Exhibit 10.11.1

Execution Copy

 

NONQUALIFIED STOCK OPTION AGREEMENT

UNDER THE HORIZON PCS, INC.

2004 STOCK INCENTIVE PLAN

 

This NONQUALIFIED STOCK OPTION AGREEMENT (this “Agreement”) , made as of this
21st day of October, 2004, by and between Horizon PCS, Inc. (the “Company”) and
Alan Morse (the “Participant”) who is an employee of the Company.

 

W I T N E S S E T H:

 

WHEREAS, pursuant to the Company’s 2004 Stock Incentive Plan (the “Plan”), the
Company desires to afford the Participant the opportunity to acquire, or
enlarge, his ownership of the Company’s common stock (“Stock”), so that he may
have a direct proprietary interest in the Company’s success.

 

NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the parties hereto hereby agree as follows:

 

1.             Grant of Option.  Subject to the term and conditions set forth
herein and in the Plan, which is attached hereto as Exhibit A, the Company
hereby grants to the Participant, during the period commencing on the date of
this Agreement and ending on the close of business on the day of the tenth
anniversary of the date hereof (the “Expiration Date”), the right and option
(the “Option”) to purchase from the Company, at a price of $17.76 per share (the
“Option Price”), an aggregate of 100,000 shares of Stock (the “Option Shares”).

 

2.             Limitation on Exercise of Option.  Subject to the terms and
conditions set forth herein and in the Plan, the Option will become vested and
exercisable with respect to 16.67% of the shares subject to the Option on the
six (6) month anniversary of the date of grant and as to an additional 16.67% on
each six (6) month anniversary thereafter (each, an “Installment”) until the
Option is 100% vested; provided, that, the Participant is then employed by the
Company.  Notwithstanding the foregoing, subject to the limitations of the Plan,
the Committee may accelerate the vesting and exercisability of all or part of
the Option at any time and for any reason.

 

3.             Termination of Employment.  Upon a termination of employment, the
Option shall remain exercisable as follows:

 

(A)          EXCEPT AS PROVIDED IN CLAUSE (C) BELOW, UPON TERMINATION OF THE
PARTICIPANT’S EMPLOYMENT BY THE COMPANY WITHOUT CAUSE OR BY THE PARTICIPANT FOR
GOOD REASON (AS SUCH TERMS ARE DEFINED BELOW), THE UNVESTED PORTION OF THE
OPTION SHALL TERMINATE AND CEASE TO BE EXERCISABLE; PROVIDED, THAT, THE
INSTALLMENT THAT WOULD HAVE VESTED ON THE NEXT VESTING DATE SHALL BECOME VESTED
IN AN AMOUNT EQUAL TO THE INSTALLMENT MULTIPLIED BY A FRACTION, THE NUMERATOR OF
WHICH IS THE NUMBER OF CALENDAR DAYS WHICH HAVE ELAPSED FROM THE BEGINNING OF
THE INSTALLMENT PERIOD UNTIL THE PARTICIPANT’S TERMINATION DATE AND THE
DENOMINATOR OF WHICH IS THE NUMBER OF CALENDAR DAYS IN THE INSTALLMENT PERIOD,
ROUNDED DOWN TO THE NEAREST NUMBER OF WHOLE SHARES, AND THE PARTICIPANT MAY
EXERCISE THE VESTED PORTION OF THE OPTION UNTIL THE EARLIER OF THE

 

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Expiration Date or the last day of the 90-day period following such termination
of employment, and the Option shall thereafter terminate and cease to be
exercisable.

 

(B)           UPON TERMINATION OF THE PARTICIPANT’S EMPLOYMENT WITH THE COMPANY
FOR ANY OTHER REASON NOT OTHERWISE SPECIFIED IN CLAUSE (A) ABOVE, THE UNVESTED
PORTION OF THE OPTION SHALL TERMINATE AND CEASE TO BE EXERCISABLE AND THE
PARTICIPANT OR HIS ESTATE OR LEGAL BENEFICIARIES IN THE CASE OF HIS DEATH, AS
APPLICABLE, MAY EXERCISE THE VESTED PORTION OF THE OPTION, BUT ONLY TO THE
EXTENT THE OPTION WAS EXERCISABLE IMMEDIATELY PRIOR TO TERMINATION OF
EMPLOYMENT, UNTIL THE EARLIER OF THE EXPIRATION DATE OR THE LAST DAY OF THE
THIRTY (30) DAY PERIOD FOLLOWING TERMINATION OF EMPLOYMENT (OR ONE (1) YEAR
PERIOD IN THE EVENT HIS TERMINATION OF EMPLOYMENT IS AS A RESULT OF HIS DEATH),
AND THE OPTION SHALL THEREAFTER TERMINATE AND CEASE TO BE EXERCISABLE.

 

(C)           IF THE PARTICIPANT’S EMPLOYMENT WITH THE COMPANY IS TERMINATED BY
THE COMPANY WITHOUT CAUSE OR BY THE PARTICIPANT FOR GOOD REASON CONCURRENT WITH
OR WITHIN SIX (6) MONTHS FOLLOWING A CHANGE IN CONTROL (AS DEFINED IN THE PLAN)
WHICH OCCURS PRIOR TO SEPTEMBER 30, 2005, AND THE EFFECTIVE DATE OF SUCH
TERMINATION OCCURS BEFORE THE PARTICIPANT HAS BECOME VESTED IN THE FIRST TWO (2)
INSTALLMENTS OF THE OPTION, THE PARTICIPANT SHALL BECOME 100% VESTED IN SUCH
FIRST TWO (2) INSTALLMENTS, AND THE PARTICIPANT MAY EXERCISE THE VESTED PORTION
OF THE OPTION UNTIL THE EARLIER OF THE EXPIRATION DATE OR THE LAST DAY OF THE
90-DAY PERIOD FOLLOWING SUCH TERMINATION OF EMPLOYMENT, AND THE OPTION SHALL
THEREAFTER TERMINATE AND CEASE TO BE EXERCISABLE.

 

(d)           Participant acknowledges and agrees that the continued vesting of
the Option granted hereunder is premised upon his provision of future services
to the Company and the vesting of such Option shall not accelerate upon his
termination of employment for any reason unless specifically provided for
herein.

 

4.             Time and Method of Exercising Option.  The Option, to the extent
vested, may be exercised, in whole or in part, by giving written notice of
exercise to the Company specifying the number of whole shares of Stock to be
purchased.  Such notice shall be accompanied by the payment in full of the
Option Price.  Such payment shall be made either: (i) in cash at the time of
purchase, (ii) by tendering shares of Stock (either by actual delivery of shares
or by attestation) that are acceptable to the Committee and have been held by
the Participant for at least six months prior to the exercise, and were valued
at Fair Market Value as of the day the shares are tendered, (iii) in any
combination of cash, shares, or attested shares, as determined by the Committee
in its sole discretion or (iv) to the extent permitted by applicable law,
Participant may elect to pay the Option Price upon the exercise of an Option by
irrevocably authorizing a third party to sell shares of Stock (or a sufficient
portion of the shares) acquired upon exercise of the Option and remit to the
Company a sufficient portion of the sale proceeds to pay the entire Option Price
and any tax withholding resulting from such exercise.

 

5.             Issuance of Shares.  Except as otherwise provided in the Plan,
and subject to applicable law, as promptly as practical after receipt of such
written notification of exercise and full payment of the Option Price and any
required income tax withholding, the Company shall issue or transfer to the
Participant the number of Option Shares with respect to which Options have been
so exercised (less shares withheld in satisfaction of tax withholding
obligations, if any), and shall deliver to the Participant a certificate or
certificates therefore, registered in the

 

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Participant’s name.

 

6.             Non-Transferability.  The Option shall not be transferable by the
Participant other than by will or by the laws of descent and distribution, and
the Option shall be exercisable during the lifetime of the Participant only by
the Participant or his guardian or legal representative.  The terms of the
Option shall be final, binding and conclusive upon the beneficiaries, executors,
administrators, heirs and successors of the Participant.  Until the Option has
vested, shares subject to the Option shall not be sold, transferred or otherwise
disposed of, shall not be pledged or otherwise hypothecated and shall not be
subject to the claims of creditors.

 

7.             Adjustments.  Options may be adjusted or terminated in any manner
as contemplated by the Plan.

 

8.             Rights as Shareholder.  The Participant or a transferee of the
Options shall have no rights as a shareholder with respect to any Option Shares
until he shall have become the holder of record of such shares, and no
adjustment shall be made for dividends or distributions or other rights in
respect of such Option Shares for which the record date is prior to the date
upon which he shall become the holder of record thereof.

 

9.             Compliance with Law.  Notwithstanding any of the provisions
hereof, the Participant hereby agrees that he will not exercise the Option, and
that the Company will not be obligated to issue or transfer any shares to the
Participant hereunder, if the Committee determines, in its sole discretion, that
the exercise of the Option or the issuance or transfer of the Option Shares
constitutes a violation by the Participant or the Company of any provisions of
any law or regulation of any governmental authority.  Such determination by the
Committee shall be final, binding and conclusive.  The Company shall in no event
be obliged to register any securities pursuant to the Securities Act of 1933 (as
now in effect or as hereafter amended) or to take any other action in order to
cause the exercise of the Option or the issuance or transfer of Option Shares
pursuant thereto to comply with any law or regulation of any governmental
authority.

 

10.           Taxes.  At such time as the Participant recognizes taxable income
in connection with the receipt of shares or cash hereunder (a “Taxable Event”),
the Participant shall pay to the Company an amount equal to the minimum federal,
state and local income taxes and other amounts as may be required by law to be
withheld by the Company in connection with the Taxable Event (the “Withholding
Taxes”) prior to the issuance of such shares or the payment of such cash.  The
Committee, in its discretion, and subject to such requirements as the Committee
may impose prior to the occurrence of such withholding, may permit such
withholding obligations to be satisfied through cash payment by the Participant,
through the surrender of shares of Stock which the Participant already owns, or
through the surrender of shares of Stock to which the Participant is otherwise
entitled under the Plan, but only to the extent of the Withholding Taxes.

 

11.           Notice.  Every notice or other communication relating to this
Agreement shall be in writing, and shall be mailed to or delivered to the party
for whom it is intended at such address as may from time to time be designated
by it in a notice mailed or delivered to the other party as

 

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herein provided; provided, that, unless and until some other address be so
designated, all notices or communications by the Participant to the Company
shall be mailed or delivered to the Company at its principal executive office,
and all notices or communications by the Company to the Participant may be given
to the Participant personally or may be mailed to him at his address as recorded
in the records of the Company.  Notwithstanding the foregoing, at such time as
the Company institutes a policy for delivery of notice by e-mail, notice may be
given in accordance with such policy.

 

12.           Nonqualified Stock Option.  The Option granted hereunder is not
intended to be an “incentive stock option” within the meaning of Section 422 of
the Code (“ISO”).

 

13.           Binding Effect.  Subject to Section 6 hereof, this Agreement shall
be binding upon the heirs, executors, administrators and successors of the
parties hereto.

 

14.           No Right to Continued Employment.  Nothing in this Agreement or in
the Plan shall confer upon the Participant any right to continue in the service
of the Company or shall interfere with or restrict in any way the rights of the
Company, which are hereby expressly reserved, to terminate the services of or
discharge the Participant at any time for any reason.

 

15.           Governing Law.  Except to the extent governed by the Delaware
General Corporation Law, this Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of Ohio without regard to its
conflict of law principles.

 

16.           Plan.  The terms and provisions of the Plan are incorporated
herein by reference, and the Participant hereby acknowledges receiving a copy of
the Plan.  In the event of a conflict or inconsistency between the terms and
provisions of the Plan and the provisions of this Agreement, the Plan shall
govern and control.  All capitalized terms not defined herein shall have the
meaning ascribed to them as set forth in the Plan.

 

17.           Successors and Assigns.  The Company may assign any of its rights
under this Agreement.  This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of the Company.  Subject to the
restrictions on transfer set forth herein, this Agreement shall be binding upon
the Participant and the Participant’s heirs, executors, administrators, and
legal representatives.

 

18.           Gender and Number.  The masculine pronoun shall be deemed to
include the feminine, and words in the singular shall be deemed to include the
plural and the plural shall be deemed to include the singular, unless a
different meaning is plainly required by the context.

 

19.           Definitions.

 

(A)          THE TERM “COMPANY” AS USED IN THIS AGREEMENT WITH REFERENCE TO
EMPLOYMENT SHALL INCLUDE THE COMPANY AND ITS SUBSIDIARIES, AS APPROPRIATE.

 

(B)         WHENEVER THE WORD “PARTICIPANT” IS USED IN ANY PROVISION OF THIS
AGREEMENT UNDER CIRCUMSTANCES WHERE THE PROVISION SHOULD LOGICALLY BE CONSTRUED
TO APPLY TO

 

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the beneficiaries, the executors, the administrators, or the person or persons
to whom the Options may be transferred by will or by the laws of descent and
distribution, the word “Participant” shall be deemed to include such person or
persons.

 

(C)           THE TERM “CAUSE” MEANS (I) PARTICIPANT’S CONVICTION OF, OR PLEA OF
GUILTY OR NO CONTEST TO: (A) ANY FELONY OR OTHER CRIMINAL OFFENSE THAT COULD
RESULT IN IMPRISONMENT OF AT LEAST 1 YEAR OR (B) A CRIME INVOLVING FRAUD, THEFT,
MISAPPROPRIATION, DISHONESTY OR EMBEZZLEMENT UNDER EITHER FEDERAL OR STATE LAW;
(II) PARTICIPANT’S DISHONESTY IN COMMUNICATIONS TO THE COMPANY’S BOARD OF
DIRECTORS (THE “BOARD”), ANY MEMBER OF THE BOARD OR ANY OTHER SUPERIOR OFFICER
OR SUPERIOR EMPLOYEE HE IS REQUIRED TO REPORT TO IN THE COURSE OF FULFILLING
PARTICIPANT’S MATERIAL EMPLOYMENT DUTIES; (III) PARTICIPANT’S PROVEN COMMISSION
OF INTENTIONAL OR GROSSLY NEGLIGENT ACTS THAT MATERIALLY IMPAIR THE GOODWILL OR
BUSINESS OF THE COMPANY OR CAUSE MATERIAL DAMAGE TO ITS PROPERTY, GOODWILL OR
BUSINESS; OR (IV) PARTICIPANT’S WILLFUL FAILURE TO PERFORM PARTICIPANT’S
EMPLOYMENT DUTIES IN ANY MATERIAL RESPECT (OTHER THAN AS A RESULT OF
PARTICIPANT’S SHORT TERM DISABILITY OR MEDICAL EMERGENCY INVOLVING A MEMBER OF
PARTICIPANT’S IMMEDIATE FAMILY, OR AS THE RESULT OF ANY COMPANY APPROVED LEAVE).

 

 (d)          The term “Good Reason” means (i) any reduction in Participant’s
annual base salary or target incentive bonus opportunity; (ii) any requirement
by the Company that Participant’s services be rendered primarily at a location
or locations other than within 35 miles of Participant’s current office location
for other than a de minimis period of time, without Participant’s prior written
consent; provided, that, Participant shall not have Good Reason if he is
required to engage in reasonable amounts of travel on Company business; or (iii)
a material adverse alteration in the nature and status of Participant’s
responsibilities unless such alteration is remedied within thirty days following
written notification by Participant to the Company of the alleged material
adverse alteration.  Participant shall not have Good Reason to terminate his
employment under clause (d)(iii) if the Company is acquired by or merged with, a
Sprint PCS affiliate (excluding Sprint FON Group in such affiliated group) and
Participant reports to the chief executive officer of the new entity and is the
chief operating officer or has another senior level transition responsibility
for the acquired or merged entity at the time of such acquisition or merger.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.

 

 

 

HORIZON PCS, INC.

 

 

 

 

 

 

 

 

By:

     /s/ William A. McKell

 

 

 

 

Name:

 William A. McKell

 

 

 

Title:

 President & Chief Executive
 Officer

 

 

 

 

 

 

 

 

PARTICIPANT

 

 

 

 

 

 

 

 

/s/ Alan G. Morse

 

 

 

Alan G. Morse

 

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