EXECUTION COPY
AMENDMENT NO. 1 TO THE
AGREEMENT AND PLAN OF MERGER
among
AT&T CORP.,
WINSTON, INC.
and
VANGUARD CELLULAR SYSTEMS, INC.,
Dated as of November 4, 1998
This AMENDMENT NO. 1 to the Agreement and Plan of Merger (this
"Amendment No. 1") is entered into as of this 4th day of November, 1998 by and
among AT&T Corp., a New York corporation ("Parent"), Winston, Inc., a Delaware
corporation and a wholly owned subsidiary of Parent ("Merger Sub"), and Vanguard
Cellular Systems, Inc., a North Carolina corporation (the "Company", and
together with Parent and Merger Sub, the "Parties").
WHEREAS, the Parties have entered into an Agreement and Plan
of Merger, dated as of October 2, 1998 (the "Original Merger Agreement" and, as
amended by this Amendment No. 1, the "Merger Agreement");
WHEREAS, the Parties desire to make certain amendments to the
Original Merger Agreement in contemplation of a proposed tender offer and
consent solicitation for the Debentures;
WHEREAS, the Parties desire that, except as set forth herein,
the Original Merger Agreement shall remain in full force and effect; and
WHEREAS, capitalized terms used herein and not defined herein
shall have the respective meanings given in the Original Merger Agreement;
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements contained herein, the Parties agree as
follows:
SECTION 1. Section 3.1(m) of the Original Merger Agreement is
amended to add the words "and, if the Company makes the election in Section
5.9(2), NationsBanc Montgomey Securities LLC" to the end of the first sentence
and to add the words ", and a true and complete copy of the engagement letter of
NationsBanc Montgomery Securities LLC in the form attached to Schedule 5.9 shall
have been delivered to Parent prior to the commencement of the Tender Offer if
the Company makes the election in Section 5.9(2)".
SECTION 2. Section 3.1 of the Original Merger
Agreement is amended to add the following:
(w) Authority; No Conflicts.
(i) The Company has all requisite corporate power and
authority to execute and deliver Amendment No. 1 and to
consummate the transactions contemplated by Amendment No.
1 (which shall include, for all purposes hereunder,
without limitation, the making and consummation of the
Tender Offer (as defined herein) and all transactions
contemplated thereby, the making of the Deposit (as
defined herein) and the execution, delivery and
performance of the Supplemental Indenture (as defined
herein)). The execution, delivery and performance of
Amendment No. 1 and the consummation of the transactions
contemplated by Amendment No. 1 have been duly authorized
by the Board of Directors of the Company and all
nec
-1-
essary corporate action on the part of the Company.
Amendment No. 1 has been duly executed and delivered by
the Company and constitutes the legal, valid and binding
obligation of the Company, enforceable against it in
accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws relating to or affecting
creditors generally, by general equity principles
(regardless of whether such enforceability is considered
in a proceeding in equity or at law) or by an implied
covenant of good faith and fair dealing.
(ii) The execution and delivery of Amendment No. 1 does
not and the consummation of the transactions contemplated
by Amendment No. 1 will not cause or result in any
Violation pursuant to: (A) any provision of the
Organizational Documents of the Company or any of its
Subsidiaries (B) (x) any Company Material Contract or (y)
any other contract, agreement or binding obligation to
which the Company or any Subsidiary is a party or to
which any of its or their assets are bound or (C) any
Law.
(iii) No consent, waiver, permit, approval, order or
authorization of, or registration, declaration or filing
with, any Governmental Entity (other than those which
have been obtained or made) is required by or with
respect to the Company or any of its Subsidiaries in
connection with the execution and delivery of Amendment
No. 1 by the Company or the consummation by the Company
of the transactions contemplated by Amendment No. 1.
(iv) Upon execution and delivery by the Company and the
Trustee under the Indenture (the "Trustee") of the
Supplemental Indenture in accordance with the Tender
Offer, the Majority Covenants (as defined herein) will
not apply to the Company or any of its affiliates. The
Company has reviewed the Supplemental Indentures with its
counsel, the Trustee and such Trustee's counsel, and is
aware of no reason that, assuming receipt of the
Requisite Consents (as defined herein), the Supplemental
Indenture would not be executed by the Trustee.
(x) Tender Offer Matters. The consummation of the
transactions contemplated by Amendment No. 1 shall comply with all
applicable laws including, without limitation, all federal and
state securities laws. None of the offer to purchase or any of the
related materials to be sent or delivered by the Company in
connection with the Tender Offer shall contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading. The supplemental
-2-
indenture (the
"Supplemental Indenture") to be entered into in connection with
the Tender Offer, upon execution by the Company and the Trustee,
shall be valid and enforceable and in full force and effect, and
neither the Company nor any of its Subsidiaries shall violate any
provision of, or commit or fail to perform any act which, with or
without notice, lapse of time, or both, could reasonably be
expected to constitute a default under the provisions of, any such
Supplemental Indenture.
SECTION 3. Section 5.9 of the Original Merger
Agreement is amended and restated in its entirety to read as follows:
5.9 Debentures. (a) Subject to compliance with this Section
5.9, the Company may, at its election, commence a tender offer and
consent solicitation (the "Tender Offer") to purchase the Company's
outstanding 9 3/8% Debentures due 2006 (the "Debentures") on the terms
and conditions set forth in Schedule 5.9 hereto, which shall effect the
deletion of substantially all of the covenants in the related
Indenture, dated as of April 1, 1996, as amended by the First
Supplemental indenture thereto, dated as of April 1, 1996 (as so
amended, the "Indenture"), which may be deleted therefrom with the
consent (the "Requisite Consent") of a majority in principal amount of
outstanding Debentures, as set forth in Schedule 5.9 (the "Majority
Covenants").
(b) The Tender Offer shall be commenced as promptly as
practicable following the date of Amendment No. 1, and, in any event,
within three days following such date (the "Third Day"). Except as may
be required by law, the Company shall not extend the consent date or
expiration date of, or amend or waive any terms or conditions of, the
Tender Offer, or deem any condition thereof not to be satisfied,
without Parent's prior written consent (in its sole discretion),
provided that, on any scheduled consent date under the Tender Offer
prior to November 25, 1998, the Company may extend such consent date,
for one business day, if on such consent date the Requisite Consent has
not been received.
(c) All documentation delivered in connection with the
Tender Offer shall be acceptable to Parent (in its sole discretion),
and Parent shall be provided all such documentation sufficiently in
advance of the anticipated date of use of such documentation to
meaningfully review and comment on such documentation. The Company
shall provide Parent with (i) opinions of North Carolina and New York
counsel to the Company, addressed to both the Company and Parent, in
form and substance satisfactory to Parent (in its sole discretion) and
as set forth in Schedule 5.9 hereto respecting the commencement and
consummation of the Tender Offer and the execution and delivery of the
Supplemental Indenture and (ii) reliance letters permitting Parent and
the Company to rely on any legal opinions or certificates delivered in
connection therewith.
(d) If the Tender Offer is commenced (x) upon the
receipt of the Requisite Consent, the Company shall execute and use its
best efforts to cause the
-3-
Trustee to execute, the Supplemental
Indenture at the Consent Time (as defined in the Tender Offer) and (y)
upon the expiration of the period for tendering Debentures under the
Tender Offer, if the conditions to consummation of the Tender Offer
have been satisfied, the Company shall accept for payment and purchase
all Debentures validly tendered thereunder and shall deliver such
Debentures to the Trustee under the Indenture for cancellation.
(e) Promptly following the expiration of the period
for tendering Debentures under the Tender Offer without Debentures
being purchased thereunder, or upon the Third Day if the Tender Offer
shall not have been commenced by such day, the Company shall make the
deposit (the "Deposit") contemplated by Section 6.1A(1) of the
Indenture and shall use its best efforts to satisfy all other
conditions to the covenant defeasance provisions of Sections 6.1 and
6.1A of the Indenture so that such covenant defeasance shall become
effective with respect to all Debentures as promptly as practicable
thereafter.
SECTION 4. Section 6.2(k) of the Original Merger
Agreement is amended and restated in its entirety to read as follows:
(k) Debentures. Either (i) all Debentures shall have
been covenant defeased (and all conditions thereto satisfied) in
accordance with the covenant defeasance provisions of Sections 6.1 and
6.1A of the Indenture or (ii) the Supplemental Indenture shall have
become effective and the provisions thereof shall have become operative
and the Majority Covenants shall no longer apply to or restrict the
operations of the Company and its successors.
SECTION 5. Sections 7.2(f) and (g) of the Original Merger
Agreement are amended and restated in their entirety to read as follows:
(f) If this Agreement is terminated pursuant to Section
7.1(h) and the Company prior to the date of such termination
consummated the Tender Offer, then Parent will pay the Company an
amount equal to the product of (x) $3.5 million and (y) the percentage
of outstanding Debentures purchased under the Tender Offer, plus all
Company Expenses which may be owed pursuant to Section 7.2(c). If this
Agreement is terminated pursuant to Section 7.1(h) and the Company
prior to the date of such termination irrevocably made the Deposit
pursuant to Section 5.9(e) hereof, then Parent will pay the Company an
amount equal to $4.5 million.
(g) If this Agreement is terminated pursuant to Section 7.1(b)
and the Company prior to the date of such termination consummated the
Tender Offer, then Parent will pay the Company an amount equal to the
product of (x) $1.75 million and (y) the percentage of outstanding
Debentures purchased under the Tender Offer, plus all Company Expenses
which may be owed pursuant to Section 7.2(c). If this Agreement is
terminated pursuant to Section 7.1(b) and the Company prior to the date
of such termination irrevocably made the Deposit pur
-4-
suant to Section
5.9(e) hereof, then Parent will pay the Company an amount equal to
$2.25 million.
SECTION 6. Except as set forth herein, the Original Merger
Agreement shall remain in full force and effect. All references to "this
Agreement" in the Original Merger Agreement shall be references to the Original
Merger Agreement as amended pursuant to this Amendment No. 1.
IN WITNESS WHEREOF, the parties below have caused this
Amendment No. 1 to be duly executed by persons duly authorized, all as of the
date first written above.
AT&T CORP.
By: /s/Michael Berg
----------------
Name: Michael Berg
Title: Assistant Secretary
WINSTON, INC.
By: /s/ David J. Pester
-------------------
Name: David J. Pester
Title: Secretary
VANGUARD CELLULAR SYSTEMS, INC.
By: /s/ Richard C. Rowlenson
------------------------
Name: Richard C. Rowlenson
Title: Executive Vice President