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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