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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 2, 1995
REGISTRATION NO. 33-61295
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 3
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
VANGUARD CELLULAR SYSTEMS, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
NORTH CAROLINA 56-1549590
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
</TABLE>
2002 PISGAH CHURCH ROAD
SUITE 300
GREENSBORO, NORTH CAROLINA 27455
(910) 282-3690
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
RICHARD C. ROWLENSON
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
VANGUARD CELLULAR SYSTEMS, INC.
2002 PISGAH CHURCH ROAD
SUITE 300
GREENSBORO, NORTH CAROLINA 27455
(910) 282-3690
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
COPIES OF COMMUNICATIONS TO:
DORIS R. BRAY
SCHELL BRAY AYCOCK ABEL & LIVINGSTON L.L.P.
POST OFFICE BOX 21847
GREENSBORO, NORTH CAROLINA 27420
(910) 370-8800
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. ( )
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with the dividend or
interest reinvestment plans, check the following box. ( )
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. ( )
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. ( )
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. ( )
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SUBJECT TO COMPLETION, DATED OCTOBER 2, 1995
PROSPECTUS
SENIOR DEBENTURES, SENIOR SUBORDINATED DEBENTURES,
SUBORDINATED DEBENTURES, PREFERRED STOCK, CLASS A COMMON STOCK,
CLASS B COMMON STOCK AND WARRANTS
Vanguard Cellular Systems, Inc. (the "Company") may offer and issue from
time to time (i) its senior debentures ("Senior Debentures"), senior
subordinated debentures ("Senior Subordinated Debentures"), and subordinated
debentures ("Subordinated Debentures") (collectively, the "Debentures"), (ii)
shares of its Preferred Stock, $.01 par value per share, which may be
represented by depositary shares as described herein (the "Preferred Stock"),
(iii) shares of its Class A Common Stock, par value $.01 per share (the "Class A
Common Stock"), (iv) shares of its Class B Common Stock, par value $.01 per
share (the "Class B Common Stock") or (v) Warrants to purchase Debentures,
Preferred Stock, Class A Common Stock or Class B Common Stock or other
securities or rights (the "Warrants"), all for an aggregate initial offering
price not to exceed $250,000,000 (or the equivalent thereof denominated in one
or more foreign currencies or foreign currency units). The Debentures, Preferred
Stock, Class A Common Stock, Class B Common Stock and Warrants are herein
collectively referred to as the "Securities." The Securities may be offered in
one or more separate classes or series, in amounts, at prices and on terms to be
determined by market conditions at the time of sale and to be set forth in a
supplement or supplements to this Prospectus (a "Prospectus Supplement"). Any
Securities may be offered with other Securities or separately. Securities may be
sold for U.S. dollars, foreign currency or currency units; amounts payable with
respect to any Securities may likewise be payable in U.S. dollars, foreign
currency or currency units -- in each case, as the Company designates.
Debentures and Preferred Stock may be convertible and/or exchangeable for
Securities or other securities or rights.
Certain terms of any Debentures in respect of which this Prospectus is
being delivered will be set forth in the accompanying Prospectus Supplement
including, where applicable, the specific designation (including whether senior,
senior subordinated or subordinated and whether convertible and/or
exchangeable), aggregate principal amount, purchase price, maturity, interest
rate and time of payment of interest (if any), terms (if any) for the
redemption, conversion or exchange thereof, listing (if any) on a securities
exchange and any other specific terms of the Debentures. The Prospectus
Supplement will include a description of any debt covenants or provisions with
respect to the Debentures that afford a holder of Debentures protection in the
event of a highly leveraged transaction. Certain terms of any Preferred Stock in
respect of which this Prospectus is being delivered will be set forth in the
accompanying Prospectus Supplement, including the specific designation, number
of shares, purchase price and the rights, preferences and privileges thereof and
any qualifications or restrictions thereon (including dividends, liquidation
value, voting rights, terms for the redemption, conversion or exchange thereof
and any other specific terms of the Preferred Stock), listing (if any) on a
securities exchange, and whether the Company has elected to offer the Preferred
Stock in the form of depositary shares. Certain terms of any Warrants in respect
of which this Prospectus is being delivered will be set forth in the
accompanying Prospectus Supplement, including the specific designation, the
number, purchase price and terms thereof, any listing of the Warrants or the
underlying Securities on a securities exchange and any other terms in connection
with the offering, sale and exercise of the Warrants, as well as the terms on
which and the securities for which such Warrants may be exercised.
SEE "RISK FACTORS" BEGINNING ON PAGE 4 HEREOF FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
The Debentures will represent unsecured general obligations of the Company,
unless otherwise provided in the Prospectus Supplement. The Senior Debentures
will be senior to all subordinated indebtedness of the Company, and pari passu
with other unsecured, unsubordinated indebtedness of the Company. The Senior
Subordinated Debentures will be subordinate in right of payment to the Senior
Debentures and the certain other debt obligations of the Company and senior to
the Subordinated Debentures. The Subordinated Debentures will be subordinate in
right of payment to the Senior Debentures, the Senior Subordinated Debentures
and to certain other debt obligations of the Company. See "Description of
Debentures." ALTHOUGH THE SENIOR DEBENTURES AND THE SENIOR SUBORDINATED
DEBENTURES ARE ENTITLED "SENIOR," THE COMPANY HAS NOT ISSUED AND DOES NOT HAVE
ANY CURRENT FIRM ARRANGEMENTS TO ISSUE ANY SIGNIFICANT INDEBTEDNESS TO WHICH ANY
DEBENTURES WOULD NOT BE EFFECTIVELY SUBORDINATED. SEE "RISK FACTORS -- HOLDING
COMPANY STRUCTURE." AS OF JUNE 30, 1995, THE COMPANY AND ITS SUBSIDIARIES HAD
APPROXIMATELY $499.7 MILLION OF INDEBTEDNESS AND OTHER LIABILITIES TO WHICH THE
DEBENTURES WOULD BE EFFECTIVELY SUBORDINATED AND THE INDENTURES GOVERNING THESE
DEBENTURES DO NOT LIMIT THE ADDITIONAL INCURRENCE OF SUCH INDEBTEDNESS AND OTHER
LIABILITIES.
The Securities may be sold on a negotiated or competitive bid basis to or
through underwriters or dealers designated from time to time or to other
purchasers directly or through agents designated from time to time. Certain
terms of the offering and sale of the Securities, including, where applicable,
the names of the underwriters, dealers or agents, if any, the principal amount
or number of shares or Warrants to be purchased, the purchase price of the
Securities and the proceeds to the Company from such sale, and any applicable
commissions, discounts and other items constituting compensation of such
underwriters, dealers or agents, will also be set forth in the accompanying
Prospectus Supplement.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED ON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS, ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE
THE DATE OF THIS PROSPECTUS IS , 1995
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IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS, IF ANY, MAY OVER-ALLOT
OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE
SECURITIES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN THE OVER-THE-COUNTER MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been previously filed by the Company with the
Securities and Exchange Commission (the "Commission") and are hereby
incorporated by reference in this Prospectus as of their respective dates: (a)
Annual Report on Form 10-K for the year ended December 31, 1994, as amended by a
Form 10-K/A dated September 22, 1995, (b) Quarterly Report on Form 10-Q for the
quarter ended March 31, 1995, (c) Quarterly Report on Form 10-Q for the quarter
ended June 30, 1995, (d) Current Report on Form 8-K filed on January 9, 1995,
(e) Current Report on Form 8-K filed on February 13, 1995 and (f) description of
the Company's Class A Common Stock contained in a Registration Statement of the
Company on Form 8-A dated February 29, 1988, as amended by a Form 8-A/A dated
July 25, 1995.
Additionally, all reports and any definitive proxy or information
statements filed by the Company with the Commission pursuant to Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), subsequent to the date of this Prospectus and prior to the
termination of the offering hereby shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such documents. Any statements contained in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of any such person, a
copy of any or all of the documents incorporated herein by reference (other than
exhibits to such documents which are not specifically incorporated by reference
in such documents). Written requests for such copies should be directed to the
Assistant Treasurer, Vanguard Cellular Systems, Inc., 2002 Pisgah Church Road,
Suite 300, Greensboro, NC 27455. Telephone requests may be directed to (910)
282-3690.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act and in accordance therewith files reports, proxy and information statements
and other information with the Commission. Such reports, proxy and information
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices
located at Suite 1400, 500 West Madison Street, Chicago, Illinois 60661 and 7
World Trade Center, New York, New York 10048, and copies of such materials can
be obtained from the Public Reference Section of the Commission, Washington,
D.C. 20549, at prescribed rates.
This Prospectus constitutes a part of a Registration Statement on Form S-3
(the "Registration Statement") filed by the Company with the Commission under
the Securities Act of 1933 (the "Securities Act"). This Prospectus omits certain
of the information contained in the Registration Statement in accordance with
the rules and regulations of the Commission. Reference is hereby made to the
Registration Statement and related exhibits for further information with respect
to the Company and the Securities. Statements contained herein concerning the
provisions of any document are not necessarily complete and, in each instance,
reference is made to the copy of such document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission. Each such
statement is qualified in its entirety by such reference.
2
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NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH ANY OFFERING OF
SECURITIES DESCRIBED HEREIN, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ANY OTHER PERSON. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES OTHER THAN THOSE SPECIFICALLY
OFFERED HEREBY OR ANY SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE AN OFFER OR SOLICITATION IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
CERTAIN DEFINITIONS
As used in this Prospectus, "pops" means the Donnelly Marketing Service
estimate of the 1994 population of a Metropolitan Statistical Area ("MSA") or
Rural Service Area ("RSA") multiplied by a percentage ownership interest in an
entity licensed or designated to receive a license by the Federal Communications
Commission (the "FCC") to construct or operate a cellular telephone system in
that MSA or RSA. An MSA or RSA is referred to herein as a "market." The number
of pops should not be confused with the current number of users of cellular
service and is not necessarily indicative of the number of users of cellular
services in the future. "Nonwireline" refers to a company that is not owned by
or primarily affiliated with a landline telephone company. A nonwireline license
is one of two licenses granted in each cellular market area. "Control markets"
refer to all markets in which the Company's current ownership interest is in
excess of 50.0% as well as the Wilmington and Jacksonville, North Carolina
markets which are jointly controlled by the Company and a subsidiary of GTE
Corporation. "Operating Cash Flow" or "EBITDA" refers to the Company's income
(loss) from operations before depreciation and amortization. Operating Cash Flow
has been used by the Company, in conjunction with external financing, to satisfy
debt service obligations and to fund capital expenditures and other operational
needs. In addition, certain covenants in the long-term credit facility are based
upon calculations using Operating Cash Flow. Operating Cash Flow does not
represent and should not be considered as an alternative to net income or
operating income as determined by generally accepted accounting principles.
3
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THE COMPANY
The Company owns and operates nonwireline cellular telephone systems in the
Eastern United States and is one of the largest independent operators of
cellular telephone systems in the United States based on aggregate pops and
number of subscribers. As of June 30, 1995, the Company has 28 control markets
with 7.5 million aggregate pops and 314,000 subscribers. The Company's control
cellular markets are grouped into five operating metro-clusters consisting of
the Mid-Atlantic Supersystem and the Florida, Carolinas, New England and West
Virginia metro-clusters. The Mid-Atlantic Supersystem, together with the New
England metro-cluster, represent 75% of the Company's pops as of June 30, 1995
and are contiguous to four of the nation's seven largest MSAs -- New York,
Philadelphia, Baltimore/Washington and Boston.
The Company was founded as a Delaware corporation in July 1984 and
reincorporated under North Carolina law in February 1987. As used in this
Prospectus, the term "Company" refers to Vanguard Cellular Systems, Inc. and its
subsidiaries, as well as the partnerships or corporations holding cellular
licenses for markets not 100% owned by the Company or its subsidiaries, to the
extent of their interests therein. The location and mailing address of the
principal executive offices of the Company is 2002 Pisgah Church Road, Suite
300, Greensboro, North Carolina 27455, telephone (910) 282-3690.
USE OF PROCEEDS
Except as may otherwise be set forth in the Prospectus Supplement, the net
proceeds from the sale of the Securities offered hereby will be used for capital
expenditures, acquisitions, working capital and general corporate purposes.
Pending such application of the proceeds, the Company will temporarily reduce
bank debt or invest the proceeds of this offering in certificates of deposit,
United States government securities or certain other interest-bearing
securities.
RISK FACTORS
Before purchasing any Securities offered hereby a prospective investor
should consider, among other things, the following factors:
NET LOSSES. The Company's activities have concentrated on the investment in
and development of its cellular systems to improve service and expand geographic
coverage. As a result, in each year of its operations the Company has incurred a
net loss and, as of June 30, 1995, the Company had an accumulated deficit of
$195.1 million. See the documents listed under "Incorporation of Certain
Documents by Reference." There can be no assurance that the Company will become
and/or remain profitable in the future.
EXISTING INDEBTEDNESS; ADDITIONAL FINANCING. The Company has relied
primarily upon borrowings under its bank credit facilities to finance
operations, capital expenditures, acquisitions and other cash requirements.
Total outstanding borrowings under its existing loan agreement (the "Loan
Agreement") were $459.0 million at June 30, 1995 and the Company expects to
continue to borrow funds under this agreement. The Loan Agreement is secured by
substantially all of the assets of the Company. The Loan Agreement provides for
total borrowings of up to $675 million; however, under the financial covenants
of the agreement, borrowing availability is dependent on continued improvement
in the Company's operating performance. In addition, the Company is currently
required to pay only interest under the Loan Agreement at rates which vary with
specified indices, but beginning March 31, 1998, the Company will be required to
begin repaying principal under the Loan Agreement with all amounts due by
December 31, 2003. The Company's interest payments under the Loan Agreement have
been $16.1 million, $15.1 million and $22.6 million in 1992, 1993 and 1994,
respectively. The Loan Agreement consists of a "Term Loan" and a "Revolving
Loan." The outstanding amount of the Term Loan as of March 31, 1998 is to be
repaid in increasing quarterly installments commencing on March 31, 1998 and
terminating at its maturity date of December 31, 2003. The quarterly installment
payments begin at 1.875% of the outstanding principal amount at March 30, 1998
and gradually increase to 5.625% at March 31, 2003. The available borrowings
under the Revolving Loan shall be reduced on a quarterly basis also commencing
on March 31, 1998 and terminating on December 31, 2003. The quarterly reduction
begins at 1.875% of the Revolving Loan commitment at March 30, 1998 and
gradually increases to 5.525% on March 31, 2003.
Although the Company has generated positive Operating Cash Flow or EBITDA
(income (loss) from operations before depreciation and amortization) since 1991
and Operating Cash Flow has increased from $14.0 million in 1992 to $25.3
million in 1993 and $35.9 million in 1994, Operating Cash Flow has not been
sufficient to meet the Company's working capital and other operational needs nor
has it provided funds for capital expenditures, acquisitions or other cash
requirements. Cash for these purposes has been generated through the Company's
bank credit facilities and the proceeds of the sale of common stock. The
Company's cash flow must continue to improve for it to meet the financial
covenants of the Loan
4
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Agreement and to service its debt and meet its other cash requirements without
additional financing. There can be no assurance that such improvements will be
achieved or, if not achieved, that additional financing will be available, or
that any available financing will be on terms that are attractive to the
Company. If cash flows do not continue to improve sufficiently or if such
financing is not available to the Company, the Company may be materially limited
in its ability to make acquisitions and capital expenditures to improve its
operations or may fail to meet the financial covenants and debt service
requirements of the Loan Agreement which would result in outstanding borrowings
under the agreement becoming immediately due and payable.
DEFICIENCY OF EARNINGS TO FIXED CHARGES. Fixed charges of the Company have
exceeded its earnings before extraordinary item and fixed charges in each year
of its operations. There can be no assurance that the Company's earnings before
fixed charges will be sufficient to pay interest on any debt securities offered
hereby. See "Ratio of Earnings to Combined Fixed Charges and Preferred Stock
Dividends." The financial covenants of the Company's Loan Agreement do not
include any required minimum ratio of earnings to fixed charges. For a
description of the financial covenants of the Loan Agreement, see the documents
listed in "Documents Incorporated by Reference."
HOLDING COMPANY STRUCTURE. The Debentures will be obligations exclusively
of the Company. The Company's subsidiaries hold substantially all of the
Company's assets and conduct substantially all of its operations. To that
extent, the Company is effectively a holding company. The Company must rely on
dividends, loan repayments and other intercompany cash flows from its
subsidiaries to generate the funds necessary to meet the Company's debt service
obligations. In addition, substantially all of the Company's subsidiaries have
guaranteed the Company's Loan Agreement and such guarantees are secured by the
assets of the respective subsidiaries. The Debentures will be effectively
subordinated to all indebtedness and other liabilities and commitments of the
subsidiaries, including trade payable and lease obligations and the guarantees
of the Loan Agreement. Any right of the Company to receive assets of any such
subsidiary upon the liquidation or reorganization of any such subsidiary (and
the consequent right of the holders of Debentures to participate in those
assets) will be effectively subordinated to the claims of that subsidiary's
creditors (including the claims of the Company's creditors under the Loan
Agreement guaranteed by the subsidiary), except to the extent the Company is
itself recognized as a creditor of such subsidiary, in which case the claims of
the Company would still be subject to any security in the assets of such
subsidiary and subordinate to any indebtedness of such subsidiary senior to that
held by the Company. As of June 30, 1995, the Company and its subsidiaries had
approximately $499.7 million of indebtedness and other liabilities, including
approximately $459.0 million of indebtedness under the Loan Agreement, to which
the Debentures may be effectively subordinated. The indentures governing the
Debentures do not limit the incurrence of additional indebtedness and other
liabilities to which the Debentures may be effectively subordinated. See
"Description of Debentures."
COMPETITION FROM WIRELINE TELEPHONE COMPANIES AND NEW TECHNOLOGIES.
Although current policies of the FCC authorize only two licensees to operate
cellular systems in each market, there is, and the Company expects there will
continue to be, significant competition from the other licensee authorized to
serve each cellular market in which the Company operates. Competition for
subscribers between cellular licensees is based principally upon the services
and enhancements offered, the technical quality of the cellular system, customer
service, system coverage and capacity, and price. The Company competes with a
wireline licensee in each of its cellular markets, some of which are larger and
have access to more substantial capital resources than does the Company.
As a result of regulatory and legislative initiatives, the Company's
cellular operations are also expected to face increased competition from
entities providing other communications technologies and services, including but
not limited to personal communications services ("PCS"). Some of these
technologies and services are currently operational and others are being
developed or may be developed in the future. Accordingly, there can be no
assurance that one or more of the technologies currently utilized by the Company
in its business will not become obsolete at some time in the future.
REGULATION. The licensing, construction, operation and sale of controlling
interests in cellular systems are regulated by the FCC. In addition, certain
aspects of cellular system operations, including but not limited to rates and
the resale of cellular service, may be subject to public utility regulation in
the state in which service is provided. Changes in the regulation of the
Company's activities, such as increased price regulation or deregulation of
interconnection arrangements or a decision by the FCC to permit more than two
licensees in each cellular market, could adversely affect the Company's results
of operations. In addition, all cellular licenses in the United States were
granted for an initial 10-year term and are subject to renewal. The majority of
the Company's cellular licenses expire within the next two years. While the
Company believes that each of these licenses will be renewed based upon FCC
rules establishing a presumption in favor of licensees that have complied with
their regulatory obligations during the initial license period, there can be no
assurance that all of the Company's licenses will be renewed.
5
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CHALLENGES OF GROWTH BY ACQUISITIONS. The Company will continue to pursue
opportunities to acquire additional interests in cellular systems proximate to
its existing metro-clusters as well as additional interests in licensees in
which it currently owns less than a 100% interest. If the Company is successful
in pursuing such acquisitions, the Company may require substantial additional
financing to acquire and develop additional systems. There can be no assurance
that the Company will be able to obtain such additional financing. Furthermore,
in acquiring additional cellular systems, the Company will be subject to the
risks that new systems will not perform as expected and that the returns from
such systems will not support the indebtedness incurred to acquire, or the
capital expenditures incurred to develop, such systems. Any additional
borrowings to finance acquisitions or related capital expenditures will increase
the Company's future debt service obligations and the amount of Operating Cash
Flow necessary to fund these obligations. In addition, in seeking to acquire
additional cellular systems or licenses in its primary markets, the Company
competes with other communications companies, many of which are larger and have
access to more substantial capital resources than does the Company. Competition
among bidders for acquisition targets is based upon a variety of factors,
including price, terms and conditions, size and access to capital, ability to
offer cash, stock or other forms of consideration, and similar matters. Although
the Company explores, on an ongoing basis, possible acquisitions of additional
cellular systems and licenses, the Company currently has no such pending
acquisition nor has it reached any agreement in principle regarding such an
acquisition.
OPTIONS TO MAKE ADDITIONAL INVESTMENT IN GEOTEK. As of June 30, 1995, the
Company had purchased 2,500,000 shares of Common Stock of Goetek Communications,
Inc. ("Geotek"), for a purchase price of $30 million and had agreed to purchase
531,463 shares of Geotek Series L Cumulative Convertible Preferred Stock on
September 1, 1995 for a purchase price of $5 million. In addition, as of June
30, 1995, the Company had earned approximately 400,000 shares of Goetek Common
Stock pursuant to a five year consulting agreement with Geotek expiring in 1999
and the Company holds options to invest up to $86 million for an aggregate of
approximately 5.3 million shares of common stock of Geotek. The options are
exercisable in series on or before September 1, 1996, subject to certain
extensions and qualifications. Should the Company exercise all or any portion of
these options, the exercise would require funds that might otherwise be
available for cellular system acquisitions, capital expenditures or other
corporate purposes. Any exercise would require approval of the Company's lenders
under its Loan Agreement or other financing alternatives.
DIVIDEND AND OTHER RESTRICTIONS UNDER THE LOAN AGREEMENT. The terms of the
Company's Loan Agreement prohibit the payment of dividends or other
distributions on any shares of the Company's capital stock (other than dividends
payable in shares of the Company's capital stock). The Company does not
anticipate paying any cash dividend or other distribution on its Common Stock in
the foreseeable future.
CONTROL OF THE COMPANY; CERTAIN PROVISIONS OF THE ARTICLES OF INCORPORATION
AND BYLAWS. Existing management of the Company and members and affiliates of the
"Richardson Family" own approximately 30% of the Company's outstanding Class A
Common Stock as of June 30, 1995, and consequently, if they act in concert, are
probably in a position to control the management and the affairs of the Company.
The articles of incorporation and bylaws of the Company contain certain
provisions that may render more difficult a hostile takeover, make it more
difficult to remove or change the composition of the Company's incumbent Board
of Directors and its officers, adversely affect shareholders who desire to
participate in a tender offer and deprive shareholders of possible opportunities
to sell their shares at prices higher than prevailing market prices. See
"Description of Common Stock."
VALUE OF FCC LICENSES. The underlying value of the Company's assets relates
primarily to its intangible assets, principally interests in entities holding
FCC construction permits and licenses, the value of which depend significantly
upon the success of the Company's business and the growth of the industry in
general. While the Company believes that there is presently a market for such
assets, such market may not exist in the future or the values obtainable may be
lower than at present. As a consequence, in the event of default on indebtedness
of the Company or any other event which would result in the liquidation of the
Company's assets, there can be no assurance that the proceeds would be
sufficient to pay its obligations, including any obligations pursuant to the
Securities offered hereby.
RADIOFREQUENCY EMISSION CONCERNS. Media reports have suggested that certain
radiofrequency ("RF") emissions from portable cellular telephones may be linked
to cancer. The FCC has a rulemaking proceeding pending to update the guidelines
and methods it uses for evaluating RF emissions from radio equipment, including
cellular telephones. While the proposal would impose more restrictive standards
on RF emissions from low power devices such as portable cellular telephones, it
is anticipated that all cellular telephones currently marketed and in use
already comply with the new proposed standards.
6
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RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
For the purposes of calculating the Company's ratio of earnings to combined
fixed charges and preferred stock dividends, "earnings" consist of income from
continuing operations before income taxes, extraordinary items, minority
interests and fixed charges (other than capitalized interest) and "fixed
charges" consist of interest, whether expensed or capitalized. The Company has
never issued any shares of preferred stock. Earnings have not been adequate to
cover fixed charges in any period of the Company's operations. The following
table sets forth the amount of the coverage deficiency in the periods indicated:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
1990 1991 1992 1993 1994 1994 1995
<S> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS)
Fixed charges in excess of earnings.......... $(30,717) $(33,738) $(27,151) $(15,317) $(14,476) $(4,625) $(8,932)
</TABLE>
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DESCRIPTION OF DEBENTURES
The Company may offer under this Prospectus Senior Debentures, Senior
Subordinated Debentures and Subordinated Debentures, any of which Debentures may
be issued as convertible and/or exchangeable Debentures.
The Debentures will represent unsecured general obligations of the Company,
unless otherwise provided in the Prospectus Supplement. The Senior Debentures
will be senior to all subordinated indebtedness of the Company, and pari passu
with any other unsecured, unsubordinated indebtedness of the Company. The Senior
Subordinated Debentures will be subordinate in right of payment to the Senior
Debentures and to certain other debt obligations of the Company and senior to
the Subordinated Debentures. The Subordinated Debentures will be subordinate in
right of payment to the Senior Debentures, the Senior Subordinated Debentures
and to certain other debt obligations of the Company. Although the Senior
Debentures and the Senior Subordinated Debentures are entitled "senior," the
Company has not issued and does not have any current firm arrangements to issue
any significant indebtedness to which any Debentures would not be effectively
subordinated. See "Risk Factors -- Holding Company Structure." As of June 30,
1995 the Company and its subsidiaries had approximately $499.7 million of
indebtedness and other liabilities to which the Debentures may be effectively
subordinated and the Indentures do not limit the additional incurrence of such
indebtedness or liabilities.
The Senior Debentures, the Senior Subordinated Debentures and the
Subordinated Debentures will be issued under separate Indentures that have been
qualified under the Trust Indenture Act of 1939 and that will be entered into
between the Company and trustees eligible under the Trust Indenture Act of 1939
to be designated prior to issuance of the respective Debentures. In this
Prospectus, the indentures with respect to the Senior Debentures, Senior
Subordinated Debentures and Subordinated Debentures are referred to as the
"Senior Indenture," "Senior Subordinated Indenture" and "Subordinated
Indenture," respectively. In addition, the Senior Indenture, the Senior
Subordinated Indenture and the Subordinated Indenture are sometimes collectively
referred to herein as the "Indentures" and the Trustee under the Senior
Indenture, the Trustee under the Senior Subordinated Indenture and the Trustee
under the Subordinated Indenture are sometimes collectively referred to as the
"Trustees" and individually as a "Trustee." The following summary of certain
provisions of the Indentures does not purport to be complete and is subject to,
and qualified in its entirety by, reference to all the provisions of the
Indentures, including the definitions therein of certain terms. Wherever
particular sections or defined terms of the Indentures are referred to, it is
intended that such sections or defined terms shall be incorporated herein by
reference. As used in the Indentures and in this section, the term the "Company"
means Vanguard Cellular Systems, Inc. without reference to its consolidated
subsidiaries.
GENERAL
The Indentures do not limit the aggregate principal amount of Debentures
which may be issued thereunder and provide that Debentures may be issued in one
or more series, in such form or forms, with such terms and up to the aggregate
principal amount authorized from time to time by the Company (Sections 2.1 and
2.2 of the Indentures). Unless otherwise provided in the Prospectus Supplement,
the Debentures may be presented for registration of transfer and exchange and
for payment or, if applicable, for conversion and/or exchange at the office of
the applicable Trustee, unless the Company appoints a different office or agency
for such purpose. (Section 4.2 of the Indentures). At the option of the Company,
the payment of interest may also be made by check mailed to the address of the
person entitled thereto as it appears in the Debenture register. (Section 4.1 of
the Indentures).
The applicable Prospectus Supplement will describe the following terms of
any Debentures (the "Offered Debentures") in respect of which this Prospectus is
being delivered (to the extent applicable to the Offered Debentures): (1) the
designation (including whether they are Senior Debentures, Senior Subordinated
Debentures or Subordinated Debentures), aggregate principal amount and
authorized denominations, if other than denominations of $1,000 and any integral
multiple thereof, of the Offered Debentures; (2) the percentage of the principal
amount at which such Offered Debentures will be issued; (3) the date or dates
(and whether fixed or extendable) on which the principal of the Offered
Debentures is payable or the method of determination thereof; (4) the rate or
rates at which the Offered Debentures will bear interest, if any, the method of
calculating such rates, the date or dates from which such interest will accrue,
the interest payment dates on which such interest shall be payable and the
record dates for the determination of Debentureholders to whom interest will be
payable; (5) the place or places where the principal of, premium, if any, and
interest, if any, on the Offered Debentures will be payable; (6) any provisions
relating to the issuance of the Offered Debentures at an original issue
discount; (7) the price or prices at which, the period or periods within which,
and the terms and conditions upon which the Offered Debentures may be redeemed,
in whole or in part, at the option of the Company, pursuant to any sinking fund
or otherwise (including the form or method of payment if other than cash, which
may include securities of other issuers); (8) the obligation, if any, of the
Company to redeem, repay
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or purchase the Offered Debentures pursuant to any mandatory redemption, sinking
fund or analogous provisions or at the option of the Debentureholder and the
price or prices at which, the period or periods within which and the terms and
conditions upon which the Offered Debentures will be redeemed, repaid or
purchased, in whole or in part, pursuant to any such obligation (including the
form or method of payment if other than in cash, which may include securities of
other issuers), and any provisions for the remarketing of such Debentures; (9)
if other than the principal amount thereof, the portion of the principal amount
of the Offered Debentures which will be payable upon declaration of acceleration
of the maturity thereof or provable in bankruptcy; (10) any Events of Default in
addition to or in lieu of those described herein and remedies therefor; (11)
whether the Offered Debentures are convertible or exchangeable and, if so, the
securities or rights into which the Offered Debentures are convertible or
exchangeable (which may include other Debentures, Preferred Stock, Class A
Common Stock, Class B Common Stock or other securities or rights of the Company
(including rights to receive payment in cash or securities based on the value,
rate or price of one or more specified commodities, currencies or indices) or
exchangeable for securities of other issuers or a combination of the foregoing)
and the terms and conditions upon which such conversion or exchange will be
effected including the initial conversion or exchange price or rate, the
conversion or exchange period and any other provision in addition to or in lieu
of those described herein; (12) any trustees, authenticating or paying agents,
transfer agents or registrars or any other agents with respect to the Offered
Debentures; (13) the currency or currencies, including composite currencies, in
which the Offered Debentures will be denominated if other than the currency of
the United States of America; (14) if other than the coin or currency in which
the Offered Debentures are denominated, the coin or currency in which payment of
the principal of, premium, if any, or interest on the Offered Debentures will be
payable; (15) if the principal of, premium, if any, or interest on the Offered
Debentures are to be payable, at the election of the Company or a holder
thereof, in a coin or currency other than that in which the Offered Debentures
are denominated, the period or periods within which, and terms and conditions
upon which, such election may be made; (16) if the amount of payments of
principal of, premium, if any, and interest on the Offered Debentures may be
determined with reference to the value, rate or price of one or more specified
commodities, currencies or indices, the manner in which such amounts shall be
determined; (17) whether and under what circumstances the Company will pay
additional amounts on the Offered Debentures held by a person who is not a
United States of America person in respect of any tax, assessment or
governmental charge withheld or deducted and, if so, whether the Company will
have the option to redeem such Debentures rather than pay such additional
amounts; (18) if receipt of certain certificates or other documents or
satisfaction of other conditions will be necessary for any purpose, including,
without limitation, as a condition to the issuance of the Offered Debentures in
definitive form (whether upon original issue or upon exchange of a temporary
Debenture), the form and terms of such certificates, documents or conditions;
(19) any other affirmative or negative covenants with respect to the Offered
Debentures; (20) whether the Offered Debentures will be issued in whole or in
part in the form of one or more Global Debentures and, in such case, the
Depositary therefor and the circumstances under which any Global Debenture may
be exchanged for Offered Debentures registered in the name of, and under which
any transfer of such Global Debenture may be registered in the name of, any
person other than the Depositary; and (21) any other specific terms of the
Offered Debentures. (Section 2.2 of the Indentures).
The Debentures will be exchangeable or transferable without charge
therefor, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith. (Sections 2.6
and 2.10 of the Indentures).
Debentures may be issued and sold at a substantial discount below their
principal amount or their redemption value. (Section 2.2 of the Indentures). If
so issued, certain federal income tax and other considerations, if applicable,
will be described in the Prospectus Supplement relating thereto.
GLOBAL DEBENTURES
The Debentures of a series may be issued in whole or in part in the form of
one or more Global Debentures that will be deposited with a Depositary or with a
nominee for a Depositary identified in the Prospectus Supplement relating to
such series. The specific terms of the depository arrangement with respect to
the Debentures of a series will be described in the Prospectus Supplement
relating to such series. The Company anticipates that the following provisions
will apply to all depository arrangements for registered Debentures issued by
it.
Unless otherwise specified in an applicable Prospectus Supplement,
Debentures which are to be represented by a Global Debenture to be deposited
with or on behalf of a Depositary will be represented by a Global Debenture
registered in the name of such Depositary or its nominee. Upon issuance of a
Global Debenture in registered form, the Depositary of such Global Debenture
will credit, on its book-entry registration and transfer system, the respective
principal amounts of the Debentures represented by such Global Debentures to the
accounts of institutions that have accounts with such Depositary or its nominee
("Participants"). The accounts to be credited shall be designated by the
underwriters or agents of such Debentures, or by the
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Company if such Debentures are offered and sold directly by the Company.
Ownership of beneficial interests in a Global Debenture will be limited to
Participants or persons that may hold interests through Participants. Ownership
of beneficial interests in such Global Debentures will be shown on, and the
transfer of that ownership will be effected only through records maintained by
the Depositary (with respect to Participants' interests) or its nominee for such
Global Debenture or by Participants or persons that hold through Participants.
The laws of some jurisdictions require that certain purchasers of Debentures
take physical delivery of such securities in definitive form. Such laws may
impair the ability to transfer beneficial interests in a Global Debenture.
So long as the Depositary for a Global Debenture in registered form, or its
nominee, is the registered owner of such Global Debentures, such Depositary or
such nominee, as the case may be, will be considered the sole owner or holder of
the Debentures represented by such Global Debentures for all purposes under the
Indenture for such Debentures. Except as set forth below, owners of beneficial
interests in such Global Debenture will not be entitled to have Debentures of
the series represented by such Global Debentures registered in their names, will
not receive or be entitled to receive physical delivery of Debentures of such
series in definitive form and will not be considered the owners or holders
thereof under the Indenture for such Debentures.
Principal, premium, if any, and interest payments on Debentures registered
in the name of or held by a Depositary or its nominee will be made to the
Depositary or its nominee, as the case may be, as the registered owner or the
holder of the Global Debenture representing such Debentures. Neither the
Company, the Trustee, or any paying agent for such Debentures will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in a Global Debenture
for such Debentures or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests. The Company expects that the
Depositary for Debentures of a series, upon receipt of any payments of
principal, premium, if any, or interest in respect to a Global Debenture, will
credit immediately the accounts of the related Participants with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of such Global Debentures as shown on the records of such Depositary. The
Company also expects that payments by Participants to owners of beneficial
interests in such Global Debentures held through such Participants will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or registered
in "street name," and will be the responsibility of such Participants.
Unless and until it is exchanged in whole or in part for Debentures in
definitive form in accordance with the terms of the Debentures, a Global
Debenture may not be transferred except as a whole by a nominee of the
Depositary to such Depositary or another nominee of such Depositary or by the
Depositary or any such nominee or a successor of the Depositary or a nominee of
such successor. If (i) a Depositary for Debentures notifies the Company that it
is unwilling or unable to continue as Depositary for the Global Debentures of
any series of Debentures or if at any time such Depositary ceases to be a
clearing agency registered under the Securities Exchange Act, (ii) the Company
in its sole discretion determines that the Global Debentures of any series of
Debentures then outstanding under an Indenture shall be exchangeable for
definitive Debentures of such series in registered form or (iii) an Event of
Default with respect to the Debentures of a series represented by a Global
Debenture has occurred and is continuing, then the Company will issue definitive
Debentures of such series in registered form in exchange for the Global
Debentures representing such Debentures. In any such instance, such definitive
Debentures of such series shall be registered in the names of the owners of the
beneficial interests in such Global Debentures.
SUBORDINATION
The Subordinated Debentures will be subordinated, to the extent and in the
manner set forth in the Subordinated Indenture, in right of payment to the prior
payment in full of all Senior Indebtedness as defined in the Subordinated
Indenture. (Section 3.1 of the Subordinated Indenture). Senior Indebtedness is
defined in the Subordinated Indenture as (a) the principal of and premium, if
any, and interest on: (i) all indebtedness for money borrowed by the Company,
whether outstanding on the date of the Indenture or thereafter created or
incurred; (ii) all indebtedness for money borrowed by another person, in which
the Company has an equity interest or has the right to purchase an equity
interest, and guaranteed directly or indirectly by the Company (whether such
guarantee is outstanding on the date of the Indenture or thereafter created or
incurred); and (iii) all indebtedness constituting purchase money indebtedness
(as defined) for the payment of which the Company is directly or contingency
liable (whether outstanding on the date of the Indenture or thereafter created
or incurred); (b) any obligation to purchase or guarantee indebtedness of, to
supply funds to or invest in, another person in which the Company has an equity
interest or has the right to purchase an equity interest (whether such
obligation is outstanding on the date of the Indenture or is thereafter created
or incurred); (c) any obligation of the Company to any person in respect of
surety or similar bonds issued by such person in connection with entering into,
renewing or extending any cellular license granted by a governmental authority
or any construction in respect of any cellular telephone system by the Company
or any other person in
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which the Company has an equity interest or has the right to purchase an equity
interest; and (d) all renewals, extensions or refundings of any such
obligations, indebtedness and guarantees; provided, however, that Senior
Indebtedness shall not include any obligation, indebtedness or guarantee which
is created or evidenced by an instrument the terms of which expressly provide
that such obligation, indebtedness or guarantee is subordinate to the
Subordinated Debentures or to all other indebtedness of the Company or is not
superior in right of payment or performance to the Subordinated Debentures.
(Section 1.1 of the Subordinated Indenture).
The Senior Subordinated Debentures will be subordinated to the extent and
in the manner set forth in the Senior Subordinated Indenture, in right of
payment to the prior payment in full of all Senior Indebtedness as defined in
the Senior Subordinated Indenture. (Section 3.1 of the Senior Subordinated
Indenture). Senior Indebtedness is defined in the Senior Subordinated Indenture
in the same manner as Senior Indebtedness is defined in the Subordinated
Indenture except that Senior Indebtedness as defined in the Senior Subordinated
Indenture does not include: (i) the Subordinated Debentures; or (ii) any
obligation, indebtedness or guarantee which is created or evidenced by an
instrument the terms of which expressly provide that such obligation,
indebtedness or guarantee is subordinate to the Senior Subordinated Indentures
or to all other indebtedness of the Company or is not superior in right of
payment or performance to the Senior Subordinated Debentures or that such
obligation, indebtedness or guarantee is subordinate to senior indebtedness and
senior indebtedness is defined by such instrument in substantially the same
manner as senior indebtedness is defined in the indenture for the Subordinated
Debentures unless the definition of senior indebtedness expressly provides that
such obligation, indebtedness or guarantee is not subordinate to the Senior
Subordinate Debentures or is superior in right of payment or performance to the
Senior Subordinated Debentures. (Section 1.1 of the Senior Subordinated
Indentures).
At June 30, 1995, the Company had approximately $459.1 million of Senior
Indebtedness and other indebtedness to which the Subordinated Debentures and the
Senior Subordinated Debentures may be effectively subordinated. The Debentures
may also be effectively subordinated to certain indebtedness and other
liabilities of the Company's subsidiaries. See "Risk Factors -- Holding Company
Structure." There is no limitation in the Indentures on the incurrence of
additional Senior Indebtedness or other indebtedness and liabilities and the
Company expects to incur such additional indebtedness or other liabilities.
No payment on account of the principal of, premium, if any, or interest on
the Senior Subordinated Debentures or Subordinated Debentures may be made, if,
at the time of such payment or immediately after giving effect thereto, there
exists a default in payment of the principal of, premium, if any, or interest on
any Senior Indebtedness (as defined in the Senior Subordinated Indenture or
Subordinated Indenture, as applicable), whether at expressed maturity,
acceleration thereof or otherwise, except as otherwise provided in the
applicable Indenture. (Section 3.2 of the Senior Subordinated and Subordinated
Indentures). Upon any payment or distribution of assets of the Company of any
kind or character, upon any dissolution or winding up or total or partial
liquidation or reorganization of the Company, whether voluntary or involuntary,
in bankruptcy, insolvency or receivership, or upon an assignment for the benefit
of creditors or any other marshalling of the assets and liabilities of the
Company or otherwise, all principal of, premium, if any, and interest due on all
Senior Indebtedness (including any outstanding Senior Debentures and, in the
case of the Subordinated Debentures, any outstanding Senior Subordinated
Indebtedness) must be paid or provided for in full before the holders of the
Senior Subordinated or Subordinated Debentures are entitled to receive or retain
any payment. (Section 3.2 of the Senior Subordinated and Subordinated
Indentures). Subject to the payment in full of all Senior Indebtedness (as
defined in the Senior Subordinated Indenture or the Subordinated Indenture, as
the case may be), the holders of the Senior Subordinated Debentures or
Subordinated Debentures, as applicable, will be subrogated to the rights of the
holders of Senior Indebtedness (as respectively defined) to receive payments or
distributions of assets of the Company applicable to Senior Indebtedness until
the Senior Subordinated or Subordinated Debentures are paid in full. (Section
3.2 of the Senior Subordinated and Subordinated Indentures). By reason of such
subordination, in the event of a distribution of assets upon insolvency, certain
general creditors of the Company may recover more, ratably, than the holders of
the Senior Subordinated or Subordinated Debentures.
CONVERTIBLE DEBENTURES
The terms, if any, on which Offered Debentures may be (mandatorily or
otherwise) exchanged for or converted into other Debentures or shares of
Preferred Stock, Class A Common Stock, Class B Common Stock or other securities
or rights of the Company (including rights to receive payments in cash or
securities based on the value, rate or price of one or more specified
commodities, currencies or indices) or securities of other issuers or any
combination of the foregoing will be set forth in the Prospectus Supplement for
such Offered Debentures.
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Unless otherwise indicated in the Prospectus Supplement, the following
provisions will apply to Offered Debentures that may be exchanged for or
converted into stock of any class of the Company ("Capital Stock"):
The holder of any Debentures convertible into capital stock will have the
right exercisable at any time during the time period specified in the Prospectus
Supplement, unless previously redeemed by the Company, to convert such
Debentures into shares of capital stock (which may include Preferred Stock,
Class A Common Stock or Class B Common Stock) as specified in the Prospectus
Supplement, at the conversion rate for each $1,000 principal amount of
Debentures set forth in the Prospectus Supplement, subject to adjustment. The
holder of a convertible Debenture may convert a portion thereof which is $1,000
or any integral multiple of $1,000. (Section 13.2 of the Indentures). In the
case of Debentures called for redemption, conversion rights will expire at the
close of business on the date fixed for the redemption as may be specified in
the Prospectus Supplement, except that in the case of redemption at the option
of the Debentureholder, if applicable, such right will terminate upon receipt of
written notice of the exercise of such option. (Section 13.2 of the Indentures).
In certain events, the conversion rate will be subject to adjustment as set
forth in the Indentures. Such events include the issuance of shares of any class
of Capital Stock of the Company as a dividend on the class of Capital Stock into
which the Debentures of such series are convertible; subdivisions, combination
and reclassifications of the class of Capital Stock into which Debentures of
such series are convertible; the issuance to all holders of the class of Capital
Stock into which Debentures of such series are convertible of rights or warrants
entitling the Debentureholders (for a period not exceeding 45 days) to subscribe
for or purchase shares of such class of Capital Stock at a price per share less
than the current market price per share of such class of Capital Stock (as
defined in the Indentures); and the distribution to all holders of the class of
Capital Stock into which Debentures of such series are convertible of evidences
of indebtedness of the Company or of assets (excluding cash dividends paid from
retained earnings and dividends payable in Capital Stock for which adjustment is
made as referred to above) or subscription rights or warrants (other than those
referred to above). No adjustment of the conversion rate will be required unless
an adjustment would require a cumulative increase or decrease of at least 1% in
such rate. (Section 13.5 of the Indentures.) Fractional shares of Capital Stock
will not be issued upon conversion but, in lieu thereof, the Company will pay a
cash adjustment. Convertible Debentures surrendered for conversion between the
record date for an interest payment, if any, and the interest payment date
(except convertible Debentures called for redemption on a redemption date during
such period) must be accompanied by payment of an amount equal to the interest
thereon which the registered holder is to receive. (Article 13 of the
Indentures).
MODIFICATION OF THE INDENTURES
Modification of any Indenture with respect to the Debentures of any series
may be made by the Company and the applicable Trustee with the consent of the
holders of not less than 66 2/3% in aggregate principal amount of outstanding
Debentures of such series; provided that no such modification may, without the
consent of the holder of each Debenture of such series affected thereby, (1)
extend the time or times of payment of the principal amount of, premium, if any,
or the interest on, any Debentures; (2) reduce the principal amount of, premium,
if any, or the rate of interest on any Debentures (and/or such other amount or
amounts as any Debentures or supplemental indentures with respect thereto may
provide to be due and payable upon declaration of acceleration of the maturity
thereof); (3) change the currency of payment of principal of, premium, if any,
or the interest on any Debenture; (4) reduce any amount payable on redemption
thereof; (5) alter or impair the right to convert or exchange the Debentures at
the rate and upon the terms provided in the Indenture; (6) alter or impair the
right to require redemption at the option of the holder; or (7) reduce the
percentage of Debentures of any series, the vote of the holders of which is
necessary to modify the Indenture. (Section 12.2 of the Indentures).
Modifications of any Indenture with respect to the Debentures of any series
may be made by the Company and the Trustee without the consent of the
Debentureholders: (a) to add to the covenants and agreements of the Company or
to surrender any right or power reserved to or conferred upon the Company in the
Indenture; (b) to cure any ambiguity or to cure, correct or supplement any
defect or inconsistent provision contained in the Indenture; (c) to make such
provisions in regard to matters arising under the Indenture which may be
necessary or desirable, or otherwise change the Indenture in any manner, which
shall not adversely affect the interests of the Debentureholders of any series;
(d) to evidence the succession of another corporation to the Company and the
assumption by the successor corporation of the covenants, agreements and
obligations of the Company pursuant to the Indenture and to provide for the
adjustment of conversion rights pursuant to Section 13.7 upon consolidation,
merger, sale or conveyance of the Company; (e) to establish the form or terms of
the Debentures of any series as permitted by the Indenture; (f) to change or
eliminate any of the provisions of the Indenture, provided that any such change
or elimination shall become effective only when there is no Debenture
outstanding of any series created prior thereto which is entitled to the benefit
of such provisions; (g) to add or change any of the provisions of the Indenture
to such extent as shall be necessary to permit or facilitate the issuance of
Debentures in bearer form or to
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provide for uncertificated Debenture (so long as any "registration-required
obligation" within the meaning of Section 163(f)(2) of the Internal Revenue Code
of 1986, as amended (the "Code"), is in registered form for purposes of the
Code); (h) to amend or supplement any provision contained in the Indenture,
which was required to be contained in the Indenture in order for the Indenture
to be qualified under the Trust Indenture Act of 1939, if the Trust Indenture
Act of 1939 or regulations thereunder change what is so required to be included
in qualified indentures, in any manner not inconsistent with what then may be
required for such qualification; (i) to add any additional events of default;
(j) to convey, transfer, assign, mortgage or pledge to the Trustee, as security
for the Debentures of one or more series, any property or assets; or (k) to add
to or change any of the provisions of the Indenture as contemplated in Section
11.7(b) relating to successor trustees. (Section 12.1 of the Indentures).
DEFAULTS AND NOTICE
The following are to be Events of Default with respect to Debentures of any
series, unless it is either inapplicable to a particular series or is
specifically deleted or modified for Debentures of a particular series, as
described in the Prospectus Supplement: (1) failure to pay the principal of, or
premium, if any, on any Debenture of such series when due and payable (whether
at maturity, by call for redemption, through any mandatory sinking fund, by
redemption at the option of the holder, by declaration of acceleration or
otherwise, and, with respect to Debentures issued pursuant to the Senior
Subordinated Indenture and the Subordinated Indenture, whether or not payment is
prohibited by the subordination provisions of such Indentures); (2) failure to
make a payment of any interest on any Debenture of such series when due,
continued for 30 days (with respect to Debentures issued pursuant to the Senior
Subordinated Indenture and the Subordinated Indenture, whether or not payment is
prohibited by the subordination provisions of such Indentures); (3) failure of
the Company to perform or observe any other covenants or agreements of the
Company in the Indenture or in the Debentures of such series (other than
agreements or covenants included in the Indentures solely for the benefit of a
series of Debentures other than the series), continued for 90 days after written
notice; (4) certain events of bankruptcy, insolvency or reorganization of the
Company; and (5) as to Senior Subordinated and Subordinated Debentures, an event
of default under any Senior Indebtedness (as respectively defined) that has
resulted in the acceleration of such indebtedness prior to the expressed
maturity thereof, which acceleration has not been rescinded or annulled within
30 business days after written notice and which acceleration is not contested by
the Company in good faith. If an Event of Default with respect to Debentures of
any series shall happen and be continuing, the Trustee or the holders of not
less than 25% in aggregate principal amount of the then outstanding Debentures
of such series may declare the principal amount (or, if the Debentures of such
series are issued at an original issue discount, such portion of the principal
amount as may be specified in the terms of the Debentures of such series) of all
Debentures of such series and/or such other amount or amounts as the Debentures
or supplemental indenture with respect to such series may provide, to be due and
payable immediately. (Section 7.1 of the Indentures).
The Indentures provide that the Trustee will, within 90 days after the
occurrence of a default, give to holders of Debentures of any series notice of
all incurred defaults with respect to such series known to it; provided,
however, that, except in the case of a default that results from the failure to
make any payment of the principal of, premium, if any, or interest on the
Debentures of any series, or in the payment of any mandatory sinking fund
installment with respect to Debentures of such series, the Trustee may withhold
such notice if it in good faith determines that the withholding of such notice
is in the interest of the holders of Debentures of such series. (Section 11.3 of
the Indentures).
The Indentures contain a provision entitling the Trustee to be indemnified
by holders of Debentures before proceeding to exercise any trust or power under
the Indentures at the request of such holders. (Section 11.1 of the Indentures).
The Indentures provide that the holders of a majority in aggregate principal
amount of the then outstanding Debentures of any series may direct the time,
method and place of conducting any proceedings for any remedy available to the
Trustee or of exercising any trust or power conferred upon the Trustee with
respect to the Debentures of such series, provided, however, that the Trustee
may decline to follow any such direction if, among other reasons, the Trustee
determines in good faith that the actions or proceedings as directed may not
lawfully be taken, would involve the Trustee in personal liability or would be
unduly prejudicial to the holders of the Debentures of such series not joining
in such direction. (Section 7.6 of the Indentures). The right of a holder to
institute a proceeding with respect to the Indenture is subject to certain
conditions precedent including, without limitation, that the holders of a
majority in aggregate principal amount of the Debentures of such series then
outstanding make a written request upon the Trustee to exercise its powers under
the Indenture, indemnify the Trustee and afford the Trustee reasonable
opportunity to act, but the holder has an absolute right to receipt of the
principal of, premium, if any, and interest when due, to require conversion or
exchange of Debentures if the Indentures provide for convertibility or
exchangeability at the option of the holder, and to institute suit for the
enforcement thereof. (Section 7.7 of the Indentures).
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REPORTS TO HOLDERS OF DEBENTURES
The Company intends to furnish to holders of Debentures all quarterly and
annual reports that it furnishes to holders of the Company's Class A Common
Stock.
DESCRIPTION OF PREFERRED STOCK
The Board of Directors of the Company is authorized to issue in one or more
series up to a maximum of 1,000,000 shares of preferred stock, par value $.01
per share. The shares can be issued with such designations, preferences,
qualifications, privileges, limitations, restrictions, options, conversion or
exchange rights and other special or relative rights as the Board of Directors
shall from time to time fix by resolution, which could adversely affect the
voting powers of the holders of Common Stock. Issuance of the Preferred Stock
could have the effect of acting as an anti-takeover device to delay or prevent a
change of control of the Company. The dividend, the liquidation preference, and
other specific terms of each series of the Preferred Stock will be set forth in
the Prospectus Supplement. The Company currently has no shares of Preferred
Stock outstanding.
The applicable Prospectus Supplement will describe the following terms of
any Preferred Stock in respect of which this Prospectus is being delivered (to
the extent applicable to such Preferred Stock): (1) the specific designation,
number of shares, seniority and purchase price; (2) any liquidation preference
per share; (3) any date of maturity; (4) any redemption, repayment or sinking
fund provisions; (5) any dividend rate or rates and the dates on which any such
dividends will be payable (or the method by which such rates or dates will be
determined); (6) any voting rights; (7) if other than the currency of the United
States of America, the currency or currencies including composite currencies in
which such Preferred Stock is denominated and/or in which payments will or may
be payable; (8) the method by which amounts in respect of such Preferred Stock
may be calculated and any commodities, currencies or indices, or value, rate or
price, relevant to such calculation; (9) whether the Preferred Stock is
convertible or exchangeable and, if so, the securities or rights to which such
Preferred Stock is convertible or exchangeable (which may include other
Preferred Stock, Debentures, Class A Common Stock, Class B Common Stock or other
securities or rights of the Company (including rights to receive payment in cash
or securities based on the value, rate or price of one or more specified
commodities, currencies or indices) or securities of other issuers or a
combination of the foregoing), and the terms and conditions upon which such
conversions or exchanges will be effected including the initial conversion or
exchange prices or rates, the conversion or exchange period and any other
related provisions; (10) the place or places where dividends and other payments
on the Preferred Stock will be payable; (11) any additional voting, dividend,
liquidation, redemption and other rights, preferences, privileges, limitations
and restrictions; and (12) if applicable, a discussion of certain federal income
tax considerations with respect to such Preferred Stock.
As described under "Description of Depositary Shares," the Company may, at
its option, elect to offer depositary shares ("Depositary Shares") evidenced by
depositary receipts ("Depositary Receipts"), each representing an interest (to
be specified in the Prospectus Supplement relating to the particular series of
the Preferred Stock) in a share of the particular series of the Preferred Stock
issued and deposited with a Depositary (as defined below).
All shares of Preferred Stock offered, or issuable upon conversion,
exchange or exercise of Securities, will, when issued, be fully paid and
nonassessable.
DESCRIPTION OF DEPOSITARY SHARES
The description below sets forth certain general terms and provisions of
the Deposit Agreement (as defined below) and of the Depositary Shares and
Depositary Receipts. The specific terms of the Depositary Shares and, if
applicable, a discussion of certain federal income tax considerations with
respect thereto will be described in the Prospectus Supplement relating to such
Depositary Shares. The following description does not purport to be complete and
is subject to, and qualified in its entirety by reference to, the form of
Deposit Agreement and form of Depositary Receipts relating to each series of the
Preferred Stock.
GENERAL
The Company may, at its option, elect to have shares of Preferred Stock
represented by Depositary Shares. The shares of any series of the Preferred
Stock underlying the Depositary Shares will be deposited under a separate
deposit agreement (the "Deposit Agreement") between the Company and a bank or
trust company selected by the Company (the "Depositary"). The Prospectus
Supplement relating to a series of Depositary Shares will set forth the name and
address of the Depositary. Subject to the terms of the Deposit Agreement, each
owner of a Depositary Share will be entitled, in proportion to the
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<PAGE>
applicable interest in the number of shares of Preferred Stock underlying such
Depositary Share, to all the rights and preferences of the Preferred Stock
underlying such Depositary Share (including dividend, voting, redemption,
conversion, exchange and liquidation rights).
The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the Deposit Agreement, each of which will represent the applicable
interest in a number of shares of a particular series of the Preferred Stock
described in the applicable Prospectus Supplement.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other cash
distributions received in respect of the Preferred Stock to the record holders
of Depositary Shares representing such Preferred Stock in proportion to the
number of such Depositary Shares owned by such holders on the relevant record
date.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Shares
entitled thereto or the Depositary may, with the approval of the Company, sell
such property and distribute the net proceeds from such sale to such holders.
The Deposit Agreement also contains provisions relating to the manner in
which any subscription or similar rights offered by the Company to holders of
Preferred Stock shall be made available to holders of Depositary Shares.
CONVERSION AND EXCHANGE
If any Preferred Stock underlying the Depositary Shares is subject to
conversion or exchange as set forth in the Prospectus Supplement relating
thereto, each record holder of Depositary Shares will have the right or
obligation to convert or exchange such Depositary Shares pursuant to the terms
thereof.
REDEMPTION OF DEPOSITARY SHARES
If Preferred Stock underlying the Depositary Shares is subject to
redemption, the Depositary Shares will be redeemed from the proceeds received by
the Depositary resulting from the redemption, in whole or in part, of the
Preferred Stock held by the Depositary. The redemption price per Depositary
Share will be equal to the aggregate redemption price payable with respect to
the number of shares of Preferred Stock underlying the Depositary Shares.
Whenever the Company redeems Preferred Stock from the Depositary, the Depositary
will redeem as of the same redemption date a proportionate number of Depositary
Shares representing the shares of Preferred Stock that were redeemed. If less
than all the Depositary Shares are to be redeemed, the Depositary Shares to be
redeemed will be selected by lot or pro rata as may be determined by the
Company.
After the date fixed for redemption, the Depositary Shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the Depositary Shares will cease, except the right to receive the
redemption price payable upon such redemption. Any funds deposited by the
Company with the Depositary for any Depositary Shares which the holders thereof
fail to redeem shall be returned to the Company after a period of two years from
the date such funds are so deposited.
WITHDRAWAL OF STOCK
Any holder of Depositary Shares may, upon surrender of the Depositary
Receipts at the corporate trust office of the Depositary (unless the related
Depositary Shares have previously been called for redemption), receive the
number of whole shares of the related series of Preferred Stock and any money or
other property represented by such Depositary Receipts. Holders of Depositary
Shares making such withdrawals will be entitled to receive whole shares of
Preferred Stock on the basis set forth in the related Prospectus Supplement for
such series of Preferred Stock, but holders of such whole shares of Preferred
Stock will not thereafter be entitled to deposit such Preferred Stock under the
Deposit Agreement or to receive Depositary Receipts therefor. If the Depositary
Shares surrendered by the holder in connection with such withdrawal exceed the
number of Depositary Shares that represent the number of whole shares of
Preferred Stock to be withdrawn, the Depositary will deliver to such holder at
the same time a new Depositary Receipt evidencing such excess number of
Depositary Shares.
VOTING
Upon receipt of notice of any meeting, or action in lieu of any meeting, at
which the holders of any shares of Preferred Stock underlying the Depositary
Shares are entitled to vote, the Depositary will mail the information contained
in such notice
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to the record holders of the Depositary Shares relating to such Preferred Stock.
Each record holder of such Depositary Shares on the record date (which will be
the same date as the record date for the Preferred Stock) will be entitled to
instruct the Depositary as to the exercise of the voting rights pertaining to
the number of shares of Preferred Stock underlying such holder's Depositary
Shares. The Depositary will endeavor, insofar as practicable, to vote the number
of shares of Preferred Stock underlying such Depositary Shares in accordance
with such instructions, and the Company will agree to take all action which may
be deemed necessary by the Depositary in order to enable the Depositary to do
so.
AMENDMENT TO THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between the Company and the Depositary, provided, however, that any amendment
which materially and adversely alters the rights of the existing holders of
Depositary Shares will not be effective unless such amendment has been approved
by a majority of the Depositary Shares then outstanding.
CHARGES OF DEPOSITARY
The Company will pay all transfer and other taxes and governmental charges
that arise solely from the existence of the depositary arrangements. The Company
will pay charges of the Depositary in connection with the initial deposit of the
Preferred Stock and any exchange or redemption of the Preferred Stock. Holders
of Depositary Shares will pay all other transfer and other taxes and
governmental charges, and, in addition, such other charges as are expressly
provided in the Deposit Agreement to be for their accounts.
MISCELLANEOUS
The Company, or at the option of the Company, the Depositary, will forward
to the holders of Depositary Shares all reports and communications from the
Company which the Company is required to furnish to the holders of Preferred
Stock.
Neither the Depositary nor the Company will be liable if it is prevented or
delayed by law or any circumstances beyond its control in performing its
obligations under the Deposit Agreement. The obligations of the Company and the
Depositary under the Deposit Agreement will be limited to performance in good
faith of their duties thereunder, and neither will be obligated to prosecute or
defend any legal proceeding in respect of any Depositary Share or Preferred
Stock unless satisfactory indemnity has been furnished. The Company and the
Depositary may rely upon written advice of counsel or accountants or information
provided by persons presenting Preferred Stock for deposit, holders of
Depositary Shares or persons believed to be competent and documents believed to
be genuine.
RESIGNATION AND REMOVAL OF DEPOSITARY; TERMINATION OF THE DEPOSIT AGREEMENT
The Depositary may resign at any time by delivering to the Company notice
of its election to do so, and the Company may at any time remove the Depositary,
any such resignation or removal to take effect upon the appointment of a
successor Depositary and its acceptance of such appointment. Such successor
Depositary will be appointed by the Company within 60 days after delivery of the
notice of resignation or removal. The Deposit Agreement may be terminated at the
direction of the Company or by the Depositary if a period of 90 days shall have
expired after the Depositary has delivered to the Company written notice of its
election to resign and a successor depositary shall not have been appointed.
Upon termination of the Deposit Agreement, the Depositary will discontinue the
transfer of Depositary Receipts, will suspend the distribution of dividends to
the holders thereof, and will not give any further notices (other than notice of
such termination) or perform any further acts under the Deposit Agreement except
that the Depositary will continue to deliver Preferred Stock certificates,
together with such dividends and distributions and the net proceeds of any sales
or rights, preferences, privileges or other property in exchange for Depositary
Receipts surrendered. Upon request of the Company, the Depositary shall deliver
all books, records, certificates evidencing Preferred Stock, Depositary Receipts
and other documents relating to the subject matter of the Deposit Agreement to
the Company.
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DESCRIPTION OF COMMON STOCK
The statements made under this caption include summaries of certain
provisions contained in the Company's Articles of Incorporation and bylaws.
These statements do not purport to be complete and are qualified in their
entirety by reference to such Articles of Incorporation and bylaws.
The authorized capital stock of the Company consists of 250,000,000 shares
of Class A Common Stock par value $.01 per share, 30,000,000 shares of Class B
Common Stock, par value $.01 per share, and the Preferred Stock. As of June 30,
1995, 41,190,848 shares of Class A Common Stock were issued and outstanding in
the names of approximately 1,200 holders of record, and no shares of Class B
Common Stock were issued and outstanding.
CLASS A COMMON STOCK
Holders of the Company's Class A Common Stock are entitled ratably, share
for share, to such dividends as may be declared upon the Class A Common Stock by
the Board of Directors and, upon any liquidation of the Company, to participate
ratably in the distribution of any corporate assets remaining after payment of
all debts and the liquidation preferences, if any, of Preferred Stock that then
may be issued and outstanding. However, the Company has entered into a Loan
Agreement which substantially prohibits the payment of dividends or other
distributions with respect to the Class A Common Stock. See "Risk
Factors -- Existing Indebtedness; Additional Financing" and "Dividend and Other
Restrictions under the Loan Agreement."
Holders of the Company's Class A Common Stock are entitled to one vote per
share on all matters submitted to a vote of holders of Class A Common Stock. No
holder of Class A Common Stock of the Company is entitled as a matter of right
to subscribe for or to purchase any shares of stock or any security convertible
into shares of stock of any class of the Company. Each outstanding share of
Class A Common Stock is validly issued, fully paid and nonassessable.
CLASS B COMMON STOCK
The Board of Directors has the authority, without any vote or action by the
shareholders, to issue Class B Common Stock. The Company's Articles of
Incorporation provide that the Class B Common Stock would have the same
characteristics as the Class A Common Stock, except that the holders of Class B
Common Stock would be entitled to one-tenth of one vote per share, voted as a
single class with the Class A Common Stock, except as required by law. Under
North Carolina law, the holders of Class B Common Stock generally would have the
right to vote as a separate voting group on (i) certain amendments to the
Articles of Incorporation, including amendments that would increase or decrease
the authorized number of shares of the class, effect an exchange or
reclassification of their shares for shares of another class, or change the
rights of the class, (ii) a plan of merger if the plan contains a provision
that, if contained in a proposed amendment to the Articles of Incorporation,
would give rise to the right to vote, except where the consideration to be
received in exchange for the shares consists solely of cash, and (iii) a plan of
share exchange if the shares are to be acquired in the exchange. Issuance of
Class B Common Stock could have the effect of acting as an anti-takeover device
to delay or prevent a change of control of the Company.
CERTAIN PROVISIONS OF THE ARTICLES OF INCORPORATION AND BYLAWS
A provision of the Company's Articles of Incorporation requires the holders
of at least 66 2/3% of the outstanding shares of stock of the Company then
entitled to vote in elections of directors or a majority of the "disinterested"
members of the Board of Directors to approve certain major corporate
transactions involving the Company and a holder of 10% or more of any class of
equity security of the Company ("Interested Shareholder") or the affiliate of an
Interested Shareholder, including a merger or consolidation with the Interested
Shareholder or the sale, lease or exchange of substantially all of the assets of
the Company or of the Interested Shareholder to the other, or any dissolution of
the Company. "Disinterested" directors are directors who are neither Interested
Shareholders nor affiliated with any Interested Shareholder. In addition, the
Company's bylaws permit (i) directors to be removed only for cause and upon the
affirmative vote of the holders of at least 66 2/3% of the outstanding shares of
the Company's capital stock entitled to vote generally in the election of
directors and (ii) newly created directorships and vacancies caused by any
reason to be filled only by the vote of the majority of directors then in office
or by the shareholders. Both the Articles of Incorporation and the bylaws
require the affirmative vote of the holders of at least 66 2/3% of the
outstanding shares of capital stock of the Company entitled to vote generally in
the election of directors to amend these provisions. These provisions could make
it more difficult for a third party to acquire control of the Company.
The Board of Directors of the Company is divided into three classes, with
one class elected annually by the shareholders to a three-year term. The effect
of the staggered Board of Directors is to negate substantially the possibility
of minority
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shareholders' obtaining representation on the Board of Directors. The holders of
common stock of the Company do not have the right to vote cumulatively in the
election of directors.
FCC RESTRICTIONS
The transfer of shares of Class A and Class B Common Stock may, in certain
circumstances, be subject to provisions of the Communications Act of 1934, as
amended, and rules and policies requiring prior FCC approval of the transfer of
control of cellular, microwave and other licensees, restricting the percentage
of alien ownership of such licensees, limiting the ownership of interests in
cellular systems serving the same area, and establishing other licensee
qualifications.
TRANSFER AGENT AND REGISTRAR
First Union National Bank, Charlotte, North Carolina, is the transfer agent
and registrar for the Class A Common Stock.
DESCRIPTION OF WARRANTS
GENERAL
The Company may issue Warrants to purchase Securities or other securities
or rights of the Company (including rights to receive payment in cash or
securities based on the value, rate or price of one or more specified
commodities, currencies or indices) or securities of other issuers or any
combination of the foregoing. Warrants may be issued independently or together
with any Securities and may be attached to or separate from such Securities.
Each series of Warrants will be issued under a separate warrant agreement (each
a "Warrant Agreement") to be entered into between the Company and a warrant
agent ("Warrant Agent"). The following sets forth certain general terms and
provisions of the Warrants. Further terms of the Warrants and the applicable
Warrant Agreement are set forth in the applicable Prospectus Supplement.
The applicable Prospectus Supplement will describe the following terms of
any Warrants in respect of which this Prospectus is being delivered: (1) the
title of such Warrants; (2) the aggregate number of such Warrants; (3) the price
or prices at which such Warrants will be issued; (4) the currency or currencies,
including composite currencies, in which the price of such Warrants may be
payable; (5) the Securities or other securities or rights of the Company
(including rights to receive payment in cash or securities based on the value,
rate or price of one or more specified commodities, currencies or indices) or
securities of other issuers or any combination of the foregoing purchasable upon
exercise of such Warrants; (6) the price at which and the currency or
currencies, including composite currencies, in which the Securities purchasable
upon exercise of such Warrants may be purchased; (7) the date on which the right
to exercise such Warrants shall commence and the date on which such right shall
expire; (8) if applicable, the minimum or maximum amount of such Warrants which
may be exercised at any one time; (9) if applicable, the designation and terms
of the Securities with which such Warrants are issued and the number of such
Warrants issued with each such Security; (10) if applicable, the date on and
after which such Warrants and the related Securities will be separately
transferable; (11) information with respect to book-entry procedures, if any;
(12) if applicable, a discussion of certain United States Federal income tax
considerations; and (13) any other terms of such Warrants, including terms,
procedures and limitations relating to the exchange and exercise of such
Warrants.
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PLAN OF DISTRIBUTION
The Company may sell Securities on a negotiated or competitive bid basis to
or through underwriters or dealers and also may sell Securities directly to
other purchasers or through agents. Any such underwriter, dealer or agent
involved in the offer and sale of Securities, and any applicable commissions,
discounts and other items constituting compensation to such underwriters, dealer
or agent, will be set forth in the Prospectus Supplement.
The distribution of Securities may be effected from time to time in one or
more transactions at a fixed price or prices, which may be changed, or at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices.
Unless otherwise indicated in a Prospectus Supplement, the obligations of
any underwriters to purchase Securities will be subject to certain conditions
precedent and the underwriters will be obligated to purchase all of the
applicable Securities if any are purchased. If a dealer is utilized in the sale,
the Company will sell the Securities to the dealer as principal. The dealer may
then resell the Securities to the public at varying prices to be determined by
such dealer at the time of resale.
Offers to purchase Securities may be solicited by the Company or agents
designated by the Company from time to time. Unless otherwise indicated in a
Prospectus Supplement, any such agent will be acting on a best efforts basis for
the period of its appointment.
Underwriters, dealers and agents that participate in the distribution of
Securities may be deemed to be underwriters as that term is defined in the
Securities Act of 1933 (the "Securities Act"), and any discounts or commissions
received by them from the Company and any profits on the resale of the
Securities by them may be deemed to be underwriting discounts and commissions
under the Securities Act. Underwriters, dealers and agents may be entitled,
under agreements entered into with the Company, to indemnification against and
contribution toward certain civil liabilities, including liabilities under the
Securities Act.
If so indicated in the Prospectus Supplement, the Company will authorize
agents and underwriters to solicit offers by certain specified institutions to
purchase Securities from the Company at the public offering price set forth in
the Prospectus Supplement pursuant to delayed delivery contracts providing for
payment and delivery on a specified date in the future. Institutions with whom
such contracts, when authorized, may be made include commercial and savings
banks, insurance companies, pension funds, investment companies, educational and
charitable institutions and other institutions but shall in all cases be subject
to the approval of the Company. Such contracts will be subject to the following
conditions (i) the purchase by an institution of the Securities covered by these
contracts shall not at the time of delivery be prohibited under the laws of any
jurisdiction in the United States to which such institution is subject and (ii)
if the Securities are being sold to underwriters, the Company shall have sold to
such underwriters the total principal amount of the Securities less the
principal amount thereof covered by such contracts. Any additional conditions
will be described in the Prospectus Supplement. The Prospectus Supplement will
set forth the commission payable for solicitation of such contracts.
LEGAL OPINIONS
The validity of the Securities that may be offered hereby will be passed
upon for the Company by Schell Bray Aycock Abel & Livingston L.L.P. Greensboro,
North Carolina. Certain additional legal matters will be passed upon for the
Company by Richard C. Rowlenson, Senior Vice President and General Counsel for
the Company. As of June 30, 1995, Mr. Rowlenson beneficially owned 115,302
shares of Class A Common Stock. Doris R. Bray, a partner of Schell Bray Aycock
Abel & Livingston L.L.P., is a director of the Company and, as of June 30, 1995,
beneficially owned 4,800 shares of Class A Common Stock.
EXPERTS
The financial statements and schedules incorporated by reference in this
Prospectus and elsewhere in the Registration Statement, to the extent and for
the periods indicated in their reports, have been audited by Arthur Andersen
LLP, independent public accountants, and are incorporated by reference herein in
reliance upon the reports of said firm and upon the authority of said firm as
experts in accounting and auditing.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
All of the expenses in connection with the offering are as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............................................................... $ 86,207
Legal fees and expenses........................................................................................... 25,000*
Printing.......................................................................................................... 10,000*
Accountant's fees and expenses.................................................................................... 10,000*
Blue Sky qualification fees and expenses.......................................................................... 5,000*
Miscellaneous..................................................................................................... 3,793*
Total........................................................................................................... 140,000*
</TABLE>
* Estimated
ITEM 15. 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
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
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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 the Article, "Indemnified Officer"
shall mean all executive officers of the corporation who are also directors of
the corporation, the Treasurer of the corporation and any other officer who is
designated by the Board of Directors as an Indemnified Officer.
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.
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 MARK) 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
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.
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<PAGE>
(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 MARK) 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
(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 MARK) 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 MARK) 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 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.
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<PAGE>
(SECTION MARK) 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 MARK) 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 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 MARK) 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 MARK) 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 foregoing
capacities; provided, however, that a corporation may not indemnify or agree to
II-4
<PAGE>
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
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 MARK) 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.
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<PAGE>
ITEM 16. EXHIBITS.
The following exhibits are filed as part of the Registration Statement:
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
<C> <S> <C>
*4 (a) Articles of Incorporation of the Registrant as amended through July 25, 1995, filed as Exhibit 1 to
the Registrant's Form 8-A/A dated July 25, 1995.
*4 (b) Bylaws of Registrant (compilation of July 25, 1995), filed as Exhibit 2 to the Registrant's Form
8-A/A dated July 25, 1995.
**4 (c)(1) Form of Indenture for Senior Debentures.
**4 (c)(2) Form of Indenture for Senior Subordinated Debentures.
**4 (c)(3) Form of Indenture for Subordinated Debentures.
*4 (d) Specimen Common Stock Certificate, filed as Exhibit 4(a) to the Registrant's Registration Statement
on Form, S-1 (File No. 33-18067).
*4 (e)(1) Amended and Restated 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 December 23, 1994, filed as of
December 23, 1994, filed as Exhibit 2(a) to the Registrant's Current Report on Form 8-K dated as
of December 23, 1994.
*4 (e)(2) Security Agreement between the Registrant and various lenders led by The Bank of New York and The
Toronto-Dominion Bank, as Secured Party, dated as of December 23, 1994, filed as Exhibit 2(b) to
the Registrant's Current Report on Form 8-K dated as of December 23, 1994.
*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
December 23, 1994, filed as Exhibit 2(c) to the Registrant's Current Report on Form 8-K dated as
of December 23, 1994.
**5 Opinion of Schell Bray Aycock Abel & Livingston L.L.P. as to legality of securities.
**12 Calculation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends.
**23 (a) Consent of Arthur Andersen LLP.
**23 (b) Consent of Schell Bray Aycock Abel & Livingston L.L.P. is contained in its opinion included as
Exhibit 5.
**24 Power of Attorney is contained on the signature page of this registration statement.
</TABLE>
* Incorporation by reference to the statement or report indicated.
** Previously filed.
ITEM 17. 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; notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) ((section mark)230.424(b) of this chapter) if, in
the aggregate, the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective 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 to such information in the Registration Statement.
PROVIDED, HOWEVER, that paragraphs (1)(i) and (1)(ii) do not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished
to the Commission
II-6
<PAGE>
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.
The undersigned Registrant hereby undertakes (1) to use its best efforts to
distribute prior to the opening of bids, to prospective bidders, underwriters,
and dealers, a reasonable number of copies of a prospectus which at that time
meets the requirements of section 10(a) of the Securities Act of 1933, and
relating to the securities offered at competitive bidding, as contained in the
registration statement, together with any supplements thereto, and (2) to file
an amendment to the registration statement reflecting the results of bidding,
the terms of the reoffering and related matters to the extent required by the
applicable form, not later than the first use, authorized by the issuer after
the opening of bids, of a prospectus relating to the securities offered at
competitive bidding, unless no further public offering of such securities by the
issuer and no reoffering of such securities by the purchasers is proposed to be
made.
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.
"The undersigned registrant hereby undertakes to file an application for
the purpose of determining the eligibility of the trustee to act under
subsection (a) of section 310 of the Trust Indenture Act ("Act") in accordance
with the rules and regulations prescribed by the Commission under section
305(b)(2) of the Act."
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this amendment to 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 October 2, 1995.
VANGUARD CELLULAR SYSTEMS, INC.
By: /s/ HAYNES G. GRIFFIN
HAYNES G. GRIFFIN, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act of 1933, this amendment
to this registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<C> <S> <C>
/s/ STUART S. RICHARDSON* Chairman of the Board of Directors October 2, 1995
STUART S. RICHARDSON
/s/ HAYNES G. GRIFFIN President, Chief Executive Officer and Director October 2, 1995
HAYNES G. GRIFFIN
/s/ L. RICHARDSON PREYER, JR.* Vice Chairman of the Board of Directors October 2, 1995
L. RICHARDSON PREYER, JR.
/s/ STEPHEN L. HOLCOMBE Chief Financial Officer (principal accounting October 2, 1995
STEPHEN L. HOLCOMBE and principal financial officer)
/s/ F. COOPER BRANTLEY* Director October 2, 1995
F. COOPER BRANTLEY
/s/ DORIS R. BRAY* Director October 2, 1995
DORIS R. BRAY
Director
ROBERT M. DEMICHELE
/s/ STEPHEN R. LEEOLOU* Director October 2, 1995
STEPHEN R. LEEOLOU
/s/ L. RICHARDSON PREYER, SR.* Director October 2, 1995
L. RICHARDSON PREYER, SR.
/s/ ROBERT A. SILVERBERG* Director October 2, 1995
ROBERT A. SILVERBERG
</TABLE>
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<PAGE>
* Haynes G. Griffin, by signing his name hereto, does sign this document on
behalf of the person indicated above pursuant to a Power of Attorney duly
executed by such person and filed with the Securities and Exchange Commission.
By: /s/ HAYNES G. GRIFFIN
HAYNES G. GRIFFIN
(ATTORNEY-IN-FACT)
II-9
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
<C> <S>
*4 (a) Articles of Incorporation of the Registrant as amended through July 25, 1995, filed as Exhibit 1 to the
Registrant's Form 8-A/A dated July 25, 1995.
*4 (b) Bylaws of Registrant (compilation of July 25, 1995), filed as Exhibit 2 to the Registrant's Form 8-A/A dated
July 25, 1995.
**4 (c)(1) Form of Indenture for Senior Debentures.
**4 (c)(2) Form of Indenture for Senior Subordinated Debentures.
**4 (c)(3) Form of Indenture for Subordinated Debentures.
*4 (d) Specimen Common Stock Certificate, filed as Exhibit 4(a) to the Registrant's Registration Statement on Form, S-1
(File No. 33-18067).
*4 (e)(1) Amended and Restated 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 December 23, 1994, filed as of December 23, 1994, filed as
Exhibit 2(a) to the Registrant's Current Report on Form 8-K dated as of December 23, 1994.
*4 (e)(2) Security Agreement between the Registrant and various lenders led by The Bank of New York and The
Toronto-Dominion Bank, as Secured Party, dated as of December 23, 1994, filed as Exhibit 2(b) to the
Registrant's Current Report on Form 8-K dated as of December 23, 1994.
*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 December 23, 1994, filed
as Exhibit 2(c) to the Registrant's Current Report on Form 8-K dated as of December 23, 1994.
**5 Opinion of Schell Bray Aycock Abel & Livingston L.L.P. as to legality of securities.
**12 Calculation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends.
**23 (a) Consent of Arthur Andersen LLP.
**23 (b) Consent of Schell Bray Aycock Abel & Livingston L.L.P. is contained in its opinion included as Exhibit 5.
**24 Power of Attorney is contained on the signature page of this registration statement.
</TABLE>
* Incorporation by reference to the statement or report indicated.
** Previously filed.
