SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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Materials
[_] Soliciting Material Pursuant to Section
240.14a-11(c) or Section 240.14a-12
AIRGATE PCS, INC.
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[X] No fee required.
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[LOGO] Airgate PCS
AIRGATE PCS, INC.
233 Peachtree Street, N.E.
Harris Tower, Suite 1700
Atlanta, Georgia 30303
January 23, 2002
Dear AirGate Shareowner:
It is my pleasure to invite you to AirGate PCS, Inc.'s 2002 Annual Meeting
of Shareowners. This year's meeting will be held at The Westin Peachtree Plaza,
210 Peachtree Street, N.W., Atlanta, Georgia 30303 on Tuesday, February 26,
2002, at 1:00 p.m., Eastern Standard Time.
At this meeting, you will be asked to vote, in person or by proxy, to elect
three directors, approve a long-term incentive plan and to consider any other
business that may properly come before the meeting. Details regarding the
meeting and the business to be conducted are described in the accompanying
Notice of Annual Meeting and Proxy Statement.
Your vote is important. Whether or not you plan to attend the meeting, I
hope you will vote as soon as possible by indicating your votes, and signing,
dating and promptly returning the enclosed proxy card in the envelope provided.
Voting by written proxy will ensure your representation at the annual meeting
if you do not attend in person.
Thank you for your ongoing support of and continued interest in AirGate PCS.
Sincerely,
/s/ Thomas M. Dougherty
Thomas M. Dougherty
President and Chief Executive Officer
[LOGO] Airgate PCS
NOTICE OF ANNUAL MEETING OF SHAREOWNERS
DATE: Tuesday, February 26, 2002
PLACE: The Westin Peachtree Plaza
210 Peachtree Street, N.W.
Atlanta, Georgia 30303
ITEMS OF BUSINESS: 1. To elect three directors;
2. To approve a long-term incentive plan; and
3. To consider any other business that may properly come
before the
meeting.
RECORD DATE: You are entitled to receive this notice of annual
meeting and to vote at the annual meeting if you
were a shareowner at the close of business on
Wednesday, January 9, 2002.
VOTING BY PROXY: Please submit a proxy by mailing it in the enclosed
envelope as soon as possible so that your shares can
be voted at the annual meeting in accordance with
your instructions. For specific instructions, please
refer to the Questions and Answers beginning on page
1 of this proxy statement and the instructions on
the proxy card.
By Order of the Board of Directors,
/s/ Barbara L. Blackford
Barbara L. Blackford
Vice President, General Counsel and
Corporate Secretary
This notice of annual meeting and proxy statement and accompanying proxy card
are being distributed on or about January 25, 2002.
TABLE OF CONTENTS
Page
----
Questions and Answers................................................... 1
Proposal 1: Election of Directors...................................... 4
Meetings and Committees of the Board.................................... 6
Audit Committee Report.................................................. 7
Proposal 2: Approval of AirGate PCS, Inc. 2002 Long-Term Incentive Plan 8
Equity Compensation Plan Information.................................... 13
Executive Compensation.................................................. 14
Security Ownership of Certain Beneficial Owners, Directors and Officers. 23
Certain Related Transactions............................................ 25
Other Information....................................................... 26
Appendix A: AirGate PCS, Inc. 2002 Long-Term Incentive Plan............ A-1
QUESTIONS AND ANSWERS ABOUT THE PROXY INFORMATION AND THE ANNUAL MEETING
Why am I receiving these materials?
Our board of directors is providing these materials to you in connection
with our annual meeting of shareowners, which will take place on Tuesday,
February 26, 2002. SEC regulations require us to provide this proxy statement
when we ask you to sign a proxy card appointing proxies to vote on your behalf.
What proposals will be voted on at the meeting?
There are two proposals scheduled to be voted on at the meeting:
. the election of three directors, and
. the approval of a long-term incentive plan.
Who is entitled to vote?
All shareowners as of the close of business on the January 9, 2002, which we
refer to as the record date, will be entitled to vote in person or by proxy at
the meeting.
What shares may I vote?
You may vote all shares you owned as of the record date. These include (1)
shares owned directly in your name as shareowner of record, including shares
purchased through our employee stock purchase plan and (2) shares held for you
as the beneficial owner through a stockbroker or bank or shares purchased
through our 401(k) plan.
What is the difference between holding shares as a shareowner of record and as
a beneficial owner?
Most of our shareowners hold their shares through a stockbroker, bank or
other nominee rather than directly in their own name. As summarized below,
there are some differences between shares held of record and those beneficially
owned.
Shareowners of Record. If our shares are registered directly in your name
with our transfer agent, American Stock Transfer & Trust Company, you are
considered the shareowner of record with regard to those shares. As the
shareowner of record, you have the right to grant your proxy directly to us to
vote your shares on your behalf at the meeting or the right to vote in person
at the meeting. We have enclosed or sent a proxy card for you to use.
Beneficial Owner. If our shares are held in a stock brokerage account or by
a bank or other nominee, you are considered the beneficial owner of shares held
in street name, and these materials are being forwarded to you by your broker
or nominee, which is considered the shareowner of record with respect to those
shares. As the beneficial owner, you have the right to direct your broker or
nominee how to vote and are also invited to attend the annual meeting. However,
since you are not the shareowner of record, you may not vote these shares in
person at the meeting unless you obtain a signed proxy from the shareowner of
record giving you the right to vote the shares. Your broker or nominee has
enclosed or provided a voting instruction card for you to use to direct your
broker or nominee how to vote these shares.
How do I vote?
(1) By Mail--You may vote by mail by signing your proxy card and returning
it in the enclosed envelope, or for shares beneficially owned, by
signing the voting instruction card provided by your broker or
nominee and returning it as instructed by your broker or nominee. If you
provide specific voting instructions, your shares will be voted as you
instruct. If you sign your proxy card or voting instruction card, but do
not provide instructions, your shares will be voted as described below
in "How are votes counted?"
(2) In Person--If you are a shareowner of record, you may vote in person at
the meeting. Even if you currently plan to attend the annual meeting, we
recommend that you also submit your proxy by mail as described above so
that your vote will be counted if you later decide not to attend the
meeting. Shares beneficially owned may be voted in person only if you
obtain a signed proxy from the shareowner of record giving you the right
to vote the shares.
Can I change my vote?
You may change your proxy instructions at any time prior to the vote at the
annual meeting. For shares held directly in your name, you may accomplish this
by granting a new proxy bearing a later date (which automatically revokes the
earlier proxy) or by attending the annual meeting and voting in person.
Attending the meeting will not cause your previously granted proxy to be
revoked unless you specifically so request. For shares you beneficially own,
you may accomplish this by submitting new voting instructions to your broker or
nominee.
How are votes counted?
In the election of directors, you may vote "FOR" all of the nominees or your
vote may be "WITHHELD" with respect to one or more nominees. For the vote on
the long-term incentive plan, you may vote "FOR," "AGAINST" or "ABSTAIN." If
you "ABSTAIN," it has the same effect as a vote "AGAINST." If you are a
shareowner of record and you sign your proxy card with no further instructions,
your shares will be voted in accordance with the recommendations of our board
of directors (FOR all of the nominees to our board of directors and FOR the
approval of the long-term incentive plan.) If you are a beneficial owner and
you sign the voting instruction card sent to you by your broker with no further
instruction, your shares will be voted in the discretion of your broker with
respect to the election of directors but will not be voted with respect to the
approval of the long-term incentive plan.
What is the voting requirement to approve each of the proposals?
In the election of directors, the three persons receiving the highest number
of "FOR" votes will be elected. All other proposals require the affirmative
"FOR" votes of a majority of those shares present and entitled to vote. If you
are a beneficial owner and do not provide your shareowner of record with voting
instructions, your shares may constitute broker non-votes, as described below
under "What is the quorum requirement for the meeting?" In tabulating the
voting results for any particular proposal, shares that constitute broker
non-votes are not considered entitled to vote on that proposal.
What does it mean if I receive more than one proxy card?
It means your shares are registered differently or are in more than one
account. Please provide voting instructions for all proxy and voting
instruction cards you receive.
Who will count the votes?
Corporate Communications, Inc. will tabulate the votes and act as inspector
of elections.
Is my vote confidential?
Proxy instructions, ballots and voting tabulations that identify individual
shareowners are handled in a manner that protects your voting privacy. Your
vote will not be disclosed either within AirGate PCS or to third
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parties except (1) as necessary to meet applicable legal requirements, (2) to
allow for the tabulation of votes and certification of the vote or (3) to
facilitate a successful proxy solicitation by our board of directors.
Occasionally, shareowners provide comments on their proxy card, which are then
forwarded to AirGate management.
Where can I find the voting results of the meeting?
We will announce the preliminary voting results at the meeting and publish
final results in our quarterly report on 10-Q for the second quarter of fiscal
year 2002.
What happens if additional proposals are presented at the meeting?
Other than the two proposals described in this proxy statement, we do not
expect any matters to be presented for a vote at the annual meeting. If you
grant a proxy, the people named as proxy holders, Thomas D. Dougherty, our
President and Chief Executive Officer, and Barbara L. Blackford, our Vice
President, General Counsel and Secretary, will have the discretion to vote your
shares on any additional matters properly presented for a vote at the meeting.
If for any unforeseen reason any of our nominees is not available as a
candidate for director, the people named as proxy holders will vote your proxy
for such other candidate or candidates as may be nominated by our board of
directors.
What shares are entitled to be voted?
Each share of our common stock outstanding as of the close of business on
January 9, 2002, the record date, is entitled to one vote on all items being
voted on at the annual meeting. On the record date, we had approximately
25,761,543 shares of common stock issued and outstanding.
Do I have cumulative voting rights or dissenters' rights of appraisal?
You do not have the right to vote cumulatively in the election of directors
and, under Delaware law, you do not have dissenters' rights of appraisal in
connection with the matters to be voted upon at the meeting.
What is the quorum requirement for the meeting?
The quorum requirement for holding the meeting and transacting business is a
majority of the outstanding shares present in person or represented by proxy
and entitled to be voted. Both abstentions and broker non-votes are counted as
present for the purpose of determining the presence of a quorum. Abstentions
are also counted as shares present and entitled to be voted. Broker non-votes,
however, are not counted as shares present and entitled to be voted with
respect to the matter on which the broker has expressly not voted. Thus, broker
non-votes will not affect the outcome of any of the matters being voted on at
the meeting. Generally, broker non-votes occur when shares held by a broker for
a beneficial owned are not voted with respect to a particular proposal because
(1) the broker has not received voting instructions from the beneficial owner
and (2) the broker lacks discretionary voting power to vote such shares.
Who will bear the costs of soliciting votes for the meeting?
We are making the solicitation and will pay the entire cost of preparing,
assembling, printing, mailing and distributing these proxy materials. In
addition to mailing and distributing of these proxy materials, the solicitation
of proxies or votes may be made in person, by telephone or by electronic
communications by our directors, officers and employees, who will not receive
any additional compensation for such solicitation activities. We also have
hired Georgeson Stockholder Communications, Inc. to assist us in the
distribution of proxy materials and the solicitation of votes. We have paid
Georgeson Shareholder Communications, Inc. a fee of $7,500 plus expenses for
these services. We will also reimburse brokerage houses and other custodians,
nominees and fiduciaries for their reasonable out-of-pocket expenses for
forwarding proxy and solicitation materials to shareowners.
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May I propose actions for consideration at next year's annual meeting of
shareowners or nominate individuals to serve as directors?
You may submit proposals for consideration at future shareowners meetings,
including director nominations. For business to be considered at next year's
annual meeting, a shareowner must submit timely notice in writing to Barbara L.
Blackford, Corporate Secretary, 233 Peachtree St., N.E., Suite 1700,
Harris Tower, Atlanta, GA 30303. For shareowner proposals, such written notice
must be received by our Corporate Secretary before August 29, 2002.
Our by-laws, which are publicly available through our reports filed with the
SEC or which may be obtained from our corporate secretary upon request, state
the specific requirements that must be included in any notice of business to be
brought before the next annual meeting.
PROPOSAL 1: ELECTION OF DIRECTORS
We have a staggered board of directors with nine members. Currently there is
one vacancy. In connection with our acquisition of iPCS, Inc., certain of the
former shareowners of iPCS, Inc. have the right to designate one independent
director to our board of directors to fill that vacancy. As of the date of this
Proxy Statement, such shareowners have not yet designated the independent
director. Our board of directors is divided into three classes of directors, as
nearly equal in number as possible, with one class elected each year at the
annual meeting of shareowners.
The shareowners will elect three directors at the annual meeting. Each of
these director's terms lasts until the annual meeting in 2005 or until he is
succeeded by another qualified director. The board of directors has nominated
Bernard A. Bianchino, Thomas M. Dougherty and Timothy M. Yager for the three
director positions.
The board unanimously recommends you vote FOR the election of the three
nominees for director.
Nominees for Director
The following information is given with respect to the nominees for election
as directors at the annual meeting, as of December 20, 2001.
Nominees to serve three years until Annual Meeting in 2005
Bernard A. Bianchino, age 53, has served as one of our directors since May
2001. Mr. Bianchino has more than fourteen years of telecommunications
experience. Most recently, from January to May 2001, Mr. Bianchino served as
the Chief Executive Officer of OnFiber Communications, a privately held local
fiber access company. From October 1995 through December 2000, Mr. Bianchino
was employed by Sprint Corporation. During this period he served as the Chief
Business Development Officer of Sprint PCS from October 1995 through July 2000
and Chief Executive Officer of Pegaso PCS, a Mexican carrier in which Sprint
Corporation holds a minority interest, from July 2000 through December 2000.
Prior to that time, Mr. Bianchino served in a variety of telecommunications
industry and legal positions, including various legal positions with Sprint
Corporation culminating as Vice President Law-General Business, and a period as
Executive Vice President, General Counsel and External Affairs at Qwest
Communications. Prior to 1986, he served as an attorney with Exxon Corporation
and its affiliates and as an attorney with the U.S. Department of Energy and
its predecessors. Mr. Bianchino holds a B.A. (1970) and J.D. (1974) from
Washburn University.
Thomas M. Dougherty, age 57, has served as one of our directors since April
1999 and has been our president and chief executive officer since April 1999.
From March 1997 to April 1999, Mr. Dougherty was a senior executive of Sprint
PCS. From June 1996 to March 1997, Mr. Dougherty served as executive vice
4
president and chief operating officer of Chase Telecommunications, a personal
communications services company. Mr. Dougherty served as president and chief
operating officer of Cook Inlet BellSouth PCS, L.P., a start-up wireless
communications company, from November 1995 to June 1996. Prior to October 1995,
Mr. Dougherty was vice president and chief operating officer of BellSouth
Mobility DCS Corporation, a PCS company.
Timothy M. Yager, age 32, has served as one of our directors since November
30, 2001. Mr. Yager served as the President and Chief Executive Officer and a
director of iPCS, Inc. from its formation in early 1999 until resigning from
such positions at the effective time of iPCS' merger with AirGate. From January
1995 to January 1999, he was the Senior Vice President of Geneseo
Communications, Inc., an independent telephone company in Illinois. During this
time, he founded and was also the Chief Operating Officer, General Manager and
later the President of GenSoft Systems, Inc., a subsidiary of Geneseo
Communications, Inc., that designs software to provide information and billing
services to the telecommunications industry.
Incumbent Directors
The following information is provided with respect to the directors who are
not nominees for election as directors at the annual meeting.
Directors Serving until Annual Meeting in 2003
Michael S. Chae, age 33, has served as one of our directors since November
30, 2001. Mr. Chae served as a director of iPCS, Inc. from August 2000 until
resigning from such position at the effective time of iPCS' merger with
AirGate. Mr. Chae also serves as a Principal of the Principal Investment Group
of The Blackstone Group, L.P. Since joining Blackstone in 1997, Mr. Chae has
been responsible for the execution of many of Blackstone's principal
investments in the communications sector. Prior to joining Blackstone, Mr. Chae
worked at the Carlyle Group, L.P., a Washington, D.C. based private equity
investment firm and at Dillon, Reed & Co. Mr. Chae is a graduate of Harvard
College, Cambridge University and Yale Law School.
Sidney E. Harris, age 52, has served as one of our directors since May 2001.
Dr. Harris is the Dean of the J. Mack Robinson College of Business at Georgia
State University, and has held such position since 1997. From July 1987 to July
1997, Dr. Harris was Professor of Management at the Peter F. Drucker Graduate
School of Management at the Claremont Graduate School, and he was Dean of the
School of Management from September 1991 to July 1996. Dr. Harris is also a
director of Transamerica Investors, Inc., an investment management company,
TSYS, Inc., a credit/debit card processor, and ServiceMaster Company, a home
and institutional services company.
Barry J. Schiffman, age 56, has served as one of our directors and our
chairman since October 1998. Mr. Schiffman is the president and executive
managing director of JAFCO America Ventures, Inc., a venture capital firm, and
has held such position since 1996. From 1994 until he joined JAFCO, he was a
general partner at Weiss, Peck & Greer Venture Partners. Mr. Schiffman is also
a member of the board of directors of Lightspan.com, a publicly held
educational software company, and of several other private companies.
Directors Serving until Annual Meeting in 2004
John R. Dillon, age 60, has served as one of our directors since February
2000. Mr. Dillon retired from Cox Enterprises in December 1996. Prior to his
retirement, Mr. Dillon was responsible for all of Cox Enterprises' corporate
financial activities as well as planning and development. Mr. Dillon joined Cox
Communications in 1981 as its vice president and chief financial officer. Mr.
Dillon was instrumental in taking Cox Communications private in 1985 and
merging it with Cox Newspapers to form Cox Enterprises at which time he was
elected senior vice president, chief financial officer and a member of its
board of directors. Mr. Dillon initiated numerous telephony ventures and was
Cox Enterprises' founding board member of Sprint PCS. Mr. Dillon holds an M.B.A.
5
from Harvard Business School and a B.E.E. degree from Georgia Institute of
Technology. Mr. Dillon is also a director of Ciena Corp., a manufacturer of
optical networking equipment.
Robert A. Ferchat, age 67, has served as one of our directors since October
1999. From November 1994 to January 1999, Mr. Ferchat served as the chairman of
the board of directors, president and chief executive officer of BCE Mobile
Communications, a wireless telecommunications company. From January 1999 until
May 1999, Mr. Ferchat was chairman of BCE Mobile Communications. Mr. Ferchat is
also a director and non-executive chairman of GST Telecommunications and a
director of Brookfield Properties Corp., as well as two other companies that
are traded on the Toronto Exchange.
MEETINGS AND COMMITTEES OF THE BOARD
The board of directors held six meetings during the fiscal year ended
September 30, 2001. All of the directors attended at least 75% of the board
meetings held during the fiscal year. In addition, all of the directors
attended at least 75% of all meetings of the board of directors' committees on
which he served during the fiscal year, except Mr. Schiffman who attended less
than 75% of Audit Committee meetings as a result of unavoidable conflicts.
Committees of the Board of Directors
Our board of directors has three standing committees: the Audit Committee,
the Compensation Committee and the Nominating Committee.
Audit Committee. The Audit Committee is composed of three directors who are
independent within the meaning of Nasdaq listing standards and who are
otherwise qualified to serve on our Audit Committee under those standards.
These members are Messrs. Ferchat (Chair), Harris and Schiffman. The Audit
Committee provides oversight regarding our accounting, auditing and financial
reporting practices. The Audit Committee met five times during fiscal year
2001. Our board of directors has adopted an Audit Committee Charter, which we
have filed with the Securities and Exchange Commission.
Compensation Committee. The Compensation Committee consists of three
directors who we consider to be independent. These members are Messrs. Dillon
(Chair), Bianchino and Ferchat. The Compensation Committee's basic
responsibilities include approving the compensation strategy for our
executives, approving the compensation arrangements in effect for our
executives and administering our employee benefit and stock incentive plans.
The Compensation Committee met six times during fiscal year 2001.
Nominating Committee. Our Nominating Committee consists of Messrs.
Dougherty (Chair), Bianchino and Harris. The Nominating Committee is
responsible for considering and recommending nominees for directors to stand
for election at our annual meetings of shareowners. The Nominating Committee
did not meet in fiscal year 2001.
Directors' Compensation
On July 31, 2001, our board of directors approved the AirGate PCS, Inc. 2001
Non-Employee Director Compensation Plan. Pursuant to the plan, non-employee
directors receive an annual retainer, which may be comprised of cash,
restricted stock or options to purchase shares of our common stock. From May 1,
2001 to September 30, 2001, each of Messrs. Dillon, Ferchat and Schiffman
received $5,000 under the plan and each of Messrs. Bianchino and Harris
received approximately $4,200. For each plan year (defined as the starting on
the day of an annual meeting of our shareowners and ending on the day before
our next annual meeting) beginning in 2002, each non-employee director that
chairs one or more committees of our board of directors will receive an annual
retainer of $12,000 and all other non-employee directors shall receive $10,000.
The recipient may elect to receive 50% or more of such amount in the form of
restricted stock or options to purchase shares of our common stock.
6
In addition, each non-employee director that joins our board of directors
after May 1, 2001, shall receive an initial grant of options to acquire 5,000
shares of our common stock. The options will vest in three equal annual
installments beginning on the first day of the plan year following the year of
grant. Each participant will also receive an annual grant of options to acquire
5,000 shares of our common stock which shall vest on the first day of the plan
year following the year of grant. In lieu of this annual grant, the recipient
may elect to receive three year's worth of annual option grants in a single
upfront grant of options to acquire 15,000 shares of our common stock
exercisable in three equal annual installments on the first day of each of the
three succeeding plan years. All options will have an exercise price equal to
the fair market value of our common stock on the date of grant. We will also
reimburse each of the non-employee directors for reasonable travel expenses to
board and committee meetings.
AUDIT COMMITTEE REPORT
As mentioned above, the Audit Committee is composed of three directors who
are independent within the meaning of Nasdaq listing standards and who are
otherwise qualified to serve on the Audit Committee under those standards.
Our management is responsible for our internal controls and the financial
reporting process. Our independent accountants are responsible for performing
an independent audit of our consolidated financial statements in accordance
with generally accepted auditing standards and to issue a report thereon. As
described in more detail in the Audit Committee Charter, the Audit Committee's
responsibility is to monitor and oversee these processes. It is not the duty of
the Audit Committee to plan or conduct audits or to determine that our
financial statements are complete and accurate and are in accordance with
generally accepted accounting principles. These duties are the responsibility
of management and the independent auditors.
In this context, the Audit Committee has met and held discussions with
management and the independent accountants. In particular,
(1) The Audit Committee has reviewed and discussed our audited financial
statements for the fiscal year ended September 30, 2001 with management and
KPMG LLP, our independent auditors;
(2) The Audit Committee has discussed with KPMG LLP the matters required
to be discussed by Statement on Auditing Standards No. 61; and
(3) The Audit Committee received written disclosures and the letter from
KPMG LLP regarding their independence required by Independence Standards
Board Standard No. 1 and discussed with KPMG LLP their independence.
Based on such review and discussion, the Audit Committee recommended to our
board of directors that our audited financial statements for the year ended
September 30, 2001 be included in our Annual Report on 10-K.
The Audit Committee has considered whether the provision by KPMG LLP of
certain non-audit services is compatible with maintaining KPMG LLP's
independence and concluded that it is.
AirGate PCS, Inc. Audit Committee
Robert A. Ferchat, Chair
Sidney E. Harris
Barry J. Schiffman
7
PROPOSAL 2: APPROVAL OF LONG-TERM INCENTIVE PLAN
On December 18, 2001, our board of directors adopted, subject to shareowner
approval at the annual meeting, the AirGate PCS, Inc. 2002 Long-Term Incentive
Plan. The plan will become effective as of the date the plan is approved by our
shareowners.
We will reserve 1,500,000 shares of our common stock for issuance upon the
grant or exercise of awards pursuant to the plan. As of December 31, 2001,
there were approximately 875 employees, officers and directors eligible to
participate in the plan. We also maintain the AirGate PCS, Inc. 1999 Stock
Option Plan, the AirGate PCS, Inc. Amended and Restated 2000 Long-Term
Incentive Plan and the AirGate PCS, Inc. 2001 Non-Executive Stock Option Plan,
under which stock options and restricted stock awards with respect to an
aggregate of approximately 2,205,236 shares of our common stock were
outstanding as of December 31, 2001. If our shareowners approve the 2002
Long-Term Incentive Plan, we will not grant any additional awards under the
prior existing plans.
A summary of the plan is set forth below. The summary is qualified in its
entirety by reference to the full text of the plan, which is attached to this
proxy statement as Appendix A.
The board of directors recommends a vote FOR the approval of the long-term
incentive plan.
Summary of the Plan
Purpose. The purpose of the plan is to promote our success by linking the
personal interests of our employees, officers, directors and consultants to
those of our shareowners, and by providing participants with an incentive for
outstanding performance.
Permissible Awards. The plan authorizes the granting of awards in any of
the following forms:
. options to purchase shares of common stock,
. restricted stock,
. performance award payable in stock or cash, or
. other stock-based awards.
Limitations on Awards. No more than 20% of the shares authorized under the
plan may be granted as awards of restricted or unrestricted stock awards or
performance shares. Any awards of restricted stock and performance shares that
exceed 10% of the shares authorized under the plan will either be subject to a
minimum vesting period of three years, or one year if the vesting is based on
performance criteria other than continued employment, or be granted only in
exchange for foregone salary, bonus or director compensation. Any awards of
unrestricted stock that, together with awards of restricted stock or
performance shares, exceed 10% of the shares authorized under the plan, may be
granted only in exchange for foregone salary, bonus or director compensation.
The maximum number of shares of common stock with respect to one or more
options or other qualified performance-based awards that may be granted during
any one calendar year under the plan to any one person is 250,000. The maximum
fair market value of any cash-based performance units that may be received by a
participant (less any consideration paid by the participant for such award)
during any one calendar year under the plan is $1,500,000.
Administration. The plan is administered by the compensation committee of
our board of directors. The committee has the authority to designate
participants; determine the type or types of awards to be granted to each
participant and the number, terms and conditions thereof; establish, adopt or
revise any rules and regulations as it may deem advisable to administer the
plan; and make all other decisions and determinations that may be required
under the plan. The board of directors may at any time administer the plan. If
it does so, it will have all the powers of the committee.
Formula Grants to Non-Employee Directors. The plan provides for the grant
of non-qualified stock options and or restricted stock to our non-employee
directors according to the parameters established in the AirGate PCS, Inc. 2001
Non-Employee Director Compensation Plan, or any successor plan for the
compensation of non-employee directors. The committee cannot make other
discretionary grants to non-employee directors
8
under the plan. All grants under the 2001 Non-Employee Director Compensation
Plan will be issued under the authority of the plan.
Stock Options. The committee is authorized to grant incentive stock options
or non-qualified stock options under the plan. The terms of an incentive stock
option must meet the requirements of Section 422 of the Code. The exercise
price of an option may not be less than the fair market value of the underlying
stock on the date of grant and no option may have a term of more than 10 years.
The committee may grant options with a reload feature, which provides for the
automatic grant of a new option for the number of shares that the optionee
delivers as full or partial payment of the exercise price of the original
option. Such new option must have an exercise price equal to the fair market
value of the stock on the new grant date, would vest after six months and would
have a term equal to the unexpired term of the original option.
Restricted Stock Awards. The committee may make awards of restricted stock
to participants, which will be subject to such restrictions on transferability
and other restrictions as the committee may impose (including, without
limitation, limitations on the right to vote restricted stock or the right to
receive dividends, if any, on the restricted stock).
Performance Awards. The committee may grant performance awards that are
designated in cash (performance units) or in shares of common stock
(performance shares). The committee will have the complete discretion to
determine the number of performance awards granted to any participant and to
set performance goals and other terms or conditions to payment of the
performance awards in its discretion which, depending on the extent to which
they are met, will determine the number and value of performance awards that
will be paid to the participant.
Other Stock-Based Awards. The committee may, subject to limitations under
applicable law, grant to participants such other awards that are payable in,
valued in whole or in part by reference to, or otherwise based on or related to
shares of common stock as deemed by the committee to be consistent with the
purposes of the plan, including, without limitation, shares of common stock
awarded purely as a bonus and not subject to any restrictions or conditions,
convertible or exchangeable debt securities, other rights convertible or
exchangeable into shares of common stock, and awards valued by reference to
book value of shares of common stock or the value of securities of or the
performance of specified parents or subsidiaries. The committee will determine
the terms and conditions of any such awards.
Performance Goals. The committee may designate any award as a qualified
performance-based award in order to make the award fully deductible without
regard to the $1,000,000 deduction limit imposed by Code Section 162(m). If an
award is so designated, the committee must establish objectively determinable
performance goals for the award based on one or more of the following
performance criteria, which may be expressed in terms of company-wide
objectives or in terms of objectives that relate to the performance of a
division, affiliate, department, region or function within the company or an
affiliate:
. earnings per share,
. EBITDA (earnings before interest, depreciation, taxes and amortization),
. EBIT (earnings before interest and taxes),
. economic profit,
. cash flow,
. transaction counts,
. customer turnover,
. gross or net additional customers,
. cost per gross additional customers,
9
. customer satisfaction ratings,
. comparable sales growth,
. net profit before tax,
. gross profit,
. operating profit,
. cash generation,
. unit volume,
. return on equity,
. return on assets,
. changes in working capital,
. return on capital, or
. shareowner return.
The committee must establish such goals prior to the beginning of the period
for which such performance goal relates (or such later date as may be permitted
under applicable tax regulations) and the committee may not increase any award
or, except in the case of certain qualified terminations of employment, waive
the achievement of any specified goal. Any payment of an award granted with
performance goals will be conditioned on the written certification of the
committee in each case that the performance goals and any other material
conditions were satisfied.
Limitations on Transfer; Beneficiaries. No award will be assignable or
transferable by a participant other than by will or the laws of descent and
distribution or, except in the case of an incentive stock option, pursuant to a
qualified domestic relations order; provided, however, that the committee may
(but need not) permit other transfers where the committee concludes that such
transferability does not result in accelerated taxation, does not cause any
option intended to be an incentive stock option to fail to qualify as such, and
is otherwise appropriate and desirable, taking into account any factors deemed
relevant, including without limitation, any state or federal tax or securities
laws or regulations applicable to transferable awards. A participant may, in
the manner determined by the committee, designate a beneficiary to exercise the
rights of the participant and to receive any distribution with respect to any
award upon the participant's death.
Acceleration Upon Certain Events. Unless otherwise provided in an award
certificate, if a participant's employment is terminated without cause or the
participant resigns for good reason (as such terms are defined in the plan)
within two years after a change in control of the company (as defined in the
plan), all of such participant's outstanding options will become fully vested
and exercisable and all restrictions on his or her outstanding awards will
lapse. The committee may in its discretion at any time accelerate the vesting
of an award upon the death, disability, retirement or termination of service of
a participant, or the occurrence of a change of control. The committee may also
in its discretion accelerate the vesting of awards for any other reason, unless
the aggregate number of awards so accelerated exceeds 5% of the total number of
shares authorized under the plan. The committee may discriminate among
participants or among awards in exercising its discretion.
Adjustments. In the event of a stock split, a dividend payable in shares of
our common stock, or a combination or consolidation of our common stock into a
lesser number of shares, the share authorization limits under the plan will
automatically be adjusted proportionately, and the shares then subject to each
award will automatically be adjusted proportionately without any change in the
aggregate purchase price for such award. If we are involved in another
corporate transaction or event that affects our common stock, such as an
extraordinary cash dividend, recapitalization, reorganization, merger,
consolidation, split-up, spin-off, combination or exchange of shares, the share
authorization limits under the plan will be adjusted proportionately, and the
committee may adjust outstanding awards to preserve the benefits or potential
benefits of the awards.
10
Termination and Amendment
Our board of directors or the committee may, at any time and from time to
time, terminate or amend the plan without shareowner approval; but if an
amendment to the plan would, in the reasonable opinion of the board or the
committee, materially increase the benefits accruing to participants,
materially increase the number of shares of stock issuable under the plan, or
materially modify the requirements for eligibility, then such amendment will be
subject to shareowner approval. In addition, the board or the committee may
condition any amendment on the approval our shareowners for any other reason,
including necessity or advisability under tax, securities or other applicable
laws, policies or regulations. No termination or amendment of the plan may
adversely affect any award previously granted under the plan without the
written consent of the participant. The committee may amend or terminate
outstanding awards. However, such amendments may require the consent of the
participant and, unless approved by our shareowners or otherwise permitted by
the antidilution provisions of the plan, the exercise price of an outstanding
option may not be reduced, directly or indirectly, and the original term of an
option may not be extended.
Certain Federal Tax Effects
Nonqualified Stock Options. There will be no federal income tax
consequences to the optionee or to us upon the grant of a nonqualified stock
option under the plan. When the optionee exercises a nonqualified option,
however, he or she will realize ordinary income in an amount equal to the
excess of the fair market value of the common stock received upon exercise of
the option at the time of exercise over the exercise price, and we will be
allowed a corresponding deduction. Any gain that the optionee realizes when he
or she later sells or disposes of the option shares will be short-term or
long-term capital gain, depending on how long the shares were held.
Incentive Stock Options. There typically will be no federal income tax
consequences to the optionee or to us upon the grant or exercise of an
incentive stock option. If the optionee holds the option shares for the
required holding period of at least two years after the date the option was
granted or one year after exercise, the difference between the exercise price
and the amount realized upon sale or disposition of the option shares will be
long-term capital gain or loss, and we will not be entitled to a federal income
tax deduction. If the optionee disposes of the option shares in a sale,
exchange, or other disqualifying disposition before the required holding period
ends, he or she will realize taxable ordinary income in an amount equal to the
excess of the fair market value of the option shares at the time of exercise
over the exercise price, and we will be allowed a federal income tax deduction
equal to such amount. While the exercise of an incentive stock option does not
result in current taxable income, the excess of the fair market value of the
option shares at the time of exercise over the exercise price will be an item
of adjustment for purposes of determining the optionee's alternative minimum
taxable income.
Transfers of Options. The committee may, but is not required to, permit the
transfer of nonqualified stock options granted under the plan. Based on current
tax and securities regulations, such transfers, if permitted, are likely to be
limited to gifts to members of the optionee's immediate family or certain
entities controlled by the optionee or such family members. The following
paragraphs summarize the likely income, estate, and gift tax consequences to
the optionee, us, and any transferees, under present federal tax regulations,
upon the transfer and exercise of such options.
Federal Income Tax. There will be no federal income tax consequences to the
optionee, us, or the transferee upon the transfer of a nonqualified stock
option. However, the optionee will recognize ordinary income when the
transferee exercises the option, in an amount equal to the excess of the fair
market value of the option shares upon the exercise of such option over the
exercise price, and we will be allowed a corresponding deduction. The gain, if
any, realized upon the transferee's subsequent sale or disposition of the
option shares will constitute short-term or long-term capital gain to the
transferee, depending on the transferee's holding period. The transferee's
basis in the stock will be the fair market value of such stock at the time of
exercise of the option.
11
Federal Estate and Gift Tax. If an optionee transfers a nonqualified stock
option to a transferee during the optionee's life but before the option has
become exercisable, the optionee will not be treated as having made a completed
gift for federal gift tax purposes until the option becomes exercisable.
However, if the optionee transfers a fully exercisable option during the
optionee's life, he or she will be treated as having made a completed gift for
federal gift tax purposes at the time of the transfer. If the optionee
transfers an option to a transferee by reason of death, the option will be
included in the decedent's gross estate for federal estate tax purposes. The
value of such option for federal estate or gift tax purposes may be determined
using a "Black-Scholes" or other appropriate option pricing methodology, in
accordance with IRS requirements.
Restricted Stock. Unless a participant makes an election to accelerate
recognition of the income to the date of grant as described below, the
participant will not recognize income, and we will not be allowed a tax
deduction, at the time a restricted stock award is granted. When the
restrictions lapse, the participant will recognize ordinary income equal to the
fair market value of the common stock as of that date (less any amount he paid
for the stock), and we will be allowed a corresponding federal income tax
deduction at that time, subject to any applicable limitations under Code
(S)162(m). If the participant files an election under Code (S)83(b) within 30
days after the date of grant of the restricted stock, he or she will recognize
ordinary income as of the date of grant equal to the fair market value of the
stock as of that date (less any amount paid for the stock), and we will be
allowed a corresponding federal income tax deduction at that time, subject to
any applicable limitations under Code (S)162(m). Any future appreciation in the
stock will be taxable to the participant at capital gains rates. However, if
the stock is later forfeited, the participant will not be able to recover the
tax previously paid pursuant to the Code (S)83(b) election.
Performance Awards. A participant generally will not recognize income, and
we will not be allowed a tax deduction, at the time performance awards are
granted, so long as the awards are subject to a substantial risk of forfeiture.
When the participant receives or has the right to receive payment of cash or
shares under the performance award, the cash amount of the fair market value of
the shares of stock will be ordinary income to the participant, and we will be
allowed a corresponding federal income tax deduction at that time, subject to
any applicable limitations under Code (S)162(m).
Benefits to Named Executive Officers and Others
As of December 31, 2001, no awards had been granted under the plan. As of
such date, options with respect to an aggregate of 61,250 shares of our common
stock had been approved for grant to non-employee directors pursuant to the
terms of our 2001 Non-Employee Director Compensation Plan and will be granted
on the date of the annual meeting. If Proposal 2 is approved at the annual
meeting, the shares of stock subject to those grants will be issued under the
2002 Long-Term Incentive Plan. Any future awards will be made at the discretion
of the committee, other than grants of options or restricted stock to
non-employee directors pursuant to the terms of the 2001 Non-Employees Director
Compensation Plan. Therefore, it is not presently possible to determine the
benefits or amounts that will be received by any individuals or groups pursuant
to the plan in the future.
12
EQUITY COMPENSATION PLAN INFORMATION
The following table gives information about our common stock that may be
issued upon the exercise of options, warrants and rights under all of our
existing equity compensation plans as of December 31, 2001, including the
AirGate PCS, Inc. 1999 Stock Option Plan, the AirGate PCS, Inc. Amended and
Restated 2000 Long-Term Incentive Plan and the AirGate PCS, Inc. 2001
Non-Executive Stock Option Plan, but excluding the AirGate PCS, Inc. 2001
Employee Stock Purchase Plan. Grants made under the AirGate PCS, Inc. 2001
Non-Employee Director Compensation Plan are issued under either the AirGate
PCS, Inc. 1999 Stock Option Plan or the AirGate PCS, Inc. Amended and Restated
2000 Long-Term Incentive Plan and thus are not separately stated in the table.
The table does not include information about the proposed AirGate PCS, Inc.
2002 Long-Term Incentive Plan, which is not yet in effect.
(c) Number of Securities
Remaining Available
(a) Number of for Future Issuance
Securities to be Issued (b) Weighted Average Under Equity
Upon Exercise of Exercise Price of Compensation Plans (d) Total of Securities
Outstanding Options, Outstanding Options, (Excluding Securities Reflected in
Plan Category Warrants and Rights Warrants and Rights Reflected in Column (a)) Columns (a) and (c)
------------- ----------------------- -------------------- ------------------------ -----------------------
Equity Compensation
Plans Approved by
Shareowners.......... 1,419,608(1) $37.59 11,204(4) 1,430,812
676,028(2) $37.24 427,992(4) 1,104,020
Equity Compensation
Plans Not Approved by
Shareowners.......... 109,600(3) $45.52 40,400(4) 150,000
--------------------- --------- ------- ---------
TOTAL............... 2,205,236 479,596 2,684,832
========= ======= =========
--------
(1) Issued under the AirGate PCS, Inc. 1999 Stock Option Plan.
(2) Issued under the AirGate PCS, Inc. Amended and Restated 2000 Long-Term
Incentive Plan.
(3) Issued under the AirGate PCS, Inc. 2001 Non-Executive Stock Option Plan.
(4) Amount remaining available for issuance will be zero if our shareowners
approve the AirGate PCS, Inc. 2002 Long-Term Incentive Plan.
AirGate PCS, Inc. 2001 Non-Executive Stock Option Plan
On January 31, 2001, our board of directors approved the AirGate PCS, Inc.
2001 Non-Executive Stock Option Plan, pursuant to which non-qualified stock
options may be granted to our employees who are not officers or directors. This
plan has not been submitted to our shareowners for approval. As of December 31,
2001, options to acquire 109,600 shares were outstanding under this plan, out
of the 150,000 shares originally reserved for issuance. If the shareowners
approve the 2002 Long-Term Incentive Plan, no further grants will be made under
the 2001 Non-Executive Stock Option Plan.
The purpose of the plan is to promote our success by linking the personal
interests of our non-executive employees to those of our shareowners and by
providing participants with an incentive for outstanding performance. The plan
authorizes the granting of non-qualified stock options only. The exercise price
of an option may not be less than the fair market value of the underlying stock
on the date of grant and no option may have a term of more than ten years. All
of the options that are currently outstanding under the plan vest ratably over
a four-year period beginning at the grant date and expire ten years from the
date of grant. The board of directors or the compensation committee may amend
or terminate the plan without shareowner approval, but no amendment or
termination of the plan or any award agreement may adversely affect any award
previously granted under the plan without the written consent of the
participant.
13
EXECUTIVE COMPENSATION
Compensation Committee Report
Compensation Committee Responsibilities
The Compensation Committee's basic responsibilities include: (1) encouraging
the achievement of our performance goals by providing compensation that
directly relates to the performance of individual and corporate objectives; (2)
establishing compensation policies and guidelines that will attract and retain
qualified personnel through an overall level of compensation opportunity that
is competitive; and (3) promoting a direct relationship between compensation
and company performance through stock option and other equity participation.
In particular, the Compensation Committee reviews and recommends to the
board of directors our executive compensation strategy; reviews and recommends
to the board of directors compensation for the chief executive officer and
other senior executives; and administers stock option and other compensation
and benefit plans.
Compensation Philosophy
We operate in the extremely competitive and rapidly changing
telecommunications industry. The Compensation Committee believes that
compensation programs for executive officers should be designed to attract,
motivate and retain talented executives responsible for the success of the
company and should be determined within a competitive framework and based on
the achievement of designated financial and other performance targets,
individual contributions and financial and other performance relative to that
of its competitors. We have a "pay for performance" philosophy which rewards
executives for long-term strategic management and enhancement of shareowner
value. Within this overall philosophy, the Committee's objectives are to:
. Offer a total compensation program that is competitive, taking into
consideration the compensation practices of other companies.
. Provide annual incentive compensation awards that take into account our
overall performance against corporate objectives, as well as individual
contributions.
. Align the financial interests of executive officers with those of
shareowners by providing significant equity-based, long-term incentives.
Compensation Components and Process
Our compensation program for executives consists of three key elements: (1)
base salary, (2) performance based annual incentive awards and (3) long term,
equity-based incentive awards.
The Compensation Committee determines these three key elements for
executives with the assistance of our human resources staff and an independent
consulting firm.
Base Salary. The base salary for each executive is determined at levels for
comparable positions at other companies. Our policy is to target base salaries
at the 50th percentile of market compensation practices.
Annual Incentive Awards. To reinforce the attainment of our goals, the
Compensation Committee believes that a substantial portion of the annual
compensation of each executive should be in the form of variable incentive pay
with the target of providing such incentives at the 60th percentile of market
compensation practices. For fiscal year 2001, the Compensation Committee
established performance targets for our revenues and expenses at the beginning
of the fiscal year. We exceeded these performance targets. Awards paid to
executives reflected those results, plus individual accomplishments of both
corporate and functional objectives.
14
Long-Term, Equity-Based Incentive Awards. The goal of our long-term,
equity-based incentive awards is to align the interests of executives with
shareowners and to provide each executive with a significant incentive to
manage the company from the perspective of an owner with an equity stake in the
business.
The Compensation Committee makes annual awards of long-term, equity-based
incentives. The Compensation Committee will determine the size of these awards
with the target of providing such incentives at the 75th percentile of market
compensation practices. Each grant allows an executive to acquire shares of our
common stock at a fixed price per share over a specified period of time. These
grants generally vest over a four-year period, 25% per year.
CEO Compensation
The annual base salary for Mr. Dougherty was established by the Compensation
Committee. The Committee's decision was based on both Mr. Dougherty's personal
performance of his duties and the salary levels paid to chief executive
officers of other comparable companies. The Compensation Committee continues to
assess the market data for chief executive officers of other comparable
companies to ensure that Mr. Dougherty's compensation is consistent with our
stated compensation objectives.
On May 4, 2000, we entered into a retention bonus agreement with Mr.
Dougherty. Unless Mr. Dougherty voluntarily terminates employment or is
terminated for cause, he is entitled to periodic retention bonuses totaling
$3.6 million, payable on specified payment dates from April 15, 2000 to January
15, 2004, which are generally quarterly. Under the terms of the retention bonus
agreement, 50% of unpaid retention bonus payments would be accelerated upon a
change of control of the company.
Payments under the retention bonus agreement are not a part of, or
considered in, the variable annual incentive program awards. Mr. Dougherty's
2001 fiscal year incentive compensation was based on the performance of the
company in exceeding its performance targets. Mr. Dougherty's incentive
compensation was based on the same company targets used for all executive
officers and provided no dollar guarantees. During fiscal year 2001, Mr.
Dougherty also received a stock option grant in the amount of 41,408 shares at
a price of $36.75.
Compliance with Internal Revenue Code Section 162(m)
Section 162(m) of the Internal Revenue Code limits AirGate's ability to
deduct annual compensation in excess of $1 million paid to any of our top
executive officers. This limitation generally does not apply to compensation
based on performance goals if certain requirements are met. Stock option grants
under our long-term incentive plans have been designed so that any compensation
deemed to be paid in connection with the exercise of option grants will qualify
as performance-based compensation which is not subject to the $1 million
deduction limitation. However, amounts paid under Mr. Dougherty's retention
bonus agreement are subject to the Section 162(m) limitation on deductibility.
It is the Committee's intent to maximize the deductibility of executive
compensation while retaining the discretion necessary to compensate executive
officers in a manner commensurate with performance and the competitive market
of executive talent.
Submitted by the Compensation Committee
John R. Dillon, Chair
Bernard A. Bianchino
Robert A. Ferchat
15
Our Executive Officers
The following table presents information with respect to our executive
officers:
Name Age Position
---- --- --------
Thomas M. Dougherty. 57 President and Chief Executive Officer and Director
J. Mark Allen....... 42 Vice President of Marketing
Barbara L. Blackford 45 Vice President, General Counsel and Secretary
Alan B. Catherall... 48 Chief Financial Officer
Charles S. Goldfarb. 37 Vice President of Sales, Coastal Region
Jonathan M. Pfohl... 35 Vice President, Sales Operations
Dennis K. Rabon..... 32 Vice President of Sales, Interior Region
David C. Roberts.... 39 Vice President of Engineering and Network Operations
Thomas M. Dougherty has been our president and chief executive officer since
April 1999. From March 1997 to April 1999, Mr. Dougherty was a senior executive
of Sprint PCS. From June 1996 to March 1997, Mr. Dougherty served as executive
vice president and chief operating officer of Chase Telecommunications, a
personal communications services company. Mr. Dougherty served as president and
chief operating officer of Cook Inlet BellSouth PCS, L.P., a start-up wireless
communications company, from November 1995 to June 1996. Prior to October 1995,
Mr. Dougherty was vice president and chief operating officer of BellSouth
Mobility DCS Corporation, a PCS company.
J. Mark Allen has been our vice president of marketing since June 2000. From
January 2000 to June 2000, Mr. Allen served as vice president of marketing with
RetailExchange.com in Boston. From July 1999 to January 2000, Mr. Allen served
as a management consultant to several internet start-up companies. During the
previous five years, Mr. Allen was vice president of marketing for Conxus
Communications a wireless email and voice mail start-up supported by Motorola,
Inc. and was responsible for a number of marketing leadership roles in the
launch of the first PCS service in the nation under the Sprint Spectrum brand
with Sprint PCS (American Personal Communications). Prior to that, Mr. Allen
held several management positions at SkyTel in marketing, international
operations and customer management. Mr. Allen has over 15 years of marketing
and operations management experience.
Barbara L. Blackford has been our vice president, general counsel and
secretary since September 2000. From October 1997 to September 2000, Ms.
Blackford was associate general counsel and secretary with Monsanto Company,
serving in a variety of roles, including head of the corporate and mergers and
acquisitions law groups and general counsel of Cereon Genomics. Prior to
joining Monsanto Company, Ms. Blackford was a partner with the private law firm
Long, Aldridge & Norman in Atlanta, Georgia. Ms. Blackford spent twelve years
with the law firm Kutak Rock, which is consistently ranked among the top ten
public finance firms nationally.
Alan B. Catherall has been our chief financial officer since March 1998.
From April 1996 to present, Mr. Catherall has served as a partner in Tatum CFO
Partners, a financial consulting firm. From August 1994 to April 1996, Mr.
Catherall was chief financial officer of Syncordia Services, a joint venture of
MCI and British Telecom that provides telecom outsourcing services.
Charles S. Goldfarb has been our vice president of sales, coastal region,
since January 2000. From September 1991 to January 2000, Mr. Goldfarb worked at
Paging Network Inc., most recently as its area vice president and general
manager for the Virginia, North Carolina and South Carolina region. Mr.
Goldfarb has over 10 years of wireless experience and has been successful in
numerous start-up markets. Prior to his wireless experience, Mr. Goldfarb
worked at ITT Financial Services as its assistant vice president of operations
in the Washington DC area.
Jonathan M. Pfohl has been our vice president, sales operations, since
January 2001. Mr. Pfohl joined us in June 1999 as our vice president, financial
operations. Prior to joining AirGate, Mr. Pfohl was responsible for
16
oversight of regional financial and planning activities at Sprint PCS. He has
over 10 years of wireless telecommunications industry experience, including
financial and strategic planning roles at Frontier Corporation.
Dennis K. Rabon has been our vice president of sales, interior region, since
September 2000. Mr. Rabon joined us in October 1999 as market manager for the
Columbia, South Carolina market. From July 1999 to September 1999, Mr. Rabon
was a general sales manager for PageNet in Atlanta, Georgia. From December 1996
to July 1999, Mr. Rabon worked for Bandag Inc. initially as a sales development
manager and most recently as a fleet sales manager. From August 1995 to
December 1996, Mr. Rabon was a territory manager at Michelin Tire Corporation
in Greenville, South Carolina. Mr. Rabon has ten years of management experience.
David C. Roberts has been our vice president of engineering and network
operations since July 1998. From July 1995 to July 1998, Mr. Roberts served as
director of engineering for AirLink II LLC, an affiliate of our predecessor
company.
17
Summary Compensation Table
The following table shows the cash compensation paid by us, as well as
certain other compensation paid or accrued, to the chief executive officer and
our four other highest paid executive officers who received compensation in
excess of $100,000 ("Named Executive Officers") for the fiscal years ended
September 30, 2001, 2000 and 1999.
SUMMARY COMPENSATION TABLE
Long Term
Compensation
Awards
------------
Securities
Underlying
Options/
Year Salary ($) Bonus ($) SARs(#)
---- ---------- ---------- ------------
Thomas M. Dougherty.................................. 2001 $272,789 $1,020,000(1) 41,408
President and Chief Executive Officer 2000 231,250 1,432,125(1) --
1999 82,500 71,875(2) 310,000(2)
Barbara L. Blackford................................. 2001 201,126 148,500 46,056
Vice President, General Counsel and Secretary 2000 3,912 -- 90,000
1999 -- -- --
Alan B. Catherall.................................... 2001 186,509 142,500 13,944
Chief Financial Officer 2000 160,750 105,866 --
1999 81,875 75,000 90,000
Jonathan M. Pfohl.................................... 2001 164,769 123,600 49,225
Vice President, Sales Operations 2000 115,773 94,080 --
1999 19,440 25,000 30,000
David C. Roberts..................................... 2001 179,231 135,000 13,521
Vice President of Engineering and Network Operations 2000 154,250 103,819 --
1999 118,220 24,325 75,000
--------
(1) For fiscal year 2001, includes a $300,000 performance-based annual
incentive award and $720,000 earned under a retention bonus agreement. For
fiscal year 2000, includes a $202,125 performance-based annual incentive
award and $1,230,000 earned under a retention bonus agreement, $900,000 of
which was paid during fiscal 2000 and $330,000 of which was paid during
fiscal 2001.
(2) Mr. Dougherty's bonus for the fiscal year ended September 30, 1999,
consisted of a cash bonus of $71,875 and options to acquire 10,000 shares
of common stock. The exercise price was equal to the market value of the
common stock on October 21, 1999, and the options were immediately
exercisable.
18
Employment Agreements
We have entered into an employment agreement with Thomas M. Dougherty, our
chief executive officer. Mr. Dougherty's employment agreement is for a five-
year term ending April 15, 2004. Mr. Dougherty is eligible under his employment
agreement to receive an annual bonus of at least 50% of his base salary. Mr.
Dougherty's base salary was set at $275,000 by the compensation committee of
our board of directors. Under his employment agreement, Mr. Dougherty has a
minimum guaranteed annual increase in his base salary of at least $20,000.
Mr. Dougherty may participate in any executive benefit/perquisite we establish
at a minimum aggregate payment of $15,000 per year. Pursuant to his employment
agreement, Mr. Dougherty initially was awarded a stock option exercisable for
300,000 shares of common stock. Under the agreement, the initial stock option
vested with respect to 25% of the underlying shares of common stock on the date
Mr. Dougherty commenced his employment with us, April 15, 1999, and such vested
options became exercisable on April 15, 2000. The remaining 75% of the shares
of common stock subject to the initial stock option vest in 15 equal quarterly
installments beginning June 30, 2000. Upon a change in control, Mr. Dougherty's
options will become vested with respect to 50% of the underlying shares of
common stock that remain unvested at the time of the change in control. The
exercise price of the initial stock option granted to Mr. Dougherty is $14.00
per share. In addition, Mr. Dougherty is eligible to participate in all
employee benefit plans and policies.
The employment agreement provides that Mr. Dougherty's employment may be
terminated with or without cause, as defined in the agreement, at any time upon
four weeks prior written notice. If Mr. Dougherty is terminated without cause,
he is entitled to receive (1) six months' base salary, plus one month's salary
for each year employed, (2) all stock options vested on the date of termination
and (3) six months of health and dental benefits. In the event of Mr.
Dougherty's death, Mr. Dougherty's legal representative is entitled to twelve
months' base pay, plus a bonus of 20% of base pay. Under the employment
agreement, Mr. Dougherty agreed to a restriction on his present and future
employment. Mr. Dougherty agreed not to (1) disclose confidential information
or trade secrets during employment with us and for two years after termination,
(2) compete in the business of wireless telecommunications services either
directly or indirectly in our territory during his employment and for a period
of 18 months after his employment is terminated and (3) solicit our employees
to terminate their employment with us or solicit certain of our customers to
purchase competing products during his employment with us and for a period of
18 months after termination of his employment.
On May 4, 2000, we entered into a retention bonus agreement with Mr.
Dougherty. Unless Mr. Dougherty voluntarily terminates employment or is
terminated for cause, he is entitled to periodic retention bonuses totaling
$3.6 million, payable on specified payment dates from April 15, 2000 to January
15, 2004, which are generally paid quarterly. In fiscal year 2001, Mr.
Dougherty earned $720,000 under this agreement. Under the terms of the
retention bonus agreement, 50% of unpaid retention bonus payments would be
accelerated upon a change of control of the company.
We have also entered into an employment agreement with Barbara L. Blackford,
our Vice President, General Counsel and Secretary. Ms. Blackford is eligible
under her employment agreement to receive an annual bonus based upon our
incentive plans and policies, but at a target of not less than 35% of the then
current base pay. Ms. Blackford may participate in any executive
benefit/perquisite program we establish on the same terms as other executives,
at a minimum aggregate benefit of $10,000 per year. Ms. Blackford's base salary
pursuant to the agreement is currently $198,000 per year. Such amount is
subject to review for an increase at least annually. Pursuant to her employment
agreement, Ms. Blackford initially was awarded a stock option exercisable for
90,000 shares of our common stock, which option became vested with respect to
25% of the underlying shares of common stock at the end of Ms. Blackford's
first year with us and the remainder of the shares vest in 5% increments for
each three month period after the initial year that she remains employed by us.
If, however, Ms. Blackford's employment is actually or constructively
terminated upon a change of control of us, the initial stock option will vest
with respect to 50% of the underlying shares of common stock that remain
unvested at the time of the change in control, and additional vesting may occur
as provided in the agreement. The exercise price of the initial stock option
granted to Ms. Blackford is $66.94 per share. In addition, Ms. Blackford is
eligible to participate in all employee benefit plans and policies.
19
The employment agreement provides that Ms. Blackford's employment may be
terminated with or without cause, as defined in the agreement, at any time upon
four weeks prior written notice. If Ms. Blackford is terminated without cause,
she is entitled to receive six months' base salary, plus one month's salary for
each year employed by us. Under the employment agreement, Ms. Blackford agreed,
during her employment with us and for a period of two years after the
termination of her employment, not to (1) disclose confidential information or
trade secrets, (2) solicit certain of our employees to terminate their
employment with us or (3) solicit certain of our customers to purchase
competing products during her employment with us and for a period of two years
after the termination of her employment. Ms. Blackford's agreement further
provides that if we enter into an agreement with any member of our senior
management other than our chief executive officer which agreement contains
change of control provisions more favorable than those given to Ms. Blackford
pursuant to her agreement, then such provisions (other than with respect to
salary, bonus, and other dollar amounts) will be made available to Ms.
Blackford.
Finally, we have also entered into an employment agreement with David C.
Roberts, our Vice President of Engineering and Network Operations. Mr. Roberts
is eligible under his employment agreement to receive an annual bonus based
upon our incentive plans and policies but at a target of not less than 35% of
his then current base salary. Mr. Roberts may participate in any executive
benefit/perquisite program that we establish for a minimum aggregate benefit
equal to $10,000 per year. Mr. Roberts' base salary pursuant to the agreement
is $180,000 per year. Such amount shall be adjusted annually to increase it by
the greater of the consumer price index for all urban consumers, U.S. City
Average, All Items or 5%. Pursuant to his employment agreement, Mr. Roberts
initially was awarded a stock option exercisable for 75,000 shares of our
common stock, which option became vested with respect to 25% of the underlying
shares of common stock after the first two years Mr. Roberts was employed by us
and the remainder of the underlying shares vest in 6 1/4% quarterly increments
thereafter. The exercise price of the initial stock option granted to Mr.
Roberts is $14.00 per share. In addition, Mr. Roberts is eligible to
participate in all employee benefit plans and policies.
Mr. Roberts' employment may be terminated with or without cause at any time
by us or Mr. Roberts upon four weeks prior written notice, except that if
termination is for cause, no notice by us is required. If we terminate Mr.
Roberts' employment without cause, he is entitled to receive (1) six months
base salary and (2) six months of health, disability, life and dental benefits.
Any unvested options granted to Mr. Roberts fully vest and become exercisable
upon Mr. Roberts' involuntary termination other than for cause. Cause is
limited to breach of the noncompete obligations described below. In the event
of Mr. Roberts' death, Mr. Roberts' legal representative is entitled to twelve
months' base pay, plus a bonus of 20% of base pay.
Under the employment agreement, Mr. Roberts agreed to a restriction on his
present and future employment. Mr. Roberts agreed not to (1) disclose
confidential information or trade secrets during employment with us and for two
years after termination, (2) compete in the business of wireless
telecommunications either directly or indirectly in our territory during his
employment and for a period of 18 months after his employment is terminated and
(3) solicit our employees to terminate their employment with us or solicit
certain of our customers to purchase competing products during his employment
with us and for a period of 18 months after termination of his employment.
20
Option/SAR Grants During the Last Fiscal Year
The following table sets forth information regarding option grants during
the last fiscal year.
Option/SAR Grants in Last Fiscal Year
Potential realized Value at
Assumed Annual Rates of
Number of % of Stock Price Appreciation for
Securities Total Option Term (10 Years)
Underlying Options Exercise Expiration ----------------------------
Name Options Granted Price Date 5% 10%
---- ---------- ------- -------- ---------- ---------- ----------
Thomas M. Dougherty. 41,408 10.4% $36.75 11/2010 $ 957,017 $2,425,268
Barbara L. Blackford 46,056 11.6% $36.75 11/2010 $1,064,441 $2,697,502
Alan B. Catherall... 13,944 3.5% $36.75 11/2010 $ 322,272 $ 816,701
Jonathan M. Pfohl... 4,225 1.1% $36.75 11/2010 $ 97,648 $ 247,458
Jonathan M. Pfohl... 45,000 11.3% $46.88 1/2011 $1,326,716 $3,362,159
David C. Roberts.... 13,521 3.4% $36.75 11/2010 $ 312,496 $ 791,925
------- ----
164,154 41.3%
Aggregated Option Exercises in Last Fiscal Year and FY-End Option Value Table
The following table sets forth information concerning the value as of
September 30, 2001 of options held by the Named Executive Officers.
Aggregated Option Exercises in Last Fiscal Year
Number of Securities
Underlying
Unexercised Value of Unexercised
Options at Fiscal In-the-money Options at
Year-End Fiscal Year-End
-------------------- -----------------------
Shares Acquired Value (exercisable/ (exercisable/
Name on Exercise Realized(1) unexercisable) unexercisable)(2)
---- --------------- ----------- -------------------- -----------------------
Thomas M. Dougherty. 107,143 $3,475,242 45,714/191,408 $1,094,370/$4,880,599
Barbara L. Blackford -- $ -- 22,500/113,556 $ --/$353,250
Alan B. Catherall... 7,142 $ 288,894 33,358/63,444 $1,014,750/$1,612,740
Jonathan M. Pfohl... 10,000 $ 359,680 3,500/65,725 $ 106,470/$534,336
David C. Roberts.... 30,356 $ 990,672 1/51,021 $ 30/$1,244,456
--------
(1) Based upon the market price of the purchased shares on the exercise date
less the option exercise price paid for such shares.
(2) The values of the unexercised in-the-money options were calculated by
multiplying the number of shares of common stock underlying the options by
the difference between $44.42, which was the closing market price of our
common stock on September 30, 2001, and the option exercise price.
21
Stock Performance Graph
The chart below compares the cumulative total shareowner return on our
common stock with the cumulative total return on the Nasdaq Stock Market (U.S.)
and the Nasdaq Telecommunications Index for the period commencing September 28,
1999 (the first day of trading of our common stock after our initial public
offering) and ending September 30, 2001, assuming an investment of $100 and the
reinvestment of any dividends.
The base price for our common stock is the initial public offering price of
$17.00 per share. The comparisons in the graph below are based upon historical
data and are not indicative of, nor intended to forecast, future performance of
the common stock.
[GRAPH APPEARS HERE]
Cumulative Total Return
-------------------------------
9/28/99 9/99 9/00 9/01
Name of Company ------- ------- ------- -------
AirGate PCS, Inc.......... $100.00 $ 92.77 $167.37 $165.67
NASDAQ Stock Market (U.S.) $100.00 $ 99.58 $132.21 $ 54.04
NASDAQ Telecommunication.. $100.00 $100.14 $ 98.15 $ 37.97
22
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS,
DIRECTOR AND OFFICERS
On December 20, 2001, there were 25,759,154 shares of our common stock
outstanding. The following table presents certain information regarding the
beneficial ownership of our common stock, as of December 20, 2001 with respect
to:
. each person who, to our knowledge, is the beneficial owner of 5% or more
of our outstanding common stock;
. each of our directors;
. each of the Named Executive Officers; and
. all of our executive officers and directors as a group.
Unless otherwise indicated, the business address of each person is AirGate
PCS, Inc., 233 Peachtree Street, N.E., Harris Tower, Suite 1700, Atlanta,
Georgia 30303.
Percentage
Number of of
Shares Outstanding
Beneficially Common
Name of Beneficial Owner(1) Owned(2) Stock
--------------------------- ------------ -----------
Bernard A. Bianchino............................................ 5,000 *
Barbara A. Blackford(3)......................................... 38,628 *
Alan B. Catherall(4)............................................ 54,276 *
Michael S. Chae(5).............................................. 2,390 *
John R. Dillon(6)............................................... 8,500 *
Thomas M. Dougherty(7).......................................... 101,509 *
Robert A. Ferchat............................................... 5,000 *
Sidney E. Harris................................................ 0 *
Jonathan M. Pfohl(8)............................................ 19,885 *
David C. Roberts(9)............................................. 64,525 *
Barry Schiffman(10)............................................. 11,803 *
Timothy M. Yager (11)........................................... 234,130 *
Franklin Resources, Inc.(12).................................... 1,336,000 5.2 %
Geneseo Communications, Inc.(13)................................ 2,115,253 8.2 %
Cambridge Telcom, Inc.(13)...................................... 1,863,074 7.2 %
The Blackstone Group (14)....................................... 2,578,379 10.0 %
All executive officers and directors as a group (15 persons)(15) 644,976 2.5 %
--------
* Less than one percent.
(1) Except as indicated, the address for each executive officer and director is
233 Peachtree Street, N.E., Harris Tower, Suite 1700, Atlanta, Georgia
30303.
(2) Beneficial ownership is determined in accordance with Rule 13d-3 of the
Securities Exchange Act. A person is deemed to be the beneficial owner of
shares of common stock if such person has or shares voting or investment
power with respect to such common stock, or has the right to acquire
beneficial ownership at any time within 60 days of the date of the table.
As used herein, "voting power" is the power to vote or direct the voting of
shares and "investment power" is the power to dispose or direct the
disposition of shares.
(3) Includes 38,514 shares of common stock subject to options which are
exercisable within 60 days of the date of this table.
(4) Includes 48,843 shares of common stock subject to options which are
exercisable within 60 days of the date of this table.
23
(5) Includes 2,390 shares of common stock subject to options which are
exercisable within 60 days of the date of this table. The address of this
shareowner is 345 Park Avenue, New York, New York 10154.
(6) Includes 6,000 shares of common stock subject to options which are
exercisable within 60 days of the date of this table.
(7) Includes 86,065 shares subject to options which are exercisable within 60
days of the date of this table, 100 shares of common stock owned by Mr.
Dougherty's wife and 750 shares of common stock owned by Mr. Dougherty's
children.
(8) Includes 18,807 shares of common stock subject to options which are
exercisable within 60 days of the date of this table.
(9) Includes 13,433 shares of common stock subject to options which are
exercisable within 60 days of the date of this table.
(10) Includes 11,181 shares of common stock held by Mr. Schiffman in his
individual capacity and 622 shares of common stock Mr. Schiffman is deemed
to beneficially own as the Executive Managing Principal of JAV Management
Associates III LLC.
(11) Information presented includes 53,631 shares held by the Kelly Yager 2001
Trust established by Mr. Yager's wife, 21,131 shares held by the Timothy
Yager 2001 Trust established by Mr. Yager, and 159,368 shares issuable to
Mr. Yager pursuant to currently vested options. Mr. Yager disclaims
beneficial ownership of shares of our common stock owned by the Kelly
Yager 2001 Trust. Mr. Yager's address is 28400 Heritage Oak Road,
Barrington, Illinois 60010.
(12) Information presented is based on a Schedule 13G dated November 9, 2001 by
Franklin Resources, Inc., Charles B. Johnson, Rupert H. Johnson, Jr. and
Franklin Advisers, Inc. The Schedule 13G indicates that Franklin Advisers,
Inc. beneficially owns and has sole voting and dispositive power over
1,185,400 shares of our common stock and that Fiduciary Trust Company
International has sole voting and dispositive power over 150,600 shares of
our common stock. According to the Schedule 13G, both entities advise one
or more open or closed-end investment companies or other managed accounts
which beneficially own the shares. The Schedule 13G further indicates that
each of Franklin Resources, Inc. ("FRI"), as the parent holding company of
the advisers, Charles B. Johnson, as a principal shareholder of FRI, and
Rupert H. Johnson, Jr., as a principal shareholder of FRI, beneficially
owns those 1,336,000 shares of our common stock. Each of the reporting
persons disclaims beneficial ownership of these shares of our common stock.
(13) The business address of this shareowner is 111 E. 1st Street, Geneseo,
Illinois, 61254.
(14) Of the 2,578,379 shares, 1,153,648 are held by Blackstone Communications
Partners I L.P. ("BCOM"), 992,328 are held by Blackstone iPCS Capital
Partners L.P. ("BICP"), 348,398 are held by Blackstone/iPCS L.L.C.
("BLLC"), 4,780 are shares issuable to Blackstone Management Partners III
pursuant to currently vested options, 71,302 are shares issuable upon
exercise of warrants by Blackstone Mezzanine Partners L.P. ("BMP") and
7,923 are shares issuable upon exercise of warrants by Blackstone
Mezzanine Holdings L.P. ("BMH"). Blackstone Communications Management
Associates I L.L.C. is the general partner of BCOM. Blackstone Media
Management Associates III, L.L.C. is the general partner of BICP.
Blackstone Media Management Associates III, L.L.C. is the manager of BLLC.
Blackstone Mezzanine Associates L.P. is the general partner of BMP and
BMH. Messrs. Peter G. Peterson and Stephen A. Schwarzman are the founding
members of Blackstone, and as such may also be deemed to share beneficial
ownership of the shares held by each of these entities. The address of The
Blackstone Group is 345 Park Avenue, New York, New York, 10154.
(15) Includes 467,929 shares of common stock subject to options which are
exercisable within 60 days of the date of this table.
24
CERTAIN RELATED TRANSACTIONS
From our inception through May 1999, we received financing from affiliates
of JAFCO America Ventures, Inc. Mr. Schiffman, one of our directors, is
president, executive managing director, chief investment officer and a member
of the board of JAFCO America Ventures, Inc.
In September 1998, we issued $3.0 million of subordinated promissory notes
to the JAFCO America Ventures, Inc. affiliated funds. These notes provided for
the conversion of the notes into preferred or common stock upon the
satisfaction of certain conditions or repayment of the notes one year after
their issuance.
We also issued warrants to purchase preferred stock to the JAFCO America
Ventures, Inc. related funds in consideration for their financing. The warrants
were to be exercised on the earlier of five years from the date of issuance or
an initial public offering. In March, April and May 1999, we received $1.25
million of additional financing from the JAFCO America Ventures, Inc.
affiliated funds pursuant to subordinated notes. In May 1999, we consolidated
the promissory notes issued to the JAFCO America Ventures, Inc. affiliated
funds for a total of $4.394 million into subordinated promissory notes that
were converted into shares of our common stock concurrently with the completion
of our initial public offering at a price 48% less than the price of a share of
common stock sold in that public offering. The warrants held by the JAFCO
America Ventures, Inc. affiliated funds were terminated. In connection with the
issuance of these convertible notes, we entered into a registration rights
agreement with the JAFCO America Ventures, Inc. affiliated funds.
25
OTHER INFORMATION
Compensation Committee Interlocks and Insider Participation
None of the members of the Compensation Committee was an officer or employee
of the company or had any relationship with us that requires disclosure under
SEC regulations.
Compliance With Section 16(a) Beneficial Ownership Reporting Requirements
Section 16(a) of the Securities Exchange Act of 1934 requires our directors
and executive officers and persons who own more than ten percent of a
registered class of our equity securities to file with the SEC and the NASDAQ
reports of ownership and changes in ownership of our common stock. Directors,
executive officers and greater than ten percent shareowners are required by SEC
regulations to furnish us with a copy of all Section 16(a) forms they file.
Based solely on a review of the copies of these reports furnished to us or
written representations that no other reports were required, we believe that
during fiscal year 2001, all our directors, executive officers and greater than
ten percent beneficial owners complied with these requirements.
Independent Certified Public Accountants
KPMG LLP was our auditor during the fiscal year ended September 30, 2001.
The board of directors has not yet selected auditors for the current fiscal
year. A representative of KPMG LLP will be present at the annual meeting, will
have the opportunity to make a statement if he or she so desires and will be
available to respond to appropriate questions.
In our fiscal year 2001, we paid KPMG LLP an aggregate of $120,000 for audit
fees, which include fees for our annual audit and quarterly limited reviews. We
paid KPMG LLP no fees for financial information systems design and
implementation. We paid KPMG LLP an aggregate of $289,274 in all other fees,
including fees for tax planning strategies, tax filing and preparation, due
diligence assistance in business development activities, SEC filing
consultation and reviews, the AirGate PCS, Inc. 401K Plan annual audit and
certification of debt compliance.
26
Delivery of this Proxy Statement
In December 2000, the Securities and Exchange Commission adopted new rules
that permit companies and intermediaries (e.g., brokers) to satisfy the
delivery requirements for proxy statements with respect to two or more security
holders sharing the same address by delivering a single proxy statement
addressed to those security holders. This process, which is commonly referred
to as "householding," potentially means extra convenience for securityholders
and cost savings for companies.
This year, a number of brokers with accountholders who are AirGate PCS, Inc.
shareowners will be "householding" our proxy materials. A single proxy
statement will be delivered to multiple shareowners sharing an address unless
contrary instructions have been received from the affected shareowner. Once you
have received notice from your broker or us that they will be "householding"
communications to your address, "householding" will continue until you are
notified otherwise or until you revoke your consent. If, at any time, you no
longer wish to participate in "householding" and would prefer to receive a
separate proxy statement, please notify your broker, direct your written
request to AirGate PCS, Inc., Barbara L. Blackford, Corporate Secretary,
233 Peachtree Street, N.E., Suite 1700, Atlanta, Georgia 30303 or contact Ms.
Blackford at (404) 525-7272.
Shareowners who currently receive multiple copies of the proxy statement at
their address and would like to request "householding" of their communications
should contact their broker or, if a shareowner is a shareowner of record of
our shares, they should submit a written request to American Stock Transfer &
Trust Company, our transfer agent, at 6201 15th Avenue, 3rd Floor, Brooklyn,
New York, 11219, Attention: Donna Ansbro.
Availability of AirGate PCS's 10-K and Annual Report
SEC rules require us to provide an Annual Report to shareowners who receive
this proxy statement. We will also provide copies of the Annual Report to
brokers, dealers, banks, voting trustees and their nominees for the benefit of
their beneficial owners of record. Additional copies of the Annual Report,
along with copies of our Annual Report on Form 10-K for the fiscal year ended
September 30, 2001 (not including documents incorporated by reference) are
available to any shareowner without charge upon written request to AirGate PCS,
Inc. to the attention of our Corporate Secretary, Barbara L. Blackford, 233
Peachtree St. N.E., Suite 1700, Harris Tower, Atlanta, GA 30303. You may also
obtain our Annual Report on Form 10-K over the Internet at the SEC's website,
www.sec.gov.
27
APPENDIX A
AIRGATE PCS, INC.
2002 LONG-TERM INCENTIVE PLAN
TABLE OF CONTENTS
Page
- ----
ARTICLE 1--PURPOSE......................................... A-1
1.1 General........................................ A-1
ARTICLE 2--DEFINITIONS..................................... A-1
2.1 Definitions.................................... A-1
ARTICLE 3--EFFECTIVE DATE.................................. A-5
3.1 Effective Date................................. A-5
ARTICLE 4--ADMINISTRATION.................................. A-5
4.1 Committee...................................... A-5
4.2 Actions and Interpretations by the Committee... A-5
4.3 Authority of the Committee..................... A-5
4.4 Award Certificates............................. A-6
ARTICLE 5--SHARES SUBJECT TO THE PLAN...................... A-6
5.1 Number of Shares............................... A-6
5.2 Lapsed Awards.................................. A-7
5.3 Stock Distributed.............................. A-7
5.4 Limitation on Awards........................... A-7
ARTICLE 6--ELIGIBILITY..................................... A-7
6.1 General........................................ A-7
ARTICLE 7--STOCK OPTIONS................................... A-7
7.1 General........................................ A-7
7.2 Incentive Stock Options........................ A-8
ARTICLE 8--PERFORMANCE AWARDS.............................. A-9
8.1 Grant of Performance Awards.................... A-9
8.2 Performance Goals.............................. A-9
8.3 Right to Payment............................... A-9
8.4 Other Terms.................................... A-9
ARTICLE 9--RESTRICTED STOCK AWARDS......................... A-10
9.1 Grant of Restricted Stock...................... A-10
9.2 Issuance and Restrictions...................... A-10
9.3 Forfeiture..................................... A-10
9.4 Certificates for Restricted Stock.............. A-10
ARTICLE 10--STOCK OR OTHER STOCK-BASED AWARDS.............. A-10
10.1 Grant of Stock or Other Stock-Based Awards..... A-10
ARTICLE 11--PROVISIONS APPLICABLE TO AWARDS................ A-10
11.1 Stand-Alone, Tandem, and Substitute Awards..... A-10
11.2 Term of Award.................................. A-11
11.3 Form of Payment for Awards..................... A-11
i
Page
- ----
11.4 Limits on Transfer................................ A-11
11.5 Beneficiaries..................................... A-11
11.6 Stock Certificates................................ A-11
11.7 Acceleration Upon a Change of Control............. A-11
11.8 Acceleration for Other Reasons.................... A-11
11.9 Effect of Acceleration............................ A-12
11.10 Qualified Performance-based Awards................ A-12
11.11 No Termination of Employment...................... A-13
11.12 Loans or Guarantees............................... A-13
ARTICLE 12--CHANGES IN CAPITAL STRUCTURE....................... A-13
12.1 General........................................... A-13
ARTICLE 13--AMENDMENT, MODIFICATION AND TERMINATION............ A-14
13.1 Amendment, Modification and Termination........... A-14
13.2 Awards Previously Granted......................... A-14
ARTICLE 14--GENERAL PROVISIONS................................. A-14
14.1 No Rights to Awards; Non-Uniform Determinations... A-14
14.2 No Stockholder Rights............................. A-14
14.3 Withholding....................................... A-14
14.4 No Right to Continued Service..................... A-15
14.5 Unfunded Status of Awards......................... A-15
14.6 Indemnification................................... A-15
14.7 Relationship to Other Benefits.................... A-15
14.8 Expenses.......................................... A-15
14.9 Titles and Headings............................... A-15
14.10 Gender and Number................................. A-15
14.11 Fractional Shares................................. A-15
14.12 Government and Other Regulations.................. A-15
14.13 Governing Law..................................... A-16
14.14 Additional Provisions............................. A-16
14.15 No Limitations on Rights of Company............... A-16
ii
AIRGATE PCS, INC.
2002 LONG-TERM INCENTIVE PLAN
ARTICLE 1
PURPOSE
1.1. General. The purpose of the AirGate PCS, Inc. 2002 Long-Term
Incentive Plan (the "Plan") is to promote the success, and enhance the value,
of AirGate PCS, Inc. (the "Company"), by linking the personal interests of
employees, officers, directors and consultants of the Company or any Affiliate
(as defined below) to those of Company stockholders and by providing such
persons with an incentive for outstanding performance. The Plan is further
intended to provide flexibility to the Company in its ability to motivate,
attract, and retain the services of employees, officers, directors and
consultants upon whose judgment, interest, and special effort the successful
conduct of the Company's operation is largely dependent. Accordingly, the Plan
permits the grant of incentive awards from time to time to selected employees
and officers, directors and consultants of the Company or any Affiliate.
ARTICLE 2
DEFINITIONS
2.1. Definitions. When a word or phrase appears in the Plan with the
initial letter capitalized, and the word or phrase does not commence a
sentence, the word or phrase shall generally be given the meaning ascribed to
it in this Section 2.1 unless a clearly different meaning is required by the
context. The following words and phrases shall have the following meanings:
(a) "Affiliate" means (i) any Subsidiary or Parent, or (ii) an entity
that directly or through one or more intermediaries controls, is controlled
by or is under common control with, the Company, as determined by the
Committee.
(b) "Award" means any Option, Restricted Stock Award, Performance Award
or Other Stock-Based Award, or any other right or interest relating to Stock
or cash, granted to a Participant under the Plan.
(c) "Award Certificate" means a written document, in such form as the
Committee prescribes from time to time, setting forth the terms and
conditions of an Award.
(d) "Board" means the Board of Directors of the Company.
(d) "Cause" with respect to a Participant who is a director or consultant
means any of the following acts by the Participant, as determined by the
Board, unless a contrary definition is contained in the applicable Award
Certificate: (A) the Participant's egregious and willful misconduct, or (B)
the Participant's final conviction of a felonious crime. With respect to a
Participant who is an officer or employee, "Cause" has the meaning assigned
such term in the employment agreement, if any, between such Participant and
the Company or an Affiliate, or if there is no such employment agreement in
which such term is defined, and unless otherwise defined in the applicable
Award Certificate, "Cause" means any of the following acts by the
Participant, as determined by the Board: (A) continued neglect in the
performance of duties assigned to the Participant (other than for a reason
beyond the control of the Participant) or repeated unauthorized absences by
the Participant during scheduled work hours; (B) the Participant's egregious
and willful misconduct, including dishonesty, fraud or continued intentional
violation of Company or Affiliate policies and procedures which is
reasonably determined to be detrimental to the Company or an Affiliate; (C)
the Participant's final conviction of a felonious crime; or (D) the
Participant's repeated material failure to meet reasonable performance
criteria as established by the Company or an Affiliate and communicated to
the Participant.
(e) "Change of Control" means the occurrence of any of the following
events:
(i) individuals who, on the Effective Date, constitute the Board of
Directors of the Company (the "Incumbent Directors") cease for any
reason to constitute at least a majority of such Board, provided
A-1
that any person becoming a director after the Effective Date and whose
election or nomination for election was approved by a vote of at least a
majority of the Incumbent Directors then on the Board shall be an
Incumbent Director; provided, however, that no individual initially
elected or nominated as a director of the Company as a result of an
actual or threatened election contest with respect to the election or
removal of directors ("Election Contest") or other actual or threatened
solicitation of proxies or consents by or on behalf of any "person"
(such term for purposes of this definition being as defined in Section
3(a)(9) of the Exchange Act and as used in Section 13(d)(3) and 14(d)(2)
of the Exchange Act) other than the Board ("Proxy Contest"), including
by reason of any agreement intended to avoid or settle any Election
Contest or Proxy Contest, shall be deemed an Incumbent Director; or
(ii) any person is or becomes a "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of either
(A) 35% or more of the then-outstanding shares of common stock of the
Company ("Company Common Stock") or (B) securities of the Company
representing 35% or more of the combined voting power of the Company's
then outstanding securities eligible to vote for the election of
directors (the "Company Voting Securities"); provided, however, that for
purposes of this subsection (ii), the following acquisitions shall not
constitute a Change of Control: (w) an acquisition directly from the
Company, (x) an acquisition by the Company or a Subsidiary of the
Company, (y) an acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any Subsidiary of the
Company, or (z) an acquisition pursuant to a Non-Qualifying Transaction
(as defined in subsection (iii) below); or
(iii) the consummation of a reorganization, merger, consolidation,
statutory share exchange or similar form of corporate transaction
involving the Company or a Subsidiary (a "Reorganization"), or the sale
or other disposition of all or substantially all of the Company's assets
(a "Sale") or the acquisition of assets or stock of another corporation
(an "Acquisition"), unless immediately following such Reorganization,
Sale or Acquisition: (A) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
outstanding Company Common Stock and outstanding Company Voting
Securities immediately prior to such Reorganization, Sale or Acquisition
beneficially own, directly or indirectly, more than 55% of,
respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled
to vote generally in the election of directors, as the case may be, of
the corporation resulting from such Reorganization, Sale or Acquisition
(including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the
Company's assets or stock either directly or through one or more
subsidiaries, the "Surviving Corporation") in substantially the same
proportions as their ownership, immediately prior to such
Reorganization, Sale or Acquisition, of the outstanding Company Common
Stock and the outstanding Company Voting Securities, as the case may be,
and (B) no person (other than (x) the Company or any Subsidiary of the
Company, (y) the Surviving Corporation or its ultimate parent
corporation, or (z) any employee benefit plan (or related trust)
sponsored or maintained by any of the foregoing is the beneficial owner,
directly or indirectly, of 35% or more of the total common stock or 35%
or more of the total voting power of the outstanding voting securities
eligible to elect directors of the Surviving Corporation, and (C) at
least a majority of the members of the board of directors of the
Surviving Corporation were Incumbent Directors at the time of the
Board's approval of the execution of the initial agreement providing for
such Reorganization, Sale or Acquisition (any Reorganization, Sale or
Acquisition which satisfies all of the criteria specified in (A), (B)
and (C) above shall be deemed to be a "Non-Qualifying Transaction"); or
(iv) approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
(e) "Code" means the Internal Revenue Code of 1986, as amended from time
to time.
(f) "Committee" means the Compensation Committee of the Board or such
other committee consisting of two or more members of the Board as may be
appointed by the Board to administer the Plan.
(g) "Company" means AirGate PCS, Inc., a Delaware corporation, its
successors and assigns.
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(h) "Continuous Status as a Participant" means the absence of any
interruption or termination of service as an employee, officer, consultant
or director of the Company, as applicable. Continuous Status as a
Participant shall continue to the extent provided in a written severance or
employment agreement during any period for which severance compensation
payments are made to an employee, officer, consultant or director and shall
not be considered interrupted in the case of any leave of absence authorized
in writing by the Company prior to its commencement.
(i) "Covered Employee" means a covered employee as defined in Code
Section 162(m)(3).
(j) "Disability" or "Disabled" has the same meaning as provided in the
long-term disability plan or policy maintained by the Company or if
applicable, most recently maintained, by the Company or if applicable, an
Affiliate, for the Participant, whether or not such Participant actually
receives disability benefits under such plan or policy. If no long-term
disability plan or policy was ever maintained on behalf of Participant or if
the determination of Disability relates to an Incentive Stock Option,
Disability means Permanent and Total Disability as defined in Section
22(e)(3) of the Code. In the event of a dispute, the determination whether a
Participant is Disabled will be made by the Committee and may be supported
by the advice of a physician competent in the area to which such Disability
relates.
(k) "Effective Date" means the date set forth in Section 3.1.
(l) "Eligible Participant" means an employee, officer, consultant or
director of the Company or any Affiliate.
(m) "Exchange" means the Nasdaq National Market or any national
securities exchange on which the Stock may from time to time be listed or
traded.
(n) "Fair Market Value" on any date, means (i) if the Stock is listed on
a securities exchange or is traded over the Nasdaq National Market, the
closing sales price on such exchange or over such system on such date or, in
the absence of reported sales on such date, the closing sales price on the
immediately preceding date on which sales were reported, all as reported by
such source as the Committee may select, or (ii) if the Stock is not listed
on a securities exchange or traded over the Nasdaq National Market, the mean
between the bid and offered prices as quoted by Nasdaq for such date,
provided that if it is determined that the fair market value is not properly
reflected by such Nasdaq quotations, Fair Market Value will be determined by
such other method as the Committee determines in good faith to be reasonable.
(o) "Good Reason" has the meaning assigned such term in the employment
agreement, if any, between a Participant and the Company or an Affiliate,
provided, however that if there is no such employment agreement in which
such term is defined, and unless otherwise defined in the applicable Award
Certificate, "Good Reason" shall mean any of the following acts by the
Company or an Affiliate without the consent of the Participant (in each
case, other than an isolated, insubstantial and inadvertent action not taken
in bad faith and which is remedied by the Company or an Affiliate promptly
after receipt of notice thereof given by the Participant): (i) the
assignment to the Participant of duties materially inconsistent with, or a
material diminution in, the Participant's position, authority, duties or
responsibilities as in effect on the Grant Date, (ii) a reduction by the
Company or an Affiliate in the Participant's base salary, (iii) the Company
or an Affiliate requiring the Participant, without his or her consent, to be
based at any office or location more than 35 miles from the location at
which the Participant was stationed immediately prior to a Change of
Control, or (iv) the material breach by the Company or an Affiliate of any
employment agreement between the Participant and the Company or an Affiliate.
(p) "Grant Date" means the date an Award is made by the Committee.
(q) "Incentive Stock Option" means an Option that is designated as an
Incentive Stock Option and that meets the requirements of Section 422 of the
Code or any successor provision thereto.
(r) "Non-Qualified Stock Option" means an Option that is not intended to
be an Incentive Stock Option or which does not meet the requirements of
Section 422 of the Code or any successor provision thereto.
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(s) "Option" means a right granted to a Participant under Article 7 of
the Plan to purchase Stock at a specified price during specified time
periods. An Option may be either an Incentive Stock Option or a
Non-Qualified Stock Option.
(t) "Other Stock-Based Award" means a right, granted to a Participant
under Article 10 , that relates to or is valued by reference to Stock or
other Awards relating to Stock.
(u) "Parent" means a company which owns or beneficially owns a majority
of the outstanding voting stock or voting power of the Company.
Notwithstanding the above, with respect to an Incentive Stock Option, Parent
shall have the meaning set forth in Section 424(e) of the Code.
(v) "Participant" means an Eligible Participant who has been granted an
Award under the Plan; provided that in the case of the death of a
Participant, the term "Participant" refers to a beneficiary designated
pursuant to Section 11.5 or the legal guardian or other legal representative
acting in a fiduciary capacity on behalf of the Participant under applicable
state law and court supervision.
(w) "Performance Award" means Performance Shares or Performance Units
granted pursuant to Article 8.
(x) "Performance Share" means any right granted to a Participant under
Article 8 to a unit to be valued by reference to a designated number of
Shares to be paid upon achievement of such performance goals as the
Committee establishes with regard to such Performance Share.
(y) "Performance Unit" means a right granted to a Participant under
Article 8 to a unit valued by reference to a designated amount of cash or
property other than Shares to be paid to the Participant upon achievement of
such performance goals as the Committee establishes with regard to such
Performance Unit.
(x) "Plan" means the AirGate PCS, Inc. 2002 Long-Term Incentive Plan, as
amended from time to time.
(aa) "Qualified Performance-Based Award" means (i) a Performance Award,
Restricted Stock Award or Other Stock-Based Award that is intended to
qualify for the Section 162(m) Exemption and is made subject to performance
goals based on Qualified Performance Criteria as set forth in Section 11.10,
or (ii) an Option having an exercise price equal to or greater than the Fair
Market Value of the underlying Stock as of the Grant Date.
(bb) "Qualified Performance Criteria" means one or more of the
performance criteria listed in Section 11.10(b) upon which performance goals
for certain Qualified Performance-Based Awards may be established by the
Committee.
(cc) "Restricted Stock Award" means Stock granted to a Participant under
Article 9 that is subject to certain restrictions and to risk of forfeiture.
(dd) "Retirement" means a Participant's termination of employment with
the Company or an Affiliate with the Committee's approval after attaining
any normal or early retirement age specified in any pension, profit sharing
or other retirement program sponsored by the Company, or, in the event of
the inapplicability thereof with respect to the Participant in question, as
determined by the Committee in its reasonable judgment.
(ee) "Section 162(m) Exemption" means the exemption from the limitation
on deductibility imposed by Section 162(m) of the Code that is set forth in
Section 162(m)(4)(C) of the Code or any successor provision thereto.
(ff) "Shares" means shares of the Company's Stock. If there has been an
adjustment or substitution pursuant to Section 12.1, the term "Shares" shall
also include any shares of stock or other securities that are substituted
for Shares or into which Shares are adjusted pursuant to Section 12.1.
(gg) "Stock" means the $0.01 par value common stock of the Company and
such other securities of the Company as may be substituted for Stock
pursuant to Article 12.
(hh) "Subsidiary" means any corporation, limited liability company,
partnership or other entity of which a majority of the outstanding voting
stock or voting power is beneficially owned directly or indirectly
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by the Company. Notwithstanding the above, with respect to an Incentive
Stock Option, Subsidiary shall have the meaning set forth in Section 424(f)
of the Code.
(ii) "1933 Act" means the Securities Act of 1933, as amended from time to
time.
(jj) "1934 Act" means the Securities Exchange Act of 1934, as amended
from time to time.
ARTICLE 3
EFFECTIVE DATE
3.1. Effective Date. The Plan shall be effective as of the date it is
approved by both the Board and the majority of the holders of the Stock of the
Company.
ARTICLE 4
ADMINISTRATION
4.1. Committee. The Plan shall be administered by the Committee or, at the
discretion of the Board from time to time, the Plan may be administered by the
Board. It is intended that at least two of the directors appointed to serve on
the Committee shall be "non-employee directors" (within the meaning of Rule
16b-3 promulgated under the 1934 Act) and "outside directors" (within the
meaning of Code Section 162(m) and the regulations thereunder) and that any
such members of the Committee who do not so qualify shall abstain from
participating in any decision to make or administer Awards that are made to
Eligible Participants who at the time of consideration for such Award are, or
who are anticipated to be become, either (i) Covered Employees or (ii) persons
subject to the short-swing profit rules of Section 16 of the 1934 Act. However,
the mere fact that a Committee member shall fail to qualify under either of the
foregoing requirements or shall fail to abstain from such action shall not
invalidate any Award made by the Committee which Award is otherwise validly
made under the Plan. The members of the Committee shall be appointed by, and
may be changed at any time and from time to time in the discretion of, the
Board. The Board may reserve to itself any or all of the authority and
responsibility of the Committee under the Plan or may act as administrator of
the Plan for any and all purposes. To the extent the Board has reserved any
authority and responsibility or during any time that the Board is acting as
administrator of the Plan, it shall have all the powers of the Committee
hereunder, and any reference herein to the Committee (other than in this
Section 4.1) shall include the Board. To the extent any action of the Board
under the Plan conflicts with actions taken by the Committee, the actions of
the Board shall control.
4.2. Actions and Interpretations by the Committee. For purposes of
administering the Plan, the Committee may from time to time adopt rules,
regulations, guidelines and procedures for carrying out the provisions and
purposes of the Plan and make such other determinations, not inconsistent with
the Plan, as the Committee may deem appropriate. The Committee's interpretation
of the Plan, any Awards granted under the Plan, any Award Certificate and all
decisions and determinations by the Committee with respect to the Plan are
final, binding, and conclusive on all parties. Each member of the Committee is
entitled to, in good faith, rely or act upon any report or other information
furnished to that member by any officer or other employee of the Company or any
Affiliate, the Company's or an Affiliate's independent certified public
accountants, Company counsel or any executive compensation consultant or other
professional retained by the Company to assist in the administration of the
Plan.
4.3. Authority of Committee. Except as provided below, the Committee has
the exclusive power, authority and discretion to:
(a) Grant Awards;
(b) Designate Participants;
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(c) Determine the type or types of Awards to be granted to each
Participant;
(d) Determine the number of Awards to be granted and the number of Shares
to which an Award will relate;
(e) Determine the terms and conditions of any Award granted under the
Plan, including but not limited to, the exercise price, grant price, or
purchase price, any restrictions or limitations on the Award, any schedule
for lapse of forfeiture restrictions or restrictions on the exercisability
of an Award, and accelerations or waivers thereof, based in each case on
such considerations as the Committee in its sole discretion determines;
(f) Accelerate the vesting, exercisability or lapse of restrictions of
any outstanding Award, in accordance with Article 11, based in each case on
such considerations as the Committee in its sole discretion determines;
(g) Determine whether, to what extent, and under what circumstances an
Award may be settled in, or the exercise price of an Award may be paid in,
cash, Stock, other Awards, or other property, or an Award may be canceled,
forfeited, or surrendered;
(h) Prescribe the form of each Award Certificate, which need not be
identical for each Participant;
(i) Decide all other matters that must be determined in connection with
an Award;
(j) Establish, adopt or revise any rules, regulations, guidelines or
procedures as it may deem necessary or advisable to administer the Plan;
(k) Make all other decisions and determinations that may be required
under the Plan or as the Committee deems necessary or advisable to
administer the Plan;
(l) Amend the Plan or any Award Certificate as provided herein; and
(m) Adopt such modifications, procedures, and subplans as may be
necessary or desirable to comply with provisions of the laws of non-U.S.
jurisdictions in which the Company or any Affiliate may operate, in order to
assure the viability of the benefits of Awards granted to participants
located in such other jurisdictions and to meet the objectives of the Plan.
Notwithstanding the foregoing, grants of Options and Restricted Stock to
non-employee directors hereunder shall be made only in accordance with the
terms, conditions and parameters of the AirGate PCS, Inc. 2001 Non-Employee
Director Compensation Plan, as amended, or any successor plan or plans for the
compensation of non-employee directors of the Company, and the Committee may
not make discretionary Awards hereunder to non-employee directors.
To the extent permitted under Delaware law, the Board or the Committee may
expressly delegate to any individual or group of individuals some or all of the
Committee's authority under subsections (a) through (i) above, except that no
delegation of its duties and responsibilities may be made to officers of the
Company with respect to Awards to Eligible Participants who are, or who are
anticipated to be become, either (i) Covered Employees or (ii) persons subject
to the short-swing profit rules of Section 16 of the 1934 Act. The acts of such
delegates shall be treated hereunder as acts of the Committee and such
delegates shall report to the Committee regarding the delegated duties and
responsibilities.
4.4. Award Certificates. Each Award shall be evidenced by an Award
Certificate. Each Award Certificate shall include such provisions, not
inconsistent with the Plan, as may be specified by the Committee.
ARTICLE 5
SHARES SUBJECT TO THE PLAN
5.1. Number of Shares. Subject to adjustment as provided in Section 12.1,
the aggregate number of Shares reserved and available for Awards or which may
be used to provide a basis of measurement for or to
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determine the value of an Award (such as with a Performance Award) shall be
1,500,000. Not more than 20% of such aggregate number of Shares may be granted
as Awards of Restricted Stock, Performance Shares or unrestricted Stock. To the
extent that Awards of Restricted Stock and Performance Shares exceed 10% of the
Shares authorized under the Plan, such Awards in excess of 10% shall either (i)
be subject to a minimum vesting period of three years, or one year if the
vesting is based on performance criteria other than continued employment, or
(ii) be granted solely in exchange for foregone salary, bonus or director
compensation. To the extent that awards of unrestricted Stock (together with
Awards of Restricted Stock or Performance Shares) exceed 10% of the Shares
authorized under the Plan, such unrestricted Shares may be granted only in
exchange for foregone salary, bonus or director compensation.
5.2. Lapsed Awards.
(a) To the extent that an Award is canceled, terminates, expires, is
forfeited or lapses for any reason, any Shares subject to the Award will
again be available for the grant of Awards under the Plan and Shares subject
to Awards settled in cash will be available for the grant of Awards under
the Plan.
(b) If the exercise price of an Option is satisfied by delivering Shares
to the Company (by either actual delivery or attestation), only the numbers
of Shares issued in excess of the delivery or attestation shall be
considered for purposes of determining the maximum number of shares
available for delivery pursuant to Awards under the Plan, other than
Incentive Stock Options. To the extent any Shares subject to an Award are
not delivered to a Participant because such Shares are used to satisfy an
applicable tax withholding obligation, such Shares shall again be available
for the grant of Awards under the Plan.
5.3. Stock Distributed. Any Stock distributed pursuant to an Award may
consist, in whole or in part, of authorized and unissued Stock, treasury Stock
or Stock purchased on the open market.
5.4. Limitation on Awards. Notwithstanding any provision in the Plan to
the contrary (but subject to adjustment as provided in Section 12.1), the
maximum number of Shares with respect to one or more Options that may be
granted during any one calendar year under the Plan to any one Participant
shall not exceed 250,000. The maximum amount of Qualified Performance-Based
Awards (other than Options) that may be granted to any Participant in any
one-year period shall not exceed the following: (i) 250,000 Shares for all
Qualified Performance-Based Awards that are Performance Shares; (ii) $1,500,000
for all Qualified Performance-Based Awards that are Performance Units based
upon a dollar amount (less any consideration paid by the Participant for such
Award); and (iii) 250,000 Shares for all other Qualified Performance-Based
Awards; provided, that the number of Shares set forth in clauses (i) and (iii)
shall be subject to adjustment as provided in Section 12.1.
ARTICLE 6
ELIGIBILITY
6.1. General. Awards may be granted only to Eligible Participants; except
that Incentive Stock Options may not be granted to Eligible Participants who
are not employees of the Company or a Parent or Subsidiary as defined in
Section 424(e) and (f) of the Code.
ARTICLE 7
STOCK OPTIONS
7.1. General. The Committee is authorized to grant Options to Participants
on the following terms and conditions:
(a) Exercise Price. The exercise price per share of Stock under an
Option shall be determined by the Committee, provided that the exercise
price for any Option shall not be less than the Fair Market Value as of the
Grant Date.
(b) Time and Conditions of Exercise. The Committee shall determine the
time or times at which an Option may be exercised in whole or in part,
subject to Section 7.1(d). The Committee shall also determine the
performance or other conditions, if any, that must be satisfied before all
or part of an Option may be exercised or vested. The Committee may waive any
exercise or vesting provisions at any time in whole or in
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part based upon factors as the Committee may determine in its sole
discretion so that the Option becomes exercisable or vested at an earlier
date. The Committee may permit an arrangement whereby receipt of Stock upon
exercise of an Option is delayed until a specified future date.
(c) Payment. The Committee shall determine the methods by which the
exercise price of an Option may be paid, the form of payment, including,
without limitation, cash, Shares, or other property (including "cashless
exercise" arrangements), and the methods by which Shares shall be delivered
or deemed to be delivered to Participants; provided, however, that if Shares
are used to pay the exercise price of an Option, such Shares must have been
held by the Participant for at least six months.
(d) Exercise Term. In no event may any Option be exercisable for more
than ten years from the Grant Date.
(e) Additional Options Upon Exercise. The Committee may, in its sole
discretion, provide in an Award Certificate, or in an amendment thereto, for
the automatic grant of a new Option to any Participant who delivers Shares
as full or partial payment of the exercise price of the original Option. Any
new Option granted in such a case (i) shall be for the same number of Shares
as the Participant delivered in exercising the original Option, (ii) shall
have an exercise price of 100% of the Fair Market Value of the surrendered
Shares on the date of exercise of the original Option (the grant date for
the new Option), (iii) shall vest six (6) months after the date of grant of
the new Option, and (iv) shall have a term equal to the unexpired term of
the original Option.
7.2. Incentive Stock Options. The terms of any Incentive Stock Options
granted under the Plan must comply with the following additional rules:
(a) Lapse of Option. An Incentive Stock Option shall lapse upon the
earliest of the following circumstances; provided, however, that the
Committee may, prior to the lapse of the Incentive Stock Option under the
circumstances described in subsections (3), (4), (5) and (6) below, provide
in writing that the Option will extend until a later date, but if an Option
is exercised after the dates specified in subsections (3), (4) and (5)
below, it will automatically become a Non-Qualified Stock Option:
(1) The expiration date set forth in the Award Certificate.
(2) The tenth anniversary of the Grant Date.
(3) Three months after termination of the Participant's Continuous
Status as a Participant for any reason other than the Participant's
Disability, death or termination for Cause.
(4) One year after the termination of the Participant's Continuous
Status as a Participant by reason of the Participant's Disability.
(5) One year after the termination of the Participant's Continuous
Status as a Participant by reason of the Participant's death.
(6) The date of the termination of the Participant's Continuous
Status as a Participant if such termination is for Cause.
(b) Individual Dollar Limitation. The aggregate Fair Market Value
(determined as of the Grant Date) of all Shares with respect to which
Incentive Stock Options are first exercisable by a Participant in any
calendar year may not exceed $100,000.00.
(c) Ten Percent Owners. No Incentive Stock Option shall be granted to
any individual who, at the Grant Date, owns stock possessing more than ten
percent of the total combined voting power of all classes of stock of the
Company or any Parent or Subsidiary unless the exercise price per share of
such Option is at least 110% of the Fair Market Value per Share at the Grant
Date and the Option expires no later than five years after the Grant Date.
(d) Expiration Of Incentive Stock Options. No Award of an Incentive
Stock Option may be made pursuant to the Plan after the day immediately
prior to the tenth anniversary of the Effective Date.
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(e) Right to Exercise. During a Participant's lifetime, an Incentive
Stock Option may be exercised only by the Participant or, in the case of the
Participant's Disability, by the Participant's guardian or legal
representative.
(f) Directors. The Committee may not grant an Incentive Stock Option to
a non-employee director. The Committee may grant an Incentive Stock Option
to a director who is also an employee of the Company or a Parent or
Subsidiary but only in that individual's position as an employee and not as
a director.
ARTICLE 8
PERFORMANCE AWARDS
8.1. Grant of Performance Awards. The Committee is authorized to grant
Performance Shares or Performance Units to Participants on such terms and
conditions as may be selected by the Committee. The Committee shall have the
complete discretion to determine the number of Performance Shares or
Performance Units granted to each Participant, subject to Section 5.4, and to
designate the provisions of such Performance Awards as provided in Section 4.3.
8.2. Performance Goals. The Committee may establish performance goals for
Performance Awards which may be based on any one or more of the Qualified
Performance Criteria listed in Section 11.10(b) or any other criteria selected
by the Committee. Such performance goals may be described in terms of
Company-wide objectives or in terms of objectives that relate to the
performance of a division, Affiliate, region, department or function within the
Company or an Affiliate. If the Committee determines that a change in the
business, operations, corporate structure or capital structure of the Company
or the manner in which the Company or an Affiliate conducts its business, or
other events or circumstances render performance goals to be unsuitable, the
Committee may modify such performance goals in whole or in part, as the
Committee deems appropriate. If a Participant is promoted, demoted or
transferred to a different business unit or function during a performance
period, the Committee may determine that the performance goals or performance
period are no longer appropriate and may (i) adjust, change or eliminate the
performance goals or the applicable performance period as it deems appropriate
to make such goals and period comparable to the initial goals and period, or
(ii) make a cash payment to the participant in amount determined by the
Committee.
8.3. Right to Payment. The grant of a Performance Share to a Participant
will entitle the Participant to receive at a specified later time a specified
number of Shares, or the equivalent cash value, if the performance goals
established by the Committee are achieved and the other terms and conditions
thereof are satisfied. The grant of a Performance Unit to a Participant will
entitle the Participant to receive at a specified later time a specified dollar
value in cash or property other than Shares, variable under conditions
specified in the Award, if the performance goals in the Award are achieved and
the other terms and conditions thereof are satisfied. The Committee shall set
performance goals and other terms or conditions to payment of the Performance
Awards in its discretion which, depending on the extent to which they are met,
will determine the number and value of the Performance Award that will be paid
to the Participant.
8.4. Other Terms. Performance Awards may be payable in cash, Stock, or
other property, and have such other terms and conditions as determined by the
Committee and reflected in the Award Certificate. For purposes of determining
the number of Shares to be used in payment of a Performance Award denominated
in cash but payable in whole or in part in Shares or Restricted Stock, the
number of Shares to be so paid will be determined by dividing the cash value of
the Award to be so paid by the Fair Market Value of a Share on the date of
determination of the amount of the Award by the Committee, or, if the Committee
so directs, the date immediately preceding the date the Award is paid.
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ARTICLE 9
RESTRICTED STOCK AWARDS
9.1. Grant of Restricted Stock. The Committee is authorized to make Awards
of Restricted Stock to Participants in such amounts and subject to such terms
and conditions as may be selected by the Committee.
9.2. Issuance and Restrictions. Restricted Stock shall be subject to such
restrictions on transferability and other restrictions as the Committee may
impose (including, without limitation, limitations on the right to vote
Restricted Stock or the right to receive dividends on the Restricted Stock).
Except as otherwise provided in an Award Certificate, the Participant shall
have all of the rights of a stockholder with respect to the Restricted Stock.
These restrictions may lapse separately or in combination at such times, under
such circumstances, in such installments, upon the satisfaction of performance
goals or otherwise, as the Committee determines at the time of the grant of the
Award or thereafter.
9.3. Forfeiture. Except as otherwise determined by the Committee at the
time of the grant of the Award or thereafter, upon termination of Continuous
Status as a Participant during the applicable restriction period or upon
failure to satisfy a performance goal during the applicable restriction period,
Restricted Stock that is at that time subject to restrictions shall be
forfeited; provided, however, that the Committee may provide in any Award
Certificate that restrictions or forfeiture conditions relating to Restricted
Stock will be waived in whole or in part in the event of terminations resulting
from specified causes, and the Committee may in other cases waive in whole or
in part restrictions or forfeiture conditions relating to Restricted Stock.
9.4. Certificates for Restricted Stock. An Award of Restricted Stock shall
be evidenced by an Award Certificate setting forth the terms, conditions, and
restrictions applicable to share of Restricted Stock. Shares of Restricted
Stock shall be delivered to the Participant at the time of grant either by
book-entry registration or by delivering to the Participant, or a custodian or
escrow agent (including, without limitation, the Company or one or more of its
employees) designated by the Committee, a stock certificate or certificates
registered in the name of the Participant. If physical certificates
representing shares of Restricted Stock are registered in the name of the
Participant, such certificates must bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to such Restricted Stock.
ARTICLE 10
STOCK OR OTHER STOCK-BASED AWARDS
10.1. Grant of Stock or Other Stock-based Awards. The Committee is
authorized, subject to limitations under applicable law, to grant to
Participants such other Awards that are payable in, valued in whole or in part
by reference to, or otherwise based on or related to Shares, as deemed by the
Committee to be consistent with the purposes of the Plan, including without
limitation Shares awarded purely as a "bonus" and not subject to any
restrictions or conditions, convertible or exchangeable debt securities, other
rights convertible or exchangeable into Shares, and Awards valued by reference
to book value of Shares or the value of securities of or the performance of
specified Parents or Subsidiaries. The Committee shall determine the terms and
conditions of such Awards.
ARTICLE 11
PROVISIONS APPLICABLE TO AWARDS
11.1. Stand-alone, Tandem, and Substitute Awards. Awards granted under the
Plan may, in the discretion of the Committee, be granted either alone or in
addition to, in tandem with, or in substitution for, any other Award granted
under the Plan. If an Award is granted in substitution for another Award, the
Committee may require the surrender of such other Award in consideration of the
grant of the new Award. Awards granted in addition to or in tandem with other
Awards may be granted either at the same time as or at a different time from
the grant of such other Awards.
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11.2. Term of Award. The term of each Award shall be for the period as
determined by the Committee, provided that in no event shall the term of any
Incentive Stock Option exceed a period of ten years from its Grant Date (or, if
Section 7.2(c) applies, five years from its Grant Date).
11.3. Form of Payment for Awards. Subject to the terms of the Plan and any
applicable law or Award Certificate, payments or transfers to be made by the
Company or an Affiliate on the grant or exercise of an Award may be made in
such form as the Committee determines at or after the Grant Date, including
without limitation, cash, Stock, other Awards, or other property, or any
combination, and may be made in a single payment or transfer, in installments,
or on a deferred basis, in each case determined in accordance with rules
adopted by, and at the discretion of, the Committee.
11.4. Limits on Transfer. No right or interest of a Participant in any
unexercised or restricted Award may be pledged, encumbered, or hypothecated to
or in favor of any party other than the Company or an Affiliate, or shall be
subject to any lien, obligation, or liability of such Participant to any other
party other than the Company or an Affiliate. No unexercised or restricted
Award shall be assignable or transferable by a Participant other than to a
beneficiary designated as provided in 11.5 or by will or the laws of descent
and distribution or, except in the case of an Incentive Stock Option, pursuant
to a domestic relations order that would satisfy Section 414(p)(1)(A) of the
Code if such Section applied to an Award under the Plan; provided, however,
that the Committee may (but need not) permit other transfers where the
Committee concludes that such transferability (i) does not result in
accelerated taxation, (ii) does not cause any Option intended to be an
Incentive Stock Option to fail to be described in Code Section 422(b), and
(iii) is otherwise appropriate and desirable, taking into account any factors
deemed relevant, including without limitation, state or federal tax or
securities laws applicable to transferable Awards.
11.5. Beneficiaries. Notwithstanding Section 11.4, a Participant may, in
the manner determined by the Committee, designate a beneficiary to exercise the
rights of the Participant and to receive any distribution with respect to any
Award upon the Participant's death. A beneficiary, legal guardian, legal
representative, or other person claiming any rights under the Plan is subject
to all terms and conditions of the Plan and any Award Certificate applicable to
the Participant, except to the extent the Plan and Award Certificate otherwise
provide, and to any additional restrictions deemed necessary or appropriate by
the Committee. If no beneficiary has been designated or survives the
Participant, payment shall be made to the Participant's estate. Subject to the
foregoing, a beneficiary designation may be changed or revoked by a Participant
at any time provided the change or revocation is filed with the Committee.
11.6. Stock Certificates. All Stock issuable under the Plan is subject to
any stop-transfer orders and other restrictions as the Committee deems
necessary or advisable to comply with federal or state securities laws, rules
and regulations and the rules of any national securities exchange or automated
quotation system on which the Stock is listed, quoted, or traded. The Committee
may place legends on any Stock certificate or issue instructions to the
transfer agent to reference restrictions applicable to the Stock.
11.7. Acceleration Upon a Change of Control. Except as otherwise provided
in the Award Certificate, all outstanding Options and other Awards in the
nature of rights that may be exercised shall become fully exercisable and all
restrictions on outstanding Awards shall lapse if the Participant's employment
is terminated without Cause or the Participant resigns for Good Reason within
two years after the effective date of a Change of Control. To the extent that
this provision causes Incentive Stock Options to exceed the dollar limitation
set forth in Section 7.2(b), the excess Options shall be deemed to be
Non-Qualified Stock Options.
11.8. Acceleration for Other Reasons. Regardless of whether an event has
occurred as described in Section 11.7 above, the Committee may in its sole
discretion at any time determine that, upon the death, Disability, Retirement
or termination of service of a Participant, or the occurrence of a Change of
Control, all or a portion of such Participant's Options and other Awards in the
nature of rights that may be exercised shall become fully or partially
exercisable, and/or that all or a part of the restrictions on all or a portion
of the
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Participant's outstanding Awards shall lapse, in each case, as of such date as
the Committee may, in its sole discretion, declare. The Committee may in its
sole discretion at any time accelerate the vesting of Awards for any other
reason, unless the aggregate number of Shares with respect to which such
acceleration occurs exceeds 5% of the total number of Shares authorized for
issuance under Section 5.1 of the Plan. The Committee may discriminate among
Participants and among Awards granted to a Participant in exercising its
discretion pursuant to this Section 11.8.
11.9. Effect of Acceleration. If an Award is accelerated under Section
11.7 or Section 11.8, the Committee may, in its sole discretion, provide (i)
that the Award will expire after a designated period of time after such
acceleration to the extent not then exercised, (ii) that the Award will be
settled in cash rather than Stock, (iii) that the Award will be assumed by
another party to a transaction giving rise to the acceleration or otherwise be
equitably converted or substituted in connection with such transaction, (iv)
that the Award may be settled by payment in cash or cash equivalents equal to
the excess of the Fair Market Value of the underlying Stock, as of a specified
date associated with the transaction, over the exercise price of the Award, or
(v) any combination of the foregoing. The Committee's determination need not be
uniform and may be different for different Participants whether or not such
Participants are similarly situated.
11.10. Qualified Performance-based Awards.
(a) The provisions of the Plan are intended to ensure that all Options
granted hereunder to any Covered Employee qualify for the Section 162(m)
Exemption.
(b) When granting any Performance Award, Restricted Stock or Other
Stock-Based Award other than Options, the Committee may designate such Award
as a Qualified Performance-Based Award, based upon a determination that the
recipient is or may be a Covered Employee with respect to such Award, and
the Committee wishes such Award to qualify for the Section 162(m) Exemption.
If an Award is so designated, the Committee shall establish performance
goals for such Award within the time period prescribed by Section 162(m) of
the Code based on one or more of the following Qualified Performance
Criteria, which may be expressed in terms of Company-wide objectives or in
terms of objectives that relate to the performance of a division, Affiliate,
region, department or function within the Company or an Affiliate:
(1) earnings per share, (2) EBITDA (earnings before interest, depreciation,
taxes and amortization), (3) EBIT (earnings before interest and taxes), (4)
economic profit, (5) cash flow, (6) transaction counts, (7) customer
turnover, (8) net or gross additional customers, (9) cost per gross
additional customers, (10) customer satisfaction ratings, (11) comparable
sales growth, (12) net profit before tax, (13) gross profit, (14) operating
profit, (15) cash generation, (16) unit volume, (17) return on equity, (18)
return on assets, (19) changes in working capital, (20) return on capital,
or (21) shareholder return.
(c) Each Qualified Performance-Based Award (other than an Option) shall
be earned, vested and payable (as applicable) only upon the achievement of
performance goals established by the Committee based upon one or more of the
Qualified Performance Criteria, together with the satisfaction of any other
conditions, such as continued employment, as the Committee may determine to
be appropriate; provided that (i) the Committee may provide, either in
connection with the grant thereof or by amendment thereafter, that
achievement of such performance goals will be waived upon the death or
Disability of the Participant, and (ii) the provisions of Section 11.7 shall
apply notwithstanding this sentence.
(d) Any payment of a Qualified Performance-Based Award granted with
performance goals shall be conditioned on the written certification of the
Committee in each case that the performance goals and any other material
conditions were satisfied. Except as specifically provided in subsection
(c), no Qualified Performance-Based Award may be amended, nor may the
Committee exercise any discretionary authority it may otherwise have under
the Plan with respect to a Qualified Performance-Based Award under the Plan,
in any manner to waive the achievement of the applicable performance goal
based on Qualified Performance Criteria or to increase the amount payable
pursuant thereto or the value thereof, or otherwise in a manner that would
cause the Qualified Performance-Based Award to cease to qualify for the
Section 162(m) Exemption.
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(e) Section 5.4 sets forth the maximum number of Shares or dollar value
that may be granted in any one-year period to a Participant in designated
forms of Qualified Performance-Based Awards.
11.11. No Termination of Employment. Whether military, government or other
service or other leave of absence shall constitute a termination of employment
shall be determined in each case by the Committee at its discretion, and any
determination by the Committee shall be final and conclusive. A Participant's
Continuous Status as a Participant shall not be deemed to terminate (i) in a
circumstance in which a Participant transfers from the Company to an Affiliate,
transfers from an Affiliate to the Company, or transfers from one Affiliate to
another Affiliate, or (ii) in the discretion of the Committee as specified at
or prior to such occurrence, in the case of a spin-off, sale or disposition of
the Participant's employer from the Company or any Affiliate. To the extent
that this provision causes Incentive Stock Options to extend beyond three
months from the date a Participant is deemed to be an employee of the Company,
a Parent or Subsidiary for purposes of Sections 424(e) and 424(f) of the Code,
the Options held by such Participant shall be deemed to be Non-Qualified Stock
Options.
11.12. Loans or Guarantees. With the consent of the Committee, the Company
or an Affiliate may make, guarantee or arrange for a loan or loans to a
Participant with respect to or allow a Participant to defer payment to the
Company of all or any portion of (i) the exercise price of any Option granted
under the Plan, (ii) the purchase price, if any, of any Award granted hereunder
and/or (iii) the payment by the Participant of any or all federal and/or state
income or employment taxes due on account of the granting or exercise of any
Award hereunder. The Committee shall have full authority to decide whether to
make a loan or guarantee or to permit a deferral hereunder and to determine the
amount, terms and provisions of any such loan or guarantee, including the
interest rate to be charged in respect of any such loan(s), whether the loan(s)
are to be made with or without recourse against the borrower, the collateral or
other security, if any, securing the repayment of the loan(s), the terms on
which the loan(s) are to be repaid and the conditions, if any, under which the
loan(s) may be forgiven. If the Committee has made or arranged a loan or
guarantee or deferred payment, the Committee may, in its discretion, require
immediate payment of such deferred amount or immediate release of such loan or
guarantee if the Participant's Continuous Status as a Participant terminates or
if the Participant sells or otherwise transfers the Participant's Shares
pursuant to such deferral, loan or guarantee.
ARTICLE 12
CHANGES IN CAPITAL STRUCTURE
12.1. General. In the event of a corporate event or transaction involving
the Company (including, without limitation, any stock dividend, stock split,
extraordinary cash dividend, recapitalization, reorganization, merger,
consolidation, split-up, spin-off, combination or exchange of shares), the
authorization limits under Section 5.1 and 5.4 shall be adjusted
proportionately, and the Committee may adjust Awards to preserve the benefits
or potential benefits of the Awards. Action by the Committee may include: (i)
adjustment of the number and kind of shares which may be delivered under the
Plan; (ii) adjustment of the number and kind of shares subject to outstanding
Awards; (iii) adjustment of the exercise price of outstanding Awards or the
measure to be used to determine the amount of the benefit payable on an Award;
and (iv) any other adjustments that the Committee determines to be equitable.
In addition, the Committee may, in its sole discretion, provide (i) that Awards
will be settled in cash rather than Stock, (ii) that Awards will become
immediately vested and exercisable and will expire after a designated period of
time to the extent not then exercised, (iii) that Awards will be assumed by
another party to a transaction or otherwise be equitably converted or
substituted in connection with such transaction, (iv) that outstanding Awards
may be settled by payment in cash or cash equivalents equal to the excess of
the Fair Market Value of the underlying Stock, as of a specified date
associated with the transaction, over the exercise price of the Award, or (v)
any combination of the foregoing. The
Committee's determination need not be uniform and may be different for
different Participants whether or not such Participants are similarly situated.
Without limiting the foregoing, in the event of a subdivision of the
outstanding Stock (stock-split), a declaration of a dividend payable in shares
of Stock, or a combination or consolidation of the outstanding Stock into a
lesser number of shares, the authorization limits under Section 5.1
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and 5.4 shall automatically be adjusted proportionately, and the Shares then
subject to each Award shall automatically be adjusted proportionately without
any change in the aggregate purchase price therefor.
ARTICLE 13
AMENDMENT, MODIFICATION AND TERMINATION
13.1. Amendment, Modification and Termination. The Board or the Committee
may, at any time and from time to time, amend, modify or terminate the Plan
without stockholder approval; provided, however, that if an amendment to the
Plan would, in the reasonable opinion of the Board or the Committee, either (i)
materially increase the benefits accruing to Participants, (ii) materially
increase the number of Shares issuable under the Plan, or (iii) materially
modify the requirements for eligibility, then such amendment shall be subject
to stockholder approval; and provided, further that the Board or Committee may
condition any other amendment or modification on the approval of stockholders
of the Company for any reason, including by reason of such approval being
necessary or deemed advisable to (i) permit Awards made hereunder to be exempt
from liability under Section 16(b) of the 1934 Act, (ii) to comply with the
listing or other requirements of an Exchange, or (iii) to satisfy any other
tax, securities or other applicable laws, policies or regulations.
13.2. Awards Previously Granted. At any time and from time to time, the
Committee may amend, modify or terminate any outstanding Award without approval
of the Participant; provided, however:
(a) Subject to the terms of the applicable Award Certificate, such
amendment, modification or termination shall not, without the Participant's
consent, reduce or diminish the value of such Award determined as if the
Award had been exercised, vested, cashed in or otherwise settled on the date
of such amendment or termination;
(b) The original term of any Option may not be extended without the prior
approval of the stockholders of the Company;
(c) Except as otherwise provided in Article 12, the exercise price of any
Option may not be reduced, directly or indirectly, without the prior
approval of the stockholders of the Company; and
(d) No termination, amendment, or modification of the Plan shall
adversely affect any Award previously granted under the Plan, without the
written consent of the Participant affected thereby.
ARTICLE 14
GENERAL PROVISIONS
14.1. No Rights to Awards; Non-Uniform Determinations. No Participant or
any Eligible Participant shall have any claim to be granted any Award under the
Plan. Neither the Company, its Affiliates nor the Committee is obligated to
treat Participants or Eligible Participants uniformly, and determinations made
under the Plan may be made by the Committee selectively among Eligible
Participants who receive, or are eligible to receive, Awards (whether or not
such Eligible Participants are similarly situated).
14.2. No Stockholder Rights. No Award gives a Participant any of the
rights of a stockholder of the Company unless and until Shares are in fact
issued to such person in connection with such Award.
14.3. Withholding. The Company or any Affiliate shall have the authority
and the right to deduct or withhold, or require a Participant to remit to the
Company, an amount sufficient to satisfy federal, state, and local taxes
(including the Participant's FICA obligation) required by law to be withheld
with respect to any exercise, lapse of restriction or other taxable event
arising as a result of the Plan. With respect to withholding required
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upon any taxable event under the Plan, the Committee may, at the time the Award
is granted or thereafter, require or permit that any such withholding
requirement be satisfied, in whole or in part, by withholding from the Award
Shares having a Fair Market Value on the date of withholding equal to the
minimum amount (and not any greater amount) required to be withheld for tax
purposes, all in accordance with such procedures as the Committee establishes.
14.4. No Right to Continued Service. Nothing in the Plan, any Award
Certificate or any other document or statement made with respect to the Plan,
shall interfere with or limit in any way the right of the Company or any
Affiliate to terminate any Participant's employment or status as an officer,
director or consultant at any time, nor confer upon any Participant any right
to continue as an employee, officer, director or consultant of the Company or
any Affiliate, whether for the duration of a Participant's Award or otherwise.
14.5. Unfunded Status of Awards. The Plan is intended to be an "unfunded"
plan for incentive and deferred compensation. With respect to any payments not
yet made to a Participant pursuant to an Award, nothing contained in the Plan
or any Award Certificate shall give the Participant any rights that are greater
than those of a general creditor of the Company or any Affiliate.
14.6. Indemnification. To the extent allowable under applicable law, each
member of the Committee shall be indemnified and held harmless by the Company
from any loss, cost, liability, or expense that may be imposed upon or
reasonably incurred by such member in connection with or resulting from any
claim, action, suit, or proceeding to which such member may be a party or in
which he may be involved by reason of any action or failure to act under the
Plan and against and from any and all amounts paid by such member in
satisfaction of judgment in such action, suit, or proceeding against him
provided he gives the Company an opportunity, at its own expense, to handle and
defend the same before he undertakes to handle and defend it on his own behalf.
The foregoing right of indemnification shall not be exclusive of any other
rights of indemnification to which such persons may be entitled under the
Company's Certificate of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold
them harmless.
14.7. Relationship to Other Benefits. No payment under the Plan shall be
taken into account in determining any benefits under any pension, retirement,
savings, profit sharing, group insurance, welfare or benefit plan of the
Company or any Parent or Subsidiary unless provided otherwise in such other
plan.
14.8. Expenses. The expenses of administering the Plan shall be borne by
the Company and its Affiliates.
14.9. Titles and Headings. The titles and headings of the Sections in the
Plan are for convenience of reference only, and in the event of any conflict,
the text of the Plan, rather than such titles or headings, shall control.
14.10. Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural
shall include the singular and the singular shall include the plural.
14.11. Fractional Shares. No fractional Shares shall be issued and the
Committee shall determine, in its discretion, whether cash shall be given in
lieu of fractional shares or whether such fractional shares shall be eliminated
by rounding up.
14.12. Government and Other Regulations.
(a) Notwithstanding any other provision of the Plan, no Participant who
acquires Shares pursuant to the Plan may, during any period of time that
such Participant is an affiliate of the Company (within the meaning of the
rules and regulations of the Securities and Exchange Commission under the
1933 Act), sell
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such Shares, unless such offer and sale is made (i) pursuant to an effective
registration statement under the 1933 Act, which is current and includes the
Shares to be sold, or (ii) pursuant to an appropriate exemption from the
registration requirement of the 1933 Act, such as that set forth in Rule 144
promulgated under the 1933 Act.
(b) Notwithstanding any other provision of the Plan, if at any time the
Committee shall determine that the registration, listing or qualification of
the Shares covered by an Award upon any Exchange or under any foreign,
federal, state or local law or practice, or the consent or approval of any
governmental regulatory body, is necessary or desirable as a condition of,
or in connection with, the granting of such Award or the purchase or receipt
of Shares thereunder, no Shares may be purchased, delivered or received
pursuant to such Award unless and until such registration, listing,
qualification, consent or approval shall have been effected or obtained free
of any condition not acceptable to the Committee. Any Participant receiving
or purchasing Shares pursuant to an Award shall make such representations
and agreements and furnish such information as the Committee may request to
assure compliance with the foregoing or any other applicable legal
requirements. The Company shall not be required to issue or deliver any
certificate or certificates for Shares under the Plan prior to the
Committee's determination that all related requirements have been fulfilled.
The Company shall in no event be obligated to register any securities
pursuant to the 1933 Act or applicable state or foreign law or to take any
other action in order to cause the issuance and delivery of such
certificates to comply with any such law, regulation or requirement.
14.13. Governing Law. To the extent not governed by federal law, the Plan
and all Award Certificates shall be construed in accordance with and governed
by the laws of the State of Delaware.
14.14. Additional Provisions. Each Award Certificate may contain such
other terms and conditions as the Committee may determine; provided that such
other terms and conditions are not inconsistent with the provisions of the Plan.
14.15. No Limitations on Rights of Company. The grant of any Award shall
not in any way affect the right or power of the Company to make adjustments,
reclassification or changes in its capital or business structure or to merge,
consolidate, dissolve, liquidate, sell or transfer all or any part of its
business or assets. The Plan shall not restrict the authority of the Company,
for proper corporate purposes, to draft or assume Awards, other than under the
Plan, to or with respect to any person. If the Committee so directs, the
Company may issue or transfer Shares to an Affiliate, for such lawful
consideration as the Committee may specify, upon the condition or understanding
that the Affiliate will transfer such Shares to a Participant in accordance
with the terms of an Award granted to such Participant and specified by the
Committee pursuant to the provisions of the Plan.
The foregoing is hereby acknowledged as being the AirGate PCS, Inc. 2002
Long-Term Incentive Plan as adopted by the Board on December 18, 2001.
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APPENDIX B
-----------------
FORM OF PROXY
-----------------
AIRGATE PCS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREOWNERS,
February 26, 2002
The undersigned shareowner(s) of AirGate PCS, Inc., a Delaware corporation
(the "Company"), hereby revoking any proxy heretofore given, does hereby
appoint Thomas M. Dougherty and Barbara L. Blackford, and each of them, with
full power to act alone, the true and lawful attorneys-in-fact and proxies of
the undersigned, with full powers of substitution, and hereby authorize(s) each
of them, to represent the undersigned and to vote all shares of common stock of
the Company that the undersigned is entitled to vote to the Annual Meeting of
Shareowners of the Company to be held at The Westin Peachtree Plaza, 210
Peachtree Street, N.W., Atlanta, Georgia, on February 26, 2002 at 1:00 p.m.,
Eastern Standard Time, and any and all adjournments and postponements thereof,
with all powers the undersigned would possess if personally present, on the
following proposals, as described more fully in the accompanying proxy
statement, and any other matters coming before said meeting.
1.. To elect Bernard A. Bianchino, Thomas M. Dougherty and Timothy M. [_] For All [_] Withhold All
Yager as Directors of the Company with terms expiring in 2005. _______________________
For all, except withhold from
The Board of Directors Recommends a Vote FOR each of the the above nominees.
nominees.
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2.. To consider and approve the AirGate PCS, Inc. 2002 Long-Term [_] For [_] Against [_] Abstain
Incentive Plan.
The Board of Directors Recommends a Vote FOR Approval of the
AirGate PCS, Inc. 2002 Long-Term Incentive Plan.
-----------------------------------------------------------------------------------------------------------------
3.. To transact such other business as may properly come before the
Meeting or any adjournment(s) or postponement(s) thereof, including
an adjournment to solicit additional proxies in the event that a quorum
is not present at the meeting or in the event sufficient proxies voted in
favor of the approval of the proposals have not been received.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES,
BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE WITH THE
BOARD OF DIRECTORS' RECOMMENDATIONS. THIS PROXY, WHEN PROPERLY EXECUTED, WILL
BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREOWNER(S). IF NO
DIRECTION IS GIVEN HEREIN, THIS PROXY WILL BE VOTED "FOR" THE PROPOSALS LISTED
ABOVE.
B-1
DATED:_______________, 2002
SIGNATURE
SIGNATURE IF HELD JOINTLY
PLEASE SIGN EXACTLY AS NAME(S) APPEAR ON THIS PROXY CARD. WHEN SHARES
ARE HELD BY JOINT TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS
ATTORNEY-IN-FACT, EXECUTOR, ADMINISTRATOR, PERSONAL REPRESENTATIVE,
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.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
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