Vanguard Cellular Systems, Inc.
2002 Pisgah Church Road
Suite 300
Greensboro, NC 27455
December 28, 1998
AT&T Corp.
295 North Maple Avenue
Basking Ridge, New Jersey 07920
Re: Vanguard Executive Option Loans
Ladies and Gentlemen:
Reference is made to that certain Amended and Restated Agreement and
Plan of Merger dated as of October 2, 1998, (the "Merger Agreement"), among you,
your wholly owned subsidiary, Winston, Inc., and the undersigned, pursuant to
which the undersigned is proposed to be merged into Winston, Inc. Further
reference is made to certain proposed loans by the undersigned to certain of its
executives (the "Executives") to finance their exercise of stock options and
related income tax liabilities (the "Option Loans") as proposed to be evidenced
by promissory notes of the executives (the "Notes"), which Notes will be secured
by and/or entitled to the benefit of (a) Pledge Agreements ("Pledge Agreements")
of the Executives and (b) Agreements Re Netting of Payments ("Netting
Agreements", and, together with the Notes and the Pledge Agreements, the "Option
Loan Documents") by the Executives.
The undersigned hereby agrees that, as a condition to the extension of
any Option Loan (other than an Option Loan to an Executive who is a party to a
Voting Agreement (as defined in the Merger Agreement)), the undersigned will
obtain and provide to you the written agreement of the Executive (for the
benefit of you) in the form of Exhibit A.
The undersigned further agrees that, without your prior consent, no
provision of any Option Loan Document will be amended, waived or otherwise
modified or compromised, no consent will be provided thereunder and the Option
Loan Documents will be enforced to the fullest extent.
By your acceptance of this letter, you hereby consent to the
undersigned's execution and delivery from time to time of Option Loan Documents
between the undersigned and its
executives listed on Schedule I hereto in the form of the drafts of the Option
Loan Documents attached hereto and in respective amounts not to exceed the
amounts on Schedule I hereto.
This letter shall terminate and be of no further force and effect upon
any termination of the Merger Agreement.
VANGUARD CELLULAR SYSTEMS, INC.
By: /s/ Stephen R. Leeolou
Title: President, CEO
ACCEPTED AND AGREED:
AT&T CORP.
By: Michael Berg
Title: General Attorney and Assistant Secretary
Exhibit A
[NAME AND ADDRESS OF EXECUTIVE VICE PRESIDENT]
_________________, 1999
Vanguard Cellular Systems, Inc.
2002 Pisgah Church Road, Suite 300
Greensboro, North Carolina 27455
AT&T Corp.
295 North Maple Avenue
Basking Ridge, New Jersey 07920
Re: Transfer of Vanguard Common Stock pledged under Pledge Agreement
Ladies and Gentlemen:
Reference is made to: (i) the Promissory Note or Promissory Notes of
even date herewith (the "Notes") made by the undersigned and payable to Vanguard
Cellular Systems, Inc. ("Vanguard"), and (ii) the Pledge Agreement of even date
herewith (the "Pledge Agreement") made by the undersigned in favor of Vanguard.
In consideration of a loan or loans made to the undersigned by Vanguard this
date, as evidenced by a Note or Notes and secured by, among other things, the
Pledge Agreement, the undersigned executive of Vanguard, hereby agrees: (a) not
to sell, transfer, dispose of, encumber (except pursuant to the Pledge
Agreement) or otherwise convey any interest in any Pledged Securities (as
defined in Pledge Agreement) prior to the Merger (as defined in the Pledge
Agreement) unless the Merger shall not have been consummated on or before March
31, 1999 (it being understood that if the Merger shall not have been consummated
on or before March 31, 1999, the undersigned may thereafter sell or otherwise
transfer or convey any or all of the Pledged Securities so long as the Notes
shall have been paid in full prior to such sale) and (b) to be present and vote
the Pledged Securities, (i) in favor of adoption and approval of the Amended and
Restated Agreement and Plan of Merger dated as of October 2, 1998 among AT&T
Corp., Winston, Inc. and Vanguard Cellular Systems, Inc. (the "Merger
Agreement") and the Merger (and each other action and transaction contemplated
by the Merger Agreement) and (ii) against any Acquisition Proposal (as defined
in the Merger Agreement) other than the Merger (or any other Acquisition
Proposal of Parent) and against any proposed action or transaction that would
prevent or intentionally delay consummation of the Merger (or other Acquisition
Proposal of Parent) or is otherwise inconsistent therewith at every meeting of
the stockholders of the Company at which any such matters are considered and at
every adjournment thereof (and, if applicable, in connection with any request or
solicitation of written consents of stockholders). Any such vote shall be cast,
or consent shall be given, in accordance with such procedures relating thereto
as shall ensure that it is duly counted for purposes of determining that a
quorum is present and for purposes of recording the results of such vote or
consent. (The capitalized terms used herein and not otherwise defined shall
have the meanings ascribed to them in the Merger Agreement).
This letter shall terminate and be of no further force and effect upon
any termination of the Merger Agreement.
---------------------------------
Name of Executive: ________________
Schedule I
Maximum Loans
to Executive Officers
Executive Officer No. of Vested Cost to At $23/sh 35.45% W/H Total Loan
Options Exercise Value of Tax Loans (2)(3)
Options Options Above (2)(3)
Exercise
Price(1)
Haynes G. Griffin 870,000 10,948,125 9,061,875 3,212,435 14,160,560
Stephen R. Leeolou 870,000 10,948,125 9,061,875 3,212,435 14,160,560
L. Richardson Preyer, Jr. 870,000 10,948,125 9,061,875 3,212,435 14,160,560
Stuart S. Richardson 208,750 2,646,875 2,154,375 763,726 3,410,601
Stephen L. Holcombe 359,799 5,946,730 2,328,648 825,506 6,772,236
Richard C. Rowlenson 352,299 5,847,980 2,254,898 799,361 6,647,341
Timothy G. Biltz 321,499 5,610,766 1,783,712 632,326 6,243.092
Dennis B. Francis 303,999 5,826,796 1,165,181 413,057 6,239,853
S. Tony Gore, III 242,449 3,951,235 1,625,092 576,095 4,527,330
(1) Assumes a fair market value of $23.00 per share on the various exercise
dates. These amounts will increase or decrease to the extent that its
actual fair market value of the option shares is above or below $23.00
per share on such exercise dates.
(2) Subject to adjustment with respect to the tax loan portion, based on
the actual fair market value of the option shares on the various option
exercise dates.
(3) If the closing of the merger contemplated by the Agreement and Plan of
Merger dated as of October 2, 1998, as amended, among AT&T Corp.,
Winston, Inc. and Vanguard Cellular Systems, Inc. occurs after April
15, 1999, the tax loans will be increased on April 15, 1999 by the
difference between the withholding taxes paid and the actual taxes due
on April 15, 1999, with respect to exercised options.