EXECUTION COPY
Vanguard Cellular Systems, Inc.
$200,000,000 9 3/8% Senior Debentures Due 2006
Underwriting Agreement
New York, New York
April 3, 1996
To the Representatives
named in Schedule I
hereto of the Under-
writers named in
Schedule II hereto
Dear Sirs:
Vanguard Cellular Systems, Inc., a North Carolina
corporation (the "Company"), proposes to sell to the
underwriters named in Schedule II hereto (the
"Underwriters"), for whom you (the "Representatives") are
acting as representatives, the principal amount of its
securities identified in Schedule I hereto (the
"Securities"), to be issued under an indenture dated as of
April 1, 1996 (as supplemented by the supplemental indenture
dated as of April 1, 1996 the "Indenture"), between the
Company and The Bank of New York, as trustee (the
"Trustee"). If the firm or firms listed in Schedule II
hereto include only the firm or firms listed in Schedule I
hereto, then the terms "Underwriters" and "Representatives",
as used herein, shall each be deemed to refer to such firm
or firms.
1. Representations and Warranties. The Company
represents and warrants to, and agrees with, each Under-
writer as set forth below in this Section 1. Certain terms
used in this Section 1 are defined in paragraph (c) hereof.
(a) If the offering of the Securities is a
Delayed Offering (as specified in Schedule I hereto),
paragraph (i) below is applicable and, if the offering
of the Securities is a Non-Delayed Offering (as so
specified), paragraph (ii) below is applicable.
(i) The Company meets the requirements for
the use of Form S-3 under the Securities Act of
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1933 (the "Act") and has filed with the Securities
and Exchange Commission (the "Commission") a
registration statement (the file number of which
is set forth in Schedule I hereto) on such Form,
including a basic prospectus, for registration
under the Act of the offering and sale of the
Securities. The Company may have filed one or
more amendments thereto, and may have used a
Preliminary Final Prospectus, each of which has
previously been furnished to you. Such registra-
tion statement, as so amended, has become effec-
tive. The offering of the Securities is a Delayed
Offering and, although the Basic Prospectus may
not include all the information with respect to
the Securities and the offering thereof required
by the Act and the rules thereunder to be included
in the Final Prospectus, the Basic Prospectus
includes all such information required by the Act
and the rules thereunder to be included therein as
of the Effective Date. The Company will next file
with the Commission pursuant to Rules 415 and
424(b)(2) or (5) a final supplement to the form of
prospectus included in such registration statement
relating to the Securities and the offering
thereof. As filed, such final prospectus supple-
ment shall include all required information with
respect to the Securities and the offering thereof
and, except to the extent the Representatives
shall agree in writing to a modification, shall be
in all substantive respects in the form furnished
to you prior to the Execution Time or, to the
extent not completed at the Execution Time, shall
contain only such specific additional information
and other changes (beyond that contained in the
Basic Prospectus and any Preliminary Final Pro-
spectus) as the Company has advised you, prior to
the Execution Time, will be included or made
therein.
(ii) The Company meets the requirements for
the use of Form S-3 under the Act and has filed
with the Commission a registration statement (the
file number of which is set forth in Schedule I
hereto) on such Form, including a basic prospec-
tus, for registration under the Act of the offer-
ing and sale of the Securities. The Company may
have filed one or more amendments thereto,
including a Preliminary Final Prospectus, each of
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which has previously been furnished to you. The
Company will next file with the Commission either
(x) a final prospectus supplement relating to the
Securities in accordance with Rules 430A and
424(b)(1) or (4), or (y) prior to the effective-
ness of such registration statement, an amendment
to such registration statement, including the form
of final prospectus supplement. In the case of
clause (x), the Company has included in such
registration statement, as amended at the Effec-
tive Date, all information (other than Rule 430A
Information) required by the Act and the rules
thereunder to be included in the Final Prospectus
with respect to the Securities and the offering
thereof. As filed, such final prospectus supple-
ment or such amendment and form of final prospec-
tus supplement shall contain all Rule 430A Infor-
mation, together with all other such required
information, with respect to the Securities and
the offering thereof and, except to the extent the
Representatives shall agree in writing to a
modification, shall be in all substantive respects
in the form furnished to you prior to the Execu-
tion Time or, to the extent not completed at the
Execution Time, shall contain only such specific
additional information and other changes (beyond
that contained in the Basic Prospectus and any
Preliminary Final Prospectus) as the Company has
advised you, prior to the Execution Time, will be
included or made therein.
(b) On the Effective Date, the Registration
Statement did or will, and when the Final Prospectus is
first filed (if required) in accordance with
Rule 424(b) and on the Closing Date, the Final Pro-
spectus (and any supplement thereto) will, comply in
all material respects with the applicable requirements
of the Act, the Securities Exchange Act of 1934 (the
"Exchange Act") and the Trust Indenture Act of 1939
(the "Trust Indenture Act") and the respective rules
thereunder; on the Effective Date, the Registration
Statement did not or will not contain any untrue
statement of a material fact or omit to state any
material fact required to be stated therein or neces-
sary in order to make the statements therein not
misleading; on the Effective Date and on the Closing
Date the Indenture did or will comply in all material
respects with the requirements of the Trust Indenture
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Act and the rules thereunder; and, on the Effective
Date, the Final Prospectus, if not filed pursuant to
Rule 424(b), did not or will not, and on the date of
any filing pursuant to Rule 424(b) and on the Closing
Date, the Final Prospectus (together with any
supplement thereto) will not, include any untrue
statement of a material fact or omit to state a mate-
rial fact necessary in order to make the statements
therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that
the Company makes no representations or warranties as
to (i) that part of the Registration Statement which
shall constitute the Statement of Eligibility and
Qualification (Form T-1) under the Trust Indenture Act
of the Trustee or (ii) the information contained in or
omitted from the Registration Statement or the Final
Prospectus (or any supplement thereto) in reliance upon
and in conformity with information furnished in writing
to the Company by or on behalf of any Underwriter
through the Representatives specifically for inclusion
in the Registration Statement or the Final Prospectus
(or any supplement thereto).
(c) The terms which follow, when used in this
Agreement, shall have the meanings indicated. The term
"the Effective Date" shall mean each date that the
Registration Statement and any post-effective amendment
or amendments thereto became or become effective and
each date after the date hereof on which a document
incorporated by reference in the Registration Statement
is filed. "Execution Time" shall mean the date and
time that this Agreement is executed and delivered by
the parties hereto. "Basic Prospectus" shall mean the
prospectus referred to in paragraph (a) above contained
in the Registration Statement at the Effective Date
including, in the case of a Non-Delayed Offering, any
Preliminary Final Prospectus. "Preliminary Final
Prospectus" shall mean any preliminary prospectus
supplement to the Basic Prospectus which describes the
Securities and the offering thereof and is used prior
to filing of the Final Prospectus. "Final Prospectus"
shall mean the prospectus supplement relating to the
Securities that is first filed pursuant to Rule 424(b)
after the Execution Time, together with the Basic
Prospectus or, if, in the case of a Non-Delayed
Offering, no filing pursuant to Rule 424(b) is
required, shall mean the form of final prospectus
relating to the Securities, including the Basic
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Prospectus, included in the Registration Statement at
the Effective Date. "Registration Statement" shall
mean the registration statement referred to in
paragraph (a) above, including incorporated documents,
exhibits and financial statements, as amended at the
Execution Time (or, if not effective at the Execution
Time, in the form in which it shall become effective)
and, in the event any post-effective amendment thereto
becomes effective prior to the Closing Date (as
hereinafter defined), shall also mean such registration
statement as so amended. Such term shall include any
Rule 430A Information deemed to be included therein at
the Effective Date as provided by Rule 430A.
"Rule 415", "Rule 424", "Rule 430A" and "Regulation S-
K" refer to such rules or regulation under the Act.
"Rule 430A Information" means information with respect
to the Securities and the offering thereof permitted to
be omitted from the Registration Statement when it
becomes effective pursuant to Rule 430A. Any reference
herein to the Registration Statement, the Basic
Prospectus, any Preliminary Final Prospectus or the
Final Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 which were filed under
the Exchange Act on or before the Effective Date of the
Registration Statement or the issue date of the Basic
Prospectus, any Preliminary Final Prospectus or the
Final Prospectus, as the case may be; and any reference
herein to the terms "amend", "amendment" or
"supplement" with respect to the Registration
Statement, the Basic Prospectus, any Preliminary Final
Prospectus or the Final Prospectus shall be deemed to
refer to and include the filing of any document under
the Exchange Act after the Effective Date of the
Registration Statement or the issue date of the Basic
Prospectus, any Preliminary Final Prospectus or the
Final Prospectus, as the case may be, deemed to be
incorporated therein by reference. If the Company
files a registration statement to register a portion of
the Securities and relies on Rule 462(b) for such
registration statement to become effective upon filing
with the Commission (the "Rule 462 Registration
Statement"), then any reference to the "Registration
Statement" shall be deemed to refer to both the
registration statement referred to above (and
identified on Schedule I hereto) and the Rule 462
Registration Statement, in each case as amended from
time to time. A "Non-Delayed Offering" shall mean an
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offering of securities which is intended to commence
promptly after the effective date of a registration
statement, with the result that, pursuant to Rules 415
and 430A, all information (other than Rule 430A
Information) with respect to the securities so offered
must be included in such registration statement at the
effective date thereof. A "Delayed Offering" shall
mean an offering of securities pursuant to Rule 415
which does not commence promptly after the effective
date of a registration statement, with the result that
only information required pursuant to Rule 415 need be
included in such registration statement at the
effective date thereof with respect to the securities
so offered. Whether the offering of the Securities is
a Non-Delayed Offering or a Delayed Offering shall be
set forth in Schedule I hereto.
2. Purchase and Sale. Subject to the terms and
conditions and in reliance upon the representations and war-
ranties herein set forth, the Company agrees to sell to each
Underwriter, and each Underwriter agrees, severally and not
jointly, to purchase from the Company, at the purchase price
set forth in Schedule I hereto the principal amount of the
Securities set forth opposite such Underwriter's name in
Schedule II hereto, except that, if Schedule I hereto
provides for the sale of Securities pursuant to delayed
delivery arrangements, the respective principal amounts of
Securities to be purchased by the Underwriters shall be as
set forth in Schedule II hereto less the respective amounts
of Contract Securities determined as provided below.
Securities to be purchased by the Underwriters are herein
sometimes called the "Underwriters' Securities" and Secur-
ities to be purchased pursuant to Delayed Delivery Contracts
as hereinafter provided are herein called "Contract Securi-
ties".
If so provided in Schedule I hereto, the Under-
writers are authorized to solicit offers to purchase Secu-
rities from the Company pursuant to delayed delivery con-
tracts ("Delayed Delivery Contracts"), substantially in the
form of Schedule III hereto but with such changes therein as
the Company may authorize or approve. The Underwriters will
endeavor to make such arrangements and, as compensation
therefor, the Company will pay to the Representatives, for
the account of the Underwriters, on the Closing Date, the
percentage set forth in Schedule I hereto of the principal
amount of the Securities for which Delayed Delivery Con-
tracts are made. Delayed Delivery Contracts are to be with
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institutional investors, including commercial and savings
banks, insurance companies, pension funds, investment
companies and educational and charitable institutions. The
Company will enter into Delayed Delivery Contracts in all
cases where sales of Contract Securities arranged by the
Underwriters have been approved by the Company but, except
as the Company may otherwise agree, each such Delayed
Delivery Contract must be for not less than the minimum
principal amount set forth in Schedule I hereto and the
aggregate principal amount of Contract Securities may not
exceed the maximum aggregate principal amount set forth in
Schedule I hereto. The Underwriters will not have any
responsibility in respect of the validity or performance of
Delayed Delivery Contracts. The principal amount of Secu-
rities to be purchased by each Underwriter as set forth in
Schedule II hereto shall be reduced by an amount which shall
bear the same proportion to the total principal amount of
Contract Securities as the principal amount of Securities
set forth opposite the name of such Underwriter bears to the
aggregate principal amount set forth in Schedule II hereto,
except to the extent that you determine that such reduction
shall be otherwise than in such proportion and so advise the
Company in writing; provided, however, that the total prin-
cipal amount of Securities to be purchased by all Under-
writers shall be the aggregate principal amount set forth in
Schedule II hereto less the aggregate principal amount of
Contract Securities.
3. Delivery and Payment. Delivery of and payment
for the Underwriters' Securities shall be made on the date
and at the time specified in Schedule I hereto, which date
and time may be postponed by agreement between the
Representatives and the Company or as provided in Section 8
hereof (such date and time of delivery and payment for the
Underwriters' Securities being herein called the "Closing
Date"). Delivery of the Underwriters' Securities shall be
made to the Representatives for the respective accounts of
the several Underwriters against payment by the several
Underwriters through the Representatives of the purchase
price thereof to or upon the order of the Company by
certified or official bank check or checks drawn on or by a
New York Clearing House bank and payable in immediately
available funds. Delivery of the Underwriters' Securities
shall be made at such location as the Representatives shall
reasonably designate at least one business day in advance of
the Closing Date and payment for the Securities shall be
made at the office specified in Schedule I hereto.
Certificates for the Underwriters' Securities shall be
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registered in such names and in such denominations as the
Representatives may request not less than two full business
days in advance of the Closing Date.
The Company agrees to have the Underwriters'
Securities available for inspection, checking and packaging
by the Representatives in New York, New York, not later than
1:00 PM on the business day prior to the Closing Date.
4. Agreements. The Company agrees with the
several Underwriters that:
(a) The Company will use its best efforts to
cause the Registration Statement, if not effective at
the Execution Time, and any amendment thereto, to
become effective. Prior to the termination of the
offering of the Securities, the Company will not file
any amendment of the Registration Statement or supple-
ment (including the Final Prospectus or any Preliminary
Final Prospectus) to the Basic Prospectus unless the
Company has furnished you a copy for your review prior
to filing and will not file any such proposed amendment
or supplement to which you reasonably object. Subject
to the foregoing sentence, the Company will cause the
Final Prospectus, properly completed, and any supple-
ment thereto to be filed with the Commission pursuant
to the applicable paragraph of Rule 424(b) within the
time period prescribed and will provide evidence
satisfactory to the Representatives of such timely
filing. The Company will promptly advise the Repre-
sentatives (i) when the Registration Statement, if not
effective at the Execution Time, and any amendment
thereto, shall have become effective, (ii) when the
Final Prospectus, and any supplement thereto, shall
have been filed with the Commission pursuant to
Rule 424(b), (iii) when, prior to termination of the
offering of the Securities, any amendment to the Regis-
tration Statement shall have been filed or become
effective, (iv) of any request by the Commission for
any amendment of the Registration Statement or supple-
ment to the Final Prospectus or for any additional
information, (v) of the issuance by the Commission of
any stop order suspending the effectiveness of the
Registration Statement or the institution or threaten-
ing of any proceeding for that purpose and (vi) of the
receipt by the Company of any notification with respect
to the suspension of the qualification of the Securi-
ties for sale in any jurisdiction or the initiation or
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9
threatening of any proceeding for such purpose. The
Company will use its best efforts to prevent the
issuance of any such stop order and, if issued, to
obtain as soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to
the Securities is required to be delivered under the
Act, any event occurs as a result of which the Final
Prospectus as then supplemented would include any
untrue statement of a material fact or omit to state
any material fact necessary to make the statements
therein in the light of the circumstances under which
they were made not misleading, or if it shall be neces-
sary to amend the Registration Statement or supplement
the Final Prospectus to comply with the Act or the
Exchange Act or the respective rules thereunder, the
Company promptly will (i) prepare and file with the
Commission, subject to the second sentence of paragraph
(a) of this Section 4, an amendment or supplement which
will correct such statement or omission or effect such
compliance and (ii) supply any supplemented Prospectus
to you in such quantities as you may reasonably
request.
(c) As soon as practicable, the Company will make
generally available to its security holders and to the
Representatives an earnings statement or statements of
the Company and its subsidiaries which will satisfy the
provisions of Section 11(a) of the Act and Rule 158
under the Act.
(d) The Company will furnish to the Representa-
tives and counsel for the Underwriters, without charge,
copies of the Registration Statement as they may
reasonably request (including exhibits thereto) and, so
long as delivery of a prospectus by an Underwriter or
dealer may be required by the Act, as many copies of
any Preliminary Final Prospectus and the Final Prospec-
tus and any supplement thereto as the Representatives
may reasonably request. The Company will pay the
expenses of printing or other production of the
Registration Statement of the Company on
Form S-3 filed on July 25, 1995 and any amendments and
exhibits thereto, the Prospectus dated October 4, 1995
and any amendments, supplements or exhibits thereto
including any post-effective amendments thereof and any
other documents for which professional printer's
expenses were incurred.
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(e) The Company will arrange for the qualifica-
tion of the Securities for sale under the laws of such
jurisdictions as the Representatives may designate,
will maintain such qualifications in effect so long as
required for the distribution of the Securities, will
arrange for the determination of the legality of the
Securities for purchase by institutional investors and
will pay the filing fee of the National Association of
Securities Dealers, Inc. (the "NASD"), in connection
with its review of the offering.
(f) Until the business date set forth on Sched-
ule I hereto, the Company will not, without the consent
of the Representatives, offer, sell or contract to
sell, or otherwise dispose of, directly or indirectly,
or announce the offering of, any debt securities issued
or guaranteed by the Company (other than the Securi-
ties).
(g) The Company confirms as of the date hereof
that it is in compliance with all provisions of
Section 1 of Laws of Florida, Chapter 92-198,
Section 517.075, An Act Relating to Disclosure of Doing
Business with Cuba, and the Company further agrees that
if it commences engaging in business with the
government of Cuba or with any person or affiliate
located in Cuba after the date the Registration
Statement becomes or has become effective with the
Commission or with the Florida Department of Banking
and Finance (the "Department"), whichever date is
later, or if the information reported in the
Prospectus, if any, concerning the Company's business
with Cuba or with any person or affiliate located in
Cuba changes in any material way, the Company will
provide the Department notice of such business or
change, as appropriate, in a form acceptable to the
Department.
5. Conditions to the Obligations of the Under-
writers. The obligations of the Underwriters to purchase
the Underwriters' Securities shall be subject to the accu-
racy of the representations and warranties on the part of
the Company contained herein as of the Execution Time and
the Closing Date, to the accuracy of the statements of the
Company made in any certificates pursuant to the provisions
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hereof, to the performance by the Company of its obligations
hereunder and to the following additional conditions:
(a) If the Registration Statement has not become
effective prior to the Execution Time, unless the
Representatives agree in writing to a later time, the
Registration Statement will become effective not later
than (i) 6:00 PM New York City time, on the date of
determination of the public offering price, if such
determination occurred at or prior to 3:00 PM New York
City time on such date or (ii) 12:00 Noon on the
business day following the day on which the public
offering price was determined, if such determination
occurred after 3:00 PM New York City time on such date;
if filing of the Final Prospectus, or any supplement
thereto, is required pursuant to Rule 424(b), the Final
Prospectus, and any such supplement, shall have been
filed in the manner and within the time period required
by Rule 424(b); and no stop order suspending the
effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall
have been instituted or threatened.
(b) The Company shall have furnished to the
Representatives the opinion of Richard C. Rowlenson,
Esq., Senior Vice President and General Counsel,
counsel for the Company, dated the Closing Date, to the
effect that:
(i) each of the Company, and the subsidiaries
that are corporations named in Schedule IV hereto
(individually a "Subsidiary" and collectively the
"Subsidiaries") has been duly incorporated and is
validly existing as a corporation in good standing
under the laws of the jurisdiction in which it is
chartered or organized, with full corporate power
and authority to own its properties and conduct
its business as described in the Final Prospectus,
and is duly qualified to do business as a foreign
corporation and is in good standing under the laws
of each jurisdiction wherein it owns or leases
material properties or conducts material business
so as to require such qualification other than
where the failure to be so qualified or in good
standing would not have a material adverse effect
on the Company and its Subsidiaries taken as a
whole; and each of the partnerships named in
Schedule IV hereto (each a "General Partnership"
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12
and collectively the "General Partnerships") has
been properly established and is validly existing
as a general partnership under the laws of the
jurisdiction in which it is organized;
(ii) all the outstanding shares of capital
stock of each Subsidiary have been duly and
validly authorized and issued and are fully paid
and nonassessable, and, except as otherwise set
forth in Schedule IV of this Agreement, all
outstanding shares of capital stock of the
Subsidiaries and ownership interest in the General
Partnerships are owned by the Company either
directly or through wholly owned subsidiaries and,
to the knowledge of such counsel, are free and
clear of any perfected security interest and, to
the knowledge of such counsel, after due inquiry
of Company officers and review of appropriate
corporate agreements, any other security
interests, claims, liens or encumbrances;
(iii) the Company's authorized equity
capitalization is as set forth in the Final
Prospectus; the Securities conform to the
description thereof contained in the Final
Prospectus;
(iv) the Indenture has been duly authorized,
executed and delivered, has been duly qualified
under the Trust Indenture Act, and constitutes a
legal, valid and binding instrument enforceable
against the Company in accordance with its terms
(subject, as to enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency,
moratorium or other laws affecting creditors'
rights generally from time to time in effect and
subject to general principles of equity, including
principles of commercial reasonableness, good
faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in
equity)); and the Securities have been duly
authorized and, when executed and authenticated in
accordance with the provisions of the Indenture
and delivered to and paid for by the Underwriters
pursuant to this Agreement, in the case of the
Underwriters' Securities, or by the purchasers
thereof pursuant to Delayed Delivery Contracts, in
the case of any Contract Securities, will
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13
constitute legal, valid and binding obligations of
the Company entitled to the benefits of the
Indenture (subject, as to enforcement of remedies,
to applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting
creditors' rights generally from time to time in
effect and subject to general principles of
equity, including principles of commercial
reasonableness, good faith and fair dealing
(regardless of whether enforcement is sought in a
proceeding at law or in equity));
(v) to the best knowledge of such counsel,
there is no pending or threatened action, suit or
proceeding before any court or governmental
agency, authority or body or any arbitrator
involving the Company or any of its subsidiaries,
that is required to be disclosed in the
Registration Statement and is not adequately
disclosed in the Final Prospectus and there is no
contract or other document that is required to be
described in the Registration Statement or Final
Prospectus, or to be filed as an exhibit, and is
not described or filed as required; and the
statements included or incorporated in the Final
Prospectus describing any legal proceedings or
material contracts or agreements relating to the
Company fairly summarize such matters;
(vi) this Agreement and any Delayed Delivery
Contracts have been duly authorized, executed and
delivered by the Company;
(vii) no consent, approval, authorization or
order of any court or governmental agency or body
is required for the consummation of the trans-
actions contemplated herein or in any Delayed
Delivery Contracts, except such as have been
obtained under the Act and such as may be required
under the blue sky laws of any jurisdiction in
connection with the purchase and distribution of
the Securities by the Underwriters and such other
approvals (specified in such opinion) as have been
obtained;
(viii) neither the execution and delivery of the
Indenture, the issue and sale of the Securities,
nor the consummation of any other of the transac-
PAGE
14
tions herein contemplated nor the fulfillment of
the terms hereof or of any Delayed Delivery
Contracts will conflict with, result in a breach
or violation of, or constitute a default under the
articles of incorporation or by-laws of the
Company or the terms of any indenture or other
agreement or instrument known to such counsel and
to which the Company or any of its subsidiaries is
a party or bound or any law, judgment, order or
decree known to such counsel to be applicable to
the Company or any of its subsidiaries of any
court, regulatory body, administrative agency,
governmental body or arbitrator having
jurisdiction over the Company or any of its
subsidiaries; and
(ix) no holders of securities of the Company
have rights to the registration of such securities
under the Registration Statement.
(x) the Company and its subsidiaries have
been granted and presently hold the Federal
Communications Commission (the "FCC")
authorizations necessary for the Company and its
subsidiaries to conduct their respective
businesses as presently conducted or proposed to
be conducted; to the knowledge of such counsel
such FCC authorizations are in full force and
effect; and to the knowledge of such counsel,
except as set forth in a schedule to such opinion,
no proceedings to revoke such FCC authorizations
are pending or threatened;
(xi) to the knowledge of such counsel after
due inquiry of Company officers and review of
appropriate corporate agreements, such counsel is
of the opinion that the Company and its
subsidiaries are not, nor with the passage of time
or the giving of notice or both would be, in
violation of any judgment, injunction, order or
decree of the FCC relating specifically to the
Company or its subsidiaries or to any properties
of the Company or its subsidiaries;
(xii) the execution and delivery of this
Agreement and the issuance and sale of Securities
by the Company, and the performance by the Company
of its obligations under this Agreement and the
PAGE
15
Securities, do not violate the Communications Act
of 1934, as amended, or any rules or the
regulation thereunder binding on the Company or
its subsidiaries or any order, writ, judgment,
injunction, decree or award of the FCC binding on
the Company or its subsidiaries of which such
counsel has knowledge after due inquiry;
(xiii) there is no proceeding or investigation
pending before the FCC, or, to the knowledge of
such counsel, any investigation pending or
threatened by the FCC against the Company or its
subsidiaries which, if adversely determined, could
have a material adverse effect on the Company and
its subsidiaries taken as a whole;
(xiv) the execution, delivery and performance
of this Agreement does not constitute the transfer
or assignment, directly or indirectly, of any
license or permit existing as of the Closing Date
issued by the FCC in connection with the
operations of the Company or its subsidiaries or
the transfer of control of the Company or its
subsidiaries within the meaning of Section 310(d)
of the Communications Act of 1934, as amended; and
(xv) to the extent they constitute matters of
law, the statements in the Prospectus under the
headings "Business--Regulation of Cellular
Systems," "Business--Cellular Telephone
Technology," "Business--Competition," "Certain
Risk Factors--Competition" and "Certain Risk
Factors--Regulation of the Cellular Industry"
fairly summarize the matters therein described.
Such counsel may limit such opinion to matters of
existing corporation laws of the states of Delaware,
Virginia and West Virginia, the existing partnership
laws of Delaware, Maryland, Pennsylvania and the
District of Columbia and the existing laws of the State
of North Carolina and the United States of America. In
rendering such opinion, such counsel may rely as to
matters of fact, to the extent deemed proper, on
certificates of responsible officers of the Company and
public officials. References to the Final Prospectus
in this paragraph (b) include any supplements thereto
at the Closing Date.
PAGE
16
Such counsel shall also state that he has no reason to
believe that at the Effective Date the Registration
Statement contained any untrue statement of a material
fact or omitted to state any material fact required to
be stated therein or necessary to make the statements
therein not misleading or that the Final Prospectus
includes any untrue statement of a material fact or
omits to state a material fact necessary to make the
statements therein, in the light of the circumstances
under which they were made, not misleading.
(c) The Company shall have furnished to the
Representatives the opinion of Schell Bray Aycock
Abel & Livingston L.L.P., counsel for the Company,
dated the Closing Date, to the effect that:
(i) the Company has been duly incorporated
and is validly existing as a corporation in good
standing under the laws of the State of North
Carolina, with full corporate power and authority
to own its properties and conduct its business as
described in the Final Prospectus;
(ii) the Company's authorized equity capital-
ization is as set forth in the Final Prospectus;
the Securities conform to the description thereof
contained in the Final Prospectus;
(iii) the Indenture has been duly authorized,
executed and delivered, has been duly qualified
under the Trust Indenture Act, and constitutes a
legal, valid and binding instrument enforceable
against the Company in accordance with its terms
(subject, as to enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency,
moratorium or other laws affecting creditors'
rights generally from time to time in effect and
subject to general principles of equity, including
principles of commercial reasonableness, good
faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in
equity)); and the Securities have been duly
authorized and, when executed and authenticated in
accordance with the provisions of the Indenture
and delivered to and paid for by the Underwriters
pursuant to this Agreement, in the case of the
Underwriters' Securities, or by the purchasers
thereof pursuant to Delayed Delivery Contracts, in
PAGE
17
the case of any Contract Securities, will
constitute legal, valid and binding obligations of
the Company entitled to the benefits of the
Indenture (subject, as to enforcement of remedies,
to applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting
creditors' rights generally from time to time in
effect and subject to general principles of
equity, including principles of commercial
reasonableness, good faith and fair dealing
(regardless of whether enforcement is sought in a
proceeding at law or in equity));
(iv) to the best knowledge of such counsel,
there is no pending or threatened action, suit or
proceeding before any court or governmental
agency, authority or body or any arbitrator
involving the Company or any of its subsidiaries,
that is required to be disclosed in the
Registration Statement and is not adequately
disclosed in the Final Prospectus and there is no
contract or other document that is required to be
described in the Registration Statement or Final
Prospectus, or to be filed as an exhibit, and is
not described or filed as required;
(v) the Registration Statement has become
effective under the Act; any required filing of
the Basic Prospectus, any Preliminary Final
Prospectus and the Final Prospectus, and any
supplements thereto, pursuant to Rule 424(b) has
been made in the manner and within the time period
required by Rule 424(b); to the best knowledge of
such counsel, no stop order suspending the effec-
tiveness of the Registration Statement has been
issued, no proceedings for that purpose have been
instituted or threatened, and the Registration
Statement and the Final Prospectus (other than the
financial statements and other financial and
statistical information contained therein as to
which such counsel need express no opinion) comply
as to form in all material respects with the
applicable requirements of the Act, the Exchange
Act and the Trust Indenture Act and the respective
rules thereunder;
PAGE
18
(vi) this Agreement and any Delayed Delivery
Contracts have been duly authorized, executed and
delivered by the Company; and
(vii) neither the execution and delivery of the
Indenture, the issue and sale of the Securities,
nor the consummation of any other of the transac-
tions herein contemplated nor the fulfillment of
the terms hereof or of any Delayed Delivery
Contracts will conflict with, result in a breach
or violation of, or constitute a default under the
articles of incorporation or by-laws of the
Company or the terms of any indenture or other
agreement or instrument known to such counsel and
to which the Company or any of its subsidiaries is
a party or bound or any law, judgment, order or
decree known to such counsel to be applicable to
the Company or any of its subsidiaries of any
court, regulatory body, administrative agency,
governmental body or arbitrator having
jurisdiction over the Company or any of its
subsidiaries.
Such counsel may limit such opinion to matters of the
existing laws of the State of North Carolina and of the
United States of America, and such opinion may exclude
all matters relating to the Communications Act of 1934,
as amended, and the rules and regulations promulgated
by the FCC. In rendering such opinion, such counsel
may rely as to matters of fact, to the extent deemed
proper, on certificates of responsible officers of the
Company and public officials.
Such counsel shall state that it has no reason to
believe that at the Effective Date the Registration
Statement contained any untrue statement of a material
fact or omitted to state any material fact required to
be stated therein or necessary to make the statements
therein not misleading or that the Final Prospectus
includes any untrue statement of a material fact or
omits to state a material fact necessary to make the
statements therein, in the light of the circumstances
under which they were made, not misleading.
Such counsel may also state that although they have
made certain inquiries and investigations in connection
with the preparation of the Registration Statement and
the Prospectus, the limitations inherent in the role of
PAGE
19
outside counsel are such that they cannot and do not
assume responsibility for the accuracy or completeness
of the statements made in the Registration Statement
and Prospectus, except insofar as such statements
relate to them and except to the extent set forth in
paragraph (ii) above.
(d) The Representatives shall have received from
Cravath, Swaine & Moore, counsel for the Underwriters,
such opinion or opinions, dated the Closing Date, with
respect to the issuance and sale of the Securities, the
Indenture, any Delayed Delivery Contracts, the Regis-
tration Statement, the Final Prospectus (together with
any supplement thereto) and other related matters as
the Representatives may reasonably require, and the
Company shall have furnished to such counsel such
documents as they request for the purpose of enabling
them to pass upon such matters.
(e) The Company shall have furnished to the
Representatives a certificate of the Company, signed by
the Chairman of the Board or the President and the
principal financial or accounting officer of the
Company, dated the Closing Date, to the effect that the
signers of such certificate have carefully examined the
Registration Statement, the Final Prospectus, any
supplement to the Final Prospectus and this Agreement
and that:
(i) the representations and warranties of the
Company in this Agreement are true and correct in
all material respects on and as of the Closing
Date with the same effect as if made on the
Closing Date and the Company has complied with all
the agreements and satisfied all the conditions on
its part to be performed or satisfied at or prior
to the Closing Date;
(ii) no stop order suspending the effective-
ness of the Registration Statement has been issued
and no proceedings for that purpose have been
instituted or, to the Company's knowledge, threat-
ened; and
(iii) since the date of the most recent finan-
cial statements included in the Final Prospectus
(exclusive of any supplement thereto), there has
been no material adverse change in the condition
PAGE
20
(financial or other), earnings, business or
properties of the Company and its subsidiaries,
whether or not arising from transactions in the
ordinary course of business, except as set forth
in or contemplated in the Final Prospectus (exclu-
sive of any supplement thereto).
(f) At the Closing Date, Arthur Andersen LLP
shall have furnished to the Representatives a letter or
letters (which may refer to letters previously
delivered to one or more of the Representatives), dated
as of the Closing Date, in form and substance satis-
factory to the Representatives, confirming that they
are independent accountants within the meaning of the
Act and the Exchange Act and the respective applicable
published rules and regulations thereunder and stating
in effect that:
(i) in their opinion the audited financial
statements and financial statement schedules
included or incorporated in the Registration
Statement and the Final Prospectus and reported on
by them comply in form in all material respects
with the applicable accounting requirements of the
Act and the Exchange Act and the related published
rules and regulations;
(ii) on the basis of a reading of the latest
unaudited financial statements made available by
the Company and its subsidiaries; carrying out
certain specified procedures (but not an examina-
tion in accordance with generally accepted audit-
ing standards) which would not necessarily reveal
matters of significance with respect to the
comments set forth in such letter; a reading of
the minutes of the meetings of the stockholders,
directors and finance, compensation and audit
committees of the Company and the Subsidiaries;
and inquiries of certain officials of the Company
who have responsibility for financial and account-
ing matters of the Company and its subsidiaries as
to transactions and events subsequent to the date
of the most recent audited financial statements in
or incorporated in the Final Prospectus, nothing
PAGE
21
came to their attention which caused them to
believe that:
(1) any unaudited financial statements
included or incorporated in the Registration
Statement and the Final Prospectus do not
comply in form in all material respects with
applicable accounting requirements and with
the published rules and regulations of the
Commission with respect to financial state-
ments included or incorporated in quarterly
reports on Form 10-Q under the Exchange Act;
and said unaudited financial statements are
not in conformity with generally accepted
accounting principles applied on a basis
substantially consistent with that of the
audited financial statements included or
incorporated in the Registration Statement
and the Final Prospectus;
(2) with respect to the period
subsequent to the date of the most recent
financial statements (other than any capsule
information), audited or unaudited, in or
incorporated in the Registration Statement
and the Final Prospectus, there were any
changes, at a specified date not more than
five business days prior to the date of the
letter, in the Long-Term Debt of the Company
and its subsidiaries or decreases in the
Total Shareholders' Equity of the Company as
compared with the amounts shown on the most
recent consolidated balance sheet included or
incorporated in the Registration Statement
and the Final Prospectus, or for the period
from the date of the most recent financial
statements included or incorporated in the
Registration Statement and the Final Pro-
spectus to such specified date there were any
decreases, as compared with the corresponding
period in the preceding year in Service
Revenue, Cellular Telephone Equipment
Revenue, Other Revenue, Income from
Operations or increases in Net Loss, except
in all instances for changes or decreases set
forth in such letter, in which case the
letter shall be accompanied by an explanation
by the Company as to the significance thereof
PAGE
22
unless said explanation is not deemed
necessary by the Representatives; or
(3) the amounts included in any
unaudited "capsule" information included or
incorporated in the Registration Statement
and the Final Prospectus do not agree with
the amounts set forth in the unaudited
financial statements for the same periods or
were not determined on a basis substantially
consistent with that of the corresponding
amounts in the audited financial statements
included or incorporated in the Registration
Statement and the Final Prospectus in
conformity with generally accepted accounting
principles or;
(4) the information included in the
Registration Statement and Final Prospectus
in response to Regulation S-K, Item 301
(Selected Financial Data), Item 302
(Supplementary Financial Information) and
Item 402 (Executive Compensation), and
Item 503 (Ratio of Earnings to Fixed Charges)
is not in conformity with the applicable
disclosure requirements of Regulation S-K;
(iii) they have performed certain other speci-
fied procedures as a result of which they deter-
mined that certain information of an accounting,
financial or statistical nature (which is limited
to accounting, financial or statistical informa-
tion derived from the general accounting records
of the Company and its subsidiaries) set forth in
the Registration Statement and the Final
Prospectus, including the information included or
incorporated in Item 14 of the Company's Annual
Report on Form 10-K, incorporated in the
Registration Statement and the Prospectus, and the
information included in the "Management's Discus-
sion and Analysis of Financial Condition and
Results of Operations" included or incorporated in
the Company's Quarterly Reports on Form 10-Q,
incorporated in the Registration Statement and the
Final Prospectus, agrees with the accounting
records of the Company and its subsidiaries,
excluding any questions of legal interpretation;
and
PAGE
23
(iv) if unaudited pro forma financial
statements are included or incorporated in the
Registration Statement and the Final Prospectus,
on the basis of a reading of the unaudited pro
forma financial statements, carrying out certain
specified procedures, inquiries of certain
officials of the Company and the acquired company
who have responsibility for financial and
accounting matters, and proving the arithmetic
accuracy of the application of the pro forma
adjustments to the historical amounts in the pro
forma financial statements, nothing came to their
attention which caused them to believe that the
pro forma financial statements do not comply in
form in all material respects with the applicable
accounting requirements of Rule 11-02 of Regula-
tion S-X or that the pro forma adjustments have
not been properly applied to the historical
amounts in the compilation of such statements.
References to the Final Prospectus in this para-
graph (f) include any supplement thereto at the date of the
letter.
In addition, except as provided in Schedule I
hereto, at the Execution Time, Arthur Andersen LLP shall
have furnished to the Representatives a letter or letters,
dated as of the Execution Time, in form and substance
satisfactory to the Representatives, to the effect set forth
above.
(g) Subsequent to the Execution Time or, if
earlier, the dates as of which information is given in
the Registration Statement (exclusive of any amendment
thereof) and the Final Prospectus (exclusive of any
supplement thereto), there shall not have been (i) any
change or decrease specified in the letter or letters
referred to in paragraph (f) of this Section 5 or
(ii) any change, or any development involving a
prospective change, in or affecting the business or
properties of the Company and its subsidiaries the
effect of which, in any case referred to in clause (i)
or (ii) above, is, in the judgment of the Representa-
tives, so material and adverse as to make it
impractical or inadvisable to proceed with the offering
or delivery of the Securities as contemplated by the
Registration Statement (exclusive of any amendment
PAGE
24
thereof) and the Final Prospectus (exclusive of any
supplement thereto).
(h) Subsequent to the Execution Time, there shall
not have been any decrease in the rating of any of the
Company's debt securities by any "nationally recognized
statistical rating organization" (as defined for
purposes of Rule 436(g) under the Act) or any notice
given of any intended or potential decrease in any such
rating or of a possible change in any such rating that
does not indicate the direction of the possible change.
(i) Prior to the Closing Date, the Company shall
have furnished to the Representatives such further
information, certificates and documents as the Repre-
sentatives may reasonably request.
(j) The Company shall have accepted Delayed
Delivery Contracts in any case where sales of Contract
Securities arranged by the Underwriters have been
approved by the Company.
If any of the conditions specified in this Sec-
tion 5 shall not have been fulfilled in all material re-
spects when and as provided in this Agreement, or if any of
the opinions and certificates mentioned above or elsewhere
in this Agreement shall not be in all material respects
reasonably satisfactory in form and substance to the Repre-
sentatives and counsel for the Underwriters, this Agreement
and all obligations of the Underwriters hereunder may be
canceled at, or at any time prior to, the Closing Date by
the Representatives. Notice of such cancellation shall be
given to the Company in writing or by telephone or telegraph
confirmed in writing.
The documents required to be delivered by this
Section 5 shall be delivered at the office of Cravath,
Swaine & Moore, counsel for the Underwriters, at Worldwide
Plaza, 825 Eighth Avenue, New York, New York, on the Closing
Date.
6. Reimbursement of Underwriters' Expenses. If
the sale of the Securities provided for herein is not con-
summated because any condition to the obligations of the
Underwriters set forth in Section 5 hereof is not satisfied,
because of any termination pursuant to Section 9 hereof or
because of any refusal, inability or failure on the part of
the Company to perform, in any material respect, any
PAGE
25
agreement herein or comply with any provision hereof other
than by reason of a default by any of the Underwriters, the
Company will reimburse the Underwriters severally upon
demand for all out-of-pocket expenses (including reasonable
fees and disbursements of counsel) that shall have been
incurred by them in connection with the proposed purchase
and sale of the Securities.
7. Indemnification and Contribution. (a) The
Company agrees to indemnify and hold harmless each Under-
writer, the directors, officers and employees of each
Underwriter and each person who controls any Underwriter
within the meaning of either the Act or the Exchange Act
against any and all losses, claims, damages or liabilities,
joint or several, to which they or any of them may become
subject under the Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or other-
wise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a
material fact contained in the registration statement for
the registration of the Securities as originally filed or in
any amendment thereof, or in the Basic Prospectus, any
Preliminary Final Prospectus or the Final Prospectus, or in
any amendment thereof or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and
agrees to reimburse each such indemnified party, as in-
curred, for any legal or other expenses reasonably incurred
by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such
case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity
with written information furnished to the Company by or on
behalf of any Underwriter through the Representatives
specifically for inclusion therein, and provided further
with respect to any untrue statement or omission of a
material fact made in any Preliminary Final Prospectus, the
indemnity agreement contained in this Section 7(a) shall not
inure to the benefit of any Underwriter (or any of the
directors, officers and employees of such Underwriter or any
controlling person of such Underwriter) from whom the person
asserting any such loss, claim, damage or liability
purchased the Securities concerned, to the extent that any
PAGE
26
such loss, claim, damage or liability of such Underwriter
occurs under the circumstances where it shall have been
determined by a court of competent jurisdiction by final and
nonappealable judgment that (w) the Company had previously
furnished copies of the Final Prospectus to the
Representatives, (x) delivery of the Final Prospectus was
required by the Act to be made to such person, (y) the
untrue statement or omission of a material fact contained in
the Preliminary Final Prospectus was corrected in the Final
Prospectus and (z) there was not sent or given to such
person, at or prior to the written confirmation of the sale
of such Securities to such person, a copy of the Final
Prospectus. This indemnity agreement will be in addition to
any liability which the Company may otherwise have.
(b) Each Underwriter severally agrees to indem-
nify and hold harmless the Company, each of its directors,
each of its officers who signs the Registration Statement,
and each person who controls the Company within the meaning
of either the Act or the Exchange Act, to the same extent as
the foregoing indemnity from the Company to each Under-
writer, but only with reference to written information
relating to such Underwriter furnished to the Company by or
on behalf of such Underwriter through the Representatives
specifically for inclusion in the documents referred to in
the foregoing indemnity. This indemnity agreement will be
in addition to any liability which any Underwriter may
otherwise have. The Company acknowledges that the state-
ments set forth in the last paragraph of the cover page of
the Final Prospectus, under the heading "Underwriting" or
"Plan of Distribution" and, if Schedule I hereto provides
for sales of Securities pursuant to delayed delivery
arrangements, in the last sentence under the heading
"Delayed Delivery Arrangements" in any Preliminary Final
Prospectus or the Final Prospectus constitute the only
information furnished in writing by or on behalf of the
several Underwriters for inclusion in the documents referred
to in the foregoing indemnity, and you, as the Representa-
tives, confirm that such statements are correct.
(c) Promptly after receipt by an indemnified
party under this Section 7 of notice of the commencement of
any action, such indemnified party will, if a claim in
respect thereof is to be made against the indemnifying party
under this Section 7, notify the indemnifying party in writ-
ing of the commencement thereof; but the failure so to
notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the
PAGE
27
extent it did not otherwise learn of such action and such
failure results in the forfeiture by the indemnifying party
of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations
to any indemnified party other than the indemnification
obligation provided in paragraph (a) or (b) above. The
indemnifying party shall be entitled to appoint counsel of
the indemnifying party's choice at the indemnifying party's
expense to represent the indemnified party in any action for
which indemnification is sought (in which case the indemni-
fying party shall not thereafter be responsible for the fees
and expenses of any separate counsel retained by the indem-
nified party or parties except as set forth below);
provided, however, that such counsel shall be reasonably
satisfactory to the indemnified party. Notwithstanding the
indemnifying party's election to appoint counsel to repre-
sent the indemnified party in an action, the indemnified
party shall have the right to employ separate counsel
(including local counsel), and the indemnifying party shall
bear the reasonable fees, costs and expenses of such
separate counsel if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would
present such counsel with a conflict of interest, (ii) the
actual or potential defendants in, or targets of, any such
action include both the indemnified party and the
indemnifying party and the indemnified party shall have
reasonably concluded that there may be legal defenses
available to it and/or other indemnified parties which are
different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not
have employed counsel reasonably satisfactory to the
indemnified party to represent the indemnified party within
a reasonable time after notice of the institution of such
action or (iv) the indemnifying party shall authorize the
indemnified party to employ separate counsel at the expense
of the indemnifying party. An indemnifying party will not,
without the prior written consent of the indemnified par-
ties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnifica-
tion or contribution may be sought hereunder (whether or not
the indemnified parties are actual or potential parties to
such claim or action) unless such settlement, compromise or
consent includes an unconditional release of each indemni-
fied party from all liability arising out of such claim,
action, suit or proceeding.
PAGE
28
(d) In the event that the indemnity provided in
paragraph (a) or (b) of this Section 7 is unavailable to or
insufficient to hold harmless an indemnified party for any
reason, the Company and the Underwriters agree to contribute
to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in
connection with investigating or defending same)
(collectively "Losses") to which the Company and one or more
of the Underwriters may be subject in such proportion as is
appropriate to reflect the relative benefits received by the
Company and by the Underwriters from the offering of the
Securities; provided, however, that in no case shall (i) any
Underwriter (except as may be provided in any agreement
among underwriters relating to the offering of the Securi-
ties) be responsible for any amount in excess of the under-
writing discount or commission applicable to the Securities
purchased by such Underwriter hereunder or (ii) Salomon
Brothers Inc in its capacity as "qualified independent
underwriter" (within the meaning of Schedule E to the NASD's
By-laws) be responsible for any amount in excess of such
compensation received by Salomon Brothers Inc for acting in
such capacity. If the allocation provided by the
immediately preceding sentence is unavailable for any
reason, the Company and the Underwriters shall contribute in
such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company
and of the Underwriters in connection with the statements or
omissions which resulted in such Losses as well as any other
relevant equitable considerations. Benefits received by the
Company shall be deemed to be equal to the total net
proceeds from the offering (before deducting expenses), and
benefits received by the Underwriters shall be deemed to be
equal to the total underwriting discounts and commissions,
in each case as set forth on the cover page of the Final
Prospectus. Benefits received by Salomon Brothers Inc in
its capacity as "qualified independent underwriter" shall be
deemed to be equal to the compensation received by Salomon
Brothers Inc for acting in such capacity. Relative fault
shall be determined by reference to whether any alleged
untrue statement or omission relates to information provided
by the Company or the Underwriters. The Company and the
Underwriters agree that it would not be just and equitable
if contribution were determined by pro rata allocation or
any other method of allocation which does not take account
of the equitable considerations referred to above. Notwith-
standing the provisions of this paragraph (d), no person
guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to
PAGE
29
contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this
Section 7, each person who controls an Underwriter within
the meaning of either the Act or the Exchange Act and each
director, officer and employee of an Underwriter shall have
the same rights to contribution as such Underwriter, and
each person who controls the Company within the meaning of
either the Act or the Exchange Act, each officer of the
Company who shall have signed the Registration Statement and
each director of the Company shall have the same rights to
contribution as the Company, subject in each case to the
applicable terms and conditions of this paragraph (d).
(e) Without limitation and in addition to its
obligations under the other paragraphs of this Section 7,
the Company agrees to indemnify and hold harmless Salomon
Brothers Inc, its directors, officers and employees and each
person who controls Salomon Brothers Inc within the meaning
of either the Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to
which they or any of them may become subject, insofar as
such losses, claims, damages or liabilities (or action in
respect thereof) arise out of or are based upon Salomon
Brothers Inc's acting as a "qualified independent
underwriter" in connection with the offering contemplated by
this Agreement, and agrees to reimburse each such
indemnified party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company
will not be liable in any such case to the extent that any
such loss, claim, damage or liability results from the gross
negligence or willful misconduct of Salomon Brothers Inc.
8. Default by an Underwriter. If any one or more
Underwriters shall fail to purchase and pay for any of the
Securities agreed to be purchased by such Underwriter or
Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their
obligations under this Agreement, the remaining Underwriters
shall be obligated severally to take up and pay for (in the
respective proportions which the amount of Securities set
forth opposite their names in Schedule II hereto bears to
the aggregate amount of Securities set forth opposite the
names of all the remaining Underwriters) the Securities
which the defaulting Underwriter or Underwriters agreed but
failed to purchase; provided, however, that in the event
that the aggregate amount of Securities which the defaulting
PAGE
30
Underwriter or Underwriters agreed but failed to purchase
shall exceed 10% of the aggregate amount of Securities set
forth in Schedule II hereto, the remaining Underwriters
shall have the right to purchase all, but shall not be under
any obligation to purchase any, of the Securities, and if
such nondefaulting Underwriters do not purchase all the
Securities, this Agreement will terminate without liability
to any nondefaulting Underwriter or the Company. In the
event of a default by any Underwriter as set forth in this
Section 8, the Closing Date shall be postponed for such
period, not exceeding seven days, as the Representatives
shall determine in order that the required changes in the
Registration Statement and the Final Prospectus or in any
other documents or arrangements may be effected. Nothing
contained in this Agreement shall relieve any defaulting
Underwriter of its liability, if any, to the Company and any
nondefaulting Underwriter for damages occasioned by its
default hereunder.
9. Termination. This Agreement shall be subject
to termination in the absolute discretion of the
Representatives, by notice given to the Company prior to
delivery of and payment for the Securities, if prior to such
time (i) trading in the Company's Common Stock shall have
been suspended by the Nasdaq Stock Market's National Market
or trading in securities generally on the New York Stock
Exchange or the Nasdaq Stock Market's National Market shall
have been suspended or limited or minimum prices shall have
been established on such Exchange or Market, (ii) a banking
moratorium shall have been declared either by Federal or New
York State authorities or (iii) there shall have occurred
any outbreak or escalation of hostilities, declaration by
the United States of a national emergency or war or other
calamity or crisis the effect of which on financial markets
is such as to make it, in the judgment of the
Representatives, impracticable or inadvisable to proceed
with the offering or delivery of the Securities as
contemplated by the Final Prospectus (exclusive of any
supplement thereto).
10. Representations and Indemnities to Survive.
The respective agreements, representations, warranties,
indemnities and other statements of the Company or its
officers and of the Underwriters set forth in or made
pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf
of any Underwriter or the Company or any of the officers,
directors or controlling persons referred to in Section 7
PAGE
31
hereof, and will survive delivery of and payment for the
Securities. The provisions of Sections 6 and 7 hereof shall
survive the termination or cancellation of this Agreement.
11. Notices. All communications hereunder will
be in writing and effective only on receipt, and, if sent to
the Representatives, will be mailed, delivered or tele-
graphed and confirmed to them, at the address specified in
Schedule I hereto; or, if sent to the Company, will be
mailed, delivered or telegraphed and confirmed to it at
2002 Pisgah Church Road, Suite 300, Greensboro, North
Carolina 27455, attention Richard C. Rowlenson, Senior Vice
President and General Counsel.
12. Successors. This Agreement will inure to the
benefit of and be binding upon the parties hereto and their
respective successors and the officers and directors and
controlling persons referred to in Section 7 hereof, and no
other person will have any right or obligation hereunder.
13. Applicable Law. This Agreement will be
governed by and construed in accordance with the laws of the
State of New York.
PAGE
32
If the foregoing is in accordance with your under-
standing of our agreement, please sign and return to us the
enclosed duplicate hereof, whereupon this letter and your
acceptance shall represent a binding agreement among the
Company and the several Underwriters.
Very truly yours,
VANGUARD CELLULAR SYSTEMS,
INC.
By: /s/ Haynes G. Griffin
Name: Haynes G. Griffin
Title: President and Chief
Executive Officer
The foregoing Agreement is
hereby confirmed and accepted
as of the date specified in
Schedule I hereto.
Salomon Brothers Inc
Goldman, Sachs & Co.
NationsBanc Capital Markets Inc.
Smith Barney Inc.
Toronto Dominion Securities (USA) Inc.
By: SALOMON BROTHERS INC
By: /s/ Edward P. Biggins
Name: Edward P. Biggins
Title: Associate
For themselves and the other
several Underwriters, if any,
named in Schedule II to the
foregoing Agreement.
PAGE
33
SCHEDULE I
Underwriting Agreement dated April 3, 1996
Type of Offering: Delayed Offering
Registration Statement No. 33-61295
Representatives: Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
NationsBanc Capital Markets Inc.
100 North Tryon Street 7th Floor
Charlotte, North Carolina 28255
Smith Barney Inc.
390 Greenwich Street
New York, New York 10013
Toronto Dominion Securities (USA) Inc.
31 West 52nd Street
New York, New York 10019
Closing Date, Time and Location: April 10, 1996,
11:00 a.m., at the offices of Cravath, Swaine & Moore,
Worldwide Plaza, 825 Eighth Avenue, New York, New York
Sale, Purchase Price and Description of Purchased Debt
Securities:
Title: 9 3/8% Senior Debentures due 2006
Principal amount and currency: U.S. $200,000,000
Purchase price: 97.401% of principal amount, plus
accrued interest, if any, from April 10, 1996
Interest rate: 9 3/8%
Interest payment dates: Semiannually on October 15 and
April 15, commencing October 15, 1996
PAGE
34
Maturity: April 15, 2006
Sinking fund provisions: None
Redemption provisions: Redeemable at the option of the
Company, in whole or in part, at any time on or after
April 15, 2001 at the purchase prices set forth in the Final
Prospectus
Bearer or registered: Registered book-entry form in
denominations of $1,000 and any integral multiple of $1,000
Other provisions: As set forth in the Prospectus
Supplement dated April 3, 1996
Date referred to in Section 4(f) after which the Company may
offer or sell debt securities issued or guaranteed by the
Company without the consent of the Representatives:
The earlier of the (i) Effective Date plus 30 days
or (ii) failure to consummate the transactions contemplated
by the Underwriting Agreement
PAGE
35
SCHEDULE II
Underwriter Principal amount of
Purchased Securities
Salomon Brothers Inc . . . . . . $100,000,000
Goldman, Sachs & Co. . . . . . . 50,000,000
NationsBanc Capital
Markets Inc. . . . . . . . . . 15,000,000
Smith Barney Inc. . . . . . . . 20,000,000
Toronto Dominion Securities
(USA) Inc. . . . . . . . . . . 15,000,000
Total . . . . . . . . . . . . . $200,000,000
PAGE
36
SCHEDULE III
* Intentionally Omitted *
SCHEDULE IV
Percentage Direct Or Jurisdiction
Indirect Ownership of
Subsidiary or General Partnership Type of Entity By Company Organization Cellular Licenses Owned
*Altoona CellTelCo General Partnership 100% DC Altoona, PA MSA
*Atlantic Cellular Telephone Corp. Corporation 100% NC Portland, ME MSA and
ME-4 RSA
*Binghamton Cellular Telephone Corp. Corporation 100% NC
*Binghamton CellTelCo General Partnership 100% DE Binghamton, NY, PA MSA
*Cellular Directory Corporation Corporation 100% NC
*Eastern North Carolina Cellular Joint Venture General Partnership 50% DE
**GTE Mobilnet of Jacksonville Incorporated Corporation 50% NC
**GTE Mobilnet of Jacksonville II Incorporated Corporation 47.34% NC Jacksonville, NC, MSA
**GTE Mobilnet of Wilmington Incorporated Corporation 50%
**GTE Mobilnet of Wilmington II Corporation 47.67% NC Wilmington, NC, MSA
*Harrisburg Cellular Telephone Company General Partnership 100% PA Harrisburg, PA MSA
**Jacksonville Cellular Partnership General Partnership 47.3% NC
*North Carolina Cellular Holding Corp. Corporation 100% NC
*Orange County Cellular Telephone Corp. Corporation 100% NC Orange County, NY MSA
*PA 10-East Partnership General Partnership 91.84% MD PA-10 East, RSA
*Pennsylvania Cellular Telephone Corp. Corporation 100% NC Allentown, PA/NJ;
Northeast Pennsylvania,
PA; Lancaster, PA;
York, PA; and Reading
PA MSAs and PA-5;
PA-11; PA-12; and PA-8
RSAs
*Piscataqua Cellular Telephone Corp. Corporation 100% NC Portsmouth, NH/ME MSA
*PLMRS Narrowband Corp. Corporation 100% NC
*State College CellTelCo General Partnership 96.99% DC State College, PA MSA
*Teleflex Information Systems, Inc. Corporation 100% NC
*Vanguard Binghamton, Inc. Corporation 100% DE Elmira, NY MSA
*Vanguard Cellular Corp. Corporation 100% NC
*Vanguard Cellular Financial Corp. Corporation 100% NC
*Vanguard Cellular Holding Corp. Corporation 100% DE
*Vanguard Cellular Operating Corp. Corporation 100% DE
*Vanguard Cellular Services, Inc. Corporation 100% DE
*Vanguard Cellular Systems of South Carolina, Inc. Corporation 100% NC SC-5 RSA
*Vanguard Communications, Inc. Corporation 100% DE
*Vanguard India, Inc. Corporation 100% DE
*Warren and Lewis, Ltd. Corporation 100% VA
*West Virginia Cellular Telephone Corp. Corporation 100% WV Charleston, WV and
Huntington, WV/OH/KY
MSAs and WV-1 East RSA
*Western Florida Cellular Telephone Corp. Corporation 100% NC Pensacola, FL and Fort
Walton Beach, FL MSAs
*Williamsport Cellular Telephone Company General Partnership 92.98% DE Williamsport, PA MSA
**Wilmington Cellular Partnership General Partnership 47.67% NC
*The capital stock and partnership interests of these corporate subsidiaries
and general partnerships, respectively, have been pledged as security for the
Company's obligations under the Credit Facility (as defined in the Final
Prospectus).
**The Company's interests in these subsidiaries and general partnerships are
owned directly or indirectly by Eastern North Carolina Cellular Joint Venture.