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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Amendment No. 2)
Under the Securities Exchange Act of 1934
Vanguard Cellular Systems, Inc.
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(Name of Issuer)
Common Stock, par value $0.01 per share
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(Title of Class of Securities)
922022
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(CUSIP Number)
Marilyn J. Wasser, Esq.
Vice President -- Law and Secretary
AT&T Corp.
295 North Maple Avenue
Basking Ridge, N.J. 07920
(908) 221-2000
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(Name, Address and Telephone Number of Person
Authorized
to Receive Notices and Communications)
With a copy to:
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David M. Silk, Esq.
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street New York, New York 10019
(212) 403-1000
December 22, 1998
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(Date of Event Which Requires Filing of This
Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box: [ ].
Page 1 of 6 Pages
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<PAGE>
SCHEDULE 13D
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Page 2 of 6 Pages
CUSIP No. 922022
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1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
AT&T CORP.
I.R.S. IDENTIFICATION NO. 13-4924710
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
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3 SEC USE ONLY [ ]
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4 SOURCE OF FUNDS
WC, OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
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6 CITIZENSHIP OR PLACE ORGANIZATION
New York
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7
SOLE VOTING POWER
13,914,281
NUMBER OF
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8
SHARES SHARED VOTING POWER
-0-
BENEFICIALLY
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9
OWNED BY SOLE DISPOSITIVE POWER
13,914,281
EACH
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10
REPORTING SHARED DISPOSITIVE POWER
-0-
PERSON WITH
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
13,914,281
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
30.5 % (assuming exercise of the Vanguard Option, the
Stockholders' Options and the Charitable Trust and Family
Foundation Stockholders' Options and the acquisition by
certain executive officers of Vanguard not parties to Voting
Agreements of 1,580,045 shares of Vanguard Common Stock
pursuant to exercises of options in connection with the
Executive Loan Program)
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14 TYPE OF REPORTING PERSON
CO
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<PAGE>
AT&T Corp. hereby amends the Schedule 13D (as previously amended,
the "Schedule 13D") originally filed on October 13, 1998 and amended on November
9, 1998 as set forth herein. Capitalized terms used without definition in this
Amendment No. 2 to the Schedule 13D shall have the respective meanings ascribed
thereto in the Schedule 13D.
ITEM 4. PURPOSE OF TRANSACTION.
Item 4 of the Schedule 13D is hereby amended by adding the
following:
AT&T, Merger Sub and Vanguard entered into the Amended and Restated
Agreement and Plan of Merger, dated as of October 2, 1998. The Amended and
Restated Agreement and Plan of Merger amends and restates the Merger Agreement
to (i) incorporate the amendments provided in Amendment No. 1, (ii) provide that
the condition to the Merger regarding the receipt of tax opinions be
non-waivable and (iii) make certain other procedural and clarificatory
amendments to the Merger Agreement regarding the closing of the Merger, the
deadline for submitting an election with respect to the form of payment to be
received by holders of shares of Vanguard Common Stock in the Merger and
dissenters' shares.
The foregoing summary of the Amended and Restated Agreement and Plan
of Merger does not purport to be complete and is qualified in its entirety by
reference to the Amended and Restated Agreement and Plan of Merger, which is
attached as Exhibit 5 hereto and is incorporated herein by reference. References
hereafter to the "Merger Agreement" shall be references to such Amended and
Restated Agreement and Plan of Merger.
On December 28, 1998, AT&T consented under the Merger Agreement to
the lending by Vanguard to certain of its executive officers (the "Executive
Loan Program") of funds which will be used by such executive officers to finance
the exercise of stock options to purchase up to an aggregate of 4,398,795 shares
of Vanguard Common Stock (1,580,045 of which are held by executive officers not
parties to Voting Agreements) and to satisfy certain related tax obligations,
provided that any such loan will be secured by the shares of Vanguard Common
Stock purchased thereby and by certain other payments to be made to such
executive officers in connection with the Merger. In connection with such
borrowing, such officers not parties to Voting Agreements will be required to
agree (i) to vote the shares of Vanguard Common Stock acquired in connection
therewith in favor of approval of the Merger Agreement and against any
Acquisition Proposal from any person other than AT&T and (ii) not to sell,
transfer, dispose of, encumber or otherwise convey any interest in such shares
prior to March 31, 1999. Such officers who are parties to Voting Agreements will
continue to be subject to such Voting Agreements.
The foregoing summary of the Executive Loan Program does not purport
to be complete and is qualified in its entirety by reference to the documents
which are attached as Exhibit 6 hereto and are incorporated herein by reference.
On December 22, 1998, AT&T consented under the Merger Agreement to
the transfers of 784,782 shares of Vanguard Common Stock, which shares are
subject to the Voting Agreements, by Haynes G. Griffin, Stephen R. Leeolou and
L. Richardson Preyer, Jr. to The Haynes G. Griffin 1998 Charitable Remainder
Unitrust, the Griffin Family Foundation, The
3
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Stephen R. and Mary D. Leeolou 1998 Charitable Remainder Unitrust, the Leeolou
Family Foundation, the Lunsford Richardson Preyer, Jr. Charitable Remainder
Unitrust and the Preyer-Jacobs Foundation (the "Charitable Trust and Family
Foundation Stockholders"). In connection therewith, the Charitable Trust and
Family Foundation Stockholders entered into voting agreements (the "Charitable
Trust and Family Foundation Voting Agreements") on terms substantially the same
as the Voting Agreements, including granting to AT&T an option to purchase
transferred shares under the applicable Charitable Trust and Family Foundation
Voting Agreement (such options to purchase, collectively, the "Charitable Trust
and Family Foundation Stockholders' Options").
The foregoing summary of the Charitable Trust and Family Foundation
Agreements does not purport to be complete and is qualified in its entirety by
reference to the Charitable Trust and Family Foundation Agreements, which are
attached as Exhibit 7 hereto and are incorporated herein by reference.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
Item 5 of the Schedule 13D is hereby amended by adding the
following:
Prior to the Charitable Trust and Family Foundation Stockholders'
Options becoming exercisable and being exercised, AT&T expressly disclaims
beneficial ownership of the shares of Vanguard Common Stock which may be
purchasable by AT&T thereunder. AT&T also expressly disclaims beneficial
ownership of the shares of Vanguard Common Stock subject to the Voting
Agreements, the shares of Vanguard Common Stock subject to the Charitable Trust
and Family Foundation Voting Agreements and the 1,580,045 shares of Vanguard
Common Stock which may be purchased pursuant to the Executive Loan Program by
executive officers not subject to Voting Agreements as described in Item 4.
Neither the filing of the Schedule 13D nor the filing of this Amendment #2 to
the Schedule 13D nor any of their contents shall be deemed to constitute an
admission that AT&T is the beneficial owner of the shares of Vanguard Common
Stock subject to the Vanguard Option, the Stockholders' Options, the Charitable
Trust and Family Foundation Stockholders' Options, the Voting Agreements or the
Charitable Trust and Family Foundation Voting Agreements or any shares of
Vanguard Common Stock purchased pursuant to the Executive Loan Program for
purposes of Section 13(d) or 16 of the Securities Exchange Act of 1934, as
amended, or for any other purpose and such beneficial ownership is expressly
disclaimed.
a) The Charitable Trust and Family Foundation Stockholders' Options are
substantially similar to the Stockholders' Options. Based on the number of
outstanding shares of Vanguard Common Stock on June 30, 1998, if the Vanguard
Option, the Stockholders' Options and the Charitable Trust and Family
Foundation Stockholders' Options were exercised in full, AT&T would
beneficially own 28.0% of the shares of Vanguard Common Stock outstanding
following exercise of the Vanguard Option, each of the Stockholder's Options
and each of the Charitable Trust and Family Foundation Stockholders' Options.
If AT&T were also to beneficially own the 1,580,045 shares of Vanguard Common
Stock which may be purchased pursuant to the Executive Loan Program by
executives of Vanguard not subject to Voting Agreements as described in Item
4, AT&T would beneficially own, in total, 30.5% of the shares of Vanguard
Common Stock outstanding.
4
<PAGE>
b) AT&T would have sole voting and dispositive power with respect to any shares
of Vanguard Common Stock acquired upon exercise of the Vanguard Option and/or
the Stockholders' Options and/or the Charitable Trust and Family Foundation
Stockholders' Options.
d) Except as described in Item 4 above, until the Vanguard Option and/or any
Stockholder's Option and/or any Charitable Trust and Family Foundation
Stockholders' Option is exercised, AT&T has no right to receive dividends
from, or the proceeds from the sale of, the shares of Vanguard Common Stock
subject to the Vanguard Option and the Stockholders' Options. If the Vanguard
Option and/or any Stockholder's Option and/or any Charitable Trust and Family
Foundation Stockholders' Option were exercised by AT&T, AT&T would have the
sole right to receive dividends on the shares of Vanguard Common Stock
acquired pursuant thereto.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
5. Amended and Restated Merger Agreement and Plan of Merger dated
as of October 2, 1998 among AT&T Corp., Winston, Inc. and Vanguard
Cellular Systems, Inc.
6. Letter Agreement between Vanguard and AT&T regarding the Executive
Loan Program with certain attachments relating to the Executive Loan
Program including the form of letter agreement to be signed by any
executive officer of Vanguard receiving a loan pursuant to the
Executive Loan Program who is not a party to a Voting Agreement, the
form of Agreement re Netting of Payments, the form of Pledge
Agreement and the forms of Promissory Notes.
7. Charitable Trust and Family Foundation Voting Agreements, dated as of
December 22, 1998, between certain stockholders of Vanguard Cellular
Systems, Inc. and AT&T Corp.
5
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SIGNATURES
After reasonable inquiry and to my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: January 4, 1999
AT&T CORP.
By:/s/ Robert Feit
--------------------------
Name: Robert Feit
Title:General Attorney and
Assistant Secretary
6
<PAGE>
INDEX OF EXHIBITS
5. Amended and Restated Merger Agreement and Plan of Merger dated
as of October 2, 1998 among AT&T Corp., Winston, Inc. and Vanguard
Cellular Systems, Inc.
6. Letter Agreement between Vanguard and AT&T regarding the Executive
Loan Program with certain attachments relating to the Executive Loan
Program including the form of letter agreement to be signed by any
executive officer of Vanguard receiving a loan pursuant to the
Executive Loan Program who is not a party to a Voting Agreement, the
form of Agreement re Netting of Payments, the form of Pledge
Agreement and the forms of Promissory Notes.
7. Charitable Trust and Family Foundation Voting Agreements, dated as of
December 22, 1998, between certain stockholders of Vanguard Cellular
Systems, Inc. and AT&T Corp.
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
DATED AS OF OCTOBER 2, 1998
AMONG
AT&T CORP.,
WINSTON, INC.
AND
VANGUARD CELLULAR SYSTEMS, INC.
<PAGE>
TABLE OF CONTENTS
PAGE
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ARTICLE I.
PLAN OF MERGER
1.1 The Merger............................................. 2
1.2 Effective Time......................................... 2
1.3 Effects of the Merger.................................. 2
1.4 Certificate of Incorporation........................... 2
1.5 By-Laws................................................ 2
1.6 Directors and Officers of Surviving Corporation........ 2
1.7 Effect on Capital Stock................................ 2
1.8 Adjustment of Merger Consideration..................... 6
1.9 No Further Ownership Rights in Company Common Stock.... 7
1.10 No Fractional Shares................................... 7
1.11 Shares of Dissenting Shareholders...................... 7
1.12 Company Options........................................ 7
ARTICLE II.
EXCHANGE OF CERTIFICATES
2.1 Closing................................................ 8
2.2 Exchange Agent......................................... 8
2.3 Exchange and Payment Procedures........................ 8
2.4 Distributions with Respect to Unexchanged Shares....... 9
2.5 Termination of Exchange Fund........................... 9
2.6 No Liability........................................... 9
2.7 Lost Certificates...................................... 10
2.8 Withholding Rights..................................... 10
2.9 Further Assurances..................................... 10
2.10 Stock Transfer Books................................... 10
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company.......... 10
3.2 Joint and Several Representations and
Warranties of Parent and Merger Sub................. 21
ARTICLE IV.
COVENANTS RELATING TO
CONDUCT OF BUSINESS
4.1 Covenants of the Company............................... 24
4.2 Reasonable Efforts..................................... 27
4.3 NYSE Listing........................................... 27
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4.4 Advice of Changes; Government Filings.................. 27
4.5 Control of Other Party's Business...................... 28
ARTICLE V.
ADDITIONAL AGREEMENTS
5.1 Preparation of Proxy Statement/Registration;
Company Shareholder Meeting.......................... 28
5.2 Access to Information.................................. 29
5.3 Approvals and Consents; Cooperation.................... 29
5.4 Acquisition Proposals.................................. 30
5.5 Employee Benefits...................................... 31
5.6 Fees and Expenses...................................... 31
5.7 Indemnification; Directors' and Officers' Insurance.... 32
5.8 Public Announcements................................... 32
5.9 Debentures............................................. 32
5.10 Affiliate Letters...................................... 33
5.11 Year 2000 Compliance................................... 33
ARTICLE VI.
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation to
Effect the Merger.................................... 33
6.2 Additional Conditions to Obligations of
Parent and Merger Sub................................ 34
6.3 Additional Conditions to Obligations of the Company.... 36
ARTICLE VII.
TERMINATION AND AMENDMENT
7.1 Termination............................................ 36
7.2 Effect of Termination.................................. 38
7.3 Amendment.............................................. 39
7.4 Extension; Waiver...................................... 39
ARTICLE VIII.
GENERAL PROVISIONS
8.1 No Survival of Representations, Warranties
and Agreements....................................... 40
8.2 Notices................................................ 40
8.3 Interpretation......................................... 40
8.4 Counterparts........................................... 40
8.5 Entire Agreement; No Third Party Beneficiaries......... 40
8.6 Governing Law.......................................... 41
8.7 Severability........................................... 41
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PAGE
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8.8 Assignment............................................. 41
8.9 Enforcement............................................ 41
8.10 Definitions............................................ 41
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<PAGE>
GLOSSARY OF DEFINED TERMS
LOCATION OF
DEFINITION DEFINED TERM
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Acquisition Proposal................. Section 5.4
Adjustment Shares.................... Section 1.8
Affiliate Letter..................... Section 5.10
Agreement............................ Preamble
Approval Satisfaction Date........... Section 8.10(d)
Articles of Merger................... Section 1.2
Board of Directors................... Section 8.10(a)
Business Day......................... Section 8.10(b)
Cash Election........................ Section 1.7(e)
Cash Fraction........................ Section 1.7(f)(C)(1)
Certificate of Merger................ Section 1.2
Certificates......................... Section 1.7(e)
Closing.............................. Section 2.1
Closing Date......................... Section 2.1
Code................................. Preamble
Communications Act................... Section 3.1(c)(iii)
Company.............................. Preamble
Company Benefit Plans................ Section 3.1(1)(ii)
Company Common Stock................. Recitals; Section 1.7
Company Disclosure Schedule.......... Section 8.10(m)
Company Material Contracts........... Section 3.1(k)(i)
Company Options...................... Section 1.12(a)
Company Permits...................... Section 3.1(f)
Company Required Regulatory
Approvals.......................... Section 6.2(e)
Company SEC Reports.................. Section 3.1(d)(i)
Company Stock Option Plans........... Section 1.12
Company Shareholders Meeting......... Section 5.1(e)
Company Voting Debt.................. Section 3.1(b)(iii)
Controlled Group Liability........... Section 3.1(l)(i)
Debentures........................... Section 5.9(a)
Defeasance........................... Section 5.9(b)
Deposit.............................. Section 5.9(e)
DGCL................................. Section 1.1
Dissenting Shares.................... Section 1.11
Effective Time....................... Section 1.2
Election............................. Section 1.7(e)
Election Deadline.................... Section 1.7(i)
Environmental Law.................... Section 3.1(q)
ERISA................................ Section 3.1(l)(i)
ERISA Affiliate...................... Section 3.1(l)(i)
ESPP................................. Section 5.5(a)
Exchange Act......................... Section 3.1(c)(iii)
Exchange Agent....................... Section 2.2
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<PAGE>
LOCATION OF
DEFINITION DEFINED TERM
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Exchange Fund........................ Section 2.2
Expenses............................. Section 5.6
Extension Conditions................. Section 7.1(b)
FCC.................................. Section 3.1(c)(iii)
FCC Consents......................... Section 6.1(c)
Final Order.......................... Section 8.10(e)
Form of Election..................... Section 1.7(e)
GAAP................................. Section 3.1(d)(i)
Governmental Entity.................. Section 3.1(c)(iii)
Guaranty of Delivery................. Section 1.7(h)(C)(2)(i)
Hazardous Substance.................. Section 3.1(q)
HSR Act.............................. Section 3.1(c)(iii)
Indenture............................ Section 5.9(a)
Intellectual Property................ Section 3.1(r)
IRS.................................. Section 3.1(l)(i)
Knowledge............................ Section 8.10(f)
Law.................................. Section 3.1(f)
Liens................................ Section 3.1(b)(ii)
Majority Covenants................... Section 5.9(a)
Material Adverse Effect.............. Section 8.10(c)
Merger............................... Recitals; Section 1.1
Merger Consideration................. Section 1.7(b)
Merger Sub........................... Preamble
Nasdaq............................... Section 3.1(c)(iii)
NCBCA................................ Section 1.1
NOLs................................. Section 3.1(h)
Non-Election......................... Section 1.7(e)
Non-Election Fraction................ Section 1.7(h)(C)(1)
NYSE................................. Section 1.7(h)(C)(2)(i)
Option Agreement..................... Preamble
Organizational Documents............. Section 8.10(h)
Outside Date......................... Section 7.1(b)
Parent............................... Preamble
Parent Common Stock.................. Section 1.7(b)
Parent Required Regulatory Approvals. Section 6.3(c)
Parent SEC Reports................... Section 3.2(e)(i)
PCS.................................. Section 4.2
Per Share Cash Amount................ Section 1.7(b)
Per Share Stock Amount............... Section 1.7(b)
Person............................... Section 8.10(i)
Proposed Amendment................... Section 5.9
Proprietary Technology............... Section 3.1(r)
Proxy Statement...................... Section 5.1(a)
Registration Statement............... Section 5.1(a)
Reorganization....................... Section 4.1(f)
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<PAGE>
LOCATION OF
DEFINITION DEFINED TERM
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Representative....................... Section 1.7(e)
Required Company Vote................ Section 3.1(i)
Required Consents.................... Section 8.10(j)
Required Regulatory Approvals........ Section 5.3(e)
Requisite Consent.................... Section 5.9(a)
SEC.................................. Section 3.1(d)(i)
Securities Act....................... Section 3.1(c)(iii)
Stock Election....................... Section 1.7(e)
Stock Fraction....................... Section 1.7(g)(C)(1)
Subsidiary........................... Section 8.10(k)
Superior Proposal.................... Section 5.4
Supplemental Indenture............... Section 3.1(x)
Surviving Corporation................ Section 1.1
Tax.................................. Section 8.10(l)
Taxable.............................. Section 8.10(l)
Taxes................................ Section 8.10(l)
Tax Return........................... Section 8.10(l)
Tender Offer......................... Section 5.9
Terminating Company Breach........... Section 7.1(g)
Terminating Parent Breach............ Section 7.1(h)
the other party...................... Section 8.10(g)
Third Day............................ Section 5.9(b)
to the knowledge..................... Section 8.10(e)
Trustee.............................. Section 3.1(c)(iv)
Violation............................ Section 3.1(c)(ii)
Voting Agreements.................... Preamble
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<PAGE>
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, dated as of October 2,
1998 (the "Agreement"), by and among AT&T Corp., a New York corporation
("Parent"), Winston, Inc., a Delaware corporation and a wholly owned subsidiary
of Parent ("Merger Sub"), and Vanguard Cellular Systems, Inc., a North Carolina
corporation (the "Company", and together with Parent and Merger Sub, the
"Parties").
W I T N E S S E T H.
WHEREAS, the Parties entered into an Agreement and Plan of Merger, dated as
of October 2, 1998 (the "Original Merger Agreement");
WHEREAS, the Parties entered into an Amendment No. 1 to the Original Merger
Agreement, dated as of November 4, 1998 (the "Amendment No. 1");
WHEREAS, the Parties desire to set forth an amended and restated agreement
and plan of merger incorporating the Original Merger Agreement, as amended by
Amendment No. 1, and to further clarify certain of the provisions contained in
the Original Merger Agreement, as amended;
WHEREAS, the Parties desire that the provisions of this Agreement shall be
effective as of the date of the Original Merger Agreement;
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and the
Company have each determined that the Merger is in the best interests of their
respective shareholders and have approved the Merger upon the terms and subject
to the conditions set forth in this Agreement, whereby each issued and
outstanding share of Class A Common Stock, par value $.01 per share, of the
Company ("Company Common Stock"), other than shares owned directly or indirectly
by the Company, will be converted into the right to receive the consideration
set forth herein;
WHEREAS, in order to effectuate the foregoing, the Company, upon the terms
and subject to the conditions of this Agreement and in accordance with the
Business Corporation Act of the State of North Carolina, will merge with and
into Merger Sub in a merger in which Merger Sub shall be the surviving
corporation;
WHEREAS, for federal income tax purposes, it is intended that the Merger
qualify as a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code");
WHEREAS, Parent has requested, and the Company has agreed, as a condition to
Parent's willingness to enter into this Agreement, that the Company enter into
that certain Option Agreement, dated as of the date hereof and attached hereto
as Annex A (the "Option Agreement");
WHEREAS, Parent has requested, and the certain stockholders of the Company
have agreed, as a condition to Parent's willingness to enter into this
Agreement, that certain stockholders of the Company enter into those certain
Voting and Option Agreements dated as of the date hereof and attached hereto as
Annex B ("Voting Agreements"); and
WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
<PAGE>
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I.
PLAN OF MERGER
1.1 The Merger. In accordance with the North Carolina Business Corporation
Act (the "NCBCA") and the Delaware General Corporation Law (the "DGCL"), the
Company shall be merged with and into Winston, Inc., a Delaware corporation and
wholly owned subsidiary of Parent ("Merger Sub") (the "Merger"). Following the
Merger, the separate corporate existence of the Company shall cease and Merger
Sub shall continue as the surviving corporation (the "Surviving Corporation") in
accordance with Section 55-11-07 of the NCBCA and Section 252 of the DGCL.
1.2 Effective Time. The Merger shall become effective when (i) articles of
merger (the "Articles of Merger") are filed with the Secretary of State of North
Carolina in such form as is required by and executed in accordance with Section
55-11-05 of the NCBCA and a certificate of merger (a "Certificate of Merger") is
filed with the Secretary of State of Delaware in accordance with Sections 251
and 252 of the DGCL or (ii) such other time as Parent and the Company shall
agree in writing should be specified in the Articles of Merger (the date and
time the Merger becomes effective being the "Effective Time").
1.3 Effects of the Merger. At and after the Effective Time, the Merger will
have the effects set forth in Section 55-11-06 of the NCBCA and Section 259 of
the DGCL. Without limiting the generality of the foregoing, and subject thereto,
at the Effective Time all the property, rights, privileges, powers and
franchises of the Company and Merger Sub shall be vested in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
1.4 Certificate of Incorporation. The certificate of incorporation of Merger
Sub in effect immediately prior to the Effective Time shall be the certificate
of incorporation of the Surviving Corporation until thereafter changed or
amended as provided therein or by applicable law.
1.5 By-Laws. The by-laws of Merger Sub in effect at the Effective Time shall
be the by-laws of the Surviving Corporation until thereafter changed or amended
as provided therein or by applicable law.
1.6 Directors and Officers of Surviving Corporation. The directors and
officers of Merger Sub shall be the directors and officers, respectively, of the
Surviving Corporation, until the earlier of their resignation or removal or
otherwise ceasing to be a director or officer, as the case may be, or until
their respective successors are duly elected and qualified, as the case may be.
1.7 Effect on Capital Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of the holders of any shares of the
Company's Class A Company Common Stock, par value $.01 per share (the "Company
Common Stock"):
(a) Cancellation of Stock. Each share of Company Common Stock that is owned
by the Company or any wholly owned subsidiary of the Company (as treasury
stock or otherwise) shall automatically be canceled and retired and shall
cease to exist and no consideration shall be delivered in exchange therefor.
(b) Consideration for Company Common Stock. Subject to Section 1.11, each
issued and outstanding share of Company Common Stock (other than Dissenting
Shares and shares to be canceled in accordance with Section 1.7(a)) shall be
converted into either (i) the right to
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<PAGE>
receive 0.3987 fully paid and nonassessable shares of common stock, par value
$1.00 per share, of Parent ("Parent Common Stock") (the "Per Share Stock
Amount"), or (ii) the right to receive $23.00 in cash, without interest (the
"Per Share Cash Amount"), or (iii) a combination of shares of Parent Common
Stock and cash, each as determined in accordance with Section 1.7(f), Section
1.7(g) or Section 1.7(h). As of the Effective Time, all such shares of
Company Common Stock shall no longer be outstanding and shall automatically
be canceled and retired and shall cease to exist, and each holder of a
certificate representing any such shares of Company Common Stock shall cease
to have any rights with respect thereto, except the right to receive, upon
surrender of such certificate in accordance with Section 2.3, the Per Share
Stock Amount, the Per Share Cash Amount or a combination of cash and Parent
Common Stock, each in accordance with this Section 1.7. The consideration to
be received in the Merger under this Article for one share of Company Common
Stock shall be referred to herein as the "Merger Consideration."
(c) Merger Sub Capital Stock. Each share of capital stock of Merger Sub
issued and outstanding immediately prior to the Effective Time shall remain
outstanding and shall be unchanged as a share of capital stock of the
Surviving Corporation.
(d) The aggregate number of shares of Company Common Stock which may be
converted into the right to receive cash in the Merger shall be equal to 50%
of the number of shares of Company Common Stock outstanding immediately prior
to the Effective Time (other than Dissenting Shares and shares to be
canceled in accordance with Section 1.7(a)). The aggregate number of shares
of Company Common Stock which may be converted into the right to receive
Parent Common Stock in the Merger shall be equal to 50% of the number of
shares of Company Common Stock outstanding immediately prior to the Effective
Time (other than Dissenting Shares and shares to be canceled in accordance
with Section 1.7(a)).
(e) Subject to the allocation and election procedures set forth in this
Section 1.7 (which allocation procedures shall be calculated as of
immediately prior to the Effective Time), each record holder (or beneficial
owner through appropriate and customary documentation and instructions)
immediately prior to the Effective Time of shares of Company Common Stock
shall be entitled either (i) to elect to receive the Per Share Cash Amount
for each such share of Company Common Stock (a "Cash Election"), or (ii) to
elect to receive the Per Share Stock Amount for each such share of Company
Common Stock (a "Stock Election"), or (iii) to indicate that such record
holder has no preference as to the receipt of cash, Parent Common Stock or a
combination thereof with respect to such holder's shares of Company Common
Stock (a "Non-Election", and any Cash Election, Stock Election or
Non-Election shall be referred to herein as an "Election"); provided,
however, that no holder of Dissenting Shares shall be entitled to make an
Election. All such elections shall be made on a form furnished by Parent for
that purpose (a "Form of Election") and reasonably satisfactory to the
Company. If more than one certificate which immediately prior to the
Effective Time represented outstanding shares of Company Common Stock (a
"Certificate") shall be surrendered for the account of the same holder, the
number of shares of Parent Common Stock, if any, to be issued to such holder
in exchange for the Certificates which have been surrendered shall be
computed on the basis of the aggregate number of shares of Company Common
Stock represented by all of the Certificates surrendered for the account of
such holder. Holders of record of shares of Company Common Stock who hold
such shares of Company Common Stock as nominees, trustees or in other
representative capacities (each, a "Representative") may submit multiple
Forms of Election, provided that such Representative certifies that each such
Form of Election covers all shares of Company Common Stock held by such
Representative for a particular beneficial owner.
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(f) If the aggregate number of shares of Company Common Stock with respect
to which Cash Elections have been made exceeds the aggregate number of shares
of Company Common Stock which may be converted into the right to receive cash
in the Merger, then:
A. Each share of Company Common Stock with respect to which a Stock
Election shall have been made shall be converted into the right to receive
the Per Share Stock Amount;
B. Each share of Company Common Stock with respect to which a Non-Election
shall have been made (or deemed to have been made) shall be converted into
the right to receive the Per Share Stock Amount; and
C. Each share of Company Common Stock with respect to which a Cash Election
shall have been made shall be converted into the right to receive:
(1) the amount in cash, without interest, equal to the product of (i) the
Per Share Cash Amount and (ii) a fraction (the "Cash Fraction"), the
numerator of which shall be the aggregate number of shares of Company Common
Stock which may be converted into the right to receive cash in the Merger,
and the denominator of which shall be the aggregate number of shares of
Company Common Stock with respect to which Cash Elections shall have been
made, and
(2) the number of shares of Parent Common Stock equal to the product of (x)
the Per Share Stock Amount and (y) a fraction equal to one minus the Cash
Fraction.
(g) If the aggregate number of shares of Company Common Stock with respect
to which Stock Elections have been made exceeds the aggregate number of
shares of Company Common Stock which may be converted into the right to
receive Parent Common Stock in the Merger, then:
A. Each share of Company Common Stock with respect to which a Cash Election
shall have been made shall be converted into the right to receive the Per
Share Cash Amount;
B. Each share of Company Common Stock with respect to which a Non-Election
shall have been made (or deemed to have been made) shall be converted into
the right to receive the Per Share Cash Amount; and
C. Each share of Company Common Stock with respect to which a Stock
Election shall have been made shall be converted into the right to receive:
(1) the number of shares of Parent Common Stock equal to the product of (i)
the Per Share Stock Amount and (ii) a fraction (the "Stock Fraction"), the
numerator of which shall be the aggregate number of shares of Company Common
Stock which may be converted into the right to receive Parent Common Stock in
the Merger, and the denominator of which shall be the aggregate number of
shares of Company Common Stock with respect to which Stock Elections shall
have been made, and
(2) the amount in cash, without interest, equal to the product of (x) the
Per Share Cash Amount and (y) a fraction equal to one minus the Stock
Fraction.
(h) In the event that neither Section 1.7(f) nor Section 1.7(g) above is
applicable, then:
A. Each share of Company Common Stock with respect to which a Cash Election
shall have been made (or deemed to have been made) shall be converted into
the right to receive the Per Share Cash Amount;
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B. Each share of Company Common Stock with respect to which a Stock
Election shall have been made (or deemed to have been made) shall be
converted into the right to receive the Per Share Stock Amount; and
C. Each share of Company Common Stock with respect to which a
Non-Election shall have been made (or deemed to have been made), if any,
shall be converted into the right to receive:
(1) the amount in cash, without interest, equal to the product of (i)
the Per Share Cash Amount and (ii) a fraction (the "Non-Election
Fraction"), the numerator of which shall be the excess of the (A)
aggregate number of shares of Company Common Stock which may be converted
into the right to receive cash in the Merger over (B) the sum of the
aggregate number of shares of Company Common Stock with respect to which
a Cash Election shall have been made, and the denominator of which shall
be the excess of (A) the aggregate number of shares of Company Common
Stock outstanding immediately prior to the Effective Time (other than
shares to be canceled in accordance with Section 1.7(a)) over (B) the
sum of the aggregate number of shares of Company Common Stock with
respect to which a Cash Election and a Stock Election shall have been
made plus Dissenting Shares, and
(2)the number of shares of Parent Common Stock equal to the product of (x)
the Per Share Stock Amount and (y) a fraction equal to one minus the
Non-Election Fraction.
(i) Elections shall be made by holders of shares of Company Common Stock by
delivering the Form of Election to the exchange agent. To be effective, a
Form of Election must be properly completed, signed and submitted to the
Exchange Agent by no later than 5:00 p.m. (New York City time) on the last
business day prior to the Company Shareholders Meeting, if the Effective Time
is reasonably expected by the Company and Parent to occur at least three but
no more than five business days following such Company Shareholders Meeting
(the "Election Deadline") (provided that if the Effective Time is not
reasonably expected to occur at least three but no more than five business
days following the Company Shareholders Meeting, Parent and the Company shall
agree to a later date and time, reasonably expected to be at least four
business days prior to the Effective Time as the Election Deadline (and shall
reset such date if necessary so that the Election Deadline is at least three
business days before the Effective Time) and shall publish appropriate
advance notice of such Election Deadline), and accompanied by (1)(x) the
Certificates representing the shares of Company Common Stock as to which the
election is being made or (y) an appropriate guarantee of delivery of such
Certificates as set forth in such Form of Election from a firm which is a
member of a registered national securities exchange or of the National
Association of Securities Dealers, Inc. or a commercial bank or trust company
having an office or correspondent in the United States, provided such
Certificates are in fact delivered to the Exchange Agent within three New
York Stock Exchange ("NYSE") trading days after the date of execution of such
guarantee of delivery (a "Guarantee of Delivery"), and (2) a properly
completed and signed letter of transmittal. Failure to deliver Certificates
covered by any Guarantee of Delivery within three NYSE trading days after the
date of execution of such Guarantee of Delivery shall be deemed to invalidate
any otherwise properly made Cash Election or Stock Election. Parent will have
the discretion, which it may delegate in whole or in part to the Exchange
Agent, to determine whether Forms of Election have been properly completed,
signed and submitted or revoked and to disregard immaterial defects in Forms
of Election. The good faith decision of Parent (or the Exchange Agent) in
such matters shall be conclusive and binding. Neither Parent nor the Exchange
Agent will be under any
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obligation to notify any person of any defect in a Form of Election submitted
to the Exchange Agent. A Form of Election with respect to Dissenting Shares
shall not be valid. The Exchange Agent shall also make all computations
contemplated by this Section 1.7 and all such computations shall be
conclusive and binding on the holders of shares of Company Common Stock in
the absence of manifest error. Any Form of Election may be changed or revoked
prior to the Election Deadline. In the event a Form of Election is revoked
prior to the Election Deadline, Parent shall, or shall cause the Exchange
Agent to, cause the Certificates representing the shares of Company Common
Stock covered by such Form of Election to be promptly returned without charge
to the person submitting the Form of Election upon written request to that
effect from such person.
(j) For the purposes hereof, a holder of shares of Company Common Stock who
does not submit a Form of Election which is received by the Exchange Agent
prior to the Election Deadline (including a holder who submits and then
revokes his or her Form of Election and does not resubmit a Form of Election
which is timely received by the Exchange Agent), or who submits a Form of
Election without the corresponding Certificates or a Guarantee of Delivery,
shall be deemed to have made a Non-Election. If any Form of Election is
defective in any manner such that the Exchange Agent cannot reasonably
determine the election preference of the shareholder submitting such Form of
Election, the purported Cash Election or Stock Election set forth therein
shall be deemed to be of no force and effect and the shareholder making such
purported Cash Election or Stock Election shall, for purposes hereof, be
deemed to have made a Non-Election.
(k) A Form of Election and a letter of transmittal shall be included with
or mailed contemporaneously with each copy of the Proxy Statement mailed to
shareholders of the Company in connection with the Company Meeting. Parent
and the Company shall each use its reasonable best efforts to mail or
otherwise make available the Form of Election and a letter of transmittal to
all persons who become holders of shares of Company Common Stock during the
period between the record date for the Company Meeting and the Election
Deadline.
1.8 Adjustment of Merger Consideration. In the event that pursuant to a
transaction announced after the date hereof and becoming effective prior to the
Effective Time (i) any distribution is made in respect of Parent Common Stock
other than a regular quarterly cash dividend or (ii) any stock dividend, stock
split, reclassification, recapitalization, combination or mandatory exchange of
shares occurs with respect to, or rights (other than non-mandatory offers to
exchange) are issued in respect of, Parent Common Stock, then, the Per Share
Stock Amount shall be adjusted accordingly. In the event of a dividend or
distribution to all holders of Parent Common Stock of any class of capital stock
of Parent or any Subsidiary of Parent ("Adjustment Shares"), the record date for
which is prior to the Effective Time (it is agreed that the appropriate
adjustment, in addition to the right to receive the Per Share Stock Amount prior
to such adjustment, shall be either, at Parent's option (provided that Parent
shall use reasonable efforts to be able to elect (A) before electing (B)), (A)
the right to receive, at the Effective Time, the number of Adjustment Shares
that such recipient would have received in respect of the Per Share Stock Amount
had such recipient owned the Per Share Stock Amount in Parent Common Stock as of
the date of this Agreement and held such through the Effective Time or and no
further adjustment shall be required under this Section 1.8 for such dividend or
distribution, or (B) the right to receive an amount of Parent Common Stock equal
in market value at the Effective Time to the market value at the Effective Time
of the number of Adjustment Shares that would have been received in respect of
the Per Share Stock Amount had the recipient thereof owned the Per Share Stock
Amount in Parent Common Stock as of the date of this Agreement and held such
through the Effective Time, and no further adjustment shall be required under
this Section 1.8 for such dividend distribution. For the purposes of the prior
sentence, "market value" means, with respect to any securities listed on a
national securities exchange or quoted on an
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interdealer quotation system, the average of the closing prices on the five
trading days prior to the Effective Time, or if not so listed, the fair market
value of such securities reasonably determined by the Board of Directors of
Parent on such date.
1.9 No Further Ownership Rights in Company Common Stock. All shares of Parent
Common Stock issued upon the surrender for exchange of Certificates in
accordance with the terms hereof (including any cash paid pursuant to Sections
1.7, 1.10 or 2.4) shall be deemed to have been issued in full satisfaction of
all rights pertaining to such shares of Company Common Stock, and from and after
the Effective Time there shall be no further registration of transfers of the
shares of Company Common Stock which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, they shall be canceled and exchanged as
provided in Article II.
1.10 No Fractional Shares. No certificate or scrip representing fractional
shares of Parent Common Stock shall be issued upon the surrender for exchange of
Certificates, and such fractional share interests will not entitle the owner
thereof to vote or to any other rights of a stockholder of Parent.
Notwithstanding any other provision of this Agreement, each holder of shares of
Company Common Stock exchanged pursuant to the Merger who would otherwise have
been entitled to receive a fraction of a share of Parent Common Stock (after
taking into account all Certificates delivered by such holder) shall receive, in
lieu thereof, cash (without interest) in an amount equal to such fractional part
of a share of Parent Common Stock multiplied by the Per Share Cash Amount.
1.11 Shares of Dissenting Shareholders. Notwithstanding anything in this
Agreement to the contrary, any shares of Company Common Stock that are
outstanding immediately prior to the Effective Time and that are held by
shareholders who shall not have voted in favor of the Merger and who shall have
given to the Company (and from whom the Company shall have actually received),
before the vote is taken at the Company Shareholders Meeting to adopt this
Agreement, written notice of such shareholder's intent to demand payment for
such shareholder's shares of Company Common Stock if the Merger is effectuated
in accordance with Article 13 of the NCBCA, and not failed to preserve such
shareholder's right to receive payment for such shares by failing to take those
actions required by such Article 13 within the time periods stipulated therein
(collectively, the "Dissenting Shares") shall not be converted into or represent
the right to receive the Merger Consideration. Such shareholders shall be
entitled to receive the amounts determined in accordance with the provisions of
such Article 13. If, after the Effective Time, any such holder fails to preserve
such rights, such Dissenting Shares shall thereupon be deemed to have been
converted into and to have become exchangeable for, as of the Effective Time,
the right to receive, without any interest thereon, the consideration provided
for in Section 1.7 as if such holder had made a Non-Election. The Company shall
give Parent prompt notice of any notice or demands for payment in accordance
with Article 13 of the NCBCA for shares of Company Common Stock received by the
Company, and Parent shall have the right to direct all proceedings, negotiations
and actions taken by the Company in respect thereof.
1.12 Company Options. At the Effective Time, each unexpired and unexercised
outstanding option, whether or not then vested or exercisable in accordance with
its terms, to purchase shares of Company Common Stock (the "Company Options")
previously granted by the Company or its Subsidiaries under the Company's
Amended and Restated Stock Compensation Plan, the 1989 Stock Plan and the
Amended and Restated 1994 Long Term Incentive Plan (collectively, the "Company
Stock Option Plans") shall be canceled and converted into the right to receive
from the Parent, within 10 days following the Effective Time, cash in an amount
equal to the product of (a) the Per Share Cash Amount minus the exercise price
per share of such Company Option, times (b) the number of shares of Common Stock
which may be purchased upon exercise of such Company Option (whether or not then
exercisable). Prior to (but effective at) the Effective Time, the Company shall
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use its reasonable best efforts to (i) obtain any consents from all holders of
Company Options and (ii) make any amendments to the terms of such stock option
or compensation plans or arrangements that, in the case of either clause (i) or
(ii), are necessary to give effect to the transactions contemplated by this
Section 1.12. Immediately prior to the Effective Time, the Company shall
terminate the Company Stock Option Plans effective as of the Effective Time.
ARTICLE II.
EXCHANGE OF CERTIFICATES
2.1 Closing. The closing of the Merger (the "Closing") shall take place at
8:00 a.m. on the first Business Day after satisfaction or waiver (as permitted
by this Agreement and applicable law) of the conditions (excluding conditions
that, by their terms, cannot be satisfied until the Closing Date) set forth in
Article VI (the "Closing Date") (provided that, if such conditions are satisfied
or waived upon completion of the Company Shareholders Meeting, the Closing shall
take place at least three, but not more than five, business days thereafter),
unless (a) Parent elects a later date (because, in its good faith judgment,
Parent believes that such delay is necessary in connection with avoiding
interference with a material transaction) that is not later than the Outside
Date or (b) another time or date is agreed to in writing by the parties hereto.
The Closing shall be held at the offices of Latham & Watkins, 885 Third Avenue,
Suite 1000, New York, NY 10022-4802, unless another place is agreed to in
writing by the parties hereto. The Articles of Merger and the Certificate of
Merger shall be filed at or as promptly as practicable following the time of the
Closing, and each shall contemplate the same Effective Time.
2.2 Exchange Agent. As of the Effective Time, Parent shall deposit with such
bank or trust company as may be designated by Parent and be reasonably
acceptable to the Company (the "Exchange Agent") for the benefit of the holders
of shares of Company Common Stock and the holders of the Company Options, for
exchange or payment in accordance with this Section 2.2, through the Exchange
Agent, (i) certificates evidencing such number of shares of Parent Common Stock
equal to (x) the Per Share Stock Amount multiplied by (y) the aggregate number
of shares of Company Common Stock which may be converted into the right to
receive Parent Common Stock in the Merger, and (ii) (1) cash in an amount equal
to (x) the Per Share Cash Amount multiplied by (y) the aggregate number of
shares of Company Common Stock which may be converted into the right to receive
cash in the Merger, and (2) any cash necessary to pay amounts due pursuant to
Section 1.10 and Section 1.12 (such certificates for shares of Parent Common
Stock and such cash being hereinafter referred to as the "Exchange Fund"). The
Exchange Agent shall, pursuant to irrevocable instructions in accordance with
these Articles I and II, deliver the Parent Common Stock and cash contemplated
to be issued pursuant to Section 1.7 out of the Exchange Fund. The Exchange Fund
shall not be used for any other purpose. The Exchange Agent shall invest any
cash included in the Exchange Fund, as directed by Parent, on a daily basis. Any
interest and other income resulting from such investments shall be paid to
Parent.
2.3 Exchange and Payment Procedures. (a) As soon as reasonably practicable
after the Effective Time, the Exchange Agent shall mail to each holder of record
of a Certificate or Certificates that were converted into the right to receive
shares of Parent Common Stock and/or cash pursuant to Section 1.7(b), (i) a
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon proper delivery
of the Certificates to the Exchange Agent, and which shall be in such form and
have such other provisions as Parent may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for shares of Parent Common Stock and/or cash. Upon surrender of a Certificate
for cancellation to the Exchange Agent together with such letter of transmittal,
duly executed and completed in accordance with the instructions thereto, and
such other documents as
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may reasonably be required by the Exchange Agent, the holder of such Certificate
shall be entitled to receive in exchange therefor a certificate representing
that number of whole shares of Parent Common Stock and/or cash which such holder
has the right to receive pursuant to the provisions of Article I and this
Article II and the Certificate so surrendered shall forthwith be canceled. In
the event of a transfer of ownership of Company Common Stock that is not
registered in the transfer records of the Company, a certificate representing
the proper number of shares of Parent Common Stock and/or cash may be issued to
a Person other than the Person in whose name the Certificate so surrendered is
registered if the Certificate representing such Company Common Stock is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this Article
II, each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon surrender the certificate representing
shares of Parent Common Stock and/or cash as contemplated by this Article II.
(b) As soon as reasonably practicable after the Effective Time, but no later
than five business days after the Effective Time, the Company, after approval by
Parent (which approval shall not be unreasonably withheld or delayed), shall
deliver to the Exchange Agent, a list of the holders of the Company Options,
their addresses and the amounts to be paid to each of them. Promptly after
receipt of such list, but no later than three days after receipts of such list,
the Exchange Agent shall pay the amounts shown on such schedule.
2.4 Distributions with Respect to Unexchanged Shares. No dividends or other
distributions declared or made after the Effective Time with respect to Parent
Common Stock with a record date after the Effective Time shall be paid to the
holder of any unsurrendered Certificate with respect to the shares of Parent
Common Stock to which such holder is entitled hereunder and no cash payment paid
to any such holder pursuant to Sections 1.7 and 1.10 until the holder of record
of such Certificate shall surrender such Certificate. Subject to the effect of
applicable laws, following surrender of any such Certificate, there shall be
given to the record holder of the certificates representing whole shares of
Parent Common Stock to which such holder is entitled hereunder, without
interest, (i) at the time of such surrender, a certificate representing the
number of whole shares of Parent Common Stock and the amount of any cash to
which such holder is entitled pursuant to Sections 1.7 and 1.10 and the amount
of dividends or other distributions with respect to such whole shares of Parent
Common Stock with a record date after the Effective Time and a payment date
prior to their date of issuance to such holder, and (ii) at the appropriate
payment date, the amount of dividends or other distributions with a record date
after the Effective Time but prior to surrender and a payment date subsequent to
surrender payable with respect to such whole shares of Parent Common Stock.
2.5 Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the holders of Certificates for six months after the
Effective Time shall be delivered to Parent, upon demand, and any shareholders
or optionholders of the Company who have not previously complied with the
provisions of this Article II shall thereafter look only to Parent for payment
of their claim for Parent Common Stock and/or cash and any dividends or
distributions with respect to Parent Common Stock. Any portion of the Exchange
Fund remaining unclaimed by holders of Company Common Stock five years after the
Effective Time (or such earlier date immediately prior to such time as such
portion would otherwise escheat to or become property of any Governmental
Entity) shall, to the extent permitted by applicable law, become the property of
the Surviving Corporation free and clear of any claims or interest of any Person
previously entitled therein.
2.6 No Liability. To the fullest extent permitted by law, none of Parent,
Merger Sub, the Company or the Surviving Corporation shall be liable to any
holder of Company Common Stock or
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Parent Common Stock, as the case may be, for any shares (or dividends or
distributions with respect thereto) and/or cash delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
2.7 Lost Certificates. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed and, if required by Parent, the
posting by such Person of a bond in such reasonable amount as Parent may direct
as indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will deliver in exchange for such lost, stolen
or destroyed Certificate the shares of Parent Common Stock and/or any cash.
2.8 Withholding Rights. Parent and the Exchange Agent shall be entitled to
deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of shares of Company Common Stock or holders of Company
Options such amounts as Parent or the Exchange Agent, as applicable, is required
to deduct and withhold with respect to the making of such payment under the
Code, or any provision of state, local or foreign Tax law. To the extent that
amounts are so withheld by Parent or the Exchange Agent, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the shares of Company Common Stock in respect of which such deduction
and withholding was made by such party.
2.9 Further Assurances. At and after the Effective Time, the officers and
directors of the Surviving Corporation will be authorized to execute and
deliver, in the name and on behalf of the Company or Merger Sub, any deeds,
bills of sale, assignments or assurances and to take and do, in the name and on
behalf of the Company of Merger Sub, any other actions and things to vest,
perfect or confirm of record or otherwise in the Surviving Corporation any and
all right, title and interest in, to and under any of the rights, properties or
assets acquired or to be acquired by the Surviving Corporation as a result of,
or in connection with, the Merger.
2.10 Stock Transfer Books. At 5:00 p.m., New York City time, on the day the
Effective Time occurs, the stock transfer books of the Company shall be closed
and there shall be no further registration of transfers of shares of Company
Common Stock thereafter on the records of the Company. From and after the
Effective Time, the holders of Certificates shall cease to have any rights with
respect to such shares of Company Common Stock formerly represented thereby,
except as otherwise provided herein or by law. On or after the Effective Time,
any Certificates presented to the Exchange Agent or Parent for any reason shall
be converted into the Merger Consideration with respect to the shares of Company
Common Stock formerly represented thereby.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. The Company represents and
warrants to Parent and Merger Sub as follows:
(a) Organization, Standing and Power. The Company is a corporation duly
organized and validly existing and in good standing under the laws of its
jurisdiction of incorporation. Each of the Company's Subsidiaries has been
duly formed and is validly existing under the laws of the jurisdiction of its
formation except where the failure of a Subsidiary to be duly formed and
validly existing in such jurisdictions could not reasonably be expected,
either individually or in the aggregate, to have a Material Adverse Effect on
the Company. Each of the Company and its Subsidiaries is duly qualified and
in good standing to do business in each jurisdiction in which the nature of
its business or the ownership or leasing of its properties makes such
qualification necessary, other than, with respect to the Subsidiaries, in
such jurisdictions where the failure so to qualify could not reasonably be
expected, either individually or in the aggregate, to have a
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Material Adverse Effect on the Company. Each of the Company and its
Subsidiaries has the requisite corporate power and authority to own, lease
and operate its properties and conduct its business as currently or proposed
to be conducted, except, with respect to the Subsidiaries, where the lack of
such requisite power could not reasonably be expected, either individually or
in the aggregate, to have a Material Adverse Effect on the Company. The
Company has previously furnished to Parent true, complete and correct copies
of the Organizational Documents of the Company and its Subsidiaries as in
effect on the date of this Agreement, and neither the Company nor its
Subsidiary is in default thereunder or acting in conflict therewith.
(b)Capital Structure.
(i) The authorized capital stock of the Company consists of (A) 250,000,000
shares of Company Common Stock, of which 36,780,009, shares are issued and
outstanding as of the date hereof and of which 36,780,009 shares plus such
number of shares as may be issued consistent with Section 4.1(b) shall be
issued and outstanding as of the Effective Time, and no shares are held by
the Company or its Subsidiaries as treasury stock, (B) 30,000,000 shares of
Class B Common Stock, par value $.01 per share, of which no shares are issued
or outstanding, and (C) 1,000,000 shares of preferred stock, par value $.01
per share, of which no shares are issued or outstanding. All issued and
outstanding shares of the capital stock of the Company are duly authorized,
validly issued, fully paid and nonassessable, and no class of capital stock
is entitled to preemptive rights. Except pursuant to the Option Agreement or
as set forth on Schedule 3.1(b)(i), there are no outstanding options,
warrants or other rights to acquire capital stock from the Company (or
securities convertible into or exchangeable or exercisable for such capital
stock) other than options representing in the aggregate the right to purchase
5,987,693 shares of Company Common Stock under the Company Stock Option
Plans.
(ii) Schedule 3.1(b)(ii) lists all Subsidiaries of the Company as of the
date of this Agreement. Except as set forth in Schedule 3.1(b)(ii), (a) all
of the issued and outstanding shares of capital stock of each Subsidiary of
the Company that is a corporation are duly authorized, validly issued, fully
paid and nonassessable and are owned, directly or indirectly, by the Company
and where owned by the Company or one or more of its Subsidiaries, are owned
free and clear of any liens, claims, encumbrances, restrictions, preemptive
rights, security interests, charges, voting and disposition restrictions or
any other claims of any third party ("Liens"), (b) all capital, membership or
voting interests of each Subsidiary of the Company that is not a corporation
have been validly created pursuant to its Organizational Documents and, where
owned by the Company or one or more of its Subsidiaries, are owned, directly
or indirectly, by the Company free and clear of any Liens and (c) none of the
Company or its Subsidiaries has any agreement or obligation to provide funds
to, or make any investment (in the form of a loan, capital contribution or
otherwise) in any other Person or owns any interests in any Person other than
a wholly owned Subsidiary (except, as of the Effective Time, as may be agreed
or allowed consistent with Section 4.1(d)).
(iii) No bonds, debentures, notes or other indebtedness of the Company
having the right to vote on any matters on which shareholders may vote
("Company Voting Debt") are issued or outstanding.
(iv) Schedule 3.1(b)(iv) sets forth a true and complete list as of the date
hereof of all holders of options to purchase Company Common Stock, including
the number of shares of Company Common Stock subject to each such option, the
exercise or vesting schedule, the exercise price per share and the term of
each such option.
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(v) Except as otherwise set forth in the last sentence of Section 3.1(b)(i)
or as set forth in Schedule 3.1(b)(v), there are no securities, options,
warrants, calls, subscriptions, rights, commitments, agreements, arrangements
or undertakings of any kind to which the Company or any of its Subsidiaries
is a party or by which any of them is bound obligating the Company or any of
its Subsidiaries to issue, deliver or sell, or cause to be issued, delivered
or sold, additional shares of capital stock or other voting securities of the
Company or any of its Subsidiaries or obligating the Company or any of its
Subsidiaries to issue, grant, extend or enter into any such security, option,
warrant, subscriptions, call, right, commitment, agreement, arrangement or
undertaking. Except as disclosed on Schedule 3.1(b)(i), there are no
outstanding obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock of the
Company or any of its Subsidiaries.
(c)Authority; No Conflicts.
(i) The Company has all requisite corporate power and authority to execute
and deliver this Agreement and the Option Agreement and, subject, in the case
of the consummation of the Merger only, to the adoption of this Agreement by
the Required Company Vote, to consummate the transactions contemplated hereby
and thereby (which shall include, for all purposes hereunder, without
limitation, the making and consummation of the Tender Offer (as defined
herein) and all transactions contemplated thereby, the making of the Deposit
(as defined herein) and the execution, delivery and performance of the
Supplemental Indenture (as defined herein)). The execution, delivery and
performance of this Agreement and the Option Agreement and the consummation
of the transactions contemplated hereby and thereby have been duly authorized
by the unanimous vote of the Board of Directors of the Company (at a meeting
duly called and a quorum being present) and all necessary corporate action on
the part of the Company, subject, in the case of the consummation of the
Merger only, to the Required Company Vote. This Agreement has been duly
executed and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable against it in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and similar laws relating to or
affecting creditors generally, by general equity principles (regardless of
whether such enforceability is considered in a proceeding in equity or at
law) or by an implied covenant of good faith and fair dealing. The Board of
Directors of the Company has (i) unanimously approved and adopted this
Agreement, the Option Agreement and the transactions contemplated hereby and
thereby and has declared that the Merger and this Agreement and the other
transactions contemplated hereby are advisable and in the best interests of
the Company and its shareholders and (ii) unanimously taken all action
necessary to render inapplicable to the transactions contemplated by this
Agreement, by the Option Agreement and by the Voting Agreement, the
provisions of Article VII of the Company's Articles of Incorporation and any
state anti-takeover or similar law, including any such law relating to the
voting of shares or a moratorium on the consummation of any business
combination. The Board of Directors of the Company has directed that this
Agreement and the transactions contemplated hereby be submitted to the
holders of the Company Common Stock to obtain the Required Company Vote and,
subject to the terms hereof, has unanimously recommended that such holders
vote for approval and adoption of this Agreement and the transactions
contemplated hereby. Neither Article 9 nor Article 9A of Chapter 55 of the
General Statutes of North Carolina apply to the Company.
(ii) Except as set forth in Schedule 3.1(c)(ii), the execution and delivery
of this Agreement, the Option Agreement or the Voting Agreements does not or
will not, as the case may be, and the consummation of the transactions
contemplated hereby and thereby
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<PAGE>
will not, conflict with, require any filing, waiver, permit, approval or
consent under, or result in any violation of, or constitute a default (with
or without notice or lapse of time, or both) under, or give rise to a right
of termination, amendment, cancellation or acceleration of any obligation or
the loss of a material benefit under, or the creation of a lien, pledge,
security interest, charge or other encumbrance on any assets (any such
conflict, requirement, violation, default, right of termination, amendment,
cancellation or acceleration, loss or creation, a "Violation") pursuant to:
(A) any provision of the Organizational Documents of the Company or any of
its Subsidiaries and (B) subject to obtaining or making the consents,
approvals, orders, authorizations, registrations, declarations and filings
referred to in paragraph (iii) below, (x) any Company Material Contract
(other than any cell site lease) except any such Violations, which
individually or in the aggregate are not material, or (y) any other contract,
agreement or binding obligation to which the Company or any Subsidiary is a
party or to which any of its or their assets are bound, except as could not,
individually or in the aggregate together with any violations pursuant to any
Company Material Contract, be reasonably expected to result in a Material
Adverse Effect on the Company.
(iii) No consent, waiver, permit, approval, order or authorization of, or
registration, declaration or filing with, any supranational, national, state,
municipal or local government, any instrumentality, subdivision, court,
administrative agency or commission or other authority thereof, or any
quasi-governmental or private body exercising any regulatory, taxing,
importing or other governmental or quasi-governmental authority (a
"Governmental Entity") is required by or with respect to the Company or any
of its Subsidiaries in connection with the execution and delivery of this
Agreement or the Option Agreement by the Company or the consummation by the
Company of the transactions contemplated hereby or thereby, except for (x)
those required under or in relation to (A) the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), (B) the Communications
Act of 1934, as amended (the "Communications Act"), and any rules and
regulations promulgated by the Federal Communications Commission ("FCC"), (C)
state securities or "blue sky" laws, (D) the Securities Act of 1933, as
amended (the "Securities Act"), (E) the Securities Exchange Act of 1934, as
amended ("Exchange Act"), (F) the NCBCA with respect to the filing and
recordation of appropriate documents to effect the Merger, (G) the Public
Utilities Commission of Ohio, Public Competitive Telecommunications Service
Provider, 563 Registration Form, (H) rules and regulations of any state
public service or utility commissions or similar state regulatory bodies, (I)
rules and regulations of the NYSE or Nasdaq National Market ("Nasdaq"), and
(J) antitrust or other competition laws of other jurisdictions, and (y) such
consents, approvals, orders, authorizations, registrations, declarations and
filings the failure of which to make or obtain, excluding those which, prior
to the Effective Time, have been made or obtained, could not reasonably be
expected to have a Material Adverse Effect on the Company.
(iv) Upon execution and delivery by the Company and the Trustee under the
Indenture (the "Trustee") of the Supplemental Indenture in accordance with
the Tender Offer, the Majority Covenants (as defined herein) will not apply
to the Company or any of its affiliates. The Company has reviewed the
Supplemental Indenture with its counsel, the Trustee and such Trustee's
counsel, and is aware of no reason that, assuming receipt of the Requisite
Consents (as defined herein), the Supplemental Indenture would not be
executed by the Trustee.
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<PAGE>
(d)Reports and Financial Statements.
(i) The Company has filed all required reports, schedules, forms,
statements and other documents required to be filed by it with the Securities
and Exchange Commission (the "SEC") since January 1, 1996 (collectively,
including all exhibits thereto and documents incorporated by reference
therein, the "Company SEC Reports"). No Subsidiary of the Company is required
to file any form, report or other document with the SEC. None of the Company
SEC Reports, as of their respective dates (and, if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such filing),
contained or will contain any untrue statement of a material fact or omitted
or will omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. Each of the financial statements
(including the related notes) included in the Company SEC Reports presents
fairly, in all material respects, the consolidated financial position and
consolidated results of operations and cash flows of the Company and its
Subsidiaries as of the respective dates or for the respective periods set
forth therein, all in conformity with generally accepted accounting
principles ("GAAP") consistently applied during the periods involved except
as otherwise noted therein, and subject, in the case of the unaudited interim
financial statements, to normal and recurring year-end adjustments that have
not been and are not expected to be material in amount. All of such the
Company SEC Reports, as of their respective dates (and as of the date of any
amendment to the respective the Company SEC Report), complied as to form in
all material respects with the applicable requirements of the Securities Act
and the Exchange Act and the rules and regulations promulgated thereunder.
(ii) Except for, and to the extent of, those liabilities that are reflected
or reserved against, to the extent reflected or reserved against, on the
consolidated balance sheet of the Company and its Subsidiaries included in
the Company's Quarterly Report on Form 10-Q for the fiscal period ended June
30, 1998, or the Company's Annual Report on Form 10-K for the year ended
December 31, 1997, and except for liabilities and obligations incurred in the
ordinary course of business consistent with past practice since June 30,
1998, and except and as to the extent disclosed in Schedule 3.1(d)(ii),
neither the Company nor any of its Subsidiaries has any liabilities or
obligations of any nature whatsoever (whether fixed, absolute, accrued,
contingent or otherwise and whether due or to become due) that individually
or in the aggregate could reasonably be expected to have a Material Adverse
Effect on the Company.
(e) Proxy Statement/Registration Statement. The information to be supplied
by the Company for inclusion in the Registration Statement shall not at the
time the Registration Statement is filed with or declared effective by the
SEC or at the date of the Company Shareholders Meeting contain any untrue
statement of a material fact or omit to state any material fact required to
be stated in the Registration Statement or necessary in order to make the
statements in the Registration Statement, in light of the circumstances under
which they were made, not misleading. The Proxy Statement shall not, on the
date the Proxy Statement is first mailed to shareholders of the Company, at
the time of the Company Shareholders' Meeting and at the Effective Time,
contain any statement which, at such time and in light of the circumstances
under which it shall be made, is false or misleading with respect to any
material fact, or omit to state any material fact necessary in order to make
the statements made in the Proxy Statement not false or misleading (excluding
any statement based upon information supplied by Parent for inclusion in the
Proxy Statement).
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<PAGE>
(f) Compliance with Applicable Laws; Regulatory Matters. The Company and
its Subsidiaries hold all permits, licenses, certificates, franchises,
registrations, variances, exemptions, orders and approvals of all
Governmental Entities which are necessary or advisable to the operation of
their businesses, other than those which, individually or in the aggregate,
the failure to hold could not reasonably be expected to have a Material
Adverse Effect on the Company (the "Company Permits"). All such Company
Permits are valid and in full force and effect, and no suspension or
cancellation of any such Company Permit is pending or, to the knowledge of
the Company, threatened, except as could not reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect on the
Company. The business of the Company and its Subsidiaries (including, without
limitation, operation of each Company Benefit Plan) are not being and have
not been conducted in violation of any law, ordinance, regulation, judgment,
decree, injunction, rule or order of any Governmental Entity ("Law") except
for violations that individually or in the aggregate (1) would not result in
a material penalty or fine, (2) would not constitute a material criminal
violation, (3) would not result in cognizable damage to the business
reputation of the Company or the Parent, and (4) which, individually or in
the aggregate, could not otherwise reasonably be expected to have a Material
Adverse Effect on the Company. As of the date of this Agreement, no
investigation by any Governmental Entity with respect to the Company or any
of its Subsidiaries is pending or, to the knowledge of the Company,
threatened, other than investigations which, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect
on the Company.
(g) Litigation. Schedule 3.1(g) is a true and complete list of all material
litigation as of the date hereof that is pending, or to the knowledge of the
Company, threatened. Other than rulemaking or other proceedings of general
applicability affecting the cellular telephone industry, which would not have
a materially disproportionate effect on the Company, there is no litigation,
arbitration, claim, suit, action, investigation or proceeding pending,
affecting or, to the knowledge of the Company, threatened, against the
Company or any of its Subsidiaries or their assets, which individually, or
except for the matters disclosed in Schedule 3.1(g) in the aggregate, as of
the date hereof could be reasonably expected to result in a material
liability, and there is no litigation, claim, suit, action, investigation or
proceeding pending, affecting or, to the knowledge of the Company or any of
its Subsidiaries, which individually, or in the aggregate could be reasonably
expected to result in a Material Adverse Effect on the Company. There is no
judgment, award, decree, injunction, rule or order of any Governmental Entity
or arbitrator outstanding against the Company or any of its Subsidiaries or
their assets, which, individually or in the aggregate, as of the date hereof
could be reasonably expected to result in a material liability, or as of the
Closing Date, could reasonably be expected to have a Material Adverse Effect
on the Company.
(h) Taxes. Except as set forth in Schedules 3.1(h)(i)-(x): (i) the Company
and each of its Subsidiaries have duly and timely filed (taking into account
any extension of time within which to file) all Tax Returns with respect to
material Taxes required to be filed by any of them and all such filed Tax
Returns are complete and accurate in all respects, except for
incompletenesses and inaccuracies that could not, individually or in the
aggregate, be reasonably expected to result in material Tax liability that
has not been paid; (ii) the Company and each of its Subsidiaries have paid
all material Tax liabilities that are shown as due on such filed Tax Returns
or that the Company or any of its Subsidiaries is obligated to withhold from
amounts owing to any employee, creditor or third party, except with respect
to matters contested in good faith; (iii) as of the date hereof, except as
could not individually or in the aggregate be reasonably expected to result
in material Tax liability that has not been paid, and as of the Closing Date,
except as could not, individually or in the aggregate, reasonably be expected
to result in a Material Adverse Effect on the Company: (A) there are no
pending or, to the
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<PAGE>
knowledge of the Company, threatened in writing audits, examinations,
investigations or other proceedings in respect of Taxes or Tax matters
relating to the Company or any of its Subsidiaries, (B) there are no
deficiencies or claims for any Taxes that have been proposed, asserted or
assessed against the Company or any of its Subsidiaries, (C) there are no
Liens for Taxes upon the assets of the Company or any of its Subsidiaries,
other than Liens for current Taxes not yet due and payable and Liens for
Taxes that are being contested in good faith by appropriate proceedings, and
(D) neither the Company nor any of its Subsidiaries has requested any
extension of time within which to file any Tax Returns in respect of any
taxable year which have not since been filed, and no request for waivers of
the time to assess any Taxes are pending or outstanding; (iv) none of the
Company or any of its Subsidiaries has made an election under Section 341(f)
of the Code; (v) as of the date hereof, the consolidated federal income Tax
Returns for the Company and its Subsidiaries have never been examined by the
Internal Revenue Service; (vi) the net operating loss carryforwards ("NOLs")
of the Company and its Subsidiaries as of December 31, 1997 are reasonably
expected to equal the amount of NOLs set forth on the most recent
consolidated federal income Tax Return of the Company and its Subsidiaries,
and, except for limitations that may apply by reason of the Merger or related
transactions contemplated by this Agreement, such NOLs are not subject to
limitation under Section 382 of the Code, Treasury Regulation Section
1.1502-15T or -21T or otherwise; (vii) neither the Company nor any of its
Subsidiaries is a party to any agreement, contract or arrangement that could
result, on account of the transactions contemplated hereunder, separately or
in the aggregate, in the payment of any "excess parachute payments" within
the meaning of Section 280G of the Code or any payment that would be
nondeductible under Section 162(m) of the Code; (viii) neither the Company
nor any of its Subsidiaries has any liability for Taxes of any person (other
than the Company and its Subsidiaries) under Treasury Regulation Section
1.1502-6 (or any comparable provision of state, local or foreign law); (ix)
neither the Company nor any Subsidiary is a party to any agreement relating
to the allocation or sharing of Taxes (other than informal arrangements among
the Company and its Subsidiaries); and (x) as of the date hereof, neither the
Company nor any of its Subsidiaries knows of any facts with respect to the
Company or its Subsidiaries that would reasonably be expected to prevent or
materially or burdensomely impede the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
(i) Absence of Certain Changes or Events. Since June 30, 1998 through the
date of this Agreement, (A) each of the Company and its Subsidiaries has
conducted its business in the ordinary course consistent with its past
practice, except for the execution and delivery of this Agreement; (B) there
has not been any event, development or change of circumstance that
constitutes, has had, or could reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on the Company; and (C) except
as disclosed in Schedule 3.1(i)(C), through the date of this Agreement, none
of the Company or its Subsidiaries has taken or failed to take any action
which, if taken after the date hereof, would have required the consent of
Parent under Section 4.1 hereof.
(j) Vote Required. The affirmative vote of the holders of a majority of the
outstanding shares of Company Common Stock (the "Required Company Vote") is
the only vote of the holders of any class or series of the Company capital
stock necessary to approve this Agreement and the transactions contemplated
hereby.
(k)Certain Agreements.
(i) Schedule 3.1(k) contains a true and complete list of all agreements,
arrangements or understandings (a) listed or which would be required to be
listed as an exhibit to the Company's Annual Report on Form 10-K for the year
ended December 31, 1997 under the
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<PAGE>
rules and regulations of the SEC, (b) relating to indebtedness for money
borrowed by the Company or any Subsidiary, which individually or in the
aggregate represent an amount greater than $1,000,000 excluding trade credit
or payables in the ordinary course of business, (c) creating any guarantee or
keepwell arrangement or other agreement to be liable for the obligations of
another Person other than the Company or its wholly owned Subsidiaries, (d)
providing for payments or the receipt of payments or the sale, purchase or
exchange of goods or services worth in excess of $1,000,000 (or in fact
resulting in such payments for 1997), (e) with any agent/dealer/retailer for
the Company's products or services, (f) any joint venture or partnership
agreement, (g) with any paging enterprise for the reselling of products or
services, (h) which is an interest rate, equity or other swap or derivative
instrument, (i) containing any provision or covenant limiting the ability of
the Company or its Subsidiaries or any of its or their affiliates to sell any
products or services of or to any other person, engage in any line of
business or compete with or to obtain products or services from any person or
limiting the ability of any person to provide products or services to the
Company or any of its Subsidiaries or affiliates and (j) cell site leases
(collectively, the "Company Material Contracts"). The Company has previously
provided Parent with true and correct copies of each of the Company Material
Contracts, as in effect on the date hereof.
(ii) All Company Material Contracts are valid and enforceable and in full
force and effect except to the extent they have previously expired in
accordance with their terms, and neither the Company nor any of its
Subsidiaries has violated any provision of, or committed or failed to perform
any act which, with or without notice, lapse of time, or both, could
reasonably be expected to constitute a default under the provisions of, any
such Company Material Contract, except for any invalidity, unenforceability
or defaults which, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on the Company. To the knowledge
of the Company, no counterparty to any such Company Material Contract has
violated any provision of, or committed or failed to perform any act which,
with or without notice, lapse of time, or both, could reasonably be expected
to constitute a default or other breach under the provisions of, such the
Company Material Contract, except for defaults or breaches which,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect on the Company. The Company has no obligations under
that certain Joint Venture Agreement, dated as of January 19, 1990, as
amended.
(l)Employee Benefit Plans; Labor Matters; Options.
(i) For purposes of this Agreement, the following definitions apply:
"Controlled Group Liability" means any and all liabilities under (A) Title IV
of ERISA, (B) section 302 of ERISA, (C) sections 412 and 4971 of the Code,
(D) the continuation coverage requirements of section 601 et seq. of ERISA
and section 4980B of the Code, and (E) corresponding or similar provisions of
foreign laws or regulations, other than such liabilities that arise solely
out of, or relate solely to, the Plans; "ERISA" means the Employee Retirement
Income Security Act of 1974, as amended, and the regulations thereunder;
"ERISA Affiliate" means, with respect to any entity, trade or business, any
other entity, trade or business that is a member of a group described in
Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA
that includes the first entity, trade or business, or that is a member of the
same "controlled group" as the first entity, trade or business pursuant to
Section 4001(a)(14) of ERISA.
(ii) With respect to each employee benefit plan, program, arrangement and
contract (including, without limitation, any "employee benefit plan," as
defined in Section 3(3) of
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<PAGE>
ERISA and any bonus, deferred compensation, stock bonus, stock purchase,
restricted stock, stock option, employment, termination, change in control
and severance plan, program, arrangement and contract), to which the Company
or any of its Subsidiaries is a party, which is maintained or contributed to
by the Company or any of its Subsidiaries, or with respect to which the
Company or any of its Subsidiaries could incur material liability under
Section 4069, 4201 or 4212(c) of ERISA (the "Company Benefit Plans"), the
Company has made available to Parent a true and complete copy of (A) such
Company Benefit Plan, (B) the most recent annual report (Form 5500) filed
with the Internal Revenue Service (the "IRS"), (C) each trust or other
funding arrangement relating to such Company Benefit Plan, (D) the most
recent summary plan description related to each Company Benefit Plan for
which a summary plan description is required, (E) the most recent actuarial
report (if applicable) relating to a Company Benefit Plan and (F) the most
recent determination letter, if any, issued by the IRS with respect to any
Company Benefit Plan qualified under Section 401(a) of the Code. Schedule
3.1(l) of the Company Disclosure Schedule sets forth a true and complete list
of Company Benefit Plans.
(iii) Each of the Company Benefit Plans that is an "employee pension
benefit plan" within the meaning of Section 3(2) of ERISA and that is
intended to be qualified under Section 401(a) of the Code has received a
favorable determination letter from the IRS, and the Company is not aware of
any circumstances likely to result in the revocation of any such favorable
determination letter that could reasonably be expected to have a Material
Adverse Effect on the Company.
(iv) All contributions, except for contributions which are not,
individually or in the aggregate, material, required to be made to any
Company Benefit Plan by applicable law have been timely made.
(v) The Company does not maintain or contribute to any Company Benefit Plan
that is subject to Title IV or Section 302 of ERISA or Sections 412 or 4971
of the Code.
(vi) There does not now exist, nor do any circumstances exist that could
result in, any Controlled Group Liability that would be a material liability
to the Company following the Effective Date.
(vii) The Company has no material 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 the Company.
(viii) No Company Benefit Plan covers foreign employees, other than
resident aliens.
(ix) No Company Benefit Plan provides for the reimbursement of any excise
taxes under Section 4999 of the Code or any income taxes under the Code.
(x) As of the date hereof, to the knowledge of the Company there are no
actions, proceedings, arbitrations, suits or claims (other than claims for
benefits) pending or threatened with respect to any Company Benefit Plan.
(xi) With respect to the Company Benefit Plans, no event has occurred and,
to the knowledge of the Company, there exists no condition or set of
circumstances, in connection with which the Company or any of its
Subsidiaries could be subject to any material liability under the terms of
such Company Benefit Plans, ERISA, the Code or any other applicable law
(other than ordinary course liabilities to fund such Company Benefit Plans
pursuant to their terms).
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<PAGE>
(xii) None of the Company or its Subsidiaries is a party to any collective
bargaining or other labor union contracts, no collective bargaining agreement
is being negotiated by the Company or any of its Subsidiaries, and as of the
date hereof to the knowledge of the Company no campaign or other attempt for
recognition has been made by any labor organization or employee with respect
to employees of the Company and to the knowledge of the Company at the date
hereof, no such campaign or other attempt has been threatened or made in the
past three years. As of the date hereof, there is no pending labor dispute,
strike or work stoppage against the Company or any of its Subsidiaries which
may interfere in any material respect with the respective business activities
of the Company or any of its Subsidiaries. There is no material pending
charge or complaint against the Company or any of its Subsidiaries by the
National Labor Relations Board or any comparable state agency.
(xiii) Except as set forth in Schedule 3.1(l)(xiii), all employment and
consulting agreements to which the Company is a party have been made
available to Parent, and as of the date hereof there are no other written
agreements obligating the Company to employ any individual.
(xiv) At the Effective Time, any outstanding Company Options will be
exercisable only for cash or the Merger Consideration and not for capital
stock of the Company or Merger Sub.
(m) Brokers or Finders. No agent, broker, investment banker, financial
advisor or other firm or Person engaged by the Company or any of its
Affiliates is or will be entitled to any broker's or finder's fee or any
other similar commission or fee in connection with any of the transactions
contemplated by this Agreement from the Company or any Subsidiary, except
Wasserstein Perella & Co., Inc. and, if the Company makes the election in
Section 5.9(a), NationsBanc Montgomery Securities, LLC. A true and complete
copy of the engagement letter of Wasserstein Perella & Co., Inc. has been
delivered to Parent prior to the date hereof, and a true and complete copy of
the engagement letter of NationsBanc Montgomery Securities LLC in the form
attached to Schedule 5.9 shall have been delivered to Parent prior to the
commencement of the Tender Offer if the Company makes the election in Section
5.9(a).
(n) Opinion of Financial Advisor. The Company has received the opinion of
Wasserstein Perella & Co., Inc. dated the date of this Agreement to the
effect that, as of such date, the Merger Consideration is fair, from a
financial point of view, to the holders of Company Common Stock.
(o) Year 2000 Compliance. The Company has taken steps (summarized in
Schedule 3.1(o)) that are reasonable to ensure that the occurrence of the
year 2000 will not materially and adversely affect the information and
business systems of the Company or the Subsidiaries, and no expenditures in
excess of currently budgeted items will be required in order to cause such
systems to operate properly following the change of the year 1999 to 2000.
The Company has taken the actions described in such Schedule (to the extent
described therein), has resolved (or is in the process of resolving) any
issues arising as a result of tests taken or otherwise to the knowledge of
the Company, and is not aware of any fact that would lead one to reasonably
conclude that the Company will be unable to resolve any of such issues on the
timetable set forth in Schedule 3.1(o) (and in any event on a timely basis in
order to be resolved before the year 2000).
(p) Affiliated Transactions and Certain Other Agreements. Set forth in
Schedule 3.1(p) is a list of (a) all contracts, arrangements, agreements or
understandings that would be required to be described pursuant to Item 404 of
Regulation S-K of the Securities Act of 1933, as amended, except for those
contracts, arrangements, agreements or understandings disclosed in the
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Company's 1998 Proxy Statement or Annual Report on Form 10-K for the year
ended December 31, 1997, and (b) all agreements or understandings, whether
written or oral, giving any Person the right to require the Company to
register shares of capital stock or to participate in any such registration.
The Company has previously provided to Parent true and complete copies of
each of the foregoing agreements.
(q) Environmental Matters. Except as disclosed in the Company SEC Reports
filed prior to the date hereof, and except as could not reasonably be
expected to result in a Material Adverse Effect on the Company: (i) the
Company and its Subsidiaries have complied with all applicable Environmental
Laws; (ii) the properties currently owned or operated by the Company and its
Subsidiaries (including soils, groundwater, surface water, buildings or other
structures) are not contaminated with any Hazardous Substance to an extent
reasonably likely to give rise to liability or remediation obligations for
the Company or any Subsidiary under any applicable Environmental Law; (iii)
the properties formerly owned or operated by the Company or any of its
Subsidiaries were not contaminated with any Hazardous Substance during the
period of ownership or operation by the Company or any of its Subsidiaries to
an extent reasonably likely to give rise to liability or remediation
obligations for the Company or any Subsidiary; (iv) neither the Company nor
any of its Subsidiaries is reasonably likely to be subject to liability or
remediation obligations for any Hazardous Substance disposal or management or
contamination at any other property to an extent reasonably likely to give
rise to liability or remediation obligations for the Company or any
Subsidiary under any Environmental Laws; (v) neither the Company nor any of
its Subsidiaries has received any notice, demand, letter, claim or request
for information indicating that the Company or any of its Subsidiaries may be
in violation of or subject to liability under any Environmental Law; (vi)
neither the Company nor any of its Subsidiaries is subject to any orders,
decrees, injunctions or other arrangements with any Governmental Entity or
any indemnity or other agreement with any third party relating to any
Environmental Law or Hazardous Substances; and (vii) there are no other
circumstances or conditions involving the Company or any of its Subsidiaries
that could reasonably be expected to result in any claims, liability,
investigations, costs or restrictions on the ownership, use, or transfer of
any property of the Company pursuant to any Environmental Law. As used
herein, the term "Environmental Law" means any federal, state, local or
foreign law, statute, ordinance, regulation, judgment, order, decree,
arbitration award, agency requirement, license, permit, authorization or
common law, relating to the protection, investigation or restoration of the
environment, health and safety, or natural resources. As used herein, the
term "Hazardous Substance" means any substance that is: (A) a pollutant or
contaminant or a hazardous or toxic chemical, waste, substance or material,
including any petroleum product or by-product, asbestos-containing material,
lead-containing paint or plumbing, polychlorinated biphenyls, radioactive
materials or radon; or (B) any other substance that may be the subject of
regulatory action by any Governmental Entity pursuant to any Environmental
Law.
(r) Intellectual Property. The Company and its Subsidiaries own, or have
the defensible right to use, the Intellectual Property used in their
respective businesses, except where the failure to own or have the right to
use such Intellectual Property, individually or in the aggregate, does not
and would not have a Material Adverse Effect on the Company. As used herein,
"Intellectual Property" means all industrial and intellectual property
rights, including Proprietary Technology, patents, patent applications,
trademarks, trademark applications and registrations, service marks, service
mark applications and registrations, copyrights, know-how, licenses, trade
secrets, proprietary processes, formulae and customer lists; and "Proprietary
Technology" means all proprietary processes, formulae, inventions, trade
secrets, know-how, development tools and other proprietary rights used by the
Company and its Subsidiaries pertaining to any product, software or service
manufactured, marketed, licensed or sold by the Company and its
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Subsidiaries or Parent and its Subsidiaries, as the case may be, in the
conduct of their business or used, employed or exploited in the development,
license, sale, marketing, distribution or maintenance thereof, and all
documentation and media constituting, describing or relating to the above,
including manuals, memoranda, know-how, notebooks, software, records and
disclosures.
(s) Properties. Schedule 3.1(s) lists all material real property and
material interests in real property owned by the Company or its Subsidiaries
or leased by the Company or its Subsidiaries as lessee or lessor, as well as
all material real property and material interests in real property used or
held for use as cell sites.
(t) Assets. All assets of the Company are in good operating condition and
sufficient for the Company's use thereof, normal wear and tear excepted,
except where such failure to be in good operating condition could not
reasonably be expected to result in a Material Adverse Effect. The Company
owns or has rights to use all assets necessary for the conduct of its
business and operations or reflected on the balance sheet included in the
most recent Form 10-Q filed by the Company with the SEC, except where the
lack of such ownership or rights could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect on the
Company.
(u) Insurance. The Company and its Subsidiaries are insured, and shall
continue to maintain insurance, in such amounts and against such losses and
risks as are consistent with industry practice and, in the reasonable
judgment of senior management of the Company, are adequate to protect the
properties and business of the Company and its Subsidiaries. As of the date
hereof, no written notice of cancellation or nonrenewal with respect to any
material insurance policy has been received by the Company or any of its
Subsidiaries. Copies of all such insurance policies have been furnished or
made available to Parent.
(v) Foreign Operations. Schedule 3.1(v) contains a complete list of foreign
nations in which the Company has a current investment or operation (and the
nature of Persons conducting such operations.)
(w) Tender Offer Matters. The consummation of the transactions contemplated
by Section 5.9 shall comply with all applicable laws including, without
limitation, all federal and state securities laws. None of the offer to
purchase or any of the related materials to be sent or delivered by the
Company in connection with the Tender Offer shall contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. The
supplemental indenture (the "Supplemental Indenture") to be entered into in
connection with the Tender Offer, upon execution by the Company and the
Trustee, shall be valid and enforceable and in full force and effect, and
neither the Company nor any of its Subsidiaries shall violate any provision
of, or commit or fail to perform any act which, with or without notice, lapse
of time, or both, could reasonably be expected to constitute a default under
the provisions of, any such Supplemental Indenture.
3.2 Joint and Several Representations and Warranties of Parent and Merger
Sub. Parent and Merger Sub jointly and severally represent and warrant to the
Company as follows:
(a) Organization, Standing and Power. Each of Parent and Merger Sub is a
corporation duly organized and is validly existing and in good standing under
the laws of the jurisdiction of its incorporation, and has the requisite
corporate power and corporate authority to own, lease, and operate its
properties and assets and to carry on its business as it is now being
conducted. Each of Parent and Merger Sub is duly qualified and in good
standing to do business in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such
qualification necessary, other than in such jurisdictions where the failure
so to qualify or be
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in good standing could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect on Parent.
(b) Authorization and Execution. Each of Parent and Merger Sub has the
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution,
delivery, and performance by each of Parent and Merger Sub of this Agreement
have been duly authorized by the Board of Directors of such corporation and
by Parent as sole stockholder of Merger Sub, and no further corporate action
of Parent or Merger Sub is necessary to consummate the transactions
contemplated hereby. Each of Parent and Merger Sub have duly executed and
delivered this Agreement, and this agreement constitutes the legal, valid,
and binding obligation of such party enforceable against it in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and similar laws relating to or
affecting creditors generally, by general equity principles (regardless of
whether such enforceability is considered in a proceeding in equity or at
law) or by an implied covenant of good faith and fair dealing.
(c) Parent Common Stock. The shares of Parent Common Stock to be issued
pursuant to Article I will, when issued, be duly authorized, validly issued,
fully paid and nonassessable, and no stockholder of Parent is entitled to
preemptive rights as a result of the issuance of the Parent Company Stock
hereunder. The Parent Common Stock to be issued in the Merger will, when
issued, be registered under the Securities Act and the Exchange Act and
registered or exempt from registration under any applicable state securities
laws, in each case for delivery hereunder to holders of Company Common Stock.
The Parent has available for issuance under its Organization Documents a
sufficient number of shares of authorized Parent Common Stock necessary to
satisfy Parent's obligations under this Agreement.
(d) No Conflicts. The execution and delivery of this Agreement does not or
will not, as the case may be, (i) conflict with or result in a breach of the
Articles or Certificate of Incorporation, Bylaws or similar organizational
documents, as currently in effect, of Parent or any of its "Significant
Subsidiaries" (as such term is defined in regulations promulgated under the
Securities Act or the Exchange Act), (ii) except for (A) the consents,
approvals, orders, authorizations, registrations, declarations and filing
required under or in relation to clause (x) of Section 3.1(c)(iii) and (B)
such consents, approvals, orders, authorizations, registrations, declarations
and filings the failure of which to make or obtain could not reasonably be
expected to have a Material Adverse Effect on Parent or impair or delay the
ability of Parent or consummate the transactions contemplated hereby, require
any filing with, or consent or approval of, any Government Entity having
jurisdiction over any of the business or assets of Parent or any of its
Significant Subsidiaries, (iii) violate any statute, law, ordinance, rule or
regulation applicable to Parent or any of its Significant Subsidiaries or any
injunction, judgment, order, writ, or decree to which Parent or any of its
Significant Subsidiaries is subject, or (iv) result in a breach of, or
constitute a default or an event which, with the passage of time or the
giving of notice, or both, would constitute a default, give rise to a right
of termination, cancellation, or acceleration, create any entitlement of any
third party to any material payment or benefit, require the consent of any
third party, or result in the creation of any lien on the assets or stock of
Parent or any of its Significant Subsidiaries, except, in the case of clauses
(ii), (iii) and (iv), where the violation, breach, default, termination,
cancellation, acceleration, payment, benefit, or lien, or the failure to make
such filing or obtain such consent or approval could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on
Parent.
(e) Reports and Financial Statements.
(i) Parent has filed all required reports, schedules, forms,
statements and other documents required to be filed by it with the SEC
since January 1, 1996 (collectively,
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including all exhibits thereto and documents incorporated by reference
therein, the "Parent SEC Reports"). None of the Parent SEC Reports, as
of their respective dates (and, if amended or superseded by a filing
prior to the date of this Agreement, then on the date of such filing),
contained or will contain any untrue statement of a material fact or
omitted or will omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of the
financial statements (including the related notes) included in the
Parent SEC Reports presents fairly, in all material respects, the
consolidated financial position and consolidated results of operations
and cash flows of Parent and its Subsidiaries as of the respective
dates or for the respective periods set forth therein, all in
conformity with GAAP consistently applied during the periods involved
except as otherwise noted therein, and subject, in the case of the
unaudited interim financial statements, to normal and recurring
year-end adjustments that have not been and are not expected to be
material in amount. All of such Parent SEC Reports, as of their
respective dates (and as of the date of any amendment to the
respective Parent SEC Report), complied as to form in all material
respects with the applicable requirements of the Securities Act and
the Exchange Act and the rules and regulations promulgated thereunder.
(f) Proxy Statement/Registration Statement. The Registration Statement
shall not at the time the Registration Statement is declared effective by the
SEC contain any untrue statement of a material fact or omit to state any
material fact required to be stated in the Registration Statement or
necessary in order to make the statements in the Registration Statement, in
light of the circumstances under which they were made, not misleading
(excluding any statement based upon information supplied by the Company for
inclusion in the Proxy Statement). The information to be supplied by Parent
for inclusion in the Registration Statement shall not on the date the Proxy
Statement is first mailed to shareholders of the Company, at the time of the
Company Shareholders' Meeting, and at the Effective Time, contain any
statement that, at such time and in light of the circumstances under which it
shall be made, is false or misleading with respect to any material fact, or
omit to state any material fact necessary in order to make the statements
made in the Proxy Statement not false or misleading.
(g) Absence of Certain Changes or Events. Except as expressly disclosed in
the Parent SEC Reports filed prior to the date of this Agreement, since June
30, 1998, there has not been a Material Adverse Effect on Parent or any
development or combination of developments of which management of Parent has
knowledge which is reasonably likely to result in such an effect.
(h) No Vote Required. No vote or approval of the holders of any class of
Parent shares is necessary to approve this Agreement and the transactions
contemplated hereby.
(i) Brokers or Finders. No agent, broker, investment banker, financial
advisor or other firm or Person engaged by Parent or Merger Sub is or will be
entitled to any broker's or finder's fee or any other similar commission or
fee from the Company or its Subsidiary in connection with any of the
transactions contemplated by this Agreement.
(j) Ownership of Company Common Stock. Except for Company Common Shares
which Parent may acquire pursuant to the terms of the Option Agreement and
the Voting Agreements, Parent "beneficially owns" (as such terms are used in
connection with Rule 13d-3 under the Exchange Act) less than 1% of the
outstanding Company Common Shares.
(k) Merger Sub. Merger Sub was formed solely for the purpose of effecting
the Merger and has not engaged in any business activities or conducted any
operations other than in connection with the Merger. Except for obligations
or liabilities incurred in connection with its incorporation or organization
and the transactions contemplated by this Agreement, and except
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for this Agreement and any other agreements or arrangements contemplated by
this Agreement, Merger Sub has not incurred, directly or indirectly, through
any subsidiary or affiliate, any obligations or liabilities or entered into
any agreement or arrangements with any person.
ARTICLE IV.
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 Covenants of the Company. During the period from the date of this
Agreement and continuing until the Effective Date (except as expressly permitted
by this Agreement or as otherwise indicated in Schedules 4.1 or to the extent
that Parent shall otherwise consent in writing), the Company and its
Subsidiaries shall carry on their respective businesses in the usual, regular
and ordinary course in all material respects, in substantially the same manner
as heretofore conducted, and shall use reasonable best efforts to preserve their
relationships with employees, Governmental Entities, customers, suppliers and
others having business dealings with them with the objective that their ongoing
businesses shall not be impaired at the Effective Time. In furtherance and not
in limitation of the foregoing, until the Effective Time (except as expressly
permitted by this Agreement or as otherwise indicated in the Company Disclosure
Schedule or to the extent that Parent shall otherwise consent in writing):
(a) Dividends; Changes in Share Capital. The Company shall not, and shall
not permit any of its Subsidiaries to, and shall not propose to, (i) declare
or pay any dividends on or make other distributions in respect of any of its
capital stock, except dividends by the Company's wholly-owned Subsidiaries in
the ordinary course of business consistent with past practice, (ii) split,
combine, subdivide or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in respect of, in
lieu of or in substitution for, shares of its capital stock, except for any
such transaction by a wholly-owned Subsidiary of the Company which remains a
wholly-owned Subsidiary after consummation of such transaction, or (iii)
repurchase, redeem or otherwise acquire any shares of its capital stock or
any securities convertible into or exercisable for any shares of its capital
stock.
(b) Securities. The Company and its Subsidiaries shall not issue, deliver,
sell, dispose, pledge or encumber, or authorize or propose the issuance,
delivery, sale, disposition, pledge or encumbrance of, any shares of its
capital stock of any class or other securities or any securities convertible
into or exercisable or exchangeable for, or any rights, warrants, calls,
commitments or options to acquire, any such shares or securities, or enter
into any agreement with respect to any of the foregoing and shall not amend
any equity-related awards issued pursuant to the Company Benefit Plans, other
than the issuance of Company Common Stock upon the exercise of stock options
issued in the ordinary course of business and consistent with past practice
in accordance with the terms of the Company Stock Option Plans as in effect
on the date of this Agreement.
(c) Organizational Documents and Funding. The Company and its Subsidiaries
shall not amend or propose to amend their respective Organizational
Documents.
(d) Investments and Loans. The Company shall not, and shall not permit any
of its Subsidiaries to, (i) incur any indebtedness for borrowed money or
guarantee, endorse or assume any obligation of other Persons other than
indebtedness of the Company or any of its Subsidiaries to the Company or any
wholly owned Subsidiary of the Company; provided, however, that the Company
may incur indebtedness under its current bank credit facilities such that the
total amount outstanding thereunder does not exceed the amounts set forth on
Schedule 4.1(d)(i) to the extent and for the purposes set forth on such
schedule plus any amounts necessary to comply with Section 5.9, (ii) make any
loans, advances or capital contributions to, or investments in, any other
Person, other than by the Company or any of its
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Subsidiaries to or in the Company or any of its wholly-owned Subsidiaries,
except for loans, advances, capital contributions or investments in Persons
that are entities in whom the Company has investments as of the date of this
Agreement, made in the ordinary course of business, consistent with past
practice, in respect of the Company's current line of business (and after
consultation with Parent) which in the aggregate do not exceed two million
dollars, or (iii) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than in the ordinary course of business consistent with
past practice.
(e) Compensation. The Company and its Subsidiaries shall not (i) grant any
increases in the compensation of any of its directors, officers or employees,
except in the ordinary course of business consistent with past practice, (ii)
pay or award or agree to pay or award any pension, retirement allowance, or
other nonequity incentive awards, or other employee benefit, not required by
any outstanding employee benefit plans or arrangements to any current or
former director, officer or employees, whether past or present, or to any
other Person, except for payments or awards that are in the ordinary course
of business, consistent with past practice, and that are not material;
provided, however, that the Company and its Subsidiaries may pay cash bonuses
for 1998 in the ordinary course of business consistent with past practice not
to exceed the amount set forth in Schedule 4.1(e)(ii), (iii) reprice, pay or
award or agree to reprice, pay or award any stock option or equity incentive
awards, (iv) enter into any new or amend any existing employment agreement
with any director, officer or employee, except for employment agreements with
new employees entered into in the ordinary course of business consistent with
past practice and except with respect to employees who are not officers,
executives or directors of the Company or its Subsidiaries, for amendments in
the ordinary course of business, consistent with past practice, that do not
materially increase benefits or payments, (v) enter into any new or amend any
existing severance agreement with any current or former director, officer or
employee, except with respect to employees who are not officers, executives
or directors of the Company or its Subsidiaries, for agreements or amendments
in the ordinary course of business, consistent with past practice, that do
not provide for materially increased benefits, (vi) other than the
acceleration of outstanding Company Stock Options and payments under the
Company's Five Year Incentive Plan, and other payments, in each case as set
forth in Schedule 4.1(e)(vi), enter into any agreement or exercise any
discretion providing for acceleration of payment or performance as a result
of a change of control of the Company or its Subsidiaries or (vii) become
obligated under any new employee benefit plan or arrangement, which was not
in existence on the date hereof or amend or exercise discretion pursuant to
any such employee benefit plan or arrangement in existence on the date
hereof, except for any such amendment applicable only to employees who are
not officers, executives or directors of the Company or its Subsidiaries or
exercise of discretion in the ordinary course of business, consistent with
past practice (that does not disproportionately effect officers, executives
or directors as opposed to other employees);
(f) Extraordinary Transactions. The Company and its Subsidiaries shall not
adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of the
Company or any of its Subsidiaries;
(g) Acquisitions; Other Uses of Funds. The Company and its Subsidiaries
shall not make any acquisition, by means of merger, consolidation or
otherwise, of (i) any direct or indirect ownership interest in or assets
comprising any business enterprise or operation or spectrum or (ii) except in
the ordinary course and consistent with past practice, any other assets;
(h) Wireless Assets. The Company and its Subsidiaries shall not make any
disposition of any direct or indirect ownership interest in or assets
comprising any tower or wireless system or
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part thereof or cell site or any other local service or access system
(including any shares of capital stock of any Subsidiary holding any such
interest) or other investment (other than cash equivalents) or material
business enterprise or operation (except for the replacement or upgrade of
assets, or disposition of redundant assets, in each case in the ordinary
course and consistent with past practice), except sales of individual assets
(other than inventory) in the ordinary course and consistent with past
practice not exceeding, in the aggregate, $1,000,000;
(i) Line of Business. The Company and its Subsidiaries shall not (i) make
any investment in a Person with operations in any foreign nation other than
in those Persons listed Schedule 4.1(i) (and only if such Persons continue to
operate only in the nations listed on Schedule 3.1(v)) or (ii) engage in the
conduct of any business or in any nation other than the wireless
telecommunications and related businesses conducted as of the date hereof and
in the nations where so conducted or in any planned expansion thereof as
disclosed to Parent in writing prior to the date hereof;
(j) Expenditures. For any quarter, the Company and its Subsidiaries shall
not make any capital expenditures in excess of the total amount set forth for
capital expenditures for such quarter in Schedule 4.1(j); provided that any
amounts not spent in prior quarters permitted hereunder may be spent in
succeeding quarters, and any amounts set forth for a particular quarter may
be accelerated and spent in the immediately preceding quarter. The Company
shall not enter into any contracts, arrangements or understandings requiring
capital expenditures at times or in amounts other than as set forth in the
preceding sentence;
(k) Affiliates. The Company and its Subsidiaries shall not enter into, or
amend or waive any right under, any agreement with any Affiliates of the
Company (other than its Subsidiaries) or with International Wireless
Communications Holdings, Inc. or its Affiliates;
(l) Claims. The Company and its Subsidiaries shall not (i) settle or
compromise any material claims (including without limitation Tax claims) or
material litigation; (ii) except in the ordinary course of business
consistent with past practice, prepay or terminate any Company Material
Contracts; or (iii) except in the ordinary course of business, modify,
prepay, amend or terminate any other material agreement of the Company or any
Subsidiary or waive, release or assign any material rights or claims;
(m) Certain Agreements. The Company and its Subsidiaries shall not enter
into any agreement containing any provision or covenant limiting the ability
of the Company or its Subsidiary to (i) sell any products or services of or
to any other person, (ii) engage in any line of business or (iii) compete
with or to obtain products or services from any person or limiting the
ability of any person to provide products or services to the Company or any
of its Subsidiaries;
(n) Tax and Accounting. Neither the Company nor any of its Subsidiaries
shall make or rescind any material Tax election (other than the making of
such elections in the ordinary course of business consistent with past
practice, which elections are required to be made on a periodic basis),
settle or compromise any material Tax liability or change any of its methods
of accounting for Tax or other purposes, except as may be required by
applicable law or by the rules and pronouncements of the Securities and
Exchange Commission;
(o) Other Actions. The Company shall not, and shall not permit any of its
Subsidiaries to, take any action that could reasonably be expected to result
in (i) any of the representations or warranties of the Company set forth in
this Agreement that are qualified as to materiality becoming untrue, or any
of the representations or warranties of the Company set forth in this
Agreement that are not so qualified becoming untrue in any material respect
or (ii) except as
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otherwise permitted by Section 5.4, any of the conditions to the Merger set
forth in Article VI not being satisfied.
(p) Intention. The Company and its Subsidiaries shall not enter into any
agreement, commitment, or obligation to take any action prohibited by this
Section.
4.2 Reasonable Efforts. Subject to Parent's rights to delay the Closing as
set forth in Section 2.1, each of the Company and Parent and their respective
Subsidiaries shall use their reasonable commercial efforts to effectuate the
transactions contemplated hereby and to cause to be fulfilled the conditions to
Closing under this Agreement, and the Company shall use its commercially
reasonable efforts to comply with and to effectuate the Voting Agreements and
the Option Agreement. Notwithstanding the foregoing or anything in this
Agreement to the contrary, (i) (A) neither the Company nor any of its
Subsidiaries shall, without Parent's prior written consent, commit to any
divestiture or hold separate or similar transaction and each of the Company and
its Subsidiaries shall commit to, and shall use reasonable efforts to effect,
such a transaction (which may, at the Company's option, be conditioned upon and
effective as of the Effective Time) as Parent shall request, and (B) neither
Parent nor any of its Subsidiaries shall be required to divest or hold separate
or otherwise take (or refrain from taking) or commit to take (or refrain from
taking) any action that limits its freedom of action with respect to, or its
ability to retain, the Company or any of its Subsidiaries or any material
portion of the assets of the Company and its Subsidiaries, or any of the
business, product lines or assets of Parent or any of its Subsidiaries, except
(1) Parent shall take such action with respect to personal communications
services ("PCS") spectrum in the Company's geographic cellular service areas as
is required to comply with the FCC's spectrum aggregation rules and policies or
shall obtain a timely waiver of such rules and policies and (2) any such
divestiture, requirement to hold separate, or limitation that arises after
Parent or any of its Subsidiaries engages in, or agrees to engage in, a merger,
acquisition or other business combination transaction after the date hereof (and
which has not been publicly announced prior to the date hereof), but would not
have arisen but for Parent engaging in or agreeing to engage in such
transaction, and (ii) nothing in this Agreement shall prevent or restrict Parent
and its Subsidiaries from engaging in any merger, acquisition or business
combination transaction; provided that such merger, acquisition or, business
combination transaction would not (x) prevent, or delay beyond the Outside Date
the ability of Parent to consummate the Merger or (y) cause the Merger to fail
to qualify as a reorganization within the meaning of Section 368(a) of the Code.
4.3 NYSE Listing. Parent will use reasonable best efforts to cause the shares
of Parent Common Stock to be listed at the Effective Time on the NYSE.
4.4 Advice of Changes; Government Filings. Each party shall (a) confer on a
regular and frequent basis with the other, (b) report (to the extent permitted
by law, regulation and any applicable confidentiality agreement) on the
Company's operational matters and (c) promptly advise the other orally and in
writing of (i) any representation or warranty made by it contained in this
Agreement that is qualified as to materiality or Material Adverse Effect
becoming untrue or inaccurate in any respect or any such representation or
warranty that is not so qualified becoming untrue and inaccurate in may material
respect, (ii) the failure by it (A) to comply with or satisfy in any respect any
covenant, condition or agreement required to be complied with or satisfied by it
under this Agreement that is qualified as to materiality or Material Adverse
Effect or (B) to comply with or satisfy in any material respect any covenant,
condition or agreement required to be complied with or satisfied by it under
this Agreement that is not so qualified as to materiality or (iii) any change,
event or circumstance that has had or could reasonably be expected to have a
Material Adverse Effect on such party or materially adversely affect its ability
to consummate the Merger in a timely manner; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
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under this Agreement. The Company and Parent shall file all reports required to
be filed by each of them with the FCC and the SEC (and all other Governmental
Entities) between the date of this Agreement and the Effective Time and shall
(to the extent permitted by law or regulation or any applicable confidentiality
agreement) deliver to the other party copies of all such reports promptly after
the same are filed. Each party agrees that, to the extent practicable, it will
consult with the other party with respect to the obtaining of all permits,
consents, approvals and authorizations of all third parties and Governmental
Entities necessary or advisable to consummate the transactions contemplated by
this Agreement and each party will keep the other party apprised of the status
of matters relating to completion of the transactions contemplated hereby.
4.5 Control of Other Party's Business. Nothing contained in this Agreement
shall give the Company, directly or indirectly, the right to control or direct
Parent's operations prior to the Effective Time. Nothing contained in this
Agreement shall be given Parent, directly or indirectly, the right to control or
direct the Company's operations prior to the Effective Time. Prior to the
Effective Time, each of the Company and Parent shall exercise, consistent with
the terms and conditions this Agreement, complete control and supervision over
its respective operations.
ARTICLE V.
ADDITIONAL AGREEMENTS
5.1 Preparation of Proxy Statement/Registration; Company Shareholder Meeting.
(a) As promptly as practicable after the execution of this Agreement,
Parent and the Company shall prepare and file with the SEC a proxy
statement/prospectus (the "Proxy Statement") to be sent to the shareholders
of the Company in connection with the Company Shareholders' Meeting to
consider the Merger and the issuance of Parent Common Stock in connection
therewith, and Parent shall prepare and file with the SEC a registration
statement on Form S-4 pursuant to which the shares of Parent Common Stock to
be issued in the Merger will be registered under the Securities Act (the
"Registration Statement"), in which the Proxy Statement will be included as a
prospectus. Parent may delay the filing of the Registration Statement until
after the Proxy Statement has been declared effective. Parent and the Company
shall use reasonable best efforts to cause the Registration Statement to
become effective as soon after the filing as practicable. The Proxy Statement
shall include the unanimous recommendation of the Board of Directors of the
Company in favor of this Agreement and the Merger unless the Board is not
required to make such recommendation pursuant to clause (e) below. Parent and
the Company shall make all other necessary filings with respect to the Merger
under the Securities Act and the Exchange Act and the rules and regulations
thereunder. If at any time before the Effective Time any event relating to
the Company or Parent, or any of its affiliates, officers, or directors, is
discovered by the Company or Parent, respectively, that should be set forth
in an amendment to the Registration Statement or a supplement to the Proxy
Statement, such party shall promptly so inform the other.
(b) The Company shall take all action necessary to cause the representation
set forth in Section 3.1(e) to be true and correct at all applicable times
with respect to each of the Proxy Statement and the Registration Statement.
(c) Parent shall take all action necessary to cause the representation set
forth in Section 3.2(f) to be true and correct at all applicable times with
respect to each of the Proxy Statement and the Registration Statement.
(d) As soon as reasonably practicable, the Company and Parent shall take
all such actions as may be necessary to comply with state "blue sky" or
securities laws in connection with the transactions contemplated by this
Agreement.
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(e) The Company shall, as soon as practicable following the date of this
Agreement, duly call, give notice of, convene and hold a meeting of its
shareholders (the "Company Shareholders Meeting") for the purpose of
obtaining the Required Company Votes with respect to this Agreement. The
Board of Directors of the Company shall unanimously recommend adoption of
this Agreement by the shareholders of the Company and, upon Parent's request,
reconfirm such recommendation (provided that the Board of Directors of the
Company need not (1) make or reconfirm such recommendation (x) if at the time
that it would otherwise be required to make or reconfirm such recommendation
the Company is not then in breach of its obligations under Section 5.4 and
(y) in such event, if and only to the extent that the Board of Directors of
the Company concludes in good faith (after having consulted with and
considered the advice of outside legal counsel) in connection with the
receipt of a Superior Proposal that such action is necessary in order for its
directors to comply with their respective fiduciary duties under applicable
law, or reconfirm such recommendation (2) reconfirm such recommendation if no
other Acquisition Proposal is pending or in Parent's reasonable judgment
likely to become pending. Subject to the foregoing, the Company shall use
reasonable best efforts to solicit such adoption.
5.2 Access to Information. Upon reasonable notice, the Company and its
Subsidiaries shall afford to the officers, employees, accountants, counsel,
financial advisors and other representatives of Parent reasonable access during
normal business hours, during the period prior to the Effective Time, to all its
personnel, properties, books, contracts, commitments and records and, during
such period, the Company and its Subsidiaries shall furnish promptly to Parent
(a) a copy of each report, schedule, registration statement and other document
filed, published, announced or received by it during such period pursuant to the
requirements of Federal or state securities laws, as applicable (other than
reports or documents which such party is not permitted to disclose under
applicable law) and (b) consistent with its legal obligations, all other
information concerning its business, properties and personnel as Parent may
reasonably request; provided, however, the Company may restrict the foregoing
access to the extent that (i) a Governmental Entity requires the Company or any
of its Subsidiaries to restrict access to any properties or information
reasonably related to any such contract on the basis of applicable laws and
regulations with respect to national security matters or (ii) any law, treaty,
rule or regulation of any Governmental Entity applicable to the Company or its
Subsidiaries requires the Company or its Subsidiaries to restrict access to any
properties or information.
5.3 Approvals and Consents; Cooperation. Subject to Section 4.2, each of the
Company and Parent shall cooperate with each other and use (and shall cause
their respective Subsidiaries to use) its reasonable best efforts to take or
cause to be taken all actions, and do or cause to be done all things, necessary,
proper or advisable on their part under this Agreement and applicable laws to
consummate and make effective the Merger and the other transactions contemplated
by this Agreement as soon as practicable, including (i) preparing and filing
promptly, after consulting with the other party and providing an opportunity to
review related documentation in advance, all documentation to effect all
necessary applications, notices, petitions, filings, tax ruling requests and
other documents and to obtain all consents, waivers, licenses, registrations,
permits, authorizations, tax rulings and authorizations necessary or advisable
to be obtained from any third party and/or any Governmental Entity in order to
consummate the Merger or any of the other transactions contemplated by this
Agreement and (ii) taking all reasonable steps as may be necessary to obtain all
such consents, waivers, licenses, registrations, permits, authorizations, tax
rulings, orders and approvals. Without limiting the generality of the foregoing,
the Company and Parent agree to make all necessary filings in connection with
the Required Regulatory Approvals promptly following the date of this Agreement,
and to use its reasonable best efforts to furnish or cause to be furnished, as
promptly as practicable, all information and documents requested with respect to
such Required
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Regulatory Approvals and shall otherwise cooperate with the applicable
Governmental Entity in order to obtain any Required Regulatory Approvals.
Subject to Section 4.2, each of the Company and Parent shall use its reasonable
best efforts to resolve such objections, if any, as any Governmental Entity may
assert with respect to this Agreement and the transactions contemplated hereby
in connection with the Required Regulatory Approvals in as expeditious a manner
as possible. Subject to Section 4.2, in the event that a suit is instituted by
a Person or Governmental Entity challenging this Agreement and the transactions
contemplated hereby as violative of applicable antitrust or competition laws or
the Communications Act, each of the Company and Parent shall use its reasonable
best efforts to resist or resolve such suit. The Company and Parent each shall,
upon request by the other, furnish the other with all information concerning
itself, its Subsidiaries, directors, officers and shareholders and such other
matters as may be reasonably be necessary or advisable in connection with the
Proxy Statement or any other statement, filing, tax ruling request, notice or
application made by or on behalf of the Company, Parent or any of their
respective Subsidiaries to any third party and/or any Governmental Entity in
connection with the Merger or the other transactions contemplated by this
Agreement.
5.4 Acquisition Proposals. The Company agrees that it and its Subsidiaries,
officers, directors, employees, agents and representatives (including any
investment banker, attorney or accountant retained by it) shall not, directly or
indirectly, initiate, solicit, encourage or otherwise facilitate any inquiries
or the making of any proposal or offer with respect to a merger, reorganization,
share exchange, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving, or any purchase of
any substantial portion of the assets of, or any equity securities of, or any
transaction that would involve the transfer or potential transfer of control of,
the Company (any such proposal or offer being hereinafter referred to as an
"Acquisition Proposal") and has terminated any discussions or negotiations with,
and the provision of information or data to, any Person (other than Parent)
respecting an Acquisition Proposal. The Company further agrees that it and its
Subsidiaries, officers, directors, employees, agents and representatives
(including any investment banker, attorney or accountant retained by it) shall
not, directly or indirectly, provide any confidential information or data to any
Person relating to or in contemplation of an Acquisition Proposal or engage in
any negotiations or discussions relating to or in contemplation of an
Acquisition Proposal; provided, however, that nothing contained in this
Agreement shall prevent the Company or its Board of Directors from (a) complying
with Rule 14e-2 promulgated under the Exchange Act with regard to any
Acquisition Proposal; and (b) if any only to the extent that the Board of
Directors of the Company concludes in good faith (after having consulted with
and considered the advice of outside legal counsel) that such Acquisition
Proposal would, if consummated, result in a transaction more favorable to the
Company shareholders from a financial point of view than the transaction
contemplated by this Agreement (any such more favorable Acquisition Proposal
being referred to in this Agreement as a "Superior Proposal"), until the
Required Company Vote has been obtained, the Company may furnish or cause to be
furnished confidential information or data and may participate in such
negotiations and discussions but only if (i) the Company is not then in breach
of its obligations under this Section, (ii) (and only to the extent that) the
Board of Directors of the Company concludes in good faith (after having
consulted with and considered the advice of outside legal counsel) that such
action is necessary in order for its directors to comply with their respective
fiduciary duties under applicable law and (iii) confidentiality arrangements on
terms no less beneficial to the Company as those entered into by Parent are
entered into with respect thereto. The Company will notify Parent immediately if
any inquiries, proposals or offers respecting an Acquisition Proposal are
received by, any such information or data is requested from, or any such
discussions or negotiations are sought to be initiated or continued with, it or
any such Persons indicating, in connection with such notice, the name of such
Person and the material terms and conditions of any proposals or offers, and
shall keep Parent apprised with respect to the status and terms thereof. The
Company also will promptly request each Person that has heretofore executed a
confidentiality
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agreement in connection with its consideration of an Acquisition Proposal to
return all confidential information heretofore furnished to such Person by or
on behalf of it or any of its Subsidiaries and will not waive any "standstill"
provision of any such, or any other, agreement. The Company shall provide
Parent at least two business days advance notice of its intention to present to
its Board of Directors or accept any Superior Proposal and shall provide Parent
with a summary of the terms and conditions thereof. Notwithstanding the
foregoing, none of the actions set forth on Schedule 5.4 shall constitute an
Acquisition Proposal.
5.5 Employee Benefits.
(a) For a period of two years immediately following the Closing Date,
Parent shall or shall cause the Surviving Corporation to maintain in effect
employee benefit plans and arrangements which provide benefits which have a
value substantially comparable, in the aggregate, to the benefits provided by
the Company Benefit Plans (not taking into account the value of any benefits
under any such plans which are equity based); provided, that Parent at its
sole option may provide employee benefits to the Surviving Corporation which,
in the aggregate, are substantially comparable to those applicable to
similarly situated employees of Parent or its Subsidiaries. At the request of
Parent, the Company shall, prior to the Effective Time, terminate the
Company's 401(k) Plan effective immediately prior to the Effective Time. The
Company shall terminate the Company's Employee Stock Purchase Plan (the
"ESPP") for each fiscal quarter beginning on or after October 1, 1998 and
shall cease all offering periods that begin on or after September 30, 1998.
(b) For purposes of determining eligibility to participate, vesting and
accrual or entitlement to benefits where length of service is relevant under
any employee benefit plan or arrangement of Parent, the Surviving Corporation
or any of their respective Subsidiaries, employees of the Company and its
Subsidiaries as of the Effective Time shall receive service credit for
service with the Company and any of its Subsidiaries to the same extent such
service credit was granted under the Company Benefit Plans, subject to
offsets for previously accrued benefits and no duplication of benefits
(except that no such credit shall be applied for (i) benefit accrual or
entitlement purposes under defined benefit pension plans or the schedule of
benefits under Parent's severance pay and short term disability plans and
policies, (ii) eligibility to receive post- retirement ancillary benefits
(consisting at this time of medical, dental, death and telephone concession
benefits) or (iii) calculating Parent service for purposes of "bridging"
prior Parent service under Parent benefit plans).
(c) Parent shall cause the Surviving Corporation to assume and honor in
accordance with their terms (i) all written employment, severance and
termination plans and agreements (including change in control provisions) of
employees of the Company and its Subsidiaries provided to Parent on or prior
to the date of this Agreement and (ii) the Tax Reimbursement Agreements
identified in Schedule 5.5(c)(ii).
5.6 Fees and Expenses. Whether or not the Merger is consummated, all Expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such Expenses, except (a) if the
Merger is consummated, the Surviving Corporation shall pay, or cause to be paid,
any and all property or transfer taxes imposed on the Company or its
Subsidiaries (b) the Expenses incurred in connection with printing, filing and
mailing to shareholders of the Proxy Statement and the solicitation of
shareholder approvals shall be borne by the Company, and (c) as provided in
Section 7.2. As used in this Agreement, "Expenses" includes all reasonable
out-of-pocket expenses (including, without limitation, all fees and expenses of
counsel, accountants, investment bankers, experts and consultants to a party
hereto and its affiliates) incurred by a party or on its behalf in connection
with or related to the authorization, preparation, negotiation, execution and
performance of this Agreement and the transactions contemplated hereby,
including the
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preparation, printing, filing and mailing of the Proxy Statement and the
solicitation of shareholder approvals and all other matters related to the
transactions contemplated hereby.
5.7 Indemnification; Directors' and Officers' Insurance. The Surviving
Corporation shall cause to be maintained in effect (i) for a period of six years
after the Effective Time, the current provisions regarding indemnification of
officers and directors contained in the Organizational Documents of the Company
and its Subsidiaries and (ii) for a period of six years, the current policies of
directors' and officers' liability insurance and fiduciary liability insurance
maintained by the Company (provided that the Surviving Corporation may
substitute therefor policies of at least the same coverage and amounts
containing terms and conditions which are, in the aggregate, no less
advantageous to the insured) with respect to claims arising from facts or events
that occurred on or before the Effective Time, provided that the annual premium
therefor is not in excess of 200% of the last annual premium paid by the Company
prior to the date hereof, or if such premium is in excess of such amount, such
policies of directors' and officers' liability insurance and fiduciary liability
insurance providing for as much coverage as can be obtained for such amount.
5.8 Public Announcements. The Company and Parent shall use reasonable best
efforts to develop a joint communications plan and each party shall use
reasonable best efforts to ensure that, all press releases and other public
statements with respect to the transactions contemplated hereby shall be
consistent with such joint communications plan. Unless otherwise required by
applicable law or by obligations pursuant to any listing agreement with or rules
of any securities exchange, the Company shall consult with, and use reasonable
best efforts to accommodate the comments of, Parent before issuing any press
release or otherwise making any public statement with respect to this Agreement
or the transactions contemplated hereby.
5.9 Debentures. (a) Subject to compliance with this Section 5.9, the Company
may, at its election, commence a tender offer and consent solicitation (the
"Tender Offer") to purchase the Company's outstanding 9 3/8% Debentures due 2006
(the "Debentures") on the terms and conditions set forth in Schedule 5.9 hereto,
which shall effect the deletion of substantially all of the covenants in the
related Indenture, dated as of April 1, 1996, as amended by the First
Supplemental indenture thereto, dated as of April 1, 1996 (as so amended, the
"Indenture"), which may be deleted therefrom with the consent (the "Requisite
Consent") of a majority in principal amount of outstanding Debentures, as set
forth in Schedule 5.9 (the "Majority Covenants").
(b) The Tender Offer shall be commenced as promptly as practicable following
November 4, 1998, and, in any event, within three days following such date (the
"Third Day"). Except as may be required by law, the Company shall not extend the
consent date or expiration date of, or amend or waive any terms or conditions
of, the Tender Offer, or deem any condition thereof not to be satisfied, without
Parent's prior written consent (in its sole discretion), provided that, on any
scheduled consent date under the Tender Offer prior to November 25, 1998, the
Company may extend such consent date, for one business day, if on such consent
date the Requisite Consent has not been received.
(c) All documentation delivered in connection with the Tender Offer shall be
acceptable to Parent (in its sole discretion), and Parent shall be provided all
such documentation sufficiently in advance of the anticipated date of use of
such documentation to meaningfully review and comment on such documentation. The
Company shall provide Parent with (i) opinions of North Carolina and New York
counsel to the Company, addressed to both the Company and Parent, in form and
substance satisfactory to Parent (in its sole discretion) and as set forth in
Schedule 5.9 hereto respecting the commencement and consummation of the Tender
Offer and the execution and delivery of the Supplemental Indenture and (ii)
reliance letters permitting Parent and the Company to rely on any legal opinions
or certificates delivered in connection therewith.
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(d) If the Tender Offer is commenced (x) upon the receipt of the Requisite
Consent, the Company shall execute and use its best efforts to cause the Trustee
to execute the Supplemental Indenture at the Consent Time (as defined in the
Tender Offer) and (y) upon the expiration of the period for tendering Debentures
under the Tender Offer, if the conditions to consummation of the Tender Offer
have been satisfied, the Company shall accept for payment and purchase all
Debentures validly tendered thereunder and shall deliver such Debentures to the
Trustee under the Indenture for cancellation.
(e) Promptly following the expiration of the period for tendering Debentures
under the Tender Offer without Debentures being purchased thereunder, or upon
the Third Day if the Tender Offer shall not have been commenced by such day, the
Company shall make the deposit (the "Deposit") contemplated by Section 6.1A(1)
of the Indenture and shall use its best efforts to satisfy all other conditions
to the covenant defeasance provisions of Sections 6.1 and 6.1A of the Indenture
so that such covenant defeasance shall become effective with respect to all
Debentures as promptly as practicable thereafter.
5.10 Affiliate Letters. Prior to the mailing of the Joint Proxy
Statement/Prospectus, the Company shall deliver to Parent a list of names and
addresses of those Persons, that to the knowledge of the Company, are or may be
deemed to be as of the time of the Company Shareholders' Meeting "affiliates" of
the Company within the meaning of Rule 145 under the Securities Act and who own
Company Common Stock. There shall be added to such list the names and addresses
of any other Person subsequently identified by either Parent or the Company, as
the case may be (unless, in the case of Parent, an opinion of outside counsel to
the Company reasonably acceptable to Parent is provided to Parent that such
Person is not an affiliate), as a Person who may be deemed to be such an
affiliate; provided, however, that no such Person identified by Parent or the
Company, as the case may be, shall remain on such list of affiliates if Parent
or the Company, as the case may be, shall receive from the other party, on or
before the date of the Company Shareholders' Meeting, an opinion of outside
counsel reasonably satisfactory to Parent to the effect that such Person is not
such an affiliate. The Company shall use reasonable best efforts to deliver or
cause to be delivered to the other party, prior to the date of the Company
Shareholders' Meeting, from each such affiliate identified in the foregoing
lists (as the same may be supplemented as aforesaid) a letter dated as of the
Company Shareholders' Meeting in the form attached as Annex C hereto
(collectively, the "Affiliate Letter"). Parent shall not be required to maintain
the effectiveness of the S-4 Registration Statement or any other registration
statement under the Securities Act for the purposes of resale of Parent Common
Stock by such affiliates received in the Merger.
5.11 Year 2000 Compliance. The Company will use reasonable best efforts to
continue to take the actions set forth on Schedule 3.1(o).
ARTICLE VI.
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation to Effect the Merger. The
obligations of the Company, Parent and Merger Sub to effect the Merger are
subject to the satisfaction or, other than with respect to (e) below which shall
be non-waivable, waiver (by the party benefiting by such condition) on the
Closing Date of the following conditions:
(a) Shareholder Approval. The Company shall have obtained the Required
Company Vote.
(b) HSR Act. The waiting period (and any extension thereof) applicable to
the Merger under the HSR Act shall have been terminated or shall have
expired.
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(c) No Injunctions or Restraints, Illegality. No temporary restraining
order, preliminary or permanent injunction or other order issued by a court
or other Governmental Entity of competent jurisdiction shall be in effect and
have the effect of making the Merger illegal or otherwise prohibiting
consummation of the Merger.
(d) Registration Statements/Proxy Statement. The Registration Statement
shall have become effective under the Securities Act and shall not be the
subject of any stop order or proceedings seeking a stop order. The Proxy
Statement shall have been delivered to the shareholders of the Company in
accordance with the requirements of the Securities Act and the Exchange Act.
(e) Tax Opinions. The Company shall have received the opinion of Latham &
Watkins and Parent shall have received the opinion of Wachtell, Lipton, Rosen
& Katz, which opinions shall be dated as of the Closing Date, to the effect
that the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code and
substantially in the forms attached to the Company's and Parent's respective
Disclosure Schedules. In rendering such opinions, such firms may rely upon
representations and covenants, including those contained in certificates of
officers of the Company, Merger Sub and Parent, which representations and
covenants are in form and substance reasonably acceptable to such counsel.
(f) Listing. The shares of Parent Common Stock to be issued in the Merger
shall have been approved for listing on the New York Stock Exchange, subject
to official notice of issuance.
6.2 Additional Conditions to Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to effect the Merger are subject to the
satisfaction of, or waiver by Parent, on the Closing Date, of the following
additional conditions:
(a) Representations and Warranties. Each of the representations and
warranties of the Company set forth in this Agreement that is qualified as to
materiality or Material Adverse Effect shall have been true and correct when
made and shall be true and correct on and as of the Closing Date as if made
on and as of such date (other than representations and warranties which
address matters only as of a certain date which shall be true and correct as
of such certain date); and each of the representations and warranties of the
Company that is not so qualified shall have been true and correct in all
material respects when made and shall be true and correct in all material
respects on and as of the Closing Date as if made on and as of such date
(other than representations and warranties which address matters only as of a
certain date which shall be true and correct in all material respects as of
such certain date); and each of the representations and warranties of the
Company set forth in this Agreement shall be true and correct when made and
shall be true and correct on and as of the Closing Date (ignoring, for such
purposes, any qualification as to materiality, Material Adverse Effect or
similar language), except as could not, individually or in the aggregate with
all other failures to be true and correct, reasonably be expected to have a
Material Adverse Effect on the Company; and Parent and Merger Sub shall have
received a certificate of the chief executive officer and the chief financial
officer of the Company to such effect.
(b) Performance of Obligations. The Company shall have performed or
complied with all agreements and covenants required to be performed by it
under this Agreement at or prior to the Closing Date that are qualified as to
materiality or Material Adverse Effect and shall have performed or complied
in all material respects with all agreements and covenants required to be
performed by it under this Agreement at or prior to the Closing Date that are
not so qualified as to materiality or Material Adverse Effect, and Parent and
Merger Sub shall have received a
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certificate of the chief executive officer and the chief financial officer
of the Company to such effect.
(c) Contractual Consents. All (i) Required Consents and (ii) other consents
of any Person the failure of which to receive or obtain (individually or in
the aggregate) could reasonably be expected to have a Material Adverse Effect
on the Company shall have been obtained or given, in each case at not more
than immaterial cost and expense to the Company and Parent and with not more
than immaterial alteration of the Company's or its Subsidiary's rights or
obligations under any agreement, arrangement or instrument.
(d) Dissenting Shares. The number of shares with respect to which
dissenters' rights have been asserted shall not exceed 5% of the number of
outstanding shares of Company Common Stock.
(e) Required Regulatory Approvals. All authorizations, consents, orders and
approvals of, and declarations and filings with, and all expirations of
waiting periods imposed by, any Governmental Entity (other than the FCC or
the appropriate Governmental Entity under the HSR Act) which, if not obtained
in connection with the consummation of the transactions contemplated hereby,
could reasonably be expected to have a Material Adverse Effect on the Parent
or Company (collectively, "Company Required Regulatory Approvals"), shall
have been obtained, have been declared or filed or have occurred, as the case
may be, and all such Company Required Regulatory Approvals shall be in full
force and effect and shall not have any term, condition or restriction
unacceptable to Parent in its sole discretion (except as provided in Section
4.2).
(f) FCC Consents. The FCC shall have granted its consent to the
consummation of the transactions contemplated hereby ("FCC Consents"), such
FCC Consents shall have become a Final Order and be in full force and effect
and such FCC Consents shall not have any term, condition or restriction
unacceptable to Parent in its sole discretion except as provided in Section
4.2.
(g) Affiliate Letters. Parent shall have received an Affiliate Letter from
each Person identified as an affiliate pursuant to Section 5.10.
(h) Absence of Certain Changes or Events. Since the date of this Agreement,
there shall not have been any event, development or change of circumstance
that constitutes, has had, or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company.
(j) Suits; Actions. No suit, action, investigation or other proceeding by
any Governmental Entity shall have been instituted and be pending which
imposes, seeks to impose or reasonably would be expected to impose any
remedy, condition or restriction that would have a Material Adverse Effect on
the Company or that would materially restrict Parent's ownership or operation
of the Company (except as provided in Section 4.2).
(k) Debentures. Either (i) all Debentures shall have been covenant defeased
(and all conditions thereto satisfied) in accordance with the covenant
defeasance provisions of Sections 6.1 and 6.1A of the Indenture or (ii) the
Supplemental Indenture shall have become effective and the provisions thereof
shall have become operative and the Majority Covenants shall no longer apply
to or restrict the operations of the Company and its successors.
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6.3 Additional Conditions to Obligations of the Company. The obligations of
the Company to effect the Merger are subject to the satisfaction of, or waiver
by the Company on or prior to the Closing Date of the following additional
conditions:
(a) Representations and Warranties. Each of the representations and
warranties of Parent and Merger Sub set forth in this Agreement that is
qualified as to materiality or Material Adverse Effect shall have been true
and correct when made and shall be true and correct on and as of the Closing
Date as if made on and as of such date (other than representations and
warranties which address matters only as of a certain date which shall be
true and correct as of such certain date), and each of the representations
and warranties of each of Parent and Merger Sub that is not so qualified
shall have been true and correct in all material respects when made and shall
be true and correct in all material respects on and as of the Closing Date as
if made on and as of such date (other than representations and warranties
which address matters only as of a certain date which shall be true and
correct in all material respects as of such certain date), and the Company
shall have received a certificate of and executive officer of Parent to such
effect.
(b) Performance of Obligations of Parent. Parent shall have performed or
complied with all agreements and covenants required to be performed by it
under this Agreement at or prior to the Closing Date that are qualified as to
materiality or Material Adverse Effect and shall have performed or complied
in all material respects with all agreements and covenants required to be
performed by it under this Agreement at or prior to the Closing Date that are
not so qualified as to materiality, and the Company shall have received a
certificate of an executive officer of Parent to such effect.
(c) Required Regulatory Approvals. All authorizations, consents, orders and
approvals of, and declarations and filings with, and all expirations of
waiting periods imposed by, any Governmental Entity (other than the FCC or
the appropriate Governmental Entity under the HSR Act) which, if not obtained
in connection with the consummation of the transactions contemplated hereby,
could reasonably be expected to have a Material Adverse Effect on the Parent
(collectively, "Parent Required Regulatory Approvals"), shall have been
obtained, have been declared or filed or have occurred, as the case may be,
and all such Parent Required Regulatory Approvals shall be in full force and
effect.
ARTICLE VII.
TERMINATION AND AMENDMENT
7.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time, by action taken or authorized by the Board of Directors of the
terminating party or parties, whether before or after approval of the matters
presented in connection with the Merger by the shareholders of the Company:
(a) By mutual written consent of Parent and the Company, by action of their
respective Boards of Directors;
(b) By either the Company or Parent if the Merger shall not have been
consummated by the date which is 12 months from the date of this Agreement;
provided, however, that such date shall be extended to the date which is 18
months from the date of this Agreement in the event all conditions to effect
the Merger other than those set forth in Sections 6.1(b), 6.1(c), 6.2(c),
6.2(d), 6.2(e), 6.2(f), 6.2(j) and 6.3(c) (the "Extension Conditions") have
been or are capable of being satisfied at the time of such extension and the
Extension Conditions have been or are reasonably capable of being satisfied
on or prior to the date which is 18 months from the date of this Agreement,
as it may be so extended, shall be referred to herein as the "Outside Date");
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provided further that the right to terminate this Agreement under this
Section 7.1(b) shall not be available to any party whose failure to fulfill
any obligation under this Agreement has been the cause of, or resulting in,
the failure of the Merger to occur on or before such date;
(c) By either the Company or Parent if any Governmental Entity shall have
issued an order, decree or ruling or taken any other action (which order,
decree, ruling or other action the parties shall have used their reasonable
best effort to resist, resolve or lift, as applicable, subject to the
provisions of Section 5.3 and 4.2) permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement, and
such order, decree, ruling or other action shall have become final and
nonappealable;
(d) By either Parent or the Company if the approval by the shareholders of
the Company required for the consummation of the Merger or the other
transactions contemplated hereby shall not have been obtained by reason of
the failure to obtain the required vote at a duly held meeting of
shareholders or at any adjournment thereof;
(e) By Parent if (i) the Board of Directors of the Company shall have
withdrawn, or adversely modified, or failed (upon Parent's request) to
reconfirm its recommendation of the Merger or this Agreement (or determined
to do so); (ii) the Board of Directors of the Company shall have determined
to recommend to the shareholders of the Company that they approve an
Acquisition Proposal other than that contemplated by this Agreement or shall
have determined to accept a Superior Proposal; (iii) a tender offer or
exchange offer that, if successful, would result in any person or "group"
becoming a "beneficial owner" (such terms having the meaning in this
Agreement as is ascribed under Regulation 13D under the Exchange Act) of 20%
or more of the outstanding shares of Company Common Stock is commenced (other
than by Parent or an affiliate of Parent) and the Board of Directors of the
Company fails to recommend that the shareholders of the Company not tender
their shares in such tender or exchange offer; (iv) any person (other than
Parent or an Affiliate of Parent) or "group" becomes the "beneficial owner"
of 20% or more of the outstanding shares of Company Common Stock; (v) for any
reason the Company fails to call or hold the Company Shareholders Meeting by
the Outside Date (provided that Parent's right to terminate this Agreement
under such clause (vi) shall not be available if at such time the Company
would be entitled to terminate this Agreement under Section 7.1(h)) or (vii)
the Company shall have furnished or caused to be furnished confidential
information or data, or engaged in negotiations or discussions with, another
Person pursuant to clause (b) of the proviso to the second sentence of
Section 5.4;
(f) By the Company, prior to the Required Company Vote having been
obtained, if the Board of Directors of the Company determines to accept a
Superior Proposal, but only after the Company (i) provides Parent with not
less than 48 hours notice of its determination to accept such Superior
Proposal including all material terms thereof and (ii) fulfills its
obligations under Section 7.2 hereof upon such termination (provided that the
Company's right to terminate this Agreement under this paragraph (f) shall
not be available if the Company is then in breach of Section 5.4);
(g) By Parent, if since the date of this Agreement, there shall have been
any event, development or change of circumstance that constitutes, has had or
could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company and such Material Adverse Effect is
not cured within 30 days after written notice thereof or if (i)(A) the
Company has breached any covenant or agreement on the part of the Company or
any of its Subsidiaries set forth in this Agreement, the Voting Agreements or
the Option Agreement, (B) any representation or warranty of the Company or
any of its Subsidiaries set forth in this Agreement, the Voting Agreements or
the Option Agreement that is qualified as to materiality or Material Adverse
Effect shall have become untrue or (C) any representation or warranty of
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the Company or any of its Subsidiaries set forth in this Agreement, the
Voting Agreements or the Option Agreement that is not so qualified shall have
become untrue in any material respect, (ii) such breach or misrepresentation
is not cured within 30 days after written notice thereof and (iii) such
breach of misrepresentation would cause the conditions set forth in Section
6.2(a) or Section 6.2(b) not to be satisfied (a "Terminating Company
Breach");
(h) By the Company, if (i)(A) Parent has breached any covenant or agreement
on the part of Parent or Merger Sub set forth in this Agreement, the Voting
Agreements or the Option Agreement, (B) any representation or warranty of
Parent or Merger Sub that is qualified as to materiality or Material Adverse
Effect shall have become untrue or (C) any representation or warranty of
Parent or Merger Sub that is not so qualified shall have become untrue in any
material respect, (ii) such breach or misrepresentation is not cured within
30 days after written notice thereof and (iii) such breach or
misrepresentation would cause the conditions set forth in Section 6.3(a) or
Section 6.3(b) not to be satisfied (a "Terminating Parent Breach"). If at any
time after the Company Shareholders Meeting has been called, a Terminating
Parent Breach exists, and the Company has given Parent notice thereof, the
Company shall have the right to adjourn or delay the Company Shareholders
Meeting until up to 10 days after the Terminating Parent Breach has been
cured or the 30 day cure period has expired.
7.2 Effect of Termination.
(a) In the event of termination of this Agreement by either the Company or
Parent as provided in Section 7.1 this Agreement shall forthwith become void
(other than covenants in Section 4.2 respecting the Voting Agreements and the
Option Agreement) and there shall be no liability or obligation on the part
of Parent or the Company or their respective officers or directors except (i)
with respect to Section 5.6, this Section 7.2 and Article VIII and (ii) with
respect to any liabilities or damages incurred or suffered by a party as a
result of the willful and material breach by the other party of any of its
representations, warranties, covenants or other agreements set forth in this
Agreement.
(b) Parent and the Company agree that if this Agreement is terminated
pursuant to Section 7.1(d), (e), (f) or (g), then the Company shall pay
Parent an amount equal to the sum of Parent's Expenses up to an amount equal
to $2 million.
(c) Parent and the Company agree that if this Agreement is terminated
pursuant to Section 7.1 (h), then Parent shall pay to the Company an amount
equal to the sum of all of the Company's Expenses up to an amount equal to $2
million.
(d) Payment of expenses pursuant to Section 7.2(b) or 7.2(c) shall be made
not later than two Business Days after delivery to the other party of notice
of demand for payment and a documented itemization setting forth in
reasonable detail all Expenses of the party entitled to receive payment
(which itemization may be supplemented and updated from time to time by such
party until the 60th day after such party delivers such notice of demand for
payment). All payments under this Section 7.2 shall be made by wire transfer
of immediately available funds to an account designated by the party entitled
to receive payment.
(e) In addition to any payment required by the foregoing provisions of this
Section: (1) in the event that this Agreement is terminated pursuant to
Section 7.1(e) (other than clause (vii) thereof) or 7.1(f), then the Company
shall pay to Parent immediately prior to such termination, in the case of a
termination by the Company, or within two business days thereafter, in the
case of a termination by Parent, a termination fee of $52.5 million; (2), in
the event that this Agreement is terminated pursuant to Section 7.1(g) or
clause (vii) of Section 7.1(e), then the Company shall pay Parent, no later
than two days after the earlier to occur of (i) the date of entrance by the
Company or any of its Subsidiaries into an agreement concerning a transaction
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<PAGE>
that constitutes an Acquisition Proposal or (ii) the date any Person or
Persons (other than Parent) purchases 20% or more of the assets or voting
securities (in one or a series of transactions) of the Company and its
Subsidiaries (provided that the entering of any definitive agreement referred
to in clauses (i) and (ii) of this sentence is entered into by the Company or
any of its Subsidiaries, or if there is no such agreement with respect to a
purchase contemplated by clause (ii), any tender, exchange or other offer or
arrangement for the Company's voting securities is first publicly disclosed,
within 12 months of such termination of this Agreement; (provided further,
however, that a financing transaction constituting a sale and leaseback of
communications towers and related equipment shall not constitute a
transaction under clause (i) or (ii) above.)), a termination fee of $52.5
million; and (3) in the event the Agreement is terminated pursuant to Section
7.1(d), and none of the events described in clauses (i) and (ii) of
subsection (2) of this Section 7.2(e) has occurred, then the Company shall
pay to Parent, upon such termination, a termination fee of $30 million,
provided however that if, within 12 months of such termination of this
Agreement, an event described in clauses (i) and (ii) of subsection (2) of
this Section 7.2(e) occurs (other than a financing transaction constituting a
sale and leaseback of communications towers and related equipment), then, no
later than two days after the occurrence of any such event, the Company shall
pay Parent an additional termination fee of $22.5 million.
(f) If this Agreement is terminated pursuant to Section 7.1(h) and the
Company prior to the date of such termination consummated the Tender Offer,
then Parent will pay the Company an amount equal to the product of (x) $3.5
million and (y) the percentage of outstanding Debentures purchased under the
Tender Offer, plus all Company Expenses which may be owed pursuant to Section
7.2(c). If this Agreement is terminated pursuant to Section 7.1(h) and the
Company prior to the date of such termination irrevocably made the Deposit
pursuant to Section 5.9(e) hereof, then Parent will pay the Company an amount
equal to $4.5 million.
(g) If this Agreement is terminated pursuant to Section 7.1(b) and the
Company prior to the date of such termination consummated the Tender Offer,
then Parent will pay the Company an amount equal to the product of (x) $1.75
million and (y) the percentage of outstanding Debentures purchased under the
Tender Offer, plus all Company Expenses which may be owed pursuant to Section
7.2(c). If this Agreement is terminated pursuant to Section 7.1(b) and the
Company prior to the date of such termination irrevocably made the Deposit
pursuant to Section 5.9(e) hereof, then Parent will pay the Company an amount
equal to $2.25 million.
7.3 Amendment. This Agreement may be amended by the parties hereto, by action
taken or authorized by their respective Boards of Directors, at any time before
or after approval of the matters presented in connection with the Merger by the
shareholders of the Company, but after any such approval, no amendment shall be
made which by law or in accordance with the rules of Nasdaq required further
approval by such shareholders without such further approval. This Agreement may
not be amended except by an instrument in writing signed on behalf of each of
the parties hereto.
7.4 Extension; Waiver. At any time prior to the Effective Time, the parties
hereto by action taken or authorized by their respective Boards of Directors,
may, to the extent legally allowed) (i) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representation and warranties contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions contained herein (other than the condition set forth in
Section 6.1(e) which shall be non-waivable). Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only if set forth in
a written instrument signed on behalf of such party. The failure of any party to
this Agreement to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of those rights.
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<PAGE>
ARTICLE VIII.
GENERAL PROVISIONS
8.1 No Survival of Representations, Warranties and Agreements. None of the
representations, warranties, covenants and other agreements in this Agreement or
in any instrument delivered pursuant to this Agreement, including any rights
arising out of any breach of such representations, warranties, covenants and
other agreements, shall survive the Effective Time, except for those covenants
and agreements contained herein and therein that by their terms apply or are to
be performed in whole or in part after the Effective Time and this Article VIII.
Nothing in this Section 8.1 shall relieve any party for any breach of any
representation, warranty, covenant or other agreement in this Agreement
occurring prior to termination.
8.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed duly given (a) on the date of delivery if delivered
personally, (b) on the first Business Day following the date of dispatch if
delivered by a recognized next-day courier service, or (c) on the tenth Business
Day following the date of mailing if delivered by registered or certified mail,
return receipt requested, postage prepaid. All notices hereunder shall be
delivered as set forth below, or pursuant to such other instructions as may be
designated in writing by the party to receive such notice:
(a) if to Parent or Merger Sub, to AT&T Corp., 295 North Maple Avenue,
Basking Ridge, New Jersey, 07920, Attention: Marilyn Wasser, Facsimile No.
(908) 221-6618 with copies to Wachtell, Lipton, Rosen & Katz, 51 West 52(nd)
Street, New York, New York, 10019, Attention: David M. Silk, Facsimile No.
(212) 403-2000;
(b) if to the Company, to Vanguard Cellular Systems, Inc., 2002 Pisgah
Church Road, Suite 300, Greensboro, North Carolina, 27455, Attention: Richard
C. Rowlenson, Facsimile No. (336) 545-2219 with a copy to Latham & Watkins,
885 Third Avenue, New York, New York, 10022, Attention: Raymond Y. Lin,
Facsimile No.: (212) 751-4864.
8.3 Interpretation. When a reference is made in this Agreement to Sections,
Exhibits or Schedules, such reference shall be to a Section of or Exhibit or
Schedule to this Agreement unless otherwise indicated. The Table of Contents,
glossary of defined terms and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation".
8.4 Counterparts. This Agreement may be executed in one or more counterparts,
all of which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered to the other party, it being understood that both parties need not
sign the same counterpart.
8.5 Entire Agreement; No Third Party Beneficiaries.
(a) This Agreement constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof, other than the confidentiality agreement
and Option Agreement entered into by Parent and the Company in connection with
the transactions contemplated hereby, which shall survive the execution and
delivery of this Agreement.
(b) This Agreement shall be binding upon and inure solely to the benefit of
each party hereto, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other Person any right, benefit or remedy
of any nature whatsoever under or by reason of this Agreement, other than
Section 5.7 (which is intended to be for the benefit of the Persons covered
thereby and may be enforced by such Persons).
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<PAGE>
8.6 Governing Law. Except as to matters of internal corporation law, which
shall be governed by the laws of the State of North Carolina, in the case of the
Company, New York in the case of Parent and Delaware in the case of Merger Sub,
this Agreement shall be governed and construed in accordance with the laws of
the State of New York without giving effect to the principles of choice-of-law
thereof.
8.7 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any law or public policy, all
other terms and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally contemplated to
the greatest extent possible.
8.8 Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto, in whole
or in part (whether by operation of law or otherwise), without the prior written
consent of the other parties, and any attempt to make any such assignment
without such consent shall be null and void, except that Merger Sub may assign,
in its sole discretion, any or all of its rights, interests and obligations
under this Agreement to any direct or indirect wholly owned Subsidiary of Parent
without the consent of the Company, but no such assignment shall relieve Merger
Sub of any of its obligations under this Agreement. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
8.9 Enforcement. The parties agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms. It is accordingly agreed that the parties
shall be entitled to specific performance of the terms hereof, this being in
addition to any other remedy to which they are entitled at law or in equity.
8.10 Definitions. As used in this Agreement:
(a) "Board of Directors" means the Board of Directors of any specified
Person and any properly serving and acting committees thereof.
(b) "Business Day" means any day on which banks are not required or
authorized to close in the City of New York.
(c) "Material Adverse Effect" means, with respect to any entity, any
adverse change, circumstance or effect that, individually or in the aggregate
with all other adverse changes, circumstances and effects, is or is
reasonably likely to be materially adverse to the business, operations,
assets, liabilities (including, without limitation, contingent liabilities),
financial condition or results of operations of such entity and its
Subsidiaries taken as a whole or could reasonably be expected to prevent or
materially delay (beyond the Outside Date) consummation of the transactions
contemplated by this Agreement, other than any such changes, circumstances
and effects to the extent arising out of changes, circumstances or effects
occurring after, which did not occur before, the Approval Satisfaction Date
from (i) general economic conditions, or (ii) changes in the wireless
communications business generally that do not, in either case, significantly
disproportionately affect the Company.
(d) "Approval Satisfaction Date" means the date not before six months from
the date hereof, on which all conditions to the Closing under Section 6.1 and
6.2 have been satisfied or waived (other than 6.1(d), 6.1(e), 6.1(f) and
6.1(a), provided that the failure to satisfy 6.1(a)
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<PAGE>
is due to Parent's failure to cause 6.1(d) to occur and not as a result of
the Company's actions or failure to take action).
(e) "Final Order" means an order of the FCC approving the transfer of
control with respect to all FCC licenses, permits and other authorizations
held by the Company, and shall be deemed to be a Final Order when the time
for the filing of any protest, request for stay, petition or request for
reconsideration, petition for rehearing or appeal of such FCC order to the
FCC or any Governmental Authority having jurisdiction over such order, and
the time for review or reconsideration by the FCC on its own motion, has
expired and no protest, request for stay, petition or request for
reconsideration, petition for rehearing or appeal or review of such order is
pending.
(f) "Knowledge" or "to the knowledge" of the Company means the actual
knowledge of any of the persons specified in Schedule 8.10(f) after
reasonable inquiry.
(g) "the other party" means, with respect to the Company, Parent and means,
with respect to Parent, the Company.
(h) "Organizational Documents" means, with respect to any entity, the
articles of incorporation, by-laws, partnership or limited liability company
agreement and other governing documents of such entity, as applicable.
(i) "Person" means an individual, corporation, partnership, association,
trust, unincorporated organization, entity or group (as defined in the
Exchange Act).
(j) "Required Consents" means the consents to the agreements set forth in
Schedule 8.10(j).
(k) "Subsidiary" when used with respect to any party means any corporation,
partnership or other organization, whether incorporated or unincorporated,
(i) of which such party or any other Subsidiary of such party is a general
partner (excluding partnerships, the general partnership interests of which
held by such party or any Subsidiary of such party do not have a majority of
the voting and economic interests in such partnership) or (ii) at least a
majority of the securities or other interests of which having by their terms
ordinary voting power to elect a majority of the Board of Directors or others
performing similar functions with respect to such corporation, partnership or
other organization is directly or indirectly owned or controlled by such
party or by any one or more of its Subsidiaries, or by such party and one or
more of its Subsidiaries. Notwithstanding the above, nothing contained in
this Agreement shall be construed such that International Wireless
Corporation Holdings, Inc. or any of its subsidiaries may be deemed to be a
Subsidiary of the Company.
(l) (i) "Tax" (including, with correlative meaning, the terms "Taxes" and
"Taxable") means all federal, state, local and foreign income, profits,
franchise, gross receipts, environmental, customs duty, capital stock,
severance, stamp, payroll, sales, employment, unemployment disability, use,
property, withholding, excise, production, value added, occupancy and other
taxes, duties or assessments of any nature whatsoever, together with all
interest, penalties, fines and additions to tax imposed with respect to such
amounts and any interest in respect of such penalties and additions to tax,
and (ii) "Tax Return" means all returns and reports (including elections,
claims, declarations, disclosures, schedules, estimates, computations and
information returns) required to be supplied to a Tax authority in any
jurisdiction relating to Taxes.
(m) "Company Disclosure Schedule" means a disclosure schedule delivered by
the Company to Parent at the execution of this Agreement, which is
incorporated by reference into, and constitutes a part of, this Agreement.
Reference to particular "Schedules" are references to schedules contained in
the Company Disclosure Schedule.
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<PAGE>
IN WITNESS WHEREOF, Parent, the Company and Merger Sub have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of October 2, 1998.
AT&T CORP.
By:/s/Michael Berg
Name:Michael Berg
Title:General Attorney and
Assistant Secretary
WINSTON, INC.
By:/s/Michael Berg
Name:Michael Berg
Title:Vice President
VANGUARD CELLULAR SYSTEMS, INC.
By:/s/Stephen R. Leeolou
Name:Stephen R. Leeolou
Title:President and
Chief Executive Officer
December 28, 1998
AT&T Corp.
295 North Maple Avenue
Basking Ridge, New Jersey 07920
Re: Vanguard Executive Option Loans
Ladies and Gentlemen:
Reference is made to that certain Amended and Restated Agreement and
Plan of Merger dated as of October 2, 1998, (the "Merger Agreement"),
among you, your wholly owned subsidiary, Winston, Inc., and the undersigned,
pursuant to which the undersigned is proposed to be merged into Winston, Inc.
Further reference is made to certain proposed loans by the undersigned to
certain of its executives (the "Executives") to finance their exercise of stock
options and related income tax liabilities (the "Option Loans") as proposed to
be evidenced by promissory notes of the executives (the "Notes"), which Notes
will be secured by and/or entitled to the benefit of (a) Pledge Agreements
("Pledge Agreements") of the Executives and (b) Agreements Re Netting of
Payments ("Netting Agreements", and, together with the Notes and the Pledge
Agreements, the "Option Loan Documents") by the Executives.
The undersigned hereby agrees that, as a condition to the extension of
any Option Loan (other than an Option Loan to an Executive who is a party to
a Voting Agreement (as defined in the Merger Agreement)), the undersigned will
obtain and provide to you the written agreement of the Executive (for the
benefit of you) in the form of Exhibit A.
The undersigned further agrees that, without your prior consent, no
provision of any Option Loan Document will be amended, waived or otherwise
modified or compromised, no consent will be provided thereunder and the
Option Loan Documents will be enforced to the fullest extent.
By your acceptance of this letter, you hereby consent to the
undersigned's execution and delivery from time to time of Option Loan
Documents between the undersigned and its
<PAGE>
executives listed on Schedule I hereto in the form of the drafts of the Option
Loan Documents attached hereto and in respective amounts not to exceed the
amounts on Schedule I hereto.
This letter shall terminate and be of no further force and effect upon
any termination of the Merger Agreement.
VANGUARD CELLULAR SYSTEMS, INC.
By: /s/ Stephen R. Leelou
Title: President and Chief Executive Officer
ACCEPTED AND AGREED:
AT&T CORP.
By:/s/ Michael Berg
Title:General Attorney and
Assistant Secretary
<PAGE>
EXHIBIT A
[NAME AND ADDRESS OF EXECUTIVE VICE PRESIDENT]
_________________, 1999
Vanguard Cellular Systems, Inc.
2002 Pisgah Church Road, Suite 300
Greensboro, North Carolina 27455
AT&T Corp.
295 North Maple Avenue
Basking Ridge, New Jersey 07920
Re: Transfer of Vanguard Common Stock pledged under Pledge Agreement
Ladies and Gentlemen:
Reference is made to: (i) the Promissory Note or Promissory Notes of
even date herewith (the "Notes") made by the undersigned and payable to
Vanguard Cellular Systems, Inc. ("Vanguard"), and (ii) the Pledge Agreement
of even date herewith (the "Pledge Agreement") made by the undersigned in
favor of Vanguard. In consideration of a loan or loans made to the
undersigned by Vanguard this date, as evidenced by a Note or Notes and
secured by, among other things, the Pledge Agreement, the undersigned
executive of Vanguard, hereby agrees: (a) not to sell, transfer, dispose of,
encumber (except pursuant to the Pledge Agreement) or otherwise convey any
interest in any Pledged Securities (as defined in Pledge Agreement) prior to
the Merger (as defined in the Pledge Agreement) unless the Merger shall not
have been consummated on or before March 31, 1999 (it being understood that
if the Merger shall not have not have been consummated on or before March 31,
1999, the undersigned may thereafter sell or otherwise transfer or convey any
or all of the Pledged Securities so long as the Notes shall have been paid in
full prior to such sale) and (b) to be present and vote the Pledged
Securities, (i) in favor of adoption and approval of the Amended and Restated
Agreement and Plan of Merger dated as of October 2, 1998 among AT&T Corp.,
Winston, Inc. and Vanguard Cellular Systems, Inc. (the "Merger Agreement")
and the Merger (and each other action and transaction contemplated by the
Merger Agreement) and (ii) against any Acquisition Proposal (as defined in
the Merger Agreement) other than the Merger (or any other Acquisition
Proposal of Parent) and against any proposed action or transaction that would
prevent or intentionally delay consummation of the Merger (or other
Acquisition Proposal of Parent) or is otherwise inconsistent therewith at
every meeting of the stockholders of the Company at which any such matters
are considered and at every adjournment thereof (and, if applicable, in
connection with any request or solicitation of written consents of
stockholders). Any such vote shall be cast, or consent shall be given, in
accordance with such procedures relating thereto as shall ensure that it is
duly counted for purposes of determining that a quorum is present and for
purposes of recording the results of such vote or consent.
<PAGE>
(The capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to them in the Merger Agreement).
This letter shall terminate and be of no further force and effect upon
any termination of the Merger Agreement.
_________________________________
Name of Executive: ________________
<PAGE>
AGREEMENT RE NETTING OF PAYMENTS
This AGREEMENT RE NETTING OF PAYMENTS (this "Agreement") is made this __
day of December, 1998 between Vanguard Cellular Systems, Inc. (the "Company")
and __________________ (the "Executive").
WHEREAS, the Company has this date, and may from time to time hereafter,
extend one or more loans (the "Loans") to the Executive, evidenced by one or
more promissory notes of the Executive in favor of the Company (the "Notes"),
the proceeds of which loans are to be applied either (i) to the payment of the
exercise price of stock options of the Company held by the Executive (the
"Exercise Price Loans") or (ii) to the payment by the Company of income tax
obligations of the Executive in connection with the exercise of such options
(the "Tax Loans").
WHEREAS, the Company is party to a certain Agreement and Plan of Merger
dated as of October 2, 1998, as amended (the "Merger Agreement"), among AT&T
Corp., Winston, Inc. and the Company, pursuant to which the Company will be
merged with and into Winston, Inc. (the "Merger").
WHEREAS, (i) pursuant to certain employment, severance and termination
arrangements between the Company and certain of its employees, including the
Executive, and as contemplated by Section 5.5(c)(i) of the Merger Agreement and
items 6 and 7 of Schedule 4.1(e)(vi) to the Merger Agreement, (ii) pursuant to
certain tax reimbursement agreements between the Company and certain of its
employees, including the Executive, and as contemplated by Section 5.5(c)(ii)
of, and the related Schedule 5.5(c)(ii) to, the Merger Agreement and (iii)
pursuant to Section 1.7(b) of the Merger Agreement, the Executive may be
entitled, following consummation of the Merger, to certain change in control
severance payments and/or tax reimbursement payments as well as certain cash
payments in respect of the shares of the Company's Common Stock to be purchased
with the proceeds of the Exercise Price Loans (collectively, the "Merger
Payments") from Winston, Inc., as successor by merger to the Company.
WHEREAS, it is a condition of the Company's agreement to make the Loans
that the Notes be prepaid by the Merger Payments and that the Company be
entitled to set off against the amount of any Merger Payments to which the
Executive would be entitled any and all amounts accrued and outstanding under
the Notes, including without limitation, principal, interest, and any fees or
expenses owing thereunder, until such Notes are paid in full.
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto agree that:
1. NETTING OF PAYMENTS. Notwithstanding anything to the contrary in
the Merger Agreement, at any time when any Note shall remain outstanding, the
Company shall be
<PAGE>
entitled to set off against, and shall set off against, the amount of any Merger
Payment to which the Executive would be entitled an amount equal to (i) the full
amount of such Merger Payment if the amount of such Merger Payment is less than
the aggregate outstanding amount of principal, interest, fees and expenses
outstanding under any Note or Notes or (ii) the aggregate outstanding amount of
principal, interest, fees and expenses outstanding under any and all Notes, if
the amount of such Merger Payment is greater than such aggregate outstandings
(in each case, regardless of whether such Note or Notes is or are due or payable
at such time). All such Merger Payment amounts netted pursuant to this Section
shall be treated as having been paid pursuant to the applicable provisions of
the agreements referred to in the third WHEREAS clause above and then repaid as
mandatory prepayments of the Notes and shall be applied as follows: (a) first,
to any fees and expenses accrued and payable under any Notes evidencing Exercise
Price Loans, (b) second, to accrued and unpaid interest on Exercise Price Loans,
(c) third, to outstanding principal of Exercise Price Loans (in inverse order of
maturity of the related Notes), (d) fourth, to any fees and expenses accrued and
payable under any Notes evidencing Tax Loans, (e) fifth, to accrued and unpaid
interest on Tax Loans, (f) sixth, to outstanding principal of Tax Loans (in
inverse order of maturity of the related Notes) and (g) seventh, to the
Executive. Upon payment in full of any Note or Notes, the Company shall return
such Note or Notes to the Executive marked "Paid in Full".
2. INSTRUCTIONS TO EXCHANGE AGENT. Any exchange agent acting in connection
with the Merger may rely on a copy of this Agreement to, and is hereby
authorized and directed to take all action necessary to, give full effect to the
provisions of this Agreement with respect to any proceeds that would be due to
the Executive in connection with the Merger. The Executive agrees to provide any
further documentation required by such exchange agent to effectuate the
foregoing.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
2
<PAGE>
3. MISCELLANEOUS. This Agreement shall be binding upon, and inure to the
benefit of (i) the parties hereto and their respective heirs, successors and
assigns, including, in the case of the Company, Winston, Inc., provided,
however, that, the Executive may not assign his rights or obligations hereunder
without the prior written consent of the Company and (ii) unless the Merger
Agreement shall have been terminated without consummation of the Merger, AT&T
Corp., as an intended third party beneficiary hereof. This Agreement shall be
governed by and construed in accordance with the laws (other than the conflict
of laws rules) of the State of North Carolina. Nothing herein shall be construed
as entitling the Executive to Merger Payments.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as an
agreement under seal as of the date first above written.
VANGUARD CELLULAR SYSTEMS, INC.
By_________________________________
A duly authorized signatory
------------------------------------
Name of Executive:____________________
[SIGNATURE PAGE TO NETTING AGREEMENT]
3
<PAGE>
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT, dated as of December __, 1998 (this "Pledge
Agreement" or this "Agreement"), is made by _________________, an individual
residing in North Carolina (the "Pledgor"), for the benefit of Vanguard Cellular
Systems, Inc., a North Carolina corporation (the "Company").
WHEREAS, the Company is party to a certain Agreement and Plan of Merger
dated as of October 2, 1998, as amended (the "Merger Agreement"), among AT&T
Corp., Winston, Inc. and the Company, pursuant to which the Company will be
merged with and into Winston, Inc. (the "Merger").
WHEREAS, (i) pursuant to certain employment, severance and termination
arrangements between the Company and certain of its employees, including the
Pledgor, and as contemplated by Section 5.5(c)(i) of the Merger Agreement and
items 6 and 7 of Schedule 4.1(e)(vi) to the Merger Agreement, (ii) pursuant to
certain tax reimbursement agreements between the Company and certain of its
employees, including the Pledgor, and as contemplated by Section 5.5(c)(ii) of,
and the related Schedule 5.5(c)(ii) to, the Merger Agreement and (iii) pursuant
to Section 1.7(b) of the Merger Agreement, the Pledgor may be entitled,
following consummation of the Merger, to certain change in control severance
payments and/or tax reimbursement payments as well as certain cash payments in
respect of the shares of the Company's Common Stock to be purchased with the
proceeds of the Exercise Price Loans referred to below (collectively, the
"Merger Payments") from Winston, Inc., as successor by merger to the Company.
WHEREAS, the Company has this date made, [has previously made,](1) and may
from time to time hereafter make, a loan or loans (each a "Loan", and,
collectively, the "Loans") to the Pledgor, the proceeds of which Loans [were
and] are to be applied either (i) to payment of the exercise price of stock
options of the Company held by the Pledgor (the "Exercise Price Loans") or (ii)
to payment of income tax obligations of the Pledgor in connection with such
stock option exercises (the "Tax Loans"), each such Loan [evidenced by or] to be
evidenced by a Promissory Note of Pledgor payable to the Company (collectively,
the "Notes").
WHEREAS, it is a condition to the Company's making of the Loans that
the Pledgor enter into this Pledge Agreement in favor of the Company: (i) to
secure the Pledgor's obligations to pay principal, interest, and any fees and
expenses or other amounts payable under the Notes (collectively, the
"Obligations") by pledging to the Company all of the Class A Common Stock, par
value $0.01 per share, (the "Common Stock") of the Company acquired by the
Pledgor upon the exercise of any stock options financed in whole or in part as
contemplated by the foregoing recital and (ii) to authorize the Company to apply
the Merger Payments to the prepayment of the Notes.
- -------------------
(1) Bracketed language in this WHEREAS clause to appear only in Pledge
Agreements for executives who have previously executed Notes for Option Loans.
<PAGE>
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, it is agreed as follows:
1. PLEDGE. As collateral security for the full and timely payment,
performance and observance of the Obligations, whether now or previously
existing or hereafter arising, the Pledgor herewith deposits, pledges with and
hypothecates to the Company, in form transferable for delivery, and grants to
the Company a security interest in, those shares of the outstanding Common Stock
and the certificates or other instruments or documents evidencing such Common
Stock set forth on Exhibit A attached hereto (together with a stock transfer
power duly endorsed in blank with signature guaranteed) and such additional
property as may at any time and from time to time be receivable by the Company
hereunder or otherwise distributed in respect of or in exchange for any or all
of such shares or into which such shares may be converted, including without
limitation any cash and/or securities receivable (or any right to receive such
consideration) in connection with the Merger (herein collectively referred to as
the "Pledged Securities"), together with any and all proceeds and products of
any of the foregoing in whatever form (the Pledged Securities and the proceeds
and products thereof may be referred to collectively as the "Pledged
Collateral").
2. PREPAYMENT FROM MERGER PAYMENTS. The Pledgor authorizes and directs the
Company, and its successor by merger, Winston, Inc., as pledgee, to apply any
and all Merger Payments to the immediate prepayment of the Notes, to the extent
of any Obligations (regardless of whether such Notes or Obligations are due or
payable at such time). Merger Payments shall be applied by the Company to the
Obligations as follows: (a) first, to any fees and expenses accrued and payable
under any Notes evidencing Exercise Price Loans, (b) second, to accrued and
unpaid interest on Exercise Price Loans, (c) third, to outstanding principal of
Exercise Price Loans (in inverse order of maturity of the related Notes), (d)
fourth, to any fees and expenses accrued and payable under any Notes evidencing
Tax Loans, (e) fifth, to accrued and unpaid interest on Tax Loans, (f) sixth, to
outstanding principal of Tax Loans (in inverse order of maturity of the related
Notes) and (g) seventh, to the Pledgor in accordance with Section 12 hereof.
In furtherance of this Section 2, the Pledgor agrees (i) to vote in favor
of the Merger and refrain from exercising any dissenter's or appraisal rights
and (ii) to cause the Merger Payments (as well as any shares of common stock of
AT&T Corp. received in the Merger with respect to the Pledged Securities) to be
delivered to the Company as pledgee, at 2002 Pisgah Church Road, Suite 300,
Greensboro, North Carolina 27455, by so completing the box entitled "Special
Delivery Instructions" on the Form of Election and Letter of Transmittal
relating to the Merger and delivering it to the Company prior to the Merger,
which Special Delivery Instructions shall then be irrevocable so long as any
Notes remain outstanding. The Company agrees to forward promptly such Form of
Election and Letter of Transmittal to the Exchange Agent specified therein,
together with certificates evidencing the Pledged Securities hereunder. The
Pledgor hereby grants the Company and, following the Merger, its successor,
Winston, Inc. power of attorney to endorse the Pledgor's name on any check or
other instrument representing
2
<PAGE>
Merger Payments in order that such Merger Payments may be applied
to prepayment of the Notes in accordance with this Section 2. The Pledgor
further agrees that, should any Merger Payments be paid to the Pledgor in lieu
of the Company at any time when any Note is outstanding, the Pledgor shall hold
such payments in trust for the Company and promptly remit to the Company all
such Merger Payments for application to the prepayment of the Notes. [The
Company and Pledgor acknowledge that the Pledged Securities are subject to that
certain Voting Agreement dated as of October 2, 1998 between the Pledgor, the
Company and AT&T Corp. and covenant to perform the obligations set forth therein
with respect to the Pledged Securities.](2)
3. REPRESENTATIONS AND WARRANTIES. The Pledgor represents and
warrants that the Pledged Securities are, and will be upon deposit hereunder,
duly and validly issued and duly and validly pledged with the Company in
accordance with the law and agrees to defend the Company's right, title, lien
and security interest in and to the Pledged Collateral against the claims and
demands of all persons whomsoever. The Pledgor also represents and warrants
to the Company that Pledgor has, and will have on deposit hereunder, good title
to all of the Pledged Collateral, free and clear of all options to purchase or
similar rights, claims, mortgages, pledges, liens, encumbrances and security
interests of every nature whatsoever, except those granted to the Company
herein, and that no consent or approval of any governmental or regulatory
authority, or of any securities exchange was or is necessary to the validity of
this pledge. Upon delivery to the Company of the stock certificates described on
Exhibit A and the related blank stock transfer power, Pledgor represents and
warrants that the security interest and lien granted hereunder will constitute a
first priority security interest in and lien on the Pledged Collateral.
4. TRANSFER UPON DEFAULT. Upon the occurrence of any default under
any of the Notes (a "Default"), the Company may cause all or any of the
Pledged Securities to be transferred to or registered in its name or the name
of its nominee or nominees.
5. VOTING RIGHTS. So long as no Default shall have occurred, the Pledgor
shall be entitled to exercise the voting power with respect to the Pledged
Securities as the Pledgor shall think fit, but in a manner not inconsistent with
the terms hereof or of the Notes, and for that purpose the Company shall (if the
Pledged Securities shall be registered in the name of the Company or its
nominee) execute or cause to be executed from time to time, at the expense of
the Pledgor, such proxies or other instruments in favor of the Pledgor, in such
form and for such purposes as shall be reasonably required by the Pledgor and
shall be specified in a written request therefor by the Pledgor to enable the
Pledgor to exercise such voting power with respect to the Pledged Securities.
6. VOTING RIGHTS UPON DEFAULT. Upon the occurrence and during the
continuance of any Default, the Company shall, to the extent permitted by law,
have the sole and absolute right, in addition to any other rights herein
contained, to exercise all voting power
- -------------------
(2) This bracketed provision to be included only in Pledge Agreements for
Pledgors who are founders, and deleted from Pledge Agreements for Pledgors who
are vice presidents.
3
<PAGE>
with respect to the Pledged Securities, and in such event the Pledgor hereby
appoints the Company as the Pledgor's true and lawful proxy to vote such shares
in any manner that the Company deems advisable for or against all matters that
may be submitted to a vote of such shareholders.
7. DIVIDENDS. (i) In case upon the dissolution or liquidation (in whole or
in part) of the Company, any sum shall be paid as a liquidating dividend or
otherwise upon or with respect to any of the Pledged Securities, and (ii) in
case after a Default any other dividends of any kind shall be paid upon or with
respect to any of the Pledged Securities under any circumstances, such sum shall
be paid over to the Company, to be held by the Company as additional collateral
hereunder. In case any stock dividend shall be declared on any of the Pledged
Securities, or any shares of stock or fractions thereof shall be issued pursuant
to any stock split involving any of the Pledged Securities, or any dividend or
distribution of capital shall be made on any of the Pledged Securities, or any
shares, obligations or other property shall be distributed upon or with respect
to the Pledged Securities pursuant to a recapitalization or reclassification of
the capital of the Borrower, or pursuant to the dissolution, liquidation (in
whole or in part), bankruptcy or reorganization of the Company, or the merger or
consolidation of the Borrower with or into another corporation, then in any such
case the stock dividends, shares of stock or fraction thereof, obligations or
other property so distributed shall be delivered to the Company, to be held by
it as additional collateral hereunder, and all of the same shall constitute
Pledged Collateral for all purposes hereof. Any cash received and retained by
the Company as additional collateral hereunder pursuant to the foregoing
provisions shall be held in an interest-bearing account for the benefit of the
Pledgor and may at any time and from time to time be applied (in whole or in
part) by the Company, at its option, to the payment of the Obligations.
Notwithstanding the foregoing, Merger Payments shall be applied as set forth in
Section 2 hereof.
8. REMEDIES. Immediately upon the occurrence of a Default, the Company
shall have all rights and remedies of a secured party under the Uniform
Commercial Code as adopted in the State of North Carolina and, without
obligation to resort to other security, shall have the right at any time and
from time to time to sell, resell, assign and deliver, in its discretion, all or
any of the Pledged Collateral, in one or more parcels at the same or different
times, and all right, title and interest, claim and demand therein and right of
redemption thereof, on any securities exchange on which the Pledged Securities
or any of them may be listed, or at public or private sale, for cash, upon
credit or for future delivery, and in connection therewith the Company may grant
options, the Pledgor hereby waiving and releasing any and all equity or right of
redemption. If any of the Pledged Collateral is sold by the Company upon credit
or for future delivery, the Company shall not be liable for the failure of the
purchaser to purchase or pay for the same and in the event of any such failure,
the Company may resell such Pledged Collateral. In no event shall the Pledgor be
credited with any part of the proceeds of sale of any Pledged Collateral until
cash payment of such sale has actually been received by the Company.
9. SALE OF PLEDGED COLLATERAL; APPLICATION OF PROCEEDS OF SALE. The
Company shall give the Pledgor at least five (5) days' prior notice of the time
and place of any public sale and of the time after which any private sale or
other disposition is to
4
<PAGE>
be made, which notice the Pledgor agrees is reasonable, all other demand,
advertisements and notices being hereby waived. The Company shall not be
obligated to make any sale of Pledged Collateral if it shall determine not to do
so, regardless of the fact that notice of sale may have been given. The Company
may, without notice or publication, adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and place
fixed for sale; and such sale may, without further notice, be made at the time
and place to which the same was so adjourned. Upon each private sale of Pledged
Collateral of a type customarily sold in a recognized market and upon each
public sale, the Company, or any holder of any of the Obligations, may purchase
all or any of the Pledged Collateral being sold, free from any equity or right
of redemption, which is hereby waived and released by the Pledgor, and may make
payment therefor (by endorsement without recourse) in the Obligations in lieu of
cash to the amount then due thereon, which the Pledgor hereby agrees to accept.
In the case of all sales of Pledged Collateral, public or private, after all
costs and expenses of every kind for sale or delivery, including brokers' and
reasonable attorneys' fees, shall be deducted from the proceeds of the sale, the
Company shall apply any residue to the payment of the Obligations in the order
provided in Section 2 above. The balance, if any, remaining after payment in
full or all of the Obligations, shall be paid to the Pledgor, subject to any
duty of the Company imposed by law to the holder of any subordinate security
interest in the Pledged Securities known to the Company.
10. PRIVATE SALE. The Pledgor recognizes that the Company may be unable to
effect a public sale of all or a part of the Pledged Securities by reason of
certain prohibitions contained in the Securities Act of 1933, as amended, as now
or hereafter in effect, or in applicable Blue Sky or other state securities
laws, as now or hereafter in effect, but may be compelled to resort to one or
more private sales to a restricted group of purchasers who will be obligated to
agree, among other things, to acquire such Pledged Securities for their own
account, for investment and not with a view to the distribution or resale
thereof. The Pledgor agrees that private sales so made may be at prices and on
other terms less favorable to the seller than if such Pledged Securities were
sold at public sales, and that the Company has no obligation to cause the
registration of such Pledged Securities for public sale under such applicable
securities laws.
11. CARE OF PLEDGED COLLATERAL. The Company shall have no duty as to the
collection or protection of the Pledged Collateral or any income thereof or as
to the preservation of any rights pertaining thereto, beyond the safe custody of
any Pledged Collateral actually in its possession. The Company shall not have
any responsibility for (i) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, redemptions, offers, tenders or other
matters relative to any Pledged Collateral, whether or not the Company has or is
deemed to have knowledge of such matters, except delivery of the Pledged
Securities as required by the Form of Election and Letter of Transmittal
relating to the Merger, or (ii) taking any necessary steps to preserve rights
against any parties with respect to any Pledged Collateral.
12. TERMINATION. When all Obligations have been paid in full, this Pledge
Agreement shall terminate and any remaining Pledged Collateral shall revert to
the Pledgor and the right, title and interest of the Company therein shall
terminate. Thereupon, the Company shall redeliver any items of Pledged
Collateral then in its possession.
5
<PAGE>
13. FURTHER ASSURANCES. The Pledgor shall take such further actions and
execute such further documents and instruments as the Company may reasonably
request in order to effectuate fully the provisions of this Pledge Agreement,
including without limitation the provisions of Section 2 hereof.
14. INSTRUCTIONS TO EXCHANGE AGENT. Any exchange agent acting in connection
with the Merger may rely on a copy of this Agreement to, and is hereby
authorized and directed to take all action necessary to, give full effect to the
provisions of this Agreement with respect to any proceeds that would be due to
the Pledgor in connection with the Merger. The Pledgor agrees to provide any
further documentation required by such exchange agent to effectuate the
foregoing.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
6
<PAGE>
15. MISCELLANEOUS. This Agreement shall be binding upon, and inure to the
benefit of (i) the parties hereto and their respective heirs, successors and
assigns, including, in the case of the Company, Winston, Inc., provided,
however, that, the Pledgor may not assign his rights or obligations hereunder
without the prior written consent of the Company and (ii) unless that certain
Agreement and Plan of Merger dated as of October 2, 1998, as amended, shall have
been terminated without consummation of the Merger, AT&T Corp., as an intended
third party beneficiary hereof. This Agreement shall be governed by and
construed in accordance with the laws (other than the conflict of laws rules) of
the State of North Carolina.
IN WITNESS WHEREOF, the parties hereto have executed this Pledge Agreement
as an agreement under seal as of the date first above written.
VANGUARD CELLULAR SYSTEMS, INC.
By_________________________________
A duly authorized signatory
______________________________________
Name of Pledgor:______________________
[SIGNATURE PAGE TO PLEDGE AGREEMENT]
<PAGE>
Exhibit A
PLEDGED SECURITIES
Certificate No. Number of Shares Description of Stock
<PAGE>
PROMISSORY NOTE
(Nonqualified Option Exercise Price Loans -- Founders' Version)
$__________ December __, 1998
FOR VALUE RECEIVED, the undersigned ___________________, an individual
residing at _________________________ (the "Maker"), hereby promises to pay to
Vanguard Cellular Systems, Inc., a North Carolina corporation, or its successors
and assigns (the "Holder"), the principal sum of ________________________
DOLLARS ($__________) on or prior to: (i) if the proposed merger of the Holder
into Winston, Inc. (the "Merger") pursuant to that certain Agreement and Plan of
Merger dated as of October 2, 1998, as amended (the "Merger Agreement"), among
AT&T Corp., Winston, Inc. and the Holder shall have been consummated, the 91st
day following the Effective Time (as defined in the Merger Agreement), or (ii)
if the Merger shall not have been consummated, the fifth anniversary of the date
hereof (or if such fifth anniversary is not a business day, the next succeeding
business day). Interest shall be payable on each anniversary of the date hereof
(or if such anniversary is not a business day, the next succeeding business day)
until repayment in full of this Note, and on any stated or accelerated maturity
of this Note, on the unpaid principal balance from the date of this Note through
the payment in full thereof, at a rate of 5.845% per annum, compounded
quarterly. All payments hereunder shall be made to the Holder in cash or other
immediately available funds, or by check or money order payable to the Holder at
Greensboro, North Carolina, or at such other location as the Holder may specify
by notice to the Maker.
The proceeds of the loan hereunder shall be used solely to pay the
exercise price of nonqualified options to purchase Class A Common Stock, par
value $0.01 per share, of the Holder (the "Common Stock") held by the Maker.
This Note may be prepaid in part or in full at any time without premium or
penalty and shall be mandatorily prepayable from and to the extent of certain
payments otherwise payable to the Maker in connection with the Merger, as more
fully set forth in: (i) Section 2 of that certain Pledge Agreement of even date
herewith (the "Pledge Agreement") by Maker in favor of the Holder and (ii) that
certain Agreement re Netting of Payments dated _________________ (the "Netting
Agreement") between the Maker and the Holder.
This Note is secured by the Pledge Agreement, by any past or future pledge
agreement entered into in connection with loans by the Holder to the Maker
relating to option exercises and related tax payments (collectively, the "Pledge
Agreements") and by the securities and other collateral pledged thereunder. This
Note is entitled to the benefits of the Pledge Agreements and the Netting
Agreement.
<PAGE>
At any time prior to the consummation of the Merger (or, if the Merger is
never consummated, then at any time) the liability of the Maker hereunder shall
be limited to the sum of: (i) the amount of any payments to be made by Holder
required to be applied as mandatory prepayments of this Note pursuant to the
Pledge Agreements or the Netting Agreement (without recourse to any other assets
of the Maker), (ii) the Pledged Collateral (as defined in the Pledge Agreements)
(without recourse to any other assets of the Maker) and (iii) with recourse to
the assets of the Maker, an amount equal to 50% of the sum of all obligations
hereunder, including outstanding principal, accrued and unpaid interest, and any
fees and expenses. Notwithstanding the preceding sentence, assuming that the
Merger is consummated, from and after the Effective Time (as defined in the
Agreement and Plan of Merger dated as of October 2, 1998, as amended, among AT&T
Corp., Winston, Inc. and the Holder), the liability and recourse limitations in
the preceding sentence shall terminate and be of no further force and effect,
and this Note shall become fully recourse to the Maker.
Upon (a) any failure by the Holder to receive any payment of interest
within 10 days of when due or principal within 5 days of maturity or any
accelerated maturity or (b) any personal bankruptcy filing by or against the
Maker or (c) any representation or warranty of the Maker in the Pledge
Agreements proving false in any material respect on the date as of which it was
made or (d) any other violation of the Maker's agreements contained in the
Pledge Agreements or the Netting Agreement, the Holder: (i) may proceed to
protect and enforce its rights hereunder by suit in equity, action at law and/or
other appropriate proceeding, (ii) may, by notice in writing to the Maker (or
his estate, if deceased), declare all or any part of the unpaid balance of this
Note to be immediately due and payable, whereupon such unpaid balance or part
thereof shall become so due and payable without presentation, protest or further
demand or notice of any kind, all of which are hereby waived (provided that, in
the event of the Maker's bankruptcy, the unpaid balance of this Note shall
automatically become due and payable), (iii) may proceed to enforce payment of
this Note in such manner as the Holder may elect, including realization upon any
and all rights in the security granted pursuant to the Pledge Agreements and the
Netting Agreement and (iv) may offset and apply toward the payment of this Note
any indebtedness from the Holder to the Maker, regardless of the adequacy of any
security for this Note.
If this Note is referred to an attorney for collection, the Maker agrees
to pay the Holder's reasonable attorneys' fees and expenses (which fees shall be
determined in accordance with the normal hourly rates of such attorneys and not
as a percentage of the indebtedness hereunder) in addition to all other sums
owed hereon.
The Maker waives to the extent not prohibited by applicable law (i) all
presentments, demands for performance, notices of nonperformance, protests,
notices of protest and notices of dishonor, (ii) any requirement of diligence or
promptness on the part of the Holder in the enforcement of its rights under this
Note, (iii) all notices of every kind which may be required to be given by any
statute or rule of law, (iv) any valuation, stay, appraisement or redemption
laws and (v) any defense or setoff or right of setoff of any kind (other than
2
<PAGE>
indefeasible payment in full) which he may now of hereafter have with respect to
his liability under this Note.
No course of dealing between the Maker and the Holder shall operate as a
waiver of any of the Holder's rights under this Note. No delay or omission on
the part of the Holder in exercising any right under this Note shall operate as
a waiver of such right or any other right hereunder. No amendment or waiver
shall be binding unless in writing and signed by the Holder.
This Note shall be governed by and construed in accordance with the laws
(other than the conflict of laws provisions) of the State of North Carolina.
IN WITNESS WHEREOF, the undersigned has executed this instrument of
indebtedness effective the day and year first above written.
____________________________________
Name of Maker: _____________________
3
<PAGE>
PROMISSORY NOTE
(Nonqualified Option Exercise Price Loans -- Executive Vice Presidents'
Version)
$__________ December __, 1998
FOR VALUE RECEIVED, the undersigned ___________________, an individual
residing at _________________________ (the "Maker"), hereby promises to pay to
Vanguard Cellular Systems, Inc., a North Carolina corporation, or its successors
and assigns (the "Holder"), the principal sum of ________________________
DOLLARS ($__________) on or prior to: (i) if the proposed merger of the Holder
into Winston, Inc. (the "Merger") pursuant to that certain Agreement and Plan of
Merger dated as of October 2, 1998, as amended (the "Merger Agreement"), among
AT&T Corp., Winston, Inc. and the Holder shall have been consummated, the
earlier of (x) 6 months and 1 day following the Effective Time (as defined in
the Merger Agreement) or (y) October 3, 1999, or (ii) if the Merger shall not
have been consummated, the fifth anniversary of the date hereof (or if such
fifth anniversary is not a business day, the next succeeding business day).
Interest shall be payable on each anniversary of the date hereof (or if such
anniversary is not a business day, the next succeeding business day) until
repayment in full of this Note, and on any stated or accelerated maturity of
this Note, on the unpaid principal balance from the date of this Note through
the payment in full thereof, at a rate of 5.845% per annum, compounded
quarterly. All payments hereunder shall be made to the Holder in cash or other
immediately available funds, or by check or money order payable to the Holder at
Greensboro, North Carolina, or at such other location as the Holder may specify
by notice to the Maker.
The proceeds of the loan hereunder shall be used solely to pay the
exercise price of nonqualified options to purchase Class A Common Stock, par
value $0.01 per share, of the Holder (the "Common Stock") held by the Maker.
This Note may be prepaid in part or in full at any time without premium or
penalty and shall be mandatorily prepayable from and to the extent of certain
payments otherwise payable to the Maker in connection with the Merger, as more
fully set forth in: (i) Section 2 of that certain Pledge Agreement of even date
herewith (the "Pledge Agreement") by Maker in favor of the Holder and (ii) that
certain Agreement re Netting of Payments dated _________________ (the "Netting
Agreement") between the Maker and the Holder.
This Note is secured by the Pledge Agreement, by any past or future pledge
agreement entered into in connection with loans by the Holder to the Maker
relating to option exercises and related tax payments (collectively, the "Pledge
Agreements") and by the securities and other collateral pledged thereunder. This
Note is entitled to the benefits of the Pledge Agreements and the Netting
Agreement.
<PAGE>
At any time prior to the consummation of the Merger (or, if the Merger is
never consummated, then at any time), the liability of the Maker hereunder shall
be limited to the sum of: (i) the amount of any payments to be made by Holder
required to be applied as mandatory prepayments of this Note pursuant to the
Pledge Agreements or the Netting Agreement (without recourse to any other assets
of the Maker), (ii) the Pledged Collateral (as defined in the Pledge Agreements)
(without recourse to any other assets of the Maker) and (iii) with recourse to
the assets of the Maker, an amount equal to 50% of the sum of all obligations
hereunder, including outstanding principal, accrued and unpaid interest, and any
fees and expenses. Notwithstanding the preceding sentence, assuming that the
Merger is consummated, from and after the Effective Time (as defined in the
Agreement and Plan of Merger dated as of October 2, 1998, as amended, among AT&T
Corp., Winston, Inc. and the Holder), the liability and recourse limitations in
the preceding sentence shall terminate and be of no further force and effect,
and this Note shall become fully recourse to the Maker.
Upon (a) any failure by the Holder to receive any payment of interest
within 10 days of when due or principal within 5 days of maturity or any
accelerated maturity or (b) any personal bankruptcy filing by or against the
Maker or (c) any representation or warranty of the Maker in the Pledge
Agreements proving false in any material respect on the date as of which it was
made or (d) any other violation of the Maker's agreements contained in the
Pledge Agreements or the Netting Agreement, the Holder: (i) may proceed to
protect and enforce its rights hereunder by suit in equity, action at law and/or
other appropriate proceeding, (ii) may, by notice in writing to the Maker (or
his estate, if deceased), declare all or any part of the unpaid balance of this
Note to be immediately due and payable, whereupon such unpaid balance or part
thereof shall become so due and payable without presentation, protest or further
demand or notice of any kind, all of which are hereby waived (provided that, in
the event of the Maker's bankruptcy, the unpaid balance of this Note shall
automatically become due and payable), (iii) may proceed to enforce payment of
this Note in such manner as the Holder may elect, including realization upon any
and all rights in the security granted pursuant to the Pledge Agreements and the
Netting Agreement and (iv) may offset and apply toward the payment of this Note
any indebtedness from the Holder to the Maker, regardless of the adequacy of any
security for this Note.
If this Note is referred to an attorney for collection, the Maker agrees
to pay the Holder's reasonable attorneys' fees and expenses (which fees shall be
determined in accordance with the normal hourly rates of such attorneys and not
as a percentage of the indebtedness hereunder) in addition to all other sums
owed hereon.
The Maker waives to the extent not prohibited by applicable law (i) all
presentments, demands for performance, notices of nonperformance, protests,
notices of protest and notices of dishonor, (ii) any requirement of diligence or
promptness on the part of the Holder in the enforcement of its rights under this
Note, (iii) all notices of every kind which may be required to be given by any
statute or rule of law, (iv) any valuation, stay, appraisement or redemption
laws and (v) any defense or setoff or right of setoff of any kind (other than
2
<PAGE>
indefeasible payment in full) which he may now of hereafter have with respect to
his liability under this Note.
No course of dealing between the Maker and the Holder shall operate as a
waiver of any of the Holder's rights under this Note. No delay or omission on
the part of the Holder in exercising any right under this Note shall operate as
a waiver of such right or any other right hereunder. No amendment or waiver
shall be binding unless in writing and signed by the Holder.
This Note shall be governed by and construed in accordance with the laws
(other than the conflict of laws provisions) of the State of North Carolina.
IN WITNESS WHEREOF, the undersigned has executed this instrument of
indebtedness effective the day and year first above written.
____________________________________
Name of Maker: _____________________
3
<PAGE>
PROMISSORY NOTE
(ISO Exercise Price Loans or Tax Loans -- Executive Vice Presidents' Version)
$__________ December __, 1998
FOR VALUE RECEIVED, the undersigned ___________________, an individual
residing at _________________________ (the "Maker"), hereby promises to pay to
Vanguard Cellular Systems, Inc., a North Carolina corporation, or its successors
and assigns (the "Holder"), the principal sum of ________________________
DOLLARS ($__________) on or prior to: (i) if the proposed merger of the Holder
into Winston, Inc. (the "Merger") pursuant to that certain Agreement and Plan of
Merger dated as of October 2, 1998, as amended (the "Merger Agreement"), among
AT&T Corp., Winston, Inc. and the Holder shall have been consummated, the
earlier of (x) 6 months and 1 day following the Effective Time (as defined in
the Merger Agreement) or (y) October 3, 1999, or (ii) if the Merger shall not
have been consummated, the fifth anniversary of the date hereof (or if such
fifth anniversary is not a business day, the next succeeding business day).
Interest shall be payable on each anniversary of the date hereof (or if such
anniversary is not a business day, the next succeeding business day) until
repayment in full of this Note, and on any stated or accelerated maturity of
this Note, on the unpaid principal balance from the date of this Note through
the payment in full thereof, at a rate of 5.845% per annum, compounded
quarterly. All payments hereunder shall be made to the Holder in cash or other
immediately available funds, or by check or money order payable to the Holder at
Greensboro, North Carolina, or at such other location as the Holder may specify
by notice to the Maker.
The proceeds of the loan hereunder shall be used solely either to pay the
exercise price of incentive stock options to purchase Class A Common Stock, par
value $0.01 per share, of the Holder (the "Common Stock") held by the Maker or
to pay (which payment shall be made by the Company) certain income tax
obligations in connection with the exercise of nonqualified options to purchase
Common Stock held by the Maker.
This Note may be prepaid in part or in full at any time without premium or
penalty and shall be mandatorily prepayable from and to the extent of certain
payments otherwise payable to the Maker in connection with the Merger, as more
fully set forth in: (i) Section 2 of that certain Pledge Agreement of even date
herewith (the "Pledge Agreement") by Maker
in favor of the Holder and (ii) that certain Agreement re Netting of Payments
dated ________________ (the "Netting Agreement") between the Maker and the
Holder.
This Note is secured by the Pledge Agreement, by any past or future pledge
agreement entered into in connection with loans by the Holder to the Maker
relating to option exercises and related tax payments (collectively, the "Pledge
Agreements") and by the securities and other collateral pledged thereunder. This
Note is entitled to the benefits of the Pledge Agreements and the Netting
Agreement.
<PAGE>
Upon (a) any failure by the Holder to receive any payment of interest
within 10 days of when due or principal within 5 days of maturity or any
accelerated maturity or (b) any personal bankruptcy filing by or against the
Maker or (c) any representation or warranty of the Maker in the Pledge
Agreements proving false in any material respect on the date as of which it was
made or (d) any other violation of the Maker's agreements contained in the
Pledge Agreements or the Netting Agreement, the Holder: (i) may proceed to
protect and enforce its rights hereunder by suit in equity, action at law and/or
other appropriate proceeding, (ii) may, by notice in writing to the Maker (or
his estate, if deceased), declare all or any part of the unpaid balance of this
Note to be immediately due and payable, whereupon such unpaid balance or part
thereof shall become so due and payable without presentation, protest or further
demand or notice of any kind, all of which are hereby waived (provided that, in
the event of the Maker's bankruptcy, the unpaid balance of this Note shall
automatically become due and payable), (iii) may proceed to enforce payment of
this Note in such manner as the Holder may elect, including realization upon any
and all rights in the security granted pursuant to the Pledge Agreements and the
Netting Agreement and (iv) may offset and apply toward the payment of this Note
any indebtedness from the Holder to the Maker, regardless of the adequacy of any
security for this Note.
If this Note is referred to an attorney for collection, the Maker agrees
to pay the Holder's reasonable attorneys' fees and expenses (which fees shall be
determined in accordance with the normal hourly rates of such attorneys and not
as a percentage of the indebtedness hereunder) in addition to all other sums
owed hereon.
The Maker waives to the extent not prohibited by applicable law (i) all
presentments, demands for performance, notices of nonperformance, protests,
notices of protest and notices of dishonor, (ii) any requirement of diligence or
promptness on the part of the Holder in the enforcement of its rights under this
Note, (iii) all notices of every kind which may be required to be given by any
statute or rule of law, (iv) any valuation, stay, appraisement or redemption
laws and (v) any defense or setoff or right of setoff of any kind (other than
indefeasible payment in full) which he may now of hereafter have with respect to
his liability under this Note.
No course of dealing between the Maker and the Holder shall operate as a
waiver of any of the Holder's rights under this Note. No delay or omission on
the part of the Holder in exercising any right under this Note shall operate as
a waiver of such right or any other right hereunder. No amendment or waiver
shall be binding unless in writing and signed by the Holder.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
2
<PAGE>
This Note shall be governed by and construed in accordance with the laws
(other than the conflict of laws provisions) of the State of North Carolina.
IN WITNESS WHEREOF, the undersigned has executed this instrument of
indebtedness effective the day and year first above written.
____________________________________
Name of Maker: _____________________
3
<PAGE>
PROMISSORY NOTE
(ISO Exercise Price Loans or Tax Loans -- Founders' Version)
$__________ December __, 1998
FOR VALUE RECEIVED, the undersigned ___________________, an individual
residing at _________________________ (the "Maker"), hereby promises to pay to
Vanguard Cellular Systems, Inc., a North Carolina corporation, or its successors
and assigns (the "Holder"), the principal sum of ________________________
DOLLARS ($__________) on or prior to: (i) if the proposed merger of the Holder
into Winston, Inc. (the "Merger") pursuant to that certain Agreement and Plan of
Merger dated as of October 2, 1998, as amended (the "Merger Agreement"), among
AT&T Corp., Winston, Inc. and the Holder shall have been consummated, the 91st
day following the Effective Time (as defined in the Merger Agreement), or (ii)
if the Merger shall not have been consummated, the fifth anniversary of the date
hereof (or if such fifth anniversary is not a business day, the next succeeding
business day). Interest shall be payable on each anniversary of the date hereof
(or if such anniversary is not a business day, the next succeeding business day)
until repayment in full of this Note, and on any stated or accelerated maturity
of this Note, on the unpaid principal balance from the date of this Note through
the payment in full thereof, at a rate of 5.845% per annum, compounded
quarterly. All payments hereunder shall be made to the Holder in cash or other
immediately available funds, or by check or money order payable to the Holder at
Greensboro, North Carolina, or at such other location as the Holder may specify
by notice to the Maker.
The proceeds of the loan hereunder shall be used solely either to pay the
exercise price of incentive stock options to purchase Class A Common Stock, par
value $0.01 per share, of the Holder (the "Common Stock") held by the Maker or
to pay (which payment shall be made by the Company) certain income tax
obligations in connection with the exercise of nonqualified options to purchase
Common Stock held by the Maker.
This Note may be prepaid in part or in full at any time without premium or
penalty and shall be mandatorily prepayable from and to the extent of certain
payments otherwise payable to the Maker in connection with the Merger, as more
fully set forth in: (i) Section 2 of that certain Pledge Agreement of even date
herewith (the "Pledge Agreement") by Maker in favor of the Holder and (ii) that
certain Agreement re Netting of Payments dated ________________ (the "Netting
Agreement") between the Maker and the Holder.
This Note is secured by the Pledge Agreement, by any past or future pledge
agreement entered into in connection with loans by the Holder to the Maker
relating to option exercises and related tax payments (collectively, the "Pledge
Agreements") and by the securities and other collateral pledged thereunder. This
Note is entitled to the benefits of the Pledge Agreements and the Netting
Agreement.
<PAGE>
Upon (a) any failure by the Holder to receive any payment of interest
within 10 days of when due or principal within 5 days of maturity or any
accelerated maturity or (b) any personal bankruptcy filing by or against the
Maker or (c) any representation or warranty of the Maker in the Pledge
Agreements proving false in any material respect on the date as of which it was
made or (d) any other violation of the Maker's agreements contained in the
Pledge Agreements or the Netting Agreement, the Holder: (i) may proceed to
protect and enforce its rights hereunder by suit in equity, action at law and/or
other appropriate proceeding, (ii) may, by notice in writing to the Maker (or
his estate, if deceased), declare all or any part of the unpaid balance of this
Note to be immediately due and payable, whereupon such unpaid balance or part
thereof shall become so due and payable without presentation, protest or further
demand or notice of any kind, all of which are hereby waived (provided that, in
the event of the Maker's bankruptcy, the unpaid balance of this Note shall
automatically become due and payable), (iii) may proceed to enforce payment of
this Note in such manner as the Holder may elect, including realization upon any
and all rights in the security granted pursuant to the Pledge Agreements and the
Netting Agreement and (iv) may offset and apply toward the payment of this Note
any indebtedness from the Holder to the Maker, regardless of the adequacy of any
security for this Note.
If this Note is referred to an attorney for collection, the Maker agrees
to pay the Holder's reasonable attorneys' fees and expenses (which fees shall be
determined in accordance with the normal hourly rates of such attorneys and not
as a percentage of the indebtedness hereunder) in addition to all other sums
owed hereon.
The Maker waives to the extent not prohibited by applicable law (i) all
presentments, demands for performance, notices of nonperformance, protests,
notices of protest and notices of dishonor, (ii) any requirement of diligence or
promptness on the part of the Holder in the enforcement of its rights under this
Note, (iii) all notices of every kind which may be required to be given by any
statute or rule of law, (iv) any valuation, stay, appraisement or redemption
laws and (v) any defense or setoff or right of setoff of any kind (other than
indefeasible payment in full) which he may now of hereafter have with respect to
his liability under this Note.
No course of dealing between the Maker and the Holder shall operate as a
waiver of any of the Holder's rights under this Note. No delay or omission on
the part of the Holder in exercising any right under this Note shall operate as
a waiver of such right or any other right hereunder. No amendment or waiver
shall be binding unless in writing and signed by the Holder.
2
<PAGE>
This Note shall be governed by and construed in accordance with the laws
(other than the conflict of laws provisions) of the State of North Carolina.
IN WITNESS WHEREOF, the undersigned has executed this instrument of
indebtedness effective the day and year first above written.
____________________________________
Name of Maker: _____________________
3
VOTING AGREEMENT
VOTING AGREEMENT (the "Agreement"), dated as of December 22,
1998, between the undersigned stockholder ("Stockholder") of Vanguard
Cellular Systems, Inc., a North Carolina corporation (the "Company"), and
AT&T Corp., a New York corporation ("Parent").
WHEREAS, prior to the execution and delivery of this Agreement,
the Company and Parent have entered into an Agreement and Plan of Merger
dated as of October 2, 1998 (the "Merger Agreement"), providing for the
merger of the Company with and into a wholly-owned subsidiary of Parent (the
"Merger") pursuant to the terms and conditions thereof; and
WHEREAS, as an inducement and a condition to Parent entering into
the Merger Agreement, various stockholders of the Company signed voting
agreements with Parent, which agreements restrict the transfer of the Class A
Common Stock, par value $0.01 per share, of the Company (the "Common Stock")
owned by such stockholders; and
WHEREAS, in accordance with such restrictions it is necessary for
Stockholder to sign this Agreement to receive certain shares of the Common
Stock;
NOW, THEREFORE, for good and valuable consideration, the receipt,
sufficiency and adequacy of which is hereby acknowledged, the parties hereto
agree as follows:
1. Representations of Stockholder. Stockholder represents
that:
(a) such Stockholder is or may become the beneficial owner of
the number of shares of Common Stock set forth opposite such Stockholder's
name on Exhibit A (such Stockholder's "Shares");
(b) except as may be denoted in Exhibit A, as of the date
hereof such Stockholder does not beneficially own (as such term is defined in
the Securities Exchange Act of 1934, as amended (the "1934 Act")) or own of
record any shares of Common Stock other than such Stockholder's Shares, but
excluding any shares of Common Stock which such Stockholder has the right to
obtain upon the exercise of stock options outstanding on the date hereof;
(c) such Stockholder has the right, power and authority to
execute and deliver this Agreement and to perform such Stockholder's
obligations under this Agreement, and this Agreement has been duly executed
and delivered by such Stockholder and constitutes a valid and legally binding
agreement of such Stockholder, enforceable in accordance with its terms; and
such execution, delivery and performance by such Stockholder of this
Agreement will not (i) conflict with, require a consent, waiver or approval
under, or result in a breach of or default under, any of the terms of any
contract, commitment or other obligation (written or oral) to which such
Stockholder is a party or by which such Stockholder is bound; (ii) violate
any order, writ, injunction, decree or statute, or any rule or regulation,
applicable to Stockholder or any of the properties or assets of Stockholder;
or (iii) result in the creation of, or impose any obligation
<PAGE>
on such Stockholder to create, any Lien (as defined in the Merger Agreement),
charge or other encumbrance of any nature whatsoever upon the Shares, other than
in favor of Parent; and
(d) there are no named beneficiaries of the Preyer-Jacobs
Foundation.
The representations and warranties contained herein shall be made
as of the date hereof and as of each date from the date hereof through and
including the date that the Merger is consummated or this Agreement is
terminated in accordance with its terms.
2. Agreement to Vote Shares. Stockholder shall be present (in
person or by proxy) at and vote his Shares and any New Shares (as defined in
Section 4 hereof), and shall cause any holder of record of his Shares or New
Shares to be present and vote, (a) in favor of adoption and approval of the
Merger Agreement and the Merger (and each other action and transaction
contemplated by the Merger Agreement or by this Agreement) and (b) against
any Acquisition Proposal (as defined in the Merger Agreement) other than the
Merger (or any other Acquisition Proposal of Parent) and against any proposed
action or transaction that would prevent or intentionally delay consummation
of the Merger (or other Acquisition Proposal of Parent) or is otherwise
inconsistent therewith at every meeting of the stockholders of the Company at
which any such matters are considered and at every adjournment thereof (and,
if applicable, in connection with any request or solicitation of written
consents of stockholders). Any such vote shall be cast, or consent shall be
given, in accordance with such procedures relating thereto as shall ensure
that it is duly counted for purposes of determining that a quorum is present
and for purposes of recording the results of such vote or consent.
Stockholder shall deliver to Parent upon request a proxy substantially in the
form attached hereto as Exhibit B, which proxy shall be coupled with an
interest and irrevocable to the extent permitted under North Carolina law,
with the total number of such Stockholder's Shares and any New Shares
correctly indicated thereon. Stockholder hereby revokes any and all previous
proxies granted with respect to his Shares. Stockholder shall also use his
reasonable best efforts to take, or cause to be taken, all action, and do, or
cause to be done, all things necessary or advisable in order to consummate
and make effective the transactions contemplated by this Agreement.
3. No Voting Trusts. After the date hereof, Stockholder
agrees that he will not, nor will he permit any entity under his control to,
deposit any Shares in a voting trust or subject any Shares to any Lien or
agreement, arrangement or understanding with respect to the voting of such
Shares other than agreements entered into with Parent.
4. Additional Purchases. Stockholder agrees that in the event
(a) of any stock dividend, stock split, recapitalization, reclassification,
combination or exchange of shares of stock of the Company on, of or affecting
the Shares of such Stockholder, (b) such Stockholder purchases or otherwise
acquires beneficial ownership of any shares of Common Stock after the
execution of this Agreement (including by exercise of options), or (c) such
Stockholder acquires the right to vote or share in the voting of any shares
of Common Stock other than the Shares (collectively, "New Shares"), such
Stockholder shall deliver promptly to Parent upon request an irrevocable
proxy substantially in the form attached hereto as Exhibit B with respect to
such New
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<PAGE>
Shares. Stockholder also agrees that any New Shares acquired or purchased by him
shall be subject to the terms of this Agreement and shall constitute Shares to
the same extent as if they were owned by such Stockholder on the date hereof.
5. Option Shares.
(a) Subject to the terms and conditions set forth herein,
Stockholder hereby grants to Parent an irrevocable option (the "Option") to
purchase, in whole or in part, such Stockholder's Shares and such
Stockholder's New Shares at a purchase price equal to the Per Share Cash
Amount (as defined in the Merger Agreement) per share; provided, however,
that if the Per Share Cash Amount under the Merger Agreement or any amendment
thereto is ever increased or if Parent shall otherwise offer to the
Stockholders of the Company an increased consideration for all of their
shares (the "Greater Consideration"), then the purchase price per share under
the Option shall be increased to equal such new Per Share Cash Amount or
Greater Consideration; and provided further that if Parent has exercised the
Option within 12 months prior to such increase in the Per Share Cash Amount
or Greater Consideration, then Parent shall pay to each Stockholder an amount
equal to the product of the number of shares previously purchased from such
Stockholder pursuant to the Option and the amount of increase between the old
Per Share Cash Amount and the new Per Share Cash Amount or Greater
Consideration, as applicable.
(b) Parent may exercise the Option, in whole or in part, at any
time and from time to time, after the first to occur of (i) any event as a
result of which Parent shall be entitled to receive a termination fee
pursuant to Section 7.2(e) of the Merger Agreement in the amount of $52.5
million pursuant to part (1) or part (2) of such Section or in the amount of
$22.5 million pursuant to part (3) of such Section or (ii) the breach by any
Stockholder of Section 2 of this Agreement (the first of such events to
occur, a "Purchase Event"); provided, however, that except as provided in the
last sentence of this Section 5(b), the Option shall terminate and be of no
further force and effect upon the earliest to occur of (A) the Effective Time
(as defined in the Merger Agreement), (B) 12 months and one day after the
occurrence of a termination of the Merger Agreement in accordance with
Section 7.1 (d), (e), (f) or (g), (C) a termination of the Merger Agreement
in accordance with Section 7.1(a), (b), (c) or (h) of the Merger Agreement
and (D) 18 months after the Outside Date as defined in Section 7.1(e) of the
Merger Agreement. Notwithstanding the termination of the Option, Parent
shall be entitled to exercise the Option or receive the Cash Payment Amount
if it has given written notice of its intent to exercise the Option or
receive the Cash Payment Amount in accordance with the terms hereof prior to
the termination of the Option and the termination of the Option shall not
affect any rights hereunder which by their terms do not terminate or expire
prior to or as of such termination.
(c) In the event that Parent wishes to exercise the Option, it
shall send to such Stockholder a written notice (the date of which being
herein referred to as the "Notice Date") to that effect which notice also
specifies the total number of shares Parent will purchase pursuant to such
exercise, and a date not earlier than three business days nor later than 15
business days from the Notice Date for the closing of such purchase (the
"Option Closing Date"); provided, however, that (i) if the closing of the
purchase and sale pursuant to the Option (the "Option
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<PAGE>
Closing") cannot be consummated by reason of any applicable judgment, decree,
order, law or regulation (including, without limitation, the rules and
regulations of the FCC), the period of time that otherwise would run pursuant to
this sentence shall run instead from the date on which such restriction on
consummation has expired or been terminated and (ii) without limiting the
foregoing, if prior notification to or approval of any Governmental Entity (as
defined in the Merger Agreement) is required in connection with such purchase or
any other transaction contemplated hereby, Parent and such Stockholder shall
promptly file the required notice or application for approval and shall
cooperate in the expeditious filing of such notice or application, and, in the
case of any prior notification or approval required in connection with such
purchase, the period of time that otherwise would run pursuant to this sentence
shall run instead from the date on which, as the case may be, (A) any required
notification period has expired or been terminated or (B) any required approval
has been obtained, and in either event, any requisite waiting period has expired
or been terminated. The place of the Option Closing shall be at the offices of
Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, New York, and the
time of the Option Closing shall be 10:00 a.m. (Eastern Time) on the Option
Closing Date.
(d) At the Option Closing, Parent (or its designee) shall pay
to each Stockholder an amount equal to the product of (x) the Per Share Cash
Amount or Greater Consideration, as applicable, and (y) the number of shares
being purchased from such Stockholder pursuant to the exercise of the
Option. Such payment shall be in immediately available funds by wire
transfer to a bank account designated in writing by such Stockholder.
(e) At the Option Closing, simultaneously with the delivery of
the amount specified in Section 5(d), each Stockholder shall deliver to
Parent (or its designee) a certificate or certificates representing its
shares to be purchased at the Option Closing, which shares shall be free and
clear of all Liens, claims, charges and encumbrances of any kind whatsoever,
except for such encumbrances or proxies in favor of Parent arising hereunder,
and a new Option evidencing the rights of the Parent (or its designee) to
purchase the balance of such Stockholder's shares purchasable hereunder.
6. Cash Election.
(a) In lieu of exercising the Option, by notice, Parent may
require such Stockholder to make a cash payment to Parent in the amount (the
"Cash Payment Amount") equal to the amount by which (A) the Market Price (as
defined below) exceeds (B) the Per Share Cash Amount, multiplied by the sum
of (i) the number of such Stockholder's Shares and (ii) the number of such
Stockholder's New Shares. Upon receipt of such notice, the Stockholder shall
be permitted to sell a sufficient number of Shares to pay the Cash Payment
Amount, if Stockholder shall, within five business days of such notice, sell
such Shares, provided that Stockholder shall use reasonable best efforts to
achieve good execution and shall consult with Parent with respect to the
manner of disposition. The term "Market Price" shall mean the closing price
(as measured by the last completed trade) for shares of Common Stock on the
date of Parent's election, or if Stockholder elects to sell Shares to pay the
Cash Payment Amount and has complied with the
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<PAGE>
proviso to the immediately preceding sentence, the average price per Share
actually realized in such sale.
(b) Parent may exercise its right to require such Stockholder
to pay the Cash Payment Amount pursuant to this Section by surrendering for such
purpose to such Stockholder, at the Company's principal office, a copy of this
Agreement, accompanied by a written notice or notices stating that Parent elects
to require such Stockholder to pay the Cash Payment Amount in accordance with
the provisions of this Section. Within five(or, in the case of a sale of Shares
under (a) above to fund the Cash Payment Amount, eight) business days after the
surrender of the Option and the receipt of such notice or notices relating
thereto, such Stockholder shall deliver or cause to be delivered to Parent the
Cash Payment Amount by wire to the account designated by Parent in immediately
available funds.
(c) If Stockholder at any time after delivery of a notice of
election by Parent to take the Cash Payment Amount pursuant to this Section
is prohibited under applicable law or regulation from selling Shares in order
to deliver to Parent the Cash Payment Amount in full, and Stockholder is
required to sell Shares to fund the Cash Payment Amount, then (i) such
Stockholder hereby undertakes to use such Stockholder's reasonable best
efforts, to the extent within the control of such Stockholder, to obtain all
required regulatory and legal approvals and to file any required notices, in
each case as promptly as practicable in order to accomplish such sales and
(ii) if Stockholder is unable to effect sales within four days after the
receipt of notice, such Stockholder shall be permitted to pay the Cash
Payment Amount to Parent in Shares valued at the Market Price.
7. No Encumbrances.
(a) Except as expressly contemplated by this Agreement,
Stockholder's Shares and the certificates representing such Shares are now,
and at all times during the term hereof will be, held by such Stockholder, or
by a nominee or custodian for the benefit of such Stockholder, free and clear
of all liens, claims, security interests, proxies, voting trusts or
agreements, understandings or arrangements or any other encumbrances
whatsoever (other than to the extent set forth on Schedule 1 to this
Agreement), except for any such encumbrances or proxies arising hereunder.
(b) Notwithstanding the foregoing, any Stockholder which has
received a notice of election by Parent (or its designee) to receive the Cash
Payment Amount shall be permitted, between receipt of such notice and the
time on which the Cash Payment Amount is due to be paid, to sell such number
of Shares as may be necessary to satisfy such obligation, as described in
Section 6(a) above.
(c) Any transfer by Stockholder of its Shares to Parent
pursuant to the Option shall pass to and unconditionally vest in Parent good
and valid title to such Stockholder's Shares and New Shares, free and clear
of all claims, liens, restrictions, security interests, pledges, limitations
and encumbrances whatsoever.
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<PAGE>
8. Acquisition Proposals. Stockholder agrees that such
Stockholder (i) shall not, directly or indirectly, initiate, solicit, encourage
or otherwise facilitate any inquiries or the making of any Acquisition Proposal
and (ii) has terminated any discussions or negotiations with, and the provision
of information or data to, any Person (other than Parent) respecting an
Acquisition Proposal. Such Stockholder further agrees that he shall not,
directly or indirectly, provide any confidential information or data to any
Person (as defined in the Merger Agreement) relating to or in contemplation of
an Acquisition Proposal or engage in any negotiations or discussions relating to
or in contemplation of an Acquisition Proposal. Such Stockholder will notify
Parent immediately if any inquiries, proposals or offers respecting an
Acquisition Proposal are received by, any such information or data is requested
from, or any such discussions or negotiations are sought to be initiated or
continued with, such Stockholder indicating, in connection with such notice, the
name of such Person and the material terms and conditions of any proposals or
offers, and shall keep Parent apprised with respect to the status and terms
thereof.
9. Appraisal Rights. Stockholder agrees not to exercise any
rights (including, without limitation, under Article 13 of the North Carolina
Business Corporation Act) to demand appraisal of any Common Stock which may
arise with respect to the Merger.
10. Affiliates Letter. Stockholder shall execute and deliver
on a timely basis an Affiliate Letter (as defined in the Merger Agreement).
11. Reliance by Parent. Stockholder understands and
acknowledges that Parent is entering into the Merger Agreement in reliance
upon Stockholder's execution and delivery of this Agreement.
12. Specific Performance. Each party hereto severally
acknowledges that it will be impossible to measure in money the damage to the
other parties if the party hereto fails to comply with any of the obligations
imposed by this Agreement, that every such obligation is material and that,
in the event of any such failure, the other parties will not have an adequate
remedy at law or damages. Accordingly, each party hereto severally agrees
that injunctive relief or other equitable remedy, in addition to remedies at
law or damages, is the appropriate remedy for any such failure and will not
oppose the granting of such relief on the basis that any other party has an
adequate remedy at law. Each party hereto severally agrees that it will not
seek, and agrees to waive any requirement for, the securing or posting of a
bond in connection with any other party's seeking or obtaining such equitable
relief.
13. Heirs, Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective heirs, successors and assigns and shall not be assignable without
the written consent of all other parties hereto other than any assignment in
whole or in part by Parent.
14. Entire Agreement. This Agreement supersedes all prior
agreements, written or oral, among the parties hereto with respect to the
subject matter hereof and contains the entire agreement among the parties
with respect to the subject matter hereof. This Agreement may not be
amended, supplemented or modified, and no provisions hereof may be modified
or
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<PAGE>
waived, except by an instrument in writing signed by all the parties hereto. No
waiver of any provisions hereof by any party shall be deemed a waiver of any
other provisions hereof by any such party, nor shall any such waiver be deemed a
continuing waiver of any provision hereof by such party.
15. Miscellaneous.
(a) Expenses. Each of the parties hereto shall bear and pay
all costs and expenses incurred by it or on its behalf in connection with the
negotiation of this Agreement, including fees and expenses of its own
financial consultants, investment bankers, accountants and counsel.
(b) Amendment. This Agreement may not be amended, except by an
instrument in writing signed on behalf of each of the parties.
(c) This Agreement shall be deemed a contract made under, and
for all purposes shall be construed in accordance with, the internal laws of
the State of New York without regard to principles of conflicts of law,
except for those provisions relating to the voting and the proxy which shall
be governed by North Carolina law.
(d) Severability. If any provision of this Agreement or the
application of such provision to any person or circumstances shall be held
invalid by a court of competent jurisdiction, the remainder of the provision
held invalid and the application of such provision to persons or
circumstances, other than the party as to which it is held invalid, shall not
be affected.
(e) Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original but all of
which together shall constitute one and the same instrument.
(f) Termination. This Agreement shall terminate upon
termination of the Option.
(g) Headings. All Section headings herein are for convenience
of reference only and are not part of this Agreement and no construction or
reference shall be derived therefrom.
(h) Notices. All notices, requests, claims, demands, and other
communications under this Agreement must be in writing and shall be deemed
given if delivered personally, telecopied (which is confirmed), or sent by
overnight courier (providing proof of delivery) to the parties at the
following addresses (or at such other address for a party as shall be
specified by like notice):
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<PAGE>
(i) if to Parent, to
AT&T Corp.
295 North Maple Avenue
Basking Ridge, New Jersey 07920
Telecopy No.: (908) 221-6618
Attention: Marilyn Wasser
with copies to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Telecopy No.: (212) 403-2000
Attention: David M. Silk; and
(ii) if to the Stockholder, to such Stockholder c/o
The Preyer-Jacobs Foundation
c/o Piedmont Financial Company
P.O. Box 20124
Greensboro, North Carolina 27420
with a copy to:
Latham & Watkins
53rd at Third Avenue, Suite 1000
885 Third Avenue
New York, New York 10022-4802
Telecopy No.: (212) 751-4864
Attention: Raymond Y. Lin
and to:
Vanguard Cellular Systems, Inc.
2002 Pisgah Church Road
Greensboro, North Carolina 27455
Telecopy No.: (336) 545-2219
Attention: Richard Rowlenson
(i) Further Assurances. In the event of any exercise of the
Option or election to take the Cash Payment Amount, each of the Company,
Parent and Stockholder shall execute
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<PAGE>
and deliver all other documents and instruments and take all other action that
may be reasonably necessary in order to consummate the transactions contemplated
by such exercise.
(j) Stockholder shall cause certificates for the Shares and New
Shares to have typed or printed thereon a restrictive legend which shall read
substantially as follows (if and to the extent true and necessary in light of
legal and factual circumstances existing at such time):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN PROVISIONS AS SET FORTH IN THE
VOTING AGREEMENT, DATED AS OF DECEMBER 22, 1998, A
COPY OF WHICH MAY BE OBTAINED FROM THE SECRETARY OF
VANGUARD CELLULAR SYSTEMS, INC. AT ITS PRINCIPAL
EXECUTIVE OFFICES, WHICH CONTAINS RESTRICTIONS ON THE
VOTING AND TRANSFER THEREOF."
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first written above.
AT&T CORP.
By: /s/ Robert Feit
Name: Robert Feit
Title: General Attorney and
Assistant Secretary
<PAGE>
The Preyer-Jacobs Foundation
By: /s/ L. Richardson Preyer, Jr.
Name: L. Richardson Preyer, Jr.
Title: President
<PAGE>
EXHIBIT A
STOCKHOLDER
Number of
Shares of Type of
Name Common Stock Ownership
----- ------------ ---------
The Preyer-Jacobs The greater of 11,852 Beneficial
Foundation shares or number of
shares having a value
of $300,000.
<PAGE>
EXHIBIT B
FORM OF PROXY
The undersigned stockholder, for consideration received, hereby
appoints [PARENT DESIGNEES] and each of them as my proxies, with full power
of substitution in each of them, to cast on behalf of the undersigned all
votes entitled to be cast by the holder of the shares of Class A Common
Stock, par value $0.01 per share, of Vanguard Cellular Systems, Inc., a North
Carolina corporation (the "Company"), owned by the undersigned at the Special
Meeting of Stockholders of the Company to be held [DATE, TIME AND PLACE] and
at any adjournment thereof (i) "FOR" approval and adoption of the Agreement
and Plan of Merger, dated as of October 2, 1998, between the Company and AT&T
Corp., a New York corporation ("Parent"), providing for the merger (the
"Merger") of the Company with and into a wholly-owned subsidiary of Parent,
and the Merger and (ii) "AGAINST" any proposal or offer with respect to a
merger, reorganization, share exchange, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving,
or any purchase of any substantial portion of the assets of, or any equity
securities of, or any transaction that would involve the transfer or
potential transfer of control of, the Company other than the Merger and any
proposed action or transaction that would prevent or intentionally delay
consummation of the Merger or is otherwise inconsistent therewith. This
proxy is coupled with an interest and is irrevocable until such time as the
Voting Agreement, dated as of December 22, 1998, between a certain
stockholder of the Company, the undersigned, and Parent terminates in
accordance with its terms.
Dated _____________________, 1998
________________________________
(Signature of Stockholder)
<PAGE>
VOTING AGREEMENT
VOTING AGREEMENT (the "Agreement"), dated as of December 22, 1998,
between the undersigned stockholder ("Stockholder") of Vanguard Cellular
Systems, Inc., a North Carolina corporation (the "Company"), and AT&T Corp., a
New York corporation ("Parent").
WHEREAS, prior to the execution and delivery of this Agreement, the
Company and Parent have entered into an Agreement and Plan of Merger dated as of
October 2, 1998 (the "Merger Agreement"), providing for the merger of the
Company with and into a wholly-owned subsidiary of Parent (the "Merger")
pursuant to the terms and conditions thereof; and
WHEREAS, as an inducement and a condition to Parent entering into
the Merger Agreement, various stockholders of the Company signed voting
agreements with Parent, which agreements restrict the transfer of the Class A
Common Stock, par value $0.01 per share, of the Company (the "Common Stock")
owned by such stockholders; and
WHEREAS, in accordance with such restrictions it is necessary for
Stockholder to sign this Agreement to receive certain shares of the Common
Stock;
NOW, THEREFORE, for good and valuable consideration, the receipt,
sufficiency and adequacy of which is hereby acknowledged, the parties hereto
agree as follows:
1. Representations of Stockholder. Stockholder represents
that:
(a) such Stockholder is or may become the beneficial owner of the
number of shares of Common Stock set forth opposite such Stockholder's name on
Exhibit A (such Stockholder's "Shares");
(b) except as may be denoted in Exhibit A, as of the date hereof
such Stockholder does not beneficially own (as such term is defined in the
Securities Exchange Act of 1934, as amended (the "1934 Act")) or own of record
any shares of Common Stock other than such Stockholder's Shares, but excluding
any shares of Common Stock which such Stockholder has the right to obtain upon
the exercise of stock options outstanding on the date hereof;
(c) such Stockholder has the right, power and authority to execute
and deliver this Agreement and to perform such Stockholder's obligations under
this Agreement, and this Agreement has been duly executed and delivered by such
Stockholder and constitutes a valid and legally binding agreement of such
Stockholder, enforceable in accordance with its terms; and such execution,
delivery and performance by such Stockholder of this Agreement will not (i)
conflict with, require a consent, waiver or approval under, or result in a
breach of or default under, any of the terms of any contract, commitment or
other obligation (written or oral) to which such Stockholder is a party or by
which such Stockholder is bound; (ii) violate any order, writ, injunction,
decree or statute, or any rule or regulation, applicable to Stockholder or any
of the properties or assets of Stockholder; or (iii) result in the creation of,
or impose any obligation
<PAGE>
on such Stockholder to create, any Lien (as defined in the Merger Agreement),
charge or other encumbrance of any nature whatsoever upon the Shares, other than
in favor of Parent; and
(d) there are no named beneficiaries of the Leeolou Family
Foundation.
The representations and warranties contained herein shall be made as
of the date hereof and as of each date from the date hereof through and
including the date that the Merger is consummated or this Agreement is
terminated in accordance with its terms.
2. Agreement to Vote Shares. Stockholder shall be present (in
person or by proxy) at and vote his Shares and any New Shares (as defined in
Section 4 hereof), and shall cause any holder of record of his Shares or New
Shares to be present and vote, (a) in favor of adoption and approval of the
Merger Agreement and the Merger (and each other action and transaction
contemplated by the Merger Agreement or by this Agreement) and (b) against any
Acquisition Proposal (as defined in the Merger Agreement) other than the Merger
(or any other Acquisition Proposal of Parent) and against any proposed action or
transaction that would prevent or intentionally delay consummation of the Merger
(or other Acquisition Proposal of Parent) or is otherwise inconsistent therewith
at every meeting of the stockholders of the Company at which any such matters
are considered and at every adjournment thereof (and, if applicable, in
connection with any request or solicitation of written consents of stock-
holders). Any such vote shall be cast, or consent shall be given, in accordance
with such procedures relating thereto as shall ensure that it is duly counted
for purposes of determining that a quorum is present and for purposes of
recording the results of such vote or consent. Stockholder shall deliver to
Parent upon request a proxy substantially in the form attached hereto as Exhibit
B, which proxy shall be coupled with an interest and irrevocable to the extent
permitted under North Carolina law, with the total number of such Stockholder's
Shares and any New Shares correctly indicated thereon. Stockholder hereby
revokes any and all previous proxies granted with respect to his Shares.
Stockholder shall also use his reasonable best efforts to take, or cause to be
taken, all action, and do, or cause to be done, all things necessary or
advisable in order to consummate and make effective the transactions
contemplated by this Agreement.
3. No Voting Trusts. After the date hereof, Stockholder agrees
that he will not, nor will he permit any entity under his control to, deposit
any Shares in a voting trust or subject any Shares to any Lien or agreement,
arrangement or understanding with respect to the voting of such Shares other
than agreements entered into with Parent.
4. Additional Purchases. Stockholder agrees that in the event (a)
of any stock dividend, stock split, recapitalization, reclassification,
combination or exchange of shares of stock of the Company on, of or affecting
the Shares of such Stockholder, (b) such Stockholder purchases or otherwise
acquires beneficial ownership of any shares of Common Stock after the execution
of this Agreement (including by exercise of options), or (c) such Stockholder
acquires the right to vote or share in the voting of any shares of Common Stock
other than the Shares (collectively, "New Shares"), such Stockholder shall
deliver promptly to Parent upon request an irrevocable proxy substantially in
the form attached hereto as Exhibit B with respect to such New
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<PAGE>
Shares. Stockholder also agrees that any New Shares acquired or purchased by him
shall be subject to the terms of this Agreement and shall constitute Shares to
the same extent as if they were owned by such Stockholder on the date hereof.
5. Option Shares.
(a) Subject to the terms and conditions set forth herein,
Stockholder hereby grants to Parent an irrevocable option (the "Option") to
purchase, in whole or in part, such Stockholder's Shares and such Stockholder's
New Shares at a purchase price equal to the Per Share Cash Amount (as defined in
the Merger Agreement) per share; provided, however, that if the Per Share Cash
Amount under the Merger Agreement or any amendment thereto is ever increased or
if Parent shall otherwise offer to the Stockholders of the Company an increased
consideration for all of their shares (the "Greater Consideration"), then the
purchase price per share under the Option shall be increased to equal such new
Per Share Cash Amount or Greater Consideration; and provided further that if
Parent has exercised the Option within 12 months prior to such increase in the
Per Share Cash Amount or Greater Consideration, then Parent shall pay to each
Stockholder an amount equal to the product of the number of shares previously
purchased from such Stockholder pursuant to the Option and the amount of
increase between the old Per Share Cash Amount and the new Per Share Cash Amount
or Greater Consideration, as applicable.
(b) Parent may exercise the Option, in whole or in part, at any
time and from time to time, after the first to occur of (i) any event as a
result of which Parent shall be entitled to receive a termination fee pursuant
to Section 7.2(e) of the Merger Agreement in the amount of $52.5 million
pursuant to part (1) or part (2) of such Section or in the amount of $22.5
million pursuant to part (3) of such Section or (ii) the breach by any
Stockholder of Section 2 of this Agreement (the first of such events to occur, a
"Purchase Event"); provided, however, that except as provided in the last
sentence of this Section 5(b), the Option shall terminate and be of no further
force and effect upon the earliest to occur of (A) the Effective Time (as
defined in the Merger Agreement), (B) 12 months and one day after the occurrence
of a termination of the Merger Agreement in accordance with Section 7.1 (d),
(e), (f) or (g), (C) a termination of the Merger Agreement in accordance with
Section 7.1(a), (b), (c) or (h) of the Merger Agreement and (D) 18 months after
the Outside Date as defined in Section 7.1(e) of the Merger Agreement.
Notwithstanding the termination of the Option, Parent shall be entitled to
exercise the Option or receive the Cash Payment Amount if it has given written
notice of its intent to exercise the Option or receive the Cash Payment Amount
in accordance with the terms hereof prior to the termination of the Option and
the termination of the Option shall not affect any rights hereunder which by
their terms do not terminate or expire prior to or as of such termination.
(c) In the event that Parent wishes to exercise the Option, it
shall send to such Stockholder a written notice (the date of which being herein
referred to as the "Notice Date") to that effect which notice also specifies the
total number of shares Parent will purchase pursuant to such exercise, and a
date not earlier than three business days nor later than 15 business days from
the Notice Date for the closing of such purchase (the "Option Closing Date");
provided, however, that (i) if the closing of the purchase and sale pursuant to
the Option (the "Option
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<PAGE>
Closing") cannot be consummated by reason of any applicable judgment, decree,
order, law or regulation (including, without limitation, the rules and
regulations of the FCC), the period of time that otherwise would run pursuant to
this sentence shall run instead from the date on which such restriction on
consummation has expired or been terminated and (ii) without limiting the
foregoing, if prior notification to or approval of any Governmental Entity (as
defined in the Merger Agreement) is required in connection with such purchase or
any other transaction contemplated hereby, Parent and such Stockholder shall
promptly file the required notice or application for approval and shall
cooperate in the expeditious filing of such notice or application, and, in the
case of any prior notification or approval required in connection with such
purchase, the period of time that otherwise would run pursuant to this sentence
shall run instead from the date on which, as the case may be, (A) any required
notification period has expired or been terminated or (B) any required approval
has been obtained, and in either event, any requisite waiting period has expired
or been terminated. The place of the Option Closing shall be at the offices of
Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, New York, and the
time of the Option Closing shall be 10:00 a.m. (Eastern Time) on the Option
Closing Date.
(d) At the Option Closing, Parent (or its designee) shall pay to
each Stockholder an amount equal to the product of (x) the Per Share Cash Amount
or Greater Consideration, as applicable, and (y) the number of shares being
purchased from such Stockholder pursuant to the exercise of the Option. Such
payment shall be in immediately available funds by wire transfer to a bank
account designated in writing by such Stockholder.
(e) At the Option Closing, simultaneously with the delivery of the
amount specified in Section 5(d), each Stockholder shall deliver to Parent (or
its designee) a certificate or certificates representing its shares to be
purchased at the Option Closing, which shares shall be free and clear of all
Liens, claims, charges and encumbrances of any kind whatsoever, except for such
encumbrances or proxies in favor of Parent arising hereunder, and a new Option
evidencing the rights of the Parent (or its designee) to purchase the balance of
such Stockholder's shares purchasable hereunder.
6. Cash Election.
(a) In lieu of exercising the Option, by notice, Parent may
require such Stockholder to make a cash payment to Parent in the amount (the
"Cash Payment Amount") equal to the amount by which (A) the Market Price (as
defined below) exceeds (B) the Per Share Cash Amount, multiplied by the sum of
(i) the number of such Stockholder's Shares and (ii) the number of such
Stockholder's New Shares. Upon receipt of such notice, the Stockholder shall be
permitted to sell a sufficient number of Shares to pay the Cash Payment Amount,
if Stockholder shall, within five business days of such notice, sell such
Shares, provided that Stockholder shall use reasonable best efforts to achieve
good execution and shall consult with Parent with respect to the manner of
disposition. The term "Market Price" shall mean the closing price (as measured
by the last completed trade) for shares of Common Stock on the date of Parent's
election, or if Stockholder elects to sell Shares to pay the Cash Payment Amount
and has complied with the
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<PAGE>
proviso to the immediately preceding sentence, the average price per Share
actually realized in such sale.
(b) Parent may exercise its right to require such Stockholder to
pay the Cash Payment Amount pursuant to this Section by surrendering for such
purpose to such Stockholder, at the Company's principal office, a copy of this
Agreement, accompanied by a written notice or notices stating that Parent elects
to require such Stockholder to pay the Cash Payment Amount in accordance with
the provisions of this Section. Within five (or, in the case of a sale of Shares
under (a) above to fund the Cash Payment Amount, eight) business days after the
surrender of the Option and the receipt of such notice or notices relating
thereto, such Stockholder shall deliver or cause to be delivered to Parent the
Cash Payment Amount by wire to the account designated by Parent in immediately
available funds.
(c) If Stockholder at any time after delivery of a notice of
election by Parent to take the Cash Payment Amount pursuant to this Section is
prohibited under applicable law or regulation from selling Shares in order to
deliver to Parent the Cash Payment Amount in full, and Stockholder is required
to sell Shares to fund the Cash Payment Amount, then (i) such Stockholder hereby
undertakes to use such Stockholder's reasonable best efforts, to the extent
within the control of such Stockholder, to obtain all required regulatory and
legal approvals and to file any required notices, in each case as promptly as
practicable in order to accomplish such sales and (ii) if Stockholder is unable
to effect sales within four days after the receipt of notice, such Stockholder
shall be permitted to pay the Cash Payment Amount to Parent in Shares valued at
the Market Price.
7. No Encumbrances.
(a) Except as expressly contemplated by this Agreement,
Stockholder's Shares and the certificates representing such Shares are now, and
at all times during the term hereof will be, held by such Stockholder, or by a
nominee or custodian for the benefit of such Stockholder, free and clear of all
liens, claims, security interests, proxies, voting trusts or agreements,
understandings or arrangements or any other encumbrances whatsoever (other than
to the extent set forth on Schedule 1 to this Agreement), except for any such
encumbrances or proxies arising hereunder.
(b) Notwithstanding the foregoing, any Stockholder which has
received a notice of election by Parent (or its designee) to receive the Cash
Payment Amount shall be permitted, between receipt of such notice and the time
on which the Cash Payment Amount is due to be paid, to sell such number of
Shares as may be necessary to satisfy such obligation, as described in Section
6(a) above.
(c) Any transfer by Stockholder of its Shares to Parent pursuant to
the Option shall pass to and unconditionally vest in Parent good and valid title
to such Stockholder's Shares and New Shares, free and clear of all claims,
liens, restrictions, security interests, pledges, limitations and encumbrances
whatsoever.
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<PAGE>
8. Acquisition Proposals. Stockholder agrees that such Stock-
holder (i) shall not, directly or indirectly, initiate, solicit, encourage or
otherwise facilitate any inquiries or the making of any Acquisition Proposal and
(ii) has terminated any discussions or negotiations with, and the provision of
information or data to, any Person (other than Parent) respecting an Acquisition
Proposal. Such Stockholder further agrees that he shall not, directly or
indirectly, provide any confidential information or data to any Person (as
defined in the Merger Agreement) relating to or in contemplation of an
Acquisition Proposal or engage in any negotiations or discussions relating to or
in contemplation of an Acquisition Proposal. Such Stockholder will notify Parent
immediately if any inquiries, proposals or offers respecting an Acquisition
Proposal are received by, any such information or data is requested from, or any
such discussions or negotiations are sought to be initiated or continued with,
such Stockholder indicating, in connection with such notice, the name of such
Person and the material terms and conditions of any proposals or offers, and
shall keep Parent apprised with respect to the status and terms thereof.
9. Appraisal Rights. Stockholder agrees not to exercise any
rights (including, without limitation, under Article 13 of the North Carolina
Business Corporation Act) to demand appraisal of any Common Stock which may
arise with respect to the Merger.
10. Affiliates Letter. Stockholder shall execute and deliver on a
timely basis an Affiliate Letter (as defined in the Merger Agreement).
11. Reliance by Parent. Stockholder understands and acknowledges
that Parent is entering into the Merger Agreement in reliance upon Stockholder's
execution and delivery of this Agreement.
12. Specific Performance. Each party hereto severally acknowledges
that it will be impossible to measure in money the damage to the other parties
if the party hereto fails to comply with any of the obligations imposed by this
Agreement, that every such obligation is material and that, in the event of any
such failure, the other parties will not have an adequate remedy at law or
damages. Accordingly, each party hereto severally agrees that injunctive relief
or other equitable remedy, in addition to remedies at law or damages, is the
appropriate remedy for any such failure and will not oppose the granting of such
relief on the basis that any other party has an adequate remedy at law. Each
party hereto severally agrees that it will not seek, and agrees to waive any
requirement for, the securing or posting of a bond in connection with any other
party's seeking or obtaining such equitable relief.
13. Heirs, Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs,
successors and assigns and shall not be assignable without the written consent
of all other parties hereto other than any assignment in whole or in part by
Parent.
14. Entire Agreement. This Agreement supersedes all prior
agreements, written or oral, among the parties hereto with respect to the
subject matter hereof and contains the entire agreement among the parties with
respect to the subject matter hereof. This Agreement may not be amended,
supplemented or modified, and no provisions hereof may be modified or
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<PAGE>
waived, except by an instrument in writing signed by all the parties hereto. No
waiver of any provisions hereof by any party shall be deemed a waiver of any
other provisions hereof by any such party, nor shall any such waiver be deemed a
continuing waiver of any provision hereof by such party.
15. Miscellaneous.
(a) Expenses. Each of the parties hereto shall bear and pay all
costs and expenses incurred by it or on its behalf in connection with the
negotiation of this Agreement, including fees and expenses of its own financial
consultants, investment bankers, accountants and counsel.
(b) Amendment. This Agreement may not be amended, except by an
instrument in writing signed on behalf of each of the parties.
(c) This Agreement shall be deemed a contract made under, and for
all purposes shall be construed in accordance with, the internal laws of the
State of New York without regard to principles of conflicts of law, except for
those provisions relating to the voting and the proxy which shall be governed by
North Carolina law.
(d) Severability. If any provision of this Agreement or the
application of such provision to any person or circumstances shall be held
invalid by a court of competent jurisdiction, the remainder of the provision
held invalid and the application of such provision to persons or circumstances,
other than the party as to which it is held invalid, shall not be affected.
(e) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
(f) Termination. This Agreement shall terminate upon termination
of the Option.
(g) Headings. All Section headings herein are for convenience of
reference only and are not part of this Agreement and no construction or
reference shall be derived therefrom.
(h) Notices. All notices, requests, claims, demands, and other
communications under this Agreement must be in writing and shall be deemed given
if delivered personally, telecopied (which is confirmed), or sent by overnight
courier (providing proof of delivery) to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
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<PAGE>
(i) if to Parent, to
AT&T Corp.
295 North Maple Avenue
Basking Ridge, New Jersey 07920
Telecopy No.: (908) 221-6618
Attention: Marilyn Wasser
with copies to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Telecopy No.: (212) 403-2000
Attention: David M. Silk; and
(ii) if to the Stockholder, to such Stockholder c/o
Leeolou Family Foundation
c/o Mr. Stephen R. Leeolou
3920 Hazel Lane
Greensboro, NC 27408
with a copy to:
Latham & Watkins
53rd at Third Avenue, Suite 1000
885 Third Avenue
New York, New York 10022-4802
Telecopy No.: (212) 751-4864
Attention: Raymond Y. Lin
and to:
Vanguard Cellular Systems, Inc.
2002 Pisgah Church Road
Greensboro, North Carolina 27455
Telecopy No.: (336) 545-2219
Attention: Richard Rowlenson
(i) Further Assurances. In the event of any exercise of the Option
or election to take the Cash Payment Amount, each of the Company, Parent and
Stockholder shall execute
-8-
<PAGE>
and deliver all other documents and instruments and take all other action that
may be reasonably necessary in order to consummate the transactions contemplated
by such exercise.
(j) Stockholder shall cause certificates for the Shares and New
Shares to have typed or printed thereon a restrictive legend which shall read
substantially as follows (if and to the extent true and necessary in light of
legal and factual circumstances existing at such time):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN PROVISIONS AS SET FORTH IN THE VOTING AGREEMENT, DATED AS OF
DECEMBER 22, 1998, A COPY OF WHICH MAY BE OBTAINED FROM THE
SECRETARY OF VANGUARD CELLULAR SYSTEMS, INC. AT ITS PRINCIPAL
EXECUTIVE OFFICES, WHICH CONTAINS RESTRICTIONS ON THE VOTING AND
TRANSFER THEREOF."
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first written above.
AT&T CORP.
By: /s/ Robert Feit
--------------------------------------
Name: Robert Feit
Title: General Attorney and
Assistant Secretary
<PAGE>
Leeolou Family Foundation
By: /s/ Stephen R. Leeolou
--------------------------------------
Name: Stephen R. Leeolou
Title: President
<PAGE>
EXHIBIT A
STOCKHOLDER
Number of
Shares of Type of
Name Common Stock Ownership
---- ------------ ---------
Leeolou Family
Foundation 80,800 Beneficial
<PAGE>
EXHIBIT B
FORM OF PROXY
The undersigned stockholder, for consideration received, hereby
appoints [PARENT DESIGNEES] and each of them as my proxies, with full power of
substitution in each of them, to cast on behalf of the undersigned all votes
entitled to be cast by the holder of the shares of Class A Common Stock, par
value $0.01 per share, of Vanguard Cellular Systems, Inc., a North Carolina
corporation (the "Company"), owned by the undersigned at the Special Meeting of
Stockholders of the Company to be held [DATE, TIME AND PLACE] and at any
adjournment thereof (i) "FOR" approval and adoption of the Agreement and Plan of
Merger, dated as of October 2, 1998, between the Company and AT&T Corp., a New
York corporation ("Parent"), providing for the merger (the "Merger") of the
Company with and into a wholly-owned subsidiary of Parent, and the Merger and
(ii) "AGAINST" any proposal or offer with respect to a merger, reorganization,
share exchange, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving, or any purchase of
any substantial portion of the assets of, or any equity securities of, or any
transaction that would involve the transfer or potential transfer of control of,
the Company other than the Merger and any proposed action or transaction that
would prevent or intentionally delay consummation of the Merger or is otherwise
inconsistent therewith. This proxy is coupled with an interest and is
irrevocable until such time as the Voting Agreement, dated as of December 22,
1998, between a certain stockholder of the Company, the undersigned, and Parent
terminates in accordance with its terms.
Dated _____________________, 1998
--------------------------------
(Signature of Stockholder)
<PAGE>
VOTING AGREEMENT
VOTING AGREEMENT (the "Agreement"), dated as of December 22, 1998,
between the undersigned stockholder ("Stockholder") of Vanguard Cellular
Systems, Inc., a North Carolina corporation (the "Company"), and AT&T Corp., a
New York corporation ("Parent").
WHEREAS, prior to the execution and delivery of this Agreement, the
Company and Parent have entered into an Agreement and Plan of Merger dated as of
October 2, 1998 (the "Merger Agreement"), providing for the merger of the
Company with and into a wholly-owned subsidiary of Parent (the "Merger")
pursuant to the terms and conditions thereof; and
WHEREAS, as an inducement and a condition to Parent entering into
the Merger Agreement, various stockholders of the Company signed voting
agreements with Parent, which agreements restrict the transfer of the Class A
Common Stock, par value $0.01 per share, of the Company (the "Common Stock")
owned by such stockholders; and
WHEREAS, in accordance with such restrictions it is necessary for
Stockholder to sign this Agreement to receive certain shares of the Common
Stock;
NOW, THEREFORE, for good and valuable consideration, the receipt,
sufficiency and adequacy of which is hereby acknowledged, the parties hereto
agree as follows:
1. Representations of Stockholder. Stockholder represents
that:
(a) such Stockholder is or may become the beneficial owner of the
number of shares of Common Stock set forth opposite such Stockholder's name on
Exhibit A (such Stockholder's "Shares");
(b) except as may be denoted in Exhibit A, as of the date hereof
such Stockholder does not beneficially own (as such term is defined in the
Securities Exchange Act of 1934, as amended (the "1934 Act")) or own of record
any shares of Common Stock other than such Stockholder's Shares, but excluding
any shares of Common Stock which such Stockholder has the right to obtain upon
the exercise of stock options outstanding on the date hereof;
(c) such Stockholder has the right, power and authority to execute
and deliver this Agreement and to perform such Stockholder's obligations under
this Agreement, and this Agreement has been duly executed and delivered by such
Stockholder and constitutes a valid and legally binding agreement of such
Stockholder, enforceable in accordance with its terms; and such execution,
delivery and performance by such Stockholder of this Agreement will not (i)
conflict with, require a consent, waiver or approval under, or result in a
breach of or default under, any of the terms of any contract, commitment or
other obligation (written or oral) to which such Stockholder is a party or by
which such Stockholder is bound; (ii) violate any order, writ, injunction,
decree or statute, or any rule or regulation, applicable to Stockholder or any
of the properties or assets of Stockholder; or (iii) result in the creation of,
or impose any obligation
<PAGE>
on such Stockholder to create, any Lien (as defined in the Merger Agreement),
charge or other encumbrance of any nature whatsoever upon the Shares, other than
in favor of Parent; and
(d) there are no named beneficiaries of the Griffin Family
Foundation.
The representations and warranties contained herein shall be made as
of the date hereof and as of each date from the date hereof through and
including the date that the Merger is consummated or this Agreement is
terminated in accordance with its terms.
2. Agreement to Vote Shares. Stockholder shall be present (in
person or by proxy) at and vote his Shares and any New Shares (as defined in
Section 4 hereof), and shall cause any holder of record of his Shares or New
Shares to be present and vote, (a) in favor of adoption and approval of the
Merger Agreement and the Merger (and each other action and transaction
contemplated by the Merger Agreement or by this Agreement) and (b) against any
Acquisition Proposal (as defined in the Merger Agreement) other than the Merger
(or any other Acquisition Proposal of Parent) and against any proposed action or
transaction that would prevent or intentionally delay consummation of the Merger
(or other Acquisition Proposal of Parent) or is otherwise inconsistent therewith
at every meeting of the stockholders of the Company at which any such matters
are considered and at every adjournment thereof (and, if applicable, in
connection with any request or solicitation of written consents of
stockholders). Any such vote shall be cast, or consent shall be given, in
accordance with such procedures relating thereto as shall ensure that it is duly
counted for purposes of determining that a quorum is present and for purposes of
recording the results of such vote or consent. Stockholder shall deliver to
Parent upon request a proxy substantially in the form attached hereto as Exhibit
B, which proxy shall be coupled with an interest and irrevocable to the extent
permitted under North Carolina law, with the total number of such Stockholder's
Shares and any New Shares correctly indicated thereon. Stockholder hereby
revokes any and all previous proxies granted with respect to his Shares.
Stockholder shall also use his reasonable best efforts to take, or cause to be
taken, all action, and do, or cause to be done, all things necessary or
advisable in order to consummate and make effective the transactions
contemplated by this Agreement.
3. No Voting Trusts. After the date hereof, Stockholder agrees
that he will not, nor will he permit any entity under his control to, deposit
any Shares in a voting trust or subject any Shares to any Lien or agreement,
arrangement or understanding with respect to the voting of such Shares other
than agreements entered into with Parent.
4. Additional Purchases. Stockholder agrees that in the event (a)
of any stock dividend, stock split, recapitalization, reclassification,
combination or exchange of shares of stock of the Company on, of or affecting
the Shares of such Stockholder, (b) such Stockholder purchases or otherwise
acquires beneficial ownership of any shares of Common Stock after the execution
of this Agreement (including by exercise of options), or (c) such Stockholder
acquires the right to vote or share in the voting of any shares of Common Stock
other than the Shares (collectively, "New Shares"), such Stockholder shall
deliver promptly to Parent upon request an irrevocable proxy substantially in
the form attached hereto as Exhibit B with respect to such New
-2-
<PAGE>
Shares. Stockholder also agrees that any New Shares acquired or purchased by him
shall be subject to the terms of this Agreement and shall constitute Shares to
the same extent as if they were owned by such Stockholder on the date hereof.
5. Option Shares.
(a) Subject to the terms and conditions set forth herein,
Stockholder hereby grants to Parent an irrevocable option (the "Option") to
purchase, in whole or in part, such Stockholder's Shares and such Stockholder's
New Shares at a purchase price equal to the Per Share Cash Amount (as defined in
the Merger Agreement) per share; provided, however, that if the Per Share Cash
Amount under the Merger Agreement or any amendment thereto is ever increased or
if Parent shall otherwise offer to the Stockholders of the Company an increased
consideration for all of their shares (the "Greater Consideration"), then the
purchase price per share under the Option shall be increased to equal such new
Per Share Cash Amount or Greater Consideration; and provided further that if
Parent has exercised the Option within 12 months prior to such increase in the
Per Share Cash Amount or Greater Consideration, then Parent shall pay to each
Stockholder an amount equal to the product of the number of shares previously
purchased from such Stockholder pursuant to the Option and the amount of
increase between the old Per Share Cash Amount and the new Per Share Cash Amount
or Greater Consideration, as applicable.
(b) Parent may exercise the Option, in whole or in part, at any
time and from time to time, after the first to occur of (i) any event as a
result of which Parent shall be entitled to receive a termination fee pursuant
to Section 7.2(e) of the Merger Agreement in the amount of $52.5 million
pursuant to part (1) or part (2) of such Section or in the amount of $22.5
million pursuant to part (3) of such Section or (ii) the breach by any
Stockholder of Section 2 of this Agreement (the first of such events to occur, a
"Purchase Event"); provided, however, that except as provided in the last
sentence of this Section 5(b), the Option shall terminate and be of no further
force and effect upon the earliest to occur of (A) the Effective Time (as
defined in the Merger Agreement), (B) 12 months and one day after the occurrence
of a termination of the Merger Agreement in accordance with Section 7.1 (d),
(e), (f) or (g), (C) a termination of the Merger Agreement in accordance with
Section 7.1(a), (b), (c) or (h) of the Merger Agreement and (D) 18 months after
the Outside Date as defined in Section 7.1(e) of the Merger Agreement.
Notwithstanding the termination of the Option, Parent shall be entitled to
exercise the Option or receive the Cash Payment Amount if it has given written
notice of its intent to exercise the Option or receive the Cash Payment Amount
in accordance with the terms hereof prior to the termination of the Option and
the termination of the Option shall not affect any rights hereunder which by
their terms do not terminate or expire prior to or as of such termination.
(c) In the event that Parent wishes to exercise the Option, it
shall send to such Stockholder a written notice (the date of which being herein
referred to as the "Notice Date") to that effect which notice also specifies the
total number of shares Parent will purchase pursuant to such exercise, and a
date not earlier than three business days nor later than 15 business days from
the Notice Date for the closing of such purchase (the "Option Closing Date");
provided, however, that (i) if the closing of the purchase and sale pursuant to
the Option (the "Option
-3-
<PAGE>
Closing") cannot be consummated by reason of any applicable judgment, decree,
order, law or regulation (including, without limitation, the rules and
regulations of the FCC), the period of time that otherwise would run pursuant to
this sentence shall run instead from the date on which such restriction on
consummation has expired or been terminated and (ii) without limiting the
foregoing, if prior notification to or approval of any Governmental Entity (as
defined in the Merger Agreement) is required in connection with such purchase or
any other transaction contemplated hereby, Parent and such Stockholder shall
promptly file the required notice or application for approval and shall
cooperate in the expeditious filing of such notice or application, and, in the
case of any prior notification or approval required in connection with such
purchase, the period of time that otherwise would run pursuant to this sentence
shall run instead from the date on which, as the case may be, (A) any required
notification period has expired or been terminated or (B) any required approval
has been obtained, and in either event, any requisite waiting period has expired
or been terminated. The place of the Option Closing shall be at the offices of
Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, New York, and the
time of the Option Closing shall be 10:00 a.m. (Eastern Time) on the Option
Closing Date.
(d) At the Option Closing, Parent (or its designee) shall pay to
each Stockholder an amount equal to the product of (x) the Per Share Cash Amount
or Greater Consideration, as applicable, and (y) the number of shares being
purchased from such Stockholder pursuant to the exercise of the Option. Such
payment shall be in immediately available funds by wire transfer to a bank
account designated in writing by such Stockholder.
(e) At the Option Closing, simultaneously with the delivery of the
amount specified in Section 5(d), each Stockholder shall deliver to Parent (or
its designee) a certificate or certificates representing its shares to be
purchased at the Option Closing, which shares shall be free and clear of all
Liens, claims, charges and encumbrances of any kind whatsoever, except for such
encumbrances or proxies in favor of Parent arising hereunder, and a new Option
evidencing the rights of the Parent (or its designee) to purchase the balance of
such Stockholder's shares purchasable hereunder.
6. Cash Election.
(a) In lieu of exercising the Option, by notice, Parent may
require such Stockholder to make a cash payment to Parent in the amount (the
"Cash Payment Amount") equal to the amount by which (A) the Market Price (as
defined below) exceeds (B) the Per Share Cash Amount, multiplied by the sum of
(i) the number of such Stockholder's Shares and (ii) the number of such
Stockholder's New Shares. Upon receipt of such notice, the Stockholder shall be
permitted to sell a sufficient number of Shares to pay the Cash Payment Amount,
if Stockholder shall, within five business days of such notice, sell such
Shares, provided that Stockholder shall use reasonable best efforts to achieve
good execution and shall consult with Parent with respect to the manner of
disposition. The term "Market Price" shall mean the closing price (as measured
by the last completed trade) for shares of Common Stock on the date of Parent's
election, or if Stockholder elects to sell Shares to pay the Cash Payment Amount
and has complied with the
-4-
<PAGE>
proviso to the immediately preceding sentence, the average price per Share
actually realized in such sale.
(b) Parent may exercise its right to require such Stockholder to
pay the Cash Payment Amount pursuant to this Section by surrendering for such
purpose to such Stockholder, at the Company's principal office, a copy of this
Agreement, accompanied by a written notice or notices stating that Parent elects
to require such Stockholder to pay the Cash Payment Amount in accordance with
the provisions of this Section. Within five (or, in the case of a sale of Shares
under (a) above to fund the Cash Payment Amount, eight) business days after the
surrender of the Option and the receipt of such notice or notices relating
thereto, such Stockholder shall deliver or cause to be delivered to Parent the
Cash Payment Amount by wire to the account designated by Parent in immediately
available funds.
(c) If Stockholder at any time after delivery of a notice of
election by Parent to take the Cash Payment Amount pursuant to this Section is
prohibited under applicable law or regulation from selling Shares in order to
deliver to Parent the Cash Payment Amount in full, and Stockholder is required
to sell Shares to fund the Cash Payment Amount, then (i) such Stockholder hereby
undertakes to use such Stockholder's reasonable best efforts, to the extent
within the control of such Stockholder, to obtain all required regulatory and
legal approvals and to file any required notices, in each case as promptly as
practicable in order to accomplish such sales and (ii) if Stockholder is unable
to effect sales within four days after the receipt of notice, such Stockholder
shall be permitted to pay the Cash Payment Amount to Parent in Shares valued at
the Market Price.
7. No Encumbrances.
(a) Except as expressly contemplated by this Agreement,
Stockholder's Shares and the certificates representing such Shares are now, and
at all times during the term hereof will be, held by such Stockholder, or by a
nominee or custodian for the benefit of such Stockholder, free and clear of all
liens, claims, security interests, proxies, voting trusts or agreements,
understandings or arrangements or any other encumbrances whatsoever (other than
to the extent set forth on Schedule 1 to this Agreement), except for any such
encumbrances or proxies arising hereunder.
(b) Notwithstanding the foregoing, any Stockholder which has
received a notice of election by Parent (or its designee) to receive the Cash
Payment Amount shall be permitted, between receipt of such notice and the time
on which the Cash Payment Amount is due to be paid, to sell such number of
Shares as may be necessary to satisfy such obligation, as described in Section
6(a) above.
(c) Any transfer by Stockholder of its Shares to Parent pursuant
to the Option shall pass to and unconditionally vest in Parent good and valid
title to such Stockholder's Shares and New Shares, free and clear of all claims,
liens, restrictions, security interests, pledges, limitations and encumbrances
whatsoever.
-5-
<PAGE>
8. Acquisition Proposals. Stockholder agrees that such Stock-
holder (i) shall not, directly or indirectly, initiate, solicit, encourage or
otherwise facilitate any inquiries or the making of any Acquisition Proposal and
(ii) has terminated any discussions or negotiations with, and the provision of
information or data to, any Person (other than Parent) respecting an Acquisition
Proposal. Such Stockholder further agrees that he shall not, directly or
indirectly, provide any confidential information or data to any Person (as
defined in the Merger Agreement) relating to or in contemplation of an
Acquisition Proposal or engage in any negotiations or discussions relating to or
in contemplation of an Acquisition Proposal. Such Stockholder will notify Parent
immediately if any inquiries, proposals or offers respecting an Acquisition
Proposal are received by, any such information or data is requested from, or any
such discussions or negotiations are sought to be initiated or continued with,
such Stockholder indicating, in connection with such notice, the name of such
Person and the material terms and conditions of any proposals or offers, and
shall keep Parent apprised with respect to the status and terms thereof.
9. Appraisal Rights. Stockholder agrees not to exercise any
rights (including, without limitation, under Article 13 of the North Carolina
Business Corporation Act) to demand appraisal of any Common Stock which may
arise with respect to the Merger.
10. Affiliates Letter. Stockholder shall execute and deliver on a
timely basis an Affiliate Letter (as defined in the Merger Agreement).
11. Reliance by Parent. Stockholder understands and acknowledges
that Parent is entering into the Merger Agreement in reliance upon Stockholder's
execution and delivery of this Agreement.
12. Specific Performance. Each party hereto severally acknowledges
that it will be impossible to measure in money the damage to the other parties
if the party hereto fails to comply with any of the obligations imposed by this
Agreement, that every such obligation is material and that, in the event of any
such failure, the other parties will not have an adequate remedy at law or
damages. Accordingly, each party hereto severally agrees that injunctive relief
or other equitable remedy, in addition to remedies at law or damages, is the
appropriate remedy for any such failure and will not oppose the granting of such
relief on the basis that any other party has an adequate remedy at law. Each
party hereto severally agrees that it will not seek, and agrees to waive any
requirement for, the securing or posting of a bond in connection with any other
party's seeking or obtaining such equitable relief.
13. Heirs, Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs,
successors and assigns and shall not be assignable without the written consent
of all other parties hereto other than any assignment in whole or in part by
Parent.
14. Entire Agreement. This Agreement supersedes all prior
agreements, written or oral, among the parties hereto with respect to the
subject matter hereof and contains the entire agreement among the parties with
respect to the subject matter hereof. This Agreement may not be amended,
supplemented or modified, and no provisions hereof may be modified or
-6-
<PAGE>
waived, except by an instrument in writing signed by all the parties hereto. No
waiver of any provisions hereof by any party shall be deemed a waiver of any
other provisions hereof by any such party, nor shall any such waiver be deemed a
continuing waiver of any provision hereof by such party.
15. Miscellaneous.
(a) Expenses. Each of the parties hereto shall bear and pay all
costs and expenses incurred by it or on its behalf in connection with the
negotiation of this Agreement, including fees and expenses of its own financial
consultants, investment bankers, accountants and counsel.
(b) Amendment. This Agreement may not be amended, except by an
instrument in writing signed on behalf of each of the parties.
(c) This Agreement shall be deemed a contract made under, and for
all purposes shall be construed in accordance with, the internal laws of the
State of New York without regard to principles of conflicts of law, except for
those provisions relating to the voting and the proxy which shall be governed by
North Carolina law.
(d) Severability. If any provision of this Agreement or the
application of such provision to any person or circumstances shall be held
invalid by a court of competent jurisdiction, the remainder of the provision
held invalid and the application of such provision to persons or circumstances,
other than the party as to which it is held invalid, shall not be affected.
(e) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
(f) Termination. This Agreement shall terminate upon termination
of the Option.
(g) Headings. All Section headings herein are for convenience of
reference only and are not part of this Agreement and no construction or
reference shall be derived therefrom.
(h) Notices. All notices, requests, claims, demands, and other
communications under this Agreement must be in writing and shall be deemed given
if delivered personally, telecopied (which is confirmed), or sent by overnight
courier (providing proof of delivery) to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
-7-
<PAGE>
(i) if to Parent, to
AT&T Corp.
295 North Maple Avenue
Basking Ridge, New Jersey 07920
Telecopy No.: (908) 221-6618
Attention: Marilyn Wasser
with copies to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Telecopy No.: (212) 403-2000
Attention: David M. Silk; and
(ii) if to the Stockholder, to such Stockholder c/o
Griffin Family Foundation
c/o Mr. Haynes G. Griffin
309 Sunset Drive
Greensboro, NC 27408
with a copy to:
Latham & Watkins
53rd at Third Avenue, Suite 1000
885 Third Avenue
New York, New York 10022-4802
Telecopy No.: (212) 751-4864
Attention: Raymond Y. Lin
and to:
Vanguard Cellular Systems, Inc.
2002 Pisgah Church Road
Greensboro, North Carolina 27455
Telecopy No.: (336) 545-2219
Attention: Richard Rowlenson
(i) Further Assurances. In the event of any exercise of the Option
or election to take the Cash Payment Amount, each of the Company, Parent and
Stockholder shall execute
-8-
<PAGE>
and deliver all other documents and instruments and take all other action that
may be reasonably necessary in order to consummate the transactions contemplated
by such exercise.
(j) Stockholder shall cause certificates for the Shares and New
Shares to have typed or printed thereon a restrictive legend which shall read
substantially as follows (if and to the extent true and necessary in light of
legal and factual circumstances existing at such time):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN PROVISIONS AS SET FORTH IN THE VOTING AGREEMENT, DATED AS OF
DECEMBER 22, 1998, A COPY OF WHICH MAY BE OBTAINED FROM THE
SECRETARY OF VANGUARD CELLULAR SYSTEMS, INC. AT ITS PRINCIPAL
EXECUTIVE OFFICES, WHICH CONTAINS RESTRICTIONS ON THE VOTING AND
TRANSFER THEREOF."
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first written above.
AT&T CORP.
By: /s/ Robert Feit
Name: Robert Feit
Title: General Attorney and
Assistant Secretary
<PAGE>
Griffin Family Foundation
By: /s/ Haynes G. Griffin
--------------------------------------
Name: Haynes G. Griffin
Title: President
<PAGE>
EXHIBIT A
STOCKHOLDER
Number of
Shares of Type of
Name Common Stock Ownership
---- ------------ ---------
Griffin Family 40,000 Beneficial
Foundation
<PAGE>
EXHIBIT B
FORM OF PROXY
The undersigned stockholder, for consideration received, hereby
appoints [PARENT DESIGNEES] and each of them as my proxies, with full power of
substitution in each of them, to cast on behalf of the undersigned all votes
entitled to be cast by the holder of the shares of Class A Common Stock, par
value $0.01 per share, of Vanguard Cellular Systems, Inc., a North Carolina
corporation (the "Company"), owned by the undersigned at the Special Meeting of
Stockholders of the Company to be held [DATE, TIME AND PLACE] and at any
adjournment thereof (i) "FOR" approval and adoption of the Agreement and Plan of
Merger, dated as of October 2, 1998, between the Company and AT&T Corp., a New
York corporation ("Parent"), providing for the merger (the "Merger") of the
Company with and into a wholly-owned subsidiary of Parent, and the Merger and
(ii) "AGAINST" any proposal or offer with respect to a merger, reorganization,
share exchange, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving, or any purchase of
any substantial portion of the assets of, or any equity securities of, or any
transaction that would involve the transfer or potential transfer of control of,
the Company other than the Merger and any proposed action or transaction that
would prevent or intentionally delay consummation of the Merger or is otherwise
inconsistent therewith. This proxy is coupled with an interest and is
irrevocable until such time as the Voting Agreement, dated as of December 22,
1998, between a certain stockholder of the Company, the undersigned, and Parent
terminates in accordance with its terms.
Dated _____________________, 1998
--------------------------------
(Signature of Stockholder)
<PAGE>
VOTING AGREEMENT
VOTING AGREEMENT (the "Agreement"), dated as of December 22,
1998, between the undersigned stockholder ("Stockholder") of Vanguard
Cellular Systems, Inc., a North Carolina corporation (the "Company"), and
AT&T Corp., a New York corporation ("Parent").
WHEREAS, prior to the execution and delivery of this Agreement,
the Company and Parent have entered into an Agreement and Plan of Merger
dated as of October 2, 1998 (the "Merger Agreement"), providing for the
merger of the Company with and into a wholly-owned subsidiary of Parent (the
"Merger") pursuant to the terms and conditions thereof; and
WHEREAS, as an inducement and a condition to Parent entering into
the Merger Agreement, various stockholders of the Company signed voting
agreements with Parent, which agreements restrict the transfer of the Class A
Common Stock, par value $0.01 per share, of the Company (the "Common Stock")
owned by such stockholders; and
WHEREAS, in accordance with such restrictions it is necessary for
Stockholder to sign this Agreement to receive certain shares of the Common
Stock;
NOW, THEREFORE, for good and valuable consideration, the receipt,
sufficiency and adequacy of which is hereby acknowledged, the parties hereto
agree as follows:
1. Representations of Stockholder. Stockholder represents
that:
(a) such Stockholder is or may become the beneficial owner of
the number of shares of Common Stock set forth opposite such Stockholder's
name on Exhibit A (such Stockholder's "Shares");
(b) except as may be denoted in Exhibit A, as of the date
hereof such Stockholder does not beneficially own (as such term is defined in
the Securities Exchange Act of 1934, as amended (the "1934 Act")) or own of
record any shares of Common Stock other than such Stockholder's Shares, but
excluding any shares of Common Stock which such Stockholder has the right to
obtain upon the exercise of stock options outstanding on the date hereof;
(c) such Stockholder has the right, power and authority to
execute and deliver this Agreement and to perform such Stockholder's
obligations under this Agreement, and this Agreement has been duly executed
and delivered by such Stockholder and constitutes a valid and legally binding
agreement of such Stockholder, enforceable in accordance with its terms; and
such execution, delivery and performance by such Stockholder of this
Agreement will not (i) conflict with, require a consent, waiver or approval
under, or result in a breach of or default under, any of the terms of any
contract, commitment or other obligation (written or oral) to which such
Stockholder is a party or by which such Stockholder is bound; (ii) violate
any order, writ, injunction, decree or statute, or any rule or regulation,
applicable to Stockholder or any of the properties or assets of Stockholder;
or (iii) result in the creation of, or impose any obligation
<PAGE>
on such Stockholder to create, any Lien (as defined in the Merger Agreement),
charge or other encumbrance of any nature whatsoever upon the Shares, other than
in favor of Parent; and
(d) L. Richardson Preyer, Jr. and The Preyer-Jacobs Foundation are
the sole beneficiaries of the Lunsford Richardson Preyer, Jr. Charitable
Remainder Unitrust.
The representations and warranties contained herein shall be made
as of the date hereof and as of each date from the date hereof through and
including the date that the Merger is consummated or this Agreement is
terminated in accordance with its terms.
2. Agreement to Vote Shares. Stockholder shall be present (in
person or by proxy) at and vote his Shares and any New Shares (as defined in
Section 4 hereof), and shall cause any holder of record of his Shares or New
Shares to be present and vote, (a) in favor of adoption and approval of the
Merger Agreement and the Merger (and each other action and transaction
contemplated by the Merger Agreement or by this Agreement) and (b) against
any Acquisition Proposal (as defined in the Merger Agreement) other than the
Merger (or any other Acquisition Proposal of Parent) and against any proposed
action or transaction that would prevent or intentionally delay consummation
of the Merger (or other Acquisition Proposal of Parent) or is otherwise
inconsistent therewith at every meeting of the stockholders of the Company at
which any such matters are considered and at every adjournment thereof (and,
if applicable, in connection with any request or solicitation of written
consents of stockholders). Any such vote shall be cast, or consent shall be
given, in accordance with such procedures relating thereto as shall ensure
that it is duly counted for purposes of determining that a quorum is present
and for purposes of recording the results of such vote or consent.
Stockholder shall deliver to Parent upon request a proxy substantially in the
form attached hereto as Exhibit B, which proxy shall be coupled with an
interest and irrevocable to the extent permitted under North Carolina law,
with the total number of such Stockholder's Shares and any New Shares
correctly indicated thereon. Stockholder hereby revokes any and all previous
proxies granted with respect to his Shares. Stockholder shall also use his
reasonable best efforts to take, or cause to be taken, all action, and do, or
cause to be done, all things necessary or advisable in order to consummate
and make effective the transactions contemplated by this Agreement.
3. No Voting Trusts. After the date hereof, Stockholder
agrees that he will not, nor will he permit any entity under his control to,
deposit any Shares in a voting trust or subject any Shares to any Lien or
agreement, arrangement or understanding with respect to the voting of such
Shares other than agreements entered into with Parent.
4. Additional Purchases. Stockholder agrees that in the event
(a) of any stock dividend, stock split, recapitalization, reclassification,
combination or exchange of shares of stock of the Company on, of or affecting
the Shares of such Stockholder, (b) such Stockholder purchases or otherwise
acquires beneficial ownership of any shares of Common Stock after the
execution of this Agreement (including by exercise of options), or (c) such
Stockholder acquires the right to vote or share in the voting of any shares
of Common Stock other than the Shares
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<PAGE>
(collectively, "New Shares"), such Stockholder shall deliver promptly to Parent
upon request an irrevocable proxy substantially in the form attached hereto as
Exhibit B with respect to such New Shares. Stockholder also agrees that any New
Shares acquired or purchased by him shall be subject to the terms of this
Agreement and shall constitute Shares to the same extent as if they were owned
by such Stockholder on the date hereof.
5. Option Shares.
(a) Subject to the terms and conditions set forth herein,
Stockholder hereby grants to Parent an irrevocable option (the "Option") to
purchase, in whole or in part, such Stockholder's Shares and such
Stockholder's New Shares at a purchase price equal to the Per Share Cash
Amount (as defined in the Merger Agreement) per share; provided, however,
that if the Per Share Cash Amount under the Merger Agreement or any amendment
thereto is ever increased or if Parent shall otherwise offer to the
Stockholders of the Company an increased consideration for all of their
shares (the "Greater Consideration"), then the purchase price per share under
the Option shall be increased to equal such new Per Share Cash Amount or
Greater Consideration; and provided further that if Parent has exercised the
Option within 12 months prior to such increase in the Per Share Cash Amount
or Greater Consideration, then Parent shall pay to each Stockholder an amount
equal to the product of the number of shares previously purchased from such
Stockholder pursuant to the Option and the amount of increase between the old
Per Share Cash Amount and the new Per Share Cash Amount or Greater
Consideration, as applicable.
(b) Parent may exercise the Option, in whole or in part, at any
time and from time to time, after the first to occur of (i) any event as a
result of which Parent shall be entitled to receive a termination fee
pursuant to Section 7.2(e) of the Merger Agreement in the amount of $52.5
million pursuant to part (1) or part (2) of such Section or in the amount of
$22.5 million pursuant to part (3) of such Section or (ii) the breach by any
Stockholder of Section 2 of this Agreement (the first of such events to
occur, a "Purchase Event"); provided, however, that except as provided in the
last sentence of this Section 5(b), the Option shall terminate and be of no
further force and effect upon the earliest to occur of (A) the Effective Time
(as defined in the Merger Agreement), (B) 12 months and one day after the
occurrence of a termination of the Merger Agreement in accordance with
Section 7.1 (d), (e), (f) or (g), (C) a termination of the Merger Agreement
in accordance with Section 7.1(a), (b), (c) or (h) of the Merger Agreement
and (D) 18 months after the Outside Date as defined in Section 7.1(e) of the
Merger Agreement. Notwithstanding the termination of the Option, Parent
shall be entitled to exercise the Option or receive the Cash Payment Amount
if it has given written notice of its intent to exercise the Option or
receive the Cash Payment Amount in accordance with the terms hereof prior to
the termination of the Option and the termination of the Option shall not
affect any rights hereunder which by their terms do not terminate or expire
prior to or as of such termination.
(c) In the event that Parent wishes to exercise the Option, it
shall send to such Stockholder a written notice (the date of which being
herein referred to as the "Notice Date") to that effect which notice also
specifies the total number of shares Parent will purchase pursuant to such
exercise, and a date not earlier than three business days nor later than 15
business days from
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<PAGE>
the Notice Date for the closing of such purchase (the "Option Closing Date");
provided, however, that (i) if the closing of the purchase and sale pursuant to
the Option (the "Option Closing") cannot be consummated by reason of any
applicable judgment, decree, order, law or regulation (including, without
limitation, the rules and regulations of the FCC), the period of time that
otherwise would run pursuant to this sentence shall run instead from the date on
which such restriction on consummation has expired or been terminated and (ii)
without limiting the foregoing, if prior notification to or approval of any
Governmental Entity (as defined in the Merger Agreement) is required in
connection with such purchase or any other transaction contemplated hereby,
Parent and such Stockholder shall promptly file the required notice or
application for approval and shall cooperate in the expeditious filing of such
notice or application, and, in the case of any prior notification or approval
required in connection with such purchase, the period of time that otherwise
would run pursuant to this sentence shall run instead from the date on which, as
the case may be, (A) any required notification period has expired or been
terminated or (B) any required approval has been obtained, and in either event,
any requisite waiting period has expired or been terminated. The place of the
Option Closing shall be at the offices of Wachtell, Lipton, Rosen & Katz, 51
West 52nd Street, New York, New York, and the time of the Option Closing shall
be 10:00 a.m. (Eastern Time) on the Option Closing Date.
(d) At the Option Closing, Parent (or its designee) shall pay
to each Stockholder an amount equal to the product of (x) the Per Share Cash
Amount or Greater Consideration, as applicable, and (y) the number of shares
being purchased from such Stockholder pursuant to the exercise of the
Option. Such payment shall be in immediately available funds by wire
transfer to a bank account designated in writing by such Stockholder.
(e) At the Option Closing, simultaneously with the delivery of
the amount specified in Section 5(d), each Stockholder shall deliver to
Parent (or its designee) a certificate or certificates representing its
shares to be purchased at the Option Closing, which shares shall be free and
clear of all Liens, claims, charges and encumbrances of any kind whatsoever,
except for such encumbrances or proxies in favor of Parent arising hereunder,
and a new Option evidencing the rights of the Parent (or its designee) to
purchase the balance of such Stockholder's shares purchasable hereunder.
6. Cash Election.
(a) In lieu of exercising the Option, by notice, Parent may
require such Stockholder to make a cash payment to Parent in the amount (the
"Cash Payment Amount") equal to the amount by which (A) the Market Price (as
defined below) exceeds (B) the Per Share Cash Amount, multiplied by the sum
of (i) the number of such Stockholder's Shares and (ii) the number of such
Stockholder's New Shares. Upon receipt of such notice, the Stockholder shall
be permitted to sell a sufficient number of Shares to pay the Cash Payment
Amount, if Stockholder shall, within five business days of such notice, sell
such Shares, provided that Stockholder shall use reasonable best efforts to
achieve good execution and shall consult with Parent with respect to the
manner of disposition. The term "Market Price" shall mean the closing price
(as measured by the last completed trade) for shares of Common Stock on the
date of Parent's election, or if
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<PAGE>
Stockholder elects to sell Shares to pay the Cash Payment Amount and has
complied with the proviso to the immediately preceding sentence, the average
price per Share actually realized in such sale.
(b) Parent may exercise its right to require such Stockholder to
pay the Cash Payment Amount pursuant to this Section by surrendering for such
purpose to such Stockholder, at the Company's principal office, a copy of this
Agreement, accompanied by a written notice or notices stating that Parent elects
to require such Stockholder to pay the Cash Payment Amount in accordance with
the provisions of this Section. Within five (or, in the case of a sale of Shares
under (a) above to fund the Cash Payment Amount, eight) business days after the
surrender of the Option and the receipt of such notice or notices relating
thereto, such Stockholder shall deliver or cause to be delivered to Parent the
Cash Payment Amount by wire to the account designated by Parent in immediately
available funds.
(c) If Stockholder at any time after delivery of a notice of
election by Parent to take the Cash Payment Amount pursuant to this Section is
prohibited under applicable law or regulation from selling Shares in order to
deliver to Parent the Cash Payment Amount in full, and Stockholder is required
to sell Shares to fund the Cash Payment Amount, then (i) such Stockholder hereby
undertakes to use such Stockholder's reasonable best efforts, to the extent
within the control of such Stockholder, to obtain all required regulatory and
legal approvals and to file any required notices, in each case as promptly as
practicable in order to accomplish such sales and (ii) if Stockholder is unable
to effect sales within four days after the receipt of notice, such Stockholder
shall be permitted to pay the Cash Payment Amount to Parent in Shares valued at
the Market Price.
7. No Encumbrances.
(a) Except as expressly contemplated by this Agreement,
Stockholder's Shares and the certificates representing such Shares are now,
and at all times during the term hereof will be, held by such Stockholder, or
by a nominee or custodian for the benefit of such Stockholder, free and clear
of all liens, claims, security interests, proxies, voting trusts or
agreements, understandings or arrangements or any other encumbrances
whatsoever (other than to the extent set forth on Schedule 1 to this
Agreement), except for any such encumbrances or proxies arising hereunder.
(b) Notwithstanding the foregoing, any Stockholder which has
received a notice of election by Parent (or its designee) to receive the Cash
Payment Amount shall be permitted, between receipt of such notice and the
time on which the Cash Payment Amount is due to be paid, to sell such number
of Shares as may be necessary to satisfy such obligation, as described in
Section 6(a) above.
(c) Any transfer by Stockholder of its Shares to Parent
pursuant to the Option shall pass to and unconditionally vest in Parent good
and valid title to such Stockholder's Shares and New Shares, free and clear
of all claims, liens, restrictions, security interests, pledges, limitations
and encumbrances whatsoever.
-5-
<PAGE>
8. Acquisition Proposals. Stockholder agrees that such
Stockholder (i) shall not, directly or indirectly, initiate, solicit, encourage
or otherwise facilitate any inquiries or the making of any Acquisition Proposal
and (ii) has terminated any discussions or negotiations with, and the provision
of information or data to, any Person (other than Parent) respecting an
Acquisition Proposal. Such Stockholder further agrees that he shall not,
directly or indirectly, provide any confidential information or data to any
Person (as defined in the Merger Agreement) relating to or in contemplation of
an Acquisition Proposal or engage in any negotiations or discussions relating to
or in contemplation of an Acquisition Proposal. Such Stockholder will notify
Parent immediately if any inquiries, proposals or offers respecting an
Acquisition Proposal are received by, any such information or data is requested
from, or any such discussions or negotiations are sought to be initiated or
continued with, such Stockholder indicating, in connection with such notice, the
name of such Person and the material terms and conditions of any proposals or
offers, and shall keep Parent apprised with respect to the status and terms
thereof.
9. Appraisal Rights. Stockholder agrees not to exercise any
rights (including, without limitation, under Article 13 of the North Carolina
Business Corporation Act) to demand appraisal of any Common Stock which may
arise with respect to the Merger.
10. Affiliates Letter. Stockholder shall execute and deliver
on a timely basis an Affiliate Letter (as defined in the Merger Agreement).
11. Reliance by Parent. Stockholder understands and
acknowledges that Parent is entering into the Merger Agreement in reliance
upon Stockholder's execution and delivery of this Agreement.
12. Specific Performance. Each party hereto severally
acknowledges that it will be impossible to measure in money the damage to the
other parties if the party hereto fails to comply with any of the obligations
imposed by this Agreement, that every such obligation is material and that,
in the event of any such failure, the other parties will not have an adequate
remedy at law or damages. Accordingly, each party hereto severally agrees
that injunctive relief or other equitable remedy, in addition to remedies at
law or damages, is the appropriate remedy for any such failure and will not
oppose the granting of such relief on the basis that any other party has an
adequate remedy at law. Each party hereto severally agrees that it will not
seek, and agrees to waive any requirement for, the securing or posting of a
bond in connection with any other party's seeking or obtaining such equitable
relief.
13. Heirs, Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective heirs, successors and assigns and shall not be assignable without
the written consent of all other parties hereto other than any assignment in
whole or in part by Parent.
14. Entire Agreement. This Agreement supersedes all prior
agreements, written or oral, among the parties hereto with respect to the
subject matter hereof and contains the entire agreement among the parties
with respect to the subject matter hereof. This Agreement may not be
amended, supplemented or modified, and no provisions hereof may be modified
or
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<PAGE>
waived, except by an instrument in writing signed by all the parties
hereto. No waiver of any provisions hereof by any party shall be deemed a
waiver of any other provisions hereof by any such party, nor shall any such
waiver be deemed a continuing waiver of any provision hereof by such party.
15. Miscellaneous.
(a) Expenses. Each of the parties hereto shall bear and pay
all costs and expenses incurred by it or on its behalf in connection with the
negotiation of this Agreement, including fees and expenses of its own
financial consultants, investment bankers, accountants and counsel.
(b) Amendment. This Agreement may not be amended, except by an
instrument in writing signed on behalf of each of the parties.
(c) This Agreement shall be deemed a contract made under, and
for all purposes shall be construed in accordance with, the internal laws of
the State of New York without regard to principles of conflicts of law,
except for those provisions relating to the voting and the proxy which shall
be governed by North Carolina law.
(d) Severability. If any provision of this Agreement or the
application of such provision to any person or circumstances shall be held
invalid by a court of competent jurisdiction, the remainder of the provision
held invalid and the application of such provision to persons or
circumstances, other than the party as to which it is held invalid, shall not
be affected.
(e) Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original but all of
which together shall constitute one and the same instrument.
(f) Termination. This Agreement shall terminate upon
termination of the Option.
(g) Headings. All Section headings herein are for convenience
of reference only and are not part of this Agreement and no construction or
reference shall be derived therefrom.
(h) Notices. All notices, requests, claims, demands, and other
communications under this Agreement must be in writing and shall be deemed
given if delivered personally, telecopied (which is confirmed), or sent by
overnight courier (providing proof of delivery) to the parties at the
following addresses (or at such other address for a party as shall be
specified by like notice):
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<PAGE>
(i) if to Parent, to
AT&T Corp.
295 North Maple Avenue
Basking Ridge, New Jersey 07920
Telecopy No.: (908) 221-6618
Attention: Marilyn Wasser
with copies to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Telecopy No.: (212) 403-2000
Attention: David M. Silk; and
(ii) if to the Stockholder, to such Stockholder c/o
Lunsford Richardson Preyer, Jr. Charitable Remainder
Unitrust
c/o Piedmont Financial Company
P.O. Box 20124
Greensboro, N.C. 27420
with a copy to:
Latham & Watkins
53rd at Third Avenue, Suite 1000
885 Third Avenue
New York, New York 10022-4802
Telecopy No.: (212) 751-4864
Attention: Raymond Y. Lin
and to:
Vanguard Cellular Systems, Inc.
2002 Pisgah Church Road
Greensboro, North Carolina 27455
Telecopy No.: (336) 545-2219
Attention: Richard Rowlenson
(i) Further Assurances. In the event of any exercise of the
Option or election to take the Cash Payment Amount, each of the Company,
Parent and Stockholder shall execute
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<PAGE>
and deliver all other documents and instruments and take all other action that
may be reasonably necessary in order to consummate the transactions contemplated
by such exercise.
(j) Stockholder shall cause certificates for the Shares and New
Shares to have typed or printed thereon a restrictive legend which shall read
substantially as follows (if and to the extent true and necessary in light of
legal and factual circumstances existing at such time):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN PROVISIONS AS SET FORTH IN THE
VOTING AGREEMENT, DATED AS OF DECEMBER 22, 1998, A
COPY OF WHICH MAY BE OBTAINED FROM THE SECRETARY OF
VANGUARD CELLULAR SYSTEMS, INC. AT ITS PRINCIPAL
EXECUTIVE OFFICES, WHICH CONTAINS RESTRICTIONS ON THE
VOTING AND TRANSFER THEREOF."
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first written above.
AT&T CORP.
By: /s/ Robert Feit
Name: Robert Feit
Title: General Attorney and
Assistant Secretary
<PAGE>
Lunsford Richardson Preyer, Jr.
Charitable Remainder Unitrust
By: /s/ L. Richardson Preyer, Jr.
Name: L. Richardson Preyer, Jr.
Title: Trustee
<PAGE>
I, L. Richardson Preyer, Jr., as beneficiary of the Lunsford
Richardson Preyer, Jr. Charitable Remainder Unitrust, consent to the signing
of this Agreement by Stockholder.
/s/ L. Richardson Preyer, Jr.
Name: L. Richardson Preyer, Jr.
I, The Preyer-Jacobs Foundation, as beneficiary of the Lunsford
Richardson Preyer, Jr. Charitable Remainder Unitrust, consent to the signing
of this Agreement by Stockholder.
/s/ L. Richardson Preyer, Jr.
Name: L. Richardson Preyer, Jr.
President
The Preyer-Jacobs Foundation
<PAGE>
EXHIBIT A
STOCKHOLDER
Number of
Shares of Type of
Name Common Stock Ownership
---- ------------ ---------
Lunsford Richardson Greater of 249,894 Beneficial
Preyer, Jr. Charitable shares of number of
Remainder Unitrust shares having a value
of $6,300,000
<PAGE>
EXHIBIT B
FORM OF PROXY
The undersigned stockholder, for consideration received, hereby
appoints [PARENT DESIGNEES] and each of them as my proxies, with full power
of substitution in each of them, to cast on behalf of the undersigned all
votes entitled to be cast by the holder of the shares of Class A Common
Stock, par value $0.01 per share, of Vanguard Cellular Systems, Inc., a North
Carolina corporation (the "Company"), owned by the undersigned at the Special
Meeting of Stockholders of the Company to be held [DATE, TIME AND PLACE] and
at any adjournment thereof (i) "FOR" approval and adoption of the Agreement
and Plan of Merger, dated as of October 2, 1998, between the Company and AT&T
Corp., a New York corporation ("Parent"), providing for the merger (the
"Merger") of the Company with and into a wholly-owned subsidiary of Parent,
and the Merger and (ii) "AGAINST" any proposal or offer with respect to a
merger, reorganization, share exchange, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving,
or any purchase of any substantial portion of the assets of, or any equity
securities of, or any transaction that would involve the transfer or
potential transfer of control of, the Company other than the Merger and any
proposed action or transaction that would prevent or intentionally delay
consummation of the Merger or is otherwise inconsistent therewith. This
proxy is coupled with an interest and is irrevocable until such time as the
Voting Agreement, dated as of December 22, 1998, between a certain
stockholder of the Company, the undersigned, and Parent terminates in
accordance with its terms.
Dated _____________________, 1998
________________________________
(Signature of Stockholder)
<PAGE>
VOTING AGREEMENT
VOTING AGREEMENT (the "Agreement"), dated as of December 22,
1998, between the undersigned stockholder ("Stockholder") of Vanguard
Cellular Systems, Inc., a North Carolina corporation (the "Company"), and
AT&T Corp., a New York corporation ("Parent").
WHEREAS, prior to the execution and delivery of this Agreement,
the Company and Parent have entered into an Agreement and Plan of Merger
dated as of October 2, 1998 (the "Merger Agreement"), providing for the
merger of the Company with and into a wholly-owned subsidiary of Parent (the
"Merger") pursuant to the terms and conditions thereof; and
WHEREAS, as an inducement and a condition to Parent entering into
the Merger Agreement, various stockholders of the Company signed voting
agreements with Parent, which agreements restrict the transfer of the Class A
Common Stock, par value $0.01 per share, of the Company (the "Common Stock")
owned by such stockholders; and
WHEREAS, in accordance with such restrictions it is necessary for
Stockholder to sign this Agreement to receive certain shares of the Common
Stock;
NOW, THEREFORE, for good and valuable consideration, the receipt,
sufficiency and adequacy of which is hereby acknowledged, the parties hereto
agree as follows:
1. Representations of Stockholder. Stockholder represents
that:
(a) such Stockholder is or may become the beneficial owner of
the number of shares of Common Stock set forth opposite such Stockholder's
name on Exhibit A (such Stockholder's "Shares");
(b) except as may be denoted in Exhibit A, as of the date
hereof such Stockholder does not beneficially own (as such term is defined in
the Securities Exchange Act of 1934, as amended (the "1934 Act")) or own of
record any shares of Common Stock other than such Stockholder's Shares, but
excluding any shares of Common Stock which such Stockholder has the right to
obtain upon the exercise of stock options outstanding on the date hereof;
(c) such Stockholder has the right, power and authority to
execute and deliver this Agreement and to perform such Stockholder's
obligations under this Agreement, and this Agreement has been duly executed
and delivered by such Stockholder and constitutes a valid and legally binding
agreement of such Stockholder, enforceable in accordance with its terms; and
such execution, delivery and performance by such Stockholder of this
Agreement will not (i) conflict with, require a consent, waiver or approval
under, or result in a breach of or default under, any of the terms of any
contract, commitment or other obligation (written or oral) to which such
Stockholder is a party or by which such Stockholder is bound; (ii) violate
any order, writ, injunction, decree or statute, or any rule or regulation,
applicable to Stockholder or any of the properties or assets of Stockholder;
or (iii) result in the creation of, or impose any obligation
<PAGE>
on such Stockholder to create, any Lien (as defined in the Merger Agreement),
charge or other encumbrance of any nature whatsoever upon the Shares, other than
in favor of Parent; and
(d) Stephen R. Leeolou and Mary D. Leeolou are the sole
beneficiaries of The Stephen R. and Mary D. Leeolou 1998 Charitable Remainder
Unitrust.
The representations and warranties contained herein shall be made
as of the date hereof and as of each date from the date hereof through and
including the date that the Merger is consummated or this Agreement is
terminated in accordance with its terms.
2. Agreement to Vote Shares. Stockholder shall be present (in
person or by proxy) at and vote his Shares and any New Shares (as defined in
Section 4 hereof), and shall cause any holder of record of his Shares or New
Shares to be present and vote, (a) in favor of adoption and approval of the
Merger Agreement and the Merger (and each other action and transaction
contemplated by the Merger Agreement or by this Agreement) and (b) against
any Acquisition Proposal (as defined in the Merger Agreement) other than the
Merger (or any other Acquisition Proposal of Parent) and against any proposed
action or transaction that would prevent or intentionally delay consummation
of the Merger (or other Acquisition Proposal of Parent) or is otherwise
inconsistent therewith at every meeting of the stockholders of the Company at
which any such matters are considered and at every adjournment thereof (and,
if applicable, in connection with any request or solicitation of written
consents of stockholders). Any such vote shall be cast, or consent shall be
given, in accordance with such procedures relating thereto as shall ensure
that it is duly counted for purposes of determining that a quorum is present
and for purposes of recording the results of such vote or consent.
Stockholder shall deliver to Parent upon request a proxy substantially in the
form attached hereto as Exhibit B, which proxy shall be coupled with an
interest and irrevocable to the extent permitted under North Carolina law,
with the total number of such Stockholder's Shares and any New Shares
correctly indicated thereon. Stockholder hereby revokes any and all previous
proxies granted with respect to his Shares. Stockholder shall also use his
reasonable best efforts to take, or cause to be taken, all action, and do, or
cause to be done, all things necessary or advisable in order to consummate
and make effective the transactions contemplated by this Agreement.
3. No Voting Trusts. After the date hereof, Stockholder
agrees that he will not, nor will he permit any entity under his control to,
deposit any Shares in a voting trust or subject any Shares to any Lien or
agreement, arrangement or understanding with respect to the voting of such
Shares other than agreements entered into with Parent.
4. Additional Purchases. Stockholder agrees that in the event
(a) of any stock dividend, stock split, recapitalization, reclassification,
combination or exchange of shares of stock of the Company on, of or affecting
the Shares of such Stockholder, (b) such Stockholder purchases or otherwise
acquires beneficial ownership of any shares of Common Stock after the
execution of this Agreement (including by exercise of options), or (c) such
Stockholder acquires the right to vote or share in the voting of any shares
of Common Stock other than the Shares
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<PAGE>
(collectively, "New Shares"), such Stockholder shall deliver promptly to Parent
upon request an irrevocable proxy substantially in the form attached hereto as
Exhibit B with respect to such New Shares. Stockholder also agrees that any New
Shares acquired or purchased by him shall be subject to the terms of this
Agreement and shall constitute Shares to the same extent as if they were owned
by such Stockholder on the date hereof.
5. Option Shares.
(a) Subject to the terms and conditions set forth herein,
Stockholder hereby grants to Parent an irrevocable option (the "Option") to
purchase, in whole or in part, such Stockholder's Shares and such
Stockholder's New Shares at a purchase price equal to the Per Share Cash
Amount (as defined in the Merger Agreement) per share; provided, however,
that if the Per Share Cash Amount under the Merger Agreement or any amendment
thereto is ever increased or if Parent shall otherwise offer to the
Stockholders of the Company an increased consideration for all of their
shares (the "Greater Consideration"), then the purchase price per share under
the Option shall be increased to equal such new Per Share Cash Amount or
Greater Consideration; and provided further that if Parent has exercised the
Option within 12 months prior to such increase in the Per Share Cash Amount
or Greater Consideration, then Parent shall pay to each Stockholder an amount
equal to the product of the number of shares previously purchased from such
Stockholder pursuant to the Option and the amount of increase between the old
Per Share Cash Amount and the new Per Share Cash Amount or Greater
Consideration, as applicable.
(b) Parent may exercise the Option, in whole or in part, at any
time and from time to time, after the first to occur of (i) any event as a
result of which Parent shall be entitled to receive a termination fee
pursuant to Section 7.2(e) of the Merger Agreement in the amount of $52.5
million pursuant to part (1) or part (2) of such Section or in the amount of
$22.5 million pursuant to part (3) of such Section or (ii) the breach by any
Stockholder of Section 2 of this Agreement (the first of such events to
occur, a "Purchase Event"); provided, however, that except as provided in the
last sentence of this Section 5(b), the Option shall terminate and be of no
further force and effect upon the earliest to occur of (A) the Effective Time
(as defined in the Merger Agreement), (B) 12 months and one day after the
occurrence of a termination of the Merger Agreement in accordance with
Section 7.1 (d), (e), (f) or (g), (C) a termination of the Merger Agreement
in accordance with Section 7.1(a), (b), (c) or (h) of the Merger Agreement
and (D) 18 months after the Outside Date as defined in Section 7.1(e) of the
Merger Agreement. Notwithstanding the termination of the Option, Parent
shall be entitled to exercise the Option or receive the Cash Payment Amount
if it has given written notice of its intent to exercise the Option or
receive the Cash Payment Amount in accordance with the terms hereof prior to
the termination of the Option and the termination of the Option shall not
affect any rights hereunder which by their terms do not terminate or expire
prior to or as of such termination.
(c) In the event that Parent wishes to exercise the Option, it
shall send to such Stockholder a written notice (the date of which being
herein referred to as the "Notice Date") to that effect which notice also
specifies the total number of shares Parent will purchase pursuant to such
exercise, and a date not earlier than three business days nor later than 15
business days from
-3-
<PAGE>
the Notice Date for the closing of such purchase (the "Option Closing Date");
provided, however, that (i) if the closing of the purchase and sale pursuant to
the Option (the "Option Closing") cannot be consummated by reason of any
applicable judgment, decree, order, law or regulation (including, without
limitation, the rules and regulations of the FCC), the period of time that
otherwise would run pursuant to this sentence shall run instead from the date on
which such restriction on consummation has expired or been terminated and (ii)
without limiting the foregoing, if prior notification to or approval of any
Governmental Entity (as defined in the Merger Agreement) is required in
connection with such purchase or any other transaction contemplated hereby,
Parent and such Stockholder shall promptly file the required notice or
application for approval and shall cooperate in the expeditious filing of such
notice or application, and, in the case of any prior notification or approval
required in connection with such purchase, the period of time that otherwise
would run pursuant to this sentence shall run instead from the date on which, as
the case may be, (A) any required notification period has expired or been
terminated or (B) any required approval has been obtained, and in either event,
any requisite waiting period has expired or been terminated. The place of the
Option Closing shall be at the offices of Wachtell, Lipton, Rosen & Katz, 51
West 52nd Street, New York, New York, and the time of the Option Closing shall
be 10:00 a.m. (Eastern Time) on the Option Closing Date.
(d) At the Option Closing, Parent (or its designee) shall pay
to each Stockholder an amount equal to the product of (x) the Per Share Cash
Amount or Greater Consideration, as applicable, and (y) the number of shares
being purchased from such Stockholder pursuant to the exercise of the
Option. Such payment shall be in immediately available funds by wire
transfer to a bank account designated in writing by such Stockholder.
(e) At the Option Closing, simultaneously with the delivery of
the amount specified in Section 5(d), each Stockholder shall deliver to
Parent (or its designee) a certificate or certificates representing its
shares to be purchased at the Option Closing, which shares shall be free and
clear of all Liens, claims, charges and encumbrances of any kind whatsoever,
except for such encumbrances or proxies in favor of Parent arising hereunder,
and a new Option evidencing the rights of the Parent (or its designee) to
purchase the balance of such Stockholder's shares purchasable hereunder.
6. Cash Election.
(a) In lieu of exercising the Option, by notice, Parent may
require such Stockholder to make a cash payment to Parent in the amount (the
"Cash Payment Amount") equal to the amount by which (A) the Market Price (as
defined below) exceeds (B) the Per Share Cash Amount, multiplied by the sum
of (i) the number of such Stockholder's Shares and (ii) the number of such
Stockholder's New Shares. Upon receipt of such notice, the Stockholder shall
be permitted to sell a sufficient number of Shares to pay the Cash Payment
Amount, if Stockholder shall, within five business days of such notice, sell
such Shares, provided that Stockholder shall use reasonable best efforts to
achieve good execution and shall consult with Parent with respect to the
manner of disposition. The term "Market Price" shall mean the closing price
(as measured by the last completed trade) for shares of Common Stock on the
date of Parent's election, or if
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<PAGE>
Stockholder elects to sell Shares to pay the Cash Payment Amount and has
complied with the proviso to the immediately preceding sentence, the average
price per Share actually realized in such sale.
(b) Parent may exercise its right to require such Stockholder
to pay the Cash Payment Amount pursuant to this Section by surrendering for
such purpose to such Stockholder, at the Company's principal office, a copy
of this Agreement, accompanied by a written notice or notices stating that
Parent elects to require such Stockholder to pay the Cash Payment Amount in
accordance with the provisions of this Section. Within five (or, in the case
of a sale of Shares under (a) above to fund the Cash Payment Amount, eight)
business days after the surrender of the Option and the receipt of such
notice or notices relating thereto, such Stockholder shall deliver or cause
to be delivered to Parent the Cash Payment Amount by wire to the account
designated by Parent in immediately available funds.
(c) If Stockholder at any time after delivery of a notice of
election by Parent to take the Cash Payment Amount pursuant to this Section
is prohibited under applicable law or regulation from selling Shares in order
to deliver to Parent the Cash Payment Amount in full, and Stockholder is
required to sell Shares to fund the Cash Payment Amount, then (i) such
Stockholder hereby undertakes to use such Stockholder's reasonable best
efforts, to the extent within the control of such Stockholder, to obtain all
required regulatory and legal approvals and to file any required notices, in
each case as promptly as practicable in order to accomplish such sales and
(ii) if Stockholder is unable to effect sales within four days after the
receipt of notice, such Stockholder shall be permitted to pay the Cash
Payment Amount to Parent in Shares valued at the Market Price.
7. No Encumbrances.
(a) Except as expressly contemplated by this Agreement,
Stockholder's Shares and the certificates representing such Shares are now,
and at all times during the term hereof will be, held by such Stockholder, or
by a nominee or custodian for the benefit of such Stockholder, free and clear
of all liens, claims, security interests, proxies, voting trusts or
agreements, understandings or arrangements or any other encumbrances
whatsoever (other than to the extent set forth on Schedule 1 to this
Agreement), except for any such encumbrances or proxies arising hereunder.
(b) Notwithstanding the foregoing, any Stockholder which has
received a notice of election by Parent (or its designee) to receive the Cash
Payment Amount shall be permitted, between receipt of such notice and the
time on which the Cash Payment Amount is due to be paid, to sell such number
of Shares as may be necessary to satisfy such obligation, as described in
Section 6(a) above.
(c) Any transfer by Stockholder of its Shares to Parent
pursuant to the Option shall pass to and unconditionally vest in Parent good
and valid title to such Stockholder's Shares and New Shares, free and clear
of all claims, liens, restrictions, security interests, pledges, limitations
and encumbrances whatsoever.
-5-
<PAGE>
8. Acquisition Proposals. Stockholder agrees that such
Stockholder (i) shall not, directly or indirectly, initiate, solicit,
encourage or otherwise facilitate any inquiries or the making of any
Acquisition Proposal and (ii) has terminated any discussions or negotiations
with, and the provision of information or data to, any Person (other than
Parent) respecting an Acquisition Proposal. Such Stockholder further agrees
that he shall not, directly or indirectly, provide any confidential
information or data to any Person (as defined in the Merger Agreement)
relating to or in contemplation of an Acquisition Proposal or engage in any
negotiations or discussions relating to or in contemplation of an Acquisition
Proposal. Such Stockholder will notify Parent immediately if any inquiries,
proposals or offers respecting an Acquisition Proposal are received by, any
such information or data is requested from, or any such discussions or
negotiations are sought to be initiated or continued with, such Stockholder
indicating, in connection with such notice, the name of such Person and the
material terms and conditions of any proposals or offers, and shall keep
Parent apprised with respect to the status and terms thereof.
9. Appraisal Rights. Stockholder agrees not to exercise any
rights (including, without limitation, under Article 13 of the North Carolina
Business Corporation Act) to demand appraisal of any Common Stock which may
arise with respect to the Merger.
10. Affiliates Letter. Stockholder shall execute and deliver
on a timely basis an Affiliate Letter (as defined in the Merger Agreement).
11. Reliance by Parent. Stockholder understands and
acknowledges that Parent is entering into the Merger Agreement in reliance
upon Stockholder's execution and delivery of this Agreement.
12. Specific Performance. Each party hereto severally
acknowledges that it will be impossible to measure in money the damage to the
other parties if the party hereto fails to comply with any of the obligations
imposed by this Agreement, that every such obligation is material and that,
in the event of any such failure, the other parties will not have an adequate
remedy at law or damages. Accordingly, each party hereto severally agrees
that injunctive relief or other equitable remedy, in addition to remedies at
law or damages, is the appropriate remedy for any such failure and will not
oppose the granting of such relief on the basis that any other party has an
adequate remedy at law. Each party hereto severally agrees that it will not
seek, and agrees to waive any requirement for, the securing or posting of a
bond in connection with any other party's seeking or obtaining such equitable
relief.
13. Heirs, Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective heirs, successors and assigns and shall not be assignable without
the written consent of all other parties hereto other than any assignment in
whole or in part by Parent.
14. Entire Agreement. This Agreement supersedes all prior
agreements, written or oral, among the parties hereto with respect to the
subject matter hereof and contains the entire agreement among the parties
with respect to the subject matter hereof. This Agreement may not be
amended, supplemented or modified, and no provisions hereof may be modified
or
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<PAGE>
waived, except by an instrument in writing signed by all the parties hereto. No
waiver of any provisions hereof by any party shall be deemed a waiver of any
other provisions hereof by any such party, nor shall any such waiver be deemed a
continuing waiver of any provision hereof by such party.
15. Miscellaneous.
(a) Expenses. Each of the parties hereto shall bear and pay
all costs and expenses incurred by it or on its behalf in connection with the
negotiation of this Agreement, including fees and expenses of its own
financial consultants, investment bankers, accountants and counsel.
(b) Amendment. This Agreement may not be amended, except by an
instrument in writing signed on behalf of each of the parties.
(c) This Agreement shall be deemed a contract made under, and
for all purposes shall be construed in accordance with, the internal laws of
the State of New York without regard to principles of conflicts of law,
except for those provisions relating to the voting and the proxy which shall
be governed by North Carolina law.
(d) Severability. If any provision of this Agreement or the
application of such provision to any person or circumstances shall be held
invalid by a court of competent jurisdiction, the remainder of the provision
held invalid and the application of such provision to persons or
circumstances, other than the party as to which it is held invalid, shall not
be affected.
(e) Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original but all of
which together shall constitute one and the same instrument.
(f) Termination. This Agreement shall terminate upon
termination of the Option.
(g) Headings. All Section headings herein are for convenience
of reference only and are not part of this Agreement and no construction or
reference shall be derived therefrom.
(h) Notices. All notices, requests, claims, demands, and other
communications under this Agreement must be in writing and shall be deemed
given if delivered personally, telecopied (which is confirmed), or sent by
overnight courier (providing proof of delivery) to the parties at the
following addresses (or at such other address for a party as shall be
specified by like notice):
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<PAGE>
(i) if to Parent, to
AT&T Corp.
295 North Maple Avenue
Basking Ridge, New Jersey 07920
Telecopy No.: (908) 221-6618
Attention: Marilyn Wasser
with copies to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Telecopy No.: (212) 403-2000
Attention: David M. Silk; and
(ii) if to the Stockholder, to such Stockholder c/o
The Stephen R. and Mary D. Leeolou 1998
Charitable Remainder Unitrust
c/o North Carolina Trust Company
P.O. Box 1108
Greensboro, North Carolina 27402
Attention: Ms. Kim Garcia (Fax 336-230-1725)
with a copy to:
Latham & Watkins
53rd at Third Avenue, Suite 1000
885 Third Avenue
New York, New York 10022-4802
Telecopy No.: (212) 751-4864
Attention: Raymond Y. Lin
and to:
Vanguard Cellular Systems, Inc.
2002 Pisgah Church Road
Greensboro, North Carolina 27455
Telecopy No.: (336) 545-2219
Attention: Richard Rowlenson
(i) Further Assurances. In the event of any exercise of the
Option or election to take the Cash Payment Amount, each of the Company,
Parent and Stockholder shall execute
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<PAGE>
and deliver all other documents and instruments and take all other action that
may be reasonably necessary in order to consummate the transactions contemplated
by such exercise.
(j) Stockholder shall cause certificates for the Shares and New
Shares to have typed or printed thereon a restrictive legend which shall read
substantially as follows (if and to the extent true and necessary in light of
legal and factual circumstances existing at such time):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN PROVISIONS AS SET FORTH IN THE
VOTING AGREEMENT, DATED AS OF DECEMBER 22, 1998, A
COPY OF WHICH MAY BE OBTAINED FROM THE SECRETARY OF
VANGUARD CELLULAR SYSTEMS, INC. AT ITS PRINCIPAL
EXECUTIVE OFFICES, WHICH CONTAINS RESTRICTIONS ON THE
VOTING AND TRANSFER THEREOF."
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first written above.
AT&T CORP.
By: /s/ Robert Feit
Name: Robert Feit
Title: General Attorney and
Assistant Secretary
<PAGE>
The Stephen R. and Mary D. Leeolou 1998
Charitable Remainder Unitrust, North
Carolina Trust Company, Trustee
By: /s/ D. Kenneth Dimock
Name: D. Kenneth Dimock
Title: Senior Vice President
<PAGE>
I, Stephen R. Leeolou, as beneficiary of The Stephen R. and Mary
D. Leeolou 1998 Charitable Remainder Unitrust, consent to the signing of this
Agreement by Stockholder.
/s/ Stephen R. Leeolou
Name: Stephen R. Leeolou
I, Mary D. Leeolou, as beneficiary of The Stephen R. and Mary D.
Leeolou 1998 Charitable Remainder Unitrust, consent to the signing of this
Agreement by Stockholder.
/s/ Mary D. Leeolou
Name: Mary D. Leeolou
<PAGE>
EXHIBIT A
STOCKHOLDER
Number of
Shares of Type of
Name Common Stock Ownership
---- ------------ ---------
The Stephen R. and Mary 202,500 Beneficial
D. Leeolou 1998
Charitable Remainder
Unitrust
<PAGE>
EXHIBIT B
FORM OF PROXY
The undersigned stockholder, for consideration received, hereby
appoints [PARENT DESIGNEES] and each of them as my proxies, with full power
of substitution in each of them, to cast on behalf of the undersigned all
votes entitled to be cast by the holder of the shares of Class A Common
Stock, par value $0.01 per share, of Vanguard Cellular Systems, Inc., a North
Carolina corporation (the "Company"), owned by the undersigned at the Special
Meeting of Stockholders of the Company to be held [DATE, TIME AND PLACE] and
at any adjournment thereof (i) "FOR" approval and adoption of the Agreement
and Plan of Merger, dated as of October 2, 1998, between the Company and AT&T
Corp., a New York corporation ("Parent"), providing for the merger (the
"Merger") of the Company with and into a wholly-owned subsidiary of Parent,
and the Merger and (ii) "AGAINST" any proposal or offer with respect to a
merger, reorganization, share exchange, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving,
or any purchase of any substantial portion of the assets of, or any equity
securities of, or any transaction that would involve the transfer or
potential transfer of control of, the Company other than the Merger and any
proposed action or transaction that would prevent or intentionally delay
consummation of the Merger or is otherwise inconsistent therewith. This
proxy is coupled with an interest and is irrevocable until such time as the
Voting Agreement, dated as of December 22, 1998, between a certain
stockholder of the Company, the undersigned, and Parent terminates in
accordance with its terms.
Dated _____________________, 1998
________________________________
(Signature of Stockholder)
<PAGE>
VOTING AGREEMENT
VOTING AGREEMENT (the "Agreement"), dated as of December 22,
1998, between the undersigned stockholder ("Stockholder") of Vanguard
Cellular Systems, Inc., a North Carolina corporation (the "Company"), and
AT&T Corp., a New York corporation ("Parent").
WHEREAS, prior to the execution and delivery of this Agreement,
the Company and Parent have entered into an Agreement and Plan of Merger
dated as of October 2, 1998 (the "Merger Agreement"), providing for the
merger of the Company with and into a wholly-owned subsidiary of Parent (the
"Merger") pursuant to the terms and conditions thereof; and
WHEREAS, as an inducement and a condition to Parent entering into
the Merger Agreement, various stockholders of the Company signed voting
agreements with Parent, which agreements restrict the transfer of the Class A
Common Stock, par value $0.01 per share, of the Company (the "Common Stock")
owned by such stockholders; and
WHEREAS, in accordance with such restrictions it is necessary for
Stockholder to sign this Agreement to receive certain shares of the Common
Stock;
NOW, THEREFORE, for good and valuable consideration, the receipt,
sufficiency and adequacy of which is hereby acknowledged, the parties hereto
agree as follows:
1. Representations of Stockholder. Stockholder represents
that:
(a) such Stockholder is or may become the beneficial owner of
the number of shares of Common Stock set forth opposite such Stockholder's
name on Exhibit A (such Stockholder's "Shares");
(b) except as may be denoted in Exhibit A, as of the date
hereof such Stockholder does not beneficially own (as such term is defined in
the Securities Exchange Act of 1934, as amended (the "1934 Act")) or own of
record any shares of Common Stock other than such Stockholder's Shares, but
excluding any shares of Common Stock which such Stockholder has the right to
obtain upon the exercise of stock options outstanding on the date hereof;
(c) such Stockholder has the right, power and authority to
execute and deliver this Agreement and to perform such Stockholder's
obligations under this Agreement, and this Agreement has been duly executed
and delivered by such Stockholder and constitutes a valid and legally binding
agreement of such Stockholder, enforceable in accordance with its terms; and
such execution, delivery and performance by such Stockholder of this
Agreement will not (i) conflict with, require a consent, waiver or approval
under, or result in a breach of or default under, any of the terms of any
contract, commitment or other obligation (written or oral) to which such
Stockholder is a party or by which such Stockholder is bound; (ii) violate
any order, writ, injunction, decree or statute, or any rule or regulation,
applicable to Stockholder or any of the properties or assets of Stockholder;
or (iii) result in the creation of, or impose any obligation
<PAGE>
on such Stockholder to create, any Lien (as defined in the Merger Agreement),
charge or other encumbrance of any nature whatsoever upon the Shares, other than
in favor of Parent; and
(d) Haynes G. Griffin and Virginia R. Griffin are the sole
beneficiaries of the The Haynes G. Griffin 1998 Charitable Remainder Unitrust.
The representations and warranties contained herein shall be made
as of the date hereof and as of each date from the date hereof through and
including the date that the Merger is consummated or this Agreement is
terminated in accordance with its terms.
2. Agreement to Vote Shares. Stockholder shall be present (in
person or by proxy) at and vote his Shares and any New Shares (as defined in
Section 4 hereof), and shall cause any holder of record of his Shares or New
Shares to be present and vote, (a) in favor of adoption and approval of the
Merger Agreement and the Merger (and each other action and transaction
contemplated by the Merger Agreement or by this Agreement) and (b) against
any Acquisition Proposal (as defined in the Merger Agreement) other than the
Merger (or any other Acquisition Proposal of Parent) and against any proposed
action or transaction that would prevent or intentionally delay consummation
of the Merger (or other Acquisition Proposal of Parent) or is otherwise
inconsistent therewith at every meeting of the stockholders of the Company at
which any such matters are considered and at every adjournment thereof (and,
if applicable, in connection with any request or solicitation of written
consents of stockholders). Any such vote shall be cast, or consent shall be
given, in accordance with such procedures relating thereto as shall ensure
that it is duly counted for purposes of determining that a quorum is present
and for purposes of recording the results of such vote or consent.
Stockholder shall deliver to Parent upon request a proxy substantially in the
form attached hereto as Exhibit B, which proxy shall be coupled with an
interest and irrevocable to the extent permitted under North Carolina law,
with the total number of such Stockholder's Shares and any New Shares
correctly indicated thereon. Stockholder hereby revokes any and all previous
proxies granted with respect to his Shares. Stockholder shall also use his
reasonable best efforts to take, or cause to be taken, all action, and do, or
cause to be done, all things necessary or advisable in order to consummate
and make effective the transactions contemplated by this Agreement.
3. No Voting Trusts. After the date hereof, Stockholder
agrees that he will not, nor will he permit any entity under his control to,
deposit any Shares in a voting trust or subject any Shares to any Lien or
agreement, arrangement or understanding with respect to the voting of such
Shares other than agreements entered into with Parent.
4. Additional Purchases. Stockholder agrees that in the event
(a) of any stock dividend, stock split, recapitalization, reclassification,
combination or exchange of shares of stock of the Company on, of or affecting
the Shares of such Stockholder, (b) such Stockholder purchases or otherwise
acquires beneficial ownership of any shares of Common Stock after the
execution of this Agreement (including by exercise of options), or (c) such
Stockholder acquires the right to vote or share in the voting of any shares
of Common Stock other than the Shares
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<PAGE>
(collectively, "New Shares"), such Stockholder shall deliver promptly to Parent
upon request an irrevocable proxy substantially in the form attached hereto as
Exhibit B with respect to such New Shares. Stockholder also agrees that any New
Shares acquired or purchased by him shall be subject to the terms of this
Agreement and shall constitute Shares to the same extent as if they were owned
by such Stockholder on the date hereof.
5. Option Shares.
(a) Subject to the terms and conditions set forth herein,
Stockholder hereby grants to Parent an irrevocable option (the "Option") to
purchase, in whole or in part, such Stockholder's Shares and such
Stockholder's New Shares at a purchase price equal to the Per Share Cash
Amount (as defined in the Merger Agreement) per share; provided, however,
that if the Per Share Cash Amount under the Merger Agreement or any amendment
thereto is ever increased or if Parent shall otherwise offer to the
Stockholders of the Company an increased consideration for all of their
shares (the "Greater Consideration"), then the purchase price per share under
the Option shall be increased to equal such new Per Share Cash Amount or
Greater Consideration; and provided further that if Parent has exercised the
Option within 12 months prior to such increase in the Per Share Cash Amount
or Greater Consideration, then Parent shall pay to each Stockholder an amount
equal to the product of the number of shares previously purchased from such
Stockholder pursuant to the Option and the amount of increase between the old
Per Share Cash Amount and the new Per Share Cash Amount or Greater
Consideration, as applicable.
(b) Parent may exercise the Option, in whole or in part, at any
time and from time to time, after the first to occur of (i) any event as a
result of which Parent shall be entitled to receive a termination fee
pursuant to Section 7.2(e) of the Merger Agreement in the amount of $52.5
million pursuant to part (1) or part (2) of such Section or in the amount of
$22.5 million pursuant to part (3) of such Section or (ii) the breach by any
Stockholder of Section 2 of this Agreement (the first of such events to
occur, a "Purchase Event"); provided, however, that except as provided in the
last sentence of this Section 5(b), the Option shall terminate and be of no
further force and effect upon the earliest to occur of (A) the Effective Time
(as defined in the Merger Agreement), (B) 12 months and one day after the
occurrence of a termination of the Merger Agreement in accordance with
Section 7.1 (d), (e), (f) or (g), (C) a termination of the Merger Agreement
in accordance with Section 7.1(a), (b), (c) or (h) of the Merger Agreement
and (D) 18 months after the Outside Date as defined in Section 7.1(e) of the
Merger Agreement. Notwithstanding the termination of the Option, Parent
shall be entitled to exercise the Option or receive the Cash Payment Amount
if it has given written notice of its intent to exercise the Option or
receive the Cash Payment Amount in accordance with the terms hereof prior to
the termination of the Option and the termination of the Option shall not
affect any rights hereunder which by their terms do not terminate or expire
prior to or as of such termination.
(c) In the event that Parent wishes to exercise the Option, it
shall send to such Stockholder a written notice (the date of which being
herein referred to as the "Notice Date") to that effect which notice also
specifies the total number of shares Parent will purchase pursuant to such
exercise, and a date not earlier than three business days nor later than 15
business days from
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<PAGE>
the Notice Date for the closing of such purchase (the "Option Closing Date");
provided, however, that (i) if the closing of the purchase and sale pursuant to
the Option (the "Option Closing") cannot be consummated by reason of any
applicable judgment, decree, order, law or regulation (including, without
limitation, the rules and regulations of the FCC), the period of time that
otherwise would run pursuant to this sentence shall run instead from the date on
which such restriction on consummation has expired or been terminated and (ii)
without limiting the foregoing, if prior notification to or approval of any
Governmental Entity (as defined in the Merger Agreement) is required in
connection with such purchase or any other transaction contemplated hereby,
Parent and such Stockholder shall promptly file the required notice or
application for approval and shall cooperate in the expeditious filing of such
notice or application, and, in the case of any prior notification or approval
required in connection with such purchase, the period of time that otherwise
would run pursuant to this sentence shall run instead from the date on which, as
the case may be, (A) any required notification period has expired or been
terminated or (B) any required approval has been obtained, and in either event,
any requisite waiting period has expired or been terminated. The place of the
Option Closing shall be at the offices of Wachtell, Lipton, Rosen & Katz, 51
West 52nd Street, New York, New York, and the time of the Option Closing shall
be 10:00 a.m. (Eastern Time) on the Option Closing Date.
(d) At the Option Closing, Parent (or its designee) shall pay
to each Stockholder an amount equal to the product of (x) the Per Share Cash
Amount or Greater Consideration, as applicable, and (y) the number of shares
being purchased from such Stockholder pursuant to the exercise of the
Option. Such payment shall be in immediately available funds by wire
transfer to a bank account designated in writing by such Stockholder.
(e) At the Option Closing, simultaneously with the delivery of
the amount specified in Section 5(d), each Stockholder shall deliver to
Parent (or its designee) a certificate or certificates representing its
shares to be purchased at the Option Closing, which shares shall be free and
clear of all Liens, claims, charges and encumbrances of any kind whatsoever,
except for such encumbrances or proxies in favor of Parent arising hereunder,
and a new Option evidencing the rights of the Parent (or its designee) to
purchase the balance of such Stockholder's shares purchasable hereunder.
6. Cash Election.
(a) In lieu of exercising the Option, by notice, Parent may
require such Stockholder to make a cash payment to Parent in the amount (the
"Cash Payment Amount") equal to the amount by which (A) the Market Price (as
defined below) exceeds (B) the Per Share Cash Amount, multiplied by the sum
of (i) the number of such Stockholder's Shares and (ii) the number of such
Stockholder's New Shares. Upon receipt of such notice, the Stockholder shall
be permitted to sell a sufficient number of Shares to pay the Cash Payment
Amount, if Stockholder shall, within five business days of such notice, sell
such Shares, provided that Stockholder shall use reasonable best efforts to
achieve good execution and shall consult with Parent with respect to the
manner of disposition. The term "Market Price" shall mean the closing price
(as measured by the last completed trade) for shares of Common Stock on the
date of Parent's election, or if
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<PAGE>
Stockholder elects to sell Shares to pay the Cash Payment Amount and has
complied with the proviso to the immediately preceding sentence, the average
price per Share actually realized in such sale.
(b) Parent may exercise its right to require such Stockholder
to pay the Cash Payment Amount pursuant to this Section by surrendering for
such purpose to such Stockholder, at the Company's principal office, a copy
of this Agreement, accompanied by a written notice or notices stating that
Parent elects to require such Stockholder to pay the Cash Payment Amount in
accordance with the provisions of this Section. Within five (or, in the case
of a sale of Shares under (a) above to fund the Cash Payment Amount, eight)
business days after the surrender of the Option and the receipt of such
notice or notices relating thereto, such Stockholder shall deliver or cause
to be delivered to Parent the Cash Payment Amount by wire to the account
designated by Parent in immediately available funds.
(c) If Stockholder at any time after delivery of a notice of
election by Parent to take the Cash Payment Amount pursuant to this Section
is prohibited under applicable law or regulation from selling Shares in order
to deliver to Parent the Cash Payment Amount in full, and Stockholder is
required to sell Shares to fund the Cash Payment Amount, then (i) such
Stockholder hereby undertakes to use such Stockholder's reasonable best
efforts, to the extent within the control of such Stockholder, to obtain all
required regulatory and legal approvals and to file any required notices, in
each case as promptly as practicable in order to accomplish such sales and
(ii) if Stockholder is unable to effect sales within four days after the
receipt of notice, such Stockholder shall be permitted to pay the Cash
Payment Amount to Parent in Shares valued at the Market Price.
7. No Encumbrances.
(a) Except as expressly contemplated by this Agreement,
Stockholder's Shares and the certificates representing such Shares are now,
and at all times during the term hereof will be, held by such Stockholder, or
by a nominee or custodian for the benefit of such Stockholder, free and clear
of all liens, claims, security interests, proxies, voting trusts or
agreements, understandings or arrangements or any other encumbrances
whatsoever (other than to the extent set forth on Schedule 1 to this
Agreement), except for any such encumbrances or proxies arising hereunder.
(b) Notwithstanding the foregoing, any Stockholder which has
received a notice of election by Parent (or its designee) to receive the Cash
Payment Amount shall be permitted, between receipt of such notice and the
time on which the Cash Payment Amount is due to be paid, to sell such number
of Shares as may be necessary to satisfy such obligation, as described in
Section 6(a) above.
(c) Any transfer by Stockholder of its Shares to Parent
pursuant to the Option shall pass to and unconditionally vest in Parent good
and valid title to such Stockholder's Shares and New Shares, free and clear
of all claims, liens, restrictions, security interests, pledges, limitations
and encumbrances whatsoever.
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<PAGE>
8. Acquisition Proposals. Stockholder agrees that such
Stockholder (i) shall not, directly or indirectly, initiate, solicit,
encourage or otherwise facilitate any inquiries or the making of any
Acquisition Proposal and (ii) has terminated any discussions or negotiations
with, and the provision of information or data to, any Person (other than
Parent) respecting an Acquisition Proposal. Such Stockholder further agrees
that he shall not, directly or indirectly, provide any confidential
information or data to any Person (as defined in the Merger Agreement)
relating to or in contemplation of an Acquisition Proposal or engage in any
negotiations or discussions relating to or in contemplation of an Acquisition
Proposal. Such Stockholder will notify Parent immediately if any inquiries,
proposals or offers respecting an Acquisition Proposal are received by, any
such information or data is requested from, or any such discussions or
negotiations are sought to be initiated or continued with, such Stockholder
indicating, in connection with such notice, the name of such Person and the
material terms and conditions of any proposals or offers, and shall keep
Parent apprised with respect to the status and terms thereof.
9. Appraisal Rights. Stockholder agrees not to exercise any
rights (including, without limitation, under Article 13 of the North Carolina
Business Corporation Act) to demand appraisal of any Common Stock which may
arise with respect to the Merger.
10. Affiliates Letter. Stockholder shall execute and deliver
on a timely basis an Affiliate Letter (as defined in the Merger Agreement).
11. Reliance by Parent. Stockholder understands and
acknowledges that Parent is entering into the Merger Agreement in reliance
upon Stockholder's execution and delivery of this Agreement.
12. Specific Performance. Each party hereto severally
acknowledges that it will be impossible to measure in money the damage to the
other parties if the party hereto fails to comply with any of the obligations
imposed by this Agreement, that every such obligation is material and that,
in the event of any such failure, the other parties will not have an adequate
remedy at law or damages. Accordingly, each party hereto severally agrees
that injunctive relief or other equitable remedy, in addition to remedies at
law or damages, is the appropriate remedy for any such failure and will not
oppose the granting of such relief on the basis that any other party has an
adequate remedy at law. Each party hereto severally agrees that it will not
seek, and agrees to waive any requirement for, the securing or posting of a
bond in connection with any other party's seeking or obtaining such equitable
relief.
13. Heirs, Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective heirs, successors and assigns and shall not be assignable without
the written consent of all other parties hereto other than any assignment in
whole or in part by Parent.
14. Entire Agreement. This Agreement supersedes all prior
agreements, written or oral, among the parties hereto with respect to the
subject matter hereof and contains the entire agreement among the parties
with respect to the subject matter hereof. This Agreement may not be
amended, supplemented or modified, and no provisions hereof may be modified or
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<PAGE>
waived, except by an instrument in writing signed by all the parties hereto. No
waiver of any provisions hereof by any party shall be deemed a waiver of any
other provisions hereof by any such party, nor shall any such waiver be deemed a
continuing waiver of any provision hereof by such party.
15. Miscellaneous.
(a) Expenses. Each of the parties hereto shall bear and pay
all costs and expenses incurred by it or on its behalf in connection with the
negotiation of this Agreement, including fees and expenses of its own
financial consultants, investment bankers, accountants and counsel.
(b) Amendment. This Agreement may not be amended, except by an
instrument in writing signed on behalf of each of the parties.
(c) This Agreement shall be deemed a contract made under, and
for all purposes shall be construed in accordance with, the internal laws of
the State of New York without regard to principles of conflicts of law,
except for those provisions relating to the voting and the proxy which shall
be governed by North Carolina law.
(d) Severability. If any provision of this Agreement or the
application of such provision to any person or circumstances shall be held
invalid by a court of competent jurisdiction, the remainder of the provision
held invalid and the application of such provision to persons or
circumstances, other than the party as to which it is held invalid, shall not
be affected.
(e) Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original but all of
which together shall constitute one and the same instrument.
(f) Termination. This Agreement shall terminate upon
termination of the Option.
(g) Headings. All Section headings herein are for convenience
of reference only and are not part of this Agreement and no construction or
reference shall be derived therefrom.
(h) Notices. All notices, requests, claims, demands, and other
communications under this Agreement must be in writing and shall be deemed
given if delivered personally, telecopied (which is confirmed), or sent by
overnight courier (providing proof of delivery) to the parties at the
following addresses (or at such other address for a party as shall be
specified by like notice):
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(i) if to Parent, to
AT&T Corp.
295 North Maple Avenue
Basking Ridge, New Jersey 07920
Telecopy No.: (908) 221-6618
Attention: Marilyn Wasser
with copies to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Telecopy No.: (212) 403-2000
Attention: David M. Silk; and
(ii) if to the Stockholder, to such Stockholder c/o
The Haynes G. Griffin 1998 Charitable Remainder
Unitrust
c/o North Carolina Trust Company
P.O. Box 1108
Greensboro, North Carolina 27402
Attention: Ms. Kim Garcia (Fax 336-230-1725)
with a copy to:
Latham & Watkins
53rd at Third Avenue, Suite 1000
885 Third Avenue
New York, New York 10022-4802
Telecopy No.: (212) 751-4864
Attention: Raymond Y. Lin
and to:
Vanguard Cellular Systems, Inc.
2002 Pisgah Church Road
Greensboro, North Carolina 27455
Telecopy No.: (336) 545-2219
Attention: Richard Rowlenson
(i) Further Assurances. In the event of any exercise of the
Option or election to take the Cash Payment Amount, each of the Company,
Parent and Stockholder shall execute
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<PAGE>
and deliver all other documents and instruments and take all other action that
may be reasonably necessary in order to consummate the transactions contemplated
by such exercise.
(j) Stockholder shall cause certificates for the Shares and New
Shares to have typed or printed thereon a restrictive legend which shall read
substantially as follows (if and to the extent true and necessary in light of
legal and factual circumstances existing at such time):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN PROVISIONS AS SET FORTH IN THE
VOTING AGREEMENT, DATED AS OF DECEMBER 22, 1998, A
COPY OF WHICH MAY BE OBTAINED FROM THE SECRETARY OF
VANGUARD CELLULAR SYSTEMS, INC. AT ITS PRINCIPAL
EXECUTIVE OFFICES, WHICH CONTAINS RESTRICTIONS ON THE
VOTING AND TRANSFER THEREOF."
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first written above.
AT&T CORP.
By: /s/ Robert Feit
Name: Robert Feit
Title: General Attorney and
Assistant Secretary
<PAGE>
The Haynes G. Griffin 1998 Charitable
Remainder Unitrust
North Carolina Trust Company, Trustee
By: /s/ D. Kenneth Dimock
Name: D. Kenneth Dimock
Title: Senior Vice President
<PAGE>
I, Haynes G. Griffin, as beneficiary of The Haynes G. Griffin
1998 Charitable Remainder Unitrust, consent to the signing of this Agreement
by Stockholder.
/s/ Haynes G. Griffin
Name: Haynes G. Griffin
I, Virginia R. Griffin, as beneficiary of The Haynes G. Griffin
1998 Charitable Remainder Unitrust, consent to the signing of this Agreement
by Stockholder.
/s/ Virginia R. Griffin
Name: Virginia R. Griffin
<PAGE>
EXHIBIT A
STOCKHOLDER
Number of
Shares of Type of
Name Common Stock Ownership
---- ------------ ---------
The Haynes G. Griffin
1998 Charitable
Remainder Unitrust 200,000 Beneficial
<PAGE>
EXHIBIT B
FORM OF PROXY
The undersigned stockholder, for consideration received, hereby
appoints [PARENT DESIGNEES] and each of them as my proxies, with full power
of substitution in each of them, to cast on behalf of the undersigned all
votes entitled to be cast by the holder of the shares of Class A Common
Stock, par value $0.01 per share, of Vanguard Cellular Systems, Inc., a North
Carolina corporation (the "Company"), owned by the undersigned at the Special
Meeting of Stockholders of the Company to be held [DATE, TIME AND PLACE] and
at any adjournment thereof (i) "FOR" approval and adoption of the Agreement
and Plan of Merger, dated as of October 2, 1998, between the Company and AT&T
Corp., a New York corporation ("Parent"), providing for the merger (the
"Merger") of the Company with and into a wholly-owned subsidiary of Parent,
and the Merger and (ii) "AGAINST" any proposal or offer with respect to a
merger, reorganization, share exchange, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving,
or any purchase of any substantial portion of the assets of, or any equity
securities of, or any transaction that would involve the transfer or
potential transfer of control of, the Company other than the Merger and any
proposed action or transaction that would prevent or intentionally delay
consummation of the Merger or is otherwise inconsistent therewith. This
proxy is coupled with an interest and is irrevocable until such time as the
Voting Agreement, dated as of December 22, 1998, between a certain
stockholder of the Company, the undersigned, and Parent terminates in
accordance with its terms.
Dated _____________________, 1998
________________________________
(Signature of Stockholder)
