As filed with the Securities and Exchange Commission on March 5, 1997
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SOUTHERN NEW ENGLAND TELECOMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
Connecticut 4813 06-1157778
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification
Number)
227 Church Street
New Haven, Connecticut 06510
(203) 771-5200
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Madelyn M. DeMatteo, Esq.
Southern New England Telecommunications Corporation
227 Church Street
New Haven, Connecticut 06510
(203) 771-5200
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
with copies to:
Burton Z. Alter, Esq. M. Louise Turilli, Esq.
Carmody & Torrance Day, Berry & Howard
50 Leavenworth Street, P.O. Box 1110 CityPlace I, 185 Asylum Street
Waterbury, Connecticut 06721 Hartford, Connecticut 06103-3499
(203) 777-5501 (860) 275-0100
Approximate date of commencement proposed sale of the securities to the
public: As soon as practicable after this registration statement becomes
effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
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Proposed maximum Proposed maximum Amount of
Title of each class of securities to be Amount to be offering price aggregate offering registration
registered registered(1) per unit(2)(3) price(3) fee(3)(4)
<S> <C> <C> <C> <C>
Common Stock, par value $1.00 per share..... 700,500 shs. $39.50 $27,669,750 $8,384.77
</TABLE>
(1) The number of shares of Common Stock, $1.00 par value, of Southern New
England Telecommunications Corporation ("SNET") being registered is
based on the approximate maximum number of shares issuable in connection
with the acquisition of The Woodbury Telephone Company ("WTC") by
SNET.
(2) Estimated solely for the purpose of calculating the registration fee.
(3) The proposed maximum offering price per share and in the aggregate and the
registration fee are based, pursuant to Rule 457(f) of the Securities Act
of 1933, upon the average of the bid and asked prices of the common stock
of WTC which was $39.50 per share.
(4) $3,858.84 of the registration fee was previously paid in connection with
the filing on February 19, 1997 of the Preliminary Proxy Statement of WTC.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
SOUTHERN NEW ENGLAND TELECOMMUNICATIONS CORPORATION
<TABLE>
<CAPTION>
Cross-Reference Sheet Between Items in Form S-4 and Joint Proxy Statement-
Prospectus
Pursuant to Item 501(b) of Regulation S-K
Heading or Location in Joint
Item No. Form S-4 Caption Proxy Statement-Prospectus
A. INFORMATION ABOUT THE TRANSACTION
<S> <C> <C>
Item 1. Forepart of Registration Statement and Outside Front Cover Page of Prospectus/ Proxy
Outside Front Cover Page of Prospectus Statement
Item 2. Inside Front and Outside Back Cover Page Inside Front Cover Page of Prospectus/Proxy
of Prospectus Statement; Available Information;
Incorporation of Certain Documents
by Reference; Table of Contents;
Summary
Item 3. Risk Factors, Ratio of Earnings to Fixed *
Charges and Other Information
Item 4. Terms of the Transaction Summary; The Merger; Description of SNET
Capital Stock; Material Differences
Between the Rights of Holders of SNET
Common Stock and WTC Common Stock
Item 5. Pro Forma Financial Information *
Item 6. Material Contacts with the Company Being Summary; The Merger
Acquired
Item 7. Additional Information Required for *
Reoffering by Persons and Parties Deemed
to be Underwriters
Item 8. Interests of Named Experts and Counsel *
Item 9. Disclosure of Commission Position on *
Indemnification for Securities Act Liabilities
B. INFORMATION ABOUT THE REGISTRANT
Item 10. Information with Respect to S-3 Registrants Incorporation of Certain Documents
by Reference
Item 11. Incorporation of Certain Information by Incorporation of Certain Documents
Reference by Reference
Item 12. Information with Respect to S-2 or S-3 *
Registrants
Item 13. Incorporation of Certain Information by *
Reference
<PAGE>
Heading or Location in Joint
Item No. Form S-4 Caption Proxy Statement-Prospectus
Item 14. Information with Respect to Registrants *
Other than S-2 or S-3 Registrants
C. INFORMATION ABOUT COMPANY BEING ACQUIRED
Item 15. Information with Respect to S-3 Companies Incorporation of Certain Documents by
Reference; Recent Development; The Merger
Item 16. Information with Respect to S-2 or S-3 *
Companies
Item 17. Information with Respect to Companies *
Other than S-2 or S-3 Companies
D. VOTING AND MANAGEMENT INFORMATION
Item 18. Information if Proxies, Consents or Summary; The Special Meeting; The
Authorizations Are to be Solicited Merger; Incorporation of
Certain Documents by Reference
Item 19. Information if Proxies, Consents or *
Authorizations Are Not to be Solicited or in
an Exchange Offer
</TABLE>
_____________
* Omitted because inapplicable or answer is in the negative.
<PAGE>
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF THE WOODBURY TELEPHONE COMPANY
Special Meeting of Shareholders - April 2, 1997
The undersigned hereby appoints J. Garry Mitchell and Donald E. Porter, each
with the power to appoint his substitute, and hereby authorizes each and either
of them to represent and to vote, as designated below, all the shares of common
stock of The Woodbury Telephone Company held of record by the undersigned on
February 14, 1997, at the special meeting of shareholders to be held at the
Southbury Hilton, 1284 Strongtown Road (Exit 16, Interstate 84), Southbury,
Connecticut 06488 on April 2, 1997, at 10:30 a.m., local time, or any
adjournment thereof.
/ / FOR
/ / AGAINST
/ / ABSTAIN
the adoption of the following resolution:
RESOLVED, that the form, terms and provisions of the Amended
and Restated Agreement and Plan of Merger dated as of December
6, 1996, among The Woodbury Telephone Company, Southern
New England Telecommunications Corporation and SNET Acquisition
Subsidiary, Inc., as described in the Prospectus/Proxy
Statement dated March ___, 1997 is hereby approved.
Unless a shareholder specifies otherwise, this proxy shall be deemed to grant
authority to vote FOR the approval of the Merger Agreement.
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting, or any adjournment thereof,
including all matters that the undersigned would be entitled to vote upon if
personally present.
This proxy when properly executed will be voted in the manner directed herein
by the undersigned.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE
APPROVAL OF THE MERGER AGREEMENT.
Receipt of Notice of Special Meeting of Shareholders, and the Prospectus/Proxy
Statement dated March ___, 1997, is hereby acknowledged.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
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______________________________________________________________________(NAME)
Dated: March ___, 1997
____________________________________________________________________________
Signature
____________________________________________________________________________
Signature (if held jointly)
PLEASE PROMPTLY MARK, SIGN, DATE AND RETURN THE
PROXY CARD USING THE ENCLOSED ENVELOPE
<PAGE>
THE WOODBURY TELEPHONE COMPANY
299 Main Street South
Woodbury, Connecticut 06798
March ___, 1997
Dear Shareholder:
We invite you to attend the Special Meeting of Shareholders of The
Woodbury Telephone Company ("WTC") to be held on April 2, 1997 at 10:30 a.m.
local time at the Southbury Hilton, 1284 Strongtown Road (Exit 16, Interstate
84), Southbury, Connecticut 06488.
At the Special Meeting, shareholders of WTC will vote upon the proposal
to approve the Amended and Restated Agreement and Plan of Merger dated as of
December 6, 1996 (the "Merger Agreement"), among Southern New England
Telecommunications Corporation ("SNET"), SNET Acquisition Subsidiary, Inc., a
wholly-owned subsidiary of SNET ("SAS"), and WTC. Pursuant to the Merger
Agreement, SAS will merge into WTC and WTC will become a wholly-owned
subsidiary of SNET, and each share of WTC common stock held by WTC shareholders
(excluding shares of WTC common stock held by SNET, which owns 36.5 percent of
WTC) will be converted into the right to receive a number of publicly traded
and listed shares of SNET common stock having a value equal to $43.00,
subject to adjustment as described in the accompanying Prospectus/Proxy
Statement. The transaction is intended to be generally free of federal income
tax consequences to WTC shareholders.
Consummation of the merger is subject to a number of conditions,
including approval by WTC shareholders and approval by governmental regulatory
authorities.
Please review carefully the accompanying Prospectus/Proxy Statement,
which describes the proposed merger and to which is attached a copy of the
Merger Agreement. Furthermore, please review the financial and other
information set forth in the documents described under "AVAILABLE INFORMATION"
in the Prospectus/Proxy Statement with respect to both SNET and WTC.
WTC's Board of Directors has approved the proposed merger and
recommends that shareholders approve the Merger Agreement by voting "FOR" on
the enclosed Proxy Card. A failure to vote, either by not returning the
enclosed Proxy Card or by checking the "ABSTAIN" box thereon, will have the
same effect as a vote "AGAINST" approval of the Merger Agreement.
Please complete the enclosed Proxy Card, and sign, date and mail it
promptly in the enclosed postage paid return envelope. Even if you intend to
attend the Special Meeting, I urge you to return the Proxy Card, duly
completed, signed and dated.
Because of the Special Meeting, we have determined to defer our Annual
Meeting of Shareholders until a later date, if required.
Very truly yours,
J. Garry Mitchell
Chairman of the Board
<PAGE>
THE WOODBURY TELEPHONE COMPANY
299 Main Street South
Woodbury, Connecticut 06798
____________________________________________________
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 2, 1997
Dear Shareholder:
March ___, 1997
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of The
Woodbury Telephone Company will be held at 10:30 a.m. on April 2, 1997 at the
Southbury Hilton, 1284 Strongtown Road (Exit 16, Interstate 84), Southbury,
Connecticut 06488 (the "Special Meeting"), for the following purpose:
To consider and vote upon a proposal to approve the Amended and
Restated Agreement and Plan of Merger, dated as of December 6, 1996
(the "Merger Agreement"), among The Woodbury Telephone Company ("WTC"),
Southern New England Telecommunications Corporation ("SNET") and SNET
Acquisition Subsidiary, Inc. ("SAS"), pursuant to which, among other
things, SAS will merge with and into WTC (the "Merger") and each
outstanding share of WTC's common stock, par value $2.50 per share
("WTC Common Stock"), (excluding any shares with respect to which
dissenters' rights have been perfected and excluding shares of
WTC Common Stock held by SNET) will be converted into the right to
receive a number of shares of common stock, par value $1.00 per share,
together with SNET Rights (as defined in the accompanying
Prospectus/Proxy Statement) attached thereto ("SNET Common Stock")
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 of the Merger (the "Merger
Consideration"); provided that if 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 WTC shall have the option to consummate the Merger
based on such deemed Average Closing Price and, if WTC does not opt to
do so, then SNET shall have the option to terminate the Merger; and if
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 WTC
shall have the option to terminate the Merger.
A copy of the Merger Agreement is set forth in ANNEX A to the
accompanying Prospectus/Proxy Statement.
The Board of Directors of WTC has fixed February 14, 1997 as the record
date for the determination of shareholders entitled to notice of and to vote at
the Special Meeting and, accordingly, only holders of record of WTC Common
Stock at the close of business on that date will be entitled to notice of and
to vote at the Special Meeting.
Approval of the Merger Agreement requires the affirmative votes at the
Special Meeting of the holders of at least (a) 80 percent of all of the
outstanding shares of WTC Common Stock and (b) two-thirds of the outstanding
shares of WTC Common Stock not held by SNET and its affiliates and associates.
Each holder of WTC Common Stock who is entitled to vote on approval of
the Merger Agreement has the right to object to the Merger and to be paid the
fair value of such holder's WTC Common Stock in cash if the Merger Agreement is
approved and the Merger is consummated. The right of any such holder of WTC
Common Stock to receive such payment is contingent upon strict compliance with
the requirements set forth in the applicable provisions of the Connecticut
Business Corporation Act, the full text of which provisions is set forth in
ANNEX C to the accompanying Prospectus/Proxy Statement and a summary of
which is set forth under "THE MERGER -- Dissenters' Rights."
The Board of Directors of WTC voting on the Merger (the director
affiliated with SNET having abstained) unanimously recommends that shareholders
vote "FOR" approval of the Merger Agreement.
By Order of the Board of
Directors of
The Woodbury Telephone Company
Harmon L. Andrews
Secretary
BECAUSE THE AFFIRMATIVE VOTES AT THE SPECIAL MEETING OF THE HOLDERS OF AT LEAST
(a) 80 PERCENT OF ALL OF THE OUTSTANDING SHARES OF WTC COMMON STOCK AND (b)
TWO-THIRDS OF THE OUTSTANDING SHARES OF WTC COMMON STOCK NOT HELD BY SNET AND
ITS AFFILIATES AND ASSOCIATES IS REQUIRED TO APPROVE THE MERGER AGREEMENT, WTC
STOCKHOLDERS ARE URGED TO COMPLETE, DATE, SIGN AND RETURN PROMPTLY THE ENCLOSED
PROXY IN THE ACCOMPANYING ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN
THE UNITED STATES. A FAILURE TO VOTE, EITHER BY NOT RETURNING THE ENCLOSED
PROXY OR BY CHECKING THE "ABSTAIN" BOX THEREON, WILL HAVE THE SAME EFFECT AS A
VOTE "AGAINST" APPROVAL OF THE MERGER AGREEMENT.
<PAGE>
PROSPECTUS
SOUTHERN NEW ENGLAND TELECOMMUNICATIONS CORPORATION
COMMON STOCK
Par Value $1.00 per share
________________________________________________
PROXY STATEMENT
THE WOODBURY TELEPHONE COMPANY
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 2, 1997
________________________________________________
This Prospectus/Proxy Statement relates to the proposed acquisition by
Southern New England Telecommunications Corporation, a Connecticut corporation
("SNET") of The Woodbury Telephone Company, a Connecticut corporation ("WTC")
in a merger transaction (the "Merger") pursuant to an Amended and Restated
Agreement and Plan of Merger, dated as of December 6, 1996 (the "Merger
Agreement"), among WTC, SNET and SNET Acquisition Subsidiary, Inc., a
Connecticut corporation ("SAS"). A copy of the Merger Agreement is attached
hereto as ANNEX A.
At the effective time of the Merger (the "Effective Time"), each
outstanding share of WTC's common stock, par value $2.50 per share ("WTC Common
Stock"), (excluding any shares with respect to which dissenters' rights have
been perfected ("Dissenting Shares") and excluding shares of WTC Common Stock
held by SNET) will be converted into the right to receive a number of shares of
common stock, par value $1.00 per share, together with SNET Rights (as herein
defined) attached thereto ("SNET Common Stock") 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
price (the "Average Closing Price") of one share of SNET Common Stock as
reported on the New York Stock Exchange ("NYSE") 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 WTC shall have the option to consummate the Merger based on such
deemed Average Closing Price and, if WTC does not opt to do so, then SNET shall
have the option to terminate the Merger; and if 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
WTC shall have the option to terminate the Merger.
This Prospectus/Proxy Statement is being furnished to the holders of
WTC Common Stock as a Proxy Statement in connection with the solicitation of
proxies by the Board of Directors of WTC (the "WTC Board") for use at a Special
Meeting of Shareholders of WTC to be held at 10:30 a.m., on April 2, 1997 at
the Southbury Hilton, 1284 Strongtown Road (Exit 16, Interstate 84), Southbury,
Connecticut 06488, and at any adjournments or postponements thereof (the
"Special Meeting"). At the Special Meeting, the WTC shareholders will be asked
to consider and vote on a proposal to approve the Merger Agreement.
This Prospectus/Proxy Statement also constitutes a prospectus of SNET
with respect to the shares of SNET Common Stock that will constitute the Merger
Consideration.
This Prospectus/Proxy Statement, the accompanying Notice of Special
Meeting and form of proxy are first being mailed to the shareholders of WTC on
or about March 11, 1997.
Information set forth herein regarding SNET and its subsidiaries has
been provided by SNET. Information set forth herein regarding WTC has been
provided by WTC.
SNET Common Stock is listed and traded on the New York and Pacific
Stock Exchanges ("Exchanges") and WTC Common Stock is listed and traded on the
NASDAQ OTC Bulletin Board. On October 21, 1996, the last business day prior to
public announcement of the agreement in principle to enter into the Merger, the
composite closing price per share of SNET Common Stock on the Exchanges was
$38.25 and the last reported bid and asked prices per share of WTC Common Stock
on the NASDAQ OTC Bulletin Board were $26.50 and $26.875, respectively. On
March 10, 1997, such price for SNET Common Stock was $_________, and for WTC
Common Stock such prices were $___________ and $_____________, respectively.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS/PROXY
STATEMENT. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Prospectus/Proxy Statement is March ___, 1997.
<PAGE>
AVAILABLE INFORMATION
SNET and WTC are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder (the "Exchange Act"), and, in accordance therewith, file reports,
proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed by SNET and WTC can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the Commission's Regional Offices in Boston at 73 Tremont
Street, Boston, Massachusetts 02108, and copies of such materials can be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. Certain of such
reports, proxy statements and other information is also available from the
Commission over the Internet at http://www.sec.gov. SNET Common Stock is
listed on the NYSE. Reports, proxy statements and other information
relating to SNET can also be inspected at the offices of the NYSE, 20 Broad
Street, New York, New York 10005.
This Prospectus/Proxy Statement does not contain all of the information
set forth in the Registration Statement on Form S-4 (No. 333-_______), of which
this Prospectus/Proxy Statement is a part, and the exhibits thereto (together
with any amendments or supplements thereto, the "Registration Statement"),
which has been filed by SNET with the Commission under the Securities Act of
1933, as amended (the "Securities Act"), and the rules and regulations
thereunder, certain portions of which have been omitted pursuant to the rules
and regulations of the Commission and to which portions reference is hereby
made for further information.
This Prospectus/Proxy Statement incorporates documents by reference
that are not presented herein or delivered herewith. A copy of such documents
is available without charge (other than certain exhibits to such documents) to
any person, including any beneficial owner, to whom this Prospectus/Proxy
Statement is delivered, upon written or oral request to: Southern New England
Telecommunications Corporation, Attn: James A. Magrone, 227 Church Street, New
Haven, Connecticut 06510 (telephone number (203) 771-4662) as to SNET
documents; and to The Woodbury Telephone Company, Attn: President, 299 Main
Street South, Woodbury, Connecticut 06798 (telephone number (203) 263-2121) as
to WTC documents. In order to ensure timely delivery of such documents, any
such request should be made by March 24, 1997.
All information contained or incorporated by reference in this
Prospectus/Proxy Statement with respect to SNET and SAS was supplied by SNET,
and all information contained or incorporated by reference in this
Prospectus/Proxy Statement with respect to WTC was supplied by WTC.
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus/Proxy Statement
and, if given or made, such information or representations must not be relied
upon as having been authorized by SNET or WTC. Neither the delivery of this
Prospectus/Proxy Statement nor any distribution of the SNET Common Stock shall,
under any circumstances, create any implication that there has been no change
in the affairs of SNET or WTC since the date hereof or that the information
contained herein is correct as of any time subsequent to its date. This
Prospectus/Proxy Statement does not constitute an offer to sell or a
solicitation of an offer to buy the securities offered by this Prospectus/Proxy
Statement or the solicitation of a proxy, in any jurisdiction, to any
person to whom it is unlawful to make such offer or solicitation of an offer or
proxy solicitation in such jurisdiction.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by SNET (File No. 1-
9157) and by WTC (File No. 0-8621) under Section 13(a) or 15(d) of the Exchange
Act are hereby incorporated by reference in this Prospectus/Proxy Statement:
SNET documents:
(i) SNET's Annual Report on Form 10-K for the year ended December 31,
1995;
(ii) SNET's Quarterly Reports on Form 10-Q for the periods ended March
31, 1996, June 30, 1996 and September 30, 1996; and
(iii) SNET's Current Reports on Form 8-K dated January 22, 1996, April
23, 1996, July 23, 1996, October 22, 1996, December 11, 1996 and
January 21, 1997.
WTC documents:
(i) WTC's Annual Report on Form 10-K for the year ended December 31,
1995; and
(ii) WTC's Quarterly Reports on Form 10-Q for the periods ended March
31, 1996, June 30, 1996; and September 30, 1996; and
(iii) WTC's Current Reports on Form 8-K dated November 4, 1996 and
February 19, 1997.
All documents filed by SNET or WTC pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date hereof and prior to the
date of the Special Meeting are hereby incorporated by reference into this
Prospectus/Proxy Statement and shall be deemed to be a part hereof from the
date of filing of such documents.
Any statement contained herein, in any supplements hereto or in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of the Registration Statement
and this Prospectus/Proxy Statement to the extent that a statement contained
herein, in any supplement hereto or in any subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of the Registration Statement, this Prospectus/Proxy Statement or any
supplement hereto.
<PAGE>
TABLE OF CONTENTS
AVAILABLE INFORMATION
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
SUMMARY
Parties to the Merger
Special Meeting; Record Date
The Merger
Vote Required
Effective Time
Recommendation of the WTC Board
Opinion of Financial Advisor
Interests of Certain Persons in the Merger
Certain Federal Income Tax Consequences
Dissenters' Rights
Resale of SNET Common Stock
Conditions to the Merger
Accounting Treatment
Certain Differences in the Rights of WTC and SNET
Shareholders
Comparison of Certain Per Share Data
Selected Financial Data of SNET
Selected Financial Data of WTC
RECENT DEVELOPMENTS
THE SPECIAL MEETING
General
Record Date; Vote Required; Revocation of Proxies
THE MERGER
General
Effective Time
Dividends on WTC Common Stock
Exchange of WTC Certificates
Background and Reasons
WTC
Industry Overview
WTC's Strategic Planning
Merger Negotiations
WTC's Reasons for the Merger
(i)
<PAGE>
TABLE OF CONTENTS (CONTINUED)
SNET's Reasons for the Merger
Opinion of Financial Advisor
Interests of Certain Persons
General
Deferred Compensation Agreement
Change-in-Control Agreement
Severance Pay
Indemnification; Directors' and Officers' Insurance
Designee of SNET on WTC Board
Certain Federal Income Tax Consequences
Conduct of WTC Business Pending Consummation
Regulatory Approvals
DPUC
HSR Act
Acquisition Proposals; Cancellation Fee
Conditions to Consummation; Termination
Waiver; Amendment
Accounting Treatment
Expenses
Dissenters' Rights
Market Prices
Dividends
WTC
General
History and Business
SNET
General
History and Business
Certain Regulatory Considerations
General
Federal Telecommunications Act
Connecticut Telecommunications Act
DESCRIPTION OF SNET CAPITAL STOCK
SNET Common Stock
Preferred Stock
Preference Stock
(ii)
<PAGE>
TABLE OF CONTENTS (CONTINUED)
Rights Plan
MATERIAL DIFFERENCES BETWEEN THE RIGHTS OF HOLDERS OF SNET COMMON STOCK AND WTC
COMMON STOCK
Articles of Incorporation Amendments
Bylaws Amendments
Distributions to Shareholders
Classes of Directors
Removal of Directors
Meetings of Shareholders
Actions by Shareholders without Meeting
Mergers and Acquisitions . . . . . . .
Interested Shareholder Transactions
Fiduciary Duty
RESALE OF SNET COMMON STOCK
VALIDITY OF SNET COMMON STOCK
EXPERTS
(iii)
<PAGE>
SUMMARY
The following summary of certain information regarding the Merger is
not intended to be a summary of all material information relating to the Merger
and is qualified in its entirety by reference to the more detailed information
contained elsewhere in this Prospectus/Proxy Statement, including the Annexes
hereto, and in the documents incorporated by reference in this Prospectus/Proxy
Statement. A copy of the Merger Agreement is set forth in ANNEX A to this
Prospectus/Proxy Statement and reference is made thereto for a complete
description of the terms of the Merger. Shareholders are urged to read
carefully this entire Prospectus/Proxy Statement, including the Annexes hereto
and the documents incorporated herein by reference. As used in this
Prospectus/Proxy Statement, the term "SNET" refers to such organization, and
unless the context otherwise requires, to its consolidated subsidiaries.
Parties to the Merger
SNET: SNET is a Connecticut-based company reaching beyond its
traditional borders to offer wireline, wireless and
information and entertainment services, including local,
national and international calling; mobile communications;
and publishing, information and advertising. SNET is
building I-SNET{SM}, a statewide information superhighway
that brings to customers a full array of information,
communications and entertainment services. The principal
executive offices of SNET are at 227 Church Street, New
Haven, Connecticut 06510. Its telephone number is (203)
771-5200.
SAS: SAS is a wholly-owned subsidiary of SNET created solely
for the purpose of effecting the Merger. The principal
executive offices of SAS are at 227 Church Street, New
Haven, Connecticut 06510. Its telephone number is (203)
771-5200.
WTC: WTC provides local exchange telephone services, intrastate
toll services and access to long distance telephone
services (both intrastate and interstate). WTC also sells
telephone equipment. WTC is the primary provider of local
exchange service in the major portions of the Towns of
Woodbury, Southbury and Bethlehem, Connecticut, and also
provides local exchange service to small portions of the
Towns of Oxford and Roxbury, Connecticut. The principal
executive offices of WTC are at 299 Main Street South,
Woodbury, Connecticut 06798. Its telephone number is
(203) 263-2121.
<PAGE>
Special Meeting; Record Date
The Special Meeting is scheduled to be held on April 2, 1997 at 10:30
a.m., at the Southbury Hilton, 1284 Strongtown Road (Exit 16, Interstate 84),
Southbury, Connecticut 06488. At the Special Meeting, shareholders will
consider and vote upon a proposal to approve the Merger Agreement and the
transactions contemplated thereby.
The WTC Board has fixed February 14, 1997 as the record date for
determining shareholders entitled to notice of and to vote at the Special
Meeting (the "Record Date"). As of such date, there were 769,107 shares of WTC
Common Stock outstanding, of which 280,645 shares (constituting 36.5 percent)
are owned of record and beneficially by SNET (the "SNET Shareholdings").
The Merger
Subject to the terms and conditions of the Merger Agreement, SAS will
merge with and into WTC, and thereafter WTC will be a wholly-owned subsidiary
of SNET. Upon consummation of the Merger, each outstanding share of WTC Common
Stock (excluding any Dissenting Shares and any SNET Shareholdings (the SNET
Shareholdings, together with the Dissenting Shares, herein the "Excluded
Shares")) will be converted into the right to receive a number of shares of
SNET Common Stock equal to $43.00, as may be adjusted pursuant to the Merger
Agreement. (See "THE MERGER -- General; -- Exchange of WTC Certificates;
- -- Dissenters' Rights"; "DESCRIPTION OF SNET CAPITAL STOCK" and "MATERIAL
DIFFERENCES BETWEEN THE RIGHTS OF HOLDERS OF SNET COMMON STOCK AND WTC COMMON
STOCK.")
Vote Required
Approval of the Merger Agreement requires the affirmative votes of the
holders of at least (a) 80 percent of all of the outstanding shares of WTC
Common Stock and (b) two-thirds of the outstanding shares of WTC Common Stock
not held by SNET and its affiliates and associates.
The directors and executive officers of WTC (including certain of their
related interests) beneficially owned, as of the Record Date, and are entitled
to vote at the Special Meeting, 10,558 shares of WTC Common Stock, which
represents 1.37 percent of the outstanding shares of WTC Common Stock entitled
to be voted at the Special Meeting. The directors have informed WTC that they
intend to vote all of their shares of WTC Common Stock in favor of approval of
the Merger Agreement. SNET has informed the WTC Board that it intends to vote
the SNET Shareholdings in favor of approval of the Merger Agreement. (See "THE
SPECIAL MEETING -- Record Date; Vote Required; Revocation of Proxies.")
A failure to vote, either by not returning the enclosed proxy or by
checking the "Abstain" box thereon, will have the same effect as a vote
"Against" approval of the Merger Agreement.
Effective Time
Subject to the conditions to the obligations of the parties to effect
the Merger set forth in the Merger Agreement, the Merger will become effective
when the certificates required under applicable law are filed with the
Connecticut Secretary of State on the date of the closing of transactions or on
such other date as the parties to the Merger Agreement shall agree. The
closing of transactions is contemplated to occur within ten days following the
receipt of all regulatory approvals. Subject to the foregoing, it is currently
anticipated that the Merger will be consummated in the second or third quarter
of 1997. If the Merger is consummated in either of such quarters, or in any
other quarter, WTC shareholders should not assume or expect that the Effective
Time will precede the record date for the dividend on SNET Common Stock for
that quarter, so as to enable such shareholders to receive such dividend. (See
"THE MERGER -- Exchange of WTC Certificates" and "-- Conditions to
Consummation; Termination.")
Recommendation of the WTC Board
The terms of the Merger were arrived at as the result of arm's-length
negotiations between representatives of SNET and WTC.
The WTC Board has adopted the Merger Agreement by unanimous vote,
believes the Merger is fair and in the best interests of WTC and its
shareholders and recommends its approval by WTC shareholders. (Such unanimous
vote did not include the vote of Michael Phelan, SNET's designee on the WTC
Board, who abstained.) The decision of the WTC Board to approve the Merger
Agreement and the Merger and to recommend the approval thereof to the
shareholders of WTC was based on a number of considerations. (See "THE
MERGER -- Background and Reasons; WTC.")
Opinion of Financial Advisor
McDonald & Company Securities, Inc. ("McDonald") has advised the WTC
Board that, in its opinion, the Merger Consideration to be received by WTC
shareholders in the Merger is fair, from a financial point of view, to the
holders of WTC Common Stock. The full text of the McDonald opinion, which
describes the procedures followed, assumptions made, limitations on the review
undertaken and other matters in connection with rendering such opinion, is set
forth in ANNEX B to this Prospectus/Proxy Statement and should be read in its
entirety by WTC shareholders. (See "THE MERGER -- Opinion of Financial
Advisor.")
<PAGE>
Interests of Certain Persons in the Merger
Certain members of WTC's management and the WTC Board of Directors may
be deemed to have interests in the Merger in addition to their interests as
shareholders of WTC generally. These include, among other things, provisions
in the Merger Agreement relating to indemnification, directors' and officers'
liability insurance, and certain other benefits as summarized below. In
addition, WTC is obligated, and will continue to be obligated after the Merger,
to continue to pay deferred compensation to J. Garry Mitchell, Chairman of the
Board and a director of WTC; and Donald E. Porter, President and a director of
WTC, may be entitled to other payments from WTC if he is terminated without
cause within 24 months following a Change of Control (as defined). SNET
designates a director to sit on the WTC Board, and such designee has not
participated in WTC Board discussions concerning the Merger or votes of the WTC
Board regarding the Merger. (See "THE MERGER -- Interests of Certain
Persons.")
Certain Federal Income Tax Consequences
Among other things, consummation of the Merger is conditioned upon
receipt by WTC of an opinion of Carmody & Torrance, counsel for WTC, dated as
of the Effective Time to the effect that no gain or loss will be recognized for
federal income tax purposes by shareholders of WTC who receive SNET Common
Stock in exchange for their shares of WTC Common Stock, except that gain or
loss may be recognized as to cash received in lieu of fractional share
interests, or in the case of any holders of WTC Common Stock who perfect their
dissenters' rights, cash received upon exercise of such rights. (See "THE
MERGER -- Certain Federal Income Tax Consequences" and "-- Dissenters'
Rights.")
BECAUSE CERTAIN TAX CONSEQUENCES MAY VARY DEPENDING UPON THE PARTICULAR
CIRCUMSTANCES OF EACH SHAREHOLDER, IT IS RECOMMENDED THAT SHAREHOLDERS CONSULT
THEIR TAX ADVISORS CONCERNING THE FEDERAL (AND ANY STATE AND LOCAL) TAX
CONSEQUENCES OF THE MERGER IN THEIR PARTICULAR CIRCUMSTANCES.
Dissenters' Rights
Holders of WTC Common Stock entitled to vote on approval of the Merger
Agreement have the right to object to the Merger, and upon consummation of the
Merger and the satisfaction of certain specified procedures, to be paid the
fair value of such holders' shares of WTC Common Stock in cash, in accordance
with the applicable provisions of the Connecticut Business Corporation Act
("CBCA"). The procedures to be followed by objecting shareholders are
summarized under "THE MERGER -- Dissenters' Rights." A copy of the applicable
provisions of the CBCA is set forth in ANNEX C to this Prospectus/Proxy
Statement. Failure to follow such provisions precisely may result in loss
of such dissenters' rights.
In general, any objecting shareholder who perfects such holder's
statutory right to be paid in cash the fair value of such holder's WTC Common
Stock will recognize gain or loss for federal income tax purposes upon receipt
of such cash. (See "THE MERGER -- Certain Federal Income Tax Consequences.")
Resale of SNET Common Stock
The shares of SNET Common Stock issued in the Merger to holders of WTC
Common Stock who are not "affiliates" (generally including directors, certain
executive officers and ten percent or more shareholders) of WTC may be resold
by them under the Securities Act. The shares of SNET Common Stock issued to
those holders of WTC Common Stock who may be deemed to be affiliates of WTC may
be resold by them only in transactions permitted by the resale provisions of
Rule 145 under the Securities Act. It is a condition to consummation of the
Merger that each holder of WTC Common Stock who is deemed by WTC to be an
affiliate has entered into an agreement with SNET providing, among other
things, that such affiliate will not transfer any SNET Common Stock received
by such affiliate in the Merger except in compliance with the Securities Act.
(See "RESALE OF SNET COMMON STOCK.")
Conditions to the Merger
The obligations of the parties under the Merger Agreement to consummate
the Merger are subject to a number of conditions, certain of which may be
material. (See "THE MERGER -- Conditions to Consummation; Termination.")
Consummation of the Merger is subject to the approval of the
Connecticut Department of Public Utility Control ("DPUC") and further subject
to the expiration or early termination of all applicable waiting periods under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"). (See "THE MERGER -- Regulatory Approvals.")
Accounting Treatment
It is intended that the Merger will be accounted for as a purchase
under generally accepted accounting principles. (See "THE MERGER -- Accounting
Treatment.")
Certain Differences in the Rights of WTC and SNET Shareholders
The rights of shareholders of WTC are currently determined by reference
to the CBCA and by WTC's Certificate of Organization, as amended (the "WTC
Certificate") and bylaws, as amended (the "WTC Bylaws"). At the Effective
Time, shareholders of WTC will become shareholders of SNET, and their rights as
shareholders of SNET will be determined by reference to the CBCA and by SNET's
Certificate of Incorporation, as amended (the "SNET Certificate"), and bylaws,
as amended (the "SNET Bylaws"). (See "DESCRIPTION OF SNET CAPITAL STOCK" and
"MATERIAL DIFFERENCES BETWEEN THE RIGHTS OF HOLDERS OF SNET COMMON STOCK AND
WTC COMMON STOCK.")
Comparison of Certain Per Share Data
The following tables set forth for the SNET Common Stock and the WTC
Common Stock as of September 30, 1996 and December 31, 1995 certain historical,
pro forma and equivalent pro forma per share financial information for the nine
month period and the year then ended, respectively. All such information is
presented on a per share basis. The pro forma amounts included below are based
on the purchase method of accounting. The equivalent pro forma information for
WTC assumes an exchange ratio of 1.186 shares of SNET Common Stock for each
share of WTC Common Stock based on the calculation contained in the Merger
Agreement using the closing price of SNET Common Stock on February 28, 1997 of
$36.25 as reported on the NYSE. The market value per share data is presented
as of October 21, 1996, the date preceding the public announcement of the
Merger.
The information shown below should be read in conjunction with, and is
qualified entirely by reference to, the historical financial statements of SNET
and WTC, including the respective notes thereto, and the documents incorporated
herein by reference. (See "AVAILABLE INFORMATION" and "INCORPORATION OF
CERTAIN DOCUMENTS BY REFERENCE.")
<TABLE>
<CAPTION>
September 30, 1996 December 31, 1995
<S> <C> <C>
Book value per share:
Historical, per share of:
SNET Common Stock.......... $ 6.73 $ 5.42
WTC Common Stock........... $17.86 $16.64
Pro Forma - SNET.................... $ 7.05 $ 5.75
Equivalent Pro Forma - WTC........ $ 8.36 $ 6.82
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, 1996 December 31, 1995
<S> <C> <C>
Cash dividends paid per share:
Historical, per share of:
SNET Common Stock.......... $1.32 $1.76
WTC Common Stock........... $1.14 $1.52
Pro Forma - SNET.................... $1.32 $1.76
Equivalent Pro Forma - WTC........ $1.57 $2.09
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, 1996 December 31, 1995
<S> <C> <C>
Net Income (Loss) Applicable To
Common Stockholders:
Historical, per share of:
SNET Common Stock.......... $2.27 ($7.99)
WTC Common Stock........... $2.36 $2.38
Pro Forma - SNET.................... $2.26 ($7.91)
Equivalent Pro Forma - WTC........ $2.68 ($9.38)
</TABLE>
<TABLE>
<CAPTION>
Historical Historical WTC
SNET WTC Equivalent
Common Stock Common Stock Pro Forma
<S> <C> <C> <C> <C>
Market Value Per Share -
October 21, 1996.... $38.25 $26.50 Bid $26.875 Asked $45.36
</TABLE>
Selected Financial Data of SNET
The following table sets forth certain historical consolidated selected
financial information for SNET as of December 31, 1995, December 31, 1994,
December 31, 1993, December 31, 1992 and December 31, 1991 and for the nine
months ended September 30, 1995 and 1994. The selected financial data for the
years ended December 31, 1995, December 31, 1994, December 31, 1993, December
31, 1992 and December 31, 1991 have been derived from SNET's consolidated
financial statements certified by its independent accountants. The selected
financial data for the nine month periods ended September 30, 1996 and 1995 are
unaudited. This information should be read in conjunction with the historical
consolidated financial statements of SNET, including the related notes thereto,
and the other documents incorporated herein by reference. (See "AVAILABLE
INFORMATION" and "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.") Interim
unaudited historical data of SNET reflect, in the opinion of management, all
adjustments (consisting only of normal recurring adjustments) necessary to a
fair presentation of such data.
<PAGE>
<TABLE>
<CAPTION>
In thousands (000's) except for per share data
September September December December December December December 31,
30, 1996 30, 1995 31, 1995 31, 1994 31, 1993 31, 1992 1991
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues and sales 1,450,000 1,352,800 1,838,500 1,717,000 1,653,600 1,614,400 1,608,400
Net income (loss) 148,500 128,100 (518,300) 177,600 (318,100) 151,400 123,700
Long-term debt 1,169,700 1,182,500 1,182,400 952,100 984,300 1,048,300 1,071,600
Total assets 2,616,800 3,831,700 2,724,000 3,504,600 3,761,500 3,484,600 3,451,000
Per share of Common
Stock
(Loss) Earnings 2.27 1.98 (7.99) 2.77 (4.99) 2.44 2.02
Cash dividends 1.32 1.32 1.76 1.76 1.76 1.76 1.76
</TABLE>
<PAGE>
Selected Financial Data of WTC
The following table sets forth certain historical selected financial
information for WTC as of and for the years ended December 31, 1995, 1994,
1993, 1992 and 1991, and for the nine months ended September 30, 1996 and 1995.
The selected financial data for the years ended December 31, 1995, 1994, 1993,
1992 and 1991 have been derived from the audited financial statements of WTC.
The selected financial data for the nine month periods ended September 30, 1996
and 1995 are derived from unaudited financial statements. Operations for the
nine months ended September 30, 1996 are not necessarily indicative of
the results that may be expected for the year ended December 31, 1996. This
information should be read in conjunction with the historical financial
statements of WTC, including the respective notes thereto, and the other
documents incorporated herein by reference. (See "AVAILABLE INFORMATION" and
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.") The unaudited financial
statements reflect, in the opinion of management, all adjustments (consisting
of normal recurring accruals) necessary for a fair presentation of the
financial position and the results of operations for these periods.
<PAGE>
<TABLE>
<CAPTION>
September September December December December December December 31,
30, 1996 30, 1995 31, 1995 31, 1994 31, 1993 31, 1992 1991
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Operating revenues 10,625,155 9,365,599 12,592,857 12,038,143 11,457,557 11,422,319 10,584,049
Net income 1,811,833 1,331,457 1,831,810 1,624,177 1,302,518 1,526,030 1,237,147
Long-term debt 9,000,000 9,000,000 9,000,000 9,000,000 9,000,000 9,000,000 2,830,000
Total assets 28,306,636 27,878,581 27,323,156 28,083,937 26,994,308 26,609,485 25,929,965
Per share of Common
Stock
Net income 2.36 1.73 2.38 2.11 1.69 1.98 1.61
Cash dividends 1.14 1.14 1.52 1.52 1.52 1.52 1.52
</TABLE>
<PAGE>
RECENT DEVELOPMENTS
Shortly following the joint public announcement on October 22, 1996 by
SNET and WTC of the agreement in principle to proceed with the Merger, the
management of WTC became aware, in the course of its normal review of trading
activity in WTC Common Stock, of certain unexplained trading activity. Some of
such activity closely preceded the October 22, 1996 public announcement. The
high bid and low asked prices of WTC Common Stock on October 21, 1996 (the last
trading day preceding the public announcement) were $26.50 and $26.875,
respectively. On October 23, 1996, the first trading day following the public
announcement, such prices were $34.50 and $42.00, respectively, and
transactions were consummated at a high bid of $38.00.
WTC, on a totally voluntary basis, promptly informed the Commission of
such unexplained activity and, in response to the Commission's request,
provided certain written information to the Commission on November 12, 1996 and
thereafter.
SNET has informed WTC that the Commission has requested SNET to provide
certain information, and in response thereto, SNET informed WTC that it has
complied.
WTC has been informed by the Commission that its investigation is not
expected to be concluded by the date of the Special Meeting.
<PAGE>
THE SPECIAL MEETING
General
This Prospectus/Proxy Statement is being furnished by WTC to its
shareholders as a Proxy Statement in connection with the solicitation of
proxies by the WTC Board for use at the Special Meeting to be held on April 2,
1997 and any adjournments or postponements thereof, to consider and vote upon a
proposal to approve the Merger Agreement and the transactions contemplated
thereby.
Directors, officers and employees of WTC and SNET may solicit proxies
from WTC shareholders, either personally or by telephone, telegraph or other
forms of communication. Such persons will receive no additional compensation
for such services. All expenses associated with the solicitation of proxies in
the form enclosed will be borne by the party incurring the same, except for
printing expenses, which will be shared equally by SNET and WTC.
The WTC Board voting on the Merger (the director affiliated with SNET
having abstained) has unanimously adopted the Merger Agreement, believes the
Merger Agreement is in the best interests of WTC and its shareholders and is
fair to the shareholders, and recommends approval of the Merger Agreement by
WTC stockholders. (See "THE MERGER -- Background and Reasons; WTC.")
Record Date; Vote Required; Revocation of Proxies
The WTC Board has fixed February 14, 1997, as the Record Date for
determining shareholders entitled to notice of and to vote at the Special
Meeting and, accordingly, only holders of WTC Common Stock of record at the
close of business on that day are entitled to notice of and to vote at the
Special Meeting. The number of shares of WTC Common Stock outstanding on the
Record Date was 769,107, of which 280,645 shares constitute the SNET
Shareholdings. Each share of WTC Common Stock is entitled to one vote. The
presence, in person or by proxy, of at least a majority of the total number of
outstanding shares is necessary to constitute a quorum at the Special Meeting.
Abstentions and broker non-votes (i.e., proxies from brokers or nominees
indicating that such persons have not received instructions from the beneficial
owners or other persons as to certain proposals on which such beneficial owners
or persons are entitled to vote their shares but with respect to which
the brokers or nominees have no discretionary power to vote without such
instruction) will be treated as shares present at the Special Meeting for
purposes of determining the presence of a quorum. Approval of the Merger
Agreement requires the affirmative votes of the holders of at least (a) 80
percent of all of the outstanding shares of WTC Common Stock and (b) two-
thirds of the outstanding shares of WTC Common Stock not held by SNET and its
affiliates and associates. Therefore, abstentions and broker non-votes will
have the same effect as votes against approval of the Merger Agreement.
The directors and executive officers of WTC beneficially owned, as of
the Record Date, and are entitled to vote at the Special Meeting, 10,558 shares
of WTC Common Stock, which represents 1.37 percent of the outstanding shares of
WTC Common Stock entitled to be voted at the Special Meeting. The directors
have informed WTC that they intend to vote all of their shares of WTC Common
Stock in favor of approval of the Merger Agreement. SNET has informed the WTC
Board that it intends to vote all of its shares of WTC Common Stock,
constituting the SNET Shareholdings, in favor of approval of the Merger
Agreement.
After having been submitted, the enclosed proxy may be revoked by the
person giving it, at any time before it is exercised, by: (i) submitting
written notice of revocation of such proxy to the Secretary of WTC; (ii)
submitting a proxy having a later date; or (iii) appearing at the Special
Meeting and requesting a return of the proxy. All shares represented by valid
proxies will be exercised in the manner specified thereon. If no specification
is made, such shares will be voted in favor of approval of the Merger Agreement
and otherwise in the discretion of the proxyholders named thereon in accordance
with their best judgment as to any other matters that may be voted on at the
Special Meeting, including among other things, a motion to adjourn or postpone
the Special Meeting to another time and/or place for the purpose of soliciting
additional proxies or otherwise; provided, however, that no proxy that
is voted against the proposal to adopt the Merger Agreement will be voted in
favor of any adjournment or postponement proposed for the purpose of soliciting
additional votes in favor of the Merger Agreement.
<PAGE>
THE MERGER
The following information relating to the Merger is qualified in its
entirety by reference to the more detailed information contained elsewhere in
this Prospectus/Proxy Statement, including the Annexes hereto, and in the
documents incorporated herein by reference. A copy of the Merger Agreement is
set forth in ANNEX A to this Prospectus/Proxy Statement and reference is made
thereto for a complete description of the terms of the Merger. Shareholders of
WTC are urged to read the Merger Agreement carefully.
General
Subject to the terms and conditions of the Merger Agreement, WTC will
merge with SAS in a transaction in which WTC will be the surviving corporation
and will become a wholly-owned subsidiary of SNET. Upon consummation of the
Merger, at the Effective Time, each outstanding share of WTC Common Stock
(other than the Excluded Shares) will be converted into the right to receive
that number of shares of SNET Common Stock (and Rights, as described below)
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 NYSE 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 WTC shall have the option to consummate the Merger based on such deemed
Average Closing Price and, if WTC does not opt to do so, then SNET shall have
the option to terminate the Merger pursuant to the Merger Agreement; 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 upon 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 WTC shall have the option to terminate the
Merger pursuant to the Merger Agreement.
In the Merger, the SNET Shareholdings will be canceled and SNET will
not be entitled to receive the Merger Consideration therefor.
No fractional shares of SNET Common Stock will be issued to WTC
shareholders in the Merger. Instead, SNET shall issue to each WTC shareholder
otherwise entitled to a fractional share a check for an amount of cash equal to
the fraction of a share of SNET Common Stock multiplied by $43.00.
<PAGE>
Effective Time
Subject to the conditions and obligations of the parties to the Merger
Agreement to effect the Merger, the effective time of the Merger (the
"Effective Time") will be at the time of the filing with the Secretary of State
of Connecticut of certificates of merger required under applicable law. Such
filing will be on the date of the closing of transactions under the Merger
Agreement on or such other date as the parties to the Merger Agreement shall
agree. Such closing of transactions is expected to occur on a date not later
than ten days following the receipt of all regulatory approvals for the Merger.
(See "THE MERGER -- Regulatory Approvals.") Subject to the foregoing, it is
currently anticipated that the Merger will be consummated in the second or
third quarter of 1997. The Board of Directors of WTC, SNET or SAS may
terminate the Merger under certain circumstances, including the failure of
the DPUC to approve the Merger by December 31, 1997. (See "THE MERGER --
Conditions to Consummation; Termination.")
Dividends on WTC Common Stock
Until the Effective Time, shareholders of WTC remain entitled to
receive dividends on WTC Common Stock, if declared by the WTC Board. Under the
Merger Agreement, quarterly cash dividends of $.38 per share may be paid on WTC
Common Stock up to the Effective Time, if declared by the WTC Board. On
January 29, 1997, the WTC Board declared a regular quarterly cash dividend of
$.38 per share to shareholders of record as of February 14, 1997. The dividend
was paid February 28, 1997.
After the Effective Time, WTC shareholders who receive shares of SNET
Common Stock in the Merger shall be entitled to receive dividends or other
distributions on SNET Common Stock issuable to them in the Merger, as set forth
below.
Exchange of WTC Certificates
As promptly as practicable after the Effective Time, SNET will send or
cause to be sent to each holder of record of WTC Common Stock as of the
Effective Time, transmittal materials for use in exchanging all of such
holder's certificates representing WTC Common Stock for a certificate or
certificates representing the SNET Common Stock to which such holder is
entitled, and a check for such holder's fractional share interest and any
dividends to which such holder is entitled, as appropriate. The transmittal
materials will contain information and instructions with respect to the
surrender and exchange of such certificates.
WTC SHAREHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL
THEY RECEIVE THE LETTER OF TRANSMITTAL FORM AND INSTRUCTIONS.
Upon surrender of all of the certificates for WTC Common Stock
registered in the name of a holder of such certificates (or indemnity
satisfactory to SNET and the exchange agent selected by SNET if any of such
certificates are lost, stolen or destroyed), together with a properly completed
letter of transmittal, such exchange agent will mail to such holder a
certificate or certificates representing the number of shares of SNET Common
Stock to which such holder is entitled, all undelivered dividends or
distributions in respect of such shares and, where applicable, a check for any
fractional share interest (in each case, without interest).
All shares of SNET Common Stock issued to the holders of WTC Common
Stock pursuant to the Merger will be deemed issued as of the Effective Time.
SNET dividends having a record date on or after the Effective Time will include
dividends on all SNET Common Stock issued in the Merger, but no dividend or
other distribution payable to the holder of record of SNET Common Stock at or
as of any time after the Effective Time will be distributed to the holder of
any WTC Common Stock certificates until such holder physically surrenders all
such certificates as described above. Promptly after such surrender,
all undelivered dividends and other distributions and, where applicable, a
check for any fractional share interest, will be delivered to such holder, in
each case without interest. SNET dividends having a record date before the
Effective Time (which record date may, in SNET's sole discretion, be the day
immediately preceding the Effective Time or any other day prior to the
Effective Time) will not include dividends on the SNET Common Stock issued in
the Merger. After the Effective Time, the stock transfer books of WTC will be
closed, and there will be no transfers on the transfer books of WTC of the
shares of WTC Common Stock that were outstanding immediately prior to the
Effective Time.
The Merger Agreement provides that as a condition to the obligation of
SNET to effect the Merger, WTC will deliver to SNET an agreement from each
person who may be deemed to be an "affiliate" (as defined in the Securities
Act) relating to the disposition of such affiliate's shares of SNET Common
Stock. (See "RESALE OF SNET COMMON STOCK.")
Background and Reasons
WTC
WTC is an independent local exchange carrier ("LEC") founded in 1899
and provides telephone service to major portions of the Towns of Woodbury,
Southbury and Bethlehem, Connecticut. It also serves small portions of the
Towns of Oxford and Roxbury, Connecticut. WTC is one of approximately 1,300
independent LEC's in the United States. As of December 31, 1996 WTC served
19,961 access lines.
WTC provides telephone services in its service area to its customers
through central office switching equipment and cable, both underground and
attached to poles. WTC's lines and cables are interconnected with those of
other telephone companies in the United States and in other countries through
the facilities of SNET and other common carriers. WTC provides intrastate toll
service under terms, conditions and rates consistent with SNET tariffs,
as approved by the WTC's primary regulator, the DPUC. WTC also provides
interstate access service under terms, conditions and rates consistent with the
National Exchange Carrier Association ("NECA") access tariffs to other common
carriers as approved by the Federal Communications Commission.
WTC is a public service company subject to regulation by the DPUC as to
intrastate rates and services, issuance of securities, reporting requirements
and other matters and has operated as a regulated monopoly in its telephone
franchise area. As such, it has largely been free from competition in offering
local and network access telephone service to its customers and is permitted by
the DPUC to earn a reasonable rate of return on its rate base.
There is no market maker holding an inventory position in WTC common
stock and there is no active trading market for shares of WTC Common Stock.
The prices at which WTC Common Stock are traded are, however, presented through
the NASDAQ OTC Bulletin Board trading system under the symbol "WBTL". (See
"THE MERGER -- Market Prices.")
Industry Overview
In recent years, the telecommunications industry has experienced
fundamental change in technology, demand for telecommunications services and
competition. In particular, digital technology has resulted in the convergence
of voice, data and video transmission. New services such as wireless, paging
and the Internet have developed. It became the consensus of legislators and
regulators that broader competition rather than broader regulation was the best
way to bring the benefits of technology and new telecommunications services to
consumers.
As a result, effective July 1, 1994, Connecticut enacted Public Act 94-
83 (the "Connecticut Telecommunications Act"). This new law promoted
competition, required the unbundling of local exchange telephone network
services, and encouraged alternative forms of regulation to replace traditional
rate-of-return regulation. In conjunction with the DPUC's implementation of
the Connecticut Telecommunications Act, three dockets with respect to
WTC were opened in November 1994. No decisions have yet been rendered in
connection with those dockets.
On February 8, 1996, the federal Telecommunications Act of 1996 (the
"Federal Telecommunications Act") was enacted. The intent of this law, which
substantially amended the Communications Act of 1934, is to promote competition
and reduce regulation in order to secure lower prices and higher quality
services for telecommunications consumers and encourage the rapid deployment of
new telecommunications technologies. Implementation is to occur primarily
through three major FCC orders regarding interconnection, access charges
and universal service.
On August 8, 1996, the FCC issued its order and new regulations
establishing rules for interconnection between local exchange carriers and
competitive service providers. Portions of the order, particularly those
relating to pricing, have been challenged and are being reviewed by the U.S.
Court of Appeals. While small, rural telephone companies like WTC are
initially exempt from many of the requirements of the order, the long-term
sustainability of such an exemption for WTC is unlikely.
While the legislative and regulatory changes described above may
benefit new market entrants, and may benefit large telephone companies such as
the seven Regional Bell Operating Companies, they may seriously threaten the
viability of small, rural telephone companies like WTC. Generally, these small
companies lack the economies of scale, financial resources, brand recognition
and management expertise to diversify into other lines of business and
successfully compete with large telecommunications providers.
WTC's Strategic Planning
WTC's management and the WTC Board responded to the opportunities and
challenges provided by the rapidly changing telecommunications industry by
engaging in a strategic planning process. At a meeting of the WTC Board on
April 28, 1995, a presentation was made by Donald E. Porter, WTC's President.
The Board reviewed various strategic planning issues, including the possibility
of adopting a holding company structure to enable WTC to diversify into other
related businesses, as well as the impact of SNET's 36.5 percent equity
ownership in Woodbury. Commencing in the Spring of 1995, the Executive
Committee of the WTC Board began to deal specifically with strategic planning
issues. The Executive Committee is comprised of Messrs. J. Garry Mitchell,
Walter F. Torrance, Jr., Harmon L. Andrews, William C. Bassett and John A.
Michaels. (In the course of discussions regarding strategic planning and the
Merger, including voting on the Merger and related issues, the SNET designees
on the WTC Board, John Sadek and his successor, Michael Phelan, did not
participate.)
The result of the strategic planning process was a recognition by the
WTC Board and WTC's management of the following:
o With the implementation of the Federal Telecommunications Act
and the Connecticut Telecommunications Act, the traditional
sources of revenue to WTC will in all likelihood erode over time
as the full effects of deregulation and competition become
evident.
o WTC will be required to manage its business more aggressively
and seek to exploit revenue opportunities in other than regulated
areas.
o WTC's management has limited experience outside of its
traditional LEC operations.
o To enter into any new businesses and services that will have
the possibility of providing material increases in the revenues
or profits of WTC would require the addition of new managers
and/or training existing managers.
o Any new businesses or services will result in a higher level of
risk than has been experienced by WTC in its business operations
in the past.
The Executive Committee also considered whether a sale of WTC would
enhance shareholder value. The Executive Committee agreed that for the
foregoing reasons the price of WTC Common Stock, which traded in the $22.50 to
$30.00 range during 1994 and the first half of 1995, would in all likelihood
not increase significantly, if at all, in the foreseeable future. Furthermore,
the Executive Committee realized that the future earnings of the WTC business
would likely erode over the foreseeable future for the reasons stated
above and, therefore, there was no assurance that the present level of
dividends to WTC shareholders could continue.
In addition, the Executive Committee considered whether a sale would
provide a greater degree of liquidity to the shareholders who hold WTC Common
Stock which is not actively traded, and came to the conclusion that an exchange
of WTC Common Stock for an acquiror's stock which is broadly traded on a
national exchange or market, or cash, would provide WTC shareholders with
increased liquidity for their shares.
The Executive Committee also assessed the risks of the uncertain
telecommunications environment and considered the effect of any weaknesses of
WTC in its ability to compete in the rapidly evolving telecommunications
industry.
Merger Negotiations
The Executive Committee and the WTC Board met during May and July 1995
to discuss various strategic planning issues, including the possible sale of
WTC. On August 9, 1995, two members of the Executive Committee, J. Garry
Mitchell and Walter F. Torrance, Jr., met with John J. Miller, Vice President
and Treasurer of SNET, to discuss the strategic planning process and to
discuss, on a preliminary basis, whether SNET had an interest in selling the
SNET Shareholdings. Mr. Miller indicated that SNET was not interested in
selling its shares, but might be interested in discussing the acquisition of
WTC shares it did not own. On September 27, 1995, the Executive Committee met
and agreed to engage an outside professional to determine a possible range of
values of WTC in the event the WTC Board decided to seek to be acquired. In
November 1995, SNET and Woodbury entered into a nondisclosure agreement, and
WTC provided SNET additional information, which included annual and interim
financial reports, a pertinent data log, union agreements, NECA settlement
excerpts, its 1995 Strategic Plan and excerpts from DPUC filings.
On November 20, 1995, Messrs. Mitchell and Porter and counsel to WTC
met with Gary Sugarman, the principal of Richfield Associates Inc.
("Richfield") to discuss preparation of a valuation of WTC. Richfield is a
Rochester, New York based financial consulting firm with particular experience
in the telephone industry. On November 22, 1995, Richfield and WTC entered
into a nondisclosure agreement. Management of WTC provided Richfield with a
variety of information concerning its finances and business, including minutes
of the WTC Board and Executive Committee and WTC financial information.
On January 22, 1996, Mr. Sugarman presented Richfield's assessment to
the Executive Committee. The conclusions reached by Richfield were presented
to Mr. Miller of SNET on March 25, 1996. Mr. Miller indicated SNET's lack of
interest in selling its shares of WTC but expressed an interest in exploring
the acquisition of the balance of the outstanding shares of WTC not owned by
SNET. Several weeks later, Mr. Miller suggested that SNET would considering
offering SNET Common Stock having a value of $37.00 per share in a tax-deferred
transaction for the WTC shares not owned by it. The offer would permit WTC
shareholders to defer taxes on the transaction.
In order to assess SNET's indication of interest at the $37.00 level,
the WTC Board proposed in April 1996 that Richfield solicit indications of
interest from potential purchasers of WTC other than SNET. At the Executive
Committee's April 17, 1996 meeting and at the WTC Board meeting on April 24,
1996, Richfield's plan to solicit indications of interest was discussed. The
WTC Board authorized Richfield to proceed, and summary information about
WTC was prepared and submitted to four potential purchasers identified by
Richfield. During June 1996, Richfield presented preliminary indications of
interest from two of the potential purchasers.
On July 5, 1996, Messrs. Mitchell, Porter and Torrance of WTC discussed
with Messrs. John Miller and Norman Steingard of SNET various options
concerning a sale or merger of WTC to or with a third party other than to or
with SNET.
During July and August 1996, Richfield sought clarification of the two
indications of interest. The first indication was a proposal to acquire all
shares of WTC Common Stock (including the SNET Shareholdings) for a price in
the $40.00 to $50.00 range. Based on the Executive Committee's understanding
that SNET was unwilling to sell its interest in WTC, this proposal was not
pursued by WTC. The Executive Committee requested additional information
regarding the second indication because, by its terms, such indication did not
contain sufficient information to fully analyze its viability.
This indication of interest was from a privately held and recently
organized company seeking to acquire rural LEC's. The Executive Committee
authorized Richfield to further discuss this indication of interest in order to
determine on a preliminary basis as many of the terms and conditions as
possible, as the preliminary indication was in purchasing all of the
outstanding shares of WTC Common Stock, including the shares held by SNET, for
$59.81 per share in a cash transaction currently taxable to WTC shareholders
or, alternatively, the same cash price for the shares of WTC Common Stock owned
by shareholders other than SNET (also currently taxable to such WTC
shareholders) but only if the party so indicating an interest could reach
appropriate agreements with SNET. The Executive Committee, knowing that SNET
was not interested in selling its shares in WTC in that price range,
sought to determine from the party the nature of the agreements it would
require from SNET and its other terms and conditions.
In response to the inquiries of Richfield on behalf of the Executive
Committee, the party indicated the following:
o In order to complete any acquisition of WTC, both debt and
equity financing would have to be utilized. Accordingly, an
appropriate structure or arrangement would need to be established
in order to allow the acquiror to utilize the cash flow generated
by WTC's business to provide interest and amortization payments
for the acquisition debt. This would require a major
recapitalization of WTC and/or a change in its existing capital
structure.
o The party desired to use WTC as a regional platform for further
acquisitions of rural LEC's and for other acquisitions serving
suburban markets in the northeast United States. Accordingly, it
would require agreements with SNET to give the party the ability
to substantially determine the management team responsible for
operating WTC after the acquisition, the regulatory and market
strategies to be employed by WTC, the budgeting and network plans
to be implemented by WTC and other material events related to the
overall performance of WTC after the acquisition.
o Furthermore, the party suggested that, as one approach, it
would form a holding company that would own all of the issued and
outstanding shares of WTC. SNET would contribute its WTC shares
and the party would contribute the cash necessary to acquire the
shares of WTC Common Stock held by persons other than SNET. As a
result, the party would own the majority of the stock of the
holding company. The amount of cash contributed would provide
the purchase price for the shares and would also partially
capitalize the holding company in a sufficient amount to permit
it to take advantage of additional growth opportunities.
On August 9, 1996, the Executive Committee communicated to SNET the
foregoing proposed agreements and terms and conditions. On August 28, 1996,
Mr. Miller responded that SNET was not interested in pursuing the agreements,
terms and conditions. SNET believed such agreements were unnecessary because
if the party acquired the WTC Common Stock other than the SNET Shareholdings,
it would control the WTC Board and WTC's management and policies. To the
extent that the party wished SNET to enter into a voting agreement in which it
would not vote its shares in opposition to the stance of the party on
any significant matter requiring a shareholder vote, SNET believed that such an
agreement was not in its best interests as an investor. SNET further believed
that a major recapitalization of WTC and/or a change in WTC's existing capital
structure, as proposed by the party, was not in the best interests of SNET or
its shareholders, because WTC would become heavily burdened with debt, SNET
would have no input on the policies of the entity, and SNET believed that the
DPUC would not approve a highly leveraged acquisition of a public utility. Mr.
Miller expressed an interest on SNET's part of acquiring the WTC shares
not owned by it at a value in the range of $45.00 per share in a tax-deferred
transaction, provided that WTC's current financial position would not be
materially and adversely changed, and pending SNET's review of the impact on
WTC of the regulations implementing the Federal Telecommunications Act
published earlier that month.
During the early part of September 1996, WTC's counsel considered
various corporate and possible anti-competitive effects of any proposed
transaction. The Executive Committee recognized that WTC could not satisfy the
conditions indicated by the private party. Nevertheless, the Executive
Committee believed that because of changes in the telecommunications industry,
WTC's position might deteriorate if WTC deferred action on sale or merger
options. Having sought indications of interests from others, the Executive
Committee determined that SNET was, in effect, the only realistic buyer if a
sale or merger were to occur in the near future. Moreover, SNET's indicative
value was significantly above the historical high bid range for WTC Common
Stock, and the transaction proposed by SNET could be effected in a tax-deferred
transaction, which would benefit WTC shareholders. Based upon the foregoing,
the Executive Committee determined that it would not be in the best interest of
WTC shareholders to pursue the indication of interest from the private party
described above.
At a meeting on September 16, 1996, the Executive Committee, after
reviewing the alternatives available to WTC, recommended that the full WTC
Board be asked to authorize discussions with SNET regarding a possible merger.
On September 18, 1996, the WTC Board authorized the Executive Committee to
continue discussions with SNET concerning a possible stock transaction valued
in the range of $45.00 per share of WTC Common Stock.
Representatives of SNET and its counsel met with Messrs. Mitchell,
Porter and Torrance of WTC and its counsel on September 25, 1996 to discuss
SNET's interest and the terms of a letter of intent. At this meeting, the
parties discussed WTC's financial position and SNET's ongoing review of the
possible impact of the Federal Telecommunications Act on the value of WTC.
SNET indicated that SNET's proposed value of $45.00 per share would be subject
to adjustment. On October 3, 1996 the WTC Board met and authorized the
Executive Committee to negotiate the terms of a letter of intent with SNET and
to engage McDonald & Company Securities, Inc. ("McDonald") to evaluate the
fairness, from a financial point of view, to WTC shareholders of any proposal
that SNET might make. WTC then entered into an engagement letter with
McDonald. (See "THE MERGER -- Opinion of Financial Advisor.")
During early October 1996, negotiations continued between SNET, WTC and
their respective counsel regarding the terms (including the value to determine
the exchange ratio for shares of WTC Common Stock) of any possible transaction
and the terms of a letter of intent. During these negotiations, SNET proposed
that WTC shareholders would receive SNET Common Stock valued at $41.00 as the
price it was willing to pay for WTC shares due to the potentially adverse
effect of the Federal Telecommunications Act on WTC. Through negotiation, this
value was raised to $43.00 (in a tax-deferred exchange).
On October 21, 1996, the WTC Board met to discuss the status of
negotiations with SNET and the terms of a proposed letter of intent between WTC
and SNET, copies of which were delivered to each member of the WTC Board.
Representatives from McDonald were also in attendance at the meeting, as were
counsel to WTC. The terms of the letter of intent were considered, including
the proposed consideration of $43.00 per share of WTC Common Stock in a tax-
deferred transaction. The representatives of McDonald present at the meeting
made presentations to the WTC Board and reviewed various aspects of the Merger
as set forth in the letter of intent, including the financial terms and
conditions of the Merger. The Board reviewed with counsel the terms of the
letter of intent and unanimously (with the exception of the director affiliated
with SNET who did not participate in such discussions) voted to accept SNET's
offer and authorized the Chairman of the Board to execute and deliver the
letter of intent to SNET as in the best interests of the WTC shareholders.
WTC's Reasons for the Merger
The WTC Board (other than the director affiliated with SNET who has
abstained from this matter) believes that the Merger will benefit WTC, its
shareholders and its employees for the reasons discussed below. In the
following discussions, references to WTC's Board exclude the director
affiliated with SNET.
Given the WTC Board's familiarity with WTC's business, financial
condition, earnings and prospects, as well as the current conditions in the
telecommunications industry, the WTC Board believes that the Merger offers the
WTC shareholders fair value for their shares of WTC Common Stock and liquidity
for their investment therein.
In reaching its determinations and recommendations, the WTC Board
considered a number of factors, including, without limitation, the following
factors which the WTC Board considered material:
o The WTC Board noted that the $43.00 per share sale price
offered by SNET was a substantial premium over the $22.50 to
$30.00 range at which the WTC shares had traded from 1994 to
1996. (See "THE MERGER -- Market Prices.")
o The WTC Board's view that it was unlikely that in the long term
WTC could remain financially viable as an independent LEC, and
that WTC would be at a competitive disadvantage as an LEC
attempting to enter into new businesses to compete in a rapidly
changing telecommunications industry.
o As shareholders of SNET, the former WTC shareholders would hold
stock in a company that was in the forefront of providing
telephone, video and data services; and the Merger will give WTC
access to increased financial, technological and managerial
resources required to compete effectively in the rapidly changing
regulatory, technological and competitive environment of the
telecommunications industry.
o WTC would face uncertainty in the event WTC were to remain
independent and be sold at some point in the future. The impact
of the rapidly changing telecommunication industry could result
in a price per share below the $43.00 per share price offered by
SNET.
o SNET's common stock is listed on the New York Stock Exchange
and Pacific Stock Exchange, is actively traded and can be readily
sold by WTC shareholders (other than affiliates of WTC) after the
Merger.
o The Merger will cause little, if any, dilution to SNET's
reported earnings per share.
o The opinion of McDonald that the consideration to be received
by the shareholders of WTC in the Merger will be fair to such
shareholders from a financial point of view.
o SNET's position as a 36.5 percent owner of WTC Common Stock
could enable it to prevent a merger or sale of assets to an
unaffiliated acquiror (which would require the affirmative vote
of two-thirds of the WTC Common Stock under Connecticut law),
although it would not prevent a tender offer for WTC Common
Stock.
o The Merger is structured to qualify as a tax-deferred
reorganization under the Internal Revenue Code, meaning that WTC
shareholders generally would not be required to pay taxes in
connection with the exchange of their shares of WTC Common Stock
for SNET Common Stock until they sold their SNET Common
Stock. (See "THE MERGER -- Certain Federal Income Tax
Consequences.")
o The likelihood that WTC as a wholly-owned subsidiary of SNET
would become a stronger competitor, which would likely enhance
employment opportunities for WTC's current employees, all of whom
will remain employed following the Merger.
o The Merger in all likelihood would have a favorable effect on
the community, suppliers and customers of WTC.
WTC Board did not assign specific or relative weights to the factors
noted above and considered other factors as well.
SNET's Reasons for the Merger
SNET believes that the Merger will provide the best opportunity for WTC
and SNET to solidify their business arrangements and position both companies to
compete in the future. In addition, as a current WTC shareholder, SNET
believes that the Merger will enhance WTC's ability to compete thereby
preserving the value of SNET's investment for the benefit of its shareholders.
Opinion of Financial Advisor
WTC retained McDonald as its financial advisor to render an opinion to
the WTC Board concerning the fairness, from a financial point of view, to WTC's
shareholders, of the Merger Consideration to be paid pursuant to the Merger
Agreement. McDonald was retained by WTC on the basis of, among other things,
its experience and expertise and familiarity with the telecommunications
industry. As part of its investment banking business, McDonald is customarily
engaged in the valuation of businesses and securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for corporate and estate planning purposes.
Representatives of McDonald attended the October 21, 1996 meeting of
the WTC Board at which the directors considered the letter of intent submitted
by SNET with respect to the proposed Merger. At such meeting, representatives
of McDonald made presentations and reviewed various aspects of the Merger as
set forth in such letter, including the financial terms and conditions of the
Merger.
Representatives of McDonald also attended the December 6, 1996 meeting
of the WTC Board at which the directors considered the Merger proposal.
McDonald advised the WTC Board that, at the request of the WTC Board, McDonald
would be in a position to render a written opinion as to the fairness to the
WTC shareholders, from a financial point of view, of the Merger Consideration
to be paid the holders of the issued and outstanding shares of WTC's Common
Stock pursuant to the Merger Agreement. On ____________, 1997, the WTC Board
requested, and McDonald delivered, such opinion, that the Merger Consideration
to be paid to WTC shareholders is fair from a financial point of view. The
full text of McDonald's opinion dated as of ________________, 1997 is attached
as ANNEX B to this Prospectus/Proxy Statement and is incorporated herein by
reference. The description of the opinion set forth herein is qualified in its
entirety by reference to ANNEX B. Holders of WTC Common Stock are urged to
read the opinion in its entirety for a description of the procedures followed,
assumptions and qualifications made, matters considered, and limitations
undertaken by McDonald.
McDonald's opinion is directed to the Board of Directors of WTC and
addresses only the fairness, from a financial point of view, to the
shareholders of WTC of the Merger Consideration to be paid to the shareholders
of WTC pursuant to the Merger Agreement as of the date of the opinion. The
opinion does not constitute a recommendation to any shareholder as to how such
shareholder should vote at the WTC Special Meeting.
In connection with rendering its opinion, McDonald reviewed and
analyzed, among other things: (i) the Merger Agreement, including the exhibits
and schedules thereto; (ii) certain correspondence between WTC and SNET and
between WTC and other prospective buyers; (iii) certain publicly available
information concerning WTC, including WTC's audited financial results for the
three year period ended December 31, 1995 as reported in the Annual Reports on
Form 10-K of WTC for each of the two years ended December 31, 1995 and
unaudited interim financial information set forth in WTC's Quarterly Reports on
Form 10-Q for each of the three quarters ended September 30, 1996; (iv) certain
other internal information, primarily financial in nature and including
projections, concerning the business and operations of WTC furnished to
McDonald by WTC for purposes of its analysis; (v) certain publicly available
information concerning the trading of, and the trading market for, WTC Common
Stock and SNET Common Stock; (vi) certain publicly available information
concerning SNET, including reports published by equity analysts with other
investment banking firms containing annual earnings estimates for SNET through
2000; (vii) certain publicly available information with respect to certain
other companies that McDonald believed to be comparable to WTC or SNET and the
trading markets for certain such other companies' securities; and (viii)
certain publicly available information concerning the nature and terms of
certain other transactions that McDonald considered relevant to its inquiry.
McDonald also had discussions with certain officers and employees of WTC and
SNET to discuss their respective businesses and prospects, as well as other
matters it believed to be relevant to its inquiry.
McDonald was not engaged to verify and relied, without independent
verification, upon the accuracy and completeness of all of the financial and
other information reviewed by it for purposes of its opinion. McDonald also
relied upon the management of WTC as to the reasonableness and achievability of
the financial and operating projections (and the assumptions and bases
therefor) provided to it, and assumed that such projections and forecasts
reflect the best currently available estimates and judgments of WTC's
management and that such projections and forecasts will be realized in the
amounts and in the time periods currently estimated by the management of WTC.
With respect to SNET, McDonald assumed that the assumptions underlying
published third party earnings estimates for SNET are reasonable and that such
earnings will be realized in the amounts and in the time periods contemplated
thereby. McDonald was not engaged to assess the achievability of such
projections or the assumptions on which they were based and expressed no view
as to such projections or assumptions. McDonald was not engaged to, and did
not, make an independent evaluation or appraisal of the assets and liabilities
of WTC or SNET and was not furnished with any such evaluation or appraisal.
McDonald was informed by WTC and assumed for the purposes of its opinion that
the Merger will qualify as a reorganization under applicable provisions of the
Internal Revenue Code.
McDonald was not engaged to solicit indications of interest from any
potential acquiror. Based upon discussions with WTC and its counsel, McDonald
assumed for purposes of its analysis that, under applicable provisions of
Connecticut law and WTC's charter documents, SNET's ownership of shares
representing more than one-third of the voting power of the Company provides it
with the ability to effectively block the sale of the Company to any other
party in a merger or sale of all or substantially all of WTC's assets.
Because of uncertainties concerning the legal effect of SNET's position on the
comparative rights of SNET and other shareholders of WTC, McDonald conducted
the various analyses summarized below with and without a discount for the
potentially non-controlling position of WTC's public shareholders.
The following is a summary of analyses presented orally by McDonald to
the Board of Directors on ______________, 1997 (the "McDonald Report") in
connection with its opinion:
Comparable Company Analysis. McDonald compared selected historical and
market value multiples of two groups of public companies that it deemed to be
comparable to WTC. For purposes of its analysis, McDonald identified six
small, independent local exchange carriers (collectively, the "LECs") that it
believed to be comparable to WTC. In McDonald's judgment, many of these LECs
are involved in telecommunications businesses with significantly more
attractive business prospects than those of WTC. McDonald also performed an
identical analysis of nine large telecommunication service providers with local
exchange activities, including Regional Bell Operating Companies and SNET
(collectively, the "RBOCs"). These RBOCs are significantly greater in size,
possess securities that trade more actively and are beginning to enter
businesses with more attractive business prospects than those of WTC, but in
McDonald's judgment, share many common characteristics with WTC in their main
local exchange business activities. The LECs used in McDonald's analysis were
CFW Communications Company, CT Communications, Hector Communications
Corporation, Hickory Tech Corporation, North Pittsburgh Systems, Inc.
and Rhinelander Telecommunications, Inc. The RBOCs used in McDonald's analysis
were Ameritech, Bell Atlantic, Bell South Corporation, GTE Corporation, NYNEX
Corporation, Pacific Telesis Group, SBC Communications, SNET and US West
Communications Group. For each of these two groups of companies, McDonald
calculated a range of values based upon the market value multiples and applied
these multiples to the relevant historical results of WTC in order to determine
a range of implied values for WTC. No company used in McDonald's analysis was
identical to WTC. Accordingly, McDonald considered the market multiples for
the composite of comparable companies to be more relevant than the market
multiples of any single company.
Using the closing prices of each of the companies within the two groups
on December 5, 1996, McDonald calculated multiples of revenue, earnings before
interest, taxes, depreciation and amortization ("EBITDA"), access lines and net
income for the comparable companies for the twelve months ended September 30,
1996 in order to develop a valuation range for WTC. McDonald calculated high,
median and low multiples for the comparable company groups, and applied these
multiples to WTC's results for the same period. Based upon its analysis of the
LECs, McDonald applied multiples to WTC ranging from 2.11x to 6.96x revenues,
5.71x to 13.83x EBITDA, 2.21x to 9.00x access lines and 13.89x to 34.46x
net income. Based on its analysis of the RBOCs, McDonald applied multiples to
WTC ranging from 1.70x to 2.87x revenues, 4.45x to 8.04x EBITDA, 1.31x to 2.96x
access lines and 12.73x to 19.77x net income. These multiple ranges compare to
historic multiples for WTC for such period of 2.61x revenues, 5.09x EBITDA,
1.84x access lines and 11.08x net income.
Application of LECs' revenue multiples to WTC's revenues for the twelve
months ended September 30,1996 resulted in an indicated equity value range of
$22.5 million to $89.6 million, with a median value of $63.5 million.
Application of the LECs' EBITDA multiples resulted in an indicated equity value
range for WTC of $33.9 million to $91.7 million, with a median value of $69.9
million. Application of the LECs' access line multiples to WTC resulted in an
indicated equity value range for WTC of $36.6 million to $170 million, with a
median value of $57.8 million. Application of the LECs' net income multiples
to WTC resulted in an indicated equity value range for WTC of $36.9 million to
$91.5 million, with a median value of $53.3 million. Application of the RBOCs'
revenue multiples to WTC's revenues for the twelve months ended September
30,1996 resulted in an indicated equity value range of $16.7 million to $33.0
million, with a median value of $27.1 million. Application of the RBOCs'
EBITDA multiples resulted in an indicated equity value range for WTC of between
$24.9 million to $50.4 million, with a median value of $36.4 million.
Application of the RBOCs' access line multiples to WTC resulted in an indicated
equity value range for WTC of $19.0 million to $51.4 million, with a median
value of $26.5 million. Application of the RBOCs' net income multiples to WTC
resulted in an indicated equity value range for WTC of $33.8 million to $52.5
million, with a median value of $40.1 million.
The indicated equity value ranges suggested by McDonald's analysis of
the LECs implied a value of between $29.21 and $221.37 for each WTC share,
before taking into account any discount for the potentially non-controlling
status of the WTC shares held by the public. With respect to the RBOCs,
McDonald's analysis implied a value of between $21.75 and $68.26 for each WTC
share. After applying a 20% lack of control discount, McDonald's analysis
implied a value of between $23.36 and $177.10 for each WTC share in the case of
the comparable LECs, and between $17.40 and $54.61 in the case of the RBOCs.
These implied values compare with the Merger Consideration of $43.00 per share
specified in the Merger Agreement. Before applying any discount, the Merger
Consideration contemplated by the Merger Agreement is at the low end of the
range of fairness based on McDonald's analysis of the LECs multiples, but
approximates the median of the various multiple analyses conducted with respect
to the RBOCs.
Analysis of Selected Acquisition Transactions. In order to assess
market pricing for recent acquisitions of small telecommunications services
providers offering local exchange services, long distance services, or both,
McDonald identified four transactions completed during 1995 and 1996. These
transactions included Telephone & Data Systems' acquisitions of Arvig
Telephone, Deposit Telephone Company and Camden Telephone, and Conestoga
Enterprises' acquisition of Buffalo Valley Telephone. McDonald analyzed the
range of last twelve month sales, EBITDA and net income multiples represented
by the purchase price paid in the transactions it reviewed. Sales multiples
ranged from 1.6x to 5.1x, with a median of 4.3x. EBITDA multiples ranged from
6.1x to 8.4x, with a median multiple of 7.4x, and net income multiples ranged
12.5x to 25.6x. These valuation techniques resulted in an implied equity value
for WTC ranging from a low of $15.1 million to a high of $64.2 million, and
suggested an implied value of between $19.64 and $83.46 per WTC share,
before applying any discount for the potentially non-controlling status of the
WTC shares held by the public. The Merger Consideration of $43.00 is within
this range.
Because of the relatively small number of transactions for which
financial information was available, McDonald did not attach significant weight
to the acquisition transactions analysis described above in rendering its
opinion.
No company or transaction used in the comparable companies and
comparable transactions analyses for comparative purposes is identical to WTC,
SNET or the Merger. Accordingly, an analysis of the results of the foregoing
necessarily involves complex considerations and judgments concerning
differences in financial and operating characteristics of the companies and
other factors. Mathematical analysis (such as determining the average
or median) is not, in itself, a meaningful method of using comparable company
or transaction data.
Discounted Cash Flow Analysis. McDonald estimated the theoretical
present value of cash flows generated by WTC's operations based on the sum of
(i) the discounted cash flows which WTC could generate over a five-year period
and (ii) a terminal value for WTC which assumes that a buyer will place a
certain value on the cash flow generated by WTC in accordance with the final
projected year in management's base case and steady state projections.
Management's base case projections were prepared taking into account the
anticipated effects of changes in the regulatory environment on WTC's financial
performance during the period under evaluation. Management's steady state
projections assume that the effects of regulatory reform and increasing
competition manifest themselves more slowly than under the base case scenario.
McDonald's calculation of the theoretical terminal value of WTC was
based on a multiple of EBITDA in the fifth year. This terminal value and the
cash flows generated by WTC were discounted using a weighted average cost of
capital that in McDonald's judgment reflects the risks associated with the cash
flows to derive the value of the enterprise and, after subtracting outstanding
net debt, the value of the equity. McDonald derived discount rates of 9.26% to
11.26% and exit multiples of EBITDA of 7.00x to 9.00x. Applying these
discount rates and exit multiples, McDonald estimated that, based on a
discounted cash flow analysis of management's base case projections, the
present value of the equity of WTC ranged from $26.6 million to $35.1 million
(without giving effect to any lack of control discount). This range of values
implied a value of between $34.55 and $45.58 per WTC share, as compared to the
Merger Consideration of $43.00 per share. Applying these same discount rates
and exit multiples of EBITDA to management's steady state projections,
McDonald estimated that the present value of WTC's equity ranged from $34.4
million to $43.0 million (without adjustment for any lack of control discount).
This range of values implied a value of between $44.73 and $61.26 per WTC
share, as compared to the Merger Consideration of $43.00 per WTC share.
The results of McDonald's discounted cash flow analysis indicated that,
before applying any discount for the potentially non-controlling position of
the public shareholders, the Merger Consideration fell within the range of
fairness under management's base case projections, but outside the range of
fairness under management's steady state projections. After applying a 20%
discount to the WTC's equity value for the potential lack of control by
the public shareholders, the results of McDonald's discounted cash flow
analysis suggested a per share value for WTC, based on management's base case
projections, of between $27.64 to $36.46. Application of the same discount to
management's steady state projections suggested a per share value of between
$35.78 and $49.00. Therefore, after applying this discount, the Merger
Consideration fell within or exceeded the range of values suggested by
McDonald's discounted cash flow analysis.
Inherent in any discounted cash flow valuation are the use of a number
of assumptions, including the accuracy of management's projections, and the
subjective determination of an appropriate terminal value and discount rate to
apply to the projected cash flows of the entity under examination. Variations
in any of these assumptions or judgments could materially alter the results of
a discounted cash flow analysis.
Relative Contribution Analysis. McDonald analyzed WTC's and SNET's
relative contributions to the combined company with respect to various
indicators of value, including access lines, revenues, EBITDA, net income and
dividends and compared this with the relative ownership of WTC shareholders in
the combined company after the Merger. Such analysis was considered on a
percentage contribution basis and was made for the twelve months ended
September 30, 1996 based upon WTC's and SNET's historical and pro forma
financial results.
In order to calculate an implied value for WTC using contribution
analysis, McDonald divided WTC's per share contribution to each indicator of
value by SNET's contribution per share. This analysis suggested per share
values ranging from $25.16 to $54.61, as compared with the Merger Consideration
of $43.00. Thus, the results indicated that the Merger Consideration was
within the range of fairness. The results of McDonald's contribution analysis
do not necessarily indicate the contributions that the respective businesses
may actually make in the future.
Stock Trading History and Other Contextual Analyses. McDonald examined
the history of trading prices and their relative relationships for both WTC
Common Stock and SNET Common Stock and performed certain other financial
analysis. These analyses did not focus on the Merger Consideration to be paid
in the Merger, but were undertaken to provide contextual data and comparative
market data to assist in assessing the market's valuation of WTC and SNET.
McDonald reviewed the daily closing prices of WTC and SNET and compared those
prices with indices of selected publicly traded companies in order to assess
the relative stock price performance of WTC, SNET and such indices. In
addition, in order to further assess the market valuation of the SNET stock to
be received by WTC shareholders, McDonald performed a discounted cash flow
analysis of SNET. As with its analysis of WTC, McDonald estimated the
theoretical present value of cash flows that were assumed to be generated by
SNET's operations based on the sum of (i) the discounted cash flows which WTC
could generate over a five-year period and (ii) a terminal value for SNET
which assumes that a buyer will place a certain value on the cash flow
generated by SNET in accordance with the final projected year in analysts'
earnings projections for SNET. With respect to WTC, McDonald also performed a
dividend discount analysis, which assesses value by discounting a series of
future dividend payments. McDonald conducted this dividend discount analysis
with respect to management's base case and steady state projections, and the
results of this analysis suggested that WTC's stock was trading at a
premium to the discounted value of future dividend payments under both sets of
projections.
The summary of the McDonald Report set forth above does not purport to
be a complete description of the presentation by McDonald of the McDonald
Report to WTC's Board of Directors or of the analyses performed by McDonald.
The preparation of a fairness opinion is not necessarily susceptible to partial
analysis or summary description. McDonald believes that its analyses and the
summary set forth above must be considered as a whole and that selecting
portions of its analyses, without considering all analyses, or of the above
summary, without considering all factors and analyses, would create an
incomplete view of the process underlying the analyses set forth in the
McDonald Report and its opinion. In addition, McDonald may have deemed various
assumptions more or less probable than other assumptions, so that the ranges of
valuations resulting from any particular analysis described above should not be
taken to represent the actual value of WTC or the combined company.
In performing its analyses, McDonald made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of WTC or SNET. The
analyses performed by McDonald are not necessarily indicative of actual values
or actual future results, which may be significantly more or less favorable
than suggested by such analyses. Such analyses were prepared solely
as part of McDonald's analysis of the fairness, from a financial point of view,
of the Merger Consideration to be paid by WTC and were discussed with the WTC
Board at its October 1996 meeting. The analyses do not purport to be
appraisals or to reflect the prices at which a company might actually be sold
or the prices at which any securities may trade at the present time or at any
time in the future. In addition, as described above, McDonald's presentation
to WTC's Board of Directors and opinion was one of many factors taken into
consideration by the Board in making its determination to approve the Merger
Agreement.
In the ordinary course of its business, McDonald may trade securities
of WTC and SNET for its own account and for the account of its customers and
may at any time hold a short or long position in such securities. McDonald has
expressed no opinion as to the prices at which shares of SNET's Common Stock
may trade following completion of the Merger.
WTC paid McDonald a fee of $200,000 for its services pursuant to the
Engagement Letter. No portion of McDonald's fee is contingent upon the closing
of the transaction. WTC also agreed to reimburse McDonald for its reasonable
out-of-pocket expenses and to indemnify McDonald against certain liabilities,
including liabilities under the federal securities laws.
Interests of Certain Persons
General
Certain members of WTC's management and the WTC Board have interests in
the Merger that are in addition to any interests they have as shareholders of
WTC generally. These interests include, among others, provisions in the Merger
Agreement relating the indemnification of WTC's directors and officers,
directors' and officers' liability insurance, and certain other benefits, as
described below.
Deferred Compensation Agreement
Pursuant to the Agreement dated May 31, 1991 between WTC and J. Garry
Mitchell, WTC agreed to pay certain deferred compensation to Mr. Mitchell.
Until his retirement on August 31, 1993, Mr. Mitchell served as President and
an employee of WTC and as a director of WTC. Mr. Mitchell currently serves as
Chairman of the Board and as a director of WTC.
The Agreement provides, in relevant part, that from Mr. Mitchell's
retirement from full-time employment with WTC, WTC will pay him $13,500 per
year as deferred compensation during the remainder of his life and, in the
event that he should die before receiving a total of $100,000, then the unpaid
balance of the $100,000 will be paid to his beneficiary. The rights to
deferred compensation under the Agreement are not assignable by Mr. Mitchell or
his beneficiary.
<PAGE>
Change-in-Control Agreement
Pursuant to the Change in Control Agreement dated June 24, 1996,
between WTC and Donald E. Porter, President and Chief Executive Officer of WTC
(the "Change in Control Agreement"), Mr. Porter is entitled to certain payments
if a "Fundamental Change" occurs in connection with a "Change in Control" (as
such terms are defined in the Change in Control Agreement).
Under the Change in Control Agreement, a Fundamental Change occurs if
there is a change in Mr. Porter's status, title, position or responsibilities;
a reduction in his compensation; a relocation of his principal office;
termination of his employment other than for cause or as a result of his death,
disability or retirement. (Mr. Porter, however, may be terminated for cause,
as defined in the Change in Control Agreement, in which event he is not
entitled to any benefits thereunder.)
Pursuant to the Change in Control Agreement, a Change in Control occurs
when a person obtains more than 10 percent of the voting power of WTC (or, in
the case of SNET, SNET acquires additional shares of WTC Common Stock); or WTC
shareholders approve a merger effecting material changes in the composition of
the WTC Board, a sale of substantially all of WTC's assets, or a plan of
liquidation of WTC; or there are certain material changes in the composition of
the WTC Board; or WTC files a plan to merge or engage in a similar transaction
with the DPUC.
In order for Mr. Porter to receive benefits under the Change in Control
Agreement, a Fundamental Change must have occurred within 6 months prior to, or
24 months after, a Change in Control. If a Fundamental Change occurs within
such a period, Mr. Porter may terminate his employment with WTC within 12
months after the occurrence of the Fundamental Change, in which case Mr. Porter
has the right to be paid the lesser of 220 percent of his then current annual
compensation or 299 percent of the average of his annual compensation for the
preceding five years. Notwithstanding the foregoing, if the Fundamental Change
which occurs is WTC's termination of Mr. Porter's employment other than for
cause, Mr. Porter is entitled to the foregoing payment without having to take
any affirmative action. In either case, Mr. Porter may designate payment in a
lump sum or in equal monthly installments.
WTC's obligations under the Change in Control Agreement terminate as of
the end of the month after Mr. Porter's death, disability or retirement
following a Change in Control.
Under the Change in Control Agreement, Mr. Porter is entitled to the
payment described above if a Fundamental Change occurs within 24 months after
each of the filing by WTC and SNET with the DPUC seeking approval of the
Merger, the approval of the Merger by WTC shareholders, SNET's acquisition of
the WTC Common Stock in connection with the Merger, or the occurrence of any
subsequent event that constitutes a Change in Control.
Severance Pay
The Merger Agreement provides that each management employee of WTC 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.
Indemnification; Directors' and Officers' Insurance
The Merger Agreement provides that for three years after the Effective
Time, WTC as the surviving corporation in the Merger will (and SNET, for as
long as it controls WTC during such period, will cause WTC to) indemnify and
hold harmless each current director of WTC in their capacities as directors or
officers to the full extent provided in WTC Articles and WTC Bylaws (except for
violations of federal securities laws) with respect to any matter existing or
occurring prior to the Effective Time. Furthermore, for a period of three
years following the Effective Time, SNET agrees not to amend the existing
indemnification provisions of the WTC Articles or WTC Bylaws in a manner
adverse to WTC's current directors and officers.
Additionally, the Merger Agreement provides that WTC as the surviving
corporation will (and SNET, for as long as it controls WTC during such period,
will cause WTC to) for six years following the Effective Time maintain policies
of officers' and directors' liability insurance maintained by WTC as of the
date of the Merger Agreement, or substantially equivalent coverage, with
respect to acts or omissions occurring prior to the Effective Time.
Designee of SNET on WTC Board
SNET has a contractual right to be represented by one director on the
WTC Board. From April 1990 to November 1995, John A. Sadek acted in that
capacity. Commencing January 1996, Michael Phelan has represented SNET on the
WTC Board. Mr. Phelan is the Vice President, Network Sales and Marketing of
SNET.
Neither Mr. Sadek nor Mr. Phelan participated in any discussions of the
WTC Board in connection with its deliberations described in "THE MERGER --
Background and Reasons; WTC" herein or in any vote of the WTC Board authorizing
any action in connection therewith or with the Merger, the Merger Agreement or
the Special Meeting.
Certain Federal Income Tax Consequences
The following is a discussion of certain federal income tax
consequences of the Merger. The discussion is included for general information
purposes only and may not apply to special situations, such as WTC
shareholders, if any, who received their WTC Common Stock upon the exercise of
employee stock options or otherwise as compensation, that hold their WTC Common
Stock as part of a "straddle" or "conversion transaction", or that are
insurance companies, securities dealers, financial institutions or foreign
persons.
Carmody & Torrance, counsel for WTC, has advised WTC that in its
opinion:
(i) No gain or loss will be recognized for federal income tax
purposes by WTC shareholders upon the exchange in the Merger of shares of WTC
Common Stock for SNET Common Stock (except with respect to cash received in
lieu of a fractional share interest in SNET Common Stock).
(ii) The basis for SNET Common Stock received in the Merger by WTC
shareholders (including the basis of any fractional share interest in SNET
Common Stock) will be the same as the basis of the shares of WTC Common Stock
surrendered in exchange therefor.
(iii) The holding period of the shares of SNET Common Stock received in
the Merger by WTC shareholders (including the holding period of any fractional
share interest in SNET Common Stock) will include the holding period during
which the shares of WTC Common Stock surrendered in exchange therefor were held
by the WTC shareholders provided such shares of WTC Common Stock were held as
capital assets.
(iv) Cash received by a holder of WTC Common Stock in lieu of a
fractional share interest in SNET Common Stock will be treated as received for
such fractional share interest and, provided the fractional share would have
constituted a capital asset in the hands of such holder, the holder should in
general recognize capital gain or loss in an amount equal to the difference
between the amount of cash received and the portion of the adjusted tax basis
in the WTC Common Stock allocable to the fractional share interest.
In addition, consummation of the Merger is conditioned, among other
things, upon receipt by WTC of an opinion of Carmody & Torrance, dated as of
the Effective Time, to the effect that (i) the Merger constitutes a
reorganization under Section 368 of the Internal Revenue Code of 1986, as
amended and (ii) no gain or loss will be recognized by WTC shareholders who
receive shares of SNET Common Stock in exchange for their shares of WTC Common
Stock, except that gain or loss may be recognized as to cash received in lieu
of fractional share interests. WTC shareholders who object to the Merger and
perfect their rights to be paid the fair value of their shares of WTC Common
Stock in cash will recognize taxable gain or loss for federal income tax
purposes upon receipt of such cash. (See THE MERGER--Dissenter's Rights.")
The tax opinions of Carmody & Torrance summarized above are or will be based,
among other things, on representations relating to certain facts and
circumstances of, and the intentions of the parties to, the Merger.
BECAUSE CERTAIN TAX CONSEQUENCES OF THE MERGER MAY VARY DEPENDING UPON
THE PARTICULAR CIRCUMSTANCES OF EACH WTC SHAREHOLDER AND OTHER FACTORS, EACH
WTC SHAREHOLDER IS URGED TO CONSULT SUCH HOLDER'S OWN TAX ADVISOR TO DETERMINE
THE PARTICULAR TAX CONSEQUENCES TO SUCH HOLDER OF THE MERGER (INCLUDING THE
APPLICATION AND EFFECT OF STATE AND LOCAL INCOME AND OTHER TAX LAWS).
Conduct of WTC Business Pending Consummation
Pending the Effective Time, WTC agreed with SNET to conduct its
business only in the ordinary course consistent with past practice and to use
its best efforts to preserve intact its business organization and good will.
The Merger Agreement provides that until the Effective Time WTC will
not, without SNET's consent, incur or agree to incur any material liability or
obligation outside the ordinary course of its business; or without SNET's
consent or as contemplated by the Merger Agreement engage in activities or
transactions or make capital expenditures outside its ordinary course of
business and which are not material, individually or in the aggregate, to
WTC's business or financial condition.
Furthermore, as more particularly set forth in the Merger Agreement,
until the Effective Time and without SNET's consent, WTC agreed not to take
certain actions, including, without limitation, making changes in its
authorized capital stock; issuing any stock options, warrants or other rights
or agreements calling for the issue, transfer, sale or delivery of its capital
or other securities; declaring, paying or setting aside for payment any
stock dividend or offering any split, division or combination or making any
reclassification in respect of its outstanding shares of capital stock;
issuing, selling or exchanging or delivering any shares of its capital stock
(or securities convertible into or exchangeable with or without additional
consideration for such capital stock), or entering into any agreement to take
any action to do so; purchasing or otherwise acquiring any of its outstanding
shares of its capital stock, or entering into any agreement to take any action
to do so; declaring, paying or setting aside for payment any dividend or
distribution (whether in cash or property) with respect to its capital stock
other than its regular quarterly cash dividends of no more than $.38 per
share; amending its certificate of incorporation or bylaws; waiving, releasing,
granting or transferring any rights of material value or modifying or changing
in any material respect any material existing license, lease, contract, benefit
plan or other documents; increasing compensation payable or to become payable
to any of its executive officers except in the ordinary course of business
consistent with past practice; making 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 WTC employees other than in the ordinary course
of business consistent with past practice; granting any stock options or stock
appreciation rights; entering into any employment agreement or other contract
or arrangement with any executive officer with respect to the performance of
personal services not terminable without liability by it on thirty days notice
or less; making any loan or advance to, or entering into any written contract,
lease or commitment with, any officer, director or shareholder of WTC;
permitting any of its current insurance policies to be canceled or terminated
or any of the coverage thereunder to lapse unless replaced in a similar manner;
assuming, guaranteeing, endorsing or otherwise becoming responsible for the
obligations of any other individual, firm or corporation or make any loans or
advances to any other individual, firm or corporation, except in the ordinary
course of business; acquiring assets, property, capital stock or business of
any other person or disposing of its assets, properties, capital stock or
business other than in the ordinary course of business, or consolidating or
merging with or into any other person; making any capital investment 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 person; writing-off as uncollectible any notes or accounts receivable or
writing down the value of any inventory other than in immaterial amounts or in
the ordinary course of business consistent with past practice; disposing or
permitting to lapse any rights in any patent, trademark, tradename or
copyright, or disclosing 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 in certain circumstances; making any change in any method of
accounting or keeping its books of account or accounting practices other than
as disclosed in public filings; and entering into any agreement to do any of
the foregoing. In addition, WTC agreed to conduct its business only in the
ordinary course and consistent with past practices, and consistent with good
business practices to take such action as may be necessary to preserve its
material properties and assets; and to use its best efforts to preserve intact
the business organization of WTC, to keep available the services of its
operating personnel and to preserve the goodwill of those having business
relationships with it.
Regulatory Approvals
DPUC
The Merger requires the advance approval of the DPUC. WTC and SNET
expect to file a joint application with the DPUC on or after the date on which
this Proxy Statement is mailed to shareholders. An order of the DPUC is
expected within 120 days following the submission of the joint application.
The DPUC may, but is not required, to hold hearings on the application. It may
approve or disapprove the application with such terms and conditions
as it deems necessary or appropriate. Any DPUC order is subject to appeal to
the Connecticut Superior Court.
HSR Act
On December 26, 1996, SNET filed with the United States Department of
Justice and the Federal Trade Commission a Notification and Report Form
pursuant to requirements under the HSR Act, in connection with the proposed
acquisition by SNET of 63.5% of the voting securities of WTC that SNET
presently does not own. On February 7, 1997, WTC filed a Notification and
Report Form pursuant to the requirements of the HSR Act. Among the conditions
to the Merger Agreement is that any waiting period applicable to the Merger
under the HSR Act shall have expired or been terminated. The waiting period
applicable to the Merger will begin to run on the date that WTC's filing is
accepted as complete.
The Merger will not proceed in the absence of the requisite regulatory
approvals. There can be no assurance that such regulatory approvals will be
obtained, and if the Merger is approved, there can be no assurance as to the
date of any such approval. There can also be no assurance that such approvals
will not contain a condition or requirement that causes such approvals to fail
to satisfy the conditions set forth in the Merger Agreement. (See THE
MERGER -- Conditions of Consummation; Termination.")
Acquisition Proposals; Cancellation Fee
Under the Merger Agreement, WTC may not directly or indirectly solicit,
initiate, encourage or accept inquiries or proposals or furnish information
relative to, or participate in negotiations or discussions concerning, the
acquisition by any party other than SNET of a substantial interest in WTC's
assets or stock. However, if the WTC Board receives a bona fide third-party
offer for more than the Merger Consideration and also receives the requisite
opinion of its counsel as to its fiduciary duties, then WTC may (after notice
to SNET) provide non-public information to and negotiate with such third party.
If WTC enters into negotiations and does not consummate a transaction
with such third party, SNET may terminate the Merger Agreement and WTC would be
obligated to pay SNET a cancellation fee of $500,000 as liquidated damages.
If, however, WTC so enters into negotiations and consummates a transaction with
a third party, or if WTC enters into negotiations with a third party in
violation of the Merger Agreement, SNET may terminate the Merger Agreement and
WTC would be obligated to pay SNET a cancellation fee of $1,500,000 as
liquidated damages.
Conditions to Consummation; Termination
Consummation of the Merger is subject, among other things, to: (i)
approval of the Merger Agreement by the requisite vote of the shareholders of
WTC; (ii) receipt of the regulatory approvals referred to above; (iii) that
there not be pending, threatened or in prospect any suit, action, proceeding,
investigation or inquiry involving SNET or WTC or their respective directors or
officers or WTC's securities with respect to their business or the Merger
Agreement or the Merger before any court or governmental agency which would
render completion of the Merger inadvisable or impractical; (iv) receipt by WTC
of the opinion of Carmody & Torrance, dated as of the Effective Time, as to
certain federal income tax consequences of the Merger; and (v) the shares of
SNET Common Stock having been approved for listing on the NYSE, subject to
official notice of issuance.
Consummation of the Merger is also subject to the satisfaction or
waiver of various other conditions specified in the Merger Agreement,
including, among others: (i) the delivery by WTC and SNET, each to each other,
of (a) opinions of their respective counsel and (b) certificates executed by
certain of their respective executive officers as to compliance with
the Merger Agreement; and (ii) the receipt by SNET of an agreement from each
"affiliate" of WTC restricting the sale of SNET Common Stock received by such
affiliate in the Merger.
The Merger Agreement provides that, whether before or after the Special
Meeting and notwithstanding the approval of the Merger Agreement by the
shareholders of WTC, the Merger Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time: (i) by mutual consent of
SNET, SAS and WTC; (ii) by SNET, SAS or WTC if any of the conditions to such
party's closing the transaction has not been met or becomes incapable of
fulfillment; (iii) by SNET if the Average Closing Price is below $30.00 and
WTC does not elect to consummate the Merger; (iv) by WTC if the Average Closing
Price is above $49.00 and SNET does not elect to consummate the Merger; (v) by
SNET or SAS if WTC negotiates with, delivers information to or consummates a
transaction with a third party pursuant to Section 6.4 of the Merger Agreement
(see "THE MERGER -- Acquisition Proposals; Cancellation Fee"); or (vi) by SNET,
SAS or WTC if the DPUC has not approved the Merger or, if approved by the DPUC
by December 31, 1997, the appeal period for such approval has not expired or
the approval is being appealed, but in either such event the Merger Agreement
may be terminated by SNET, SAS or WTC on March 31, 1998 if the appeal has not
been finally and favorably determined.
Waiver; Amendment
Prior to the Effective Time any provision of the Merger Agreement may
be: (i) waived by the party benefitted by the provision; or (ii) amended or
modified at any time (including the structure of the transaction) by an
agreement in writing among the parties thereto approved by their respective
Board of Directors and executed in the same manner as the Merger Agreement,
provided that after approval by the shareholders of WTC, no amendment may be
adverse to WTC shareholders (including any adverse change in the terms
of the consideration to be received by the shareholders of WTC).
Accounting Treatment
It is expected that the purchase method of accounting will be used to
reflect the Merger upon consummation. As required by generally accepted
accounting principles, under purchase accounting the assets and liabilities of
WTC as of the Effective Time will be recorded at their respective fair values
and added to those of SNET. Consolidated financial statements of SNET issued
after consummation of the Merger would reflect such values. Consolidated
financial statements of SNET issued before consummation of the Merger would
not be restated to reflect the acquired company's historical financial position
or results of operations.
The impact of WTC's historical financial condition and results of
operations is not material to SNET's historical consolidated financial
statements. Accordingly, (i) WTC's results of operations will be included in
the consolidated financial statements of SNET from the Effective Time and (ii)
pro forma financial statements are not included herein.
Expenses
Each party will pay its own expenses in connection with the Merger
Agreement and the consummation of the Merger, whether or not consummated.
However, SNET and WTC will share printing costs.
Notwithstanding the foregoing, the Merger Agreement provides that if
the Merger is not consummated either due to the failure of either party to
obtain necessary regulatory approvals despite their best efforts or due solely
to SNET's fault, then SNET will reimburse WTC for its expenses up to $125,000
(if due to such failure to receive approvals) or $300,000 (if due solely to
SNET's fault).
Dissenters' Rights
Any WTC shareholder who objects to the Merger Agreement shall have the
right to be paid the fair value of all shares of WTC Common Stock owned by such
shareholder in accordance with the provisions of Sections 33-855 to 33-872 of
the CBCA, a copy of which is set forth in ANNEX C to this Prospectus/Proxy
Statement. The right to be paid the value of such shares shall be such
shareholder's exclusive remedy as holder of such shares with respect to the
Merger, whether or not such shareholder proceeds as provided in CBCA
Sections 33-855 to 33-872.
Any WTC shareholder may elect to exercise such right by giving written
notice to WTC of such shareholder's intent to demand payment for such
shareholder's shares as provided in CBCA Section 33-861(a) prior to the
shareholders' voting on the proposal to approve the Merger Agreement and must
not vote such shares in favor of the proposal.
If the Merger Agreement is approved, any such shareholder so notifying
WTC, provided none of such shareholder's shares shall have been voted in favor
thereof, may require WTC to purchase such shareholder's shares at fair value.
As provided in CBCA Section 33-862, WTC shall send a dissenters' notice to
shareholders who have complied with CBCA Section 33-861 no later than ten days
after the consummation of the Merger. The dissenters' notice sent by WTC shall
state where the demand for payment must be sent and where and when certificates
for certificated shares must be deposited; inform holders of uncertificated
shares to what extent transfer of the shares will be restricted after the
payment demand is received; supply a form for demanding payment that includes
the date of the first announcement to news media or to shareholders of the
terms of the Merger Agreement; and require that each shareholder asserting
dissenters' rights certify whether or not such shareholder acquired beneficial
ownership of the shares before that date. Finally, WTC shall set a date by
which WTC must receive the payment demand, which date may not be fewer
than 30 nor more than 60 days after the date that the written dissenters'
notice is delivered by WTC, and WTC shall ensure that each such dissenters'
notice is accompanied by a copy of CBCA Sections 33-855 to 33-872.
After a WTC shareholder receives such written dissenters' notice by
WTC, such shareholder must demand payment for such shareholder's shares and
certify whether such shareholder acquired beneficial ownership of such shares
prior to the date of the first announcement to the news media or to
shareholders of the terms of the Merger Agreement in accordance with the terms
of the dissenters' notice, as provided in CBCA Section 33-863(a). Such
shareholder who demands payment shall also be required to submit the
certificate or certificates representing such shareholder's shares to WTC in
accordance with the terms of the dissenters' notice. Such shareholder's
failure to demand payment or deposit his share certificates shall terminate
such shareholder's rights under CBCA Sections 33-855 to 33-872.
If a WTC shareholder makes such demand for payment and submits such
share certificates to WTC, such shareholder shall retain all other rights of a
WTC shareholder until these rights are canceled or modified by the consummation
of the Merger as provided in CBCA Section 33-863(b). Any shareholder failing
to make such demand as described above shall be bound by the terms of the
Merger Agreement if it is approved.
Pursuant to CBCA Section 33-864, WTC is further entitled to restrict
the transfer of uncertificated shares from the date the demand for payment by
such shareholders is received until WTC either consummates the Merger or fails
to do so within 60 days after the date set for demanding payment and depositing
share certificates. A WTC shareholder who has asserted dissenters' rights as
to uncertified securities retains all rights (other than the foregoing
potential restriction on transfer) of a WTC shareholder until such rights are
canceled or modified by the consummation of the Merger.
After WTC either receives such demand for payment by a WTC shareholder,
or upon consummation of the Merger, WTC shall pay each shareholder who makes a
proper demand for payment pursuant to CBCA Section 33-863 the amount WTC
estimates to be the fair value of such shareholder's shares, plus accrued
interest as provided in CBCA Section 33-865(a). The payment by WTC to such
shareholder shall be accompanied by: WTC's balance sheet as of the fiscal year
ending not more than sixteen months before the date of payment; an income
statement for that year; a statement of changes in shareholders' equity
for that year; and the latest available interim financial statements, if any; a
statement of WTC's estimate of the fair value of the shares; an explanation of
how the interest was calculated; a statement of the dissenting shareholder's
right to demand payment under CBCA Section 33-860; and a copy of CBCA Sections
33-855 to 33-872.
Pursuant to CBCA Section 33-866, if the Merger is not consummated
within 60 days after the date set for such shareholders' demand for payment and
deposit of share certificates, WTC shall return the deposited certificates and
release the transfer restrictions imposed on uncertificated shares. If the
Merger is consummated after the deposited certificates have been returned and
the transfer restrictions have been released, WTC shall send a new dissenters'
notice under CBCA Section 33-862 and repeat the payment demand procedure.
WTC may elect to withhold payment to a shareholder who makes a demand
for payment pursuant to CBCA Section 33-863 if such shareholder was not the
beneficial owner of such shares before the date set forth in the dissenters'
notice as the date of the first announcement to the news media or to
shareholders of the terms of the Merger Agreement. Pursuant to CBCA Section
33-867(b), if WTC elects to withhold payment to such shareholder and the Merger
is consummated, WTC shall estimate the fair value of such shareholder's shares,
plus accrued interest, and shall pay this amount to such shareholder if
such shareholder agrees to accept such payment in full satisfaction of such
shareholder's demand. WTC's offer to such shareholder shall be accompanied by
a statement of WTC's estimate of the fair value of such shares, an explanation
of how the interest was calculated and a statement of such shareholder's right
to demand payment under CBCA Section 33-868.
Pursuant to CBCA Section 33-868, a dissenting WTC shareholder may
notify WTC in writing of such shareholder's own estimate of the fair value of
his shares and the amount of interest due, and demand payment of his estimate,
less any payment by WTC under CBCA Section 33-865, or may reject WTC's offer to
purchase such shareholder's shares, and demand payment for the fair value of
such shareholder's shares and interest owing, if: such shareholder believes
that the amount paid under CBCA Section 33-865 or offered under CBCA Section
33-867 is less than the fair value of such shareholder's shares or that the
interest due is incorrectly calculated; WTC fails to make payment under CBCA
Section 33-865 within 60 days after the date set for such shareholder's demand
for payment; or if the Merger is not consummated, and WTC fails to return the
deposited certificates or release the transfer restrictions imposed on
uncertificated shares within 60 days after the date set for such shareholder's
demand for payment. Such dissenting WTC shareholder must make a demand for
payment pursuant to CBCA Section 33-868(a) within 30 days after WTC makes
or offers payment for such shareholder's shares.
If a WTC's shareholder's demand for payment under CBCA Section 33-868
remains unsettled, WTC shall commence a proceeding within 60 days after receipt
of such shareholder's demand for payment and file a petition in the Waterbury,
Connecticut Superior Court or before any judge thereof, requesting that the
fair value of the shares of such shareholder and the accrued interest thereon
be found and determined as provided in CBCA Section 33-871(a). If WTC fails to
timely commence such proceeding, WTC shall pay each dissenting shareholder
whose demand remains unsettled the amount demanded. All shareholders making
such demand for payment as described above, whose demands remain unsettled,
wherever residing, shall be made parties to the proceeding. A copy of the
petition shall be served on each such shareholder who is a resident of
Connecticut. Non-resident dissenting shareholders may be served by registered
or certified mail or by publication as provided by law. The jurisdiction of
the court shall be exclusive. The court may, if it so elects, appoint one or
more persons as appraisers to receive evidence and recommend a decision on the
question of fair value. The appraisers shall have such power and authority as
shall be specified in the order of their appointment or an amendment thereof.
Each WTC shareholder made a party to the proceeding is entitled to judgment for
the amount, if any, by which the court finds the fair value of such
shareholders shares, plus interest, exceeds the amount paid by WTC, or for the
fair value, plus accrued interest, of the after-acquired shares of such
shareholders for which WTC elected to withhold payment under CBCA Section 33-
867. The costs and expenses, including the reasonable compensation and
expenses of court-appointed appraisers, of any such proceeding shall be
determined by the court and shall be assessed against WTC, but all or any part
of such costs and expenses may be apportioned and assessed as the court may
deem equitable against any or all shareholders who are parties to the
proceeding to whom WTC has made an offer to pay for the shares if the court
finds that the action of such shareholders was arbitrary or vexatious or not in
good faith in demanding payment under CBCA Section 33-868. Such expenses also
may include the fees and expenses of counsel and experts employed by any party,
and be entered against (a) WTC in favor of any or all dissenting shareholders
who are parties to the proceeding if WTC failed to substantially comply with
the requirements of CBCA Sections 33-860 to 33-868, inclusive, or (b) either
WTC or a dissenter, in favor of any other party, if the party against whom the
fees and expenses are assessed acted arbitrarily, vexatiously or not in good
faith with respect to rights provided by CBCA Sections 33-855 to 33-872,
inclusive. If the court finds that the services of counsel for any shareholder
were of substantial benefit to other dissenting shareholders similarly
situated, and that such fees should not be assessed against WTC, the court may
find that such fees should be paid out of the amounts awarded to the dissenting
shareholders who were benefitted.
The foregoing is only a summary of the rights of an objecting holder of
WTC Common Stock. Any holder of WTC Common Stock who intends to object to the
Merger Agreement should carefully review the text of the applicable provisions
of the CBCA set forth in ANNEX C to this Prospectus/Proxy Statement and should
also consult with such holder's attorney. The failure of a holder of WTC
Common Stock to follow precisely the procedures summarized above and set forth
in ANNEX C may result in loss of dissenters' rights. No further notice of the
events giving rise to dissenters' rights or any steps associated therewith will
be furnished to holders of WTC Common Stock, except as otherwise required by
law.
In general, any objecting shareholder who perfects such holder's right
to be paid the fair value of such holder's WTC Common Stock in cash will
recognize taxable gain or loss for federal income tax purposes upon receipt of
such cash. (See "THE MERGER -- Certain Federal Income Tax Consequences.")
Market Prices
The following table sets forth (i) the high and low last reported sale
prices per share of SNET Common Stock on the NYSE (trading symbol, SNG), with
respect to each quarterly period since January 1, 1995, (ii) the high bid and
low asked prices per share of WTC Common Stock on the NASDAQ OTC Bulletin Board
(trading symbol, WBTC) since January 1, 1995, and (iii) the high bid and low
asked equivalent pro forma per share prices of WTC Common Stock. The prices
per share of WTC Common Stock reflect transactions consummated during the
relevant period. Set forth on the cover page of this Prospectus/Proxy
Statement is the last reported sale price per share of SNET Common Stock
of the NYSE on the most recent practicable date prior to the mailing hereof.
WTC stockholders are urged to obtain current quotations of the market price of
SNET Common Stock.
<TABLE>
<CAPTION>
SNET WTC
Common Stock Common Stock
High Low High Bid Low Asked
<S> <C> <C> <C> <C>
1995
First Quarter................................................. 34 1/2 31 3/4 26 1/4 23
Second Quarter.............................................. 35 1/2 32 3/8 25 22 1/2
Third Quarter................................................ 26 1/8 32 5/8 24 1/2 23
Fourth Quarter............................................... 40 1/4 35 1/8 27 23 3/4
1996
First Quarter................................................. 43 3/4 37 1/2 26 3/8 24
Second Quarter.............................................. 45 1/2 40 1/2 26 3/8 23 3/8
Third Quarter................................................ 42 3/4 36 3/4 28 1/2 24 1/4
Fourth Quarter............................................... 41 1/8 36 39 1/2 26 3/4
1997
First Quarter To March 10, 1997.......................
</TABLE>
On October 21, 1996, the last business day prior to public announcement
of the agreement in principle to effect the Merger, the last reported sale
price per share of SNET Common Stock on the NYSE was $38.25 and the last
reported bid and asked prices of WTC Common Stock on the NASDAQ OTC Bulletin
Board were $26.50 and $26.875, respectively. On March 10, 1997, such prices
were $_____ per share of SNET Common Stock and $_____ and $_____ per share of
WTC Common Stock.
The Merger Agreement provides for the filing of a listing application
with the NYSE covering the SNET Common Stock exchangeable for WTC Common Stock.
It is a condition to consummation of the Merger that such SNET Common Stock be
authorized for listing on the NYSE effective upon official notice of issuance.
(See "THE MERGER -- Conditions to Consummation; Termination.")
<PAGE>
Dividends
The following table sets forth the cash dividends per share paid on
SNET Common Stock and WTC Common Stock with respect to each calendar quarter
since January 1, 1995, and the equivalent pro forma per share cash dividend on
WTC Common Stock.
<TABLE>
<CAPTION>
SNET WTC
Common Stock Common Stock
<S> <C> <C>
1995
First Quarter............................................... $.44 $.38
Second Quarter.............................................. $.44 $.38
Third Quarter............................................... $.44 $.38
Fourth Quarter.............................................. $.44 $.38
1996
First Quarter............................................... $.44 $.38
Second Quarter.............................................. $.44 $.38
Third Quarter............................................... $.44 $.38
Fourth Quarter.............................................. $.44 $.38
1997
First Quarter............................................... $.44 $.38
</TABLE>
WTC
General
Financial and other information relating to WTC, including information
about WTC's directors and executive officers, is set forth in WTC's 1995 Annual
Report on Form 10-K, 1996 First, Second and Third Quarter Reports on Form 10-Q,
1996 Annual Meeting Proxy Statement and 1996 Current Reports on Form 8-K,
copies of which may be obtained from WTC as indicated under "AVAILABLE
INFORMATION".
History and Business
WTC is a Connecticut corporation that was organized in 1899. WTC is
engaged in the business of furnishing local exchange telephone services,
intrastate toll services, and access to long distance telephone services (both
intrastate and interstate). WTC also sells telephone equipment and is an
Internet Services Provider. WTC currently is the primary provider of local
exchange service in the major portions of the Towns of Woodbury, Southbury, and
Bethlehem, Connecticut, and provides local exchange service to small
portions of the Towns of Oxford and Roxbury, Connecticut. WTC's business and
number of customers has grown with the increase in the population of its
service area and the introduction of new telecommunications applications (e.g.,
facsimiles, computer-based communications).
The total number of exchange lines in service at the end of each of the
last five years was 16,640 for 1992, 17,240 for 1993, 17,977 for 1994, 18,710
for 1995 and 19,961 for 1996. Approximately 59% of the WTC exchange lines are
located in the Town of Southbury, approximately 29% in the Town of Woodbury,
approximately 10% in the Town of Bethlehem and approximately 2% in the Towns of
Oxford and Roxbury. WTC provides local exchange service in its service area to
its customers through central office switching equipment and cables
(underground and attached to poles). Customers have the option of purchasing
or leasing their telephone instrument and other termination equipment from WTC
or other sources. WTC's lines and cables are interconnected with those of
other telephone companies in the United States and many other countries through
the facilities of SNET and other carriers. WTC provides intrastate toll
service through SNET tariffs, as approved by the DPUC. WTC provides intrastate
and interstate access through National Exchange Carrier Association Tariff No.
5. WTC has upgraded its switching system to provide for equal access to inter-
exchange carriers (e.g., AT&T Corp. ("AT&T"), Sprint, MCI Communications Corp.
("MCI")).
WTC, SNET Springwich, Inc. and certain other carriers are parties to a
limited partnership agreement pursuant to which WTC holds a 1% investment
interest in Springwich Cellular Limited Partnership, a limited partnership that
provides cellular mobile telephone service. WTC's allocation of profits and
losses are determined in accordance with such agreement.
SNET
General
Financial and other information relating to SNET, including information
relating to SNET's directors and executive officers, is set forth in SNET's
1995 Annual Report on Form 10-K, 1996 First, Second and Third Quarter Reports
on Form 10-Q, 1996 Annual Meeting Proxy Statement and 1996 and 1997 Current
Reports on Form 8-K, copies of which may be obtained from SNET as indicated
under "AVAILABLE INFORMATION".
History and Business
SNET was incorporated in 1986 under the laws of the State of
Connecticut and has its principal executive offices at 227 Church Street, New
Haven, Connecticut 06510 (telephone number (203) 771-5200). SNET is a holding
company engaged through its subsidiaries in operations principally in
Connecticut which expanded cellular services in Rhode Island and certain areas
in Massachusetts. SNET has business units in the following telecommunications
product groups; wireline; wireless; and information and entertainment.
Wireline includes The Southern New England Telephone Company's
telecommunications services; SNET America, Inc. (providing national and
international long-distance services to Connecticut customers); and SNET
Diversified Group, Inc. (providing premium telecommunications services and the
selling and leasing of communications equipment to residential and business
customers). Wireless includes SNET Cellular, Inc. and SNET Mobility, Inc.
(providing cellular (wholesale and retail), personal communications and paging
resale services). Information and entertainment includes directory publishing,
advertising and multimedia services. Non-telecommunications services include
SNET Real Estate, Inc. (engaging in leasing commercial real estate) and the
holding company (engaging in financial and strategic planning).
Certain Regulatory Considerations
General
WTC currently is the primary provider of local exchange service in the
major portions of the Towns of Woodbury, Southbury, and Bethlehem, Connecticut,
and provides local exchange service to small portions of the Towns of Oxford
and Roxbury, Connecticut (the area to which WTC provides exchange service being
sometimes hereinafter referred to as its "Service Area"). The Service Area was
established by agreement with The Southern New England Telephone Company, a
wholly-owned subsidiary of SNET and Connecticut's largest incumbent local
exchange carrier ("SNETCo"). The Service Area has been accepted by the DPUC
and is incorporated in tariffs filed by WTC with the DPUC; however, as
described in below, it is likely that recent Connecticut and federal
legislation and regulations adopted in connection therewith will enable
competitive providers to offer local service in the Service Area. WTC has no
geographic limitation on its unregulated business.
As a public service company, WTC is subject to regulation by the DPUC
as to intrastate rates and services, issuance of securities, reporting
requirements, and other matters. WTC is also subject to regulation by the
Federal Communications Commission ("FCC") as to interstate access charges,
reporting requirements, use of a uniform system of accounting established by
the FCC for telephone companies, and other matters.
WTC provides intrastate toll service under terms, conditions and rates
consistent with SNETCo tariffs, as approved by the DPUC. The DPUC has recently
granted an application by SNETCo to reclassify its intrastate toll service as
competitive (as opposed to its previous designation as noncompetitive), thereby
allowing SNETCo greater flexibility with respect to its intrastate toll service
tariff. Given the recent change in such classification, WTC cannot anticipate
the precedential effect, if any, of that change which to date has not had any
material impact on WTC's operations or rates for intrastate toll service.
Effective December 1, 1996, WTC installed and implemented a system to
provide intrastate equal access and presubscription in accordance with a DPUC
order. If a customer selects an intrastate carrier other than WTC, WTC will be
compensated for its services in connection with intrastate toll calls based on
access charges. WTC provides intrastate access under terms, conditions and
rates consistent with NECA Tariff No. 5. Given its recent adoption of
intrastate equal access and presubscription, WTC cannot anticipate the effect
thereof, though WTC expects that it will experience a loss, either from reduced
revenue or increased cost (or a combination of both). The amount of such loss
also may be influenced by the billing and collection arrangement, if any, that
WTC maintains from time to time with each of the carriers selected by
customers.
The method for compensating WTC for its services in connection with
interstate toll calls is based on access charges. WTC provides interstate
access through NECA Tariff No. 5. These access charges are paid by the
interstate toll carriers and end users. Under this system, WTC's revenues from
interstate toll calling are not affected by the caller's choice of carrier. In
1992, WTC upgraded its switching system to provide for equal access to
interstate carriers. While some local exchange carriers or their affiliates
have entered into the competitive interstate toll market as a result of
legislative and regulatory initiatives, WTC currently is not affiliated with
any interstate offering.
Historically, WTC and other local exchange carriers generally have
competed, on an unregulated basis, in the areas of billing and collection of
interstate services, and customer premises equipment. WTC offers customer
premises equipment on an unregulated basis under an FCC approved plan. An
increasing number of customers are providing their own equipment and other
facilities in lieu of equipment and facilities leased by WTC. WTC has
no geographical limitation on its unregulated business. WTC presently does not
derive a material amount of its revenue from its unregulated business.
Federal Telecommunications Act
Since AT&T was required to divest itself of the 22 Bell operating
companies, regulatory and judicial rulings have generally increased competition
within the telephone industry, and have deregulated the provision of new
terminal equipment and enhanced services. In February 1996, the Federal
Telecommunications Act became law. The Federal Telecommunications Act, among
other things, removes all barriers to competition in the provision of local
telecommunications services and imposes certain obligations on local
exchange carriers, like WTC, to facilitate the introduction of competition to
the local markets. In August 1996, the FCC issued rules for interconnection
between incumbent local exchange carriers and competitive service providers.
These rules have been the subject of certain appeals currently pending in
federal court, and some rules have been stayed pending judicial review.
Generally, the Federal Telecommunications Act requires all
telecommunications carriers to interconnect with each other and not to install
equipment that would preclude interconnectivity. Each local exchange carrier
has the duty to not impose unreasonable or discriminatory conditions on the
resale of its telecommunications services; provide, to the extent technically
feasible, number portability; provide dialing parity and nondiscriminatory
access to telephone numbers, operator services, directory assistance and
directory listing; allow access to rights of way; and establish reciprocal
compensation for the transport and termination of telecommunications.
The Federal Telecommunications Act also imposes additional obligations
on all incumbent local exchange carriers to negotiate in good faith; provide
interconnection with the facilities and equipment of any requesting carrier;
provide nondiscriminatory access to unbundled network elements; offer any
telecommunication service for resale at wholesale rates (based on retail rates
less avoided costs); provide public notice of changes that would affect
interoperability; and provide for physical collocation of another carrier's
equipment necessary for interconnection or access to unbundled network
elements.
As an incumbent local exchange carrier, WTC is not only subject to the
duties generally applicable to all local exchange carriers, but also, unless
exempt, the additional obligations imposed on incumbents. The Federal
Telecommunications Act exempts "rural telephone companies" from such additional
obligations. WTC qualifies as such a rural telephone company because it
provides telephone exchange services to fewer than 50,000 access lines.
Accordingly, WTC is exempt from such additional obligations until it has
received a bona fide request for interconnection, services, or network
elements, and the DPUC terminates WTC's exemption because the request is not
unduly economically burdensome, is technically feasible, and is consistent with
universal service principles being developed under the Federal
Telecommunications Act.
To date one competitive carrier, TCI Telephony Services of Connecticut,
Inc. ("TCI"), has requested that WTC initiate negotiations concerning
interconnection, services and network elements under the Federal
Telecommunications Act. WTC has advised TCI of its exemption as a rural
telephone company. On November 5, 1996, on TCI's application, the DPUC opened
Docket No. 96-11-06 (the "TCI Docket") to conduct the inquiries necessary to
determine whether to terminate WTC's exemption. WTC recently reached an
agreement in principle with TCI pursuant to which, among other things, WTC
would offer for resale by TCI its local, retail telecommunications services at
a wholesale price reflecting a discount to be established by the DPUC in a
SNETCo docket. In connection with that agreement in principle, TCI withdrew
its request to inquire into WTC's exemption, without prejudice if WTC and TCI
fail to reach a definitive agreement on resale. Accordingly, the DPUC has
closed the TCI Docket. WTC anticipates that other competitive carriers may
seek to resell WTC's local, retail telecommunications services in a manner
similar to TCI.
It is likely that irrespective of WTC's obligations under the Federal
Telecommunications Act, in 1997 the DPUC will process WTC's dockets opened
under the Connecticut Telecommunications Act described below, subject to the
regulatory treatment of the Merger by the DPUC. If the DPUC terminates WTC's
exemption under the Federal Telecommunications Act or takes other action having
a similar effect, WTC anticipates that increased competition in the Service
Area will result in market penetration by other carriers, a reduction in WTC's
traditional sources of revenues, and increased expenses being incurred
by WTC to satisfy its regulatory obligations. In the absence of regulatory
relief, local exchange competition and the additional obligations imposed on
incumbent local exchange carriers under the Federal Telecommunications Act
could seriously threaten the viability of WTC in the long term. In any event,
WTC believes that based on the DPUC's actions in implementing the Connecticut
Telecommunications Act described below and general industry trends, it is
likely that WTC could face local exchange competition and could be materially
and adversely affected thereby in the long term.
Connecticut Telecommunications Act
Prior to the enactment of the Federal Telecommunications Act,
Connecticut has taken steps to increase competition in the provision of local
exchange telephone service. Effective July 1, 1994, the Connecticut
Telecommunications Act promotes broader competition in the Connecticut
telecommunications market, with the stated goal of assuring high quality
customer and technical services. The Connecticut Telecommunications Act opens
Connecticut telecommunications services, including local exchange service, to
full competition, and encourages the DPUC to adopt alternative forms of
regulation for telephone companies, like WTC. The Federal Telecommunications
Act is largely consistent with the Connecticut Telecommunications Act, though
the federal pricing provisions could require WTC to charge competitors for
services below WTC's cost of providing such services.
The DPUC has been charged with implementing the Connecticut
Telecommunications Act. More than 100 organizations have been certified to
operate as telecommunications companies in Connecticut, and approximately 20
(including AT&T, MCI and TCI) have been certified by the DPUC to provide local
service. The DPUC has held numerous hearings on, and is nearing the completion
of, implementation proceedings for SNETCo and certain other matters having
general application to the Connecticut telecommunications market. As a
result of proceedings in its dockets, SNETCo has already or shortly will
unbundle its local network, resell its local exchange services, and
interconnect with competitive carriers. SNETCo also has been granted an
alternative form of regulation and reclassified some of its services as
competitive (as opposed to emerging competitive or noncompetitive) under the
Connecticut Telecommunications Act.
WTC has been participating in the proceedings involving the
implementation of the Connecticut Telecommunications Act, and the DPUC has
opened three dockets to examine the cost of providing service, intrastate
depreciation rates, and unbundling the local telecommunications network,
respectively, for WTC. While WTC's dockets have not been significantly
advanced, the DPUC has indicated that the principles developed in the SNETCo
dockets are likely to apply equally to WTC. WTC has consistently maintained
that such a uniform application may not be appropriate given certain
significant differences between SNETCo and WTC. For example, WTC has a
different rate and access charge structure, almost all of WTC's
telecommunications services are currently classified as noncompetitive,
and there is no alternative regulation plan for WTC pending before the DPUC.
Unlike the Federal Telecommunications Act, the Connecticut Telecommunications
Act does not provide for any exemption for WTC as a rural or small telephone
company.
Like the potential adverse effect of the Federal Telecommunications
Act, the implementation of the Connecticut Telecommunications Act, including
the introduction of local exchange competition to the Service Area, could
seriously threaten the viability of WTC in the long term. WTC anticipates that
the DPUC will process WTC's dockets in 1997, subject to the regulatory
treatment of the Merger. Moreover, it is likely that in the near future the
DPUC will implement local exchange competition in the Service Area, and as
a result of the agreement in principle reached between WTC and TCI in the TCI
Docket, WTC will be required to offer its local, retail telecommunications
services to competitive carriers at a wholesale price reflecting a discount to
be established in a SNETCo docket. While WTC cannot reasonably predict the
effect of such competition at this time, absent favorable regulatory treatment,
including modifying some of the principles developed in the SNETCo dockets, it
is likely that local exchange competition could materially and adversely
affect WTC in the long term.
<PAGE>
DESCRIPTION OF SNET CAPITAL STOCK
The descriptive information supplied herein outlines certain provisions
of the SNET Articles, the SNET Bylaws, the Rights Agreement and the Connecticut
Business Corporation Act. The information does not purport to be complete and
is qualified in all respects by reference to the provisions of the SNET
Articles, the SNET Bylaws, the Rights Agreement, and the Connecticut Business
Corporation Act.
The authorized capital stock of SNET consists of 300 million shares of
SNET Common Stock, two million shares of preferred stock, par value $50 per
share ("Preferred Stock"), and 50 million shares of preference stock, par value
$1.00 per share ("Preference Stock"). As of the date of this Prospectus/Proxy
Statement there are 65,122,647 shares of SNET Common Stock issued and
outstanding and 2,758,512 shares of SNET Common Stock issued and held by SNET
as treasury shares. No shares of SNET Preferred Stock or Preference Stock were
issued and outstanding.
SNET Common Stock
Each share of SNET Common Stock is entitled to one vote, which may be
cast either in person or by proxy. Holders of SNET Common Stock have no
cumulative voting rights with respect to the election of directors and have no
preemptive or other rights to purchase additional securities of SNET.
Each share of SNET Common Stock will have an equal and ratable right to
receive dividends, when, as and if declared by the board out of assets legally
available therefore and subject to the prior dividend rights of the holders of
any Preferred Stock or Preference Stock then outstanding. In the event of a
liquidation, dissolution or winding up of SNET, the holders of SNET Common
Stock will be entitled to share equally and ratably in the assets available for
distribution after the payment of liabilities, subject to any prior rights of
holders of any Preferred Stock or Preference Stock then outstanding.
Preferred Stock
The SNET Board of Directors ("SNET Board") has the authority to issue
up to two million shares of Preferred Stock in one or more series, to fix the
terms, limitations and relative rights and preferences of any unissued shares
of Preferred Stock and to fix the number of shares constituting any series and
the designations of such series, without any further vote or action by the
shareholders. Dividends on Preferred Stock of each series are cumulative from
the date or dates fixed with respect to such series and are paid or declared
or set apart for payment for all past dividend periods and for the current
dividend period before any dividends (except dividends payable in Preference or
SNET Common Stock) shall be declared or paid or set apart for payment on
Preference or Common Stock. The SNET Board, without shareholder approval, will
be able to issue Preferred Stock with voting and conversion rights which could
adversely effect the voting power of the holders of SNET Common Stock.
Generally, holders of Preferred Stock have no right or power to vote on
any question or in any proceeding or to be represented at or to receive notice
of any meetings of shareholders. However, whenever dividends payable on
Preferred Stock at the time outstanding, the outstanding shares of Preferred
Stock shall, in addition to any other voting rights, have the exclusive right,
voting separately as a class and without regard to series, to elect, at the
next regular annual meeting of SNET, two directors of SNET and such right
continues until such time as all dividends on Preferred Stock to the latest
dividend payment date shall have been paid or declared or set apart for
payment.
Preference Stock
The SNET Board has the authority to issue up to 50 million shares of
Preference Stock. The Preference Stock ranks after and is junior to the
Preferred Stock with respect to payment of dividends, the amount payable upon
shares in the event of involuntary liquidation and the amount payable upon
shares in the event of voluntary liquidation. The SNET Board has the authority
to fix and determine the terms, limitations and relative rights and preferences
of the Preference Stock and to establish series and fix and determine the
variation as among series.
Rights Plan
Under a 1996 shareholders' rights plan ("Rights Plan"), effective
February 11, 1997, each share of SNET Common Stock has a purchase right that
entitles the holder to purchase one hundredth of a share of Preference Stock at
an exercise price of $180.00. The rights are not exercisable or transferable
apart from the SNET Common Stock until a person or group has acquired, or has
made an offer for, 20 percent or more of the outstanding SNET Common Stock. In
the event that a person or group acquires 20 percent or more of the outstanding
SNET Common Stock, each outstanding right, other than those held by the 20
percent acquiror, is entitled to purchase, at the exercise price of the rights,
a number of shares of SNET Common Stock having a market value of two times the
exercise price of the right. At any time after any person or group acquires,
or has made an offer for, 20 percent or more of the outstanding SNET Common
Stock, and prior to the acquisition by such person or group of 50 percent or
more of the SNET Common Stock, the Board may exchange the Rights (other than
the Rights held by such person or group), in whole or in part, at an exchange
ratio of one share of SNET Common Stock or one-one hundredth of a share of
Preference Stock per Right. The rights are redeemable at one cent each prior
to public announcement that a person or group has acquired beneficial ownership
of 20 percent or more of the outstanding SNET Common Stock. The rights expire
on February 11, 2007.
<PAGE>
MATERIAL DIFFERENCES BETWEEN THE RIGHTS
OF HOLDERS OF SNET COMMON STOCK
AND WTC COMMON STOCK
The following is a summary of material differences between the rights
of holders of SNET Common Stock and the rights of holders of WTC Common Stock.
The rights of the shareholders of SNET and WTC are currently governed primarily
by the CBCA and the respective articles of incorporation and bylaws of SNET and
WTC. The summary sets forth a list of the material differences and
shareholders' rights under the SNET Certificate and the SNET Bylaws and the WTC
Certificate and the WTC Bylaws. This discussion, however, is not and does not
purport to be an exhaustive list or to identify all differences that may, under
any given fact situation, be material to WTC shareholders. Moreover, this
discussion is qualified in its entirety by reference to the SNET Certificate,
the SNET Bylaws, the WTC Certificate, the WTC Bylaws and the CBCA.
Articles of Incorporation Amendments
Under the CBCA, a corporation may amend its articles of incorporation
by vote of the board of directors and by the shareholders if the votes cast
favoring the action exceed the votes cast opposing the action, unless the
articles of incorporation requires a greater number of affirmative votes. The
SNET Certificate provides that the affirmative vote of at least 80 percent of
the voting power of all of the shares of SNET then entitled to vote generally
in the election of directors shall be required to amend or repeal or adopt any
provision inconsistent with provisions in the SNET Certificate relating to
classification of the SNET Board, the calling of special meetings, unanimous
voting for actions by consent and the amendment of the SNET Certificate and
Bylaws, unless such amendment, repeal or adoption has been recommended to the
shareholders by a vote of at least two-thirds of the SNET Board.
The rights of the shareholders of WTC are also governed by the CBCA in
addition to the WTC Bylaws and the WTC Certificate. Those provisions of the
CBCA pertaining to an amendment of a corporation's articles of incorporation
apply to WTC in the same manner as outlined above. The WTC Certificate
provides that the affirmative vote of at least 80 percent of the voting power
of all of the shares of WTC then entitled to vote generally in the election
of directors shall be required to amend or repeal or adopt any provision
inconsistent with the provisions in the WTC Certificate denying preemptive
rights (i.e., the right of a shareholder to maintain its proportionate share of
ownership by purchasing a proportionate share of any new stock issues) to WTC
shareholders; and establishing qualifications for, and the minimum and maximum
number of, WTC directors and the classification of the WTC Board.
<PAGE>
Bylaws Amendments
Under the CBCA, a corporation's board of directors may amend or repeal
the corporation's bylaws unless (1) the articles of incorporation or the CBCA
reserve this power exclusively to the shareholders in whole or in part or (2)
the shareholders in amending or repealing a particular bylaw expressly provide
that the board of directors may not amend or repeal that bylaw. In addition, a
corporation's shareholders may amend or repeal the corporation's bylaws even
though the bylaws may also be amended or repealed by its board of directors.
The SNET Bylaws provide that the Bylaws may be amended by the SNET Board or the
SNET shareholders provided that the amendment or repeal of provisions in the
SNET Bylaws relating to annual and special meetings of the SNET Board and
provisions relating to amending the SNET Bylaws require the affirmative vote of
the holders of at least 80 percent of the voting power of all of the shares of
SNET then entitled to vote generally in the election of directors.
The rights of the shareholders of WTC are also governed by the CBCA in
addition to the WTC Bylaws and the WTC Certificate. Those provisions of the
CBCA pertaining to amendment or repeal of a corporation's bylaws apply to WTC
in the same manner as outlined above. The WTC Bylaws may be amended by the WTC
Board or the WTC shareholders provided that the amendment or repeal of
provisions of the WTC Bylaws relating to the removal of a director or the
factors (e.g., WTC ratepayers, WTC employees, the community and WTC's duties as
a public service company) that the Board may consider in the exercise of its
judgment requires the affirmative vote of the holders of at least 80
percent of the voting power of all of the shares of WTC then entitled to vote
generally in the election of directors.
Distributions to Shareholders
Under the CBCA, a corporation has the power, subject to restrictions in
its articles of incorporation, to make distributions to its shareholders unless
after giving effect thereto the corporation would not be able to pay its debts
as they become due in the usual course of business or the corporation's total
assets would be less than the sum of its total liabilities plus, unless the
articles of incorporation permit otherwise, the amount that would be needed
if the corporation where to be dissolved at the time of the distribution to
satisfy the preferential rights upon dissolution of shareholders whose
preferential rights are superior to those receiving the distribution. The SNET
Certificate does not contain any limitations on such powers.
The rights of the shareholders of WTC to receive distributions are also
governed by the CBCA in addition to the WTC Certificate. Those provisions of
the CBCA pertaining to distributions to shareholders apply to WTC shareholders
in the same manner as outlined above. The WTC Certificate does not contain any
limitation on such powers.
<PAGE>
Classes of Directors
Under the CBCA, the articles of incorporation may provide for
staggering the terms of directors by dividing the total number of directors up
to five groups, with each group containing approximately the same percentage of
the total, as near may be. The SNET Certificate provides that the directors of
SNET, other than those who may be elected by the holders of any class of
Preferred or Preference Stock or any series thereof, shall be divided
into three classes with each class serving for staggered three year terms. The
SNET Bylaws provide that the SNET Board shall consist of not less than 3 nor
more than 17 directors.
The number and classes of WTC directors are also subject to the
provisions of the CBCA in addition to WTC Bylaws and the WTC Certificate.
Those provisions of the CBCA pertaining to the total number and classes of
permitted directors apply to WTC in the same manner as outlined above. WTC is
also governed by the WTC Certificate which provides that WTC shall be managed
by a Board of not less than 5 nor more than 9 directors, all of whom shall be
shareholders of WTC. The WTC Certificate also provides that the Board
shall be divided into three classes of directors, specified as Classes I, II,
and III, as nearly equal in number as possible. The WTC Board fixes the number
of directors and each class thereof, and the classification of WTC directors
was effected at the 1989 annual meeting of WTC shareholders, during which 3
Class I directors were elected for a one-year term, 3 Class II directors were
elected for a two-year term, and 3 Class III directors were elected for
a three year term. After such initial classification, the WTC Certificate
further provides that successors to the class of directors whose terms expire
at the succeeding annual meetings of WTC shareholders shall be elected for
three year terms. Directors are required to hold office until their terms
expire and until a successor is elected, except that if any director
attains the age of 70 during his term, such term shall end on the date of the
next annual meeting of the WTC shareholders and a replacement director shall be
elected to fill the unexpired term. The WTC Bylaws reference the WTC
Certificate for determining the qualifications, number and classes of
directors.
Removal of Directors
Under the CBCA, the shareholders may remove one or more directors with
or without cause unless the articles of incorporation provide that directors
may be removed only for cause. The SNET Bylaws provide that any director may
be removed from office at any time but only either by the affirmative vote of
the holders of at least 80 percent of the voting power of the shares of the
corporation then entitled to vote generally in the election of directors or by
the SNET Board for cause pursuant to a resolution approved by a majority of
the entire SNET Board upon not less than 10 nor more than 60 days written
notice of the meeting at which said resolution is to be presented.
The removal of WTC directors is also governed by the CBCA in addition
to the WTC Bylaws and the WTC Certificate. Those provisions of the CBCA
pertaining to the removal of directors apply to WTC in the same manner as
outlined above. The WTC Bylaws provide that any director may be removed from
office only for cause by the affirmative vote of the holders of at least 80
percent of the voting power of the shares of WTC then entitled to vote
generally in the election of directors, at a meeting the notice of which shall
include a notice of such proposed action. The WTC Bylaws further provide that
cause for removal shall only exist if a director has been convicted of a felony
in a final adjudication by a court of competent jurisdiction, or if a director
has willfully engaged in gross misconduct which is materially and demonstrably
injurious to WTC. The WTC Certificate does not contain any limitations on
removal of directors.
Meetings of Shareholders
Under the CBCA, special meetings of shareholders may be called by the
board of directors or the person or persons authorized to do so by the articles
of incorporation or bylaws or the holders of 35 percent, in the case of a
public company such as SNET, of all of the votes entitled to be cast on any
issue proposed to be considered at the proposed special meeting if such holders
sign, date and deliver to the corporation's secretary one or more written
demands for the meeting describing the purpose or purposes for which it is to
be held. The SNET Bylaws and the SNET Certificate provide that special
meetings of shareholders of SNET may be called only by the SNET Board pursuant
to a resolution approved by a majority of the entire SNET Board.
Special meetings of WTC shareholders are also governed by the CBCA in
addition to the WTC Bylaws and the WTC Certificate. Those provisions of the
CBCA pertaining to special meetings of shareholders apply to WTC in the same
manner as outlined above, except that the holders of 10 percent of WTC Common
Stock (as opposed to 35 percent in the case of other public companies such as
SNET) may so request a special meeting. Such difference exists because SNET
owned more than 10 percent of WTC Common Stock as of February 1, 1988. The WTC
Bylaws also provide that special meetings of shareholders of WTC may be
called at any time by WTC's President or the WTC Board and that the President
shall call a special meeting upon receipt of a written request to do so by WTC
shareholders representing at least 10 percent of the outstanding voting power.
The WTC Certificate does not address special meetings of shareholders.
Action by Shareholders Without Meeting
Under the CBCA, any action which may be taken at a meeting of
shareholders may be taken without a meeting by consent in writing setting forth
the action taken or to be taken signed by all of the persons who would be
entitled to vote upon such action at a meeting or by their duly authorized
attorneys. However, if the articles of incorporation so provide, shareholder
action may be taken by written consent setting forth the action to be taken
signed by all of the persons holding such designated proportion, not less than
a majority, of the voting power of shares entitled to vote thereon or to take
such action, as may be provided in the articles of incorporation, or by their
duly authorized attorneys. The SNET Certificate provides that whenever
shareholders are required or permitted to take any action by vote, such action
may be taken without a meeting by written consent setting forth the actions so
taken but only if such written consent is signed by all of the persons who
would be entitled to vote upon such action at a meeting.
Any action taken by WTC shareholders without a meeting is governed by
the CBCA in addition to the WTC Bylaws and the WTC Certificate. Those
provisions of the CBCA pertaining to action taken by shareholders without
holding a meeting apply to WTC shareholders in the same manner as outlined
above. Neither the WTC Bylaws nor the WTC Certificate contains any provisions
specifically addressing actions by shareholders without a meeting.
Mergers and Acquisitions
Under the CBCA, as a general matter, a corporation may merge with
another corporation or acquire all of the outstanding shares of another
corporation if the boards of directors and a majority of the votes entitled to
be voted on the merger or exchange by the shareholders of each corporation
approve such merger or exchange. Under prior law, which applies to
corporations incorporated before January 1, 1996, such as SNET and WTC, the
affirmative vote of two-thirds of the voting power of the holders of the
outstanding shares entitled to vote thereon is required, unless the
corporation's articles of incorporation provide otherwise. The SNET
Certificate and the WTC Certificate, respectively, do not provide for
a majority vote of shareholders in connection with the approval of a merger or
share exchange, and therefore, the two-thirds voting requirement would normally
apply. The Merger, however, requires the affirmative vote of the holders of 80
percent of the voting power of all of the outstanding shares of WTC Common
Stock and the holders of two-thirds of the outstanding shares of WTC Common
Stock other than WTC Common Stock held by SNET or any affiliate or associate of
SNET, as described under interested shareholder transactions below.
Interested Shareholder Transactions
Under Connecticut law, certain transactions between a Connecticut
corporation and an interested shareholder (which is defined as a beneficial
owner of 10 percent or more of the voting power of the then outstanding shares
of voting stock of the corporation, or an affiliate of the corporation which at
any time during the two year period prior to the transaction was the beneficial
owner of 10 percent or more of the voting power of the then outstanding
shares of voting stock of the corporation), are prohibited absent compliance
with specific authorization requirements. CBCA Section 33-841 prohibits
business combinations (which include, without limitation, mergers,
consolidations, sales of assets having an aggregate book value of 10 percent or
more of the total market value of the outstanding shares of the corporation or
its net worth, the issuance or transfer of equity securities having an
aggregate market value of 5 percent or more of the total market value of the
outstanding shares of the corporation, the adoption of a resolution calling for
the liquidation or dissolution of the corporation proposed by or on behalf of
the interested shareholder, or reclassification of securities or merger having
the effect of increasing by 5 percent or more of proportionate amount of
securities owned by an interested shareholder) with or for the benefit of an
interested shareholder or its affiliates or associates unless such business
combination is approved by the board of directors and receives the affirmative
vote of 80 percent of the voting power of all of the outstanding shares of
voting stock and two-thirds of the voting power of the outstanding shares of
the voting stock exclusive of the stock held by the interested shareholder and
its affiliates and its associates. The provision is inapplicable where, among
other things, the consideration to be received by shareholders for their shares
in the business combination meet certain pricing and form criteria.
Connecticut corporations are permitted to exclude certain business combinations
in certain instances from the voting requirements of this provision by board
resolution. The WTC Board has not adopted such exclusion.
CBCA Section 33-841 applies to the Merger because SNET owns 36.5
percent of WTC Common Stock. Accordingly, unless the Merger qualifies for
exemption, the Merger must be authorized by the affirmative votes of at least
80 percent of all of the outstanding shares of WTC Common Stock and two-thirds
of the outstanding shares of WTC Common Stock not held by SNET and its
affiliates and associates. Although the terms of the Merger satisfy the
exemption provisions pertaining to the minimum consideration to be received by
WTC shareholders in the transaction, other requirements for exemption (e.g.,
the form of consideration) cannot be satisfied because, among other reasons,
the Merger has been structured as a tax-deferred exchange, and SNET's historic
ownership of WTC Common Stock, which can be traced to a transaction between WTC
and SNET in 1910, may not comply with the technical rules circumscribing share
ownership by the interested shareholder. As a result, the Merger will be
prohibited unless authorized by the affirmative votes in compliance with CBCA
Section 33-841. (See "SUMMARY -- Vote Required.")
A similar provision of the CBCA prohibits business combinations
(defined for purposes of this provision to include a merger or a consolidation
of the corporation or any subsidiary of the corporation, a sale or other
disposition of assets having a market value equal to 10 percent or more of the
aggregate market value of all of the outstanding stock of the corporation or
representing 10 percent or more of the earning power or net income of the
corporation, the issuance or transfer by the corporation or a subsidiary of the
corporation of stock of such corporation or subsidiary having an aggregate
market value equal to 5 percent or more of the aggregate market value of all
outstanding stock of the corporation (other than through a pro rata dividend or
the exercise of warrants or other rights or the conversion of convertible
securities), the adoption of a plan or proposal for the complete or partial
liquidation of the corporation or a subsidiary or payment of certain dividends
having an aggregate market value equal to 5 percent or more of the aggregate
market value of the corporation and proposed by an interested shareholder or an
affiliate or an associate, or any reclassification of securities or merger
which has the effect of increasing the proportionate share of any class or
series of voting stock (or securities convertible into voting stock) owned
by the interested shareholder and is proposed by an interested shareholder or
an affiliate or an associate, or the receipt by the interested shareholder or
an affiliate or associate of any financial benefit from the corporation (other
than proportionately as a shareholder of the corporation) with interested
shareholders (which is defined as a beneficial owner of 10 percent or more of
the voting power of the outstanding shares of voting stock of the corporation,
or an affiliate or associate of the corporation which at any time during the
five year period prior to the transaction was the beneficial owner of 10
percent or more of the voting power of the then outstanding shares of voting
stock of the corporation) within a five year period after such shareholder
became an interested shareholder unless such business combination is approved
by the board of directors and a majority of the non-employee directors of which
there must be at least two, prior to such interested shareholders' stock
acquisition date.
The foregoing provision of the CBCA is not applicable to the Merger, as
SNET acquired its share ownership in WTC more than five years prior to the date
of the Merger Agreement.
Fiduciary Duty
As permitted under Connecticut law, the SNET Certificate limits in
certain circumstances the monetary liability of directors to SNET and its
shareholders for a breach of their fiduciary duty as directors to the amount of
their compensation for serving SNET as directors during the year of the
violation. These provisions do not eliminate the liability of a director if
such breach (1) involved a knowing and culpable violation of law by the
director, (2) enabled the director or an associate, as defined in CBCA Section
33-840, to receive an improper personal economic gain, (3) showed a lack of
good faith and a conscious disregard for the duty of the director to SNET under
circumstances in which the director was aware his or her conduct or omission
created an unjustifiable risk of serious injury to SNET, (4) constituted a
sustained and unexecuted pattern of inattention that amounted to an application
of the director's duty to SNET, or (5) created liability under provisions of
the CBCA relating to the distribution of assets of SNET whether by dividend,
purchase or redemption of shares or otherwise in violation of the CBCA. In
addition, these provisions do not eliminate the liability of a director for
violation of federal securities laws, nor do they limit the rights of
SNET or its shareholders in appropriate circumstances to seek equitable remedy
such as injunctive or other forms of non-monetary relief. Such remedies may
not be effective in all cases.
The WTC Certificate does not contain any limitation for the monetary
liability of directors to WTC and its shareholders for a breach of their
fiduciary duties as directors.
Under Connecticut law, a director shall discharge his duties as a
director, including his duties as a member of a committee in good faith, with
the care an ordinarily prudent person in a like position would exercise under
similar circumstances, and in a manner he or she reasonably believes to be in
the best interest of the corporation. In discharging his duties, a director
may rely on information, opinions, reports or statements prepared or
presented by corporate officers or employees whom the director believes to be
reliable and competent in the matters presented, by legal counsel, public
accountants and other persons as to matters the director reasonably believes
are within the person's professional or expert competence, or by a committee of
the board of directors of which he is not a member if the director reasonably
believes the committee merits confidence. In approving a merger, consolidation
or sale of all or substantially all of the assets of a corporation, a director
in determining what he reasonably believes to be in the best interest of the
corporation is to consider (1) the long- term as well as the short-term
interests of the corporation, (2) the interests of the shareholders, long-term
as well as short-term, including the possibility that those interests may best
be served by the continued independence of the corporation, (3) the interests
of the corporation's employees, customers, creditors and suppliers, and (4)
community and societal considerations including those of any community in which
any office or other facility of the corporation is located. A director who so
performs those duties shall be presumed to have no liability by reason of being
a director or having been a director of the corporation.
<PAGE>
RESALE OF SNET COMMON STOCK
The SNET Common Stock to be issued in the Merger to holders of WTC
Common Stock who are not deemed to be "affiliates" (as defined under the
Securities Act, but generally including directors, certain executive officers
and ten percent or more stockholders) of WTC or SNET may be resold by them
under the Securities Act. It is a condition to consummation of the Merger that
each holder of WTC Common Stock who is deemed by WTC to be an affiliate has
entered into an agreement with SNET providing, among other things, that such
affiliate will not transfer any SNET Common Stock received by such affiliate in
the Merger except in compliance with the Securities Act. This Prospectus/Proxy
Statement does not cover any resales of SNET Common Stock received by
affiliates of WTC.
<PAGE>
VALIDITY OF SNET COMMON STOCK
The validity of the SNET Common Stock being offered hereby is being
passed upon for SNET by Madelyn M. DeMatteo, General Counsel of SNET. Ms.
DeMatteo is also a shareholder of SNET and holds options to purchase additional
shares of SNET Common Stock.
<PAGE>
EXPERTS
The financial statements and financial statement schedule of WTC
incorporated by reference and included in WTC's Annual Report (Form 10-K) for
the year ended December 31, 1995, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their reports thereon included and
incorporated by reference therein and incorporated herein by reference. Such
financial statements and schedule are incorporated herein by reference in
reliance upon such reports given upon the authority of such firm in accounting
and auditing.
The consolidated balance sheets of SNET as of December 31, 1995 and
1994, and the related consolidated statements of income, changes in
stockholders' equity and cash flows for each of the years in the three-year
period ended December 31, 1995, included in SNET's 1995 Annual Report on Form
10-K and incorporated by reference herein, have been incorporated by reference
herein in reliance upon the reports of Coopers & Lybrand L.L.P., independent
accountants, given upon the authority of said firm as experts in accounting and
auditing.
<PAGE>
ANNEX A
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
DATED AS OF DECEMBER 6, 1996
AMONG
SOUTHERN NEW ENGLAND TELECOMMUNICATIONS CORPORATION,
SNET ACQUISITION SUBSIDIARY, INC.
AND
THE WOODBURY TELEPHONE COMPANY
<PAGE>
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
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 Hart-Scott-Rodino 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
<PAGE>
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (the "Agreement"),
dated as of December 6, 1996 among Southern New England 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, Berry & Howard, 185 Asylum Street,
CityPlaceI, Hartford, Connecticut, 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,
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
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
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
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
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
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
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
Section22a-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
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
the Federal Communications Commission or under the Hart-Scott-Rodino 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
Section4975 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 Section501(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
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:
(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
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
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
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,
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,
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 Hart-Scott-Rodino 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
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 Carmody & Torrance, counsel to WB, dated the Closing
Date and in form and substance satisfactory to SNET.
(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 Madelyn M. DeMatteo, General Counsel of SNET, dated
the Closing Date and in form and substance satisfactory to WB.
(c) The opinion of Carmody & 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
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 McDonald & 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
Section2.1 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. Garry
Mitchell and WB, and the Change-in-Control Agreement dated July 24, 1996
between Donald E. Porter and WB.
14.3 Community Activities. Subsequent to the Effective Time, SNET shall
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 227 Church
Street, New Haven, Connecticut 06510, Attention: Paula M. Anderson, Esq.; and
if to WB, addressed to WB at P.O. Box N, Woodbury, Connecticut 06798-0478,
Attention: DonaldE. Porter, with copies to Thomas Candrick, Esq., Carmody &
Torrance, 195 Church Street, New Haven, Connecticut 06510, 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
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 Section14.11 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.
<PAGE>
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: John J. Miller
Its: Vice President & Treasurer
SNET ACQUISITION SUBSIDIARY, INC.
By:
Name: John J. Miller
Its: President
THE WOODBURY TELEPHONE COMPANY
By:
Name: Donald E. Porter
Its: President
<PAGE>
ANNEX B
OPINION OF MCDONALD & CO. SECURITIES, INC.
[to be filed by amendment]
<PAGE>
ANNEX C
PART XIII
DISSENTERS' RIGHTS
(A)
RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
Sec. 33-855. Definitions. As used in sections 33-855 to 33-872,
inclusive:
(1) "Corporation" means the issuer of the shares held by a dissenter
before the corporate action or the surviving or acquiring corporation by merger
or share exchange of that issuer.
(2) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under section 33-856 and who exercises that right when and in
the manner required by sections 33-860 to 33-868, inclusive.
(3) "Fair value", with respect to a dissenter's shares, means the
value of the shares immediately before the effectuation of the corporate action
to which the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action.
(4) "Interest" means interest from the effective date of the
corporate action until the date of payment, at the average rate currently paid
by the corporation on its principal bank loans or, if none, at a rate that is
fair and equitable under the circumstances.
(5) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares to
the extent of the rights granted by a nominee certificate on file with a
corporation.
(6) "Beneficial shareholder" means the person who is a beneficial
owner of shares held in a voting trust or by a nominee as the record
shareholder.
(7) "Shareholder" means the record shareholder or the beneficial
shareholder.
Sec. 33-856. Right to dissent. (a) A shareholder is entitled to
dissent from, and obtain payment of the fair value of his shares in the event
of, any of the following corporate actions:
(1) Consummation of a plan of merger to which the corporation is a
party (A) if shareholder approval is required for the merger by section 33-817
or the articles of incorporation and the shareholder is entitled to vote on the
merger or (B) if the corporation is a subsidiary that is merged with its parent
under section 33-818;
(2) Consummation of a plan of share exchange to which the
corporation is a party as the corporation whose shares will be acquired, if the
shareholder is entitled to vote on the plan;
(3) Consummation of a sale or exchange of all, or substantially all,
of the property of the corporation other than in the usual and regular course
of business, if the shareholder is entitled to vote on the sale or exchange,
including a sale in dissolution, but not including a sale pursuant to
court order or a sale for cash pursuant to a plan by which all or substantially
all of the net proceeds of the sale will be distributed to the shareholders
within one year after the date of sale;
(4) An amendment of the articles of incorporation that materially
and adversely affects rights in respect of a dissenter's shares because it: (A)
Alters or abolishes a preferential right of the shares; (B) creates, alters or
abolishes a right in respect of redemption, including a provision respecting a
sinking fund for the redemption or repurchase, of the shares; (C) alters or
abolishes a preemptive right of the holder of the shares to acquire shares or
other securities; (D) excludes or limits the right of the shares to vote on any
matter, or to cumulate votes, other than a limitation by dilution through
issuance of shares or other securities with similar voting rights; or (E)
reduces the number of shares owned by the shareholder to a fraction of a share
if the fractional share so created is to be acquired for cash under section 33-
668; or
(5) Any corporate action taken pursuant to a shareholder vote to the
extent the articles of incorporation, by laws or a resolution of the board of
directors provides that voting or non-voting shareholders are entitled to
dissent and obtain payment for their shares.
(b) Where the right to be paid the value of shares is made available
to a shareholder by this section, such remedy shall be his exclusive remedy as
holder of such shares against the corporate transactions described in this
section, whether or not he proceeds as provided in sections 33-855 to 33-872,
inclusive.
Sec. 33-857. Dissent by nominees and beneficial owners. (a) A record
shareholder may assert dissenters' rights as to fewer than all the shares
registered in his name only if he dissents with respect to all shares
beneficially owned by any one person and notifies the corporation in writing
of the name and address of each person on whose behalf he asserts dissenters'
rights. The rights of a partial dissenter under this subsection are determined
as if the shares as to which he dissents and his other shares were registered
in the names of different shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to
shares held on his behalf only if: (1) He submits to the corporation the record
shareholder's written consent to the dissent not later than the time the
beneficial shareholder asserts dissenters' rights; and (2) he does so with
respect to all shares of which he is the beneficial shareholder or over which
he has power to direct the vote.
Secs. 33-858 and 33-859. Reserved for future use.
(B)
PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS
Sec. 33-860. Notice of dissenters' rights. (a) If proposed corporate
action creating dissenters' rights under section 33-856 is submitted to a vote
at a shareholders' meeting, the meeting notice shall state that shareholders
are or may be entitled to assert dissenters' rights under sections 33-855 to
33-872, inclusive, and be accompanied by a copy of said sections.
(b) If corporate action creating dissenters' rights under section
33-856 is taken without a vote of shareholders, the corporation shall notify in
writing all shareholders entitled to assert dissenters' rights that the action
was taken and send them the dissenters' notice described in section 33-862.
Sec. 33-861. Notice of intent to demand payment. (a) If proposed
corporate action creating dissenters' rights under section 33-856 is submitted
to a vote at a shareholders' meeting, a shareholder who wishes to assert
dissenters' rights (1) shall deliver to the corporation before the vote is
taken written notice of his intent to demand payment for his shares if the
proposed action is effectuated and (2) shall not vote his shares in favor of
the proposed action.
(b) A shareholder who does not satisfy the requirements of
subsection (a) of this section is not entitled to payment for his shares under
sections 33-855 to 33-872, inclusive.
Sec. 33-862. Dissenters' notice. (a) If proposed corporate action
creating dissenters' rights under section 33-856 is authorized at a
shareholders' meeting, the corporation shall deliver a written dissenters'
notice to all shareholders who satisfied the requirements of section 33-861.
(b) The dissenters' notice shall be sent no later than ten days
after the corporate action was taken and shall:
(1) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;
(2) Inform holders of uncertificated shares to what extent transfer
of the shares will be restricted after the payment demand is received;
(3) Supply a form for demanding payment that includes the date of
the first announcement to news media or to shareholders of the terms of the
proposed corporate action and requires that the person asserting dissenters'
rights certify whether or not he acquired beneficial ownership of the shares
before that date;
(4) Set a date by which the corporation must receive the payment
demand, which date may not be fewer than thirty nor more than sixty days after
the date the subsection (a) of this section notice is delivered; and
(5) Be accompanied by a copy of sections 33-855 to 33-872,
inclusive.
Sec. 33-863. Duty to demand payment. (a) A shareholder sent a
dissenters' notice described in section 33-862 must demand payment, certify
whether he acquired beneficial ownership of the shares before the date required
to be set forth in the dissenters' notice pursuant to subdivision (3) of
subsection (b) of said section and deposit his certificates in accordance with
the terms of the notice.
(b) The shareholder who demands payment and deposits his share
certificates under subsection (a) of this section retains all other rights of a
shareholder until these rights are cancelled or modified by the taking of the
proposed corporate action.
(c) A shareholder who does not demand payment or deposit his share
certificates where required, each by the date set in the dissenters' notice, is
not entitled to payment for his shares under sections 33-855 to 33-872,
inclusive.
Sec. 33-864. Share restrictions. (a) The corporation may restrict the
transfer of uncertificated shares from the date the demand for their payment is
received until the proposed corporate action is taken or the restrictions
released under section 33-866.
(b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until these
rights are cancelled or modified by the taking of the proposed corporate
action.
Sec. 33-865. Payment. (a) Except as provided in section 33-867, as
soon as the proposed corporate action is taken, or upon receipt of a payment
demand, the corporation shall pay each dissenter who complied with section 33-
863 the amount the corporation estimates to be the fair value of his shares,
plus accrued interest.
(b) The payment shall be accompanied by: (1) The corporation's
balance sheet as of the end of a fiscal year ending not more than sixteen
months before the date of payment, an income statement for that year, a
statement of changes in shareholders' equity for that year and the latest
available interim financial statements, if any; (2) a statement of the
corporation's estimate of the fair value of the shares; (3) an explanation of
how the interest was calculated; (4) a statement of the dissenter's right to
demand payment under section 33-860; and (5) a copy of sections 33-855 to 33-
872, inclusive.
Sec. 33-866. Failure to take action. (a) If the corporation does not
take the proposed action within sixty days after the date set for demanding
payment and depositing share certificates, the corporation shall return the
deposited certificates and release the transfer restrictions imposed
on uncertificated shares.
(b) If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
dissenters' notice under section 33-862 and repeat the payment demand
procedure.
Sec. 33-867. After-acquired shares. (a) A corporation may elect to
withhold payment required by section 33-865 from a dissenter unless he was the
beneficial owner of the shares before the date set forth in the dissenters'
notice as the date of the first announcement to news media or to shareholders
of the terms of the proposed corporate action.
(b) To the extent the corporation elects to withhold payment under
subsection (a) of this section, after taking the proposed corporate action, it
shall estimate the fair value of the shares, plus accrued interest, and shall
pay this amount to each dissenter who agrees to accept it in full satisfaction
of his demand. The corporation shall send with its offer a statement of its
estimate of the fair value of the shares, an explanation of how the interest
was calculated and a statement of the dissenter's right to demand payment under
section 33-868.
Sec. 33-868. Procedure if shareholder dissatisfied with payment or
offer. (a) A dissenter may notify the corporation in writing of his own
estimate of the fair value of his shares and amount of interest due, and demand
payment of his estimate, less any payment under section 33-865, or reject the
corporation's offer under section 33-867 and demand payment of the fair value
of his shares and interest due, if:
(1) The dissenter believes that the amount paid under section 33-865
or offered under section 33-867 is less than the fair value of his shares or
that the interest due is incorrectly calculated;
(2) The corporation fails to make payment under section 33-865
within sixty days after the date set for demanding payment; or
(3) The corporation, having failed to take the proposed action, does
not return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within sixty days after the date set for
demanding payment.
(b) A dissenter waives his right to demand payment under this
section unless he notifies the corporation of his demand in writing under
subsection (a) of this section within thirty days after the corporation made or
offered payment for his shares.
Secs. 33-869 and 33-870.Reserved for future use.
(C)
JUDICIAL APPRAISAL OF SHARES
Sec. 33-871. Court action. (a) If a demand for payment under section
33-868 remains unsettled, the corporation shall commence a proceeding within
sixty days after receiving the payment demand and petition the court to
determine the fair value of the shares and accrued interest. If the
corporation does not commence the proceeding within the sixty-day period, it
shall pay each dissenter whose demand remains unsettled the amount demanded.
(b) The corporation shall commence the proceeding in the superior
court for the judicial district where a corporation's principal office or, if
none in this state, its registered office is located. If the corporation is a
foreign corporation without a registered office in this state, it shall
commence the proceeding in the superior court for the judicial district where
the registered office of the domestic corporation merged with or whose shares
were acquired by the foreign corporation was located.
(c) The corporation shall make all dissenters, whether or not
residents of this state, whose demands remain unsettled parties to the
proceeding as in an action against their shares and all parties must be served
with a copy of the petition. Nonresidents may be served by registered or
certified mail or by publication as provided by law.
(d) The jurisdiction of the court in which the proceeding is
commenced under subsection (b) of this section is plenary and exclusive. The
court may appoint one or more persons as appraisers to receive evidence and
recommend decision on the question of fair value. The appraisers have the
powers described in the order appointing them, or in any amendment to it. The
dissenters are entitled to the same discovery rights as parties in other civil
proceedings.
(e) Each dissenter made a party to the proceeding is entitled to
judgment (1) for the amount, if any, by which the court finds the fair value of
his shares, plus interest, exceeds the amount paid by the corporation, or (2)
for the fair value, plus accrued interest, of his after-acquired shares for
which the corporation elected to withhold payment under section 33-867.
Sec. 33-872. Court costs and counsel fees. (a) The court in an
appraisal proceeding commenced under section 33-871 shall determine all costs
of the proceeding, including the reasonable compensation and expenses of
appraisers appointed by the court. The court shall assess the costs against
the corporation, except that the court may assess costs against all or some of
the dissenters, in amounts the court finds equitable, to the extent the court
finds the dissenters acted arbitrarily, vexatiously or not in good faith in
demanding payment under section 33-868.
(b) The court may also assess the fees and expenses of counsel and
experts for the respective parties, in amounts the court finds equitable: (1)
Against the corporation and in favor of any or all dissenters if the court
finds the corporation did not substantially comply with the requirements of
sections 33-860 to 33-868, inclusive; or (2) against either the corporation or
a dissenter, in favor of any other party, if the court finds that the party
against whom the fees and expenses are assessed acted arbitrarily, vexatiously
or not in good faith with respect to the rights provided by sections 33-855 to
33-872, inclusive.
(c) If the court finds that the services of counsel for any
dissenter were of substantial benefit to other dissenters similarly situated,
and that the fees for those services should not be assessed against the
corporation, the court may award to these counsel reasonable fees to be paid
out of the amounts awarded the dissenters who were benefited.
Secs. 33-873 to 33-879. Reserved for future use.
<PAGE>
PART II
Information Not Required in Prospectus
Item 20. Indemnification of Directors and Officers.
SNET is a Connecticut corporation. Sections 33-770 through 33-778 of
the Connecticut General Statutes ("C.G.S.") provides that a Connecticut
corporation may, under certain circumstances, and shall, in other
circumstances, indemnify its directors, officers, employees, agents and certain
other persons.
Section 33-771 of C.G.S. provides that except as provided below, a
Connecticut corporation may indemnify an individual made a party to a
proceeding because he is or was a director against liability incurred in the
proceeding if: (1)He conducted himself in good faith, and (2) he reasonably
believed (A) in the case of conduct in his official capacity with the
corporation, that his conduct was in its best interests, and (B) in all other
cases, that his conduct was at least not opposed to its best interests; and
(3)in the case of any criminal proceeding, he had no reason to believe his
conduct was unlawful. A director's conduct with respect to an employee benefit
plan for a purpose he reasonably believed to be in the best interest of the
participants in and beneficiaries of the plan is conduct that satisfies the
requirement of clause (B) above. The termination of a proceeding by
judgment, order, settlement or conviction or upon a plea of nolo contendre or
its equivalent is not, of itself, determinative that the director did not meet
the standard of conduct described in C.G.S. Section 33-771. A corporation may
not indemnify a director under C.G.S. Section 33-771: (1) in connection with a
proceeding by or in the right of the corporation in which the director was
adjudged liable to the corporation; or (2) in connection with any other
proceeding charging improper personal benefit to him, whether or not involving
action in his official capacity, in which he was adjudged liable on the basis
of that personal benefit was improperly received by him. Indemnification
permitted under C.G.S. Section 33-771 in connection with a proceeding by or in
the right of the corporation is limited to reasonable expenses incurred in
connection with the proceeding. Notwithstanding any provision of C.G.S.
Section 33-771 to the contrary, a corporation which was incorporated under the
laws of Connecticut, whether under chapter 599 of the general statutes, revised
to January 1, 1995, or any other general law or special act, prior to
January1, 1996, such as SNET, shall, except to the extent that the articles of
incorporation expressly provide otherwise, provide its directors with the full
amount of indemnification that the corporation is permitted to provide to such
directors pursuant to C.G.S. Section 33-771, as limited by the provisions of
C.G.S. Section 33-775, further described below.
C.G.S. Section 33-772 provides that, unless limited by its articles of
incorporation, a corporation shall indemnify a director who was wholly
successful, on the merits or otherwise, in the defense of any proceeding to
which he was a party because he is or was a director of the corporation against
reasonable expenses incurred by him in connection with the proceeding.
C.G.S. Section 33-773 provides that a corporation may pay for or
reimburse the reasonable expenses incurred by a director who is a party to a
proceeding in advance of final disposition of the proceeding if: (1) the
director furnishes the corporation a written affirmation of his good faith
belief that he has met the standard of conduct described in C.G.S. Section 33-
771; (2) the director furnishes the corporation a written undertaking, executed
personally or on his behalf, to repay the advance if it is ultimately
determined that he did not meet the standard of conduct; and (3) a
determination is made that the facts then known to those making the
determination would not preclude indemnification under C.G.S. Sections 33-770
through 33-778, inclusive. The undertaking required by clause (2) above must
be an unlimited obligation of the director but need not be secured and may be
accepted without reference to financial ability to make repayment.
Determinations and authorizations of payments under C.G.S. Section 33-773 shall
be made in the manner specified in C.G.S. Section 33-775, described below.
C.G.S. Section 33-774 provides that, unless a corporation's articles
of incorporation provide otherwise, a director of the corporation who is a
party to a proceeding may apply for indemnification to the court conducting the
proceeding or to another court of competent jurisdiction. On receipt of an
application, the court after giving any notice the court considers necessary
may order indemnification if it determines: (1) The director is entitled to
mandatory indemnification under C.G.S. Section 33-772, in which case the court
shall also order the corporation to pay the director's reasonable expenses
incurred to obtain court-ordered indemnification; or (2) standard of conduct
set forth in C.G.S. Section 33-771 or was adjudged liable as described in
C.G.S. Section 33-771 but if he was adjudged so liable his indemnification is
limited to reasonable expenses incurred.
C.G.S. Section 33-775 provides a corporation may not indemnify a
director under C.G.S. Section 33-771 unless authorized in the specific case
after a determination has been made that indemnification of the director is
permissible in the circumstances because he has met the standard of conduct set
forth in C.G.S. Section 33-771. The determination shall be made: (1) by the
board of directors by majority vote of a quorum consisting of directors not at
the time parties to the proceeding: (2) if a quorum cannot be obtained, by
majority vote of a committee duly designed by the board of directors, in which
designation directors who are parties may participate, consisting solely of two
or more directors not at the time parties to the proceeding; (3) by special
legal counsel (A) selected by the board of directors or its committee, or (B)
if a quorum of the board of directors cannot be obtained under and a committee
cannot be designated, selected by majority vote of the full board of directors,
in which selection directors who are parties may participate; or (4) by the
shareholders, but the shares owned by or voted under the control of directors
who are at the time parties to the proceeding may not be voted on the
determination. Authorization of indemnification and evaluation as to
reasonableness of expenses shall be made in the same manner as the
determination that indemnification is permissible, except that the
determination is made by special legal counsel, authorization of
indemnification and evaluation as to reasonableness of expense shall be made by
those entitled under C.G.S. 33-775 to select counsel.
C.G.S. Section 33-776, provides that, unless a corporation's articles
of incorporation provide otherwise (1) an officer of the corporation who is not
a director is entitled to mandatory indemnification under C.G.S. Section 33-
772, and is entitled to apply for court-ordered indemnification under C.G.S.
Section 33-774, in each case to the same extent as a director; (2) the
corporation may indemnify and advance expenses to an officer, employee or agent
who is not a director to the extent; (3) a corporation may also indemnify and
advance expenses to an officer, employee or agent who is not a director to the
extent, consistent with public policy, that may be provided by its articles of
incorporation, bylaws, general or specific action of its board of directors or
contract; and (4) a corporation which was incorporated under the laws of
Connecticut, whether under chapter 599 of the general statutes, revised to
January 1, 1995, or any other general law or special act, prior to January 1,
1996, such as SNET, shall, except to the extent that the articles of
incorporation expressly provide otherwise, indemnify and advance expenses under
C.G.S. Sections 33-770 to 33-778, inclusive, to each officer, employee or agent
of the corporation who is not a director to the same extent as the corporation
is permitted to provide the same to a director pursuant to C.G.S. Section 33-
771, as limited by C.G.S. Section 33-775.
C.G.S. Section 33-777 provides that a corporation may purchase and
maintain insurance on behalf of an individual who is or was a director,
officer, employee or agent of the corporation, or who, while a director,
officer, employee or agent of the corporation, is or was serving at the request
of the corporation as a director, officer, partner, trustee, employee or agent
of another foreign or domestic corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, against liability asserted against
or incurred by him in that capacity or arising from his status as a director,
officer, employee or agent, whether or not the corporation would have the power
to indemnify him against the same liability under C.G.S. Section 33-771 or 33-
772.
C.G.S. Section 33-778 provides that a provision treating a
corporation's indemnification of or advance for expenses to directors that is
contained in its articles of incorporation, bylaws, a resolution of its
shareholders or board of directors, or in a contract or otherwise, is valid
only if and to the extent the provision is consistent with C.G.S. Sections 33-
770 to 33-778, inclusive. If articles of incorporation limit indemnification
or advance of expenses, indemnification and advance for expenses are valid only
to the extent consistent with the articles. C.G.S. Sections 33-770 to 33-778,
inclusive, do not limit a corporation's power to pay or reimburse expenses
incurred by a director in connection with his appearance as a witness in a
proceeding at a time when he has not been made a named defendant or respondent
to the proceeding.
Consistent with the statute, SNET has obtained insurance for its
directors and officers which supplements the indemnification rights provided to
those individuals by C.G.S. Section 33-771 to 33-778, inclusive. Unlike the
statute, such policy does not require the standard of conduct required by
C.G.S. Section 33-771, nor does the policy require the undertakings required
by C.G.S. Section 33-773 relating to the advances for expenses in connection
with the defense of an officer or director in a proceeding.
The Certificate of Incorporation of SNET limits the personal liability
of directors for monetary damages to SNET and its shareholders for a breach of
duty as a director to the amount of the compensation received by the Director
for serving SNET during the alleged breach of duty, with certain exceptions.
Item 21. Exhibits and Financial Statement Schedules.
Exhibits identified in parentheses below, on file with the SEC, are
incorporated herein by reference as exhibits hereto.
Exhibit
Number Description
- ------- -----------
2 Amended and Restated Agreement and Plan of Merger among SNET, SAS and
WTC (See Annex A).
3a Amended and Restated Certificate of Incorporation of the registrant as
filed June 14, 1990 (Exhibit 3-A to Form SE dated 3/15/91, File No. 1-
9157).
3b By-Laws of the registrant as amended and restated through October 10,
1990 (Exhibit 3 to Form 8-K dated 10/10/90, File No. 1-9157).
4a Rights Agreement effective February 11, 1997 between Southern New
England Telecommunications Corporation and The State Street Bank and
Trust Company, as Rights Agent (Exhibit 4 to Form 8-K dated 12/11/96,
File No. 1-9157).
4b Indenture dated December 13, 1993 between The Southern New England
Telephone Company and Fleet National Bank of Connecticut, Trustee,
issued in connection with the sale of $200,000,000 of 6 1/8% Medium-
Term Notes, Series C, due December 15, 2003 and $245,000,000 of 7 1/4%
Medium Term Notes, Series C, Due December 15, 2033 (Exhibit 4b to 1994
Form 10-K dated 3/10/95, File No. 1-9157).
4c Indenture dated July 10, 1991 between the registrant and Fleet
National Bank of Connecticut, Trustee, issued in connection with the
sale of $100,000,000 of 6 1/2% Medium Term Notes, Series 2, due August
15, 2000 and $200,000,000 of 7% Medium-Term Notes, Series 2, due
August 15, 2005 (Exhibit 4c to Form 10-K dated 3/20/96,
File No. 1-9157).
5 Opinion of Madelyn M. DeMatteo, Esq., as to the legality of the SNET
Common Stock registered hereby.
8 Opinion of Carmody & Torrance as to tax matters.*
23(a) Consent of Madelyn M. DeMatteo, Esq. (See Exhibit 5.)
23(b) Consent of Carmody & Torrance (See Exhibit 8.)
23(c) Consent of Coopers & Lybrand L.L.P.
23(d) Consent of Ernst & Young LLP
24 Power of Attorney
LEGEND
* To be filed by amendment.
(b) Not applicable.
(c) See Annex B to the Prospectus/Proxy Statement.
Item 22. Undertakings.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
The undersigned registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
The registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) the Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by a
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New Haven, State of
Connecticut, on March 5, 1997.
Southern New England Telecommunications
Corporation
By: /s/ Donald R. Shassian
Name: Donald R. Shassian
Title: Senior Vice President
and Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name Title Date
<S> <C> <C>
Chairman, President, March 5, 1997
* Chief Executive
Daniel J. Miglio Officer and Director
(Principal Executive Officer)
Senior Vice President March 5, 1997
* and Chief Financial Officer
Donald R. Shassian (Principal Financial and Accounting
Officer)
Director March 5, 1997
*
William F. Andrews
Director March 5, 1997
*
Zo<e"> Baird
Director March 5, 1997
*
Robert L. Bennet
Director March 5, 1997
*
Barry M. Bloom
Director March 5, 1997
*
Frank J. Connor
Director March 5, 1997
*
William R. Fenoglio
Director March 5, 1997
*
Claire L. Guadiani
Director March 5, 1997
*
James R. Greenfield
Director March 5, 1997
*
Ira D. Hall
Director March 5, 1997
*
Burton G. Malkiel
Director March 5, 1997
*
Frank R. O'Keefe, Jr.
*
/s/ Madelyn M. DeMatteo
By Madelyn M. DeMatteo March 5, 1997
Attorney-In-Fact
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit Index
<S> <C> <C>
Exhibit
Number Description Page
2 Amended and Restated Agreement and Plan of Merger among SNET, SAS and
WTC (see ANNEX A).
3a Amended and Restated Certificate of Incorporation of the registrant as
filed June 14, 1990
(Exhibit 3-A to Form SE dated 3/15/91, File No. 1-9157).
3b By-Laws of the registrant as amended and restated through October 10,
1990 (Exhibit 3 to Form 8-K dated 10/10/90, File No. 1-9157).
4a Rights Agreement effective February 11, 1989 between Southern New
England Telecommunications Corporation and The State Street Bank and
Trust Company, as Rights Agent (Exhibit 4 to Form 8-K dated 12/11/96,
File No. 1-9157).
4b Indenture dated December 13, 1993 between The Southern New England
Telephone Company and Fleet National Bank of Connecticut, Trustee,
issued in connection with the sale of $200,000,000 of 6 1/8% Medium-Term
Notes, Series C, due December 15, 2003 and $245,000,000 of 7 1/4% Medium
Term Notes, Series C, Due December 15, 2033 (Exhibit 4b to 1994 Form 10-K
dated 3/10/95, File No. 1-9157).
4c Indenture dated July 10, 1991 between the registrant and Fleet
National Bank of Connecticut, Trustee, issued in connection with the
sale of $100,000,000 of 6 1/2% Medium Term Notes, Series 2, due
August 15, 2000 and $200,000,000 of 7% Medium-Term Notes, Series 2,
due August 15, 2005 (Exhibit 4c to Form 10-K dated 3/20/96,
File No. 1-9157).
5 Opinion of Madelyn M. DeMatteo, Esq., as to the legality of the SNET
Common Stock registered hereby.
8 Opinion of Carmody & Torrance as to tax matters.*
23(a) Consent of Madelyn M. DeMatteo, Esq. (See Exhibit 5.)
23(b) Consent of Carmody & Torrance (See Exhibit 8.)
23(c) Consent of Coopers & Lybrand L.L.P.
23(d) Consent of Ernst & Young LLP
24 Power of Attorney
LEGEND
* To be filed by amendment.
</TABLE>
<PAGE>
Exhibit 5
February 28, 1997
Southern New England Telecommunications Corporation
227 Church Street
New Haven, Connecticut 06107
Re: Registration Statement on Form S-4 relating to the Acquisition of The
Woodbury Telephone Company ("WTC") by Southern New England
Telecommunications Corporation
Ladies and Gentlemen:
With reference to the Registration Statement on Form S-4 ("Registration
Statement") to be filed by Southern New England Telecommunications Corporation,
a Connecticut corporation ("Corporation"), with the Securities and Exchange
Commission for the purpose of registering under the Securities Act of 1933, as
amended, 700,500 shares of the Corporation's Common Stock, $1.00 par value
("Common Stock"), to be issued in connection with the acquisition of The
Woodbury Telephone Company in a merger transaction (the "Merger"), I am of the
opinion that:
1. The Merger has been duly adopted and approved by all necessary
corporate action.
2. The 700,500 shares of Common Stock issuable pursuant to the
terms of the Amended and Restated Agreement and Plan of Merger,
dated as of December 6, 1996, among WTC, the Corporation and
SNET Acquisition Subsidiary, Inc. ("SAS") ("Merger Agreement"),
have been duly authorized and reserved for issuance.
3. When such shares are issued pursuant to the Merger Agreement
while the Registration Statement is effective, such shares will
be validly issued, fully paid and nonassessable.
I consent to the use of this opinion in the Registration Statement and
in any amendments thereof.
Very truly yours,
/s/ Madelyn M. DeMatteo
Madelyn M. DeMatteo
Exhibit 23(c)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement of
Southern New England Telecommunications Corporation Form S-4 (File No.
___________) of our reports, of which one includes an explanatory paragraph
describing the fact that the Corporation discontinued accounting for the
operations of its telephone subsidiary in accordance with Statement of
Financial Accounting Standards No. 71, effective January 1, 1996 and, in 1993,
the Corporation changed its method of accounting for postretirements benefits
other than pensions, postemployment benefits and income taxes, dated January
22, 1996, on our audits of the consolidated financial statements and the
financial statement schedule of Southern New England Telecommunications
Corporation as of December 31, 1995 and 1994, and for the years ended
December 31, 1995, 1994 and 1993 which reports are included in or incorporated
by reference in the Corporation*s Annual Report on Form 10-K. We also consent
to the reference to our Firm under the caption "Experts".
/s/Coopers & Lybrand L.L.P.
February 27, 1997
Hartford, Connecticut
<PAGE>
Exhibit 23(d)
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" and to the
use of our reports dated February 5, 1996, with respect to the financial
statements of The Woodbury Telephone Company incorporated by reference in its
annual report (Form 10-K) for the year ended December 31, 1995 and the related
financial statement schedule included therein, filed with the Securities and
Exchange Commission, all incorporated by reference in the Registration
Statement (Form S-4) and related prospectus of Southern New England
Telecommunications Corporation for the registration of 700,500 shares of its
common stock.
/s/ Ernst & Young LLP
Hartford, Connecticut
March 4, 1997
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Southern New England Telecommunications Corporation, a
Connecticut corporation ("Corporation"), proposes to file shortly with the
Securities and Exchange Commission under the provisions of the Securities Act
of 1933, as amended ("Act"), a registration statement on Form S-4 for the
registration, under said Act, of up to 1,000,000 shares of the Corporation's
common stock in connection with the acquisition through an exchange of common
stock of all of the outstanding common stock of The Woodbury Telephone Company;
and
WHEREAS, each of the undersigned is an officer or director, or both, of
the Corporation, and holds the office, or offices, in the Corporation herein
below indicated under their name, respectively;
NOW, THEREFORE, the undersigned, and each of them, hereby constitutes
and appoints Madelyn M. DeMatteo their attorney-in-fact for them and in their
name, place and stead, and in each of their offices and capacities with the
Corporation, to sign and file such registration statement and any and all
additional post-effective amendments in connection with the acquisition
through an exchange of common stock of all of the outstanding common stock of
The Woodbury Telephone Company, including prospectuses and amendments thereto,
and the exhibits thereto, hereby giving and granting to said attorney full
power and authority to do and perform all and every act and thing whatsoever
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as they might or could do if personally present at the
doing thereof, hereby ratifying and confirming all that said attorney may or
shall lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney this 11th day of December, 1996.
Principal Executive Officer: Directors:
/s/ Daniel J. Miglio /s/ William F. Andrews
Daniel J. Miglio William F. Andrews, Director
Chairman, President, Chief
Executive Officer and Director
Principal Financial and Accounting Officer: /s/ Richard H. Ayers
Richard H. Ayers, Director
/s/ Donald R. Shassian
Senior Vice President and
Chief Financial Officer /s/ Zo<e"> Baird
Zo<e"> Baird, Director
/s/ Robert L. Bennett
Robert L. Bennett, Director
/s/ Barry M. Bloom
Barry M. Bloom, Director
/s/ Frank J. Connor
Frank J. Connor, Director
/s/ William R. Fenoglio
William R. Fenoglio, Director
/s/ Claire L. Gaudiani
Claire L. Gaudiani, Director
/s/ James R. Greenfield
James R. Greenfield, Director
/s/ Ira D. Hall
Ira D. Hall, Director
/s/ Burton G. Malkiel
Burton G. Maikiel, Director
/s/ Frank R. O'Keefe, Jr.
Frank R. O'Keefe, Jr., Director
