the outstanding Common Shares, the
Board of Directors of the Company may redeem the Rights in
whole, but not in part, at a price of $.01 per Right (the
"Redemption Price"). The redemption of the Rights may be made
effective at such time on such basis with such conditions as
the Board of Directors in its sole discretion may establish.
Immediately upon any redemption of the Rights, the right to
exercise the Rights will terminate and the only right of the
holders of Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board
of Directors of the Company without the consent of the holders
of the Rights, including an amendment to lower certain
thresholds described above to not less than the greater of (i)
the sum of .001% and the largest percentage of the outstanding
Common Shares then known to the Company to be beneficially
owned by any person or group of affiliated or associated
persons and (ii) 10%, except that from and after such time as
any person or group of affiliated or associated persons
becomes an Acquiring Person no such amendment may adversely
affect the interests of the holders of the Rights.
Until a Right is exercised, the holder thereof, as
such, will have no rights as a shareholder of the Company,
including, without limitation, the right to vote or to receive
dividends.
-5-
Item 2. Exhibits
4. Rights Agreement, dated as of December 11, 1996,
between the Company and State Street Bank and
Trust Company as Rights Agent, which includes the
Certificate of Designations for the Series A Junior
Participating Preference Stock as Exhibit A, the
form of Right Certificate as Exhibit B and the
Summary of Rights to Purchase Preference Shares as
Exhibit C. Pursuant to the Rights Agreement,
printed Right Certificates will not be mailed until
as soon as practicable after the earlier of the
tenth day after public announcement that a person
or group has acquired beneficial ownership of 20%
or more of the Common Shares or the tenth business
day after a person commences, or announces its
intention to commence, a tender offer or exchange
offer the consummation of which would result in the
beneficial ownership by a person or group of 20% or
more of the Common Shares.
20. News Release issued December 11, 1996.
-6-
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this
registration statement to be signed on its behalf by the
undersigned thereunto duly authorized.
SOUTHERN NEW ENGLAND
TELECOMMUNICATIONS CORPORATION
Dated: December 13, 1996 By: /s/ Madelyn M. DeMatteo
Name: Madelyn M. DeMatteo
Title: Vice President, General
Counsel and Secretary
EXHIBIT INDEX
Exhibit No. Description
4. Rights Agreement, dated as of December 11, 1996,
between the Company and State Street Bank and
Trust Company as Rights Agent, which includes the
Certificate of Designations for the Series A Junior
Participating Preference Stock as Exhibit A, the
form of Right Certificate as Exhibit B and the
Summary of Rights to Purchase Preference Shares as
Exhibit C. Pursuant to the Rights Agreement,
printed Right Certificates will not be mailed until
as soon as practicable after the earlier of the
tenth day after public announcement that a person
or group has acquired beneficial ownership of 20%
or more of the Common Shares or the tenth business
day after a person commences, or announces its
intention to commence, a tender offer or exchange
offer the consummation of which would result in the
beneficial ownership by a person or group of 20% or
more of the Common Shares.
20. News Release issued December 11, 1996.
Exhibit No. 4
SOUTHERN NEW ENGLAND TELECOMMUNICATIONS CORPORATION
and
STATE STREET BANK AND TRUST COMPANY,
Rights Agent
Rights Agreement
Dated as of December 11, 1996
____________________________________________________________
TABLE OF CONTENTS
Page
Section 1. Certain Definitions 1
Section 2. Appointment of Rights Agent 7
Section 3. Issue of Right Certificates 7
Section 4. Form of Right Certificates 10
Section 5. Countersignature and Registration 11
Section 6. Transfer, Split Up, Combination and
Exchange of Right Certificates;
Mutilated, Destroyed, Lost or
Stolen Right Certificates 12
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights 13
Section 8. Cancellation and Destruction of
Right Certificates 15
Section 9. Availability of Preference Shares 16
Section 10. Preference Shares Record Date 17
Section 11. Adjustment of Purchase Price, Number of
Shares or Number of Rights 18
Section 12. Certificate of Adjusted Purchase Price
or Number of Shares 31
Section 13. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power 31
Section 14. Fractional Rights and Fractional Shares 33
Section 15. Rights of Action 35
Section 16. Agreement of Right Holders 36
- i -
Section 17. Right Certificate Holder Not Deemed a
Shareholder 37
Section 18. Concerning the Rights Agent 37
Section 19. Merger or Consolidation or Change of
Name of Rights Agent 38
Section 20. Duties of Rights Agent 40
Section 21. Change of Rights Agent 43
Section 22. Issuance of New Right Certificates 45
Section 23. Redemption 45
Section 24. Exchange 46
Section 25. Notice of Certain Events 49
Section 26. Notices 50
Section 27. Supplements and Amendments 51
Section 28. Successors 52
Section 29. Benefits of this Agreement 52
Section 30. Severability 53
Section 31. Governing Law 53
Section 32. Counterparts 53
Section 33. Descriptive Headings 54
Signatures 54
Exhibit A - Form of Certificate of Designations
Exhibit B - Form of Right Certificate
Exhibit C - Summary of Rights to Purchase Preference
Shares
- ii -
Agreement, dated as of December 11, 1996, between
Southern New England Telecommunications Corporation, a
Connecticut corporation (the "Company"), and State Street Bank
and Trust Company (the "Rights Agent").
The Board of Directors of the Company has authorized
and declared a dividend of one preference share purchase right
(a "Right") for each Common Share (as hereinafter defined) of
the Company outstanding on January 27, 1997 (the "Record
Date"), each Right representing the right to purchase one
one-hundredth of a Preference Share (as hereinafter defined),
upon the terms and subject to the conditions herein set forth,
and has further authorized and directed the issuance of one
Right with respect to each Common Share that shall become
outstanding between the Record Date and the earliest of the
Distribution Date, the Redemption Date and the Final
Expiration Date (as such terms are hereinafter defined);
provided, however that Rights may be issued with respect to
Common Shares that shall become outstanding after the
Distribution Date.
Accordingly, in consideration of the premises and
the mutual agreements herein set forth, the parties hereby
agree as follows:
Section 1. Certain Definitions. For purposes of
this Agreement, the following terms have the meanings
indicated:
1
(a) "Acquiring Person" shall mean any Person who
or which, together with all Affiliates and Associates of such
Person, shall be the Beneficial Owner of 20% or more of the
Common Shares of the Company then outstanding, but shall not
include the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or any Subsidiary of the
Company, or any entity holding Common Shares for or pursuant
to the terms of any such plan. Notwithstanding the foregoing,
no Person shall become an "Acquiring Person" as the result of
an acquisition of Common Shares by the Company which, by
reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such
Person to 20% or more of the Common Shares of the Company then
outstanding; provided, however, that if a Person shall become
the Beneficial Owner of 20% or more of the Common Shares of
the Company then outstanding by reason of share purchases by
the Company and shall, after such share purchases by the
Company, become the Beneficial Owner of any additional Common
Shares of the Company, then such Person shall be deemed to be
an "Acquiring Person." Notwithstanding the foregoing, if the
Board of Directors of the Company determines in good faith
that a Person who would otherwise be an "Acquiring Person," as
defined pursuant to the foregoing provisions of this paragraph
(a), has become such inadvertently, and such Person divests as
promptly as practicable a sufficient number of Common Shares
so that such Person would no longer be an "Acquiring Person,"
as defined pursuant to the foregoing provisions of this
paragraph (a), then such Person shall not be deemed to be an
"Acquiring Person" for any purposes of this Agreement.
2
(b) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of
the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as in
effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner"
of and shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or
indirectly;
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire
(whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement,
arrangement or understanding (other than customary
agreements with and between underwriters and selling
group members with respect to a bona fide public offering
of securities), or upon the exercise of conversion
rights, exchange rights, rights (other than these
Rights), warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, securities tendered
pursuant to a tender or exchange offer made by or on
behalf of such Person or any of such Person's Affiliates
or Associates until such tendered securities are accepted
for purchase or exchange; or (B) the right to vote pursuant to any
3
agreement, arrangement or understanding;
provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, any security
if the agreement, arrangement or understanding to vote
such security (1) arises solely from a revocable proxy or
consent given to such Person in response to a public
proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations
promulgated under the Exchange Act and (2) is not also
then reportable on Schedule 13D under the Exchange Act
(or any comparable or successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or
any of such Person's Affiliates or Associates has any
agreement, arrangement or understanding (other than
customary agreements with and between underwriters and
selling group members with respect to a bona fide public
offering of securities) for the purpose of acquiring,
holding, voting (except to the extent contemplated by the
proviso to Section 1(c)(ii)(B)) or disposing of any
securities of the Company.
Notwithstanding anything in this definition of
Beneficial Ownership to the contrary, the phrase "then outstanding",
when used with reference to a Person's Beneficial Owner
ship of securities of the Company, shall mean the number of
such securities then issued and outstanding together with the
number of such securities not then actually issued and
outstanding which such Person would be deemed to own beneficially
hereunder.
4
(d) "Business Day" shall mean any day other than a
Saturday, a Sunday, or a day on which banking institutions in
the State of New York or the State of Connecticut are authorized
or obligated by law or executive order to close.
(e) "Close of Business" on any given date shall
mean 5:00 P.M., New York City time, on such date; provided,
however, that, if such date is not a Business Day, it shall
mean 5:00 P.M., New York City time, on the next succeeding
Business Day.
(f) "Common Shares" when used with reference to the
Company shall mean the shares of common stock, par value $1.00
per share, of the Company. "Common Shares" when used with
reference to any Person other than the Company shall mean the
capital stock (or equity interest) with the greatest voting
power of such other Person or, if such other Person is a
Subsidiary of another Person, the Person or Persons which
ultimately control such first-mentioned Person.
(g) "Distribution Date" shall have the meaning set
forth in Section 3 hereof.
5
(h) "Effective Date" shall mean the earlier of the
close of business on February 11, 1997 or Redemption Date as
defined in the prior rights agreement dated as of February 11,
1987, between the Company and State Street Bank and Trust
Company.
(i) "Final Expiration Date" shall have the meaning
set forth in Section 7(a) hereof.
(j) "Person" shall mean any individual, firm,
corporation or other entity, and shall include any successor (by
merger or otherwise) of such entity.
(k) "Preference Shares" shall mean shares of Series
A Junior Participating Preference Stock, par value $1.00 per
share, of the Company having the rights and preferences set
forth in the Form of Certificate of Designations attached to
this Agreement as Exhibit A.
(l) "Redemption Date" shall have the meaning set
forth in Section 7(a) hereof.
(m) "Shares Acquisition Date" shall mean the first
date of public announcement by the Company or an Acquiring
Person that an Acquiring Person has become such.
6
(n) "Subsidiary" of any Person shall mean any
corporation or other entity of which a majority of the voting
power of the voting equity securities or equity interest is
owned, directly or indirectly, by such Person.
Section 2. Appointment of Rights Agent. The Company
hereby appoints the Rights Agent to act as agent for the
Company and the holders of the Rights (who, in accordance with
Section 3 hereof, shall, prior to the Distribution Date, also
be the holders of the Common Shares) in accordance with the
terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time
appoint such co-Rights Agents as it may deem necessary or
desirable.
Section 3. Issue of Right Certificates. (a) Until
the later of (A) the Effective Date or (B) the earlier of (i)
the tenth day after the Shares Acquisition Date or (ii) the
tenth Business Day (or such later date as may be determined by
action of the Board of Directors of the Company prior to such time
as any Person becomes an Acquiring Person) after the date of the
commencement by any Person (other than the Company, any Subsidiary of
the Company, any employee benefit plan of the Company or of any
7
Subsidiary of the Company or any entity
holding Common Shares for or pursuant to the terms of any such
plan) of, or of the first public announcement of the intention
of any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any
Subsidiary of the Company or any entity holding Common Shares
for or pursuant to the terms of any such plan) to commence, a
tender or exchange offer the consummation of which would
result in any Person becoming the Beneficial Owner of Common
Shares aggregating 20% or more of the then outstanding Common
Shares (including any such date which is after the date of
this Agreement and prior to the issuance of the Rights; the
later of the dates specified in (A) or (B) above being herein
referred to as the "Distribution Date"), (x) the Rights will
be evidenced (subject to the provisions of Section 3(b)
hereof) by the certificates for Common Shares registered in
the names of the holders thereof (which certificates shall
also be deemed to be Right Certificates) and not by separate
Right Certificates, and (y) the right to receive Right
Certificates will be transferable only in connection with the
transfer of Common Shares. As soon as practicable after the
Distribution Date, the Company will prepare and execute, the
Rights Agent will countersign, and the Company will send or
cause to be sent (and the Rights Agent will, if requested,
send) by first-class, insured, postage-prepaid mail, to each
record holder of Common Shares as of the Close of Business on
the Distribution Date, at the address of such holder shown on
the records of the Company, a Right Certificate, in
substantially the form of Exhibit B hereto (a "Right
Certificate"), evidencing one Right for each Common Share so
held. As of the Distribution Date, the Rights will be
evidenced solely by such Right Certificates.
(b) On the Record Date, or as soon as practicable thereafter,
the Company will send a copy of a Summary of Rights to Purchase
Preference Shares, in substantially the form of Exhibit C
8
hereto (the "Summary of Rights"), by first
class, postage-prepaid mail, to each record holder of Common
Shares as of the Close of Business on the Record Date, at the
address of such holder shown on the records of the Company.
With respect to certificates for Common Shares outstanding as
of the Record Date, until the Distribution Date, the Rights
will be evidenced by such certificates registered in the names
of the holders thereof together with a copy of the Summary of
Rights attached thereto. Until the Distribution Date (or the
earlier of the Redemption Date or the Final Expiration Date),
the surrender for transfer of any certificate for Common
Shares outstanding on the Record Date, with or without a copy
of the Summary of Rights attached thereto, shall also
constitute the transfer of the Rights associated with the
Common Shares represented thereby.
(c) Certificates for Common Shares which become
outstanding (including, without limitation, reacquired Common
Shares referred to in the last sentence of this paragraph (c))
after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date or the Final Expiration
Date shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder
hereof to certain rights as set forth in a Rights Agreement
between Southern New England Telecommunications
Corporation and State Street Bank and Trust Company dated
as of December 11, 1996 (the "Rights Agreement"), the
terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal
executive offices of Southern New England
Telecommunications Corporation. Under certain
circumstances, as set forth in the Rights Agreement,
9
such Rights will be evidenced by separate certificates
and will no longer be evidenced by this certificate.
Southern New England Telecommunications Corporation will
mail to the holder of this certificate a copy of the
Rights Agreement without charge after receipt of a
written request therefor. Under certain circumstances,
as set forth in the Rights Agreement, Rights issued to
any Person who becomes an Acquiring Person (as defined in
the Rights Agreement) may become null and void.
With respect to such certificates containing the foregoing
legend, until the Distribution Date, the Rights associated
with the Common Shares represented by such certificates shall
be evidenced by such certificates alone, and the surrender for
transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares
represented thereby. In the event that the Company purchases
or acquires any Common Shares after the Record Date but prior
to the Distribution Date, any Rights associated with such
Common Shares shall be deemed cancelled and retired so that
the Company shall not be entitled to exercise any Rights
associated with the Common Shares which are no longer outstanding.
Section 4. Form of Right Certificates. The Right
Certificates (and the forms of election to purchase Preference
Shares and of assignment to be printed on the reverse thereof)
shall be substantially the same as Exhibit B hereto and may
have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the
Company may deem appropriate and as are not inconsistent with
the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or
10
regulation made pursuant thereto or with any rule or regulation
of any stock exchange or automated quotation system on which the
Rights may from time to time be listed, or to conform to
usage. Subject to the provisions of Section 22 hereof, the
Right Certificates shall entitle the holders thereof to
purchase such number of one one-hundredths of a Preference Share
as shall be set forth therein at the price per one one-
hundredth of a Preference Share set forth therein (the "Purchase
Price"), but the number of such one one-hundredths of a Preference
Share and the Purchase Price shall be subject to adjustment
as provided herein.
Section 5. Countersignature and Registration. The
Right Certificates shall be executed on behalf of the Company
by its Chairman of the Board, its Chief Executive Officer, its
President, any of its Vice Presidents, or its Treasurer,
either manually or by facsimile signature, shall have affixed
thereto the Company's seal or a facsimile thereof, and shall
be attested by the Secretary or an Assistant Secretary of the
Company, either manually or by facsimile signature. The Right
Certificates shall be manually countersigned by the Rights
Agent and shall not be valid for any purpose unless
countersigned. In case any officer of the Company who shall
have signed any of the Right Certificates shall cease to be
such officer of the Company before countersignature by the
Rights Agent and issuance and delivery by the Company, such
Right Certificates, nevertheless, may be countersigned by the
Rights Agent and issued and delivered by the Company with the
same force and effect as though the person who signed such
Right Certificates had not ceased to be such officer of the
Company; and any Right Certificate may be signed on behalf of
the Company by any person who, at the actual
11
date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the
date of the execution of this Rights Agreement any such person
was not such an officer.
Following the Distribution Date, the Rights Agent
will keep or cause to be kept, at its principal office, books
for registration and transfer of the Right Certificates issued
hereunder. Such books shall show the names and addresses of
the respective holders of the Right Certi-ficates, the number
of Rights evidenced on its face by each of the Right
Certificates and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and
Exchange of Right Certificates; Mutilated, Destroyed, Lost or
Stolen Right Certificates. Subject to the provisions of
Section 14 hereof, at any time after the Close of Business on the
Distribution Date, and at or prior to the Close of Business on
the earlier of the Redemption Date or the Final Expiration
Date, any Right Certificate or Right Certificates (other than
Right Certificates representing Rights that have become void
pursuant to Section 11(a)(ii) hereof or that have been
exchanged pursuant to Section 24 hereof) may be transferred,
split up, combined or exchanged for another Right Certificate
or Right Certificates, entitling the registered holder to
purchase a like number of one one- hundredths of a Preference
Share as the Right Certificate or Right Certificates
surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up, combine or
exchange any Right
12
Certificate or Right Certificates shall
make such request in writing delivered to the Rights Agent,
and shall surrender the Right Certificate or Right Certifi-
cates to be transferred, split up, combined or exchanged at
the principal office of the Rights Agent. Thereupon the
Rights Agent shall countersign and deliver to the person
entitled thereto a Right Certificate or Right Certificates, as
the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer,
split up, combination or exchange of Right Certificates.
Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft,
destruction or mutilation of a Right Certificate, and, in case
of loss, theft or destruction, of indemnity or security
reasonably satisfactory to them, and, at the Company's
request, reimbursement to the Company and the Rights Agent of
all reasonable expenses incidental thereto, and upon surrender
to the Rights Agent and cancellation of the Right Certificate
if mutilated, the Company will make and deliver a new Right
Certificate of like tenor to the Rights Agent for delivery to
the registered holder in lieu of the Right Certificate so
lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights. (a) The registered holder of any
Right Certificate may exercise the Rights evidenced thereby
(except as otherwise provided herein) in whole or in part at
any time after the Distribution Date upon surrender of the
Right Certificate, with the
13
form of election to purchase on the reverse side thereof duly
executed, to the Rights Agent at the principal office of the
Rights Agent, together with payment of the Purchase Price for
each one one-hundredth of a Preference Share as to which the
Rights are exercised, at or prior to the earliest of (i) the
Close of Business on February 11, 2007 (the "Final Expiration
Date"), (ii) the time at which the Rights are redeemed as
provided in Section 23 hereof (the "Redemption Date"), or
(iii) the time at which such Rights are exchanged as provided
in Section 24 hereof.
(b) The Purchase Price for each one one-hundredth
of a Preference Share purchasable pursuant to the exercise of
a Right shall initially be $180, and shall be subject to
adjustment from time to time as provided in Section 11 or 13
hereof and shall be payable in lawful money of the United
States of America in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate represent
ing exercisable Rights, with the form of election to purchase
duly executed, accompanied by payment of the Purchase Price
for the shares to be purchased and an amount equal to any
applicable transfer tax required to be paid by the holder of
such Right Certificate in accordance with Section 9 hereof by
certified check, cashier's check or money order payable to the
order of the Company, the Rights Agent shall thereupon
promptly (i) (A) requisition from any transfer agent of the
Preference Shares certificates for the number of Preference
Shares to be purchased and the Company hereby irrevocably
authorizes its transfer agent to comply with all such
14
requests, or (B) requisition from the depositary agent
depositary receipts representing such number of one one
hundredths of a Preference Share as are to be purchased (in
which case certificates for the Preference Shares represented
by such receipts shall be deposited by the transfer agent with
the depositary agent) and the Company hereby directs the
depositary agent to comply with such request, (ii) when
appropriate, requisition from the Company the amount of cash
to be paid in lieu of issuance of fractional shares in
accordance with Section 14 hereof, (iii) after receipt of such
certificates or depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of
such Right Certificate, registered in such name or names as
may be designated by such holder and (iv) when appropriate,
after receipt, deliver such cash to or upon the order of the
registered holder of such Right Certificate.
(d) In case the registered holder of any Right
Certificate shall exercise less than all the Rights evidenced
thereby, a new Right Certificate evidencing Rights equivalent
to the Rights remaining unexercised shall be issued by the
Rights Agent to the registered holder of such Right Certificate
or to his duly authorized assigns, subject to the provisions
of Section 14 hereof.
Section 8. Cancellation and Destruction of Right
Certificates. All Right Certificates surrendered for the purpose of
exercise, transfer, split up, combination or exchange shall, if
surrendered to the Company or to any of its agents, be delivered
to the Rights Agent for cancellation or in cancelled form, or, if
15
surrendered to the Rights Agent,
shall be cancelled by it, and no Right Certificates shall be
issued in lieu thereof except as expressly permitted by any of
the provisions of this Rights Agreement. The Company shall
deliver to the Rights Agent for cancellation and retirement,
and the Rights Agent shall so cancel and retire, any other
Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent
shall deliver all cancelled Right Certificates to the Company,
or shall, at the written request of the Company, destroy such
cancelled Right Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. Availability of Preference Shares. The
Company covenants and agrees that it will cause to be reserved
and kept available out of its authorized and unissued
Preference Shares or any Preference Shares held in its
treasury, the number of Preference Shares that will be suf-
ficient to permit the exercise in full of all outstanding
Rights in accordance with Section 7. The Company covenants
and agrees that it will take all such action as may be
necessary to ensure that all Preference Shares delivered upon
exercise of Rights shall, at the time of delivery of the
certificates for such Preference Shares (subject to payment of
the Purchase Price), be duly and validly authorized and issued
and fully paid and nonassessable shares.
The Company further covenants and agrees that it will
pay when due and payable any and all federal and state transfer
taxes and charges which may be payable in respect of the issuance or
16
delivery of the Right Certificates or of any
Preference Shares upon the exercise of Rights. The Company
shall not, however, be required to pay any transfer tax which
may be payable in respect of any transfer or delivery of Right
Certificates to a person other than, or the issuance or
delivery of certificates or depositary receipts for the
Preference Shares in a name other than that of, the registered
holder of the Right Certificate evidencing Rights surrendered
for exercise or to issue or to deliver any certificates or
depositary receipts for Preference Shares upon the exercise of
any Rights until any such tax shall have been paid (any such
tax being payable by the holder of such Right Certificate at
the time of surrender) or until it has been established to the
Company's reasonable satisfaction that no such tax is due.
Section 10. Preference Shares Record Date. Each
person in whose name any certificate for Preference Shares is
issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the Preference
Shares represented thereby on, and such certificate shall be
dated, the date upon which the Right Certificate evidencing
such Rights was duly surrendered and payment of the Purchase
Price (and any applicable transfer taxes) was made; provided,
however, that if the date of such surrender and payment is a
date upon which the Preference Shares transfer books of the
Company are closed, such person shall be deemed to have become
the record holder of such shares on, and such certificate shall
be dated, the next succeeding Business Day on which the Preference
Shares transfer books of the Company are open. Prior to the exercise
of the Rights evidenced thereby, the holder of
17
a Right Certificate shall not be entitled to any rights of a holder of
Preference Shares for which the Rights shall be exercisable, including,
without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be
entitled to receive any notice of any proceedings of the Company,
except as provided herein.
Section 11. Adjustment of Purchase Price, Number of
Shares or Number of Rights. The Purchase Price, the number of
Preference Shares covered by each Right and the number of
Rights outstanding are subject to adjustment from time to time
as provided in this Section 11.
(a) (i) In the event the Company shall at any time
after the date of this Agreement (A) declare a dividend on the
Preference Shares payable in Preference Shares, (B) subdivide
the outstanding Preference Shares, (C) combine the outstanding
Preference Shares into a smaller number of Preference Shares
or (D) issue any shares of its capital stock in a
reclassification of the Preference Shares (including any such
reclassification in connection with a consolidation or merger
in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section
11(a), the Purchase Price in effect at the time of the record
date for such dividend or of the effective date of such sub-
division, combination or reclassification, and the number and
kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive the aggregate number
18
and kind of shares of capital stock which, if such Right
had been exercised immediately prior to such date and
at a time when the Preference Shares transfer books of the
Company were open, he would have owned upon such exercise and
been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification; provided, how
ever, that in no event shall the consideration to be paid upon
the exercise of one Right be less than the aggregate par value
of the shares of capital stock of the Company issuable upon
exercise of one Right.
(ii) Subject to Section 24 of this Agreement, in the
event any Person becomes an Acquiring Person, each holder of a
Right shall thereafter have a right to receive, upon exercise
thereof at a price equal to the then current Purchase Price
multiplied by the number of one one-hundredths of a Preference
Share for which a Right is then exercisable, in accordance
with the terms of this Agreement and in lieu of Preference
Shares, such number of Common Shares of the Company as shall
equal the result obtained by (x) multiplying the then current
Purchase Price by the number of one onehundredths of a
Preference Share for which a Right is then exercisable and
dividing that product by (y) 50% of the then current per share
market price of the Company's Common Shares (determined
pursuant to Section 11(d) hereof) on the date of the
occurrence of such event. In the event that any Person shall
become an Acquiring Person and the Rights shall then be
outstanding, the Company shall not take any action which would
eliminate or diminish the benefits intended to be afforded by
the Rights.
19
From and after the occurrence of such event, any
Rights that are or were acquired or beneficially owned by any
Acquiring Person (or any Associate or Affiliate of such
Acquiring Person) shall be void and any holder of such Rights
shall thereafter have no right to exercise such Rights under
any provision of this Agreement. No Right Certificate shall
be issued pursuant to Section 3 that represents Rights
beneficially owned by an Acquiring Person whose Rights would be
void pursuant to the preceding sentence or any Associate or
Affiliate thereof; no Right Certificate shall be issued at any
time upon the transfer of any Rights to an Acquiring Person
whose Rights would be void pursuant to the preceding sentence
or any Associate or Affiliate thereof or to any nominee of
such Acquiring Person, Associate or Affiliate; and any Right
Certificate delivered to the Rights Agent for transfer to an
Acquiring Person whose Rights would be void pursuant to the
preceding sentence shall be cancelled.
(iii) In the event that there shall not be sufficient
Common Shares issued but not outstanding or authorized but
unissued to permit the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii), the Company
shall take all such action as may be necessary to authorize
additional Common Shares for issuance upon exercise of the
Rights. In the event the Company shall, after good faith
effort, be unable to take all such action as may be necessary
to authorize such additional Common Shares, the Company shall
substitute, for each Common Share that would otherwise be issuable
upon exercise of a Right, a number of Preference Shares or fraction
thereof such that the current per share market price of one Preference
Share multiplied by such number or fraction is equal
20
to the current per share market price of one Common Share as of
the date of issuance of such Preference Shares or fraction thereof.
(b) In case the Company shall fix a record date for
the issuance of rights, options or warrants to all holders of
Preference Shares entitling them (for a period expiring within
45 calendar days after such record date) to subscribe for or
purchase Preference Shares (or shares having the same rights,
privileges and preferences as the Preference Shares
("equivalent preference shares")) or securities convertible
into Preference Shares or equivalent preference shares at a
price per Preference Share or equivalent preference share (or
having a conversion price per share, if a security convertible
into Preference Shares or equivalent preference shares) less
than the then current per share market price of the Preference
Shares (as defined in Section 11(d)) on such record date, the
Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the
numerator of which shall be the number of Preference Shares
outstanding on such record date plus the number of Preference
Shares which the aggregate offering price of the total number
of Preference Shares and/or equivalent preference shares so to
be offered (and/or the aggregate initial conversion price of
the convertible securities so to be offered) would purchase at
such current market price and the denominator of which shall
be the number of Preference Shares outstanding on such record
date plus the number of additional Preference Shares and/or
equivalent preference shares to be offered for subscription or
purchase (or into which the convertible
21
securities so to be offered are initially convertible); provided,
however, that in no event shall the consideration to be paid upon
the exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Company issuable upon exercise
of one Right. In case such subscription price may be paid in
a consideration part or all of which shall be in a form other
than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement
filed with the Rights Agent. Preference Shares owned by or
held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record
date is fixed; and in the event that such rights, options or
warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for
the making of a distribution to all holders of the Preference
Shares (including any such distribution made in connection
with a consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash
dividend or a dividend payable in Preference Shares) or
subscription rights or warrants (excluding those referred to in
Section 11(b) hereof), the Purchase Price to be in effect
after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the then current per
22
share market price of the Preference Shares on such
record date, less the fair market value (as determined in
good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the
Rights Agent) of the portion of the assets or evidences of
indebtedness so to be distributed or of such subscription
rights or warrants applicable to one Preference Share and the
denominator of which shall be such current per share market
price of the Preference Shares; provided, however, that in no
event shall the consideration to be paid upon the exercise of
one Right be less than the aggregate par value of the shares
of capital stock of the Company to be issued upon exercise of
one Right. Such adjustments shall be made successively when
ever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be
adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(d) (i) For the purpose of any computation here
under, the "current per share market price" of any security (a
"Security" for the purpose of this Section 11(d)(i)) on any
date shall be deemed to be the average of the daily closing
prices per share of such Security for the 30 consecutive
Trading Days (as such term is hereinafter defined) immediately
prior to such date; provided, however, that in the event that
the current per share market price of the Security is
determined during a period following the announcement by the
issuer of such Security of (A) a dividend or distribution on
such Security payable in shares of such Security or securities
convertible into such shares, or (B) any subdivision,
23
combination or reclassification of such Security and prior to
the expiration of 30 Trading Days after the ex-dividend date
for such dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in
each such case, the current per share market price shall be
appropriately adjusted to reflect the current market price per
share equivalent of such Security. The closing price for each
day shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing
bid and asked prices, regular way, in either case as reported
in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on
the New York Stock Exchange or, if the Security is not listed
or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal
national securities exchange on which the Security is listed
or admitted to trading or, if the Security is not listed or
admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the
high bid and low asked prices in the over-the-counter market,
as reported by the National Association of Securities Dealers,
Inc. Automated Quotations System ("NASDAQ") or such other
system then in use, or, if on any such date the Security is
not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market
maker making a market in the Security selected by the Board of
Directors of the Company. The term "Trading Day" shall mean a
day on which the principal national securities exchange on
which the Security is listed or admitted to trading is open
for the transaction of
24
business or, if the Security is not listed or admitted to trading
on any national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder,
the "current per share market price" of the Preference Shares
shall be determined in accordance with the method set forth in
Section 11(d)(i). If the Preference Shares are not publicly
traded, the "current per share market price" of the Preference
Shares shall be conclusively deemed to be the current per-
share market price of the Common Shares as determined pursuant
to Section 11(d)(i) (appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring
after the date hereof), multiplied by one hundred. If neither
the Common Shares nor the Preference Shares are publicly held
or so listed or traded, "current per share market price" shall
mean the fair value per share as determined in good faith by
the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent.
(e) No adjustment in the Purchase Price shall be
required unless such adjustment would require an increase or
decrease of at least 1% in the Purchase Price; provided,
however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All
calculations under this Section 11 shall be made to the near
est cent or to the nearest one one-millionth of a Preference
Share or one ten-thousandth of any other share or security as
the case may be. Notwithstanding the
25
first sentence of this Section 11(e), any adjustment required
by this Section 11 shall be made no later than the earlier of
(i) three years from the date of the transaction which requires
such adjustment or (ii) the date of the expiration of the right
to exercise any Rights.
(f) If as a result of an adjustment made pursuant
to Section 11(a) hereof, the holder of any Right thereafter
exercised shall become entitled to receive any shares of
capital stock of the Company other than Preference Shares,
thereafter the number of such other shares so receivable upon
exercise of any Right shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Preference
Shares contained in Section 11(a) through (c), inclusive, and
the provisions of Sections 7, 9, 10 and 13 with respect to the
Preference Shares shall apply on like terms to any such other
shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price here
under shall evidence the right to purchase, at the adjusted
Purchase Price, the number of one one- hundredths of a Preference
Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election
as provided in Section 11(i), upon each adjustment of the Purchase
Price as a result of the calculations made in Sections 11(b) and
26
(c), each Right outstanding immediately prior to the making of such
adjustment shall thereafter evidence the right to purchase, at the
adjusted Purchase Price, that number of one one-hundredths of a
Preference Share (calculated to the nearest one one-millionth of a
Preference Share) obtained by (i) multiplying (x) the number of one
one-hundredths of a share covered by a Right immediately prior to
this adjustment by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price and
(ii) dividing the product so obtained by the Purchase Price in
effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of
any adjustment of the Purchase Price to adjust the number of
Rights, in substitution for any adjustment in the number of
one one-hundredths of a Preference Share purchasable upon the
exercise of a Right. Each of the Rights outstanding after
such adjustment of the number of Rights shall be exercisable
for the number of one one-hundredths of a Preference Share for
which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjust
ment of the number of Rights shall become that number of
Rights (calculated to the nearest one ten-thousandth) obtained
by dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in
effect immediately after adjustment of the Purchase Price.
The Company shall make a public announcement of its election
to adjust the number of Rights, indicating the record date for
the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on
which the Purchase Price is
27
adjusted or any day thereafter, but, if the Right Certificates
have been issued, shall be at least 10 days later than the date of
the public announcement. If Right Certificates have been issued,
upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Right Certificates
on such record date Right Certificates evidencing, subject to Section
14 hereof, the additional Rights to which such holders shall
be entitled as a result of such adjustment, or, at the option
of the Company, shall cause to be distributed to such holders
of record in substitution and replacement for the Right
Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the
Company, new Right Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment.
Right Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein
and shall be registered in the names of the holders of record
of Right Certificates on the record date specified in the
public announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of one one-hundredths of a
Preference Share issuable upon the exercise of the Rights, the
Right Certificates theretofore and thereafter issued may
continue to express the Purchase Price and the number of one
one-hundredths of a Preference Share which were expressed in
the initial Right Certificates issued hereunder.
28
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below one one-hundredth
of the then par value, if any, of the Preference Shares
issuable upon exercise of the Rights, the Company shall take
any corporate action which may, in the opinion of its counsel,
be necessary in order that the Company may validly and legally
issue fully paid and nonassessable Preference Shares at such
adjusted Purchase Price.
(l) In any case in which this Section 11 shall
require that an adjustment in the Purchase Price be made
effective as of a record date for a specified event, the Company
pany may elect to defer until the occurrence of such event the
issuing to the holder of any Right exercised after such record
date of the Preference Shares and other capital stock or
securities of the Company, if any, issuable upon such exercise
over and above the Preference Shares and other capital stock
or securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to
such adjustment; provided, however, that the Company shall
deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such
additional shares upon the occurrence of the event requiring
such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to
be advisable in order that any consolidation or subdivision of
the Preference Shares, issuance
29
wholly for cash of any Preference Shares at less than the current
market price, issuance wholly for cash of Preference Shares or
securities which by their terms are convertible into or exchangeable
for Preference Shares, dividends on Preference Shares payable in
Preference Shares or issuance of rights, options or warrants
referred to hereinabove in Section 11(b), hereafter made by
the Company to holders of its Preference Shares shall not be
taxable to such shareholders.
(n) In the event that at any time after the date of
this Agreement and prior to the Distribution Date, the Company
shall (i) declare or pay any dividend on the Common Shares
payable in Common Shares or (ii) effect a subdivision,
combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common
Shares) into a greater or lesser number of Common Shares, then
in any such case (A) the number of one one-hundredths of a
Preference Share purchasable after such event upon proper
exercise of each Right shall be determined by multiplying the
number of one one- hundredths of a Preference Share so purchasable
immediately prior to such event by a fraction, the
numerator of which is the number of Common Shares outstanding
immediately before such event and the denominator of which is
the number of Common Shares outstanding immediately after such
event, and (B) each Common Share outstanding immediately after
such event shall have issued with respect to it that number of
Rights which each Common Share outstanding immediately prior
to such event had issued with respect to it. The adjustments
provided for in this Section 11(n) shall be made successively
whenever such a dividend is
30
declared or paid or such a subdivision, combination or consolidation
is effected.
Section 12. Certificate of Adjusted Purchase Price
or Number of Shares. Whenever an adjustment is made as pro-
vided in Section 11 or 13 hereof, the Company shall promptly
(a) prepare a certificate setting forth such adjustment, and a
brief statement of the facts accounting for such adjustment,
(b) file with the Rights Agent and with each transfer agent
for the Common Shares or the Preference Shares a copy of such
certificate and (c) mail a brief summary thereof to each
holder of a Right Certificate in accordance with Section 25
hereof.
Section 13. Consolidation, Merger or Sale or
Transfer of Assets or Earning Power. In the event, directly or
indirectly, at any time after a Person has become an Acquiring
Person, (a) the Company shall consolidate with, or merge with
and into, any other Person, (b) any Person shall consolidate
with the Company, or merge with and into the Company and the
Company shall be the continuing or surviving corporation of
such merger and, in connection with such merger, all or part
of the Common Shares shall be changed into or exchanged for
stock or other securities of any other Person (or the Company)
or cash or any other property, or (c) the Company shall sell
or otherwise transfer (or one or more of its Subsidiaries
shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50% or more
of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person other than
the Company or one or more of its wholly-owned
31
Subsidiaries, then, and in each such case, proper provision shall
be made so that (i) each holder of a Right (except as otherwise provided
herein) shall thereafter have the right to receive, upon the
exercise thereof at a price equal to the then current Purchase
Price multiplied by the number of one one-hundredths of a
Preference Share for which a Right is then exercisable, in
accordance with the terms of this Agreement and in lieu of
Preference Shares, such number of Common Shares of such other
Person (including the Company as successor thereto or as the
surviving corporation) as shall equal the result obtained by
(A) multiplying the then current Purchase Price by the number
of one one-hundredths of a Preference Share for which a Right
is then exercisable and dividing that product by (B) 50% of
the then current per share market price of the Common Shares
of such other Person (determined pursuant to Section 11(d)
hereof) on the date of consummation of such consolidation,
merger, sale or transfer; (ii) the issuer of such Common
Shares shall thereafter be liable for, and shall assume, by
virtue of such consolidation, merger, sale or transfer, all
the obligations and duties of the Company pursuant to this
Agreement; (iii) the term "Company" shall thereafter be deemed
to refer to such issuer; and (iv) such issuer shall take such
steps (including, but not limited to, the reservation of a
sufficient number of its Common Shares in accordance with
Section 9 hereof) in connection with such consummation as may
be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in
relation to the Common Shares thereafter deliverable upon the
exercise of the Rights. The Company shall not consummate any such
such consolidation, merger, sale or transfer unless prior thereto the
32
Company and such issuer shall have executed and
delivered to the Rights Agent a supplemental agreement so
providing. The Company shall not enter into any transaction
of the kind referred to in this Section 13 if at the time of
such transaction there are any rights, warrants, instruments
or securities outstanding or any agreements or arrangements
which, as a result of the consummation of such transaction,
would eliminate or substantially diminish the benefits
intended to be afforded by the Rights. The provisions of this
Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers.
Section 14. Fractional Rights and Fractional
Shares. (a) The Company shall not be required to issue
fractions of Rights or to distribute Right Certificates which
evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the
Right Certificates with regard to which such fractional Rights
would otherwise be issuable, an amount in cash equal to the
same fraction of the current market value of a whole Right.
For the purposes of this Section 14(a), the current market
value of a whole Right shall be the closing price of the
Rights for the Trading Day immediately prior to the date on
which such fractional Rights would have been otherwise
issuable. The closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal con-
solidated transaction reporting system with respect to secur-
ities listed or admitted to trading on the New York Stock
Exchange or, if the Rights are not listed or admitted to
33
trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with
respect to securities listed on the principal national
securities exchange on which the Rights are listed or admitted to
trading or, if the Rights are not listed or admitted to trading
on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by
NASDAQ or such other system then in use or, if on any such
date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights
selected by the Board of Directors of the Company. If on any
such date no such market maker is making a market in the
Rights, the fair value of the Rights on such date as deter-
mined in good faith by the Board of Directors of the Company
shall be used.
(b) The Company shall not be required to issue
fractions of Preference Shares (other than fractions which are
integral multiples of one one-hundredth of a Preference Share)
upon exercise of the Rights or to distribute certificates
which evidence fractional Preference Shares (other than fractions
which are integral multiples of one one-hundredth of a
Preference Share). Fractions of Preference Shares in integral
multiples of one one-hundredth of a Preference Share may, at
the election of the Company, be evidenced by depositary
receipts, pursuant to an appropriate agreement between the
Company and a depositary selected by it; provided, that such
agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges
34
and preferences to which they are entitled as beneficial owners
of the Preference Shares represented by such depositary receipts.
In lieu of fractional Preference Shares that are not integral
multiples of one one-hundredth of a Preference Share, the
Company shall pay to the registered holders of Right
Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the
current market value of one Preference Share. For the
purposes of this Section 14(b), the current market value of a
Preference Share shall be the closing price of a Preference
Share (as determined pursuant to the second sentence of Section
11(d)(i) hereof) for the Trading Day immediately prior to
the date of such exercise.
(c) The holder of a Right by the acceptance of the
Right expressly waives his right to receive any fractional
Rights or any fractional shares upon exercise of a Right
(except as provided above).
Section 15. Rights of Action. All rights of action
in respect of this Agreement, excepting the rights of action
given to the Rights Agent under Section 18 hereof, are vested
in the respective registered holders of the Right Certificates
(and, prior to the Distribution Date, the registered holders
of the Common Shares); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common
Shares), without the consent of the Rights Agent or of the
holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in his own
behalf and for his own benefit, enforce,
35
and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of,
his right to exercise the Rights evidenced by such Right Certificate
in the manner provided in such Right Certificate and in this Agreement.
Without limiting the foregoing or any remedies available to
the holders of Rights, it is specifically acknowledged that
the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to
specific performance of the obligations under, and injunctive
relief against actual or threatened violations of the
obligations of any Person subject to, this Agreement.
Section 16. Agreement of Right Holders. Every
holder of a Right, by accepting the same, consents and agrees
with the Company and the Rights Agent and with every other
holder of a Right that:
(a) prior to the Distribution Date, the Rights will
be transferable only in connection with the transfer of the
Common Shares;
(b) after the Distribution Date, the Right
Certificates are transferable only on the registry books of the
Rights Agent if surrendered at the principal office of the
Rights Agent, duly endorsed or accompanied by a proper
instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat
the person in whose name the Right Certificate (or, prior to the
Distribution Date, the associated Common Shares certificate) is
36
registered as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or writing on the
Right Certificates or the associated Common Shares certificate made
by anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent shall be affected
by any notice to the contrary.
Section 17. Right Certificate Holder Not Deemed a
Shareholder. No holder, as such, of any Right Certificate
shall be entitled to vote, receive dividends or be deemed for
any purpose the holder of the Preference Shares or any other
securities of the Company which may at any time be issuable on
the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Right Certificate be
construed to confer upon the holder of any Right Certificate, as
such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to give
or withhold consent to any corporate action, or to receive
notice of meetings or other actions affecting shareholders
(except as provided in Section 25 hereof), or to receive
dividends or subscription rights, or otherwise, until the
Right or Rights evidenced by such Right Certificate shall have
been exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. The Company
agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time, on demand
of the Rights Agent, its reasonable expenses and counsel fees and
37
other disbursements incurred in the administration and execution of
this Agreement and the exercise and performance of its duties hereunder.
The Company also agrees to indemnify the Rights Agent for, and to hold
it harmless against, any loss, liability, or expense, incurred
without negligence, bad faith or willful misconduct on the
part of the Rights Agent, for anything done or omitted by the
Rights Agent in connection with the acceptance and
administration of this Agreement, including the costs and
expenses of defending against any claim of liability in the
premises.
The Rights Agent shall be protected and shall incur
no liability for, or in respect of any action taken, suffered
or omitted by it in connection with, its administration of
this Agreement in reliance upon any Right Certificate or
certificate for the Preference Shares or Common Shares or for
other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged,
by the proper person or persons, or otherwise upon the
advice of counsel as set forth in Section 20 hereof.
Section 19. Merger or Consolidation or Change of
Name of Rights Agent. Any corporation into which the Rights Agent
or any successor Rights Agent may be merged or with which it may
be consolidated, or any corporation resulting from any merger
or consolidation to which the Rights Agent or any successor Rights
38
Agent shall be a party, or any corporation succeeding
to the stock transfer or corporate trust powers of the
Rights Agent or any successor Rights Agent, shall be
the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further
act on the part of any of the parties hereto; provided, that
such corporation would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21 hereof.
In case at the time such successor Rights Agent shall succeed
to the agency created by this Agreement, any of the Right
Certificates shall have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature
of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right Certificates
either in the name of the predecessor Rights Agent or in the
name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
In case at any time the name of the Rights Agent
shall be changed and at such time any of the Right Certifi-
cates shall have been countersigned but not delivered, the
Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; and in
case at that time any of the Right Certificates shall not have
been countersigned, the Rights Agent may countersign such
Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates
39
shall have the full force provided in the Right Certificates and
in this Agreement.
Section 20. Duties of Rights Agent. The Rights
Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of
which the Company and the holders of Right Certificates, by
their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel
(who may be legal counsel for the Company), and the opinion of
such counsel shall be full and complete authorization and
protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under
this Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter be proved or established by
the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by
any one of the Chairman of the Board, the Chief Executive
Officer, the President, any Vice President, the Treasurer or
the Secretary of the Company and delivered to the Rights
Agent; and such certificate shall be full authorization to the
Rights Agent for any action taken or suffered in good faith by
it under the provisions of this Agreement in reliance upon
such certificate.
40
(c) The Rights Agent shall be liable hereunder to
the Company and any other Person only for its own negligence,
bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by
reason of any of the statements of fact or recitals contained
in this Agreement or in the Right Certificates (except its
countersignature thereof) or be required to verify the same,
but all such statements and recitals are and shall be deemed
to have been made by the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or
the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its counter-
signature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained
in this Agreement or in any Right Certificate; nor shall it be
responsible for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section
11(a)(ii) hereof) or any adjustment in the terms of the Rights
(including the manner, method or amount thereof) provided for
in Section 3, 11, 13, 23 or 24, or the ascertaining of the
existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice that such
change or adjustment is required); nor shall it by any act
hereunder be deemed to make any representation
41
or warranty as to the authorization or reservation of any
Preference Shares to be issued pursuant to this Agreement or
any Right Certificate or as to whether any Preference Shares will,
when issued, be validly authorized and issued, fully paid and
nonassessable.
(f) The Company agrees that it will perform,
execute, acknowledge and deliver or cause to be performed,
executed, acknowledged and delivered all such further and
other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing
by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and
directed to accept instructions with respect to the performance
of its duties hereunder from any one of the Chairman of
the Board, the Chief Executive Officer, the President, any
Vice President, the Secretary or the Treasurer of the Company,
and to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for any
action taken or suffered by it in good faith in accordance
with instructions of any such shareholder or for any delay in
acting while waiting for those instructions.
(h) The Rights Agent and any shareholder, director,
officer or employee of the Rights Agent may buy, sell or deal in any
of the Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested,
or contract with or lend money to the Company or otherwise act as
fully and freely as though it were not Rights Agent
42
under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the
Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any
of the rights or powers hereby vested in it or perform any
duty hereunder either itself or by or through its attorneys or
agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company
resulting from any such act, default, neglect or misconduct,
provided reasonable care was exercised in the selection and
continued employment thereof.
Section 21. Change of Rights Agent. The Rights
Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon 30 days'
notice in writing mailed to the Company and to each transfer
agent of the Common Shares or Preference Shares by registered
or certified mail, and to the holders of the Right Certificates
by first-class mail. The Company may remove the Rights
Agent or any successor Rights Agent upon 30 days' notice in
writing, mailed to the Rights Agent or successor Rights Agent,
as the case may be, and to each transfer agent of the Common
Shares or Preference Shares by registered or certified mail,
and to the holders of the Right Certificates by first-class
mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint
a successor to the Rights Agent. If the Company shall fail to make
such appointment within a period of 30 days after giving notice of such
43
removal or after it has been notified in writing of such resignation
or incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Right Certificate (who shall, with such notice,
submit his Right Certificate for inspection by the Company), then the
registered holder of any Right Certificate may apply to any
court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be a corporation
organized and doing business under the laws of the United
States or of the State of Connecticut (or of any other state
of the United States so long as such corporation is authorized
to do business as a banking institution in the State of
Connecticut, in good standing, having an office in the State
of Connecticut, which is authorized under such laws to
exercise corporate trust or stock transfer powers and is
subject to supervision or examination by federal or state
authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $50
million. After appointment, the successor Rights Agent shall
be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent
any property at the time held by it hereunder, and execute and
deliver any further assurance, conveyance, act or deed
necessary for the purpose. Not later than the effective date
of any such appointment the Company shall file notice thereof
in writing with the predecessor Rights Agent and each transfer
agent of the Common Shares or Preference Shares, and mail a
notice thereof in writing to the registered holders of the
Right Certificates. Failure to give
44
any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the appointment
of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of
the Rights to the contrary, the Company may, at its option,
issue new Right Certificates evidencing Rights in such form as
may be approved by the Board of Directors of the Company to
reflect any adjustment or change in the Purchase Price and the
number or kind or class of shares or other securities or
property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement.
Section 23. Redemption. (a) The Board of Directors
of the Company may, at its option, at any time prior to
such time as any Person becomes an Acquiring Person, redeem
all but not less than all the then outstanding Rights at a
redemption price of $.01 per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price"). The
redemption of the Rights by the Board of Directors of the
Company may be made effective at such time, on such basis and
with such conditions as the Board of Directors of the Company
in its sole discretion may establish.
45
(b) Immediately upon the action of the Board of
Directors of the Company ordering the redemption of the Rights
pursuant to paragraph (a) of this Section 23, and without any
further action and without any notice, the right to exercise
the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price.
The Company shall promptly give public notice of any such
redemption; provided, however, that the failure to give, or
any defect in, any such notice shall not affect the validity
of such redemption. Within 10 days after such action of the
Board of Directors of the Company ordering the redemption of
the Rights, the Company shall mail a notice of redemption to
all the holders of the then outstanding Rights at their last
addresses as they appear upon the registry books of the Rights
Agent or, prior to the Distribution Date, on the registry
books of the transfer agent for the Common Shares. Any notice
which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each
such notice of redemption will state the method by which the
payment of the Redemption Price will be made. Neither the
Company nor any of its Affiliates or Associates may redeem,
acquire or purchase for value any Rights at any time in any
manner other than that specifically set forth in this Section
23 or in Section 24 hereof, and other than in connection with
the purchase of Common Shares prior to the Distribution Date.
Section 24. Exchange. (a) The Board of Directors of the
Company may, at its option, at any time after any Person becomes an
Acquiring Person, exchange all or part of the then outstanding
46
and exercisable Rights (which shall not include Rights that have
become void pursuant to the provisions of Section 11(a)(ii) hereof)
for Common Shares at an exchange ratio of one Common Share per Right,
appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such exchange
ratio being hereinafter referred to as the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors of the
Company shall not be empowered to effect such exchange at any
time after any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan of the Company or
any such Subsidiary, or any entity holding Common Shares for
or pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the Common Shares then
outstanding.
(b) Immediately upon the action of the Board of
Directors of the Company ordering the exchange of any Rights
pursuant to paragraph (a) of this Section 24 and without any
further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive that number of
Common Shares equal to the number of such Rights held by such
holder multiplied by the Exchange Ratio. The Company shall
promptly give public notice of any such exchange; provided, however,
that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company promptly shall
mail a notice of any such exchange to all of the holders of such
Rights at their last addresses as they appear upon the registry
books of the Rights Agent. Any notice which is
47
mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice.
Each such notice of exchange will state the method by which
the exchange of the Common Shares for Rights will be effected
and, in the event of any partial exchange, the number of
Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than
Rights which have become void pursuant to the provisions of
Section 11(a)(ii) hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient
Common Shares issued but not outstanding or authorized but
unissued to permit any exchange of Rights as contemplated in
accordance with this Section 24, the Company shall take all
such action as may be necessary to authorize additional Common
Shares for issuance upon exchange of the Rights. In the event
the Company shall, after good faith effort, be unable to take
all such action as may be necessary to authorize such
additional Common Shares, the Company shall substitute, for
each Common Share that would otherwise be issuable upon
exchange of a Right, a number of Preference Shares or fraction
thereof such that the current per share market price of one
Preference Share multiplied by such number or fraction is
equal to the current per share market price of one Common
Share as of the date of issuance of such Preference Shares or
fraction thereof.
(d) The Company shall not be required to issue fractions
of Common Shares or to distribute certificates which evidence fractional
Common Shares. In lieu of such fractional Common Shares, the Company
shall pay to the registered holders of the Right
48
Certificates with regard to which such fractional Common
Shares would otherwise be issuable an amount in cash
equal to the same fraction of the current market value of a
whole Common Share. For the purposes of this paragraph (d),
the current market value of a whole Common Share shall be the
closing price of a Common Share (as determined pursuant to the
second sentence of Section 11(d)(i) hereof) for the Trading
Day immediately prior to the date of exchange pursuant to this
Section 24.
Section 25. Notice of Certain Events. (a) In case
the Company shall propose (i) to pay any dividend payable in
stock of any class to the holders of its Preference Shares or
to make any other distribution to the holders of its Preference
Shares (other than a regular quarterly cash dividend),
(ii) to offer to the holders of its Preference Shares rights
or warrants to subscribe for or to purchase any additional
Preference Shares or shares of stock of any class or any other
securities, rights or options, (iii) to effect any
reclassification of its Preference Shares (other than a
reclassification involving only the subdivision of outstanding
Preference Shares), (iv) to effect any consolidation or merger
into or with, or to effect any sale or other transfer (or to
permit one or more of its Subsidiaries to effect any sale or
other transfer), in one or more transactions, of 50% or more
of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to, any other Person, (v) to
effect the liquidation, dissolution or winding up of the Com-
pany, or (vi) to declare or pay any dividend on the Common
Shares payable in Common Shares or to effect a subdivision,
combination or consolidation of the Common Shares (by reclas-
49
sification or otherwise than by payment of dividends in Common
Shares), then, in each such case, the Company shall give to
each holder of a Right Certificate, in accordance with Section
26 hereof, a notice of such proposed action, which shall
specify the record date for the purposes of such stock
dividend, or distribution of rights or warrants, or the date
on which such reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution, or winding up is to take
place and the date of participation therein by the holders of
the Common Shares and/or Preference Shares, if any such date
is to be fixed, and such notice shall be so given in the case
of any action covered by clause (i) or (ii) above at least 10
days prior to the record date for determining holders of the
Preference Shares for purposes of such action, and in the case
of any such other action, at least 10 days prior to the date
of the taking of such proposed action or the date of
participation therein by the holders of the Common Shares
and/or Preference Shares, whichever shall be the earlier.
(b) In case the event set forth in Section
11(a)(ii) hereof shall occur, then the Company shall as soon
as practicable thereafter give to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of
the occurrence of such event, which notice shall describe such
event and the consequences of such event to holders of Rights
under Section 11(a)(ii) hereof.
Section 26. Notices. Notices or demands authorized
by this Agreement to be given or made by the Rights Agent or
by the holder of any Right Certificate to or on the Company shall be
50
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Rights
Agent) as follows:
Southern New England Telecommunications Corporation
227 Church Street,
New Haven, Connecticut 06510
Attention: Secretary
Subject to the provisions of Section 21 hereof, any notice or
demand authorized by this Agreement to be given or made by the
Company or by the holder of any Right Certificate to or on the
Rights Agent shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
State Street Bank and Trust Company
c/o Boston Equiserve
150 Royall Street
Canton, Massachusetts 02021
Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any
Right Certificate shall be sufficiently given or made if sent
by first-class mail, postage prepaid, addressed to such holder
at the address of such holder as shown on the registry books
of the Company.
Section 27. Supplements and Amendments. The Company
may from time to time supplement or amend this Agreement without the
approval of any holders of Right Certificates in order to cure any
ambiguity, to correct or supplement any provision contained herein
51
which may be defective or inconsistent with any other provisions
herein, or to make any other provisions with respect to the Rights
which the Company may deem necessary or desirable, any such supplement
or amendment to be evidenced by a writing signed by the Company and
the Rights Agent; provided, however, that from and after such time
as any Person becomes an Acquiring Person, this Agreement
shall not be amended in any manner which would adversely
affect the interests of the holders of Rights. Without
limiting the foregoing, the Company may at any time prior to
such time as any Person becomes an Acquiring Person amend this
Agreement to lower the thresholds set forth in Sections 1(a)
and 3(a) to not less than the greater of (i) the sum of .001%
and the largest percentage of the outstanding Common Shares
then known by the Company to be beneficially owned by any
Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or any Subsidiary of
the Company, or any entity holding Common Shares for or
pursuant to the terms of any such plan) and (ii) 10%.
Section 28. Successors. All the covenants and
provisions of this Agreement by or for the benefit of the Company
or the Rights Agent shall bind and inure to the benefit of
their respective successors and assigns hereunder.
Section 29. Benefits of this Agreement. Nothing in
this Agreement shall be construed to give to any person or
corporation other than the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to
the Distribution Date, the Common Shares) any legal or
equitable right, remedy or claim under
52
this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to
the Distribution Date, the Common Shares).
Section 30. Severability. If any term, provision,
covenant or restriction of this Agreement is held by a court
of competent jurisdiction or other authority to be invalid,
void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected,
impaired or invalidated.
Section 31. Governing Law. This Agreement and each
Right Certificate issued hereunder shall be deemed to be a
contract made under the laws of the State of Connecticut and
for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts
to be made and performed entirely within such State.
Section 32. Counterparts. This Agreement may be
executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one
and the same instrument.
53
Section 33. Descriptive Headings. Descriptive
headings of the several Sections of this Agreement are
inserted for convenience only and shall not control or affect
the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed and attested, all as of the
day and year first above written.
Attest: SOUTHERN NEW ENGLAND
TELECOMMUNICATIONS CORPORATION
By /s/Paula M. Anderson By /s/Daniel J. Miglio
Name: Paula M. Anderson Name: Daniel J. Miglio
Title: Assistant Secretary Title: Chairman, President
and Chief Executive Officer
Attest: STATE STREET BANK AND TRUST COMPANY
By /s/Stephen Cesso By /s/David M. Elwood
Name: Stephen Cesso Name: David M. Elwood
Title: Vice President Title: Vice President
and Associate Counsel and Senior Counsel
54
Exhibit A
FORM
of
CERTIFICATE OF DESIGNATIONS
of
SERIES A JUNIOR PARTICIPATING PREFERENCE STOCK
of
SOUTHERN NEW ENGLAND TELECOMMUNICATIONS CORPORATION
Southern New England Telecommunications Corporation,
a corporation organized and existing under the General
Corporation Law of the State of Connecticut (hereinafter
called the "Corporation"), hereby certifies that the following
resolution was adopted by the Board of Directors of the
Corporation at a meeting duly called and held on December 11,
1996:
VOTED: That under the authority granted to the Board
in the Corporation's Restated Certificate of Incorporation, the
Board creates a series of Preference Stock, par value $1 per share,
states the designation and number of shares, and fixes the
relative rights, preferences and limitations thereof (in
addition to the provisions set forth in said Certificate of
Incorporation), as set forth in the Rights Agreement, as follows:
Series A Junior Participating Preference Stock:
Section 1. Designation and Amount. The shares of
such series shall be designated as "Series A Junior Participating
Preference Stock" (the "Series A Preference Stock") and
the number of shares constituting the Series A Preference
Stock shall be 2,000,000. Such number of shares may be
increased or decreased by resolution of the Board of Directors;
provided, that no decrease shall reduce the number of
shares of Series A Preference Stock to a number less than the
number of shares then outstanding plus the number of shares
reserved for issuance upon the exercise of outstanding
options, rights or warrants or upon the conversion of any
outstanding securities issued by the Corporation convertible
into Series A Preference Stock.
A-1
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any
shares of any series of Preference Stock (or any similar
stock) ranking prior and superior to the Series A Preference
Stock with respect to dividends, the holders of
shares of Series A Preference Stock, in preference to the
holders of Common Stock, par value $1.00 per share (the
"Common Stock"), of the Corporation, and of any other
junior stock, shall be entitled to receive, when, as and
if declared by the Board of Directors out of funds
legally available for the purpose, quarterly dividends
payable in cash on the first day of March, June,
September and December in each year (each such date being
referred to herein as a "Quarterly Dividend Payment
Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or
fraction of a share of Series A Preference Stock, in an
amount per share (rounded to the nearest cent) equal to
the greater of (a) $1 or (b) subject to the provision for
adjustment hereinafter set forth, 100 times the aggregate
per share amount of all cash dividends, and 100 times the
aggregate per share amount (payable in kind) of all
non-cash dividends or other distributions, other than a
dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common
Stock since the immediately preceding Quarterly Dividend
Payment Date or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series A Preference
Stock. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable
in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then
in each such case the amount to which holders of shares
of Series A Preference Stock were entitled immediately
prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by
a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately
prior to such event.
A-2
(B) The Corporation shall declare a dividend or
distribution on the Series A Preference Stock as provided
in paragraph (A) of this Section immediately after it
declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common
Stock); provided that, in the event no dividend or distribution
shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment
Date and the next subsequent Quarterly Dividend Payment
Date, a dividend of $1 per share on the Series A Preference
Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative
on outstanding shares of Series A Preference Stock
from the Quarterly Dividend Payment Date next preceding
the date of issue of such shares, unless the date of
issue of such shares is prior to the record date for the
first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the
date of issue of such shares, or unless the date of issue
is a Quarterly Dividend Payment Date or is a date after
the record date for the determination of holders of
shares of Series A Preference Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend
Payment Date, in either of which events such dividends
shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the
shares of Series A Preference Stock in an amount less
than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro
rata on a share-by-share basis among all such shares at
the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of
Series A Preference Stock entitled to receive payment of
a dividend or distribution declared thereon, which record
date shall be not more than 60 days prior to the date
fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of
Series A Preference Stock shall have the following voting
rights:
A-3
(A) Subject to the provision for adjustment hereinafter
set forth, each share of Series A Preference Stock shall
entitle the holder thereof to 100 votes on all matters
submitted to a vote of the shareholders of the Corporation.
In the event the Corporation shall at any time declare or
pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock
(by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case
the number of votes per share to which holders of shares
of Series A Preference Stock were entitled immediately
prior to such event shall be adjusted by multiplying such
number by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number
of shares of Common Stock that were outstanding immediately
prior to such event.
(B) Except as otherwise provided herein, in any
other Certificate of Designations creating a series of
Preference Stock or any similar stock, or by law, the
holders of shares of Series A Preference Stock and the
holders of shares of Common Stock and any other capital
stock of the Corporation having general voting rights
shall vote together as one class on all matters submitted
to a vote of shareholders of the Corporation.
(C) Except as set forth herein, or as otherwise
provided by law, holders of Series A Preference Stock
shall have no special voting rights and their consent
shall not be required (except to the extent they are
entitled to vote with holders of Common Stock as set
forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends
or distributions payable on the Series A Preference Stock
as provided in Section 2 are in arrears, thereafter and
until all accrued and unpaid dividends and distributions,
whether or not declared, on shares of Series A Preference
Stock outstanding shall have been paid in full, the
Corporation shall not:
A-4
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior
(either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preference
Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a
parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preference
Stock, except dividends paid ratably on the
Series A Preference Stock and all such parity stock
on which dividends are payable or in arrears in
proportion to the total amounts to which the holders
of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior
(either as to dividends or upon liquidation, dissolution
or winding up) to the Series A Preference Stock,
provided that the Corporation may at any time
redeem, purchase or otherwise acquire shares of any
such junior stock in exchange for shares of any
stock of the Corporation ranking junior (either as
to dividends or upon dissolution, liquidation or
winding up) to the Series A Preference Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series A Preference
Stock, or any shares of stock ranking on a parity
with the Series A Preference Stock, except in accordance
with a purchase offer made in writing or by
publication (as determined by the Board of
Directors) to all holders of such shares upon such
terms as the Board of Directors, after consideration
of the respective annual dividend rates and other
relative rights and preferences of the respective
series and classes, shall determine in good faith
will result in fair and equitable treatment among
the respective series or classes.
(B) The Corporation shall not permit any subsidiary
of the Corporation to purchase or otherwise acquire for
consideration any shares of stock of the Corporation
unless the Corporation could, under paragraph (A) of this
Section 4, purchase or otherwise acquire such shares at
such time and in such manner.
A-5
Section 5. Reacquired Shares. Any shares of Series
A Preference Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and
cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but
unissued shares of Preference Stock and may be reissued as
part of a new series of Preference Stock subject to the conditions
and restrictions on issuance set forth herein, in the
Certificate of Incorporation, or in any other Certificate of
Designations creating a series of Preference Stock or any
similar stock or as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up.
Upon any liquidation, dissolution or winding up of the Corporation,
no distribution shall be made (1) to the holders of
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A
Preference Stock unless, prior thereto, the holders of shares
of Series A Preference Stock shall have received $100 per
share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the
date of such payment, provided that the holders of shares of
Series A Preference Stock shall be entitled to receive an aggregate
amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount
to be distributed per share to holders of shares of Common
Stock, or (2) to the holders of shares of stock ranking on a
parity (either as to dividends or upon liquidation, dissolution
or winding up) with the Series A Preference Stock, except
distributions made ratably on the Series A Preference Stock
and all such parity stock in proportion to the total amounts
to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. In the event the
Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect
a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater
or lesser number of shares of Common Stock, then in each such
case the aggregate amount to which holders of shares of Series
A Preference Stock were entitled immediately prior to such event
under the proviso in clause (1) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
A-6
Section 7. Consolidation, Merger, etc. In case the
Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common
Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such
case each share of Series A Preference Stock shall at the same
time be similarly exchanged or changed into an amount per
share, subject to the provision for adjustment hereinafter set
forth, equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind),
as the case may be, into which or for which each share of
Common Stock is changed or exchanged. In the event the
Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect
a subdivision or combination or consolidation of the out
standing shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of
shares of Series A Preference Stock shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior
to such event.
Section 8. No Redemption. The shares of Series A
Preference Stock shall not be redeemable.
Section 9. Rank. The Series A Preference Stock
shall rank, with respect to the payment of dividends and the
distribution of assets, junior to all series of any other
class of the Corporation's Preference Stock.
Section 10. Amendment. The Certificate of Incorporation
of the Corporation shall not be amended in any manner which
would materially alter or change the powers, preferences or
special rights of the Series A Preference Stock so as to
affect them adversely without the affirmative vote of the
holders of at least two-thirds of the outstanding shares of
Series A Preference Stock, voting together as a single class.
A-7
IN WITNESS WHEREOF, this Certificate of Designations
is executed on behalf of the Corporation by its Chief
Executive Officer and attested by its Secretary this 11th day
of December, 1996.
Chief Executive Officer
Attest:
Secretary
A-8
Exhibit B
FORM OF RIGHT CERTIFICATE
Certificate No. R- Rights
NOT EXERCISABLE AFTER FEBRUARY 11, 2007 OR EARLIER IF
REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT
TO REDEMPTION AT $.01 PER RIGHT AND TO EXCHANGE ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT.
Right Certificate
SOUTHERN NEW ENGLAND TELECOMMUNICATIONS CORPORATION
This certifies that , or registered
assigns, is the registered owner of the number of Rights set
forth above, each of which entitles the owner thereof, subject
to the terms, provisions and conditions of the Rights Agreement,
dated as of December 11, 1996 (the "Rights Agreement"), between
Southern New England Telecommunications Corporation, a Connecticut
corporation (the "Company"), and State Street Bank and Trust
Company (the "Rights Agent"), to purchase from the Company at
any time after the Distribution Date (as such term is defined
in the Rights Agreement) and prior to 5:00 P.M., New York City
time, on February 11, 2007 at the principal office of the Rights
Agent, or at the office of its successor as Rights Agent, one
one-hundredth of a fully paid non-assessable share of Series A
Junior Participating Preference Stock, par value $1.00 per share,
of the Company (the "Preference Shares"), at a purchase price of
$180 per one one-hundredth of a Preference Share (the "Purchase
Price"), upon presentation and surrender of this Right Certificate
with the Form of Election to Purchase duly executed. The number of
Rights evidenced by this Right Certificate (and the number of
one one-hundredths of a Preference Share which may be purchased
upon exercise hereof) set forth above, and the Purchase
Price set forth above, are the number and Purchase Price as of
December 11, 1996, based on the Preference Shares as
constituted at such date. As provided in the Rights
Agreement, the Purchase Price and the number of one one
hundredths of a Preference Share which may be purchased upon
the exercise of the Rights evidenced by this Right Certificate
are subject to modification and adjustment upon the happening
of certain events.
This Right Certificate is subject to all of the
terms, provisions and conditions of the Rights Agreement,
which terms, provisions and conditions are hereby incorporated
herein by
B-1
reference and made a part hereof and to which Rights
Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and
immunities hereunder of the Rights Agent, the Company and the
holders of the Right Certificates. Copies of the Rights
Agreement are on file at the principal executive offices of
the Company and the above-mentioned offices of the Rights
Agent.
This Right Certificate, with or without other Right
Certificates, upon surrender at the principal office of the
Rights Agent, may be exchanged for another Right Certificate
or Right Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of
Preference Shares as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall have entitled
such holder to purchase. If this Right Certificate shall
be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or
Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement,
the Rights evidenced by this Certificate (i) may be redeemed
by the Company at a redemption price of $.01 per Right or (ii)
may be exchanged in whole or in part for Preference Shares or
shares of the Company's Common Stock, par value $1.00 per
share.
No fractional Preference Shares will be issued upon
the exercise of any Right or Rights evidenced hereby (other
than fractions which are integral multiples of one one
hundredth of a Preference Share, which may, at the election of
the Company, be evidenced by depositary receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights
Agreement.
No holder of this Right Certificate shall be entitled
to vote or receive dividends or be deemed for any purpose the
holder of the Preference Shares or of any other securities of
the Company which may at any time be issuable on the exercise
hereof, nor shall anything contained in the Rights Agreement
or herein be construed to confer upon the holder hereof, as
such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to give
or withhold consent to any corporate action, or to receive
notice of meetings or other actions affecting shareholders
(except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the
Right or Rights evidenced by this Right Certificate shall have
been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory
for any purpose until it shall have been countersigned by the
Rights Agent.
B-2
WITNESS the facsimile signature of the proper officers
of the Company and its corporate seal. Dated as of .
ATTEST: SOUTHERN NEW ENGLAND TELECOMMUNICATIONS
CORPORATION
By
Countersigned:
STATE STREET BANK AND TRUST
COMPANY
By
Authorized Signature
B-3
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED
hereby sells, assigns and transfers unto
(Please print name and address of transferee)
this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint Attorney, to transfer the within
Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated:
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a
registered national securities exchange, a member of the
National Association of Securities Dealers, Inc., or a
commercial bank or trust company having an office or
correspondent in the United States.
- ------------------------------------------------------------
The undersigned hereby certifies that the Rights
evidenced by this Right Certificate are not beneficially owned
by an Acquiring Person or an Affiliate or Associate thereof
(as defined in the Rights Agreement).
Signature
- -------------------------------------------------------------
B-4
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Right Certificate.)
To: Southern New England Telecommunications Corporation
The undersigned hereby irrevocably elects to exercise
Rights represented by this Right
Certificate to purchase the Preference Shares issuable upon
the exercise of such Rights and requests that certificates for
such Preference Shares be issued in the name of:
Please insert social security
or other identifying number
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced
by this Right Certificate, a new Right Certificate for the
balance remaining of such Rights shall be registered in the
name of and delivered to:
Please insert social security
or other identifying number
(Please print name and address)
Dated:
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a
registered national securities exchange, a member of the
National Association of Securities Dealers, Inc., or a
commercial bank or trust company having an office or
correspondent in the United States.
B-5
Form of Reverse Side of Right Certificate -- continued
- -------------------------------------------------------------
The undersigned hereby certifies that the Rights
evidenced by this Right Certificate are not beneficially owned
by an Acquiring Person or an Affiliate or Associate thereof
(as defined in the Rights Agreement).
Signature
- -------------------------------------------------------------
NOTICE
The signature in the Form of Assignment or Form of
Election to Purchase, as the case may be, must conform to the
name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any
change whatsoever.
In the event the certification set forth above in the
Form of Assignment or the Form of Election to Purchase, as the
case may be, is not completed, the Company and the Rights
Agent will deem the beneficial owner of the Rights evidenced
by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights
Agreement) and such Assignment or Election to Purchase will
not be honored.
B-6
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE
PREFERENCE SHARES
On December 11, 1996, the Board of Directors of
Southern New England Telecommunications Corporation (the
"Company") declared a dividend of one preference share
purchase right (a "Right") for each outstanding share of common
stock, par value $1.00 per share (the "Common Shares"), of the
Company. The dividend is payable on January 27, 1997 (the
"Record Date") to the shareholders of record on that date.
Upon the earlier of (i) the expiration of rights
issued pursuant to the Rights Agreement dated as of February
11, 1987 between the Company and State Street Bank and Trust
Company (the "Prior Rights Agreement") or (ii) the redemption
of the rights as provided in the Prior Rights Agreement (the
earlier of such dates referred to as the "Effective Date"),
each Right shall entitle the registered holder to purchase
from the Company one one-hundredth of a share of Series A
Junior Participating Preference Stock, par value $1.00 per
share (the "Preference Shares"), of the Company at a price of
$180 (the "Purchase Price"), subject to adjustment. The
Rights are described in a Rights Agreement (the "Rights
Agreement") between the Company and State Street Bank and
Trust Company as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 days following
a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") have acquired
beneficial ownership of 20% or more of the outstanding Common
Shares or (ii) 10 business days (or such later date as may be
determined by action of the Board of Directors prior to such
time as any person or group of affiliated persons becomes an
Acquiring Person) following the commencement of, or announcement
of an intention to make, a tender offer or exchange offer
the consummation of which would result in the beneficial
ownership by a person or group of 20% or more of the outstanding
Common Shares (the earlier of such dates being called
the "Distribution Date"), the Rights will be evidenced, with
respect to any of the Common Share certificates outstanding as
of the Record Date, by such Common Share certificate with a
copy of this Summary of Rights attached.
C-1
The Rights Agreement provides that, until the
Distribution Date (or earlier redemption or expiration of
the Rights), the Rights will be transferred only with the
Common Shares. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Share
certificates issued after the Record Date upon transfer or
new issuance of Common Shares will contain a reference
incorporating the Rights Agreement. Until the Distribution
Date (or earlier redemption or expiration of the Rights),
the surrender for transfer of any certificates for Common
Shares outstanding as of the Record Date, even without such
notation or an attached copy of this Summary of Rights, will
also constitute the transfer of the Rights associated with
the Common Shares being transferred. As soon as practicable
following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed
to holders of record of the Common Shares as of the close of
business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution
Date. The Rights will expire on February 11, 2007 (the "Final
Expiration Date"), unless the Final Expiration Date is
extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case, as described below.
The Purchase Price payable, and the number of Preference
Shares or other securities or property issuable, upon exercise
of the Rights are subject to adjustment from time to time to
prevent dilution (i) in the event of a stock dividend on, or
a subdivision, combination or reclassification of, the Preference
Shares, (ii) upon the grant to holders of the Preference Shares
of certain rights or warrants to subscribe for or purchase
Preference Shares at a price, or securities convertible into
Preference Shares with a conversion price, less than the
then-current market price of the Preference Shares or (iii)
upon the distribution to holders of the Preference Shares of
evidences of indebtedness or assets (excluding regular periodic
cash dividends paid out of earnings or retained earnings or
dividends payable in Preference Shares) or of subscription
rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of
one one-hundredths of a Preference Share issuable upon exercise
of each Right are also subject to adjustment in the event
of a stock split of the Common Shares or a stock dividend on
the Common Shares payable in Common Shares or subdivisions,
consolidations or combinations of the Common Shares occurring,
in any such case, prior to the Distribution Date.
C-2
Preference Shares purchasable upon exercise of the
Rights will not be redeemable. Each Preference Share will be
entitled to a minimum preferential quarterly dividend payment
of $1 per share but will be entitled to an aggregate dividend
of 100 times the dividend declared per Common Share. In the
event of liquidation, the holders of the Preference Shares
will be entitled to a minimum preferential liquidation payment
of $100 per share but will be entitled to an aggregate payment
of 100 times the payment made per Common Share. Each
Preference Share will have 100 votes, voting together with the
Common Shares. Finally, in the event of any merger, consolidation
or other transaction in which Common Shares are exchanged,
each Preference Share will be entitled to receive 100 times
the amount received per Common Share. These rights are protected
by customary antidilution provisions.
Because of the nature of the Preference Shares'
dividend, liquidation and voting rights, the value of the
one one-hundredth interest in a Preference Share purchasable
upon exercise of each Right should approximate the value of
one Common Share.
In the event that the Company is acquired in a merger
or other business combination transaction or 50% or more
of its consolidated assets or earning power are sold after a
person or group has become an Acquiring Person, proper provision
will be made so that each holder of a Right will there
after have the right to receive, upon the exercise thereof at
the then current exercise price of the Right, that number of
shares of common stock of the acquiring company which at the
time of such transaction will have a market value of two times
the exercise price of the Right. In the event that any person
or group of affiliated or associated persons becomes an
Acquiring Person, proper provision shall be made so that each
holder of a Right, other than Rights beneficially owned by the
Acquiring Person (which will thereafter be void), will
thereafter have the right to receive upon exercise that number
of Common Shares having a market value of two times the
exercise price of the Right.
At any time after any person or group becomes an
Acquiring Person and prior to the acquisition by such person
or group of 50% or more of the outstanding Common Shares, the
Board of Directors of the Company may exchange the Rights
(other than Rights owned by such person or group which will
have become void), in whole or in part, at an exchange ratio
of one Common Share, or one one-hundredth of a Preference
Share (or of a share of a class or series of the Company's
preference stock having equivalent rights, preferences and
privileges), per Right (subject to adjustment).
C-3
With certain exceptions, no adjustment in the Purchase
Price will be required until cumulative adjustments require
an adjustment of at least 1% in such Purchase Price. No
fractional Preference Shares will be issued (other than
fractions which are integral multiples of one one-hundredth of
a Preference Share, which may, at the election of the Company,
be evidenced by depositary receipts) and in lieu thereof, an
adjustment in cash will be made based on the market price of
the Preference Shares on the last trading day prior to the
date of exercise.
At any time prior to the acquisition by a person or
group of affiliated or associated persons of beneficial own
ership of 20% or more of the outstanding Common Shares, the
Board of Directors of the Company may redeem the Rights in
whole, but not in part, at a price of $.01 per Right (the
"Redemption Price"). The redemption of the Rights may be made
effective at such time on such basis with such conditions as
the Board of Directors in its sole discretion may establish.
Immediately upon any redemption of the Rights, the right to
exercise the Rights will terminate and the only right of the
holders of Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board
of Directors of the Company without the consent of the holders
of the Rights, including an amendment to lower certain
thresholds described above to not less than the greater of (i)
the sum of .001% and the largest percentage of the outstanding
Common Shares then known to the Company to be beneficially
owned by any person or group of affiliated or associated
persons and (ii) 10%, except that from and after such time as
any person or group of affiliated or associated persons
becomes an Acquiring Person no such amendment may adversely
affect the interests of the holders of the Rights.
Until a Right is exercised, the holder thereof, as
such, will have no rights as a shareholder of the Company,
including, without limitation, the right to vote or to receive
dividends.
A copy of the Rights Agreement has been filed with
the Securities and Exchange Commission as an Exhibit to a
Registration Statement on Form 8-A dated December 13, 1996. A
copy of the Rights Agreement is available free of charge from
the Company. This summary description of the Rights does not
purport to be complete and is qualified in its entirety by
reference to the Rights Agreement, which is hereby incorporated
herein by reference.
C-4
SNET News Release
227 Church Street
New Haven, Connecticut 06510
December 11, 1996
FOR FURTHER INFORMATION CONTACT: Kevin Moore
203-771-2136
ANALYSTS CONTACT: Jim Magrone
203-771-4662
SNET RENEWS SHAREHOLDER RIGHTS PLAN
Southern New England Telecommunications Corporation's (SNET) Board
of Directors today approved the renewal of the existing shareholder rights
plan and declared a distribution of Preference Share Purchase Rights on the
outstanding shares of SNET common stock. Each right represents the ability
to buy 1/100th of a Preference Share that is the economic equivalent of one
share of SNET common stock. The rights issued today will replace the rights
currently attached to all outstanding SNET shares that expire in February
1997 when the present rights plan expires.
-more-
Daniel J. Miglio, Chairman and Chief Executive Officer of SNET, said,
"The maintenance of a shareholder rights plan continues to be the best
available way to ensure that all our stockowners are treated fairly in the
event of any proposed takeover of the company.
The rights are intended to enable all SNET stockholders to realize the
long-term value of their investment in the company by encouraging anyone
seeking to acquire SNET to negotiate with the board before attempting a
takeover."
The record date for the new rights is the close of business on January
27, 1997. The new plan will become effective on February 11, 1997 when the
old plan expires and the new rights will expire in ten years on February 11,
2007. The rights distribution is not taxable to shareholders.
SNET will send shareholders a summary of the new plan early next year.
SNET is a Connecticut-based company reaching beyond its traditional
borders to offer wireline, wireless and information and entertainment
services, including local, national, and international calling; mobile
communications; and publishing, information and advertising. The company
is building I-SNET[sm], a statewide, information superhighway that brings
to customers a full array of information, communications, and entertainment
services.
-xx-
