VOTING AGREEMENT
VOTING AGREEMENT (the "Agreement"), dated as of October 2,
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, concurrently with 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, pursuant to which Stockholder will receive the
consideration provided for in the Merger Agreement in exchange for each share of
Class A Common Stock, par value $0.01 per share, of the Company (the "Common
Stock") owned by him, Stockholder has agreed to enter into this Agreement;
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
such Stockholder:
(a) is the beneficial owner of that 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, 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; and
(c) 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 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.
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 (except,
if any Shares were as of September 25, 1998 in margin accounts, to the extent of
the collateral required by the related loan as noted on Exhibit A hereto) 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 Shares.
Stockholder also agrees that any New Shares acquired or purchased by him shall
be
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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 Closing") cannot be consummated by reason of any
applicable judgment, decree, order, law or
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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, Xxxxx & Xxxx, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 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 proviso to the immediately preceding sentence, the
average price per Share actually realized in such sale.
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(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:
(i) Stockholder shall be permitted to sell (or
pledge to the Company in support of a loan) such portion of New Shares
(but may not sell any New Shares to the Company or its Subsidiaries)
solely to pay the exercise price of any employee stock options and tax
liabilities in respect of an exercise of employee stock options;
provided that Parent shall have a right of first refusal to purchase
such New Shares at the lower of $23 per share or the Market Price; and
provided further that, if any such New Shares are sold or pledged for
an amount in excess of $23 per share and the Option becomes
exercisable, such Stockholder shall remit such excess over $23 per
share directly to Parent if Parent ever exercises the Option; and
provided further that any such New Shares shall be sold (or pledged)
subject to the irrevocable proxy referred to in paragraph 2.
(ii) 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
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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.
(iii) In the event that the Merger Agreement is
terminated pursuant to Section 7.1(d) or 7.1(g) (based upon a breach
not due to the willful breach of any representation or warranty or the
willful breach of any covenant by the Company), any Stockholder shall
be permitted to sell up to 20% of such Stockholder's Shares held as of
the date hereof if reasonably necessary to provide liquidity to such
Stockholder if at such time no Acquisition Proposal shall be pending or
could reasonably expected to become pending prior to expiration of the
Option and there shall have been no willful breach of the Merger
Agreement or the Stock Option Agreement by the Company or this
Agreement by such Stockholder; provided that Parent shall have a right
of first refusal to purchase such Shares at the lower of $23 per share
or the Market Price on the date that such Stockholder notifies Parent
of his intention to sell; and provided further that, if any such Shares
are sold or pledged for an amount in excess of $23 per share and the
Option becomes exercisable, such Stockholder shall remit such excess
over $23 per share directly to Parent if Parent ever exercises the
Option; and provided further that any such New Shares shall be sold (or
pledged) subject to the irrevocable proxy referred to in paragraph 2.
(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.
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.
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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. Action in Stockholder Capacity Only. Stockholder makes no
agreement or understanding hereunder as a director or officer of the Company.
Stockholder signs this Agreement solely in his capacity as a beneficial owner of
the Shares, and nothing herein shall limit or effect any actions taken in
Stockholder's capacity as an officer or director of the Company.
13. 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.
14. 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.
15. 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 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.
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16. 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):
(i) if to Parent, to
AT&T Corp.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx Xxxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxx Xxxxxx
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with copies to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxx X. Silk; and
(ii) if to the Stockholder, to such Stockholder c/o
Vanguard Cellular Systems, Inc.
0000 Xxxxxx Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxxx
with a copy to:
Xxxxxx & Xxxxxxx
53rd at Third Avenue, Suite 1000
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxx X. Xxx.
(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 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 OCTOBER 2, 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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IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first written above.
AT&T CORP.
By:/s/ Xxxxxxx Xxxx
-------------------------------------
Name: Xxxxxxx Xxxx
Title: Assistant Secretary
Confirmed and accepted as of the date first written above:
By:/s/ X. Xxxxxxxxxx Xxxxxx, Jr.
------------------------------
Name: X. Xxxxxxxxxx Xxxxxx, Jr.
EXHIBIT A
STOCKHOLDER
Number of Shares of
Name Common Stock Type of Ownership
---- ------------ -----------------
X. Xxxxxxxxxx Xxxxxx, Jr. 765,510 (1) Beneficial
(1) Includes 327,749 shares pledged to NationsBank to secure a loan of
$3,073,868 as of the date hereof.
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" 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
October 2, 1998, between a certain stockholder of the Company, the undersigned,
and Parent terminates in accordance with its terms.
Dated _____________________, 1998
--------------------------------
(Signature of Stockholder)
VOTING AGREEMENT
VOTING AGREEMENT (the "Agreement"), dated as of October 2,
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, concurrently with 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, pursuant to which Stockholder will receive the
consideration provided for in the Merger Agreement in exchange for each share of
Class A Common Stock, par value $0.01 per share, of the Company (the "Common
Stock") owned by him, Stockholder has agreed to enter into this Agreement;
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
such Stockholder:
(a) is the beneficial owner of that 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, 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; and
(c) 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 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.
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 (except,
if any Shares were as of September 25, 1998 in margin accounts, to the extent of
the collateral required by the related loan as noted on Exhibit A hereto) 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 Shares.
Stockholder also agrees that any New Shares acquired or purchased by him shall
be
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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 Closing") cannot be consummated by reason of any
applicable judgment, decree, order, law or
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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, Xxxxx & Xxxx, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 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 proviso to the immediately preceding sentence, the
average price per Share actually realized in such sale.
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(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:
(i) Stockholder shall be permitted to sell (or
pledge to the Company in support of a loan) such portion of New Shares
(but may not sell any New Shares to the Company or its Subsidiaries)
solely to pay the exercise price of any employee stock options and tax
liabilities in respect of an exercise of employee stock options;
provided that Parent shall have a right of first refusal to purchase
such New Shares at the lower of $23 per share or the Market Price; and
provided further that, if any such New Shares are sold or pledged for
an amount in excess of $23 per share and the Option becomes
exercisable, such Stockholder shall remit such excess over $23 per
share directly to Parent if Parent ever exercises the Option; and
provided further that any such New Shares shall be sold (or pledged)
subject to the irrevocable proxy referred to in paragraph 2.
(ii) 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
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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.
(iii) In the event that the Merger Agreement is
terminated pursuant to Section 7.1(d) or 7.1(g) (based upon a breach
not due to the willful breach of any representation or warranty or the
willful breach of any covenant by the Company), any Stockholder shall
be permitted to sell up to 20% of such Stockholder's Shares held as of
the date hereof if reasonably necessary to provide liquidity to such
Stockholder if at such time no Acquisition Proposal shall be pending or
could reasonably expected to become pending prior to expiration of the
Option and there shall have been no willful breach of the Merger
Agreement or the Stock Option Agreement by the Company or this
Agreement by such Stockholder; provided that Parent shall have a right
of first refusal to purchase such Shares at the lower of $23 per share
or the Market Price on the date that such Stockholder notifies Parent
of his intention to sell; and provided further that, if any such Shares
are sold or pledged for an amount in excess of $23 per share and the
Option becomes exercisable, such Stockholder shall remit such excess
over $23 per share directly to Parent if Parent ever exercises the
Option; and provided further that any such New Shares shall be sold (or
pledged) subject to the irrevocable proxy referred to in paragraph 2.
(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.
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.
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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. Action in Stockholder Capacity Only. Stockholder makes no
agreement or understanding hereunder as a director or officer of the Company.
Stockholder signs this Agreement solely in his capacity as a beneficial owner of
the Shares, and nothing herein shall limit or effect any actions taken in
Stockholder's capacity as an officer or director of the Company.
13. 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.
14. 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.
15. 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 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.
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16. 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):
(i) if to Parent, to
AT&T Corp.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx Xxxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxx Xxxxxx
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with copies to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxx X. Silk; and
(ii) if to the Stockholder, to such Stockholder c/o
Vanguard Cellular Systems, Inc.
0000 Xxxxxx Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxxx
with a copy to:
Xxxxxx & Xxxxxxx
53rd at Third Avenue, Suite 1000
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxx X. Xxx.
(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 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 OCTOBER 2, 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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IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first written above.
AT&T CORP.
By:/s/ Xxxxxxx Xxxx
-------------------------------------
Name: Xxxxxxx Xxxx
Title:Assistant Secretary
Confirmed and accepted as of the date first written above:
By:/s/ Xxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxx
EXHIBIT A
STOCKHOLDER
Number of Shares of
Name Common Stock Type of Ownership
---- ------------ -----------------
Xxxxxx X. Xxxxxxx 1,047,931 (1) Beneficial
(1) Includes 140,850 shares in a margin account at Xxxxxx Securities, Inc., with
0 shares securing a loan of $0 as of the date hereof.
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" 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
October 2, 1998, between a certain stockholder of the Company, the undersigned,
and Parent terminates in accordance with its terms.
Dated _____________________, 1998
--------------------------------
(Signature of Stockholder)
VOTING AGREEMENT
VOTING AGREEMENT (the "Agreement"), dated as of October 2,
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, concurrently with 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, pursuant to which Stockholder will receive the
consideration provided for in the Merger Agreement in exchange for each share of
Class A Common Stock, par value $0.01 per share, of the Company (the "Common
Stock") owned by him, Stockholder has agreed to enter into this Agreement;
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
such Stockholder:
(a) is the beneficial owner of that 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, 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; and
(c) 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 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.
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 (except,
if any Shares were as of September 25, 1998 in margin accounts, to the extent of
the collateral required by the related loan as noted on Exhibit A hereto) 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 Shares.
Stockholder also agrees that any New Shares acquired or purchased by him shall
be
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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 Closing") cannot be consummated by reason of any
applicable judgment, decree, order, law or
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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, Xxxxx & Xxxx, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 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 proviso to the immediately preceding sentence, the
average price per Share actually realized in such sale.
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(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:
(i) Stockholder shall be permitted to sell (or
pledge to the Company in support of a loan) such portion of New Shares
(but may not sell any New Shares to the Company or its Subsidiaries)
solely to pay the exercise price of any employee stock options and tax
liabilities in respect of an exercise of employee stock options;
provided that Parent shall have a right of first refusal to purchase
such New Shares at the lower of $23 per share or the Market Price; and
provided further that, if any such New Shares are sold or pledged for
an amount in excess of $23 per share and the Option becomes
exercisable, such Stockholder shall remit such excess over $23 per
share directly to Parent if Parent ever exercises the Option; and
provided further that any such New Shares shall be sold (or pledged)
subject to the irrevocable proxy referred to in paragraph 2.
(ii) 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
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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.
(iii) In the event that the Merger Agreement is
terminated pursuant to Section 7.1(d) or 7.1(g) (based upon a breach
not due to the willful breach of any representation or warranty or the
willful breach of any covenant by the Company), any Stockholder shall
be permitted to sell up to 20% of such Stockholder's Shares held as of
the date hereof if reasonably necessary to provide liquidity to such
Stockholder if at such time no Acquisition Proposal shall be pending or
could reasonably expected to become pending prior to expiration of the
Option and there shall have been no willful breach of the Merger
Agreement or the Stock Option Agreement by the Company or this
Agreement by such Stockholder; provided that Parent shall have a right
of first refusal to purchase such Shares at the lower of $23 per share
or the Market Price on the date that such Stockholder notifies Parent
of his intention to sell; and provided further that, if any such Shares
are sold or pledged for an amount in excess of $23 per share and the
Option becomes exercisable, such Stockholder shall remit such excess
over $23 per share directly to Parent if Parent ever exercises the
Option; and provided further that any such New Shares shall be sold (or
pledged) subject to the irrevocable proxy referred to in paragraph 2.
(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.
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.
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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. Action in Stockholder Capacity Only. Stockholder makes no
agreement or understanding hereunder as a director or officer of the Company.
Stockholder signs this Agreement solely in his capacity as a beneficial owner of
the Shares, and nothing herein shall limit or effect any actions taken in
Stockholder's capacity as an officer or director of the Company.
13. 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.
14. 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.
15. 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 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.
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16. 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):
(i) if to Parent, to
AT&T Corp.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx Xxxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxx Xxxxxx
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with copies to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxx X. Silk; and
(ii) if to the Stockholder, to such Stockholder c/o
Vanguard Cellular Systems, Inc.
0000 Xxxxxx Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxxx
with a copy to:
Xxxxxx & Xxxxxxx
53rd at Third Avenue, Suite 1000
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxx X. Xxx.
(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 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 OCTOBER 2, 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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IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first written above.
AT&T CORP.
By:/s/ Xxxxxxx Xxxx
-------------------------------------
Name: Xxxxxxx Xxxx
Title: Assistant Secretary
Confirmed and accepted as of the date first written above:
By:/s/ Xxxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxx
EXHIBIT A
STOCKHOLDER
Number of Shares of
Name Common Stock Type of Ownership
---- ------------ -----------------
Xxxxxxx X. Xxxxxxx 821,850 (1) Beneficial
(1) Includes 208,524 shares pledged to NationsBank to secure a loan of
$1,900,000 and 104,523 shares pledged to First Union Bank to secure a loan of
$497,500.
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" 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
October 2, 1998, between a certain stockholder of the Company, the undersigned,
and Parent terminates in accordance with its terms.
Dated _____________________, 1998
--------------------------------
(Signature of Stockholder)
VOTING AGREEMENT
VOTING AGREEMENT (the "Agreement"), dated as of October 2,
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, concurrently with 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, pursuant to which Stockholder will receive the
consideration provided for in the Merger Agreement in exchange for each share of
Class A Common Stock, par value $0.01 per share, of the Company (the "Common
Stock") owned by him, Stockholder has agreed to enter into this Agreement;
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
such Stockholder:
(a) is the beneficial owner of that 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, 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; and
(c) 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 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.
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 (except,
if any Shares were as of September 25, 1998 in margin accounts, to the extent of
the collateral required by the related loan as noted on Exhibit A hereto) 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 Shares.
Stockholder also agrees that any New Shares acquired or purchased by him shall
be
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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 Closing") cannot be consummated by reason of any
applicable judgment, decree, order, law or
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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, Xxxxx & Xxxx, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 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 proviso to the immediately preceding sentence, the
average price per Share actually realized in such sale.
-4-
(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:
(i) 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.
(ii) In the event that the Merger Agreement is
terminated pursuant to Section 7.1(d) or 7.1(g) (based upon a breach
not due to the willful breach of any representation or warranty or the
willful breach of any covenant by the Company), any Stockholder shall
be permitted to sell up to 20% of such Stockholder's Shares held as of
the date hereof if reasonably necessary to provide liquidity to such
Stockholder if at such time no Acquisition Proposal shall be pending or
could reasonably expected to become pending prior to expiration of the
Option and there shall have been no willful breach of
-5-
the Merger Agreement or the Stock Option Agreement by the Company or
this Agreement by such Stockholder; provided that Parent shall have a
right of first refusal to purchase such Shares at the lower of $23 per
share or the Market Price on the date that such Stockholder notifies
Parent of his intention to sell; and provided further that, if any such
Shares are sold or pledged for an amount in excess of $23 per share and
the Option becomes exercisable, such Stockholder shall remit such
excess over $23 per share directly to Parent if Parent ever exercises
the Option; and provided further that any such New Shares shall be sold
(or pledged) subject to the irrevocable proxy referred to in paragraph
2.
(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.
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. Action in Stockholder Capacity Only. Stockholder makes no
agreement or understanding hereunder as a director or officer of the Company.
Stockholder signs this Agreement solely in his capacity as a beneficial owner of
the Shares, and nothing herein shall limit or effect any actions taken in
Stockholder's capacity as an officer or director of the Company.
-6-
13. 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.
14. 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.
15. 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 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.
16. 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.
-7-
(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):
(i) if to Parent, to
AT&T Corp.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx Xxxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxx Xxxxxx
with copies to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxx X. Silk; and
(ii) if to the Stockholder, to such Stockholder c/o
Vanguard Cellular Systems, Inc.
0000 Xxxxxx Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxxx
-8-
with a copy to:
Xxxxxx & Xxxxxxx
53rd at Third Avenue, Suite 1000
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxx X. Xxx.
(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 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 OCTOBER 2, 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. "
-9-
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first written above.
AT&T CORP.
By:/s/ Xxxxxxx Xxxx
-------------------------------------
Name: Xxxxxxx Xxxx
Title: Assistant Secretary
Confirmed and accepted as of the date first written above:
XXXXX XXXXXXXXXX FOUNDATION
By:/s/ Xxxxx X. Xxxxxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxxxxx
Title: President
EXHIBIT A
STOCKHOLDER
Number of Shares of
Name Common Stock Type of Ownership
---- ------------ -----------------
Xxxxx Xxxxxxxxxx Foundation 1,020,292 Beneficial
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" 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
October 2, 1998, between a certain stockholder of the Company, the undersigned,
and Parent terminates in accordance with its terms.
Dated _____________________, 1998
--------------------------------
(Signature of Stockholder)
VOTING AGREEMENT
VOTING AGREEMENT (the "Agreement"), dated as of October 2,
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, concurrently with 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, pursuant to which Stockholder will receive the
consideration provided for in the Merger Agreement in exchange for each share of
Class A Common Stock, par value $0.01 per share, of the Company (the "Common
Stock") owned by him, Stockholder has agreed to enter into this Agreement;
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
such Stockholder:
(a) is the beneficial owner of that 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, 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; and
(c) 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 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.
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 (except,
if any Shares were as of September 25, 1998 in margin accounts, to the extent of
the collateral required by the related loan as noted on Exhibit A hereto) 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 Shares.
Stockholder also agrees that any New Shares acquired or purchased by him shall
be
-2-
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 Closing") cannot be consummated by reason of any
applicable judgment, decree, order, law or
-3-
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, Xxxxx & Xxxx, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 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 proviso to the immediately preceding sentence, the
average price per Share actually realized in such sale.
-4-
(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:
(i) 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.
(ii) In the event that the Merger Agreement is
terminated pursuant to Section 7.1(d) or 7.1(g) (based upon a breach
not due to the willful breach of any representation or warranty or the
willful breach of any covenant by the Company), any Stockholder shall
be permitted to sell up to 20% of such Stockholder's Shares held as of
the date hereof if reasonably necessary to provide liquidity to such
Stockholder if at such time no Acquisition Proposal shall be pending or
could reasonably expected to become pending prior to expiration of the
Option and there shall have been no willful breach of
-5-
the Merger Agreement or the Stock Option Agreement by the Company or
this Agreement by such Stockholder; provided that Parent shall have a
right of first refusal to purchase such Shares at the lower of $23 per
share or the Market Price on the date that such Stockholder notifies
Parent of his intention to sell; and provided further that, if any such
Shares are sold or pledged for an amount in excess of $23 per share and
the Option becomes exercisable, such Stockholder shall remit such
excess over $23 per share directly to Parent if Parent ever exercises
the Option; and provided further that any such New Shares shall be sold
(or pledged) subject to the irrevocable proxy referred to in paragraph
2.
(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.
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. Action in Stockholder Capacity Only. Stockholder makes no
agreement or understanding hereunder as a director or officer of the Company.
Stockholder signs this Agreement solely in his capacity as a beneficial owner of
the Shares, and nothing herein shall limit or effect any actions taken in
Stockholder's capacity as an officer or director of the Company.
-6-
13. 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.
14. 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.
15. 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 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.
16. 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.
-7-
(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):
(i) if to Parent, to
AT&T Corp.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx Xxxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxx Xxxxxx
with copies to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxx X. Silk; and
(ii) if to the Stockholder, to such Stockholder c/o
Vanguard Cellular Systems, Inc.
0000 Xxxxxx Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxxx
-8-
with a copy to:
Xxxxxx & Xxxxxxx
53rd at Third Avenue, Suite 1000
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxx X. Xxx.
(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 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 OCTOBER 2, 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. "
-9-
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first written above.
AT&T CORP.
By:/s/ Xxxxxxx Xxxx
-------------------------------------
Name: Xxxxxxx Xxxx
Title: Assistant Secretary
Confirmed and accepted as of the date first written above:
By:/s/ Xxxxxx X. Xxxxxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
EXHIBIT A
STOCKHOLDER
Number of Shares of
Name Common Stock Type of Ownership
---- ------------ -----------------
Xxxxxx X. Xxxxxxxxxx 50,736 (1) Beneficial
(1) Does not include (1) the Xxxxx Xxxxx Xxxxxxxxxx Testamentary Trust; Xxxxxx
X. Xxxxxxxxxx & Xxxxx X. Xxxxxxxxxx, Trustees and (2) the X. Xxxxx Xxxxxxxxxx
Family Trust; Xxxxx X. Xxxxxxxxxx, Xxxxxx X. Xxxxxxxxxx, E. Xxxxxxx Xxxxxxx, III
and Winburne X. Xxxx, III, Trustees.
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" 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
October 2, 1998, between a certain stockholder of the Company, the undersigned,
and Parent terminates in accordance with its terms.
Dated _____________________, 1998
--------------------------------
(Signature of Stockholder)
VOTING AGREEMENT
VOTING AGREEMENT (the "Agreement"), dated as of October 2,
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, concurrently with 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, pursuant to which Stockholder will receive the
consideration provided for in the Merger Agreement in exchange for each share of
Class A Common Stock, par value $0.01 per share, of the Company (the "Common
Stock") owned by him, Stockholder has agreed to enter into this Agreement;
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
such Stockholder:
(a) is the beneficial owner of that 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, 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; and
(c) 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 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.
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 (except,
if any Shares were as of September 25, 1998 in margin accounts, to the extent of
the collateral required by the related loan as noted on Exhibit A hereto) 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 Shares.
Stockholder also agrees that any New Shares acquired or purchased by him shall
be
-2-
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 Closing") cannot be consummated by reason of any
applicable judgment, decree, order, law or
-3-
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, Xxxxx & Xxxx, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 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 proviso to the immediately preceding sentence, the
average price per Share actually realized in such sale.
-4-
(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:
(i) 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.
(ii) In the event that the Merger Agreement is
terminated pursuant to Section 7.1(d) or 7.1(g) (based upon a breach
not due to the willful breach of any representation or warranty or the
willful breach of any covenant by the Company), any Stockholder shall
be permitted to sell up to 20% of such Stockholder's Shares held as of
the date hereof if reasonably necessary to provide liquidity to such
Stockholder if at such time no Acquisition Proposal shall be pending or
could reasonably expected to become pending prior to expiration of the
Option and there shall have been no willful breach of
-5-
the Merger Agreement or the Stock Option Agreement by the Company or
this Agreement by such Stockholder; provided that Parent shall have a
right of first refusal to purchase such Shares at the lower of $23 per
share or the Market Price on the date that such Stockholder notifies
Parent of his intention to sell; and provided further that, if any such
Shares are sold or pledged for an amount in excess of $23 per share and
the Option becomes exercisable, such Stockholder shall remit such
excess over $23 per share directly to Parent if Parent ever exercises
the Option; and provided further that any such New Shares shall be sold
(or pledged) subject to the irrevocable proxy referred to in paragraph
2.
(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.
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. Action in Stockholder Capacity Only. Stockholder makes no
agreement or understanding hereunder as a director or officer of the Company.
Stockholder signs this Agreement solely in his capacity as a beneficial owner of
the Shares, and nothing herein shall limit or effect any actions taken in
Stockholder's capacity as an officer or director of the Company.
-6-
13. 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.
14. 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.
15. 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 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.
16. 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.
-7-
(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):
(i) if to Parent, to
AT&T Corp.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx Xxxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxx Xxxxxx
with copies to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxx X. Silk; and
(ii) if to the Stockholder, to such Stockholder c/o
Vanguard Cellular Systems, Inc.
0000 Xxxxxx Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxxx
-8-
with a copy to:
Xxxxxx & Xxxxxxx
53rd at Third Avenue, Suite 1000
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxx X. Xxx.
(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 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 OCTOBER 2, 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. "
-9-
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first written above.
AT&T CORP.
By:/s/ Xxxxxxx Xxxx
-------------------------------------
Name: Xxxxxxx Xxxx
Title: Assistant Secretary
Confirmed and accepted as of the date first written above:
PIEDMONT ASSOCIATES LIMITED
By:/s/ Xxxxxx X. Xxxxxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: General Partner
PIEDMONT HARBOR-PIEDMONT ASSOCIATED LIMITED PARTNERSHIP
APPOINTMENT OF AGENT BY MANAGING GENERAL PARTNER
WHEREAS, the undersignee, Xxxxxxxx Xxxxxxxxxx, Xx. is the duly
appointed Managing Partner (the "Managing Partner") of Piedmont Harbor-Piedmont
Associates Limited Partnership (the "Partnership"); and
WHEREAS, under the terms of the Agreement of Limited
Partnership relating to the Partnership, the undersigned is authorized to employ
agents to perform any of his powers and authority under the Agreement of Limited
Partnership; and
WHEREAS, the Managing Partner deisres to appoint such agency;
NOW, THEREFORE, the managing Partner hereby appoints Xxxxxx
Xxxxx Xxxxxxxxxx, a General Partner of the Partnership, as his agent for the
purpose of dealing with any and all shares of capital stock of Vanguard Cellular
Systems, Inc. (the "Shares") owned by the Partnership, including without
limitation voting the Shares, selling the Shares for whatever price he deems
appropriate, and entering into agreements and options with respect to the
foregoing. This authority is unlimited and includes the authority to vote or to
sell the Shares in connection with any merger, sale of assets, or simlar
transaction undertaken by Vanguard Cellular Systems, Inc.
IN WITNESS WHEREOF, the undersigned has executed this document
pursuant to Section 2 of Article 4 of the Agreement of Limited Partnership, this
30th day of September, 1998.
/s/ Xxxxxxxx Xxxxxxxxxx, Xx.
--------------------------------------
Xxxxxxxx Xxxxxxxxxx, Xx., Managing General Partner
EXHIBIT A
STOCKHOLDER
Number of Shares of
Name Common Stock Type of Ownership
---- ------------ -----------------
Piedmont Associates Limited 1,308,917 Beneficial
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" 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
October 2, 1998, between a certain stockholder of the Company, the undersigned,
and Parent terminates in accordance with its terms.
Dated _____________________, 1998
--------------------------------
(Signature of Stockholder)
