SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
20549
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
VANGUARD CELLULAR SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
North Carolina 56-1549590
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2002 Pisgah Church Road, Suite 300
Greensboro, North Carolina 27455
(Address of Principal Executive Offices) (Zip Code)
VANGUARD CELLULAR SYSTEMS, INC.
1994 LONG-TERM INCENTIVE PLAN
(Full title of the plan)
RICHARD C. ROWLENSON, GENERAL COUNSEL
Vanguard Cellular Systems, Inc.
2002 Pisgah Church Road, Suite 300
Greensboro, North Carolina 27455
(Name and address of agent for service)
(910) 282-3690
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
Proposed Proposed
Title of Maximum Maximum
Securities Offering Aggregate
to be Amount to be Price Offering Amount of
registered Registered Per Share* Price* Registration Fee
Class A
Common Stock,
par value
$.01 per 2,000,000 $33.75 $67,500,000 $23,275.86*
share shares
</TABLE>
*Pursuant to Rule 457(h), the average of the high and low
price of the Class A Common Stock as reported on NASDAQ's National
Market System on May 4, 1994 has been used to calculate the amount
of the registration fee.
<PAGE>
This Registration Statement on Form S-8 covers 2,000,000 shares
of the Class A Common Stock, par value $.01 per share, (the "Common
Stock") of Vanguard Cellular Systems, Inc. (the "Registrant") issuable
upon exercise of options to be granted under the Registrant's 1994
Long-Term Incentive Plan (the "Plan").
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The Registrant is subject to the informational requirements of
the Securities Exchange Act of 1934 (the "Exchange Act"), and in
accordance therewith files reports and other information with the
Securities and Exchange Commission. The following documents have
previously been filed by the Registrant with the Commission and are
incorporated herein by reference as of their respective dates:
a) the Annual Report on Form 10-K of Vanguard Cellular
Systems, Inc. for the fiscal year ended December 31, 1993
(dated March 30, 1994).
b) the description of the Registrant's Common Stock
included under the heading "Description of Capital Stock"
in the Registrant's Registration Statement on Form S-4
(File No. 33-35054), as amended by Post-Effective
Amendment No. 2 dated June 13, 1991, filed with the
Securities and Exchange Commission.
All documents that are hereafter filed by the Registrant
pursuant to Sections 13, 14 and 15(d) of the Exchange Act, prior to
the filing of a post-effective amendment which indicates that all
shares of the Common Stock issuable pursuant to the Plan have been
issued or which deregisters any shares then remaining unissued,
shall be deemed to be incorporated herein by reference and to be a
part hereof from the date of filing of such documents.
Item 4. Description of Securities.
Not Applicable.
Item 5. Interests of Named Experts and Counsel.
Legal matters in connection with the securities registered
hereunder are being passed upon for the Registrant by Messrs.
Schell Bray Aycock Abel & Livingston L.L.P., Renaissance Plaza, 230
North Elm Street, Suite 1500, Greensboro, North Carolina 27401.
<PAGE>
Item 6. Indemnification of Directors and Officers.
Article VIII of the Company's Bylaws provides:
"ARTICLE VIII
Indemnification
1. Extent. In addition to the indemnification otherwise
provided by law, the corporation shall indemnify and hold harmless
its directors and Indemnified Officers (as hereinafter defined)
against all liability and litigation expense, including reasonable
attorneys' fees, arising out of their status as directors or
officers or their activities in any of such capacities or in any
capacity in which any of them is or was serving, at the
corporation's request, in another corporation, partnership, joint
venture, trust or other enterprise, and the corporation shall
indemnify and hold harmless those persons who are officers,
directors or employees and are deemed to be fiduciaries of the
corporation's present and future employee pension and welfare
benefit plans as defined under the Employee Retirement Income
Security Act of 1974, as amended ("ERISA fiduciaries"), against all
liability and litigation expense, including reasonable attorneys'
fees, arising out of their status or activities as ERISA
fiduciaries; provided, however, that the corporation shall not
indemnify a director or Indemnified Officer against liability or
litigation expense that he may incur on account of his activities
that at the time taken were known or reasonably should have been
known by him to be clearly in conflict with the best interests of
the corporation, and the corporation shall not indemnify an ERISA
fiduciary against any liability or litigation expense that he may
incur on account of his activities that at the time taken were
known or reasonably should have been known by him to be clearly in
conflict with the best interests of the employee benefit plan to
which the activities relate. The corporation shall also indemnify
the director, Indemnified Officer or ERISA fiduciary for reasonable
costs, expenses and attorneys' fees in connection with the
enforcement of rights to indemnification granted herein, if it is
determined in accordance with Section 2 of this Article that the
director, officer or ERISA fiduciary is entitled to indemnification
hereunder.
2. Determination. Any indemnification under Section 1 shall
be paid by the corporation in any specific case only after a
determination that the director, Indemnified Officer or ERISA
fiduciary did not act in a manner, at the time the activities were
taken, that was known or reasonably should have been known by him
to be clearly in conflict with the best interests of the
corporation, or the employee benefit plan to which the activities
relate, as the case may be. Such determination shall be made
(a)\by the affirmative vote of a majority (but not less than two)
of directors who are or were not parties to such action, suit or
<PAGE>
proceeding or against whom any such claim is asserted
("disinterested directors") even though less than a quorum, or
(b)\if a majority (but not less than two) of disinterested
directors so direct, by independent legal counsel in a written
opinion, or (c)\if there are less than two disinterested directors,
by the affirmative vote of all of the directors, or (d)\by the vote
of a majority of all of the voting shares other than those owned or
controlled by directors, officers or ERISA fiduciaries who were
parties to such action, suit or proceeding or against whom such
claim is asserted, or by a unanimous vote of all of the voting
shares, or (e)\by a court of competent jurisdiction.
3. Advanced Expenses. Expenses incurred by a director,
Indemnified Officer or ERISA fiduciary in defending a civil or
criminal claim, action, suit or proceeding may, upon approval of a
majority (but not less than two) of the disinterested directors,
even though less than a quorum, or, if there are less than two
disinterested directors, upon unanimous approval of the Board of
Directors, be paid by the corporation in advance of the final
disposition of such claim, action, suit or proceeding upon receipt
of an undertaking by or on behalf of the director, Indemnified
Officer or ERISA fiduciary to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified
against such expenses by the corporation.
4. Corporation. For purposes of this Article, references to
directors, officers, or ERISA fiduciaries of the "corporation"
shall be deemed to include directors, officers and ERISA
fiduciaries of Vanguard Cellular Systems, Inc., its subsidiaries,
and all constituent corporations absorbed into Vanguard Cellular
Systems, Inc. or any of its subsidiaries by a consolidation or
merger.
5. Indemnified Officer. For purposes of this Article,
"Indemnified Officer" shall mean all officers of the corporation
who are elected by the Board of Directors.
6. Reliance and Consideration. Any director, Indemnified
Officer, or ERISA fiduciary who at any time after the adoption of
this Bylaw serves or has served in any of the aforesaid capacities
for or on behalf of the corporation shall be deemed to be doing or
to have done so in reliance upon, and as consideration for, the
right of indemnification provided herein. Such right shall inure
to the benefit of the legal representatives of any such person and
shall not be exclusive of any other rights to which such person may
be entitled apart from the provision of this Bylaw. No amendment,
modification or repeal of this Article VIII shall adversely affect
the right of any director, Indemnified Officer or ERISA fiduciary
to indemnification hereunder with respect to any activities
occurring prior to the time of such amendment, modification or
repeal.
<PAGE>
7. Insurance. The corporation may purchase and maintain
insurance on behalf of its directors, officers, employees and
agents and those persons who were serving at the request of the
corporation as a director, officer, partner or trustee of, or in
some other capacity in, another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted
against him and incurred by him in any such capacity, or arising
out of his status as such, whether or not the corporation would
have the power to indemnify him against such liability under the
provisions of this Article or otherwise. Any full or partial
payment made by an insurance company under any insurance policy
covering any director, officer, employee or agent made to or on
behalf of a person entitled to indemnification under this Article
shall relieve the corporation of its liability for indemnification
provided for in this Article or otherwise to the extent of such
payment, and no insurer shall have a right of subrogation against
the corporation with respect to such payment."
The North Carolina General Statutes contain provisions
prescribing the extent to which directors and officers shall or may
be indemnified. These statutory provisions are set forth below:
CH. 55 N.C. BUSINESS CORPORATION ACT
Part 5. Indemnification.
Section 55-8-50. Policy Statement and Definitions.
(a) It is the public policy of this State to enable
corporations organized under this Chapter to attract and
maintain responsible, qualified directors, officers, employees
and agents, and, to that end, to permit corporations organized
under this Chapter to allocate the risk of personal liability
of directors, officers, employees and agents through
indemnification and insurance as authorized in this Part.
(b) Definitions in this Part:
(1) "Corporation" includes any domestic or foreign
predecessor entity of a corporation in a merger or
other transaction in which the predecessor's
existence ceased upon consummation of the
transaction.
(2) "Director" means an individual who is or was a
director of a corporation or an individual who, while
a director of a corporation, is or was serving at the
corporation's request as a director, officer,
partner, trustee, employee, or agent of another
foreign or domestic corporation, partnership, joint
venture, trust, employee benefit plan, or other
<PAGE>
enterprise. A director is considered to be serving
an employee benefit plan at the corporation's request
if his duties to the corporation also impose duties on,
or otherwise involve services by, him to the plan or
to participants in or beneficiaries of the plan.
"Director" includes, unless the context requires
otherwise, the estate or personal representative of a
director.
(3) "Expenses" means expenses of every kind incurred in
defending a proceeding, including counsel fees.
(4) "Liability" means the obligation to pay a judgment,
settlement, penalty, fine (including an excise tax
assessed with respect to an employee benefit plan),
or reasonable expenses incurred with respect to a
proceeding.
(4)(a) "Officer", "employee", or "agent" includes, unless
the context requires otherwise, the estate or
personal representative of a person who acted in that
capacity.
(4) "Liability" means the obligation to pay a judgment,
settlement, penalty, fine (including an excise tax
assessed with respect to an employee benefit plan),
or reasonable expenses incurred with respect to a
proceeding.
(5) "Official capacity" means: (i) when used with
respect to a director, the office of director in a
corporation; and (ii) when used with respect to an
individual other than a director, as contemplated in
G.S. 55-8-56, the office in a corporation held by the
officer or the employment or agency relationship
undertaken by the employee or agent on behalf of the
corporation. "Official capacity" does not include
service for an other foreign or domestic corporation
or any partnership, joint venture, trust, employee
benefit plan, or other enterprise.
(6) "Party" includes an individual who was, is, or is
threatened to be made a named defendant or respondent
in a proceeding.
(7) "Proceeding" means any threatened, pending, or
completed action, suit, or proceeding, whether civil,
criminal, administrative, or investigative and
whether formal or informal.
Section 55-8-51. Authority to Indemnify.
(a) Except as provided in subsection (d), a corporation may
indemnify an individual made a party to a proceeding because he
is or was a director against liability incurred in the
proceeding if:
(1) He conducted himself in good faith; and
(2) He reasonably believed (i) in the case of conduct in
his official capacity with the corporation, that his
conduct was in its best interests; and (ii) in all
other cases, that his conduct was at least not
opposed to its best interests; and
<PAGE>
(3) In the case of any criminal proceeding, he had no
reasonable cause to believe his conduct was unlawful.
(b) A director's conduct with respect to an employee benefit
plan for a purpose he reasonably believed to be in the
interests of the participants in and beneficiaries of the plan
is conduct that satisfies the requirement of subsection
(a)(2)(ii).
(c) The termination of a proceeding by judgment, order,
settlement, conviction, or upon a plea of no contest or its
equivalent is not, of itself, determinative that the director
did not meet the standard of conduct described in this section.
(d) A corporation may not indemnify a director under this
section:
(1) In connection with a proceeding by or in the right of
the corporation in which the director was adjudged
liable to the corporation; or
(2) In connection with any other proceeding charging
improper personal benefit to him, whether or not
involving action in his official capacity, in which
he was adjudged liable on the basis that personal
benefit was improperly received by him.
(e) Indemnification permitted under this section in connection
with a proceeding by or in the right of the corporation that is
concluded without a final adjudication on the issue of
liability is limited to reasonable expenses incurred in
connection with the proceeding.
(f) The authorization, approval or favorable recommendation by
the board of directors of a corporation of indemnification, as
permitted by this section, shall not be deemed an act or
corporate transaction in which a director has a conflict of
interest, and no such indemnification shall be void or voidable
on such ground.
Section 55-8-52. Mandatory Indemnification.
Unless limited by its articles of incorporation, a corporation
shall indemnify a director who was wholly successful, on the merits
or otherwise, in the defense of any proceeding to which he was a
party because he is or was a director of the corporation against
reasonable expenses incurred by him in connection with the
proceeding.
Section 55-8-53. Advance For Expenses.
Expenses incurred by a director in defending a proceeding may
be paid by the corporation in advance of the final disposition of
<PAGE>
such proceeding as authorized by the board of directors in the
specific case or as authorized or required under any provision in
the articles of incorporation or bylaws or by any applicable
resolution or contract upon receipt of an undertaking by or on
behalf of the director to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified by
the corporation against such expenses.
Section 55-8-54. Court-ordered Indemnification.
Unless a corporation's articles of incorporation provide
otherwise, a director of the corporation who is a party to a
proceeding may apply for indemnification to the court conducting
the proceeding or to another court of competent jurisdiction. On
receipt of an application, the court after giving any notice the
court considers necessary may order indemnification if it
determines:
(1) The director is entitled to mandatory indemnification
under G.S. 55-8-52, in which case the court shall
also order the corporation to pay the director's
reasonable expenses incurred to obtain court-ordered
indemnification; or
(2) The director is fairly and reasonably entitled to
indemnification in view of all the relevant
circumstances, whether or not he met the standard of
conduct set forth in G.S. 55-8-51 or was adjudged
liable as described in G.S. 55-8-51(d), but if he was
adjudged so liable his indemnification is limited to
reasonable expenses incurred.
Section 55-8-55. Determination and Authorization of Indemnification.
(a) A corporation may not indemnify a director under G.S.
55-8-51 unless authorized in the specific case after a
determination has been made that indemnification of the
director is permissible in the circumstances because he has met
the standard of conduct set forth in G.S. 55-8-51.
(b) The determination shall be made:
(1) By the board of directors by majority vote of a
quorum consisting of directors not at the time
parties to the proceeding;
(2) If a quorum cannot be obtained under subdivision (1),
by majority vote of a committee duly designated by
the board of directors (in which designation
directors who are parties may participate),
consisting solely of two or more directors not at the
time parties to the proceeding;
(3) By special legal counsel (i) selected by the board of
directors or its committee in the manner
<PAGE>
prescribed in subdivision (1) or (2); or (ii) if a
quorum of the board of directors cannot be obtained
under subdivision (1) and a committee cannot be
designated under subdivision (2), selected by majority
vote of the full board of directors (in which selection
directors who are parties may participate); or
(4) By the shareholders, but shares owned by or voted
under the control of directors who are at the time
parties to the proceeding may not be voted on the
determination.
(c) Authorization of indemnification and evaluation as to
reasonableness of expenses shall be made in the same manner as
the determination that indemnification is permissible, except
that if the determination is made by special legal counsel,
authorization of indemnification and evaluation as to
reasonableness of expenses shall be made by those entitled
under subsection (b)(3) to select counsel.
Section 55-8-56. Indemnification of Officers, Employees, and Agents.
Unless a corporation's articles of incorporation provide
otherwise:
(1) An officer of the corporation is entitled to mandatory
indemnification under G.S. 55-8-52, and is entitled to
apply for court-ordered indemnification under G.S.
55-8-54, in each case to the same extent as a director.
(2) The corporation may indemnify and advance expenses under
this Part to an officer, employee, or agent of the
corporation to the same extent as to a director; and
(3) A corporation may also indemnify and advance expenses to
an officer, employee, or agent who is not a director to
the extent, consistent with public policy, that may be
provided by its articles of incorporation, bylaws, general
or specific action of its board of directors, or contract.
Section 55-8-57. Additional Indemnification and Insurance.
(a) In addition to and separate and apart from the
indemnification provided for in G.S. 55-8-51, 55-8-52, 55-8-54,
55-8-55 and 55-8-56, a corporation may in its articles of
incorporation or bylaws or by contract or resolution indemnify
or agree to indemnify any one or more of its directors,
officers, employees, or agents against liability and expenses
in any proceeding (including without limitation a proceeding
brought by or on behalf of the corporation itself) arising out
of their status as such or their activities in any of the
<PAGE>
foregoing capacities; provided, however, that a corporation may
not indemnify or agree to indemnify a person against liability
or expenses he may incur on account of his activities which were
at the time taken known or believed by him to be clearly in
conflict with the best interests of the corporation. A corporation
may likewise and to the same extent indemnify or agree to indemnify
any person who, at the request of the corporation, is or was serving
as a director, officer, partner, trustee, employee, or agent of
another foreign or domestic corporation, partnership, joint venture,
trust or other enterprise or as a trustee or administrator under an
employee benefit plan. Any provision in any articles of incorporation,
bylaw, contract, or resolution permitted under this section may include
provisions for recovery from the corporation of reasonable costs,
expenses, and attorneys' fees in connection with the enforcement
of rights to indemnification granted therein and may further include
provisions establishing reasonable procedures for determining and
enforcing the rights granted therein.
(b) The authorization, adoption, approval, or favorable
recommendation by the board of directors of a public
corporation of any provision in any articles of incorporation,
bylaw, contract or resolution, as permitted in this section,
shall not be deemed an act or corporate transaction in which a
director has a conflict of interest, and no such articles of
incorporation or bylaw provision or contract or resolution
shall be void or voidable on such grounds. The authorization,
adoption, approval, or favorable recommendation by the board of
directors of a nonpublic corporation of any provision in any
articles of incorporation, bylaw, contract or resolution, as
permitted in this section, which occurred prior to July 1,
1990, shall not be deemed an act or corporate transaction in
which a director has a conflict of interest, and no such
articles of incorporation, bylaw provision, contract or
resolution shall be void or voidable on such grounds. Except
as permitted in G.S. 55-8-31, no such bylaw, contract, or
resolution not adopted, authorized, approved or ratified by
shareholders shall be effective as to claims made or
liabilities asserted against any director prior to its
adoption, authorization, or approval by the board of directors.
(c) A corporation may purchase and maintain insurance on
behalf of an individual who is or was a director, officer,
employee, or agent of the corporation, or who, while a
director, officer, employee, or agent of the corporation, is or
was serving at the request of the corporation as a director,
officer, partner, trustee, employee, or agent of another
foreign or domestic corporation, partnership, joint venture,
trust, employee benefit plan, or other enterprise, against
liability asserted against or incurred by him in that
<PAGE>
capacity or arising from his status as a director, officer,
employee, or agent, whether or not the corporation would have
power to indemnify him against the same liability under any
provision of this Chapter.
Section 55-8-58. Application of Part.
(a) If articles of incorporation limit indemnification or
advance for expenses, indemnification and advance for expenses
are valid only to the extent consistent with the articles.
(b) This Part does not limit a corporation's power to pay or
reimburse expenses incurred by a director in connection with
his appearance as a witness in a proceeding at a time when he
has not been made a named defendant or respondent to the
proceeding.
(c) This Part shall not affect rights or liabilities arising
out of acts or omissions occurring before July 1, 1990.
Item 7. Exemption from Registration Claimed.
Not Applicable.
Item 8. Exhibits
The Exhibits to this Form S-8 are listed in the accompanying
Index to Exhibits.
Item 9. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration
Statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
Registration Statement or any material change in such
information in the Registration Statement.
<PAGE>
Provided, however, that paragraphs (1)(i) and (1)(ii) do
not apply if the Registration Statement is on Form S-3 or Form
S-8, and the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to section 13
or section 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
The undersigned Registrant hereby undertakes that, for the
purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of
1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-8 and
has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City
of Greensboro, State of North Carolina, on May 4, 1994.
VANGUARD CELLULAR SYSTEMS, INC.
By: /s/Haynes G. Griffin
Haynes G. Griffin, President
and Chief Executive Officer
POWER OF ATTORNEY
Each officer or director whose signature appears below hereby
appoints Haynes G. Griffin and Stuart S. Richardson, or either of
them, his true and lawful attorney-in-fact to sign on his behalf
as an individual and in the capacity stated below, any amendment
or post-effective amendment to this Registration Statement which
said attorney-in-fact may deem appropriate or necessary.
Pursuant to the requirements of the Securities Act of 1933,
this registration statement has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
Signature Title Date
/s/Stuart S. Richardson Chairman of the Board May 4, 1994
Stuart S. Richardson of Directors
/s/Haynes G. Griffin President, Chief May 4, 1994
Haynes G. Griffin Executive Officer
and Director
/s/L. Richardson Preyer, Jr. Vice Chairman of the May 4, 1994
L. Richardson Preyer, Jr. Board of Directors
/s/Stephen L. Holcombe Chief Financial Officer May 4, 1994
Stephen L. Holcombe (principal accounting
and principal financial
officer)
/s/Doris R. Bray Director May 4, 1994
Doris R. Bray
/s/Robert M. DeMichele Director May 4, 1994
Robert M. DeMichele
/s/John F. Dille, Jr. Director May 4, 1994
John F. Dille, Jr.
<PAGE>
/s/Stephen R. Leeolou Director May 4, 1994
Stephen R. Leeolou
/s/L. Richardson Preyer, Sr. Director May 4, 1994
L. Richardson Preyer, Sr.
/s/Robert A. Silverberg Director May 4, 1994
Robert A. Silverberg
</TABLE>
<PAGE>
EXHIBITS
<PAGE>
Index to Exhibits
Exhibit Sequential
No. Description Page No.
*4(a) Charter of the Registrant, filed as
Exhibit 3(a) to the Registrant's
Registration Statement on Form S-1
(File No. 33-18067).
*4(b) Articles of Amendment to the
Charter of the Registrant dated May
12, 1989, filed as Exhibit 3(b) to
the Registrant's Registration
Statement on Form S-4 (File No.
33-35054).
*4(c)(1) Amended and Restated Bylaws of the
Registrant, filed as Exhibit 4(b)
to the Registrant's Form 10-Q for
the quarter ended September 30,
1990.
*4(c)(2) Amendment to the Bylaws adopted
September 11, 1991, filed as
Exhibit 4(c)(2) to the amendment on
Form 8 dated September 27, 1991 to
the Registrant's Form 10-Q report
for the quarter ended June 30,
1991.
*4(d) Specimen Common Stock Certificate
filed as Exhibit 4(a) to the
Registrant's Registration Statement
on Form S-1 (No. 33-18067).
*4(e)(1) Loan Agreement between the
Registrant and various lenders led
by The Bank of New York and The
Toronto-Dominion Bank as agents,
dated as of April 21, 1993, filed
as Exhibit 2(a) to the Registrant's
Current Report on Form 8-K dated as
of April 21, 1993.
*4(e)(2) Security Agreement between the
Registrant and various lenders led
<PAGE>
by The Bank of New York and The
Toronto-Dominion Bank, as Secured
Party, dated as of April 21, 1993,
filed as Exhibit 2(b) to the
Registrant's Current Report on
Form 8-K dated as of April 21,
1993.
*4(e)(3) Master Subsidiary Security
Agreement between the Registrant,
certain of its subsidiaries and
various lenders led by The Bank of
New York and The Toronto-Dominion
Bank, as Secured Party, dated as of
April 21, 1993 filed as Exhibit
2(c) to the Registrant's Current
Report on Form 8-K as of April 21,
1993.
*4(e)(4) Amendment No. 1 dated as of January
31, 1994 to the Loan Agreement
among Registrant and various
lenders led by The Bank of New York
and The Toronto-Dominion Bank, as
managing agents, filed as Exhibit 8
to Amendment 1 of Schedule 13D
dated February 23, 1994 with
respect to the common stock of
Geotek Communications, Inc.
5 Opinion of Messrs. Schell Bray
Aycock Abel & Livingston.
24(a) Consent of Arthur Andersen & Co.
24(b) The consent of Messrs. Schell Bray
Aycock Abel & Livingston L.L.P. is
contained in their opinion filed as
Exhibit 5.
99(a) 1994 Long-Term Incentive Plan of
the Registrant.
* Incorporated by reference to the statement or
report indicated.
<PAGE>
EXHIBIT 5
<PAGE>
May 6, 1994
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Re: Vanguard Cellular Systems, Inc.
Registration Statement on Form S-8
Gentlemen:
We have represented Vanguard Cellular Systems, Inc., a North
Carolina corporation, (the "Registrant") in connection with the
registration of 2,000,000 shares of the Registrant's Class A
Common Stock, par value $.01 per share, (the "Shares") issuable
pursuant to the Registrant's 1994 Long-Term Incentive Plan (the
"Plan").
In connection with this opinion, we have examined the
Registrant's Articles of Incorporation and Bylaws, as amended, the
Registration Statement on Form S-8 relating to the foregoing
registration (the "Registration Statement"), the prospectus which
is to be distributed to Plan participants, the Plan and such
corporate records of the Registrant and questions of law as we
have deemed relevant for the purpose of this opinion. Based upon
such review, we are of the opinion that:
1. All necessary corporate action has been taken to
authorize the issuance of the Shares pursuant to the
Plan.
2. When duly issued in accordance with the terms of the Plan
as contemplated by the Prospectus, the Shares will be
validly issued, fully paid and nonassessable shares of
Common Stock of the Company.
<PAGE>
Securities and Exchange Commission
May 6, 1994
Page Two
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the reference to this firm
under "Item 5. Interests of Named Experts and Counsel" contained
therein. This consent is not to be construed as an admission that
we are a person whose consent is required to be filed with the
Registration Statement under the provisions of the Securities Act
of 1933, as amended.
Very truly yours,
SCHELL BRAY AYCOCK ABEL & LIVINGSTON L.L.P.
<PAGE>
EXHIBIT 24(a)
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Vanguard Cellular Systems, Inc.:
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our
report dated February 23, 1994 included in Vanguard Cellular
Systems, Inc.'s Form 10-K for the year ended December 31, 1993
and to all references to our Firm included in this registration
statement.
ARTHUR ANDERSEN & CO.
Greensboro, North Carolina,
May 3, 1994.
<PAGE>
EXHIBIT 99(a)
<PAGE>
VANGUARD CELLULAR SYSTEMS, INC.
1994 Long-Term Incentive Plan
<PAGE>
VANGUARD CELLULAR SYSTEMS, INC.
1994 Long-Term Incentive Plan
Table of Contents
Page
ARTICLE 1. PURPOSE
1.1 Purpose 1
1.2 Grant of Awards 1
ARTICLE 2. DEFINITIONS
2.1 Award 1
2.2 Board 1
2.3 Code 1
2.4 Committee 1
2.5 Disinterested Person 1
2.6 Fair Market Value 1
2.7 Grantee 2
2.8 Incentive Stock Option 2
2.9 Nontandem Stock Appreciation Right 2
2.10 Nonqualified Stock Option 2
2.11 Performance-based Compensation Award 2
2.12 Performance Shares 2
2.13 Restricted Stock 2
2.14 Stock 2
2.15 Stock Appreciation Right 2
2.16 Stock Option 2
2.17 Subsidiary 3
2.18 Tandem Stock Appreciation Right 3
2.19 Unrestricted Stock 3
ARTICLE 3. ADMINISTRATION
3.1 Committee 3
3.2 Authority of Committee 3
3.3 Liability; Indemnification 3
ARTICLE 4. STOCK SUBJECT TO PLAN
4.1 Maximum Number of Shares Subject to Plan 4
4.2 Maximum Number of Shares For Any Individual 4
4.3 Reservation of Shares of Common Stock 4
ARTICLE 5 ELIGIBILITY 5
ARTICLE 6 STOCK OPTIONS
6.1 Grant of Stock Options 5
6.2 Stock Option Terms and Conditions 5
<PAGE>
6.3 Purchase Price 5
6.4 Duration of Stock Options 6
6.5 Exercise of Stock Options 6
6.6 Written Notice Required 6
6.7 Maximum Amount of Incentive Stock Options
In Any Calendar Year 6
6.8 Cancellation of Stock Appreciation Rights 7
ARTICLE 7 STOCK APPRECIATION RIGHTS
7.1 Grant of Stock Appreciation Rights 7
7.2 Stock Appreciation Rights Terms and Conditions 7
7.3 Tandem Stock Appreciation Rights 7
7.3.1 Award of Tandem Stock Appreciation Rights 7
7.3.2 Limitations on Exercise of Tandem Stock
Appreciation Rights 7
7.3.3 Surrender or Exchange of Tandem Stock
Appreciation Rights 8
7.4 Nontandem Stock Appreciation Rights 8
7.4.1 Award of Nontandem Stock Appreciation Rights 8
7.4.2 Exercise of Nontandem Stock Appreciation Rights 8
7.5 Settlement of Stock Appreciation Rights 8
7.6 Cash Settlement 9
7.7 Written Notice Required 9
ARTICLE 8 UNRESTRICTED STOCK
8.1 Grant of Unrestricted Stock 9
8.2 Delivery of Unrestricted Stock 9
ARTICLE 9 RESTRICTED STOCK
9.1 Grant of Restricted Stock 9
9.2 Restrictions and Conditions 9
9.3 Duration of Awards 10
9.4 Restricted Stock Certificates 10
9.5 Rights of Holders of Restricted Stock 10
9.6 Delivery of Restricted Stock 10
ARTICLE 10 PERFORMANCE SHARES
10.1 Grant of Performance Shares 10
10.2 Terms and Conditions 11
10.3 Cash in Lieu of Stock 11
10.4 Performance Objective Period 11
ARTICLE 11 PERFORMANCE-BASED COMPENSATION AWARDS
11.1 Awards 11
11.2 Performance Goals 12
11.3 Limitations of Shares 12
-ii-
<PAGE>
ARTICLE 12 TERMINATION OF EMPLOYMENT
12.1 Termination of Employment 12
12.2 Disability 12
12.3 Death of Grantee 12
12.4 Termination as Nonemployee Director of
The Company 12
ARTICLE 13 TRANSFER RESTRICTIONS 13
ARTICLE 14 ADJUSTMENTS 13
ARTICLE 15 MISCELLANEOUS PROVISIONS
15.1 Tax Withholding 13
15.2 Termination, Amendment of Plan 14
15.3 Prior Rights and Obligations 14
15.4 Employment 14
15.5 Securities Laws 14
15.6 Compliance with Section 16(b) 15
15.7 Reorganization 15
15.8 Effective Date and Term of Plan 15
-iii-
<PAGE>
VANGUARD CELLULAR SYSTEMS, INC.
1994 LONG-TERM INCENTIVE PLAN
ARTICLE 1
PURPOSE
1.1 Purpose. This Vanguard Cellular Systems, Inc. 1994
Long-Term Incentive Plan (the "Plan") is intended to induce those
persons who are in a position to contribute materially to the
success of Vanguard Cellular Systems, Inc. (the "Company") to
remain with the Company, to offer them rewards in recognition of
their contributions to the Company's progress and to offer them
incentives to continue to promote the best interests of the
Company.
1.2 Grant of Awards. In order to maintain flexibility in the
grant of incentive benefits, the Plan allows for the grant of
Stock Options (both Incentive Stock Options and Nonqualified Stock
Options), Stock Appreciation Rights, Unrestricted Stock,
Restricted Stock and Performance Shares.
ARTICLE 2
DEFINITIONS
2.1 "Award" means any grant of Stock Options, Stock
Appreciation Rights, Unrestricted Stock, Restricted Stock or
Performance Shares authorized by the Committee under this Plan.
2.2 "Board" means the Board of Directors of the Company.
2.3 "Code" means the Internal Revenue Code of 1986, as
amended.
2.4 "Committee" means the Committee appointed by the Board
pursuant to Article 3 of the Plan for the purpose of administering
the Plan.
2.5 "Disinterested Person" means a person who is both a
"disinterested person" within the meaning of Rule 16b-3 as
promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934 and an "outside director" within
the meaning of Section 162(m) of the Code and the regulations
promulgated thereunder.
2.6 "Fair Market Value" means, as of a given date, the
closing sales price per share of the Company's Stock, as reported
on the national securities exchange on which the Stock is
principally traded on the day preceding the day (or the most
<PAGE>
recent trading day preceding the day) on which the stock is to be
valued. For purposes of this section, the term "national
securities exchange" shall include the National Association of
Securities Dealers Automated Quotation System. If at the time the
determination of Fair Market Value is made the Stock is not
admitted to trading on a national securities exchange for which
sales prices are regularly reported, Fair Market Value shall be
determined by the Committee on the basis of such factors as it
deems appropriate; provided, however, that Fair Market Value shall
be determined without regard to any restriction other than a
restriction which, by its terms, shall never lapse.
2.7 "Grantee" means a person who receives an Award pursuant
to the Plan.
2.8 "Incentive Stock Option" means any Stock Option
designated as an Incentive Stock Option within the meaning of
Section 422 of Code. Any Stock Option so designated shall be
construed to comply in every respect with Section 422 of the Code.
2.9 "Nontandem Stock Appreciation Right" means any Stock
Appreciation Right granted pursuant to Article 7 of the Plan in a
manner not related to a grant of a Stock Option.
2.10 "Nonqualified Stock Option" means any Stock Option
granted pursuant to the Plan that is not designated as being an
Incentive Stock Option under Section 422 of the Code. Any Stock
Option so designated shall not be subject to Section 422 of the
Code.
2.11 "Performance-based Compensation Award" means an Award
described in Article 11 of the Plan.
2.12 "Performance Shares" means shares of Stock that are
subject to an Award pursuant to Article 10 of the Plan.
2.13 "Restricted Stock" means shares of Stock that are issued
to a Grantee subject to restrictions under Article 9 of the Plan.
2.14 "Stock" means the Class A Common Stock, par value $.01
per share, of the Company or any successor class of stock.
2.15 "Stock Appreciation Right" means the right to receive,
pursuant to an Award granted pursuant to Article 7 of the Plan,
shares of Stock equal in value to the excess, at the time the
right is exercised, of the Fair Market Value of the number of
shares subject to the Award over the Fair Market Value of such
shares at the time the Award was granted. A Stock Appreciation
Right may be a Tandem Stock Appreciation Right or a Nontandem
Stock Appreciation Right.
2.16 "Stock Option" means any Incentive Stock Option or
Nonqualified Stock Option to purchase shares of Stock granted to
any Grantee pursuant to Article 6 of the Plan.
<PAGE>
2.17 "Subsidiary" means any person, firm, partnership,
limited liability company or corporation at least 50% of the total
combined voting power of which is owned directly or indirectly by
the Company.
2.18 "Tandem Stock Appreciation Right" means any Stock
Appreciation Right granted pursuant to Article 7 of the Plan in
conjunction with all or part of any Stock Option granted under the
Plan pursuant to a Stock Option agreement which states that the
Grantee may, in lieu of exercising the Stock Option, surrender the
Stock Option and receive shares of Stock equal in value to the
Stock Appreciation Right.
2.19 "Unrestricted Stock" means an Award of shares of Stock
pursuant to Article 8 of the Plan.
ARTICLE 3
ADMINISTRATION
3.1 Committee. The Plan shall be administered by a Committee
appointed by the Board consisting of not less than two members,
all of whom must be Disinterested Persons. Any action of the
Committee shall be taken by majority vote at a meeting called in
accordance with procedures adopted by the Committee or by the
unanimous written consent of the Committee.
3.2 Authority of Committee. Subject to the other provisions
of this Plan, and with a view to effecting its purpose, the
Committee shall have sole authority in its absolute discretion:
(i) to grant Awards under the Plan; (ii) to determine the
officers, employees and directors to whom Awards shall be granted
under the Plan; (iii) to determine the number of shares of Stock
subject to any Award under the Plan; (iv) to establish the price,
duration, performance measures and any other term, restriction or
condition of an Award under the Plan; (v) to accelerate the time
at which any outstanding Stock Option or Stock Appreciation Right
may be exercised or the time when restrictions or conditions on
any other Awards will lapse; (vi) to construe and interpret the
Plan; (vii) to prescribe, amend, and rescind rules and regulations
relating to the Plan; and (viii) to make any other determinations
necessary or advisable for the administration of the Plan and to
do everything necessary or appropriate to administer the Plan.
3.3 Liability; Indemnification. No member of the Committee
or the Board shall be liable for any action or determination made
in good faith with respect to the Plan or to any Award granted
thereunder. In addition, directors and members of the Committee
shall be eligible for indemnification from the Company, pursuant
to the Company's Bylaws, with respect to any matter arising under
the Plan.
<PAGE>
ARTICLE 4
STOCK SUBJECT TO PLAN
4.1 Maximum Number of Shares Subject to the Plan. The
maximum aggregate number of shares of Stock available pursuant to
the Plan, subject to adjustment as provided in Article 14 hereof,
shall be 2,000,000 shares of the Stock. If any Stock Option
granted pursuant to the Plan expires or terminates for any reason
before it shall have been exercised in full, the unpurchased
shares subject to such expired or terminated Stock Option shall
again be available for the purposes of the Plan, except that any
unpurchased shares that have been subject to a Stock Option in
connection with which a Tandem Stock Appreciation Right has also
been granted shall be reduced by the number of shares issued in
connection with the Tandem Stock Appreciation Right. If any
Nontandem Stock Appreciation Right granted pursuant to the Plan
expires or terminates for any reason before all shares subject
thereto have been issued, the unissued shares associated with such
Nontandem Stock Appreciation Rights shall again be available for
the purposes of the Plan. If any shares issued pursuant to a
Restricted Stock Award shall be forfeited, such shares shall again
be available for the purposes of the Plan. If a Performance Share
Award terminates for any reason before all of the shares
associated with such Performance Shares Award shall have been
issued pursuant thereto, such unissued shares shall again be
available for the purposes of the Plan. If any Stock Appreciation
Right or Performance Shares are paid in cash rather than in
shares, in whole or in part, the number of shares of Stock
available under the Plan will be reduced by the number of shares
to which the cash payment relates.
4.2 Maximum Number of Shares For Any Individual.
Notwithstanding any other term or provision of the Plan, the
aggregate number of shares of Stock with respect to which Awards
under the Plan may be granted to any individual shall not exceed
350,000 shares of Stock of the Company. If a Stock Option is
cancelled, terminated or repriced, the cancelled, terminated or
repriced Stock Option shall be counted against the maximum number
of shares for which Awards may be granted to such Grantee. If
cash is paid to a Grantee in settlement of any Stock Appreciation
Right or Performance Shares Award, the number of shares to which
the cash payment relates shall be counted against the maximum
number of shares for which Awards may be granted to such Grantee.
4.3 Reservation of Shares of Common Stock. The Company,
during the term of this Plan, will at all times reserve and keep
available such number of shares of the Stock as shall be
sufficient to satisfy the requirements of the Plan. In addition,
the Company will from time to time, as is necessary to accomplish
the purposes of this Plan, seek to obtain from any regulatory
agency having jurisdiction any requisite authority in order to
issue and sell shares of Stock hereunder. The inability of the
Company to obtain from any regulatory agency having jurisdiction
<PAGE>
the authority deemed by the Company's counsel to be necessary to
the lawful issuance and sale of any shares of the Stock hereunder
shall relieve the Company of any liability in respect of the
nonissuance or sale of the Stock as to which the requisite
authority shall not have been obtained.
ARTICLE 5
ELIGIBILITY
Awards under the Plan may be granted to persons identified by
the Committee who are executive or supervisory employees, officers
or directors of the Company or any Subsidiary. Notwithstanding
the foregoing, Incentive Stock Options to purchase shares of Stock
may be granted pursuant to the Plan only to executive or
supervisory employees of the Company or a Subsidiary that is a
corporation, including directors and officers who are also
employees of the Company or a Subsidiary that is a corporation.
ARTICLE 6
STOCK OPTIONS
6.1 Grant of Stock Options. The Committee may cause the
Company to grant Stock Options for the purchase of shares of Stock
to Grantees under the Plan in such amounts as the Committee, in
its sole discretion, shall determine. Such Stock Options may be
granted either alone or in addition to other Awards granted under
the Plan. The Stock Options granted under the Plan shall be
designated as either: (i) Incentive Stock Options or (ii)
Nonqualified Stock Options.
6.2 Stock Option Terms and Conditions. Stock Options
granted under the Plan shall be evidenced by written agreements in
such form as the Committee may from time to time approve. The
terms and conditions of Stock Options granted under the Plan,
including the satisfaction of corporate or individual performance
objectives and other vesting standards, may differ one from
another as the Committee shall, in its discretion, determine, as
long as all Stock Options granted under the Plan satisfy the
requirements of the Plan.
6.3 Purchase Price. The purchase price for shares acquired
pursuant to the exercise, in whole or in part, of any Stock Option
shall be determined by the Committee at the time of grant, subject
to the limitations set forth in this Section 6.3. In no event
shall the purchase price of any Stock Option be less than the Fair
Market Value of the shares at the time of the grant of the Stock
Option; except that for any Grantee who owns more than 10% of the
combined voting power of all classes of stock of the Company, the
purchase price of any Incentive Stock Option shall not be less
than 110% of Fair Market Value. The applicable Stock Option
agreement may provide for adjustments to the purchase price, as
the Committee shall determine, provided that the purchase price
<PAGE>
shall never be less than the initial purchase (except to the
extent such adjustments are pursuant to Article 14). The purchase
price so determined shall also be applicable in connection with
the exercise of any Tandem Stock Appreciation Right granted with
respect to such Stock Option.
6.4 Duration of Stock Options. Each Stock Option and all
rights thereunder granted pursuant to the terms of the Plan shall
expire on the date in the applicable Stock Option agreement, but
in no event shall any Stock Option granted under the Plan expire
later than 10 years from the date on which the Stock Option is
granted; provided, however, that any Incentive Stock Option
granted to an employee who owns more than 10% of the combined
voting power of all classes of stock of the Company, may not be
exercisable after the date five years from the date of the Award.
6.5 Exercise of Stock Options. Each Stock Option shall be
exercisable in one or more installments during its term, and the
right to exercise may be cumulative. No Stock Option may be
exercised for a fraction of a share of Stock. Unless otherwise
provided by the applicable Stock Option agreement, the purchase
price of any shares purchased shall be paid in full in cash or by
certified or cashier's check payable to the order of the Company
or by shares of Stock, or by a combination of cash, check, or
shares of Stock. If any portion of the purchase price is paid in
shares of Stock, those shares shall be valued at their Fair Market
Value as of the day of delivery. No Grantee, or Grantee's
executor, administrator, legatee, or distributee, shall be deemed
to be a holder of any shares subject to a Stock Option unless and
until a stock certificate or certificates for such are issued to
such Grantee under the terms of the Plan. No adjustment shall be
made for dividends (ordinary or extraordinary, whether in cash,
securities or other property) or distributions or other rights for
which the record date is prior to the date such stock certificate
is issued, except as provided in Article 14. The exercise of
Stock Options under the Plan shall be subject to the withholding
requirements as set forth in Section 15.1.
6.6 Written Notice Required. A Stock Option shall be
exercised when written notice of that exercise, stating the number
of shares of Stock with respect to which the Stock Option is being
exercised, has been given to the Company at its principal office,
to the attention of the General Counsel, by the Grantee and full
payment for the shares with respect to which the Stock Option is
exercised has been received by the Company.
6.7. Maximum Amount of Incentive Stock Options in Any
Calendar Year. The aggregate Fair Market Value (determined as of
the time the option is granted) of the Stock with respect to which
Incentive Stock Options are first exercisable by any Grantee
during any calendar year under the terms of this Plan and all
other such plans of the Company and any parent and Subsidiary
shall not exceed $100,000. Any Stock Option in excess of the
foregoing limitation shall be deemed a Nonqualified Stock Option
to the extent of such excess.
<PAGE>
6.8 Cancellation of Stock Appreciation Rights. Upon exercise
of all or a portion of a Stock Option, any related Tandem Stock
Appreciation Rights shall be cancelled with respect to an equal
number of shares of Stock.
ARTICLE 7
STOCK APPRECIATION RIGHTS
7.1 Grant of Stock Appreciation Rights. The Committee may
cause the Company to grant Stock Appreciation Rights to Grantees
under the Plan in such amounts as the Committee, in its sole
discretion, shall determine. Such Stock Appreciation Rights may
be granted either alone or in addition to other Awards granted
under the Plan. The Stock Appreciation Rights granted under the
Plan shall be designated as either: (i) Tandem Stock Appreciation
Rights or (ii) Nontandem Stock Appreciation Rights.
7.2 Stock Appreciation Rights Terms and Conditions. Stock
Appreciation Rights granted under the Plan shall be evidenced by
written agreements in such form as the Committee may from time to
time approve. The terms and conditions of Stock Appreciation
Rights granted under the Plan, including the satisfaction of
corporate or individual performance objectives and other vesting
standards, may differ one from another as the Committee shall, in
its discretion, determine, as long as all Stock Appreciation
Rights granted under the Plan satisfy the requirements of the
Plan.
7.3 Tandem Stock Appreciation Rights.
7.3.1 Award of Tandem Stock Appreciation Rights. Tandem
Stock Appreciation Rights may be granted by the Committee in
connection with any Stock Option granted under the Plan,
either at the time the Stock Option is granted or thereafter
at any time prior to the exercise, termination or expiration
of the Stock Option, except that in the case of an Incentive
Stock Option, such rights may be granted only at the time of
the grant of such Incentive Stock Option.
7.3.2 Limitations on Exercise of Tandem Stock
Appreciation Rights. A Tandem Stock Appreciation Right shall
be exercisable only to the extent that the related Stock
Option is exercisable and shall be exercisable only for such
period as the Committee may determine (which period may expire
prior to the expiration date of the related Stock Option).
Upon the exercise of all or a portion of Tandem Stock
Appreciation Rights, the related Stock Option shall be
cancelled with respect to the shares of Stock to which the
exercised portion of the Tandem Stock Appreciation Rights
relates.
<PAGE>
7.3.3 Surrender or Exchange of Tandem Stock Appreciation
Rights. A Tandem Stock Appreciation Right shall entitle the
Grantee to surrender to the Company unexercised the related
Stock Option, or any portion thereof, and to receive from the
Company in exchange therefor that number of shares of Stock
having an aggregate Fair Market Value equal to (i) the excess
of (A) the Fair Market Value of one (1) share of Common Stock
at the time the Tandem Stock Appreciation Right is exercised
over (B) the purchase price per share specified in such Stock
Option, multiplied by (ii) the number of shares of Stock
subject to the Stock Option, or portion thereof, which is
surrendered. Cash shall be delivered in lieu of any
fractional shares.
7.4 Nontandem Stock Appreciation Rights.
7.4.1 Award of Nontandem Stock Appreciation Rights.
Nontandem Stock Appreciation Rights may be granted by the
Committee in a manner not related to a grant of a Stock
Option. At the time of grant of a Nontandem Stock
Appreciation Right, the Committee shall specify the number of
shares of Stock covered by such right and the base price of
shares of Stock to be used in connection with the calculation
described in Section 7.4.2 below. The base price of a
Nontandem Stock Appreciation Right shall be not less than 100%
of the Fair Market Value of a share of Common Stock on the
date of grant. A Nontandem Stock Appreciation Right shall be
exercisable during such period as the Committee shall
determine.
7.4.2 Exercise of Nontandem Stock Appreciation Rights.
The exercise of a Nontandem Stock Appreciation Right shall
entitle the Grantee to receive from the Company that number of
shares of Stock having an aggregate Fair Market Value equal to
(i) the excess of (A) the Fair Market Value of one (1) share
of Stock at the time at which the Nontandem Stock Appreciation
Right is exercised over (B) the base price of the shares
covered by the Nontandem Stock Appreciation Right, multiplied
by (ii) the number of shares of Stock covered by the Nontandem
Stock Appreciation Right, or the portion thereof being
exercised. Cash shall be delivered in lieu of any fractional
shares.
7.5 Settlement of Stock Appreciation Rights. As soon as is
reasonably practicable after the exercise of a Stock Appreciation
Right, the Company shall (i) issue, in the name of the Grantee,
stock certificates representing the total number of full shares of
Stock to which the Grantee is entitled pursuant to Section 7.3.3
or Section 7.4.2 hereof and cash in an amount equal to the Fair
Market Value, as of the date of exercise, of any resulting
fractional shares, and (ii) if the Committee causes the Company to
elect to settle all or part of its obligations arising out of the
<PAGE>
exercise of the Stock Appreciation Right in cash pursuant to
Section 7.6, deliver to the Grantee an amount in cash equal to the
Fair Market Value, as of the date of exercise, of the shares of
Stock it would otherwise be obligated to deliver. The settlement
of any Stock Appreciation Right under the Plan shall be subject to
the withholding requirements as set forth in Section 15.1.
7.6 Cash Settlement. The Committee, in its discretion, may
cause the Company to settle all or any part of its obligation
arising out of the exercise of a Stock Appreciation Right by the
payment of cash in lieu of all or part of the shares of Stock it
would otherwise be obligated to deliver in an amount equal to the
Fair Market Value of such shares on the date of exercise.
7.7 Written Notice Required. A Stock Appreciation Right
shall be exercised when written notice of that exercise, stating
the number of shares of Stock with respect to which the Stock
Appreciation Right is being exercised, has been given to the
Company at its principal office, to the attention of the General
Counsel, by the Grantee.
ARTICLE 8
UNRESTRICTED STOCK
8.1 Grant of Unrestricted Stock. The Committee may cause the
Company to award Unrestricted Stock to persons eligible under the
Plan in such amounts as the Committee, in its sole discretion,
shall determine. Such shares of Stock may be issued either alone
or in addition to other Awards granted under the Plan.
8.2 Delivery of Unrestricted Stock. The Company shall issue,
in the name of each Grantee to whom Unrestricted Stock has been
granted, stock certificates representing the total number shares
of Unrestricted Stock granted to the Grantee and shall deliver
such certificates to the Grantee as soon as reasonably practicable
after the date of the Award. The delivery of Unrestricted Stock
under the Plan shall be subject to the withholding requirements as
set forth in Section 15.1.
ARTICLE 9
RESTRICTED STOCK
9.1 Grant of Restricted Stock. The Committee may cause the
Company to grant Restricted Stock to Grantees under the Plan in
such amounts as the Committee, in its sole discretion, shall
determine. Such shares of Restricted Stock may be issued either
alone or in addition to other Awards granted under the Plan.
9.2 Restrictions and Conditions. Restricted Stock granted
under the Plan shall be evidenced by written agreements in such
form as the Committee may from time to time approve. The
restrictions and conditions imposed on Restricted Stock granted
<PAGE>
under the Plan, including the satisfaction of corporate or
individual performance objectives, may differ from one Award to
another as the Committee shall, in its discretion, determine as
long as all Awards satisfy the requirements of the Plan; provided,
however, that no grant shall require any payment of cash
consideration by the recipient. Each Award of Restricted Stock
shall be effective as of the date so stated in the resolution of
the Committee making the Award.
9.3 Duration of Awards. The restrictions and conditions
imposed upon any Restricted Stock shall lapse, in whole or in
part, as provided in the agreement pursuant to which the Award is
made, but in no event later than 10 years from the date of the
Award.
9.4. Restricted Stock Certificates. Each certificate issued
for shares of Restricted Stock shall be registered in the name of
the Grantee and shall be deposited by him or her with the Company,
to the attention of the General Counsel, together with a stock
power endorsed in blank. The shares shall be subject to
restrictions as to transferability as provided in Article 13 and
to such other restrictions and conditions as may be imposed by the
Committee at the time of making the Award (the "restrictions and
conditions"), which shall be referenced by a conspicuous legend on
the reverse side of the stock certificate representing the shares.
9.5 Rights of Holders of Restricted Stock. Subject to the
restrictions and conditions, the Grantee shall be the owner of the
Restricted Stock and shall have all of the rights of a
shareholder, including, but not limited to, the right to receive
all dividends paid on the Restricted Stock and the right to vote
the shares. In the event there is a change in the Stock as
described in Article 14, any shares or other securities issued
with respect to shares subject to restrictions and conditions
under the Plan shall be subject to the same restrictions and
conditions, and the certificates therefor, together with a stock
power endorsed in blank, shall be delivered to the Company, to the
attention of the General Counsel.
9.6 Delivery of Restricted Stock. Following the lapse of the
restrictions and conditions imposed on any Restricted Stock, the
certificate or certificates evidencing such shares shall be
reissued by the Company in the name of the Grantee without legend
(except to the extent that a legend may be necessary for
compliance with applicable securities laws) and shall be delivered
to the Grantee. The delivery of Restricted Stock under the Plan
shall be subject to the withholding requirements as set forth in
Section 15.1.
ARTICLE 10
PERFORMANCE SHARES
10.1 Grant of Performance Shares. The Committee may cause
the Company to grant Performance Shares to Grantees under the Plan
in such amounts as the Committee, in its sole discretion, shall
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determine. Such Performance Shares may be issued either alone or
in addition to other Awards under the Plan. Each Performance
Share grant shall confer upon the Grantee the right to receive a
specified number of shares of Stock contingent upon the
achievement of specified corporate or individual performance
objectives within a specified period.
10.2 Terms and Conditions. Performance Shares granted under
the Plan shall be evidenced by written agreements in such form as
the Committee may from time to time approve. The Committee shall
specify the performance objectives and the period of duration of
the Performance Shares Award at the time that such Award is
granted. Any Performance Share Award granted under this Plan
shall constitute an unfunded promise to issue shares of Stock to
the Grantee in the future upon the completion of specified
conditions. No Grantee shall be deemed to be a holder of any
Shares subject to a Performance Shares Award unless and until a
stock certificate or certificates for such are issued to such
Grantee under the terms of the Plan. No adjustment shall be made
for dividends (ordinary or extraordinary, whether in cash,
securities or other property) or distributions or other rights for
which the record date is prior to the date stock certificates are
issued pursuant to any Performance Shares Award, except as
provided in Article 14. The settlement of any Performance Shares
Award shall be subject to the withholding requirements as set
forth in Section 15.1.
10.3 Cash in Lieu of Stock. In lieu of some or all of the
shares earned by achievement of the specified performance
objectives within the specified period, the Committee may
distribute cash in an amount equal to the Fair Market Value of the
Stock at the time that the performance objective is achieved
within the specified period multiplied by the number of
Performance Shares.
10.4 Performance Objective Period. The duration of the
period within which to achieve the performance objectives is to be
determined by the Committee, but in no event shall the duration be
later than ten years from the date of the Award.
ARTICLE 11
PERFORMANCE-BASED COMPENSATION AWARDS
11.1 Awards. All Stock Options and Stock Appreciation Rights
granted to key executive and supervisory employees under the Plan
are Performance-based Compensation Awards because they are
required by the terms of the Plan to have an exercise price that
is not less than Fair Market Value at the time of the Award.
Restricted Stock and Performance Shares awarded to key executive
and supervisory employees are also Performance-based Compensation
Awards under this Article if granted subject to a written
agreement between the Company and the Grantee setting forth one or
more objective performance goals based on the criteria set forth
in Section 11.2 that are required to be met in order for an Award
to vest in the Grantee. The performance goals must be established
in writing by the Committee prior to the employee's performance of
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the relevant services and while the outcome under the goal or
goals is substantially uncertain.
11.2 Performance Goals. The performance goals
established by the Committee with respect to a specific
Performance-based Compensation Award must be based on one or more
of the following criteria: net gains in the number of Company
subscribers; achieving targeted revenues per subscriber; achieving
targeted marketing costs per net new subscriber; increases in
service revenue; control of operating expenses; increases in
operating cash flow; increases in operating income; reduction in
net loss; and achieving and increasing net income.
11.3 Limitations of Shares. The maximum number of
shares that may be subject to Awards under the Plan contained in
Section 4.1 and the maximum number of shares for any individual
contained in Section 4.2 include Performance-based Compensation
Awards.
ARTICLE 12
TERMINATION OF EMPLOYMENT
12.1 Termination of Employment. If a Grantee ceases to be
employed by the Company or a Subsidiary for any reason other than
death or disability, any Award granted to such Grantee that is
unexercised or still subject to any restrictions or conditions
shall be terminated or forfeited, unless otherwise provided in the
applicable Award agreement.
12.2 Disability. If a Grantee becomes disabled within the
meaning of Section 22(e)(3) of the Code while employed by the
Company, or a Subsidiary, any Stock Option or Stock Appreciation
Right granted to such Grantee shall expire one year after the date
of termination of employment due to disability, unless a longer or
shorter period of exercise is provided in the applicable Award
agreement. Any Restricted Stock or Performance Shares granted to
such Grantee shall be terminated or forfeited, unless otherwise
provided in the applicable Award agreement.
12.3 Death of Grantee. If a Grantee dies while employed by
the Company, or a Subsidiary, any Stock Option or Stock
Appreciation Right granted to such Grantee shall expire one year
after the date of death, unless a longer or shorter period of
exercise is provided in the applicable Award agreement. During
the exercise period after death, the Stock Option or Stock
Appreciation Right may be exercised, to the extent provided in the
applicable Award agreement, by the person or persons to whom the
Grantee's rights under the Award Right shall pass by will or by
the laws of descent and distribution but in no event may the Stock
Option or Stock Appreciation Right be exercisable more than ten
years from the date of grant. Any Restricted Stock or Performance
Shares granted to such Grantee shall be terminated or forfeited,
unless otherwise provided in the applicable Award agreement.
12.4 Termination as Nonemployee Director of the Company. If
a nonemployee director ceases to serve the Company in that
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capacity, the Grantee's rights upon such termination shall be
governed in the manner of an Grantee's rights upon termination of
employment as set forth above.
ARTICLE 13
TRANSFER RESTRICTIONS
Stock Options and Stock Appreciation Rights that have not been
exercised by the Grantee and Restricted Stock and Performance
Shares that are subject to restrictions and conditions shall not
be subject in any manner to alienation, sale, transfer,
assignment, pledge, attachment or encumbrance of any kind. Any
attempt to alienate, sell, transfer, assign, pledge or otherwise
encumber any such Awards shall be void, except for a transfer by
will or by the laws of descent and distribution.
ARTICLE 14
ADJUSTMENTS
If the shares of Stock of the Company are increased,
decreased, changed into, or exchanged for a different number or
kind of shares or securities through merger, consolidation,
combination, exchange of shares, other reorganization,
recapitalization, reclassification, stock dividend, stock split or
reverse stock split in which the Company is the surviving entity,
an appropriate and proportionate adjustment shall be made in the
maximum number and kind of shares as to which Awards may be
granted under this Plan. A corresponding adjustment changing the
number or kind of shares allocated to unexercised or unvested
Awards, or portions thereof, which shall have been granted prior
to any such change, shall likewise be made. Any such adjustment
in outstanding Awards shall be made without change in the
aggregate purchase price applicable to the unexercised portion of
any such Award, but with a corresponding adjustment in the price
for each share or other unit of any security covered by the Award.
In making any adjustment pursuant to this Article 14, any
fractional shares shall be disregarded.
ARTICLE 15
MISCELLANEOUS PROVISIONS
15.1 Tax Withholding. With respect to any Award under the
Plan, the Company shall have the right to require Grantees or
their beneficiaries or legal representatives to remit to the
Company an amount sufficient to satisfy federal, state and local
withholding requirements, or to deduct from all payments under the
Plan amounts sufficient to satisfy all withholding tax
requirements. Within the discretion of the Committee, the Company
may withhold the tax required to be withheld from any other cash
compensation then or thereafter payable to the Grantee, or, if
deemed necessary by the Company, the Company may sell or withhold a
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portion of shares of Stock to be delivered to the Grantee pursuant
to the Plan to provide sufficient funds for withholding tax and
delivery of the proceeds to the Company.
15.2 Termination, Amendment of Plan. The Board may at any
time terminate, amend or revise the terms of the Plan; provided
that no amendment or revision shall, without the approval of the
Company's shareholders, (i)\increase the maximum aggregate number
of shares that may be sold or distributed pursuant to Awards
granted under this Plan, except as permitted under Article 13;
(ii)\change the minimum purchase price for shares of Stock that may
be received by exercise of Stock Option or Stock Appreciation Right
under the Plan; (iii)\increase the maximum duration established
under the Plan for any Award; or (iv)\permit the granting of an
Award to anyone other than specified in Article 5.
15.3 Prior Rights and Obligations. No amendment, suspension,
or termination of the Plan shall, without the consent of the
Grantee or other person who has received an Award, alter or impair
any of that Grantee's rights or obligations under any Award granted
under the Plan prior to such amendment, suspension, or termination.
15.4 Employment. Nothing in the Plan or in any Award shall
confer upon any eligible employee any right to continued employment
by the Company, or a Subsidiary, or limit in any way the right of
the Company or a Subsidiary at any time to terminate or alter the
terms of that employment.
15.5 Securities Laws. Shares of Stock issuable pursuant to
this Plan may, at the option of the Company, be registered under
applicable federal and state securities laws, but the Company shall
have no obligation to undertake such registrations and may, in lieu
thereof, issue shares hereunder only pursuant to applicable
exemptions from such registrations. In the event that no such
registrations are undertaken, the shares shall be issued only to
persons who qualify to receive such shares in accordance with the
exemption from registration on which the Company relies. In
connection with any Award of shares or the reissuance of
certificates under the Plan, the Committee may require appropriate
representations from the recipient of such shares and take such
other action as the Committee may deem necessary, including but not
limited to placing restrictive legends on certificates evidencing
such shares and placing stop transfer instructions in the Company's
stock transfer records, or delivering such instructions to the
Company's transfer agent, in order to assure compliance with any
such exemptions. Notwithstanding any other provision of the Plan,
no shares will be issued pursuant to the Plan unless such shares
have been registered under all applicable federal and state
securities laws or unless, in the opinion of counsel satisfactory
to the Company, exemptions from such registrations are available.
<PAGE>
15.6 Compliance with Section 16(b). In the case of Grantees
who are or may be subject to Section 16 of the Securities Exchange
Act of 1934, it is the intent of the Company that the Plan and any
Award granted hereunder satisfy and be interpreted in a manner that
satisfies the applicable requirements of Rule 16b-3, so that such
Grantees will be entitled to the benefits of Rule 16b-3 or other
exemptive rules under Section 16 and will not be subjected to
liability thereunder. Accordingly, any Awards to such Grantee
shall be subject to the following conditions: (i) Stock or Stock
Appreciation Rights acquired pursuant to the Plan must be held at
least six months from the date the Award is granted, and (ii) an
election to receive cash in full or partial settlement of a Stock
Appreciation Right must be made during the period beginning on the
third business day following the Company's release of its quarterly
or annual summary statements of earnings to the public and ending
on the twelfth business day following such date (provided however,
this condition shall not apply to any exercise of a Stock
Appreciation Right for cash where the date of exercise is automatic
or fixed in advance under the Plan and is outside the control of
the Grantee). If any provision of the Plan or any Award would
otherwise conflict with the intent expressed herein, that
provision, to the extent possible, shall be interpreted and deemed
amended so as to avoid such conflict. To the extent of any
remaining irreconcilable conflict with such intent, such provision
shall be deemed void as applicable to Grantees who are or may be
subject to Section 16.
15.7 Reorganization. Except as otherwise provided in the
applicable Award agreement, in the event of a consolidation or a
merger in which the Company is not the surviving corporation, or
any other merger in which the shareholders of the Company exchange
their shares of Stock in the Company for stock of another
corporation, or in the event of complete liquidation of the
Company, or in the case of a tender offer approved, all Awards that
are unexercised or still subject to any restrictions and conditions
shall thereupon be terminated or forfeited, provided that the Board
may, prior to the effective date of any such transaction, either
(i) make all such Award immediately vested or exercisable or (ii)
arrange to have the surviving corporation grant to the Grantees
replacement Award on terms which the Board shall determine to be
fair and reasonable.
15.8 Effective Date and Term of Plan. The effective date of
this Plan is March 25, 1994; provided, however, that no Award
granted hereunder may be exercised or become vested unless and
until the Plan is approved by the shareholders of the Company. No
Awards may be granted under the Plan after March 24, 2004.
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