<PAGE>
===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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 Section 240.14a-11(c) or Section 240.14a-12
COMMNET CELLULAR INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
COMMNET CELLULAR INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] No fee required
[_] 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:
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(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:
-------------------------------------------------------------------------
(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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
COMMNET CELLULAR INC.
_____________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
February 25, 1999
_____________________
The Annual Meeting of Stockholders of CommNet Cellular Inc., a Colorado
corporation (the "Company"), will be held on Thursday, February 25, 1999, at
9:00 A.M., local time, at the Hyatt Regency Tech Center, Englewood, Colorado,
for the following purposes:
1. To elect Directors of the Company.
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
All stockholders are cordially invited to attend the meeting, although only
stockholders of record at the close of business on January 7, 1999 will be
entitled to notice of and to vote at the meeting.
Shares can only be voted at the meeting if the holder is present or
represented by proxy. If you do not expect to attend the meeting, you are urged
to date and sign the enclosed proxy and return it in the accompanying envelope
promptly, so that your shares may be voted in accordance with your wishes and
the presence of a quorum may be assured. The prompt return of your signed
proxy, regardless of the number of shares you hold, will aid the Company in
reducing the expense of additional proxy solicitation. The giving of such proxy
does not affect your right to vote in person in the event you attend the
meeting.
The Company's Annual Report for the fiscal year ended September 30, 1998 is
enclosed.
James C. Everson
Secretary
Englewood, Colorado
January 14, 1999
<PAGE>
PROXY STATEMENT
COMMNET CELLULAR INC.
8350 East Crescent Parkway, Suite 400
Englewood, Colorado 80111
This statement is furnished in connection with the solicitation of proxies
by CommNet Cellular Inc., a Colorado corporation (the "Company"), for use at the
Annual Meeting of Stockholders of the Company to be held on February 25, 1999,
and at any and all adjournments of such meeting.
January 7, 1999 has been fixed as the record date for the determination of
stockholders entitled to notice of and to vote at the meeting or any
adjournments thereof. At the close of business on that date 22,662,985 shares
of Common Stock, par value $.001 per share, of the Company were issued and
outstanding. Each share of Common Stock is entitled to one vote on any matter
which properly comes before the meeting. Cumulative voting is not permitted
with respect to the election of directors. The presence in person or by proxy
of the holders of at least a majority of the shares of Common Stock entitled to
be voted at the meeting will constitute a quorum.
This proxy statement and the accompanying proxy card are being mailed to
stockholders commencing on or about January 14, 1999.
Stockholders who execute proxies retain the right to revoke them at any
time by giving written notice of revocation to the Secretary of the Company.
Unless so revoked, the shares represented by the proxies solicited by the
Company will be voted in accordance with the directions given therein by the
stockholder. Any proxy not specifying to the contrary will be voted FOR the
election of the Board of Directors' nominees as director referred to in Item 1.
So far as the Company's management is aware, such matter is the only matter to
be acted on at the meeting. As to any other matter which may properly come
before the meeting or any adjournments thereof, the persons named in the
accompanying proxy card will vote thereon in accordance with their best
judgment.
<PAGE>
ELECTION OF DIRECTORS
(Proxy Card Item 1)
The persons named in the accompanying proxy will vote for the election of
directors with a term of office to continue until the 2000 Annual Meeting of
Stockholders or until their successors shall have been duly elected and
qualified, unless authority to vote is withheld. The nominees for election as
directors of the Company are listed below and the Company is informed that these
nominees are willing to serve as directors. However, if such nominees should
decline or become unable to serve as directors for any reason, votes will be
cast for a substitute nominee, if any, designated by the Board of Directors, or,
if none is so designated prior to the election, votes will be cast according to
the judgment in such matters of the person or persons voting the proxy. Each
nominee for election as a director of the Company is incumbent.
The following lists the nominees for election as directors of the Company
including the age of each person as of January 7, 1999, the positions with the
Company or principal occupations of each person, certain other directorships
held and the year each person became a director of the Company. The number of
shares of Common Stock of the Company owned beneficially by each such person as
of January 7, 1999 is set forth in "Security Ownership Of Certain Beneficial
Owners And Management "
NOMINEES FOR ELECTION AS DIRECTORS
Arnold C. Pohs, age 70; Chairman of the Board and Chief Executive Officer of the
Company;
Director since 1985
Daniel P. Dwyer, age 39; President and Chief Operating Officer of the Company;
Director since 1990
Mark T. Gallogly, age 41; Senior Managing Director of The Blackstone Group L.P.;
Director since February 1998
Lawrence H. Guffey, age 30; Managing Director of The Blackstone Group L.P.;
Director since February 1998
Glenn H. Hutchins, age 43; Senior Managing Director of The Blackstone Group
L.P. Director since May 1998
Simon P. Lonergan, age 30; Vice President of The Blackstone Group L.P.;
Director since February 1998
William J. Ryan, age 66; former CEO of Price Communications Wireless
and former CEO of Palmer Wireless, Inc.;
Director since May 1998
John P. Scully, age 52; former Vice President External Relations & Colorado
of US WEST Communications;
Director since May 1998
Peter F. Wallace, age 23; Analyst with The Blackstone Group L.P.;
Director since December 1998
The Board of Directors recommends a vote FOR each of these Directors.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
At January 7, 1999, there were 22,662,985 shares of Common Stock of the
Company issued and outstanding. As of such date options to purchase 1,705,700
shares were outstanding. Each holder of Common Stock, but not unexercised
options, is entitled to one vote per share on each matter which may be presented
at a meeting of stockholders. Cumulative voting is not allowed. The Company's
Common Stock is traded on the Nasdaq National Market under the symbol CELS.
The following table sets forth information regarding ownership of the
Company's Common Stock at January 7, 1999 by each person who is known by
management of the Company to own beneficially more than 5% of the Common Stock,
by each director of the Company and by all directors and executive officers of
the Company as a group. Shares issuable on exercise of options are deemed to be
outstanding for the purpose of computing the percentage ownership of persons
beneficially owning such options, but have not been deemed to be outstanding for
the purpose of computing the percentage ownership of any other person. Insofar
as is known to the Company, the persons indicated below have sole voting and
investment power with respect to the shares indicated as owned by them except as
otherwise stated in the notes to the table.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership Class
---------------- -------------------- -----
<S> <C> <C>
Arnold C. Pohs 1,015,240 (1) 4.19%
8350 East Crescent Parkway
Englewood, Colorado 80111
Daniel P. Dwyer 328,370 (2) 1.36%
8350 East Crescent Parkway
Englewood, Colorado 80111
William J. Ryan 5,000 .02%
8111 Bay Colony Drive
Naples, Florida 34108
BCP CommNet L.P. 19,695,835 86.91%
c/o The Blackstone Group
345 Park Avenue, 31st Floor
New York, New York 10154
All executive officers and directors 1,553,825 (3) 6.42%
(13 persons - stock, options and
restricted stock)
</TABLE>
__________
(1) Includes options to purchase 933,150 shares of Common Stock and restricted
stock to be granted subject to a retirement agreement of 82,090 shares.
(2) Includes options to purchase 328,370 shares of Common Stock.
(3) Includes options to purchase 1,466,735 shares of Common stock and 82,090
shares of registered stock.
<PAGE>
CONCERNING MANAGEMENT, DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding the executive
officers and directors of the Company:
<TABLE>
<CAPTION>
NAME Age Position
- ---- --- --------
<S> <C> <C>
Arnold C. Pohs 70 Chairman of the Board, Chief Executive Officer and Director
Daniel P. Dwyer 39 President, Chief Operating Officer and Director
Timothy C. Morrisey 45 Executive Vice President - Sales Operations
Andrew J. Gardner 44 Executive Vice President, Treasurer and Chief Financial Officer
David S. Lynn 41 Executive Vice President - Network Operations
James C. Everson 48 Vice President, Secretary and General Counsel
Mark T. Gallogly (2) 41 Director
Lawrence H. Guffey (2) 30 Director
Glenn H. Hutchins 43 Director
Simon P. Lonergan (1) 30 Director
William J. Ryan (1)(2) 66 Director
John P. Scully (1)(2) 52 Director
Peter F. Wallace 23 Director
</TABLE>
__________
(1) Member Audit Committee.
(2) Member Compensation Committee.
<PAGE>
Arnold C. Pohs has been Chairman of the Board of the Company since February
1991, Chief Executive Officer since August 1989 and a director since September
1985. Mr. Pohs served as President of the Company from August 1989 until
December 1998 and Executive Vice President of the Company from January 1986
through August 1989. Mr. Pohs was designated Chief Operating Officer of the
Company in August 1987, prior to which time he was the Chief Financial Officer
of the Company. Mr. Pohs is Chairman Emeritus of the Board of Directors of the
Cellular Telecommunications Industry Association and currently serves as a
director and a member of the Executive Committee of the CTIA Board. He is a
member of the board and past Chairman of the CTIA Foundation for Wireless
Telecommunications.
Daniel P. Dwyer has been President and Chief Operating Officer of the
Company since December 1998 and a director of the Company since March 1990. Mr.
Dwyer was Executive Vice President of the Company from November 1992 to December
1998, Chief Financial Officer from August 1988 to December 1998 and Treasurer
from August 1987 to December 1998. He was Vice President - Finance of the
Company from November 1989 until November 1992, Secretary from August 1987 until
March 1990, Assistant Secretary from January 1987 until August 1987, Controller
from May 1986 until November 1988 and accounting manager for the Company from
March 1986 until May 1986. He is a Certified Public Accountant and a member of
the American Institute of Certified Public Accountants and the Colorado Society
of Certified Public Accountants.
Timothy C. Morrisey was named Executive Vice President - Sales Operations
of the Company in November 1996. He was Senior Vice President - Sales
Operations from February 1995 until November 1996 and General Sales Manager of
the Company's Midwest Region from July 1993 until February 1995.
Andrew J. Gardner was named Executive Vice President, Treasurer and Chief
Financial Officer of the Company in December 1998. Mr. Gardner was Senior Vice
President from July 1994 to December 1998 and Controller from November 1992 to
December 1998. He was Vice President from November 1992 to July 1994 and
Assistant Vice President - Accounting and Tax from July 1990 to October 1992.
David S. Lynn was named Executive Vice President - Network Operations of
the Company in December 1998. Mr. Lynn was Senior Vice President - Network
Operations of the Company from July 1994 to December 1998. He was Vice
President - Network Operations from March 1993 until July 1994, Vice President -
Network Development from February 1992 until March 1993, Assistant Vice
President - Finance from June 1990 until February 1992, Controller from November
1988 until June 1990 and Manager, Financial Reporting from August 1988 until
November 1988.
James C. Everson was named General Counsel and Secretary of the Company in
March 1998. He was Vice President - Legal Affairs from March 1996 to March 1998
and has been legal counsel to the Company since March 1992.
Mark T. Gallogly was designated a director of the Company in February 1998.
Mr. Gallogly is a member of the limited liability company which acts as the
general partner of the general partner of BCP CommNet L.P. He is a Senior
Managing Director of The Blackstone Group L.P. and has been with Blackstone
since 1989. Mr. Gallogly is a member of the boards of directors of InterMedia
Partners VI Cable TV, TW Fanch-One Co. and Centennial Cellular Corp.
Lawrence H. Guffey was designated a director of the Company in February
1998. Mr. Guffey is a Managing Director of The Blackstone Group L.P., with which
he has been associated since 1991. He is a member of the board of directors of
TW Fanch-One Co. and Centennial Cellular Corp.
Glenn H. Hutchins was designated a director of the Company in May 1998. He
is a member of the limited liability company which acts as the general partner
of the general partner of BCP CommNet L.P. He is a Senior Managing Director of
The Blackstone Group L.P. and has been with Blackstone since 1994. Previously,
he was a Managing Director of Thomas H. Lee Co. from 1987 until 1994. Mr.
Hutchins is a member of the boards of directors of Clark Refining & Marketing,
Inc., Clark USA, Inc., American Axle and Manufacturing Holdings, Inc., American
Axle and Manufacturing, Inc., Corp Banca (Argentina) S.A., Corp Group C.V., and
Haynes International, Inc.
<PAGE>
Simon P. Lonergan was designated a director of the Company in February
1998. Mr. Lonergan is a Vice President of The Blackstone Group L.P., which he
joined in 1996. Prior to joining Blackstone, Mr Lonergan was an Associate at
Bain Capital, Inc. and a Consultant at Bain and Co. He currently serves on the
Advisory Committees of Intermedia Partners VI and Graham Packaging Company.
William J. Ryan was designated a director of the Company in May 1998. Mr.
Ryan was named CEO of Price Communications Wireless, a subsidiary of Price
Communications Corporation ("Price"), in October 1997 following the purchase of
Palmer Wireless, Inc. by Price. From 1995 to October 1997, Mr. Ryan was
President & CEO of Palmer Wireless, Inc. Prior thereto, he was President & CEO
of Palmer Communications Incorporated. Mr. Ryan is currently Trustee, Naples
Community Hospital; Vice Chairman, Naples Philharmonic Center for the Arts;
Director, Florida Council on Economic Education; Member CATV Pioneers, Broadcast
Pioneers, and the International Radio & Television Society.
John P. Scully was designated a director of the Company in May 1998. From
May 1992 until April 1998, Mr. Scully was Vice President External Relations &
Colorado for U S WEST Communications. In March 1997, external relations
responsibilities were added. Mr. Scully serves on the boards of the Greater
Denver Chamber of Commerce (past chairman), the Metro Denver Board of Governors,
the Public Education and Business Coalition (past chairman), the Denver Center
for the Performing Arts, the State Board of Agriculture, the Urban League of
Metro Denver and the National Exchange Carrier Association.
Peter F. Wallace was designated a director of the Company in December 1998.
Mr. Wallace has been associated with The Blackstone Group L.P. since 1997.
Prior to joining Blackstone Mr. Wallace studied at Harvard University.
BOARD COMPENSATION.
Board members other than John P. Scully and William J. Ryan are not paid
for service on the Board. Messrs. Ryan and Scully are paid an annual retainer of
$15,000 plus $1,000 for special meetings and will receive a stock grant annually
of 1,500 shares of the common stock of the Company.
<PAGE>
EXECUTIVE COMPENSATION.
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation received by the named
Executive Officers for each of the three years ended September 30, 1998.
<TABLE>
<CAPTION>
Annual Long-Term
------ ---------
Compensation All Others Compensation
------------ ---------- ------------
Name and Principal Position Year Salary ($) Bonus ($) ($)(1) Options (#) All Others ($)(2)
--------------------------- ---- ---------- --------- ------ ----------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Arnold C. Pohs........................ 1998 450,000 242,811 3,703 - 7,088
Chairman of the Board 1997 400,000 234,944 10,778 - 9,750
and Chief Executive Officer 1996 350,000 149,306 11,473 100,000 10,125
Daniel P. Dwyer....................... 1998 350,000 151,082 8,006 - 7,088
President and Chief Operating 1997 300,000 140,966 4,242 - 9,750
Officer 1996 250,000 83,598 2,880 50,000 10,125
Timothy C. Morrisey................... 1998 175,000 74,141 6,256 - 7,088
Executive Vice President - Sales 1997 158,000 72,978 11,463 - 9,750
Operations 1996 132,000 36,753 - 20,000 10,125
David S. Lynn......................... 1998 165,000 54,537 58 - 7,088
Executive Vice President - Network 1997 148,000 51,950 - - 9,650
Operations 1996 132,000 35,103 - 20,000 10,125
Andrew J. Gardner..................... 1998 155,000 51,232 58 - 7,088
Executive Vice President, Treasurer 1997 138,000 49,075 - - 9,750
and Chief Financial Officer 1996 126,000 35,082 - 20,000 10,125
</TABLE>
__________
(1) The amounts shown represent premiums paid on supplemental health benefits
for certain named executives.
(2) The amounts shown represent contributions by the Company to defined
contribution plans.
REPORT OF COMPENSATION COMMITTEE.
General. The Compensation Committee of the Board of Directors is responsible
for establishing the executive compensation program for the Company. The
Committee monitors and recommends changes in the compensation levels of
executive management and administers the Company's incentive compensation
programs as well as determining the grants under the Company's Employee Stock
Ownership Plan. All of the Committee members are non-employee directors of the
Company. The Company has periodically retained the services of a nationally
recognized executive compensation consulting firm to assist the Company in
compensation matters.
Compensation Philosophy. The Company's compensation program is designed to
attract and retain high quality executive management, to give management
incentives that motivate superior performance on behalf of the Company and to
align the interests of management with those of the Company's shareholders. The
Committee believes that the Company's base salaries should be competitive with
the base salaries paid to executives with similar responsibilities in similar
cellular companies. Executive compensation should also be correlated to the
Company's performance and shareholder return.
<PAGE>
The companies used for compensation comparison purposes are not all of the
same companies contained in the Nasdaq telecommunications industry group
comparison of total shareholder return in the Stockholder Performance Return
Graph. The companies used for compensation purposes are those companies which
are similarly sized and are in the cellular industry.
Components of Compensation.
Salary: The salary of the Chief Executive Officer and the other executive
------
officers of the Company are based on a subjective evaluation of an individual
officer's responsibility and a comparison of salaries for similar positions in
comparable companies.
During 1998, the salary increases for the executive officers, other than
Arnold C. Pohs, the Chief Executive Officer, ranged between 9% and 14%. Mr.
Pohs' base salary was increased by 11%. The basis for Mr. Pohs' salary increase
was twofold. The increase recognizes the performance of the Company in terms of
operating cash flow achievements, and considers comparative industry
information.
Short-Term Incentive Plan Bonuses: The Company maintains an annual bonus
---------------------------------
plan which is based on meeting certain operational targets. The bonus
opportunities are established based on the opportunities provided to executives
in similar positions at similar companies.
Actual annual bonuses for the executive officers were determined based on the
Company's performance relative to corporate operating targets and on each
individual's performance relative to officer specific individual goals. The
weightings of corporate and individual performance vary by position and
responsibilities and range from a weighting of 70% corporate/30% individual to
80% corporate/20% individual, which is the weighting applied to Mr. Pohs' award.
The corporate operating targets were based on the following measures which
represent the key business indicators of performance within the cellular
industry: Net managed market subscriber additions (50%) and Company
proportionate operating cash flow (50%).
During fiscal 1998, the Company's weighted average performance results were
97.4% of the operating targets as described above and bonuses were paid
accordingly after a subjective evaluation of individual performance. The
corporate performance results represent excellent performance against aggressive
operating plan targets.
Mr. Pohs' award was 54% of base salary and was based 80% on the weighted
performance results of 97.4% of the operating targets and 20% on individual
performance. The Committee determined that the individual portion of Mr. Pohs'
award should be based on a maximum individual performance rating. Specifically,
the Committee considered the following: the Company added 61,136 managed market
customers, a 22% increase, bringing the total to 335,881 at September 30, 1998,
and proportionate EBITDA (before nonrecurring and The Blackstone Group L.P.
monitoring expenses) increased to $71.5 million which represented a 25% increase
over the $57.4 million reported in the prior fiscal year.
Long-Term Incentive Compensation: The Company provides long-term incentive
--------------------------------
compensation to its executives through stock options. As of November 4, 1998,
Mr. Pohs owned options to purchase 933,150 shares of the Company's Common Stock.
The committee believes that the interests held by the named Executive Officers
represent a significant incentive to continue to increase shareholder value.
Policy with Respect to the $1 Million Limit: Section 162(m) of the Internal
--------------------------------------------
Revenue Code generally limits to $1,000,000 the tax deductible compensation paid
to the Chief Executive Officer and the four highest-paid executive officers who
are employed as executive officers on the last day of the year. However, the
limitation does not apply to performance-based compensation provided certain
conditions are satisfied.
<PAGE>
None of the Company's compensation payments for fiscal 1998 exceeded the tax
deductibility limit set forth in Section 162(m) nor is it expected that
compensation to be paid in fiscal 1999 will exceed the limit. The committee
will continue to monitor the Company's executive compensation program with the
impact of Section 162(m) and will seek to minimize the impact of Section 162(m)
where appropriate and consistent with the Company's compensation philosophy.
Mark T. Gallogly Lawrence H. Guffey William J. Ryan John P. Scully
OTHER MATTERS.
- --------------
Change in Control Agreements
----------------------------
In July 1993, the Board of Directors approved change in control agreements
with Messrs. Pohs and Dwyer. In October 1994, the Board authorized a comparable
agreement with Homer Hoe, the Company's former Chief Information Officer. In
November 1995, the Board authorized comparable agreements with Messrs. Gardner,
Lynn and Morrisey, then the Company's Senior Vice President and Controller,
Senior Vice President - Network Operations, and Executive Vice President - Sales
Operations, respectively, and Amy M. Shapiro, the Company's former Senior Vice
President and General Counsel. The purpose of these agreements is to reinforce
and encourage the officers to maintain objectivity and a high level of attention
to their duties without distraction from the possibility of a change in control
of the Company. These agreements provide that in the event of a change in
control of the Company, as that term is defined in the agreements, each officer
is entitled to receive certain severance benefits upon the subsequent
termination or constructive termination of employment, unless such termination
is due to death, disability or voluntary retirement; unless the termination is
by the Company for cause (as defined in the agreements) or is by the officer for
other than good reason (as defined in the agreements).
The severance benefits include the payment of the officer's full base
salary through the date of termination. The severance benefits also include a
lump sum payment equal to 2.99 times the sum of (a) the officer's annual base
salary in effect immediately prior to the circumstances giving rise to
termination, and (b) the actual bonus earned by the officer in the year prior to
the year in which termination occurs. In addition, each officer will be
provided with life and health benefits and a continuation of all other employee
benefits for 12 months following the date of termination. In addition, the
officers will be fully vested in all benefit plans to the extent not otherwise
entitled to 100% of all contributions made by the Company on their behalf.
On February 10, 1998, the date of the Merger between CommNet Cellular Inc.
and AV Acquisition Corp., Messrs. Pohs, Dwyer, Gardner, Lynn and Morrisey
executed an amendment to their change in control agreements. Under the
amendment, each officer is entitled to receive certain severance benefits upon
termination or constructive termination of employment subject to the same
conditions as the original agreements, but only if termination occurs prior to
February 10, 2000. In addition, the amendment causes the agreements to expire on
February 10, 2001. Mr. Hoe and Ms. Shapiro did not execute an amendment to their
agreements. Both Mr. Hoe and Ms. Shapiro have asserted that they are entitled to
receive severance benefits under their change in control agreements, however the
Company believes that no such benefits are owed by the Company.
On March 30, 1997, CommNet and Mr. Pohs entered into a Retirement and
Consulting Agreement (the "Consulting Agreement") pursuant to which Mr. Pohs
will receive the following upon his retirement from the Company: (i) a payment
equal in amount to the additional employment contributions and matching
contributions under the CommNet Cellular Inc. Retirement Savings Plan and the
ESOP to which Mr. Pohs would have been entitled had such contributions been
determined without regard to the statutory limits applicable to such
contributions under the Code for the five year period ending on Mr. Pohs'
retirement date; (ii) a payment equal to the present value of five times the
annual premium cost with respect to Mr. Pohs' coverage level and plan option of
the Company's health plan and the Exec-U-Care Medical Reimbursement Insurance;
and (iii) a grant of 82,090 shares of restricted stock under the CommNet
Cellular Inc. Omnibus Stock and Incentive Plan (which shares will vest upon
death, disability, the end of the consulting period described below or a change
of control). The Consulting Agreement also provides that the Company will
retain Mr. Pohs as a consultant for a period of six years following his
retirement in exchange for a consulting fee equal to 50% of Mr. Pohs' final
annualized base salary plus his final year's annualized bonus per year. In the
event of a change in control of the Company, as defined in the Consulting
Agreement, (i) if Mr. Pohs has not yet retired, he may elect to receive the
benefits set forth in his change of control agreement, as described in the two
preceding paragraphs, or to receive the benefits provided for in the Consulting
Agreement, and (ii) if Mr. Pohs has retired, he will be entitled to receive a
lump-sum payment of all consulting fees due for the remaining portion of the
consulting arrangement, and all restrictions on the shares granted pursuant to
the Consulting Agreement will lapse.
<PAGE>
In the event any payment or benefit to be received by an officer pursuant
to the agreements would be subject to the federal excise tax, the amount of the
benefits payable under the agreement will be increased such that the net amount
retained by the officer after deduction of any excise tax on such payment and
any federal, state and local tax and excise tax upon such additional payment
shall be equal to the full severance benefits contemplated by the agreement.
Options
-------
The following table provides information on the value of unexercised
options at September 30, 1998 (closing price $11.00 per share).
1998 AGGREGATED OPTION EXERCISES
AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Proceeds From Number of Value of Unexercised
Options Cancelled Unexercised Options In-the-Money Options
Name Cancelled (1) Options (1) at Fiscal Year End at Fiscal Year End
- -------------------------------------------------------------------------------------------------------------------
Vested Unvested Vested Unvested
------ -------- ------ --------
(2) (2) (2) (2)
<S> <C> <C> <C> <C> <C> <C>
Arnold C. Pohs 890,530 $3,481,000 933,150 - $5,539,000 $2,659,000
Daniel P. Dwyer 986,900 3,266,000 328,370 - 1,895,000 936,000
Timothy C. Morrisey 75,005 166,000 59,150 - 300,000 169,000
David S. Lynn 190,995 714,000 90,740 - 500,000 259,000
Andrew J. Gardner 161,425 543,000 48,760 - 272,000 139,000
</TABLE>
(1) As a result of the merger, certain options were cancelled and settled for
cash.
(2) The option holder is fully vested in the excess of $7.20 per share minus the
per share exercise price of the applicable option. Any additional
appreciation above $7.20 is subject to a six-year vesting schedule up to a
maximum of 75% prior to a Liquidation Event, except such appreciation will
vest upon the death or disability of the option holder. All options vest
100% upon the occurrence of a Liquidation Event which is defined as a sale
by BCP CommNet L.P. of all of its interest in the Company.
BCP CommNet L.P.
----------------
Members of management (including the named Executive Officers) could
receive distributions through a management limited partnership from BCP CommNet
L.P., the owner of 86.91% of the Company's Common Stock, based upon the internal
rate of return of certain affiliates of Blackstone Management Associates II
L.L.C. and their co-investors in the Company Common Stock held by BCP CommNet
L.P. If there were such a distribution, then the Company would record a charge
to net income and an increase to contributed capital in the amount of the
distribution.
<PAGE>
STOCKHOLDER PERFORMANCE RETURN GRAPH.
The following graph compares the yearly percentage change in the cumulative
total shareholder return on the Company's Common Stock with that of the
cumulative total return of the NASDAQ Stock Market (U.S.) index and the Nasdaq
Telecommunications index for the five-year period ended on September 30, 1998.
The information below is based on an investment of $100, on September 30, 1993,
in the Company's Common Stock, the Nasdaq Stock Market (U.S.) index and the
Nasdaq Telecommunications index, with dividends reinvested.
CommNet Cellular Inc (CELS)
CUMULATIVE TOTAL RETURN
--------------------------------------------------
9/93 9/94 9/95 9/96 9/97 9/98
COMMNET CELLULAR INC. 100.00 132.25 168.12 167.39 203.26 318.84
NASDAQ STOCK MARKET (U.S.) 100.00 100.83 139.28 165.24 226.81 231.84
NASDAQ TELECOMMUNICATIONS 100.00 92.48 110.35 114.41 155.21 203.92
<PAGE>
OTHER INFORMATION
COMMITTEES.
The Company has no standing nominating committee of the Board of Directors.
The Compensation Committee makes recommendations to the Board of Directors
concerning the Compensation of the Company's officers. The Compensation
Committee currently consists of Messrs. Gallogly, Ryan, Scully and Guffey.
The Audit Committee makes recommendations to the Board of Directors
concerning the selection of the Company's auditors and the scope of auditing and
accounting matters. The Audit Committee currently consists of Messrs. Lonergan,
Ryan and Scully.
MEETINGS OF THE BOARD.
The Board of Directors held four meetings during the fiscal year ended
September 30, 1998. Messrs. Pohs, Dwyer, Gallogly, Guffey, Ryan and Scully
attended 100% of the total number of meetings of the Board and committees
thereof on which they served during that period. Mr. Lonergan attended 50% of
the total number of meetings of the Board and committees thereof on which he
served during the fiscal year. Mr. Hutchins attended none of the meetings of
the Board and committees thereof on which he served during the fiscal year.
SUBMISSION OF STOCKHOLDER PROPOSALS.
Stockholder proposals intended for presentation at the Company's next
annual meeting must be received by the Company at its principal offices in
Englewood, Colorado, not later than September 30, 1999.
OTHER MATTERS.
The cost of soliciting proxies will be borne by the Company. In addition
to solicitation by mail, proxies may be solicited by directors, officers and
employees of the Company by personal interview, telephone or telegram.
Arrangements will also be made with brokerage houses and other custodians,
nominees and fiduciaries to forward the solicitation material to the beneficial
owners of common stock held of record by such persons and the Company may
reimburse them for reasonable out-of-pocket and clerical expenses incurred by
them in connection therewith.
A COPY OF THE COMPANY'S FORM 10-K AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION, EXCLUDING EXHIBITS, MAY BE OBTAINED BY STOCKHOLDERS WITHOUT CHARGE
BY WRITTEN REQUEST ADDRESSED TO STOCKHOLDER RELATIONS, COMMNET CELLULAR INC.,
8350 E. CRESCENT PARKWAY, SUITE 400, ENGLEWOOD, COLORADO 80111.
Englewood, Colorado
January 14, 1999
<PAGE>
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
- -----------------------
COMMNET CELLULAR INC.
- -----------------------
RECORD DATE SHARES:
<TABLE>
<CAPTION>
<S> <C>
For With-hold For All
All Except
[_] [_] [_]
1. Election of Directors Nominees
to serve as Directors until the
next annual meeting:
Arnold C. Pohs, Daniel P. Dwyer,
Mark T. Gallogly, Lawrence H.
Guffey, Glenn H. Hutchins,
Simon P. Lonergan, William J. Ryan,
John P. Scully, Peter F. Wallace
NOTE: If you do not wish your shares voted "For" a particular nominee,
mark the "For All Except" box and strike a line through the name(s) of
the nominee(s). Your shares will be voted for the remaining nominee(s).
2. Such other matters as may properly come before the meeting.
</TABLE>
<TABLE>
<CAPTION>
Please be sure to sign and date this Proxy. Date
- -----------------------------------------------------------------
<S> <C>
Mark box at right if an address change or comment
has been noted on the reverse side of this card. [_]
Stockholder sign here Co-owner sign here
------------------------------------- -------------------------------------
DETACH CARD DETACH CARD
- ----------- -----------
</TABLE>
<PAGE>
COMMNET CELLULAR INC.
Proxy Solicited on Behalf of the Board of Directors for
ANNUAL MEETING OF STOCKHOLDERS, FEBRUARY 25, 1999
The undersigned holder of shares of Common Stock of CommNet Cellular Inc. (the
"Company") hereby appoints Arnold C. Pohs and Daniel P. Dwyer, and each of them,
as proxies of the undersigned, with full power of substitution, to act and to
vote for and in the name, place and stead of the undersigned at the Annual
Meeting of Stockholders of the Company to be held on February 25, 1999 at 9:00
a.m. at Hyatt Regency/Tech Center, 7800 E. Tufts Avenue, Denver, Colorado,
80237, and at any and all adjournments thereof, according to the number of votes
and as fully as the undersigned would be entitled to vote if personally present
at such meeting, and particularly with respect to the proposals listed on the
reverse side.
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS INDICATED, THIS PROXY
WILL BE VOTED FOR ITEM 1.
PLEASE VOTE, DATE, AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN
ENCLOSED ENVELOPE.
Please sign this proxy exactly as your name appears on the reverse side. Joint
owners should each sign personally. Trustees and others signing in a
representative capacity should indicate the capacity in which they sign.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
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