SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(X ) Filed by the Registrant
( ) Filed by a Party other than the Registrant
Check the appropriate box:
( ) Preliminary Proxy Statement
(X ) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to (section mark)240.14a-11(c) or
(section mark)240.14a-12
VANGUARD CELLULAR SYSTEMS, INC.
(Name of Registrant as Specified In Its Charter)
Richard Rowlenson, 2002 Pisgah Church Road,
Suite 300, Greensboro, North Carolina 27455-3314
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (Check the appropriate box):
( ) $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
( ) $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
(X) Fee previously paid with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: $
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
(Vanguard Logo)
April 15, 1996
To the Shareholders of
Vanguard Cellular Systems, Inc.:
I am pleased to invite you to the Annual Meeting of Shareholders of your
Company to be held on Wednesday, May 15, 1996. The Notice of the meeting and a
Proxy Statement relating to matters to be considered at the meeting are
attached. A proxy card and return envelope are enclosed. The shareholders are
being asked to consider and approve the election of certain members of the Board
of Directors and a stock option plan for non-employee directors and to ratify
the selection of Arthur Andersen LLP as the Company's independent auditors.
These proposals are discussed in detail in the enclosed Proxy Statement.
You are cordially invited to attend the Annual Meeting in person. Whether
or not you plan to attend, please sign and return the proxy card in the postpaid
return envelope so that your vote may be counted.
Information relating to the Company's activities and operations during the
fiscal year ended December 31, 1995, is contained in the Company's Annual
Report, which is enclosed.
Sincerely,
/s/ Haynes G. Griffin
Haynes G. Griffin
PRESIDENT
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
OF
VANGUARD CELLULAR SYSTEMS, INC.
TO THE SHAREHOLDERS OF VANGUARD CELLULAR SYSTEMS, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of VANGUARD
CELLULAR SYSTEMS, INC. will be held at the Company's principal executive
offices, 2002 Pisgah Church Road, Greensboro, North Carolina on Wednesday, May
15, 1996, at 9:30 a.m. for the following purposes:
1. To elect three Class III nominees to the Board of Directors, to serve a
three-year term, until the 1999 Annual Meeting of Shareholders;
2. To approve the 1996 Stock Option Plan for Non-Employee Directors;
3. To ratify appointment of Arthur Andersen LLP as auditors for the present
year; and
4. To consider and act upon any other business that may come before the
meeting or any adjournment thereof.
All shareholders are invited to attend the meeting. Only those shareholders
of record as of the close of business on March 15, 1996, shall be entitled to
notice of and to vote at the meeting. It is important that your stock be
represented at this meeting in order that the presence of a quorum may be
assured.
ENCLOSED IS A PROXY CARD WHICH YOU ARE URGED TO SIGN AND RETURN IN THE
POSTPAID RETURN ENVELOPE.
By Order of the Board of Directors
/s/ Stephen R. Leeolou
Stephen R. Leeolou
SECRETARY
April 15, 1996
<PAGE>
VANGUARD CELLULAR SYSTEMS, INC.
PROXY STATEMENT
This Proxy Statement is furnished to the shareholders of Vanguard Cellular
Systems, Inc. (the "Company") in connection with the solicitation of proxies to
be used in voting at the Annual Meeting of Shareholders to be held on May 15,
1996. The address of the Company's principal executive offices is 2002 Pisgah
Church Road, Suite 300, Greensboro, North Carolina 27455-3314. The approximate
date on which this Proxy Statement and the enclosed proxy were first sent or
given to shareholders was April 15, 1996.
The enclosed proxy is being solicited by the Board of Directors of the
Company. A shareholder who executes the accompanying proxy may revoke it at any
time before it is voted by filing with the Secretary of the Company a written
revocation or a duly executed proxy bearing a later date, or by attending and
voting in person. All shares represented by valid proxies received pursuant to
this solicitation prior to the meeting and not revoked before their exercise
will be voted, and, if a choice is specified with respect to any matter to be
acted upon, the shares will be voted in accordance with such specification. If
no direction is made in the proxy, the shares will be voted for the nominees for
director named in this Proxy Statement and for the other proposals described
herein.
The cost of solicitation will be borne by the Company. In addition to the
use of the mails, proxies may be solicited personally or by telephone or
telegram by directors, officers and employees of the Company. It is not expected
that any compensation will be paid for the solicitation of proxies, but brokers
and other custodians, nominees or fiduciaries may be reimbursed for their
expenses in forwarding proxy materials to principals and obtaining their
proxies.
VOTING SECURITIES OUTSTANDING
Only shareholders of record as of the close of business on March 15, 1996,
will be entitled to notice of and to vote at the Annual Meeting. On such date,
the Company had 41,313,443 shares of Class A Common Stock, par value $0.01 per
share ("Common Stock"), issued and outstanding. There are no other voting
securities outstanding. Each share is entitled to one vote.
1
<PAGE>
The following are the only persons known to the Company who beneficially
owned more than five percent of the Company's outstanding Common Stock:
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP (1)(2)
NAME AND ADDRESS SHARES PERCENT
<S> <C> <C>
FMR Corp. 5,069,150(3) 12.27%
82 Devonshire Street
Boston, MA 02109
The Capital Group Companies, Inc. 2,483,600(4) 6.01%
333 South Hope Street
Los Angeles, CA 90071
The Equitable Companies Incorporated 4,148,306(5) 10.04%
787 Seventh Avenue
New York, NY 10019
Stuart S. Richardson 2,129,609(6) 5.14%
c/o Lexington Global Asset Managers, Inc.
Park 80 West, Plaza Two
Saddle Brook, NJ 07663
</TABLE>
(1) The descendants of Lunsford Richardson, Sr., their spouses, trusts and
corporations in which they have interests and charitable organizations
established by such descendants (collectively referred to as the "Richardson
Family") beneficially own approximately 9,707,853 shares or 23.25% of the
Company's Common Stock and consequently may, if they act in concert, be in a
position to control the management and the affairs of the Company. Such
number of shares includes 438,250 shares which members of the Richardson
Family have the right to acquire under presently exercisable options granted
to them under Company stock option plans. The individuals and institutions
constituting the Richardson Family have differing interests and may not
necessarily vote their shares in the same manner. Furthermore, trustees and
directors have fiduciary obligations (either individually or jointly with
other fiduciaries) under which they must act on the basis of fiduciary
requirements which may dictate positions that differ from their personal
interests.
(2) Unless otherwise indicated, all shares are owned of record by the persons
named and the beneficial ownership consists of sole voting power and sole
investment power.
(3) Ownership as of December 31, 1995 as reported to the Company on a Schedule
13G dated February 14, 1996. Certain of these shares may be deemed to be
beneficially owned by Fidelity Management & Research Company and by Fidelity
Management Trust Company, both wholly-owned subsidiaries of FMR Corp.
("FMR"), and by Edward C. Johnson 3d, Chairman of FMR. According to the
Schedule 13G, Mr. Johnson, FMR and these subsidiaries may be deemed to
exercise sole investment power as to all such shares and sole voting power
as to 19,000 shares.
(4) Ownership as of December 31, 1995 as reported to the Company on a Schedule
13G dated February 9, 1996. These shares may be deemed to be beneficially
owned by Capital Guardian Trust Company and Capital Research and Management
Company, operating subsidiaries of The Capital Group Companies, Inc.
("Capital"). According to the Schedule 13G, these subsidiaries of Capital
may be deemed to exercise sole voting power as to 791,000 shares and sole
investment power as to all such shares.
(5) Ownership as of December 31, 1995 as reported to the Company on a Schedule
13G dated February 9, 1996. These shares may be deemed to be beneficially
owned by a group consisting of The Equitable Companies Incorporated
("Equitable"), AXA (a French holding company), and five French mutual
insurance companies consisting of AXA Assurances I.A.R.D. Mutuelle, AXA
Assurances Vie Mutuelle, Alpha Assurances
2
<PAGE>
I.A.R.D. Mutuelle, Alpha Assurances Vie Mutuelle and Uni Europe Assurance
Mutuelle. According to the Schedule 13G, the group may be deemed to exercise
sole voting power as to 4,106,581 shares, sole investment power as to
4,148,031 shares and shared investment power as to 275 shares.
(6) Ownership as of March 15, 1996. Includes 88,750 shares that Mr. Richardson
has the right to acquire under presently exercisable stock options granted
to him under Company stock option plans; 1,350 shares owned by Mr.
Richardson's spouse; 372,882 shares held by the H. Smith Richardson
Testamentary Trust, 1,020,292 shares held by the Smith Richardson Foundation
and 395,542 shares held by the Grace Jones Richardson Testamentary Trust, of
which Mr. Richardson is a trustee; and 160,247 shares held by various other
trusts of which Mr. Richardson is also a trustee. The shares shown as
beneficially owned do not include 61,076 shares held in trusts for the
benefit of his children. Mr. Richardson denies beneficial ownership of the
shares held by such trusts. The shares shown also do not include 130,665
shares held by trusts of which Mr. Richardson may be deemed to share
investment power, but exercise no voting power, and 16,550 shares that may
be deemed beneficially owned by his spouse. Mr. Richardson denies beneficial
ownership of the shares owned by his spouse and the shares that may be
deemed beneficially owned by his spouse.
3
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information with respect to the beneficial
ownership of the Company's Common Stock, as of March 15, 1996, by its directors,
nominees for election as directors, the executive officers named in the Summary
Compensation Table and by all directors, nominees and officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP (1) PERCENT
<S> <C> <C>
Stuart S. Richardson......................................................... 2,129,609(2) 5.14%
Haynes G. Griffin............................................................ 1,240,405(3) 2.98%
Stephen R. Leeolou........................................................... 1,352,351(4) 3.25%
L. Richardson Preyer, Jr..................................................... 1,348,333(5) 3.24%
Stephen L. Holcombe.......................................................... 125,457(6) *
Richard C. Rowlenson......................................................... 139,685(7) *
F. Cooper Brantley........................................................... 19,198 *
Doris R. Bray................................................................ 4,800(8) *
Robert M. DeMichele.......................................................... 1,031,542(9) 2.50%
L. Richardson Preyer, Sr..................................................... 93,337(10) *
Robert A. Silverberg......................................................... 160,921(11) *
All Directors, Nominees and Officers as a group (14 persons)................. 6,875,409(12) 16.05%
</TABLE>
* Represents less than 1%
(1) Unless otherwise indicated, all shares are owned of record by the persons
named and the beneficial ownership consists of sole voting power and sole
investment power.
(2) For a detailed description of the nature of Mr. Richardson's beneficial
ownership, see "Voting Securities Outstanding."
(3) Includes 345,000 shares that Mr. Griffin has the right to acquire under
presently exercisable stock options granted to him under Company stock
option plans. Also includes 5,271 shares owned by Mr. Griffin's spouse as
to which he shares voting and investment power. Does not include 18,321
shares held by trusts, the sole beneficiaries of which are Mr. Griffin's
sons and the trustee of which is Mr. Griffin's brother. Mr. Griffin denies
beneficial ownership of the foregoing shares owned by his spouse and held
by such trusts. The shares shown also do not include 73,555 shares held by
a trust of which Mr. Griffin may be deemed to share investment power, but
exercises no voting power.
(4) Includes 345,000 shares that Mr. Leeolou has the right to acquire under
presently exercisable stock options granted to him under Company stock
option plans. Does not include 27,723 shares held by trusts, the sole
beneficiaries of which are Mr. Leeolou's children and the trustee of which
is Mr. Leeolou's brother. Mr. Leeolou denies beneficial ownership of the
shares held by these trusts. The shares shown also do not include 48,868
shares held by a trust of which Mr. Leeolou may be deemed to share
investment power, but exercise no voting power.
4
<PAGE>
(5) Includes 345,000 shares that Mr. Preyer has the right to acquire under
presently exercisable stock options granted to him under Company stock
option plans. Also includes 12,061 shares owned by Mr. Preyer's spouse as
to which he shares voting and investment power. Does not include 56,193
shares held by trusts, the sole beneficiaries of which are Mr. Preyer's
children and the trustee of which is Mr. Preyer's sister. Mr. Preyer denies
beneficial ownership of the foregoing shares owned by his spouse and held
by such trusts. The shares shown also do not include 98,533 shares held by
a trust of which Mr. Preyer may be deemed to share investment power, but
exercise no voting power.
(6) Includes 112,454 shares that Mr. Holcombe has the right to acquire under
presently exercisable options granted to him under Company stock option
plans.
(7) Includes 90,000 shares that Mr. Rowlenson has the right to acquire under
presently exercisable options granted to him under Company stock option
plans. Also includes 24,417 shares owned by Mr. Rowlenson's spouse as to
which he shares voting and investment power. Does not include 7,370 shares
held by trusts, the sole beneficiaries of which are Mr. Rowlenson's
children and the trustee of which is Mr. Rowlenson's brother-in-law. Mr.
Rowlenson denies beneficial ownership of the foregoing shares owned by his
spouse and held by such trusts.
(8) Includes 4,500 shares that Mrs. Bray has the right to acquire under
presently exercisable options granted to her under Company stock option
plans.
(9) Includes 4,500 shares that Mr. DeMichele has the right to acquire under
presently exercisable options granted to him under Company stock option
plans and 1,020,292 shares held by the Smith Richardson Foundation, of
which Mr. DeMichele serves as one of eight trustees. The shares held by the
Smith Richardson Foundation are also reported as beneficially owned by
Stuart S. Richardson. Mr. DeMichele denies beneficial ownership of the
shares held by such foundation.
(10) Includes 4,500 shares that Mr. Preyer has the right to acquire under
presently exercisable options granted to him under Company stock option
plans and 30,545 shares held by Mr. Preyer's spouse. Mr. Preyer denies
beneficial ownership of the foregoing shares owned by his spouse.
(11) Includes 45,486 shares that represent Mr. Silverberg's pro rata ownership
of Common Stock owned by a corporation of which he is an officer, director
and principal shareholder. Of the shares shown as beneficially owned by Mr.
Silverberg, he exercises shared voting and investment power with respect to
45,486 shares and sole voting and investment power with respect to 115,435
shares.
(12) Includes 1,518,454 shares that directors and officers have the right to
purchase under presently exercisable options granted to them under Company
stock option plans.
Under federal securities laws, the Company's directors, its executive
officers, and any persons holding more than 10 percent of the Company's stock
are required to report their ownership of the Company's stock and any changes in
that ownership to the Securities and Exchange Commission. Specific due dates for
these reports have been established and the Company is required to report in
this proxy statement any failure to file by these dates during fiscal 1995. All
of these filing requirements were satisfied by its directors, officers and 10
percent holders. In making these statements, the Company has relied on the
written representations of its directors, officers and 10 percent holders and
copies of the reports that they have filed with the Commission.
5
<PAGE>
ELECTION OF DIRECTORS
It is intended that the persons named in the accompanying proxy will vote
for the three nominees listed below for directors, unless the authority so to
vote is withheld. A plurality of the votes cast is required to elect each
director, and, as a result, abstentions and broker nonvotes will not affect the
election results if a quorum is present. In the event that any nominee should
not be available to serve for any reason, the proxy holders may vote for
substitute nominees designated by the Board of Directors. The Board of Directors
has no reason to believe any of the nominees named below will be unavailable to
serve as a member of the Board of Directors. All three nominees are presently
members of the Board of Directors of the Company.
The Board of Directors of the Company is divided into three classes: Class
I, Class II and Class III. In accordance with this classification, the members
of Class III of the Board of Directors are to be elected at this Annual Meeting.
If elected, the nominees will serve until the 1999 Annual Meeting of
Shareholders. The directors designated as Class I have been previously elected
to serve until the 1997 Annual Meeting of Shareholders and the directors
designated as Class II have been previously elected to serve until the 1998
Annual Meeting of Shareholders.
<TABLE>
<CAPTION>
DIRECTOR
NAME, AGE AND PRINCIPAL OCCUPATION FOR LAST FIVE YEARS SINCE
<S> <C>
NOMINEES FOR THREE-YEAR TERM (CLASS III)
Robert M. DeMichele, 51, President, Chief Executive Officer and Director of Lexington Global Asset 1987
Managers, Inc., a diversified financial services company, 1995-present; President, Chief Executive
Officer and Director of Piedmont Management Company, Inc., a diversified financial services holding
company 1981-1995; director, The Navigators Group, Inc. and Chartwell Reinsurance Co.
Stephen R. Leeolou, 40, Executive Vice President, Chief Operating Officer, and Secretary of the Company, 1984
1984-present.
L. Richardson Preyer, Jr., 48, Vice Chairman of the Board, Executive Vice President, Treasurer and 1984
Assistant Secretary of the Company, 1984-present.
CONTINUING DIRECTORS (CLASS I)
Doris R. Bray, 58, Partner, Schell Bray Aycock Abel & Livingston, L.L.P. (Attorneys at Law), 1994
1987-present; director, Cone Mills Corporation.
Stuart S. Richardson, 49, Chairman of the Board of the Company, 1985-present; Chairman of the Board of 1985
Lexington Global Asset Managers, Inc., 1995-present; executive of Piedmont Management Company, Inc.,
1985-1995, Vice Chairman, 1986-1995; director, Chartwell Reinsurance Co.
Robert A. Silverberg, 61, Executive Vice President and Director of Vectra Bank, 1995-present; Chairman 1985
of the Board and President of First Denver Corporation and Chairman of the Board of its subsidiary,
First National Bank of Denver, 1981-1995; President and Chairman of the Board of 181 Realty Company,
Inc., a commercial real estate holding company, 1968-present.
CONTINUING DIRECTORS (CLASS II)
F. Cooper Brantley, 48, Member, Adams Kleemeier Hagan Hannah & Fouts L.L.P. (Attorneys at Law), 1995
1981 -- present; formerly President of Brantley Communications, Inc., a cellular system owner and
operator.
Haynes G. Griffin, 49, President and Chief Executive Officer of the Company, 1984-present; director, 1984
Lexington Global Asset Managers, Inc. and Geotek Communications, Inc.
L. Richardson Preyer, Sr., 77, Distinguished Fellow in Public Policy, University of North Carolina at 1985
Greensboro, 1981-1992; director, Lexington Global Asset Managers, Inc.
</TABLE>
6
<PAGE>
During 1995, there were six meetings of the Board of Directors of the
Company. Each of the directors attended more than 75% of the total number of
meetings of the Board of Directors and of committees of which he or she is a
member.
The Board of Directors has a Compensation Committee that met six times
during 1995. See "Executive Compensation" -- "Compensation Committee Report on
Executive Compensation" and "Compensation Committee Interlocks and Insider
Participation".
The Board of Directors has an Audit Committee that confers with the
Company's independent auditors and reviews the scope of auditing of the
Company's books and accounts and reports submitted by the officers. The
Committee also reviews, with the independent auditors and appropriate Company
personnel, procedures and methods employed in connection with the Company's
internal audit program and management policies relating to such program. The
Audit Committee met twice during 1995. Members of the Audit Committee are Robert
A. Silverberg, Chairman, Robert M. DeMichele, and F. Cooper Brantley.
The Company has no standing Nominating Committee.
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth cash and certain other compensation paid or
accrued by the Company for its chief executive officer and the four other most
highly compensated executive officers (the "Named Executive Officers") for the
years ended December 31, 1995, 1994 and 1993, respectively:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
PAYOUTS
(E) (F) (G)
OTHER RESTRICTED SECURITIES (H) (I)
(A) (C) (D) ANNUAL STOCK UNDERLYING LTIP ALL
NAME AND (B) SALARY BONUS COMPEN- AWARD(S) OPTIONS PAYOUTS OTHER COMPEN-
PRINCIPAL POSITION YEAR ($) ($) SATION ($) ($) (1)(#) ($) SATION ($)(2)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Haynes G. Griffin 1995 398,385 204,582 -- -- 150,000 -- 4,500
President and Chief Executive Officer 1994 374,254 200,000 -- -- 225,000 -- 4,500
1993 347,683 170,000 -- -- 150,000 -- 2,249
Stephen R. Leeolou 1995 359,357 205,164 -- -- 150,000 -- 4,500
Executive Vice President and Chief 1994 337,639 200,000 -- -- 225,000 -- 4,500
Operating Officer 1993 310,293 170,000 -- -- 150,000 -- 2,249
L. Richardson Preyer, Jr. 1995 348,205 185,322 -- -- 150,000 -- 4,500
Executive Vice President and Treasurer 1994 328,122 180,000 -- -- 225,000 -- 4,500
1993 303,100 170,000 -- -- 150,000 -- 2,249
Stephen L. Holcombe 1995 172,530 71,070 -- -- 45,000 -- 4,500
Senior Vice President and Chief 1994 162,000 70,000 -- -- 44,999 -- 3,984
Financial Officer 1993 150,000 40,000 -- -- 30,000 -- 1,369
Richard C. Rowlenson 1995 172,530 71,070 -- -- 45,000 -- 4,500
Senior Vice President and General 1994 162,000 70,000 -- -- 44,999 -- 4,500
Counsel 1993 150,000 40,000 -- -- 30,000 -- 1,369
</TABLE>
(1) Options were granted under Company stock option plans.
(2) Amounts shown represent the Company's contribution to its 401(k) Plan.
7
<PAGE>
STOCK OPTIONS
The following table provides details regarding stock options granted to the
Named Executive Officers during 1995.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
(B) (C) ASSUMED ANNUAL RATES OF STOCK
NUMBER OF % OF TOTAL (D) APPRECIATION FOR OPTION TERM
SECURITIES OPTIONS EXERCISE (3)
UNDERLYING GRANTED TO OR BASE (E)
(A) OPTIONS EMPLOYEES IN PRICE EXPIRATION (F) (G) (H)
NAME GRANTED FISCAL YEAR ($/SHARE) DATE 0%($) 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C> <C>
Haynes G. Griffin 150,000(1) 16.66 25.125 3/06/05 0 2,370,147 6,006,417
Stephen R. Leeolou 150,000(1) 16.66 25.125 3/06/05 0 2,370,147 6,006,417
L. Richardson Preyer, Jr. 150,000(1) 16.66 25.125 3/06/05 0 2,370,147 6,006,417
Stephen L. Holcombe 45,000(2) 5.0 25.125 3/06/05 0 711,044 1,801,925
Richard C. Rowlenson 45,000(2) 5.0 25.125 3/06/05 0 711,044 1,801,925
</TABLE>
(1) Includes 7,171 incentive stock options and 142,829 non-qualified stock
options granted under Company stock option plans. Incentive options vest
over a 2-year period beginning 3/07/99 and non-qualified options vest over a
5-year period beginning 3/07/96.
(2) Includes 3,980 incentive stock options and 41,020 non-qualified stock
options granted under Company stock option plans. Incentive options vest on
3/07/00 and non-qualified options vest over a 5-year period beginning
3/07/96.
(3) As required by Securities and Exchange Commission, the amounts shown assume
a 5% and 10% annual rate of appreciation on the price of the Company's
Common Stock throughout a 10 year option term. There can be no assurance
that the rate of appreciation assumed for purposes of this table will be
achieved. The actual value of the stock options to the Named Executive
Officers and all optionees as a group will depend on the future price of the
Company's Common Stock. As reflected in the column which assumes a 0% rate
of appreciation, the options will have no value to the Named Executive
Officers if the price of the Company's Common Stock does not increase above
the exercise price of the options. If the price of the Company's Common
Stock increases, all shareholders will benefit commensurately with the Named
Executive Officers. On December 29, 1995, the last trading day of 1995,
there were 41,312,053 shares of Common Stock outstanding and the closing
sales price of the Common Stock as reported on NASDAQ was $20.25. Using the
same Assumed Annual Rates of Stock Price Appreciation for the Option Term to
arrive at Potential Realizable Value shown in the table above, the gain to
all shareholders as a group at the 5% and 10% rates would be $526,113,795
and $1,333,275,653, respectively. The amount of the gain to all Named
Executive Officers as a percent of the gain to all shareholders under these
scenarios would be approximately 1.62%.
8
<PAGE>
OPTION EXERCISES AND HOLDINGS
The following table shows stock options exercised by the Named Executive
Officers during 1995, including the aggregate value of gains on the date of
exercise (the "Value Realized"). In addition, this table includes the number of
shares covered by both exercisable and unexercisable stock options as of
December 31, 1995. Also reported are the values for "in-the-money" options which
represent the positive spread between the exercise price of any such existing
stock options and the year-end price of the Common Stock.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
(A) (B) (C) (D) (D) (E) (E)
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING UNEXERCISED OPTIONS AT YEAR-END ($)(1)
SHARES ACQUIRED OPTIONS AT YEAR-END (#)
NAME ON EXERCISE (#) VALUE REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
Haynes G. Griffin 126,193 2,780,032 345,000 435,000 1,679,940 607,500
Stephen R. Leeolou 163,824 3,609,043 345,000 435,000 1,679,940 607,500
L. Richardson Preyer, Jr. 163,824 3,609,043 345,000 435,000 1,679,940 607,500
Stephen L. Holcombe -- -- 86,914 156,084 534,166 214,281
Richard C. Rowlenson -- -- 62,999 112,500 203,989 175,886
</TABLE>
(1) The closing sales price of the Common Stock on December 29, 1995, the last
trading day of 1995, was $20.25 as reported on NASDAQ.
DIRECTORS' FEES
Five of the nine present directors are not salaried employees of the
Company. For their services, those directors are paid a retainer at an annual
rate of $12,000 plus $1,000 for the first in-person Board or Board Committee
meeting in any one day, and $500 per day for each telephonic meeting or for each
additional meeting on the same day. Salaried employees receive no additional
compensation for their services as directors.
EMPLOYMENT AND OTHER RELATED AGREEMENTS
As of March 1, 1995, the Company entered into three-year employment
agreements with Messrs. Griffin, Preyer, Jr., and Leeolou effectively extending
existing agreements that expired on February 28, 1995. Following the initial
three-year term, the agreements continue from year to year until terminated by
either party on one year's notice. Each agreement provides for continuation of
salary and benefits for the remaining term of the agreement if employment is
terminated by the Company "other than for cause" as defined in the agreement. If
the executive's employment is terminated "other than for cause" following a
"change in control" of the Company or if the executive terminates his employment
following a "change in control" because (i) his authority and/or responsibility
are substantially reduced, or (ii) he is required to move his residence from
Greensboro, North Carolina or (iii) his travel obligations are materially
increased without his consent, the executive is entitled to receive a payment
equal to his average annual cash compensation for the immediately preceding five
fiscal years, multiplied by 2.99. However, if necessary, such payment will be
reduced to an amount that would cause the payment not to be disqualified from
deductibility for federal income tax purposes by reason of Section 280G of the
Internal Revenue Code as an "excess parachute payment." Each employment
agreement also provides that the executive will not compete with the Company for
the term of the agreement or for one year following his termination of
employment, whichever is later.
9
<PAGE>
As of October 1, 1990, the Company implemented an Executive Officer
Long-Term Compensation Plan in which four executive officers participate. Under
this plan, Haynes G. Griffin, Stephen R. Leeolou and L. Richardson Preyer, Jr.
each would earn two cash bonuses of $500,000 each and Stuart S. Richardson would
earn two cash bonuses of $94,000 each if and when the consolidated net profits
of the Company for four profitable consecutive quarters equal or exceed $20
million and $40 million, respectively. In order to be entitled to his bonuses,
the participating executive officer must be employed by the Company at the end
of the applicable period or his employment must have been previously terminated
"other than for cause" prior to a "change of control" or by reason of his death
or permanent disability. If there is a "change of control," the bonuses will
become immediately payable. By its terms, this plan is a legally binding
obligation of the Company.
On March 8, 1995, the Board of Directors of the Company adopted the Senior
Management Severance Plan. The Plan is available to certain senior management
employees designated as participants by the Board of Directors of the Company or
its Compensation Committee. The Plan provides that if the employment of a
participant is terminated "other than for cause" following a "change in control"
or if he terminates his employment following a "change in control" because (i)
his authority and/or responsibility are substantially reduced, or (ii) he is
required to move his residence, or (iii) his travel obligations are materially
increased without his consent, he is entitled to receive a payment equal to his
average annual cash compensation for the immediately preceding five fiscal
years, multiplied by 2.99. However, if necessary, such payment will be reduced
to an amount that would cause the payment not to be disqualified from
deductibility for federal income tax purposes by reason of Section 280G of the
Internal Revenue Code as an "excess parachute payment." The plan requires each
Plan participant, as a condition to his participation, to agree not to compete
with the Company for a period of one year following termination of his
employment with the Company. Messrs. Holcombe and Rowlenson and four other
executive officers of the Company have been designated participants in the Plan.
Messrs. Richardson, Griffin, Leeolou, Preyer, Jr., and Holcombe own shares
of stock that were granted to them pursuant to certain restricted stock
agreements. The restrictions on such shares have expired. The Company has agreed
that in the event there is a "change in control" (as defined in the agreements)
of the Company at any time prior to December 31, 1998, the executives will be
reimbursed for the income taxes they pay with respect to the restricted stock up
to an amount that would not be deemed an "excess parachute payment" for federal
income tax purposes (the executive's average compensation for the preceding five
years, multiplied by three). Both the value of the stock bonuses and the amount
of the tax reimbursements should be deductible items to the Company or an
acquiror, as the case may be, for tax purposes.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Decisions on compensation of the Chief Executive Officer and of the other
Named Executive Officers are made by the Company's Compensation Committee (the
"Committee"). Two nonemployee directors currently serve as members of the
Committee: Robert M. DeMichele, Chairman, and Robert A. Silverberg. In addition,
all compensation decisions regarding the Chief Executive Officer and the other
Named Executive Officers are reviewed and ratified by the full Board of
Directors.
The Company has employed independent consultants since 1986, in connection
with compensation matters, to compile for review and analysis objective survey
information from other companies both within and outside of the industry to
establish a range of benchmarks for salary, bonus, and other incentives for
executive officers with similar positions and responsibilities.
10
<PAGE>
COMPENSATION PHILOSOPHY
The Company's compensation policies are designed to attract and retain
competent management. The Board's goal is to provide competitive salaries to its
executive officers and to give them performance incentives to motivate superior
performance on behalf of the Company and its shareholders. The Company has
generally used two types of incentive compensation: annual bonuses, payable in
cash or in stock, and long-term compensation in the form of stock options and
restricted stock bonuses and, in the case of its officer-directors, cash bonuses
linked to specific performance goals. The Committee believes that linking
long-term compensation to the value of the Company's Common Stock is especially
effective because it aligns the interests of management with those of the
Company's shareholders.
EXECUTIVE OFFICER COMPENSATION
SALARIES. The Board approved increases ranging from 6.3% to 6.5% in the
salaries of the Named Executive Officers during 1995. The Committee and the
Board considered these increases appropriate in view of their overall assessment
that the performance of each Named Executive Officer had been outstanding.
ANNUAL BONUSES. The Committee considers annual cash and stock bonus awards
as an integral part of the Company's financial incentive package to achieve the
Company's goals. Bonuses for the Chief Executive Officer and other Named
Executive Officers are based upon the Company's performance during the year in a
number of measurable areas. The Company is in an industry that is in a start-up
phase of its history, and, therefore, customary measures of performance, such as
net income, return on assets, and return on shareholders' equity are not
applicable as measures of management performance at this time.
In making decisions with regard to annual bonuses to Named Executive
Officers, the Committee examines two key areas:
1. Performance of the Company against the operating and financial targets
established by the Board of Directors each year by adoption of the
annual operating plan, and
2. The specific actions of Named Executive Officers to respond effectively
to outside factors such as economic trends and industry competitive
factors that can impact the Company's operating performance.
Annual bonuses were determined in early 1996 based upon the Named Executive
Officers' contributions to the Company's achievements in the following
performance areas: net gain in subscribers; control of marketing costs per new
subscriber; maintenance of revenue per subscriber; increase in service revenue;
control of operating expenses; increase in operating cash flow; and reduction of
net loss. The Committee's determination of annual bonuses is within its
discretion, and it uses the Company's performance relative to target performance
contained in the Company's operating plan as a standard in assessing the
performance of the Named Executive Officers. However, no quantifiable weight was
given to any particular performance area in the consideration of 1995 bonuses;
rather, the Committee considered the aggregate results, which in the Committee's
opinion, were outstanding.
The Committee approved in early 1996 cash bonuses for the Named Executive
Officers ranging from 29.2% to 36.3% of their total cash compensation based on
the Company's performance for the past year.
LONG-TERM COMPENSATION. The Company's long-term incentive compensation
awards are designed to encourage the retention of key executives. Long-term
compensation for the Chief Executive Officer and other officer-directors,
including Messrs. Leeolou and Preyer, Jr., consists of two elements, both of
which have been in place for some time: (i) restricted stock bonuses and stock
options, and (ii) a long-term cash incentive bonus.
11
<PAGE>
RESTRICTED STOCK BONUSES AND STOCK OPTIONS. The Company currently has a
Stock Compensation Plan and a 1989 Stock Option Plan under which incentive and
nonqualified stock options have been granted in the past, some of which remain
outstanding. However, no further grants may be made under these plans. At the
1994 Annual Meeting of Shareholders, the 1994 Long-Term Incentive Plan (the
"1994 Plan"), which provides for the grant of incentive and nonqualified
options, stock bonuses and restricted stock, was approved. The Company believes
that all of these plans are performance-based compensation plans under which
compensation is deductible by the Company under Section 162(m) of the Internal
Revenue Code. The Committee administers these plans and determines, in its
discretion, what grants will be made thereunder. Under these plans, stock
options were granted to Named Executive Officers in 1987, 1990, 1993, 1994 and
1995. For options granted in 1995, see Notes 1 and 2 under "Stock Options" above
for vesting schedule.
LONG-TERM CASH INCENTIVES. A long-term cash bonus opportunity was
established in 1990 under the Company's Executive Officer Long-term Incentive
Compensation Plan, which was adopted in conjunction with employment agreements
between the Company and its officer-directors. It is a bonus opportunity
pursuant to which Messrs. Griffin, Preyer, Jr. and Leelou can earn two bonuses
of $500,000 each at any time prior to September 30, 1998 if the Company achieves
certain profitability levels. The Company believes that this compensation, if
paid, will be deductible by the Company under Section 162(m) of the Internal
Revenue Code because it is payable under a written binding contract that was in
effect on February 17, 1993. See "Employment and Other Related Agreements"
above.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
SALARY. The salary of Haynes G. Griffin, the Chief Executive Officer, was
increased 6.4% in 1995. Based upon information furnished by the compensation
consultants in 1994, Mr. Griffin's salary falls within the benchmark range of
other salaries for chief executive officers of competitor companies. Since most
of the Company's competitors have been acquired so that separate performance
information about them is no longer available, they are not included in the
performance graph.
ANNUAL BONUS. The Committee approved in early 1996 a cash bonus for Mr.
Griffin of $204,582, which represents 34.0% of his total cash compensation. In
determining the amount of Mr. Griffin's bonus, the Committee recognized the
achievements detailed under "Executive Officer Compensation -- Annual Bonuses"
above.
LONG-TERM COMPENSATION. In 1995, Mr. Griffin was granted options to
purchase 150,000 shares of Common Stock under the 1994 Plan. The options are
subject to the vesting provisions described in Note 1 under "Stock Options"
above.
Robert M. DeMichele Robert A. Silverberg
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Robert M. DeMichele, a member of the Company's Compensation Committee, is a
director and executive officer of Lexington Global Asset Managers, Inc. Haynes
G. Griffin, Chief Executive Officer of the Company, and Stuart S. Richardson,
Chairman of the Board of the Company, serve on the Board of Directors of
Lexington Global Asset Managers, Inc.
12
<PAGE>
PERFORMANCE GRAPH
The graph shown below compares the Company's cumulative, five-year
shareholder return on an indexed basis with the S&P 500 Stock Index and the CRSP
Index of NASDAQ Telecommunications Stocks.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN
(Comparison chart appears here. Plot points are below.)
Assumes an initial investment of $100 on December 31, 1990 and reinvestment
of dividends.
Based on quarterly dividends and quarterly closing stock prices.
<TABLE>
<CAPTION>
12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
<S> <C> <C> <C> <C> <C> <C>
Vanguard Cellular Systems, Inc. 100.00 115.95 113.78 124.44 164.33 129.23
S&P 500 Stock Index, a broad based
index of industrial and service
companies. 100.00 126.36 132.12 141.21 139.09 186.67
CRSP Index of Nasdaq Telecommunications
Stocks, a published index of telecommunications
companies. 100.00 137.92 169.40 261.20 215.95 259.94
</TABLE>
CERTAIN TRANSACTIONS
During 1995 and the first quarter of 1996, the Company made certain
investments in Inter-Act Systems, Incorporated ("Inter-Act"), a
development stage company that provides targeted promotions to retail customers
at the point of entry at a retail outlet, primarily supermarkets, through a
computer-equipped kiosk. The Company had invested approximately $3.8 million as
of December 31, 1995 and an additional $6.2 million as of March 31, 1996 to
bring its total ownership of Inter-Act's outstanding Common Stock to
approximately 26%. The Company has no present commitment, arrangement or plan to
invest any additional amounts in Inter-Act. As of March 31, 1996, Haynes
G. Griffin, Stephen R. Leeolou and L. Richardson Preyer, Jr. each owned 3.9% of
Inter-Act's outstanding common stock and Stephen L. Holcombe, Richard C.
Rowlenson, F. Cooper Brantley, Doris R. Bray, Robert M. DeMichele and Robert A.
Silverberg each owned less than 1% of such stock. In addition, as of March 31,
1996, Piedmont Acorn Investors Limited Partnership and Piedmont Harbor-Piedmont
Associates Limited Partnership, of which members of the Richardson Family are
partners, owned 10.9% and less than 1%, respectively, of Inter-Act's
Common Stock and Alonzo Family Partners, Ltd., of which members of the immediate
family of Haynes G. Griffin are partners, and the Smith Richardson Foundation,
Inc., of which
13
<PAGE>
Stuart S. Richardson serves as a Trustee, owned 1.2% and less than 1%,
respectively, of such stock. As a group, the foregoing directors, officers and
related partnerships and trust owned approximately 26% of the outstanding Common
Stock of Inter-Act as of March 31, 1996. Mr. Leeolou serves as the
Chairman of Inter-Act and Messrs. Richardson, Griffin, Preyer and
DeMichele each serves as a director of Inter-Act.
As of January 30, 1996, the Company also entered into a consulting
agreement with Inter-Act pursuant to which the Company has appointed one
of its employees to serve as Inter-Act's Chief Operating Officer and
agreed to provide other consulting services requested by Inter-Act.
Pursuant to the agreement, the Company expects to receive approximately $200,000
during 1996.
Each of the foregoing transactions was approved by the disinterested
nonemployee directors of the Company after a determination that the transaction
was in the best interests of the Company.
PROPOSAL TO APPROVE THE 1996 STOCK OPTION
PLAN FOR NON-EMPLOYEE DIRECTORS
The Board of Directors has adopted, subject to shareholder approval, the
1996 Stock Option Plan for Non-Employee Directors (the "Plan"). The following
summary describes the principal features of the Plan and is qualified in its
entirety by the text of the Plan.
The Plan is intended to encourage non-employee members of the Board of
Directors to remain directors and to provide incentives to them that are linked
directly to increases in shareholder value and will therefore benefit all
shareholders. The Plan provides for the grant of options and awards of up to
100,000 shares of the Company's Common Stock. The number and class of shares
available under the Plan may be adjusted in the event of stock splits and
combinations, stock dividends and similar changes in the capitalization of the
Company. No grants may be made under the Plan after February 28, 2006.
Pursuant to the terms of the Plan, each eligible director of the Company is
granted, on the fifth business day after each annual meeting of shareholders
("grant date"), an option to purchase 2,000 shares of Common Stock. The price at
which shares of Common Stock may be purchased under the Plan is 100% of the fair
market value of the Common Stock at the grant date. The fair market value is the
closing sales price of the Common Stock on the day immediately preceding the
grant date as reported on NASDAQ. The Plan provides that each option has a term
of ten years from grant date.
Each director who is not an employee of the Company or its subsidiaries on
the grant date is eligible to receive options granted under the Plan on that
date. Currently, five directors would be eligible to receive options under the
Plan. The following table sets forth the benefit the eligible group would
receive in 1996 if the Plan is approved:
NEW PLAN BENEFITS
1996 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
<TABLE>
<CAPTION>
SECURITIES UNDERLYING
NAME AND POSITION(*) OPTIONS (#)
<S> <C>
Non-Executive Director Group -- (5) persons.............................................. 10,000
</TABLE>
* Named Executive Officers, executives, and employees are not eligible to
receive options pursuant to the Plan. A dollar value of the options to be
received is not presently determinable.
14
<PAGE>
The Plan is administered by the Board of Directors; however, the Board may,
in its discretion, delegate to a committee of members of the Board its authority
with respect to the administration of the Plan. The Board of Directors has no
discretion as to the date or amount of the grants, the option prices or the term
of the options.
The Plan provides that the Board of Directors may terminate, amend or
revise the terms of the Plan except that shareholder approval is required to (i)
increase the aggregate number of shares of Common Stock issuable under the Plan,
(ii) change the minimum purchase price for shares that may be received by
exercise of stock options under the Plan, (iii) increase the maximum duration
established under the Plan for any option, or (iv) permit the granting of an
option to any person other than as specified under the Plan. In addition, no
amendment or revision can be made more than once every six months to the
provisions of the Plan relating to the amount, price and timing of options
except to comply with the Internal Revenue Code or the regulations thereunder.
Options may be exercised by giving written notice to the Company,
specifying the number of shares to be purchased, accompanied by the full
purchase price for the shares to be purchased either in cash, by check or by
delivery of shares of Common Stock with a value equal to the purchase price.
Prior to the delivery of the shares, an optionee is required to pay tax
withholdings to the Company required under applicable income tax or other laws
in connection with the exercise of an option.
The Plan provides that options that have not been exercised may not be
transferred by a participant except by will or applicable laws of descent and
distribution. Unexercised options will terminate if a participant ceases to be a
director of the Company for any reason other than death or disability. In the
event of death or disability, options shall expire one year thereafter. Any
shares of Common Stock that are subject to options under the Plan and are not
issued prior to termination of the option may again be made the subject of
grants under the Plan.
The option agreement that each optionee will enter into with the Company
provides that the shares cannot be sold during the six-month period after the
date of grant. If the option is exercised prior to the expiration date of such
restrictive period, the share certificates will bear a restrictive legend
prohibiting the sale of the shares during such period.
The Plan also provides that, in the event of a consolidation or merger in
which the Company is not the surviving corporation, or any other merger in which
the shareholders of the Company exchange their stock for stock of another
corporation, or in the event of a complete liquidation of the Company, or in the
case of a tender offer for 50% or more of the combined voting power of the
Company's outstanding securities, then (i) if the consideration to be received
for Common Stock in any such transaction is cash, the optionee is entitled to
receive from the Company at the time the transaction is consummated cash in an
amount equal to the difference between the exercise price of the aggregate
number of shares then subject to the option and not yet purchased by the
optionee and the price of such number of shares in the transaction and (ii) if
the transaction is for consideration other than cash, the optionee is entitled
to receive a replacement option on the same terms and conditions as the option
except that the consideration that would have been received by the optionee as a
result of such transaction had the option been exercised immediately prior to
consummation of such transaction would be substituted for the Common Stock.
Options granted under the Plan are not intended to qualify as incentive
stock options under the Internal Revenue Code. The grant of a stock option under
the Plan will not result in taxable income to the participant or a deduction to
the Company. On the date any such option is exercised, a participant generally
will be deemed to receive ordinary income equal to the amount by which the fair
market value of the Common Stock on the exercise date exceeds the option price,
and the Company will generally receive a deduction in the same amount.
15
<PAGE>
The closing market price of the Common Stock as reported on NASDAQ on April
9, 1996, was $21.875.
The proposed Plan requires the approval of the majority of the outstanding
shares of Common Stock present in person or by proxy and entitled to vote at the
Annual Meeting. Abstentions and broker non-votes will have the effect of a vote
against the proposal.
THE BOARD RECOMMENDS A VOTE FOR THE ADOPTION OF THE 1996 STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS.
INDEPENDENT AUDITORS
The accounting firm of Arthur Andersen LLP has been selected by the Board
of Directors as independent auditors of the Company for the fiscal year ending
December 31, 1996. Arthur Andersen LLP has conducted the audit of the Company's
year-end financial statements since its inception.
A representative of Arthur Andersen LLP is expected to be present at the
Annual Meeting and will be given the opportunity to make a statement if he
desires to do so. Such representative will be available to respond to questions
relating to the audit of the Company's 1995 financial statements.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE SELECTION
OF ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS.
PROPOSAL OF SECURITIES HOLDERS
A proposal of a security holder of the Company intended to be presented at
the next Annual Meeting of Shareholders must be received at the Company's
principal executive offices on or before December 16, 1996 in order to be
considered for inclusion in the Company's Proxy Statement and form of proxy
relating to that meeting.
OTHER MATTERS
Management is not aware of any matter to be brought before the Annual
Meeting other than the matters described herein. However, if other matters do
come before the meeting, it is the intention of the persons named in the
accompanying form of proxy to vote said proxy in accordance with their judgment
on such matters.
By Order of the Board of Directors
April 15, 1996
16
<PAGE>
*****************************************************************************
APPENDIX
VANGUARD CELLULAR SYSTEMS, INC.
PROXY
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 15, 1996.
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Stuart Smith Richardson, Haynes G. Griffin
and Stephen R. Leeolou, or any of them, proxies with full power of substitution
to vote all shares of Class A Common Stock of Vanguard Cellular Systems, Inc.
standing in the name of the undersigned at the Annual Meeting of Shareholders of
the Company to be held May 15, 1996, and any adjournment thereof:
<TABLE>
<S> <C> <C>
1. Election of Directors (Class III): For all nominees listed below Withhold authority to vote for
(except as indicated to the contrary all nominees listed below [ ].
below) [ ].
</TABLE>
Robert M. DeMichele, Stephen R. Leeolou, L. Richardson Preyer, Jr.
To withhold authority to vote for any nominee or nominees, write the nominee's
name in the space provided below.
2. To approve the 1996 Stock Option Plan for Non-Employee Directors.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(Continued on reverse side)
<PAGE>
3. To ratify appointment of Arthur Andersen LLP as the Company's auditors for
1996. FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE NOMINEES NAMED IN THE PROXY STATEMENT AND FOR PROPOSALS 2, AND
3.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Dated , 1996
Signature
Signature
