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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_]Preliminary Proxy Statement
[_]Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[X]Definitive Proxy Statement
[_]Definitive Additional Materials
[_]Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
----------------
TeleCorp PCS, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X]No fee required.
[_]$125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1) or Item 22(a)(2)
of Schedule 14A.
[_]Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1)Title of each class of securities to which transaction applies:
---------------------------------------------------------------
2)Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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4)Proposed maximum aggregate value of transaction:
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5)Total fee paid:
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[_]Fee paid previously with preliminary materials.
[_Check]box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing:
1)Amount previously paid: _____________________________________
2)Form, Schedule or Registration Statement No: ________________
3)Filing party: _______________________________________________
4)Date Filed: _________________________________________________
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TELECORP PCS, Inc.
1010 N. Glebe Road, Suite 800
Arlington, Virginia 22201
703-236-1100
----------------
NOTICE OF 2000 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON WEDNESDAY, MAY 24, 2000
----------------
To the Stockholders of TeleCorp PCS, Inc.:
The 2000 Annual Meeting of the stockholders of TeleCorp PCS, Inc. will be
held at the Key Bridge Marriott Hotel, 1401 Lee Highway, Arlington, Virginia
22209 on Wednesday, May 24, 2000 at 1:00 p.m., eastern standard time, to
consider and act upon the following matters:
1. To elect three directors to serve for three-year terms ending in
2003.
2. To ratify the appointment of auditors for the year 2000.
3. To transact such other business as may properly come before the
annual meeting and any and all adjournments thereof.
Stockholders of record at the close of business on April 10, 2000 will be
entitled to notice of and to vote at the annual meeting. A list of such
stockholders will be available at the time and place of the annual meeting and
during the ten days prior to the annual meeting, at the office of the Secretary
of the Company at the above address. A copy of the Company's Annual Report to
Stockholders for the year ended December 31, 1999, which contains financial
statements and other information of interest to stockholders, accompanies this
Notice and the enclosed Proxy Statement.
All stockholders are cordially invited to attend the meeting.
By Order of the Board of Directors
Thomas H. Sullivan, Secretary
Arlington, Virginia
April 21, 2000
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE,
DATE AND SIGN THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE ENCLOSED
ENVELOPE IN ORDER TO ENSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE
AFFIXED IF THE PROXY IS MAILED IN THE UNITED STATES.
<PAGE>
TELECORP PCS, INC.
1010 N. Glebe Road, Suite 800
Arlington, Virginia 22201
----------------
PROXY STATEMENT
For Annual Meeting of Stockholders
To Be Held May 24, 2000
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VOTING PROCEDURES
Introduction
The enclosed proxy is being solicited by our board of directors to be voted
at our 2000 Annual Meeting of Stockholders to be held on Wednesday, May 24,
2000, beginning at 1:00 p.m. eastern standard time at the Key Bridge Marriott
Hotel, 1401 Lee Highway, Arlington, Virginia 22209, and at any postponement or
adjournment thereof for the purpose set forth in the attached notice.
At this year's annual meeting, the agenda includes the annual election of
directors and a proposal to ratify the appointment of our independent auditing
firm. The Board of Directors recommends that you vote FOR the election of the
slate of nominees for directors and FOR ratification of the appointment of the
independent auditors.
We are mailing this proxy statement and accompanying forms of proxy and
voting instructions to holders of our class A common stock on or about April
21, 2000.
How to Vote Your Shares
Please complete, sign, date and return the accompanying Proxy Card promptly
in the enclosed addressed envelope, even if you plan to attend the annual
meeting. Postage need not be affixed to the envelope if mailed in the United
States. The immediate return of your proxy will be of great assistance in
preparing for the annual meeting and is therefore urgently requested. If you
attend the annual meeting you may vote in person and your proxy card will be
revoked.
Stockholders Entitled to Vote
Stockholders holding class A common stock and/or voting preference common
stock at the close of business on the record date, Monday, April 10, 2000, are
entitled to notice of and to vote at the annual meeting.
On April 10, 2000, there were 87,533,189 shares of class A common stock
outstanding and 3,090 shares of voting preference common stock outstanding. The
holders of the class A common stock are entitled to an aggregate of 4,990,000
votes and the holders of the voting preference common stock are entitled to an
aggregate of 5,010,000 votes. Therefore, on each matter properly brought before
the annual meeting each share of class A common stock is entitled to the amount
of votes equal to 4,990,000 divided by the number of outstanding shares of
class A common stock on the record date, or approximately .057 votes per share
and each share of voting preference common stock is entitled to the amount of
votes equal to 5,010,000 divided by the number of outstanding share of voting
preference common stock on the record date, or approximately 1,621 votes per
share.
In accordance with Delaware law, a list of stockholders entitled to vote at
the annual meeting will be available at the location of the annual meeting on
May 24, 2000, and for 10 days prior to the annual meeting, at our office at the
1010 N. Glebe Road, Arlington, Virginia 22201 between the hours of 9:00 a.m.
and 4:00 p.m. eastern standard time.
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How to Revoke Your Proxy
You can revoke your proxy at any time before it is exercised by delivering a
properly executed, later-dated proxy or by voting by ballot at the annual
meeting. All shares entitled to vote and represented by properly completed
proxies received prior to the annual meeting and not revoked will be voted at
the annual meeting in accordance with your instructions. IF YOU DO NOT INDICATE
HOW YOUR SHARES SHOULD BE VOTED ON A PARTICULAR MATTER, THE SHARES REPRESENTED
BY YOUR PROXY WILL BE VOTED AS OUR BOARD OF DIRECTORS RECOMMENDS.
If You Plan to Attend the Meeting In Person
The annual meeting will be held at 1:00 p.m., eastern standard time, on
Wednesday, May 24, 2000 at the Key Bridge Marriott Hotel located at 1401 Lee
Highway, in Arlington, Virginia. If your shares are not registered in your own
name and you plan to attend the annual meeting and vote your shares in person,
you should contact your broker or agent in whose name your shares are
registered to obtain a broker's proxy and bring it to the annual meeting in
order to vote.
Required Vote
To constitute a quorum at the annual meeting requires the presence, in
person or by proxy, of the holders of:
. a majority of the shares of voting preference common stock outstanding as
of the record date; and
. shares of any classes of common stock entitled to vote at the annual
meeting representing at least 5,010,000 votes.
Abstentions and broker "non-votes" will be counted as present and entitled
to vote for purposes of determining a quorum. A broker "non-vote" occurs when a
nominee holding shares for a beneficial owner does not vote on a particular
proposal because the nominee does not have discretionary voting power with
respect to that item and has not received instructions from the beneficial
owner.
A plurality of the votes duly cast is required for the election of a
director (i.e., the nominee receiving the greatest number of votes will be
elected). Abstentions and broker "non-votes" are not counted for purposes of
the election of a director.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote is required to approve the
stockholder proposals described in this proxy statement. An abstention is
counted as a vote against each of the stockholder proposals. A broker "non-
vote" is not counted for purposes of approving the stockholder proposals.
Multiple Copies of Annual Report to Stockholders
If you received more than one copy of our 1999 annual report and wish to
reduce the number of reports you receive and save us the cost of producing and
mailing these reports, we will discontinue the mailing of reports on the
accounts you select if you mark the designated box on the appropriate proxy
card(s).
At least one account at your address must continue to receive annual
reports, unless you elect to view future annual reports and proxy statements
over the internet. Mailing of dividends, dividend reinvestment statements,
proxy materials and special notices will not be affected by your election to
discontinue duplicate mailings of the annual report. To discontinue or resume
the mailing of an annual report for an account, please call Jim Morrisey at
703-236-1100. If you own our stock through a bank, broker or other holder of
record and receive more than one of our annual reports, contact the holder of
record to eliminate duplicate mailings.
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Electronic Access to Proxy Materials and Annual Report
This proxy statement and the 1999 annual report are available on our
internet site at www.telecorppcs.com. Most stockholders can elect to view
future proxy statements and annual reports over the internet instead of
receiving paper copies in the mail.
If you are a stockholder of record, you can choose this option and save us
the cost of producing and mailing these documents by marking the appropriate
box on your proxy card. You can also choose between paper documents and
electronic access by calling Jim Morrisey at 703-236-1100. Your choice will
remain in effect until you call Jim Morrisey at 703-236-1100 and tell us
otherwise. You do not have to elect internet access each year.
If you hold our stock through a bank, broker or other holder of record,
please refer to the information provided by that entity for instructions on how
to elect to view future proxy statements and annual reports over the internet.
Most stockholders who hold our stock through a bank, broker or other holder
of record and who elect electronic access will receive an e-mail next year
containing the internet address to use to access our proxy statement and annual
report.
Cost of Proxy Solicitation
We will pay the cost of soliciting proxies. Proxies may be solicited on our
behalf by our directors, officers or employees in person or by telephone,
facsimile or other electronic means. We will reimburse brokerage houses and
others for forwarding proxy material to you.
Stockholder Communications
You can obtain a transcript of the annual meeting by writing to Jim
Morrisey, Stockholder Meeting Transcript Requests, TeleCorp PCS, Inc., 1010 N.
Glebe Road, Suite 800, Arlington, Virginia 22201.
As a stockholder, your comments pertaining to any aspect of our business are
welcome. Space is provided for this purpose on the proxy card given to
stockholders of record. Although stockholder comments are not answered on an
individual basis, they do assist us in understanding the concerns of
stockholders.
Stockholder Account Maintenance
Our transfer agent is EquiServe, located at 150 Royall Street, Canton,
Massachusetts 02021. All communications concerning accounts of stockholders of
record, including address changes, name changes, inquiries as to requirements
to transfer our stock and similar issues can be handled by calling Jim Morrisey
at TeleCorp at 703-236-1100. For other information about us, you can visit our
internet site at www.telecorppcs.com.
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PROPOSAL 1
ELECTION OF DIRECTORS
Our board of directors is divided into three classes, Class I, Class II and
Class III, currently consisting of three directors each. Each class of
directors is elected for a three-year term. The current term of our Class I
Directors will expire at this annual meeting. The nominees for Class I
Directors are Gerald T. Vento, Thomas H. Sullivan and William Kussell. Messrs.
Vento, Sullivan and Kussell currently serve on our board of directors and are
available for re-election as Class I Directors.
Your proxy holder will vote your shares for the nominees unless you instruct
otherwise or you indicate that your vote should be withheld. They will not vote
for additional directors. If elected, each of Messrs. Vento, Sullivan and
Kussell will continue in office until our 2003 annual meeting, upon his
successor being duly elected and qualified, or until his earlier death,
resignation or retirement. We expect each of the nominees to be able to serve
if elected. However, if any nominee should be unable to serve, your proxy
holder may vote the proxy for any substitute nominee.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR MESSRS. VENTO, SULLIVAN AND
KUSSELL FOR ELECTION AS CLASS I DIRECTORS.
The names of our current directors and executive officers, including the
Class I directors who are up for reelection, and certain information about them
is set forth below:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Gerald T. Vento......... 52 Chief Executive Officer, Director
Thomas H. Sullivan...... 37 Executive Vice President and Chief Financial Officer, Director
Julie A. Dobson......... 43 Chief Operating Officer
William A. Kussell...... 40 Director
Michael R. Hannon....... 39 Director
Mary Hawkins-Key........ 49 Director
Rohit M. Desai.......... 61 Director
James M. Hoak, Jr. ..... 56 Director
Scott I. Anderson....... 41 Director
Michael Schwartz........ 35 Director
</TABLE>
Executive Officers and Directors
Gerald T. Vento. Mr. Vento is our co-founder, the co-founder of our
predecessor company, TeleCorp Holding Corp., Inc., and has been our Chief
Executive Officer and a director since our inception in July 1997. He has been
Chairman of our board of directors since June 1999. From December 1993 to March
1995, Mr. Vento was Vice Chairman and Chief Executive Officer of Sprint
Spectrum/American PCS, L.P. From April 1995 to March 1998, Mr. Vento was
Chairman of Entel Technologies, Inc., a wireless site acquisition and
construction management company. From April 1996 to October 1996, Mr. Vento
also served as the Chief Executive Officer of National Fiber Networks, Inc. Mr.
Vento also served as managing partner in a joint venture with the Washington
Post Company to build and operate that company's systems in the United Kingdom
prior to its sale in 1993 to TCI/US West Communications. Mr. Vento has spent
over twenty years in cable, telephone and wireless businesses. Mr. Vento was
the founder and Managing General Partner for several communications companies,
which he developed from inception, including wireless and cable television
properties throughout the United States and Puerto Rico.
Thomas H. Sullivan. Mr. Sullivan is our co-founder and the co-founder of our
predecessor company, TeleCorp Holding Corp., Inc., and has been our Executive
Vice President and one of our directors since our inception in July 1997, and
Chief Financial Officer since March 1999. Mr. Sullivan served as President of
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TeleCorp Holding Corp., Inc. from 1996 to 1998 and has served as a senior
executive and founder of several wireless and wireline companies for the past
five years. From 1992 to 1999, Mr. Sullivan was a partner of, and counsel to,
McDermott, Will & Emery, where he served as co-head of its telecommunications
practice and co-chairman of its Boston corporate department.
Julie A. Dobson. Ms. Dobson has served as our Chief Operating Officer since
July 1998. Prior to joining us, Ms. Dobson was President of Bell Atlantic
Mobile Systems New York/New Jersey Metro Region. She was responsible for sales,
marketing, customer service and the continued expansion of that company's
wireless communications network in the region. She also oversaw more than 1,500
employees and an extensive retail store network in seven counties in New York
and northern and central New Jersey. Ms. Dobson had been with Bell Atlantic
since 1980, when she began her career as an account executive in sales at Bell
Atlantic-Pennsylvania, and served in a variety of positions in sales, marketing
and operations over two decades. Ms. Dobson also serves as a director of INA
Trust.
William A. Kussell. Mr. Kussell has served as President of Dunkin' Donuts
marketing office since March 1994, as well as Retail Concept Officer for Allied
Domecq Retailing USA since 1997. He was Vice President of worldwide marketing
for Reebok from November 1991 to March 1994. He has served as one of our
directors since July 1998.
Michael R. Hannon. Mr. Hannon has been a General Partner of Chase Capital
Partners, a general partnership with over $15 billion under management, since
January 1988. Chase Capital Partners invests in a wide variety of international
equity opportunities including management buyouts, growth equity, and venture
capital situations. Chase Capital Partner's chief limited partner is The Chase
Manhattan Corporation, one of the largest bank holding companies in the United
States. Mr. Hannon also serves as the global practice head of the media and
telecommunications industry at Chase Capital Partners. From 1998 until November
1999, Mr. Hannon served as our Chairman and he is currently on the board of
directors of Entercom Communications and several privately held media and
telecommunications firms. He has served as one of our directors since July 1998
and is one of three Class II directors who will continue in office until our
2001 annual meeting.
Mary Hawkins-Key. Ms. Hawkins-Key has been a Senior Vice President for AT&T
Wireless since July 1998. Ms. Hawkins-Key joined AT&T's Messaging Division in
April 1995, and subsequently became Chief Operating Officer for the division
until its sale in 1998. Ms. Hawkins-Key is on the board of Triton PCS and is a
partner committee member for CMT Partners, the partnership which owns Bay Area
Cellular Telephone. She has served as one of our directors since March 1999 and
is one of three Class II directors who will continue in office until our 2001
annual meeting.
Rohit M. Desai. Mr. Desai has been the Chairman, President and Chief
Investment Officer of Desai Capital Management Incorporated since 1984. Desai
Capital Management is an equity investment firm with approximately $2 billion
under management and is the investment advisor to Equity-Linked Investors II,
Private Equity Investors III, L.P. and Private Equity Investors IV, L.P., of
which Mr. Desai is the managing general partner. Mr. Desai currently sits on
the board of The Rouse Company, Sunglass Hut International, Finlay Fine Jewelry
Holdings and Independence Community Bankcorp. He has served as one of our
directors since July 1998 and is one of three Class II directors who will
continue in office until our 2001 annual meeting.
James M. Hoak, Jr. Mr. Hoak has served as Chairman and a Principal of Hoak
Capital Corporation, a private equity investment firm, since September 1991. He
has also served as Chairman of HBW Holdings, an investment bank, from July 1996
to November 1999, and continues to serve as a director of this firm. He served
as Chairman of Heritage Media Corporation, a broadcasting and marketing
services firm, from its inception in August 1987 to its sale in August 1997.
From February 1991 to January 1995, he served as Chairman and Chief Executive
Officer of Crown Media, Inc., a cable television company. From 1971 to 1987, he
served as President and Chief Executive Officer of Heritage Communications,
Inc., a diversified communications company, and as its Chairman and Chief
Executive Officer from August 1987 to December 1990. He is also a director of
PanAmSat Corporation, Pier 1 Imports and Texas Industries. He has served as one
of our directors since July 1998 and is one of three Class III directors who
will continue in office until our 2002 annual meeting.
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Scott I. Anderson. Mr. Anderson has served as Principal in Cedar Grove
Partners, an investment and consulting/advisory partnership since 1997, and
since 1998 as Principal in Cedar Grove Investments, an angel capital investment
fund. He was a board member of Tegic Communications prior to its merger with
America Online, Inc., is currently a board member of Tritel Communications,
Triton PCS and Xypoint. He was employed by McCaw Cellular Communications and
AT&T from 1986 until 1997, where he last served as Senior Vice President of the
Acquisitions and Development group. He has served as one of our directors since
July 1998 and is one of three Class III directors who will continue in office
until our 2002 annual meeting.
Michael Schwartz. Mr. Schwartz is a co-founder and Executive Vice President
of habit.com, an e-commerce entertainment community. Prior to joining
habit.com. in March, 2000, he was a Vice President in AT&T Wireless'
Acquisitions and Development group. Mr. Schwartz continues to provide services
to AT&T on a part-time basis. From September 1996 through September 1998, Mr.
Schwartz was Vice President and Chief Counsel of AT&T's Messaging Division.
Prior to joining AT&T, Mr. Schwartz was in private law practice in the Seattle
firm of Ridell Williams P.S. He has served as one of our directors since
November 1998 and is one of three Class III directors who will continue in
office until our 2002 annual meeting.
Board and Committee Meetings
During the fiscal year ended December 31, 1999, our board of directors had
two ongoing committees: an Audit Committee and a Compensation Committee.
The Audit Committee meets with management periodically to consider the
adequacy of our internal controls and the objectivity of our financial
reporting. The committee also meets with the independent auditors and with
appropriate company financial personnel regarding these matters. The
independent auditors have unrestricted access to the committee. The Audit
Committee recommends to our board of directors the appointment of the
independent auditors. The Audit Committee reviews our financing plans and
reports recommendations to the full board of directors for approval and to
authorize action. The committee has a written charter. The members of the
committee have reviewed the charter and believe that the committee complied
with the charter in fiscal 1999. The Audit Committee consists of Messrs. Hoak
(Chairman), Kussell and Anderson, none of whom is our employee or consultant.
The Audit Committee met four times in fiscal 1999.
The Compensation Committee administers our 1999 Stock Option Plan and 1998
Restricted Stock Plan and approves salaries, bonuses and other compensation
arrangements and policies for our employees, directors and officers, including
the chief executive officer. The Compensation Committee consists of Messrs.
Anderson, Desai, Hannon and Schwartz (Chairman). The Compensation Committee met
six times during the last fiscal year.
During the fiscal year ended December 31, 1999, our board of directors held
14 meetings, including meetings held by telephone conference, and the
committees held a total of ten meetings. All directors, during the time in
which they served as directors, attended at least 75% of the meetings of our
board and of the committees on which they served except for Rohit Desai,
William Kussell, Gary Fuqua and William Laverack.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee consists of Messrs. Anderson, Desai, Hannon and
Schwartz (Chairman), none of whom is our employee or consultant. In addition,
none of our executive officers has served as a director or member of the
compensation committee of any other entity whose executive officer served as a
director or member of our Compensation Committee
Director Compensation
Representatives of our initial investors who serve on our board of directors
or its committees, do not receive cash compensation for such services. Other
non-management members of our board of directors or its
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committees receive a quarterly stipend of $1,875, an additional $1,000 for
attending each board or committee meeting and $500 for participating in each
teleconference. The directors are also eligible to receive stock options. As of
April 11, 2000, two of our directors, Mr. Anderson and Mr. Kussell, have each
been granted options to purchase 30,900 shares of our class A common stock, of
which options to purchase 7,725 shares have vested. All members of our board of
directors or any committee of our board of directors, including our management
members, are reimbursed for out-of-pocket expenses in connection with
attendance at meetings.
Compensation Committee Report On Executive Compensation
Role of the Compensation Committee
The Committee is comprised of four members of our board of directors, Mr.
Michael Schwartz, Mr. Rohit Desai, Mr. Michael Hannon and Mr. Scott Anderson,
each of whom is neither a current nor former employee of the company. We set
the overall compensation principles of the company and review the entire
compensation program at least once a year. The base salaries of the company's
executive officers are determined by the Committee. In establishing base
salaries for executive officers the Committee considers numerous factors such
as: a review of salaries in comparable telecommunications companies, the
executive's responsibilities, the executive's importance to the company, the
executive's performance in the prior year, historical salary levels of the
executive and relative salary levels within the company. To date, we have not
considered the advice of independent outside consultants in determining whether
the amounts and types of compensation the company pays its officers are
appropriate but the Committee may choose to do so from time to time in the
future.
Executive Compensation Guiding Principles
The goal of our compensation program is to attract, motivate and retain the
highly talented individuals TeleCorp needs to be a market leader in a highly
competitive industry. We developed the program with the company's leadership
team to support the company's aggressive business strategy. The following
principles guided the development of the program:
.Compensation Should Be Related To Performance
We believe that the better an individual performs, the higher the
individual's compensation should be. We also believe that individual
compensation should be tied to how well the company performs financially. That
is, when the company's performance exceeds our pre-established objectives, the
bonus pool will be higher and to the extent company's performance does not meet
these objectives, the bonus pool is reduced, and to the extent the company's
performance is less than pre-determined levels, any award payment will be
subject to the Committee's discretion.
.TeleCorp Employees Should Own TeleCorp Stock
We provide TeleCorp employees at virtually all levels with a way to become
stockholders. In August 1999 we made stock option grants to all of our
employees employed prior to July 1, 1999 and in December 1999 we approved the
grant of stock options to all employees employed on or before December 31, 1999
who were not included in the previous grant of options. To date the executive
officers have not received stock options under our 1999 Stock Option Plan. Our
goal is to encourage each employee to act like an owner of the business.
. Incentive Compensation Should Be A Greater Part Of Total Compensation For
More Senior Management
The proportion of an individual's total compensation that depends on
individual and company performance objectives should increase as the individual
becomes more senior in the company.
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.Other Goals
Our compensation program is designed to balance short and long term
financial objectives, build stockholder value and reward individual, team and
corporate performance.
We review compensation survey data from several independent sources to
ensure that our total compensation program is competitive. Companies selected
include those with whom we compete for executive and other employee talent. The
company's competitors for executive and other employee talent are not
necessarily the same companies that are included in the index used to compare
stockholder returns (see Performance Graph, page 24) because the company may
require specialized skills from a more varied set of backgrounds.
Components of the Compensation Program
The principal components of our compensation program, other than the
employee benefits, including a 401(k) retirement plan and medical insurance
plans that are available to all employees of TeleCorp, include the following:
. Base Salary;
. Short Term Incentives: Annual Bonus;
. Long Term Incentives: Stock Options; and
. Special Equity Grants: Stock Options and Restricted Stock Grants.
1. Base Salary. We set base salaries for all employees, officers and
executives at levels that are comparable to similar positions at companies with
whom we compare for compensation purposes. While we compare salaries on a
regular basis, we usually adjust salaries only when our review shows a
significant deviation. This is in line with our philosophy that compensation
above competitive levels should come primarily from the variable portion of the
compensation package.
2. Short Term Incentives: Bonus. The annual bonus component of incentive
compensation is intended to align the compensation of our employees, officers
and executives with the short term, or annual, performance of the company. In
1999, the annual bonus opportunity was based on the company achieving a number
of financial, operating and other objectives, including, without limitation,
meeting revenue and expense targets, meeting build-out requirements for its
licenses and the completion of the company's initial public offering of
securities. When we evaluate performance, we consider factors such as
leadership, customer focus, business knowledge and execution of TeleCorp's
business strategy.
3. Long Term Incentives: Stock Options. We make grants of stock options to
independent members of the company's board of directors, as well as most other
employees of the company. On July 22, 1999, our board approved the grant of
options to virtually all our employees and three of our directors to purchase
an aggregate of 581,967 shares of class A common stock under our plan at an
exercise price of $.0065 per share, the estimated fair value of the class A
common stock on the date of grant. We effected these grants on August 31, 1999.
On December 17, 1999 our board also approved the grant of options to employees
employed on or prior to December 31, 1999 who had not previously been granted
options to purchase an aggregate of approximately 260,000 shares of our class A
common stock at a below fair market exercise price of $20.00 per share. These
grants will be effective as of January 1, 2000. The company currently plans to
issue future options at an exercise price equal to the fair market value of the
company's class A common stock on the day we grant the options. These options
generally vest over a four year period of continuous service to the company and
expire ten years from the date of the grant. We base target grants on a
comparison to our selected sample group; however, grants to individuals can be
adjusted based on individual performance, retention and other special
circumstances.
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4. Special Equity Grants: Stock Options and Restricted Stock Grants. We
believe that ownership of TeleCorp stock is a key element of our compensation
program and that retention of our senior management team is essential to
TeleCorp's future success, both in the short and long term. From time to time,
we may make special equity grants to accomplish one or both of these
objectives. Depending on the circumstances, a special equity grant may take the
form of a stock option, restricted stock or a combination of the two.
Compensation of the Chief Executive Officer
In fiscal 1999, the company's most highly compensated officer was Gerald T.
Vento, the Chairman of the Board and Chief Executive Officer. Each year, the
board of directors agrees on a set of objectives with Mr. Vento. At the end of
the year, the Committee reviews Mr. Vento's performance against those
objectives. This review includes analysis of the company's short and long term
financial results, as well as its progress towards its strategic objectives. In
addition, we consider individual factors such as Mr. Vento's leadership ability
and ability to execute TeleCorp's business strategy and the company's
relationship with customers and the investment community.
Base Salary:
In the year ended December 31, 1999, we did not change Mr. Vento's annual
base salary from 1998 of $300,000. The Compensation Committee believes that Mr.
Vento's current annual base salary is competitive with those paid by other
companies in this industry to their chief executive officers.
Short Term Incentives:
For fiscal 1999, Mr. Vento's annual bonus was based on corporate objectives,
as determined by the board of directors, including meeting revenue and expense
targets, meeting build-out requirements for its licenses, the company's
performance compared to its competitors and the completion of the company's
initial public offering.
When we assessed Mr. Vento's performance and determined his short-term
incentive award at the end of the year, we considered the following
accomplishments:
. the company ended 1999 with over 142,000 customers;
. the company successfully completed its debt offering in April 1999;
. expenses continued to be in line with expectations;
. the company successfully completed its initial public offering of
securities in November 1999; and
. at December 31, 1999 the company successfully launched service in 26
markets with networks covering approximately 66% of the population where
the company held licenses.
Section 162(m)
Under Section 162(m) of the Internal Revenue Code of 1986, as amended,
certain executive compensation (in the form of cash, options or stock) received
by any of the three executive officers of the company, when aggregated with all
other compensation received by such executive, in excess of $1.0 million will
not be deductible by the company for federal income tax purposes unless such
compensation is awarded under a performance-based plan approved by the
stockholders of the company. To date, all awards of stock to the executive
officers have been made pursuant to agreements or plans approved by the
company's stockholders. The Committee intends to review the potential effect of
Section 162(m) when making future recommendations to the company regarding the
compensation of the executive officers.
Committee Conclusion
The Committee believes that the caliber and motivation of the company's
employees and the quality of the company's leadership determine the company's
long term performance. The Committee further believes that it
9
<PAGE>
is in the stockholders' interests to compensate executives well when
performance meets or exceeds the high standards set by the board of directors,
so long as there is an appropriate downside risk to compensation when
performance falls short of such high standards. The Committee was satisfied
with the company's progress for 1999 and believes that the compensation paid
was consistent with the company's philosophy of linking executive compensation
with the creation of stockholder value.
This report submitted by the Committee, composed of:
Michael Schwartz, Chairman Scott Anderson
Michael Hannon
Rohit Desai
Compensation of Executive Officers
Summary Compensation
The following table contains information about the cash and other
compensation that we paid in 1998 and 1999 to Mr. Vento, our Chief Executive
Officer, and the three other most highly paid executive officers. The bonuses
in the table are shown in the year in which they are earned. In general,
bonuses are paid in the year after they are earned.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
------------------------------------ ------------
Other Restricted
Annual Stock All Other
Name and Principal Position* Year Salary($) Bonus($) Compensation($) Awards($) Compensation($)
- ---------------------------- ---- --------- -------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Gerald T. Vento......... 1999 300,000(1) 300,000 -- -- --
Chief Executive Officer 1998 213,461(2) 157,500 -- -- --
and Chairman
Thomas H. Sullivan...... 1999 250,000(3) 250,000 -- -- --
Executive Vice 1998 206,931(4) 125,000 106,637(5) -- --
President and Chief
Financial Officer
Julie A. Dobson......... 1999 250,000 250,000 67,871(6) 47,574(7) --
Vice President and 1998 124,289 155,000 66,134(8) 5,494(9) --
Chief Operating Officer
Robert Dowski (10)...... 1999 35,000 -- -- -- 275,497(11)
Chief Financial Officer 1998 181,196 105,000 -- 2,064(12) --
</TABLE>
- --------
* We historically have had only four officers which constitute executive
officers, and as of April 11, 2000, have only three officers which
constitute executive officers as a result of the departure of Mr. Dowski on
March 8, 1999.
(1) This amount consists of $300,000 that TeleCorp Management Corp. paid to
Mr. Vento out of amounts we paid to TeleCorp Management Corp. under the
Management Agreement.
(2) This amount consists of $111,538 that TeleCorp Management Corp. paid to
Mr. Vento out of amounts we paid to TeleCorp Management Corp. under the
Management Agreement and $101,923 that TeleCorp Holding Corp. paid to Mr.
Vento.
(3) This amount consists of $250,000 that TeleCorp Management Corp. paid to
Mr. Sullivan out of amounts we paid to TeleCorp Management Corp. under the
Management Agreement.
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<PAGE>
(4) This amount consists of $92,947 that TeleCorp Management Corp. paid to Mr.
Sullivan out of amounts we paid to TeleCorp Management Corp. under the
Management Agreement and $113,984 that TeleCorp Holding Corp. paid to Mr.
Sullivan.
(5) This amount consists of $103,637 in relocation expenses that TeleCorp
Management Corp. paid to Mr. Sullivan out of amounts that we paid to
TeleCorp Management Corp. under the Management Agreement and $3,000 that
we paid on behalf of Mr. Sullivan in our 401(k) plan.
(6) This amount consists of 67,871 in relocation expenses that TeleCorp
Communications paid to Ms. Dobson.
(7) Consists of 833 shares of series E preferred stock, valued at $52.00 per
share, and 532,308 shares of class A common stock, valued at $.008 per
share, issued under our restricted stock plan on July 1, 1999.
(8) This amount consists of $66,134 in relocation expenses that TeleCorp
Communications paid to Ms. Dobson.
(9) Consists of 2,287 shares of series E preferred stock, valued at $1.00 per
share, and 1,068,971 shares of class A common stock, valued at $.003 per
share, issued under our restricted stock grant plan on July 17, 1998.
(10) Mr. Dowski ceased to be employed with us as of March 8, 1999, except for
transition support.
(11) This amount consists of amounts we paid or are required to pay to Mr.
Dowski pursuant to his Separation Agreement as follows: $210,000 payable
12 monthly installments of $17,500 each ending March 2000, $17,769 for his
vacation balance and $47,728 in relocation expenses.
(12) Consists of 714 shares of series E preferred stock, valued at $1.00 per
share, and 449,877 shares of class A common stock, valued at $.003 per
share, issued under our restricted stock grant plan on July 17, 1998. In
March, 1999 we repurchased 577 of Mr. Dowski's shares of series E
preferred stock and 406,786 of Mr. Dowski's shares of class A common stock
for a total of approximately $19, which is not reflected in the table.
Option Grants in Fiscal Year Ending December 31, 1999
There were no stock options awarded to the named executive officers in the
last fiscal year.
Management Agreement
Under a five-year Management Agreement dated July 17, 1998, as amended,
TeleCorp Management Corp. assists us with various services and provides the
services of Mr. Vento and Mr. Sullivan in connection with the performance of
TeleCorp Management Corp.'s obligations under the Management Agreement. Mr.
Vento and Mr. Sullivan own TeleCorp Management Corp.
We reimburse TeleCorp Management Corp. for all out of pocket expenses it
incurs for the retention of third parties on our behalf. We pay TeleCorp
Management Corp. fees of $550,000 per year, payable in monthly installments,
plus a potential annual bonus based upon the achievement of objectives
established by the compensation committee of our board for a particular
calendar year. In 1998 and 1999, TeleCorp Management Corp. earned bonuses in
the amount of approximately $282,500 and $550,000, respectively.
Certain shares of our class A common stock and series E preferred stock held
by Messrs. Vento and Sullivan are subject to vesting under the Management
Agreement. We are obligated to repurchase from Mr. Vento and Mr. Sullivan, and
they are required to sell to us, following the termination of the Management
Agreement for any reason, up to 5,764,595 shares of class A common stock and up
to 18,219 shares of series E preferred stock held by Mr. Vento and Mr. Sullivan
that have not yet vested.
11
<PAGE>
Employment Agreement
On July 17, 1998, we entered into an employee agreement with Julie Dobson,
under which she serves as our Chief Operating Officer at a base annual salary
of $250,000 with a potential annual bonus based upon the achievement of
objectives established by the compensation committee of our board of directors.
We will reimburse the reasonable expenses that she incurs while performing her
services under her employee agreement and she may participate in our employee
benefit plans available to employees of comparable status and position.
If we terminate Ms. Dobson for cause, or she voluntarily quits, we will pay
her any amounts that we owe to her accrued prior to the cessation of
employment. If she is terminated other than for cause, we will pay Ms. Dobson
an amount equal to her then annual base salary, at normal payroll intervals, as
well as continue to cover her under our employee benefit plans for 12 months.
Under her employee agreement, Ms. Dobson is subject to confidentiality
provisions, and has agreed, for one year after cessation of employment with us,
to non-competition and non-solicitation provisions and to limit public
statements concerning us.
1998 Restricted Stock Plan
In July 1998 we established the TeleCorp PCS, Inc. 1998 Restricted Stock
Plan to award key employees shares of our series E preferred stock and class A
common stock. Each award is subject to a five- or six-year vesting schedule
that depends on the employee's date of hire, with unvested shares being
redeemed by us for $.003 per share upon termination of employment. The shares
granted are subject to the same transfer restrictions and repurchase rights as
shares held by AT&T and our other initial investors. As of April 11, 2000,
6,821 shares of series E preferred stock and 3,884,821 shares of class A common
stock were granted under this plan. We repurchased an additional 1,361 shares
of series E preferred stock and 959,261 shares of class A common stock from our
stockholders, which we had granted under this plan, and we have granted some of
these repurchased shares under this plan. Any shares not granted on or prior to
July 17, 2003 will be granted to Messrs. Vento and Sullivan.
1999 Stock Option Plan
On July 22, 1999, we implemented the 1999 Stock Option Plan to award
employees and members of our board options to acquire shares of our class A
common stock. Our board has the discretion to determine the terms of any
options granted under this plan. We have reserved 1,814,321 shares of our class
A common stock for issuance under this plan. On July 22, 1999, our board
approved the grant of options to virtually all our employees and three of our
directors to purchase an aggregate of 581,967 shares of class A common stock
under our plan at an exercise price of $.0065 per share, the estimated fair
value of the class A common stock on the date of grant. We effected these
grants on August 31, 1999. On December 17, 1999 our board also approved the
grant of options to employees employed on or prior to December 31, 1999 who had
not previously been granted options to purchase an aggregate of approximately
260,000 shares of our class A common stock at a below fair market exercise
price of $20.00 per share. These grants will be effective as of January 1,
2000. All of the options vest ratably over a four year period.
Separation Agreement
On March 8, 1999 we entered into a separation agreement with Mr. Dowski
under which we paid Mr. Dowski a lump sum payment of $105,000 plus additional
amounts representing unused vacation time and travel and relocation
reimbursements and an aggregate of $210,000 payable in 12 installments of
$17,500 per month. We also repurchased 577 shares of Mr. Dowski's series E
preferred stock and 406,786 of Mr. Dowski's class A common stock for an
aggregate amount of approximately $19.
12
<PAGE>
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information concerning the beneficial
ownership of our class A common stock as of April 11, 2000 for:
. each person known to us to beneficially own more than 5% of the
outstanding shares of class A common stock;
. our directors;
. the Chief Executive Officer and the three other most highly compensated
executive officers who were serving as executive officers during 1999;
and
. all of our executive officers and directors, as a group.
Except as otherwise noted, the named individual has sole voting and
investment power with respect to such securities.
<TABLE>
<CAPTION>
Amount and Nature of Beneficial Ownership
-----------------------------------------------------
Number of Shares Percentage of Percentage of
of Class A Outstanding Outstanding
Common Stock Class A Voting Preference
Stockholders Beneficially Owned(1) Common Stock Common Stock(2)
------------ --------------------- ------------- -----------------
<S> <C> <C> <C>
Chase Capital Partners.. 15,618,648(3) 17.8 --
Equity-Linked Investors
II..................... 14,835,023(4) 16.9 --
Hoak Communications
Partners, L.P.......... 10,974,781(5) 12.5 --
Whitney Equity Partners,
L.P.................... 9,100,865(6) 10.4 --
Media/Communications
Partners............... 5,923,519(7) 6.7 --
AT&T Wireless PCS, LLC.. 17,867,453(8) 17.4 --
Michael R. Hannon....... 15,618,648(3) 17.8 --
Michael Schwartz........ 17,867,453(8) 17.4 --
Mary Hawkins-Key........ 17,867,453(8) 17.4 --
Rohit M. Desai.......... 14,835,023(4) 16.9 --
James M. Hoak........... 10,974,781(5) 12.5 --
Scott Anderson.......... 499,789(9) * --
William Kussell......... 499,789(10) * --
Gerald T. Vento......... 5,249,654(11) 6.0 50.0
Thomas H. Sullivan...... 3,394,228(12) 3.8 50.0
Julie A. Dobson......... 1,602,879(13) 1.8 --
Robert Dowski........... 37,090 * --
Directors and Executive
Officers as a Group
(11 persons)........... 69,103,142 67.4 100.0
</TABLE>
- --------
* Less than one percent
(1) Pursuant to the rules of the Securities and Exchange Commission,
percentages of beneficial ownership of the class A common stock are
calculated assuming that shares of class A common stock issuable upon
conversion of securities convertible into class A common stock are
outstanding for purposes of each respective stockholder or group, but not
outstanding for purposes of computing the percentage of any other person.
Included in the calculation of beneficial ownership are shares of class A
common stock issuable upon conversion or exercise of securities within 60
days of April 11, 2000. This calculation does not include conversion of
our class C, class D and voting preference common stock into class A
common stock upon lapse of FCC ownership restrictions, which is not
expected to occur until 2004.
(2) Mr. Vento and Mr. Sullivan also each own 1,545 shares of voting preference
stock. Together, the voting preference stock possesses 50.1% of the voting
power of all shares of our capital stock. Mr. Vento and Mr. Sullivan are
required to vote their shares of voting preference stock together on all
matters.
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<PAGE>
(3) Consists of 15,265,692 shares of class A common stock held by CB Capital
Investors, L.P., an affiliate of Chase Capital Partners, and 352,956
shares of class A common stock held by TeleCorp Investment Corp., L.L.C.,
of which CB Capital Investors, L.P. owns a majority of the membership
interest. This amount does not include 27,489 shares of class C common
stock and 199,522 shares of class D common stock held by CB Capital
Investors, L.P. and 575 shares of class C common stock and 3,780 shares of
class D common stock held by TeleCorp Investment Corp., L.L.C. These
shares may also be deemed to be beneficially owned by Mr. Hannon, Vice
President of CB Capital Investors, L.P., who disclaims beneficial
ownership of all of these shares. The address of these stockholders and
Mr. Hannon is 380 Madison Avenue, 12th Floor, New York, New York 10017.
(4) Consists of 8,848,318 shares of class A common stock held by Private
Equity Investors III, L.P and 5,986,705 shares of class A common stock
held by Equity-Linked Investors-II. This amount does not include 13,457
shares of class C common stock and 105,947 shares of class D common stock
held by Private Equity Investors III, L.P and 13,457 shares of class C
common stock and 88,341 shares of class D common stock held by Equity-
Linked Investors-II. Each of these stockholders is an affiliate of Desai
Capital Management. These shares may also be deemed to be beneficially
owned by Mr. Desai, the managing general partner of each of these
stockholders, who disclaims beneficial ownership of all of these shares.
The address of these stockholders and Mr. Desai is 540 Madison Avenue,
36th Floor, New York, New York 10022.
(5) Consists of 919,881 shares of class A common stock held by HCP Capital
Fund, L.P. and 10,054,900 shares of class A common stock held by Hoak
Communications Partners, L.P. This amount does not include 1,691 shares of
class C common stock and 12,212 shares of class D common stock held by HCP
Capital Fund, L.P. and 18,494 shares of class C common stock and 133,510
shares of class D common stock held by Hoak Communications Partners, L.P.
These shares may also be deemed to be beneficially owned by Mr. Hoak,
Principal and Chairman of the manager of these stockholders, shareholder
of the manager and General Partner of Hoak Communications Partners, L.P.
and limited partner and shareholder of the General Partner of HCP Capital
Fund, L.P. The address of these stockholders and Mr. Hoak is One Galleria
Tower, 13355 Noel Road, Suite 1050, Dallas, Texas 75240.
(6) Consists of 6,255,859 shares of class A common stock held by J. H. Whitney
III, L.P., 150,746 shares of class A common stock held by Whitney
Strategic Partners III, L.P.; and 2,694,260 shares of class A common stock
held by Whitney Equity Partners, L.P. This amount does not include 11,498
shares of class C common stock and 83,004 shares of class D common stock
held by J. H. Whitney III, L.P.; 279 shares of class C common stock and
2,003 shares of class D common stock held by Whitney Strategic Partners
III, L.P.; and 5,046 shares of class C common stock and 36,432 shares of
class D common stock held by Whitney Equity Partners, L.P. The address of
these stockholders is 177 Broad Street, 15th Floor, Stamford, Connecticut
06901.
(7) Consists of 5,657,726 shares of class A common stock held by
Media/Communications Partners III Limited Partnership and 265,793 shares
of class A common stock held by Media/Communications Investors Limited
Partnership. This amount does not include 10,241 shares of class C common
stock and 73,604 shares of class D common stock held by
Media/Communications Partners III Limited Partnership and 427 shares of
class C common stock and 3,764 shares of Class D common stock held by
Media/Communications Investors Limited Partnership. These shares may also
be deemed to be beneficially owned by Mr. Wade, President of M/C Investor
General Partner-J, Inc., which is a General Partner in Media
Communications Investors Limited Partnerships and Manager of M/C III,
L.L.C., which is a General Partner in Media Communications Partners III
Limited Partnership. The address of these stockholders and Mr. Wade is 75
State Street, Suite 2500, Boston, Massachusetts 02109.
(8) Consists of 3,149,737 shares of class A common stock and 14,912,778 shares
of series F preferred stock, which is convertible into 14,717,716 shares
of class A common stock and 195,062 shares of class D common stock, held
by AT&T Wireless PCS, LLC. This amount does not include the amount of
class D common stock into which the series F preferred stock converts or
20,902 shares of class D common stock held by AT&T Wireless PCS, LLC.
These shares may also be deemed to be held by Mr. Schwartz, Ms. Hawkins-
Key and various AT&T affiliates. Mr. Schwartz and Ms. Hawkins-Key disclaim
beneficial
14
<PAGE>
ownership of all of these shares. The address of these stockholders, Mr.
Schwartz and Ms. Hawkins-Key is c/o AT&T Wireless PCS, LLC 7277 164th
Avenue, N.E., Redmond, Washington 98052.
(9) Consists of 492,064 shares of class A common stock held by TeleCorp
Investment Corp. II, L.L.C., of which Cedar Grove Partners, LLC owns
4.49%, and vested options to purchase 7,725 shares of class A common
stock held by Mr. Anderson. Mr. Anderson is a principal of Cedar Grove
Partners, LLC. This amount does not include 11,366 shares of class D
common stock held by TeleCorp Investment Corp. II, L.L.C. The address of
Mr. Anderson is c/o Cedar Grove Investments, 2415 Carillon Point,
Kirkland, WA 98033.
(10) Consists of 492,064 shares of class A common stock held by TeleCorp
Investment Corp. II, L.L.C., of which Mr. Kussell owns 2.99%, and vested
options to purchase 7,725 shares of class A common stock held by Mr.
Kussell. This amount does not include 11,366 shares of class D common
stock held by TeleCorp Investment Corp. II, L.L.C. The address of Mr.
Kussell is c/o Allied Domecq Retailing USR, 15 Pacella Park Drive,
Randolph, MA 02368.
(11) Consists of 492,064 shares of class A common stock held by TeleCorp
Investment Corp. II, L.L.C. and 5,249,654 shares of class A common stock
held by Mr. Vento. This amount does not include 11,366 shares of class D
common stock held by TeleCorp Investment Corp. II, L.L.C. and 105,444
shares of class C common stock and 3,137 shares of class D common stock
held by Mr. Vento. Mr. Vento serves as a manager and is a member of
TeleCorp Investment Corp. II, L.L.C. The address of the stockholder is
c/o TeleCorp PCS, Inc. 1010 N. Glebe Road, Suite 800, Arlington, VA
22201. Mr. Vento is also one of our directors.
(12) Consists of 492,064 shares of class A common stock held by TeleCorp
Investment Corp. II, L.L.C.; 3,394,228 shares of class A common stock
held by Mr. Sullivan; and 2,200 shares of class A common stock held by
Mr. Sullivan's spouse. This amount does not include 11,366 shares of
class D common stock held by TeleCorp Investment Corp. II, L.L.C. and
65,373 shares of class C common stock and 699 shares of class D common
stock held by Mr. Sullivan. Mr. Sullivan serves as a manager and is the
manager of a member of TeleCorp Investment Corp. II, L.L.C. The address
of Mr. Sullivan is c/o TeleCorp PCS, Inc. 1010 N. Glebe Road, Suite 800,
Arlington, VA 22201. Mr. Sullivan is also one of our directors.
(13) Consists of 1,601,279 shares of class A common stock held by Ms. Dobson
and 1,600 shares of class A common stock held by Ms. Dobson's spouse.
15
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
With respect to all of the relationships and transactions described in this
section, including those with AT&T, the terms of the agreements or arrangements
were no more favorable to the parties than they could have obtained from third
parties negotiated at arms length.
AT&T Agreements
On January 23, 1998, we and AT&T announced the formation of a venture under
which we are financing, constructing and operating a wireless communications
network using the AT&T and SunCom brand names and logos together, giving equal
emphasis to both. AT&T contributed licenses to us in exchange for an equity
interest in us. The venture provides the basis for an alliance between us and
AT&T to provide wireless communications services in particular markets. AT&T,
as a result of these agreements, owns shares of our capital stock. Mary
Hawkins-Key, one of our directors, serves as a Senior Vice President of AT&T
Wireless Services and Michael Schwartz, one of our directors, was a Vice
President in AT&T Wireless' Acquisitions and Development Group until his
departure in March, 2000, and continues to provide services to AT&T on a part-
time basis. The terms of the venture and the alliance are described in a number
of agreements, summaries of which are set forth below.
Securities Purchase Agreement. Under a Securities Purchase Agreement, dated
as of January 23, 1998, as amended, among our initial investors, Mr. Vento and
Mr. Sullivan and us, in exchange for shares of our class A common stock, class
C common stock, class D common stock, voting preference common stock, series A
preferred stock, series C preferred stock, series D preferred stock, series E
preferred stock and/or series F preferred stock and $21.0 million to AT&T, we
received:
. PCS licenses from AT&T Wireless and TWR Cellular, Inc.;
. $128.0 million from our initial investors, other than AT&T Wireless and
TWR Cellular, and an additional $5 million upon our closing of an
acquisition of a PCS license covering populations of one million or more
people, which was satisfied on April 20, 1999;
. all of the shares of our predecessor company, TeleCorp Holding Corp.,
Inc., held by certain of our initial investors and TeleCorp Investment
Corp., L.L.C.; and
. shares of our stock held by Mr. Sullivan and Mr. Vento.
Approximately $39.0 million of the cash contribution was made on the closing
of the transaction on July 17, 1998 and the remainder of the cash contributions
are required to be made over a three-year period.
Stockholders' Agreement.
The Stockholders' Agreement, as amended, among our initial investors,
Messrs. Vento and Sullivan and us sets guidelines for our management and
operations and restricts the sale, transfer or other disposition of our capital
stock. The parties to the Stockholders' Agreement have agreed to vote all of
the shares of class A voting common stock and voting preference stock to cause
the election of nine individuals to our board who include, among others, Mr.
Vento and Mr. Sullivan, so long as each remains an officer and the Management
Agreement with TeleCorp Management Corp. remains in effect, and one individual
nominated by AT&T Wireless. Messrs. Vento and Sullivan also have the right to
select four of the other seven directors subject to approval by AT&T and/or a
majority in interest of the common stock beneficially owned by our initial
investors. When FCC ownership restrictions no longer apply to us, our board
will be reduced to seven members, whose members will include Mr. Vento and Mr.
Sullivan, and Mr. Vento and Sullivan will have the right to appoint two of the
other five members.
The Stockholders' Agreement provides that any action of our board be
approved by the affirmative vote of a majority of our entire board, except in
certain circumstances including a sale of the business, the issuance or
repurchase of our stock, an amendment to our organizational documents, the
hiring or termination of an
16
<PAGE>
executive officer, the approval of or amendment to our operating or capital
budget, the incurrence of indebtedness in excess of $1,000,000, certain
agreements with our directors, capital expenditures in excess of $1,000,000 or
the initiation of bankruptcy proceedings, where voting by particular classes of
directors is required.
The initial investors have agreed not to transfer any shares of their common
stock until July 17, 2001 except to affiliates, and Mr. Vento and Mr. Sullivan
have agreed not to transfer any shares of common stock prior to July 17, 2003,
subject to limited exceptions, including that 25% of their common stock may be
transferred after July 17, 2001.
The parties to the stockholders' agreement have agreed that, during the term
of the Stockholders' Agreement, neither they nor any of their respective
affiliates will provide or resell, or act as the agent for any person offering,
within the areas covered by our licenses, wireless communications services
initiated or terminated using TDMA and portions of the airwaves licensed by the
FCC, except that AT&T and its affiliates may:
. resell or act as agent for us in connection with mobile wireless
communications services;
. provide or resell wireless communications services only to or from
specific locations, provided that any equipment sold in connection with
the service must be capable of providing our wireless communications
services; and
. resell mobile wireless communications services from another person in any
area where we have not placed a system into commercial service.
Additionally, with respect to some markets identified in the intercarrier
roamer services agreement with AT&T Wireless Services, each of us and AT&T
Wireless Services has agreed to cause our respective affiliates in their home
carrier capacities to:
. program and direct the programming of customer equipment so that the
other party, in its capacity as the serving carrier, is the preferred
provider in these markets; and
. refrain from inducing any of its customers to change such programming.
AT&T Wireless has retained some PCS licenses within the areas covered by our
licenses for which we have a right of negotiation in the event of a proposed
transfer.
If we materially breach any of our obligations, AT&T Wireless may terminate
its exclusivity obligations under the Stockholders' Agreement and may terminate
our rights to the AT&T brand and logo under the license agreement if a default
continues after the applicable cure periods lapse.
The exclusivity provisions in the stockholders' agreement do not apply to
approximately 100,000 people that overlapped with the coverage area of licenses
AT&T purchased from Vanguard Cellular in Strafford, New Hampshire. We have
agreed with AT&T to exchange our licenses covering these people for licenses
covering other people. These exchanged populations will be covered under the
scope of our agreements with AT&T.
In addition to the approval of our senior lenders, the terms of the
stockholders' agreement may be amended only if agreed to in writing by us and
the beneficial holders of a majority of the class A common stock party to the
stockholders' agreement, including AT&T Wireless, 66 2/3% of the class A common
stock beneficially owned by our initial investors other than AT&T, and 66 2/3%
of the class A common stock beneficially owned by Mr. Vento and Mr. Sullivan.
The stockholders' agreement will terminate upon the earliest to occur of:
. the receipt of the written consent of each party;
. July 17, 2009; and
17
<PAGE>
. under specified circumstances, the date on which a single stockholder
beneficially owns all of the outstanding shares of class A common stock.
Network Membership License Agreement. Under a five year Network Membership
License Agreement dated as of July 17, 1998 between AT&T and us, AT&T granted
to us a royalty-free, non-transferable, non-sublicensable, non-exclusive,
limited license to use some of their licensed marks in our markets. Except in
specified instances, AT&T has agreed not to grant to any other person a right
to provide or resell, or act as agent for any person offering, mobile wireless
communications services under the licensed marks in our licensed markets. AT&T
retains all rights of ownership to the licensed marks subject to exclusivity
obligations to us in both areas covered by our licenses and all other areas.
The term of the license may be renewed for an additional five-year period if
each party gives written notice to the other party of its election to renew the
license agreement and neither party gives notice of non-renewal.
The Network Membership License Agreement restricts our use and modification
of any of the licensed marks. Although we may develop our own marks, we may not
use them together with the licensed marks without the prior approval of AT&T.
Any services we market or provide using the licensed marks must be of
comparable quality to similar services that AT&T markets and provides in areas
that are comparable to the areas covered by our licenses. We may take into
account commercial reasonableness and the relative stage of development of the
licensed areas, to determine what is comparable service. We must also provide
sufficiently high quality services to provide maximum enhancement to and
protect licensed marks, such as attaining specified levels of network quality,
audio quality, system performance and meeting customer care standards. The
license agreement also defines specific testing procedures to determine
compliance with these standards and affords us with a grace period to cure any
instances of noncompliance. Following the cure period, we must stop using the
licensed marks until we comply with the standards, or we may be deemed to be in
breach of the license agreement and we may lose our rights to the licensed
marks.
We may not assign, sublicense or transfer, by change of control or
otherwise, any of our rights under the license agreement, except that the
license agreement may be, and has been, assigned to our lenders under our
senior credit facilities. After the expiration of any applicable grace and cure
periods under our senior credit facilities, the lenders may then enforce our
rights under the license agreement and assign the license agreement to any
person with AT&T's consent.
The license agreement may be terminated by AT&T at any time in the event of
our significant breach and the exhaustion of any applicable cure periods, which
include:
. our misuse of any licensed marks;
. our bankruptcy;
. our licensing or assignment of any of our rights under the license
agreement, except as permitted by the terms of the license agreement;
. our loss of the licenses acquired from AT&T;
. our failure to maintain AT&T's quality standards in any material respect;
or
. our change of control, which is defined as a transaction, other than a
transfer by AT&T, that results in any person other than our initial
stockholders or our senior lenders acquiring beneficial ownership of more
than 50% of our voting stock, or 33.3% of our voting stock if the person
acquiring our stock acquires more than our initial stockholders hold at
that time. Also included is a transaction that results in any of the
three largest telecommunications carriers, excluding AT&T and any
wireless carrier using TDMA technology, or any regional bell operating
company, or Microsoft acquiring more than 15% of our voting stock,
excluding acquisitions through open market transactions, or a majority of
our directors are removed in a proxy contest.
Our rights under the license agreement are also subject to the minimum
construction plan set forth in the stockholders' agreement. After the initial
term, AT&T may also terminate the license agreement in connection with a
disqualifying transaction.
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Roaming Agreements. We entered into a 20 year Intercarrier Roamer Services
Agreement dated as of July 17, 1998 with AT&T Wireless Services and several of
its affiliates. The Intercarrier Roamer Service Agreement is automatically
renewed on a year-to-year basis unless terminated by either party upon 90 days
prior written notice after 10 years. We have agreed with AT&T Wireless Services
that each party, in its capacity as a serving provider, will provide services
to each others' customers where it has a license or permit to operate a
wireless communications system. Each home carrier whose customers receive
service from a serving provider will pay to the serving provider all of the
serving provider's charges for wireless service and all of the applicable
charges. Each serving provider's service charges per minute or partial minute
for use for the first three years will be fixed at a declining rate.
The intercarrier roamer service agreement may be terminated immediately by
either party upon written notice to the other of a default of the other party.
The intercarrier roamer service agreement may also be suspended by either party
immediately upon written notice to the other party of the existence of a breach
of the agreement, whether or not the breach constitutes a default, if the
breach materially affects the service being provided to the customers of the
non-breaching party. Neither party may assign or transfer its rights and
obligations under the intercarrier roamer service agreement without the written
consent of the other party, except to an affiliate or an assignee of its
license.
In addition, under a two year Roaming Administrative Service Agreement dated
as of July 17, 1998 between AT&T Wireless Services and us, AT&T Wireless
Services has agreed to make available to us the benefits of the intercarrier
roaming services agreements it has entered into with other wireless carriers.
The Roaming Administrative Service Agreement is automatically renewed on a
year-to-year basis unless terminated by either party upon 90 days prior written
notice.
Resale Agreement. The Stockholders' Agreement provides that, from time to
time, at AT&T Wireless' request, we are required to enter into a resale
agreement with AT&T Wireless or other of its affiliates. The resale agreement
would grant to AT&T Wireless the right to purchase from us our wireless
services on a non- exclusive basis within a designated area and resell access
to, and use of, our services. AT&T Wireless must pay charges for any services
that are resold, including usage, roaming, directory assistance and long
distance charges, and taxes and tariffs. Any resale agreement would have an
initial term of ten years that would be automatically renewed on a year-to-year
basis unless terminated by either party upon 90 days prior written notice. In
addition, AT&T Wireless would be able to terminate any resale agreement for any
reason at any time upon 180 days prior written notice.
Long Distance Agreement. Under the long distance agreement dated as of
December 21, 1998 between AT&T Wireless and us, we purchase interstate and
intrastate long distance services from AT&T Wireless at preferred rates. We
then resell these long distance services to our customers. We can only obtain
these preferred rates if we continue our affiliation with AT&T Wireless. The
long distance agreement has a term of up to three years.
The long distance agreement requires that we meet a minimum traffic volume
during the term of the agreement, which are adjusted at least once each
calendar year at the time specified by AT&T Wireless. The minimum traffic
volume commitments may be adjusted more frequently upon mutual agreement by
AT&T Wireless and us. During the first year, we set the minimum traffic volume
commitment in our sole discretion. After the first calendar year, the
commitment may be increased by any amount or decreased by any amount up to ten
percent at our discretion. We may reduce the minimum traffic volume commitments
by more than ten percent with AT&T Wireless' permission. If we fail to meet the
volume commitments, we must pay to AT&T Wireless the difference between the
expected fee based on the volume commitment and the fees based on actual
volume.
The long distance services we purchase from AT&T Wireless may only be used
in connection with:
. our commercial mobile radio services;
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. calls that originate on our network; and
. those commercial mobile radio services that share our call connection
equipment.
Puerto Rico
In a series of transactions, we acquired a license and related assets
covering the San Juan major trading area from AT&T Wireless on May 25, 1999.
The following transactions took place ultimately to effect the acquisition of
the license and related assets from AT&T Wireless:
. on May 24, 1999, we sold to AT&T Wireless for $40.0 million 30,750 shares
of our series A preferred stock, 10,250 shares of our series D preferred
stock, and 3,090,000 shares of our series F preferred stock under a
preferred stock purchase agreement;
. on May 25, 1999, we sold to our initial investors, other than AT&T
Wireless, 39,997 shares of our series C preferred stock and 12,358,950
shares of our class A common stock in exchange for an aggregate amount of
$40.0 million in cash under a stock purchase agreement, which will be
funded over a three-year period.
. on May 25, 1999, we purchased the license for the San Juan major trading
area and related assets, which included 27 constructed network equipment
sites, call connection equipment and leases for additional network
equipment sites, from AT&T Wireless for $96.5 million in cash under an
asset purchase agreement; and
. we incurred $3.2 million for microwave relocation and $0.3 million for
legal expenses in connection with this acquisition.
In addition, Mr. Vento and Mr. Sullivan were issued fixed and variable
awards of 4,063 and 1,633,899 restricted shares of our series E preferred stock
and class A common stock, respectively, in exchange for their interest in
Puerto Rico Acquisition Corporation. Puerto Rico Acquisition Corporation was an
entity wholly-owned by Mr. Vento and Mr. Sullivan that was created for the
special purpose of acquiring the license and related assets of the San Juan
major trading area. The fixed awards typically vest over a five-year period.
The variable awards vest based upon certain events taking place, including our
reaching milestones in our minimum construction plan.
Other Transactions and Relationships
Wireless Facilities, Inc. and Other Site Acquisition Service Providers. We
receive site acquisition, construction management, program management,
microwave relocation and engineering services under a master services agreement
with Wireless Facilities, Inc. Payments under the agreement were approximately
$30.7 million and $76.0 million in the years ended December 31, 1998 and 1999,
respectively. At the time of entering into the master services agreement, Mr.
Vento was a senior officer, and he and Mr. Sullivan were the controlling
stockholders, of Entel Technologies. In February 1998, they sold their
interests in Entel Technologies to Wireless Facilities, Inc.
American Towers, Inc. provides us with network site leases for PCS
deployment under a master site lease agreement. Chase Capital Partners, one of
our beneficial owners, has a noncontrolling interest in American Towers.
Initial Purchasers of Senior Subordinated Discount Notes. Chase Securities
Inc. was one of the initial purchasers of the outstanding notes. Chase
Securities Inc. and its affiliates perform various investment banking and
commercial banking services from time to time for us and our affiliates. Chase
Securities Inc. acted as our lead manager for our offering of our senior
subordinated discount notes. The Chase Manhattan Bank, an affiliate of Chase
Securities Inc., is the agent bank and a lender under our senior credit
facilities. Michael R. Hannon, a member of our board, is a General Partner of
Chase Capital Partners, an affiliate of Chase Securities Inc. In addition, CB
Capital Investors, L.P., an affiliate of Chase Capital Partners, is one of our
initial investors and owns shares of our common and preferred stock. For
further information concerning these relationships, see "Stock Ownership of
Certain Beneficial Owners and Management."
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Tritel Communications and Triton PCS. We have formed Affiliate License Co.
with Triton PCS and Tritel Communications to adopt a common brand, SunCom, that
is co-branded with AT&T on an equal emphasis basis. Under the agreement, we,
Triton PCS and Tritel Communications each own one third of Affiliate License
Co., the owner of the SunCom name. We and the other SunCom companies license
the SunCom name from Affiliate License Co. Mr. Sullivan is a director of
Affiliate License Co.
AT&T Wireless owns stock in us and in Tritel Communications, and we and
Tritel may be deemed affiliates by virtue of common ownership. Mr. Anderson,
one of our directors, also serve as a director of Tritel Communications. AT&T
Wireless, CB Capital Investors and Equity-Linked Investors own stock in us and
in Triton PCS, and we and Triton may be deemed affiliates by virtue of common
ownership. Ms. Hawkins-Key, our director nominated by AT&T Wireless, and Mr.
Anderson also serve as directors of Triton PCS.
Tritel Communications owned a controlling interest in Digital PCS at the
time we acquired licenses from Digital PCS. Tritel Communications may be deemed
an affiliate of Digital PCS. In addition, at the time we acquired licenses from
Digital PCS, Mr. Anderson and Mr. Fuqua, one of our former directors, were
directors of Tritel Communications.
TeleCorp Holding Corp. TeleCorp Holding Corp., our predecessor company, was
incorporated to participate in the FCC's auction of licenses in April 1997.
TeleCorp Holding Corp. raised money from investors to develop any licenses it
obtained in the auction. TeleCorp Holding Corp. successfully obtained licenses
in the New Orleans, Memphis, Beaumont, Little Rock, Houston, Tampa, Melbourne
and Orlando basic trading areas. In August 1997, TeleCorp Holding Corp.
transferred the Houston, Tampa, Melbourne and Orlando basic trading area
licenses to four newly-formed entities created by TeleCorp Holding Corp.'s
stockholders:
. THC of Houston;
. THC of Tampa;
. THC of Melbourne; and
. THC of Orlando;
and issued notes in the aggregate amount of approximately $2.7 million to these
entities to develop these licenses. These licenses were transferred along with
the related operating assets and liabilities in exchange for investment units
consisting of class A, B and C common stock and series A preferred stock in
August 1997. Concurrently, TeleCorp Holding Corp. distributed the investment
units, on a pro rata basis, in a partial stock redemption to TeleCorp Holding
Corp.'s existing stockholder group. As a result of this distribution, TeleCorp
Holding Corp. no longer retains any ownership equity interest in the newly
formed entities. TeleCorp Holding Corp. performed administrative and management
services and paid costs on behalf of these entities for the year ended December
31, 1997 worth the aggregate amount of $0.7 million. In 1998, upon the closing
of the agreements with AT&T, TeleCorp Holding Corp. paid approximately $2.0
million to the four THC entities as payment of the notes, offset by the
approximately $0.7 million in services and costs.
TeleCorp WCS. On May 5, 1997, TeleCorp Holding Corp. lent approximately $3.0
million to TeleCorp WCS, Inc. in exchange for interest-free notes from TeleCorp
WCS. On May 5, 1997, TeleCorp Holding Corp. received equity investments in
exchange for the right to receive:
. the notes from TeleCorp WCS;
. any cash, notes or other assets received by TeleCorp Holding Corp. on
behalf of the notes; or
. any capital stock into which the notes were converted.
TeleCorp WCS repaid approximately $2.7 million of the notes with cash to
TeleCorp Holding Corp., and TeleCorp Holding Corp. forwarded this cash to the
equity investors. TeleCorp WCS issued a note in the amount of approximately
$0.3 million directly to the investors on behalf of the remaining $0.3 million
outstanding under the notes. TeleCorp WCS converted these notes into capital
stock issued to the investors in 1998.
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Mr. Sullivan and Mr. Vento own 2,875 and 4,625 shares of class C common
stock of TeleCorp WCS, respectively, which represents 60% of its outstanding
class A common stock. At the time of entering into the transactions with
TeleCorp WCS, Mr. Sullivan and Mr. Vento were stockholders in TeleCorp Holding
Corp.
TeleCorp Investment Corp. TeleCorp Investment Corp. owns 352,956 shares of
our class A common stock, 575 shares of our class C common stock, 3,780 shares
of our class D common stock and 1,160.17 shares of our series C preferred stock
Chase Capital Partners, one of our initial investors, owns an 80% equity
interest in TeleCorp Investment Corp.; Mr. Sullivan and Mr. Vento each own a
2.4% equity interest; and Mr. Dowski owns a 1.6% equity interest.
TeleCorp Investment Corp II. In addition, TeleCorp Investment Corp. II was
formed to purchase from Entergy Technology Holding Corporation 492,064 shares
of class A common stock and 11,366 shares of class D common stock. The purchase
of shares was concluded on July 15, 1999. Mr. Vento, Mr. Sullivan and Ms.
Dobson each own 5.99% of TeleCorp Investment Corp. II. Mr. Vento and Mr.
Sullivan serve as managers of TeleCorp Investment Corp. II.
Viper Wireless. On April 11, 2000 we completed the acquisition of the 15% of
Viper Wireless, Inc. that we do not yet own from Messrs. Vento and Sullivan in
exchange for an aggregate of 323,372 shares of our class A common stock and 800
shares of our series E preferred stock. TeleCorp Holding Corp. acquired 85% of
Viper Wireless on March 1, 1999 in exchange for $32,286,000 contributed by AT&T
and some of our other initial investors for additional shares of our preferred
and common stock. As part of this financing, we paid approximately $0.5 million
to Chase Securities, Inc., an initial purchaser and an affiliate of one of our
initial investors, for placement advice. Viper Wireless' used the proceeds to
participate in the FCC's reauction of PCS licenses. Viper Wireless was
subsequently granted six PCS licenses in the reauction.
TeleCorp LMDS. On April 7, 2000 we completed the acquisition of TeleCorp
LMDS, Inc. through an exchange of all of the outstanding stock of TeleCorp LMDS
for 834,300 shares of our class A common stock and 2,700 shares of our series C
preferred stock. TeleCorp LMDS's stockholders are Mr. Vento, Mr. Sullivan and
three of our initial investors. By acquiring TeleCorp LMDS, we will gain LMDS
licenses covering airwaves in Little Rock, Arkansas, Beaumont, Texas, New
Orleans, Louisiana, San Juan and Mayaguez, Puerto Rico, and the U.S. Virgin
Islands.
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. We use the services of a
law firm, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., whose affiliate,
ML Strategies, LLC, pursuant to an agreement and for matters unrelated to us,
utilizes the services of Mr. Sullivan, our Executive Vice President, as a
consultant, for a consulting fee. The terms of these arrangements are no more
favorable to Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., ML Strategies
or Mr. Sullivan, than could have been obtained from third parties negotiated at
arms length.
McDermott, Will & Emery. We use the services of a law firm, McDermott, Will
& Emery, to which Mr. Sullivan, our executive vice president, was counsel until
October 1999 and a partner prior to July 1998. The terms of these arrangements
were no more favorable to McDermott, Will & Emery than could have been obtained
from third parties negotiated at arms' length.
Recent Developments
Proposed Merger with Tritel, Inc. On February 28, 2000, we agreed to merge
with Tritel, Inc. through a merger of each of us and Tritel into a newly formed
subsidiary of a new holding company. The new holding company, to be called
TeleCorp PCS, Inc., will be controlled by our voting preference common
stockholders, and we and Tritel will become subsidiaries of the holding
company. In connection with the merger, AT&T Wireless agreed to contribute
certain wireless rights and commitments in the Midwestern United States, cash
of approximately $20 million and a two year extension of AT&T's brand license
in exchange for approximately $410 million worth of common shares in the newly
formed company. The proposed merger has been
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unanimously approved by our and Tritel's board of directors, with three of our
directors abstaining. In addition, shareholders with greater than 50% of the
voting power of each company have agreed to vote in favor of the merger. The
merger is subject to regulatory approval and other conditions and is expected
to close in the last quarter of 2000.
Proposed Exchange with AT&T Wireless. On February 28, 2000, we agreed to
exchange our licenses in several New England markets for certain wireless
properties or rights to acquire additional wireless properties of AT&T Wireless
in the Milwaukee, Wisconsin and Des Moines, Iowa markets, a cash payment of
approximately $80 million and the right to extend the term and geographic
coverage of AT&T's license and roaming agreements with us to include the new
markets, either through amending our existing agreements or entering into new
agreements with the new entity that will result from our merger with Tritel,
Inc. on substantially the same terms as our existing agreements. AT&T has also
agreed to extend its affiliation agreements to include licenses covering an
additional 1.4 million people in the Midwest if we acquire them.
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STOCK PERFORMANCE GRAPH
The graph below provides an indicator of our cumulative total stockholder
returns on our class A common stock from the period beginning November 23,
1999, when our class A common stock was first traded on the Nasdaq National
Market, through March 31, 2000, as compared with the cumulative total return
for the Nasdaq Stock Market Index and the Nasdaq Telecommunications Index for
the same period. This graph assumes the investment of $100 on November 23, 1999
in our class A common stock, the Nasdaq Stock Market Index and the Nasdaq
Telecommunications Index and assumes dividends are reinvested.
Management cautions that the stock price performance shown in the graph
below should not be considered indicative of potential future stock
performance.
Date
November 23, 1999 December 31, 2000
----------------- -----------------
TELECORP PCS, INC. (TLCP) $100 $115.15
NASDAQ NATIONAL MARKET INDEX (COMP) $100 $121.78
NASDAQ TELECOMMUNICATIONS INDEX (IXCT) $100 $120.14
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PROPOSAL 2
RATIFICATION OF THE APPOINTMENT OF AUDITORS
Our board of directors based upon the recommendation of our Audit Committee
has appointed PricewaterhouseCoopers, LLP, independent auditors, to audit our
consolidated financial statements for the fiscal year ending December 31, 2000,
and recommends that the stockholders vote for ratification of such appointment.
If the stockholders do not ratify the selection of PricewaterhouseCoopers, LLP
as our independent auditors, the selection of the independent auditors may be
reconsidered by our board of directors.
A representative of PricewaterhouseCoopers, LLP, is expected to be present
at the annual meeting to be available to respond to appropriate questions from
stockholders and to make a statement if he or she desires to do so.
OUR BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
RATIFICATION OF PRICEWATERHOUSECOOPERS, LLP TO SERVE AS OUR INDEPENDENT
AUDITORS FOR THE 2000 FISCAL YEAR.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING
Section 16(a) of the Securities and Exchange Act of 1934, as amended,
requires our directors and executive officers, and persons who beneficially own
more than ten percent of a registered class of our equity securities, to file
reports of holdings and transactions in our stock with the Securities and
Exchange Commission. Except as described below, and based solely on our review
of the copies of such forms received or written representations from certain
reporting persons, we believe that, during fiscal 1999, our officers, directors
and ten-percent stockholders complied with all applicable Section 16(a) filing
requirements applicable to such individuals.
Based solely on our review of the copies of such forms received or written
representations from certain reporting persons, certain of our stockholders who
constitute members of a group that hold more than ten percent of our class A
common stock inadvertently did not timely file a Form 3 with the Securities and
Exchange Commission, which was due by November 22, 1999, disclosing their
beneficial ownership in us. As of February 14, 2000, all of such stockholders
filed a Form 3 or Form 5 disclosing their beneficial ownership in us.
OTHER MATTERS
Our board does not know of any other matter which may come before the annual
meeting. If any other matters are properly presented to the annual meeting, it
is the intention of the persons named as proxies in the accompanying proxy card
to vote, or otherwise to act, in accordance with their best judgment on such
matters.
Our board hopes that stockholders will attend the annual meeting. Whether or
not you plan to attend, you are urged to sign, date and complete the enclosed
proxy card and return it in the accompanying envelope. A prompt response will
greatly facilitate arrangements for the annual meeting, and your cooperation
will be appreciated. Stockholders who attend the annual meeting may vote their
shares even though they have sent in their proxies.
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STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
FOR 2001 ANNUAL MEETING
Any proposal that any of our stockholders wish to be considered for
inclusion in our proxy statement and proxy card for our 2001 Annual Meeting of
Stockholders must be submitted to our Secretary, Thomas H. Sullivan, at our
offices at 1010 N. Glebe Road, Arlington, Virginia 22201, no later than January
25, 2001. In addition, the proposals must comply with the requirements of Rule
14a-8 under the Securities and Exchange Act of 1934, as amended. If you want to
recommend a director candidate, please write to the Secretary, providing the
recommended candidate's name, biographical information and qualifications. The
Secretary must receive such notice no later than February 23, 2000. If a
stockholder fails to provide timely notice of a proposal to be presented at the
2001 Annual Meeting, the proxies designated by our board of directors will have
discretionary authority to vote on the proposal.
By Order of the Board of Directors,
/s/ Thomas H. Sullivan
_____________________________________
Thomas H. Sullivan, Secretary
Arlington, Virginia
April 21, 2000
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TELECORP PCS, INC.
THIS PROXY IS BEING SOLICITED BY TELECORP PCS, INC.'S BOARD OF DIRECTORS
The undersigned, revoking any previous proxies relating to these shares, hereby
acknowledges receipt of the Notice and Proxy Statement dated April 21, 2000 in
connection with the annual meeting to be held at 1:00 p.m. eastern standard time
on Wednesday, May 24, 2000 at the Key Bridge Marriott Hotel, 1401 Lee Highway,
Arlington, Virginia 22209 and hereby appoints Thomas H. Sullivan and Gerald T.
Vento, and each of them (with full power to act alone), the attorneys and
proxies of the undersigned, with power of substitution to each, to vote all
shares of the class A common stock of TeleCorp PCS, Inc. registered in the name
provided herein which the undersigned is entitled to vote at the 2000 Annual
Meeting of Stockholders, and at any adjournments thereof, with all the powers
the undersigned would have if personally present. Without limiting the general
authorization hereby given, said proxies are, and each of them is, instructed to
vote or act as follows on the proposals set forth in said Proxy.
This Proxy when executed will be voted in the manner directed herein. If no
direction is made this Proxy will be voted FOR the election of Directors and FOR
Proposal 2.
In their discretion the proxies are authorized to vote upon such other matters
as may properly come before the meeting or any adjournment thereof.
Election of Directors (or if any nominee is not available for election, such
substitute as the Board of Directors may designate)
Nominees: Gerald T. Vento
Thomas H. Sullivan
William Kussell
SEE REVERSE SIDE FOR BOTH PROPOSALS. If you wish to vote in accordance with the
Board of Directors' recommendations, just sign on the reverse side. You need not
mark any boxes.
(SEE REVERSE SIDE)
----------------
[X] Please mark votes as in this example.
The Board of Directors recommends a vote FOR Proposals 1 and 2.
1. Election of Directors (See reverse). FOR [_] WITHHELD [_]
-------------------
[_] For all nominees except as noted above.
2. Proposal to Ratify the Appointment of PricewaterhouseCoopers, LLP as the
Company's independent public accountants for the fiscal year ending December
31, 2000.
[_] FOR [_] AGAINST [_] ABSTAIN
[_] I plan to attend the annual meeting.
[_] I have included comments, or a change of address.
[_] I do not wish to receive future annual reports for this account.
[_] I agree to access future proxy statements and annual reports electronically
at www.telecorppes.com instead of receiving paper copies in the mail.
-------------------
Please sign exactly as name(s) appears hereon. Joint
owners should each sign. When signing as attorney,
executor, administrator, trustee or guardian, please
give full title as such.
Signature:____________________________ Date _____________
Signature:____________________________ Date _____________
