1
Exhibit 2
AMENDED AND RESTATED
PLAN AND AGREEMENT OF MERGER
DATED DECEMBER 6, 1996,
BETWEEN THE COMPANY, SNET AND SAS
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TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 The Merger: Surviving Corporation . . . . . . . . . . . . . . 1
1.2 Effective Time: Filing Date . . . . . . . . . . . . . . . . . 2
1.3 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Effect of the Merger. . . . . . . . . . . . . . . . . . . . . 2
1.5 Further Assurances. . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
CONVERSION OF SHARES. . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Conversion of WB Common Stock . . . . . . . . . . . . . . . . 2
2.2 Treasury Shares; Shares owned by WB or SNET . . . . . . . . . 3
2.3 Fractional Shares . . . . . . . . . . . . . . . . . . . . . . 3
2.4 Rights of WB Shareholders . . . . . . . . . . . . . . . . . . 3
2.5 Closing of WB Transfer Books. . . . . . . . . . . . . . . . . 3
2.6 Exchange of Certificates; Dividends . . . . . . . . . . . . . 4
2.7 Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.8 Dissenters' Rights. . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III
CERTIFICATES; BYLAWS; OFFICERS AND DIRECTORS. . . . . . . . . . . . . 5
3.1 Certificates of Incorporation . . . . . . . . . . . . . . . . 5
3.2 Bylaws. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.3 Officers and Directors . . . . . . . . . . . . . . . . . .. . 5
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF WB. . . . . . . . . . . . . . . . . 5
4.1 Organization. . . . . . . . . . . . . . . . . . . . . . . . . 5
4.2 No Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 6
4.3 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . 6
4.4 Financial Statements: Material Liabilities. . . . . . . . . . 6
4.5 SEC Filings . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.6 Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.7 Employee Relations . . . . . . . . . . . . . . . . . . . . . 7
4.8 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.9 Customers . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.10 Accounts Payable. . . . . . . . . . . . . . . . . . . . . . . 9
4.11 Litigation; Disputes. . . . . . . . . . . . . . . . . . . . . 9
4.12 Real and Personal Property. . . . . . . . . . . . . . . . . . 9
4.13 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.15 Patents, Trademarks, Copyrights and Other Intellectual Property 10
4.16 Absence of Certain Changes or Events. . . . . . . . . . . . . 11
4.17 Compliance with Law . . . . . . . . . . . . . . . . . . . . . 11
4.18 Environmental Matters . . . . . . . . . . . . . . . . . . . . 12
4.19 Transfer Act. . . . . . . . . . . . . . . . . . . . . . . . . 14
4.20 No Violation; Consents. . . . . . . . . . . . . . . . . . . . 15
4.21 Pension and Welfare Plans . . . . . . . . . . . . . . . . . . 15
4.22 Related Party Transactions. . . . . . . . . . . . . . . . . . 17
4.23 Compensation of Directors, Officers and Employees . . . . . . 17
4.24 Bank Accounts, Etc. . . . . . . . . . . . . . . . . . . . . . 18
4.25 Books of Account; Minute Books. . . . . . . . . . . . . . . . 18
4.26 Authorization . . . . . . . . . . . . . . . . . . . . . . . . 18
4.27 Registration Statement. . . . . . . . . . . . . . . . . . . . 18
4.28 Affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.29 Conflicting Interests . . . . . . . . . . . . . . . . . . . . 19
4.30 Certain Payments. . . . . . . . . . . . . . . . . . . . . . . 19
4.31 Accuracy of Representations . . . . . . . . . . . . . . . . . 19
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SNET AND SAS. . . . . . . . . . . . 19
5.1 Organization. . . . . . . . . . . . . . . . . . . . . . . . . 19
5.2 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . 20
5.3 SEC Filings . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.4 Absence of Certain Changes or Events. . . . . . . . . . . . . 20
5.5 No Violation; Government Consent. . . . . . . . . . . . . . . 20
5.6 Authorization . . . . . . . . . . . . . . . . . . . . . . . . 21
5.7 Registration Statement. . . . . . . . . . . . . . . . . . . . 21
5.8 Validity of Securities. . . . . . . . . . . . . . . . . . . . 22
5.9 Accuracy of Representations . . . . . . . . . . . . . . . . . 22
ARTICLE VI
COVENANTS OF WB . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.1 Consents; Approvals . . . . . . . . . . . . . . . . . . . . . 22
6.2 Shareholder Approval; Registration Statement. . . . . . . . . 22
6.3 Conduct of the Business of WB . . . . . . . . . . . . . . . . 23
6.4 Acquisition Proposals . . . . . . . . . . . . . . . . . . . . 25
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6.5 Letter of WB's Accountants. . . . . . . . . . . . . . . . . . 25
6.6 Best Efforts. . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE VII
COVENANTS OF SNET AND SAS . . . . . . . . . . . . . . . . . . . . . . 26
7.1 Consents; Approvals . . . . . . . . . . . . . . . . . . . . . 26
7.2 Registration Statement. . . . . . . . . . . . . . . . . . . . 26
7.3 Blue Sky. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.4 Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.5 Certain Actions . . . . . . . . . . . . . . . . . . . . . . . 26
7.6 Best Efforts. . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE VIII
COVENANTS APPLICABLE TO ALL PARTIES . . . . . . . . . . . . . . . . . 27
8.1 Reasonable Efforts. . . . . . . . . . . . . . . . . . . . . . 27
8.2 Public Announcements. . . . . . . . . . . . . . . . . . . . . 27
8.3 Notification of Certain Matters . . . . . . . . . . . . . . . 27
8.4 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act Filing. . . . . . . . . . . . . . . . . 28
ARTICLE IX
ACCESS AND CONFIDENTIALITY. . . . . . . . . . . . . . . . . . . . . . 28
9.1 Access. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.2 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE X
CONDITIONS TO OBLIGATIONS OF SNET AND SAS . . . . . . . . . . . . . . 29
10.1 Performance. . . . . . . . . . . . . . . . . . . . . . . . . 29
10.2 Consents Obtained. . . . . . . . . . . . . . . . . . . . . . 29
10.3 No Litigation. . . . . . . . . . . . . . . . . . . . . . . . 29
10.4 Documents to be Delivered . . . . . . . . . . . . . . . . . 29
ARTICLE XI
CONDITIONS TO THE OBLIGATION OF WB. . . . . . . . . . . . . . . . . . 30
11.1 Performance. . . . . . . . . . . . . . . . . . . . . . . . . 30
11.2 Consents Obtained . . . . . . . . . . . . . . . . . . . . . 30
11.3 No Litigation . . . . . . . . . . . . . . . . . . . . . . . 30
11.4 Documents to be Delivered . . . . . . . . . . . . . . . . . 30
ARTICLE XII
CONDITIONS APPLICABLE TO ALL PARTIES. . . . . . . . . . . . . . . . . 31
12.1 Shareholder Approval . . . . . . . . . . . . . . . . . . . . 31
12.2 Suspension of Trading. . . . . . . . . . . . . . . . . . . . 31
12.3 Regulatory Approvals . . . . . . . . . . . . . . . . . . . . 31
12.4 Effectiveness of the Registration Statement. . . . . . . . . 31
12.5 No Orders . . . . . . . . . . . . . . . . . . . . . . . . . 32
12.6 HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . 32
12.7 New York Stock Exchange. . . . . . . . . . . . . . . . . . . 32
12.8 Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE XIII
TERMINATION; AMENDMENT; WAIVER. . . . . . . . . . . . . . . . . . . . 32
13.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . 32
13.2 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . 32
13.3 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE XIV
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
14.1 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . 33
14.2 Woodbury Management Employees. . . . . . . . . . . . . . . . 33
14.3 Community Activities . . . . . . . . . . . . . . . . . . . . 33
14.4 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 33
14.5 Brokers; Finder Fees . . . . . . . . . . . . . . . . . . . . 33
14.6 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 33
14.7 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . 34
14.8 Non-Assignability. . . . . . . . . . . . . . . . . . . . . . 34
14.9 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 34
14.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 34
14.11 Indemnification and Insurance. . . . . . . . . . . . . . . . 34
14.12 Interpretation . . . . . . . . . . . . . . . . . . . . . . . 35
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THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (the "Agreement"),
dated as of December ▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ Telecommunications
Corporation, a Connecticut corporation ("SNET"), SNET Acquisition Subsidiary,
Inc., a Connecticut corporation and a wholly-owned subsidiary of SNET ("SAS"),
and The Woodbury Telephone Company, a Connecticut corporation ("WB").
RECITALS
WHEREAS, the authorized capital stock of WB consists of 1,250,000 shares of
Common Stock par value $2.50 ("WB Common Stock"). As of December 6, 1996,
769,107 shares of WBCommon Stock were issued and outstanding, and no shares of
WB Common Stock were issued and held by WB as treasury shares. Each share of
WB Common Stock is entitled to one vote per share;
WHEREAS, the authorized capital stock of SAS consists of 1,000 shares of
Common Stock, par value $.01 ("Sub Common Stock"), all of which are issued and
outstanding and are owned by SNET;
WHEREAS, the authorized capital stock of SNET consists of 300,000,000
shares of Common Stock, $1.00 par value ("SNET Common Stock"), 2,000,000 shares
of Preferred Stock, $50.00 par value, and 50,000,000 shares of Preference Stock,
$1.00 par value. As of December 6, 1996, 65,122,647 shares of SNET Common
Stock were issued and outstanding, 2,758,512 shares were issued and held by
SNET as treasury shares, and no shares of SNET Preferred or Preference Stock
were issued and outstanding;
WHEREAS, it is intended that the merger of SAS into WB (the "Merger") be
pursuant to the laws of the State of Connecticut and shall qualify as a
reorganization under Section 368(a) of the Internal Revenue Code of 1986, as
amended; and
WHEREAS, the respective Boards of Directors of WB, SAS and SNET deem the
Merger desirable and in the best interests of their respective shareholders and
have duly approved this Agreement and directed that, in the case of WB, this
Agreement be submitted to its shareholders for approval.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger: Surviving Corporation. In accordance with the provisions
of this Agreement and the Connecticut Business Corporation Act (the "CBCA"), SAS
shall be merged with and into WB, and the separate corporate existence of SAS
shall cease. WB, as the surviving corporation, shall continue to be governed by
the CBCA. SAS and WB are hereinafter referred to as the "Constituent
Corporations," and WB is hereinafter sometimes referred to as the "Surviving
Corporation."
1.2 Effective Time: Filing Date. Subject to the provisions of this
Agreement, the certificates of merger required under applicable law (the "Merger
Certificates") shall be filed with the Secretary of the State of Connecticut on
the day of the Closing (as defined in Section 1.3 hereof) or on such other date
as the parties agree. The Merger shall become effective at the time of such
filing with the Secretary of the State of Connecticut (the "Effective Time").
1.3 Closing. The closing (the "Closing") under this Agreement
shall be held at the offices of Day, ▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, or at such other place as the parties
agree, at 10:00 A.M. on a date no later than ten days following the receipt of
all regulatory approvals.
1.4 Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided under Connecticut law. As of the Effective
Time, the separate existence of SAS shall cease and the corporate existence and
identity of WB shall be a direct wholly-owned subsidiary of SNET.
1.5 Further Assurances. If at any time after the Effective
Time, the Surviving Corporation shall consider that any deeds, assignments or
assurances in law or any other acts are necessary or desirable (a) to vest,
perfect or confirm of record or otherwise, in the Surviving Corporation, its
right, interest or title to any property or right of the Constituent
Corporations acquired or to be acquired by reason of, or as a result of, the
Merger, or (b) otherwise to carry out the purposes of this Agreement,
the Constituent Corporations agree that the Surviving Corporation and its
officers and directors may, shall and will execute and deliver in the name and
on behalf of the Constituent Corporations all such property, deeds, assignments
and assurances in law and do all acts necessary or desirable to vest,
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perfect or confirm all rights, interest or title to such property or right in
the Surviving Corporation or otherwise to carry out this Agreement.
ARTICLE II
CONVERSION OF SHARES
The manner and basis of exchanging the shares of WB shall be as follows:
2.1 Conversion of WB Common Stock.
(a) At the Effective Time, SAS will merge with and into WB, by
the filing with the Secretary of the State of Connecticut of the Merger
Certificates; and each share of WB Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares of WBCommon Stock
owned by SNET), shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into the right to receive, and shall
be exchangeable for that number of shares of SNET Common Stock (including
related rights to purchase shares of SNET Common Stock pursuant to the Rights
Agreement, dated as of December11, 1996, between SNET and State Street Bank
and Trust Company) equal to the product of one share of SNET Common Stock
times a fraction, the numerator of which is $43.00 and the denominator of which
is equal to the average of the closing prices (the "Average Closing Price") of
one share of SNET Common Stock as reported on the New York Stock Exchange for
the ten trading days ending on the fifth business day prior to the Effective
Time (the "Merger Consideration"); provided that in the event the Average
Closing Price is less than $30.00, then the Merger Consideration shall be
determined in accordance with the foregoing formula based on a deemed Average
Closing Price of $30.00 and WB shall have the option to consummate the Merger
based on such deemed Average Closing Price and, if WB does not opt to do so,
then SNET shall have the option to terminate the Merger pursuant to
ArticleXIII, and in the event the Average Closing Price is more than $49.00,
then the Merger Consideration shall be determined in accordance with the
foregoing formula based on a deemed Average Closing Price of $49.00 and SNET
shall have the option to consummate the Merger based on such deemed Average
Closing Price and, if SNET does not opt to do so, then WB shall have the option
to terminate the Merger pursuant to Article XIII.
(b) At the Effective Time, each share of Sub Common Stock
outstanding prior to the Merger shall be converted into 1,000 shares of the
Surviving Corporation, so that SNET will be the sole and exclusive owner of
equity securities of the Surviving Corporation.
2.2 Treasury Shares; Shares owned by WB or SNET. Each share of
WB Common Stock issued and held in the treasury of WB or owned by SNET
immediately prior to the Effective Time shall be canceled, retired and shall
cease to exist, and no right to receive SNET Common Stock shall arise with
respect thereto.
2.3 Fractional Shares. No fractional shares of SNET Common
Stock shall be issued in the Merger. In lieu thereof, SNET shall issue to any
holder of certificates of WB Common Stock otherwise entitled to a fractional
share, upon surrender of such certificates in accordance with the instructions
furnished by SNET, a check for an amount of cash equal to the fraction of a
share of SNET Common Stock multiplied by $43.00.
2.4 Rights of WB Shareholders. The holders of certificates
representing shares of WBCommon Stock, other than SNET, shall, by virtue of
the Merger, cease to have rights as shareholders of WB and their sole right
shall be the right to receive the Merger Consideration for each share of WB
Common Stock.
2.5 Closing of WB Transfer Books. At the Effective Time, the
stock transfer books of WB shall be closed, and no transfer of shares of
capital stock of WB shall thereafter be made. If, after the Effective Time,
certificates representing shares of WB Common Stock (the "WB Certificates") are
presented to the Surviving Corporation or the Exchange Agent (as defined in
Section 2.6) by shareholders of record of WB Common Stock other than SNET, they
shall be canceled or exchanged for SNET Common Stock and, if required, cash in
lieu of fractional shares as provided in this ArticleII.
2.6 Exchange of Certificates; Dividends.
(a) At the Effective Time, SNET or SAS shall deposit with State Street
Bank and Trust Transfer Services (the "Exchange Agent"), for the benefit of the
holders of shares of WBCommon Stock, certificates representing shares of SNET
Common Stock. The Exchange Agent shall, pursuant to irrevocable instructions,
make the deliveries provided for in Section 2.1 using such SNET Common Stock.
Promptly after the Effective Time, the Exchange Agent shall mail to each WB
shareholder of record (other than SNET) as of immediately prior to the Effective
Time, a form letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the WB Certificates shall pass, only
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upon proper delivery of the WB Certificates to the Exchange Agent) and
instructions for use in effecting the surrender of the WB Certificates for
conversion and exchange thereof. Upon surrender to the Exchange Agent of a WB
Certificate, in accordance with the instructions thereto, the holder of such WB
Certificate shall be entitled to receive in exchange therefor SNET Common Stock
allocable to such WB Certificate (and cash in lieu of any fractional share), and
such WB Certificate shall forthwith be canceled. If SNET Common Stock is to be
issued to a person other than the person in whose name the WB Certificate is
registered, it shall be a condition of exchange that the WB Certificate so
surrendered shall be properly endorsed with signatures guaranteed, or otherwise
in proper form for transfer and that the person requesting such payment shall
pay any transfer or other taxes required by reason of the issuance or delivery
to such person or establish to the satisfaction of the Surviving Corporation
that such tax has been paid or is not applicable. Until surrendered in
accordance with this Section 2.6, each WB Certificate shall represent solely the
right to receive the Merger Consideration in the form and manner provided
herein.
(b) No dividends or other distributions that are otherwise payable on such
SNET Common Stock shall be paid to persons entitled to receive such Stock until
such persons surrender their WB Certificates. Upon such surrender, there shall
be paid to such person any dividends which shall have become payable with
respect to such WB Certificates (less the amount of taxes, if any, which may
have been imposed thereon) between the Effective Time and the time of such
surrender. Notwithstanding the above, neither the Exchange Agent nor any party
hereto shall be liable for any SNET Common Stock or dividend or distribution
thereon delivered to any government agency pursuant to any abandoned property,
escheat or similar law.
2.7 Adjustments. If, between the date of this Agreement and the Effective
Time, the outstanding shares of SNET Common Stock or WB Common Stock shall have
been changed into a different number of shares or a different class by reason of
any reclassification, recapitalization, split-up, combination, exchange of
shares or readjustment or similar event, or a stock dividend thereon shall be
declared with a record date within such period, then the number of shares of
SNET Common Stock into which shares of WB Common Stock are to be converted shall
be correspondingly adjusted.
2.8 Dissenters' Rights. Any shareholder of WB demanding dissenters'
rights as provided in CBCA Sections 33-855 to 33-872, inclusive, and who does
not satisfy all requirements for the exercise of dissenters' rights under said
sections of the CBCA, shall be bound by this Agreement in accordance with its
terms. If any such dissenting shareholder of WB shall not satisfy such
requirements, the shares held by such dissenting shareholder of WB shall
thereupon be treated as though such shares had been converted into the
right to receive the Merger Consideration pursuant to Section 2.1 of this
Agreement, and each WB Certificate shall represent solely the right to receive
the Merger Consideration in the form and manner provided in this Agreement.
ARTICLE III
CERTIFICATES; BYLAWS; OFFICERS AND DIRECTORS
3.1 Certificates of Incorporation. At and after the Effective Time, the
Certificate of Incorporation of WB, as in effect on the date hereof, shall be
the Certificate of Incorporation of the Surviving Corporation, until altered or
amended.
3.2 Bylaws. The Bylaws of WB, as in effect at the Effective Time, shall
be the Bylaws of the Surviving Corporation from and after the Effective Time
until altered, amended or repealed.
3.3 Officers and Directors. The persons who are officers and
directors of SAS immediately prior to the Effective Time shall, after the
Effective Time, be officers and directors of the Surviving Corporation until
their successors have been duly elected and qualified in accordance with the
Certificate of Incorporation and Bylaws of the Surviving Corporation.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF WB
WB represents and warrants to SNET and SAS as follows:
4.1 Organization. WB is a corporation duly organized, validly existing
and in good standing under the laws of the State of Connecticut, and has the
corporate power to own or lease its properties and to carry on its business as
now being conducted. WB has provided to SNET a true and complete copy of each
of its Certificate of Incorporation and Bylaws as in full force and effect on
the date hereof.
4.2 No Subsidiaries. WB has no subsidiaries and does not directly or
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indirectly own, control or have an interest in any corporation, partnership,
joint venture or other entity, except for a one percent (1%) limited partnership
interest in Springwich Cellular Limited Partnership.
4.3 Capital Stock. The authorized, issued and outstanding capital stock
of WB is as set forth in the preamble to this Agreement and all of such capital
stock which is issued and outstanding is validly issued, fully paid and
nonassessable and free of preemptive rights. There is no option, warrant, call
or commitment in effect to which WB is a party, including any employee stock
options, relating to unissued or treasury shares of WB Common Stock, and WB is
not a party to any other agreement or instrument with respect to the purchase,
sale or voting of WB Common Stock.
4.4 Financial Statements: Material Liabilities.
(a) WB has delivered to SNET balance sheets of WB as of
December 31, 1995 and 1994, and the related statements of operations and cash
flows for the two years ended December 31, 1995 accompanied by the related
opinions of Ernst & Young, L.L.P. In addition, WB has delivered to SNET
unaudited balance sheets of WB as of September 30, 1996 and the related
unaudited statement of operations and cash flows for the nine-month period
ended on such date. WB agrees to deliver to SNET promptly until the Effective
Time, such quarterly unaudited balance sheets and related statements of
operations and cash flows. All such financial statements, together with any
notes thereto (i) present fairly, in all material respects, the financial
position, results of operations and cash flows as of the dates and for the
respective periods referred to, and (ii) have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis, subject
to fiscal year-end audit adjustments in the case of unaudited interim financial
statements.
(b) At September 30, 1996, WB had no material indebtedness or
liabilities, whether accrued, absolute or contingent, including, but not
limited to, any material liabilities with respect to any Plan as defined in
Section 4.21, except to the extent shown or provided for on its balance sheets.
Other than in the ordinary course of business and except for the transactions
contemplated by this Agreement and as provided in Schedule 4.4, WB has incurred
no material indebtedness, liability or obligation (whether accrued, absolute or
contingent) including, but not limited to, any material liabilities with
respect to any Plan as defined in Section 4.21, since September 30, 1996.
(c) WB maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed
in accordance with management's general and specific authorization, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles and to
maintain accountability for assets, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv) the
rendered accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
4.5 SEC Filings. WB has filed with the SEC all forms, reports
and documents required to be filed with the SEC since January 1, 1993 and has
delivered to SNET true and complete copies of its (i) Annual Report on Form 10-
K for the years ended December 31, 1995, December 31, 1994 and December 31,
1993, as filed with the SEC, (ii) proxy statements relating to all of WB's
meetings of stockholders (whether annual or special) since September 30, 1993,
and (iii) all other reports, statements and registration statements (including
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K) filed by WB
with the SEC since September 30, 1993 (collectively, the "SEC Filings"). As of
their respective dates, the SEC Filings (including all exhibits and schedules
thereto and documents incorporated by reference therein), did not contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading. The financial
statements of WB included in the SEC Filings (including the related notes and
schedules) have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto) and fairly present the assets,
liabilities and financial position of WB as of the dates thereof and the
results of operations and changes in financial position for the periods then
ended (subject, in the case of any unaudited interim financial statements, to
normal year-end adjustments).
4.6 Title. WB has good and marketable title to, or, in the case of leases
and licenses, valid and subsisting leasehold interests or licenses in, all of
its properties and assets of whatever kind (whether real or personal, tangible
or intangible) necessary for the operation of its business and has good and
marketable title to all other assets and properties shown as owned by it on the
balance sheet of WB as of December 31, 1995 (the "Audited Balance Sheet"), in
each case free of all mortgages, liens, security interests, charges and
8
encumbrances of any nature whatsoever, except as stated in Schedule 4.6 or, in
the case of any mortgage, lien, security interest, charge or other encumbrance
which does not relate to financing or indebtedness, except those which, alone or
in the aggregate, do not materially detract from the value, or interfere with
the present use, of any material asset or property of WB or otherwise materially
impair the business of WB.
4.7 Employee Relations. Set forth on Schedule 4.7 are all labor and col-
lective bargaining agreements to which WB is a party or by which it is bound.
Since January 1, 1993, no unfair labor practice charges or complaints have been
filed (or have been pending) against WB with the National Labor Relations Board,
WB has no knowledge of any event or circumstance which is reasonably likely to
give rise to the filing of any unfair labor practice charge or complaint, and WB
has not received any notice or communication reflecting an intention or a threat
to file any such charges or complaint. Except as disclosed on Schedule 4.7,
during the last five years, WB has complied in all material respects with all
applicable laws, rules, or regulations relating to the employment of labor,
including those relating to wages, hours, collective bargaining, the withholding
and payment of taxes and contributions, safety and civil rights. During the
last five years, there have been no general work stoppages or other such
controversies.
4.8 Contracts. (a) Except as set forth in Schedule 4.8, WB is not a party
to or is bound by any written, and to the knowledge of WB, is not a party to or
is bound by any oral (i) contract for the employment of any officer, employee or
consultant which is not terminable without liability on 30 days' (or less)
notice and does not provide for any further payments following such termination,
or contract with a former officer or employee, or (ii) profit-sharing,
severance, change-in-control, bonus, employee stock ownership, pension,
retirement, deferred compensation, stock option, or similar plan or agreement.
(b) Except as disclosed in Schedule 4.8 and as provided herein, WB is
neither a party to, nor is otherwise bound by, any (i) mortgage, indenture,
debenture, note or installment obligation, the unpaid balance of which exceeds
$25,000, or other instruments for, or relating to, any borrowing of money by WB,
the unpaid balance of which exceeds $25,000; (ii) guaranty of any obligation for
borrowing and other guaranties, which in the aggregate exceed $25,000; (iii)
agreement for the sale or lease of any material amount of its assets (other than
sales in the ordinary course of business) or part of its business or for the
grant of preferential rights to purchase or lease any material amount of its
assets or part of its business; (iv) material purchase agreement or material
long-term (i.e., more than one year) purchase, sale or supply agreement; (v)
contract or commitment to perform services by or for Woodbury, involving in any
one case $25,000 or more; (vi) contract or commitment limiting or restricting it
from engaging in competing lines of business with any person, firm, corporation
or other entity; (vii) confidentiality agreement other than such an agreement
entered into in the ordinary course of business; (viii) material lease; or (ix)
material contract not made in the ordinary course of business. WB has complied
in all material respects with all contracts, agreements, leases and instruments
identified in Schedule 4.8, each of which is valid and enforceable in accordance
with its terms subject to any applicable bankruptcy, insolvency, or other laws
affecting creditors' rights generally. All such contracts, agreements, leases
and instruments are in full force and effect and to WB's knowledge there exists
no event or condition which with or without notice or lapse of time would be a
default thereunder, give rise to a right to accelerate or terminate any
provision thereof, or give rise to any lien, claim, encumbrance, or restriction
on any of the assets or properties of WB. True and correct copies of all
contracts, agreements, leases and documents listed in Schedule 4.8 have
been delivered or made available to SNET.
4.9 Customers.
(a) Schedule 4.9 hereto identifies any customers or accounts over $2,500
beyond 60 days old which have received from WB any notification of a delinquent
account in the twelve months preceding the date hereof, have been denied service
due to credit issues, have been placed on credit watch or have otherwise been
identified by WB as involving unusual risk.
(b) WB is not engaged in any material disputes with any customers or
suppliers. To the best of WB's knowledge, no customer or supplier is
considering termination, non-renewal or any adverse modification to its
arrangements nor will consummation of the Merger have a material adverse effect
on WB's relationships with any customer or supplier.
4.10 Accounts Payable. Schedule 4.10 sets forth a list of all
accounts payable and accrued expenses of WB in each case in excess of $25,000
as of a date not more than 15 days prior to the date of this Agreement,
specifying in each case the payee, the face amount of each payable and the age
of each payable regardless of classification on the balance sheet account.
4.11 Litigation; Disputes. Except as disclosed in Schedule 4.11, there
are no actions, suits, proceedings or investigations pending or to WB's
9
knowledge threatened against or affecting WB, or any of its officers or
directors, at law or in equity, or before any governmental or administrative
body or agency which, alone or in the aggregate, are likely to materially and
adversely affect the business, properties and rights of WB or the ability of WB
to carry out the transactions contemplated in this Agreement. There are no
unresolved disputes under any contract to which WB is a party or by which it is
bound involving in the aggregate an amount which is material to the assets,
properties, business or financial condition of WB. WB is not subject to or in
default with respect to any order, writ, award, judgment, injunction or decree
of any court or governmental or administrative body or agency which could
reasonably be foreseen to have a materially adverse effect on the assets,
properties, business or financial condition of WB as a whole, except for
defaults which would have a material adverse effect on telecommunications
companies generally under applicable law.
4.12 Real and Personal Property. WB has delivered to SNET a
complete and correct list of all real property (including buildings and
structures) owned or leased by WB and all interests therein (including a brief
description of the property, the record title holder and with respect to leased
property, the identity of the lessor, rental rate and the unexpired terms of
the lease. WB has delivered to SNET copies of policies of title insurance (to
the extent the same exist) on all such real property. All such real property,
buildings, and structures, and the equipment therein, and the operations and
maintenance thereof, comply substantially with any applicable agreements and
restrictive covenants and conform substantially to all applicable legal
requirements including those relating to the environment, health and safety,
land use and zoning, and all work required to be done by WB as landlord or
tenant has been duly performed. No condemnation or other proceeding is pending
or to WB's knowledge threatened which would materially affect the use of any
such property. Schedule4.12 contains a complete and correct list and brief
description of all equipment, machinery, computers, furniture, leasehold
improvements and vehicles owned by WB having, as to each such item, an original
cost in excess of $10,000. The buildings and other structures, equipment and
other assets (whether leased or owned) of WB are in good operating condition
and repair, subject to ordinary wear and tear, and have been maintained in all
material respects in accordance with standard industry practices.
4.13 Insurance. Schedule 4.13 is a correct and complete list of
insurance policies covering the operations and property of WB, including,
without limitation, policies of life, disability, fire, theft, casualty,
product liability, workers' compensation, business interruptions, employee
fidelity, and other casualty and liability insurance indicating the type of
coverage, name of insured, the issuer, the premium, the expiration date of each
policy and the amount of coverage. The operations, assets and properties of WB
are insured with sufficient coverage with responsible insurers against the
usual and normal hazards and liabilities of the character usually insured
against by companies in the same or similar business. All such policies are in
full force and effect, and WB has not received any notice of cancellation in
respect of insurance coverage.
4.14 Taxes. WB has duly filed, or caused to be duly filed, in a
timely manner all returns and reports required with respect to all federal
taxes and all state, county, and local income, excise, property, franchise,
business, payroll, sales, use and other taxes in the State of Connecticut (all
of the foregoing, including interest and penalties thereon being referred to as
"Taxes"). WB has timely paid, or, where extensions have been obtained, will
pay (an adequate reserve having been established therefor on the September 30,
1996 balance sheet), whether or not requiring the filing of a return, all
Taxes due for the periods covered thereby. All such returns or reports are
true and correct in all material respects.
The income tax returns of WB have been examined by the Internal Revenue
Service and satisfied or closed by applicable statutes as set forth on Schedule
4.14. Except as set forth in Schedule4.14, any deficiencies asserted as a result
of such examination have been paid or finally settled and WB has not been
notified in writing by any taxing authority in any such examination of any
material issue, or issues which the aggregate are material which, by the
application of similar principles, reasonably can be expected to result in a
deficiency for any other year not so examined. Tax returns for the years set
forth in Schedule 4.14 remain subject to examination but additional Taxes, if
any, resulting from such examinations will not, except as may be disclosed in
Schedule 4.14, have a material adverse effect upon the financial position of
WB. Any additional income found by the Internal Revenue Service upon which Tax
has been paid by WB has been reported to the appropriate state taxing
authorities on amended state income tax returns and any additional taxes due
the state authorities thereon have been paid. Except as disclosed in Schedule
4.14, WB has not executed any outstanding agreements or waivers extending the
statutory period of limitation applicable to any Tax return or report for any
period with respect to WB. Except as set forth in Schedule 4.14, WB is not a
party to any pending action or proceeding, nor to WB's knowledge is any
action or proceeding threatened, by any governmental authority for assessment
or collection of any Tax. No claim for assessment or collection of Taxes has
10
been asserted against WB.
4.15 Patents, Trademarks, Copyrights and Other Intellectual Property. A
list and brief description of all trademarks, service marks, trade
names, brands, software, copyrights, and patents, which are currently being
used or have since January 1, 1991, been used in WB's business, all
applications for registration and registrations for such trademarks, service
marks, trade names, brands, software, copyrights, and patents, and all
licenses, contracts, rights, and arrangements with respect to the foregoing,
are set forth in Schedule 4.15. WB has furnished or made available to SNET
true and complete copies of each of the foregoing. Except as set forth in
Schedule 4.15, no rights or licenses to others have been granted with respect
to any of such properties. Except as set forth in Schedule 4.15, to the
knowledge of WB, WB owns or possesses the right to use all the trademarks,
service marks, trade names, brands, software, copyrights, patents, franchises,
permits, and licenses, and rights with respect to the foregoing, necessary for
the conduct of business as now conducted, without any conflict with or
infringement of the rights of others. Except as set forth in Schedule 4.15,
WB has not received notice of any infringement with respect to any of the
foregoing. WB has no knowledge of any default or alleged default or state of
facts which with notice or lapse of time or both would constitute a default on
the part of any party in the performance of any obligation to be performed or
paid by any party under any licenses, contracts, agreements or arrangements
referred to in or submitted as a part of Schedule 4.15.
4.16 Absence of Certain Changes or Events.
(a) Except as described in the balance sheet as of September
30, 1996 and related statement of operations and cash flows for the nine-month
period then ended, or Schedule 4.16, there has not been (i) since September 1,
1996 any material adverse change in the assets, properties, business or
financial condition of WB other than regulatory changes affecting the
telecommunications industry generally, whether or not pending on September 1,
1996; (ii) any damage, destruction or loss, whether covered by insurance or
not, materially affecting the assets, properties, business or financial
condition of WB; (iii) any declaration, payment or setting aside for payment of
any dividend (whether in cash, stock and property) with respect to the capital
stock of WB; (iv) any material increase in the compensation payable or to
become payable by WB to its officers, directors or key employees; (v) any labor
dispute, other than routine matters, none of which is, or so far as can
reasonably be foreseen could be, materially adverse to the assets, properties,
business or financial condition of WB; or (vi) any entry into any material
commitment or transaction other then as provided herein (including, without
limitation, any borrowing or capital expenditure).
(b) WB has, from December 31, 1995 to the date hereof, continued to
operate its business in an ordinary and prudent manner, consistent with past
practice, and, except as contemplated by this Agreement, WB has not engaged in
any activities or transactions or made any capital expenditures which are
outside the ordinary course of its business as conducted from December 31, 1995
and which are material, individually or in the aggregate, to the business or
financial condition of WB.
4.17 Compliance with Law.
(a) All material permits, licenses, orders or approvals of any
federal, state or local regulatory agencies presently held by WB are valid and
described in Schedule 4.17 and constitute all material permits, licenses,
orders or approvals which are required in order to allow WB to continue
to carry on its business and use its properties as now conducted. Except as
disclosed in Schedule4.17, WB has at all times been operated in all material
respects in compliance with all federal, state and local laws, ordinances,
regulations, and all orders, decrees and consents of all governmental and
administrative entities to which WB is a party which are material to the
business of WB. Except as set forth in Schedule 4.17, no notice of any
material claim, suit, action or inquiry has been issued and served upon or
delivered to WB, and no investigation or review is pending or to the best
knowledge of WB threatened by any governmental entity, with respect to any
alleged material violation by WB of any law, ordinance, regulation, decree or
consent order, of any governmental or administrative entity in connection with
the business or operations of WB. Except as set forth on Schedule 4.17, there
no proceedings or investigations pending involving (i) reduction of rates
charged to customers, (ii) reduction of earnings, (iii) refund of amounts
previously charged to customers, (iv) failure to satisfy any service or
infrastructure or other standards previously agreed to or imposed by any court,
regulatory or other administrative body. Except as set forth in Schedule4.17,
(i) the operations and facilities of WB have been in substantial compliance
since January 1, 1991 with the Occupational Safety and Health Act of 1970, as
amended, and all similar state laws, and the rules and regulations promulgated
thereunder and the orders issued thereunder, and (ii) WB has been in compliance
with the Fair Labor Standards Act and any other state or federal law
governing the payment of wages, and WB has no knowledge of any class of any
violation thereof or investigation by any government entity or other person in
11
connection therewith.
(b) WB is in compliance with all federal, state and local statutes,
regulations and other laws with regard to equal employment opportunity and has
not engaged in any practices or acted pursuant to any policies which have
resulted in either a disparate treatment or disparate impact on former or
current employees in violation of law on the basis of race, sex, age, religion,
national origin, marital status, sexual orientation, veterans status, disability
or any other category protected by federal, state or local law and for which a
claim would not be barred. Except as set forth foreclosure Schedule4.11, WB has
no knowledge of any charge, claim, or threatened claim regarding discrimination
on the basis of any category protected by federal, state or local law.
(c) All facilities of WB subject to the federal Americans With
Disabilities Act have been and are in compliance with the provisions of such
act in all material respects.
4.18 Environmental Matters.
(a) Except as set forth on Schedule 4.18(a), WB is in compliance in all
material respects with all applicable federal, state and local laws and
regulations, court and administrative orders, permits and approvals relating to
environmental protection and pollution control and all Environmental Laws (as
defined in Section 4.18(e) hereof).
(b) WB has not received since January 1, 1993, any claim, notice,
complaint, court order, administrative order, or request for information from
any governmental authority or private party, alleging violation of, or asserting
any noncompliance with or accedence under any Environmental Laws by it, except
as set forth on Schedule 4.18(b).
(c) WB possesses all material governmental permits, licenses, orders,
consents, and approvals required under the Environmental Laws and necessary to
the ownership of its properties, and to the conduct of the business, of WB,
except as set forth on Schedule 4.18(c).
(d) WB has not received from any governmental authority any (i) formal
complaint or notice asserting potential liability under the Environmental Laws,
(ii) written request for information under the Environmental Laws, (iii) written
request to investigate or clean up any site under the Environmental Laws, or
(iv) formal written demand or suit by a private party responsible for cleanup of
such a site alleging that WB should share such responsibility, except as set
forth on Schedule4.18(d).
(e) Schedule 4.18(e) identifies the Hazardous Materials used, generated,
stored, or disposed of by WB in the operation of the business of WB. For the
purposes of this Section 4.18, "Hazardous Materials' means and includes, without
limitation, any toxic, hazardous, or radioactive substances or materials, and
any biomedical waste as defined in Section 22a-207 of the Connecticut General
Statutes, and any oil or petroleum, chemical liquid, solid, liquid or gaseous
products, or hazardous waste, as defined by Section 22a-448 of the Connecticut
General Statutes, or other pollutants and substances, whether or not naturally
occurring, including, without limitation, asbestos, radon and methane gas,
generated, used, treated, stored or disposed of, or otherwise deposited in,
handled at, or located on or under, any facility or real property owned,
operated or leased by WB (collectively, the "Premises"), including, without
limitation, the surface and subsurface waters of the Premises. "Hazardous
Materials' shall also include: (i) any materials, the generation, use,
treatment, storage or disposal of which would cause a person producing such
material to become a hazardous waste generator, or the Premises at which such
materials are located to become a hazardous waste treatment, storage or disposal
facility within the meaning of, or to make such person or Premises subject to
the provisions of, the Resource Conservation and Recovery Act of 1976 ("RCRA"),
42 U.S.C. Section 6901 et seq. or regulations promulgated thereunder, as the
same may be amended from time to time, or any similar state law or regulation
or local ordinance; (ii) any materials, the generation, use, treatment, storage
or disposal of which could cause a release or threatened release of hazardous
substances from the Premises within the meaning of, or otherwise make the
Premises subject to the provisions of, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), 42 U.S.C. Section 9601 et
seq. or regulations promulgated thereunder, as the same may be amended from time
to time, or any similar state law or regulation, including, but not limited to,
activities constituting "a spill" as defined in Connecticut General Statutes
Section 22a-452c, or any similar local ordinance; (iii) any materials, the
generation, use, treatment, storage or disposal of which would cause the
discharge of pollutants or effluents into any water source or system, or the
discharge into the air of any emissions which would require a permit under the
Federal Water Pollution Control Act, 33 U.S.C. Section 1251 et seq. or the Clean
Air Act, 42 U.S.C. Section 7401 et seq. or regulations promulgated thereunder,
as all such Acts or regulations may be amended from time to time, or any similar
state laws, regulations or local ordinances; (iv) any material defined as
"asbestos" pursuant to Parts 1910 or 1926 of Title 29 of the Code of Federal
12
Regulations; (v) any materials regulated pursuant to the Toxic Substances
Control Act of 1976, 42 U.S.C. Section 2601 et seq. or regulations promulgated
thereunder; as the same may be amended from time to time, or any similar state
law or regulation or local ordinance; or (vi) any substances in, on or under the
Premises which may support a claim or cause of action under RCRA, CERCLA or any
other federal, state or local environmental statutes, regulations, ordinances or
other environmental regulatory requirements. The federal, state and local laws,
regulations, and ordinances referred to above in this Section 4.18(e), and the
state laws set forth under Connecticut General Statutes Title 22a are defined
and collectively referred to in Agreement as "Environmental Laws."
(f) WB has not transported, or arranged for the transportation of, any
Hazardous Materials to any site which is the subject of federal, state, or local
enforcement actions, or other governmental or private investigations, or which
would lead to claims against WB for cleanup costs, remedial work, or for
damages, except as set forth on Schedule 4.18(f).
(g) To WB's knowledge, there has not been any release as defined in CERCLA
of Hazardous Materials at or from any facility or real property owned, operated,
or leased by WB, except as set forth on Schedule 4.18(g).
(h) WB has not treated, stored for more than ninety days, disposed of, or
recycled any Hazardous Materials on any real property owned or leased by WB nor,
to WB's knowledge, has any other party treated, stored for more than ninety
days, disposed of, or recycled any Hazardous Materials on such property except
as set forth on Schedule 4.18(h).
(i) To WB's knowledge, there are no Underground Storage Tanks, as defined
in RCRA and under applicable state law, and none have ever been located on any
real property owned or leased by WB, except as set forth foreclosure Schedule
4.18(i).
(j) To WB's knowledge, there are no asbestos-containing materials, or
capacitors, transformers, or other equipment or fixtures containing PCBs, and,
to WB's knowledge, none have ever been located at, any facility or on any real
property owned, operated or leased by WB, except as set forth on Schedule
4.18(j).
(k) WB (i) has no application to treat, incinerate or dispose of PCBs
pending or on file and does not hold any permit, license, or approval to
incinerate PCBs; and (ii) does not engage, and has never engaged, in road
oiling activities or the application of used oil or Hazardous Materials for
dust control or paving.
(l) Schedule 4.18(l) identifies (i) all environmental audits,
assessments or studies within the possession of WB with respect to the
facilities or real property owned or leased by WB; and (ii) the results of
sampling or any analysis of any asbestos, air, soil, or water, including ground
and surface water, undertaken with respect to such facilities or real property.
4.19 Transfer Act. WB shall promptly take any actions required in
connection with the Merger to comply with the Transfer Act; WB agrees to
file the appropriate form under the Transfer Act with respect to any real
property owned by WB in Connecticut or otherwise subject to the Transfer Act
and to make such certifications as are required under the Transfer Act; and WB
will provide copies to SNET of all filings and correspondence relating to
compliance with the Transfer Act and shall consult with SNET prior to filing
any plan for remediation measures or entering into any agreement with any
regulatory authority with respect to the Transfer Act.
4.20 No Violation; Consents.
(a) Subject to the receipt of all consents and approvals contemplated by
this Agreement, including without limitation, approval of this Agreement by the
shareholders of WB, the execution and delivery of this Agreement by WB, the
consummation by WB of the transactions contemplated hereby and the fulfillment
of and compliance with the terms and provisions hereof by WB do not and will not
(i) violate any law or any judicial or administrative order, writ, judgment,
injunction or decree binding upon WB; (ii) conflict with any material
restriction to which property of WB is bound; (iii) conflict with the terms,
conditions or provisions of the Certificate of Incorporation or Bylaws of WB;
(iv) conflict with, result in a breach of, constitute a default under or
accelerate or permit the acceleration of the performance required by, any
agreement required to be disclosed on Schedule 4.8 hereto; (v) result in the
creation of any material lien, charge or encumbrance upon any of the assets of
WB under any such agreement; or (vi) result in the termination or give any party
thereto the right to terminate any such agreement.
(b) No consent, waiver, approval, license or authorization of or any
declaration or filing on the part of WB with any person or with any federal,
state, local or foreign governmental or regulatory authority is required (other
than filings required with the Department of Public Utility Control ("DPUC") or
13
the Federal Communications Commission or under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended (the "HSR Act") in connection with the
valid execution and delivery of this Agreement or the performance by WB of any
of the transactions contemplated hereby.
4.21 Pension and Welfare Plans.
(a) WB has not engaged in any transaction with respect to any Plan, as
defined below, which could subject WB to a tax or penalty imposed by either
Section 4975 of the Code, as defined below, or Section 502(i) of ERISA in an
amount which could be material to the financial condition of WB. The
consummation of the transactions contemplated by this Agreement does not and
shall not result in a transaction under Section 4975 of the Code or Section 406
of ERISA with respect to any Plan for which an exemption is not available or
has not been obtained.
(b) No Plan has an accumulated funding deficiency, whether or not waived,
and all contributions required to be made by applicable law or regulation or
under the terms of each Plan or other contractual undertaking for any period
through the date hereof have been made in a timely manner, or to the extent not
required to be made or paid on or before the date hereof, have been fully
reflected on the books and records of WB.
(c) No liability to the Pension Benefit Guaranty Corporation has been, or
is expected by WB to be, incurred by WB with respect to any Plan in any amount
which would be material to the financial condition of WB. WB has not incurred
and does not expect to incur any withdrawal liability with respect to any Plan
which is a multiemployer plan in an amount which would be material to the
financial condition of WB.
(d) Except as otherwise disclosed to SNET, no liability to the United
States Department of Labor has been, or is expected by WB to be, incurred by WB
with respect to any Plan in any amount which would be material to the financial
condition of WB.
(e) The Plans which are single employer plans and subject to the funding
rules of ERISA are not in the aggregate materially underfunded based on the
actuarial assumptions used by the enrolled actuary for funding such Plans.
(f) All premiums under insurance contracts providing benefits under one or
more Plans have been paid when due, and all such premiums collected from
employees have been remitted to the insurance carrier in a timely manner.
(g) There are no actions, suits or claims pending, other than routine
claims for benefits with respect to any of the Plans.
(h) Each Plan intended to qualify under Section 401(a) of the Code has
received a favorable determination letter from the Internal Revenue Service that
such Plan is a "qualified plan" under Section 401(a) of the Code, and that the
related Trusts are exempt from Tax under Section 501(a) of the Code, and WB is
not aware of any facts or circumstances that would jeopardize the qualification
of such Plan(s) or related Trust(s). Each Plan complies, both as to form and
operation in all material respects with the requirements of the Code and ERISA.
(i) WB has delivered to SNET a true, complete and correct copy of (i) each
writing constituting a part of each Plan, including, without limitation all plan
documents, benefit schedules, trust agreements, and insurance contracts and
other funding vehicles; (ii) the most recent Annual Report (Form 5500 Series)
and accompanying schedule, if any; (iii) the current summary plan description,
if any; (iv) the most recent annual financial report, if any; and (v) the most
recent determination letter from the Internal Revenue Service, if any. Except
as specifically provided in the foregoing documents furnished to SNET, there are
no amendments to any Plan that have been adopted or approved, nor has WB
undertaken to make any such amendments.
(j) Schedule 4.21(j) sets forth a list of all (i) nonqualified defined
compensation or retirement plans, (ii) qualified defined contribution retirement
plans, (iii) qualified defined benefit pension plans, (iv) welfare benefit
plans, and (v) other employee benefit plans, programs, policies, practices, and
other arrangements providing benefits to any employee or former employee or
beneficiary or dependent thereof, whether or not written, and whether covering
one person or more than one person, sponsored or maintained by WB, or to which
WB is obligated to contribute, on behalf of its employees.
(k) Except as set forth in Schedule 4.21(k), WB has no liability for life,
health, medical or other welfare benefits to former employees or beneficiaries
or dependents thereof, except for health continuation coverage as required by
Section 4980B of the Code or Part 6 of Title I of ERISA and at no expense to WB.
(l) Neither WB nor any of its directors, officers, employees, nor, to WB's
knowledge, any other "fiduciary," as such term is defined in Section 3 of ERISA,
has committed any breach of fiduciary responsibility imposed by ERISA or any
14
other applicable law with respect to the Plans which would subject WB or SNET,
or any of their respective directors, officers or employees, to any material
liability under ERISA or any applicable law.
(m) There are no pending or threatened claims (other than claims for
benefits in the ordinary course), lawsuits or arbitrations which have been
asserted or instituted against the Plan, any fiduciaries thereof with
respect to their duties to the Plans or the assets or any of the trusts under
any of the Plans which could reasonably be expected to results in any material
liability of WB.
(n) As used in this Agreement, (i) "accumulated funding deficiency" shall
have the meaning assigned to such term in Section 412 of the Code and Section
302 of ERISA; (ii) the "Code" means the Internal Revenue Code of 1986, as
amended; (iii) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended; (iv) "employee benefit plan," and "multiemployer plan" and
"plan year" shall have the respective meanings assigned to such terms in Section
3 of ERISA; (v) "single employer plan" shall have the meaning assigned to such
term in Section 4001 of ERISA, (vi) "taxable period" shall have the meaning
assigned to such term in Section 4975 of the Code; and (vii) "withdrawal
liability" shall have the meaning assigned to such term in Part I of Subtitle E
of Title IV of ERISA.
4.22 Related Party Transactions. Except for any direct or indirect
material interest of SNET or any of its affiliates, Schedule 4.22 describes any
transaction or dealings to which WB is currently a party, or was a party at any
time since January 1, 1993, in which the amount involved exceeds $25,000 and in
which any of the following persons has a direct or indirect material interest:
any director or officer or affiliate or member of the immediate family (as
defined in Item 404(a) of Regulation S-K of the SEC) of any such person or any
beneficial owner of more than 5% of WB Common Stock, any affiliate of any such
beneficial owner, or any member of the immediate family of any such person.
4.23 Compensation of Directors, Officers and Employees. WB has delivered
to SNET a written list of the names and total annual remuneration (including
current salaries, date of previous salary adjustment and amount stated in
percentage terms) of all the directors, officers and full-time salaried
employees of WB, together with a statement of the full amount of any bonuses,
profit sharing, or other remuneration (exceeding 5% of salary) paid to each such
person during the past twelve months or payable to such person in the future and
the basis therefor.
4.24 Bank Accounts, Etc. Schedule 4.24 hereto sets forth (a) the name of
each bank in which WB has an interest in any account or safe deposit box and the
names of all persons authorized to draw thereon or to have access thereto, and
(b) the name of each person, corporation, firm association or business
organization, entity or enterprise holding a general or special power of
attorney from WB and a summary of the terms thereof. True and complete copies
of all such documents have heretofore been delivered to SNET.
4.25 Books of Account; Minute Books. WB has filed all reports and returns
required by any federal law or regulation to be filed by it and by any law or
regulations of the State of Connecticut and has duly paid or accrued on its
books of account all applicable duties and charges due (or assessed against it)
pursuant to such reports. True and correct copies of the minute books and stock
ledger of WB covering the last ten years have been previously made available to
SNET and contain accurate records of all meetings of the Board of Directors and
accurately reflect all other corporate action of the shareholders and Board of
Directors.
4.26 Authorization. The Board of Directors of WB has approvedthis
Agreement and has directed that this Agreement be submitted to the shareholders
of WB for approval. WB has full power and authority to enter into this
Agreement, to undertake the obligations set forth herein and, upon appropriate
vote of WB's shareholders in accordance with law, and subject to obtaining all
required regulatory approvals, to consummate the transactions contemplated
hereby. This Agreement has been duly executed and delivered bY WB and
constitutes the legal, valid and binding agreement of WB enforceable
against WB in accordance with its terms, subject to bankruptcy, moratorium,
insolvency, reorganization, fraudulent conveyance and other federal or state
laws of general applicability relating to or affecting the enforcement of the
rights and remedies of creditors or secured parties and to general equitable
principles.
4.27 Registration Statement. When the Registration Statement foreclosure
Form S-4 of SNET (the "Registration Statement") or any post-effective amendment
thereto shall become effective, and when the Prospectus constituting a part
thereof or supplement thereto shall be mailed to WB's shareholders, and at all
times subsequent to such effectiveness or mailing, up to and including the time
of approval of the Merger by the WB shareholders, the Registration Statement
and Prospectus and all amendments or supplements thereto, with respect to all
information set forth therein provided by WB and relating to WB:
15
(i) will comply in all material respects with the provisions of the
Securities Act of 1933, as amended (the "Securities Act") and the rules and
regulations of the Securities and Exchange Commission ("Commission" or "SEC")
thereunder, and
(ii) will not, at the respective times such Registration Statement becomes
effective and such Prospectus is mailed, contain an untrue statement of a
material fact, or omit to state any material fact necessary in order to make the
statements therein in the light of the circumstances under which they were made
not misleading.
4.28 Affiliates. To WB's knowledge, all of the persons who may be deemed
to be "Affiliates' of WB (the "WB Affiliates") for the purpose of Rule 145 under
the Securities Act, shall be listed in a letter, to be delivered by WB to SNET
prior to the date the Registration Statement becomes effective under the
Securities Act.
4.29 Conflicting Interests. Except as specifically set forth in Schedule
4.29, no director or officer of WB owns, directly or indirectly, any interest
in, or is a director, officer or employee of any corporation or other business
organization other than SNET which is a significant supplier, competitor or
customer of WB, provided that ownership of not more than one percent of the
capital stock of any company required to file reports under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") shall not be deemed to be
ownership of an interest in such a corporation for purposes of this Section .
4.30 Certain Payments. Neither WB nor, to the best of the knowledge of WB,
any of WB's officers, employees or agents or any consultant has unlawfully
offered, paid or agreed to pay, directly or indirectly, any money or anything of
value to, or for the benefit of, any individual who is or was a candidate for
public office, or an official or employee of any government of any governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, or any officer or employee of any customer or supplier of WB. WB has
not engaged in any such transaction, maintained any bank account or used any
corporate funds except for transactions or bank accounts reflected in WB's
normally maintained books and records.
4.31 Accuracy of Representations. No representations or warranty made by
WB in this Agreement or any Schedule, when all such representations and
warranties are taken as a whole, contains any untrue statement of material fact
or omits to state any material fact necessary to make the statements made
therein, in the light of the circumstances under which they were made, not false
or misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SNET AND SAS
SNET and SAS jointly and severally represent and warrant to WB as follows:
5.1 Organization. SNET and SAS each is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Connecticut, and has the corporate power to own or lease its properties and to
carry on its business as now being conducted. SNET has provided WB with true
and complete copies of the Certificate of Incorporation and Bylaws of each of
SNET and SAS as in full force and effect on the date hereof.
5.2 Capital Stock. The authorized, issued and outstanding capital stock
of SNET and of SAS is as set forth in the preamble to this Agreement and all of
such capital stock which is issued and outstanding is validly issued, fully paid
and nonassessable.
5.3 SEC Filings. SNET has filed with the SEC all forms, reports and
documents required to be filed with the SEC since January 1, 1993 and has
delivered to WB true and complete copies of its (i) Annual Report foreclosure
Form 10-K for the years ended December 31, 1995, December 31, 1994 and
December 31, 1993, as filed with the SEC; (ii) proxy statements relating to all
of SNET's meetings of stockholders (whether annual or special) since September
30, 1993; and (iii) all other reports, statements and registration statements
(including Quarterly Reports on Form 10-Q and Current Reports on Form 8-K)
filed by SNET with the SEC since September 30, 1993 (collectively, the "SEC
Filings"). As of their respective dates, the SEC Filings (including all
exhibits and schedules thereto and documents incorporated by reference
therein), did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The financial statements of SNET and its subsidiaries
included or incorporated by reference in the SEC Filings (including the related
notes and schedules) have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly present the
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consolidated assets, liabilities and financial position of SNET and its
consolidated subsidiaries as of the dates thereof and the consolidated results
of their operations and changes in financial position for the periods then
ended (subject, in the case of any unaudited interim financial statements, to
normal year-end adjustments).
5.4 Absence of Certain Changes or Events. Except as described in the
financial statements contained in the SEC Filings, since December 31, 1995 there
has not been (i) any material adverse change in the assets, properties, business
or financial condition of SNET and its subsidiaries (separately, a "SNET
Subsidiary" and collectively, the "SNET Subsidiaries") as a whole; (ii) any
damage, destruction or loss, whether covered by insurance or not, materially
affecting, the assets, properties, business or financial condition of SNET and
the SNET Subsidiaries as a whole; (iii) any declaration, payment or setting
aside for payment of any dividend (whether in cash, stock or property) with
respect to the capital stock of SNET, other than regular quarterly dividends; or
(iv) the entry into any material commitment or transaction (including without
limitation any borrowing or capital expenditure), other than in the ordinary
course of business.
5.5 No Violation; Government Consent. Subject to the receipt of all
consent and approvals contemplated by this Agreement, the execution and delivery
of this Agreement, the consummation by SNET and SAS of the transactions
contemplated hereby and the fulfillment of and compliance with the terms and
provisions hereof by SNET and SAS and thereof do not and will not (i) violate
any provision of law or any judicial or administrative order, writ, award,
judgment, injunction or decree binding upon SNET or any of the SNET
Subsidiaries; (ii) conflict with any material restriction to which property of
SNET or any of the SNET Subsidiaries is bound; (iii) conflict with the terms,
conditions or provisions of the Certificate of Incorporation or Bylaws of SNET
or SAS; (iv) conflict with, result in a breach of, constitute a default under,
or accelerate or permit the acceleration of the performance required by, any
material indenture, instrument or agreement relating to any indebtedness of SNET
or of any other material agreement of SNET or any SNET Subsidiary; (v) result in
the creation of any material lien, charge or encumbrance upon any of the asset
of SNET or any SNET Subsidiary under any such material indenture, instrument or
agreement; or (vi) result in the termination or give any party thereto the right
to terminate any such material indenture, instrument or agreement.
5.6 Authorization.
(a) SNET has full power and authority to enter into this Agreement, and
subject to obtaining all required regulatory approvals, to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by SNET and constitutes the legal, valid and binding agreement of SNET
enforceable against SNET in accordance with its terms, subject to bankruptcy,
moratorium, insolvency, reorganization, fraudulent conveyance and other federal
and state laws of general applicability relating to or affecting the enforcement
of the rights and remedies of creditors or secured parties and to general
equitable principles.
(b) The Board of Directors and the sole stockholder of SAS has approved
this Agreement. SAS has full power and authority to enter into this Agreement
and subject to obtaining all required regulatory approvals, to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by SAS and constitutes the legal, valid and binding agreement of SAS
enforceable against SAS in accordance with its terms, subject to bankruptcy,
moratorium, insolvency, reorganization, fraudulent conveyance and other federal
and state laws of general applicability relating to or affecting the enforcement
of the rights and remedies of creditors or secured parties and to general
equitable principles.
5.7 Registration Statement. When the Registration Statement or any
post-effective amendment thereto shall become effective, and when the Prospectus
constituting a part thereof or any amendment or supplement thereto shall be
mailed to WB shareholders, and at all times subsequent to such effectiveness or
mailing up to and including the time of approval of the Merger by the WB
shareholders, the Registration Statement and Prospectus and all amendments or
supplements thereto, with respect to all information set forth therein other
than information provided therein by WB and related to WB:
(i) will comply in all material respects with the
provision of the Securities Act and the rules and regulations of the
Commission thereunder, and
(ii) will not, at the respective times such Registration
Statement becomes effective and such Prospectus is mailed, contain an
untrue statement of a material fact, or omit to state any material fact
necessary in order to make the statements therein in the light of the
circumstances under which they were made not misleading.
5.8 Validity of Securities. At the Effective Time, the shares of SNET
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Common Stock, when exchanged for WB Common Stock, will be duly authorized,
validly issued, fully paid and nonassessable.
5.9 Accuracy of Representations. No representation or warranty made by
SNET in this Agreement or any Schedule, when all such representations and
warranties are taken as a whole, contains any untrue statement of material fact
or omits to state any material fact necessary to make the statements made
therein, in the light of the circumstances under which they were made, not
false or misleading.
ARTICLE VI
COVENANTS OF WB
6.1 Consents; Approvals. WB shall use its best efforts consistent with
law to obtain all consents, waivers, approvals, authorizations or orders
(including without limitation all governmental and regulatory rulings and
approvals), and WB shall make all filings (including without limitation
all filings with governmental or regulatory agencies, including any
environmental agency) required for the authorization, execution and delivery of
this Agreement by WB and the consummation by it of the Merger.
6.2 Shareholder Approval; Registration Statement.
(a) WB shall cooperate with SNET in the preparation and filing with the
Commission of the Registration Statement, and shall use its best efforts
consistent with law to assist SNET in obtaining clearance thereof by the
Commission and causing the Registration Statement to be declared effective and
continue such effectiveness. WB agrees to recommend approval of this Agreement
to the shareholders of WB and to use its best efforts to obtain the necessary
adoption of this Agreement by the shareholders of WB pursuant to a duly called
meeting of shareholders.
(b) WB shall furnish all the information concerning WB required for
inclusion in the Registration Statement, or for any other filing to be made
pursuant to the rules and regulations of any governmental body in connection
with the transactions contemplated by this Agreement, and shall otherwise
cooperate with SNET in connection therewith. None of the information furnished
by or on behalf of WB for use in the Registration Statement shall contain any
untrue statement of material fact or omit to state a material fact required to
be stated therein or necessary to make the statements contained therein not
misleading.
(c) WB shall prepare and file with the Commission as soon as
practicable a proxy statement that will be the same proxy statement-prospectus
contained in the Registration Statement and a form of proxy, in connection with
the vote of WB's shareholders with respect to the Merger (such proxy statement-
prospectus, together with any amendments thereof or supplements thereto, in
each case in the form or forms mailed to WB's shareholders, is herein called
the "Proxy Statement"). SNET shall furnish WB all information concerning SNET
and SAS required for use in the Proxy Statement and SNET shall take such other
action as WB may reasonably request in connection with the preparation of the
Proxy Statement.
6.3 Conduct of the Business of WB. Between the date hereof and the
Effective Time:
(a) WB shall not, without the prior written consent of SNET, agree to
incur or agree to become subject to any material liability or obligation
(absolute or contingent), except liabilities incurred or obligations under
contracts entered into in the ordinary course of business.
(b) Except as contemplated by this Agreement, WB shall not, without the
prior written consent of SNET, engage in any activities or transactions or make
any capital expenditures which are outside the ordinary course of its business
as conducted at the date hereof and which are material, individually or in the
aggregate, to the business or financial condition of WB.
(c) WB shall give prompt notice to SNET of (i) the receipt of any
notice of, or other communication relating to, a default or an event of default
or any event which with lapse of time could become a default or any event of
default under any material indenture, instrument or agreement to which WB is a
party, by which it or any of its properties is bound or to which it or any of
its properties is subject; (ii) the receipt of any notice or other
communication from any third party alleging that the consent of such required
to consummate the Merger; and (iii) any matter which, if it had occurred prior
to the date hereof, would have constituted a material breach of the
representations and warranties of WB contained in this Agreement.
(d) Without the prior written consent of SNET, WB shall not (i) make
any change in its authorized capital stock; (ii) issue any stock options,
warrants or other rights or agreements calling for the issue, transfer, sale or
18
delivery of any of its capital stock or other securities; (iii) declare, pay,
or set aside for payment any stock dividend or effect any split, division or
combination or make any reclassification in respect of its outstanding shares
of capital stock; (iv) issue, sell, exchange or deliver any shares of its
capital stock (or securities convertible into or exchangeable, with or without
additional consideration, for such capital stock); (v) purchase, or otherwise
acquire any outstanding shares of its capital stock; (vi) declare, pay or set
aside for payment any dividend or distribution (whether in cash or property)
with respect to its capital stock other than its regular quarterly cash
dividend of no more than $0.38 per share; (vii) enter into any agreement to
take any action under clauses (iv) or (v); (viii) amend its Certificate of
Incorporation or Bylaws; or (ix) waive, release, grant or transfer any rights
of material value or modify or change in any material respect any material
existing license, lease, contract, Plan or other document.
(e) WB shall conduct its business only in the ordinary course and
consistent with past practice, and WB shall consistent with good business
practices take such action as may be necessary to preserve its material
properties and assets, wherever located.
(f) WB shall use its best efforts to preserve intact the business
organization of WB, to keep available the services of its operating personnel
and to preserve the good will of those having business relationships with it.
(g) WB shall not (i) increase the compensation payable or to become
payable by it to any of its executive officers, except in the ordinary course
of business consistent with past practice; (ii) make any payment or provision
with respect to any bonus, profit sharing, employee stock ownership,
pension, retirement, deferred compensation, employment or other payment plan,
agreement or arrangement for the benefit of employees of WB, other than in the
ordinary course of business consistent with past practice; (iii) grant any
stock options or stock appreciation rights; (iv) enter into any employment
agreement or other contract or arrangement with an executive officer with
respect to the performance of personal services which is not terminable without
liability by it on thirty days notice (or less); or (v) make any loan or
advance to, or enter into any written contract, lease or commitment with, any
officer, director or shareholder of WB.
(h) WB shall not permit any of its current insurance policies to be
canceled or terminated or any of the coverage thereunder to lapse, unless,
simultaneously with such termination, cancellation or lapse, replacement
policies providing coverage equal to or greater than the coverage under the
canceled, terminated or lapsed policies for substantially similar premiums are
in full force and effect.
(i) WB shall not assume, guarantee, endorse or otherwise become
responsible for the obligations of any other individual, firm or corporation
other than WB to the extent provided herein or make any loans or advances to
any individual, firm or corporation, except in the ordinary course of its
business.
(j) WB shall not (i) acquire all or any part of the assets, properties,
capital stock or business of any other person; (ii) dispose of all or any part
of its assets, properties, capital stock or business other than in the ordinary
course of business; or (iii) consolidate or merge with or into any other
person.
(k) WB shall not make any investment of a capital nature either by
purchase of stock or securities, contributions to capital, property transfers
or otherwise, or by the purchase or lease of any property or assets of any
other individual, firm or corporation.
(l) WB shall not write off as uncollectible any notes or accounts
receivable or write down the value of any inventory other than in immaterial
amounts or in the ordinary and usual course of business consistent with past
practice.
(m) WB shall not dispose of or permit to lapse any rights in, to or for
the use of any patent, trademark, trade name or copyright or other intellectual
property, or disclose to any person not an employee, or otherwise dispose of
any trade secret, process or know-how not theretofore a matter of public
knowledge, except pursuant to judicial or administrative process or pursuant to
Section 6.4 in connection with a bona fide offer thereunder.
(n) make any change in any method of accounting or keeping its books of
account or accounting practices other than as disclosed in the SEC Filings.
(o) WB shall not enter into an agreement to do any of the things
described in clauses (a) through (n).
6.4 Acquisition Proposals. Prior to the Effective Time, neither WB nor
any of its subsidiaries, affiliates, officers, directors, employees,
19
shareholders, representatives or agents shall, directly or indirectly, solicit,
initiate, encourage or accept inquiries or proposals with respect to,
furnish any information relating to, or participate in any negotiations or
discussions concerning, any other party's (other than SNET) acquisition or
purchase of all or a substantial portion of the assets of, or of a substantial
equity interest in, WB or any business combination or similar transaction with
WB other than as contemplated by this Agreement; provided, however, that upon
receipt by the Board of Directors of WB of (i) a bona fide offer of a third
party to engage in a transaction with WB which would result in shareholders of
WB receiving value for their shares of WB stock in excess of the consideration
furnished by SNET pursuant to this Agreement, and (ii) the written opinion of
its counsel that the discharge of the WB directors' fiduciary duties under
applicable law requires its Board to negotiate with and provide non-public
information to such third party, WB may provide such information and enter into
such negotiations after giving prior notice to SNET. If WB enters into
negotiations pursuant to the proviso contained in the preceding sentence and
does not consummate a transaction with such third party, SNET may terminate
this Agreement, and, if it does so, then at SNET's request, WB shall compensate
SNET for entering into the Agreement, taking action to consummate the
transaction, incurring costs and expenses thereto, and foregoing other
opportunities, and for any other damages incurred by SNET, by immediately
paying to SNET a cancellation fee of $500,000 as liquidated damages regarding
any claim for damages which SNET would otherwise be entitled to assert against
WB regarding the transaction. If WB enters into negotiations with a third
party pursuant to the proviso in the first sentence of this Section 6.4 and
consummates a transaction, or if WB enters into negotiations with a third party
in violation of this section, SNET may similarly terminate this Agreement, and
if it does so, at SNET's request, WB shall immediately pay SNET a cancellation
fee of $1,500,000 as liquidated damages. SNET shall have no obligation under
Section 14.4 of Article XIV hereof as a result of its invocation of this
section.
6.5 Letter of WB's Accountants. WB shall use its best efforts to cause
to be delivered to SNET a letter of Ernst & Young, L.L.P., WB's independent
auditors, dated a date within two business days before the date on which the
Registration Statement shall become effective and addressed to SNET, in form
and substance reasonably satisfactory to SNET and customary in scope and
substance for letters delivered by independent public accountants in connection
with registration statements similar to the Registration Statement.
6.6 Best Efforts. WB shall use its best efforts consistent with law to
cause all of the conditions precedent to the consummation of the Merger
applicable to WB to be met.
ARTICLE VII
COVENANTS OF SNET AND SAS
7.1 Consents; Approvals. SNET will use its best efforts consistent
with law to obtain all consents, waivers, approvals, authorizations or orders
(including without limitation all governmental and regulatory rulings and
approvals), and SNET shall make all filings (including without limitation
all filings with governmental agencies, including any environmental agency)
required for the authorization, execution and delivery of this Agreement by
SNET and SAS and the consummation by them of the Merger.
7.2 Registration Statement.
(a) SNET shall prepare and file the Registration Statement with the
Commission as soon as is reasonably practicable and shall use its best efforts
consistent with law to have the Registration Statement declared effective by
the Commission.
(b) SNET shall furnish all the information concerning SNET and SNET
Subsidiaries required for inclusion in the Registration Statement, or for any
application or other filing to be made pursuant to the rules and regulations of
any governmental body in connection with the Merger and shall otherwise
cooperate with WB in connection therewith. None of the information furnished
by or on behalf of SNET for use in the Registration Statement shall contain any
untrue statement of material fact or omit to state a material fact required to
be stated therein or necessary to make the statements contained therein not
misleading.
7.3 Blue Sky. SNET shall use its best efforts consistent with law to
comply with all applicable "Blue Sky" or similar securities laws of each
jurisdiction as and when such compliance is required.
7.4 Listing. SNET shall use its best efforts to cause the shares of
SNET Common Stock to be issued in the Merger to be listed on the New York Stock
Exchange.
7.5 Certain Actions. Between the date hereof and the Effective Time,
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SNET shall give prompt notice to WB of the receipt by it or any SNET Subsidiary
of (i) any notice of, or other communication relating to, a material default or
a material event of default or any event which with lapse of time could become
a material default or a material event of default under any material
instrument or agreement to which SNET or any SNET Subsidiary is a party, by
which it or any of its properties it bound or to which it or any of its
properties is subject; (ii) any notice or other communication from any third
party alleging that the consent of such third party is or may be required
in connection with the transactions contemplated by this Agreement; and (iii)
any matter which, if it had occurred prior to the date hereof, would have
constituted a material breach of the representations of SNET contained in this
Agreement.
7.6 Best Efforts. SNET and SAS shall use their best efforts consistent
with law to cause all of the conditions precedent to the consummation of the
Merger applicable to SNET and SAS to be met.
ARTICLE VIII
COVENANTS APPLICABLE TO ALL PARTIES
8.1 Reasonable Efforts. Subject to Section 6.4, upon the terms and
subject to the conditions set forth in this Agreement, each of the parties
agrees to use its reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate with the
other parties in doing, all things necessary, proper or advisable to consummate
and make effective, in the most expeditious manner practicable, the Merger and
the other transactions contemplated by this Agreement, including (a) the
obtaining of all necessary actions or non-actions, waivers, consents
and approvals from governmental authorities and the making of all necessary
registrations and filings (including filings with governmental entities) and
the taking of all reasonable steps as may be necessary to obtain an approval or
waiver from, or to avoid an action or proceeding by any governmental entity,
(b)the obtaining of all necessary consents, approvals or waivers from third
parties, (c)the defending of any lawsuits or other legal proceedings, whether
judicial or administrative, challenging this Agreement or the consummation of
the transactions contemplated hereby including seeking to have any stay or
temporary restraining order entered by any court or other governmental entity
vacated or reversed, (d)the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by this
Agreement, and (e)not to take, commit, or agree in writing or otherwise to
take, any action which would make any representation or warranty of such party
contained in this Agreement untrue or incorrect in any material respect as
of the date when made or as of a future date.
8.2 Public Announcements. SNET and SAS, on the one hand, and WB, on
the other hand, will consult with each other before issuing any press release
with respect to the transactions contemplated by this Agreement, and shall not
issue any such press release prior to such consultation.
8.3 Notification of Certain Matters. Each party shall give the other
prompt notice of: (i)any notice of, or other communication relating to, a
default or event that, with notice or lapse of time or both, would become a
default, received subsequent to the date of this Agreement and prior
to the Effective Time under any note, license, agreement or other instrument or
obligation other than in respect of defaults which, individually or in the
aggregate, could not reasonably be expected to result in a material adverse
effect on such party; and (ii)any material adverse effect or the occurrence
of any event which, so far as reasonably can be foreseen at the time of its
occurrence, is reasonably likely to result in a material adverse effect on such
party. Each party shall give the other prompt notice of any written notice or
other written communication from any third party alleging that the consent of
such third party is or may be required in connection with the transactions
contemplated by this Agreement.
8.4 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act Filing. The parties will cooperate in
preparing and filing any Notification and Report Forms and related material
that it may be required to file with the Federal Trade Commission and the
Antitrust Division of the United States Department of Justice under the
HSR Act, and will use their respective best efforts to obtain an early
termination of the applicable waiting period, and will make any further filings
pursuant thereto that may be necessary, proper, or advisable.
ARTICLE IX
ACCESS AND CONFIDENTIALITY
9.1 Access. Upon reasonable notice, WB shall afford the officers,
employees, counsel, accountants and other authorized representatives of SNET
and SAS (collectively, "Representatives"), access, during normal business hours
throughout the period prior to the Effective Time, to its properties, books,
contracts and records, and, during such period, WB shall furnish promptly to
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SNET all information concerning its business, properties and personnel as SNET
may reasonably request, provided that no investigation pursuant to this Section
9.1 shall affect or be deemed to modify any representation or warranty made by
WB.
9.2 Confidentiality.
(a) SNET and SAS each agree that the Confidentiality Agreement dated
November 2, 1995 shall remain in effect and it shall, and shall use its best
efforts to cause its respective Representatives to, hold in strict confidence
all data and information obtained by them from WB (or from any of its
respective officer, employees, agents or authorized representatives) (unless
such information is previously known to SNET or SAS or is or becomes readily
ascertainable from public or published information or trade sources) and shall
not, and shall use its best efforts to ensure that such Representatives do not,
disclose such confidential information to others without the prior written
consent of WB.
(b) WB agrees that the Confidentiality Agreement dated November 2, 1995
shall remain in effect and it shall, and shall use its efforts to, cause its
officers, employees, agents and authorized representatives to, hold in strict
confidence all data and information obtained by them from SNET or SAS (unless
such information is previously known to them or is or becomes readily
ascertainable from public or published information or is provided pursuant to
Section 6.4 in connection with a bona fide offer thereunder) and shall not, and
shall use their best efforts to ensure that such officers, employees, agents
and authorized representatives do not, disclose such confidential information
to others without the prior written consent of SNET.
ARTICLE X
CONDITIONS TO OBLIGATIONS OF SNET AND SAS
The obligations of SNET and SAS under this Agreement to consummate the
Merger are subject to the conditions that:
10.1 Performance.
(a) The representations and warranties of WB herein contained shall
have been true and accurate when made and in addition shall be true and
accurate in all material respects at and as of the Effective Time with the same
force and effect as though made at and as of the Effective Time, except
as affected by transactions contemplated by this Agreement.
(b) WB shall have performed in all material respects all other
obligations and agreements and complied with all covenants and conditions
contained in this Agreement at or prior to the Effective Time.
10.2 Consents Obtained. All consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required to
be made, by WB and its Board and shareholders for the authorization, execution
and delivery of this Agreement and the consummation by it of the transactions
contemplated hereby shall have been obtained and made by WB.
10.3 No Litigation. No suit, action, proceeding, investigation or
inquiry, whether or not existing on the date hereof, involving WB or WB
securities or its directors or officers with respect to the business of WB or
this Agreement or related to the transaction contemplated hereby, shall be
pending, threatened, or in prospect before any court or governmental agency,
which, in the reasonable opinion of SNET, renders completion of the Merger
inadvisable or impractical.
10.4 Documents to be Delivered. WB shall have delivered or cause to be
delivered, to SNET and SAS at the Closing:
(a) A certificate of WB, signed by its President and Chief Executive
Officer which shall confirm the compliance by WB in all material respects with
its covenants and agreements contained in this Agreement, and the accuracy in
all material respects of the representations and warranties made by WB in this
Agreement at and as of the Effective Time as if made at such time, except as
affected by transactions contemplated by this Agreement.
(b) An agreement from each WB Affiliate (as defined under the rules of
the SEC under the Securities Act), in form and substance satisfactory to SNET
and its counsel, relating to the disposition of the securities of SNET
receivable by such WB Affiliate in the Merger together with such documents as
SNET may reasonably request related to SNET's compliance with the Securities
Act.
(c) The opinion of ▇▇▇▇▇▇▇ & Torrance, counsel to WB, dated the Closing
Date and in form and substance satisfactory to SNET.
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(d) Such other documents and instruments as SNET shall reasonably
request.
ARTICLE XI
CONDITIONS TO THE OBLIGATION OF WB
The obligations of WB under this Agreement to consummate the Merger are
subject to the conditions that:
11.1 Performance.
(a) The representations and warranties of SNET and SAS herein contained
shall have been true and accurate when made and, in addition, shall be true and
accurate in all material respects at and as of the Effective Time with the same
force and effect as though made at and as of the Effective Time, except as
affected by transactions contemplated by this Agreement.
(b) SNET and SAS shall have performed in all material respects all
obligations and agreements and complied with all covenants and conditions
contained in this Agreement at or prior to the Effective Time.
11.2 Consents Obtained. All consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required to
be made, by SNET and SAS for the authorization, execution and delivery of this
Agreement and the consummation by them of the transactions contemplated
hereby shall have been obtained and made by SNET and SAS.
11.3 No Litigation. No suit, action or proceeding or investigation
involving SNET or its directors or officers with respect to the business of
SNET or this Agreement or the transaction contemplated hereby, shall be
pending, threatened, or reasonably believed by SNET and its directors
or officers or their counsel to be in prospect before any court or governmental
agency, which, in the reasonable opinion of WB, renders completion of the
Merger hereby inadvisable or impractical.
11.4 Documents to be Delivered. SNET shall have delivered, or caused to
be delivered, to WB at the Closing:
(a) A certificate of each of SNET and SAS, signed by its President and
Chief Executive Officer, which shall confirm the compliance by them in all
material respects with their covenants and agreements contained in this
Agreement, and the truth and accuracy in all material respects of the
representations and warranties made by them in this Agreement at and as of the
Effective Time as if made at such time, except as affected by transactions
contemplated by this Agreement.
(b) The opinion of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, General Counsel of SNET, dated
the Closing Date and in form and substance satisfactory to WB.
(c) The opinion of ▇▇▇▇▇▇▇ & Torrance, counsel to WB, dated the Closing
Date, that the Merger qualifies as a reorganization under Section 368 of the
Code.
(d) Such other documents and instruments as WB shall reasonably
request.
ARTICLE XII
CONDITIONS APPLICABLE TO ALL PARTIES
The obligations of each of the parties to consummate the Merger are
subject to the following additional terms and conditions:
12.1 Shareholder Approval. This Agreement shall have been approved by
the requisite vote of the holders of the outstanding shares of WB Common Stock.
12.2 Suspension of Trading. There shall not have occurred (i)any
general suspension of, or limitation on prices for, trading in securities on
the New York Stock Exchange or in the over-the-counter market; (ii)a
commencement of war, armed hostilities, or other international or national
calamity directly or indirectly involving the United States; or (iii)in the
case of any of the foregoing existing at the date hereof a material
acceleration or worsening thereof.
12.3 Regulatory Approvals. The satisfaction of any applicable federal
or state regulatory requirements, including without limitation, the approval of
the Connecticut Department of Public Utility Control and, if required, the
Federal Communications Commission.
12.4 Effectiveness of the Registration Statement. The Registration
Statement shall have been declared effective. No stop order suspending the
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effectiveness of the Registration Statement shall have been issued by the SEC
and no proceedings for that purpose shall, on or prior to the Effective Time,
have been initiated or, to the knowledge of SNET or WB, threatened by the SEC.
All necessary state securities or blue sky authorizations shall have been
obtained.
12.5 No Orders. The consummation of the Merger or the transactions
contemplated hereby shall not have been restrained, enjoined or prohibited by
any court or governmental authority of competent jurisdiction.
12.6 HSR Act. Any waiting period applicable to the Merger under the HSR
Act shall have expired or been terminated.
12.7 New York Stock Exchange. The shares of SNET Common Stock
exchangeable for WB shares shall have been admitted to listing on the New York
Stock Exchange, subject to official notice of issuance.
12.8 Fairness Opinion. The receipt from ▇▇▇▇▇▇▇▇ & Company Securities,
Inc. of a final written opinion that the Merger is fair to WB's shareholders
from a financial point of view, which opinion shall be dated within two (2)
days of the date of the Proxy Statement.
ARTICLE XIII
TERMINATION; AMENDMENT; WAIVER
13.1 Termination. This Agreement and the transactions contemplated
hereby may be terminated at any time prior to the filing of the Merger
Certificates, whether before or after action by the shareholders of WB, (i) by
mutual consent of the Board of Directors of WB, SAS, and SNET; (ii) by action
of the Board of Directors of SNET in the event of a failure of a condition set
forth in ArticleX of this Agreement or in the event such a condition becomes
incapable of fulfillment; (iii) by action of the Board of Directors of WB in
the event of failure of a condition set forth in ArticleXI of this Agreement
or in the event such a condition becomes incapable of fulfillment; (iv) by
action of the Board of Directors of either WB, SAS or SNET in the event of a
failure of a condition set forth in Article XII of this Agreement or in the
event such a condition becomes incapable of fulfillment; (v) by action of the
Board of Directors of either WB or SNET pursuant to the provisions of
Section 2.1 hereof; (vi) by SAS of SNET pursuant to the provisions of Section
6.4 hereof; or (vii) by action of the Board of Directors of WB, SAS or SNET if
the Merger has not occurred by December 31, 1997 (the "Determination Date"),
but if the Merger has not occurred by the Determination Date because the DPUC
has approved the Merger but all rights to appeal such approval have not expired
or been waived or the approval is being appealed and a final favorable
determination of the appeal by a court of competent jurisdiction has not been
made, then the Determination Date shall be extended and deemed to be the date
ten days after the earliest to occur of (a) the expiration or waiver of all
rights to appeal the DPUC's approval of the Merger, (b) the final favorable
determination of the DPUC's approval of the Merger by a court of competent
jurisdiction or (c) March 31, 1998.
13.2 Amendment. SNET, SAS and WB may agree in writing to amend this
Agreement at any time prior to the Effective Time, provided that, after the
shareholders of WB approve the Merger, no amendment shall be made which is
adverse to the shareholders of WB (including, without limitation, any adverse
change in the terms of the consideration to be received by the WB shareholders)
unless such amendment is approved by such shareholders.
13.3 Waiver. Any condition to the performance of WB, SNET or SAS which
may legally be waived at or prior to the Effective Time may be waived at any
time by the third party entitled to the benefit thereof by action taken or
authorized by the Board of Directors of the waiving party.
ARTICLE XIV
MISCELLANEOUS
14.1 Survival. Except for the agreements contained in Article III and
Sections 6.4, 14.4 and14.11, which shall survive the Merger, all
representations, warranties, agreements and covenants under this Agreement
shall not survive the Merger.
14.2 Woodbury Management Employees. Each management employee of WB who
is not employed by SNET as of the Effective Time shall receive severance pay of
a type generally available to SNET management employees with similar lengths of
service and job descriptions, and the Surviving Corporation shall continue in
full force and effect the Agreement dated May 31, 1991 between J. ▇▇▇▇▇
▇▇▇▇▇▇▇▇ and WB, and the Change-in-Control Agreement dated July 24, 1996
between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and WB.
14.3 Community Activities. Subsequent to the Effective Time, SNET shall
24
continue WB's support of local community activities to the extent consistent
with SNET's corporate strategy.
14.4 Expenses. Whether or not the Merger shall be consummated, each
party shall pay its own expenses in connection with this Agreement and the
consummation of the Merger, provided that if this Agreement is executed but the
Merger is not consummated (i) due to the failure of either party to receive the
necessary regulatory approvals, despite their best efforts, or (ii) due solely
to the fault of SNET, then SNET will pay to WB an amount equal to all
reasonable costs and expenses including fees and costs of attorneys, investment
bankers, accountants and financial advisors, incurred by WB after September
26, 1996 in connection with the Merger but in no event shall such costs and
expenses exceed $125,000 if pursuant to clause (i) or $300,000 if pursuant to
clause (ii) herein.
14.5 Brokers; Finder Fees. Each party to this Agreement represents to
the other that all negotiations relative to this Agreement and the Merger have
been carried on by SNET directly with WB and without the intervention of any
other person and no person is entitled to a finder's fee, brokerage commission
or other similar fee.
14.6 Notices. Any notice, request, instruction or other document to be
given hereunder shall be in writing and delivered personally, telecopied (if
receipt is confirmed) or sent by registered or certified mail, postage prepaid,
if to SNET or SAS, addressed to SNET or SAS, as the case may be, at ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.; and
if to WB, addressed to WB at ▇.▇. ▇▇▇ ▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
Attention: DonaldE. ▇▇▇▇▇▇, with copies to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq., ▇▇▇▇▇▇▇ &
Torrance, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or to such other
persons as may be designated by notice in writing by any party.
14.7 Governing Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of Connecticut (without reference to
the choice of law principles thereof).
14.8 Non-Assignability. This Agreement shall not be assignable by any
of the parties hereto.
14.9 Entire Agreement. This Agreement contains all of the
representations, warranties, understandings and agreements of the parties
relating to the transactions contemplated herein; (ii) supersedes all prior
written agreements and negotiations and oral understandings, if any, between
the parties; and (iii) may not be amended, supplemented or discharged except by
performance or by an instrument in writing executed by the parties hereto.
14.10 Counterparts. For the convenience of the parties, this Agreement
may be executed in any number of counterparts, and each such counterpart shall
be deemed to be an original instrument, and all such counterparts shall
together constitute the same agreement.
14.11 Indemnification and Insurance.
(a) After the Effective Time, the Surviving Corporation will (and SNET
will as long as it controls Surviving Corporation) indemnify and hold harmless
each of the current directors of WB (the "Indemnified Parties") in their
capacities as directors or officers to the full extent provided in WB's
Certificate of Incorporation and Bylaws (except for violations of the federal
securities laws), with respect to any matter existing or occurring prior to the
Effective Time.
(b) The Surviving Corporation will not amend, and SNET will not (as
long as it controls the Surviving Corporation) authorize or permit the
amendment of, provisions of WB's Certificate of Incorporation or Bylaws
providing for indemnification (as in effect as of the date of this Agreement)
in any manner adverse to the Indemnified Parties for a period of three (3)
years from and after the date of this Agreement; provided, however, that such
indemnification is subject to any limitation imposed from time to time under
applicable law.
(c) For six (6) years after the Closing, the Surviving Corporation will
(and for so long as it controls the Surviving Corporation, SNET will cause the
Surviving Corporation to) maintain policies of officers' and directors'
liability insurance maintained by WB as of the date of this Agreement (provided
that the Surviving Corporation may substitute therefor policies of at least the
same coverage containing terms and conditions substantially equivalent) with
respect to the acts or omissions occurring before the Effective Time, including
but not limited to the transactions contemplated by this Agreement, covering
each of the Indemnified Parties currently covered by WB's officers' and
directors' liability insurance policy, or who become covered by such policy
before the Effective Time. The provisions of this Section 14.11 shall survive
the Effective Time and shall be enforceable by the Indemnified Parties, their
heirs, executors and personal representatives and are binding on successors and
25
assigns of WB, SNET and SAS.
(d) Any determination to be made as to whether any Indemnified party
has met any standard of conduct imposed by law or by WB's Certificate of
Incorporation or Bylaws will be made by legal counsel reasonably acceptable to
such Indemnified Party and SNET.
(e) In the event any Indemnified Party is or becomes involved in any
capacity in any action, proceeding, or investigation for which he has a claim
for indemnification against the Surviving Corporation (including, without
limitation, the transactions contemplated by this Agreement), the Surviving
Corporation will, and SNET will (as long as it controls the Surviving
Corporation) cause the Surviving Corporation to, pay as incurred such
Indemnified Party's legal and other expenses actually and reasonably incurred
in connection therewith upon receipt of an understanding by or on behalf of
such Indemnified Party to repay such amount if it is ultimately determined that
he is not entitled to be indemnified by WB. Neither WB, SNET or the Surviving
Corporation shall be liable for any settlement of any claim without its written
consent, which shall not be unreasonably withheld.
(f) Any Indemnified Party wishing to claim indemnification under this
Section 14.11, upon hearing of any claim, action, suit or proceeding or
investigation, shall notify WB, SNET or the Surviving Corporation (but the
failure to so notify an Indemnifying Party shall not relieve it from any
liability it may have under this Section , except to the extent such failure
prejudices such party). The Indemnified Parties as a group may retain only one
law firm to represent them with respect to such matter unless there is, under
applicable standards of conduct, a conflict on any significant issue
between the parties of any two or more Indemnified Parties.
(g) The obligations pursuant to this Section 14.11 will survive the
Merger and will continue in full force and effect for a period of three (3)
years from the Effective Time (except that the obligations of the Surviving
Corporation pursuant to subsection(c) of this Section to maintain policies of
officers' and directors' liability insurance shall continue for six(6) years
and the obligations of the Surviving Corporation and SNET pursuant to
subsection(a) of this Section shall continue for such six-year period solely
with respect to matters covered by such policies), provided that as to any
claim for indemnification asserted pursuant to this Section 14.11 during such
three-year or six-year period, as applicable, such obligations will remain in
full force and effect until the final disposition of such claim.
14.12 Interpretation. The section headings in this Agreement are
inserted for convenience only and are not part of this Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered as of the day and year first above written.
SOUTHERN NEW ENGLAND
TELECOMMUNICATIONS CORPORATION
By:
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Vice President & Treasurer
SNET ACQUISITION SUBSIDIARY, INC.
By:
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: President
THE WOODBURY TELEPHONE COMPANY
By:
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: President