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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 14, 1999
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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NEXTEL PARTNERS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 4813 91-1930918
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
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4500 CARILLON POINT, KIRKLAND, WASHINGTON 98033, (425) 828-1713
(Address, including ZIP code, and telephone number, including area code, of
the Registrant's principal executive offices)
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DONALD MANNING, ESQ.
4500 CARILLON POINT
KIRKLAND, WASHINGTON 98033
(425) 828-1713
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
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COPY TO:
BRUCE R. KRAUS, ESQ.
WILLKIE FARR & GALLAGHER
787 SEVENTH AVENUE
NEW YORK, NEW YORK 10019
(212) 728-8000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED OFFER TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If the securities being registered on this Form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE OFFERING AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PRICE(1) OFFERING PRICE FEE
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14% Senior Discount Notes due 2009 $800,000,000 50.797% $406,376,000 $112,973
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(1) Estimated solely for the purpose of calculating the registration fee.
---------------
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until this Registration Statement shall
become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT OFFER THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED MAY 14, 1999.
[GRAPHIC OMITTED]
EXCHANGE OFFER FOR
14% SENIOR DISCOUNT NOTES DUE 2009
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This is an offer to exchange the outstanding, unregistered Nextel Partners
14% Senior Discount Notes you now hold for new, substantially identical 14%
Senior Discount Notes that will be free of the transfer restrictions that apply
to the old notes. This offer will expire at 5:00 p.m., New York City time, on
, 1999, unless we extend it. You must tender your old, unregistered notes
by the deadline to obtain new, registered notes and the liquidity benefits they
offer.
We agreed with the initial purchasers of the old notes to make this offer
and register the issuance of the new notes following the closing. This offer
applies to any and all old notes tendered by the deadline.
The new notes will not trade on any established exchange. The new notes
have the same financial terms and covenants as the old notes, and are subject
to the same business and financial risks. A DESCRIPTION OF THOSE RISKS BEGINS
ON PAGE 10.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
, 1999
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TABLE OF CONTENTS
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PAGE
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Nextel Partners ......................... 1
Risk Factors ............................ 10
Use of Proceeds ......................... 17
Capitalization .......................... 18
Management's Discussion and
Analysis of Financial Condition
and Results of Operations ............ 19
Where You Can Find More
Information .......................... 24
Delivery of prospectus .................. 24
Business ................................ 25
Regulation .............................. 45
Management .............................. 48
Certain Relationships and Related
Transactions ......................... 52
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PAGE
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Ownership of Capital Stock and
Principal Stockholders ............... 56
The Exchange Offer ...................... 59
Description of the Notes ................ 69
Book-Entry, Delivery and Form ........... 108
Description of Credit Facility .......... 109
Material United States Federal
Income Tax Consequences .............. 111
Plan of Distribution .................... 113
Legal Matters ........................... 114
Experts ................................. 114
Index to Consolidated Financial
Statements ........................... F-1
Index to Pro Forma Unaudited
Consolidated Financial
Statements ........................... P-1
</TABLE>
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NEXTEL PARTNERS
Nextel Partners provides, or is preparing to provide, digital wireless
communications services in mid-sized and smaller markets throughout the United
States. We are the only wireless service provider licensed to use the Nextel
(Registered Trademark) brand name in these markets, and offer the same package
of digital wireless communications services that Nextel Communications uses in
its own markets. Our relationship with Nextel should enable us to benefit from
Nextel's national marketing efforts, which are designed to increase awareness
of the Nextel brand name and stimulate demand for Nextel service by stressing
its versatility, value, simplicity and quality.
Our services will be substantially identical to Nextel's from the
customer's point of view. We will build our systems to be operationally
seamless with those of Nextel, so that customers of each company are able to
roam within and between the two companies' systems with equal ease and at no
additional charge. Together, our facilities and those of Nextel will operate as
a single, nationwide wireless communications system that we call the Digital
Mobile Network.
We offer a bundled product consisting of three services accessible through
a single device: (i) cellular telephone service; (ii) two-way dispatch with
instant conferencing capabilities (marketed as Direct ConnectSM service); and
(iii) paging and alphanumeric short-messaging service. We believe that Nextel's
experience demonstrates a significant degree of overlap in the customer
population for these separate wireless communications services.
We have rights to use the Nextel brand name and technology as well as
rights to the necessary radio frequencies, in markets where 33 million people
live or work. We consider our markets attractive because they generally contain
fewer wireless competitors than large cities do, and because we believe Nextel
has experienced rapid subscriber growth and competitive success in similar
markets.
We currently operate in five markets in Hawaii and upstate New York, where
4.5 million people live or work. We expect to launch service in four additional
markets by the end of 1999, and expect to serve a total of 39 markets where
22.4 million people live or work by the end of 2001.
We have an experienced senior management team which includes former
managers of AT&T Wireless Services, and believe that our management will enable
us to complete our network on schedule and operate it efficiently and
effectively. We also have operating agreements with Nextel that give us access
to switching and network monitoring facilities, back-office systems, technology
improvements and employee training at prices based on Nextel's costs.
In January 1999, we raised, or had irrevocable commitments for, $989.4
million in debt and equity capital, which we believe will be sufficient to fund
our network build-out plans and anticipated operating losses through 2003. At
the same time, we executed operating and licensing agreements with Nextel, and
purchased or received as in-kind capital contributions from Nextel the right to
use radio frequencies in each of our markets, operational networks in five
markets, and build-out work in progress in other parts of our territory.
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BUSINESS STRATEGY
Our strategy for success in the competitive market for wireless
communications services includes the following key elements:
o Following Nextel's marketing approach, we have initially concentrated our
sales efforts on mobile workers, including personnel in the transportation,
delivery, real property and facilities management, construction and
building trades, and landscaping and other service sectors. We intend to
gradually expand our target customer group to include additional industry
groups.
o We have adopted several of the pricing strategies used by Nextel that we
believe to be both profitable and attractive to customers, although we will
set our price levels in each of our markets independently of Nextel.
o We are developing efficient, standardized operations to support customer
activation, billing and customer care. We plan to use the flexibility our
agreements with Nextel provide to minimize overhead costs and provide
high-quality customer service by utilizing Nextel's back-office systems
and practices, or implementing our own when appropriate.
o We are developing our own relationships with vendors and are seeking terms
from Nextel's distributors similar to those agreed to with Nextel. We
anticipate that numerous offices and branches of Nextel's national accounts
will become our customers when we launch service in those markets.
2
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THE EXCHANGE OFFER
The Exchange Offer.......... We are offering to exchange $1,000 principal
amount at maturity of Nextel Partners 14% Senior
Discount Notes due 2009 which have been
registered under the Securities Act for each
$1,000 principal amount at maturity of Nextel
Partners outstanding 14% Senior Discount Notes
due 2009 which were issued in January 1999 in a
private offering. In order to be exchanged, an
old note must be properly tendered and accepted.
We will exchange all notes validly tendered and
not validly withdrawn. There is $800.0 million
aggregate principal amount at maturity of old
notes outstanding.
Expiration and
Exchange Dates.............. This offer will expire at 5:00 p.m., New York
City time, on , 1999 unless we extend it,
and we will consummate the exchange on the next
business day.
Registration Rights......... You have the right to exchange the old notes
that you now hold for new notes with
substantially identical terms. This exchange
offer is intended to satisfy these rights. After
the exchange offer is complete, you will no
longer be entitled to any exchange or
registration rights with respect to your notes.
Conditions.................. This offer is conditioned only upon compliance
with the securities laws. The offer applies to
any and all old notes tendered by the deadline.
Withdrawal Rights........... You may withdraw your tender of old notes at
any time before the offer expires.
Federal Income Tax
Consequences............... The exchange will not be a taxable event for
United States federal income tax purposes. You
will not recognize any taxable gain or loss or
any interest income as a result of such exchange.
Resale Without Further
Registration............... We believe that the new notes may be offered
for resale, resold and otherwise transferred by
you without compliance with the registration and
prospectus delivery provisions of the Securities
Act so long as the following statements are true:
o you acquire the new notes issued in the
exchange offer in the ordinary course of your
business;
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o you are not one of our "affiliates," as
defined in Rule 405 of the Securities Act of
1933, as amended; and
o you are not participating, and do not intend
to participate, and have no arrangement or
understanding with any person to participate,
in the distribution of the new notes issued
to you in the exchange offer.
By tendering your notes as described below, you
will be making representations to this effect.
Transfer Restrictions on
New Notes.................. You may incur liability under the Securities
Act if:
(1) any of the representations listed above
are not true; or
(2) you transfer any new note issued to you in
the exchange offer without:
o delivering a prospectus meeting the
requirements of the Securities Act, or
o qualifying for an exemption under the
Securities Act's requirements to
register your new notes.
We do not assume or indemnify you against any
such liability. Each broker-dealer that is
issued new notes for its own account in exchange
for old notes that were acquired as a result of
market-making or other trading activities, must
acknowledge that it will deliver a prospectus
meeting the requirements of the Securities Act
in connection with any resale of the new notes.
A broker-dealer may use this prospectus for an
offer to resell, a resale or other transfer of
the new notes issued to it in the exchange
offer.
Procedures for Tendering
Old Notes.................. Each holder of old notes who wishes to accept
the exchange offer must:
o complete, sign and date the accompanying
letter of transmittal, or a facsimile
thereof; or
o arrange for The Depository Trust Company to
transmit certain required information to the
exchange agent in connection with a
book-entry transfer.
You must mail or otherwise deliver such
documentation and your old notes to The Bank of
New York, as
4
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exchange agent, at the address set forth under
"The Exchange Offer-- Exchange Agent."
Failure to Exchange Will Affect
You Adversely.............. If you are eligible to participate in the
exchange offer and you do not tender your old
notes, you will not have any further registration
or exchange rights and your old notes will
continue to be subject to some restrictions on
transfer. Accordingly, the liquidity of the old
notes could be adversely affected.
Special Procedures for Beneficial
Owners..................... If you beneficially own old notes registered in
the name of a broker, dealer, commercial bank,
trust company or other nominee and you wish to
tender your old notes in the exchange offer, you
should contact such registered holder promptly
and instruct it to tender on your behalf. If you
wish to tender on your own behalf, you must,
before completing and executing the letter of
transmittal for the exchange offer and delivering
your old notes, either arrange to have your old
notes registered in your name or obtain a
properly completed bond power from the registered
holder. The transfer of registered ownership may
take considerable time.
Guaranteed Delivery
Procedures.................. You may comply with the procedures described in
this prospectus under the heading "The Exchange
Offer-- Guaranteed Delivery Procedures" if you
wish to tender your old notes and:
o time will not permit your required documents
to reach the exchange agent by the expiration
date of the exchange offer,
o you cannot complete the procedure for
book-entry transfer on time, or
o your old notes are not immediately
available.
5
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THE NEW NOTES
The new notes have the same financial terms and covenants as the old
notes, which are as follows:
Issuer...................... Nextel Partners, Inc.
Maturity.................... February 1, 2009.
Accreted Value
and Interest................ The aggregate accreted value of the notes will
increase from $406.4 million at issuance at a
rate of 14% per year, compounded semi-annually,
to their aggregate principal amount of $800
million at February 1, 2004.
From and after February 1, 2004, interest will
accrue at the rate of 14% per year, payable
semi-annually in arrears on February 1 and
August 1 of each year, beginning on August 1,
2004.
Ranking..................... The new notes are senior unsecured indebtedness
of Nextel Partners.
Optional Redemption......... On or after February 1, 2004, we will have the
right to redeem any or all of the new notes at
their principal amount at maturity plus accrued
interest and a premium initially equal to 7.0%
and declining annually after that date.
In addition, before February 1, 2002, we have
the right to use the net cash proceeds of
qualifying offerings of stock to redeem up to
35% of the sum of the issue price of the old
notes plus any principal or interest that shall
have accrued from the issue date of the old
notes at a redemption price equal to 114% of
their accreted value. For more information, see
"Description of the Notes--Optional Redemption."
Tax Consequences of Holding the
Notes...................... The accretion of the notes from their original
issue price to their principal amount will
produce taxable ordinary interest income in the
amount of the accretion for holders of the notes
during the accretion period. The Internal Revenue
Code calls this original issue discount or OID.
Change of Control........... If an event treated as a change of control of
Nextel Partners occurs, we must make an offer to
purchase any and all of the new notes then
outstanding from you at a cash purchase price
equal to 101% of the accreted value of the new
notes to the purchase date (if prior to
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February 1, 2004) or 101% of the aggregate
principal amount of the new notes, plus accrued
and unpaid interest, if any, to the date of
purchase (if on or after February 1, 2004). For
a summary of what constitutes a change of
control, see "Description of the
Notes--Covenants--Change of Control."
Covenants................... The indenture under which the old notes have
been and the new notes are being issued contains
covenants for your benefit which, among other
things and subject to certain exceptions,
restrict our ability and the ability of our
subsidiaries to:
o incur indebtedness;
o make certain payments;
o enter into certain transactions, including
transactions with affiliates;
o engage in any business other than
telecommunications;
o create liens;
o pay dividends or make other distributions;
o issue or sell shares of capital stock of
certain subsidiaries; and
o consolidate, merge or sell all or
substantially all of our assets or the assets
of our subsidiaries.
The indenture allows modification and amendment
of these and other covenants by a vote of
holders of a majority in aggregate principal
amount of the notes, subject to certain
exceptions described in the indenture. Also,
holders of a majority in aggregate principal
amount of the notes may waive our compliance
with certain other restrictive covenants in the
indenture.
For additional information regarding the notes, see "Description of the
Notes" and "Material United States Federal Income Tax Consequences."
RISK FACTORS
See "Risk Factors" immediately following this summary for a discussion of
risks relating to the new notes, all of which apply to the old notes as well.
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SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED
FINANCIAL INFORMATION AND OPERATING DATA
(DOLLARS IN THOUSANDS)
We have summarized below our historical consolidated financial data as of
and for the year ended December 31, 1998 and unaudited pro forma financial and
other data for the period ended December 31, 1998. The pro forma financial data
give effect to the transactions which occurred on January 29, 1999 and the
applications of the proceeds as if they had occurred on December 31, 1998 for
the purposes of the consolidated balance sheet data and January 1, 1998 for
statement of operations data purposes. The operating results shown below are
not necessarily indicative of what actual results would have been for the full
year ending December 31, 1998. The operating data presented below are derived
from our records.
Please read this table together with Management's Discussion and Analysis
of Financial Condition and Results of Operations, our consolidated financial
statements audited by Arthur Andersen LLP and the notes thereto and the pro
forma unaudited financial statements and accompanying discussion and notes
thereto included elsewhere in this prospectus.
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AS OF AND FOR THE YEAR ENDED
DECEMBER 31, 1998
-----------------------------------------
AS ADJUSTED FOR
THE OFFERING, BORROWINGS
ON CREDIT FACILITY AND
ACTUAL EQUITY CONTRIBUTIONS
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CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Operating revenues:
Service revenues ......................................... $ 3,745 $3,745
Equipment revenues ....................................... 1,564 1,564
--------- ------
Total revenues ............................................ 5,309 5,309
--------- ------
Operating expenses:
Cost of service revenues ................................. 6,108 6,108
Cost of equipment revenues ............................... 2,935 2,935
Sales and marketing ...................................... 6,636 6,636
General and administrative ............................... 6,895 6,895
Deferred compensation .................................... 447 447
Depreciation and amortization ............................ 4,586 4,586
--------- ------
Total operating expenses .................................. 27,607 27,607
--------- ------
Loss from operations ...................................... (22,298) (22,298)
Interest expense .......................................... -- 79,196
Interest income ........................................... -- 25,281
--------- -------
Loss before income tax provision .......................... (22,298) (76,213)
Income tax provision ...................................... -- --
--------- -------
Net loss .................................................. $ (22,298) $ (76,213)
========= =========
OTHER DATA:
Ratio of earnings to fixed charges (1) .................... $ -- $ --
Working capital (2) ....................................... $ (5,755) $ 478,529
EBITDA (3) ................................................ $ (17,265) $ (17,265)
Capital expenditures (4) .................................. $ 104,334 $ 104,334
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents and restricted cash (5) ......... $ 16 $ 478,862
Current assets ............................................ $ 3,240 $ 482,086
Plant, property and equipment, net ........................ $ 107,948 $ 107,948
FCC operating licenses, net ............................... $ 133,180 $ 133,180
Non current assets ........................................ $ 136,478 $ 155,864
Total assets .............................................. $ 247,666 $ 744,200
Current liabilities ....................................... $ 8,995 $ 3,557
Long term debt ............................................ $ 0 $ 581,376
Total shareholders' equity ................................ $ 238,671 $ 160,965
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(1) "Earnings" is defined as earnings before extraordinary items and
accounting changes, interest expense, amortization of deferred financing
costs, and taxes. Fixed charges consist of interest expense, amortization
of deferred financing costs and a portion of rent expense under operating
leases representative of interest. For the year ended December 31, 1998
earnings were insufficient to cover fixed charges by $22.3 million.
(2) Working capital is defined as the excess (deficiency) of current assets
over current liabilities.
(3) EBITDA represents net loss before interest expense, interest income,
depreciation, amortization and deferred compensation expense. EBITDA is
commonly used to analyze companies on the basis of operating performance,
leverage and liquidity. While EBITDA should not be construed as a
substitute for operating income or a better measure of liquidity than
cash flow from operating activities, which are determined in accordance
with generally accepted accounting principles, we have presented to
provide additional information with respect to our ability to meet future
debt service, capital expenditure and working capital requirements.
(4) Capital expenditures are cash outlays during the period related to
depreciable property, plant and equipment. Capital expenditures are
required to purchase network equipment, such as switching and radio
transmission equipment. Capital expenditures also include purchases of
other equipment used for administrative purposes, such as office
equipment and computer and telephone systems.
(5) Restricted cash reflects the cash collateral account maintained under the
credit facility equal to borrowings outstanding, until the FCC has
approved the transfer applications.
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RISK FACTORS
The new notes, like the old notes, entail the following risks:
WE NEED TO BUILD SUBSTANTIAL NETWORK FACILITIES AND DEVELOP A CUSTOMER BASE
BEFORE WE CAN GENERATE EARNINGS TO SERVICE OUR DEBT
Nextel Partners had no operating history until January 1999, and the
networks we acquired on that date only had a few months of operating history.
We expect to spend significant amounts for site acquisition, construction,
testing and deployment before commencement of full-scale commercial operations.
There is a risk that we will fail to complete our build-out on schedule, and a
risk that we will not acquire customers in our territory as early as we plan.
Either eventuality might leave us unable to repay or refinance our existing
debt.
OUR SUBSIDIARIES MAY NOT BE IN A POSITION TO PAY US THE CASH WE NEED TO MAKE
PAYMENTS ON THE NOTES
We are a holding company and conduct our business principally through
operating subsidiaries. We depend on payments from those subsidiaries to
provide the cash necessary to make the payments on the notes. As a result, the
notes are structurally subordinated to the debts of our subsidiaries. This
means that creditors of our subsidiaries, including trade creditors, have and
will have claims that are senior to the notes with respect to the assets of
that subsidiary. Thus, if we become insolvent, the creditors of our
subsidiaries, like the holders of the secured debt, would receive payments from
the assets of our subsidiaries or assets pledged as security before noteholders
would receive any payments.
Our principal operating subsidiary is the primary obligor on a $275.0
million credit facility that is structurally senior to the notes, secured by
the operating assets of our subsidiaries, and contains covenants that limit the
amount of cash our subsidiaries can pay us. The indenture relating to the notes
permits us and our subsidiaries to incur additional secured debt.
BECAUSE THE NOTES THAT YOU HOLD ARE UNSECURED, YOU MAY NOT BE FULLY REPAID IF
WE BECOME INSOLVENT
The notes are not secured by any of our assets or those of our
subsidiaries. Therefore, you may not be fully repaid if we become insolvent.
Moreover, any payment you receive if we become insolvent will be limited to the
accreted value of the notes.
WE MIGHT NOT HAVE CASH FROM OPERATIONS OR THE ABILITY TO REFINANCE OUR DEBT
WHEN CASH INTEREST PAYMENTS ON THE NOTES ARE SCHEDULED TO BEGIN
We expect to incur substantial operating losses and negative cash flows
during our first several years of operation and, according to our business
plan, we do not contemplate a positive cash flow from operations until 2003.
The terms of the notes call for cash interest payments beginning in 2004, and
by that time our business plan calls for substantially all of the funds raised
in January 1999 to have been spent. If we fail to complete our portion of the
Digital Mobile Network on schedule and achieve significant and sustained growth
in our revenues and earnings from operations, we will not have sufficient cash
from operations to make these payments.
We might need additional financing or a refinancing to prevent a default
under the notes, but we cannot assure you that we will be able to effect such a
transaction on
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acceptable terms, if at all. Our failure to pay cash interest on the notes as
required would also result in parallel defaults under our other debt
agreements, including the credit facility.
DIFFICULTIES IN CONSTRUCTING AND OPERATING OUR PORTION OF THE DIGITAL MOBILE
NETWORK COULD INCREASE ITS ESTIMATED COSTS AND DELAY ITS SCHEDULED COMPLETION,
THEREBY ADVERSELY AFFECTING OUR ABILITY TO GENERATE REVENUE
The proposed development and operation of our portion of the Digital
Mobile Network involves a high degree of risk. Before we are in a position to
commence operations in our unbuilt markets, we will need to, among other
things, select and acquire appropriate base radios and sites, purchase and
install the network equipment, build out the physical infrastructure and test
the network.
The successful implementation of our portion of the Digital Mobile Network
would be hindered by any failure on our part:
o to lease or obtain rights to sites for the location of our base radio
equipment;
o to obtain necessary zoning and other local approvals with respect to
the placement, construction and modification of our facilities;
o to acquire additional radio frequencies from third parties or to
exchange radio frequency licenses with Nextel;
o to obtain qualified subcontractors for the construction of cell sites;
and
o to obtain necessary approvals, licenses and permits from federal,
state and local agencies, including land use regulatory approvals and
approval from the Federal Aviation Administration with respect to our
transmission towers.
In addition, we may experience cost overruns and delays not within our
control caused by acts of governmental entities, design changes, material and
equipment shortages, delays in delivery and catastrophic occurrences. We cannot
assure you that we will be able to launch service in any particular market in
accordance with our current plans and schedules. Our schedule for construction
is aggressive, and any failure to construct our portion of the Digital Mobile
Network on a timely basis may affect our ability to provide services in our
markets, and any significant delays could have a material adverse effect on our
business.
WE COULD NEED ADDITIONAL FINANCING IN ORDER TO COMPLETE OUR PORTION OF THE
DIGITAL MOBILE NETWORK, WHICH MIGHT BE EXPENSIVE OR IMPOSSIBLE TO OBTAIN
If we encounter unanticipated construction cost overruns or incur
additional costs due to changes in technology adopted by Nextel, we would
require additional financing earlier than contemplated by our current business
plan and the financial covenants in our debt agreements. If that financing is
unavailable, we could have inadequate cash flow to service our debt, including
the notes.
Our debt covenants restrict our ability to incur debt, while our
agreements with Nextel limit our access to the public equity markets. In
addition, our ability to raise financing by issuing debt or equity depends on a
variety of factors that cannot presently be predicted with certainty, such as
the commercial success of our portion of the Digital Mobile Network and the
amount and timing of our capital expenditures and operating losses.
WE MUST ATTRACT AND RETAIN LARGE NUMBERS OF CUSTOMERS IN ORDER TO ACHIEVE OUR
BUSINESS GOALS
Critical to our business plan is our success in attracting and retaining
large numbers of customers to our portion of the Digital Mobile Network. The
ability to do so depends on:
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o the construction of our portion of the Digital Mobile Network with
sufficient capacity to accommodate new customers and the related
increase in the use of our system;
o the availability of a sufficient quantity of cell sites, system
infrastructure equipment and subscriber units to meet the demands and
preferences of potential customers on our portion of the Digital
Mobile Network;
o the adequacy and efficiency of our information systems, business
processes and related support functions;
o the length of time from customer order to commencement of service on
the Digital Mobile Network; and
o the efficiency and speed of the processes for our customer service and
accounts receivable collection functions to respond to the needs of a
growing customer base on the Digital Mobile Network and the increasing
amounts of billed digital service and equipment revenue.
While we believe we have evaluated our requirements to accommodate rapid
growth of our portion of the Digital Mobile Network, we cannot assure you that
we will not experience delays or unanticipated difficulties.
THE COMPLETION OF OUR PORTION OF THE DIGITAL MOBILE NETWORK DEPENDS ON APPROVAL
BY THE FCC OF THE TRANSFER OF LICENSES TO US FROM NEXTEL
As an equity contribution to Nextel Partners, Nextel has assigned certain
licenses for use in the operation of our markets to a wholly owned subsidiary,
whose shares will be transferred to us following approval by the Federal
Communications Commission or the "FCC" of the transfer applications. Pending
FCC approval of the transfer applications, we have the right to use the
frequencies covered by these licenses under a management agreement. While we
are not aware of any basis for the FCC to deny the transfer applications, and
no comments opposing the transfers were submitted to the FCC by the relevant
deadlines, we cannot assure you that the FCC will grant approval of the
transfer applications. We have established a cash collateral account in which
we maintain a balance equal to the borrowings under the credit facility until
FCC approval of the transfer applications. Failure to obtain such approval by
January 29, 2000 constitutes an event of default under the credit facility and
any indebtedness outstanding under the credit facility may be accelerated.
NEXTEL COULD ADOPT A DIFFERENT TECHNOLOGY WHICH WOULD DISRUPT USE OF OUR
INTEGRATED SYSTEM WITH NEXTEL AND REQUIRE US TO SWITCH TECHNOLOGY AS WELL
The Digital Mobile Network is based on a proprietary Motorola technology
that Motorola calls "iDEN." We believe that Nextel and Nextel Partners account
for the vast majority of Motorola's sales of iDEN equipment. Nextel has
reported its belief that its systems planning and its contractual relationships
with Motorola would permit it to utilize different telecommunications
technologies. If Nextel implements such a change, it could request that we
implement the same change. If we decline to do so, then, subject to some
limitations, Nextel would be required to either compensate us for the
additional costs involved or give the other holders of our equity securities
the right to sell their shares to Nextel at a price determined by a contractual
formula.
12
<PAGE>
WE ARE ENTIRELY DEPENDENT ON MOTOROLA TO SUPPLY MOST OF THE TELECOMMUNICATIONS
EQUIPMENT OUR BUSINESS REQUIRES
Motorola is our sole-source supplier of transmitters and subscriber
handset equipment and we rely on Motorola to manufacture a substantial portion
of the equipment necessary to construct our portion of the Digital Mobile
Network. Moreover, we expect that for the foreseeable future, Motorola and
competing manufacturers who are licensed by Motorola will be the only
manufacturers of iDEN subscriber equipment that is compatible with our portion
of the Digital Mobile Network. If Motorola becomes unable to deliver such
equipment, or refused to do so on reasonable terms, our business would be
adversely affected.
OUR BUSINESS STRATEGY DEPENDS ON THE SUCCESSFUL AND CONTINUED INTEGRATION OF
OUR PORTION OF THE DIGITAL MOBILE NETWORK WITH NEXTEL'S PORTION
The successful implementation and launch of our portion of the Digital
Mobile Network depends on our ability to implement an integrated customer
service, network management and billing system to utilize and interface with
Nextel's systems. Integration requires that numerous and diverse hardware and
software platforms work together through interfaces. Any failure to develop an
integrated information systems solution on schedule will have an adverse effect
on our ability to commence commercial operations in our portion of the Digital
Mobile Network.
We depend on Nextel for important services and assistance critical to the
successful integration of our system with Nextel's. The agreements with Nextel
require us to construct our portion of the Digital Mobile Network by set
deadlines. Our failure to do so may constitute a material default under the
operating agreements that would give Nextel the right to terminate these
agreements. The non-renewal or termination of the operating agreements would
eliminate our ability to carry out our current business plan and strategy and
would likely leave us unable to repay our debts.
THE TECHNOLOGIES WE USE MAY BECOME OBSOLETE, WHICH COULD AFFECT OUR ABILITY TO
COMPETE EFFECTIVELY
The telecommunications industry is subject to rapid and significant
changes in technology. If we do not replace or upgrade technology and equipment
that becomes obsolete, we will be unable to compete effectively because we will
not be able to meet the expectations of our customers. The iDEN technology we
use is not widely used by any major telecommunications service provider other
than Nextel. Future technological advancements in other industry standards not
matched by iDEN could place us at a competitive disadvantage.
We cannot assure you that Motorola would respond to such pressures and
upgrade iDEN technology on a timely basis, or at an acceptable cost. Moreover,
the operating agreements with Nextel restrict our ability to adopt
technological standards other than iDEN without the consent of Nextel.
WE FACE COMPETITION FROM OTHER WIRELESS SERVICE PROVIDERS AND OTHER
COMMUNICATIONS TECHNOLOGIES, PUTTING DOWNWARD PRESSURE ON PRICES
We compete with current cellular communications providers, PCS providers
and current or potential wireless communications service providers, many of
which have financial resources, subscriber bases and name recognition greater
than ours. Our competitors may
13
<PAGE>
offer prospective customers equipment subsidies or discounts that are
substantially greater than those, if any, that we could offer and may offer
services to customers at prices that are below prices that we are able or
willing to offer.
In addition, we compete with other communications technologies, such as
paging and global satellite networks. In the future, wireless services may also
compete more directly with traditional landline telephone service providers and
with cable operators who may expand their services by offering traditional
telecommunications services over their cable systems. In addition, we may face
competition from technologies that may be introduced in the future. All of such
competition is expected to be intense. We cannot assure you that we will be
able to compete successfully in this environment.
NEXTEL, MOTOROLA AND EAGLE RIVER ARE REPRESENTED ON OUR BOARD, AND MAY HAVE
INTERESTS THAT CONFLICT WITH OURS AND YOURS
Nextel WIP Corp., a subsidiary of Nextel, and Eagle River each have the
right to designate one of our five directors. We cannot be certain that any
conflicts that arise between our interests and those of our significant
shareholders will always be resolved in our favor.
Motorola is currently engaged in wireless communications businesses, and
may in the future engage in additional businesses which are or may be
competitive with some or all of the services offered by our Digital Mobile
Network. Motorola also owns a substantial percentage of ownership of Nextel's
stock. Although we have structured our equipment purchase relationship with
Motorola to address some of the potential issues raised by purchasing from a
competitor, we cannot assure you that the potential conflict of interest will
not adversely affect us in the future. Moreover, Motorola's role as a
significant shareholder, in addition to its role as a major supplier, also
creates potential conflicts of interest, particularly with regard to
significant transactions.
Eagle River, which is owned and controlled by Craig O. McCaw, has
interests in a number of other telecommunications companies and ventures,
including significant investments in Nextel, NEXTLINK Communications, which
provides telephone and other telecommunications services to businesses, and
Teledesic Corporation, which is building a satellite constellation to provide
data services worldwide. We do not have a noncompetition agreement with either
Mr. McCaw or Eagle River.
REGULATORY AUTHORITIES EXERCISE CONSIDERABLE POWER OVER OUR OPERATIONS, WHICH
COULD BE EXERCISED AGAINST OUR INTERESTS
The FCC and state telecommunications authorities regulate our business to
a substantial degree. The regulation of the wireless telecommunications
industry is subject to constant change, and we must comply with applicable
regulations to remain in business. Modifications of our business plans or
operations to comply with any changing regulations might increase our costs.
The FCC has the right to revoke licenses at any time for cause, including
failure to comply with the terms of the licenses, failure to continue to
qualify for the licenses, malfeasance or other misconduct. Moreover, at the end
of a ten-year term, we will have to apply to the FCC for renewal of our
licenses. We cannot assure you that our licenses will be renewed.
We are currently awaiting approval by the Hawaii Public Service Commission
of the transfer of assets by a subsidiary of Nextel to our operating subsidiary
in Hawaii, and the grant of a certificate of registration to operate our
businesses in Hawaii. We cannot assure you that we will obtain such approval or
certificate of registration.
14
<PAGE>
IF AN EVENT CONSTITUTING A CHANGE IN CONTROL OF NEXTEL PARTNERS OCCURS, WE MAY
BE UNABLE TO FULFILL OUR OBLIGATION TO PURCHASE YOUR NOTES
The credit facility prohibits us from purchasing any of the notes before
their stated maturity. In the event we become subject to a change of control at
a time when we are prohibited from purchasing the notes, we may seek the
consent of our lenders to purchase the notes or attempt to refinance the
borrowings that contain the prohibition. If we do not obtain a consent or repay
the borrowings, our failure to purchase the tendered notes would constitute an
event of default under the indenture, which would in turn result in a default
under the credit facility. Even if we obtain the consent, we cannot assure you
that we will have sufficient resources to repurchase the notes following the
change of control.
THERE IS NO PUBLIC MARKET FOR THE NEW NOTES, SO YOU MAY BE UNABLE TO SELL THE
NEW NOTES
The new notes are new securities for which there is currently no public
market. Consequently, the new notes will be relatively illiquid, and you may be
unable to sell your new notes, even though they will be registered. We do not
intend to apply for listing of the new notes on any national securities
exchange or for the inclusion of the new notes in any automated quotation
system. Accordingly, we cannot assure you that a liquid market for the new
notes will develop.
WE MAY FACE ADDITIONAL COST AND OTHER ADVERSE EFFECTS DUE TO YEAR 2000 ISSUES
To ensure that our computer systems and applications will function
properly beyond year 1999, we have implemented a year 2000 program. As part of
this program, we are assessing overall year 2000 risk and modifying or
replacing certain hardware and software which we maintain, as well as
communicating with external service providers to ensure that they are taking
the appropriate action to remedy certain year 2000 issues of their own.
However, our ability to reach our year 2000 compliance goal is, and continues
to be, dependent on the parallel efforts of certain third party vendors,
suppliers and business partners, in particular Nextel and Motorola.
Any failure by third parties, especially Motorola or Nextel, to become
year 2000 compliant may have a material adverse effect on our ability to become
year 2000 compliant if the failure by either party were to adversely impact its
ability to provide products or services that it is obligated to provide to us
or products or services that are critical to our operations. To the extent we
are not in a position to validate or certify that technology provided by third
parties, including Motorola, is year 2000 compliant, we are seeking to obtain
assurances from such third parties that their systems are or will be year 2000
compliant no later than the third quarter of 1999. The costs of modifying,
upgrading or replacing our information systems and equipment may have a
material adverse effect on our ability to complete our portion of the Digital
Mobile Network on schedule, to conduct our operations and to implement our
business plans as currently contemplated.
In addition, we cannot independently assess the impact of year 2000 risks,
issues and compliance activities and programs involving operators of public
telephone networks. We therefore must rely on the telephone companies'
estimates of their own year 2000 risks and issues and the status of their
related compliance activities and programs in our own risk assessment process.
Because our systems are interconnected with the public telephone network, and
we depend upon the systems of other service providers, any disruption of
operations in the computer programs of the public switch telecommunications
networks or other service providers may have an impact on our operations.
15
<PAGE>
THIS PROSPECTUS INCLUDES FORWARD-LOOKING STATEMENTS, WHICH ARE PREDICTIONS THAT
MIGHT NOT BE FULFILLED
Some statements and information contained in this prospectus are not
historical facts, but are "forward-looking statements", as such term is defined
in the Private Securities Litigation Reform Act of 1995. We wish to caution you
that these forward-looking statements are only predictions, and actual events
or results may differ materially as a result of risks that we face , including
those set forth herein under "Risk Factors." These forward-looking statements
can be identified by the use of forward-looking terminology such as "believes",
"expects", "plans", "may", "will", "would", "could", "should" or "anticipates"
or the negative of these words or other variations of these words or other
comparable words, or by discussions of strategy that involve risks and
uncertainties. Such forward-looking statements include, but are not limited to:
o general economic conditions in the geographic areas and occupational
market segments that represent our portion of the Digital Mobile
Network;
o the availability of adequate quantities of system infrastructure and
subscriber equipment and components to meet our service deployment and
marketing plans and customer demand;
o our expectation regarding the success of efforts to improve and
satisfactorily address any issues relating to our Digital Mobile
Network performance;
o our expectation regarding the continued successful performance of the
iDEN technology being deployed in our markets;
o our ability to achieve market penetration and average subscriber
revenue levels sufficient to provide financial viability to our
portion of the Digital Mobile Network business;
o our ability to timely and successfully accomplish required scale-up of
our billing, collection, customer care and similar back-room
operations to keep pace with customer growth, increased system usage
rates and growth in levels of accounts receivable being generated by
the Digital Mobile Network customer base;
o our ability to secure required zoning permits or approvals for
construction of our sites;
o access to sufficient debt or equity capital to meet our operating and
financing needs;
o the quality and price of similar or comparable wireless communications
services offered or to be offered by our competitors, including
providers of cellular and PCS service;
o future legislative or regulatory actions relating to SMR services,
other wireless communications services or telecommunications
generally;
o our ability to attract and retain qualified employees and managers;
and
o our ability to comply with our obligations under the agreements with
Nextel, including the build-out requirements thereunder.
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<PAGE>
USE OF PROCEEDS
Nextel Partners will not receive any cash proceeds from the issuance of
the new notes as described in this prospectus. Nextel Partners will receive in
exchange for the new notes, old notes in like principal amount. The old notes
surrendered in exchange for the new notes will be retired and canceled and
cannot be reissued. Accordingly, the issuance of the new notes will not result
in any change in the indebtedness of Nextel Partners.
The net proceeds from the offering of the old notes, the cash equity
contributions, the capital contributions by Nextel and Motorola and the
borrowings under the credit facility which we received on January 29, 1999, the
closing date of these capitalization transactions, are being used to complete
our portion of the Digital Mobile Network and to fund operating losses and
working capital through 2003, when we expect to achieve positive operating cash
flow for the full fiscal year.
The following table shows the sources and uses of the proceeds from the
capitalization transactions through 2003:
SOURCES AND USES OF FUNDS AND ASSETS
(IN MILLIONS)
<TABLE>
<CAPTION>
SOURCES:
<S> <C>
Gross proceeds of the offering of old
notes .......................................... $ 406.4
Revolving borrowings under credit
facility (1) ................................... 100.0
Term borrowings under credit facility (1) ......... 175.0
Cash equity contributed ........................... 52.1
Committed cash equity (2) ......................... 104.3
Motorola contribution ............................. 18.4
Nextel contribution ............................... 133.2
--------
Total sources ..................................... $ 989.4
========
</TABLE>
<TABLE>
<CAPTION>
USES:
<S> <C>
Nextel capital expenditure
reimbursement ...................... $ 115.6
Nextel and Eagle River operating loss
reimbursement ...................... 17.8
Capital expenditures .................. 486.5
Operating losses ...................... 71.9
Transaction expenses, net cash interest
and working capital ................ 97.8
FCC licenses .......................... 133.2
Excess cash ........................... 66.6
--------
Total uses ............................ $ 989.4
========
</TABLE>
- ----------
(1) Nextel Partners' principal operating subsidiary entered into a $275.0
million credit facility of which $100.0 million is a reducing revolving
credit facility and $175.0 million is a term loan facility. The term loan
was drawn down on January 29, 1999. See "Description of Credit Facility."
(2) Of the $104.3 million of committed cash equity, the subscription
agreement provides that $52.1 million will be funded no later than
December 31, 1999 and the remainder will be funded no later than December
31, 2000. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources" and
"Certain Relationships and Related Transactions--The Subscription and
Contribution Agreement."
17
<PAGE>
CAPITALIZATION
(Dollars in thousands)
The following table sets forth as of December 31, 1998, the capitalization
of Nextel Partners as adjusted to take into account of the transactions which
occurred on January 29, 1999. This table should be read in conjunction with the
unaudited Summary Historical and Pro Forma Consolidated Financial Information
and Operating Data and the audited and pro forma unaudited consolidated
financial statements and notes thereto included elsewhere in this prospectus.
<TABLE>
<CAPTION>
AS OF
DECEMBER 31, 1998
(PRO FORMA)
------------------
<S> <C>
Cash and cash equivalents and restricted cash (1) ................ $ 478,862
==========
Debt:
Credit Facility (2) ............................................ $ 175,000
14% Senior Discount Notes due 2009 (3) ......................... 406,376
----------
Total long-term debt ........................................... 581,376
----------
Shareholders' equity:
Redeemable or Convertible Preferred Stock due 2010 (4) ......... 2
Convertible Preferred Stock (5) ................................ 28
Class A Common Stock and additional paid-in capital ............ 6,733
Warrants outstanding ........................................... 3,847
Other paid-in capital (5) ...................................... 301,833
Subscription receivable (5) .................................... (122,655)
Deferred compensation .......................................... (6,270)
Accumulated deficit ............................................ (22,553)
----------
Total shareholders' equity .................................... 160,965
----------
Total capitalization .......................................... $ 742,341
==========
</TABLE>
- ----------
(1) Restricted cash reflects the cash collateral account maintained under the
credit facility equal to borrowings outstanding, until the FCC has
approved the transfer applications.
(2) Nextel Partners Operating Corp. entered into a $275.0 million credit
facility, and on January 29, 1999, it drew down the $175.0 million term
loan facility. See "Description of Credit Facility."
(3) Represents the Accreted Value of the notes as of January 29, 1999.
(4) Relates to redeemable preferred stock held by a subsidiary of Nextel. The
stock is subject to mandatory redemption by Nextel Partners 375 days
after the stated maturity of the notes. See "Ownership of Capital Stock
and Principal Stockholders."
(5) See "Ownership of Capital Stock and Principal Stockholders."
18
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Certain of the statements contained in the following discussion of our
financial condition and results of operations are forward-looking statements.
For a discussion of important factors, including but not limited to, the
build-out of our portion of the Digital Mobile Network, actions of regulatory
authorities and competitors, and other factors that could cause results to
differ materially from the forward-looking statements, see "Risk Factors."
Please read this discussion together with the unaudited Summary Historical
and Pro Forma Consolidated Financial Information and Operating Data, the
consolidated financial statements audited by Arthur Andersen LLP and the notes
thereto and the pro forma unaudited financial statements and accompanying
discussion and notes thereto included elsewhere in this prospectus.
GENERAL
Nextel Partners is a newly-formed corporation with operations since
January 1999.
We currently operate in five markets in Hawaii and upstate New York, where
4.5 million people live or work. We expect to launch service in four additional
markets by the end of 1999, and expect to serve a total of 39 markets where
22.4 million people live or work by the end of 2001. Our upstate New York and
Hawaii markets launched commercial service in July and September of 1998,
respectively. For the year ended December 31, 1998 we had approximately 11,000
subscribers in these markets combined.
We expect to continue to experience negative operating margins while we
are developing, building-out, enhancing and expanding our Digital Mobile
Network and implementing related commercialization activities. As additional
markets are added to our Digital Mobile Network we expect to incur increased
costs such as site rentals, telecommunications expenses, system and other
capital expenses. Sales and marketing and general and administrative expenses
are also expected to increase with the commercialization of service in
additional markets.
LIQUIDITY AND CAPITAL RESOURCES
The build-out of our portion of the Digital Mobile Network and the
marketing of our services requires substantial capital. Currently, we estimate
that capital requirements to build our portion of the Digital Mobile Network,
including operating losses and working capital for the period from inception
through the end of 2003, when we expect to achieve positive operating cash flow
for a full fiscal year, will total approximately $989.4 million, including the
in-kind contributions by Nextel and Motorola in exchange for equity interests
in Nextel Partners. We expect capital expenditures to include, among other
things, switches, base radios, towers, antennae, radio frequency engineering
and cell site construction. We estimate capital expenditures will total
approximately $602.1 million from inception through 2003, including
approximately $115.6 million of reimbursements paid to Nextel, $201.6 million
of capital expenditures in 1999 and $151.5 million of capital expenditures in
2000. The capital expenditure reimbursement paid to Nextel was for purchases of
existing network equipment and capitalized expenses incurred by Nextel on our
behalf in certain markets including upstate New York and Hawaii. Actual amounts
of capital required to complete our portion of the build-out may vary
materially from these estimates. For the year ended December 31, 1998 our
capital expenditures were approximately $104.3 million spent primarily in the
upstate New York and Hawaii markets to build out the Digital Mobile Network and
make these markets operational.
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<PAGE>
Our primary sources of funding are the proceeds from the cash equity
contributions, the offering of the old notes and the credit facility which we
received on January 29, 1999. Concurrently, we also received (i) the
contribution by Nextel of FCC licenses in exchange for $133.2 million of Nextel
Partners' redeemable preferred stock and convertible preferred stock and (ii)
the contribution by Motorola of an $18.4 million credit to Nextel Partners
against our future purchases of Motorola-manufactured infrastructure equipment
of which we have utilized approximately $1.5 million through the first quarter
of 1999. We expect to utilize the credit from Motorola fully by the end of
1999. The cash equity contributions consist of irrevocable commitments of an
aggregate of $156.4 million of cash in exchange for equity in the form of
convertible preferred stock. Our cash equity investors contributed $52.1
million on January 29, 1999, with an additional $52.1 million to be funded no
later than December 31, 1999 and the remaining $52.1 million to be funded no
later than December 31, 2000.
Nextel Partners Operating Corp., our wholly owned subsidiary, has entered
into a $275.0 million credit facility which provides for a $100.0 million,
eight-year revolving credit facility and a $175.0 million, nine-year term loan
facility. On January 29, 1999, our subsidiary borrowed the $175.0 million term
loan facility under the credit facility. Borrowings under the credit facility
are secured by a first priority pledge of all assets of our subsidiaries and a
pledge of their capital stock, including the stock of Nextel License Corp.
following approval of the transfer applications by the FCC. The credit facility
contains customary financial and other covenants for the wireless industry. Our
subsidiary established a cash collateral account in which it maintains a
balance equal to the amount of any borrowings until FCC approval of the
transfer applications is obtained. Failure to obtain such approval within one
year of the closing date constitute an event of default under the credit
facility. The credit facility contains covenants requiring us to maintain
certain defined financial ratios and meet operational targets including service
revenues, subscriber units and network coverage. We were in compliance with all
covenants associated with our credit facility as of March 31, 1999.
We believe the net proceeds from the offering of the old notes, together
with the equity investments and borrowings under the credit facility, provide
us with funds sufficient to complete our build-out and for working capital
necessary to cover our debt service requirements and operating losses, through
2003, which is when we anticipate achieving positive operating cash flow for
the full fiscal year. Although we estimate that we will have sufficient funds
through 2003, we cannot assure you that additional funding will not be
necessary. We could need additional financing in order to complete our portion
of the Digital Mobile Network, which might be expensive or impossible to
obtain.
OPERATIONS
Revenues. Our primary source of revenues consist of service, roaming and
equipment sales revenues. Our service revenues consist of charges for airtime
usage and monthly network access fees from providing integrated wireless
services within our territory, particularly from the provision of mobile
telephone and two-way radio dispatch services. The service revenues are the
product of the number of customers that subscribe to our service and our
monthly ARPU. ARPU is defined as our total service revenue from our subscribers
divided by the average number of digital subscriber units in service in our
markets during the period.
We also receive revenues from the payment of roaming fees by Nextel equal
to 95% of the aggregate service revenue per minute generated by Nextel's
customers roaming on our
20
<PAGE>
portion of the Digital Mobile Network through 1999, 90% in 2000, 85% in 2001
and 80% after 2001. When our customers roam onto Nextel's portion of the
Digital Mobile Network, we pay approximately 80% of the aggregate service
revenue per minute generated by such customers to Nextel. To the extent that
our measured levels of customer satisfaction either exceed or fall below the
weighted average of Nextel's operating subsidiaries, the roaming service
revenues paid to us may increase or decrease incrementally. However, in no
event will the percentage earned be greater than 100% nor less than our actual
cost of providing such service.
In recent years cellular providers have increased the use of discounts on
phone equipment as competition between service providers has intensified. As a
result we have incurred, and expect to continue to incur, losses on equipment
sales, which have resulted in increased marketing and selling costs per gross
additional subscriber. While we expect to continue these discounts and
promotions, we believe that the use of such promotions will result in increased
revenue from increases in the number of our subscribers. Revenues for the year
ended December 31, 1998 were $5.3 million of which $3.7 million was related to
service and roaming revenues and $1.6 million was related to equipment
revenues. These revenues were generated primarily from our upstate New York and
Hawaii markets which became operational during 1998. For the year ending
December 31, 1998 we had a loss on equipment sales of $(1.4) million which
resulted from our sales of subscriber handset and accessories.
Operating Expenses. Our primary operating expenses include network
operations, switching, marketing and sales, management information systems,
customer billing and care, and general and administrative expenses. We believe
that we are in the process of establishing a more efficient cost structure than
we would otherwise have been able to setup due to our relationship with Nextel
and our ability to take advantage of their systems and vendor relationships.
Network expenses include site rent, utilities and maintenance, engineering
personnel and interconnect charges. Network expenses depend primarily on the
number of cell sites, total minutes of use and mix of minutes of use between
interconnect and Nextel Direct Connect services.
Switching costs include the cost of operating switches and network
elements we own as well as rent, utilities and maintenance and payments to
Nextel for sharing its switches (switches are the devices that direct calls to
their destinations). We currently utilize Nextel's switches in all of our
operational markets, except for Hawaii. In exchange for switch sharing
services, we pay switching fees at a rate per minute reflecting Nextel's
estimated costs as of January 2001. This rate is paid through January 1, 2001
and at an adjusted rate based on Nextel's cost thereafter, subject to our
development of our own switch infrastructure. As the number of customers in any
particular area grows and based on other economic factors, we will buy and
operate our own switches. Nextel also provides network signaling and
twenty-four hour per day monitoring for switches we own for a per-switch
monitoring fee based on Nextel's cost. For the year ending December 31, 1998
our cost of service revenues from network expenses and switching costs was $1.6
million incurred primarily from our upstate New York and Hawaii markets.
Sales and marketing expenses relate to sales representatives, sales
support personnel, indirect distribution channels, marketing and advertising
programs and equipment subsidies. We expect our cost per gross additional
customer to be relatively high in our first several years of operation and to
decline as sales representatives become more efficient, as we expand our
indirect distribution channels and as cost of our sales infrastructure is
distributed
21
<PAGE>
over a greater base of customer additions. We will benefit from the use of the
Nextel (Registered Trademark) brand, national advertising and other marketing
programs. We will not pay Nextel a marketing service fee until the later of
January 2002 or the first month of the quarter beginning after we achieve two
consecutive quarters of positive EBITDA, at which time the marketing service
fee will be 0.5% of gross monthly service revenues for the next three years and
1.0% of gross monthly service revenues after. Sales and marketing expenses for
the year ended December 31, 1998 was $6.6 million primarily from the upstate
New York and Hawaii markets which launched commercial service during 1998.
We also currently use Nextel's back-office systems to support customer
activation, billing and customer care for a fee based on Nextel's cost.
General and administrative costs relate to corporate overhead personnel
including tax, legal, planning, human resources, treasury and accounting
functions. While we have directly hired key personnel in such areas, during the
transition period, Nextel has made certain accounting, payroll, customer care,
purchasing, human resources and billing functions available to us. In return
for these services during the transition period, we pay monthly fees based on
Nextel's cost of providing them. See "Certain Relationships and Related
Transactions--Nextel Operating Agreements." For the year ending December 31,
1998 general and administrative costs were $6.9 million and were primarily
attributable to our New York and Hawaii markets as they commenced operations
during 1998. We recorded deferred compensation expense associated with our
restricted stock purchase plan of $0.5 million. The plan is considered
compensatory and we account for them on a basis similar to that used for stock
appreciation rights.
YEAR 2000 DATE CONVERSION
As is the case with most other businesses using computers in their
operations, we are in the process of evaluating and addressing Year 2000
compliance of our computer systems. Such Year 2000 compliance efforts are
designed to identify, address and resolve issues that may be created by
computer programs being written using two digits rather than four to define the
applicable year. Any of our computer programs that have time-sensitive software
may recognize a date using "00" as the year 1900 rather than the year 2000.
This could result in a system failure or miscalculations causing disruptions of
operations, including, among other things, a temporary inability to process
transactions, send invoices or engage in similar normal business activities.
To the extent we implement our own computer systems and software, we will
endeavor to ensure that such systems and software are Year 2000 compliant. This
process will involve assessing overall Year 2000 risk and modifying or
replacing certain hardware and software maintained by us, as well as
communicating with external service providers to ensure that they are taking
the appropriate action to remedy certain Year 2000 compliance issues of their
own. However, our ability to reach our Year 2000 compliance goal is, and will
continue to be, dependent on the parallel efforts of certain third party
vendors, suppliers and business partners. In particular, we rely on services
and products offered by Motorola, for system infrastructure equipment and
subscriber handset units, and Nextel and/or third party providers of services
and products to Nextel, for sales, distribution and back-office services, and
information systems, including billing and customer care. We have begun the
process of requesting from these third parties detailed action plans and
timetables for achieving Year 2000 compliance.
Since we are in the process of gathering information to determine the Year
2000 compliance of Motorola, Nextel and such other third parties, we have not
fully assessed the
22
<PAGE>
impact on our information systems of such third parties' non-compliance. Any
failure by Motorola or Nextel to become Year 2000 compliant may have a material
adverse effect on our ability to become Year 2000 compliant if such failure
were to adversely impact the ability of either party to provide products or
services that it is obligated to provide to us or products or services that are
critical to our operations. To the extent we are not in a position to validate
or certify that technology provided by third parties, including Motorola, is
Year 2000 compliant, we will seek assurances from such third parties that their
systems are or will be Year 2000 compliant no later than the third quarter of
1999. There is no assurance that the costs of modifying, upgrading or replacing
our information systems and equipment will not have a material adverse effect
on our ability to complete our portion of the Digital Mobile Network on
schedule, to conduct our operations or to implement our business plans as
currently contemplated. See "Business--Network Build-out and Capital
Expenditure Plan."
We cannot independently assess the impact of Year 2000 risks, issues and
compliance activities and programs involving operators of PSTNs or other (such
as electric utility) service providers. We therefore must rely on PSTNs and
utility providers' estimates of their own Year 2000 risks, issues and the
status of their related compliance activities and programs in our own risk
assessment process. Because our systems are interconnected with PSTNs and are
dependent upon the systems of other service providers, any disruption of
operations in the computer programs of such PSTNs or service providers would
likely have an impact on our systems. Moreover, we cannot assure you that such
impact will not have a material adverse effect on our operations.
SUPPLEMENTAL FINANCIAL DATA
The following unaudited quarterly financial data for the year ended
December 31, 1998 represents operations of Nextel Partners during its build-out
phase. The results for any quarter are not necessarily indicative of results
for any future quarterly or annual results.
QUARTERLY FINANCIAL DATA (UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
1998 FIRST SECOND THIRD FOURTH TOTAL
- ------------------------------- ------------ ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
Revenues ...................... $ 153 $ 284 $ 1,697 $ 3,175 $ 5,309
Operating expenses ............ $ 1,400 $ 2,896 $ 9,998 $ 13,313 $ 27,607
Operating loss ................ $ (1,247) $ (2,612) $ (8,301) $ (10,138) $ (22,298)
Income tax provision .......... $ -- $ -- $ -- $ -- $ --
Net loss ...................... $ (1,247) $ (2,612) $ (8,301) $ (10,138) $ (22,298)
</TABLE>
23
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-4 to
register this exchange offer. This prospectus, which forms part of the
Registration Statement, does not contain all of the information included in
that registration statement. For further information about Nextel Partners and
the new notes offered in this prospectus, you should refer to the registration
statement and its exhibits.
Upon consummation of this exchange offer and so long as the notes remain
outstanding, we will file annual, quarterly and current reports with the SEC.
In addition, so long as the notes remain outstanding, we will make available to
any prospective purchaser of the notes or beneficial owner of the notes in
connection with any sale of the notes, the information required by Rule
144A(d)(4) under the Securities Act.
You may read and copy any document we file with the SEC at the SEC's
Public Reference Room at 450 Fifth Street, N.W., Judiciary Plaza, Washington,
D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on
the operation of the Public Reference Room. We file our SEC materials
electronically with the SEC, so you can also review our filings by accessing
the web site maintained by the SEC at http://www.sec.gov. This site contains
reports, proxy and information statements and other information regarding
issuers that file electronically with the SEC.
Our principal executive offices are located at 4500 Carillon Point,
Kirkland, Washington, 98033. Our telephone number is (425) 828-1713.
DELIVERY OF PROSPECTUS
We remind professional securities dealers of their obligation under the
securities laws to deliver a copy of this prospectus to anyone who buys new
notes from them until , 1999, which is the 90th day after the date of this
prospectus. Securities dealers who were initial purchasers of the old notes and
are acting as underwriters of unsold allotments have additional prospectus
delivery requirements.
24
<PAGE>
BUSINESS
OVERVIEW
We are the only service provider licensed to use the Nextel (Registered
Trademark) brand name and market Nextel digital wireless service in 39
mid-sized and smaller markets throughout the United States. Our markets contain
approximately 33 million POPs (population equivalents as estimated by Nextel
Partners as of 1997 by extrapolation from the 1990 U.S. Census and other
publicly available information) and include Albany, Binghamton, Buffalo, Corpus
Christi, Des Moines, Green Bay, Harrisburg, Louisville, Mobile, Omaha, Peoria,
Rochester, Shreveport and Syracuse, as well as the State of Hawaii, the Florida
Panhandle and selected corridors along interstate highways.
We offer a differentiated, integrated package of digital wireless
communications services under the Nextel (Registered Trademark) brand name,
initially targeting business users. This package of wireless services is
identical to the package of services that Nextel has used to achieve success in
its own markets. Our customers will be able to access cellular telephone
service, two-way dispatch (which provides instant conferencing capabilities and
which Nextel markets as Nextel Direct ConnectSM service), paging and
alphanumeric short-messaging service and, in the future, are expected to be
able to send and receive data.
We consider these markets to be attractive because:
o based on our understanding of Nextel's plans, these markets are
integral to Nextel's strategy of providing digital wireless services
nationwide;
o we believe that Nextel has experienced rapid subscriber growth and
competitive success in markets with similar economic and demographic
characteristics;
o our markets generally contain fewer wireless competitors than do large
urban markets; and
o a number of our markets are directly contiguous to operational Nextel
markets and include numerous offices and branches of Nextel's national
accounts that are expected to become our customers as soon as we launch
service in their vicinity.
We have five operational systems covering approximately 4.5 million POPs
in Hawaii and upstate New York and our other markets in various stages of
design or construction. We expect to have operational systems in 34 additional
markets within three years.
We intend to make our service offerings operationally seamless with those
of Nextel, so that our services and services of Nextel will be substantially
identical from the customer's point of view and customers of each company will
be able to roam both within and between the two companies' systems with equal
ease at no additional charge. To achieve seamless integration, we will build
our portion of the Digital Mobile Network using the same technology used by
Nextel. This technology, developed by Motorola, is referred to as "integrated
Digital Enhanced Network" or "iDEN"TM.
We will operate our portion of the Digital Mobile Network in accordance
with Nextel's standards to enable both companies to achieve a consistent level
of service throughout the United States. Based on Nextel's current reported
coverage and our expected coverage of our markets, the overall Digital Mobile
Network is expected to cover approximately 195 million POPs. Nextel's
all-digital network provides customers with digital quality and advanced
features wherever they roam on the Digital Mobile Network, in contrast to the
hybrid analog/digital networks of cellular competitors which do not support
these features in the large analog-only portions of their networks.
25
<PAGE>
As of March 31, 1999, Nextel reported that it provides digital service to
more than 3.1 million subscriber units in the United States, and that its
network constitutes one of the largest integrated wireless communications
systems using a single transmission technology in the United States. Based on
reported information, in three of the four quarters through March 31, 1999,
Nextel has been one of the top three U.S. wireless industry growth leaders as
measured by net customer additions.
We also believe that the Nextel Direct Connect feature has made its
service an integral part of doing business in its targeted industry groups,
contributing to both its high rate of growth and subscriber loyalty. Nextel has
had an average monthly churn rate in each of the four quarters through March
31, 1999 lower than the industry average. ("Churn" is an industry term
referring to the percentage of a service provider's customer base that cancels
service or whose service is terminated during a given month.)
Nextel's reported monthly average revenue per subscriber unit (an industry
measure generally referred to as ARPU) for Nextel's services was $70 for the
fourth quarter of 1998, as compared with a wireless industry average of $46 for
same period. We believe Nextel's focus on business customers, particularly
those customers who employ a mobile workforce with high demand for wireless
communications offerings, accounts, in part, for this superior performance.
We believe our relationship with Nextel will provide us with several
advantages and cost savings.
We intend to achieve build-out of our portion of the Digital Mobile
Network to cover approximately 22.4 million POPs located within our territory
by the end of the third quarter of 2001. We have completed the initial design
for the build-out, subject to on-going review. At the time Nextel Partners was
capitalized, Nextel had already launched commercial operations covering
approximately 4.5 million POPs in Hawaii and Upstate New York. We acquired the
assets relating to these operational networks on January 29, 1999, along with
other plans, surveys and capital assets in our territory in various stages of
completion. We expect to launch service in four additional markets by the end
of 1999 and to complete our portion of the Digital Mobile Network by the end of
the third quarter of 2001.
On January 29, 1999, we acquired leasehold interests in 563 cell sites (of
which 220 were already operational), which is more than one-third of the 1,450
sites that we estimate will be required to complete our portion of the Digital
Mobile Network. Through our relationship with Nextel, we expect to have access
to many of Nextel's vendors and distributors and have agreed on terms with
Motorola for the purchase of base radios, handsets and other related iDEN
technology.
To reduce the risk of zoning and other local regulatory delays,
construction delays and site acquisition costs, we intend to co-locate our cell
sites with existing towers wherever possible. In addition, we plan to take
advantage of the inherent incremental capacity of iDEN technology to employ
less-expensive, right-sized base radio equipment for less densely-populated
areas and for coverage along interstate highways.
We have attracted an experienced senior management team including former
managers of AT&T Wireless Services (formerly McCaw Cellular Communications) and
believe that our dedicated management focus will enable us to complete our
portion of the Digital Mobile Network and operate effectively.
THE CAPITALIZATION TRANSACTIONS
On January 29, 1999, we raised $989.4 million in debt and equity capital
through cash and in-kind equity investments, issuance of the old notes and
borrowings by our principal
26
<PAGE>
operating subsidiary under a secured credit facility. As a result of these
transactions, we have assets and financial resources that we believe will be
sufficient to accomplish the build-out of the Digital Mobile Network, and fund
our anticipated operating losses and working capital requirements through 2003,
when we expect to achieve positive operating cash flow for the full fiscal
year.
(1) Equity Investments. In consideration for the issuance of our preferred
stock and pursuant to a subscription agreement:
o The cash equity investors, including DLJ Merchant Banking Partners II,
L.P., Eagle River Investments, LLC, the private telecommunications
investment vehicle of Craig O. McCaw and Madison Dearborn Capital
Partners II, L.P. contributed, or agreed to contribute, a total of $156.4
million in cash equity contributions;
o Nextel contributed the transferred licenses, with a book value of
$133.2 million, to Nextel License Corp., and, upon approval by the FCC,
will transfer the capital stock of Nextel License Corp. to us; and
o Motorola, Inc. granted us an $18.4 million credit against future
purchases of Motorola infrastructure equipment.
(2) Operating Agreements. We entered into the operating agreements with
Nextel WIP Corp., a subsidiary of Nextel, which:
o provide for mutual roaming and marketing;
o provide for switch sharing;
o set standards for network quality and support;
o enable our access to billing, customer care and information systems
used by Nextel; and
o enable our access to Nextel's vendor relationships.
(3) Credit Facility. Our principal operating subsidiary, Nextel Partners
Operating Corp., or "OPCO", entered into the $275.0 million credit
facility with various financial institutions. OPCO drew down $175.0
million, an amount representing the entire term loan portion of the
credit facility on the closing date, and we established a cash collateral
account in which we maintain a balance equal to the amount of such
borrowings until FCC approval of the transfer applications relating to
the transferred licenses is obtained.
(4) Offering of the Old Notes. We sold the old notes and received gross
proceeds from this sale of approximately $406.4 million.
BUSINESS STRATEGY
Our principal business objective is to become a leading provider of
wireless communications services in each market in our territory by offering
high-capacity, high-quality, advanced communications services on our portion of
the Digital Mobile Network and implementing key elements of Nextel's business
strategy in our markets. We believe the following elements of our business
strategy will distinguish our wireless service offerings from those of our
competitors and will enable us to compete successfully in the wireless
communications marketplace.
CAPITALIZE ON RELATIONSHIP WITH NEXTEL. We intend to capitalize on our
relationship with Nextel, employing the same iDEN technology as Nextel, and, in
concert with Nextel, accelerating iDEN service coverage under the Nextel
(Registered Trademark) brand. We believe our relationship with Nextel provides
strategic advantages, including the following:
27
<PAGE>
o Nextel (Registered Trademark) brand awareness and marketing
programs. We benefit from the broad scope and geographic coverage of
Nextel's marketing efforts and related advertising campaigns, which are
designed to increase awareness of the Nextel brand name and stimulate
interest in and demand for Nextel service by stressing its versatility,
value, simplicity and quality. In March 1997, Nextel launched a
nationwide radio, television and print advertising campaign and continues
to conduct aggressive advertising and promotional campaigns.
o Nationwide roaming. Our customers and customers of Nextel are able to
use interconnect service to roam on both networks at no additional charge
to the customer. Nextel provides our customers the same basic mobile
telephone functionality and related features available to them in their
home markets when they roam into Nextel's markets. Conversely, Nextel's
customers generate revenue for us when they roam into our markets.
o Nextel support services. The operating agreements enable us to:
(1) use Nextel's switching facilities and network monitoring center,
(2) use Nextel's back-office systems to support customer activation,
billing and customer care,
(3) access technology improvements from Nextel's research and development
program, and
(4) use Nextel's employee training sessions.
Prices for these services are based on Nextel's costs.
o Nextel's existing relationships with vendors and distributors. Through
our relationship with Nextel, we have access to many of the goods and
services available from Nextel's vendors. Additionally Motorola sells
base radios and other related iDEN technology to us at the same prices it
offers to Nextel. We intend to develop our own relationships with vendors
and seek from Nextel's distributors terms similar to those agreed to with
Nextel.
o Nextel's national accounts. We anticipate that numerous offices and
branches of Nextel's national accounts will become our customers when we
launch service in their vicinity. Nextel national accounts that were
already customers in operational markets were acquired by us on January
29, 1999.
FOCUS ON MID-SIZED AND SMALLER MARKETS. We believe that our focus on mid-sized
and smaller markets represents an opportunity to capture market share as a
result of the competitive advantages of our service offering, and demonstrates
our belief that price competition for similar services may not be as intense as
in major metropolitan areas where a larger number of wireless service providers
compete.
PROVIDE DIFFERENTIATED, INTEGRATED PACKAGE OF WIRELESS SERVICES INCLUDING
DIRECT CONNECT. We offer a bundled product consisting of three services
accessible through a single device: (i) cellular telephony; (ii) two-way
dispatch; and (iii) paging and alphanumeric short-messaging service. We believe
that Nextel's experience demonstrates that a significant degree of overlap
exists in the customer population for these separate wireless communications
services and that business customers are attracted to the convenience of
combining multiple wireless communications options in a single handset and
consolidating all wireless service charges into a single package price and
billing statement.
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<PAGE>
We believe that Nextel's experience and market research show that a
sizable portion of business users' communications involve contacting others
within the same organization. Nextel Direct Connect service is especially
well-suited to address these intracompany wireless communications needs. Nextel
Direct Connect service, which enables a user to instantly set up a conference
on either a private (i.e., one-to-one) or group (i.e., one-to-many) basis
within the same geographic area, is a service that is not included in any
integrated service package currently available from competing cellular and PCS
operators. Nextel Direct Connect service is twice as efficient in using
available spectrum as its cellular-like interconnect service. We believe that
this Direct Connect feature generated a majority of Nextel's network traffic as
of March 31, 1999.
To further expand the flexibility and convenience offered by Nextel Direct
Connect service to users outside a single organization but within a single
industry or interest group in a particular dispatch service area, Nextel has
introduced the "Business Net Service" concept. Business Net Service extends
Nextel Direct Connect service beyond a company's employees to suppliers,
customers and other parties involved in the same transaction, industry or work
site. As of December 31, 1998, Nextel reported its estimate that over 700,000
digital subscriber units were utilizing its Business Net Service offerings.
Nextel recently introduced Motorola's fourth-generation iDEN phone: the
i1000 (Trade Mark) . The i1000 delivers the full functionality of the Nextel
range of services in a compact, lighter, folding-form handset designed to
appeal to business professionals. In addition, this palm-sized unit offers
longer battery life, functions as a wireless speakerphone and has a second line
capability. We will offer a full range of iDEN subscriber equipment, including
the i1000 phone, to our customers.
FOCUS ON BUSINESS CUSTOMERS. Our marketing strategy targets business users who
we believe are particularly attracted to the Digital Mobile Network's potential
for increasing efficiencies and reducing costs. Following Nextel's marketing
approach, we have initially concentrated our sales efforts on a number of
distinct groups of mobile workers, including personnel in the transportation,
delivery, real property and facilities management, construction and building
trades, and landscaping and other service sectors. We will gradually expand our
target customer group to include additional industry groups.
We believe, based on Nextel's experience, that this focus on business
customers and its unique bundle of services will result in higher monthly ARPU
and lower average monthly churn rate than other wireless services.
OFFER COMPETITIVE AND SIMPLIFIED PRICING FEATURES. We have adopted several of
Nextel's pricing strategies that we believe to be both profitable and
attractive to customers, although we set our price levels in each of our
markets independently of Nextel. These pricing features include home rate
roaming, one second rounding and flat rate pricing, which we believe
differentiates our services from competitors, and enable us to benefit from
Nextel's national advertising of these features:
o Home rate roaming. Our customers pay the same rates they pay at home
when traveling anywhere on either Nextel's or our portion of the Digital
Mobile Network, without the complex dialing procedures, access fees or
higher roaming airtime rates frequently encountered by "roaming"
customers of cellular providers. As a result of our planned build-out and
Nextel's existing build-out in its own markets, the Digital Mobile
Network is expected to cover approximately 195 million POPs in the United
States.
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<PAGE>
o One second rounding. We bill our mobile telephone service customers
based on the actual number of seconds of airtime used after the first
minute, in contrast to the common cellular industry practice of rounding
all call lengths up to the next minute.
o Flat rate pricing. Our rate plans do not distinguish between "peak" and
"off-peak" minutes, charging one airtime rate and a single nationwide
long distance rate, regardless of the time of day a call is made.
EFFICIENT, STANDARDIZED OPERATIONS. We intend to develop efficient,
standardized operations to support customer activation, billing and customer
care. We intend to use our flexibility under the operating agreements to
minimize overhead costs and provide high-quality customer service by utilizing
Nextel's back-office systems and practices, or implementing our own when
appropriate. For example, we believe that our ability to establish consistent
pricing and billing across our territory will enable us to offer
cost-effective, high-quality customer care. An overarching goal is to present
consumers with a seamless, national interface with the Digital Mobile Network
from an operational and customer care standpoint. Customers are able to contact
us through the national 800 number advertised by Nextel; Nextel's call center
automatically routes all calls from our customers to us.
EXPERIENCED MANAGEMENT. We have assembled the following senior management team
with significant experience in the telecommunications industry:
o John Chapple, Chief Executive Officer. Mr. Chapple has nearly twenty
years of experience in the wireless communications and cable television
industries. His experience includes serving from 1988 to 1995 as
Executive Vice President of Operations for McCaw and subsequently AT&T
Wireless Services following the merger of those companies. He is the past
Chairman of Cellular One Group and the Personal Communications Industry
Association, as well as Vice-Chairman of the Cellular Telecommunications
Industry Association or the "CTIA."
o John Thompson, Chief Financial Officer. Mr. Thompson has twenty years
of finance experience including twelve years in the wireless
communications industry. Mr. Thompson served as Vice President of Tax for
McCaw and, more recently, as Senior Vice President of McCaw and as Chief
Financial Officer of AT&T Wireless Services. Mr. Thompson played a
significant role in a number of key initiatives for the company including
McCaw's acquisition of LIN Broadcasting, the merger of McCaw and AT&T and
AT&T's PCS license acquisitions.
o David Thaler, Vice President--Field Operations. Mr. Thaler has nearly
seventeen years of experience in the wireless and cable television
industries. Mr. Thaler served as Vice President of Operations for AT&T
Wireless Services' Central Region business unit and, more recently, as
Senior Vice President and Managing Director of International Development
and Operations for AT&T Wireless Services.
o David Aas, Vice President--Engineering and Technical Operations. Mr.
Aas has over twenty years of experience in the wireless industry. Mr. Aas
led the design, development, construction and operation of AT&T Wireless
Services' national messaging network. He has also served in a number of
senior technical management positions with Airsignal, MCI and MobileComm.
o Perry Satterlee, Vice President--Business Operations. Mr. Saterlee has
approximately ten years of wireless industry experience. Mr. Satterlee
has spent the last two years at Nextel as President-Pacific Northwest
Area, and prior thereto, served as Vice President and General Manager of
AT&T Wireless Service's Central California District.
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<PAGE>
For more information on the senior management team, see "Management."
FCC MATTERS
As an equity contribution, Nextel assigned licenses to Nextel License
Corp., whose capital stock will be transferred to us following FCC approval of
Nextel's transfer applications relating to the transferred licenses. The
transfer applications were filed with the FCC on or around January 29, 1999.
The FCC received no comments from third parties during the public comment
period on these applications, and we anticipate receiving FCC approval by July
1999. Pending FCC approval, we have the right to use the frequencies we need
under a frequency management agreement. After FCC approval of the transfer
applications, we will pledge all of the outstanding shares of Nextel License
Corp. to secure borrowings under the credit facility.
NETWORK BUILD-OUT AND CAPITAL EXPENDITURE PLAN
On January 29, 1999, Nextel sold us operational systems that had been
offering service in upstate New York since July 1998, and in Hawaii in
September 1998. In addition, Nextel, in return for a cash reimbursement,
provided its preliminary design work, construction work in progress and design
and construction contracts for systems within our territory.
We expect to launch additional commercial operations in our selected
markets covering approximately 22.4 million POPs in our territory by the end of
the third quarter of 2001. On January 29, 1999, we acquired leasehold interests
in 563 cell sites (of which 220 are already operational), which is more than
one third of the 1,450 sites that we estimate we will need to complete our
network build-out. Some operational sites remain subject to local regulatory
approval.
The table below indicates the number of markets expected to be
commercially launched in our markets and the total POPs covered by such
markets.
<TABLE>
<CAPTION>
NUMBER OF
LAUNCH YEAR MARKETS COVERED POPS
- ------------- ---------- -------------
<S> <C> <C>
1998 5 4.5 million
1999 4 1.5 million
2000 21 12.6 million
2001 9 3.8 million
</TABLE>
We believe that our total projected capital requirements from inception through
year-end 2003 are approximately $921.0 million. These requirements include
capital expenditures related to building our portion of the Digital Mobile
Network, customer acquisition costs, operating losses incurred through the
build-out phase, debt service and closing costs.
Our markets contain approximately 33 million POPs. Under the terms of the
operating agreements, specific build areas, including metropolitan areas,
smaller communities and corridors, are "required build" areas. Our agreements
with Nextel require us to launch commercial service in the required build areas
of our territory within one, two or three years from January 29, 1999, and have
ongoing requirements to complete additional build-outs in subsequent years.
After we complete the build-out of areas scheduled to be launched in the first
year and prior to the first nineteen months after January 29, 1999, we will be
given the option to build-out additional optional markets accounting for
approximately 20.4 million additional POPs in the aggregate (provided that
Nextel may under certain circumstances build out areas of the option markets
prior to our election). Under certain limited circumstances, Nextel will have
the right to build out portions of our territory or additional markets which we
have not built out.
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<PAGE>
MARKETS
Nextel License Corp. holds licenses in our markets containing
approximately 33 million POPs, of which four markets have populations greater
than 1 million and 13 markets have populations between 500,000 and 1 million.
The table below lists the markets to which we intend to provide digital
wireless service.
<TABLE>
<S> <C>
REGION MARKETS
- --------------------- ----------------------------------------
NORTHEAST Albany
Binghamton/Elmira
Buffalo
Erie
Glens Falls
Harrisburg/York/Lancaster
Ithaca/Norwich
Jamestown
Rochester
Syracuse
Wilkes-Barre/Scranton/Berwick
- --------------------- ----------------------------------------
SOUTH Alexandria
Beaumont/Lafayette/Lake Charles
Bristol/Johnson City/Kingsport
Bryan-College Station
Corpus Christi
Florida Panhandle
Gieger/Dothan/Auburn-Opelika
Jackson/Hattiesburg
Lynchburg/Louisville/Lexington
Mobile/Montgomery
Pascagoula
Pensacola/Panama City/Fort Walton Beach
Roanoke/Blacksburg
Shreveport/Texarkana
Tallahassee
Temple-Killeen/Waco
- --------------------- ----------------------------------------
MIDWEST & WEST Boise/Sun Valley
Davenport/Dubuque
Des Moines/Ames
Duluth
Eau Claire
Green Bay/Fond du Lac
Independence
Omaha/Lincoln
Peoria/Springfield
Rochester
Twin Falls
- --------------------- ----------------------------------------
NONCONTINENTAL U.S. Hawaii
- --------------------- ----------------------------------------
</TABLE>
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<PAGE>
In addition to medium-sized and smaller markets, our markets include
selected corridors along interstate highways and state highways. While these
corridors do not have large business or residential population, we believe that
significant revenues will be earned from travelers on such highways.
Accordingly, the population of a given area may not fully indicate the amount
of the revenues that may be generated in such area.
THE U.S. WIRELESS COMMUNICATIONS INDUSTRY
OVERVIEW
Wireless communications systems use a variety of radio frequencies to
transmit voice and data, and include cellular telephone services, ESMR, PCS and
paging. ESMR stands for Enhanced Specialized Mobile Radio, and is the
regulatory term applied to the services, including those provided by the
Digital Mobile Network, that combine wireless telephone service with a dispatch
feature and paging. PCS stands for Personal Communications Service, and refers
to digital wireless telephone service.
Since the first commercial cellular systems became operational in 1983,
wireless telecommunications services have grown dramatically as these services
have become widely available and increasingly affordable. This growth has been
driven by technological advances, changes in consumer preferences and increased
availability of spectrum to new operators.
Wireless telephone service has been one of the fastest growing market
segments in the telecommunications industry. According to the CTIA, between
1994 and 1998, the number of wireless customers and associated industry
revenues grew at compounded annual growth rates of 30% and 23.5%, respectively,
and in 1998, cellular, ESMR and PCS service providers together added
approximately 13.9 million new customers, an increase of 25% from 1997 totals.
The following chart illustrates the annual growth in wireless customers and
total industry revenues during the period indicated.
[GRAPHIC OMITTED]
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According to the CTIA, as of December 31, 1998, there were over 69 million
mobile telephone users in the United States. Industry sources estimate that
U.S. mobile wireless penetration rates will continue to grow significantly and
reach 63% by 2008.
WIRELESS COMMUNICATIONS SYSTEMS
In the U.S. wireless communications industry, there are three wireless
telephone services: cellular, ESMR and PCS. Currently, cellular is the
predominant service available and has several competitive advantages. Cellular
and ESMR services utilize radio spectrum in the 800 MHz band while PCS operates
at higher frequencies of 1850 to 1990 MHz. Use of the 800 MHz band gives
cellular and ESMR superior propagation characteristics, reducing infrastructure
costs (since fewer base radios are needed to cover a given area) and increasing
the ability to penetrate buildings and other physical obstacles.
All cellular services transmissions were originally analog-based, although
some cellular providers have now overlaid digital systems alongside their
analog systems in many markets. Analog cellular technology has the advantage of
using a consistent standard nationwide, permitting nationwide roaming using a
single mode (i.e., analog), single band (i.e., cellular) handset. On the other
hand, analog technology has several disadvantages, including less efficient use
of spectrum, which reduces effective call capacity, inconsistent service
quality, and reduced privacy, security and reliability as compared to digital
technologies.
Beginning in 1995, the FCC allocated the 1850 to 1990 MHz portion of the
radio spectrum for the provision of PCS service. All PCS services, like ESMR,
are all-digital systems which convert voice or data signals into a stream of
binary digits that is compressed before transmission, enabling a single radio
channel to carry multiple simultaneous signal transmissions. This enhanced
capacity, along with improvements in digital signaling, allows digital-based
wireless technologies to offer new and enhanced services, improved voice
quality and system flexibility, as compared with analog technologies. Call
forwarding, call waiting and greater call privacy are among the enhanced
services digital systems provide. In addition, due to the reduced power
consumption of digital handsets, users benefit from an extended battery life.
The FCC assigned non-contiguous portions of the 800 MHz band to SMR
service, which was initially dedicated to analog two-way dispatch services.
This service only became a competitor in the wireless telephone market with the
introduction in 1993 of enhanced SMR (or ESMR), which applies digital
technology to make use of the 800 MHz spectrum band and its superior
propagation characteristics to deliver the advantages of a digital wireless
mobile telephone system while retaining and significantly enhancing the value
of SMR's traditional dispatch feature.
Unlike analog cellular, which has been implemented in a uniform manner
across the United States, several mutually incompatible digital technologies
are currently in use in the United States. Roaming into different areas often
requires multi-mode (analog/digital) and/or multi-band (PCS/cellular) handsets
that function at both cellular and PCS frequencies and/or are equipped for more
than one type of modulation technology. Time-division technologies, which
include GSM, TDMA and iDEN, one of the most widely implemented ESMR
technologies, break up each transmission channel into time slots that increase
effective capacity. CDMA is a spread-spectrum technology which transmits
portions of many messages over a broad portion of the available spectrum rather
than a single channel. iDEN phones presently operate only in the iDEN mode
within SMR frequencies, and therefore cannot roam onto other digital or analog
wireless networks.
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NEXTEL
Subscriber and Revenue Growth. Nextel implemented a significant
improvement in Motorola's iDEN technology beginning in the third quarter of
1996. Due, in part, to this improvement, Nextel has reported a high rate of
customer growth since that time, making it one of the industry's growth
leaders. Over the past two years, the reported number of Nextel's ESMR
customers has grown at a 28.5% compounded growth rate, quarter over quarter and
as of March 31, 1999, the number of Nextel's ESMR customers is estimated to
have grown to more than 3.1 million. The following chart illustrates the
reported quarterly growth of Nextel's ESMR customers over the past four years.
Because our physical network will take several years to build out fully, and
because of the smaller size of our territory as compared to Nextel's, our rate
of customer growth may not equal or exceed Nextel's record of recent years.
Moreover, we cannot assure you that Nextel itself, whose growth we believe has
been driven primarily by its success in penetrating its core market of
industries dependent upon mobile work groups, will sustain its recent growth
rates in the future.
[GRAPHIC OMITTED]
Nextel's reported monthly ARPU has generally increased since 1993, a fact
that stands in notable contrast to the overall trend in the wireless industry,
where, according to the CTIA data, monthly ARPU has been declining since 1993
as a result of increasing competition. Nextel's monthly ARPU may be adversely
affected in the future as it attempts to broaden its customer base and faces
increasing competition. There can be no assurance that our monthly ARPU will
duplicate that of Nextel, because we set our prices independently, and our
markets are geographically and demographically distinct from Nextel's. The
following chart illustrates the quarterly growth of Nextel's monthly ARPU rates
over the past two years.
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[GRAPHIC OMITTED]
Differentiated Product Offering We believe that Nextel has maintained and
increased its monthly ARPU as a result of the unique features of its
differentiated product and its focus on mobile work groups. Nextel has reported
that these groups have made Nextel's service an integral part of their business
operations, which we believe contributes to high usage and lower rates of
churn. Nextel's iDEN service offers the same mobile telephone features as
digital cellular and PCS service, including call forwarding, call waiting and
greater call privacy. Moreover, iDEN technology's unique differentiation from
other digital standards is its dispatch service, which is marketed by Nextel
and which we will market in the future, as Nextel Direct Connect service.
This Direct Connect dispatch capability allows any member of a mobile team
to immediately communicate with any or all of a Nextel phone-equipped team of
up to 100 members with the push of a button. This "push-to-talk" feature works
like a two-way radio, but, in contrast to analog dispatch SMR radios, digital
iDEN technology allows only the person or persons being called to hear the
conversation.
Nextel Direct Connect service, together with other enhancements, including
call alert, speakerphone capability, alphanumeric paging and "hot-sync"
programming through personal computers (on certain subscriber unit models),
differentiate Nextel's digital service from cellular and PCS providers, and we
believe it has been responsible for Nextel's strong appeal to business users in
mobile occupations, including transportation, delivery, real property and
facilities management, construction and building, landscaping, and other
service sectors. In addition to its advantages to users, Nextel Direct Connect
service uses only half the bandwidth that a switched call over an iDEN network
would use, and this efficient use of spectrum gives the iDEN service provider
the opportunity to offer attractive pricing for Nextel Direct Connect service.
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THE OPERATING AGREEMENTS
The operating agreements define the relationship between Nextel and us.
The operating agreements demand that we adhere to certain key operating
requirements, including the following:
o we generally are required to offer the full complement of products and
services offered by Nextel in comparable service areas;
o we must abide by Nextel's standard pricing structure (principally home
rate pricing, per second billing, and flat rate pricing), but we need
not charge the same prices as Nextel;
o we must meet minimum network performance and customer care thresholds;
and
o we must adhere to standards in other operating areas, such as
frequency design, site acquisition, construction, cell site
maintenance, telco provisioning, and marketing and advertising.
The initial terms of the operating agreements (except for the master site
lease) are for ten years (which initial terms may be extended for up to two and
a half years) from January 29, 1999, with four, ten-year renewals at our
option.
As an equity contribution, Nextel assigned SMR licenses in our territory
to Nextel License Corp. The capital stock of Nextel License Corp. will be
transferred to us following FCC approval of the transfer applications and will
be pledged to secure borrowings under the credit facility. Pending FCC approval
of the transfer applications, our use of SMR frequencies covered by the
transferred licenses is governed by the frequency management agreement which
affords us the use of frequencies in our territory covered by the transferred
licenses. Nextel agreed, as part of its contribution, to pay for future SMR
licenses acquired from third parties in exchange for the assignment by us of
transferred licenses back to Nextel. The aggregate value of all such exchanges
of the transferred licenses may not exceed $25.0 million. We are responsible
for the cost of migrating customers off of the frequencies if necessary.
In addition, Nextel shares with us its experience and know-how in
operating iDEN Digital Mobile Networks, by granting us access to meetings and
employee training sessions, and will provide services upon our request. The
most significant services we can ask Nextel to provide are:
o use of certain of Nextel's switching facilities in exchange for a
per-minute fee based on Nextel's national average cost for such
service (including financing and depreciation costs);
o monitoring of switches owned by us on a 24-hour per day basis by
Nextel's network monitoring center in exchange for a fee based on
pro-rata costs;
o use of Nextel's back-office systems for a transitional period in order
to support customer activation, billing and customer care in exchange
for fees based on Nextel's national average cost for such services,
and if necessary after the transitional period, for fees to be
mutually determined;
o use of the Nextel brand name and certain trademarks and service marks,
and the marketing and advertising materials developed by Nextel in
exchange for a marketing services fee described below;
o access to technology enhancements and improvements in exchange for
pro-rata sharing of any research and development costs; and
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o access to Nextel vendor contracts and terms wherever possible
(including Motorola infrastructure and subscriber unit pricing).
To further support us in our efforts, Nextel has also agreed that:
o the per-minute switching fees through the year 2001 will be based on
the estimated national average cost for such services in the year
2001;
o the switch monitoring services will be supplied for a fee based on
Nextel's average costs of providing such service;
o the marketing services fee will be eliminated until the later of
January 2002 or the first month of the quarter beginning after we
achieve two consecutive quarters of positive EBITDA, at which time the
fee will be 0.5% of gross monthly service revenues for the next three
years of operation and 1.0% of gross monthly service revenues
thereafter; and
o the roaming transfer rate payable to us when Nextel subscribers use
our system will be 95% of the average revenue per minute through 1999,
90% in 2000, 85% in 2001 and 80% thereafter, subject to upward or
downward adjustment based on the relative customer satisfaction levels
of Nextel and us.
In exchange for the contribution, Nextel received equity interests in
Nextel Partners. Subject to certain conditions, Nextel has the option to
acquire 100% of the outstanding equity interests of Nextel Partners which it
does not already own upon the occurrence of any of the following:
o on certain dates beginning on the seventh anniversary of the
commencement of the operating agreements;
o in the event Nextel materially changes its technology and does not
elect to replace our equipment; or
o in the event of a material breach by us of our joint venture agreement
with Nextel.
On the other hand, subject to certain conditions, our shareholders have
the right to put their entire interest to Nextel if:
o there is a change of control of Nextel (such right exercisable at any
time during the 18-month period following such change of control);
o Nextel implements operational changes, technology improvements, or
pricing structure changes that adversely impact our business, and
Nextel does not elect to compensate us for net losses attributable to
such changes; or
o Nextel exercises its right to preempt certain demand registrations of
our stock by DLJMB.
The determination of the purchase price to be paid to interest holders
other than Nextel varies for each of the above scenarios, but is generally
based on formula prices or some variation of "fair market value" (or a
percentage thereof) as determined by independent appraisers.
We are managed by a board of directors. The Board of Directors consists,
and at all times will consist, of one member designated by each of Nextel and
Eagle River, two members designated by DLJMB (one of whom will be an officer or
director of Madison Dearborn Partners) and our Chief Executive Officer. While
the Board of Directors will set
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forth the general policies, decisions regarding certain matters require the
consent of DLJMB, and Nextel's approval must be obtained before any change in
technology, any change in our business scope and any sale of all or
substantially all of our assets.
MARKETING
At the time of launch in each of our markets, we expect to market our
services to leads and prospects previously generated by the Nextel marketing
organization within our territory, either as a result of offices or branches of
Nextel national accounts located within our territory or as a result of
inquiries directed to Nextel prior to the launch of services. We expect to
benefit from Nextel's national advertising campaign and utilize a direct sales
force as well as indirect sales channels, such as a "store-within-a-store" at
building supply superstores, direct mail and telemarketing.
CUSTOMER CARE
An overarching goal will be to present customers with a seamless, national
interface with the Digital Mobile Network from an operational and customer care
standpoint. Customers will be able to contact us through the national 800
number advertised by Nextel; Nextel's call center will automatically route all
calls from our customers to us. Because we will have fewer and more consistent
pricing and service plans, we anticipate that we will be in a position to offer
high-quality customer service. We will initially provide customer care through
a dedicated team based at Nextel's customer care center, and intend to
establish one or more separate customer care centers when our business base is
large enough to justify the expenditures involved.
THE DIGITAL MOBILE NETWORK
Digital Mobile Network Services. We are designing and constructing our
portion of the Digital Mobile Network to generally support the same variety of
service offerings as Nextel, including:
o mobile telephone service, including access to features competitive
with those offered by current wireless communications services, such
as the "hand-off" of calls from one site to another and "in-building"
signal penetration for improved portable performance in selected high
usage areas;
o two-way dispatch capability; and
o signaling or paging capability, which also has been built into each
subscriber unit, to enable a customer to receive alphanumeric
short-text messages.
In addition, the Digital Mobile Network has been designed to offer customers
additional features, such as voicemail, call hold, call waiting, no-answer or
busy-signal transfer, call forwarding, three-way calling and two lines.
Roaming Agreements. We expect to enter into international roaming
agreements with carriers operating outside of the United States. To the extent
that we, independently, are unable to obtain any such agreements due to a
technological issue, the operating agreements provide that we will cooperate
with Nextel WIP Corp. to provide us with the benefit of Nextel's international
roaming arrangement.
Nextel International, Inc., which is a substantially wholly-owned
subsidiary of Nextel, owns significant equity interests in a number of entities
that provide wireless communications services (primarily using the iDEN
technology) outside the United States. Nextel
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International's operating subsidiaries and affiliated entities plan to
construct and operate digital networks employing iDEN technology in major
metropolitan market areas located in Brazil, Mexico, Argentina, Peru and the
Philippines.
Nextel has entered into a roaming agreement with Clearnet Communications,
Inc., which has constructed and operates a digital wireless communications
network in Canada using iDEN technology. Nextel also may enter into a roaming
agreement with Nextel International's wholly owned subsidiary which has
constructed and operates a digital wireless communications network in Mexico
using iDEN technology. Such roaming agreements are expected to provide, among
other things, the coordination of customer identification and validation
necessary to facilitate cross-border roaming service in North America.
Digital Mobile Network Technology. The Digital Mobile Network, as
currently deployed by Nextel, combines the iDEN digital technology developed
and designed by Motorola, with a low-power, multi-site transmitter/receiver
configuration similar to that used by cellular service, that permits us to
reuse the same frequency in different cells, increasing our system's effective
capacity. The iDEN technology being deployed by Nextel shares many common
components with the GSM technology that has been established as the digital
cellular communications standard in Europe and is a variant of the GSM
technology that is being deployed by certain PCS operators in the United
States.
The design of the Digital Mobile Network is premised on dividing a service
area into multiple sites. Each site will contain the "base radio," a low-power
transmitter, receiver and control equipment. The base radio in each site is
connected by a microwave, fiber optic or telephone line to a computer
controlled switching center. The switching center controls the automatic
hand-off of calls from site to site as a customer travels, coordinates calls to
and from a customer unit and connects calls to the public switched telephone
network or "PSTN", in the case of mobile telephone calls. In the case of
two-way dispatch, the switching center connects the customer initiating the
call directly to the other customer (in the case of a private call) and
directly to a number of other customers (in the case of a group call) to whom
the call is directed in the requested service areas.
Northern Telecom, Inc. has supplied the mobile telephone switches for
Nextel's Digital Mobile Network. At September 30, 1998, Nextel reported that it
had 28 operational switches and approximately 5,700 cell sites constructed and
in operation in its portion of the Digital Mobile Network. As of March 31,
1999, we had one operational switch and approximately 203 cell sites
constructed and in operation in our portion of the Digital Mobile Network.
Under the operating agreements, Nextel will cooperate with us to optimize
the location of the switching centers to support our launch of service until
such time, if ever, that we attract a customer base in a region sufficient to
justify our own purchase of a switch in that region.
Nextel now uses iDEN technology throughout its portion of the Digital
Mobile Network, and we intend to use it exclusively. Although iDEN technology
is based on the TDMA technology format, it differs in a number of significant
respects from the TDMA technology versions being assessed or deployed by
cellular operators and PCS licensees in the United States, which differences
may have important consequences. The iDEN technology platform, when utilized
for the two-way dispatch function, can carry up to six voice and/or control
paths per channel, as compared with three-time slot TDMA technology formats,
one of which is now used for iDEN's mobile telephone function and by certain
cellular providers.
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The implementation of the Digital Mobile Network design and technology
increases the capacity of a SMR channel significantly (as compared to analog
technology) in two ways:
(1) Each channel is capable of carrying up to six voice and/or control
paths by employing the six-time slot TDMA digital technology or up to
three voice and/or control paths by employing the three-time slot TDMA
digital technology. Each voice is converted into a stream of data bits
that are compressed before being transmitted, allowing each of the
time-slotted voice and/or control paths to be transmitted on the same
channel without causing interference.
Upon receipt of the coded voice data bits, the subscriber unit decodes
the voice signal. By using the iDEN technology instead of an analog
system, we achieve an approximate six times improvement in channel
utilization capacity for channels used for two-way dispatch service and
an approximate three times improvement in channel utilization for
channels used for mobile telephone service.
(2) By employing a system design in use in the cellular industry, we are
able to reuse channels many times throughout the market area by
placing transmitters at low elevation sites and restricting the power
output to not more than 100 watts of effective radiated power (which
creates a service area of between less than one mile and thirty miles,
depending on the terrain and the power setting).
The use of six-time slot TDMA technology for two-way dispatch service and
three-time slot TDMA technology for mobile telephone service, in combination
with the reuse of frequencies in a cellular-type system design, enables us to
utilize our spectrum efficiently.
SYSTEM CONSTRUCTION AND SUPPLIERS
The first step required to build our network in a new market is the
completion of the radio design plan, which typically takes about four months.
This stage involves the selection of specific areas in the market for the
placement of base radio sites and the identification of specific frequencies
that will be employed at each site in the initial configuration. Sites are
selected on the basis of their proximity to targeted customers, the ability to
acquire and build the site and frequency propagation characteristics. Site
procurement efforts include obtaining leases and permits, and in many cases,
zoning approvals. This site acquisition process for the initial system to be
constructed in a market, depending on the number of sites, typically takes from
two to eighteen months.
Preparation of each site for equipment installation, including
construction of equipment shelters, towers and power systems, grounding,
ventilation and air conditioning, typically takes six weeks, while equipment
installation, testing and pre-operational systems optimization generally takes
an additional six weeks prior to commencement of system operation. Following
commencement of system operations in a selected market, we expect to add new
sites to the system continually in order to improve coverage and capacity.
COMPETITION
In each of the markets where our portion of the Digital Mobile Network
will operate, we will compete with the two established cellular licensees and
as many as six PCS licensees, as well as other companies reselling such
services. Our ability to compete effectively with other wireless communications
service providers depends on a number of factors, including:
o the continued satisfactory performance of iDEN technology;
o the establishment and maintenance of roaming service among our market
areas and those of Nextel; and
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o the development of cost-effective direct and indirect channels of
distribution for our Digital Mobile Network products and services.
A substantial number of the entities that have been awarded PCS licenses
are current cellular communications service providers and joint ventures of
current and potential wireless communications service providers, many of which
have financial resources, customer bases and name recognition greater than
ours. PCS operators will likely compete with us in providing some or all of the
services available through our network. Additionally, we expect that existing
cellular service providers, some of which have been operational for a number of
years and have significantly greater financial and technical resources,
customer bases and name recognition than ours, will continue to upgrade their
systems to provide digital wireless communications services competitive with
those available on our network. Moreover, cellular and wireline companies have
been granted authority to participate in dispatch and SMR services,
respectively. We also expect our business to face competition from other
technologies and services developed and introduced in the future.
While we believe that the mobile telephone service currently being
provided on the Digital Mobile Network utilizing the iDEN technology is similar
in function to and achieves performance levels competitive with those being
offered by other current wireless communications service providers in our
market areas, there are (and will in certain cases continue to be) differences
between the services provided by us and by cellular and/or PCS system operators
and the performance of their respective systems. Nextel's all-digital network
provides customers with digital quality and advanced features wherever they
roam on the Digital Mobile Network, in contrast to hybrid analog/digital
networks of cellular competitors, which do not support these features in the
large analog-only portion of their networks. Nevertheless, our ability to
provide roaming services will be more limited than that of other carriers who
have roaming agreements covering larger parts of the country. As we, with the
assistance of Nextel, make progress toward building out the Digital Mobile
Network nationwide, this disadvantage will be reduced, but we can give no
assurance that the Digital Mobile Network will ever be as ubiquitous as other
mobile telephone services. In addition, if either PCS or cellular operators
provide two-way dispatch services in the future, our competitive advantage in
being uniquely able to combine that service with our mobile telephone service
would be impaired.
Subscriber units on the Digital Mobile Network are not compatible with
those employed on cellular or PCS systems, and vice versa. This lack of
interoperability may impede our ability to attract cellular or PCS customers or
those new mobile telephone customers that desire the ability to access
different service providers in the same market.
We plan to market the Nextel multi-function subscriber unit, which is (and
is likely to remain) significantly more expensive than analog handsets and is
(and is likely to remain) somewhat more expensive than digital cellular or PCS
handsets that do not incorporate a comparable multi-function capability. We
therefore expect to charge higher prices expected for the subscriber handsets
to be used by our Digital Mobile Network customers than those charged to
operators for analog cellular handsets and possibly more than those charged to
operators for digital cellular handsets. However, we believe that Nextel's
multi-function subscriber units currently are competitively priced compared to
multi-function (mobile telephone service and alphanumeric short-text messaging)
digital cellular and PCS handsets.
During the transition to digital technology, certain participants in the
United States cellular industry are offering subscriber units with dual mode
(analog and digital) compatibility. Additionally, certain analog cellular
system operators that directly or through their affiliates also are
constructing and operating digital PCS systems have made available to
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their customers dual mode/dual band (800 MHz cellular/1900 MHz PCS) subscriber
units, to combine the enhanced feature set available on digital PCS systems
within their digital service coverage areas with the broader wireless coverage
area available on the analog cellular network. We do not have comparable hybrid
subscriber units available to our customers.
Additionally, we can give no assurances that existing analog SMR customers
will be willing to invest in new subscriber equipment necessary to migrate to
the Digital Mobile Network, nor can we give any assurance that a sufficient
number of our customers or potential customers of our portion of the Digital
Mobile Network will be willing to accept system coverage limitations as a
trade-off for the enhanced multi-function wireless communications package
provided by us on our portion of the Digital Mobile Network.
Over the past several years as the number of wireless communications
providers in our market areas has increased, the prices of such providers'
wireless service offerings to customers in those markets have generally been
decreasing, although this trend is less pronounced in our markets than in the
larger markets on which Nextel has focused its attention. We may encounter
market pressures to reduce our Digital Mobile Network service offering prices
or to restructure our Digital Mobile Network service offering packages to
respond to particular short-term, market-specific situations (such as special
introductory pricing or packages that may be offered by new providers launching
their service in a market) or to remain competitive in the event that wireless
service providers generally continue to reduce the prices charged to their
customers, particularly if PCS operators enter the smaller markets that we
intend to serve.
Because many of the cellular operators and certain of the PCS operators in
our markets have substantially greater financial resources than us, such
operators may be able to offer prospective customers equipment subsidies or
discounts that are substantially greater than those, if any, that could be
offered by us and may be able to offer services to customers at prices that are
below prices that we are able to offer for comparable services. Thus, our
ability to compete based on the price of its Digital Mobile Network subscriber
units and service offerings will be limited. We cannot predict the competitive
effect that any of these factors, or any combination thereof, will have on us.
Cellular operators and certain PCS operators and entities that have been
awarded PCS licenses each control more spectrum than is allocated for SMR
service in each of the relevant market areas. Each cellular operator is
licensed to operate 25 MHz of spectrum and certain PCS licensees have been
licensed for 30 MHz of spectrum in the markets in which they are licensed,
while no more than 21.5 MHz is available in the 800 MHz band to all SMR
systems, including our systems, in those markets. The control of more spectrum
gives cellular operators and such PCS licensees the potential for more system
capacity and, therefore, more subscribers than SMR operators, including Nextel
and us.
We believe that we generally have adequate spectrum to provide the
capacity needed on our portion of the Digital Mobile Network currently and for
the reasonably foreseeable future. We face competition from other wireless
service providers and other communications technologies, putting downward
pressure on prices. Difficulties in constructing and operating our portion of
the Digital Mobile Network could increase its estimated costs and delay its
scheduled completion and our ability to generate revenue.
Nextel has told us that it expects to increase over time the proportion of
its Digital Mobile Network customers that it obtains through its indirect
distributor network, and we anticipate that our own marketing efforts will
follow the same pattern of Nextel's, with an initial reliance on direct sales,
followed by increasing reliance on indirect distribution
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channels. Nextel has reported that, as it expands its retail subscriber base
through increased reliance on indirect distribution channels, and as price
competition in the wireless industry intensifies, its monthly ARPU is expected
to decrease and its average monthly churn rate is expected to increase, and we
may be affected by similar factors in the future. We face competition from
other wireless service providers and other communications technologies, putting
downward pressure on prices.
In 1997, the FCC reallocated and auctioned 30 MHz of 2.3 GHz spectrum to
wireless services. However, the strict operational and technical limitations
the FCC placed on use of the spectrum will likely prohibit the provision of
mobile services using current technology. Additionally, the FCC has reallocated
220 MHz of radio spectrum for use by "emerging telecommunications
technologies," such as PCS, low-earth orbit satellites and mobile satellite
systems. The FCC has authorized a consortium of communications companies to
provide nationwide mobile satellite services. Additionally, the FCC recently
reallocated 36 MHz of the former analog television channels to commercial
services, including broadcasts, fixed and mobile services. We cannot predict
how these technologies will develop or what impact, if any, they will have on
our ability to compete for wireless communications services customers.
EMPLOYEES
As of March 31, 1999, we had approximately 200 employees, which includes
our upstate New York territory and Hawaii operations. None of our employees is
or is expected to be represented by a labor union or subject to a collective
bargaining agreement, nor have we experienced any work stoppage due to labor
disputes. We believe that our relations with our employees are good.
PROPERTIES
Our headquarters is in Kirkland, Washington. We also maintain
administrative offices in Minnetonka, Minnesota.
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REGULATION
Federal Regulation.
SMR Regulation. We are an SMR operator regulated as such by the FCC. The
FCC also regulates the licensing, construction, operation and acquisition of
all other wireless telecommunications systems in the United States, including
cellular and PCS operators. We are generally subject to the same FCC rules and
regulations as cellular and PCS operators, but our status as an SMR operator
creates some important regulatory differences.
Within the limitations of available spectrum and technology, SMR operators
are authorized to provide mobile communications services to business and
individual users, including mobile telephone, two-way dispatch, paging and
mobile data services. SMR regulations have undergone significant changes during
the last five years and continue to evolve as new FCC rules and regulations are
adopted.
The first SMR systems became operational in 1974, but these early systems
were not permitted or designed to provide mobile telephone service competitive
with that provided by cellular operators. SMR operators originally emphasized
two-way dispatch service, which involves shorter duration communications than
mobile telephone service and places less demand on system capacity. SMR system
capacity and quality was originally limited by:
o the smaller portion of the radio spectrum allocated to SMR,
o the assignment of SMR frequencies on a non-contiguous basis,
o regulations and procedures that initially served to spread ownership
of SMR licenses among a large number of operators in each market,
thereby further limiting the amount of SMR spectrum available to any
particular operator, and
o older SMR technology, which employed analog transmission and a single
site, high-power transmitter configuration, thus precluding the use of
any given SMR frequency by more than one caller at a time within a
given licensed service area.
The original analog SMR market, therefore, was oriented largely to
customers such as contractors, service companies and delivery services that
have significant field operations and need to provide their personnel with the
ability to communicate directly with one another, either on a one-to-one or
one-to-many basis, within a limited geographic area. SMR licenses granted prior
to 1997 have several unfavorable characteristics, as compared with cellular or
PCS licenses. Because these SMR licenses were on a site-by-site basis, numerous
SMR licenses were required to cover the metropolitan area typically covered by
a single cellular or PCS license.
SMR licenses granted in 1997 and later were granted to cover a large area
(known as an economic area, or EA) rather than a particular antenna at a
particular site. EA licenses, therefore, are more like cellular or PCS licenses
in this regard, and eliminate one of the former regulatory disadvantages of SMR
licenses. Nextel was the largest successful bidder in the FCC's auction of EA
licenses, and, as a result, Nextel License Corp. holds EA licenses for all of
the territory that Nextel Partners intends to serve. Nextel Partners will be
acquiring and utilizing both site by site licenses and EA licenses.
All of our SMR licenses are subject to FCC build-out requirements,
although the FCC recently suspended the build-out deadlines for pre-1997 SMR
licenses. Like other wireless providers, we are also required to implement
enhanced 911 capabilities by October 2001 and to meet number portability
requirements in the 100 largest MSAs, including support for nationwide roaming,
by November 2002.
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Federal Regulation of Wireless Operators. Since 1996 SMR operators like
Nextel and Nextel Partners have been subject to common carrier obligations
similar to those of cellular and PCS operators. This regulatory change
recognized the emergence of Nextel's type of SMR service as competitive with
the wireless service provided by cellular and PCS providers.
As a result, SMR providers like Nextel Partners now have many of the same
rights (such as the right to interconnect with other carriers) and are subject
to many of the same obligations applicable to cellular and PCS operators.
Requirements applicable to all wireless operators include:
o an obligation to permit resale of their services until November 24,
2002;
o spectrum cap regulations generally limiting any entity for holding
more than 45 MHz of wireless spectrum in any geographic area;
o technical and reporting requirements, such as coordination of proposed
frequency usage with adjacent wireless users to avoid electrical
interference between adjacent networks and regulation of the height
and power of base radio transmitters;
o rules governing the interconnection between our networks and the rest
of the public telephone network;
o rules permitting law enforcement authorities to intercept calls, with
appropriate authorization, and requiring wireless operators to
maintain the technical capability to permit this;
o required payments to support the cost of federal universal service
programs, calculated as a percentage of revenue, and
o a requirement to make services accessible to persons with
disabilities.
State Regulation and Local Approvals
The states in which we operate generally have state agencies or
commissions charged under state law with regulating telecommunications
companies, and local governments generally seek to regulate placement of
transmitters and rights of way. While the powers of state and local governments
to regulate wireless carriers are limited to some extent by federal law, we
will have to devote resources to comply with state and local requirements. For
example, state and local governments generally may not regulate our rates or
our entry into a market, but are permitted to manage public rights of way, for
which they can require fair and reasonable compensation.
Pending Regulatory Initiatives
The FCC and a number of state regulatory authorities have initiated
proceedings or indicated their intention to examine the implementation of
number portability to permit customers to retain their telephone numbers when
they change service providers, the implementation of various number
conservation mechanisms, and alterations in the structure of universal service
funding, among other matters. These initiatives could impose significant
financial obligations on us and other wireless service providers, the magnitude
of which we cannot predict.
LEGAL AND ADMINISTRATIVE PROCEEDINGS
The Communications Act requires us to obtain FCC approval before we can
assume full control of the licenses Nextel is transferring to us. We began the
approval process by filing
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transfer applications with the FCC. The period for third parties to file
petitions to deny these applications has closed with no petitions filed. The
FCC, however, may accept late filed petitions under exceptional circumstances.
At the conclusion of the process, the FCC may approve the transfer applications
as in the public interest, or may conclude that there are substantial and
material issues of fact that prevent approval of the transfer applications. The
latter determination requires the FCC to convene a hearing on the transfer
applications. Typically the FCC's review process takes three to six months to
complete. However, the FCC is not required to complete its assessment within
any time limit, and any determination it reaches is subject to judicial review.
While neither we nor Nextel are aware of any basis for the FCC to deny the
transfer applications, we cannot be absolutely certain that the transfer
applications will be granted.
The Hawaii Public Service Commission requires wireless providers to obtain
a Certificate of Registration to operate in Hawaii and requires approval of
asset transfers and encumbrance of regulated entity assets. The process was
initiated by the filing on January 29, 1999 of a Petition for a Certificate of
Registration, Transfer of Assets from Nextel West Corp. to NPCR, Inc. and
Encumbrance of NPCR, Inc.'s Assets. Nextel West Corp. is a wholly owned
subsidiary of Nextel and NCPR is a wholly-owned subsidiary of Nextel Partners.
We expect the Petition to be granted by June 30, 1999, and neither we nor
Nextel are aware of any basis for the Hawaii Public Service Commission to deny
the Petition.
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MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information with respect to the
executive officers and directors of Nextel Partners:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------- ----- ------------------------------------------------
<S> <C> <C>
John Chapple ................ 45 President, Chief Executive Officer and Director
John D. Thompson ............ 45 Chief Financial Officer and Treasurer
David Thaler ................ 43 Vice President--Field Operations
Vice President--Engineering and Technical
David Aas ................... 45 Operations
Perry Satterlee ............. 38 Vice President--Business Operations
Mark Fanning ................ 39 Vice President--People Development
Donald Manning .............. 38 Vice President, General Counsel and Secretary
Timothy M. Donahue .......... 49 Director
Andrew H. Rush .............. 40 Director
Andrew E. Sinwell ........... 34 Director
Dennis M. Weibling .......... 47 Director
</TABLE>
John Chapple has worked to organize Nextel Partners throughout 1998 and
has been the President, Chief Executive Officer and a director of Nextel
Partners since August 1998. Mr. Chapple, a graduate of Syracuse University and
Harvard University's Advanced Management Program, has nearly twenty years
experience in the cable television and wireless communications industries. From
1978 to 1983, he served on the senior management team of Rogers Cablesystems
before moving to American Cablesystems as Senior Vice President of Operations
from 1983 to 1988. From 1988 to 1995, he served as Executive Vice President of
Operations for McCaw and subsequently AT&T Wireless Services following the
merger of those companies. From 1995 to 1997, Mr. Chapple was the President and
Chief Operating Officer for Orca Bay Sports and Entertainment in Vancouver,
B.C. Orca Bay owns and operates Vancouver's National Basketball Association and
National Hockey League sports franchises in addition to the General Motors
Place sports arena and retail interests. Mr. Chapple is the past Chairman of
Cellular One Group and the Personal Communications Industry Association, as
well as Vice-Chairman of the CTIA.
John D. Thompson has been the Chief Financial Officer and Treasurer of
Nextel Partners since August 1998 and has approximately twenty years of finance
experience including twelve years in the wireless communications industry. Mr.
Thompson holds both a B.A. in Accounting and a Juris Doctor from the University
of Puget Sound. From 1978 to 1986, he served as Tax Manager for Laventhol &
Horwath. In 1986, he joined McCaw as Vice President of Tax. In 1990, he became
Senior Vice President of McCaw and assumed a significant role in a number of
key initiatives for the company, including McCaw's acquisition of LIN
Broadcasting in 1990, the merger of McCaw and AT&T in 1993 and AT&T's PCS
license acquisitions in 1996. In 1997, he became Chief Financial Officer for
AT&T Wireless Services. Mr. Thompson has served on the boards of a number of
AT&T Wireless Services joint ventures, including Bay Area Cellular Telephone
Company.
David Thaler has been the Vice President-Field Operations of Nextel
Partners since August 1998 and has nearly seventeen years of management
experience in the wireless and cable television industries. From February 1997
to 1998, he served as Senior Vice President and Managing Director of
International Development and Operations for AT&T Wireless
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Services. In this role, Mr. Thaler had overall responsibility for all operating
facets related to AT&T Wireless joint ventures in Brazil, Hong Kong, India,
Colombia and Taiwan. From 1995 to 1997, Mr. Thaler was Vice President of
Operations for AT&T Wireless Services' Central Region business unit. From 1988
to 1995, Mr. Thaler served as Vice President and General Manager of McCaw's
Minnesota District providing overall leadership for an operation consisting of
fourteen MSAs. From 1983 to 1988, he served as General Manager and Regional
Vice President for American Cablesystems.
David Aas has been the Vice President-Engineering and Technical Operations
of Nextel Partners since August 1998. Prior to joining Nextel Partners, Mr. Aas
served as Vice President of Engineering and Operations of AT&T Wireless
Services' Messaging Division. Mr. Aas has twenty-one years experience in the
wireless industry and has held a number of senior technical management
positions, including positions with Airsignal from 1977 to 1981, MCI from 1981
to 1986 and MobileComm from 1986 to 1989. Since 1989, he has been with AT&T
Wireless Services, where he has led the design, development, construction and
operation of AT&T Wireless Services' national messaging network. Mr. Aas served
on the Technical Development Committee of the Personal Communications Industry
Association and led the development and deployment of the PACT two-way
messaging system.
Perry Satterlee has been the Vice President-Business Operation of Nextel
Partners since August 1998 and has approximately ten years of wireless industry
experience. He has spent the last two years with Nextel, where he held the
position of President-Pacific Northwest Area since its inception in 1996. Prior
to joining Nextel, Mr. Satterlee served from 1992 to 1996 as Vice President and
General Manager of AT&T Wireless Services' Central California District. From
1990 to 1992, he was General Manager of McCaw's Ventura/Santa Barbara market.
From 1988 to 1990, Mr. Satterlee was Director of Planning for McCaw, where he
led the company's planning and budgeting processes.
Mark Fanning has been the Vice President-People Development of Nextel
Partners since August 1998 and has over seventeen years of human resources
experience, including nine years in the wireless industry with McCaw and AT&T
Wireless Services. From 1995 to 1998, Mr. Fanning served as Vice President for
People Development Operations for AT&T Wireless Services. From 1991 to 1995, he
served as Director and later as Vice President of Compensation & Benefits for
AT&T Wireless Services. From 1989 to 1991, he was the Director of People
Development for McCaw's California/Nevada region.
Donald Manning has been the Vice President, General Counsel and Secretary
of Nextel Partners since July 1998. Prior thereto, he served as Regional
Attorney for AT&T Wireless Services' Western Region, an eleven state business
unit generating over $400 million in revenues annually. Prior to joining AT&T
Wireless Services, Mr. Manning was a Senior Associate with Heller, Ehrman,
White and McAuliffe specializing in corporate and commercial litigation. From
1985 through 1989, he was an Associate with the Atlanta-based firm of Long,
Aldridge & Norman.
Timothy M. Donahue has been a director of Nextel Partners since January
1999. Mr. Donahue has been a director of Nextel since May 1996 and has been the
President of Nextel since February 1996. From 1986 to January 1996, Mr. Donahue
held various senior management positions with AT&T Wireless Services.
Andrew H. Rush has been a director of Nextel Partners since January 1999.
Mr. Rush has been a Managing Director of DLJ Merchant Banking since January
1997. From 1992 to 1997, Mr. Rush was an officer of DLJ Merchant Banking and
its predecessors. Mr. Rush currently serves as a member of the advisory board
of Triax Midwest Associates, L.P. and as a member of the board of directors of
Societe d'Ethanol de Synthese.
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Andrew E. Sinwell has been a director of Nextel Partners since January
1999. Mr. Sinwell has been a Director of Madison Dearborn Partners since August
1996. From 1994 to 1996, Mr. Sinwell was a Senior Policy Advisor at the FCC.
Dennis M. Weibling has been a director of Nextel Partners since January
1999. Mr. Weibling has been a director of NEXTLINK since January 1997. Mr.
Weibling also has been President of Eagle River, Inc. since October 1993. Mr.
Weibling is a director of Nextel and a member of the operations, audit, finance
and compensation committees. Mr. Weibling serves on the board and executive
committee of Teledesic Corporation, a satellite telecommunications company
backed by Mr. McCaw and Bill Gates. As a licensed certified public accountant
in Washington, Mr. Weibling is a member of the American Society of Certified
Public Accountants and the Washington Society of Certified Public Accountants.
DIRECTOR COMPENSATION
Directors of Nextel Partners do not receive compensation for services
provided as a director. All Board members are reimbursed for their
out-of-pocket expenses in serving on the Board of Directors.
EXECUTIVE EMPLOYMENT CONTRACTS AND COMPENSATION
Nextel Partners has entered into employment agreements with Messrs.
Chapple, Thompson, Thaler, Aas, Satterlee and Fanning in connection with their
employment. Each receives an annual base salary ranging from $125,000 to
$150,000 with an additional cash payment of up to 40% of his then current base
salary if certain performance targets are met. On January 29, 1999, each
received a lump sum ranging from $70,000 to $90,000 in recognition of his
service prior to such date. Each agreement has an initial 4 year term. In
addition, each executed restricted stock purchase agreements, whereby Nextel
Partners issued to each shares of restricted common stock equal to 4.51% in the
aggregate of the diluted equity of Nextel Partners which vest over a
four-to-six year period based on attainment of certain performance goals by
Nextel Partners. See "Ownership of Capital Stock and Principal Stockholders".
In addition, on January 29, 1999, Nextel Partners entered into a stock
option agreement whereby Nextel Partners granted Mr. Thompson the option to
purchase up to 35,000 shares of Class A common stock at an exercise price of
$10.00 per share. After the fourth anniversary of the Agreement, Mr. Thompson
may surrender, without payment of the exercise price, all or a portion of the
option for payment in cash by the Company of $14.286 per share. Moreover, Mr.
Thompson obtained a secured loan of $2.2 million from Nextel Partners,
evidenced by the non-negotiable promissory note delivered by Mr. Thompson on
January 29, 1999 to Nextel Partners. The option is vested and exercisable by
Mr. Thompson, and will expire on January 29, 2009.
EMPLOYEE STOCK OPTION PLAN
Nextel Partners has established a stock option plan which offers employees
the opportunity to purchase shares of Class A common stock at a price equal to
the fair market value of a share of such stock as of the date of grant of such
options. The total number of shares that could be acquired under the plan would
be approximately 2,022,222 shares.
The grant of options to senior managers is conditioned on Nextel Partners'
achievement of performance criteria based on buildout, revenue and EBITDA
targets. The grants to employees, other than senior managers, may be subject to
similar performance criteria or
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other criteria established by Nextel Partners' Board of Directors. Nextel
Partners expects 25% of the options subject to the plan to be granted in
connection with the recruitment of new employees and that senior managers will
receive in the aggregate 20% of the total number of options granted in each
year.
No more than 30% of the number of authorized options will be granted in
any year. The first options will be awarded as of December 31, 1999. No options
may be granted after January 1, 2003.
The options granted will be exercisable and vested in whole or in part
depending on the number of years such option holder has worked at Nextel
Partners.
The plan contemplates the acceleration of vesting of some or all options
upon a Change of Control of Nextel Partners (as defined in the plan).
The options granted would be exercisable for 10 years. The options would
be generally non-transferable and the right to exercise can terminate
concurrently with termination of employment.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
THE SUBSCRIPTION AND CONTRIBUTION AGREEMENT
As discussed under "Business--The Capitalization Transactions," through a
subscription agreement, Nextel WIP Corp. agreed to assign certain licenses to
Nextel License Corp. Upon FCC approval, Nextel WIP Corp. will transfer to us
the capital stock of Nextel License Corp. The book value of these licenses was
approximately $133.2 million as of January 29, 1999. In exchange, Nextel WIP
Corp. received 2,185,000 shares of Series B redeemable or convertible preferred
stock, 8,740,000 shares of Series C convertible preferred stock, and 2,185,000
shares of Series D convertible preferred stock of Nextel Partners.
Each of the cash equity investors has made irrevocable commitments to
contribute to Nextel Partners an aggregate of $156.4 million in cash in
exchange for a total of 15,643,322 shares of Series A preferred stock. As of
January 29, 1999, the cash equity investors contributed an aggregate of $52.1
million of their $156.4 million commitment. The cash equity investors are
required to contribute the unfunded portion of their respective commitments
under the subscription agreement in installments of $52.1 million on each of
December 31, 1999 and December 31, 2000.
Motorola contributed to Nextel Partners an $18.4 million credit against
future purchases of certain Motorola system infrastructure equipment in
exchange for 1,836,649 shares of Series A convertible preferred stock.
THE SHAREHOLDERS' AGREEMENT
General. As set forth in a shareholders' agreement, Nextel WIP Corp.,
Motorola, the cash equity investors, the management shareholders and Nextel
Partners agreed to certain matters in connection with the management and
operations of Nextel Partners and the sale, transfer or other disposition of
the capital stock of Nextel Partners.
Nextel Partners is governed by the Board of Directors consisting of five
persons, and, unless otherwise required, actions of the Board of Directors
require the affirmative vote of a majority of the Board of Directors at a duly
convened meeting. The shareholders have agreed to vote for the five persons as
follows: (i) two directors selected by DLJMB (one of whom will be an officer of
Madison Dearborn Partners); (ii) one director selected by Nextel WIP Corp.;
(iii) one director selected by Eagle River; and (iv) the Chief Executive
Officer of Nextel Partners. DLJMB also has the right to have two non-voting
observers present at board meetings. Certain significant matters require the
approval of at least one of the directors selected by DLJMB or the approval of
the director selected by Nextel WIP Corp.
Restrictions on Transfer. The shareholders' agreement imposes numerous
restrictions with respect to the sale, transfer or other disposition of the
capital stock of Nextel Partners.
Registration Rights. Subject to certain limitations, DLJMB has certain
demand registration rights prior to an initial public offering and the parties
to the shareholders' agreement are entitled to unlimited "piggy back"
registrations if Nextel Partners proposes to register its own securities. In
addition, Nextel WIP Corp. has certain rights to preempt a public offering of
Nextel Partners' stock by Nextel Partners or DLJMB or repurchase all of Nextel
Partners' Stock being offered.
Preemptive Rights. The shareholders' agreement grants preemptive rights in
certain circumstances to the shareholders. If, on or prior to the initial
public offering, Nextel Partners proposes to issue any equity security (other
than pursuant to any warrant, stock option or stock appreciation rights plan)
for cash, each shareholder shall have a preemptive right to purchase its pro
rata portion of such securities.
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Certain Rights and Obligations of Nextel WIP Corp. Subject to certain
limitations, Nextel WIP Corp. has the right to purchase all of the outstanding
stock of Nextel Partners. The parties to the shareholders' agreement, other
than Nextel WIP Corp., have the right, subject to certain limitations, to
require Nextel WIP Corp. to purchase all of the outstanding stock of Nextel
Partners. The parties to the shareholders' agreement (other than Nextel WIP
Corp.) also have the right, subject to certain limitations, to participate in
any sale by Nextel WIP Corp. of all of its shares to a third party.
Reimbursement of Certain Expenses. Nextel Partners has reimbursed Nextel
and Eagle River $16.6 million and $1.2 million for operating expenses made and
incurred by them prior to January 29, 1999 in order to facilitate the
construction of Nextel Partners' portion of the Digital Mobile Network. Nextel
Partners also reimbursed the actual out-of-pocket transaction costs, including
reasonable fees and expenses of counsel, for Nextel, Eagle River and DLJMB in
connection with the consummation of the capitalization transactions on January
29, 1999.
Repurchase Rights. Under the joint venture agreement, Nextel Partners has
the right to extend its build-out of the Digital Mobile Network to include
option markets within a specified time period. If Nextel Partners does not
elect to construct option markets covering a specified number of POPs prior to
the expiration of such period, or upon the earlier merger or consolidation of
Nextel Partners with another entity or sale of all or substantially all of
Nextel Partners' assets, Nextel Partners is obligated to purchase from Eagle
River and each of the management shareholders, at $.01 per share, up to 12.6%
(on a sliding scale basis, depending on the number of POPs covered by any
option markets that are timely constructed) of the shares of Class A common
stock that Eagle River and such management shareholders purchased from Nextel
Partners on November 20, 1998.
NEXTEL OPERATING AGREEMENTS
As described under "Business--Capitalization Transactions" and
"--Operating Agreements," Nextel Partners entered into agreements with Nextel
WIP Corp., a wholly owned subsidiary of Nextel, which govern the build out and
operation of Nextel Partners' portion of the Digital Mobile Network. Copies of
certain of the following agreements have been filed with the SEC as part of our
registration statement of which this prospectus is a part.
o The Joint Venture Agreement. This agreement requires Nextel Partners
to meet certain build out and operational obligations, including meeting
minimum construction requirements, ensuring compatibility of Nextel Partners'
systems with Nextel's portion of the Digital Mobile Network, offering certain
service features with respect to its systems and causing Nextel Partners'
systems to comply with Nextel's iDEN quality standards. In addition, Nextel
Partners has agreed that it will obtain Nextel's approval in certain
circumstances, including making a material change in the technology used in its
business or disposing all or substantially all of its assets. Nextel WIP Corp.
has agreed to assist Nextel Partners in obtaining discounts from Nextel vendors
and service providers as well as provide certain back office and information
systems platforms to Nextel Partners on a ongoing basis.
o Trademark License Agreement. Under this agreement Nextel WIP Corp.
granted OPCO a license to use certain Nextel trademarks and service marks. OPCO
is obligated to pay royalties to Nextel WIP Corp. for its use of the licensed
marks, beginning on a date that is the later of January 1, 2002 or the first
day of the month after Nextel Partners has achieved two consecutive fiscal
quarters of positive EBITDA. For the first three years after such date, the
royalty is equal to 0.5% of gross monthly service revenues, and will be equal
to 1% of gross monthly service revenues thereafter.
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o Roaming Agreement. Through this agreement, Nextel WIP Corp. and OPCO
provides ESMR service to subscribers and certain other designated users of the
other, in either case, the "Home Service Provider", while such subscribers or
designated users are out of the Home Service Provider's territory and roaming
in the territory of the other.
Subject to quarterly adjustment, Nextel Partners receives revenues from
the payment of roaming fees by Nextel WIP Corp. equal to 95% of the aggregate
service revenue per minute generated by Nextel's customers roaming on Nextel
Partners' portion of the Digital Mobile Network through 1999, 90% in 2000, 85%
in 2001 and 80% thereafter. When customers of Nextel Partners roam onto
Nextel's portion of the Digital Mobile Network, approximately 80% of the
aggregate service revenue per minute generated by such customers will be paid
to Nextel WIP Corp.
o Frequency Management Agreement. Pending FCC approval of the transfer
applications, Nextel Partners' right to utilize the frequencies covered by the
transferred licenses is governed by this agreement.
o Analog Management Agreement. Through this agreement, Nextel Partners
permits Nextel WIP Corp. (which may in turn permit Nextel) to use certain SMR
frequencies that are covered by the transferred licenses, and that are not
being used by Nextel Partners to operate its portion of the Digital Mobile
Network, for the operation of analog systems and the offering of analog
service.
o Asset Transfer and Reimbursement Agreement. Nextel Partners purchased
from Nextel WIP Corp. assets located in Nextel Partners' markets at a cost of
approximately $115.6 million through this agreement. Nextel Partners also
reimbursed Nextel WIP Corp. for operating losses incurred by Nextel prior to
January 29, 1999 in the amount of $16.6 million.
Nextel WIP Corp. has agreed to indemnify Nextel Partners for undisclosed
liabilities in excess of $1.5 million upon notice by Nextel Partners in
reasonable detail thereof within 180 days after January 29, 1999.
o Master Site Lease Agreement. OPCO leases from Nextel WIP Corp., under
this agreement, space on telecommunications towers, that are owned by
affiliates of Nextel WIP Corp. in Nextel Partners' markets. OPCO pays Nextel
WIP Corp. monthly rental payments based on the number of sites subject to the
master site lease. Nextel and SpectraSite Communications, Inc. have entered
into an agreement whereby SpectraSite has agreed to purchase cell sites and
towers from Nextel including the cell sites and towers located in Nextel
Partners' territory. When this transaction is consummated, Nextel Partners will
execute a master site lease agreement with SpectraSite to replace, and which
will contain substantially similar terms to, the current master lease with
Nextel. In addition, Nextel WIP Corp. has agreed that certain economic terms,
such as the rental amounts due for the first three years, will be the same
under the SpectraSite master lease and, if such terms are less favorable,
Nextel WIP Corp. will compensate Nextel Partners for the difference.
o Transition Services Agreement. Under this agreement, certain
accounting, payroll, customer care, purchasing, human resources and billing
functions is made available to OPCO through Nextel WIP Corp. OPCO pays monthly
fees based on Nextel's cost of providing such services.
o Switch Sharing Agreement. Nextel WIP Corp. provides certain
telecommunications switching services to OPCO which permits OPCO to link cell
sites to and electronically access certain switching equipment used and
maintained by affiliates of Nextel WIP Corp.
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and facilitates OPCO's provision of ESMR service to Nextel Partners'
subscribers under this agreement. OPCO pays Nextel WIP Corp. monthly switching
fees based on Nextel's cost of providing such services at a rate reflecting
Nextel's estimated cost as of January 2001 through January 1, 2001 subject to
adjustment.
o Agreement Specifying Obligations of and Limiting Liability and
Recourse to Nextel. Pursuant to the terms of this agreement, the maximum
cumulative, aggregate cash liability of Nextel and its controlled affiliates
(other than Nextel WIP Corp.) for any and all actual or alleged claims or
causes of action arising in connection with any aspect of the agreements
governing or otherwise relating to the operating agreements is capped at $200.0
million.
MOTOROLA PURCHASE AGREEMENTS
Under the iDEN Infrastructure Equipment Purchase Agreement and the
Subscriber Purchase and Distribution Agreement between Nextel Partners and
Motorola, dated as of January 29, 1999, Nextel Partners agreed to purchase, and
Motorola agreed to sell, certain infrastructure equipment and related software
and services required for the build-out of Nextel Partners' portion of the
Digital Mobile Network, as well as subscriber handsets and certain accessories.
Nextel Partners obtained pricing for the Motorola equipment and subscriber
units on financial and other terms that are substantially similar to those
obtained by Nextel. Under the Motorola purchase agreements, Nextel Partners
expects to purchase over a three year period $98.5 million worth of subscriber
units and accessories and over the same period approximately $145.0 million
worth of Motorola equipment. Nextel Partners received, in connection with its
purchases of the Motorola equipment, an $18.4 million credit from Motorola in
return for the issuance of 1,836,649 shares of Series A convertible preferred
stock to Motorola as part of the capitalization transactions consummated on
January 29, 1999. See "Business--The Capitalization Transactions," "--Business
Strategy."
DLJMB AFFILIATION WITH INITIAL PURCHASER/BANK SYNDICATE
DLJ Capital, an affiliate of DLJMB, will receive customary fees and
reimbursement of expenses in connection with the arrangement and syndication of
the credit facility and as a lender thereunder. Donaldson, Lufkin & Jenrette
Securities Corporation, which is also an affiliate of DLJMB, acted as a
financial advisor to Nextel Partners, as arranger under the credit facility and
as an initial purchaser in the offering of the old notes. The aggregate amount
of all fees paid to the DLJ entities in connection with the capitalization
transactions was approximately $14.7 million. Nextel Partners and its
affiliates may from time to time enter into other investment banking
relationships with DLJ Securities or one of its affiliates through which DLJ
Securities or its affiliate will receive customary fees and will be entitled to
reimbursement of reasonable disbursements and out-of-pocket expenses incurred
in connection with such services. Nextel Partners expects that any such
arrangement will include provisions for the indemnification of DLJ Securities
against certain liabilities, including liabilities under the federal securities
laws. See "Plan of Distribution."
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OWNERSHIP OF CAPITAL STOCK AND PRINCIPAL STOCKHOLDERS
CAPITAL STOCK
General. Nextel Partners is authorized to issue an aggregate of 200
million shares of common stock, par value $.001 per share, of which 1,558,888
shares are outstanding, and up to 100.0 million shares of preferred stock, par
value $.001 per share, of which 17,479,971 shares of Series A convertible
preferred stock, 2,185,000 shares of Series B redeemable preferred stock,
8,740,000 shares of Series C convertible preferred stock and 2,185,000 shares
of Series D convertible preferred stock are outstanding. The following is a
summary of certain of the rights and privileges pertaining to the common stock
and the preferred stock. The summary in this prospectus with respect to the
provisions of Nextel Partners' capital stock does not purport to be complete
and is subject to, and is qualified in its entirety by, Nextel Partners'
restated certificate of incorporation, a copy of which is filed as an exhibit
to the registration statement of which this prospectus is a part.
COMMON STOCK
The common stock is classified into two classes: Class A common stock and
Class B common stock. As of March 31, 1999, all outstanding shares of common
stock are Class A common stock. The holders of common stock are entitled to one
vote per share on all matters submitted for action by the shareholders. There
is no provision for cumulative voting with respect to the election of
directors. Holders of common stock are entitled to share equally, share for
share, if dividends are declared on common stock, whether payable in cash,
property or securities.
Class A Common Stock. Under certain circumstances, shares of Class A
common stock (and securities convertible into Class A common stock other than
Class B common stock) are callable at the option of Nextel WIP Corp., a
subsidiary of Nextel or may be put to NWIP at the option of the holders.
Class B Common Stock. Shares of Class B common stock are convertible at
any time at the option of the holder into an equal number of shares of Class A
common stock.
PREFERRED STOCK
Ranking. With respect to rights on liquidation, dissolution or winding up
the order of preference is as follows:
(1) the Series B redeemable preferred stock;
(2) the Series A convertible preferred stock;
(3) the Series C and Series D convertible preferred stock; and
(4) the Class A and Class B common stock.
The holders of the Series A and Series C convertible preferred stock are
entitled to vote on an as converted basis on all matters submitted for action
by the shareholders. Series D convertible preferred stock and Series B
redeemable preferred stock do not have any voting rights other than to approve
mergers or consolidations adverse to the rights of holders of such securities.
The holders of Series A, Series C and Series D convertible preferred stock are
entitled to share equally, share for share on an as converted basis, if and
when dividends are declared on common stock, whether payable in cash, property
or securities.
Series A Convertible Preferred Stock. Each share of Series A convertible
preferred stock is convertible into one share of Class A common stock at any
time.
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Series B Redeemable or Convertible Preferred Stock. The Series B
redeemable or convertible preferred stock is subject to mandatory redemption by
Nextel Partners 375 days after the stated maturity of the notes. The price for
redemption will be the liquidation value, which accretes at an annual rate of
12% from the date of issuance. The Company may elect under certain
circumstances to pay the redemption price by issuing Series C Preferred Stock
for each share of Series B Preferred Stock so redeemed. The Series B Preferred
Stock is subject to voluntary redemption.
Series C Convertible Preferred Stock. Each share of Series C convertible
preferred stock is convertible into one share of Class B common stock at any
time.
Series D Convertible Preferred Stock. Each share of Series D convertible
preferred stock is convertible into one share of Class B common stock at any
time.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information as of March 31, 1999,
with respect to the beneficial ownership of shares of Class A common stock by
(i) certain persons known to Nextel Partners to be a beneficial owner of more
than 5% of the outstanding shares of such common stock, (ii) each director and
executive officer of Nextel Partners, and (iii) all executive officers and
directors as a group.
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF CLASS A
NAME AND ADDRESS SHARES(1) COMMON STOCK
- ------------------------------------------ ------------------- -------------
<S> <C> <C>
Nextel WIP Corp.
1505 Farm Credit Drive
McLean, VA 22102 ........................ 10,925,000(2) 33.7%
Motorola, Inc.
1303 East Algonquin Road, 11th Floor
Schaumburg, IL 60196 .................... 1,836,649(3) 5.7
Eagle River Investments, LLC
2300 Carillon Point
Kirkland, WA 98033 ...................... 2,748,389(3) 8.5
DLJMB Funds
277 Park Avenue
New York, NY 10172 ...................... 3,800,000(3) 12.3
Madison Dearborn Capital Partners II, L.P.
Three First National Plaza
Chicago, IL 60602 ....................... 3,624,972(3) 11.8
GE Capital Services
Structured Finance Group, Inc.
120 Long Ridge Road
Stamford, CT 06927 ...................... 439,248(3) 1.4
NMS Capital L.P.
9 West 57th Street
New York, NY 10019 ...................... 419,271(3) 1.3
Cascade Investments, L.L.C.
2365 Carillon Point
Kirkland, WA 98033 ...................... 698,800(3) 2.2
Ampersand Holdings, L.L.C.
1301 Santa Barbara Street
Santa Barbara, CA 93101 ................. 419,271(3) 1.3
John Chapple ............................. 511,071(3) 1.6
John D. Thompson ......................... 374,444(4) 1.2
David Thaler ............................. 195,000 *
</TABLE>
57
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF CLASS A
NAME AND ADDRESS SHARES(1) COMMON STOCK
- ------------------------------------------- ----------- -------------
<S> <C> <C>
David Aas ................................. 162,500 *
Perry Satterlee ........................... 137,222 *
Mark Fanning .............................. 137,222 *
Directors and Officers of Nextel
Partners as a group (10 Persons) ......... 1,517,459 4.7
</TABLE>
- ----------
* Less than 1%.
(1) Beneficial ownership is determined in accordance with the rules of the
SEC. In computing the number of shares beneficially owned by a person and
the percentage ownership of that person, shares subject to options,
warrants and convertible securities held by that person that are
currently exercisable or exercisable within 60 days are deemed
outstanding. Such shares, however, are not deemed outstanding for the
purposes of computing the percentage ownership of any other person.
Except as indicated in the footnotes to this table, each shareholder
named in the table has sole voting and investment power with respect to
the shares set forth opposite such shareholder's names.
(2) Includes shares of Class B common stock which Nextel WIP Corp. has the
right to acquire upon conversion of its Series C convertible preferred
stock and Series D convertible preferred stock.
(3) Includes shares of Class A common stock which it has the right to acquire
upon conversion of its or its affiliates' Series A convertible preferred
stock.
(4) Includes 35,000 shares of Class A common stock issuable upon exercise of
options exercisable within 60 days of January 29, 1999.
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<PAGE>
THE EXCHANGE OFFER
BACKGROUND
On January 29, 1999, Nextel Partners privately placed the old notes in a
transaction exempt from the registration under the Securities Act. Accordingly,
the old notes may not be reoffered, resold or otherwise transferred in the
United States unless so registered or unless an exemption from the Securities
Act registration requirements is available.
In the registration rights agreement, we agreed with the initial
purchasers to, at our own cost:
o file an exchange offer registration statement within 120 days after
January 29, 1999, the original issue date of the old notes,
o use our commercially reasonable efforts to cause the exchange offer
registration statement to become effective under the Securities Act at
the earliest possible time, but no later than 180 days following January
29, 1999, and
o upon effectiveness of the exchange offer registration statement, offer
new notes in exchange for surrender of the old notes.
In addition, we agreed to keep the exchange offer open for at least 30
days, or longer if required by applicable law, after the date notice of the
exchange offer is mailed to holders of the old notes. The new notes are being
offered under this prospectus to satisfy these obligations of Nextel Partners
under the registration rights agreement.
The summary in this prospectus of provisions of the registration rights
agreement does not purport to be complete and is subject to, and is qualified
in its entirety by all the provisions of the registration rights agreement, a
copy of which is filed as an exhibit to the registration statement of which
this prospectus is a part.
TERMS OF THE EXCHANGE
Upon the terms and subject to the conditions contained in this prospectus
and in the letter of transmittal that accompanies this prospectus, Nextel
Partners will accept any and all old notes validly tendered and not withdrawn
before 5:00 p.m., New York City time, on the expiration date of the exchange
offer. Nextel Partners will issue an equal principal amount at maturity of new
notes in exchange for the principal amount of old notes accepted in the
exchange offer. Old notes may be tendered only in integral multiples of $1,000.
The form and terms of the new notes are substantially identical to the
form and terms of the old notes, except that:
(1) the new notes will be freely transferable, other than as described in
this prospectus, and will not contain any legend restricting their
transfer;
(2) holders of the new notes will not be entitled to certain rights of
holders of old notes under the registration rights agreement, which
rights will terminate on consummation of the exchange offer; and
(3) the new notes will not contain any provisions regarding the payment
of special interest.
The new notes will evidence the same debt as the old notes and will be
entitled to the benefits of the indenture. See "Description of the Notes."
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<PAGE>
The exchange offer is not conditioned on any minimum aggregate principal
amount at maturity of old notes being tendered for exchange.
RESALE OF THE NEW NOTES
Based on interpretations by the staff of the SEC in no-action letters
issued to third parties, Nextel Partners believes that the new notes issued
pursuant to the exchange offer in exchange for the old notes may be offered for
resale, resold and otherwise transferred by holders of the new notes without
complying with the registration and prospectus delivery requirements of the
Securities Act if:
(1) the holders acquired the new notes in the ordinary course of its
business;
(2) the holders are not engaged in, and do not intend to engage in, and
have no arrangement or understanding with any person to participate
in, a distribution of the new notes;
(3) the holders are not "affiliates" of Nextel Partners within the
meaning of Rule 405 under the Securities Act;
(4) the holders are not broker-dealers who acquired the old notes
directly from Nextel Partners; and
(5) the holders are not broker-dealers who acquired the old notes as a
result of market-making or other trading activities.
Each broker-dealer that receives new notes for its own account in the
exchange offer must acknowledge that it will deliver a prospectus in connection
with any resale of those new notes. The letter of transmittal that accompanies
this prospectus states that by so acknowledging and by delivering a prospectus,
a broker-dealer will not be deemed to admit that it is an underwriter within
the meaning of the Securities Act. A participating broker-dealer may use this
prospectus, as it may be amended or supplemented from time to time, in
connection with resales of new notes received in exchange for old notes where
those new notes were acquired by the broker-dealer as a result of market-making
activities or other trading activities. Nextel Partners will make this
prospectus available to any participating broker-dealer in connection with any
resale of this kind for a period of 30 days after the expiration date of the
exchange offer. See "Plan of Distribution."
SHELF REGISTRATION STATEMENT
If applicable law or interpretations of the staff of the SEC are changed
such that the new notes received by holders who make all of the above
representations in the letter of transmittal are not or would not be, upon
receipt, transferable by each such holder without restriction under the
Securities Act, Nextel Partners will, at its cost:
o file a shelf registration statement covering resales of the old notes,
o use all commercially reasonable efforts to cause the shelf registration
statement to be declared effective under the Securities Act, and
o use all commercially reasonable efforts to keep effective the shelf
registration statement until the earlier of two years after January 29,
1999 or the time when all of the applicable old notes are no longer
outstanding.
Nextel Partners will, if and when it files the shelf registration
statement, provide to each holder of the old notes copies of the prospectus
which is a part of the shelf registration
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<PAGE>
statement, notify each such holder when the shelf registration statement has
become effective and take other actions as are required to permit unrestricted
resales of the old notes. A holder that sells old notes pursuant to the shelf
registration statement generally must be named as a selling security holder in
the related prospectus and must deliver a prospectus to purchasers, will be
subject to civil liability provisions under the Securities Act in connection
with these sales and will be bound by the provisions of the registration rights
agreement which are applicable to the holder, including certain indemnification
obligations. In addition, each holder of old notes must deliver information to
be used in connection with the shelf registration statement and provide
comments on the shelf registration statement in order to have its old notes
included in the shelf registration statement and benefit from the provisions
regarding any liquidated damages described below.
LIQUIDATED DAMAGES
Liquidated damages will accrue on the principal amount at maturity of the
old notes, in addition to the stated interest on the old notes, from the date
on which a registration default occurs to the date such registration default is
cured.
The occurrence of any of the following is a registration default:
(1) neither the exchange offer registration statement nor the shelf
registration statement has been filed with the SEC on or before the
applicable deadline described above,
(2) neither the exchange offer registration statement nor the shelf
registration statement has been declared effective by the SEC on or
before the applicable deadline described above,
(3) the exchange offer has not been consummated by the 30th business day
after the exchange offer registration statement has become effective,
or
(4) after either the exchange offer registration statement or the shelf
registration statement has been declared effective, that registration
statement ceases to be effective or usable, subject to certain
exceptions, without being succeeded within two days by an amendment to
that registration statement that cures such failure and is declared
effective within five days of such filing.
Liquidated damages will accrue at a rate of $0.05 per week per $1,000 in
principal amount at maturity of the notes during the 90-day period after the
occurrence of the registration default and will increase by an additional $0.05
per week per $1,000 in principal amount at maturity at the end of each
subsequent 90-day period until all registration defaults have been cured. In no
event will the rate exceed $0.50 per week per $1,000 in principal amount at
maturity of the notes.
The sole remedy available to the holders of the old notes will be the
immediate assessment of liquidated damages on the old notes as described above.
Any amount of liquidated damages due as described above will be payable in cash
on the same interest payment dates as the old notes.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The expiration date of the exchange offer is 5:00 p.m., New York City
time, on , 1999, unless Nextel Partners, in its reasonable discretion,
extends the exchange offer, in which case the expiration date shall be the
latest date and time to which the exchange offer is extended.
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<PAGE>
In order to extend the exchange offer, Nextel Partners will notify the
exchange agent of any extension by oral or written notice and will make a
public announcement of the extension prior to 9:00 a.m., New York City time, on
the next business day after the previously scheduled expiration date.
Nextel Partners reserves the right, in its reasonable discretion:
o to delay accepting any old notes, to extend the exchange offer or to
terminate the exchange offer if, in its reasonable judgment, any of the
conditions described below under "--Conditions" shall not have been
satisfied, by giving oral or written notice of the delay, extension or
termination to the exchange agent, or
o to amend the terms of the exchange offer in any manner.
Nextel Partners will promptly announce any such event by making a timely
release to the Dow Jones News Service and may or may not do so by other means
as well.
PROCEDURES FOR TENDERING
To tender old notes in the exchange offer, the holder must:
o properly complete, sign and date the letter of transmittal, or a
facsimile of the letter of transmittal,
o have the signatures thereon guaranteed if required by the letter of
transmittal, and
o except as discussed in "Guaranteed Delivery Procedures," mail or
otherwise deliver the letter of transmittal, or facsimile, together with
the old notes and any other required documents, to the exchange agent
prior to 5:00 p.m., New York City time, on the expiration date of the
exchange offer.
The exchange agent must receive the old notes, a completed letter of
transmittal and all other required documents at the address listed below under
"--Exchange Agent" before 5:00 p.m., New York City time, on the expiration date
for the tender to be effective. You may deliver your old notes by using the
book-transfer procedures described below, as long as the exchange agent
receives confirmation of the book-entry transfer before the expiration date.
The Depository Trust Company has authorized its participants that hold old
notes on behalf of beneficial owners of old notes through The Depository Trust
Company to tender their old notes as if they were holders. To effect a tender
of old notes, The Depository Trust Company participants should either:
(1) complete and sign the letter of transmittal (or a manually signed
facsimile of the letter), have the signature thereon guaranteed if
required by the instructions to the letter of transmittal and mail or
deliver the letter of transmittal (or the manually signed facsimile)
to the exchange agent according to the procedure described above, or
(2) transmit their acceptance to The Depository Trust Company through its
automated tender offer program for which the transaction will be
eligible and follow the procedure for book-entry transfer as described
in "Book-Entry; Delivery and Form."
By tendering, each holder will make the representations contained in the
first paragraph under the heading "--Resale of the New Notes." Each
participating broker-dealer must acknowledge that it will deliver a prospectus
in connection with any resale of such new notes. See "Plan of Distribution."
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<PAGE>
The tender by a holder and the acceptance of the tender by Nextel Partners
will constitute the agreement between the holder and Nextel Partners set forth
in this prospectus and in the letter of transmittal.
THE METHOD OF DELIVERY OF THE OLD NOTES AND THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK
OF THE HOLDER. AS AN ALTERNATIVE TO DELIVERY BY MAIL, HOLDERS MAY WISH TO
CONSIDER OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, HOLDERS SHOULD ALLOW
SUFFICIENT TIME TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION
DATE. NO LETTER OF TRANSMITTAL OR OLD NOTES OR BOOK-ENTRY CONFIRMATION SHOULD
BE SENT TO NEXTEL PARTNERS. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS,
DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE
TRANSACTIONS ON THEIR BEHALF.
Any beneficial owner whose old notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct such
registered holder to tender on such beneficial owner's behalf. See
"Instructions to Registered Holder and/or Book-Entry Transfer Facility
Participant from Beneficial Owner" included with the letter of transmittal. If
the beneficial owner wishes to tender on his own behalf, such owner must, prior
to completing and executing the letter of transmittal and delivering his old
notes, either make appropriate arrangement to register ownership of the old
notes in such owner's name or obtain a properly completed bond power from the
registered holder. The transfer of registered ownership may take considerable
time.
Signatures on a letter of transmittal or a notice of withdrawal must be
guaranteed by an eligible guarantor institution (within the meaning of Rule
17Ad-5 under the Exchange Act) unless the old notes are tendered:
o by a registered holder who has not completed the box entitled "Special
Issuance Instructions" or "Special Delivery Instructions" on the letter
of transmittal, or
o for the account of an eligible guarantor institution.
If signatures on a letter of transmittal or notice of withdrawal, as the
case may be, are required to be guaranteed, the guarantee must be by a member
firm of a registered national securities exchange or of the National
Association of Securities Dealers, Inc., a commercial bank or trust company
having an office or correspondent in the United States or an eligible guarantor
institution.
If a letter of transmittal is signed by a person other than the registered
holder of any old notes listed in the letter of transmittal, the old notes must
be endorsed or accompanied by a properly completed bond power and signed by the
registered holder as the registered holder's name appears on the old notes.
If a letter of transmittal or any old notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by Nextel Partners,
evidence satisfactory to Nextel Partners of their authority to so act must be
submitted with the letter of transmittal.
Promptly after the date of this prospectus, the exchange agent will
establish a new account or utilize an existing account with respect to the old
notes at the book-entry transfer facility, The Depository Trust Company, for
the purpose of facilitating the exchange offer. Subject to the establishment of
the accounts, any financial institution that is a participant in The Depository
Trust Company's system may make a book-entry tender of old notes by
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<PAGE>
causing The Depository Trust Company to transfer such old notes into the
exchange agent's account in accordance with procedures. Although delivery of
the old notes may be effected through book-entry transfer into the exchange
agent's account at The Depository Trust Company, an appropriate letter of
transmittal properly completed and duly executed or an agent's message with any
required signature guarantee and all other required documents, must be received
by the exchange agent at its address listed below on or prior to the expiration
date of the exchange offer, or, if the guaranteed delivery procedures described
below must be complied with, within the time period provided under such
procedures. Delivery of documents to The Depository Trust Company does not
constitute delivery to the exchange agent.
The term "agent's message" means a message transmitted by The Depository
Trust Company to, and received by, the exchange agent, which states that The
Depository Trust Company has received an express acknowledgment from the
participant in The Depository Trust Company tendering the old notes stating:
o the aggregate principal amount at maturity of old notes which have been
tendered by such participant,
o that such participant has received and agrees to be bound by the term
of the letter of transmittal, and
o that Nextel Partners may enforce such agreement against the
participant.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered old notes will be determined by
Nextel Partners in its sole discretion, which determination shall be final and
binding. Nextel Partners reserves the absolute right to reject any and all old
notes not properly tendered or any old notes the acceptance of which would, in
the opinion of counsel for Nextel Partners, be unlawful. Nextel Partners also
reserves the right to waive any defects, irregularities or conditions of tender
as to particular old notes. Nextel Partners' interpretation of the terms and
conditions of the exchange offer, including the instructions in the letter of
transmittal, will be final and binding on all parties. Unless waived, any
defects of irregularities in connection with tenders of old notes must be cured
within such time as Nextel Partners shall determine. Neither Nextel, the
exchange agent nor any other person shall incur any liability for failure to
give notice of any defect or irregularity with respect to any tender of old
notes. Tender of old notes will not be deemed to have been made until such
defects or irregularities have been cured or waived. Any old notes received by
the exchange agent that are not properly tendered and as to which the defects
or irregularities have not been cured or waived will be returned by the
exchange agent to the tendering holders, unless otherwise provided in the
letter of transmittal, as soon as practicable following the expiration date.
GUARANTEED DELIVERY PROCEDURES
A holder who wishes to tender old notes and:
o whose old notes are not immediately available,
o who cannot deliver the old notes, the letter of transmittal or any
other required documents to the exchange agent prior to the expiration
date, or
o who cannot complete the procedures for book-entry transfer before the
expiration date may effect a tender if
o the tender is made through an eligible guarantor institution,
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<PAGE>
o before the expiration date, the exchange agent receives from the
eligible guarantor institution a properly completed and duly executed
notice of guaranteed delivery by facsimile transmission, mail or hand
delivery setting forth the name and address of the holder, the
certificate number(s) of the old notes and the principal amount of the
old notes tendered, stating that the tender is being made thereby and
guaranteeing that, within three New York Stock Exchange trading days
after the expiration date, the letter of transmittal (or facsimile
thereof) together with the certificate(s) representing the old notes
(or a confirmation of book-entry transfer of the old notes into the
exchange agent's account at The Depository Trust Company), and any
other documents required by the letter of transmittal will be
deposited by the eligible guarantor institution with the exchange
agent, and
o the exchange agent receives, within three New York Stock Exchange
trading days after the expiration date, a properly completed and
executed letter of transmittal or facsimile, as well as the
certificate(s) representing all tendered old notes in proper form for
transfer or a confirmation of book-entry transfer of the old notes
into the exchange agent's account at The Depository Trust Company, and
all other documents required by the letter of transmittal.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of old notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the expiration date of
the exchange offer.
To withdraw a tender of old notes in the exchange offer, a letter or
facsimile transmission notice of withdrawal must be received by the exchange
agent at its address set forth herein prior to 5:00 p.m., New York City time,
on the expiration date. Any notice of withdrawal must:
o specify the name of the person having deposited the old notes to be
withdrawn,
o identify the old notes to be withdrawn, including the certificate
number(s) and principal amount of such old notes, or in the case of
old notes transferred by book-entry transfer, the name and number of
the account at the book-entry transfer facility to be credited, and
otherwise comply with the procedures of the exchange agent,
o be signed by the holder in the same manner as the original signature
on the letter of transmittal by which such old notes were tendered,
including any required signature guarantees, or be accompanied by
documents of transfer sufficient to have the trustee under the
indenture governing the old notes register the transfer of the old
notes into the name of the person withdrawing the tender, and
o specify the name in which any such old notes are to be registered, if
different from that of the person who deposited the notes.
If certificates for old notes have been delivered or otherwise identified
to the exchange agent, then, before the release of the certificates, the
withdrawing holder must also submit the serial numbers of the particular
certificates to be withdrawn and a signed notice of withdrawal with signatures
guaranteed by an eligible guarantor.
All questions as to the validity, form and eligibility, including time of
receipt, of such notices will be determined by Nextel Partners, whose
determination shall be final and binding on all parties. Any old notes so
withdrawn will be deemed not to have been validly tendered for purposes of the
exchange offer, and no new notes will be issued, unless the old
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<PAGE>
notes so withdrawn are validly retendered. Any old notes which have been
tendered but which are not accepted for exchange will be returned to the holder
of the notes without cost to the holder as soon as practicable after
withdrawal, rejection of tender or termination of the exchange offer. Properly
withdrawn old notes may be retendered by following any of the procedures
described above under "--Procedures for Tendering" at any time prior to the
expiration date.
CONDITIONS
Despite any other term of the exchange offer, Nextel Partners shall not be
required to accept for exchange, or exchange new notes for, any old notes, and
may terminate the exchange offer as provided in this prospectus before the
acceptance of such old notes:
(1) if any action or proceeding is instituted or threatened in any court
or by or before any governmental agency with respect to the exchange
offer which, in the reasonable judgment of Nextel Partners, might
materially impair the ability of Nextel Partners to proceed with the
exchange offer or materially impair the contemplated benefits of the
exchange offer to Nextel Partners, or any material adverse development
has occurred in any existing action or proceeding with respect to
Nextel Partners or any of its subsidiaries;
(2) if any change, or any development involving a prospective change, in
the business or financial affairs of Nextel Partners or any of its
subsidiaries has occurred which, in the reasonable judgment of Nextel
Partners, might materially impair the ability of Nextel Partners to
proceed with the exchange offer or materially impair the contemplated
benefits of the exchange offer to Nextel Partners;
(3) if any law, statute, rule or regulation is proposed, adopted or
enacted, which, in the reasonable judgment of Nextel Partners, might
materially impair the ability of Nextel Partners to proceed with the
exchange offer or materially impair the contemplated benefits of the
exchange offer to Nextel Partners; or
(4) if any governmental approval has not been obtained, which approval
Nextel Partners shall, in its reasonable discretion, deem necessary
for the consummation of the exchange offer as contemplated hereby.
The conditions listed above are for the sole benefit of Nextel Partners
and may be asserted by Nextel Partners regardless of the circumstances giving
rise to any of these conditions. Nextel Partners may waive these conditions in
its reasonable discretion in whole or in part from time to time. The failure by
Nextel Partners at any time to exercise any of the above rights shall not be
deemed a waiver of such right and each such right shall be deemed an ongoing
right which may be asserted at any time and from time to time.
If Nextel Partners determines in its reasonable discretion that any of the
conditions are not satisfied, Nextel Partners may:
(1) refuse to accept any old notes and return all tendered old notes to
the tendering holders,
(2) extend the exchange offer and retain all old notes tendered prior to
the expiration of the exchange offer, subject, however, to the rights
of holders to withdraw these old notes (see "--Withdrawal of Tenders"
above), or
(3) waive unsatisfied conditions with respect to the exchange offer and
accept all properly tendered old notes which have not been withdrawn.
If this waiver
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constitutes a material change to the exchange offer, Nextel Partners
will promptly disclose the waiver by means of a prospectus supplement
that will be distributed to the registered holders. Nextel Partners will
also extend the exchange offer for a period of five to ten business
days, depending upon the significance of the waiver and the manner of
disclosure to the registered holders, if the exchange offer would
otherwise expire during such five to ten business day period.
EXCHANGE AGENT
The Bank of New York has been appointed as exchange agent for the exchange
offer. Questions and requests for assistance and requests for additional copies
of this prospectus or of the letter of transmittal should be directed to The
Bank of New York addressed as follows:
For Information by Telephone:
(212) 815-2824
By Hand or Overnight Delivery Service:
The Bank of New York
101 Barclay Street, Floor 7 East
New York, NY 10286
Attention: Tolutope Adeyoju
By Facsimile Transmission:
(212) 815-4699
(Telephone Confirmation)
(212) 815-2824
The Bank of New York also acts as trustee under the indenture governing
the notes.
FEES AND EXPENSES
Nextel Partners will bear the expenses of soliciting. Nextel Partners has
not retained any dealer-manager in connection with the exchange offer and will
not make any payments to brokers, dealers or others soliciting acceptances of
the exchange offer. Nextel Partners, however, will pay the exchange agent
reasonable and customary fees for its services and will reimburse it for its
reasonable out-of-pocket expenses in connection with providing the services.
The cash expenses to be incurred in connection with the exchange offer
will be paid by Nextel Partners. Such expenses include fees and expenses of The
Bank of New York as exchange agent and as trustee under the indenture governing
the notes, accounting and legal fees and printing costs, among others.
ACCOUNTING TREATMENT
The new notes will be recorded at the same carrying value as the old notes
as reflected in Nextel Partners' accounting records on the date of exchange.
Accordingly, no gain or loss for accounting purposes will be recognized by
Nextel Partners. The expenses of the exchange offer and the unamortized
expenses related to the issuance of the old notes will be amortized over the
term of the notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of old notes who are eligible to participate in the exchange offer
but who do not tender their old notes will not have any further registration
rights, and their old notes will continue to be subject to restrictions on
transfer. Accordingly, such old notes may be resold only:
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<PAGE>
o to Nextel Partners, upon redemption of these notes or otherwise,
o so long as the old notes are eligible for resale pursuant to Rule 144A
under the Securities Act, to a person outside the United States whom
the seller reasonably believes is a qualified institutional buyer
within the meaning of Rule 144A in a transaction meeting the
requirements of Rule 144A,
o in accordance with Rule 144 under the Securities Act, or under another
exemption from the registration requirements of the Securities Act,
and based upon an opinion of counsel reasonably acceptable to Nextel
Partners,
o outside the United States to a foreign person in a transaction meeting
the requirements of Rule 904 under the Securities Act, or
o pursuant to an effective registration statement under the Securities
Act,
in each case in accordance with any applicable securities laws of any state of
the United States.
REGULATORY APPROVALS
Nextel Partners does not believe that the receipt of any material federal
or state regulatory approvals will be necessary in connection with the exchange
offer, other than the effectiveness of the exchange offer registration
statement under the Securities Act.
OTHER
Participation in the exchange offer is voluntary and holders of old notes
should carefully consider whether to accept the terms and conditions of this
offer. Holders of the old notes are urged to consult their financial and tax
advisors in making their own decisions on what action to take with respect to
the exchange offer.
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DESCRIPTION OF THE NOTES
The new notes, like the old notes, will be issued under the indenture,
dated January 29, 1999, between Nextel Partners and The Bank of New York, as
trustee. The new notes are the same as the old notes except that the new notes:
o will not bear legends restricting their transfer, and
o will not contain certain terms providing for the payment of liquidated
damages under the circumstances described in the registration rights
agreement.
The indenture and its associated documents contain the full legal text of
the matters described in this section. A copy of the indenture has been filed
with the SEC as part of our registration statement of which this prospectus
forms a part. See "Where You Can Find More Information" on page 24 for
information on how to obtain a copy.
Because this section is a summary, it does not describe every aspect of
the notes. This summary is subject to and qualified in its entirety by
reference to all the provisions of the indenture, including definitions of some
terms used in the indenture. For example, in this section we use capitalized
words to signify defined terms that have been given special meaning in the
indenture. We describe the meaning for only the more important terms, under
"--Certain Definitions." We also include references in parentheses to certain
sections of the indenture. Whenever we refer to particular sections or defined
terms of the indenture in this prospectus, these sections or defined terms are
incorporated by reference into this prospectus.
In this description of the notes, the term "Nextel Partners" refers to
Nextel Partners, Inc. and does not include its subsidiaries except for purposes
of financial data determined on a consolidated basis.
BRIEF DESCRIPTION OF THE NOTES
These notes:
o will be senior unsecured obligations of Nextel Partners;
o will be limited to $1.0 billion in aggregate principal amount at
maturity, of which $800 million in aggregate principal amount at
maturity has been issued;
o will mature on February 1, 2009; and
o will bear interest at the rate of 14% per annum.
Interest will be paid semi-annually on February 1 and August 1 of each
year, commencing August 1, 2004, to the registered holder at the close of
business on the preceding January 15 or July 15.
Interest on the notes will be computed on the basis of a 360-day year of
twelve 30-day months. ( Section Section 3.01, 3.09 and 3.12) Accretion of
original issue discount will be computed on a basis of a 360-day year of twelve
30-day months, compounded semiannually.
METHODS OF RECEIVING PAYMENTS ON THE NOTES
Nextel Partners will pay interest, principal and any other money due on
the notes at the corporate trust office of the trustee in New York City. That
office is currently located at 101 Barclay Street, New York, New York 10286.
You must make arrangements to have your payments picked up at or wired from
that office. Nextel Partners may also choose to pay interest by mailing checks.
( Section Section 3.01 and 10.02)
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The notes will be issued only in fully registered form, without coupons,
in denominations of $1,000 and any integral multiple of $1,000. ( Section 3.02)
You will not be required to pay a service charge to transfer or exchange notes,
but you may be required to pay for any tax or other governmental charge
associated with the exchange or transfer. ( Section 3.05)
RANKING
The notes:
o will be senior unsecured obligations of Nextel Partners;
o will rank equally in right of payment to all existing and future
senior unsecured obligations of Nextel Partners; and
o will rank senior in right of payment to all existing and future
subordinated obligations of Nextel Partners.
Holders of secured obligations of Nextel Partners will, however, have
claims that are prior to the claims of the holders of the notes with respect to
the assets securing those other obligations.
Nextel Partners' principal operations are conducted through its
Subsidiaries, and Nextel Partners is therefore dependent upon the cash flow of
its Subsidiaries to meet its obligations. Nextel Partners' Subsidiaries will
have no obligation to guarantee or otherwise pay amounts due under the notes.
Therefore, the notes will be effectively subordinated to all indebtedness and
other liabilities and commitments, including borrowings under the credit
facility and trade payables, of Nextel Partners' Subsidiaries. Any right of
Nextel Partners to receive assets of any Subsidiary upon any liquidation or
reorganization of that Subsidiary (and the consequent right of holders of the
notes to participate in those assets) will be effectively subordinated to the
claims of the Subsidiary's creditors, except to the extent that Nextel Partners
itself is recognized as a creditor of the Subsidiary. See "Risk Factors--Our
subsidiaries may not be in a position to pay us the cash we need to make
payments on the notes."
As of December 31, 1998, on a pro forma basis after giving effect to the
capitalization transactions which were consummated on January 29, 1999:
o the total amount of outstanding consolidated liabilities of Nextel
Partners and its Subsidiaries, including trade payables, was
approximately $584.9 million, of which $581.4 million were secured
obligations; and
o the total amount of outstanding liabilities of Nextel Partners'
Subsidiaries, including trade payables, were $180.6 million, of which
$175 million were secured obligations.
For more information, see "Description of Credit Facility" and "Selected
Historical and Pro Forma Consolidated Financial Information and Operating
Data."
OPTIONAL REDEMPTION
Nextel Partners may opt to redeem the notes, in whole or in part, at any
time on or after February 1, 2004. If Nextel Partners chooses this optional
redemption, it is required to mail a notice of redemption not less than 30 nor
more than 60 days prior to the redemption to each holder of notes at the
holder's address as it appears in the note register at the redemption prices
set forth below, plus an amount in cash equal to all accrued and unpaid
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interest and any Liquidation Damages, if any, to the redemption date, if
redeemed during the twelve-month period beginning on February 1 of each of the
years set forth below.
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
- --------------------------------------- -----------------
<S> <C>
2004 ................................ 107.000%
2005 ................................ 104.667%
2006 ................................ 102.333%
2007 and thereafter ................. 100.000%
</TABLE>
The prices are expressed as percentages of the principal amount at
maturity of the notes. ( Section Section 2.03, 11.01, 11.05 and 11.07)
Prior to February 1, 2002, Nextel Partners may redeem up to 35% of the
notes at a redemption price of 114% of the Accreted Value of the notes on the
redemption date, plus Liquidated Damages, if any, to the redemption date if:
o Nextel Partners receives net proceeds of at least $75 million from one
or more sales of its Capital Stock (other than Redeemable Stock) prior
to February 1, 2002,
o at least 65% of the aggregate Accreted Value of the notes originally
issued remain outstanding immediately after the redemption; and
o the redemption occurs within 60 days of such sale.
If less than all the notes are to be redeemed, the trustee shall select
the particular notes to be redeemed or any portion thereof that is an integral
multiple of $1,000. The trustee will make this selection on a pro rata basis,
by lot or by such other method as it will deem fair and appropriate.
MANDATORY REDEMPTION; SINKING FUND
Except as described under "--Covenants--Limitation on Asset Sales" and
"--Covenants--Change of Control" below, Nextel Partners is not required to
purchase or make mandatory redemption payments or sinking fund payments with
respect to the notes.
COVENANTS
In the indenture, Nextel Partners agreed to certain restrictions that
limit its and its Restricted Subsidiaries' ability to:
(1) incur additional Debt;
(2) to pay dividends, acquire shares of Nextel Partners, make Investments
or redeem Debt of Nextel Partners which is subordinate in right of payment
to the notes;
(3) designate Unrestricted Subsidiaries;
(4) enter into transactions with Affiliates;
(5) engage in any business other than telecommunications;
(6) create Liens;
(7) pay dividends, to make loans or advances to Nextel Partners or any
other Restricted Subsidiary or to transfer any of its property or assets to
Nextel Partners or any other Restricted Subsidiary;
(8) issue or sell shares of Capital Stock of Restricted Subsidiaries;
and
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(9) make Asset Sales.
In addition, if a Change of Control occurs, each holder of notes will have
the right to require Nextel Partners to repurchase all or part of such holder's
notes at a price equal to 101% of the Accreted Value plus Liquidated Damages,
if any, to any purchase date prior to February 1, 2004 or 101% of the aggregate
principal amount of the notes, plus accrued and unpaid interest and Liquidated
Damages, if any, to any purchase date thereafter. The above limitations are
"restrictive covenants" that are promises that we make to you about how we will
run our business, or business actions that we promise not to take. A more
detailed description of the restrictive covenants and the exceptions to them
follows below.
Limitation on Consolidated Debt
Nextel Partners may not, and may not permit any Restricted Subsidiary to,
Incur any Debt (including Acquired Debt), other than Permitted Debt, unless
immediately after giving effect to the Incurrence of such Debt and the receipt
and application of the net proceeds therefrom (including, without limitation,
the application or use of the net proceeds therefrom to repay Debt or make any
Restricted Payment):
(1) the Consolidated Debt to Annualized Operating Cash Flow Ratio would
be less than 7.0 to 1.0, or
(2) in the case of any incurrence of Debt prior to January 1, 2005 only,
Consolidated Debt would be equal to or less than 80% of Total Invested
Capital. ( Section 10.08)
Limitation on Restricted Payments
Nextel Partners may not:
(1) directly or indirectly, declare or pay any dividend on, or make any
distribution in respect of, its Capital Stock or to holders thereof (in
their capacity as such), excluding any dividends or distributions payable
solely in its shares of Capital Stock (other than Redeemable Stock) or in
options, warrants or other rights to purchase any such Capital Stock (other
than Redeemable Stock);
(2) and may not permit any Restricted Subsidiary to, purchase, redeem or
otherwise acquire or retire for value (other than value consisting solely
of Capital Stock of Nextel Partners that is not Redeemable Stock or
options, warrants or other rights to acquire such Capital Stock that is not
Redeemable Stock), any Capital Stock of Nextel Partners (including options,
warrants or other rights to acquire such Capital Stock);
(3) and may not permit any Restricted Subsidiary to, redeem, repurchase,
defease or otherwise acquire or retire for value, or permit any Restricted
Subsidiary to, directly or indirectly, redeem, repurchase, defease or
otherwise acquire or retire for value (other than value consisting solely
of Capital Stock of Nextel Partners that is not Redeemable Stock or
options, warrants or other rights to acquire such Capital Stock that is not
Redeemable Stock), prior to any scheduled maturity, scheduled repayment or
scheduled sinking fund payment, any Debt that is subordinate (whether
pursuant to its terms or by operation of law) in right of payment to the
notes; or
(4) and may not permit any Restricted Subsidiary to, directly or
indirectly, make any Investment, except for Permitted Investments, in any
Person, other than in a Restricted Subsidiary or a Person that becomes a
Restricted Subsidiary as a result of such Investment (each of clauses (1)
through (4), other than any such action that is a
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Permitted Investment or a Permitted Distribution, being referred to as a
"Restricted Payment") unless, at the time of such Restricted Payment, and
upon giving effect to such Restricted Payment:
(a) no Default or Event of Default has occurred and be continuing;
(b) Nextel Partners would have been permitted to Incur at least $1.00
of additional Debt pursuant to the terms of the indenture described in
clause (2) under the caption "Limitation on Consolidated Debt" above;
and
(c) the aggregate amount of all Restricted Payments made from the
Closing Date does not exceed:
(A) the amount of the Operating Cash Flow of Nextel Partners after
December 31, 2002 through the end of the latest full fiscal quarter
for which consolidated financial statements of Nextel Partners are
available preceding the date of such Restricted Payment (treated as a
single accounting period) less 150% of the cumulative Consolidated
Interest Expense of Nextel Partners after December 31, 2002 through
the end of the latest full fiscal quarter for which consolidated
financial statements of Nextel Partners are available preceding the
date of such Restricted Payment (treated as a single accounting
period), plus
(B) the aggregate net proceeds (other than proceeds from a
Committed Capital Contribution), including the fair market value of
property other than cash, as determined:
(x) in the case of any property other than cash with a value
less than $25.0 million, by Nextel Partners' Board of Directors,
whose good faith determination will be conclusive and as
evidenced by a Board Resolution, or
(y) in the case of any property other than cash with a value
equal to or greater than $25.0 million, by an accounting,
appraisal or investment banking firm of national standing and
evidenced by a written opinion of such firm, received by Nextel
Partners from the issuance and sale (other than to a Restricted
Subsidiary) after the Closing Date of shares of its Capital Stock
(other than Redeemable Stock), or any options, warrants or other
rights to purchase such Capital Stock (other than Redeemable
Stock), other than shares of Capital Stock or options, warrants
or other rights to purchase Capital Stock (or shares issuable
upon exercise thereof), the proceeds of the issuance of which is
used to make a Directed Investment, unless such designation has
been revoked by Nextel Partners' Board of Directors and Nextel
Partners is able to make such Investment pursuant to this
covenant (other than as a Directed Investment), plus
(C) the aggregate net proceeds, including the fair market value of
property other than cash, as determined:
(x) in the case of any property other than cash with a value
less than $25.0 million, by Nextel Partners' Board of Directors,
whose good faith determination will be conclusive and as
evidenced by a Board Resolution, or
(y) in the case of any property other than cash with a value
equal to or greater than $25.0 million, by an accounting,
appraisal or investment banking firm of national standing and
evidenced by a written opinion of such firm, received by Nextel
Partners from the issuance or sale (other than
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to a Restricted Subsidiary) after the Closing Date of any Capital
Stock of Nextel Partners (other than Redeemable Stock), or any
options, warrants or other rights to purchase such Capital Stock
(other than Redeemable Stock), upon the conversion of, or
exchange for, Debt of Nextel Partners or a Restricted Subsidiary.
Nothing contained in this section limits or restricts Nextel Partners from
making of any Permitted Distribution, Permitted Investment or Directed
Investment, and neither a Permitted Distribution or Permitted Investment will
be counted as a Restricted Payment for purposes of clause (c) above.
In addition, the foregoing limitations do not prevent Nextel Partners
from:
(1) paying any dividend on its Capital Stock within 60 days after the
declaration thereof if, on the date when the dividend was declared, Nextel
Partners could have paid such dividend in accordance with the provisions of
the indenture,
(2) repurchasing its Capital Stock (including options, warrants or other
rights to acquire such Capital Stock) from former employees or directors of
Nextel Partners or any Subsidiary thereof for consideration not to exceed:
(a) in the case of all such employees or directors (other than
Itemized Executives), $500,000 in the aggregate in any fiscal year, with
amounts not used in any given fiscal year being carried over into
subsequent fiscal years, and
(b) in the case of any Itemized Executive, $2.0 million per Itemized
Executive (plus the amount of any proceeds of any key man life insurance
received by Nextel Partners in respect to such Itemized Executive) in
any fiscal year, with the aggregate amount of such repurchases not to
exceed $5.0 million in any fiscal year;
provided that the aggregate amount of all such repurchases made pursuant to this
paragraph (2) does not exceed $17.0 million in the aggregate (not including the
amount of any proceeds of key man life insurance received by Nextel Partners in
respect to any Itemized Executive),
(3) the repurchase, redemption or other acquisition for value of Capital
Stock of Nextel Partners to the extent necessary to prevent the loss or
secure the renewal or reinstatement of any license or franchise held by
Nextel Partners or any of its Subsidiaries from any governmental agency,
(4) making a loan in the aggregate principal amount of approximately $2.2
million to certain officers of Nextel Partners as described in this
prospectus (with Restricted Payments pursuant to this clause not being
counted as Restricted Payments for purposes of clause (c) above),
(5) the redemption, repurchase, defeasance or other acquisition or
retirement for value of Indebtedness that is subordinated in right of
payment to the notes, including premium, if any, and accrued and unpaid
interest, with the proceeds of, or in exchange for:
(a) the proceeds of a capital contribution or a substantially
concurrent offering of, shares of Capital Stock of Nextel Partners
(other than Redeemable Stock) or options, warrants or other rights to
acquire such Capital Stock, the proceeds of which are not designated as
a Directed Investment, or
(b) Debt that is at least as subordinated in right of payment to the
notes, including premium, if any, and accrued and unpaid interest, as
the Debt being purchased (with Restricted Payments pursuant to this
paragraph not being counted as Restricted Payments for purposes of
clause (c) above),
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(6) the repurchase, redemption or other acquisition of Capital Stock of
Nextel Partners, or options, warrants or other rights to acquire such
Capital Stock, in exchange for, or out of the proceeds of a capital
contribution or a substantially concurrent offering of, shares of Common
Stock of Nextel Partners (other than Redeemable Stock), or options,
warrants or other rights to acquire such Capital Stock) the proceeds of
which are not designated as a Directed Investment, or
(7) other Restricted Payments not to exceed $5.0 million in the aggregate
at any time outstanding (with Restricted Payments pursuant to this
paragraph not being counted as Restricted Payments for purposes of clause
(c) above).
Notwithstanding the foregoing, no Investment in a Person that immediately
thereafter would be a Restricted Subsidiary will be a Restricted Payment. In
addition, if any Person in which an Investment is made, which Investment
constitutes a Restricted Payment when made, thereafter becomes a Restricted
Subsidiary, all such Investments previously made in such Person will no longer
be counted as Restricted Payments for purposes of calculating the aggregate
amount of Restricted Payments pursuant to clause (c) above or the aggregate
amount of Investments pursuant to paragraph (5)(a) above, in each case to the
extent such Investments would otherwise be so counted.
For purposes of clause (c)(3) above, the net proceeds received by Nextel
Partners from the issuance or sale of its Capital Stock either upon the
conversion of, or exchange for, Debt of Nextel Partners or any Restricted
Subsidiary will be deemed to be an amount equal to:
(a) the sum of the principal amount or accreted value (whichever is
less) of such Debt on the date of such conversion or exchange and the
additional cash consideration, if any, received by Nextel Partners upon
such conversion or exchange, less any payment on account of fractional
shares, minus
(b) all expenses incurred in connection with such issuance or sale.
In addition, for purposes of clause (c)(3) above, the net proceeds
received by Nextel Partners from the issuance or sale of its Capital Stock upon
the exercise of any options or warrants of Nextel Partners or any Restricted
Subsidiary will be deemed to be an amount equal to the additional cash
consideration, if any, received by Nextel Partners upon such exercise, minus
all expenses incurred in connection with such issuance or sale.
For purposes of this "Limitation on Restricted Payments" covenant, if a
particular Restricted Payment involves a non-cash payment, including a
distribution of assets, then such Restricted Payment will be deemed to be an
amount equal to the cash portion of such Restricted Payment, if any, plus an
amount equal to the fair market value of the non-cash portion of such
Restricted Payment, as determined by Nextel Partners' Board of Directors (whose
good faith determination shall be conclusive and evidenced by a Board
Resolution).
The amount of any Investment outstanding at any time will be deemed to be
equal to the amount of such Investment on the date made, less the return of
capital, repayment of loans and return on capital (including interest and
dividends), in each case, received in cash, up to the amount of such Investment
on the date made. ( Section 10.09)
Restricted Subsidiaries
Subject to compliance with the "Limitation on Restricted Payments"
covenant, Nextel Partners' Board of Directors may designate any Restricted
Subsidiary as an Unrestricted Subsidiary.
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The designation by the Board of Directors of a Restricted Subsidiary as an
Unrestricted Subsidiary will, for all purposes of the "Limitation on Restricted
Payments" covenant (including clause (b) thereof), be deemed to be a Restricted
Payment of an amount equal to the fair market value of Nextel Partners'
ownership interest in such Subsidiary (including, without duplication, such
indirect ownership interest in all Subsidiaries of such Subsidiary), as
determined by Nextel Partners' Board of Directors in good faith and evidenced
by a Board Resolution.
Notwithstanding the foregoing provisions of this "Restricted Subsidiaries"
covenant, the Board of Directors may not designate a Subsidiary of Nextel
Partners to be an Unrestricted Subsidiary if, after such designation:
(a) Nextel Partners or any of its other Restricted Subsidiaries:
(i) provides credit support for, or a Guarantee of, any Debt of
such Subsidiary (including any undertaking, agreement or instrument
evidencing such Debt) or
(ii) is directly or indirectly liable for any Debt of such
Subsidiary,
(b) a default with respect to any Debt of such Subsidiary (including
any right which the holders thereof may have to take enforcement action
against such Subsidiary) would permit (upon notice, lapse of time or
both) any holder of any other Debt of Nextel Partners or any Restricted
Subsidiary to declare a default on such other Debt or cause the payment
thereof to be accelerated or payable prior to its final scheduled
maturity, or
(c) such Subsidiary owns any Capital Stock of, or owns or holds any
Lien on any property of, any Restricted Subsidiary which is not a
Subsidiary of the Subsidiary to be so designated.
Nextel Partners' Board of Directors, from time to time, may designate any
Person that is about to become a Subsidiary of Nextel Partners as an
Unrestricted Subsidiary, and may designate any newly-created Subsidiary as an
Unrestricted Subsidiary, if at the time such Subsidiary is created it contains
no assets (other than such de minimis amount of assets then required by law for
the formation of corporations) and no Debt. Subsidiaries of Nextel Partners
that are not designated by Nextel Partners' Board of Directors as Restricted or
Unrestricted Subsidiaries shall be deemed to be Restricted Subsidiaries.
Notwithstanding any provisions of this "Restricted Subsidiaries" covenant, all
Subsidiaries of an Unrestricted Subsidiary shall be Unrestricted Subsidiaries.
( Section 10.10)
Transactions with Affiliates
Nextel Partners may not, and may not permit any Restricted Subsidiary to,
directly or indirectly, enter into any transaction (including the purchase,
sale, lease or exchange of any property or the rendering of any service) or
series of related transactions with any Affiliate of Nextel Partners on terms
that are less favorable to Nextel Partners or such Restricted Subsidiary, as
the case may be, than those which might be obtained at the time of such
transaction from a Person that is not such an Affiliate. However, this
"Transactions with Affiliates" covenant will not limit, or be applicable to:
(1) any transaction between Unrestricted Subsidiaries not involving
Nextel Partners or any Restricted Subsidiary,
(2) any transaction between Nextel Partners and any Restricted Subsidiary
or between Restricted Subsidiaries, or
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(3) any Permitted Transactions.
In addition, any transaction or series of related transactions, other than
Permitted Transactions, between Nextel Partners or any Restricted Subsidiary
and any Affiliate of Nextel Partners (other than a Restricted Subsidiary)
involving an aggregate consideration of $5 million or more must be approved in
good faith by:
(a) a majority of Nextel Partners' Disinterested Directors (of which
there must be at least one) and evidenced by a Board Resolution, or
(b) if there is no Disinterested Director at such time or such
transaction involves aggregate consideration of $25.0 million or more,
by an opinion as to fairness to Nextel Partners or such Subsidiary from
a financial point of view issued by an accounting, appraisal or
investment banking firm of national standing.
For purposes of this "Transactions with Affiliates" covenant, any
transaction or series of related transactions between Nextel Partners or any
Restricted Subsidiary and an Affiliate of Nextel Partners that is approved by a
majority of the Disinterested Directors (of which there must be at least one to
utilize this method of approval) and evidenced by a Board Resolution or for
which a fairness opinion has been issued will be deemed to be on terms as
favorable as those that might be obtained at the time of such transaction (or
series of transactions) from a Person that is not such an Affiliate and thus
will be permitted under this "Transactions with Affiliates" covenant. (
Section 10.11)
Limitation on the Activities of Nextel Partners and its Restricted
Subsidiaries
Nextel Partners may not, and may not permit any Restricted Subsidiary to,
engage in any business other than the telecommunications business and related
activities and services, including such businesses, activities and services as
Nextel Partners and the Restricted Subsidiaries were engaged in on the Closing
Date. ( Section 10.15)
Limitation on Liens
Nextel Partners may not and may not permit any of its Restricted
Subsidiaries to, create, incur, assume or otherwise cause or suffer to exist or
become effective any Lien of any kind (other than Permitted Liens) upon any of
their property or assets, now owned or hereafter acquired, unless all payments
due under the indenture and the notes are secured on an equal and ratable basis
with the obligations so secured until such time as such obligations are no
longer secured by a Lien. ( Section 10.12)
Limitation on Dividend and Other Payment Restrictions Affecting Subsidiaries
Nextel Partners may not, and may not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to:
(1) pay dividends or make any other distributions to Nextel Partners or
any of its Restricted Subsidiaries with respect to its Capital Stock or any
other interest or participation in, or measured by, its profits, or pay any
indebtedness owed to Nextel Partners or any of its Restricted Subsidiaries,
(2) make loans or advances to Nextel Partners or any of its Restricted
Subsidiaries, or
(3) transfer any of its properties or assets to Nextel Partners or any of
its Restricted Subsidiaries.
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However, the foregoing restrictions will not apply to encumbrances or
restrictions existing under or by reason of:
(a) existing Debt as in effect on the date of the indenture,
(b) any Credit Facility as in effect as of the date of the indenture
(or in the case of the New Credit Facility, as initially executed by the
parties thereto), and any amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or
refinancings thereof, provided that such amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements
or refinancings are no more restrictive, taken as a whole, with respect
to such dividend and other payment restrictions than those contained in
such Credit Facility as in effect on the date of the indenture (as
conclusively determined in good faith by Nextel Partners' Board of
Directors and set forth in a Board Resolution),
(c) the indenture and the notes,
(d) applicable law,
(e) any instrument governing Debt and any amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements
or refinancings thereof, provided that such amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacement
or refinancings are no more restrictive, taken as a whole, with respect
to such dividend and payment restrictions other than those contained in
such Debt as in effect on the date of its incurrence by Nextel Partners
or any Restricted Subsidiary (as conclusively determined in good faith
by an executive officer of Nextel Partners) or Capital Stock of a Person
acquired by Nextel Partners or any of its Restricted Subsidiaries as in
effect at the time of such acquisition (except to the extent such Debt
was incurred in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not applicable to any
Person, or the properties or assets of any Person, other than the
Person, or the property or assets of the Person, so acquired, provided
that, in the case of Debt, such Debt was permitted by the terms of the
indenture to be incurred,
(f) customary non-assignment provisions in leases entered into in the
ordinary course of business,
(g) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature described in
clause (3) above on the property so acquired,
(h) any agreement for the sale or other disposition of a Restricted
Subsidiary that restricts distributions by that Subsidiary pending its
sale or other disposition,
(i) Liens securing Debt otherwise permitted to be incurred pursuant to
the provisions of the covenant described above under the caption
"Limitation on Liens" that limit the right of Nextel Partners or any of
its Restricted Subsidiaries to dispose of the assets subject to such
Lien,
(j) provisions with respect to the disposition or distribution of
assets or property in joint venture agreements and other similar
agreements entered into in the ordinary course of business, and
(k) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of
business. ( Section 10.14)
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Limitation on Issuances and Sales of Equity Interests in Wholly Owned
Subsidiaries
Nextel Partners may not and may not permit any of its Restricted
Subsidiary to:
(1) transfer, convey, sell or otherwise dispose of any Capital Stock in
any Wholly Owned Restricted Subsidiary of Nextel Partners to any Person
(other than Nextel Partners or any Wholly Owned Restricted Subsidiary of
Nextel Partners) unless:
(a) such transfer is of all the Capital Stock in such Wholly Owned
Restricted Subsidiary and
(b) the cash Net Proceeds from such transfer are applied in accordance
with the covenant described under the caption "--Limitation on Asset
Sales," and
(2) will not permit any Wholly Owned Restricted Subsidiary of Nextel
Partners to issue any of its Capital Stock (other than, if necessary,
shares of its Capital Stock constituting directors' qualifying shares) to
any Person other than to Nextel Partners or a Wholly Owned Restricted
Subsidiary of Nextel Partners.
The foregoing restrictions shall not apply to:
(1) the creation of Permitted Joint Ventures,
(2) any transfer required by applicable law or regulation,
(3) the issuance of Redeemable Stock that is otherwise permitted to be
issued pursuant to the terms of the indenture, and
(4) transfers in which Nextel Partners or a Restricted Subsidiary
acquires at the same time not less than its proportionate share in such
issuance of Capital
Stock. ( Section 10.20)
Limitation on Asset Sales
Nextel Partners may not, and may not permit any Restricted Subsidiary to,
make any Asset Sale unless:
(1) Nextel Partners or the Restricted Subsidiary, as the case may be,
receives consideration for such Asset Sale at least equal to the fair
market value for the assets or Capital Stock issued or sold or otherwise
disposed of as determined by Nextel Partners' Board of Directors in good
faith and evidenced by a Board Resolution set forth in an Officers'
Certificate delivered to the trustee, which determination shall be
conclusive, and
(2) at least 80% of the consideration for such disposition consists of
cash; provided that the amount of:
(a) any liabilities (as shown on Nextel Partners' or such Restricted
Subsidiary's most recent balance sheet), of Nextel Partners or any
Restricted Subsidiary (other than contingent liabilities and liabilities
that are by their terms subordinated to the notes or any guarantee
thereof) that are assumed by the transferee of any such assets and
(b) any securities, notes or other obligations received by Nextel
Partners or any such Restricted Subsidiary from such transferee that are
contemporaneously (subject to ordinary settlement periods) converted by
Nextel Partners or such Subsidiary into cash (to the extent of the cash
received) shall be deemed to be cash for purposes of this provision.
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At its option, Nextel Partners may, within 360 days after receipt, apply
the Net Proceeds from such Asset Sale:
(1) to repay Debt under a Credit Facility or any Vendor Financing Debt,
(2) to make a capital expenditure in the same or similar line of business
as Nextel Partners is engaged in on the date of the indenture or in a
business reasonably related thereto, or
(3) to acquire Capital Stock of an entity that is or becomes a Restricted
Subsidiary or other long-term assets that are used or useful in the same or
similar line of business as Nextel Partners or such Restricted Subsidiaries
were engaged in on the date of the indenture or in businesses reasonably
related thereto.
Pending the final application of any such Net Proceeds, Nextel Partners
may temporarily reduce revolving credit borrowings or otherwise invest such Net
Proceeds in any manner that is not prohibited by the indenture. Any Net
Proceeds from Asset Sales that are not applied or invested as provided in the
first sentence of this paragraph will be deemed to constitute "Excess
Proceeds."
When the aggregate amount of Excess Proceeds exceeds $5.0 million, Nextel
Partners will be required to make an offer (an "Asset Sale Offer") to all
holders of notes and all holders of other Debt that is pari passu with the
notes containing provisions similar to those set forth in the indenture with
respect to offers to purchase or redeem with the proceeds of sales of assets to
purchase the maximum principal amount at maturity of notes and such other pari
passu Debt that may be purchased out of the Excess Proceeds. The offer price
for such Asset Sale Offer shall be an amount in cash equal to 100% of the
principal amount (or Accreted Value, if applicable) thereof plus accrued and
unpaid interest thereon, if any, to the date of purchase, in accordance with
the procedures set forth in the indenture and the instrument or instruments
governing such other pari passu Debt, respectively.
To the extent that any Excess Proceeds remain after consummation of an
Asset Sale Offer, Nextel Partners may use such Excess Proceeds for any purpose
not otherwise prohibited by the indenture. If the aggregate principal amount of
notes tendered into such Asset Sale Offer surrendered by holders thereof
exceeds the amount of Excess Proceeds, the trustee shall select the notes to be
purchased on a pro rata basis. Upon completion of such offer to purchase, the
amount of Excess Proceeds shall be reset at zero. ( Section 10.22)
Change of Control
Within 30 days of the occurrence of a Change of Control, Nextel Partners
will be required to make an Offer to Purchase all outstanding notes at a cash
purchase price equal to 101% of the Accreted Value of the notes plus Liquidated
Damages, if any purchase date prior to February 1, 2004 or 101% of the
aggregate principal amount at maturity of the notes, plus accrued and unpaid
interest and Liquidated Damages, if any, to the purchase date on or after
February 1, 2004. ( Section 10.13)
Except as described above with respect to a Change of Control, the
indenture does not contain provisions that permit the holders of the notes to
require Nextel Partners to repurchase or redeem the notes in the event of a
takeover, recapitalization or similar restructuring.
Restrictions in the indenture on the ability of Nextel Partners and its
Restricted Subsidiaries to incur additional Indebtedness, to grant Liens on its
or their property, to make Restricted Payments and to make Asset Sales may also
make more difficult or discourage a
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takeover of Nextel Partners, whether favored or opposed by the management of
Nextel Partners. Consummation of any such transaction in certain circumstances
may require redemption or repurchase of the notes, and there can be no
assurance that Nextel Partners or the acquiring party will have sufficient
financial resources to effect such redemption or repurchase. Such restrictions
and the restrictions on transactions with Affiliates may, in certain
circumstances, make more difficult or discourage any leveraged buyout of Nextel
Partners or any of its Subsidiaries by the management of Nextel Partners or
other Persons. While such restrictions cover a variety of arrangements which
have traditionally been used to effect highly leveraged transactions, the
indenture may not afford the holders of notes protection in all circumstances
from the adverse aspects of a highly leveraged transaction, reorganization,
restructuring, merger or similar transaction.
Nextel Partners does not currently have adequate financial resources to
effect such repurchases and repurchase the notes upon a Change of Control and
there can be no assurance that Nextel Partners will have such resources in the
future. The inability of Nextel Partners to repurchase the notes upon a Change
of Control would constitute an Event of Default.
In addition, there may be restrictions contained in instruments evidencing
Indebtedness incurred by Nextel Partners or its Restricted Subsidiaries
permitted under the indenture which restrict or prohibit the ability of Nextel
Partners to effect any repurchase required under the indenture in connection
with a Change of Control.
In the event that Nextel Partners makes an Offer to Purchase the notes,
Nextel Partners intends to comply with any applicable securities laws and
regulations, including any applicable requirements of Section 14(e) of, and
Rule l4e-1 under, the Exchange Act.
Provision of Financial Information
Nextel Partners has agreed that, for so long as any notes remain
outstanding, it will file with the SEC copies of the annual and quarterly
reports and the information, documents, and other reports that Nextel Partners
would have been required to file with the SEC pursuant to Section 13(a) or
15(d) of the Exchange Act if Nextel Partners were subject thereto on or prior
to dates by which Nextel Partners would have been required to file such
document. Nextel Partners also agreed that it will, within 15 days of such
filing, transmit by mail to all holders without cost to such holders and file
with the trustee the required filings. If under the Exchange Act Nextel
Partners is not permitted to file such documents with the SEC, upon written
request of any prospective holder, Nextel Partners shall supply copies of these
documents. ( Section 10.16)
MERGERS, SALES OF ASSETS, ETC.
Nextel Partners may not, in any transaction or series of related
transactions:
(1) merge or consolidate with or into, or sell, assign, convey, transfer
or otherwise dispose of its properties and assets substantially as an
entirety to, any Person, and
(2) permit any of its Restricted Subsidiaries to enter into any such
transaction or series of transactions if such transaction or series of
transactions, in the aggregate, would result in a sale, assignment,
conveyance, transfer or other disposition of the properties and assets of
Nextel Partners and its Restricted Subsidiaries, taken as a whole,
substantially as an entirety to any Person,
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unless:
(a) either:
(A) if the transaction or series of transactions is a consolidation
of Nextel Partners with or a merger of Nextel Partners with or into
any other Person, Nextel Partners shall be the surviving Person of
such merger or consolidation, or
(B) the Person formed by any consolidation with or merger with or
into Nextel Partners, or to which the properties and assets of Nextel
Partners or Nextel Partners and its Restricted Subsidiaries, taken as
a whole, as the case may be, substantially as an entirety are sold,
assigned, conveyed or otherwise transferred shall be a corporation,
partnership, limited liability company or trust organized and
existing under the laws of the United States of America, any state
thereof or the District of Columbia and shall expressly assume by a
supplemental indenture executed and delivered to the trustee, in form
satisfactory to the trustee, all the obligations of Nextel Partners
under the notes and the indenture and, in each case, the indenture,
as so supplemented, shall remain in full force and effect, and
(b) immediately before and immediately after giving effect to such
transaction or series of transactions on a pro forma basis (including
any Debt Incurred or anticipated to be Incurred in connection with or in
respect of such transaction or series of transactions), no Default or
Event of Default shall have occurred and be continuing, and
(c) Nextel Partners or the successor entity to Nextel Partners will,
at the time of such transaction and after giving pro forma effect
thereto as if such transaction had occurred at the beginning of the
applicable period:
(A) have Consolidated Net Worth immediately after the transaction
equal to or greater than the Consolidated Net Worth of Nextel
Partners immediately preceding the transaction and
(B) be permitted to Incur at least $1.00 of additional Debt
pursuant to clause (1) of the covenant described above under
"--Covenants--Limitation on Consolidated Debt."
The foregoing requirements shall not apply to any transaction or series of
transactions involving the sale, assignment, conveyance, transfer or other
disposition of the properties and assets by any Restricted Subsidiary to any
other Restricted Subsidiary, or the merger or consolidation of any Restricted
Subsidiary with or into any other Restricted Subsidiary.
The indenture also provides that Nextel Partners may not, directly or
indirectly, lease all or substantially all of its properties or assets, in one
or more related transactions, to any other Person.
In connection with any consolidation, merger, sale, assignment,
conveyance, transfer or other disposition contemplated by the foregoing
provisions, Nextel Partners shall deliver, or cause to be delivered, to the
trustee, in form and substance reasonably satisfactory to the trustee, an
Officers' Certificate stating that such consolidation, merger, sale,
assignment, conveyance, transfer, or other disposition and the supplemental
indenture in respect thereof (required under clause (a)(B) of the preceding
paragraph) comply with the requirements of the indenture and an opinion of
counsel. Each such Officers' Certificate shall set forth the manner of
determination of Nextel Partners' compliance with clause (c) of the preceding
paragraph.
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For all purposes of the indenture and the notes (including the provisions
described in the two immediately preceding paragraphs and the "Limitation on
Consolidated Debt" and "Restricted Subsidiaries" covenants), Subsidiaries of
any successor entity will, upon such transaction or series of transactions,
become Restricted Subsidiaries or Unrestricted Subsidiaries as provided
pursuant to the "Restricted Subsidiaries" covenant and all Debt of the
successor entity and its Subsidiaries that was not Debt of Nextel Partners and
its Subsidiaries immediately prior to such transaction or series of
transactions shall be deemed to have been Incurred upon such transaction or
series of transactions.
The successor entity shall succeed to, and be substituted for, and may
exercise every right and power of Nextel Partners under the indenture, and the
predecessor company shall be released from all its obligations and covenants
under the indenture and the notes. ( Section Section 8.01 and 8.02)
CERTAIN DEFINITIONS
Set forth below is a summary of some of the definitions used in the
indenture. Reference is made to the indenture for the definition of all such
terms, as well as any other term used herein for which no definition is
provided. ( Section 1.01)
"Accreted Value" of any note as of or to any date of determination means
an amount equal to the sum of:
(1) the issue price of such note as determined in accordance with Section
1273 of the Code plus
(2) the aggregate of the portions of the original issue discount (the
excess of the amounts considered as part of the "stated redemption price at
maturity" of such note within the meaning of Section 1273(a)(2) of the Code
or any successor provisions, whether denominated as principal or interest,
over the issue price of such Note) that shall theretofore have accrued
pursuant to Section 1272 of the Code (without regard to Section 1272(a)(7)
of the Code) from the date of issue of such note to the date of
determination plus
(3) accrued and unpaid interest to the date such Accreted Value is paid
(without duplication of any amount set forth in (2) above) and minus
(4) all amounts theretofore paid in respect of such note, which amounts
are considered as part of the "stated redemption price at maturity" of such
note within the meaning of Section 1273(a)(2) of the Code or any successor
provisions (whether such amounts paid were denominated principal or
interest).
"Acquired Debt" means Debt of a Person:
(1) existing at the time such Person becomes a Restricted Subsidiary or
assumed by Nextel Partners or a Restricted Subsidiary in connection with
the acquisition of assets from such Person, and
(2) secured by a Lien encumbering any asset of such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Person. For purposes of the covenant described under
"--Covenants--Transactions with Affiliates" only, "affiliate" shall be deemed
to include, any Person owning, directly or indirectly, (i) 10% or more of the
outstanding Common Stock of Nextel Partners or (ii) securities having 10% or
more of the total voting power of the Voting Stock of Nextel Partners. For the
purposes
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of this definition, "control" when used with respect to any specified Person
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing. No individual shall be deemed to be controlled by
or under common control with any specified Person solely by virtue of his or
her status as an employee or officer of such specified Person or of any other
Person controlled by or under common control with such specified Person.
"Annualized Operating Cash Flow" means, for any fiscal quarter, the
Operating Cash Flow for such fiscal quarter multiplied by four.
"Asset Sale" means:
(1) the sale, lease, conveyance or other disposition of any assets or
rights (including, without limitation, by way of a sale and leaseback)
other than sales of inventory and obsolete equipment in the ordinary course
of business (provided that the sale, conveyance or other disposition of all
or substantially all of the assets of Nextel Partners and its Restricted
Subsidiaries taken as a whole will be governed by the provisions of the
indenture described above under the caption "--Covenants--Change of
Control" and/or the provisions described above under the caption "--Merger,
Sale of Assets, Etc." and not by the provisions of the Asset Sale
covenant), and
(2) the issue or sale by Nextel Partners or its Restricted Subsidiaries
of Capital Stock of any of Nextel Partners' Subsidiaries
provided in each case, the transaction or a series of related transactions has a
fair market value in excess of $5.0 million or net proceeds in excess of $5.0
million.
The following items shall not be deemed to be Asset Sales:
(a) a transfer of assets by Nextel Partners to a Wholly Owned
Restricted Subsidiary or by a Wholly Owned Restricted Subsidiary to
Nextel Partners or to another Wholly Owned Restricted Subsidiary;
(b) an issuance of Capital Stock by a Wholly Owned Restricted
Subsidiary to Nextel Partners or to another Wholly Owned Restricted
Subsidiary;
(c) a Restricted Payment that is permitted by the covenant described
under "--Covenants--Limitation on Restricted Payments";
(d) Permitted Joint Ventures, and
(e) any License Exchange.
"Average Life" means, at any date of determination with respect to any
Debt, the quotient obtained by dividing:
(1) the sum of the products of the number of years from such date of
determination to the dates of each successive scheduled principal payment
of such Debt and the amount of such principal payment by
(2) the sum of all such principal payments.
"Beneficial Owner" means a beneficial owner as defined in Rules 13d-3 and
13d-5 under the Exchange Act (or any successor rules), including the provision
of such Rules that a person shall be deemed to have beneficial ownership of all
securities that such person has a right to acquire within 60 days, provided
that a person shall not be deemed a beneficial owner of, or to own
beneficially, any securities if such beneficial ownership arises solely as a
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result of a revocable proxy delivered in response to a proxy or consent
solicitation made pursuant to, and in accordance with, the Exchange Act and the
applicable rules and regulations thereunder and is not also then reportable on
Schedule 13D (or any successor schedule) under the Exchange Act.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of Nextel Partners to have been duly adopted by its
Board of Directors (unless the context specifically requires that such
resolution be adopted by a majority of the Disinterested Directors, in which
case by a majority of such directors) and to be in full force and effect on the
date of such certification and delivered to the trustee.
"Capital Lease Obligations" of any Person means the obligations to pay
rent or other amounts under lease of (or other Debt arrangements conveying the
right to use) real or personal property of such Person which are required to be
classified and accounted for as a capital lease or a liability on the face of a
balance sheet of such Person determined in accordance with generally accepted
accounting principles and the amount of such obligations shall be the
capitalized amount thereof in accordance with generally accepted accounting
principles and the stated maturity thereof shall be the date of the last
payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment of a
penalty.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of stock of, or other
ownership interests in, such Person.
"Change of Control" means the occurrence of any of the following events:
(1) any person or group of persons (as such term is used in Section
13(d)(3) of the Exchange Act and the regulations thereunder) other than a
Permitted Holder is or becomes the Beneficial Owner, directly or
indirectly, of more than 50% of the total Voting Stock or Total Common
Equity of Nextel Partners; provided that no Change of Control shall be
deemed to occur pursuant to this clause (1) if the person is a corporation
with outstanding debt securities having a maturity at original issuance of
at least one year and if such debt securities are rated Investment Grade by
S&P or Moody's for a period of at least 90 consecutive days, beginning on
the date of such event (which period will be extended up to 90 additional
days for as long as the rating of such debt securities is under publicly
announced consideration for possible downgrading by the applicable rating
agency); or
(2) Nextel Partners consolidates with, or merges with or into, another
Person other than a Permitted Holder or sells, assigns, conveys, transfers,
leases or otherwise disposes of all or substantially all of its assets to
any Person other than a Permitted Holder, or any Person other than a
Permitted Holder consolidates with, or merges with or into, Nextel
Partners, in any such event pursuant to a transaction in which the
outstanding Voting Stock of Nextel Partners is converted into or exchanged
for cash, securities or other property, other than any such transaction
where:
(a) the outstanding Voting Stock of Nextel Partners is converted into
or exchanged for:
(A) Voting Stock (other than Redeemable Stock) of the surviving or
transferee Person or
(B) cash, securities and other property in an amount which could be
paid by Nextel Partners as a Restricted Payment under the indenture,
and
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(b) immediately after such transaction no person or group of persons
(as such term is used in Section 13(d)(3) of the Exchange Act and the
regulations thereunder) is the Beneficial Owner, directly or indirectly,
of more than 50% of the total Voting Stock or Total Common Equity of the
surviving or transferee Person; provided that no Change of Control shall
be deemed to occur pursuant to this clause (2), if the surviving or
transferee Person or the person referred to in clause (2)(b) is a
corporation with outstanding debt securities having a maturity at
original issuance of at least one year and if such debt securities are
rated Investment Grade by S&P or Moody's for a period of at least 90
consecutive days, beginning on the date of such event (which period will
be extended up to 90 additional days for as long as the rating of such
debt securities is under publicly announced consideration for possible
downgrading by the applicable rating agency); or
(3) during any consecutive two-year period, individuals who at the
beginning of such period constituted the Board of Directors together with:
(a) any directors who are members of the Board of Directors on the
Closing Date,
(b) any new directors whose election by such Board of Directors or
whose nomination for election by the stockholders of Nextel Partners was
approved by a vote of 662/3% of the directors then still in office who
were either directors at the beginning of such period or whose election
or nomination for election was previously so approved, and
(c) any new directors appointed or selected by a Permitted Holder,
whether pursuant to a transaction of a type described in either of the
preceding paragraphs (a) and (b), pursuant to a contractual right or
pursuant to a right granted under Nextel Partners' certificate of
incorporation or by-laws) cease for any reason to constitute a majority
of the Board of Directors then in office; or
(4) the adoption of a plan relating to the liquidation or dissolution of
Nextel Partners.
Any event that would constitute a Change of Control pursuant to clause (1)
or (2) above but for the exceptions thereto shall not be deemed to be a Change
of Control until such time (if any) as the conditions described in such
exceptions cease to have been met.
"Closing Date" means January 29, 1999, the date on which the notes were
originally issued under the indenture.
"Closing Price" on any Trading Day with respect to the per share price of
any shares of Capital Stock means the last reported sale price regular way or,
in case no such reported sale takes place on such day, the average of the
reported closing bid and asked prices regular way, in either case on the New
York Stock Exchange or, if such shares of Capital Stock are not listed or
admitted to trading on such exchange, on the principal national securities
exchange on which such shares are listed or admitted to trading or, if not
listed or admitted to trading on any national securities exchange, on the
Nasdaq Stock Market or, if such shares are not listed or admitted to trading on
any national securities exchange or quoted on the Nasdaq Stock Market but the
issuer is a Foreign Issuer (as defined in Rule 3b-4(b) under the Exchange Act)
and the principal securities exchange on which such shares are listed or
admitted to trading is a Designated Offshore Securities Market (as defined in
Rule 902(a) under the Securities Act), the average of the reported closing bid
and asked prices regular way on such principal exchange, or, if such shares are
not listed or admitted to trading on
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any national securities exchange or quoted on the Nasdaq Stock Market and the
issuer and principal securities exchange do not meet such requirements, the
average of the closing bid and asked prices in the over-the-counter market as
furnished by any New York Stock Exchange member firm of national standing that
is selected from time to time by Nextel Partners for that purpose.
"Code" means the Internal Revenue Code, as amended from time to time, and
the rules and regulations thereunder.
"Committed Capital Contribution" means the irrevocable cash commitments
pursuant to that certain subscription and contribution agreement by and among
Nextel Partners, Nextel WIP Corp., Motorola and the Cash Equity Investors (as
defined therein), as in effect on the date of the indenture.
"Common Stock" of any Person means Capital Stock of such Person that does
not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person, to shares of Capital Stock of any other class of such Person.
"Consolidated Debt" means the aggregate amount of Debt of Nextel Partners
and its Restricted Subsidiaries on a Consolidated basis outstanding at the date
of determination.
"Consolidated Debt to Annualized Operating Cash Flow Ratio" means, as at
any date of determination, the ratio of (i) Consolidated Debt to (ii) the
Annualized Operating Cash Flow of Nextel Partners for the most recently
completed fiscal quarter of Nextel Partners for which financial statements are
available.
"Consolidated Interest Expense" of any Person means, for any period:
(1) the aggregate interest expense and fees and other financing costs in
respect of Debt (including amortization of original issue discount and
non-cash interest payments and accruals),
(2) the interest component in respect of Capital Lease Obligations and
any deferred payment obligations of such Person and its Restricted
Subsidiaries, determined on a Consolidated basis in accordance with
generally accepted accounting principles,
(3) all commissions, discounts, other fees and charges owed with respect
to letters of credit and bankers' acceptance financing and net costs
(including amortizations of discounts) associated with interest rate swap
and similar agreements and with foreign currency hedge, exchange and
similar agreements and
(4) the product of:
(a) all dividend payments, whether or not in cash, on any series of
Preferred Capital Stock of such Person or any of its Restricted
Subsidiaries, other than dividend payments on Capital Stock payable
solely in Capital Stock of Nextel Partners (other than Redeemable Stock)
or to Nextel Partners or its Restricted Subsidiary, times
(b) a fraction, the numerator of which is one and the denominator of
which is one minus the then current combined federal, state and local
statutory tax rate of such Person, expressed as a decimal, in each case,
on a Consolidated basis in accordance with generally accepted accounting
principles.
"Consolidated Net Income" and "Consolidated Net Loss" mean, for any
period, the net income or net loss, as the case may be, of Nextel Partners and
its Restricted Subsidiaries for
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such period, all as determined on a Consolidated basis in accordance with
generally accepted accounting principles, adjusted, to the extent included in
calculating such net income or net loss, as the case may be, by excluding
without duplication:
(1) any after-tax gain or loss attributable to the sale, conversion or
other disposition of assets other than in the ordinary course of business,
(2) any after-tax gains resulting from the write-up of assets and any
loss resulting from the write-down of assets,
(3) any after-tax gain or loss on the repurchase or redemption of any
securities (including in connection with the early retirement or defeasance
of any Debt),
(4) any foreign exchange gain or loss,
(5) all payments in respect of dividends on shares of Preferred Capital
Stock of Nextel Partners,
(6) any other extraordinary, non-recurring or unusual items incurred by
Nextel Partners or any Restricted Subsidiary,
(7) the net income (or loss) of any Person acquired by Nextel Partners or
any Restricted Subsidiary in a pooling-of-interests transaction for any
period prior to the date of such transaction,
(8) all income or losses of Unrestricted Subsidiaries and Persons (other
than Subsidiaries) accounted for by Nextel Partners using the equity method
of accounting, and
(9) the net income (but not net loss) of any Restricted Subsidiary which
is subject to any judgment, decree, order or governmental regulation which
prevent the payment of dividends or the making of distributions to Nextel
Partners but only to the extent of such restrictions.
"Consolidated Net Income (Loss)" means, for any period, Nextel Partners'
Consolidated Net Income or Consolidated Net Loss for such period, as
applicable.
"Consolidated Net Worth" of any Person means the consolidated
stockholders' equity of such Person, determined on a consolidated basis in
accordance with generally accepted accounting principles, less amounts
attributable to Redeemable Stock of such Person; provided that, with respect to
Nextel Partners, no effect shall be given to adjustments following the Closing
Date to the accounting books and records of Nextel Partners in accordance with
Accounting Principles Board Opinions Nos. 16 and 17 (or successor opinions
thereto) or otherwise resulting from the acquisition of control of Nextel
Partners by another Person.
"Consolidation" means the consolidation of the accounts of each of the
Restricted Subsidiaries with those of Nextel Partners, if and to the extent
that the accounts of each such Restricted Subsidiary would normally be
consolidated with those of Nextel Partners in accordance with generally
accepted accounting principles; provided, however, that "Consolidation" shall
not include consolidation of the accounts of any Unrestricted Subsidiary, but
the interest of Nextel Partners or any Restricted Subsidiary in any
Unrestricted Subsidiary shall be accounted for as an investment. The term
"Consolidated" has a correlative meaning.
"Credit Facility" means any credit facility (whether a term or revolving
type or both, including the New Credit Facility) or letter of credit facility
of the type customarily entered
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into with banks or any Hedging Agreement (as defined), between Nextel Partners
and/or any of its Restricted Subsidiaries, on the one hand, and any banks or
other lenders or affiliates thereof, on the other hand (and any renewals,
refundings, extensions or replacements of any such credit facility), which
credit facility is designated by Nextel Partners as a "Credit Facility" for
purposes of the indenture, and shall include all such credit facilities in
existence on the Closing Date whether or not so designated.
"Debt" means (without duplication), with respect to any Person, whether
recourse is to all or a portion of the assets of such Person and whether or not
contingent:
(1) every obligation of such Person for money borrowed, including without
limitation, in each case, premium, interest (including interest accruing
subsequent to the filing of, or which would have accrued but for the filing
of, a petition for bankruptcy, whether or not such interest is an allowable
claim in such bankruptcy proceeding), fees and expenses relating thereto,
(2) every obligation of such Person evidenced by bonds, debentures, notes
or other similar instruments, including obligations Incurred in connection
with the acquisition of property, assets or businesses,
(3) every reimbursement obligation of such Person with respect to letters
of credit, bankers' acceptances or similar facilities issued for the
account of such Person,
(4) every obligation of such Person issued or assumed as the deferred
purchase price of property or services (but excluding trade accounts
payable or accrued liabilities arising in the ordinary course of business
which are not overdue or which are being contested in good faith),
(5) every Capital Lease Obligation of such Person,
(6) the maximum fixed redemption or repurchase price of Redeemable Stock
of such Person at the time of determination plus accrued but unpaid
dividends,
(7) every obligation of such Person under interest rate swap or similar
agreements or foreign currency hedge, exchange or similar agreements of
such Person (collectively, "Hedging Agreements"), and
(8) every obligation of the type referred to in clauses (1) through (7)
of another Person and all dividends of another Person the payment of which,
in either case, such Person has Guaranteed or is liable, directly or
indirectly, as obligor, Guarantor or otherwise.
The amount of Debt of any Person issued with original issue discount is the
face amount of such Debt less the unamortized portion of the original issue
discount of such Debt at the time of its issuance as determined in conformity
with generally accepted accounting principles, and money borrowed at the time
of the Incurrence of any Debt in order to pre-fund the payment of interest on
such Debt shall be deemed not to be "Debt". The amount of Debt represented by
an obligation under an agreement referred to in clause (7) shall be equal to:
(a) zero if such obligation has been Incurred under clause (5)(b) of
the definition of Permitted Debt and
(b) the notional amount of such obligation if it is not so Incurred.
"Default" means an event that is, or after notice or passage of time, or
both, would be, an Event of Default.
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"Default Amount" means, in respect of any note:
(1) as of any particular date prior to February 1, 2004, the Accreted
Value of the note as of such date or
(2) as of any particular date on and after February 1, 2004, 100% of the
principal amount payable in respect of the note at the Stated Maturity
thereof.
"Directed Investment" by Nextel Partners or any of its Restricted
Subsidiaries means any Investment for which the cash or property used for such
Investment is received by Nextel Partners from the issuance and sale (other
than to a Restricted Subsidiary) on or after the date of the Indenture of
shares of its Capital Stock (other than any of the Preferred Stock), or any
options, warrants or other rights to purchase such Capital Stock (other than
any of the Preferred Stock) designated by Nextel Partners' Board of Directors
as a "Directed Investment" to be used for one or more specified investments in
the telecommunications business (including related activities and services) and
is so designated and used at any time within 365 days after the receipt
thereof; provided that the aggregate amount of any such Directed Investments
may not at any time exceed fifty percent (50%) of the aggregate amount of such
cash or property received by Nextel Partners on or after the date of the
indenture from any such issuance and sale or capital contribution; and provided
further that any proceeds from any such issuance or sale may not be used for
such an Investment if such proceeds were, prior to being designated for use as
a Directed Investment, used to make a Restricted Payment.
"Disinterested Director" means, with respect to any proposed transaction
between Nextel Partners and an Affiliate thereof, a member of Nextel Partners'
Board of Directors who is not an officer or employee of Nextel Partners, would
not be a party to, or have a financial interest in, such transaction and is not
an officer, director or employee of, and does not have a financial interest in,
such Affiliate. For purposes of this definition, no person would be deemed not
to be a Disinterested Director solely because such person holds Capital Stock
of Nextel Partners.
"DLJMB" means DLJ Merchant Banking Partners II, L.P. and its Affiliates.
"Exchange Notes" means the new notes of Nextel Partners that may be
exchanged for the notes pursuant to a registration rights agreement.
"Fair Market Value" means, for purposes of clause (1) of the "Limitation
on Consolidated Debt" covenant, the price that would be paid in an arm's-length
transaction between an informed and willing seller under no compulsion to sell
and an informed and willing buyer under no compulsion to buy, as determined in
good faith by Nextel Partners' Board of Directors, whose determination shall be
conclusive if evidenced by a Board Resolution, provided that:
(a) the Fair Market Value of any security registered under the
Exchange Act shall be the average of the closing prices, regular way, of
such security for the 20 consecutive trading days immediately preceding
the sale of Capital Stock and
(b) in the event the aggregate Fair Market Value of any other property
received by Nextel Partners exceeds $10 million, the Fair Market Value
of such property shall be determined in good faith by Nextel Partners'
Board of Directors, including a majority of the Disinterested Directors
who are then members of such Board of Directors, which determination
shall be conclusive if evidenced by a Board Resolution.
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"Guarantee" by any Person means any obligation, contingent or otherwise,
of such Person guaranteeing any Debt of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, and including any
obligation of such Person:
(1) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or to purchase (or to advance or supply funds for the
purchase of) any security for the payment of such Debt,
(2) to purchase property, securities or services for the purpose of
assuring the holder of such Debt of the payment of such Debt, or
(3) to maintain working capital, equity capital or other financial
statement condition or liquidity of the primary obligor so as to enable the
primary obligor to pay such Debt (and "Guaranteed", "Guaranteeing" and
"Guarantor" shall have meanings correlative to the foregoing);
provided, however, that the Guarantee by any Person shall not include
endorsements by such Person for collection or deposit, in either case, in the
ordinary course of business.
"Incur" means, with respect to any Debt or other obligation of any Person,
to create, issue, incur (by conversion, exchange or otherwise), assume
(pursuant to a merger, consolidation, acquisition or other transaction),
Guarantee or otherwise become liable in respect of such Debt or other
obligation or the recording, as required pursuant to generally accepted
accounting principles or otherwise, of any such Debt or other obligation on the
balance sheet of such Person (and "Incurrence" and "Incurred" shall have
meanings correlative to the foregoing); provided, however, that a change in
generally accepted accounting principles that results in an obligation of such
Person that exists at such time becoming Debt shall not be deemed an Incurrence
of such Debt; provided further, however, that the accretion of original issue
discount on Debt shall not be deemed to be an Incurrence of Debt. Debt
otherwise Incurred by a Person before it becomes a Subsidiary of Nextel
Partners shall be deemed to have been Incurred at the time it becomes such a
Subsidiary.
"Investment" by any Person means any direct or indirect loan, advance or
other extension of credit or capital contribution to (by means of transfers of
cash or other property to others or payments for property or services for the
account or use of others, or otherwise), or purchase or acquisition of Capital
Stock, bonds, notes, debentures or other securities or evidence of Debt issued
by, any other Person or the designation of a Subsidiary as an Unrestricted
Subsidiary; provided that a transaction will not be an Investment to the extent
it involves:
(1) the issuance or sale by Nextel Partners of its Capital Stock (other
than Redeemable Stock), including options, warrants or other rights to
acquire such Capital Stock (other than Redeemable Stock),
(2) a transfer, assignment or contribution by Nextel Partners of shares
of Capital Stock (or any options, warrants or rights to acquire Capital
Stock), or all or substantially all of the assets of, any Unrestricted
Subsidiary of Nextel Partners to another Unrestricted Subsidiary of Nextel
Partners, or
(3) extensions of trade credit by Nextel Partners and its Restricted
Subsidiaries on commercially reasonable terms in the ordinary course of
business and consistent with their normal practice.
"Investment Grade" means a rating of at least BBB-, in the case of S&P, or
Baa3, in the case of Moody's.
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"Itemized Executive" means any of the following individuals: (i) John
Chapple; (ii) John Thompson; (iii) David Thaler; (iv) David Aas; (v) Perry
Satterlee; and (vi) Mark Fanning.
"License Exchange" means:
(1) any exchange of Licenses between Nextel Partners and Nextel or any
Affiliates of Nextel which Nextel Partners' Board of Directors determines
in good faith, on the date of such exchange, are, in the aggregate, of at
least equivalent value; provided, however, that the aggregate value of all
such Licenses exchanged pursuant to this clause (1) shall not exceed $25.0
million, or
(2) any transaction pursuant to which Nextel Partners transfers certain
of its Licenses to Nextel or any Affiliates of Nextel in exchange for
Licenses from a third party, the purchase price for which was funded by
Nextel or any Affiliates of Nextel; provided, however, that the aggregate
value of all such Licenses exchanged pursuant to this clause (2) shall not
exceed $25.0 million.
"Licenses" means SMR licenses granted by the FCC that entitle the holder
to use the radio channels covered thereby, subject to compliance with FCC rules
and regulations, in connection with the SMR business.
"Lien" means, with respect to any property or assets, any mortgage or deed
of trust, pledge, hypothecation, assignment, deposit arrangement, security
interest, lien, charge, easement, encumbrance, preference, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever
on or with respect to such property or assets (including any conditional sale
or other title retention agreement having substantially the same economic
effect as any of the foregoing).
"Liquidated Damages" means all liquidated damages then owing pursuant to
section 5 of the registration rights agreement.
"Marketable Securities" means:
(1) securities either issued directly or fully guaranteed or insured by
the government of the United States of America or any agency or
instrumentality thereof having maturities of not more than one year;
(2) time deposits and certificates of deposit, having maturities of not
more than six months from the date of deposit, of any domestic commercial
bank having capital and surplus in excess of $500 million and having
outstanding long-term debt rated A or better (or the equivalent thereof) by
S&P or Aaa or better (or the equivalent thereof) by Moody's;
(3) commercial paper rated A-1 or the equivalent thereof by S&P or P-1 or
the equivalent thereof by Moody's, and in each case maturing within one
year;
(4) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (1) above; and
(5) investments in money market funds substantially all of whose assets
comprise securities of the types described in clauses (1) through (4).
"Moody's" means Moody's Investors Service, Inc. or, if Moody's Investors
Service, Inc. shall cease rating debt securities having a maturity at original
issuance of at least one year and such ratings business shall have been
transferred to a successor Person, such successor Person; provided, however,
that if Moody's Investors Service, Inc. ceases rating debt securities having a
maturity at original issuance of at least one year and its ratings business
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with respect thereto shall not have been transferred to any successor Person,
then "Moody's" shall mean any other national recognized rating agency (other
than S&P) that rates debt securities having a maturity at original issuance of
at least one year and that shall have been designated by Nextel Partners by a
written notice given to the trustee.
"Net Proceeds" means the aggregate cash proceeds received by Nextel
Partners or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of:
(1) the direct costs relating to such Asset Sale (including, without
limitation, legal, accounting, appraisal, investment banking fees, and
sales and brokerage commissions),
(2) any relocation expenses incurred as a result thereof,
(3) taxes paid or payable as a result thereof,
(4) amounts required to be applied to the repayment of Debt secured by a
Lien on the asset or assets that were the subject of such Asset Sale,
(5) amounts required to be paid in order to obtain a necessary consent to
such Asset Sale,
(6) distributions made to minority interest holders, based on their pro
rata ownership, in Subsidiaries or Permitted Joint Ventures of such Person
as a result of an Asset Sale by such Subsidiaries or Permitted Joint
Ventures, and
(7) appropriate amounts to be provided by such Person or any Subsidiary
thereof, as the case may be, as a reserve in accordance with generally
accepted accounting principles against any liabilities associated with such
assets that are the subject thereof, as the case may be, after such Asset
Sale, including liabilities under any indemnification obligations and
severance and other employee termination costs associated with such Asset
Sale, in each case, as conclusively determined by the board of directors of
such Person.
"New Credit Facility" means that certain credit agreement, dated as of the
Closing Date, by and among Nextel Partners and or its Subsidiaries and a
syndicate of banks and other financial institutions led by Donaldson, Lufkin &
Jenrette Securities Corporation, as arranger, DLJ Capital Funding, as
syndication agent and the Bank of Montreal, as administrative agent, governing
a $175.0 million term loan facility and $100.0 million revolving credit
facility, and Hedging Agreements with Persons that were lenders under the New
Credit Facility (or were affiliates of such lenders) at the time such Hedging
Agreements were entered into, including any related notes, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, as such credit agreement, Hedging Agreements and/or related
documents may be amended, restated, supplemented, renewed, replaced or
otherwise modified from time to time whether or not with the same agent or
lenders and irrespective of any changes in the terms and conditions thereof.
"Offer to Purchase" means a written offer (the "Offer") sent by Nextel
Partners by first class mail, postage prepaid, to each holder at the address
appearing in the security register maintained by the trustee (the "Security
Register") on the date of the Offer offering to purchase the notes at the
purchase price specified in such Offer (as determined pursuant to the
indenture). Unless otherwise required by applicable law, the Offer will specify
an expiration date (the "Expiration Date") of the Offer to Purchase which shall
be, subject to any contrary requirements of applicable law, not less than 30
days or more than 60 days after
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the date of such Offer and a settlement date (the "Purchase Date") for purchase
of notes within five Business Days after the Expiration Date. Nextel Partners
will notify the trustee at least 15 days (or such shorter period as is
acceptable to the trustee), prior to the mailing of the Offer of Nextel
Partners' obligation to make an Offer to Purchase, and the Offer will be mailed
by Nextel Partners or, at Nextel Partners' request, by the trustee, in the name
and at the expense of Nextel Partners. The Offer will contain information
concerning the business of Nextel Partners and its Subsidiaries which, at a
minimum, will include:
(1) the most recent annual and quarterly financial statements and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" contained in the documents required to be filed with the
Trustee pursuant to the indenture (which requirements may be satisfied by
delivery of such documents together with the Offer),
(2) a description of material developments in Nextel Partners' business
subsequent to the date of the latest of such financial statements referred
to in clause (1) (including a description of the events requiring Nextel
Partners to make the Offer to Purchase),
(3) if required under applicable law, pro forma financial information
concerning, among other things, the Offer to Purchase and the events
requiring Nextel Partners to make the Offer to Purchase and
(4) any other information required by applicable law to be included
therein.
The Offer will contain all instructions and materials necessary to enable such
holders to tender their notes pursuant to the Offer to Purchase.
The Offer shall also state:
(a) the section of the indenture pursuant to which the Offer to
Purchase is being made;
(b) the Expiration Date and the Purchase Date;
(c) the aggregate principal amount at Stated Maturity of the
outstanding notes offered to be purchased by Nextel Partners pursuant to
the Offer to Purchase (the "Purchase Amount");
(d) the purchase price to be paid by Nextel Partners for each $1,000
principal amount at Stated Maturity of notes accepted for payment (as
specified pursuant to the Indenture) (the "Purchase Price");
(e) that the holder may tender all or any portion of the notes
registered in the name of such holder and that any portion of notes
tendered must be tendered in an integral multiple of $1,000 of principal
amount at Stated Maturity;
(f) the place or places where the notes are to be surrendered for
tender pursuant to the Offer to Purchase;
(g) that interest, if any, on any notes not tendered or tendered but
not purchased by Nextel Partners pursuant to the Offer to Purchase will
continue to accrue;
(h) that on the Purchase Date the Purchase Price will become due and
payable upon each note being accepted for payment pursuant to the Offer
to Purchase;
(i) that each holder electing to tender notes pursuant to the Offer to
Purchase will be required to surrender such notes at the place or places
specified in the Offer prior to the close of business on the Expiration
Date (such notes being, if Nextel
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Partners or the trustee so requires, duly endorsed by, or accompanied by
a written instrument of transfer in form satisfactory to Nextel Partners
and the trustee duly executed by the holder thereof or his attorney duly
authorized in writing);
(j) that holders will be entitled to withdraw all or any portion of
the notes tendered if Nextel Partners (or its Paying Agent) receives,
not later than the close of business on the Expiration Date, a facsimile
transmission or letter setting forth the name of the holder, the
principal amount at Stated Maturity of the notes the holder tendered,
the certificate number of the notes the holder tendered and a statement
that such holder is withdrawing all or a portion of his tender;
(k) that Nextel Partners will purchase all such notes duly tendered
and not withdrawn pursuant to the Offer to Purchase; and
(l) that in the case of any holder whose notes are purchased only in
part, Nextel Partners will execute, and the trustee will authenticate
and deliver to the holder of such notes without service charge, new
notes of any authorized denomination as requested by such holder, in an
aggregate principal amount at Stated Maturity equal to and in exchange
for the unpurchased portion of the aggregate principal amount at Stated
Maturity of the notes so tendered.
Any Offer to Purchase will be governed by and effected in accordance with the
Offer for such Offer to Purchase.
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, the President or Vice President, and by the Treasurer, an Assistant
Treasurer, the Secretary, or an Assistant Secretary, of Nextel Partners, and
delivered to the trustee.
"Operating Cash Flow" means, for any fiscal quarter:
(1) Nextel Partners' Consolidated Net Income (Loss) plus depreciation,
amortization and other non-cash charges in respect thereof for such fiscal
quarter, plus
(2) all amounts deducted in calculating Consolidated Net Income (Loss)
for such fiscal quarter in respect of Consolidated Interest Expense, and
all income taxes, whether or not deferred, applicable to such income
period, all as determined on a Consolidated basis in accordance with
generally accepted accounting principles.
For purposes of calculating Operating Cash Flow for the fiscal quarter most
recently completed for which financial statements are available prior to any
date on which an action is taken that requires a calculation of the Operating
Cash Flow to Consolidated Interest Expense Ratio or Consolidated Debt to
Annualized Cash Flow Ratio:
(A) any Person that is a Restricted Subsidiary on such date (or
would become a Restricted Subsidiary in connection with the
transaction that requires the determination of such ratio) will be
deemed to have been a Restricted Subsidiary at all times during such
fiscal quarter,
(B) any Person that is not a Restricted Subsidiary on such date (or
would cease to be a Restricted Subsidiary in connection with the
transaction that requires the determination of such ratio) will be
deemed not to have been a Restricted Subsidiary at any time during
such fiscal quarter, and
(C) if Nextel Partners or any Restricted Subsidiary shall have in
any manner acquired (including through commencement of activities
constituting such operating business) or disposed (including through
termination or
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discontinuance of activities constituting such operating business) of
any operating business during or subsequent to the most recently
completed fiscal quarter, such calculation will be made on a pro
forma basis on the assumption that such acquisition or disposition
had been completed on the first day of such completed fiscal quarter
and may give effect to projected quantifiable improvements in
operating results (on an annualized basis) due to cost reductions
calculated in accordance with Regulation S-X of the Securities Act
and evidenced by:
(x) in the case of cost reductions of less than $10.0 million,
an Officers' Certificate delivered to the trustee, and
(y) in the case of cost reductions of $10.0 million or more, a
resolution of Nextel Partners' Board of Directors set forth in an
Officers' Certificate delivered to the trustee.
"Paying Agent" means any Person authorized by Nextel Partners to pay the
principal of (and premium, if any) or interest on any notes on behalf of Nextel
Partners.
"Permitted Debt" means:
(1) any Debt (including Guarantees thereof) outstanding on the Closing
Date (including the old notes and the new notes) and any accretion of
original issue discount and accrual of interest with respect to such Debt;
(2) any additional Debt outstanding under a Credit Facility in aggregate
principal amount at any one time outstanding under this clause (2) not to
exceed $325.0 million in the aggregate for all such credit facilities, less
permanent repayments of Debt under such Credit Facilities made by Nextel
Partners or any of its Restricted Subsidiaries pursuant to the covenant
described above under the caption "Asset Sales";
(3) any Vendor Financing Debt in an aggregate principal amount
outstanding at any time not to exceed $100.0 million;
(4) Debt to Nextel Partners or to any Restricted Subsidiary; provided
that any event which results in any such Restricted Subsidiary ceasing to
be a Restricted Subsidiary or any subsequent transfer of such Debt (other
than to Nextel Partners or another Restricted Subsidiary) will be deemed,
in each case, to constitute an Incurrence of such Debt not permitted by
this clause (4);
(5) Debt:
(a) in respect of performance, surety or appeal bonds or bankers'
acceptances provided in the ordinary course of business,
(b) under foreign currency hedge, foreign currency exchange, interest
rate swap or similar agreements; provided that such agreements:
(A) are designed solely to protect Nextel Partners or its
Restricted Subsidiaries against fluctuations in foreign currency
exchange rates or interest rates and
(B) do not increase the Debt of the obligor outstanding at any time
other than as a result of fluctuations in foreign currency exchange
rates or interest rates or by reason of fees, indemnities and
compensation payable thereunder; and
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(c) arising from agreements providing for indemnification, adjustment
of purchase price or similar obligations, or from Guarantees or letters
of credit, surety bonds or performance bonds securing any obligations of
Nextel Partners or any Restricted Subsidiary pursuant to such
agreements, in any case Incurred in connection with the disposition of
any business, assets or Restricted Subsidiary (other than Guarantees of
Debt Incurred by any Person acquiring all or any portion of such
business, assets or Restricted Subsidiary for the purpose of financing
such acquisition), in a principal amount not to exceed the gross
proceeds actually received by Nextel Partners or any Restricted
Subsidiary in connection with such disposition;
(6) renewals, refundings or extensions of any Debt referred to in clause
(1) or (3) above or Incurred pursuant to clause (2) under the caption
"Limitation on Consolidated Debt" and any renewals, refundings or
extensions thereof, plus:
(a) the amount of any premium reasonably determined by Nextel Partners
as necessary to accomplish such renewal, refunding or extension and
(b) such other fees and expenses of Nextel Partners reasonably
incurred in connection with the renewal, refunding or extension,
provided that such renewal, refunding or extension shall constitute
Permitted Debt only:
(A) to the extent that it does not result in an increase in the
aggregate principal amount (or, if such Debt provides for an amount
less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the maturity thereof, in an amount not
greater than such lesser amount) of such Debt (except as permitted by
paragraphs (a) or (b) above), and
(B) to the extent such renewed, refunded or extended Debt does not
have a mandatory redemption date prior to the mandatory redemption
date of the Debt being renewed, refunded or extended or have an
Average Life shorter than the remaining Average Life of the Debt
being renewed, refunded or extended;
(7) Debt payable solely in, or mandatorily convertible into, Capital
Stock (other than Redeemable Stock) of Nextel Partners;
(8) all new notes issued pursuant to the terms of the registration rights
agreement for the notes;
(9) Debt (in addition to Debt permitted under clauses (1) through (8)
above) in an aggregate principal amount outstanding at any time not to
exceed $50.0 million.
In the event that an item of Indebtedness meets the criteria of more than
one of the types of Indebtedness specified in the above clauses (1) through
(9), Nextel Partners shall have the right, at any time in its sole discretion,
to classify such item as one of the types and shall only be required to include
such item under the clause permitting such Indebtedness as so classified.
"Permitted Distribution" of a Person means:
(1) the exchange by such Person of Capital Stock (other than Redeemable
Stock) for outstanding Capital Stock; and
(2) the redemption, repurchase, defeasance or other acquisition or
retirement for value of Debt of Nextel Partners that is subordinate in
right of payment to the notes,
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in exchange for (including any such exchange pursuant to the exercise of a
conversion right or privilege in connection with which cash is paid in lieu of
the issuance of fractional shares or scrip), or out of the proceeds of a
substantially concurrent issue and sale (other than to a Restricted Subsidiary)
of, either:
(a) Capital Stock of Nextel Partners (other than Redeemable Stock) or
(b) Debt of Nextel Partners that is subordinate in right of payment to
the notes on subordination terms no less favorable to the holders of the
notes in their capacities as such than the subordination terms (or other
arrangement) applicable to the Debt that is redeemed, repurchased,
defeased or otherwise acquired or retired for value, provided that, such
new Debt does not mature prior to the Stated Maturity or have a
mandatory redemption date prior to the mandatory redemption date of
the Debt being redeemed, repurchased, defeased or otherwise acquired
or retired for value or have an Average Life shorter than the
remaining Average Life of the Debt being redeemed, repurchased,
defeased or otherwise acquired or retired for value.
"Permitted Holder" means each of:
(1) Nextel Communications, Inc., and any entity or entities controlled
by, directly or indirectly, Nextel Communications, Inc.
(2) Craig O. McCaw and any entity or entities:
(A) controlled, directly or indirectly, by Craig O. McCaw or the
estate of Craig O. McCaw and
(B) a majority of the equity interests of which are owned, directly
or indirectly, by Craig O. McCaw and his family, his brothers and
estates of, or trusts for the primary benefit of, the foregoing
persons,
(3) Motorola, Inc.,
(4) DLJMB, and any of their respective Affiliates and the respective
successors (by merger, consolidation, transfer or otherwise) to all or
substantially all of the respective businesses and assets of any of the
foregoing, and
(5) any "person" or "group" (as such terms are used in Section 13(d) and
14(d) of the Exchange Act) controlled by one or more persons identified in
clauses (1) through (4) of this definition.
"Permitted Investment" means any Investment in Marketable Securities or a
Permitted Joint Venture.
"Permitted Joint Venture" means any joint venture entered into by Nextel
Partners or any of its Restricted Subsidiaries with a third party:
(1) for the purpose of financing the acquisition or lease of
telecommunications towers for use in the Nextel Partners' markets; provided
that the aggregate value of all assets contributed by Nextel Partners or
any of its Restricted Subsidiaries to any joint venture pursuant to this
clause (1) shall not exceed $15.0 million (as determined in good faith by
Nextel Partners' Board of Directors) or
(2) in which Nextel Partners or any of its Restricted Subsidiaries:
(a) is responsible for the managerial control of such joint venture
and
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(b) owns at least 40% of the outstanding Capital Stock of such joint
venture; provided that such joint venture, together with all other
Permitted Joint Ventures described in this clause (2), does not cover or
service more than 10.0% of the POPs (computed by including only a
percentage of the total POPs equal to Nextel Partners' percentage
ownership in that joint venture) covered by Nextel Partners at the date
of determination (as determined in good faith by the board of
directors).
"Permitted Liens" means:
(1) Liens securing Debt or other monetary obligations under a Credit
Facility to the extent the principal amount of such obligations was
permitted by the terms of the indenture to be Incurred;
(2) Liens in favor of Nextel Partners or a Wholly Owned Restricted
Subsidiary;
(3) Liens on property of a Person existing at the time such Person is
merged with or into or consolidated with Nextel Partners or any Subsidiary
of Nextel Partners; provided that such Liens were in existence prior to the
contemplation of such merger or consolidation and do not extend to any
assets other than those of the Person merged into or consolidated with
Nextel Partners;
(4) Liens on property existing at the time of acquisition thereof by
Nextel Partners or any Subsidiary of Nextel Partners, provided that such
Liens were in existence prior to the contemplation of such acquisition;
(5) Liens to secure the performance of statutory obligations, surety or
appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business;
(6) Liens to secure Indebtedness (including Capital Lease Obligations)
permitted by clause (3) of the definition of "Permitted Debt";
(7) Liens existing on the date of the indenture;
(8) Liens for taxes, assessments or governmental charges or claims that
are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded,
provided that any reserve or other appropriate provision as will be
required to be in conformity with generally accepted accounting principles
shall have been made therefor;
(9) Liens (including zoning restrictions, servitudes, easements and
rights-of-way) incurred in the ordinary course of business of Nextel
Partners or its Subsidiary that:
(a) are not incurred in connection with the borrowing of money or the
obtaining of advances or credit (other than trade credit in the ordinary
course of business) and
(b) do not in the aggregate materially detract from the value of the
property or materially impair the use thereof in the operation of
business by Nextel Partners or such Subsidiary;
(10) Liens of a lessor under a lease (other than a capitalized lease);
(11) Liens not otherwise permitted by the foregoing clauses (1) through
(7) securing Debt in an aggregate amount not to exceed 5% of Nextel
Partners' consolidated tangible assets; and
(12) Liens to secure Debt incurred to refinance, in whole or in part,
Debt secured by any Lien referred to in the foregoing clauses (1), (3),
(4), (5) or this clause (12) so
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long as such Lien does not extend to any other property (other than
improvements and accessions to the original property) and the principal
amount of Debt so secured is not increased except as otherwise permitted by
the indenture.
"Permitted Transaction" means:
(1) any transaction pursuant to written agreements existing on the
Closing Date and described in or incorporated by reference into this
prospectus,
(2) any transaction or transactions with any vendor or vendors (other
than Motorola) of property or materials used in the telecommunications
business (including related activities and services) of Nextel Partners or
any Restricted Subsidiary, provided such transactions are in the ordinary
course of business and such vendor does not beneficially own more than 10%
of the voting power of the Voting Stock of Nextel Partners,
(3) any amendment, modification or other change to the purchase agreement
between Nextel Partners and Motorola, dated as of the Closing Date, or any
other similar agreement with Motorola that has been approved by a majority
of the Disinterested Directors of Nextel Partners,
(4) agreements and transactions contemplated by the joint venture
agreement entered into by and among Nextel Partners and Nextel and their
respective Subsidiaries as of the Closing Date,
(5) any License Exchange, and
(6) any issuance of equity by Nextel Partners (other than Redeemable
Stock).
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"POP" means the population equivalents as estimated by Nextel Partners by
extrapolation from the 1990 or 2000 U.S. Census and other publicly available
information.
"Preferred Capital Stock," as applied to the Capital Stock of any Person,
means Capital Stock of such Person of any class or classes (however designated)
that ranks prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person, to shares of Capital Stock of any other class of such Person.
"Preferred Stock" means each of Nextel Partners' Series A convertible
preferred stock, the Series B redeemable preferred stock, the Series C
convertible preferred stock, and the Series D convertible preferred stock.
"Redeemable Stock" of any Person means any Capital Stock of such Person
that by its terms or otherwise is:
(1) required to be redeemed prior to the Stated Maturity of the notes,
(2) redeemable at the option of the holder thereof at any time prior to
the Stated Maturity of the notes, or
(3) convertible into or exchangeable for Capital Stock referred to in
clause (1) or (2) above or Debt having a scheduled maturity prior to the
Stated Maturity of the notes; provided that any Capital Stock that would
not constitute Redeemable Stock but for provisions thereof giving holders
thereof the right to require such Person to repurchase or redeem such
Capital Stock upon the occurrence of a "change of control" occurring
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prior to the Stated Maturity of the notes shall not constitute Redeemable
Stock if the "change of control" provisions applicable to such Capital
Stock are no more favorable to the holders of such Capital Stock than the
provisions contained in the "Change of Control" covenant described herein
and such Capital Stock specifically provides that such Person will not
repurchase or redeem any such stock pursuant to such provision prior to
Nextel Partners' repurchase of such notes as are required to be repurchased
pursuant to the covenant described under the caption "Change of Control".
"Required Consent" means except as otherwise expressly provided in the
indenture with respect to matters requiring the consent of each holder of notes
affected thereby, the consent of holders of not less than a majority in
aggregate principal amount at Stated Maturity of the notes.
"Restricted Subsidiary" means any Subsidiary of Nextel Partners, whether
existing on the Closing Date or created subsequent thereto, designated from
time to time by the Board of Directors as (or otherwise deemed to be) a
"Restricted Subsidiary" in accordance with the covenant described under the
caption "Restricted Subsidiaries".
"S&P" means Standard & Poor's Ratings Services or, if Standard & Poor's
Ratings Services shall cease rating debt securities having a maturity at
original issuance of at least one year and such ratings business shall have
been transferred to a successor Person, such successor Person; provided,
however, that if Standard & Poor's Ratings Services ceases rating debt
securities having a maturity at original issuance of at least one year and its
ratings business with respect thereto will not have been transferred to any
successor Person, then "S&P" will mean any other nationally recognized rating
agency (other than Moody's) that rates debt securities having a maturity at
original issuance of at least one year and that will have been designated by
Nextel Partners by a written notice given to the trustee.
"Specialized Mobile Radio" or "SMR" means a mobile radio communications
system that is operated as described in this prospectus:
"Stated Maturity", when used with respect to any Debt security or any
installment of interest thereon, means the date specified in such Debt security
as the fixed date on which the principal of such Debt security or such
installment of interest is due and payable.
"Subsidiary" of any Person means:
(1) a corporation more than 50% of the outstanding Voting Stock of which
is owned, directly or indirectly, by such Person or by one or more other
Subsidiaries of such Person or by such Person and one or more Subsidiaries
thereof or
(2) any other Person (other than a corporation) in which such Person, or
one or more other Subsidiaries of such Person or such Person and one or
more other Subsidiaries thereof, directly or indirectly, has at least a
majority ownership and power to direct the policies, management and affairs
thereof.
"Total Common Equity" of any Person means, as of any day of determination
(and as modified for purposes of the definition of "Change of Control"), the
product of:
(1) the aggregate number of outstanding primary shares of Common Stock of
such Person on such day (which will not include any options or warrants on,
or securities convertible or exchangeable into, shares of Common Stock of
such Person) and
(2) the average Closing Price of such Common Stock over the 20
consecutive Trading Days immediately preceding such day.
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If no such Closing Price exists with respect to shares of any such class,
the value of such shares for purposes of clause (2) of the preceding sentence
shall be determined by Nextel Partners' Board of Directors in good faith and
evidenced by a Board Resolution.
"Total Invested Capital" means at any time of determination, the sum of,
without duplication:
(1) the total amount of equity contributed to Nextel Partners as of the
Closing Date (being $185.3 million), plus
(2) the aggregate net cash proceeds received by Nextel Partners from
capital contributions or the issuance or sale of Capital Stock (other than
Redeemable Stock but including Capital Stock issued upon the conversion of
convertible Debt or from the exercise of options, warrants or rights to
purchase Capital Stock (other than Redeemable Stock)), including cash
payments under the Committed Capital Contribution, subsequent to the
Closing Date, other than to a Restricted Subsidiary, plus
(3) the aggregate net cash proceeds received by Nextel Partners or any
Restricted Subsidiary from the sale, disposition or repayment of any
Investment made after the Closing Date and constituting a Restricted
Payment in an amount equal to the lesser of:
(a) the return of capital with respect to such Investment and
(b) the initial amount of such Investment, in either case, less the
cost of the disposition of such Investment, plus
(4) an amount equal to the Consolidated net Investment (as of the date of
determination) Nextel Partners and/or any of its Restricted Subsidiaries
has made in any Subsidiary that has been designated as an Unrestricted
Subsidiary after the Closing Date upon its redesignation as a Restricted
Subsidiary in accordance with the covenant described above under the
caption "Restricted Subsidiaries", plus
(5) Consolidated Debt,
minus
(6) the aggregate amount of all Restricted Payments declared or made on
or after the Closing Date.
"Trading Day" with respect to a securities exchange or automated quotation
system means a day on which such exchange or system is open for a full day of
trading.
"Trustee" means the trustee under the Indenture.
"U.S. Government Obligation" means:
(1) any security which is:
(a) a direct obligation of the United States of America for the
payment of which the full faith and credit of the United States of
America is pledged or
(b) an obligation of a Person controlled or supervised by and acting
as an agency or instrumentality of the United States of America the
payment of which is unconditionally guaranteed as a full faith and
credit obligation of the United States of America, which, in either
case, is not callable or redeemable at the option of the issuer thereof,
and
(2) any depository receipt issued by a bank (as defined in the Securities
Act) as custodian with respect to any U.S. Government Obligation and held
by such bank for the account of the holder of such depository receipt, or
with respect to any specific
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payment of principal of or interest on any U.S. Government Obligation which
is so specified and held, provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific
payment of principal or interest evidenced by such depository receipt.
"Unrestricted Subsidiary" means any Subsidiary that is not a Restricted
Subsidiary and includes any Restricted Subsidiary that becomes an Unrestricted
Subsidiary in accordance with the covenant described above under the caption
"Restricted Subsidiaries."
"Vendor Financing Debt" means any Debt owed to:
(1) a vendor or supplier of any property or materials used by Nextel
Partners or its Restricted Subsidiaries in their telecommunications
business,
(2) any Affiliate of such a vendor or supplier,
(3) any assignee of such a vendor, supplier or Affiliate of such a vendor
or supplier, or
(4) a bank or other financial institution that has financed or refinanced
the purchase of such property or materials from such a vendor, supplier,
Affiliate of such a vendor or supplier or assignee of such a vendor or
supplier; provided that the aggregate amount of such Debt does not exceed
the sum of:
(a) the purchase price of such property or materials (including
transportation, installation, warranty and testing charges, as well as
applicable taxes paid, in respect of such property or materials),
(b) the cost of design, development, site acquisition and
construction,
(c) any interest or other financing costs accruing or otherwise
payable in respect of the foregoing, and
(d) the cost of any services provided by such vendor, supplier or
Affiliate of such vendor or supplier.
"Voting Stock" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors (or persons
performing similar functions) of such Person, whether at all times or only so
long as no senior class of securities has such voting power by reason of any
contingency.
"Wholly Owned Restricted Subsidiary" of Nextel Partners means a Restricted
Subsidiary all of the outstanding Capital Stock of which (other than directors'
qualifying shares) is at the time owned by Nextel Partners or by one or more
Wholly Owned Restricted Subsidiaries or by Nextel Partners and one or more
Wholly Owned Restricted Subsidiaries.
EVENTS OF DEFAULT
The following are Events of Default under the indenture:
(1) failure to pay principal of (or premium, if any, on) any note when
due;
(2) failure to pay any interest on any note when due, continued for 30
days;
(3) default in the payment of principal and interest on notes required to
be purchased pursuant to an Offer to Purchase as described under
"Covenants--Change of Control" when due and payable;
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(4) failure to perform or comply with the provisions described under
"Mergers, Sales of Assets, Etc.";
(5) failure to perform any other covenant or agreement of Nextel Partners
under the indenture or the notes continued for 60 days after written notice
to Nextel Partners by the trustee or holders of at least 25% in aggregate
principal amount at maturity of the outstanding notes;
(6) failure to pay when due the principal of, or acceleration of, any
Debt of Nextel Partners or any Restricted Subsidiary having an outstanding
principal amount of at least $25 million, individually or in the aggregate;
(7) the rendering of a final judgment or judgments (not subject to
appeal) for the payment of money against Nextel Partners or any Restricted
Subsidiary in an aggregate amount in excess of $25 million which remains
undischarged or unstayed for a period of 60 days after the date on which
the right to appeal all such judgments has expired; and
(8) certain events of bankruptcy, insolvency or reorganization affecting
Nextel Partners or any Restricted Subsidiary. ( Section 5.01)
Subject to the provisions of the indenture relating to the duties of the
trustee in case an Event of Default occurs and is continuing, the trustee will
be under no obligation to exercise any of its rights or powers under the
indenture at the request or direction of any of the holders, unless such
holders shall have offered to the trustee reasonable indemnity. ( Section
6.03) Subject to such provisions for the indemnification of the trustee, the
holders of a majority in aggregate principal amount of the outstanding notes
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the trustee or exercising any trust or
power conferred on the trustee. The trustee may refuse, however, to follow any
direction that the trustee, in its sole discretion, determines may be unduly
prejudicial to the rights of another holder or that may subject the trustee to
any liability or expense if the trustee determines, in its sole discretion,
that it lacks indemnification against such loss or expense. ( Section 5.12)
If an Event of Default (other than an Event of Default described in clause
(8) above) occurs and is continuing, either the trustee or the holders of at
least 25% in aggregate principal amount of the outstanding notes at maturity
may accelerate the maturity of all notes; provided, however, that after such
acceleration, but before a judgment or decree based on acceleration, the
holders of a majority in aggregate principal amount at maturity of outstanding
notes may, under certain circumstances, rescind and annul such acceleration if
all Events of Default, other than the nonpayment of accelerated principal, have
been cured or waived as provided in the indenture. If an Event of Default
specified in clause (8) above occurs, the outstanding notes will ipso facto
become immediately due and payable without any declaration or other act on the
part of the trustee or any holder. ( Section 5.02) For information as to
waiver of defaults, see "Modification and Waiver".
No holder of any note will have any right to institute any proceeding with
respect to the indenture or for any remedy thereunder, unless such holder has
previously given to the trustee written notice of a continuing Event of Default
and unless also the holders of a majority in aggregate principal amount at
Stated Maturity of the outstanding notes have made written request, and offered
reasonable indemnity, to the trustee to institute such proceeding as trustee,
and the trustee will not have received from the holders of a majority in
aggregate principal amount at Stated Maturity of the outstanding notes a
direction inconsistent with such request and shall have failed to institute
such proceeding within 60
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days. ( Section 5.07) However, such limitations do not apply to a suit
instituted by a holder of a note for enforcement of payment of the principal of
and premium, if any, or interest on such note on or after the respective due
dates expressed in such note. ( Section 5.08)
The indenture provides that if a Default occurs and is continuing,
generally the trustee must, within 90 days after the occurrence of such
Default, give to the holders notice of such Default. The trustee may withhold
from holders of the notes notice of any continuing Default or Event of Default
(except a Default or Event of Default relating to the payment of principal of,
premium, if any or interest) if it determines that withholding notice is in
their interest; provided, however, that in the case of any default of a
character specified in clause (e) above, no such notice to holders shall be
given until at least 30 days after the occurrence thereof. ( Section 6.02)
Nextel Partners will be required to furnish to the trustee annually a
statement as to the performance by Nextel Partners of certain of its
obligations under the indenture and Nextel Partners is required upon becoming
aware of any Default or Event of Default to deliver to the trustee a statement
specifying such Default or Event of Default. ( Section 10.17)
SATISFACTION AND DISCHARGE OF THE INDENTURE
The indenture will cease to be of further effect as to all outstanding
notes except as to:
(1) rights of registration of transfer and exchange and Nextel Partners'
right of optional redemption,
(2) substitution of apparently mutilated, defaced, destroyed, lost or
stolen notes,
(3) rights of holders to receive payment of principal of and premium, if
any, and interest on the notes,
(4) rights, obligations and immunities of the trustee under the
indenture, and
(5) rights of the holders of the notes as beneficiaries of the indenture
with respect to any property deposited with the trustee payable to all or
any of them), if:
(a) Nextel Partners will have paid or caused to be paid the principal
of and premium, if any, and interest on the notes as and when the same
will have become due and payable or
(b) all outstanding notes (except lost, stolen or destroyed notes
which have been replaced or paid) have been delivered to the trustee for
cancellation. ( Section 4.01)
DEFEASANCE
The indenture will provide that, at the option of Nextel Partners:
(1) if applicable, Nextel Partners will be discharged from any and all
obligations in respect of the outstanding notes or
(2) if applicable, Nextel Partners may omit to comply with certain
restrictive covenants, and that such omission shall not be deemed to be an
Event of Default under the indenture and the notes, in either case (1) or
(2) upon irrevocable deposit with the trustee, in trust, of money and/or
U.S. government obligations which will provide money in an amount
sufficient in the opinion of a nationally recognized firm of independent
certified public accountants to pay the principal of each installment of
interest, if any, on the outstanding notes on the Stated Maturity. With
respect to clause (2), the obligations
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under the indenture other than with respect to such covenants and the
Events of Default other than the Events of Default relating to such
covenants above shall remain in full force and effect. Such trust may only
be established if, among other things:
(a) with respect to clause (1), Nextel Partners has received from, or
there has been published by, the Internal Revenue Service a ruling or
there has been a change in law, which in the opinion of counsel provides
that holders of the notes will not recognize gain or loss for Federal
income tax purposes as a result of such deposit, defeasance and
discharge and will be subject to Federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if
such deposit, defeasance and discharge were not to occur; or, with
respect to clause (2), Nextel Partners has delivered to the trustee an
opinion of counsel to the effect that the holders of the notes will not
recognize gain or loss for Federal income tax purposes as a result of
such deposit and defeasance and will be subject to Federal income tax on
the same amounts, in the same manner and at the same times as would have
been the case if such deposit and defeasance were not to occur;
(b) no Default or Event of Default will have occurred or be
continuing;
(c) the deposit shall not cause the trustee or the trust so created to
be subject to the Investment Company Act of 1940, as amended; and
(d) certain other customary conditions precedent are satisfied. (
Section 12.04)
MODIFICATION AND WAIVER
Modifications and amendments of the indenture may be made by Nextel
Partners and the trustee with the consent of the holders of a majority in
aggregate principal amount at Stated Maturity of the outstanding notes;
provided, however, that no such modification or amendment may, without the
consent of the holder of each outstanding note affected thereby:
(1) change the due date of the principal of, or any installment of
interest on, any note;
(2) reduce the principal amount of, or the premium or interest on, any
note;
(3) change the place or currency of payment of principal of, or premium
or interest on, any note;
(4) impair the right to institute suit for the enforcement of any payment
on or with respect to any note;
(5) waive a default in the payment of, or the premium or interest on,
any note;
(6) reduce the above stated percentage of outstanding notes necessary to
modify or amend the indenture;
(7) reduce the percentage of aggregate principal amount of outstanding
notes necessary for waiver of compliance with certain provisions of the
indenture or for waiver of certain defaults;
(8) modify any provisions of the indenture relating to the calculation of
the Accreted Value of the notes; or
(9) following the mailing of any Offer to Purchase and until the
Expiration Date of that Offer to Purchase, modify any Offer to Purchase for
the notes required under the "Limitation on Asset Dispositions" and the
"Change of Control" covenants contained in the indenture in a manner
materially adverse to the holders of the notes. ( Section 9.02)
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Notwithstanding the foregoing, without the consent of any holder of notes,
Nextel Partners and the trustee may amend or supplement the indenture or the
notes:
o to cure any ambiguity, defect or inconsistency,
o to provide for uncertificated notes in addition to or in place of
certificated notes,
o to provide for the assumption of Nextel Partners' obligations to
holders of notes in the case of a merger or consolidation,
o to make any change that would provide any additional rights or benefits
to holders of notes or that does not adversely affect the legal rights
under the indenture of any such holder, or
o to comply with requirements of the SEC in order to maintain the
qualification of the indenture under the Trust Indenture Act. ( Section
9.01)
The holders of a majority in aggregate principal amount at Stated Maturity
of the outstanding notes, on behalf of all holders of notes, may waive
compliance by Nextel Partners with certain restrictive provisions of the
indenture. ( Section 10.18) Subject to certain rights of the trustee, as
provided in the indenture, the holders of a majority in aggregate principal
amount at Stated Maturity of the outstanding notes, on behalf of all holders of
notes, may waive any past default under the indenture, except a default in the
payment of principal, premium or interest or a default arising from failure to
purchase any note tendered pursuant to an Offer to Purchase. ( Section 5.13)
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of Nextel
Partners, as such, will have any liability for any obligations of Nextel
Partners under the notes or the indenture or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each holder of notes
by accepting a note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the notes. Such waiver
may not be effective to waive liabilities under the federal securities laws and
it is the view of the commission that such waiver is against public policy.
GOVERNING LAW
The indenture and the notes will be governed by the laws of the State of
New York.
THE TRUSTEE
The indenture provides that, except during the continuance of an Event of
Default, the trustee will perform only such duties as are specifically set
forth in the indenture. During the existence of an Event of Default, the
trustee will exercise such rights and powers vested in it under the indenture
and use the same degree of care and skill in its exercise as a prudent person
would exercise under the circumstances in the conduct of such person's own
affairs. ( Section 6.01)
The indenture and provisions of the Trust Indenture Act, incorporated by
reference in the indenture, contain limitations on the rights of the trustee,
should it become a creditor of Nextel Partners, to obtain payment of claims in
certain cases or to realize on certain property received by it in respect of
any such claim as security or otherwise. The trustee is permitted to engage in
other transactions with Nextel Partners or any Affiliate, provided, however,
that if it acquires any conflicting interest (as defined in the indenture or in
the Trust Indenture Act), it must eliminate such conflict or resign. ( Section
Section 6.08 and 6.13)
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BOOK-ENTRY; DELIVERY AND FORM
The new notes initially will be represented by one or more permanent
global certificates in definitive, fully registered form. This global note will
be deposited upon issuance with The Depository Trust Company, New York, New
York and registered in the name of a nominee of the Depository Trust Company.
THE GLOBAL NOTE. We expect that pursuant to procedures established by The
Depository Trust Company:
(1) upon the issuance of the global note, The Depository Trust Company or
its custodian will credit, on its internal system, the principal
amount of the individual beneficial interests represented by the
global note to the respective accounts of persons who have accounts
with such depositary and
(2) ownership of beneficial interests in the global note will be shown on,
and the transfer of ownership will be effected only through, records
maintained by The Depository Trust Company or its nominee, with
respect to interests of participants, and the records of participants,
with respect to interests of persons other than participants.
Ownership of beneficial interests in the global notes will be limited to
persons who have accounts with The Depository Trust Company or persons who hold
interests through participants.
So long as The Depository Trust Company or its nominee is the registered
owner or holder of the new notes, The Depository Trust Company (or the nominee)
will be considered the sole owner or holder of the new notes represented by the
global note for all purposes under the indenture. No beneficial owner of an
interest in the global note will be able to transfer that interest except in
accordance with The Depository Trust Company's procedures.
Payments of interest, principal and other amounts due on the global note
will be made to The Depository Trust Company or its nominee as the registered
owner. None of Nextel Partners, the trustee or any paying agent will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the global note
or for maintaining, supervising or reviewing any records relating to this
beneficial ownership interest.
We expect that The Depository Trust Company or its nominee, upon receipt
of any payment of interest, principal or other amounts due on the global note,
will credit participants' accounts with payments in amounts proportionate to
their respective beneficial interests in the global note as shown on the
records of The Depository Trust Company. We also expect that payments by
participants to owners of beneficial interests in the global note held through
such participants will be governed by standing instructions and customary
practice, as is the case with securities held for the accounts of customers
registered in the names of nominees for those customers. These payments will be
the responsibility of the participants.
Transfers between participants in The Depository Trust Company will be
effected in the ordinary way through The Depository Trust Company's settlement
system in accordance with The Depository Trust Company rules and will be
settled in same day funds.
The Depository Trust Company has advised us that it will take any action
permitted to be taken by a holder of new notes, including the presentation of
new notes for exchange as described below, only at the direction of a
participant to whose account The Depository
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Trust Company interests in the global note are credited. Further, The
Depository Trust Company will take action only as to such portion of the notes
as to which the participant has given such direction. However, if there is an
Event of Default under the indenture, the Depository Trust Company will
exchange the global note for certificated notes, which it will distribute to
its participants.
The Depository Trust Company has advised us as follows: The Depository
Trust Company is a limited purpose trust company organized under the laws of
the State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the Uniform Commercial Code and a "Clearing
Agency" registered under the provisions of Section 17A of the Exchange Act. The
Depository Trust Company was created to hold securities for its participants
and facilitate the clearance and settlement of securities transactions between
participants through electronic book-entry changes in accounts of its
participants, thereby eliminating the need for physical movement of
certificates. Participants include securities brokers and dealers, banks, trust
companies and clearing corporations and certain other organizations. Indirect
access to The Depository Trust Company system is available to others such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.
Although The Depository Trust Company has agreed to the foregoing
procedures in order to facilitate transfers of interests in the global note
among participants of The Depository Trust Company, it is under no obligation
to perform those procedures, and those procedures may be discontinued at any
time. Neither Nextel Partners nor the trustee will have any responsibility of
the performance by The Depository Trust Company or its participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.
CERTIFICATED SECURITIES. If the Depository Trust Company is at any time
unwilling or unable to continue as a depositary for the global note and a
successor depositary is not appointed by Nextel Partners within 90 days,
certificated notes will be issued in exchange for the global note.
DESCRIPTION OF CREDIT FACILITY
Nextel Partners Operating Corp. or "OPCO", a wholly-owned subsidiary of
Nextel Partners, entered into a credit facility dated as of January 29, 1999
with a syndicate of banks and other financial institutions led by Donaldson,
Lufkin & Jenrette Securities Corporation, as arranger, DLJ Capital Funding, as
syndication agent and Bank of Montreal, as administrative agent. The credit
facility includes a $175.0 million term loan facility and a $100.0 million
reducing revolving credit facility. Subject to OPCO's right in the future to
seek an increase of up to $50.0 million, the credit facility will not exceed
$275.0 million. The term loan facility has a maturity of nine years. The
revolving credit facility will terminate eight years after the date of initial
funding of the credit facility.
On January 29, 1999, OPCO borrowed the full amount of the term loan
facility and established an account which maintains a balance equal to the
lesser of (x) $275.0 million or (y) the aggregate outstanding principal amount
borrowed under the credit facility, until the earlier of FCC approval of the
transfer applications for licenses being transferred from Nextel or 395 days
after the initial borrowings under the credit facility. The failure of the FCC
to approve these transfer applications within 365 days after the initial
borrowings under the credit facility constitutes an event of default under the
credit facility.
Interest. At OPCO's option, the term loan facility bears interest at
reserve-adjusted London Interbank Offered Rate ("LIBOR") plus 4.75%. The
revolving credit facility bears
109
<PAGE>
interest at LIBOR plus 4.25% over LIBOR until consolidated EBITDA is positive
at which time the applicable margin will be initially 4.0% over LIBOR and
thereafter will be determined on the basis of the ratio of total debt to
annualized EBITDA and will range between 2.25% and 3.75% over LIBOR.
Fees. OPCO pays a commitment fee calculated at a rate equal to the lower
of (i) 2.00% per annum and (ii) one-half of the applicable margin for LIBOR
loans, in each case, calculated on the daily average unused commitment under
the revolving credit facility (whether or not then available). Such fee is
payable quarterly in arrears. The commitment fee is subject to reduction based
on utilization of the revolving credit facility.
Reduction of Commitments. Beginning on the fifth anniversary of the
closing of the credit facility, commitments under the revolving credit facility
automatically reduces in quarterly installments. The term loan facility
amortizes in quarterly installments aggregating in the percentage outlined in
the following schedule:
<TABLE>
<CAPTION>
% OF TERM LOAN
YEAR FACILITY
- ------ ---------------
<S> <C>
1 --
2 --
3 --
4 --
5 1%
6 1%
7 1%
8 1%
9 96%
</TABLE>
Prepayments. The term loan facility is subject to mandatory prepayment:
(1) with 100% of the net cash proceeds from the issuance of debt, subject
to certain exceptions,
(2) with 100% of the net cash proceeds of asset sales, subject to certain
exceptions,
(3) after December 31, 2003, with 50% of OPCO's Excess Cash Flow (as
defined in the credit facility), and
(4) after the fifth anniversary of the closing of the credit facility, with
50% of the net cash proceeds from the issuance of equity, subject to
certain exceptions.
Security; Guarantees. OPCO's obligations under the credit facility is
secured by a first-priority lien on all property and assets, tangible and
intangible, of OPCO and its subsidiaries, including a pledge of the capital
stock of the borrower and its subsidiaries, including the subsidiary holding
the FCC licenses following approval by the FCC of the transfer applications.
Nextel Partners and OPCO's current and future subsidiaries have guaranteed or
will guarantee the obligations of OPCO under the credit facility.
Covenants. The credit facility contains customary covenants and
restrictions on OPCO's ability to engage in certain activities, including but
not limited to:
(1) limitations on the incurrence of liens and indebtedness,
(2) restrictions on sale lease-back transactions, consolidations, mergers,
sale of assets, capital expenditures, transactions with affiliates and
investments, and
(3) severe restrictions on dividends and distributions on, and redemptions
and repurchases of, capital stock, and other similar distributions and
various financial maintenance covenants.
110
<PAGE>
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
Prospective holders of notes should consult their own tax advisors with
regard to the application of the tax considerations discussed below to their
particular situations as well as the application of any state, local, foreign
or other tax laws, including gift and estate tax laws.
This section discusses the rules applicable to U.S. holders only. A U.S.
holder is any of the following:
o citizens and residents of the United States for U.S. federal income
tax purposes;
o corporations, partnerships, and other entities created or organized
in or under the laws of the United States or any political subdivision
thereof;
o estates, if the income of the estate is subject to U.S. federal
income taxation regardless of its source, and trusts, if a U.S. court can
exercise primary supervision over the administration of the trust and one
or more U.S. persons have the authority to control all substantial
decisions of the trust; and
o other persons whose worldwide income or gain is otherwise subject to
U.S. federal income taxation on a net income basis.
Non-U.S. holders are subject to substantially different rules, which are
not described here.
The Exchange Offer
The exchange of old notes for new notes under the exchange offer should be
treated as a continuation of the corresponding old notes because the terms of
the new notes are substantially the same as the terms of the old notes.
Accordingly, the exchange should not constitute a taxable event to holders and,
therefore:
o no gain or loss should be realized by holders upon receipt of a new
note;
o the holding period of the new note should include the holding period of
the old note; and
o the adjusted tax basis of the new note should be the same as the
adjusted tax basis of the old note immediately before the exchange.
Original Issue Discount on the Notes
The notes will be issued with original issue discount (or OID). In
general, holding notes will result in taxable ordinary interest income in an
amount equal to the OID that accrues during each accrual period. OID is defined
as the excess of:
(1) the stated redemption price at maturity of a note over
(2) its issue price.
The "stated redemption price at maturity" of a note is the sum of all
payments (including cash interest) provided by the note. The "issue price" of a
note is the first price at which a substantial amount of the notes are sold to
the public for cash (excluding sales to bond houses, brokers or similar persons
or organizations acting in the capacity as underwriters, placement agents or
wholesalers).
A holder is required to include OID in income as ordinary interest as it
accrues under the constant yield method in advance of receipt of the cash
payments attributable to such income, regardless of the holder's regular method
of accounting. Because the calculation of
111
<PAGE>
the amount of OID takes the cash interest payments into account as part of the
stated redemption price at maturity, the cash interest payments need not be
reported separately as taxable income when received.
In general, the amount of OID included in income by the holder of a note
is the sum of the daily portions of OID for each day during the taxable year or
portion of the taxable year on which such holder held such note. The "daily
portion" is determined by allocating the OID for the actual period ratably to
each day in that accrual period. The "accrual period" for a note may be of any
length and may vary in length over the term of a note, provided that each
accrual period is no longer than one year and each scheduled payment of
principal or interest occurs either on the first or final day of an accrual
period.
The amount of OID for an accrual period is generally equal to the product
of the note's adjusted issue price at the beginning of such accrual period and
its yield to maturity. The "adjusted issue price" of a note at the beginning of
any accrual period is the sum of the issue price of the note plus the amount of
OID allocable to all prior accrual periods minus the amount of any prior
payments on the note, such as the cash interest payments. Under the constant
yield method of determining OID, a holder generally will have to include
increasingly greater amounts of OID in income in successive accrual periods.
Sale, Exchange and Retirement of Notes
A holder will recognize gain or loss upon the sale, retirement or other
taxable disposition of a note. Such gain or loss will generally equal the
difference between:
o the amount of cash and the fair market value of property received for
the note (other than amounts representing accrued but unpaid stated
interest) and
o the holder's adjusted tax basis in the note.
A holder's adjusted tax basis in notes will generally equal the holder's
purchase price, increased by any accrued OID, and reduced by any cash payments
on the notes. Gain or loss generally will be capital gain or loss and will be
long-term capital gain or loss, if the holder has held such notes for more than
one year. Long-term capital gain of a non-corporate holder is generally subject
to a maximum tax rate of 20%. There are limits on the deductibility of capital
losses. Any amounts paid with respect to accrued but unpaid stated interest
generally will be taxable as ordinary interest income. Gain or loss realized on
the sale, retirement or other taxable disposition of a note derived by a holder
generally will be treated as U.S. source income or loss for foreign tax credit
purposes.
Backup Withholding and Information Reporting
In general, information reporting requirements will apply to certain
payments of principal, premium, if any, and interest; they will also apply to
the proceeds of sale of a note made to holders other than exempt recipients,
such as corporations. Backup withholding and information reporting generally
will not apply to payments of principal, premium, if any, and interest on notes
made outside the United States (other than payments made to an address in the
United States or by transfer to an account maintained by the holder with a bank
in the United States) by us or any paying agent (acting in its capacity as
such) to a holder. A 31% backup withholding tax may apply to such payments if a
U.S. holder fails to provide a taxpayer identification number or certification
of foreign or other exempt status or is notified by the IRS that it has failed
to report its full dividend and interest income.
112
<PAGE>
This Tax Discussion is not Complete
The above is a general discussion of United States federal income tax
consequences of the purchase, ownership and sale of the notes by U.S. holders.
It applies only to holders who purchase their notes at the issue price, and it
does not purport to be a complete analysis of all potential tax effects. The
discussion is based on the tax law as it exists today, but the law could change
at any time, and any change could be applied retroactively in a manner that
could adversely affect a holder of the notes. This discussion does not address
the special rules applicable to holders such as insurance companies and other
financial institutions, dealers in securities, tax-exempt organizations and
persons holding the notes as part of a "straddle," "hedge" or "conversion
transaction," and deals only with notes held as "capital assets" within the
meaning of Section 1221 of the Code.
PLAN OF DISTRIBUTION
Each holder desiring to participate in the exchange offer will be required
to represent, among other things, that:
(1) it is not an "affiliate" (as defined in Rule 405 of the Securities Act)
of Nextel Partners,
(2) it is not engaged in, and does not intend to engage in, and has no
arrangement or understanding with any person to participate in, a
distribution of the new notes, and
(3) it is acquiring the new notes in the ordinary course of its business.
A holder unable to make the above representations is referred to as a
restricted holder. A restricted holder will not be able to participate in the
exchange offer, and may only sell its old notes pursuant to a registration
statement containing the selling securityholder information required by Item
507 of Regulation S-K of the Securities Act, or pursuant to an exemption from
the registration requirement of the Securities Act.
Each participating broker-dealer is required to acknowledge in the letter
of transmittal that it acquired the old notes as a result of market-making
activities or other trading activities and that it will deliver a prospectus in
connection with the resale of such new notes. Based upon interpretations by the
staff of the SEC, Nextel Partners believes that new notes issued through the
exchange offer to participating broker-dealers may be offered for resale,
resold, and otherwise transferred by a participating broker-dealer upon
compliance with the prospectus delivery requirements, but without compliance
with the registration requirements, of the Securities Act. Nextel Partners has
agreed that for a period of 30 days following consummation of the exchange
offer, it will make this prospectus available to participating broker-dealers
for use in connection with any such resale. During such period of time,
delivery of this prospectus, as it may be amended or supplemented, will satisfy
the prospectus delivery requirements of a participating broker-dealer engaged
in market making or other trading activities.
Based upon interpretations by the staff of the SEC, Nextel Partners
believes that new notes issued pursuant to the exchange offer may be offered
for resale, resold and otherwise transferred by their holder, other than a
participating broker-dealer, without compliance with the registration and
prospectus delivery requirements of the Securities Act.
Nextel Partners will not receive any proceeds from any sale of new notes
by broker-dealers. New notes received by participating broker-dealers for their
own account pursuant to the exchange offer may be sold from time to time in one
or more transactions in
113
<PAGE>
the over-the-counter market, in negotiated transactions, through the writing of
options on the new notes or a combination of such methods of resale, at market
prices prevailing at the time of resale, at prices related to such prevailing
market prices or at negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such participating
broker-dealer and/or the purchasers of any such new notes. Any participating
broker-dealer that resells new notes that were received by it for its own
account through the exchange offer and any broker or dealer that participates
in a distribution of such new notes may be deemed to be an "underwriter" within
the meaning of the Securities Act and any profit on any such resale of new
notes and any commissions or concessions received by any such persons may be
deemed to be underwriting compensation under the Securities Act. The letter of
transmittal states that by acknowledging that it will deliver and by delivering
a prospectus, a participating broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
Nextel Partners has agreed to pay all expenses incidental to the exchange
offer other than commissions and concessions of any brokers or dealers and will
indemnify holders of the notes (including any broker-dealers) against certain
liabilities, including liabilities under the Securities Act, as set forth in
the registration rights agreement.
LEGAL MATTERS
The validity of the new notes will be passed upon for Nextel Partners by
Willkie Farr & Gallagher, New York, New York.
EXPERTS
The consolidated financial statements of Nextel Partners, Inc. and
Subsidiaries as of December 31, 1998, and the consolidated statements of
operations, changes in shareholders' equity and cash flows for the period then
ended, included in this prospectus have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said reports.
114
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Report of Independent Public Accountants .................... F-2
Consolidated Balance Sheet as of December 31, 1998 .......... F-3
Consolidated Statement of Operations for the year ended
December 31, 1998 .......................................... F-5
Consolidated Statement of Changes in Shareholders' Equity
for the year ended December 31, 1998 ....................... F-6
Consolidated Statement of Cash Flows for the year ended
December 31, 1998 .......................................... F-7
Notes to Consolidated Financial Statements .................. F-8
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Nextel Partners, Inc.:
We have audited the accompanying consolidated balance sheet of Nextel
Partners, Inc. (a Delaware corporation) and Subsidiaries as of December 31,
1998 and the related consolidated statements of operations, changes in
stockholders' equity and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Nextel Partners, Inc. and
Subsidiaries as of December 31, 1998, and the results of their operations and
their cash flows for the year then ended in conformity with generally accepted
accounting principles.
/s/ Arthur Andersen LLP
Seattle, Washington,
May 13, 1999
F-2
<PAGE>
NEXTEL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET--DECEMBER 31, 1998
(DOLLARS IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
PRO FORMA
DECEMBER 31,
DECEMBER 31, 1998
1998 (NOTE 1)
-------------- -------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents ............................ $ 16 $ 16
Accounts receivable, net of allowance of $254......... 1,546 1,546
Subscriber equipment inventory ....................... 1,353 1,353
Prepaid expenses ..................................... 325 325
-------- --------
Total current assets ................................ 3,240 3,240
-------- --------
PROPERTY, PLANT AND EQUIPMENT, at cost ................ 112,334 112,334
Less-accumulated depreciation ........................ 4,386 4,386
-------- --------
Property, plant and equipment, net .................. 107,948 107,948
-------- --------
OTHER NON-CURRENT ASSETS:
FCC operating licenses, net of accumulated
amortization of $200.................................. 133,180 133,180
Debt issuance costs and other assets ................. 3,298 3,298
-------- --------
Total non-current assets ............................ 136,478 136,478
-------- --------
TOTAL ASSETS .......................................... $247,666 $247,666
======== ========
</TABLE>
F-3
<PAGE>
NEXTEL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET--DECEMBER 31, 1998 (CONT'D)
(DOLLARS IN THOUSANDS)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
PRO FORMA
DECEMBER 31,
DECEMBER 31, 1998
1998 (NOTE 1)
-------------- -------------
(UNAUDITED)
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable .................................................... $ 1,043 $ 1,043
Accrued expenses .................................................... 4,554 4,554
Payable to Nextel and Eagle River ................................... 3,398 3,398
Return of capital payable to Nextel ................................. -- 127,326
--------- ---------
Total current liabilities ............................................ 8,995 136,321
--------- ---------
COMMITMENTS AND CONTINGENCIES (See Notes)
STOCKHOLDERS' EQUITY:
Preferred stock, Series A convertible, 17,479,971 shares issued and
outstanding at January 29, 1999 ..................................... -- --
Preferred stock, Series B redeemable or convertible to
Series C preferred stock 2010, 12% cumulative annual dividend;
2,185,000 shares issued and outstanding at January 29, 1999 ......... -- 2
Preferred stock, Series C convertible, 8,740,000 shares issued and
outstanding at January 29, 1999 ..................................... -- 9
Preferred stock, Series D convertible, 2,185,000 shares issued and
outstanding at January 29, 1999 ..................................... -- 2
Common stock, Class A, 1,588,888 shares issued and outstanding, and
paid-in capital ..................................................... 1,604 1,604
Common stock, Class B, convertible ................................... -- --
Other paid-in capital ................................................ 260,761 133,422
Accumulated deficit .................................................. (22,553) (22,553)
Deferred compensation ................................................ (1,141) (1,141)
--------- ---------
Total stockholders' equity ......................................... 238,671 111,345
--------- ---------
$ 247,666 $ 247,666
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
F-4
<PAGE>
NEXTEL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C>
REVENUES:
Service revenues ...................... $ 3,745
Equipment revenues .................... 1,564
--------
Total revenues ....................... 5,309
--------
OPERATING EXPENSES:
Cost of service revenues .............. 6,108
Cost of equipment revenues ............ 2,935
Sales and marketing ................... 6,636
General and administrative ............ 6,895
Deferred compensation ................. 447
Depreciation and amortization ......... 4,586
--------
Total operating expenses ............ 27,607
--------
OPERATING LOSS ......................... (22,298)
INCOME TAX PROVISION ................... --
----------
Net loss ............................. $(22,298)
==========
</TABLE>
The accompanying notes are an integral part of this consolidated statement.
F-5
<PAGE>
NEXTEL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
CLASS A
COMMON STOCK AND
PAID-IN CAPITAL OTHER
----------------------- PAID-IN ACCUMULATED DEFERRED
SHARES AMOUNT CAPITAL DEFICIT COMPENSATION TOTALS
------------ -------- ----------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE,
January 1, 1998 .............. -- $ -- $ 8,255 $ (255) $ -- $ 8,000
Equity contributions .......... -- -- 252,506 -- -- 252,506
Issuance of common stock
under restricted stock
purchase plan ................ 1,588,888 1,604 -- -- (1,588) 16
Deferred compensation ......... -- -- -- -- 447 447
Net loss ...................... -- -- -- (22,298) -- (22,298)
--------- ------ -------- --------- -------- ---------
BALANCE,
December 31, 1998 ............ 1,588,888 $1,604 $260,761 $ (22,553) $ (1,141) $ 238,671
========= ====== ======== ========= ======== =========
</TABLE>
The accompanying notes are an integral part of this consolidated statement.
F-6
<PAGE>
NEXTEL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss .................................................................... $(22,298)
Adjustments to reconcile net loss to net cash used in operating activities ..
Depreciation and amortization .............................................. 4,586
Deferred compensation ...................................................... 447
Allowance for doubtful accounts ............................................ 254
Change in current assets and liabilities:
Accounts receivable ....................................................... (1,800)
Subscriber equipment inventory ............................................ (1,353)
Prepaid expenses .......................................................... (325)
Accounts payable and accrued expenses ..................................... 2,300
Operating advances from Nextel and Eagle River ............................ 3,398
--------
Net cash used in operating activities ..................................... (14,791)
--------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ........................................................ (104,334)
--------
Net cash used in investing activities ...................................... (104,334)
--------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock .................................................... 16
Equity contributions from Nextel ............................................ 119,125
--------
Net cash provided by financing activities .................................. 119,141
--------
NET INCREASE IN CASH AND CASH EQUIVALENTS .................................... 16
CASH AND CASH EQUIVALENTS, beginning of year ................................. --
--------
CASH AND CASH EQUIVALENTS, end of year ....................................... $ 16
========
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS
Contribution of FCC licenses from Nextel Communications, Inc. ................ $133,380
========
Accrued debt issuance costs .................................................. $ 3,298
========
</TABLE>
The accompanying notes are an integral part of this consolidated statement.
F-7
<PAGE>
NEXTEL PARTNERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. OPERATIONS:
Organization
Nextel Partners, Inc. and Subsidiaries ("Partners" or the "Company") provide a
wide array of digital wireless communications services throughout the United
States, primarily to business users, utilizing frequencies licensed by the
Federal Communications Commission ("FCC"). Partners' operations are primarily
conducted by Nextel Partners Operating Corp. ("OPCO"), a wholly owned
subsidiary of Partners.
Prior to the capitalization of the Company on January 29, 1999 (see Note 2),
all the operations of OPCO were a part of Nextel Communications, Inc. and
Subsidiaries ("Nextel"). As a part of the Company's capitalization, Nextel
assigned the use and, subject to pending FCC approval, ownership of its FCC
licenses at its historical cost of $133.2 million, in exchange for a continuing
equity interest in the Company. Partners' digital network has been developed
with advanced mobile communication systems employing digital technology with a
multi-site configuration permitting frequency reuse ("Digital Mobile Network")
utilizing digital technology developed by Motorola, Inc. ("Motorola") (such
technology is referred to as the "integrated Digital Enhanced Network" or
"iDENTM"). Effective January 29, 1999, Motorola became a stockholder of the
Company. Partners' principal business objective is to offer high-capacity,
high-quality, advanced communication services throughout the United States
targeted towards mid-sized and smaller markets. Various operating agreements
entered into by the Company and Nextel (see Note 9) provide for support
services to be provided by Nextel, including the use of Nextel's switching
facilities and network monitoring centers, access to technology improvements
from Nextel's research and development program and the use of Nextel's employee
training sessions. Additionally, the Company plans to use Nextel's back-office
systems initially to support customer activation, billing and customer care as
well as other services during a transition period.
Basis of Presentation
Legally, the operations of the Company prior to January 29, 1999, were a part
of Nextel. For financial reporting purposes, because the formation of the
Company was a reorganization of Nextel's business into a newly formed
subsidiary, the historical operations of the Company include the results of the
operations acquired from Nextel prior to January 29, 1999, using a "carve-out"
methodology. The operations included in the "carve-out" generally began
operations in 1998. Prior to January 1, 1998, the only activity associated with
the "carved-out" operations were fixed asset purchases of approximately $8.0
million. Revenues, operating expenses and net loss related to the operations of
these assets and the "carve-out" for the year ending December 31, 1997, are
estimated to be $195,000, $450,000 and $255,000, respectively. Because these
net operating results amounts are not included in the reimbursement amount to
be paid to Nextel by the Company and given the relative immateriality of the
amounts, financial statements for periods prior to January 1, 1998 have not
been provided. The results of the Company's operations would not have been
materially different had it operated on a stand-alone basis. Of the $22.6
million accumulated deficit at December 31, 1998 reported by the Company,
approximately $19.4 million related to the operations of the "carve-out." The
remainder represented the 1998 operating results of the parent holding Company.
Unaudited Pro Forma Balance Sheet
The pro forma balance sheet is presented to conform to Securities and Exchange
Commission Staff Accounting Bulletin No. 1.B.3., as amended. The pro forma
balance sheet gives effect to the issuance of preferred stock to Nextel in the
amount of $133.2 million and the return of capital to be paid to
F-8
<PAGE>
NEXTEL PARTNERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
Nextel on January 29, 1999 for net operating expense and capital reimbursements
incurred. This pro forma balance sheet does not reflect the other
capitalization transactions nor the proceeds received from the issuance of
long-term debt which occurred on January 29, 1999.
Concentration of Risk
The Company believes that the geographic and industry diversity of its customer
base minimizes the risk of incurring material losses due to concentration of
credit risk.
The Company is party to certain equipment purchase agreements with Motorola
(see Notes 2 and 9). For the foreseeable future the Company expects that it
will need to rely on Motorola for the manufacture of a substantial portion of
the infrastructure equipment necessary to construct and make operational its
Digital Mobile Network as well as for the provision of digital subscriber
hand-sets and accessories.
As previously discussed, the Company is reliant on Nextel for the provision of
certain services. For the foreseeable future, the Company will need to rely on
Nextel for the provision of these services as the Company will not have the
infrastructure to support those services.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Principles of Consolidation
The consolidated financial statements include the accounts of Partners and its
wholly owned subsidiaries. All significant intercompany transactions and
balances have been eliminated in consolidation.
Cash and Cash Equivalents
Cash equivalents include time deposits and highly liquid investments with
remaining maturities of three months or less at the time of purchase.
Subscriber Equipment Inventory
Subscriber equipment is valued at the lower of cost or market. Cost is
determined by the first-in, first-out method.
Property, Plant and Equipment
Property, plant and equipment, including improvements that extend useful lives,
are recorded at cost, while maintenance and repairs are charged to operations
as incurred. Depreciation and amortization are computed using the straight-line
method based on estimated useful lives of three to ten years for equipment and
three to seven years for furniture and fixtures. Leasehold improvements are
amortized over the shorter of the respective lives of the leases or the useful
lives of the improvements.
Construction in progress includes labor, material, transmission and related
equipment, engineering, site design, interest and other costs relating to the
construction of the Digital Mobile Network.
F-9
<PAGE>
NEXTEL PARTNERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
The Company periodically reviews the carrying value of its long-lived assets
(including property, plant and equipment and operating licenses) whenever
events or changes in circumstances indicate that the carrying value may not be
recoverable. If the estimated future cash inflows attributable to the asset,
less estimated future cash outflows is less than the carrying amount, an
impairment loss will be recognized.
Capitalized Interest
The Company's wireless communications systems and FCC operating licenses
represent qualifying assets pursuant to Statement of Financial Accounting
Standards (SFAS) No. 34, "Capitalization of Interest Cost." The Company
capitalized interest of approximately $6.3 million for the year ended December
31, 1998.
FCC Operating Licenses
FCC operating licenses are recorded at historical cost and are amortized using
the straight-line method based on estimated useful lives of 40 years.
Amortization begins with the commencement of service to customers in a
particular market.
Interest Rate Risk Management
The Company intends to use derivative financial instruments consisting of
interest rate swap and interest rate protection agreements in the management of
its interest rate exposures. These interest rate swap agreements will have the
effect of converting certain of the Company's variable rate obligations to
fixed or other variable rate obligations. Amounts to be paid or received under
interest rate swap agreements will be accrued as interest rates change and will
be recognized over the life of the swap agreements as an adjustment to interest
expense. The fair value of the swap agreements will not be recognized in the
consolidated financial statements, since the swap agreements will meet the
criteria for matched swap accounting.
The Company will not use financial instruments for trading or other speculative
purposes, nor will it be a party to any leveraged derivative instrument. The
use of derivative financial instruments will be monitored through regular
communication with senior management. The Company will be exposed to credit
loss in the event of nonperformance by the counterparties. This credit risk is
minimized by dealing with a group of major financial institutions with which
the Company has other financial relationships. The Company does not anticipate
nonperformance by these counterparties.
Revenue Recognition
Revenue net of customer discounts and rebates is recognized for airtime and
other services over the period earned and for sales of equipment when
delivered.
Certain of the Company's digital equipment sales are made through independent
distributors under agreements allowing rights of return on merchandise unsold
by the distributors. The Company defers recognition of such sales until the
merchandise is sold by the distributors.
Advertising Costs
Costs related to advertising and other promotional expenditures are expensed as
incurred. Advertising costs totaled approximately $1.5 million for the year
ended December 31, 1998.
Debt Issuance Costs
In relation to the issuance of long-term debt discussed in Note 4, the Company
incurred a total of $20.5 million (unaudited) ($3.3 million had been incurred
as of December 31, 1998) in deferred
F-10
<PAGE>
NEXTEL PARTNERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
financing costs related to the issuances of the Notes and the Facility. These
debt issuance costs will be amortized over the terms of the underlying
obligation using the effective interest method.
Stock Based Compensation
As allowed by SFAS No. 123 (SFAS 123), "Accounting for Stock Based
Compensation," the Company has chosen to account for compensation cost
associated with its stock compensation plans in accordance with APB Opinion No.
25, "Accounting for Stock Issued to Employees" and related interpretations. For
the year ended December 31, 1998, compensation expense under SFAS No. 123 and
APB Opinion No. 25 were identical. In the future, the Company will disclose pro
forma net loss as if compensation expense costs had been determined consistent
with SFAS No. 123. The Company has no stock options outstanding as of December
31, 1998.
Income Taxes
Deferred tax assets and liabilities are determined based on the temporary
difference between the financial reporting and tax bases of assets and
liabilities applying enacted statutory tax rates in effect for the year in
which the differences are expected to reverse. Future tax benefits, such as net
operating loss carryforwards, are recognized to the extent that realization of
such benefits is considered to be more likely than not. Net operating losses
incurred by "carve-out" prior to the closing of the Capitalization Transactions
will be retained by Nextel.
Recently Issued Accounting Pronouncements
Software Costs -- In March 1998, the American Institute of Certified Public
Accountants (the "AICPA") issued Statement of Position 98-1, "Accounting for
the Costs of Computer Software Developed or Obtained for Internal Use." This
statement became effective for the Company on January 1, 1999 and established
accounting standards for costs incurred in the acquisition or development and
implementation of computer software. These new standards require the
capitalization of certain software implementation costs relating to software
acquired or developed and implemented for the Company's use. The adoption of
this statement will not have a significant effect on the Company's financial
position or results of operations.
Accounting for Start-Up Activities -- In April 1998, the AICPA issued Statement
of Position 98-5, "Reporting on the Costs of Start-Up Activities." This
statement became effective on January 1, 1999 and required that costs of
start-up activities and organization costs be expensed as incurred. This
statement will not have a significant effect on the Company's financial
position or results of operations.
Accounting for Derivative Instrument and Hedging Activities -- In June 1998,
the Financial Accounting Standards Board ("FASB") issued SFAS No.133,
"Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"),
which establishes accounting and reporting standards for derivative instruments
and for hedging activities by requiring that all derivatives be recognized in
the balance sheet and measured at fair value. SFAS 133 is effective for fiscal
years beginning after June 15, 1999. The Company has not evaluated the effects
of this change on its financial position or results of operations.
2. CAPITALIZATION TRANSACTIONS:
On January 29, 1999, the Company, previously wholly owned by Nextel was
capitalized with equity infusions consisting of: (1) cash equity received at
closing of $52.1 million plus an additional irrevocable cash equity commitment
of $104.3 million to be received over the next two-year period
F-11
<PAGE>
NEXTEL PARTNERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
(the $156.4 million cash equity includes warrants to purchase 405,710 shares of
common stock for an exercise price of $.001 per share. The fair value of the
warrants at issuance were estimated to be approximately $3.9 million), (2) a
vendor credit from Motorola of $18.4 million towards the purchase of
infrastructure equipment expected to be utilized by the Company during 1999,
and (3) the assignment of FCC licenses held by Nextel with a historical cost
basis of $133.2 million. Nextel has made application to the FCC for transfer to
the Company of the FCC licenses. Pending FCC approval, the Company is utilizing
the FCC frequency pursuant to a frequency management agreement (the Frequency
Management Agreement (see Note 9) between the Company and NWIP (a subsidiary of
Nextel). The Company expects that approval of the License transfer by the FCC
will occur during 1999. See Note 7, Capital Stock and Stock Rights for a brief
description of the stock issued as a part of the capitalization of the Company.
The following summarizes the dollar amount and number of shares issued as part
of the capitalization transactions which occurred on January 29, 1999.
<TABLE>
<CAPTION>
EQUITY
SHARES ISSUED CONTRIBUTIONS
--------------- -----------------
<S> <C> <C>
Series A Preferred Shares .................................... 17,479,971 $ 170,952,810
Series B Preferred Shares .................................... 2,185,000 21,850,000
Series C Preferred Shares .................................... 8,740,000 89,064,000
Series D Preferred Shares .................................... 2,185,000 22,266,000
Subscription Receivable ...................................... (122,655,000)
Warrants to purchase Class A Common Shares issued for purchase
price of $.001 per share..................................... 405,710 3,846,900
</TABLE>
Approximately $2.5 million (unaudited) of issuance costs were charged to equity
as part of the Capitalization Transactions.
3. PROPERTY AND EQUIPMENT (IN THOUSANDS):
<TABLE>
<S> <C>
Building and improvements .............................. $ 998
Equipment .............................................. 87,523
Furniture and fixtures ................................. 2,248
Less accumulated depreciation and amortization ......... (4,386)
--------
86,383
--------
Construction in progress ............................... 21,565
--------
$107,948
========
</TABLE>
F-12
<PAGE>
NEXTEL PARTNERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
4. LONG-TERM DEBT:
<TABLE>
<CAPTION>
PRO FORMA
AS OF AS OF
DECEMBER 31, DECEMBER 31,
1998 1998
-------------- ---------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
14% Senior Redeemable Discount Notes 2009, net of unamortized
discount of $393.6 million ..................................... $ -- $406,376
Bank Credit Facility, interest at Company's option, calculated on
Administrative Agent's alternate base rate or reserve-adjusted
London Interbank Offered Rate (LIBOR) .......................... -- 175,000
---- --------
Less-Current portion ............................................ -- --
---- --------
$ -- $581,376
==== ========
</TABLE>
Senior Redeemable Discount Notes
On January 29, 1999, the Company completed the issuance of $406.4 million
Senior Redeemable Discount Notes (the "Notes") due 2009. The aggregate accreted
value of the Notes will increase from $406.4 million at issuance at a rate of
14%, compounded semi-annually to a final accreted value equal to a principal
amount of $800 million. Thereafter, the Notes bear interest at a rate of 14%
per annum payable semi-annually in arrears.
The Notes represent senior unsecured obligations of the Company, and rank
equally in right of payment to all existing and future senior unsecured
indebtedness of the Company and senior in right of payment to all existing and
future subordinated indebtedness of the Company. The Notes are effectively
subordinated to (i) all secured obligations of the Company, including
borrowings under the Company's bank credit facility, to the extent of assets
securing such obligations and (ii) all indebtedness including borrowings under
the Company's bank credit facility and trade payables of OPCO.
The indenture contains certain covenants that limit, among other things, the
ability of the Company to: (i) pay dividends, redeem capital stock or make
certain other restricted payments or investments, (ii) incur additional
indebtedness or issue preferred equity interests, (iii) merge, consolidate or
sell all or substantially of its assets, (iv) create liens on assets, and (v)
enter into certain transactions with affiliates or related persons. As of March
31, 1999, the Company was in compliance with applicable covenants.
The Notes are redeemable at the option of the Company, in whole or in part, any
time on or after February 1, 2004 in cash at the redemption price on that date,
plus accrued and unpaid interest and liquidated damages if any, at the date of
liquidation. In addition, prior to February 1, 2002, the Company may on any one
or more occasions redeem up to 35% of the aggregate principal amount at
maturity of Notes originally issued at a redemption price equal to 114% of the
accreted value at that date, plus accrued and unpaid interest and liquidated
damages if any, with the net cash proceeds of one or more public equity
offerings; provided that at least 65% of the aggregate principal amount at
maturity of Notes originally issued remain outstanding immediately after the
occurrence of such redemption.
Bank Credit Facility
On January 29, 1999, the Company entered into a credit facility (the
"Facility") with a syndicate of banks and other financial institutions led by
Donaldson, Lufkin and Jenrette Securities Corporation
F-13
<PAGE>
NEXTEL PARTNERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
("DLJ"). Effective January 29, 1999, DLJ also holds an equity investment in the
Company. The Facility includes a $175 million term loan facility and initially,
a $100 million revolving credit facility. The term loan facility has a maturity
of nine years. The revolving credit facility terminates eight years from the
initial funding of the Facility.
The Credit Facility will bear interest, at the option of the Company, at the
Administrative Agent's alternate base rate or reserve-adjusted LIBOR plus, in
each case, applicable margins. The applicable margin for the term loan facility
will be 4.75% over LIBOR and 3.75% over the base rate. For the revolving credit
Facility, the initial applicable margin will be 4.25% over LIBOR and 3.25% over
the base rate until consolidated EBITDA is positive at which time the
applicable margin will be initially 4.0% over LIBOR and 3.0% over the base rate
and thereafter will be determined on the basis of the ratio of total debt to
annualized EBITDA and will range between 2.25% and 3.75% over LIBOR and between
1.25% and 2.75% over the base rate.
The Company will pay a commitment fee calculated at a rate equal to 2.00% per
annum, calculated on the daily average unused commitment under the revolving
credit Facility (whether or not then available). Such fee will be payable
quarterly in arrears. The commitment fee will be subject to reduction based on
utilization of the revolving credit Facility.
Prior to the date on which the Company's portion of the digital mobile system
is substantially complete and operations and services are offered to customers
over a minimum coverage area, loans under the revolving credit facility will be
made subject to satisfaction of certain financial covenants and certain
build-out covenants.
The term loan Facility is subject to mandatory prepayment: (i) with 100% of the
net cash proceeds from the issuance of debt, subject to certain exceptions,
(ii) with 100% of net cash proceeds of asset sales, subject to certain
exceptions, (iii) with 50% of the Company's excess cash flow (as defined), and
(iv) with 50% of the net cash proceeds from the issuance of equity.
The Company's obligations under the Facility are secured by a first-priority
perfected lien on (i) all property and assets, tangible and intangible, of the
Company's subsidiaries including a pledge of the capital stock of all the
Company's subsidiaries. The Company's subsidiaries will guarantee the
obligations of the Company under the Facility. Such guarantee will only be
recourse to the Company's pledge of all of the outstanding capital stock of the
Company's subsidiaries to secure the obligations of the Company under the
Facility.
The Facility contains covenants and restrictions on the ability of the Company
to engage in certain activities, including but not limited to: (i) limitations
on the incurrence of liens and indebtedness, (ii) restrictions on sale
lease-back transactions, consolidations, mergers, sale of assets, capital
expenditures, transactions with affiliates and investments, and (iii) severe
restrictions on dividends, and other similar distributions.
Additionally, the Facility also contains financial covenants requiring the
Company to maintain certain defined ratios of senior debt and total debt to
EBITDA as defined by the Facility; a minimum interest coverage ratio; a minimum
fixed charge coverage ratio; a maximum leverage ratio; and minimum service
revenues, subscriber units and covered POP's. As of March 31, 1999, the Company
was in compliance with all of its required covenants.
Future Maturities of Long-Term Debt
Based on the debt issued on January 29, 1999, as discussed above, for the years
subsequent to December 31, 1998, scheduled annual maturities of long-term debt
outstanding as of December 31, 1998, under existing long-term debt agreements
are as follows (in thousands):
F-14
<PAGE>
NEXTEL PARTNERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
<TABLE>
<S> <C>
1999 ............................... $ --
2000 ............................... --
2001 ............................... --
2002 ............................... --
2003 ............................... 1,312
Thereafter ......................... 973,688
----------
975,000
Less--Unamortized discount ......... (393,624)
----------
$ 581,376
==========
</TABLE>
5. INCOME TAXES:
Deferred tax assets and liabilities consist of the following and are presented
as if Nextel Partners holding company, which was incorporated in 1998 to serve
as the parent company of the "carve-out," had conducted operations in 1998 (in
thousands):
<TABLE>
<S> <C>
Deferred tax assets:
Operating loss carryforwards .......... $ 14,731
Valuation allowance .................... (8,182)
--------
6,549
--------
Deferred tax liabilities:
Property, plant and equipment ......... (6,097)
Other ................................. (452)
--------
(6,549)
--------
Net deferred tax liability ............. $ --
========
</TABLE>
At December 31, 1998, the Company would have had approximately $39.8 million of
consolidated net operating loss ("NOL") carryforwards for federal income tax
purposes expiring through 2018. The Company would have recorded a valuation
allowance of approximately $8.2 million for 1998 because available objective
evidence would have created sufficient uncertainty regarding the realization of
the net deferred tax assets. Such factors primarily would have included
anticipated recurring operating losses resulting from the development of the
Company's business. On a stand-alone Company basis, ignoring the tax effects of
the "carve-out" whose tax impacts will be included in the consolidated tax
return of Nextel for the year ended December 31, 1998 and for the period
through January 29, 1999, and given that the Company had no actual operations
in 1998, the Company would have reported a deferred tax asset of $1.5 million,
a deferred tax liability of $400,000 off set by a valuation allowance on the
net deferred tax asset of $1.1 million. The Company prior to January 29, 1999,
had no operations on a stand-alone basis. As a result, the Company capitalized
and amortized over future periods for tax purposes costs incurred by the
Company prior to January 29, 1999, which were expensed for financial reporting
purposes resulting in the deferred tax asset. The Company, on a stand-alone
basis, did not generate any NOL for the year ended December 31, 1998.
The difference between the statutory tax rate of approximately 37% (35% federal
and 2% state, net of federal benefits) and the tax benefit of zero disclosed
above by the Company is primarily due to the Company's full valuation allowance
against the net deferred tax assets. The Company's ability to utilize the NOL
in any given year may be limited by certain events, including a significant
change in ownership interest.
F-15
<PAGE>
NEXTEL PARTNERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
6. COMMITMENTS AND CONTINGENCIES:
Operating Lease Commitments
The Company leases various equipment and office facilities under operating
leases. Leases for antenna sites are typically five years with renewal options.
Office facilities and equipment other than antenna sites are leased under
agreements with terms ranging from one month to 20 years. The leases normally
provide for the payment of minimum annual rentals and certain leases include
provisions for renewal options of up to five years.
For years subsequent to December 31, 1998, future minimum payments for all
operating lease obligations that have initial noncancellable lease terms
exceeding one year are as follows (in thousands):
<TABLE>
<S> <C>
1999 .................... $ 5,798
2000 .................... 5,850
2001 .................... 5,618
2002 .................... 4,976
2003 .................... 2,551
Thereafter .............. 5,271
-------
$30,064
=======
</TABLE>
Total rental expense was approximately $3 million for the year ended December
31, 1998.
Regulatory Matters
The FCC issues Specialized Mobile Radio ("SMR") licenses on both a
site-specific and wide-area basis. Each license enables SMR carriers to provide
service either on a site-specific basis, in specific 800 MHz Economic Areas
("EA") or 900 MHz Metropolitan Trading Areas ("MTA") in the U.S. Currently, SMR
licenses are issued for a period of 10 years, and are subject to certain
construction and operational requirements.
The FCC has routinely granted license renewals providing the licensees have
complied with applicable rules, policies and the Communications Act of 1934, as
amended. The Company believes that it has met and will continue to meet all
requirements necessary to secure the retention and renewal of its SMR licenses
subsequent to the FCC approved transfer of the licenses from Nextel. Failure of
the Company to obtain such FCC approval within one year of the closing date
prior to January 29, 2000, would constitute an event of default under the
Facility and any indebtedness outstanding thereunder may be accelerated.
Pursuant to the Facility, until FCC approval of the ownership transfer, the
Company will be required to establish a cash collateral account in which it
maintains a balance equal to amounts outstanding under the Facility.
7. CAPITAL STOCK AND STOCK RIGHTS:
Pursuant to the Restated Certificate of Incorporation, the Company has the
authority to issue 170 million shares of capital stock, divided into five
classes as follows: (i) 100 million shares of Common Stock; (ii) 25 million
shares of Series A Convertible Preferred Stock, par value $.001 per share
("Series A Preferred Stock"); (iii) 25 million shares of Series B Mandatory
Redeemable Preferred Stock, par value $.001 per share ("Series B Preferred
Stock"); (iv) 15 million shares of Series C Convertible Preferred Stock, stated
value $.001 per share ("Series C Preferred Stock"); (v) 5 million shares of
Series D Convertible Preferred Stock ("Series D Preferred Stock").
F-16
<PAGE>
NEXTEL PARTNERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
The following is a summary description of the Company's capital stock.
Common Stock
The holders of Common Stock are entitled to one vote per share on all matters
submitted for action by the shareholders. There is no provision for cumulative
voting with respect to the election of directors. Holders of Common Stock are
entitled to share equally, share for share, if dividends are declared on Common
Stock, whether payable in cash, property or securities.
Class A Common Stock -- Under certain circumstances, shares of Class A Common
Stock (and securities convertible into Class B Common Stock other than Class B
Common Stock) are callable at the option of Nextel or may be put to Nextel at
the option of the holders.
Class B Common Stock -- Shares of Class B Common Stock are convertible at any
time at the option of the holder into an equal number of shares of Class A
Common Stock.
Preferred Stock
Ranking -- With respect to rights on liquidation, dissolution or winding up the
order of preference is as follows:
1. the Series B Preferred Stock;
2. the Series A Preferred Stock;
3. the Series C and Series D Preferred Stock
4. the Class A and Class B Common Stock
The holders of the Series A and Series C Preferred Stock are entitled to vote
on an as converted basis on all matters submitted for action by the
shareholders. Series D and Series B Preferred Stock do not have any voting
rights other than to approve mergers or consolidations adverse to the rights of
holders of such securities. The holders of Series A, Series C and Series D
Preferred Stock are entitled to share equally, share for share on an as
converted basis, if dividends are declared on Common Stock, whether payable in
cash, property or securities.
Series A Preferred Stock -- Each share of Series A Preferred Stock is
convertible into one share of Class A Common Stock at any time.
Series B Redeemable Preferred Stock -- The Series B Preferred Stock is subject
to mandatory redemption by the Company 375 days after the stated maturity of
the Notes. The price for redemption will be the liquidation value, which
accretes at an annual rate of 12% from the date of issuance. The Company may
elect under certain circumstances to pay the redemption price by issuing Series
C Preferred Stock for each share of Series B Preferred Stock so redeemed. The
Series B Preferred Stock is subject to voluntary redemption.
Series C Preferred Stock and Series D Preferred Stock -- Each share of Series C
and Series D Preferred Stock is convertible into one share of Class B Common
Stock at any time.
Common Stock Reserved for Issuance
As of the closing of the Capitalization Transactions, the Company had reserved
Common Stock for future issuance as detailed below.
F-17
<PAGE>
NEXTEL PARTNERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
<TABLE>
<S> <C>
Preferred Stock conversion rights ............ 30,589,971
Warrants outstanding ......................... 405,710
Employee options outstanding ................. 262,000
Employee options available for grant ......... 1,795,222
----------
Total ........................................ 33,052,903
==========
</TABLE>
8. STOCK AND EMPLOYEE BENEFIT PLANS:
Restricted Stock Purchase Plan
Pursuant to the Company's Restricted Stock Purchase Plan (the Plan), in 1998,
the Company issued 1,588,888 shares of Class A Common Stock, to senior managers
of the Company and a stockholder of the Company at $.01 per share. Pursuant to
the Plan, the issued shares vest over a four-year period based on the passing
of time and based on certain Company performance goals related to revenue,
EBITDA and the successful build-out of the Company's Network. As of December
31, 1998, 446,547 shares were considered fully vested. Compensation expense
recognized by the Company, which accounts for the Plan using variable
accounting, for the year ended December 31, 1998 was $446,547.
Stock Option Grant
On January 29, 1999, pursuant to an employment agreement entered into by the
Company and an employee of the Company, the Company issued 35,000 options with
an exercise price equal to the fair value at that time ($10 per share) that
vested immediately. The agreement provides that the Company will be required to
purchase the unexercised options on the fourth anniversary for an aggregate
purchase price of $500,000 if directed to do so by the employee.
Employee Note Receivable
On January 29, 1999, the Company advanced $2.2 million to an employee of the
Company. The note does not bear interest and is collateralized by proceeds of
the loan and the restricted stock of the employee.
Employee Benefit Plan
The Company has a defined contribution plan pursuant to Section 401(k) of the
Internal Revenue Code covering all eligible officers and employees. The Company
provides a matching contribution of $0.50 for every $1.00 contributed by the
employee up to 4% of each employee's salary. Such contributions were
approximately $50,000 for the year ended December 31, 1998. At December 31,
1998, the Company had no other pension or postemployment benefit plans.
9. RELATED PARTY TRANSACTIONS:
Motorola Purchase Agreements
Pursuant to the equipment purchase agreements between Partners and Motorola,
and prior to the Capitalization Transactions, purchase agreements between
Nextel and Motorola, Motorola provided the iDEN infrastructure and subscriber
handset equipment to Partners throughout its markets (such equipment purchase
agreements, are referred to herein as the "Equipment Purchase Agreements"). The
Company expects to rely on Motorola for the manufacture of a substantial
portion of the
F-18
<PAGE>
NEXTEL PARTNERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
equipment necessary to construct its Digital Mobile Network and handset
equipment for the foreseeable future. The Equipment Purchase Agreements govern
Partners' rights and obligations regarding purchases of system infrastructure
equipment manufactured by Motorola and others.
For the year ended December 31, 1998, the Company purchased approximately $47.5
million, for infrastructure and other equipment, handsets, warranties, rent and
services from Motorola.
The Joint Venture Agreement
The Company, OPCO and a wholly owned subsidiary of Nextel ("Nextel Sub")
entered into a joint venture agreement (the "Joint Venture Agreement").
Summarized below are several of the important terms of the Joint Venture
Agreement.
Build-Out -- The Company is bound to certain operational obligations, including
meeting the construction requirements set forth in an agreed-upon minimum
build-out plan, ensuring compatibility of the Company's systems with the Nextel
Digital Mobile Network, offering certain core service features with respect to
its systems (including upgrading its system to comply with future Nextel
Standards) and causing the Company's systems to comply with Nextel's iDEN
quality standards.
Acquisition of Licenses -- Nextel has transferred SMR licenses to Nextel WIP
License Corporation (a Delaware Corporation and currently a wholly owned
subsidiary of Nextel). Upon approval of the FCC, Nextel will transfer the stock
of Nextel WIP License Corporation to Nextel Partners. These licenses will allow
the Company to provide wireless communication service to customers in 39
mid-sized and smaller markets throughout the United States.
Nextel Vendor Relationships -- If requested by the Company, Nextel Sub has
agreed to use reasonable efforts to assist the Company in obtaining access to
many of the goods and services available through Nextel's vendors with whom the
Company is negotiating for the purpose of obtaining equipment as well as
advertising, media buying, telemarketing and related services.
Nextel Approval Rights -- Subject to Nextel maintaining a certain percentage
ownership in Nextel Partners, and without the approval of Nextel Sub, the
Company may not (i) make a material change in the technology used in its
business, (ii) dispose of all or substantially all of its assets or (iii) prior
to the occurrence of certain specified events, broaden the scope of its
business beyond the limits provided for in the Joint Venture Agreement.
Exclusivity -- Nextel Sub has agreed, on behalf of Nextel and its affiliates,
that during the term of the Joint Venture Agreement, Nextel and its affiliates
will not provide digital wireless communication services within the Company's
territory (the "Territory") using 800 MHz frequencies. Nextel and its
affiliates may continue to provide analog 800 MHz service in the Territory
provided that such analog service is not offered under any of the trademarks
licensed to the Company under the parties Trademark License Agreement (the
Agreement) and do not involve the use of iDEN or other digital transmission
technology. In addition, Nextel and its affiliates may offer digital services
in the Territory using non-800 MHz frequencies provided that these services are
not offered under the licensed trademarks and do not offer interconnection with
landline telecommunication providers. Nextel may engage in national advertising
(including print, television, radio and Internet), promotions and sponsorships
to promote Nextel service, but will coordinate with the Company to ensure that
customers in the Company service areas adjacent to Nextel service areas do not
switch between Nextel and Company territories. Nextel may continue to service
national accounts, accounts with virtual private networks and national indirect
distributors within the Territory.
Standard of Care -- Nextel Sub (on behalf of Nextel and its affiliates) has
agreed to provide services to the Company at the same level that such services
are provided to subsidiaries of Nextel and not to discriminate between the
Company and subsidiaries of Nextel with respect to providing such services.
F-19
<PAGE>
NEXTEL PARTNERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
In the event that Nextel Sub (on behalf of Nextel and its affiliates) has
agreed to provide services to the Company that are not provided to subsidiaries
of Nextel, Nextel Sub will only be liable in cases of gross negligence or
willful misconduct in the provision of such services.
Marketing, Advertising, Pricing, etc. -- The Company is generally required to
adhere to Nextel standards for pricing structure, advertising, promotions,
customer care, telemarketing and related activities.
Back Office/MIS Services -- Nextel provides the Company access to certain back
office and information systems platforms on an ongoing basis, as more fully
described in the Joint Venture Agreement. The Company pays to Nextel a fee,
based on Nextel's cost, for these services.
Trademark License Agreement -- Pursuant to the Trademark License Agreement,
Nextel Sub has granted OPCO a non-exclusive license to use certain trademarks
and other intellectual property (the "Licensed Marks") that are now or in the
future may be used by or licensed to Nextel.
The Trademark License Agreement allows OPCO to sublicense the Licensed Marks
solely to its wholly owned subsidiaries and to authorized dealers of OPCO in
connection with the marketing, promotion and sale of OPCO services, and the
marketing, promotion and sale of certain equipment to be used by OPCOs
customers. OPCO is obligated to pay royalties to Nextel Sub for its use of the
Licensed Marks, beginning on a date (the "Royalty Commencement Date") that is
the latter of January 1, 2002 or the first day of the month after the Company
has achieved two consecutive fiscal quarters of positive EBITDA. After the
Royalty Commencement Date and through December 31, 2004, the royalty will be
equal to 0.5% of gross monthly service revenues, and will equal 1% of the gross
monthly service revenues from January 1, 2005 and thereafter.
Either OPCO or Nextel Sub is allowed to, at any time upon or following the
termination of the Joint Venture Agreement, terminate the Trademark License
Agreement, and Nextel Sub is entitled to seek to terminate the Trademark
License Agreement upon the occurrence of certain material defaults under the
Joint Venture Agreement, even if the Joint Venture Agreement and other
Operating Agreements remain in effect. Termination of the Trademark License
Agreement requires, among other things, that OPCO discontinue use of the
Trademark as part of its corporate, assumed or trade name.
Roaming Agreement -- Pursuant to a roaming agreement (the "Roaming Agreement")
entered into between Nextel Sub and OPCO, Nextel Sub and OPCO provide ESMR
service to subscribers of the other (in either case, the "Home Service
Provider") while such subscribers are out of the Home Service Provider's
territory and roaming in the territory of the other (in either case, the
"Remote Service Provider"). Under the Roaming Agreement, each Home Service
Provider is responsible for billing its own subscribers and designated users
for roaming usage in accordance with its own subscriber plans and service
agreements. The Roaming Agreement provides that each party pays the others
monthly roaming fees in an amount based on the actual system minutes generated
by the respective subscribers of each Home Service Provider operating as
authorized roamers in the Remote Service Provider's territory.
Frequency Management Agreement -- Pending FCC approval of the Company's
acquisition of SMR licenses from Nextel, its right to utilize those frequencies
are governed by the Frequency Management Agreement. The Frequency Management
Agreement obligates the Company to, among other things, comply with all
applicable FCC rules and regulations governing the licenses underlying the
managed frequencies and with various standards and criteria established by
Nextel relating to the construction, implementation and operation of the
Digital Mobile Network. Pending FCC approval of the license transfer, Nextel
Sub will represent the Company before the FCC with respect to any matters
relating to the managed frequencies. The Frequency Management Agreement will
terminates upon FCC approval of the license transfer.
F-20
<PAGE>
NEXTEL PARTNERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
Master Site Lease Agreement -- OPCO will lease from Nextel Sub, under a master
site lease agreement to be entered into between them (the "Master Site Lease"),
telecommunications towers and sites and space on telecommunications towers,
which are owned or leased by affiliates of Nextel Sub in the Territory.
Pursuant to the Master Site Lease, as the network build-out progresses,
additional sites will become subject to the Master Site Lease. OPCO will pay
Nextel Sub monthly rental payments based on the number of telecommunication
towers leased by OPCO.
The Master Site Lease, and each Site lease thereunder, has an initial term of
five years, renewable at OPCO's option for up to nine additional terms of five
years. Either OPCO or Nextel Sub is allowed to, at any time upon or following
the termination of the Joint Venture Agreement, terminate the Master Site
Lease. Neither party is permitted to assign or transfer the Master Site Lease
or any of its rights or obligations thereunder without the consent of the
other, except that Nextel Sub will be entitled to assign or transfer the Master
Site Lease to any affiliate or any Tower Aggregator.
Transition Services Agreement -- Nextel Sub, through its affiliates, provides
certain services to OPCO for a limited period under a transition services
agreement entered into between OPCO and Nextel (the "Transition Services
Agreement"). Under the Transition Services Agreement, certain accounting,
payroll, customer care, purchasing, human resources and billing functions are
made available to OPCO. In return for the services received through Nextel,
OPCO pays monthly fees to Nextel based on Nextel's cost.
The services provided under the Transition Services Agreement have different
variable terms agreed to by OPCO and Nextel Sub. OPCO has the sole discretion
to terminate its use of any services covered by the Transition Services
Agreement before the end of any term of service. The parties contemplate that
in the event OPCO desires to purchase any services from Nextel Sub following
the expiration of the Transition Services Agreement, Nextel Sub may, at its
election, agree to provide certain services to OPCO on an arm's length basis,
at prices to be agreed upon.
Switch Sharing Agreement -- Nextel, through its affiliates, provides certain
telecommunications switching services to OPCO pursuant to a switch sharing
agreement entered into between Nextel and OPCO (the "Switch Sharing
Agreement"). The Switch Sharing Agreement permits OPCO to link cell sites to
and electronically access certain switching equipment used and maintained by
affiliates of Nextel in the operation of Nextel's Digital Mobile Network, which
facilitates OPCO provision of ESMR service to the Company's subscribers. Under
the Switch Sharing Agreement, OPCO pays Nextel monthly switching fees based on
a pricing formula agreed to by the parties based on Nextel's cost of providing
such services in the year 2001.
Agreement Limiting Liability and Recourse to Nextel -- Pursuant to the term of
an agreement (the "Limitation on Liability and Recourse Agreement") entered
into by Nextel and the Company, the maximum cumulative, aggregate cash
liability of Nextel and its controlled affiliates for any and all actual or
alleged claims or causes of action arising in connection with any aspect of the
agreements governing or otherwise relating to the operating agreements will be
capped at $200 million. The cap amount will be reduced, dollar for dollar, by
the cumulative, aggregate amount that Nextel and its controlled affiliates have
advanced, expended or otherwise provided to or for the benefit of Nextel Sub to
enable Nextel Sub to perform its obligations relating to the Operating
Agreements. Among other things, the Limitation on Liability and Recourse
Agreement will also provide that Nextel will have no obligation to pay any sum
to the Company if the Company has not pursued and exhausted all remedies
available to the Company in connection with any relevant claim or cause of
action. The Limitation on Liability and Recourse Agreement will survive the
expiration or termination of any and all of the agreements governing or
otherwise relating to the operating agreements.
DLJMB Affiliation with Initial Purchaser/Bank Syndicate -- DLJ Capital, an
affiliate of DLJMB, has received customary fees and reimbursement of expenses
in connection with the arrangement and
F-21
<PAGE>
NEXTEL PARTNERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
syndication of the Facility and as a lender thereunder. Donaldson, Lufkin &
Jenrette Securities Corporation ("DLJSC"), which is also an affiliate of DLJMB,
has acted as a financial advisor to the Company, as an arranger under the
Facility and as an initial purchaser in the Notes offering. The aggregate
amount of all fees paid to the DLJ entities in connection with the
Capitalization Transactions was approximately $14.7 million. The Company and
its affiliates may from time to time enter into other investment banking
relationships with DLJSC or one of its affiliates pursuant to which DLJSC or
its affiliate will receive customary fees and will be entitled to reimbursement
of reasonable disbursements and out-of-pocket expenses incurred in connection
therewith. The Company expects that any such arrangement will include
provisions for the indemnification of DLJSC against certain liability,
including liabilities under the federal securities laws.
10: VALUATION AND QUALIFYING ACCOUNTS (in thousands):
<TABLE>
<CAPTION>
BALANCE
BEGINNING COSTS AND AT
OF PERIOD EXPENSES WRITE-OFFS END OF PERIOD
----------- ----------- ------------ --------------
<S> <C> <C> <C> <C>
Year ended December 31, 1998
Allowance for doubtful accounts ......... $ -- $254 $-- $254
==== ==== === ====
</TABLE>
F-22
<PAGE>
INDEX TO PRO FORMA UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Pro Forma Unaudited Consolidated Statement of Operations for
the year ended December 31, 1998 ................................ P-3
Pro Forma Unaudited Consolidated Balance Sheet for
the year ended December 31, 1998 ................................ P-4
Notes to Pro Forma Unaudited Consolidated Financial Statements for
the year ended December 31, 1998 ................................ P-5
</TABLE>
P-1
<PAGE>
PRO FORMA UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS
The Pro Forma Unaudited Consolidated Statement of Operations for the year
ended December 31, 1998 gives effect to the issuance of preferred stock, the
bank credit facility, issuance of the senior redeemable discount notes, and the
application of the net proceeds therefrom as if they had occurred on the first
day of such period. The Pro Forma Unaudited Consolidated Balance Sheet for the
year ended December 31, 1998 gives effect to the issuance of the preferred
stock, the bank credit facility, issuance of the senior redeemable discount
notes, and the application of the net proceeds therefrom as if they had
occurred on that date.
The Pro Forma Unaudited Consolidated Financial Statements have not been
audited by the independent auditors of the Company and are intended for
informational purposes only and are not necessarily indicative of the future
financial position or future results of operations of the Company or of the
financial position or the results of operations of the Company that would have
been realized had the issuance of the preferred stock, the bank credit
facility, issuance of the senior redeemable discount notes, and the application
of the net proceeds therefrom occurred as of the dates presented.
P-2
<PAGE>
NEXTEL PARTNERS, INC. AND SUBSIDIARIES
PRO FORMA UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
----------------------------------------------------
NEXTEL PRO FORMA
PARTNERS, INC. ADJUSTMENTS TOTALS
---------------- ------------------ ------------
<S> <C> <C> <C>
Operating revenues:
Service revenues ........................ $ 3,745 $ -- $ 3,745
Equipment revenues ...................... 1,564 -- 1,564
--------- ---------- ---------
Total revenues ........................... 5,309 -- 5,309
--------- ---------- ---------
Operating expenses:
Cost of service revenues ................ 6,108 -- 6,108
Cost of equipment revenues .............. 2,935 -- 2,935
Sales and marketing ..................... 6,636 -- 6,636
General and administrative .............. 6,895 -- 6,895
Deferred compensation ................... 447 -- 447
Depreciation and amortization ........... 4,586 -- 4,586
--------- ---------- ---------
Total operating expenses ................. 27,607 -- 27,607
--------- ---------- ---------
Loss from operations ..................... (22,298) -- (22,298)
Interest expense ......................... -- (79,196)(1) (79,196)
Interest income .......................... -- 25,281 (2) 25,281
--------- ---------- ---------
Loss before income tax provision ......... (22,298) (53,915) (76,213)
Income tax provision ..................... -- -- (3) --
--------- ---------- ---------
Net loss ................................. $ (22,298) $ (53,915) $ (76,213)
========= ========== =========
</TABLE>
P-3
<PAGE>
NEXTEL PARTNERS, INC. AND SUBSIDIARIES
PRO FORMA UNAUDITED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
--------------------------------------------------------
NEXTEL PRO FORMA
PARTNERS, INC. ADJUSTMENTS TOTALS
---------------- --------------------- -------------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents ....................... $ 16 $ 395,201 (4) $ 303,862
168,125 (5)
52,144 (6)
(130,724)(7)
(3,700)(8)
(2,200)(9)
(175,000)(11)
Accounts receivable, net ........................ 1,546 -- 1,546
Subscriber equipment inventory .................. 1,353 -- 1,353
Prepaid rent .................................... 325 -- 325
Restricted cash ................................. 175,000 (11) 175,000
Property, plant and equipment ................... 112,334 -- 112,334
Less: Accumulated depreciation .................. (4,386) -- (4,386)
FCC operating licenses, net ..................... 133,180 -- 133,180
Debt issuance costs ............................. 3,298 11,175 (4) 20,484
6,875 (5)
(864)(8)
Receivable from management employee ............. -- 2,200 (9) 2,200
--------- -------------- ----------
Total Assets ................................... $ 247,666 $ 498,232 $ 745,898
========= ============== ==========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Accounts payable ................................ $ 1,043 $ -- $ 1,043
Accrued expenses and other ...................... 4,554 (2,040)(8) 2,514
Payable to Nextel and Eagle River ............... 3,398 (3,398)(7) --
Long-term debt .................................. -- 406,376 (4) 581,376
175,000 (5)
STOCKHOLDERS' EQUITY
Preferred stock--Series A ....................... -- 17 (6) 17
Preferred stock--Series B ....................... -- 2 (6) 2
Preferred stock--Series C ....................... -- 9 (6) 9
Preferred stock--Series D ....................... -- 2 (6) 2
Common stock--Class A and paid in capital........ 1,604 5,129 (10) 6,733
Warrants outstanding ............................ -- 3,847 (6) 3,847
Other paid in capital ........................... 260,761 170,922 (6) 301,833
(127,326)(7)
(2,524)(8)
Accumulated deficit ............................. (22,553) -- (22,553)
Subscription receivable from stockholders ....... -- (122,655)(6) (122,655)
Deferred compensation ........................... (1,141) (5,129)(10) (6,270)
--------- -------------- ----------
Total liabilities and stockholders' equity ..... $ 247,666 $ 498,232 $ 745,898
========= ============== ==========
</TABLE>
P-4
<PAGE>
NOTES TO PRO FORMA UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998
1) To reflect (i) $17.8 million in interest expense associated with borrowings
under the Company's Credit Facility, (ii) accretion of $59.2 million in
non-cash interest expense associated with the 14% Senior Discount Notes,
(iii) $2.1 million of amortization of deferred financing costs associated
with the Company's Credit Facility and 14% Senior Discount Notes, and (iv)
$0.1 million in interest on a management employee loan.
2) To reflect $25.3 million in interest income associated with the net
investment of proceeds of the Senior Discount Notes Offering and the
Company's Credit Facility assuming an interest rate of 5.3%.
3) No benefit for income tax has been recorded as the Company has determined
that a full valuation allowance is required.
4) To reflect the proceeds from issuance of the 14% Senior Discount Notes of
$800 million, net of the discount of $393.6 million and commissions and
expenses of $11.2 million.
5) To reflect the proceeds from the Company's term loan of $175.0 million, net
of commissions and expenses of $6.9 million.
6) To reflect the $308.2 million of irrevocable equity commitments consisting
of (i) $21.9 million of Redeemable or Convertible Preferred Stock, and
(ii) $286.3 million of Convertible Preferred Stock. In exchange for the
Nextel Contribution, Nextel received $133.4 million of equity. The Nextel
Contribution consists of the transferred licenses. The total cash equity
commitment is equal to $156.4 million with initial cash equity of $52.1
million funded on January 29, 1999, the "Closing", and $52.1 million to be
funded no later than December 31, 1999, and $52.1 million to be funded no
later than December 31, 2000. The $156.4 million of cash equity includes
warrants to purchase a total of 1.25% of the diluted common stock of the
Company with an exercise price of $.01 per share. The fair value of the
outstanding warrants is estimated to be $3.9 million. In exchange for the
Motorola Contribution, Motorola received $18.4 million in Convertible
Preferred Stock. The Motorola Contribution consists of a vendor credit to
be used toward the purchase of Motorola infrastructure equipment.
<TABLE>
<CAPTION>
PREFERRED STOCK: (IN THOUSANDS)
- --------------------------------------------------------------------------- ---------------
<S> <C>
Nextel Contribution ............................................... $ 133,380
Cash Equity Contributions ......................................... 156,433
Motorola Contribution ............................................. 18,367
----------
Total committed equity ........................................... 308,180
Subscription Receivable from Convertible Preferred Stock ......... (122,655)
----------
Total received from Preferred Stock at the Closing ................ $ 185,525
==========
</TABLE>
7) Reflects payments to Nextel and Eagle River of $130.7 million representing
reimbursement of capital assets and operating expenses incurred by Nextel
and Eagle River (as of December 31, 1998), the majority of which covers
the Upstate New York and Hawaii Territories. Actual cash paid to Nextel
and Eagle River on January 29, 1999 was equal to $132.2 million and
differed from the December 31, 1998 amount as a result of January 1999
operations.
8) Reflects payments and reclassifications of debt and equity issuance costs.
9) Reflects loan made to a management employee at the Closing.
10) Reflects adjustment to deferred compensation relating to Company's
Restricted Stock Purchase Plan.
11) Reflects cash collateral account maintained under the credit facility equal
to the borrowings until FCC approval of the transfer applications is
approved.
P-5
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE
NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION OR TO MAKE ANY
REPRESENTATION TO YOU THAT IS NOT CONTAINED IN THIS PROSPECTUS. THIS PROSPECTUS
IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO
BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT
PERMITTED. YOU SHOULD NOT UNDER ANY CIRCUMSTANCES ASSUME THAT THE INFORMATION
IN THIS PROSPECTUS IS CORRECT ON ANY DATE AFTER THE DATE OF THIS PROSPECTUS.
-----------------------------------
$800,000,000
Offer to Exchange
14% Senior Discount Notes
due 2009
that have been registered
under the
Securities Act of 1933
for outstanding
14% Senior Discount Notes
due 2009
--------------------------------------------
P R O S P E C T U S
DATED , 1999
--------------------------------------------
[GRAPHIC OMITTED]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company is a Delaware corporation. In its restated certificate of
incorporation, the Company has adopted the provisions of Section 102(b)(7) of
the Delaware General Corporation Law (the "Delaware Law"), which enables a
corporation in its original certificate of incorporation or an amendment
thereto to eliminate or limit the personal liability of a director for monetary
damages for breach of the director's fiduciary duty, except (i) for any breach
of the director's duty of loyalty to the corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) under Section 174 of the Delaware law
(providing for liability of directors for unlawful payment of dividends or
unlawful stock purchases or redemptions) or (iv) for any transaction from which
a director will personally receive a benefit in money, property or services to
which the director is not legally entitled.
The Company has also adopted indemnification provisions pursuant to
Section 145 of the Delaware Law, which provides that a corporation may
indemnify any persons, including officers and directors, who are, or are
threatened to be made, parties to any threatened, pending or completed legal
action, suit or proceedings, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation), by
reason of the fact that such person was an officer, director, employee or agent
of the corporation, or is or was serving at the request of such corporation as
a director, officer, employee or agent of another corporation or enterprise.
The indemnity may include expenses (including attorneys fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by such person
in connection with such action, suit or proceeding, provided such officer,
director, employee or agent acted in good faith and in a manner he reasonably
believed to be in or not opposed to the corporation's best interests and, with
respect to criminal proceedings, had no reasonable cause to believe that his
conduct was unlawful. A Delaware corporation may indemnify officers or
directors in an action by or in the right of the corporation under the same
conditions, except that no indemnification is permitted without judicial
approval if the officer or director is adjudged to be liable to the
corporation. Where an officer or director is successful on the merits or
otherwise in the defense of any action referred to above, the corporation must
indemnify him against expenses (including attorney's fees) that such officer or
director actually and reasonably incurred.
The Company intends to enter into indemnification agreements with each of
the Company's officers and directors.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS:
<TABLE>
<S> <C>
3.1 Restated Certificate of Incorporation of the Company.
3.2 Bylaws of the Company.
4.1 Indenture, dated January 29, 1999, by and between the Company and The Bank of New
York, as trustee, relating to the 14% Senior Discount Notes due 2009.
4.2 Registration Rights, dated as of January 29, 1999, by and among the Company,
Donaldson, Lufkin & Jenrette Securities Corporation, Barclays Capital Inc., First Union
Capital Markets, BNY Capital Markets, Inc. and Nesbitt Burns Securities Inc.
4.3 Credit Agreement, dated as of January 29, 1999, among Nextel Partners Operating Corp.,
DLJ Capital Fund, Inc., The Bank of New York, Bank of Montreal and other financial
institutions.
4.4 Borrower Security and Pledge Agreement, dated as of January 29, 1999, by and between
Nextel Partners Operating Corp. and Bank of Montreal.
</TABLE>
II-1
<PAGE>
<TABLE>
<S> <C>
4.5 Subsidiary Security and Pledge Agreement, dated as of January 29, 1999, by and among
the subsidiaries of the Company and Bank of Montreal.
4.6 Parent Guaranty and Pledge Agreement, dated as of January 29, 1999, by and between
the Company and Bank of Montreal.
4.7 Subsidiary Guaranty, dated as of January 29, 1999, by and among the subsidiaries of the
Company and Bank of Montreal.
5.1 Opinion of Willkie Farr & Gallagher.
8.1 Opinion of Willkie Farr & Gallagher with respect to certain tax matters.
10.1 Purchase Agreement, dated January 22, 1999, by and among the Company, Donaldson,
Lufkin & Jenrette Securities Corporation, Barclays Capital Inc., First Union Capital
Markets, BNY Capital Markets, Inc. and Nesbitt Burns Securities Inc.
10.2 Shareholders' Agreement, dated as of January 29, 1999, among the Company and the
shareholders named therein.
10.3 Joint Venture Agreement, dated as of January 29, 1999, by and among the Company,
Nextel Partners Operating Corp., and Nextel WIP Corp.
10.4 Interim Management Agreement, dated as of January 29, 1999, by and between Nextel
Partners Operating Corp. and Nextel WIP Corp.
10.5 Analog Management Agreement, dated as of January 29, 1999, by and between Nextel
Partners Operating Corp. and Nextel WIP Corp.
10.6* Trademark License Agreement, dated as of January 29, 1999, by and between Nextel
Partners Operating Corp. and Nextel WIP Corp.
10.7* Roaming Agreement, dated as of January 29, 1999, by and between Nextel Partners
Operating Corp. and Nextel WIP Corp.
10.8* Switch Sharing Agreement, dated as of January 29, 1999, by and between Nextel Partners
Operating Corp. and Nextel WIP Corp.
10.9* Transition Services Agreement, dated as of January 29, 1999, by and between Nextel
Partners Operating Corp. and Nextel WIP Corp.
10.10* iDEN (Registered Trademark) Infrastructure Equipment Purchase Agreement, dated as of January 29, 1999, by
and between Motorola, Inc. and Nextel Partners Operating Corp.
10.11* Subscriber Purchase and Distribution Agreement, dated as of January 29, 1999, by and
between Motorola, Inc. and Nextel Partners Operating Corp.
10.12* Agreement Specifying Obligations of, and Limiting Liability and Recourse to, Nextel,
dated as of January 29, 1999, among the Company, Nextel Partners Operating Corp. and Nextel
Communications, Inc.
10.13* Asset and Stock Transfer and Reimbursement Agreement, dated as of January 29, 1999,
by and between Nextel Partners Operating Corp. and Nextel WIP Corp.
10.14 Employment Agreement, dated as of January 29, 1999, between the Company and John
Chapple.
10.15 Employment Agreement, dated as of January 29, 1999, between the Company and John
Thompson.
10.16 Stock Option Agreement, dated as of January 29, 1999, between the Company and John
Thompson.
</TABLE>
II-2
<PAGE>
<TABLE>
<S> <C>
10.17 Non-negotiable Promissory Note, dated January 29, 1999, by John Thompson to the
Company.
10.18 1999 Nonqualified Stock Option Plan of the Company
21 Subsidiaries of the Company.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Willkie Farr & Gallagher (included in their opinions filed as Exhibits 5.1
and 8.1).
24.1 Powers of Attorney (included on signature page to Registration Statement on Form S-4).
25.1* Statement on Form T-1 of Eligibility of Trustee.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Letter to Clients.
99.4 Form of Letter to Nominees.
</TABLE>
- ----------
* To be filed by amendment.
(B) FINANCIAL STATEMENT SCHEDULES:
None.
ITEM 22. UNDERTAKINGS.
Insofar as indemnifications for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 20 above, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the option of their counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of this Registration Statement through
the date of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in this Registration Statement when it became effective.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new
II-3
<PAGE>
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing a Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Kirkland, State of Washington, on the 14th day of
May, 1999.
NEXTEL PARTNERS, INC.
By: /s/ John Chapple
------------------------------------
John Chapple
Chief Executive Officer
POWER OF ATTORNEY
We, the undersigned officers and directors of Nextel Partners, Inc.,
hereby severally and individually constitute and appoint John Chapple, John D.
Thompson and Donald Manning, and each of them, as the true and lawful
attorneys-in-fact for the undersigned, in any and all capacities, with full
power of substitution, to sign any and all amendments to this Registration
Statement (including post-effective amendments), and to file the same with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact, and
each of them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully to
all intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- ---------------------------- -------------
<S> <C> <C>
/s/ John Chapple President, Chief Executive May 14, 1999
- ----------------------------- Officer and Director
John Chapple
/s/ John D. Thompson Chief Financial Officer May 14, 1999
- ----------------------------- and Treasurer
John D. Thompson
/s/ Timothy M. Donahue Director May 14, 1999
- -----------------------------
Timothy M. Donahue
/s/ Andrew H. Rush Director May 14, 1999
- -----------------------------
Andrew H. Rush
/s/ Andrew E. Sinwell Director May 14, 1999
- -----------------------------
Andrew E. Sinwell
/s/ Dennis M. Weibling Director May 14, 1999
- -----------------------------
Dennis M. Weibling
</TABLE>
II-5
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
OF NEXTEL PARTNERS, INC.
(Originally incorporated on July 8, 1998
under the name WIP Parent Corp.)
Pursuant to Sections 242 and 245 of the General Corporation Law of the
State of Delaware, this Restated Certificate of Incorporation was adopted by
the Corporation's Board of Directors and its shareholders in accordance with
Section 228 thereof. This Restated Certificate of Incorporation restates,
integrates and amends the provisions of the Certificate of Incorporation of the
Corporation.
ARTICLE I
NAME
The name of the Corporation is Nextel Partners, Inc.
ARTICLE II
REGISTERED OFFICE; REGISTERED AGENT
The address of the registered office of the Corporation in Delaware is
9 East Loockerman Street, Dover, Kent County, Delaware 19901, and the name of
the Corporation's registered agent at such address is National Registered
Agents, Inc.
ARTICLE III
PURPOSE
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware (the "DGCL").
<PAGE>
ARTICLE IV
AUTHORIZED CAPITAL
4.1 Authorized Capital. The total authorized number of shares of all classes of
capital stock which the Corporation has authority to issue is 170,000,000
shares, consisting of:
(a) 70,000,000 shares of preferred stock, of which 25,000,000 shares are
designated as Series A Convertible Preferred Stock, par value $.001 per share
(the "Series A Preferred Stock"), 25,000,000 shares are designated as Series B
Preferred Stock, par value $.001 per share (the "Series B Preferred Stock"),
15,000,000 shares are designated as Series C Convertible Preferred Stock, par
value $.001 per share (the "Series C Preferred Stock"), and 5,000,000 shares
are designated as Series D Convertible Preferred Stock, par value $.001 per
share (the "Series D Preferred Stock" and, together with the Series A Preferred
Stock, the Series B Preferred Stock and the Series C Preferred Stock, the
"Preferred Stock"; the "Series A Preferred Stock," "Series C Preferred Stock"
and "Series D Preferred Stock" are sometimes collectively referred to herein as
the "Convertible Preferred Stock"); and
(b) 100,000,000 shares of common stock, of which 75,000,000 shares are
designated as Class A Common Stock, par value $.001 per share (the "Class A
Common Stock"), and 25,000,000 shares are designated as Class B Convertible
Common Stock, par value $.001 per share (the "Class B Common Stock" and,
together with the Class A Common Stock, the "Common Stock").
4.2 Additional Series of Preferred Stock, Reacquired Shares.
(a) Subject to approval by holders of shares of any series or class of
Preferred Stock to the extent such approval is required by its terms, the Board
of Directors of the Corporation (the "Board of Directors") is hereby expressly
authorized, by resolution or resolutions, to provide, out of the unissued
shares of Preferred Stock, for series of Preferred Stock in addition to the
Series A Preferred Stock, the Series B Preferred Stock, the Series C Preferred
Stock and the Series D Preferred Stock. Before any shares of any such series
are issued, the Board of Directors shall fix, and is hereby expressly empowered
to fix, by resolution or resolutions, the number of shares of Preferred Stock
constituting such series, and the designations, powers, preferences and
relative, participating, optional or other specified rights and the
qualifications, limitations and restrictions thereof.
(b) Any shares of Preferred Stock redeemed or purchased or otherwise acquired
by the Corporation in any manner whatsoever shall be retired and canceled
promptly after the acquisition thereof. All such shares shall upon their
cancellation become authorized but unissued shares of Preferred Stock and may
be reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors, subject to the conditions
or restrictions on issuance set forth herein.
4.3 Dividends.
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<PAGE>
(a) Holders of outstanding shares of Convertible Preferred Stock and holders
of outstanding shares of Common Stock shall be entitled to receive dividends,
out of funds legally available therefor, when, as and if declared by the Board
of Directors. Dividends shall be paid to such holders on a pro rata basis (i)
in the case of the holders of Convertible Preferred Stock, based on the number
of shares of Class A Common Stock or Class B Common Stock, as the case may be,
that such holders would have received had such holders converted their shares
of Convertible Preferred Stock into Common Stock as of the record date set for
such dividend payment (the "Dividend Record Date") pursuant to Section 4.10 and
(ii) in the case of the holders of Common Stock, the number of shares of Common
Stock held by such holders as of such Dividend Record Date. Holders of
outstanding shares of Series B Preferred Stock shall not be entitled to receive
dividends on their shares of Series B Preferred Stock.
(b) Nothing herein contained shall in any way or under any circumstances be
construed or deemed to require the Board of Directors to declare, or the
Corporation to pay or set aside for payment, any dividends on shares of the
Convertible Preferred Stock, the Common Stock or any other class of Capital
Stock or series of preferred stock at any time.
4.4 Voting.
(a) Except as set forth in Section 4.4(b) or as otherwise required by
Delaware law, the holders of the Series A Preferred Stock, the Series C
Preferred Stock, the Class A Common Stock and Class B Common Stock shall vote
together on each matter submitted for a vote of holders of Common Stock, and
not by separate class or series. For purposes of any such vote (i) each holder
of Series A Preferred Stock and each holder of Series C Preferred Stock shall
be entitled to notice of any stockholders' meeting in accordance with this
Restated Certificate of Incorporation and the Bylaws of the Corporation and to
vote that number of shares of Common Stock that such holder would have received
had such holder converted its shares of Series A Preferred Stock or Series C
Preferred Stock into Common Stock as of the record date set for such vote (the
"Voting Record Date") pursuant to Section 4.10 and (ii) each holder of Common
Stock shall be entitled to vote that number of shares of the Common Stock held
by such holder as of the Voting Record Date. Except as set forth in Section
4.4(b), or as otherwise required by Delaware law, (A) the holders of Series B
Preferred Stock and the holders of Series D Preferred Stock shall not be
entitled to vote on any matter submitted to stockholders and (B) the shares of
Series B Preferred Stock and Series D Preferred Stock shall not be included for
purposes of determining the number of shares of Capital Stock of the
Corporation voting or entitled to vote on any such matter.
(b) So long as any shares of any series of Preferred Stock are outstanding,
the Corporation shall not, without the affirmative vote or, notwithstanding any
contrary provision of the Bylaws of the Corporation, written consent of holders
of at least a majority of the shares of such series of Preferred Stock then
outstanding (or such higher percentage as may be required by Delaware law),
each series voting or consenting, as the case may be, separately as one class,
given in person or by proxy, either in writing or by resolution adopted at an
annual or special meeting, (i) amend, alter or repeal any provision of this
Restated Certificate of Incorporation or the Bylaws (by merger or otherwise) or
of
3
<PAGE>
any provision (including the adoption of a new provision thereof which would
result in an alteration or circumvention of the voting and other rights,
preferences or privileges of the holders of such series of Preferred Stock), or
to authorize additional shares of such series of Preferred Stock, (ii)
authorize any Senior Securities, (iii) subject to Article V, merge or
consolidate with or into any Person (A) if the Corporation is the surviving
entity in the merger or consolidation and the specified rights, preferences or
privileges of the holders of such series of Preferred Stock are changed
adversely as a result of such transaction or (B) if the Corporation is not the
surviving entity in the merger or consolidation and the securities of the
surviving entity issued in exchange for the shares of such series of Preferred
Stock have specified rights, preferences and privileges that are not as
favorable as the specified rights, preferences and privileges of such series of
Preferred Stock, or (iv) make any payment on account of, or set apart for
payment any money for a sinking or other similar fund for, the purchase,
redemption or other retirement of, any shares of any class of Capital Stock of
the Corporation, or any options, warrants or other rights exercisable for or
convertible into any such Capital Stock, except (x) for repurchases of Common
Stock (and options, warrants or other rights to acquire Common Stock) from
employees or former employees (or consultants) of the Corporation and (y) to
the extent necessary to prevent the loss or secure the renewal or reinstatement
of any license or franchise held by the Corporation or any of its Subsidiaries
from any governmental agency.
4.5 Series A Preferred Stock. The Series A Preferred Stock shall have
the following powers, preferences and rights and qualifications, limitations
and restrictions (in addition to the powers, preferences and rights and
qualifications, limitations and restrictions applicable to the Series A
Preferred Stock specified elsewhere herein):
(a) Ranking. The Series A Preferred Stock shall, with respect to dividend
rights, (i) rank senior to each class of Capital Stock or series of preferred
stock of the Corporation hereafter created the terms of which do not expressly
provide that it ranks senior to or on a parity with the Series A Preferred
Stock as to dividend rights or which do not specify any rank relative to the
Series A Preferred Stock, (ii) rank on a parity with the Series C Preferred
Stock, the Series D Preferred Stock, the Class A Common Stock, the Class B
Common Stock and each other class of Capital Stock or series of preferred stock
of the Corporation hereafter created the terms of which expressly provide that
it ranks on a parity with the Series A Preferred Stock as to dividend rights
and (iii) rank junior to each class of Capital Stock or series of preferred
stock of the Corporation hereafter created the terms of which expressly provide
that it ranks senior to the Series A Preferred Stock as to dividend rights. The
Series A Preferred Stock shall, with respect to rights on liquidation,
dissolution or winding-up of the Corporation, (A) rank senior to the Series C
Preferred Stock, the Series D Preferred Stock, the Class A Common Stock, the
Class B Common Stock and each other class of Capital Stock or series of
preferred stock of the Corporation hereafter created the terms of which do not
expressly provide that it ranks senior to or on a parity with the Series A
Preferred Stock or which do not specify any rank relative to the Series A
Preferred Stock as to rights on liquidation, dissolution or winding-up of the
Corporation, (B) rank on a parity with each class of Capital Stock or series of
preferred stock of the Corporation hereafter created the terms of which
expressly provide that it ranks on a parity with the Series A Preferred Stock
as to rights on liquidation, dissolution or winding-up of the Corporation and
(C) rank junior to the Series B Preferred Stock and each other class of Capital
Stock or series of
4
<PAGE>
preferred stock of the Corporation hereafter created the terms of which
expressly provide that it ranks senior to the Series A Preferred Stock as to
rights on liquidation, dissolution or winding-up of the Corporation.
(b) Liquidation.
(i) Upon any voluntary or involuntary liquidation, dissolution or winding-up
of the Corporation, holders of Series A Preferred Stock then outstanding shall
be entitled to be paid, out of the assets of the Corporation available for
distribution to its stockholders, $10 per share of Series A Preferred Stock,
plus an amount in cash equal to accumulated and unpaid dividends thereon to the
date fixed for liquidation, dissolution or winding-up, after any payment or
distribution of the assets of the Corporation (whether capital or surplus)
shall be made to or set apart for the holders of the Series B Preferred Stock
and each other class of Capital Stock or series of preferred stock of the
Corporation hereafter created the terms of which expressly provide that it
ranks senior to the Series A Preferred Stock as to distributions on
liquidation, dissolution or winding-up of the Corporation and before any
payment or distribution of the assets of the Corporation (whether capital or
surplus) shall be made to or set apart for the holders of shares of the Series
C Preferred Stock, the Series D Preferred Stock, the Class A Common Stock, the
Class B Common Stock and each other class of Capital Stock or series of
preferred stock of the Corporation hereafter created which does not expressly
provide that it ranks senior to the Series A Preferred Stock as to
distributions upon the liquidation, winding-up or dissolution of the
Corporation.
(ii) If, upon any voluntary or involuntary liquidation, dissolution or
winding-up of the Corporation, the amounts payable with respect to the Series A
Preferred Stock and each other class of Capital Stock or series of preferred
stock of the Corporation hereafter created, which expressly provides that it
ranks on a parity with the Series A Preferred Stock as to distributions upon
the liquidation, winding-up or dissolution of the Corporation, are not paid in
full, the holders of the Series A Preferred Stock and each such class of
Capital Stock or series of preferred stock shall share ratably in any
distribution of assets of the Corporation in proportion to the full liquidation
preference and accumulated and unpaid dividends to which each is entitled.
(iii) After payment of the full amount of the liquidation preference and
accumulated and unpaid dividends to which they are entitled, the holders of
Series A Preferred Stock shall not be entitled to any further participation in
any distribution of assets of the Corporation.
(iv) Neither the merger, consolidation or sale of all or substantially all of
the assets of the Corporation shall be deemed to be a liquidation, dissolution
or winding-up, voluntary or involuntary, of the Corporation for purposes of
this Section 4.5(b).
4.6 Series B Preferred Stock. The Series B Preferred Stock shall have
the following powers, preferences and rights and qualifications, limitations
and restrictions (in addition to the powers, preferences and rights and
qualifications, limitations and restrictions applicable to the Series B
Preferred Stock specified elsewhere herein):
5
<PAGE>
(a) Ranking. The Series B Preferred Stock shall, with respect to rights on
liquidation, dissolution or winding-up of the Corporation, (i) rank senior to
the Series A Preferred Stock, the Series C Preferred Stock, the Series D
Preferred Stock, the Class A Common Stock, the Class B Common Stock and each
other class of Capital Stock or series of preferred stock of the Corporation
hereafter created the terms of which do not expressly provide that it ranks
senior to or on a parity with the Series B Preferred Stock or which do not
specify any rank relative to the Series B Preferred Stock as to rights on
liquidation, dissolution or winding-up of the Corporation, (ii) rank on a
parity with each class of Capital Stock or series of preferred stock of the
Corporation hereafter created the terms of which expressly provide that it
ranks on a parity with the Series B Preferred Stock as to rights on
liquidation, dissolution or winding-up of the Corporation and (iii) rank junior
to each class of Capital Stock or series of preferred stock of the Corporation
hereafter created the terms of which expressly provide that it ranks senior to
the Series B Preferred Stock as to rights on liquidation, dissolution or
winding-up of the Corporation. The holders of outstanding shares of Series B
Preferred Stock shall not be entitled to receive dividends on their shares of
Series B Preferred Stock (other than paid in connection with the liquidation,
dissolution or winding-up of the Corporation).
(b) Liquidation.
(i) Upon any voluntary or involuntary liquidation, dissolution or winding-up
of the Corporation, holders of Series B Preferred Stock then outstanding shall
be entitled to be paid, out of the assets of the Corporation available for
distribution to its stockholders, the Accreted Liquidation Preference to the
date fixed for liquidation, dissolution or winding-up, before any payment shall
be made on or any assets distributed to the holders of shares of any class of
Capital Stock or series of preferred stock of the Corporation, the terms of
which do not expressly provide that it ranks senior to the Series B Preferred
Stock as to distributions upon the liquidation, dissolution or winding-up of
the Corporation.
(ii) If, upon any voluntary or involuntary liquidation, dissolution or
winding-up of the Corporation, any amounts payable with respect to the Series B
Preferred Stock and any other class of Capital Stock or series of preferred
stock of the Corporation, the terms of which expressly provide that it ranks on
a parity with the Series B Preferred Stock as to distributions upon the
liquidation, dissolution or winding-up of the Corporation, are not paid in
full, the holders of the Series B Preferred Stock and any other such class of
Capital Stock or series of preferred stock shall share equally and ratably in
any distribution of assets of the Corporation in proportion to the full amount
of the Accreted Liquidation Preference to which each is entitled.
(iii) After payment of the full amount of the Accreted Liquidation Preference
to which they are entitled, the holders of Series B Preferred Stock shall not
be entitled to any further participation in any distribution of assets of the
Corporation.
(iv) Neither the merger, consolidation or sale of all or substantially all of
the assets of the Corporation shall be deemed to be a liquidation, dissolution
or winding-up of the Corporation for purposes of this Section 4.6(b).
6
<PAGE>
(c) Redemption.
(i) Optional Redemption. The Series B Preferred Stock may be redeemed
(subject to contractual and other restrictions with respect thereto existing on
the Closing Date, compliance with covenants contained in the Senior Notes
Indenture and the legal availability of funds therefor) at any time, at the
Corporation's option, in whole but not in part, in the manner provided in
paragraph (iii) below, at a redemption price equal to the amount of the
Accreted Liquidation Preference to the date fixed for redemption.
(ii) Mandatory Redemption. On the Mandatory Redemption Date, the Corporation
shall redeem from any source of funds legally available therefor, in the manner
provided in paragraph (iii) below, all of the shares of Series B Preferred
Stock then outstanding, at an aggregate redemption price equal to the Accreted
Liquidation Preference thereof. The redemption price shall be payable in cash,
provided, that if the Initial Public Offering has not been completed prior to
the Mandatory Redemption Date, the Corporation may elect to pay the redemption
price by delivering to the holders of Series B Preferred Stock one duly
authorized, validly issued, fully paid and non-assessable share of Series C
Preferred Stock for each share of Series B Preferred Stock so redeemed.
(iii) Procedures for Redemption.
(A) At least 30 days and not more than 60 days prior to the date fixed for
any redemption of the Series B Preferred Stock, written notice (the "Redemption
Notice") shall be given by first-class mail, postage prepaid, to each holder of
record on the record date fixed for such redemption of the Series B Preferred
Stock at such holder's address as the same appears on the stock register of the
Corporation, provided, that no failure to give such notice nor any deficiency
therein shall affect the validity of the procedure for the redemption of any
shares of Series B Preferred Stock to be redeemed except as to any holder to
whom the Corporation has failed to give said notice or whose notice was
defective. The Redemption Notice shall state: (1) the number of shares of
Series B Preferred Stock held, as of the appropriate record date, by the holder
that the Corporation intends to redeem; (2) the date fixed for redemption (the
"Redemption Date"); (3) the amount of the redemption price per share of Series
B Preferred Stock or, if applicable in the case of a mandatory redemption, that
the redemption price will be paid in shares of Series C Preferred Stock in
accordance with paragraph (ii) above; (4) that the holder is to surrender to
the Corporation his certificate or certificates representing the shares of
Series B Preferred Stock to be redeemed at the place or places where
certificates for shares of Series B Preferred Stock are to be surrendered for
redemption; and (5) that the Accreted Liquidation Preference shall cease to
accrue on such Redemption Date unless the Corporation defaults in the payment
of the redemption price.
(B) Each holder of Series B Preferred Stock shall surrender the certificate
or certificates representing such shares of Series B Preferred Stock to the
Corporation, duly endorsed, in the manner and at the place designated in the
Redemption Notice. The full redemption price for such shares of
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<PAGE>
Series B Preferred Stock shall be payable to the Person whose name appears on
such certificate or certificates as the owner thereof, and each surrendered
certificate shall be canceled and retired.
(C) Unless the Corporation defaults in the payment in full of the applicable
redemption price, the Accreted Liquidation Preference shall cease to accrue on
the Redemption Date, and the holders of such redeemed shares shall cease to
have any further rights with respect thereto from and after the Redemption
Date, other than the right to receive the redemption price, without interest.
(iv) Certain Adjustments. In case the Corporation shall at any time subdivide
(by any stock split, stock dividend or otherwise) its outstanding shares of
Series C Preferred Stock into a greater number of shares, the rate at which
shares of Series C Preferred Stock are issued in exchange for shares of Series
B Preferred Stock in effect immediately prior to such subdivision shall be
proportionately increased, and, conversely, in case the outstanding shares of
Series C Preferred Stock shall be combined into a smaller number of shares, the
rate at which shares of Series C Preferred Stock are issued in exchange for
shares of Series B Preferred Stock in effect immediately prior to such
combination shall be proportionately reduced.
(v) Reservation of Series C Preferred Stock. The Corporation shall at all
times reserve and keep available for issuance upon the redemption of the Series
B Preferred Stock the maximum number of its authorized but unissued shares of
Series C Preferred Stock as is reasonably anticipated to be sufficient to
permit the redemption of all outstanding shares of Series B Preferred Stock,
and shall take all action required to increase the authorized number of shares
of Series C Preferred Stock if at any time there shall be insufficient
authorized but unissued shares of Series C Preferred Stock to permit such
reservation or to permit the redemption of all outstanding shares of Series B
Preferred Stock.
4.7 Series C Preferred Stock. The Series C Preferred Stock shall have
the following powers, preferences and rights and qualifications, limitations
and restrictions (in addition to the powers, preferences and rights and
qualifications, limitations and restrictions applicable to the Series C
Preferred Stock specified elsewhere herein):
(a) Ranking. The Series C Preferred Stock shall, with respect to dividend
rights, (i) rank senior to each class of Capital Stock or series of preferred
stock of the Corporation hereafter created the terms of which do not expressly
provide that it ranks senior to or on a parity with the Series C Preferred
Stock as to dividend rights or which do not specify any rank relative to the
Series C Preferred, (ii) rank on a parity with the Series A Preferred Stock,
the Series D Preferred Stock, the Class A Common Stock, the Class B Common
Stock and each other class of Capital Stock or series of preferred stock of the
Corporation hereafter created the terms of which expressly provide that it
ranks on a parity with the Series C Preferred Stock as to dividend rights and
(iii) rank junior to each class of Capital Stock or series of preferred stock
of the Corporation hereafter created the terms of which expressly provide that
it ranks senior to the Series C Preferred Stock as to dividend rights. The
Series C Preferred Stock shall, with respect to rights on liquidation,
dissolution or winding-up of the Corporation, (A) rank senior to the Class A
Common Stock, the Class B Common Stock and each other class of Capital Stock or
series of preferred stock of the Corporation hereafter created the terms of
which do not
8
<PAGE>
expressly provide that it ranks senior to or on a parity with the
Series C Preferred Stock as to rights on liquidation, dissolution or winding-up
of the Corporation, (B) rank on a parity with the Series D Preferred Stock and
each other class of Capital Stock or series of preferred stock of the
Corporation hereafter created the terms of which expressly provide that it
ranks on a parity with the Series C Preferred Stock as to rights on
liquidation, dissolution or winding-up of the Corporation and (C) rank junior
to the Series A Preferred Stock, the Series B Preferred Stock and each other
class of Capital Stock or series of preferred stock of the Corporation
hereafter created the terms of which expressly provide that it ranks senior to
the Series C Preferred Stock as to rights on liquidation, dissolution or
winding-up of the Corporation.
(b) Liquidation.
(i) Upon any voluntary or involuntary liquidation, dissolution or winding-up
of the Corporation, holders of Series C Preferred Stock then outstanding shall
be entitled to be paid, out of the assets of the Corporation available for
distribution to its stockholders, $10 per share of Series C Preferred Stock,
plus an amount in cash equal to accumulated and unpaid dividends thereon to the
date fixed for liquidation, dissolution or winding-up, after any payment or
distribution of the assets of the Corporation (whether capital or surplus)
shall be made to or set apart for the holders of the Series A Preferred Stock
and Series B Preferred Stock and each other class of Capital Stock or series of
preferred stock of the Corporation hereafter created the terms of which
expressly provide that it ranks senior to the Series C Preferred Stock as to
distributions on liquidation, dissolution or winding-up of the Corporation, and
before any payment or distribution of assets of the Corporation (whether
capital or surplus) shall be made to the holders of shares of any class of
Capital Stock or series of preferred stock of the Corporation, the terms of
which do not expressly provide that it ranks senior to the Series C Preferred
Stock as to distributions upon the liquidation, dissolution or winding-up of
the Corporation.
(ii) If, upon any voluntary or involuntary liquidation, dissolution or
winding-up of the Corporation, the amounts payable with respect to the Series C
Preferred Stock and the Series D Preferred Stock, and any other class of
Capital Stock or series of preferred stock of the Corporation, the terms of
which expressly provide that such class or series will rank on a parity with
the Series C Preferred Stock as to distributions upon the liquidation,
dissolution or winding-up of the Corporation, are not paid in full, the holders
of the Series C Preferred Stock and the Series D Preferred Stock, and any other
such class of Capital Stock or series of preferred stock, shall share equally
and ratably in any distribution of assets of the Corporation in proportion to
the full liquidation preference and accumulated and unpaid dividends to which
each is entitled.
(iii) After payment of the full amount of the liquidation preference and
accumulated and unpaid dividends to which they are entitled, the holders of
Series C Preferred Stock shall not be entitled to any further participation in
any distribution of assets of the Corporation.
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<PAGE>
(iv) Neither the merger, consolidation or sale of all or substantially all of
the assets of the Corporation shall be deemed to be a liquidation, dissolution
or winding-up of the Corporation for purposes of this Section 4.7(b).
4.8 Series D Preferred Stock. The Series D Preferred Stock shall have
the following powers, preferences and rights and qualifications, limitations
and restrictions (in addition to the powers, preferences and rights and
qualifications, limitations and restrictions applicable to the Series D
Preferred Stock specified elsewhere herein):
(a) Ranking. The Series D Preferred Stock shall, with respect to dividend
rights, (i) rank senior to each class of Capital Stock or series of preferred
stock of the Corporation hereafter created the terms of which do not expressly
provide that it ranks senior to or on a parity with the Series D Preferred
Stock as to dividend rights or which do not specify any rank relative to the
Series D Preferred, (ii) rank on a parity with the Series A Preferred Stock,
the Series C Preferred Stock, the Class A Common Stock, the Class B Common
Stock and each other class of Capital Stock or series of preferred stock of the
Corporation hereafter created the terms of which expressly provide that it
ranks on a party with the Series D Preferred Stock as to dividend rights and
(iii) rank junior to each class of Capital Stock or series of preferred stock
of the Corporation hereafter created the terms of which expressly provide that
it ranks senior to the Series D Preferred Stock as to dividend rights. The
Series D Preferred Stock shall, with respect to rights on liquidation,
dissolution or winding-up of the Corporation, (A) rank senior to the Class A
Common Stock, the Class B Common Stock and each other class of Capital Stock or
series of preferred stock of the Corporation hereafter created the terms of
which do not expressly provide that it ranks senior to or on a parity with the
Series D Preferred Stock as to rights on liquidation, dissolution or winding-up
of the Corporation, (B) rank on a parity with the Series C Preferred Stock and
each other class of Capital Stock or series of preferred stock of the
Corporation hereafter created the terms of which expressly provide that it
ranks on a parity with the Series D Preferred Stock as to rights on
liquidation, dissolution or winding-up of the Corporation and (C) rank junior
to the Series A Preferred Stock, the Series B Preferred Stock and each other
class of Capital Stock or series of preferred stock of the Corporation
hereafter created the terms of which expressly provide that it ranks senior to
the Series D Preferred Stock as to rights on liquidation, dissolution or
winding-up of the Corporation.
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<PAGE>
(b) Liquidation.
(i) Upon any voluntary or involuntary liquidation, dissolution or winding-up
of the Corporation, holders of Series D Preferred Stock then outstanding shall
be entitled to be paid, out of the assets of the Corporation available for
distribution to its stockholders, $10 per share of Series D Preferred Stock,
plus an amount in cash equal to accumulated and unpaid dividends thereon to the
date fixed for liquidation, dissolution or winding-up, after any payment or
distribution of the assets of the Corporation (whether capital or surplus)
shall be made to or set apart for the holders of the Series A Preferred Stock
and Series B Preferred Stock and each other class of Capital Stock or series of
preferred stock of the Corporation hereafter created the terms of which
expressly provide that it ranks senior to the Series D Preferred Stock as to
distributions on liquidation, dissolution or winding-up of the Corporation, and
before any payment or distribution of assets of the Corporation (whether
capital or surplus) shall be made to the holders of shares of any class of
Capital Stock or series of preferred stock of the Corporation, the terms of
which do not expressly provide that it ranks senior to the Series D Preferred
Stock as to distributions upon the liquidation, dissolution or winding-up of
the Corporation.
(ii) If, upon any voluntary or involuntary liquidation, dissolution or
winding-up of the Corporation, the amounts payable with respect to the Series D
Preferred Stock and the Series C Preferred Stock, and any other class of
Capital Stock or series of preferred stock of the Corporation, the terms of
which expressly provide that such class or series will rank on a parity with
the Series D Preferred Stock as to distributions upon the liquidation,
dissolution or winding-up of the Corporation, are not paid in full, the holders
of the Series D Preferred Stock and the Series C Preferred Stock, and any other
such class of Capital Stock or series of preferred stock, shall share equally
and ratably in any distribution of assets of the Corporation in proportion to
the full liquidation preference and accumulated and unpaid dividends to which
each is entitled.
(iii) After payment of the full amount of the liquidation preference and
accumulated and unpaid dividends to which they are entitled, the holders of
Series D Preferred Stock shall not be entitled to any further participation in
any distribution of assets of the Corporation.
(iv) Neither the merger, consolidation or sale of all or substantially all of
the assets of the Corporation shall be deemed to be a liquidation, dissolution
or winding-up of the Corporation for purposes of this Section 4.8(b).
4.9 Common Stock. Except as provided in this Section 4.9, in Sections
5.1(a)(i), 5.1(b)(i), 5.5 or otherwise, the Class A Common Stock and the Class
B Common Stock shall have the same rights and privileges and shall rank
equally, share ratably and be identical in all respects as to all matters.
(a) Ranking. The Class A Common Stock shall, with respect to dividend rights,
rank on a parity with the Series A Preferred Stock, the Series C Preferred
Stock, the Series D Preferred Stock, the
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Class B Common Stock and each other class of common stock of the Corporation
hereafter created. The Class A Common Stock shall, with respect to rights on
liquidation, dissolution or winding-up of the Corporation, (i) rank on a parity
with the Class B Common Stock and each other class of common stock of the
Corporation hereafter created and (ii) rank junior to the Series A Preferred
Stock, the Series B Preferred Stock, the Series C Preferred Stock, the Series D
Preferred Stock and each other class of Capital Stock or series of preferred
stock of the Corporation hereafter created the terms of which expressly provide
that it ranks senior to the Class A Common Stock or which do not specify any
rank relative to the Class A Common Stock as to rights on liquidation,
dissolution or winding-up of the Corporation.
(b) Class B Common Stock. The Class B Common Stock shall, with respect to
dividend rights, rank on a parity with the Series A Preferred Stock, the Series
C Preferred Stock, the Series D Preferred Stock, the Class A Common Stock and
each other class of common stock of the Corporation hereafter created. The
Class B Common Stock shall, with respect to rights on liquidation, dissolution
or winding-up of the Corporation, (i) rank on a parity with the Class A Common
Stock and each other class of common stock of the Corporation hereafter created
and (ii) rank junior to the Series A Preferred Stock, the Series B Preferred
Stock, the Series C Preferred Stock, the Series D Preferred Stock and each
other class of Capital Stock or series of preferred stock of the Corporation
hereafter created the terms of which expressly provide that it ranks senior to
the Class B Common Stock or which do not specify any rank relative to the Class
B Common Stock as to rights on liquidation, dissolution or winding-up of the
Corporation.
(c) Dividends. Holders of Class A Common Stock and Class B Common Stock shall
be entitled to receive such dividends, payable in cash or otherwise, as may be
declared thereon by the Board of Directors from time to time out of assets or
funds of the Corporation legally available therefor, provided that no dividend
may be declared and paid to holders of Class A Common Stock unless at the same
time the Board of Directors shall also declare and pay to the holders of Class
B Common Stock a per share dividend equal to the dividend declared and paid to
holders of Class A Common Stock, and vice versa. Common stock dividends
declared on the Class A Common Stock shall be payable in Class A Common Stock,
and common stock dividends declared on Class B Common Stock shall be payable in
Class B Common Stock.
(d) Voting. On all matters upon which stockholders are entitled or permitted
to vote, every holder of Class A Common Stock shall be entitled to one vote in
person or by proxy for each share of Class A Common Stock standing in such
stockholder's name on the transfer books of the Corporation and every holder of
Class B Common Stock shall be entitled to one vote in person or by proxy for
each share of Class B Common Stock standing in his or its name on the transfer
books of the Corporation. Except as set forth in Section 4.4(a) or as may
otherwise be required by law, the holders of Class A Common Stock and Class B
Common Stock shall vote together as a single class.
(e) Subdivisions and Combinations. If the Corporation in any manner
subdivides or combines the outstanding shares of one class of Common Stock, the
outstanding shares of the other class of Common Stock will be likewise
subdivided or combined.
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(f) Liquidation or Dissolution. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, holders of Class A
Common Stock and holders of Class B Common Stock shall receive a pro rata
distribution of any remaining assets after payment or provision for liabilities
and the liquidation preference on stock, if any.
(g) Merger and Consolidation. In the event of the merger or consolidation of
the Corporation with or into any other entity pursuant to a transaction in
which the outstanding Common Stock of the Corporation is converted into or
exchanged for cash, securities or other property, holders of Class A Common
Stock and holders of Class B Common Stock shall receive the same kind and
amount of consideration per share payable to holders of Common Stock in
connection with such transaction.
4.10 Conversion Rights of Convertible Preferred Stock and Class B
Common Stock. The Series A Preferred Stock and the Class B Common Stock shall
be convertible into Class A Common Stock, and the Series C Preferred Stock and
the Series D Preferred Stock shall be convertible into Class B Common Stock, as
follows:
(a) Optional Conversion. Subject to the procedures set forth herein:
(i) each share of Series A Preferred Stock shall be convertible into Class A
Common Stock, at the option of the holders thereof, at any time and from time
to time, at the Class A Conversion Rate;
(ii) each share of Class B Common Stock shall be convertible into Class A
Common Stock, at the option of any Class B Shareholder concurrently with a sale
or other transfer of such shares of Class B Common Stock to any Person other
than a Class B Shareholder, in each case at any time and from time to time, at
the Class A Conversion Rate; and
(iii) each share of Series C Preferred Stock and each share of Series D
Preferred Stock shall be convertible into Class B Common Stock, at the option
of the holders thereof, at any time and from time to time, at the Class B
Conversion Rate.
(b) Mandatory Conversion. Subject to the procedures set forth herein:
(i) shares of Class A Common Stock acquired by any Nextel Shareholder shall
immediately and automatically be converted into an equal number of shares of
Class B Common Stock at the Class B Conversion Rate;
(ii) on the IPO Date (A) each share of Series A Preferred Stock then
outstanding shall automatically be converted into Class A Common Stock at the
Class A Conversion Rate and (B) each share of Series C Preferred Stock then
outstanding and each share of Series D Preferred Stock shall automatically be
converted into Class B Common Stock at the Class B Conversion Rate; and
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(iii) if a shareholder defaults on its payment obligations under Section 2.03
of the Subscription Agreement, such shareholder's shares of Series A Preferred
Stock shall automatically be converted into Class A Common Stock at the Class A
Conversion Rate.
(c) Procedures for Conversion. A holder of shares of Convertible Preferred
Stock or Class B Common Stock desiring to exercise such holder's option to
convert pursuant to Section 4.10(a) shall surrender to the Corporation, at its
principal office or such other office or agency maintained by the Corporation
for such purpose, the certificates representing the shares of Convertible
Preferred Stock or Class B Common Stock to be converted, accompanied by a
written notice stating that such holder elects to convert such shares in
accordance herewith. If required by the Corporation, certificates surrendered
for conversion shall be endorsed or accompanied by a written instrument of
transfer, in form satisfactory to the Corporation, duly executed by the
registered holder or his or its attorney duly authorized in writing. As soon as
practicable after the surrender of such certificates and receipt of such
notice, the Corporation shall issue to such holder the number of shares of
Class A Common Stock or Class B Common Stock, as the case may be, into which
such shares of Convertible Preferred Stock or Class B Common Stock are
convertible. All shares of Class A Common Stock delivered upon conversion of
the Convertible Preferred Stock or Class B Common Stock will upon delivery be
duly and validly issued, fully paid and non-assessable, free of all liens and
charges and not subject to any preemptive rights. Certificates representing
shares of Class A Common Stock issued upon conversion shall be delivered to
such holder at the address of such holder as it appears on the records of the
transfer agent for the Corporation (or the records of the Corporation if it
serves as its own transfer agent). Such conversion shall be deemed to have been
made at the close of business on the date of the receipt of such notice and of
such surrender of the certificates representing the shares of Convertible
Preferred Stock or Class B Common Stock to be converted, and the rights of the
holder thereof shall cease on such date of receipt and surrender, except for
the right to receive the shares of Class A Common Stock or Class B Common
Stock, as the case may be, issuable upon conversion thereof, and payment of any
declared but unpaid dividends thereon.
(d) Procedures for Mandatory Conversion. Holders of record of shares of
Convertible Preferred Stock will be given at least 30 but not more than 60
days' prior written notice of the date fixed (the "Mandatory Conversion Date")
and the place designated for mandatory conversion of the Convertible Preferred
Stock pursuant to Section 4.10(b). Such notice will be sent by first class or
registered mail, postage prepaid, to each record holder of Convertible
Preferred Stock at the address of such holder as it appears on the records of
the transfer agent for the Convertible Preferred Stock (or the records of the
Corporation if it serves as its own transfer agent). On or before the Mandatory
Conversion Date, each holder of shares of Convertible Preferred Stock shall
surrender certificates for all such shares to the Corporation at the place
designated in such notice. If required by the Corporation, certificates
surrendered for conversion shall be endorsed or accompanied by a written
instrument of transfer, in form satisfactory to the Corporation, duly executed
by the registered holder or his or its attorney duly authorized in writing. On
and after the
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Mandatory Conversion Date, all rights with respect to the Convertible Preferred
Stock so converted will terminate, except for the right to receive the shares
of Class A Common Stock or Class B Common Stock, as the case may be, issuable
upon conversion thereof, and payment of any declared but unpaid dividends
thereon. As soon as practicable after the Mandatory Conversion Date and the
surrender of the certificates representing shares of Convertible Preferred
Stock to be converted, the Corporation shall issue and deliver to such holder,
or on such holder's written order to such holder's nominees, certificates for
the number of shares of Class A Common Stock or Class B Common Stock, as the
case may be, issuable upon such conversion in accordance with the provisions
hereof.
(e) No Charge or Tax. The issuance and delivery of certificates for shares of
Common Stock upon the conversion of shares of Convertible Preferred Stock or
Class B Common Stock pursuant to this Section 4.10 shall be made without charge
to the holder of shares of Convertible Preferred Stock or Class B Common Stock
for any issue or transfer tax, or other incidental expense in respect of the
issuance or delivery of such certificates or the securities represented
thereby, all of which taxes and expenses shall be paid by the Corporation.
(f) FCC Approval. Notwithstanding anything herein to the contrary, if FCC or
other regulatory approval is required to be obtained prior to the conversion of
shares of Convertible Preferred Stock or Class B Common Stock pursuant to
Section 4.10(a) or 4.10(b), the holder thereof may nevertheless elect to
convert any or all of such holder's shares of Convertible Preferred Stock or
Class B Common Stock by written notice given to the Corporation in accordance
with Section 4.10(c), or the mandatory conversion may nevertheless proceed in
accordance with Section 4.10(d), as applicable, provided that in any event such
conversion shall not become effective until the close of business on the date
of the receipt of the last of any such approvals and of the surrender of the
certificates representing the shares of Convertible Preferred Stock or Class B
Common Stock to be converted, and the rights of the holder thereof shall
continue in full force and effect pending the receipt of all such approvals.
(g) Certain Adjustments. If there occurs any capital reorganization or any
reclassification of the Common Stock, the consolidation or merger of the
Corporation with or into another Person (other than a merger or consolidation
of the Corporation in which the Corporation is the continuing corporation and
which does not result in any reclassification or change of outstanding shares
of the Common Stock) or the sale or conveyance of all or substantially all of
the assets of the Corporation, then each share of Convertible Preferred Stock
and Class B Common Stock shall thereafter be convertible into the same kind and
amount of securities (including shares of stock) or other assets (or both)
which were issuable or distributable to the holders of outstanding Common Stock
upon such reorganization, reclassification, consolidation, merger, sale or
conveyance, in respect of that number of shares of Common Stock into which such
share of Convertible Preferred Stock or Class B Common Stock might have been
converted immediately prior to such reorganization, reclassification,
consolidation, merger, sale or conveyance; and, in any such case, appropriate
adjustments (as determined in good faith by the Board of Directors, whose
determination shall be conclusive) shall be made to assure that the provisions
set forth herein shall thereafter be applicable, as nearly as reasonably
practicable, in relation to any securities or other assets thereafter
deliverable upon conversion of the Convertible Preferred Stock or Class B
Common Stock.
(h) Notice of Adjustments. Whenever the securities or other property
deliverable upon the conversion of the Convertible Preferred Stock or Class B
Common Stock shall be adjusted pursuant to
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the provisions hereof, the Corporation shall promptly give written notice
thereof to each holder of shares of Convertible Preferred Stock and/or the
Class B Common Stock at such holder's address as it appears on the transfer
books of the Corporation and shall forthwith file, at the Corporation's
principal executive office and with any transfer agent or agents for the
Convertible Preferred Stock and/or the Class B Common Stock, a certificate,
signed by the President or one of the Vice Presidents of the Corporation, and
by its Chief Financial Officer, Treasurer or one of its Assistant Treasurers,
identifying the securities or other property deliverable per share of
Convertible Preferred Stock and/or the Class B Common Stock (calculated to the
nearest cent or to the nearest 1/100 of a share) and setting forth in
reasonable detail the method of calculation and the facts requiring such
adjustment and upon which such calculation is based. Each adjustment shall
remain in effect until a subsequent adjustment is required.
(i) Notice of Certain Events. In case the Corporation shall propose at any
time or from time to time (i) to declare or pay any dividend payable in stock
of any class to the holders of Common Stock in accordance with Section 4.9(c)
or to make any other distribution to the holders of Common Stock, (ii) to offer
to the holders of Common Stock rights or warrants to subscribe for or to
purchase any additional shares of Common Stock or shares of stock of any class
or any other securities, rights or options, (iii) to subdivide, split or effect
any combination or reclassification of its Common Stock, (iv) to effect any
consolidation, merger or sale, transfer or other disposition of all or
substantially all of the property, assets or business of the Corporation which
would, if consummated, adjust the Class A Conversion Rate, the Class B
Conversion Rate or the securities issuable upon conversion of shares of
Convertible Preferred Stock or the Class B Common Stock, or (v) to effect the
liquidation, dissolution or winding up of the Corporation, then, in each such
case, the Corporation shall mail to each holder of shares of Convertible
Preferred Stock and Class B Common Stock, at such holder's address as it
appears on the transfer books of the Corporation, a written notice of such
proposed action, which shall specify (A) the date on which a record is to be
taken for the purpose of such dividend or distribution of rights or warrants
or, if a record is not to be taken, the date as of which the holders of shares
of Common Stock of record to be entitled to such dividend or distribution of
rights or warrants are to be determined, or (B) the date on which such
reclassification, consolidation, merger, sale, conveyance, dissolution,
liquidation or winding up is expected to become effective, and such notice
shall be so given as promptly as possible but in any event at least 20 Business
Days prior to the applicable record, determination or effective date, specified
in such notice.
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(j) Reservation of Common Stock.
(i) The Corporation covenants that it will at all times reserve and keep
available, free from preemptive rights, for issuance upon the conversion of the
shares of Convertible Preferred Stock and Class B Common Stock the maximum
number of its authorized but unissued shares of Class A Common Stock and Class
B Common Stock as is reasonably anticipated to be sufficient to permit the
conversion of all outstanding shares of Convertible Preferred Stock and Class B
Common Stock, and shall take all action required to increase the authorized
number of shares of Class A Common Stock and Class B Common Stock if at any
time there shall be insufficient authorized but unissued shares of Class A
Common Stock and Class B Common Stock to permit such reservation or to permit
the conversion of all outstanding shares of Convertible Preferred Stock and
Class B Common Stock.
(ii) Prior to the delivery of any securities which the Corporation shall be
obligated to deliver upon conversion of the Convertible Preferred Stock and
Class B Common Stock, the Corporation shall comply with all applicable federal
and state laws and regulations which require action to be taken by the
Corporation.
(iii) In connection with the conversion of any shares of Convertible Preferred
Stock and Class B Common Stock, no fractions of shares of Common Stock shall be
issued, but in lieu thereof the Corporation shall pay a cash adjustment in
respect of such fractional interest in an amount equal to such fractional
interest multiplied by the price per share of Common Stock on the Business Day
on which such shares of Convertible Preferred Stock and Class B Common Stock
are deemed to have been converted.
ARTICLE V
CERTAIN RIGHTS AND OBLIGATIONS OF NWIP
The provisions of this Article V shall not be effective until the IPO
Date except for those provisions necessary to implement (i) any exercise of the
NWIP Call Right under Section 5.1(a)(i)(C) or (ii) any exercise of the Put
Right in connection with a Put Event described in clause (D) of the definition
thereof.
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5.1 NWIP Call Right; Put Right.
(a) NWIP Call Right.
(i) On the terms and subject to the conditions hereof, upon (A) the ninth
anni versary of the Closing Date, (B) the exercise by NWIP of its call right
under Section 7.03 or 7.04(d) of the Shareholders' Agreement or (C) termination
of the Joint Venture Agree ment in accordance with Section 12.9D thereof, NWIP
shall have the right (the "NWIP Call Right") to purchase all (but not less than
all) of the shares of Class A Common Stock then outstanding, provided, that if
the NWIP Call Right pertains to clause (A) above, the Board of Directors (by
majority vote with the NWIP Designee abstaining) will have the right to
postpone the exercise of the NWIP Call Right for 365 days on each of two
occasions and for 180 days on one additional occasion by giving written notice
of such election to NWIP within five Business Days after delivery of the
applicable NWIP Call Notice (or after the one-year or six-month anniversary of
the postponement of the exercise of the NWIP Call Right, as the case may be, in
the event that the NWIP Call Right is postponed); provided, that NWIP shall not
be obligated to consummate the transaction contemplated by the NWIP Call Right
that has been so postponed, unless NWIP so notifies the shareholders and the
Corporation not later than 90 days following the expiration of the relevant
postponement period.
(ii) To exercise the NWIP Call Right under Section 5.1(a)(i)(A), NWIP must
give written notice (the "NWIP Call Notice") by first-class mail, postage
prepaid, to the shareholders and the Corporation no later than the 90th day
following the later of (i) the relevant anniversary and (ii) if applicable, the
relevant postponement period. Such NWIP Call Right will expire on the later of
(x) the 91st day following the ninth anniversary of the Closing Date and (y) if
applicable, the 91st day following the relevant postponement period, if NWIP
has not delivered an NWIP Call Notice by such time. To exercise the NWIP Call
Right under Section 5.1(a)(i)(B), NWIP must give the NWIP Call Notice to the
Class A Shareholders and the Corporation in accordance with the time periods
set forth in the relevant section of the Shareholders' Agreement. The NWIP Call
Right under Section 5.1(a)(i)(C) will automatically be exercised upon the
termination of the Joint Venture Agreement pursuant to Section 12.9D thereof,
and the Class A Shareholders shall thereupon be obligated to sell their shares
of Class A Common Stock in accordance with either, at NWIP's election, Section
5.3 (an "Article V Purchase") or Section 5.4 (an "Article V Redemption").
(iii) The purchase price payable for all outstanding shares of Class A Common
Stock purchased pursuant to the exercise of the NWIP Call Right under Section
5.1(a)(i)(A) or Section 5.1(a)(i)(B) (the "NWIP Call Price") shall be the
portion allocable to the Class A Common Stock of the Corporation's Fair Market
Value determined in accordance with Section 5.7, provided, that if the exercise
of the NWIP Call Right is pursuant to NWIP's rights under Section 7.03 of the
Shareholders' Agreement, Fair Market Value shall be determined as if neither
the Corporation nor the NDS needed to implement the Technology Change (as
defined in Section 7.03 of the Shareholders' Agreement) and without diminishing
the value of the Corporation due to the fact that the Technology Change had not
been implemented. The purchase price payable for all outstanding shares of
Class A Common Stock
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purchased pursuant to the exercise of the NWIP Call Right under Section
5.1(a)(i)(C) shall be 80% of the portion allocable to the Class A Common Stock
of the Company Equity Value (as defined in the Joint Venture Agreement).
(iv) The NWIP Call Notice shall state: (A) the applicable event under Section
5.1(b)(i) giving rise to the NWIP Call Right; (B) the name and address of the
NWIP Appraiser; and (C) the proposed date on which (or the period following the
determination of Fair Market Value during which) NWIP will deposit cash or
Nextel Shares with the Payment Agent for the purpose of funding the Article V
Purchase or the Article V Redemption. NWIP's election to exercise the NWIP Call
Right shall be irrevocable upon delivery of the NWIP Call Notice. The
Corporation Appraiser shall be named by the Board of Directors within 20 days
of receipt of the NWIP Call Notice.
(b) Put Right.
(i) Within 60 days after the occurrence of a Put Event (other than a Nextel
Sale), the Corporation shall notify the Class A Shareholders of the date and
time of a special meeting of the Class A Shareholders, which date will not be
more than 120 days after the date of the Put Event (or such later date as
required by applicable law, including any requirement to provide the Class A
Shareholders with an effective registration statement relating to the Nextel
Shares). Within five days after the occurrence of a Nextel Sale, the
Corporation shall notify the Class A Shareholders of the occurrence of such
Nextel Sale, and at any time thereafter Class A Shareholders holding 20% or
more of the outstanding Voting Stock of such Shareholders shall have the right
to require that the Corporation notify the Class A Shareholders of the date and
time of a special meeting of such Shareholders, which date will not be more
than 20 days after the date the Corporation receives such request (or such
later date as required by applicable law, including any requirement to provide
such shareholders with an effective registration statement relating to Nextel
Shares). At such meeting the Class A Shareholders will have the right (the "Put
Right") to require NWIP to purchase all (but not less than all) of the shares
of Class A Common Stock then outstanding at a price determined in accordance
with clause (iii) below, provided, that if the Put Event is a Nextel Sale, the
Class A Shareholders, by majority vote, may adjourn such meeting until a date
not to exceed 545 days after the Nextel Sale. "Put Event" means any of the
following events:
(A) a Nextel Sale;
(B) the purchase by NWIP of Common Stock in accordance with its Preemption
Right with respect to a Qualifying DLJ Demand under Section 5.03 of the
Shareholders' Agreement (a "NWIP Preemption Put");
(C) the exercise of a put right granted by the Board of Directors to the
Class A Shareholders pursuant to Section 7.04 of the Shareholders' Agreement;
or
(D) the termination of the Joint Venture Agreement in accordance with Section
12.9E thereof.
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(ii) If the Class A Shareholders vote to exercise the Put Right at the meeting
held pursuant to clause (i) above, no later than (A) in the case of a Nextel
Sale, 545 days after such Put Event or (B) in the case of a Put Event other
than a Nextel Sale, the 90th day after the Put Event (or such later date if
such meeting is delayed pursuant to clause (i) above), the Class A Shareholders
shall be obligated to sell their shares of Class A Common Stock to NWIP, and
NWIP shall be obligated to purchase such shares, in accordance with either, at
NWIP's election, Section 5.3 or Section 5.4.
(iii) The purchase price paid by NWIP for the Class A Common Stock purchased
pursuant to this Section 5.1(b) (the "Put Price") shall be determined as
follows:
(A) If the Put Event is a Nextel Sale, the Put Price will be the portion
allocable to the Class A Common Stock of the Fair Market Value of the
Corporation as determined in accordance with Section 5.7;
(B) If the Put Event is an NWIP Preemption Put, the Put Price will be the
same per share price that was paid by NWIP to purchase the shares subject to
the Qualifying DLJ Demand;
(C) If the Put Event is the exercise of put rights under Section 7.04 of the
Shareholders' Agreement, the Put Price will be the portion allocable to the
Class A Common Stock of the Investment Formula Price; and
(D) If the Put Event is the termination of the Joint Venture Agreement in
accordance with Section 12.9E thereof, the Put Price will be 120% of the
portion allocable to the Class A Common Stock of the Company Equity Value (as
defined in the Shareholders' Agreement).
(iv) If NWIP is required to purchase all outstanding shares of Class A Common
Stock as set forth in this Section 5.1(b), unvested or out-of-the-money
derivative securities of the Corporation shall be treated as follows: (A) in
the case of an NWIP Preemption Put, all unvested or out-of-the-money options
and warrants issued by the Corporation that are granted at any time during the
period from 30 days before the Corporation's announcement of its intention to
proceed with a Demand Registration (as defined in the Shareholders' Agreement)
until the date on which the pre-emptive purchase by NWIP is closed, and are not
granted consistently with ordinary past practice of the Corporation's employee
compensation programs or policies, shall be terminated; (B) all other unvested
or out-of-the-money options or warrants (as appropriate) will be converted to
substantially identical options or warrants to acquire shares of common stock
of Nextel on the same substantive economic terms (based on the per common share
price of the Corporation in the pre-emptive purchase and the per common share
price of Nextel on the pre-emptive purchase date) and other terms as applied to
the Corporation options or warrants and all shares of Common Stock subject to
vesting under the Restricted Stock Purchase Agreements; and (C) all shares of
Common Stock issuable upon exercise of options granted under the 1999 Stock
Option Plan, in each case that are beneficially owned by the Management
Shareholders, shall be purchased by NWIP pursuant to this Section 5.1(b) (it
being understood that NWIP's acquisition of all the outstanding shares of Class
A Common Stock pursuant
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to this Section 5.1(b) shall constitute a "Change in Control of the Company"
for purposes of the Restricted Stock Purchase Agreements and the 1999 Stock
Option Plan).
(v) Upon the consummation of a Section 5.5 Sale, all the Put Rights shall
terminate except for the Put Right with respect to a Nextel Sale, which right
shall not terminate until the one-year anniversary of the date of the
consummation of the Section 5.5 Sale.
5.2A Delivery of Nextel Shares.
(a) Any payment for Class A Common Stock purchased by NWIP from the Class A
Shareholders pursuant to this Article V may be made, at NWIP's election, by
delivery of listed Nextel common stock (the "Nextel Shares"), provided, that
NWIP delivers such Nextel Shares within 180 days of the date of the Article V
Closing, and provided, further, that in connection with the delivery of the
Nextel Shares, NWIP (and Nextel with respect to Section 5.2A(c)) agrees to
comply with the requirements set forth in this Section 5.2A. Notwithstanding
the immediately preceding sentence, if NWIP elects to deliver Nextel Shares,
which election NWIP may change at any time prior to the delivery of such
shares, NWIP will use its reasonable best efforts to deliver Nextel Shares as
promptly as practicable, provided, that (x) if NWIP fails to deliver the Nextel
Shares or cash within 60 days of the date such payment is due, it shall pay
interest on the purchase price at a rate of 10% per annum from the date such
payment is due and (y) if NWIP fails to deliver the Nextel Shares in accordance
with this Section 5.2A, NWIP shall deliver cash no later than the 180th day
following the date such payment is due.
(b) If NWIP delivers Nextel Shares, in lieu of cash, pursuant to Section
5.2A(a), NWIP shall use its reasonable best efforts to facilitate the
conversion of such Nextel Shares to cash within 30 days of delivery of the
Nextel Shares.
(c) NWIP shall not be deemed to have delivered Nextel Shares or to have
discharged its payment obligations hereunder unless, at the time of delivery of
such Nextel Shares, (i) NWIP delivers to the Board of Directors and the holders
of Class A Common Stock an SEC "no-action" letter or an opinion of counsel
reasonably acceptable to the Board of Directors (excluding the NWIP Designee)
that provides that, assuming that the shareholder receiving the Nextel Shares
is not an Affiliate of Nextel, the shares to be received by that shareholder
can be freely sold without complying with the registration requirements of the
Securities Act or (ii) the SEC has declared effective a registration statement
on the appropriate form, Nextel has caused such shares to be quoted on the
NASDAQ National Market and the recipient shall have a continuous period of 60
days from the date of delivery to sell such shares under such registration
statement.
(d) For purposes of any payment by NWIP in Nextel Shares, the value of Nextel
Shares will be based on the average Closing Price of Nextel common stock for
the ten Trading Days immediately preceding the date of delivery of the Nextel
Shares. If NWIP elects to consummate a transaction with Nextel Shares instead
of cash, NWIP will take all reasonable steps requested by the Board of
Directors (with any NWIP Designee abstaining) to permit the purchase to be tax
deferred to the relevant shareholders.
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5.2B Article V Transaction Notice. Within ten days of receipt by the
Corporation of a NWIP Call Notice, written notice (the "Article V Transaction
Notice") shall be given by the Corporation to each Record Holder by first-class
mail, postage prepaid, to the address as shown on the records of the
Corporation, on the Record Date fixed by the Article V Transaction Notice,
which date shall not be less than ten nor more than 20 days following the date
of such notice. The Article V Transaction Notice shall state: (1) the number of
shares of Class A Common Stock held, as of the Record Date, by the Record
Holder; (2) the date proposed for the Article V Transaction (if NWIP elects, in
accordance with Section 5.3, to fund an Article V Purchase, such date shall be
the "Article V Purchase Date," if NWIP elects, in accordance with Section 5.4,
to fund an Article V Redemption, such date shall be the "Article V Redemption
Date"); and (3) that the Record Holder is to surrender to the Payment Agent the
certificates representing such holder's shares of Class A Common Stock to be
purchased or redeemed, as applicable, at the place where certificates for
shares of Class A Common Stock are to be surrendered for purchase or
redemption, as applicable.
5.3 Article V Purchase.
(a) On or before the Article V Transaction Date, NWIP shall notify the
Corporation whether NWIP has elected to fund an Article V Purchase or an
Article V Redemption. If NWIP elects to fund an Article V Purchase, NWIP shall
comply with the provisions of this Section 5.3.
(b) On or before the Article V Purchase Date, NWIP shall deposit the full
amount of the Option Price for all of the issued and outstanding shares of
Class A Common Stock with the Payment Agent to pay, on NWIP's behalf, the
Option Price. Cash, if any, and Nextel Shares, if any, deposited with the
Payment Agent shall be delivered in trust for the benefit of the Record
Holders. NWIP shall provide the Payment Agent with irrevocable instructions to
pay the NWIP Call Price or the Put Price, as the case may be, for the Class A
Common Stock to the Record Holders upon surrender of the certificates
representing their shares of Class A Common Stock.
(c) Payment for shares of Class A Common Stock shall be mailed to each such
Record Holder at the address set forth in the Corporation's records or at the
address provided by each such Record Holder or, if no address is set forth in
the Corporation's records for any such Record Holder or provided by such Record
Holder, to such Record Holder at the address of the Corporation, but only upon
receipt from such Record Holder of certificates evidencing shares of Class A
Common Stock. At the request of NWIP, the Corporation shall provide, or shall
cause its transfer agent to provide, to NWIP or to the Payment Agent, free of
charge, a complete list of the Record Holders, including the number of shares
of Class A Common Stock held of record and the address of each Record Holder.
5.4 Article V Redemption.
(a) On or before the Article V Transaction Date, NWIP shall notify the
Corporation whether NWIP has elected to fund an Article V Purchase or an
Article V Redemption. If NWIP elects to fund an Article V Redemption, NWIP
shall comply with the provisions of this Section 5.4.
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(b) On or before the Article V Redemption Date, NWIP shall deposit the full
amount of the Option Price for all of the issued and outstanding shares of
Class A Common Stock with the Payment Agent to pay, on NWIP's behalf, the
Option Price. Cash, if any, and Nextel Shares, if any, deposited with the
Payment Agent shall be delivered in trust for the benefit of the Record
Holders. Immediately upon the deposit by NWIP of the full amount of the Option
Price for all of the issued and outstanding shares of Class A Common Stock,
then, notwithstanding that any certificate for shares of Class A Common Stock
subject to redemption shall not have been surrendered for cancellation, all
shares of Class A Common Stock shall no longer be deemed to be outstanding on
and after the Article V Redemption Date, and all rights with respect to such
shares shall forthwith cease and terminate at the close of business on the
Article V Redemption Date, except only the right of the Record Holders to
receive the Option Price for all of the issued and outstanding shares of Class
A Common Stock, without interest.
(c) Unless the Corporation defaults in the payment in full of the applicable
redemption price, the holders of such redeemed shares shall cease to have any
further rights with respect thereto from and after the Article V Redemption
Date, other than the right to receive the redemption price, without interest.
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5.5 Special Nextel Sale Rights.
(a) The Class B Shareholders may collectively transfer all, but not less than
all, of their shares of Common Stock to a third party after the twelfth
anniversary of the Closing Date (a "Section 5.5 Sale"), but only after
complying with this Section 5.5. If the Class B Shareholders wish to consummate
a Section 5.5 Sale, the Class B Shareholders shall provide written notice (a
"Section 5.5 Notice") of such Section 5.5 Sale to the Class A Shareholders and
the Corporation not later than the 45th day prior to the proposed Section 5.5
Sale (or such later date as required by applicable law). The Section 5.5 Notice
shall identify (i) the third party transferee (the "Section 5.5 Purchaser"),
(ii) the number of shares owned by the Class B Shareholders subject to the
Section 5.5 Sale and the form and amount of consideration per share for which a
transfer is proposed to be made (the "Section 5.5 Sale Price"), and (iii) all
other material terms and conditions of the Section 5.5 Sale. Within five
Business Days of the receipt of such Section 5.5 Notice, the Corporation shall
notify all Class A Shareholders of the date and time of a special meeting of
such shareholders, which date will not be more than 25 days after receipt of
the Section 5.5 Notice (or such later date as required by applicable law). At
such meeting all Class A Shareholders shall be entitled to vote whether to sell
their shares to the Section 5.5 Purchaser on the same terms and conditions as
the Class B Shareholders. If such Class A Shareholders elect to sell their
shares to the Section 5.5 Purchaser by the affirmative vote of at least 50% of
the then outstanding Voting Stock held by such Class A Shareholders, all Class
A Shareholders shall be required to participate in the Section 5.5 Sale on the
terms and conditions set forth in the Section 5.5 Notice and to tender all of
their shares as set forth below. Within five days (or such later date as
required by applicable law) following such vote, the Corporation shall deliver
to a representative of the Class B Shareholders designated in the Section 5.5
Notice a notice indicating whether the Class A Shareholders will participate in
the Section 5.5 Sale. If the Class A Shareholders elect to participate in the
Section 5.5 Sale, then, on or prior to the date of such sale, they shall
deliver to the representative of the Class B Shareholders certificates
representing all shares held by the Class A Shareholders, duly endorsed,
together with all other documents required to be executed in connection with
such Section 5.5 Sale or, if such delivery is not permitted by applicable law,
an unconditional agreement to deliver such shares pursuant to this Section
5.5(a) at the closing for such Section 5.5 Sale against delivery to the Class A
Shareholders of the consideration therefor. If any Class A Shareholder should
fail to deliver such certificates or, in lieu thereof (as provided above) an
unconditional agreement to deliver such shares at the closing for such Section
5.5 Sale, to the Class B Shareholders, such Class A Shareholder have shall have
irrevocably agreed that, upon the closing of the Section 5.5 Sale, such shares
shall no longer be deemed to be outstanding and all rights of a shareholder
with respect to such shares will terminate except the right to receive the
Section 5.5 Sale Price and the Corporation shall (subject to reversal under
Section 5.5(b)) cause the books and records of the Corporation to show that
such shares are bound by the provisions of this Section 5.5 and that such
shares shall be transferred to the Section 5.5 Purchaser immediately upon
surrender for transfer by the holder thereof or as otherwise provided in this
Section 5.5(a).
(b) If, within 270 days after the Class A Shareholders give notice of their
election to sell their shares pursuant to this Section 5.5, the Class B
Shareholders have not consummated the Section 5.5
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Sale, then (i) the Class A Shareholders shall not be required to sell their
shares to the Section 5.5 Purchaser, (ii) the representative of the Class B
Shareholders shall return to each of the Class A Shareholders all certificates
representing shares that such Class A Shareholder delivered for transfer
pursuant hereto, together with any documents in the possession of the Class B
Shareholders executed by the Class A Shareholders in connection with such
proposed transfer, and (iii) all of the provisions of this Restated Certificate
of Incorporation or otherwise applicable at such time with respect to shares
owned by the Class A Shareholders shall again be in effect. No Class B
Shareholder (nor any member of the Nextel Group) shall have any liability or
responsibility to the Corporation or any Class A Shareholder upon or by reason
of any termination or failure to consummate a Section 5.5 Sale except as
expressly set forth above in this Section 5.5.
(c) Promptly after the consummation of the Section 5.5 Sale by the Section
5.5 Purchaser, the Section 5.5 Purchaser shall give notice thereof to the Class
A Shareholders, and shall remit to each of the Class A Shareholders who have
surrendered their certificates the total consideration for the shares of Class
A Common Stock transferred pursuant hereto.
(d) The sale obligations of the Class A Shareholders under this Section 5.5
shall be subject to the following conditions:
(i) upon the consummation of such sale, all of the Class A Shareholders
participating therein will receive the same form and amount of consideration
per share, or if any Class A Shareholders are given an option as to the form
and amount of consideration to be received, all Class A Shareholders
participating therein will be given the same option;
(ii) no Class A Shareholder shall be obligated to pay any expenses incurred
in connection with a consummated sale; and
(iii) no Class A Shareholder shall be required to provide any representations,
indemnities or other agreements in connection with such sale.
(e) In connection with any Section 5.5 Sale in which the Class A Shareholders
elect to participate, the Board of Directors shall engage an investment banking
firm of nationally recognized standing to evaluate whether, as a result of
transactions, relationships, and understandings between Nextel and the Section
5.5 Purchaser, the Section 5.5 Sale Price is not less than the fair market
value of the shares of Class A Common Stock to be sold to the Section 5.5
Purchaser. If such investment banking firm is unable to render an opinion to
such effect, the Board of Directors shall submit the Section 5.5 Sale price to
arbitration in accordance with Section 12.7 of the Joint Venture Agreement, and
the Section 5.5 Sale Price as determined in such arbitration shall be binding
on NWIP and the Class A Shareholders. If the arbitrators determine that the
Section 5.5 Sale Price is greater than or equal to the fair market value of the
shares of Class A Common Stock, the Class A Shareholders shall pay the fees and
expenses of the arbitrators, otherwise NWIP shall pay such fees and expenses.
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(f) The Class B Shareholders shall not be permitted to transfer their shares
to the Section 5.5 Purchaser unless NWIP shall have assigned (or caused the
assignment) for $1.00 to the Corporation not later than the closing day of the
Section 5.5 Sale any FCC licenses acquired by NWIP (or its Subsidiaries)
pursuant to Section 4.16 of the Joint Venture Agreement.
5.6 Generally Applicable Provisions. Each of the NWIP Call Right and
the Put Right, whether effected as an Article V Purchase or an Article V
Redemption, shall be governed by the following provisions:
(a) Transfer of Title. Transfer of title to NWIP of all of the issued and
outstanding shares of Class A Common Stock shall occur automatically on the
Article V Closing Date, subject to the payment by or for the account of NWIP to
the Payment Agent, on or before such date, of the amount owing to the Record
Holders, and thereafter NWIP shall be the sole holder of all issued and
outstanding shares of Class A Common Stock, notwithstanding the failure of any
Class A Shareholders to tender the certificates representing such shares to the
Payment Agent for payment therefor in accordance with Section 5.3(b) or Section
5.4(b). The Corporation shall instruct its transfer agent not to accept any
shares of Class A Common Stock for transfer on and after the Article V Closing
Date, except for the shares of Class A Common Stock transferred to NWIP. The
Corporation shall take all actions reasonably requested by NWIP to assist in
effectuating the transfer of shares of Class A Common Stock in accordance with
this Section 5.6(a). After the Article V Closing Date, the Record Holders shall
have no rights in connection with such Class A Common Stock other than the
right to receive the Option Price therefor. The Corporation shall cause its
books and records to show that such shares are bound by the provisions of this
Section 5.6(a) and that such shares shall be transferred to NWIP immediately
upon deposit by NWIP with the Payment Agent of the amount owing to the Record
Holders.
(b) Legend. Any certificates evidencing shares of Class A Common Stock issued
by the Corporation shall bear a legend in substantially the following form:
THE SECURITIES OF THE CORPORATION EVIDENCED HEREBY ARE SUBJECT TO
CERTAIN OPTIONS, DESCRIBED IN THE RESTATED CERTIFICATE OF INCORPORATION OF THE
CORPORATION, AS AMENDED FROM TIME TO TIME, OF A PERSON TO PURCHASE OR TO CAUSE
THE CORPORATION TO REDEEM SUCH SECURITIES, OR OF THE SHAREHOLDERS TO SELL SUCH
SECURITIES, AT A PURCHASE PRICE DETERMINED IN ACCORDANCE WITH THE PROVISIONS
THEREOF, EXERCISABLE BY WRITTEN NOTICE AT ANY TIME DURING THE PERIODS SET FORTH
THEREIN. COPIES OF THE RESTATED CERTIFICATE OF INCORPORATION ARE AVAILABLE AT
THE PRINCIPAL PLACE OF BUSINESS OF THE CORPORATION LOCATED AT 4500 CARILLON
POINT, KIRKLAND, WASHINGTON, AND WILL BE FURNISHED WITHOUT COST TO SHAREHOLDERS
ON REQUEST.
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Upon the termination or expiration (other than by exercise) of the NWIP Call
Right and the Put Right, the Corporation shall, at the request of any holder of
shares of Class A Common Stock bearing the legend set forth above, remove such
legend from such shares.
(c) No Conflicting Action. The Corporation shall not take, or permit any
Person within its control to take, any action inconsistent with the rights of
NWIP and the obligations of the Corporation under this Article V. The
Corporation shall not enter into any agreement, arrangement or understanding,
either oral or written, that is inconsistent with the rights of NWIP under this
Article V.
(d) Amendment. This Article V may not be amended or repealed without the
affirmative vote or, notwithstanding any contrary provisions of the Bylaws of
the Corporation, written consent of NWIP and holders of at least a majority of
the shares of Class A Common Stock then outstanding, voting or consenting, as
the case may be, separately as one class, given in person or by proxy, either
in writing or by resolution adopted at an annual or special meeting.
(e) Termination. The NWIP Call Right shall terminate on the earliest to occur
of: (i) the Article V Closing Date; (ii) if the NWIP Call Right is not
exercised, 11:59 p.m., New York time, on the last day on which the NWIP Call
Right may be exercised hereunder; and (iii) the failure by NWIP to deposit
Nextel Shares or cash with the Payment Agent as required by this Article V. The
Corporation shall promptly notify each Record Holder in writing upon the
occurrence of the events described in Section 5.6(e)(iii).
(f) Delay Due to FCC Approval. The closing for the purchase of the shares of
Class A Common Stock pursuant to this Article V (the "Article V Closing") shall
occur as promptly as practicable (but in no event later than 30 days) after
receipt by the Class A Shareholders of the NWIP Call Notice or exercise by the
Class A Shareholders of the Put Right, provided that if the purchase of any
Class A Shareholder's shares is subject to prior regulatory approval or
requires the determination of Fair Market Value in accordance with Section 5.7,
the Corporation and such shareholder will use their reasonable best efforts to
obtain the necessary regulatory approvals and the 30-day period shall be
extended until the later of (i) the expiration of five Business Days after all
such regulatory approvals shall have been received and (ii) the determination
of Fair Market Value. At the Article V Closing, each Class A Shareholder shall
deliver to the Corporation or NWIP, as the case may be, certificates
representing such Class A Shareholder's shares, duly endorsed, together with
all other documents required to be executed in connection with the sale of such
shares (it being understood that in no event shall a Class A Shareholder be
obligated to make any representations and warranties, or to provide any
indemnities, with respect to any matters other than title to the shares held by
such Person, such title being free and clear of all liens and encumbrances, and
such Person's authority, authorization and right to enter into and consummate
the sale without contravention of any law or agreement, and without the need
for any third party (not including any governmental or regulatory) consent
or approval). At the Article V Closing or as otherwise permitted by Section
5.2, NWIP shall deliver to each Class A Shareholder such Class A Shareholder's
portion of the Option Price, allocated pursuant to Section 5.7(g), to the
address such Class A Shareholder shall have specified in writing. If any Class
A Shareholder should fail to deliver such certificates to NWIP and NWIP has
deposited such Class A
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Shareholder's proportionate share of the Option Price for such certificates
with the Payment Agent, such shares shall no longer be deemed to be outstanding
and all rights of such shareholder with respect to such shares will terminate
except the right to receive the Option Price. The Corporation shall cause the
books and records of the Corporation to show that such Shares are bound by the
provisions of this Section 5.6(f) and that such Shares shall be transferred to
the Corporation or NWIP, as the case may be, immediately upon surrender for
transfer by the holder thereof.
(g) The Option Price payable pursuant to this Article V shall be allocated
to each Class A Shareholder based on such shareholder's Percentage Ownership.
(h) Warrants; Options; Restricted Stock.
(i) Vested in-the-money options and warrants will be exercised for cash
prior to the Article V Closing or will be exchanged at such closing for an
amount equal to the Option Price (on a per share basis) minus the exercise
price of such option or warrant multiplied by the number of shares subject to
such options or which can be purchased pursuant to such warrants.
(ii) Vested in-the-money options and warrants, together with any shares of
Common Stock or options then beneficially owned by the Management Shareholders
that vest upon the consummation of the NWIP Call Right or Put Right in
accordance with the Restricted Stock Purchase Agreements or the 1999 Stock
Option Plan, as the case may be, will be included both in the determination of
Percentage Ownership of the Corporation and in the allocation of the NWIP Call
Price among the Class A Shareholders (it being understood that NWIP's
acquisition of all the outstanding shares of Class A Common Stock pursuant to
this Article V shall constitute a "Change in Control of the Company" for
purposes of the Restricted Stock Purchase Agreements and the 1999 Stock Option
Plan).
(iii) Any warrants, options or other securities (other than the Class B
Common Stock) exercisable or exchangeable for, or convertible into, shares of
Class A Common Stock that are not exercised, exchanged or converted by the
holders thereof at or prior to the Article V Closing or otherwise in accordance
with Section 5.1(b)(iv) shall be canceled effective upon such closing, and the
Corporation's books and records shall reflect such cancellation.
5.7 Fair Market Value Calculation. For purposes of this Article V, Fair
Market Value will be determined as follows:
(a) "Fair Market Value" of the Corporation means the price that would be paid
for all of the Corporation Capital Stock (excluding the Series B Preferred and
any mandatorily redeemable pay-in-kind non-convertible securities) by a willing
buyer to a willing seller, in an arm's-length transaction, as if the
Corporation were a publicly traded and non-controlled corporation and the buyer
was acquiring all of such Corporation Capital Stock of the Corporation, and
assuming that the Corporation was being sold in a manner designed to attract
all possible participants to the sales process (including Nextel and its
Competitors, subject to the provisions below) and to maximize stockholder value
(including, if
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necessary, through a public or private market sale or other disposition
(including tax-free spin-offs, if possible) of businesses prohibited by legal
restrictions to be owned by a particular buyer or class of buyer), with both
buyer and seller in possession of all material facts concerning the Corporation
and its business. In all cases, Fair Market Value for the Corporation will
include a control premium and there will be no minority or illiquidity
discount. Fair Market Value of the Corporation shall be determined on the
assumption that in a competitive acquisition market with Nextel and prospective
buyers other than Nextel, the Corporation would be at least as valuable to
other prospective buyers as to Nextel. Fair Market Value shall be determined on
the assumption that the Corporation is at least as valuable as if it were a
part (although separable) of Nextel, with the valuation of the Corporation for
purposes of this sentence being derived from a valuation of Nextel consistent
with the first sentence of this paragraph but without taking into account a
control premium for Nextel (it being understood that a control premium,
however, will be applied to the Corporation). Fair Market Value of the
Corporation will not include any premium solely due to the fact that a
competitor of Nextel might be willing to pay a premium for the Corporation in
order to hamper or impede Nextel's growth or strategy. If the Corporation's
stock is publicly traded, Fair Market Value will take into consideration (i)
the trading activity and history of the Corporation's stock and (ii) the
Corporation's most recent "unaffected" public market stock price. In making the
determination of Fair Market Value of the Corporation, the Corporation will be
given the benefit of the fact that it uses the Nextel brand name, business and
technology pursuant to the Joint Venture Agreement and the other Transaction
Documents, but there will be no discount or premium included in any valuation
of the Corporation relative to its business as conducted or reasonably expected
to be conducted due to the facts that (v) the Corporation will not own but
Nextel will directly or indirectly lease or otherwise make available to the
Corporation certain of its rights, assets and services pursuant to the Joint
Venture Agreement and the other Collateral Agreements, or pursuant to any other
agreements or arrangements entered into from time to time between Nextel and/or
its Subsidiaries, on the one hand, and the Corporation and/or its Subsidiaries,
on the other hand, (w) in certain circumstances Nextel will have the right to
acquire the Corporation's FCC licenses, and in such a case, the Corporation
will not own, but Nextel and/or its Subsidiaries will directly or indirectly
make available to the Corporation, the right to manage the use of the
frequencies subject to such licenses, (x) Nextel directly or indirectly has,
and may exercise, certain aspects of control over the Corporation's business
and the Corporation, (y) Nextel directly or indirectly provides certain
services and other benefits to the Corporation on a cost or subsidized basis
and (z) there may be few potential buyers for the Corporation due to any real
or perceived control of the Corporation exercised by Nextel or due to the fact
that only Nextel has an identical technology platform.
(b) Within 20 days after notice is given of the exercise of a Put Right or an
NWIP Call Right, the Board of Directors (by majority vote with the NWIP
Designee abstaining) will select and identify to NWIP a nationally recognized
investment banker or appraiser (the "First Appraiser") and NWIP will select and
identify to the shareholders a nationally recognized investment banker or
appraiser (the "Second Appraiser"). The date when both appraisers have been
identified, is the "Start Date". NWIP, the Corporation and the other
shareholders will (and NWIP will cause Nextel to) cooperate with any appraisers
appointed under this Section and share with each such appraiser all information
relevant to a valuation of the Corporation. Within 30 days of the Start Date,
the First Appraiser and the Second Appraiser will each determine its
preliminary view of the Fair Market Value of the Corporation in
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accordance with the criteria set forth in Section 5.7(a), and will consult with
each other with respect to their respective preliminary values. On or prior to
the 45th day after the Start Date, the First Appraiser and the Second Appraiser
will each render to the shareholders its written report on the Fair Market
Value of the Corporation.
(c) If the higher Fair Market Value determined under Section 5.7(b) (the
"High Value") is not more than 110% of the lower Fair Market Value determined
under Section 5.7(b) (the "Low Value"), then the Fair Market Value will be the
average of the High Value and the Low Value. If the High Value is more than
110% of the Low Value, then, not more than 60 days after the Start Date, the
First Appraiser and the Second Appraiser will together designate another
nationally recognized investment banker or appraiser (the "Third Appraiser"),
who will not be informed of the values determined by the First and Second
Appraisers. The Third Appraiser will make a determination of the Fair Market
Value of the Corporation in accordance with the criteria set forth in Section
5.7(a) and deliver its written report to the shareholders (the "Third Value")
not more than 30 days after the Third Appraiser is designated. If the Third
Value is within the middle one third of the range of values between the High
Value and the Low Value (the "Mid-Range"), Fair Market Value will be the Third
Value. If the Third Value does not fall within the Mid-Range, the Fair Market
Value will be the average of (x) the Third Value and (y) either (i) the High
Value or (ii) the Low Value, whichever is closest to the Third Value, provided
that the Fair Market Value shall not be less than the Low Value nor greater
than the High Value.
(d) The determination of Fair Market Value under Section 5.7(c) will be final
and binding on all Class A Shareholders unless a challenge (a "Notice of
Challenge") by any Class A Shareholder is filed with NWIP pursuant to this
Section 5.7(d) within 20 days of the receipt by the Class A Shareholders of the
final determination under Section 5.7(c). As soon as practicable after the end
of the 20-day period for giving a Notice of Challenge, NWIP will notify the
Corporation and all challengers of the names and addresses of all challengers.
Not more than 10 days after receiving such notice, the challengers will, in a
writing executed by all of them, notify the Corporation and NWIP of the
challenger that has been selected as their representative and who has been
given irrevocable authority to represent the challengers for all proceedings
under this Section 5.8(d) (the "Challenger's Representative"). If the
Corporation and NWIP do not receive the executed writing from the challengers
in the 10-day period, the Corporation will select a challenger by lot to act as
the Challenger's Representative, and will notify NWIP and all the challengers
of the party selected. If the Challenger's Representative is selected by lot,
each challenger will have 5 days to notify the Corporation and NWIP that it
elects to irrevocably abandon the challenge, and to accept its share of the
Fair Market Value as determined under Section 5.8(c). Any challenger that does
not abandon the challenge as described in the preceding sentence, will be
deemed to have irrevocably designated the Challenger's Representative selected
by lot as its agent for purposes of proceedings under this Section 5.8(d). No
challenger can participate in the challenge proceeding except through the
Challenger's Representative. Any Class A Shareholder that does not give notice
and join the challengers will be paid its appropriate share of Fair Market
Value (as determined under Section 5.8(c)), but will be forever barred from
asserting any objection to Fair Market Value as so determined. The procedures
provided for in this Section 5.7(d), including the
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Challenge Floor Price and Challenge Ceiling Price, each as hereinafter defined,
shall not be considered by any appraiser in determining Fair Market Value.
(e) The determination of Fair Market Value under Section 5.7(c) will be final
and binding on NWIP unless NWIP believes that the Fair Market Value determined
under Section 5.7(c) does not reflect the true Fair Market Value or was
improperly determined and gives notice to each Class A Shareholder and to the
Corporation within 20 days of receiving the final determination under Section
5.7(c) that it is initiating a proceeding under this Section 5.7(e). Not more
than 10 days after receiving a notice under the preceding sentence, the Class A
Shareholders will designate, by majority vote, a representative and notify NWIP
and the Corporation in writing of the identity of such representative (or, if
such designation by majority vote does not occur for any reason, then the
Corporation will select a representative by lot and shall notify NWIP and the
other Class A Shareholders in writing of such selection), who will be
irrevocably authorized to be the "Challenger's Representative" to act as the
agent of all Class A Shareholders in the defense of the challenge by NWIP. No
Class A Shareholder will have the right to participate in the defense except
through the Challenger's Representative.
(f) The party or parties bringing the challenge will be required to
demonstrate to a tribunal composed of three persons with expertise in valuing
companies similar to the Corporation, one selected by each of NWIP and the
Board of Directors and the third member of the tribunal selected by the first
two members, that the Fair Market Value determined under Section 5.7(c) (or the
underlying values determined by the Appraisers on which it was based) was
grossly incorrect or fraudulently obtained; and what the correct Fair Market
Value should be. The tribunal determining the challenge is to determine Fair
Market Value and no party will seek to have that determination referred to an
investment banker or appraiser (although they may testify or offer evidence to
the tribunal).
(g) If there is a challenge by NWIP pursuant to Section 5.7(e), regardless of
the outcome of the proceeding, the amount to be paid to the Class A
Shareholders may be higher than their proportionate share of the amount that
they would have received if the Fair Market Value were equal to the Challenge
Ceiling Price but will not be less than their proportionate share of the amount
that they would have received if the Fair Market Value were equal to the
Challenge Floor Price. If there is a challenge by the Board of Directors
pursuant to Section 5.7(d), regardless of the outcome of the proceeding, the
amount to be paid to the Class A Shareholders may be less than their
proportionate share of the amount that they would have received if the Fair
Market Value were equal to the Challenge Floor Price but will not be more than
their proportionate share of the amount that they would have received if the
Fair Market Value were equal to the Challenge Ceiling Price.
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(h) The following terms have the following meanings:
"Challenge Ceiling Price" means an amount equal to the sum of those
amounts that for each tranche of capital actually invested in the Corporation
(whether contributed in cash or in kind and, if in kind, valued as set forth in
Section 5.7(i)), would return to investors in each tranche (regardless of
whether there are any investors from that tranche who continue as equity
holders, and without regard to any purchase or sale transactions or the price
of such transfers among equity holders) an amount that would represent a 30%
internal rate of return on the amount of capital invested in connection with
such tranche, compounded annually from the date that such capital relating to
such tranche was contributed to the date of the determination.
"Challenge Floor Price" means an amount equal to the sum of those
amounts that for each tranche of capital actually invested in the Corporation
(whether contributed in cash or in kind and, if in kind, valued as set forth in
the Section 5.7(i)), would return to investors in each tranche (regardless
whether there are any investors from that tranche who continue as equity
holders, and without regard to any purchase or sale transactions or the price
of such transfers among equity holders) an amount that would represent a 10%
internal rate of return on the amount of capital invested in connection with
such tranche, compounded annually from the date that such capital relating to
such tranche was contributed to the date of the determination.
"Investment Formula Price" means in respect of each tranche of capital
actually invested in the Corporation (whether contributed in cash or in kind,
but excluding the Series B Preferred Stock), an amount that would represent a
20% internal rate of return on the amount of capital invested in connection
with such tranche (regardless of whether there are any investors from such
tranche who continue as equity holders, and without regard to any purchase or
sale transactions or the price of such transfers among equity holders),
compounded annually from the date that such capital relating to such tranche
was contributed to the date of the purchase.
(i) For purposes of calculating the Investment Formula Price, Challenge
Ceiling Price and Challenge Floor Price, except for frequencies which will be
valued as provided in Exhibit 4.1 to the Joint Venture Agreement, the Board of
Directors shall place a cash equivalent value on each non-cash capital
investment made in the Corporation at the time such investment is made, and
such cash equivalent value shall be used in all calculations of Investment
Formula Price, Challenge Ceiling Price, and Challenge Floor Price.
ARTICLE VI
DEFINITIONS
As used in this Restated Certificate of Incorporation, the following
terms shall have the following meanings:
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"Accreted Liquidation Preference" means the initial liquidation
preference of the Series B Preferred Stock equal to $21,850,000, accreting at
an annual rate of 12% (computed on the basis of a 360-day year), compounding
quarterly and accruing daily from the date of issuance of the Series B
Preferred Stock to NWIP up to and including the date fixed for the redemption
of the Series B Preferred Stock or, if earlier, the liquidation, dissolution or
winding-up of the Corporation.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with
such Person, provided that no security holder of the Corporation shall be
deemed an Affiliate of any other security holder solely by reason of any
investment in Corporation nor shall any Person be deemed an Affiliate of the
Corporation solely by reason of veto, approval or similar rights granted to
such Person pursuant to any of the Transaction Documents. For the purposes of
this definition, the term "control" (including with correlative meanings, the
terms "controlling," "controlled by" and "under common control with"), as used
with respect to any Person, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities or by contract
or otherwise.
"Appraisers" means the NWIP Appraiser and the Corporation Appraiser.
"Article V Closing" is defined in Section 5.6(g).
"Article V Closing Date" means (a) with respect to an Article V
Redemption pursuant to Section 5.4, the Article V Redemption Date, or (b) with
respect to an Article V Purchase pursuant to Section 5.3, the Article V
Purchase Date.
"Article V Purchase" is defined in Section 5.1(a)(ii).
"Article V Purchase Date" is defined in Section 5.3(a).
"Article V Redemption" is defined in Section 5.1(a)(ii).
"Article V Redemption Date" is defined in Section 5.4(a).
"Article V Transaction" means either the Article V Purchase or the
Article V Redemption, as elected by NWIP on or prior to the Article V
Transaction Date.
"Board of Directors" is defined in Section 4.2(a).
"Business Day" means any day other than a Saturday, Sunday or a day on
which commercial banking institutions are authorized or required by law,
regulation or executive order to be closed in New York, New York.
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"Capital Stock" of any Person means any and all shares, interests,
participation or other equivalents (however designated) of stock of, or other
ownership interests in, such Person.
"Class A Common Stock" is defined in Section 4.1(b).
"Class A Conversion Rate" means, for each share of Capital Stock of
the Corporation that is convertible at the Class A Conversion Rate, one fully
paid and non-assessable share of Class A Common Stock of the Corporation. In
case the Corporation shall at any time subdivide (by any stock split, stock
dividend or otherwise) its outstanding shares of Class A Common Stock into a
greater number of shares, the Class A Conversion Rate in effect immediately
prior to such subdivision shall be proportionately increased, and, conversely,
in case the outstanding shares of Class A Common Stock shall be combined into a
smaller number of shares, the Class A Conversion Rate in effect immediately
prior to such combination shall be proportionately reduced.
"Class A Shareholder" means a holder of shares of Class A Common
Stock.
"Class B Common Stock" is defined in Section 4.1(b).
"Class B Conversion Rate" means, for each share of Capital Stock of
the Corporation that is convertible at the Class B Conversion Rate, one fully
paid and non-assessable share of Class B Common Stock of the Corporation. In
case the Corporation shall at any time subdivide (by any stock split, stock
dividend or otherwise) its outstanding shares of Class B Common Stock into a
greater number of shares, the Class B Conversion Rate in effect immediately
prior to such subdivision shall be proportionately increased, and, conversely,
in case the outstanding shares of Class B Common Stock shall be combined into a
smaller number of shares, the Class B Conversion Rate in effect immediately
prior to such combination shall be proportionately reduced.
"Class B Shareholder" means a holder of shares of Class B Common
Stock.
"Closing" means the consummation of the transactions at the closing
contemplated by the Subscription Agreement.
"Closing Date" means the date of the Closing.
"Closing Price" on any Trading Day, with respect to the per share
price of any shares of Capital Stock of any Person, means the last reported
sale price regular way or, in case no such reported sale takes place on such
day, the average of the reported closing bid and asked prices regular way, in
either case on the New York Stock Exchange or if such shares of Capital Stock
are not listed or admitted to trading on such exchange, on the principal
national securities exchange on which such shares are listed or admitted to
trading or, if not listed or admitted to trading on any national securities
exchange, on the NASDAQ National Market or, if such shares are not listed or
admitted to trading on any national securities exchange or quoted on the NASDAQ
National Market and the issuer and
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principal securities exchange do not meet such requirements, the average of the
closing bid and asked prices in the over-the-counter market as furnished by any
New York Stock Exchange member firm of national standing that is selected from
time to time by such Person for that purpose. If no such Closing Price exists
with respect to shares of any such class, the value of such shares shall be
determined by the Board of Directors of such Person in good faith and evidenced
by a resolution of such Board of Directors.
"Common Stock" means, collectively, the Class A Common Stock and the
Class B Common Stock.
"Competitor" means (i) a Telecommunications Company, or (ii) any
Person beneficially owning more than 50% of the total common equity or Voting
Stock of or otherwise controlling a Telecommunications Company, or (iii) any
Person the total common equity or Voting Stock of which is more than 50%
beneficially owned or otherwise controlled by an entity described in clause (i)
or (ii).
"Control" of a Person means the power, direct or indirect, (i) to vote
or direct the voting of more than 50% of the outstanding shares of Voting Stock
of such Person, or (ii) to direct or cause the direction of the management and
policies of such Person whether by contract or otherwise.
"Convertible Preferred Stock" is defined in Section 4.1(a).
"Corporation Appraiser" means a nationally recognized investment
banker or appraiser selected by the Corporation.
"Corporation Capital Stock" means the Common Stock, the Convertible
Preferred Stock, the Series B Preferred Stock, the Warrants (as defined in the
Subscription Agreement) and any other equity security issued by the
Corporation.
"DGCL" is defined in Article III.
"Dividend Record Date" is defined in Section 4.3(a).
"Fair Market Value" is defined in Section 5.7.
"FCC" means the Federal Communications Commission or similar
regulatory authority established in replacement thereof.
"First Appraiser" is defined in Section 5.7(b).
"Fully Diluted" means, with respect to any class of Corporation
Capital Stock and without duplication, all outstanding shares and all shares
issuable in respect of outstanding securities convertible into or exchangeable
for Common Stock, stock appreciation rights or options, warrants and other
irrevocable rights to purchase or subscribe for Common Stock or securities
convertible into or
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exchangeable for Common Stock; provided that no Person shall be deemed to own
such number of Fully Diluted shares of such class as such Person has the right
to acquire from any Person other than the Corporation.
"High Value" is defined in Section 5.7(c).
"Initial Public Offering" means the initial public offering of Common
Stock of the Corporation pursuant to an effective registration statement under
the Securities Act other than pursuant to a registration statement filed in
connection with a transaction of the type described in Rule 145 of the
Securities Act or for the purpose of issuing securities pursuant to an employee
benefit plan.
"Investment Formula Price" is defined in Section 5.7(h).
"IPO Date" means the date of closing of the Initial Public Offering.
"Joint Venture Agreement" means the Joint Venture Agreement, dated as
of the Closing Date, among the Corporation, Opco and NWIP, as it may be amended
from time to time.
"Low Value" is defined in Section 5.7(c).
"Management Shareholders" means John Chapple, John Thompson, David
Thaler, David Aas, Perry Satterlee and Mark Fanning.
"Mandatory Conversion Date" is defined in Section 4.10(d).
"Mandatory Redemption Date" means February 11, 2010.
"Mid-Range" is defined in Section 5.7(c).
"NDS" means, collectively, all of Nextel's Subsidiaries operating all
or any portion of an ESMR Network (as defined in the Joint Venture Agreement)
in the United States.
"Nextel" means Nextel Communications, Inc. and its successors and
assigns, including any surviving or transferee Person of a transaction
described in clause (iii) of the definition of Nextel Sale.
"Nextel Group" means Nextel and its Subsidiaries.
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"Nextel Sale" is defined in Section 4.01(h) of the Shareholders'
Agreement.
"Nextel Shareholder" is defined in Section 1.01 of the Shareholders
Agreement.
"Nextel Shares" is defined in Section 5.2(a).
"1999 Stock Option Plan" means the 1999 Nonqualified Stock Option Plan
of the Corporation, effective on the Closing Date, as it may be amended from
time to time.
"Notice of Challenge" is defined in Section 5.7(d).
"NWIP" means Nextel WIP Corp., a Delaware corporation and a wholly
owned Subsidiary of Nextel or any Nextel Shareholder.
"NWIP Appraiser" means a nationally recognized investment banker or
appraiser selected by NWIP and identified to the Corporation in a NWIP Call
Notice.
"NWIP Call Notice" is defined in Section 5.1(a)(ii).
"NWIP Call Price" is defined in Section 5.1(a)(iii).
"NWIP Call Right" is defined in Section 5.1(a)(i).
"NWIP Designee" is defined in the Shareholders' Agreement.
"NWIP Preemption Put" is defined in Section 5.1(b)(i)(B).
"Opco" means Nextel Partners Operating Corp., a Delaware corporation
and a wholly owned subsidiary of the Corporation.
"Option Price" means, as applicable, the NWIP Call Price or the Put
Price.
"Other Entity" is defined in Section 9.1.
"Payment Agent" means a bank, transfer agent or similar entity
designated by NWIP.
"Percentage Ownership" means, with respect to any shareholder or any
group of shareholders at any time, (i) the number of shares of Fully Diluted
Common Stock that such shareholder or group of shareholders beneficially owns
(and (without duplication) has the right to acquire from the Corporation) at
such time, divided by (ii) the total number of shares of Fully Diluted Common
Stock at such time.
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"Person" means a corporation (including a business trust),
association, partnership, organization, company, business, individual, joint
stock company, trust, joint venture, limited liability company, government or
political subdivision thereof, or governmental agency, or other entity of any
nature whatsoever.
"Preemption Right" is defined in the Shareholders' Agreement.
"Preferred Stock" is defined in Section 4.1(a).
"Proceeding" is defined in Section 9.1.
"Put Event" is defined in Section 5.1(b)(i).
"Put Price" is defined in Section 5.1(b)(iii).
"Put Right" is defined in Section 5.1(b)(i).
"Qualifying DLJ Demand" is defined in the Shareholders' Agreement.
"Record Date" means the date on which record ownership of the Class A
Common Stock is to be determined for purposes of Section 5.3(a) and 5.4(a).
"Record Holder" means a holder of record of Class A Common Stock.
"Redemption Date" is defined in Section 4.6(c)(iii)(A).
"Redemption Notice" is defined in Section 4.6(c)(iii)(A).
"Restricted Stock Purchase Agreements" means the Restricted Stock
Purchase Agreements, dated as of November 20, 1998, as amended, between the
Corporation and each of the Management Shareholders, as amended from time to
time.
"SEC" means the Securities and Exchange Commission.
"Second Appraiser" is defined in Section 5.7(b).
"Section 5.5 Notice" is defined in Section 5.5(a).
"Section 5.5 Purchaser" is defined in Section 5.5(a).
"Section 5.5 Sale" is defined in Section 5.5(a).
"Section 5.5 Sale Price" is defined in Section 5.5(a).
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"Securities Act" means the Securities Act of 1933, as amended.
"Senior Discount Notes" means the Corporation's 14% Senior Discount
Notes due 2009 in the aggregate principal amount at maturity of $400,000,000.
"Senior Notes Indenture" means the Indenture relating to the Senior
Discount Notes.
"Senior Security" means, with respect to any series of Preferred
Stock, any class or series of Capital Stock of the Corporation that (i) ranks
senior to such series of Preferred Stock with respect to distributions upon the
liquidation, winding-up and dissolution of the Corporation or (ii) has voting
rights to which the holders of such series of Preferred Stock are not entitled
(other than voting rights granted under applicable law); provided, that any
class or series of Capital Stock that (a) is subject to mandatory redemption by
the Corporation, (b) does not entitle the holder thereof to receive dividends
except by payment of additional shares of such Capital Stock and (c) is not
convertible into or exchangeable for (or convertible into or exchangeable for
into any debt or equity security that is convertible into or exchangeable for)
Common Stock, shall not be considered a "Senior Security" for purposes of this
Restated Certificate of Incorporation.
"Series A Preferred Stock" is defined in Section 4.1(a).
"Series B Preferred Stock" is defined in Section 4.1(a).
"Series C Preferred Stock" is defined in Section 4.1(a).
"Series D Preferred Stock" is defined in Section 4.1(a).
"Shareholders' Agreement" means the Shareholders' Agreement, dated as
of the Closing Date, among the Corporation and the shareholders named therein,
as amended from time to time.
"Start Date" is defined in Section 5.7(b).
"Subscription Agreement" means the Subscription and Contribution
Agreement, dated as of the Closing Date, among the Corporation and the
investors named therein, as amended from time to time.
"Subsidiary" means, with respect to any Person, any entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by such Person.
"Telecommunications Company" means any Person whose total Telecommuni
cations Revenue is at least 10% of its revenues (calculated on a consolidated
basis).
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"Telecommunications Revenue" of any Person means all revenue derived
from the transmission or exchange of non-video data or voice information by any
form of wire, cable, fiber optic or wireless transmission in geographic markets
where Nextel or the Corporation is either (1) doing business, or (2) holds a
telecommunications license and has publicly stated its intention to do
business, and includes the revenue that the company derives by engaging in the
business of transmitting or exchanging video information to the extent that
Nextel offers services to transmit or exchange video information in the
relevant geographic area. For purposes of this definition, (A) Nextel includes
any entity in which Nextel holds a 10% or greater direct or indirect ownership
interest that uses an iDEN or similar technology platform compatible with that
used by Nextel and (B) the Corporation includes the Corporation and all of its
Subsidiaries.
"Third Appraiser" is defined in Section 5.7(c).
"Third Value" is defined in Section 5.7(c).
"Trading Day" with respect to a securities exchange or automated
quotation system means a day on which such exchange or system is open for a
full day of trading.
"Transaction Documents" is defined in the Subscription Agreement.
"Voting Record Date" is defined in Section 4.4(a).
"Voting Stock" means any Capital Stock which ordinarily has voting
power for the election of directors (or persons performing similar functions),
whether at all times or only so long as no senior class of securities has such
voting power by reason of any contingency.
ARTICLE VII
PREEMPTIVE RIGHTS
No holder of shares of Common Stock shall be entitled to preemptive or
subscription rights.
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ARTICLE VIII
ELECTION OF DIRECTORS
Election of Directors need not be by written ballot.
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification. Any person who was or is a party or is threatened
to be made a party to any threatened, pending, or completed action, suit, or
proceeding (a "Proceeding"), whether civil, criminal, administrative, or
investigative (whether or not by or in the right of the Corporation), by reason
of the fact that such person, or a person of whom such person is the legal
representative, is or was a director, officer or incorporator of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer or incorporator of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise (an "Other Entity"),
shall be entitled to be indemnified by the Corporation to the full extent then
permitted by law against expenses (including counsel fees and disbursements),
judgments, fines (including excise taxes assessed on a person with respect to
an employee benefit plan), and amounts paid in settlement incurred by him in
connection with such action, suit, or proceeding. Persons who are not directors
or officers of the Corporation may be similarly indemnified in respect of
service to the Corporation or to an Other Entity at the request of the
Corporation to the extent the Board of Directors at any time specifies that
such persons are entitled to the benefits of this Article IX.
9.2 Advancement of Expenses. The Corporation shall, from time to
time, reimburse or advance to any director or officer (or any other person the
Board of Directors determines is entitled to indemnification hereunder in a
specific instance), the funds necessary for payment of expenses, including
attorneys, fees and disbursements, incurred in connection with any Proceeding,
in advance of the final disposition of such Proceeding; provided, however,
that, if (and only if) required by the DGCL, such expenses incurred by or on
behalf of any director or officer or other person may be paid in advance of the
final disposition of a Proceeding only upon receipt by the Corporation of an
undertaking, by or on behalf of such director or officer (or other person
indemnified hereunder), to repay any such amount so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right of appeal that such director, officer or other person is not
entitled to be indemnified for such expenses.
9.3 Rights Not Exclusive. The rights to indemnification and
reimbursement or advancement of expenses provided by, or granted pursuant to,
this Article IX shall not be deemed exclusive of any other rights to which a
person seeking indemnification or reimbursement or advancement of expenses may
have or hereafter be entitled under any statute, this Restated Certificate
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of Incorporation, the Bylaws, any agreement, any vote of stockholders or
disinterested directors or otherwise, both as to action in his or her official
capacity and as to action in another capacity while holding such office.
9.4 Continuing Rights. The rights to indemnification and reimbursement
or advancement of expenses provided by, or granted pursuant to, this Article IX
shall continue as to a person who has ceased to be a director or officer (or
other person indemnified hereunder), shall inure to the benefit of the
executors, administrators, legatees and distributees of such person, and in
either case, shall inure whether or not the claim asserted is based on matters
which antedate the adoption of this Article IX.
9.5 Insurance. The Corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of
the Corporation, as a director, officer, employee or agent of an Other Entity,
against any liability asserted against such person and incurred by such person
in any such capacity, or arising out of such person's status as such, whether
or not the Corporation would have the power to indemnify such person against
such liability under the provisions of this Article IX, the Bylaws or under
Section 145 of the DGCL or any other provision of law.
9.6 Contract Rights; No Repeal. The provisions of this Article IX
shall be a contract between the Corporation, on the one hand, and each director
and officer who serves in such capacity at any time while this Article IX is in
effect and any other person indemnified hereunder, on the other hand, pursuant
to which the Corporation and each such director, officer, or other person
intend to be legally bound. No repeal or modification of this Article IX shall
affect any rights or obligations with respect to any state of facts then or,
heretofore or thereafter brought or threatened based in whole or in part upon
any such state of facts.
9.7 Enforceability; Burden of Proof. The rights to indemnification and
reimbursement or advancement of expenses provided by, or granted pursuant to,
this Article IX shall be enforceable by any person entitled to such
indemnification or reimbursement or advancement of expenses in any court of
competent jurisdiction. The burden of proving that such indemnification or
reimbursement or advancement of expenses is not appropriate shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, its independent legal counsel and its stockholders) to have made a
determination prior to the commencement of such action that such
indemnification or reimbursement or advancement of expenses is proper in the
circumstances nor an actual determination by the Corporation (including its
Board of Directors, its independent legal counsel and its stockholders) that
such person is not entitled to such indemnification or reimbursement or
advancement of expenses shall constitute a defense to the action or create a
presumption that such person is not so entitled. Such a person shall also be
indemnified for any expenses incurred in connection with successfully
establishing his or her right to such indemnification or reimbursement or
advancement of expenses, in whole or in part, in any such proceeding.
9.8 Service at the Request of the Corporation. Any director or officer
of the Corporation serving in any capacity (a) another corporation of which a
majority of the shares entitled
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to vote in the election of its directors is held, directly or indirectly, by
the Corporation or (b) any employee benefit plan of the Corporation or any
corporation referred to in clause (a) shall be deemed to be doing so at the
request of the Corporation.
ARTICLE X
EXCULPATION
10.1 Exculpation. No director of the Corporation shall be liable to the
Corporation or any of its stockholders for monetary damages for breach of
fiduciary duty as a director, provided that this provision does not eliminate
the liability of the director (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the DGCL or (iv) for any transaction from which
the director derived an improper personal benefit. For purposes of the prior
sentence, the term "damages" shall, to the extent permitted by law, include
without limitation, any judgment, fine, amount paid in settlement, penalty,
punitive damages, excise or other tax assessed with respect to an employee
benefit plan, or expense of any nature (including, without limitation, counsel
fees and disbursements). Each person who serves as a director of the Corporation
while this Article X is in effect shall be deemed to be doing so in reliance on
the provisions of this Article X, and neither the amendment or repeal of this
Article X, nor the adoption of any provision of this Restated Certificate of
Incorporation inconsistent with this Article X, shall apply to or have any
effect on the liability or alleged liability of any director of the Corporation
for, arising out of, based upon, or in connection with any acts or omissions of
such director occurring prior to such amendment, repeal, or adoption of an
inconsistent provision. The provisions of this Article X are cumulative and
shall be in addition to and independent of any and all other limitations on or
eliminations of the liabilities of directors of the Corporation, as such,
whether such limitations or eliminations arise under or are created by any law,
rule, regulation, bylaw, agreement, vote of stockholders or disinterested
directors, or otherwise.
ARTICLE XI
REDEMPTION REQUIRED BY GOVERNMENTAL RULES
Notwithstanding any other provision of this Restated Certificate of
Incorporation to the contrary, outstanding shares of stock of the Corporation
shall always be subject to redemption by the Corporation, by action of the
Board, if in the judgment of the Board such action should be taken, pursuant to
Section 151(b) of the GCL or any other applicable provision of law, to the
extent necessary to prevent the loss or secure the reinstatement of any license
or franchise from any governmental agency held by the Corporation or any of its
Subsidiaries to conduct any portion of the business of the Corporation or any
of its subsidiaries, which license or franchise is conditioned upon some or all
of the holders of the Corporation's stock possessing prescribed qualifications;
provided,
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that the Corporation shall notify any Disqualified Holder prior to redeeming
its shares and, at the request of any Disqualified Holder, use its commercially
reasonable best efforts to obtain a waiver from such governmental agency. The
terms and conditions of such redemption shall be as follows:
(a) the redemption price of the shares to be redeemed pursuant to this
Article XI shall be equal to the lesser of (i) the Article XI Redemption Value
or (ii) if such stock was purchased by such Disqualified Holder within one year
of the Article XI Redemption Date, such Disqualified Holder's purchase price
for such shares;
(b) the redemption price of such shares may be paid in cash, Redemption
Securities or any combination thereof;
(c) if less than all the shares held by Disqualified Holders are to be
redeemed, the shares held by the DLJ Entities (as defined in the Shareholders'
Agreement) shall be the last of any such shares to be redeemed, and the other
shares (if any) to be redeemed shall be selected in such manner as shall be
determined by the Board of Directors, which may include selection first of the
most recently purchased shares thereof, selection by lot or selection in any
other manner determined by the Board of Directors;
(d) at least 30 days' written notice of the Article XI Redemption Date shall
be given to the record holders of the shares selected to be redeemed (unless
waived in writing by any such holder), provided that the Article XI Redemption
Date may be the date on which written notice shall be given to record holders
if the cash or Redemption Securities necessary to effect the redemption shall
have been deposited in trust for the benefit of such record holders and subject
to immediate withdrawal by them upon surrender of the stock certificates for
their shares to be redeemed;
(e) from and after the Article XI Redemption Date, any and all rights of
whatever nature, which may be held by the owners of shares selected for
redemption (including without limitation any rights to vote or participate in
dividends declared on stock of the same class or series as such shares), shall
cease and terminate and they shall thenceforth be entitled only to receive the
cash or Redemption Securities payable upon redemption; and
(f) such other terms and conditions as the Board shall determine.
For purposes of this Article XI:
(i) "Disqualified Holder" shall mean any holder of shares of stock of the
Corporation whose holding of such stock, either individually or when taken
together with the holding of shares of stock of the Corporation by any other
holders, may result, in the judgment of the Board, in the loss of, or the
failure to secure the reinstatement of, any license or franchise from any
governmental agency hold by the Corporation or any of its Subsidiaries to
conduct any portion of the business of the Corporation or any of its
Subsidiaries.
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(ii) "Article XI Redemption Value" of a share of the Corporation's stock-of
any class or series shall mean the average Closing Price for such a share for
each of the 45 most-recent days on which shares of stock of such class or
series shall have been traded preceding the day on which notice of redemption
shall be given pursuant to,-- paragraph (d) of this Article XI; provided,
however, that if shares of stock of such class or series are not traded on any
securities exchange or the NASDAQ National Market, "Article XI Redemption
Value" shall be determined by the Board in good faith.
(iii) "Closing Price" on any day means the reported closing sales price or, in
case no such sale takes place, the average of the reported closing bid and
asked prices on the principal United States securities exchange on which such
stock is listed, or on the NASDAQ National Market, or if no such prices or
quotations are available, the fair market value on the day in question as
determined by the Board in good faith.
(iv) "Article XI Redemption Date" shall mean the date fixed by the Board for
the redemption of any shares of stock of the Corporation pursuant to this
Article XI.
(v) "Redemption Securities" shall mean any debt or equity securities of the
Corporation, any of its Subsidiaries or any other corporation, or any
combination thereof, having such terms and conditions as shall be approved by
the Board and which, together with any cash to be paid as part of the
redemption price, in the opinion of any nationally recognized investment
banking firm selected by the Board (which may be a firm which provides other
investment banking, brokerage or other services to the Corporation), has a
value, at the time notice of redemption is given pursuant to paragraph (d) of
this Article XI, at least equal to the price required to be paid pursuant to
paragraph (a) of this Article XI (assuming, in the case of Redemption
Securities to be publicly traded, such Redemption Securities were fully
distributed and subject only to normal trading activity).
45
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IN WITNESS WHEREOF, the undersigned officer of the Corporation has
executed this Restated Certificate of Incorporation this 28th day of January,
1999.
/s/ Donald J. Manning
-----------------------
Name: Donald J. Manning
Title: Secretary
<PAGE>
Subject to the Shareholders' Agreement, dated as of
January 29, 1999, among the Corporation and the
shareholders named therein.
- -------------------------------------------------------------------------------
NEXTEL PARTNERS, INC.
BYLAWS
Adopted as of July 8, 1998
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE 1 STOCKHOLDERS......................................................1
1.1 Annual Meeting................................................1
1.2 Special Meetings..............................................1
1.3 Notice of Meetings; Waiver....................................1
1.4 Quorum........................................................2
1.5 Voting........................................................2
1.6 Voting by Ballot..............................................2
1.7 Adjournment...................................................2
1.8 Proxies.......................................................3
1.9 Organization; Procedure.......................................3
1.10 Consent of Stockholders in
Lieu of Meeting .............................................3
ARTICLE 2 BOARD OF DIRECTORS................................................3
2.1 General Powers................................................3
2.2 Number and Term of Office.....................................4
2.3 Election of Directors.........................................4
2.4 Annual and Regular Meetings...................................4
2.5 Special Meetings; Notice......................................4
2.6 Quorum; Voting................................................5
2.7 Adjournment...................................................5
2.8 Action Without a Meeting......................................5
2.9 Regulations; Manner of Acting.................................5
2.10 Action by Telephonic Communications..........................5
2.11 Resignation..................................................5
2.12 Removal of Directors.........................................6
2.13 Vacancies and Newly
Created Directorships .......................................6
2.14 Compensation.................................................6
2.15 Reliance on Accounts and Reports, etc........................6
ARTICLE 3 EXECUTIVE COMMITTEE AND OTHER COMMITTEES..........................6
3.1 How Constituted...............................................6
3.2 Powers........................................................7
3.3 Quorum; Voting................................................7
3.4 Action without a Meeting......................................7
3.5 Regulations; Manner of Acting.................................8
3.6 Action by Telephonic Communications...........................8
3.7 Resignation...................................................8
3.8 Removal.......................................................8
3.9 Vacancies.....................................................8
ARTICLE 4 OFFICERS..........................................................8
4.1 Titles........................................................8
i
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4.2 Election......................................................8
4.3 Salaries......................................................9
4.4 Removal and Resignation; Vacancies............................9
4.5 Authority and Duties..........................................9
4.6 The Chairman of the Board.....................................9
4.7 The President................................................10
4.8 The Vice Presidents..........................................10
4.9 The Secretary................................................10
4.10 The Treasurer...............................................11
4.11 Additional Officers.........................................12
4.12 Security....................................................12
ARTICLE 5 CAPITAL STOCK....................................................12
5.1 Certificates of Stock,
Uncertificated Shares .......................................12
5.2 Signatures; Facsimile........................................13
5.3 Lost, Stolen or Destroyed Certificates.......................13
5.4 Transfer of Stock............................................13
5.5 Record Date..................................................13
5.6 Registered Stockholders......................................14
5.7 Transfer Agent and Registrar.................................14
ARTICLE 6 OFFICES..........................................................15
6.1 Registered Office............................................15
6.2 Other Offices................................................15
ARTICLE 7 GENERAL PROVISIONS...............................................15
7.1 Dividends....................................................15
7.2 Reserves.....................................................15
7.3 Execution of Instruments.....................................15
7.4 Corporate Indebtedness.......................................16
7.5 Deposits.....................................................16
7.6 Checks.......................................................16
7.7 Sale, Transfer, etc. of Securities...........................16
7.8 Voting as Stockholder........................................16
7.9 Fiscal Year..................................................17
7.10 Seal........................................................17
7.11 Books and Records...........................................17
ARTICLE 8 AMENDMENT OF BYLAWS..............................................17
8.1 Amendment....................................................17
ARTICLE 9 CONSTRUCTION....................................................17
9.1 Construction................................................17
ii
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BYLAWS
NEXTEL PARTNERS, INC.
ARTICLE 1
STOCKHOLDERS
------------
1.1 Annual Meeting. The annual meeting of the stock holders of the
Corporation for the election of directors and for the transaction of such other
business as may properly come before such meeting shall be held at such place,
either within or without the State of Delaware, at 9:00 A.M. on the second
Wednesday of each April of each year (or, if such day is a legal holiday, then
on the next succeeding business day), or at such other date and hour, as may be
fixed from time to time by resolution of the Board of Directors and set forth
in the notice or waiver of notice of the meeting.
1.2 Special Meetings. Special meetings of the stock holders
may be called at any time by the President (or, in the event of his absence or
disability, by any Vice President), or by the Board of Directors. A special
meeting shall be called by the President (or, in the event of his absence or
disability, by any Vice President), or by the Secretary, immediately upon
receipt of a written request therefor by stockholders holding in the aggregate
not less than 50% of the outstanding shares of the Corporation at the time
entitled to vote at any meeting of the stockholders. If such officers or the
Board of Directors shall fail to call such meeting within 20 days after receipt
of such request, any stock holder executing such request may call such meeting.
Any such special meeting of the stockholders shall be held at such place,
within or without the State of Delaware, as shall be specified in the notice or
waiver of notice thereof.
1.3 Notice of Meetings; Waiver. The Secretary or any Assistant
Secretary shall cause written notice of the place, date and hour of each
meeting of the stockholders, and, in the case of a special meeting, the purpose
or purposes for which such meeting is called, to be given personally or by
mail, not less than ten nor more than 60 days before the date of the meeting,
to each stock holder of record entitled to vote at such meeting. If such notice
is mailed, it shall be deemed to have been given to a stockholder when
deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the record of stockholders of the
Corporation, or, if he shall have filed with the Secretary a written request
that notices to him be mailed to some other address, then directed to him at
such other address. Such further notice shall be given as may be required by
law.
<PAGE>
Whenever notice is required to be given to stockholders hereunder, a
written waiver, signed by a stockholder, whether before or after the time
stated therein, shall be deemed equivalent to notice. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
stockholders need be specified in a written waiver of notice. The attendance of
any stockholder at a meeting of stockholders shall constitute a waiver of
notice of such meeting, except when the stockholder attends a meeting for the
express purpose of objecting, at the beginning of the meeting, to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
1.4 Quorum. Except as otherwise required by law or by the Certificate
of Incorporation, the presence in person or by proxy of the holders of record
of a majority of the shares entitled to vote at a meeting of stockholders shall
constitute a quorum for the transaction of business at such meeting.
1.5 Voting. If, pursuant to Section 5.5 of these By laws, a record
date has been fixed, every holder of record of shares entitled to vote at a
meeting of stockholders shall be entitled to one vote for each share
outstanding in his name on the books of the Corporation at the close of
business on such record date. If no record date has been fixed, then every
holder of record of shares entitled to vote at a meeting of stockholders shall
be entitled to one vote for each share of stock standing in his name on the
books of the Corporation at the close of business on the day next preceding the
day on which notice of the meeting is given, or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held. Except as otherwise required by law, by the Certificate of Incorporation,
or by the Shareholders' Agreement, dated as of January 29, 1999, by and among
the Corporation and the shareholders identified therein (the "Shareholders'
Agreement"), the vote of a majority of the shares represented in person or by
proxy at any meeting at which a quorum is present shall be sufficient for the
transaction of any business at such meeting.
1.6 Voting by Ballot. No vote of the stockholders need be taken by
written ballot or conducted by inspectors of election, unless otherwise
required by law. Any vote which need not be taken by ballot may be conducted in
any manner approved by the meeting.
1.7 Adjournment. If a quorum is not present at any meeting of the
stockholders, the stockholders present in person or by proxy shall have the
power to adjourn any such meeting from time to time until a quorum is present.
Notice of any adjourned meeting of the stockholders of the Corporation need not
be given if the
<PAGE>
place, date and hour thereof are announced at the meeting at which the
adjournment is taken, provided, however, that if the adjourn ment is for more
than 30 days, or if after the adjournment a new record date for the adjourned
meeting is fixed pursuant to Section 5.5 of these Bylaws, a notice of the
adjourned meeting, conforming to the requirements of Section 1.3 hereof, shall
be given to each stockholder of record entitled to vote at such meeting. At any
adjourned meeting at which a quorum is present, any business may be transacted
that might have been transacted on the original date of the meeting.
1.8 Proxies. Any stockholder entitled to vote at any meeting of the
stockholders or to express consent to or dissent from corporate action without
a meeting may, by a written instru ment signed by such stockholder or his
attorney-in-fact, authorize another person or persons to vote at any such
meeting and express such consent or dissent for him by proxy. No such proxy
shall be voted or acted upon after the expiration of three years from the date
of such proxy, unless such proxy provides for a longer period. Every proxy
shall be revocable at the pleasure of the stockholder executing it, except in
those cases where applicable law provides that a proxy shall be irrevocable. A
stockholder may revoke any proxy which is not irrevocable by attending the
meeting and voting in person or by filing an instrument in writing revoking the
proxy or by filing another duly executed proxy bearing a later date with the
Secretary.
1.9 Organization; Procedure. At every meeting of stock holders the
presiding officer shall be the Chairman of the Board or, in the event of his
absence or disability, the President or, in the event of his absence or
disability, a presiding officer chosen by a majority of the stockholders
present in person or by proxy. The Secretary, or in the event of his absence or
disability, the Assistant Secretary, if any, or if there be no Assistant
Secretary, in the absence of the Secretary, an appointee of the presiding
officer, shall act as Secretary of the meeting. The order of business and all
other matters of procedure at every meeting of stockholders may be determined
by such presiding officer.
1.10 Consent of Stockholders in Lieu of Meeting. To the fullest extent
permitted by law, whenever the vote of the stock holders at a meeting thereof
is required or permitted to be taken for or in connection with any corporate
action, such action may be taken without a meeting, without prior notice and
without a vote of stockholders, if the holders of outstanding stock having not
less than the minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon were
present and voted shall consent in
3
<PAGE>
writing to such corporate action being taken. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not so consented in writing.
ARTICLE 2
BOARD OF DIRECTORS
------------------
2.1 General Powers. Except as may otherwise be provided by law, by the
Certificate of Incorporation or by these Bylaws, the property, affairs and
business of the Corporation shall be managed by or under the direction of the
Board of Directors and the Board of Directors may exercise all the powers of
the Corporation.
2.2 Number and Term of Office. Except as otherwise provided in the
Shareholders' Agreement, the number of Directors constituting the entire Board
of Directors shall be five, which number may be modified from time to time by
resolution of the Board of Directors, but in no event shall the number of
Directors be less than five. Each Director (whenever elected) shall hold office
until his successor has been duly elected and qualified, or until his earlier
death, resignation or removal.
2.3 Election of Directors. Except as otherwise provided in Sections
2.12 and 2.13 of these Bylaws and in the Shareholders' Agreement, the Directors
shall be elected at each annual meeting of the stockholders. If the annual
meeting for the election of Directors is not held on the date designated
therefor, the Directors shall cause the meeting to be held as soon thereafter
as convenient. At each meeting of the stockholders for the election of
Directors, provided a quorum is present and subject to the provisions of the
Shareholders' Agreement, the Directors shall be elected by a plurality of the
votes validly cast in such election.
2.4 Annual and Regular Meetings. The annual meeting of the Board of
Directors for the purpose of electing officers and for the transaction of such
other business as may come before the meeting shall be held as soon as possible
following adjournment of the annual meeting of the stockholders at the place of
such annual meeting of the stockholders. Notice of such annual meeting of the
Board of Directors need not be given. The Board of Directors from time to time
may by resolution provide for the holding of regular meetings and fix the place
(which may be within or without the State of Delaware) and the date and hour of
such meetings. Notice of regular meetings need not be given, provided, however,
that if the Board of Directors shall fix or change the time or place of any
regular meeting, notice of such action shall be mailed promptly, or
4
<PAGE>
sent by telegram, facsimile or cable, to each Director who shall not have been
present at the meeting at which such action was taken, addressed to him at his
usual place of business, or shall be delivered to him personally. Notice of
such action need not be given to any Director who attends the first regular
meeting after such action is taken without protesting the lack of notice to
him, prior to or at the commencement of such meeting, or to any Director who
submits a signed waiver of notice, whether before or after such meeting.
2.5 Special Meetings; Notice. Special meetings of the Board of
Directors shall be held whenever called by the President or, in the event of
his absence or disability, by any Vice President, at such place (within or
without the State of Delaware), date and hour as may be specified in the
respective notices or waivers of notice of such meetings. Special meetings of
the Board of Directors may be called on 24 hours' notice, if notice is given to
each Director personally or by telephone or facsimile, or on five days' notice,
if notice is mailed to each Director, addressed to him at his usual place of
business. Notice of any special meeting need not be given to any Director who
attends such meeting without protesting the lack of notice to him, prior to or
at the commencement of such meeting, or to any Director who submits a signed
waiver of notice, whether before or after such meeting, and any business may be
transacted thereat.
2.6 Quorum; Voting. At all meetings of the Board of Directors, the
presence of a majority of the total authorized number of Directors shall
constitute a quorum for the transaction of business. Except as otherwise
required by law, the vote of a majority of the Directors present at any meeting
at which a quorum is present shall be the act of the Board of Directors. The
provisions of this Section 2.6 shall be subject to the Shareholders' Agreement
for so long as the Shareholders' Agreement remains in effect.
2.7 Adjournment. A majority of the Directors present, whether or not a
quorum is present, may adjourn any meeting of the Board of Directors to another
time or place. No notice need be given of any adjourned meeting unless the time
and place of the adjourned meeting are not announced at the time of
adjournment, in which case notice conforming to the requirements of Section 2.5
shall be given to each Director.
2.8 Action Without a Meeting. Any action required or permitted to be
taken at any meeting of the Board of Directors may be taken without a meeting
if all members of the Board of Directors
5
<PAGE>
consent thereto in writing, and such writing or writings are filed with the
minutes of proceedings of the Board of Directors.
2.9 Regulations; Manner of Acting. To the extent consistent with
applicable law, the Certificate of Incorporation and these Bylaws, the Board of
Directors may adopt such rules and regulations for the conduct of meetings of
the Board of Directors and for the management of the property, affairs and
business of the Corporation as the Board of Directors may deem appropriate. The
Directors shall act only as a Board, and the individual Directors shall have no
power as such.
2.10 Action by Telephonic Communications. Members of the Board of
Directors may participate in a meeting of the Board of Directors by means of
conference telephone or similar communi cations equipment by means of which all
persons participating in the meeting can hear each other, and participation in
a meeting pursuant to this provision shall constitute presence in person at
such meeting.
2.11 Resignation. Any Director may resign at any time by delivering a
written notice of resignation, signed by such Director, to the President or the
Secretary. Unless otherwise spe cified therein, such resignation shall take
effect upon delivery.
2.12 Removal of Directors. Any Director may be removed at any time,
either for or without cause, upon the affirmative vote of the holders of a
majority of the outstanding shares of stock of the Corporation entitled to vote
for the election of such Director, cast at a special meeting of stockholders
called for that purpose. Any vacancy in the Board of Directors caused by any
such removal may be filled at such meeting by the stockholders entitled to vote
for the election of the Director so removed. If such stockholders do not fill
such vacancy at such meeting (or in the written instrument effecting such
removal, if such removal was effected by consent without a meeting), such
vacancy may be filled in the manner provided in Section 2.13 of these Bylaws.
The provisions of this Section 2.12 shall be subject to the Shareholders'
Agreement for so long as the Shareholders' Agreement remains in effect.
2.13 Vacancies and Newly Created Directorships. If any vacancies shall
occur in the Board of Directors, by reason of death, resignation, removal or
otherwise, or if the authorized number of Directors shall be increased, the
Directors then in office shall continue to act, and such vacancies and newly
created directorships may be filled by a majority of the Directors then in
office, although less than a quorum. A Director elected to fill a vacancy or a
newly created directorship shall hold office until his
6
<PAGE>
successor has been elected and qualified or until his earlier death,
resignation or removal. Any such vacancy or newly created directorship may also
be filled at any time by vote of the stockholders.
2.14 Compensation. The amount, if any, which each Director shall be
entitled to receive as compensation for his services as such shall be fixed
from time to time by resolution of the Board of Directors.
2.15 Reliance on Accounts and Reports, etc. A member of the Board of
Directors, or a member of any Committee designated by the Board of Directors,
shall, in the performance of his duties, be fully protected in relying in good
faith upon the records of the Corporation and upon such information, opinions,
reports or state ments presented to the Corporation by any of the Corporation's
officers or employees, or Committees of the Board of Directors, or by any other
person as to matters the member reasonably believes are within such other
person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Corporation, including without
limitation independent certified public accountants and appraisers.
7
<PAGE>
ARTICLE 3
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
----------------------------------------
3.1 How Constituted. The Board of Directors may desig nate one or more
Committees, including an Executive Committee, each such Committee to consist of
such number of Directors as from time to time may be fixed by the Board of
Directors. The Board of Directors may designate one or more directors as
alternate members of any such Committee, who may replace any absent or
disqualified member or members at any meeting of such Committee. In addition,
unless the Board of Directors has so designated an alternate member of such
Committee, in the absence or disqualification of a member of such Committee,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member. Thereafter, members (and alternate
members, if any) of each such Committee may be designated at the annual meeting
of the Board of Directors. Any such Committee may be abolished or redesignated
from time to time by the Board of Directors. Each member (and each alternate
member) of any such Committee (whether designated at an annual meeting of the
Board of Directors or to fill a vacancy or otherwise) shall hold office until
his successor shall have been designated or until he shall cease to be a
Director, or until his earlier death, resignation or removal.
3.2 Powers. During the intervals between the meetings of the Board of
Directors, the Executive Committee, if created by the Board of Directors, and
except as otherwise provided in this section, shall have and may exercise all
the powers and authority of the Board of Directors in the management of the
property, affairs and business of the Corporation, including the power to
declare dividends. Each such other Committee shall have and may exercise such
powers of the Board of Directors as may be provided by resolution of the Board,
provided, that neither the Executive Committee nor any such other Committee
shall have the power or authority to (i) approve or adopt, or recommend to the
stockholders, any action or matter expressly required by the General
Corporation Law to be submitted to stockholders for approval or (ii) adopt,
amend or repeal any of these Bylaws. The Executive Committee shall have, and
any such other Committee may be granted by the Board of Directors, power to
authorize the seal of the Corporation to be affixed to any or all papers which
may require it.
3.3 Quorum; Voting. Except as may be otherwise provided in the
resolution creating such Committee, at all meetings of any
8
<PAGE>
Committee the presence of members (or alternate members) constitut ing a
majority of the total authorized membership of such Committee shall constitute
a quorum for the transaction of business. The act of a majority of the members
present at any meeting at which a quorum is present shall be the act of such
Committee.
3.4 Action without a Meeting. Any action required or permitted to be
taken at any meeting of any such Committee may be taken without a meeting, if
all members of such Committee shall consent to such action in writing and such
writing or writings are filed with the minutes of the proceedings of the
Committee.
3.5 Regulations; Manner of Acting. Each such Committee may fix its own
rules of procedure and may meet at such place (within or without the State of
Delaware), at such time and upon such notice, if any, as it shall determine
from time to time. Each such Committee shall keep minutes of its proceedings
and shall report such proceedings to the Board of Directors at the meeting of
the Board of Directors next following any such proceeding. The members of any
such Committee shall act only as a Committee, and the individual members of
such Committee shall have no power as such.
3.6 Action by Telephonic Communications. Members of any Committee
designated by the Board of Directors may participate in a meeting of such
Committee by means of conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and participation in a meeting pursuant to this provision shall constitute
presence in person at such meeting.
3.7 Resignation. Any member (and any alternate member) of any
Committee may resign at any time by delivering a written notice of resignation,
signed by such member, to the Chairman or the President. Unless otherwise
specified therein, such resig nation shall take effect upon delivery.
3.8 Removal. Any member (any alternate member) of any Committee may be
removed at any time, with or without cause, by resolution adopted by a majority
of the whole Board of Directors.
3.9 Vacancies. If any vacancy shall occur in any Committee, by reason
of death, resignation, removal or otherwise, the remaining members (and any
alternate members) shall continue to act, and any such vacancy may be filled by
the Board of Directors or the remaining members of the Committee as provided in
Section 3.1 hereof.
9
<PAGE>
ARTICLE 4
OFFICERS
--------
4.1 Titles. The officers of the Corporation shall be chosen by the
Board of Directors and shall be a President, one or more Vice Presidents, a
Secretary and a Treasurer. The Board of Directors also may elect one or more
Assistant Secretaries and Assistant Treasurers in such numbers as the Board of
Directors may determine, and may also elect a Chairman of the Board. Any number
of offices may be held by the same person. No officer need be a Director of the
Corporation.
4.2 Election. Unless otherwise determined by the Board of Directors,
the officers of the Corporation shall be elected by the Board of Directors at
the annual meeting of the Board of Directors, and shall be elected to hold
office until the next succeeding annual meeting of the Board of Directors. In
the event of the failure to elect officers at such annual meeting, officers may
be elected at any regular or special meeting of the Board of Directors. Each
officer shall hold office until his successor has been elected and qualified,
or until his earlier death, resignation or removal.
4.3 Salaries. The salaries of all officers of the Corporation shall be
fixed by the Board of Directors.
4.4 Removal and Resignation; Vacancies. Any officer may be removed
with or without cause at any time by the Board of Directors. Any officer may
resign at any time by delivering a written notice of resignation, signed by
such officer, to the Board of Directors or the President. Unless otherwise
specified therein, such resignation shall take effect upon delivery. Any
vacancy occurring in any office of the Corporation by death, resignation,
removal or otherwise, shall be filled by the Board of Directors.
4.5 Authority and Duties. The officers of the Corpor ation shall have
such authority and shall exercise such powers and perform such duties as may be
specified in these Bylaws, except that in any event each officer shall exercise
such powers and perform such duties as may be required by law.
4.6 The Chairman of the Board. The Chairman of the Board shall preside
at all meetings of the stockholders and directors, shall be the chief executive
officer of the Corporation and, together with the President and subject to the
directions of the Board of Directors, shall have general control and
supervision of the business and operations of the Corporation and shall see
that
10
<PAGE>
all orders and resolutions of the Board of Directors are carried into effect.
He shall manage and administer the Corpor ation's business and affairs and
shall also perform all duties and exercise all powers usually pertaining to the
office of a Chairman of the Board of a corporation. He shall have the authority
to sign, in the name and on behalf of the Corporation, checks, orders,
contracts, leases, notes, drafts and other documents and instruments in
connection with the business of the Corporation and, together with the
Secretary or an Assistant Secretary, conveyances of real estate and other
documents and instruments to which the seal of the Corporation is affixed. He
shall have the authority to cause the employment or appointment of such
employees and agents of the Corporation as the conduct of the business of the
Corporation may require, to fix their compensation, and to remove or suspend
any employee or agent elected or appointed by the Chairman of the Board, the
President or the Board of Directors. The Chairman of the Board shall perform
such other duties and have such other powers as the Board of Directors may from
time to time prescribe.
4.7 The President. The President shall be the chief operating officer
of the Corporation and, together with the Chair man of the Board and subject to
the directions of the Board of Directors, shall have general control and
supervision of the policies and operations of the Corporation and shall see
that all orders and resolutions of the Board of Directors are carried into
effect. In the absence of the Chairman of the Board, the President shall
preside at all meetings of the stockholders and directors. He shall manage and
administer the Corporation's business and affairs and shall also perform all
duties and exercise all powers usually pertaining to the office of a chief
operating officer of a corporation. He shall have the authority to sign, in the
name and on behalf of the Corporation, checks, orders, contracts, leases,
notes, drafts and other documents and instruments in connection with the
business of the Corporation and, together with the Secre tary or an Assistant
Secretary, conveyances of real estate and other documents and instruments to
which the seal of the Corpor ation is affixed. He shall have the authority to
cause the employ ment or appointment of such employees and agents of the
Corporation as the conduct of the business of the Corporation may require, to
fix their compensation, and to remove or suspend any employee or agent elected
or appointed by the Chairman of the Board, the President or the Board of
Directors. The President shall perform such other duties and have such other
powers as the Chairman of the Board or the Board of Directors may from time to
time prescribe.
4.8 The Vice Presidents. Each Vice President shall per form such
duties and exercise such powers as may be assigned to him from time to time by
the President. In the absence of the Presi-
11
<PAGE>
dent, the duties of the President shall be performed and his powers may be
exercised by such Vice President as shall be designated by the President, or
failing such designation, such duties shall be performed and such powers may be
exercised by each Vice President in the order of their election to that office;
subject in any case to review and superseding action by the President.
4.9 The Secretary. The Secretary shall have the following powers and
duties:
(a) He shall keep or cause to be kept a record of all the proceedings of the
meetings of the stockholders and of the Board of Directors in books provided
for that purpose.
(b) He shall cause all notices to be duly given in accordance with the
provisions of these Bylaws and as required by law.
(c) Whenever any Committee shall be appointed pursuant to a resolution of the
Board of Directors, he shall furnish a copy of such resolution to the members
of such Committee.
(d) He shall be the custodian of the records and of the seal of the
Corporation and cause such seal (or a facsimile thereof) to be affixed to all
certificates representing shares of the Corporation prior to the issuance
thereof and to all instruments the execution of which on behalf of the
Corporation under its seal shall have been duly authorized in accordance with
these Bylaws, and when so affixed he may attest to same.
(e) He shall properly maintain and file all books, reports, statements,
certificates and all other documents and records required by law, the
Certificate of Incorporation or these Bylaws.
(f) He shall have charge of the stock books and ledgers of the Corporation and
shall cause the stock and transfer books to be kept in such manner as to show
at any time the number of shares of stock of the Corporation of each class
issued and outstanding, the names (alphabetically arranged) and the addresses
of the holders of record of such shares, the number of shares held by each
holder and the date as of which each became such holder of record.
(g) He shall sign (unless the Treasurer, an Assistant Treasurer or Assistant
Secretary shall have signed) certificates representing shares of the
Corporation the issuance of which shall have been authorized by the Board of
Directors.
(h) He shall perform, in general, all duties incident to the office of
secretary and such other duties as may be specified in
12
<PAGE>
these Bylaws or as may be assigned to him from time to time by the Board of
Directors or the President.
4.10 The Treasurer. The Treasurer shall be the chief financial officer
of the corporation and shall have the following powers and duties:
(a) He shall have charge and supervision over and be responsible for the
moneys, securities, receipts and disbursements of the Corporation, and shall
keep or cause to be kept full and accurate records of all receipts of the
Corporation.
(b) He shall cause the moneys and other valuable effects of the Corporation to
be deposited in the name and to the credit of the Corporation in such banks or
trust companies or with such bankers or other depositaries as shall be selected
in accordance with Section 8.5 of these Bylaws.
(c) He shall cause moneys of the Corporation to be disbursed by checks or
drafts (signed as provided in Section 8.6 of these Bylaws) upon the authorized
depositories of the Corporation and cause to be taken and preserved proper
vouchers for all moneys disbursed.
(d) He shall render to the Board of Directors or the President, whenever
requested, a statement of the financial con dition of the Corporation and of
all his transactions as Treasurer, and render a full financial report at the
annual meeting of the stockholders, if called upon to do so.
(e) He shall be empowered from time to time to require from all officers or
agents of the Corporation reports or state ments giving such information as he
may desire with respect to any and all financial transactions of the
Corporation.
(f) He may sign (unless an Assistant Treasurer or the Secretary or an
Assistant Secretary shall have signed) certificates representing stock of the
Corporation the issuance of which shall have been authorized by the Board of
Directors.
(g) He shall perform, in general, all duties incident to the office of
treasurer and such other duties as may be specified in these Bylaws or as may
be assigned to him from time to time by the Board of Directors, or the
President.
4.11 Additional Officers. The Board of Directors may appoint such
other officers and agents as it my deem appropriate, and such other officers
and agents shall hold their offices for
13
<PAGE>
such terms and shall exercise such powers and perform such duties as may be
determined from time to time by the Board of Directors. The Board of Directors
from time to time may delegate to any officer or agent the power to appoint
subordinate officers or agents and to prescribe their respective rights, terms
of office, authorities and duties. Any such officer or agent may remove any
such subordinate officer or agent appointed by him, with or without cause.
4.12 Security. The Board of Directors may direct that the Corporation
secure the fidelity of any or all of its officers or agents by bond or
otherwise.
ARTICLE 5
CAPITAL STOCK
-------------
5.1 Certificates of Stock, Uncertificated Shares. The shares of the
Corporation shall be represented by certificates, provided that the Board of
Directors may provide by resolution that some or all of any or all classes or
series of the stock of the Corporation shall be uncertificated shares. Any such
resolution shall not apply to shares represented by a certificate until each
certificate is surrendered to the Corporation. Notwithstanding the adoption of
such a resolution by the Board of Directors, every holder of stock in the
Corporation represented by certificates and upon request every holder of
uncertificated shares shall be entitled to have a certificate signed by, or in
the name of the Corporation, by the Chairman of the Board, President or a Vice
President, and by the Treasurer or an Assistant Treasurer, or the Secretary or
an Assistant Secretary, representing the number of shares registered in
certificate form. Such certificate shall be in such form as the Board of
Directors may determine, to the extent consistent with applicable law, the
Certificate of Incorporation and these Bylaws.
5.2 Signatures; Facsimile. All of such signatures on the certificate
may be a facsimile, engraved or printed, to the extent permitted by law. In
case any officer, transfer agent or registrar who has signed, or whose
facsimile signature has been placed upon a certificate shall have ceased to be
such officer, transfer agent or registrar before such certificate is issued, it
may be issued by the Corporation with the same effect as if he were such
officer, transfer agent or registrar at the date of issue.
5.3 Lost, Stolen or Destroyed Certificates. The Secretary of the
Corporation may cause a new certificate of stock or uncertificated shares in
place of any certificate therefor issued
14
<PAGE>
by the Corporation, alleged to have been lost, stolen or destroyed, upon
delivery to the Secretary of an affidavit of the owner or owners of such
certificate, or his or their legal repre sentative setting forth such
allegation. The Secretary may require the owner or owners of such lost, stolen
or destroyed certificate, or his or their legal representative, to give the
Corporation a bond sufficient to indemnify it against any claim that may be
made against it on account of the alleged loss, theft or destruction of any
such certificate or the issuance of any such new certificate or uncertificated
shares.
5.4 Transfer of Stock. Upon surrender to the Corpor ation or the
transfer agent of the Corporation of a certificate for shares, duly endorsed or
accompanied by appropriate evidence of succession, assignment or authority to
transfer, the Corporation shall issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
Within a reasonable time after the transfer of uncer tificated stock, the
Corporation shall send to the registered owner thereof a written notice
containing the information required to be set forth or stated on certificates
pursuant to Section 151, 156, 202(a) or 218(a) of the General Corporation Law.
Subject to the provisions of the Certificate of Incorporation, the
Shareholders' Agreement and these Bylaws, the Board of Directors may prescribe
such additional rules and regulations as it may deem appropriate relating to
the issue, transfer and registration of shares of the Corporation.
5.5 Record Date. In order to determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
or entitled to express consent to corporate action in writing without a
meeting, or entitled to receive payment of any dividend or other distribution
or allotment of any rights, or entitled to exercise any rights in respect of
any change, conversion or exchange of stock or for the purpose of any other
lawful action, the Board of Directors may fix, in advance, a record date, which
shall not be more than 60 nor less than ten days before the date of such
meeting, nor more than 60 days prior to any other action. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting, provided, however,
that the Board of Directors may fix a new record date for the adjourned
meeting.
5.6 Registered Stockholders. Prior to due surrender of a certificate
for registration of transfer, the Corporation may treat the registered owner as
the person exclusively entitled to receive dividends and other distributions,
to vote, to receive notice and otherwise to exercise all the rights and powers
of the owner of the
15
<PAGE>
shares represented by such certificate, and the Corporation shall not be bound
to recognize any equitable or legal claim to or interest in such shares on the
part of any other person, whether or not the Corporation shall have notice of
such claim or interest. Whenever any transfer of shares shall be made for
collateral security, and not absolutely, it shall be so expressed in the entry
of the transfer if, when the certificates are presented to the Corporation for
transfer or uncertificated shares are requested to be transferred, both the
transferor and transferee request the Corporation to do so.
5.7 Transfer Agent and Registrar. The Board of Directors may appoint one or more
transfer agents and registrars, and may require all certificates representing
shares to bear the signature of any such transfer agents or registrars.
ARTICLE 6
OFFICES
-------
6.1 Registered Office. The registered office of the Corporation in the State of
Delaware shall be located at 9 East Loockerman Street, Dover, Delaware 19901,
and the Corporation's registered agent shall be National Registered Agents, Inc.
6.2 Other Offices. The Corporation may maintain offices or places of business at
such other locations within or without the State of Delaware as the Board of
Directors may from time to time determine or as the business of the Corporation
may require.
ARTICLE 7
GENERAL PROVISIONS
------------------
7.1 Dividends. Subject to any applicable provisions of law and the Certificate
of Incorporation, dividends upon the shares of the Corporation may be declared
by the Board of Directors at any regular or special meeting of the Board of
Directors and any such dividend may be paid in cash, property, or shares of the
Corporation.
7.2 Reserves. There may be set aside out of any funds of the Corporation
available for dividends such sum or sums as the Board of Directors from time to
time, in its absolute discretion, thinks proper as a reserve or reserves to meet
contingencies, or for equalizing dividends, or for repairing or maintaining any
property of the Corporation or for such other purpose as the Board of Directors
shall think conducive to the interest of the
16
<PAGE>
Corporation, and the Board of Directors may similarly modify or abolish any
such reserve.
7.3 Execution of Instruments. The President, any Vice President, the Secretary
or the Treasurer may enter into any contract or execute and deliver any
instrument in the name and on behalf of the Corporation. The Board of Directors
or the President may authorize any other officer or agent to enter into any
contract or execute and deliver any instrument in the name and on behalf of the
Corporation. Any such authorization may be general or limited to specific
contracts or instruments.
7.4 Corporate Indebtedness. No loan shall be contracted on behalf of the
Corporation, and no evidence of indebtedness shall be issued in its name, unless
authorized by the Board of Directors. Such authorization may be general or
confined to specific instances. Loans so authorized may be effected at any time
for the Corporation from any bank, trust company or other institution, or from
any firm, corporation or individual. All bonds, debentures, notes and other
obligations or evidences of indebtedness of the Corporation issued for such
loans shall be made, executed and delivered as the Board of Directors shall
authorize. When so authorized by the Board of Directors, any part of or all the
properties, including contract rights, assets, business or good will of the
Corporation, whether then owned or thereafter acquired, may be mortgaged,
pledged, hypothecated or conveyed or assigned in trust as security for the
payment of such bonds, debentures, notes and other obligations or evidences of
indebtedness of the Corporation, and of any interest thereon, by instruments
executed and delivered in the name of the Corporation.
7.5 Deposits. Any funds of the Corporation may be deposited from time to time in
such banks, trust companies or other depositaries as may be determined by the
Board of Directors or the President, or by such officers or agents as may be
authorized by the Board of Directors or the President to make such
determination.
7.6 Checks. All checks or demands for money and notes of the Corporation shall
be signed by such officer or officers or such agent or agents of the
Corporation, and in such manner, as the Board of Directors or the President from
time to time may determine.
7.7 Sale, Transfer, etc. of Securities. To the extent authorized by the Board of
Directors or by the President, any Vice President, the Secretary or the
Treasurer or any other officers designated by the Board of Directors or the
President may sell, transfer, endorse, and assign any shares of stock, bonds or
other
17
<PAGE>
securities owned by or held in the name of the Corporation, and may make,
execute and deliver in the name of the Corporation, under its corporate seal,
any instruments that may be appropriate to effect any such sale, transfer,
endorsement or assignment.
7.8 Voting as Stockholder. Unless otherwise determined by resolution of the
Board of Directors, the President or any Vice President shall have full power
and authority on behalf of the Corporation to attend any meeting of stockholders
of any corporation in which the Corporation may hold stock, and to act, vote (or
execute proxies to vote) and exercise in person or by proxy all other rights,
powers and privileges incident to the ownership of such stock. Such officers
acting on behalf of the Corporation shall have full power and authority to
execute any instrument expressing consent to or dissent from any action of any
such corporation without a meeting. The Board of Directors may by resolution
from time to time confer such power and authority upon any other person or
persons.
7.9 Fiscal Year. The fiscal year of the Corporation shall commence on the first
day of January of each year (except for the Corporation's first fiscal year
which shall commence on the date of incorporation) and shall end in each case on
December 31.
7.10 Seal. The seal of the Corporation shall be circular in form and shall
contain the name of the Corporation, the year of its incorporation and the words
"Corporate Seal" and "Delaware". The form of such seal shall be subject to
alteration by the Board of Directors. The seal may be used by causing it or a
facsimile thereof to be impressed, affixed or reproduced, or may be used in any
other lawful manner.
7.11 Books and Records. Except to the extent otherwise required by law, the
books and records of the Corporation shall be kept at such place or places
within or without the State of Delaware as may be determined from time to time
by the Board of Directors.
ARTICLE 8
AMENDMENT OF BYLAWS
-------------------
8.1 Amendment. These Bylaws may be amended, altered or repealed:
(a) by resolution adopted by a majority of the Board of Directors at any
special or regular meeting of the Board if, in the case of such special meeting
only, notice of such amendment, alteration or
18
<PAGE>
repeal is contained in the notice or waiver of notice of such meeting; or
(b) at any regular or special meeting of the stock holders if, in the case of
such special meeting only, notice of such amendment, alteration or repeal is
contained in the notice or waiver of notice of such meeting.
ARTICLE 9
CONSTRUCTION
------------
ARTICLE 9.1 Construction. In the event of any conflict between the provisions
of these Bylaws as in effect from time to time and the provisions of the
Certificate of Incorporation as in effect from time to time, the provisions of
the Certificate of Incorporation shall be controlling.
19
<PAGE>
Execution Copy
Nextel Partners, Inc.
to
The Bank of New York
Trustee
------------------
Indenture
Dated as of January 29, 1999
------------------
14% Senior Discount Notes due 2009
<PAGE>
Nextel Partners, Inc.
Reconciliation and tie between Trust Indenture Act
of 1939 and Indenture, dated as of January 29, 1999
Trust Indenture Indenture
Act Section Section
- -------------------------- ----------------
Section 310(a)(1) ................................... 609
(a)(2) ................................... 609
(a)(3) ................................... Not Applicable
(a)(4) ................................... Not Applicable
(a)(5) ................................... 609
(b) ................................... 608, 610
Section 311(a) ................................... 613
(b) ................................... 613
(c) ................................... 613
Section 312(a) ................................... 701, 702
(b) ................................... 702(b)
(c) ................................... 702(c)
Section 313(a) ................................... 703
(b) ................................... 703
(c) ................................... 703
(d) ................................... 703(b)
Section 314(a)(1)-(3) ................................... 704
(a)(4) ................................... 1017
(b) ................................... Not Applicable
(c)(1) ................................... 102, 401, 1204
(c)(2) ................................... 102, 401, 1204
(c)(3) ................................... 1204
(d) ................................... Not Applicable
(e) ................................... 102
Section 315(a) ................................... 601, 603
(b) ................................... 602
(c) ................................... 601
(d) ................................... 601
(e) ................................... 514
Section 316(a)(1)(A) ................................... 512
(a)(1)(B) ................................... 513
(a)(2) ................................... Not Applicable
(b) ................................... 508
(c) ................................... 104
Section 317(a)(1) ................................... 503
(a)(2) ................................... 504
(b) ................................... 1003
Section 318(a) ................................... 107
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE 1. DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION...............................................1
Section 1.01. Definitions............................................................................1
Section 1.02. Compliance Certificates and Opinions..................................................27
Section 1.03. Form of Documents Delivered to Trustee................................................27
Section 1.04. Acts of Holders; Record Dates.........................................................28
Section 1.05. Notices, Etc., to Trustee and Company.................................................30
Section 1.06. Notice to Holders; Waiver.............................................................30
Section 1.07. Conflict with Trust Indenture Act.....................................................30
Section 1.08. Effect of Headings and Table of Contents..............................................31
Section 1.09. Successors and Assigns................................................................31
Section 1.10. Separability Clause...................................................................31
Section 1.11. Benefits of Indenture.................................................................31
Section 1.12. Governing Law.........................................................................31
Section 1.13. Legal Holidays........................................................................31
Section 1.14. No Recourse Against Others............................................................31
ARTICLE 2. SECURITY FORMS.......................................................................................32
Section 2.01. Forms Generally.......................................................................32
Section 2.02. Form of Face of Security..............................................................33
Section 2.03. Form of Reverse of Security...........................................................35
Section 2.04. Form of Trustee's Certificate of Authentication.......................................42
Section 2.05. Restrictive Legends...................................................................42
ARTICLE 3. THE SECURITIES.......................................................................................44
Section 3.01. Title and Terms.......................................................................44
Section 3.02. Denominations.........................................................................45
Section 3.03. Execution, Authentication, Delivery and Dating........................................45
Section 3.04. Temporary Securities..................................................................46
Section 3.05. Registration, Registration of Transfer and Exchange...................................46
Section 3.06. Book-Entry Provisions for Global Security.............................................47
Section 3.07. Special Transfer Provisions...........................................................49
Section 3.08. Mutilated, Destroyed, Lost and Stolen Securities......................................51
Section 3.09. Payment of Interest; Interest Rights Preserved........................................52
Section 3.10. Persons Deemed Owners.................................................................53
Section 3.11. Cancellation..........................................................................53
Section 3.12. Computation of Interest...............................................................54
Section 3.13. CUSIP, CINS and ISIN Numbers..........................................................54
ii
<PAGE>
ARTICLE 4. SATISFACTION AND DISCHARGE...........................................................................54
Section 4.01. Satisfaction and Discharge of Indenture...............................................54
Section 4.02. Application of Trust Money............................................................55
ARTICLE 5. REMEDIES.............................................................................................55
Section 5.01. Events of Default.....................................................................55
Section 5.02. Acceleration of Maturity; Rescission and Annulment....................................57
Section 5.03. Collection of Indebtedness and Suits for Enforcement by Trustee.......................58
Section 5.04. Trustee May File Proofs of Claim......................................................59
Section 5.05. Trustee May Enforce Claims Without Possession of Securities...........................60
Section 5.06. Application of Money Collected........................................................60
Section 5.07. Limitation on Suits...................................................................60
Section 5.08. Unconditional Right of Holders to Receive Principal, Premium and
Interest..............................................................................61
Section 5.09. Restoration of Rights and Remedies....................................................61
Section 5.10. Rights and Remedies Cumulative........................................................61
Section 5.11. Delay or Omission Not Waiver..........................................................61
Section 5.12. Control by Holders....................................................................62
Section 5.13. Waiver of Past Defaults...............................................................62
Section 5.14. Undertaking for Costs.................................................................62
Section 5.15. Wavier of Stay of Extension Laws......................................................63
ARTICLE 6. THE TRUSTEE..........................................................................................63
Section 6.01. Certain Duties and Responsibilities...................................................63
Section 6.02. Notice of Defaults....................................................................63
Section 6.03. Certain Rights of Trustee.............................................................63
Section 6.04. Not Responsible for Recitals or Issuance of Securities................................64
Section 6.05. May Hold Securities...................................................................64
Section 6.06. Money Held in Trust...................................................................65
Section 6.07. Compensation and Reimbursement........................................................65
Section 6.08. Conflicting Interests.................................................................66
Section 6.09. Corporate Trustee Required; Eligibility...............................................66
Section 6.10. Resignation and Removal; Appointment of Successor.....................................66
Section 6.11. Acceptance of Appointment by Successor................................................67
Section 6.12. Merger, Conversion, Consolidation or Succession to Business...........................68
Section 6.13. Preferential Collection of Claims Against Company.....................................68
Section 6.14. Appointment of Authenticating Agent...................................................68
ARTICLE 7. HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY....................................................70
Section 7.01. Company to Furnish Trustee Names and Addresses of Holders.............................70
Section 7.02. Preservation of Information; Communications to Holders................................70
iii
<PAGE>
Section 7.03. Reports by Trustee....................................................................70
Section 7.04. Reports by Company....................................................................71
ARTICLE 8. CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE.................................................71
Section 8.01. Company May Consolidate, Etc. Only on Certain Terms...................................71
Section 8.02. Successor Substituted.................................................................72
ARTICLE 9. SUPPLEMENTAL INDENTURES..............................................................................73
Section 9.01. Supplemental Indentures Without Consent of Holders....................................73
Section 9.02. Supplemental Indenture with Consent of Holders........................................73
Section 9.03. Execution of Supplemental Indentures..................................................74
Section 9.04. Effect of Supplemental Indentures.....................................................74
Section 9.05. Conformity with Trust Indenture Act...................................................74
Section 9.06. Reference in Securities to Supplemental Indentures....................................75
ARTICLE 10. COVENANTS...........................................................................................75
Section 10.01. Payment of Principal, Premium and Interest............................................75
Section 10.02. Maintenance of Office or Agency.......................................................75
Section 10.03. Money for Security Payments to be Held in Trust.......................................76
Section 10.04. Existence.............................................................................76
Section 10.05. Maintenance of Properties.............................................................77
Section 10.06. Payment of Taxes and Other Claims.....................................................77
Section 10.07. Maintenance of Insurance..............................................................77
Section 10.08. Limitation on Consolidated Debt.......................................................77
Section 10.09. Limitation on Restricted Payments.....................................................78
Section 10.10. Restricted Subsidiaries...............................................................81
Section 10.11. Transactions with Affiliates..........................................................82
Section 10.12. Liens.................................................................................83
Section 10.13. Change of Control.....................................................................83
Section 10.14. Dividend and Other Payment Restrictions Affecting Subsidiaries........................83
Section 10.15. Activities of the Company and Restricted Subsidiaries.................................84
Section 10.16. Provision of Financial Information....................................................84
Section 10.17. Statement by Officers as to Default: Compliance Certificates..........................85
Section 10.18. Waiver of Certain Covenants...........................................................85
Section 10.19. Company to Supply Information Concerning Original Issue Discount......................85
Section 10.20. Limitation on Issuances and Sales of Equity Interests in Wholly Owned
Subsidiaries..........................................................................85
Section 10.21. Payments for Consent..................................................................86
Section 10.22. Asset Sales...........................................................................86
iv
<PAGE>
ARTICLE 11. REDEMPTION OF SECURITIES............................................................................87
Section 11.01. Right of Redemption...................................................................87
Section 11.02. Applicability of Article..............................................................88
Section 11.03. Election to Redeem; Notice to Trustee.................................................88
Section 11.04. Selection by Trustee of Securities to Be Redeemed.....................................88
Section 11.05. Notice of Redemption..................................................................88
Section 11.06. Deposit of Redemption Price...........................................................89
Section 11.07. Securities Payable on Redemption Date.................................................89
Section 11.08. Securities Redeemed in Part...........................................................90
ARTICLE 12. DEFEASANCE AND COVENANT DEFEASANCE..................................................................90
Section 12.01. Company's Option to Effect Defeasance or Covenant Defeasance..........................90
Section 12.02. Defeasance and Discharge..............................................................90
Section 12.03. Covenant Defeasance...................................................................91
Section 12.04. Conditions to Defeasance or Covenant Defeasance.......................................91
Section 12.05. Deposited Money and U.S. Government Obligations to Be Held in Trust;
Miscellaneous Provisions..............................................................93
Section 12.06. Reinstatement.........................................................................93
</TABLE>
EXHIBITS
EXHIBIT A Form of Certificate to Be Delivered in Connection with Transfers
Pursuant to Regulation S
EXHIBIT B Form of Certificate to Be Delivered in Connection with Transfers
to Non-QIB Institutional Accredited Investors
EXHIBIT C Form of Certificate to Be Delivered in Connection with Transfers
Pursuant to Regulation S
v
<PAGE>
INDENTURE, dated as of January 29, 1999, between Nextel Partners,
Inc., a Delaware corporation (herein called the "Company"), having its
principal office at 4500 Carillon Point, Kirkland, Washington 98033 and The
Bank of New York, as Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of its Senior
Discount Notes due 2009 of substantially the tenor and amount hereinafter set
forth, and to provide therefor the Company has duly authorized the execution
and delivery of this Indenture.
All things necessary to make the Securities, when executed by the
Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company, and to make this Indenture a
valid agreement of the Company, in accordance with their and its terms, have
been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for
the equal and proportionate benefit of all Holders of the Securities, as
follows:
ARTICLE 1.
Definitions and Other Provisions
of General Application
Section 1.01. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) whenever this Indenture requires that a particular ratio or amount
be calculated with respect to a specified period after giving effect to
certain transactions or events on a pro forma basis, such calculation will
be made as if the transactions or events occurred on the first day of such
period, unless otherwise specified herein, and all accounting terms not
otherwise defined herein have the meanings assigned to them in accordance
with generally accepted accounting principles (whether or not such is
indicated herein), and, except as otherwise herein expressly provided, the
term "generally accepted accounting principles" with respect to any
computation required or permitted hereunder
<PAGE>
shall mean such accounting principles as are generally accepted at the
date of such computation;
(4) unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or Section, as the case may
be, of this Indenture;
(5) the words "herein", "hereof' and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision; and
(6) each reference herein to a rule or form of the Commission shall
mean such rule or form and any rule or form successor thereto, in each
case as amended from time to time.
Certain terms, used principally in Article 6, are defined in that
Article.
Whenever this Indenture requires that a particular ratio or amount be
calculated with respect to a specified period after giving effect to certain
transactions or events on a pro forma basis, such calculation shall be made as
if the transactions or events occurred on the first day of such period, unless
otherwise specified.
"Accreted Value" of any Outstanding Security as of or to any date of
determination means an amount equal to the sum of (i) the issue price of
such Security as determined in accordance with Section 1273 of the Code
plus (ii) the aggregate of the portions of the original issue discount
(the excess of the amounts considered as part of the "stated redemption
price at maturity" of such Security within the meaning of Section
1273(a)(2) of the Code or any successor provisions, whether denominated as
principal or interest, over the issue price of such Security) that shall
theretofore have accrued pursuant to Section 1272 of the Code (without
regard to Section 1272(a)(7) of the Code) from the date of issue of such
Security (a) for each six-month or shorter period ending February 1 or
August 1 prior to the date of determination (each a "Semi-Annual Accrual
Date") and (b) for the shorter period, if any, from the end of the
immediately preceding six-month or shorter period, as the case may be, to
the date of determination, plus (iii) accrued and unpaid interest to the
date such Accreted Value is paid (without duplication of any amount set
forth in (ii) above), minus all amounts theretofore paid in respect of
such Security, which amounts are considered as part of the "stated
redemption price at maturity" of such Security within the meaning of
Section 1273(a)(2) of the Code or any successor provisions (whether such
amounts paid were denominated principal or interest).
"Acquired Debt" means Debt of a Person (i) existing at the time such
Person becomes a Restricted Subsidiary or assumed by the Company or a
Restricted Subsidiary in connection with the acquisition of assets from
such Person and (ii) secured by a Lien encumbering any asset of such
specified Person.
"Act", when used with respect to any Holder, has the meaning specified
in Section 1.04.
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"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Person. "Affiliate" shall be deemed to include, but only
for purposes of Section 10.11 and without limiting the application of the
preceding sentence for the purpose of such or any other Section, any
Person owning, directly or indirectly, (i) 10% or more of the Company's
outstanding Common Stock or (ii) securities having 10% or more of the
total voting power of the Company's Voting Stock. For the purposes of this
definition, "control" when used with respect to any specified Person means
the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing. No individual shall be deemed to be
controlled by or under common control with any specified Person solely by
virtue of his or her status as an employee or officer of such specified
Person or of any other Person controlled by or under common control with
such specified Person.
"Agent Members" has the meaning provided in Section 3.06(a).
"Annualized Operating Cash Flow" means, for any fiscal quarter, the
Operating Cash Flow for such fiscal quarter multiplied by four.
"Asset Sale" means (i) the sale, lease, conveyance or other
disposition of any assets or rights (including, without limitation, by way
of a sale and leaseback) other than sales of inventory and obsolete
equipment in the ordinary course of business (provided that the sale,
conveyance or other disposition of all or substantially all of the assets
of the Company and its Restricted Subsidiaries taken as a whole will be
governed by the provisions of Section 10.13 and/or the provisions of
Section 8.01 and not by the provisions of Section 10.22), and (ii) the
issue or sale by the Company or any of its Restricted Subsidiaries of
Capital Stock of any of the Company's Subsidiaries, in the case of either
clause (i) or (ii), whether in a single transaction or a series of related
transactions (a) that have a fair market value in excess of $5.0 million
or (b) for net proceeds in excess of $5.0 million. Notwithstanding the
foregoing, the following items shall not be deemed to be Asset Sales: (i)
a transfer of assets by the Company to a Wholly Owned Restricted
Subsidiary or by a Wholly Owned Restricted Subsidiary to the Company or to
another Wholly Owned Restricted Subsidiary, (ii) an issuance of Capital
Stock by a Wholly Owned Restricted Subsidiary to the Company or to another
Wholly Owned Restricted Subsidiary, (iii) a Restricted Payment that is
permitted by Section 10.09, (iv) Permitted Joint Ventures and (v) any
License Exchange.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 6.14 hereof to act on behalf of the Trustee to
authenticate Securities.
"Average Life" means, at any date of determination with respect to any
Debt, the quotient obtained by dividing (i) the sum of the products of (a)
the number of years from such date of determination to the dates of each
successive scheduled principal payment of such Debt and (b) the amount of
such principal payment by (ii) the sum of all such principal payments.
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"Beneficial Owner" means a beneficial owner as defined in Rules 13d-3
and 13d-5 under the Exchange Act (or any successor rules), including the
provision of such Rules that a person shall be deemed to have beneficial
ownership of all securities that such person has a right to acquire within
60 days, provided that a person shall not be deemed a beneficial owner of,
or to own beneficially, any securities if such beneficial ownership (1)
arises solely as a result of a revocable proxy delivered in response to a
proxy or consent solicitation made pursuant to, and in accordance with,
the Exchange Act and the applicable rules and regulations thereunder and
(2) is not also then reportable on Schedule 13D (or any successor
schedule) under the Exchange Act.
"Board of Directors" means the board of directors of the Company.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly
adopted by the Board of Directors (unless the context specifically
requires that such resolution be adopted by a majority of the
Disinterested Directors, in which case by a majority of such directors)
and to be in full force and effect on the date of such certification and
delivered to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in the Borough of
Manhattan, The City of New York are authorized or obligated by law or
executive order to close.
"Capital Lease Obligations" of any Person means the obligations to pay
rent or other amounts under lease of (or other Debt arrangements conveying
the right to use) real or personal property of such Person which are
required to be classified and accounted for as a capital lease or a
liability on the face of a balance sheet of such Person determined in
accordance with generally accepted accounting principles and the amount of
such obligations shall be the capitalized amount thereof in accordance
with generally accepted accounting principles and the stated maturity
thereof shall be the date of the last payment of rent or any other amount
due under such lease prior to the first date upon which such lease may be
terminated by the lessee without payment of a penalty.
"Capital Stock" of any Person means any and all shares,
interests, participations or other equivalents (however designated) of
stock of, or other ownership interests in, such Person.
"Change of Control" means the occurrence of any of the following
events:
(a) any person or group of persons (as such term is used in Section
13(d)(3) of the Exchange Act and the regulations thereunder) other
than a Permitted Holder is or becomes the Beneficial Owner, directly
or indirectly, of more than 50% of the total Voting Stock or Total
Common Equity of the Company; provided that no Change of Control shall
be deemed to occur pursuant to this clause (a) if the person is a
corporation with outstanding debt securities having a maturity at
original issuance of at least one year and if such debt securities are
rated Investment Grade by S&P or Moody's for a period of at least 90
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consecutive days, beginning on the date of such event (which period
will be extended up to 90 additional days for as long as the rating of
such debt securities is under publicly announced consideration for
possible downgrading by the applicable rating agency);
(b) the Company consolidates with, or merges with or into, another
Person other than a Permitted Holder or sells, assigns, conveys,
transfers, leases or otherwise disposes of all or substantially all of
its assets to any Person other than a Permitted Holder, or any Person
other than a Permitted Holder consolidates with, or merges with or
into, the Company, in any such event pursuant to a transaction in
which the outstanding Voting Stock of the Company is converted into or
exchanged for cash, securities or other property, other than any such
transaction where (i) the outstanding Voting Stock of the Company is
converted into or exchanged for (1) Voting Stock (other than
Redeemable Stock) of the surviving or transferee Person or (2) cash,
securities and other property in an amount which could be paid by the
Company as a Restricted Payment under this Indenture and (ii)
immediately after such transaction no person or group of persons (as
such term is used in Section 13(d)(3) of the Exchange Act and the
regulations thereunder) is the Beneficial Owner, directly or
indirectly, of more than 50% of the total Voting Stock or Total Common
Equity of the surviving or transferee Person; provided that no Change
of Control shall be deemed to occur pursuant to this clause (b), if
the surviving or transferee Person or the person referred to in clause
(b)(ii) is a corporation with outstanding debt securities having a
maturity at original issuance of at least one year and if such debt
securities are rated Investment Grade by S&P or Moody's for a period
of at least 90 consecutive days, beginning on the date of such event
(which period will be extended up to 90 additional days for as long as
the rating of such debt securities is under publicly announced
consideration for possible downgrading by the applicable rating
agency);
(c) during any consecutive two-year period, individuals who at the
beginning of such period constituted the Board of Directors (together
with (i) any directors who are members of the Board of Directors on
the date hereof, (ii) any new directors whose election by such Board
of Directors or whose nomination for election by the stockholders of
the Company was approved by a vote of 66 2/3% of the directors then
still in office who were either directors at the beginning of such
period or whose election or nomination for election was previously so
approved, and (iii) any new directors appointed or selected by a
Permitted Holder, whether pursuant to a transaction of a type
described in either of the preceding paragraphs (a) and (b), pursuant
to a contractual right or pursuant to a right granted under the
Company's certificate of incorporation or by-laws) cease for any
reason to constitute a majority of the Board of Directors then in
office; or
(d) the adoption of a plan relating to the liquidation or
dissolution of the Company.
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Any event that would constitute a Change of Control pursuant to clause
(a) or (b) above but for the proviso thereto shall not be deemed to be a
Change of Control until such time (if any) as the conditions described in
such proviso cease to have been met.
"Closing Date" means the date on which the Securities are originally
issued hereunder.
"Closing Price" on any Trading Day with respect to the per share price
of any shares of Capital Stock means the last reported sale price regular
way or, in case no such reported sale takes place on such day, the average
of the reported closing bid and asked prices regular way, in either case
on the New York Stock Exchange or, if such shares of Capital Stock are not
listed or admitted to trading on such exchange, on the principal national
securities exchange on which such shares are listed or admitted to trading
or, if not listed or admitted to trading on any national securities
exchange, on the Nasdaq Stock Market or, if such shares are not listed or
admitted to trading on any national securities exchange or quoted on the
Nasdaq Stock Market but the issuer is a Foreign Issuer (as defined in Rule
3b-4(b) under the Exchange Act) and the principal securities exchange on
which such shares are listed or admitted to trading is a Designated
Offshore Securities Market (as defined in Rule 902(a) under the Securities
Act), the average of the reported closing bid and asked prices regular way
on such principal exchange, or, if such shares are not listed or admitted
to trading on any national securities exchange or quoted on the Nasdaq
Stock Market and the issuer and principal securities exchange do not meet
such requirements, the average of the closing bid and asked prices in the
over-the-counter market as furnished by any New York Stock Exchange member
firm of national standing that is selected from time to time by the
Company for that purpose.
"Code" means the Internal Revenue Code, as amended from time to time,
and the rules and regulations thereunder.
"Committed Capital Contribution" means the irrevocable cash
commitments pursuant to that certain Subscription and Contribution
Agreement by and among the Company, Nextel Sub, Motorola and the Cash
Equity Investors (as defined therein) as in effect on the date hereof.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or, if at any
time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties at such time.
"Common Stock" of any Person means Capital Stock of such Person that
does not rank prior, as to the payment of dividends or as to the
distribution of assets upon any voluntary or involuntary liquidation,
dissolution or winding up of such Person, to shares of Capital Stock of
any other class of such Person.
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"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become
such pursuant to the applicable provisions of this Indenture and
thereafter "Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its
President or a Vice President, and by its Treasurer, an Assistant
Treasurer, its Secretary or an Assistant Secretary, and delivered to the
Trustee.
"Consolidated Debt" means the aggregate amount of Debt of the Company
and its Restricted Subsidiaries on a Consolidated basis, outstanding at
the date of determination.
"Consolidated Debt to Annualized Operating Cash Flow Ratio" means, as
at any date of determination, the ratio of (i) Consolidated Debt to (ii)
the Annualized Operating Cash Flow of the Company for the most recently
completed fiscal quarter of the Company for which financial statements are
available.
"Consolidated Interest Expense" of any Person means, for any period,
(i) the aggregate interest expense and fees and other financing costs in
respect of Debt (including amortization of original issue discount and
non-cash interest payments and accruals), (ii) the interest component in
respect of Capital Lease Obligations and any deferred payment obligations
of such Person and its Restricted Subsidiaries, determined on a
Consolidated basis in accordance with generally accepted accounting
principles, (iii) all commissions, discounts, other fees and charges owed
with respect to letters of credit and bankers' acceptance financing and
net costs (including amortizations of discounts) associated with interest
rate swap and similar agreements and with foreign currency hedge, exchange
and similar agreements and (iv) the product of (a) all dividend payments,
whether or not in cash, on any series of Preferred Capital Stock of such
Person or any of its Restricted Subsidiaries, other than dividend payments
on Capital Stock payable solely in Capital Stock of the Company (other
than Redeemable Stock) or to the Company or a Restricted Subsidiary of the
Company, times (b) a fraction, the numerator of which is one and the
denominator of which is one minus the then current combined federal, state
and local statutory tax rate of such Person, expressed as a decimal, in
each case, on a Consolidated basis in accordance with generally accepted
accounting principles.
"Consolidated Net Income" and "Consolidated Net Loss" mean, for any
period, the net income or net loss, as the case may be, of the Company and
its Restricted Subsidiaries for such period, all as determined on a
Consolidated basis in accordance with generally accepted accounting
principles, adjusted, to the extent included in calculating such net
income or net loss, as the case may be, by excluding without duplication
(a) any after-tax gain or loss attributable to the sale, conversion or
other disposition of assets other than in the ordinary course of business,
(b) any after-tax gains resulting from the write-up of assets and any loss
resulting from the write-down of assets, (c) any after-tax gain or loss on
the repurchase or redemption of any securities (including in connection
with the early retirement or defeasance of any Debt), (d) any foreign
exchange gain or loss, (e) all payments in respect of dividends on shares
of Preferred Capital Stock of the
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Company, (f) any other extraordinary, non-recurring or unusual items
incurred by the Company or any of its Restricted Subsidiaries, (g) the net
income (or loss) of any Person acquired by the Company or any Restricted
Subsidiary in a pooling-of-interests transaction for any period prior to
the date of such transaction, (h) all income or losses of Unrestricted
Subsidiaries and Persons (other than Subsidiaries) accounted for by the
Company using the equity method of accounting and (i) the net income (but
not net loss) of any Restricted Subsidiary which is subject to any
judgment, decree, order or governmental regulation which prevent the
payment of dividends or the making of distributions to the Company but
only to the extent of such restrictions.
"Consolidated Net Income (Loss)" means, for any period, the Company's
Consolidated Net Income or Consolidated Net Loss for such period, as
applicable.
"Consolidated Net Worth" of any Person means the consolidated
stockholders' equity of such Person, determined on a consolidated basis in
accordance with generally accepted accounting principles, less amounts
attributable to Redeemable Stock of such Person; provided that, with
respect to the Company, no effect shall be given to adjustments following
the Closing Date to the accounting books and records of the Company in
accordance with Accounting Principles Board Opinions Nos. 16 and 17 (or
successor opinions thereto) or otherwise resulting from the acquisition of
control of the Company by another Person.
"Consolidation" means the consolidation of the accounts of each of the
Restricted Subsidiaries with those of the Company, if and to the extent
that the accounts of each such Restricted Subsidiary would normally be
consolidated with those of the Company in accordance with generally
accepted accounting principles; provided, however, that "Consolidation"
shall not include consolidation of the accounts of any Unrestricted
Subsidiary, but the interest of the Company or any Restricted Subsidiary
in any Unrestricted Subsidiary shall be accounted for as an investment.
The term "Consolidated" has a correlative meaning.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be
administered, which address as of the Closing Date is located at 101
Barclay Street, New York, New York 10286, Attention: Corporate Trust
Administration.
"Corporation" means a corporation, association, company, joint-stock
company or business trust.
"Covenant Defeasance" has the meaning specified in Section 12.03.
"Credit Facility" means any credit facility (whether a term or
revolving type or both, including New Credit Facility) or letter of credit
facility of the type customarily entered into with banks or Hedging
Agreement (as defined), between the Company and/or any of its Restricted
Subsidiaries, on the one hand, and any banks or other lenders or
affiliates thereof, on the other hand (and any renewals, refundings,
extensions or
8
<PAGE>
replacements of any such credit facility), which credit facility is
designated by the Company as a "Credit Facility" for purposes of this
Indenture and shall include all such credit facilities in existence on the
Closing Date whether or not so designated.
"Debt" means (without duplication), with respect to any Person,
whether recourse is to all or a portion of the assets of such Person and
whether or not contingent, (i) every obligation of such Person for money
borrowed, including without limitation, in each case, premium, interest
(including interest accruing subsequent to the filing of, or which would
have accrued but for the filing of, a petition for bankruptcy, whether or
not such interest is an allowable claim in such bankruptcy proceeding),
fees and expenses relating thereto, (ii) every obligation of such Person
evidenced by bonds, debentures, notes or other similar instruments,
including obligations Incurred in connection with the acquisition of
property, assets or businesses, (iii) every reimbursement obligation of
such Person with respect to letters of credit, bankers' acceptances or
similar facilities issued for the account of such Person, (iv) every
obligation of such Person issued or assumed as the deferred purchase price
of property or services (but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business which are not
overdue or which are being contested in good faith), (v) every Capital
Lease Obligation of such Person, (vi) the maximum fixed redemption or
repurchase price of Redeemable Stock of such Person at the time of
determination plus accrued but unpaid dividends, (vii) every obligation of
such Person under interest rate swap or similar agreements or foreign
currency hedge, exchange or similar agreements of such Person
(collectively, "Hedging Agreements"), and (viii) every obligation of the
type referred to in clauses (i) through (vii) of another Person and all
dividends of another Person the payment of which, in either case, such
Person has Guaranteed or is liable, directly or indirectly, as obligor,
Guarantor or otherwise. The amount of Debt of any Person issued with
original issue discount is the face amount of such Debt less the
unamortized portion of the original issue discount of such Debt at the
time of its issuance as determined in conformity with generally accepted
accounting principles, and money borrowed at the time of the Incurrence of
any Debt in order to pre-fund the payment of interest on such Debt shall
be deemed not to be Debt. The amount of Debt represented by an obligation
under an agreement referred to in clause (vii) shall be equal to (x) zero
if such obligation has been Incurred under clause (v)(B) of the definition
of Permitted Debt and (y) the notional amount of such obligation if it is
not so Incurred.
"Default" means an event that is, or after notice or passage of time,
or both, would be, an Event of Default.
"Default Amount" has the meaning specified in Section 5.02.
"Defaulted Interest" has the meaning specified in Section 3.09.
"Defeasance" has the meaning specified in Section 12.02.
"Depository" shall mean The Depository Trust Company, as nominees and
their respective successors.
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"Directed Investment" by the Company or any of its Restricted
Subsidiaries means any Investment for which the cash or property used for
such Investment is received by the Company from the issuance and sale
(other than to a Restricted Subsidiary) on or after the date hereof of
shares of its Capital Stock (other than any of the Preferred Stock), or
any options, warrants or other rights to purchase such Capital Stock
(other than any of the Preferred Stock) designated by the Board of
Directors as a "Directed Investment" to be used for one or more specified
investments in the telecommunications business (including related
activities and services) and is so designated and used at any time within
365 days after the receipt thereof ; provided that the aggregate amount of
any such Directed Investments may not at any time exceed fifty percent
(50%) of the aggregate amount of such cash or property received by the
Company on or after the date hereof from any such issuance and sale or
capital contribution; and provided further that any proceeds from any such
issuance or sale may not be used for such an Investment if such proceeds
were, prior to being designated for use as a Directed Investment, used to
make a Restricted Payment.
"Disinterested Director" means, with respect to any proposed
transaction between the Company and an Affiliate thereof, a member of the
Board of Directors who is not an officer or employee of the Company, would
not be a party to, or have a financial interest in, such transaction and
is not an officer, director or employee of, and does not have a financial
interest in, such Affiliate. For purposes of this definition, no person
would be deemed not to be a Disinterested Director solely because such
person holds Capital Stock of the Company.
"DLJMB" means DLJ Merchant Banking Partners II, L.P. and its
Affiliates.
"Event of Default" has the meaning specified in Section 5.01.
"Exchange Securities" means the new securities of the Company
containing terms identical to the Securities initially issued hereunder
(except that such Securities shall have been registered under the
Securities Act) that are issued and exchanged for the Securities pursuant
to the Registration Rights Agreement.
"Exchange Act" refers to the Securities Exchange Act of 1934 and any
statute successor thereto, in each case as amended from time to time.
"Expiration Date" has the meaning specified in the definition of Offer
to Purchase.
"Fair Market Value" means, for purposes of clause (i) of Section
10.08, the price that would be paid in an arm's-length transaction between
an informed and willing seller under no compulsion to sell and an informed
and willing buyer under no compulsion to buy, as determined in good faith
by the Board of Directors, whose determination shall be conclusive if
evidenced by a Board Resolution; provided that (x) the Fair Market Value
of any security registered under the Exchange Act shall be the average of
the closing prices, regular way, of such security for the 20 consecutive
trading days immediately preceding the sale of Capital Stock and (y) in
the event the aggregate Fair Market Value of any other property received
by the Company exceeds $10 million, the Fair Market Value of such
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property shall be determined in good faith by the Board of Directors,
including a majority of the Disinterested Directors who are then members
of such Board of Directors, which determination shall be conclusive if
evidenced by a Board Resolution.
"FCC" means the Federal Communications Commission.
"Global Securities" has the meaning provided in Section 2.01.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person guaranteeing any Debt of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, and
including any obligation of such Person, (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Debt or to
purchase (or to advance or supply funds for the purchase of) any security
for the payment of such Debt, (ii) to purchase property, securities or
services for the purpose of assuring the holder of such Debt of the
payment of such Debt, or (iii) to maintain working capital, equity capital
or other financial statement condition or liquidity of the primary obligor
so as to enable the primary obligor to pay such Debt (and "Guaranteed",
"Guaranteeing" and "Guarantor" shall have meanings correlative to the
foregoing); provided, however, that the Guarantee by any Person shall not
include endorsements by such Person for collection or deposit, in either
case, in the ordinary course of business.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Incur" means, with respect to any Debt or other obligation of any
Person, to create, issue, incur (by conversion, exchange or otherwise),
assume (pursuant to a merger, consolidation, acquisition or other
transaction), Guarantee or otherwise become liable in respect of such Debt
or other obligation or the recording, as required pursuant to generally
accepted accounting principles or otherwise, of any such Debt or other
obligation on the balance sheet of such Person (and "Incurrence" and
"Incurred" shall have meanings correlative to the foregoing); provided,
however, that a change in generally accepted accounting principles that
results in an obligation of such Person that exists at such time becoming
Debt shall not be deemed an Incurrence of such Debt; provided further,
however, that the accretion of original issue discount on Debt shall not
be deemed to be an Incurrence of Debt. Debt otherwise Incurred by a Person
before it becomes a Subsidiary of the Company shall be deemed to have been
Incurred at the time it becomes such a Subsidiary.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions
hereof, including, for all purposes of this instrument and any such
supplemental indenture, the provisions of the Trust Indenture Act that are
deemed to be a part of and govern this instrument and any such
supplemental indenture, respectively.
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"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3)
or (7) under the Securities Act.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Securities.
"Investment" by any Person means any direct or indirect loan, advance
or other extension of credit or capital contribution to (by means of
transfers of cash or other property to others or payments for property or
services for the account or use of others, or otherwise), or purchase or
acquisition of Capital Stock, bonds, notes, debentures or other securities
or evidence of Debt issued by, any other Person or the designation of a
Subsidiary as an Unrestricted Subsidiary; provided that a transaction will
not be an Investment to the extent it involves (i) the issuance or sale by
the Company of its Capital Stock (other than Redeemable Stock), including
options, warrants or other rights to acquire such Capital Stock (other
than Redeemable Stock), (ii) a transfer, assignment or contribution by the
Company of shares of Capital Stock (or any options, warrants or rights to
acquire Capital Stock), or all or substantially all of the assets of, any
Unrestricted Subsidiary of the Company to another Unrestricted Subsidiary
of the Company or (iii) extensions of trade credit by the Company and its
Restricted Subsidiaries on commercially reasonable terms in the ordinary
course of business and consistent with their normal practice.
"Investment Grade" means a rating of at least BBB-, in the case of
S&P, or Baa3, in the case of Moody's.
"Itemized Executive" means any of the following individuals: (i) John
Chapple; (ii) John Thompson; (iii) David Thaler; (iv) David Aas; (v) Perry
Satterlee; and (vi) Mark Fanning.
"License Exchange" means (A) any exchange of Licenses between the
Company and Nextel Communications, Inc. or any Affiliates of Nextel
Communications, Inc. which the Board of Directors of the Company
determines in good faith, on the date of such exchange, are, in the
aggregate, of at least equivalent value; provided, however, that the
aggregate value of all such balances exchanged pursuant to this clause (A)
shall not exceed $25.0 million, or (B) any transaction pursuant to which
the Company transfers certain of its Licenses to Nextel Communications,
Inc. or any Affiliates of Nextel Communications, Inc. in exchange for
Licenses from a third party, the purchase price for which was funded by
Nextel or any Affiliates of Nextel Communications, Inc.; provided, however
that the aggregate value of all such Licenses exchanged pursuant to this
clause (B) shall not exceed $25.0 million.
"Licenses" means SMR licenses granted by the FCC that entitle the
holder to use the radio channels covered thereby, subject to compliance
with FCC rules and regulations, in connection with its SMR business.
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"Lien" means, with respect to any property or assets, any mortgage or
deed of trust, pledge, hypothecation, assignment, deposit arrangement,
security interest, lien, charge, easement, encumbrance, preference,
priority or other security agreement or preferential arrangement of any
kind or nature whatsoever on or with respect to such property or assets
(including any conditional sale or other title retention agreement having
substantially the same economic effect as any of the foregoing).
"Liquidated Damages" means all liquidated damages then owing pursuant
to section 5 of the Registration Rights Agreement.
"Marketable Securities" means:
(1) securities either issued directly or fully guaranteed or insured
by the government of the United States of America or any agency or
instrumentality thereof having maturities of not more than one year;
(2) time deposits and certificates of deposit, having maturities of
not more than six months from the date of deposit, of any domestic
commercial bank having capital and surplus in excess of $500 million and
having outstanding long-term debt rated A or better (or the equivalent
thereof) by S&P or Aaa or better (or the equivalent thereof) by Moody's;
(3) commercial paper rated A-1 or the equivalent thereof by S&P or P-1
or the equivalent thereof by Moody's, and in each case maturing within one
year;
(4) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (1) above; and
(5) investments in money market funds substantially all of whose
assets comprise securities of the types described in clauses (1) through
(4).
"Maturity", when used with respect to any Security, means the date on
which the principal of such Security becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption, offer to purchase or otherwise.
"Memorandum" means the offering memorandum dated January 22, 1999 in
connection with the offering of the Securities.
"Moody's" means Moody's Investors Service, Inc. or, if Moody's
Investors Service, Inc. shall cease rating debt securities having a
maturity at original issuance of at least one year and such ratings
business shall have been transferred to a successor Person, such successor
Person; provided, however, that if Moody's Investors Service, Inc. ceases
rating debt securities having a maturity at original issuance of at least
one year and its ratings business with respect thereto shall not have been
transferred to any successor Person, then "Moody's" shall mean any other
national recognized rating agency (other than S&P) that rates debt
securities having a maturity at original issuance of at least one
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year and that shall have been designated by the Company by a written
notice given to the Trustee.
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net
of (a) the direct costs relating to such Asset Sale (including, without
limitation, legal, accounting, appraisal, investment banking fees, and
sales and brokerage commissions), (b) any relocation expenses incurred as
a result thereof, (c) taxes paid or payable as a result thereof, (d)
amounts required to be applied to the repayment of Debt secured by a Lien
on the asset or assets that were the subject of such Asset Sale, (e)
amounts required to be paid in order to obtain a necessary consent to such
Asset Sale, (f) distributions made to minority interest holders, based on
their pro rata ownership, in Subsidiaries or Permitted Joint Ventures of
such Person as a result of an Asset Sale by such Subsidiaries or Permitted
Joint Ventures, and (g) appropriate amounts to be provided by such Person
or any Subsidiary thereof, as the case may be, as a reserve in accordance
with generally accepted accounting principles against any liabilities
associated with such assets that are subject thereof, as the case may be,
after such Asset Sale, including liabilities under any indemnification
obligations and severance and other employee termination costs associated
with such Asset Sale, in each case, as conclusively determined by the
board of directors of such Person.
"New Credit Facility" means that certain credit agreement by and among
the Company and or its Subsidiaries and a syndicate of banks and other
financial institutions led by Donaldson, Lufkin & Jenrette Securities
Corporation, as arranger, DLJ Capital Funding, as syndication agent and
the Bank of Montreal, as administrative agent, governing a $175.0 million
term loan facility and $100.0 million revolving credit facility, and
Hedging Agreements with Persons that were lenders under the New Credit
Facility (or were affiliates of such lenders) at the time such Hedging
Agreements were entered into, including any related notes, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, as such credit agreement, Hedging Agreements and/or related
documents may be amended, restated, supplemented, renewed, replaced or
otherwise modified from time to time whether or not with the same agent or
lenders and irrespective of any changes in the terms and conditions
thereof.
"Non-U.S. Person" means a person who is not a "U.S. Person" (as
defined in Regulation S).
"Notice of Default" means a written notice of the kind specified in
Section 5.01(5).
"Offer" has the meaning specified in the definition of Offer to
Purchase.
"Offer to Purchase" means a written offer (the "Offer") sent by the
Company by first class mail, postage prepaid, to each Holder at his
address appearing in the Security Register on the date of the Offer
offering to purchase the Securities at the purchase price specified in
such Offer (as determined pursuant to this Indenture). Unless otherwise
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required by applicable law, the Offer shall specify an expiration date
(the "Expiration Date") of the Offer to Purchase which shall be, subject
to any contrary requirements of applicable law, not less than 30 days or
more than 60 days after the date of such Offer and a settlement date (the
"Purchase Date") for purchase of Securities within five Business Days
after the Expiration Date. The Company shall notify the Trustee at least
15 days (or such shorter period as is acceptable to the Trustee) prior to
the mailing of the Offer of the Company's obligation to make an Offer to
Purchase, and the Offer shall be mailed by the Company or, at the
Company's request, by the Trustee, in the name and at the expense of the
Company. The Offer shall contain information concerning the business of
the Company and its Subsidiaries which, at a minimum, shall include (i)
the most recent annual and quarterly financial statements and
"Management's Discussion and Analysis of Financial Condition and Results
of Operations" contained in the documents required to be filed with the
Trustee pursuant to this Indenture (which requirements may be satisfied by
delivery of such documents together with the Offer), (ii) a description of
material developments in the Company's business subsequent to the date of
the latest of such financial statements referred to in clause (i)
(including a description of the events requiring the Company to make the
Offer to Purchase), (iii) if required under applicable law, pro forma
financial information concerning, among other things, the Offer to
Purchase and the events requiring the Company to make the Offer to
Purchase and (iv) any other information required by applicable law to be
included therein. The Offer shall contain all instructions and materials
necessary to enable such Holders to tender their Securities pursuant to
the Offer to Purchase. The Offer shall also state:
(1) the section of this Indenture pursuant to which the Offer to
Purchase is being made;
(2) the Expiration Date and the Purchase Date;
(3) the aggregate principal amount at Stated Maturity of the
Outstanding Securities offered to be purchased by the Company pursuant to
the Offer to Purchase (the "Purchase Amount");
(4) the purchase price to be paid by the Company for each $1,000
principal amount at Stated Maturity of Securities accepted for payment (as
specified pursuant to this Indenture) (the "Purchase Price");
(5) that the Holder may tender all or any portion of the Securities
registered in the name of such Holder and that any portion of Securities
tendered must be tendered in an integral multiple of $1,000 of principal
amount at Stated Maturity;
(6) the place or places where the Securities are to be surrendered for
tender pursuant to the Offer to Purchase;
(7) that interest, if any, on any Securities not tendered or tendered
but not purchased by the Company pursuant to the Offer to Purchase will
continue to accrue;
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(8) that on the Purchase Date the Purchase Price will become due and
payable upon each Security being accepted for payment pursuant to the
Offer to Purchase;
(9) that each Holder electing to tender Securities pursuant to the
Offer to Purchase will be required to surrender such Securities at the
place or places specified in the Offer prior to the close of business on
the Expiration Date (such Securities being, if the Company or the Trustee
so requires, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Trustee duly executed
by the Holder thereof or his attorney duly authorized in writing);
(10) that Holders will be entitled to withdraw all or any portion of
the Securities tendered if the Company (or its Paying Agent) receives, not
later than the close of business on the Expiration Date, a facsimile
transmission or letter setting forth the name of the Holder, the principal
amount at Stated Maturity of the Securities the Holder tendered, the
certificate number of the Securities the Holder tendered and a statement
that such Holder is withdrawing all or a portion of his tender;
(11) that the Company shall purchase all such Securities duly tendered
and not withdrawn pursuant to the Offer to Purchase, and
(12) that in the case of any Holder whose Securities are purchased
only in part, the Company shall execute, and the Trustee shall
authenticate and deliver to the Holder of such Securities without service
charge, new Securities of any authorized denomination as requested by such
Holder, in an aggregate principal amount at Stated Maturity equal to and
in exchange for the unpurchased portion of the aggregate principal amount
at Stated Maturity of the Securities so tendered.
Any Offer to Purchase shall be governed by and effected in accordance
with the Offer for such Offer to Purchase.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, the President or a Vice President, and by the Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary, of the
Company, and delivered to the Trustee. One of the officers signing an
Officers' Certificate given pursuant to Section 10.17 shall be the
principal executive, financial or accounting officer of the Company.
"Offshore Global Securities" has the meaning provided in Section 2.01.
"Offshore Physical Securities" has the meaning provided in Section
2.01.
"Operating Cash Flow" means, for any fiscal quarter, (i) the Company's
Consolidated Net Income (Loss) plus depreciation, amortization and other
non-cash charges in respect thereof for such fiscal quarter, plus (ii) all
amounts deducted in calculating Consolidated Net Income (Loss) for such
fiscal quarter in respect of Consolidated Interest Expense, and all income
taxes, whether or not deferred, applicable to such income period, all as
determined on a Consolidated basis in accordance with generally accepted
accounting principles. For purposes of calculating Operating Cash
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Flow for the fiscal quarter most recently completed for which financial
statements are available prior to any date on which an action is taken
that requires a calculation of the Operating Cash Flow to Consolidated
Interest Expense Ratio or Consolidated Debt to Annualized Operating Cash
Flow Ratio, (1) any Person that is a Restricted Subsidiary on such date
(or would become a Restricted Subsidiary in connection with the
transaction that requires the determination of such ratio) will be deemed
to have been a Restricted Subsidiary at all times during such fiscal
quarter, (2) any Person that is not a Restricted Subsidiary on such date
(or would cease to be a Restricted Subsidiary in connection with the
transaction that requires the determination of such ratio) will be deemed
not to have been a Restricted Subsidiary at any time during such fiscal
quarter and (3) if the Company or any Restricted Subsidiary shall have in
any manner acquired (including through commencement of activities
constituting such operating business) or disposed (including through
termination or discontinuance of activities constituting such operating
business) of any operating business during or subsequent to the most
recently completed fiscal quarter, such calculation will be made on a pro
forma basis on the assumption that such acquisition or disposition had
been completed on the first day of such completed fiscal quarter and may
give effect to projected quantifiable improvements in operating results
(on a annualized basis) due to cost reductions calculated in accordance
with Regulation S-X of the Securities Act and evidenced by (A) in the case
of cost reductions of less than $10.0 million, an Officers' Certificate
delivered to the Trustee and (B) in the case of cost reductions of $10.0
million or more, a resolution of the Board of Directors set forth in an
Officers' Certificate delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company.
"Outstanding", when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(i) Securities theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or
any Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its
own Paying Agent) for the Holders of such Securities; provided that,
if such Securities are to be redeemed, notice of such redemption has
been duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made;
(iii) Securities which have been paid pursuant to Section 3.08 or
in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any
such Securities in respect of which there shall have been presented to
the Trustee proof satisfactory to it that
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such Securities are held by a bona fide purchaser in whose hands such
Securities are valid obligations of the Company; and
(iv) Securities as to which Defeasance has been effected pursuant
to Section 12.02;
provided, however, that in determining whether the Holders of the
requisite principal amount of the Outstanding Securities have given, made
or taken any request, demand, authorization, direction, notice, consent,
waiver or other action hereunder as of any date, Securities owned by the
Company or any other obligor upon the Securities or any Affiliate of the
Company or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization,
direction, notice, consent, waiver or other action, only Securities which
the a Responsible Officer of the Trustee actually knows to be so owned
shall be so disregarded. Securities so owned which have been pledged in
good faith may be regarded as Outstanding if the pledgee establishes to
the satisfaction of the Trustee the pledgee's right so to act with respect
to such Securities and that the pledgee is not the Company or any other
obligor upon the Securities or any Affiliate of the Company or of such
other obligor.
"pari passu", when used with respect to the ranking of any Debt of any
Person in relation to other Debt of such Person, means that each such Debt
(a) either (i) is not subordinated in right of payment to any other Debt
of such Person or (ii) is subordinate in right of payment to the same Debt
of such Person as is the other and is so subordinate to the same extent
and (b) is not subordinate in right of payment to the other or to any Debt
of such Person as to which the other is not so subordinate.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Securities on behalf
of the Company.
"Permitted Debt" means:
(i) any Debt (including Guarantees thereof) outstanding on the
Closing Date (including the Securities) and any accretion of original
issue discount and accrual of interest with respect to such Debt;
(ii) any additional Debt outstanding under a Credit Facility in
aggregate principal amount at any one time outstanding under this
clause (ii) not to exceed $325.0 million in aggregate for all such
Credit Facilities, less permanent repayments of Debt under such Credit
Facilities made by the Company or any of its Restricted Subsidiaries
pursuant to Section 10.22;
(iii) any Vendor Financing Debt in an aggregate principal amount
outstanding at any time not to exceed $100.0 million;
(iv) Debt (A) to the Company or (B) to any Restricted Subsidiary;
provided that any event which results in any such Restricted
Subsidiary ceasing to be
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a Restricted Subsidiary or any subsequent transfer of such Debt (other
than to the Company or another Restricted Subsidiary) shall be deemed,
in each case, to constitute an Incurrence of such Debt not permitted
by this clause (iv);
(v) Debt (A) in respect of performance, surety or appeal bonds or
bankers' acceptances provided in the ordinary course of business, (B)
under foreign currency hedge, foreign currency exchange, interest rate
swap or similar agreements; provided that such agreements (a) are
designed solely to protect the Company or its Restricted Subsidiaries
against fluctuations in foreign currency exchange rates or interest
rates and (b) do not increase the Debt of the obligor outstanding at
any time other than as a result of fluctuations in foreign currency
exchange rates or interest rates or by reason of fees, indemnities and
compensation payable thereunder; and (C) arising from agreements
providing for indemnification, adjustment of purchase price or similar
obligations, or from Guarantees or letters of credit, surety bonds or
performance bonds securing any obligations of the Company or any
Restricted Subsidiary pursuant to such agreements, in any case
Incurred in connection with the disposition of any business, assets or
Restricted Subsidiary (other than Guarantees of Debt Incurred by any
Person acquiring all or any portion of such business, assets or
Restricted Subsidiary for the purpose of financing such acquisition),
in a principal amount not to exceed the gross proceeds actually
received by the Company or any Restricted Subsidiary in connection
with such disposition;
(vi) renewals, refundings or extensions of any Debt referred to in
clause (i) or (iii) above or Incurred pursuant to clause (ii) of
Section 10.08 and any renewals, refundings or extensions thereof, plus
(A) the amount of any premium reasonably determined by the Company as
necessary to accomplish such renewal, refunding or extension and (B)
such other fees and expenses of the Company reasonably incurred in
connection with the renewal, refunding or extension, provided that
such renewal, refunding or extension shall constitute Permitted Debt
only (a) to the extent that it does not result in an increase in the
aggregate principal amount (or, if such Debt provides for an amount
less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the maturity thereof, in an amount not
greater than such lesser amount) of such Debt (except as permitted by
clause (A) or (B) above), and (b) to the extent such renewed, refunded
or extended Debt does not have a mandatory redemption date prior to
the mandatory redemption date of the Debt being renewed, refunded or
extended or have an Average Life shorter than the remaining Average
Life of the Debt being renewed, refunded or extended; and
(vii) Debt payable solely in, or mandatorily convertible into,
Capital Stock (other than Redeemable Stock) of the Company;
(viii) all Exchange Notes issued pursuant to the terms of the
Registration Rights Agreement for the Notes;
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(ix) Debt (in addition to Debt permitted under clauses (i) through
(viii) above) in an aggregate principal amount outstanding at any time
not to exceed $50.0 million.
In the event that an item of Indebtedness meets the criteria of more
than one of the types of Indebtedness specified in the above clauses (i)
through (ix), the Company shall have the right, at any time in its sole
discretion, to classify such item as one of the types and shall only be
required to include such item under the clause permitting such Indebtedness as
so classified.
"Permitted Distribution" of a Person means (x) the exchange by such
Person of Capital Stock (other than Redeemable Stock) for outstanding
Capital Stock; and (y) the redemption, repurchase, defeasance or other
acquisition or retirement for value of Debt of the Company that is
subordinate in right of payment to the Securities, in exchange for
(including any such exchange pursuant to the exercise of a conversion
right or privilege in connection with which cash is paid in lieu of the
issuance of fractional shares or scrip), or out of the proceeds of a
substantially concurrent issue and sale (other than to a Restricted
Subsidiary) of, either (a) Capital Stock of the Company (other than
Redeemable Stock) or (b) Debt of the Company that is subordinate in right
of payment to the Securities on subordination terms no less favorable to
the Holders of the Securities in their capacities as such than the
subordination terms (or other arrangement) applicable to the Debt that is
redeemed, repurchased, defeased or otherwise acquired or retired for
value, provided that, in the case of this clause (b), such new Debt does
not mature prior to the Stated Maturity or have a mandatory redemption
date prior to the mandatory redemption date of the Debt being redeemed,
repurchased, defeased or otherwise acquired or retired for value or have
an Average Life shorter than the remaining Average Life of the Debt being
redeemed, repurchased, defeased or otherwise acquired or retired for
value.
"Permitted Holder" means each of (a)(i) Nextel Communications, Inc.,
and any entity or entities controlled by, directly or indirectly, Nextel
Communications, Inc. (ii) Craig O. McCaw and any entity or entities (A)
controlled, directly or indirectly, by Craig O. McCaw or the estate of
Craig O. McCaw and (B) a majority of the equity interests of which are
owned, directly or indirectly, by Craig O. McCaw and his family, his
brothers and estates of, or trusts for the primary benefit of, the
foregoing persons, (iii) Motorola, Inc., (iv) DLJMB, and any of their
respective Affiliates and the respective successors (by merger,
consolidation, transfer or otherwise) to all or substantially all of the
respective businesses and assets of any of the foregoing and (b) any
"person" or "group" (as such terms are used in Section 13(d) and 14(d) of
the Exchange Act) controlled by one or more persons identified in clauses
(i) through (iv) of this definition.
"Permitted Investment" means any Investment in (i) Marketable
Securities or (ii) a Permitted Joint Venture.
"Permitted Joint Venture" means any joint venture entered into by the
Company or any of its Restricted Subsidiaries with a third party (a) for
the purpose of financing the acquisition or lease of telecommunications
towers for use in the Territory; provided that the aggregate value of all
assets contributed by the Company or any of its Restricted
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Subsidiaries to any joint venture pursuant to this clause (a) shall not
exceed $15.0 million (as determined in good faith by the Board of
Directors) or (b) in which the Company or any of its Restricted
Subsidiaries (i) is responsible for the managerial control of such joint
venture and (ii) owns at least 40% of the outstanding Capital Stock of
such joint venture; provided that such joint venture, together with all
other Permitted Joint Ventures described in this clause (b), does not
cover or service more than 10% of the POPs (computed by including only a
percentage of the total POPs equal to the Company's percentage ownership
in that joint venture) covered by the Company at the date of determination
(as determined in good faith by the board of directors).
"Permitted Liens" means (i) Liens securing Debt or other monetary
obligations under Credit Facilities to the extent the principal amount of
such obligations is permitted by the terms of this Indenture to be
incurred; (ii) Liens in favor of the Company or a Wholly Owned Restricted
Subsidiary; (iii) Liens on property of a Person existing at the time such
Person is merged with or into or consolidated with the Company or any
Subsidiary of the Company; provided that such Liens were in existence
prior to the contemplation of such merger or consolidation and do not
extend to any assets other than those of the Person merged into or
consolidated with the Company; (iv) Liens on property existing at the time
of acquisition thereof by the Company or any Subsidiary of the Company,
provided that such Liens were in existence prior to the contemplation of
such acquisition; (v) Liens to secure the performance of statutory
obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the ordinary course of business;
(vi) Liens to secure Indebtedness (including Capital Lease Obligations)
permitted by clause (iii) of the definition of "Permitted Debt"; (vii)
Liens on the date hereof; (viii) Liens for taxes, assessments or
governmental charges or claims that are not yet delinquent or that are
being contested in good faith by appropriate proceedings promptly
instituted and diligently concluded, provided that any reserve or other
appropriate provision as shall be required in conformity with generally
accepted account principles shall have been made therefor; (ix) Liens
(including zoning restrictions, servitudes, easements and rights-of-way)
incurred in the ordinary course of business of the Company or any
Subsidiary of the Company that (a) are not incurred in connection with the
borrowing of money or the obtaining of advances or credit (other than
trade credit in the ordinary course of business) and (b) do not in the
aggregate materially detract from the value of the property or materially
impair the use thereof in the operation of business by the Company or such
Subsidiary; (x) Liens of a lessor under a lease (other than a capitalized
lease); (xi) Liens not otherwise permitted by the foregoing clauses (i)
through (vii) securing Debt in an aggregate amount not to exceed 5% of the
Company's consolidated tangible assets; and (xii) Liens to secure Debt
incurred to refinance, in whole or in part, Debt secured by any Lien
referred to in the foregoing clauses (i), (iii), (iv), (v) or this clause
(xii) so long as such Lien does not extend to any other property (other
than improvements and accessions to the original property) and the
principal amount of Debt so secured is not increased except as otherwise
permitted by this Indenture.
"Permitted Transaction" means (i) any written agreements existing on
the Closing Date and described in or incorporated by reference into the
Memorandum and (ii) any transaction or transactions with any vendor or
vendors (other than Motorola, Inc.) of
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property or materials used in the telecommunications business (including
related activities and services) of the Company or any Restricted
Subsidiary, provided (x) such transactions are in the ordinary course of
business and (y) such vendor does not beneficially own more than 10% of
the voting power of the Voting Stock of the Company, (iii) any amendment,
modification or other change to the Motorola Purchase Agreement, dated as
of the date hereof, or any other similar agreement with Motorola, Inc.
that has been approved by a majority of the Disinterested Directors of the
Company, (iv) agreements and transactions contemplated by the Joint
Venture Agreement to be entered into by and among the Company and Nextel
Communications, Inc. and any of their respective Subsidiaries, (v) any
License Exchange and (vi) any issuance of equity by the Company (other
than Redeemable Stock).
"Person" means any individual, corporation, partnership, joint
venture, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"POP" means the population equivalents as estimated by the Company by
extrapolation from the 1990 or 2000 U.S. Census and other publicly
available information.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by
such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 3.08 in exchange for or
in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed
to evidence the same debt as the mutilated, destroyed, lost or stolen
Security.
"Preferred Capital Stock" as applied to the Capital Stock of any
Person, means Capital Stock of such Person of any class or classes
(however designated) that ranks prior, as to the payment of dividends or
as to the distribution of assets upon any voluntary or involuntary
liquidation, dissolution or winding up of such Person, to shares of
Capital Stock of any other class of such Person.
"Preferred Stock" means each of the Series A Convertible Stock, the
Series B Redeemable Preferred Stock, the Series C Convertible Preferred
Stock, and the Series D Convertible Preferred Stock.
"Private Placement Legend" means the legend initially set forth on the
Securities in the form set forth in Section 2.05.
"Purchase Amount" has the meaning specified in the definition of Offer
to Purchase.
"Purchase Date" has the meaning specified in the definition of Offer
to Purchase.
"Purchase Price" has the meaning specified in the definition of Offer
to Purchase.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
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"Record Expiration Date" has the meaning specified in Section 1.04.
"Redeemable Stock" of any Person means any Capital Stock of such
Person that by its terms or otherwise is (i) required to be redeemed prior
to the Stated Maturity of the Securities, (ii) redeemable at the option of
the holder thereof at any time prior to the Stated Maturity of the
Securities or (iii) convertible into or exchangeable for Capital Stock
referred to in clause (i) or (ii) above or Debt having a scheduled
maturity prior to the Stated Maturity of the Securities; provided that any
Capital Stock that would not constitute Redeemable Stock but for
provisions thereof giving holders thereof the right to require such Person
to repurchase or redeem such Capital Stock upon the occurrence of a
"change of control" occurring prior to the Stated Maturity of the
Securities shall not constitute Redeemable Stock if the "change of
control" provisions applicable to such Capital Stock are no more favorable
to the holders of such Capital Stock than the provisions contained in
Section 10.13 and such Capital Stock specifically provides that such
Person will not repurchase or redeem any such stock pursuant to such
provision prior to the Company's repurchase of such Securities as are
required to be repurchased pursuant to Section 10.13.
"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Registration Rights Agreement" means the Registration Rights
Agreement dated the Closing Date, between the Company and the Initial
Purchasers.
"Registration Statement" means the Registration Statement as defined
and described in the Registration Rights Agreement.
"Regular Record Date" for the interest payable on any Interest Payment
Date means the January 15 or July 15 (whether or not a Business Day), as
the case may be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act.
"Required Consent" means, except as otherwise expressly provided in
this Indenture with respect to matters requiring the consent of each
holder of Securities affected thereby, the consent of holders of not less
than a majority in aggregate principal amount at Stated Maturity of the
Securities.
"Responsible Officer" when used with respect to the Trustee, means any
officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) with direct responsibility for the
administration of this Indenture and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of his or her knowledge of and familiarity with the particular subject.
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"Restricted Payments" has the meaning specified in Section 10.09.
"Restricted Subsidiary" means any Subsidiary of the Company, whether
existing on the Closing Date or created subsequent thereto, designated
from time to time by the Board of Directors as (or otherwise deemed to be)
a "Restricted Subsidiary" in accordance with Section 10.10.
"Rule 144A" means Rule 144A under the Securities Act.
"S&P" means Standard & Poor's Ratings Services or, if Standard &
Poor's Ratings Services shall cease rating debt securities having a
maturity at original issuance of at least one year and such ratings
business shall have been transferred to a successor Person, such successor
Person; provided, however, that if Standard & Poor's Ratings Services
ceases rating debt securities having a maturity at original issuance of at
least one year and its ratings business with respect thereto shall not
have been transferred to any successor Person, then "S&P" shall mean any
other nationally recognized rating agency (other than Moody's) that rates
debt securities having a maturity at original issuance of at least one
year and that shall have been designated by the Company by a written
notice given to the Trustee.
"Securities" means securities designated in the first paragraph of the
RECITALS OF THE COMPANY that are authenticated and delivered under this
Indenture. For all purposes of this Indenture, the term "Securities" shall
include the Securities issued on the Closing Date, any Exchange Securities
to be issued and exchanged for any Securities pursuant to the Registration
Rights Agreement and any other Securities issued after the Closing Date
under this Indenture. For purposes of this Indenture all Securities shall
vote together as one series of Securities under this Indenture.
"Securities Act" means the Securities Act of 1933 and any statute
successor thereto, in each case as amended from time to time.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 3.05.
"Shelf Registration Statement" means the Shelf Registration Statement
as defined in the Registration Rights Agreement.
"Special Record Date" for the payment of any Defaulted Interest means
a date fixed by the Trustee pursuant to Section 3.09.
"Specialized Mobile Radio" or "SMR" means a mobile radio
communications system that is operated as described in the Memorandum.
"Stated Maturity" when used with respect to any Debt security or any
installment of interest thereon, means the date specified in such Debt
security as the fixed date on which the principal of such Debt security or
such installment of interest is due and payable.
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"Subsidiary" of any Person means (i) a corporation more than 50% of
the outstanding Voting Stock of which is owned, directly or indirectly, by
such Person or by one or more other Subsidiaries of such Person or by such
Person and one or more Subsidiaries thereof or (ii) any other Person
(other than a corporation) in which such Person, or one or more other
Subsidiaries of such Person or such Person and one or more other
Subsidiaries thereof, directly or indirectly, has at least a majority
ownership and power to direct the policies, management and affairs
thereof.
"Total Common Equity" of any Person means, as of any day of
determination (and as modified for purposes of the definition of "Change
of Control"), the product of (i) the aggregate number of outstanding
primary shares of Common Stock of such Person on such day (which shall not
include any options or warrants on, or securities convertible or
exchangeable into, shares of Common Stock of such Person) and (ii) the
average Closing Price of such Common Stock over the 20 consecutive Trading
Days immediately preceding such day. If no such Closing Price exists with
respect to shares of any such class, the value of such shares for purposes
of clause (ii) of the preceding sentence shall be determined by the Board
of Directors in good faith and evidenced by a Board Resolution.
"Total Invested Capital" means at any time of determination, the sum
of, without duplication, (i) the total amount of equity contributed to the
Company as of the Closing Date (being $183.2 million), plus (ii) the
aggregate net cash proceeds received by the Company from capital
contributions or the issuance or sale of Capital Stock (other than
Redeemable Stock but including Capital Stock issued upon the conversion of
convertible Debt or from the exercise of options, warrants or rights to
purchase Capital Stock (other than Redeemable Stock)), including cash
payments under the Committed Capital Contribution, subsequent to the
Closing Date, other than to a Restricted Subsidiary, plus (iii) the
aggregate net cash proceeds received by the Company or any Restricted
Subsidiary from the sale, disposition or repayment of any Investment made
after the Closing Date and constituting a Restricted Payment in an amount
equal to the lesser of (a) the return of capital with respect to such
Investment and (b) the initial amount of such Investment, in either case,
less the cost of the disposition of such Investment, plus (iv) an amount
equal to the Consolidated net Investment (as of the date of determination)
the Company and/or any of the Restricted Subsidiaries has made in any
Subsidiary that has been designated as an Unrestricted Subsidiary after
the Closing Date upon its redesignation as a Restricted Subsidiary in
accordance with the covenant described under "Restricted Subsidiaries,"
plus (v) Consolidated Debt minus (vi) the aggregate amount of all
Restricted Payments declared or made on or after the Closing Date.
"Trading Day" with respect to a securities exchange or automated
quotation system means a day on which such exchange or system is open for
a full day of trading.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become
such pursuant to the applicable provisions of this Indenture, and
thereafter "Trustee" shall mean such successor Trustee.
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"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed; provided,
however, that in the event the Trust Indenture Act of 1939 is amended
after such date, "Trust Indenture Act" means, to the extent required by
any such amendment, the Trust Indenture Act of 1939 as so amended.
"U.S. Global Securities" has the meaning provided in Section 2.01.
"U.S. Government Obligation" has the meaning specified in Section
12.04.
"U.S. Physical Securities" has the meaning provided in Section 2.01.
"Unrestricted Subsidiary" means any Subsidiary that is not a
Restricted Subsidiary and includes any Restricted Subsidiary that becomes
an Unrestricted Subsidiary in accordance with Section 10.10.
"Vendor Financing Debt" means any Debt owed to (i) a vendor or
supplier of any property or materials used by the Company or its
Restricted Subsidiaries in their telecommunications business, (ii) any
Affiliate of such a vendor or supplier, (iii) any assignee of such a
vendor, supplier or Affiliate of such a vendor or supplier, or (iv) a bank
or other financial institution that has financed or refinanced the
purchase of such property or materials from such a vendor, supplier,
Affiliate of such a vendor or supplier or assignee of such a vendor or
supplier; provided that the aggregate amount of such Debt does not exceed
the sum of (w) the purchase price of such property or materials (including
transportation, installation, warranty and testing charges, as well as
applicable taxes paid, in respect of such property or materials), (x) the
cost of design, development, site acquisition and construction, (y) any
interest or other financing costs accruing or otherwise payable in respect
of the foregoing, and (z) the cost of any services provided by such
vendor, supplier or Affiliate of such vendor or supplier.
"Vice President", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number
or a word or words added before or after the title "vice president".
"Voting Stock" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors (or persons
performing similar functions) of such Person, whether at all times or only
so long as no senior class of securities has such voting power by reason
of any contingency.
"Wholly Owned Restricted Subsidiary" of the Company means a Restricted
Subsidiary all of the outstanding Capital Stock of which (other than
directors' qualifying shares) shall at the time be owned by the Company or
by one or more Wholly Owned Restricted Subsidiaries or by the Company and
one or more Wholly Owned Restricted Subsidiaries.
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Section 1.02. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture (except, for any actions in
connection with the original issuance of Securities hereunder), the Company
shall furnish to the Trustee such certificates and opinions as may be required
under the Trust Indenture Act. Each such certificate or opinion shall be given
in the form of an Officers' Certificate, if to be given by an officer of the
Company, or an Opinion of Counsel, if to be given by counsel, and shall comply
with the requirements of the Trust Indenture Act and any other requirement set
forth in this Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
Section 1.03. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous.
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Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 1.04. Acts of Holders; Record Dates.
Any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 6.01) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.
The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
The ownership of Securities shall be proved by the Security Register.
Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Security shall bind every future Holder of
the same Security and the Holder of every Security issued upon the registration
of transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such
Security.
The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to give or take any
request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Indenture to be given or taken by Holders
of Securities, provided that the Company may not set a record date for, and the
provisions of this paragraph shall not apply with respect to, the giving or
making of any notice, declaration, request or direction referred to in the next
paragraph. If any record date is set pursuant to this paragraph, the Holders of
Outstanding Securities on such record date, and no other Holders, shall be
entitled to take the relevant action, whether or not such Holders remain
Holders after such record date; provided that no such action shall be effective
hereunder unless taken on or prior to the applicable Record Expiration Date by
Holders of the requisite principal amount of Outstanding Securities on such
record date; and provided, further, that for the purpose
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of determining whether Holders of the requisite principal amount of such
Securities have taken such action, no Security shall be deemed to have been
Outstanding on such record date unless it is also Outstanding on the date such
action is to become effective. Nothing in this paragraph shall prevent the
Company from setting a new record date for any action for which a record date
has previously been set pursuant to this paragraph (whereupon the record date
previously set shall automatically and with no action by any Person be canceled
and of no effect), nor shall anything in this paragraph be construed to render
ineffective any action taken by Holders of the requisite principal amount of
Outstanding Securities on the date such action is taken. Promptly after any
record date is set pursuant to this paragraph, the Company. at its own expense,
shall cause notice of such record date, the proposed action by Holders and the
applicable Record Expiration Date to be given to the Trustee in writing and to
each Holder of Securities in the manner set forth in Section 1.06.
The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to join in the
giving or making of (i) any Notice of Default, (ii) any declaration of
acceleration referred to in Section 5.02, (iii) any request to institute
proceedings referred to in Section 5.07(2), (iv) any direction referred to in
Section 5.12 or (v) the Required Consent. If any record date is set pursuant to
this paragraph, the Holders of Outstanding Securities on such record date, and
no other Holders, shall be entitled to join in such notice, declaration,
request or direction, whether or not such Holders remain Holders after such
record date; provided that no such action shall be effective hereunder unless
taken on or prior to the applicable Record Expiration Date by Holders of the
requisite principal amount of Outstanding Securities on such record date; and
provided, further, that for the purpose of determining whether Holders of the
requisite principal amount of such Securities have taken such action, no
Security shall be deemed to have been Outstanding on such record date unless it
is also Outstanding on the date such action is to become effective. Nothing in
this paragraph shall be construed to prevent the Trustee from setting a new
record date for any action (whereupon the record date previously set shall
automatically and without any action by any Person be canceled and of no
effect), nor shall anything in this paragraph be construed to render
ineffective any action taken by Holders of the requisite principal amount of
Outstanding Securities on the date such action is taken. Promptly after any
record date is set pursuant to this paragraph, the Trustee, at the Company's
expense, shall cause notice of such record date, the matter(s) to be submitted
for potential action by Holders and the applicable Record Expiration Date to be
given to the Company in writing and to each Holder of Securities in the manner
set forth in Section 1.06.
With respect to any record date set pursuant to this Section, the
party hereto that sets such record date may designate any day as the "Record
Expiration Date" and from time to time may change the Record Expiration Date to
any earlier or later day, provided that no such change shall be effective
unless notice of the proposed new Record Expiration Date is given to the other
party hereto in writing, and to each Holder of Securities in the manner set
forth in Section 1.06, on or before the existing Record Expiration Date. If a
Record Expiration Date is not designated with respect to any record date set
pursuant to this Section, the party hereto that set such record date shall be
deemed to have initially designated the 180th day after such record date as the
Record Expiration Date with respect thereto, subject to its right to change the
Record Expiration Date as provided in this paragraph. Notwithstanding the
foregoing, no Record Expiration Date shall be later than the 180th day after
the applicable record date.
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Without limiting the foregoing, a Holder entitled hereunder to take
any action hereunder with regard to any particular Security may do so with
regard to all or any part of the principal amount of such Security or by one or
more duly appointed agents each of which may do so pursuant to such appointment
with regard to all or any part of such principal amount.
Section 1.05. Notices, Etc., to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
and mailed, first-class postage prepaid, to or with the Trustee at its
Corporate Trust Office, Attention: Corporate Trust Administration, or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to the Company
addressed to it at the address of its principal office specified in the
first paragraph of this instrument or at any other address previously
furnished in writing to the Trustee by the Company.
Section 1.06. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Security Register, not later
than the latest date (if any), and not earlier than the earliest date (if any),
prescribed for the giving of such notice. In any case where notice to Holders
is given by mail, neither the failure to mail such notice, nor any defect in
any notice so mailed, to any particular Holder shall affect the sufficiency of
such notice with respect to other Holders. Where this Indenture provides for
notice in any manner, such notice may be waived in writing by the Person
entitled to receive such notice, either before or after the event, and such
waiver shall be the equivalent of such notice. Waivers of notice by Holders
shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the Trustee
shall constitute a sufficient notification for every purpose hereunder.
Section 1.07. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required under such Act to be part
of and govern this Indenture, the latter provision shall control. If any
provision of this Indenture modifies or excludes any provision of
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the Trust Indenture Act that may be so modified or excluded, the latter
provision shall be deemed to apply to this Indenture as so modified or to be
excluded, as the case may be.
Section 1.08. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
Section 1.09. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
Section 1.10. Separability Clause.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 1.11. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder and the Holders of Securities, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
Section 1.12. Governing Law.
This Indenture and the Securities shall be governed by and construed
in accordance with the laws of the State of New York, without regard to
principles of conflicts of laws.
Section 1.13. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date, Purchase
Date or Stated Maturity of any Security shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the Securities)
payment of interest or principal (and premium, if any) need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect (including with respect to the accrual of interest) as if made on
the Interest Payment Date, Redemption Date or Purchase Date, or at the Stated
Maturity.
Section 1.14. No Recourse Against Others.
No recourse for the payment of the principal of, premium, if any, or
interest on any of the Securities, or for any claim based thereon or otherwise
in respect thereof, and no recourse under or upon any obligation, covenant or
agreement of the Company contained in this Indenture, or in any of the
Securities, or because of the creation of any indebtedness represented thereby,
shall be had against any incorporator or against any past, present or future
partner, shareholder,
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other equity holder, officer, director, employee or controlling person, as
such, of the Company or of any successor Person, either directly or through the
Company or any successor Person, whether by virtue of any constitution, statute
or rule of law, or by the enforcement of any assessment or penalty or
otherwise; it being expressly understood that all such liability is hereby
expressly waived and released as a condition of, and as a consideration for,
the execution of this Indenture and the issue of the Securities.
ARTICLE 2.
Security Forms
Section 2.01. Forms Generally.
The Securities and the Trustee's certificates of authentication shall
be in substantially the forms set forth in this Article, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Securities,
as evidenced by their execution thereof.
Securities offered and sold in reliance on Rule 144A shall be issued
initially in the form of one or more permanent global Securities in registered
form, substantially in the form set forth in Section 2.02 (the "U.S. Global
Securities"), deposited with the Trustee, as custodian for the Depository, duly
executed by the Company and authenticated by the Trustee as hereinafter
provided. The aggregate principal amount of the Global Securities may from time
to time be increased or decreased by adjustments made on the records of the
Trustee as custodian for the Depository or its nominee, as hereinafter
provided.
Securities offered and sold in offshore transactions in reliance on
Regulation S shall be issued initially in the form of one or more permanent
Global Securities in registered form substantially in the form set forth in
Section 2.02 (the "Offshore Global Securities") deposited with the Trustee, as
custodian for the Depositary, duly executed by the Company and authenticated by
the Trustee as hereinafter provided. The aggregate principal amount of the
Offshore Global Securities may from time to time be increased or decreased by
adjustments made on the records of the Trustee, as custodian for the
Depositary, as hereinafter provided.
The Offshore Physical Securities and U.S. Physical Securities are
sometimes collectively herein referred to as the "Physical Securities." The
U.S. Global Securities and the Offshore Global Securities are sometimes
collectively herein referred to as the "Global Securities."
Securities offered and sold in reliance on Regulation D under the
Securities Act shall be issued in the form of permanent certificated Securities
in registered form in substantially the form set forth in Section 2.02 (the
"U.S. Physical Securities"). Securities issued pursuant to Section 3.07 in
exchange for interests in the Global Securities shall be in the form of
fpermanent
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certificated Securities in registered form substantially in the form set forth
in Section 2.02 (the "Offshore Physical Securities").
The definitive Securities shall be printed, lithographed or engraved
or produced by any combination of these methods on steel engraved borders or
may be produced in any other manner permitted by the rules of any securities
exchange on which the Securities may be listed, all as determined by the
officers executing such Securities, as evidenced by their execution of such
Securities.
Section 2.02. Form of Face of Security.
Nextel Partners, Inc.
14% Senior Discount Notes due 2009
No. ____________ $____________
CUSIP NO.____________
CINS NO.____________
Nextel Partners, Inc., a corporation duly organized and existing under
the laws of the State of Delaware (herein called the "Company", which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, hereby promises to pay to _____________________, or registered
assigns, the principal amount at maturity of ______________________ Dollars on
February 1, 2009 and to pay cash interest thereon from August 1, 2004 or from
the most recent Interest Payment Date to which interest has been paid or duly
provided for, semiannually in arrears on February 1 and August 1 in each year,
commencing August 1, 2004 at the rate of 14% per annum, until the principal
hereof is paid or duly provided for, provided that any principal and premium,
and any such installment of interest, which is overdue shall bear interest at
the rate of 14% per annum (to the extent that the payment of such interest
shall be legally enforceable), from the dates such amounts are due until they
are paid or duly provided for, and such interest shall be payable on demand.
The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the January 15 or July 15 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date. Any such
interest not so punctually paid or duly provided for will forthwith cease to be
payable to the Holder on such Regular Record Date and may either be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Securities not less than 10 days prior to such Special
Record Date, or be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Securities may be
listed, and upon such notice as may be required by such exchange, all as more
fully provided in said Indenture.
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The principal of this Security shall not bear or accrue cash interest
until August 1, 2004, except in the case of a default in payment of principal
upon acceleration, redemption or repurchase and, in such case, the overdue
principal and any overdue premium shall bear interest at the rate of 14% per
annum (to the extent that the payment of such interest shall be legally
enforceable), from the dates such amounts are due until they are paid or duly
provided for. Interest on any overdue principal or premium shall be payable on
demand. Any such interest on overdue principal or premium which is not paid on
demand shall bear interest at the rate of 14% per annum (to the extent that the
payment of such interest on interest shall be legally enforceable), from the
date of such demand until the amount so demanded is paid or duly provided for,
and such shall be payable on demand.
In accordance with the terms of the Registration Rights Agreement (i)
if the Company fails to file an Exchange Offer Registration Statement with the
Commission on or prior to May 29, 1999, (ii) if the Exchange Offer Registration
Statement is not declared effective by the Commission on or prior to July 28,
1999, (iii) if the Exchange Offer is not consummated on or before the 30th
business day after the Exchange Offer Registration Statement is declared
effective, (iv) if obligated to file the Shelf Registration Statement and the
Company fails to file the Shelf Registration Statement with the Commission on
or prior to the 60th day after such filing obligation arises, (v) if obligated
to file a Shelf Registration Statement and the Shelf Registration Statement is
not declared effective on or prior to the 90th day after the obligation to file
a Shelf Registration Statement arises, or (vi) if the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case may be,
is declared effective but thereafter ceases to be effective or useable in
connection with resales of the Transfer Restricted Securities, for such time of
non-effectiveness or non-usability (each, a "Registration Default"), the
Company agrees to pay to each Holder of Transfer Restricted Securities affected
thereby liquidated damages ("Liquidated Damages") in an amount equal to $0.05
per week per $1,000 in principal amount of Transfer Restricted Securities held
by such Holder for each week or portion thereof that the Registration Default
continues for the first 90 day period immediately following the occurrence of
such Registration Default. The amount of the Liquidated Damages shall increase
by an additional $0.05 per week per $1,000 in principal amount of Transfer
Restricted Securities with respect to each subsequent 90 day period until all
Registration Defaults have been cured, up to a maximum amount of Liquidated
Damages of $0.50 per week per $1,000 in principal amount of Transfer Restricted
Securities. The Company shall not be required to pay Liquidated Damages for
more than one Registration Default at any given time. Following the cure of all
Registration Defaults, the accrual of Liquidated Damages will cease.
All accrued Liquidated Damages shall be paid by the Company to Holders
entitled thereto by wire transfer to the accounts specified by them or by
mailing checks to their registered address if no such accounts have been
specified.
The Holder of this Security is entitled to the benefits of such
Registration Rights Agreement.
Payment of the principal of (and premium, if any) and any interest on
this Security will be made at the office or agency of the Company maintained
for that purpose in the Borough of Manhattan, The City of New York, in such
coin or currency of the United States of America as
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at the time of payment is legal tender for payment of public and private debts;
provided, however, that at the option of the Company payment of interest may be
made by check mailed to the address of the Person entitled thereto as such
address shall appear in the Security Register.
Nextel Partners, Inc. promises to pay to . or registered assigns, the
principal amount at maturity of Two Hundred Million Dollars on February 1,
2009. Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Interest Payment Dates: February 1 and August 1, commencing August 1, 2004
Record Dates: January 15 and July 15
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this
Security shall not be entitled to any benefit under the Indenture or be valid
or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
NEXTEL PARTNERS, INC.
By:_____________________________
Title:
Section 2.03. Form of Reverse of Security.
This Security is one of a duly authorized issue of Securities of the
Company designated as its Senior Discount Notes due 2009 (herein called the
"Securities"), limited in aggregate principal amount at Stated Maturity to
$1,000,000,000, issued and to be issued under an Indenture, dated as of January
29, 1999 (herein called the "Indenture", which term shall have the meaning
assigned to it in such instrument), between the Company and The Bank of New
York, as Trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture), and reference is hereby made to the
Indenture for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Company, the Trustee and the Holders of
the Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered.
The Securities may be redeemed at any time on or after February 1,
2004, at the Company's option, in whole or in part, upon not less than 30 nor
more than 60 days' prior written notice mailed by first class mail to each
Holder's last address as it appears in the Security Register, at the Redemption
Prices (expressed as a percentage of the principal amount at maturity thereof)
set forth below, plus an amount in cash equal to all accrued and unpaid
interest and Liquidated Damages, if any, to the Redemption Date, if redeemed
during the twelve-month period beginning February 1 of each of the years set
forth below.
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YEAR PERCENTAGE
---- ----------
2004........................................ 107.000%
2005........................................ 104.667%
2006........................................ 102.333%
2007 and thereafter......................... 100.000%
In addition, in the event of one or more sales by the Company on or
prior toFebruary 1, 2002 of at least $75.0 million of its Capital Stock (other
than Redeemable Stock), the Company may redeem up to 35% of the aggregate
Accreted Value of the Notes originally issued with the proceeds of such sale at
a Redemption Price equal to 114% of such Accreted Value on the Redemption Date,
plus Liquidated Damages, if any thereon, to the Redemption Date; provided that
at least 65% of the aggregate Accreted Value of the Notes originally issued
remain outstanding immediately after the occurrence of any such redemption
(excluding Notes held by the Company and its Restricted Subsidiaries); and
provided, further, that such redemption occurs within 60 days after
consummation of any such sale.
For purposes of this Security and the Indenture, Accreted Value of any
Outstanding Security as of or to any date of determination means an amount
equal to the sum of (i) the issue price of such Security as determined in
accordance with Section 1273 of the Code plus (ii) the aggregate of the
portions of the original issue discount (the excess of the amounts considered
as part of the "stated redemption price at maturity" of such Security within
the meaning of Section 1273(a)(2) of the Code or any successor provisions,
whether denominated as principal or interest, over the issue price of such
Security) that shall theretofore have accrued pursuant to Section 1272 of the
Code (without regard to Section 1272(a)(7) of the Code) from the date of issue
of such Security (a) for each six-month or shorter period ending February 1 or
August 1 prior to the date of determination and (b) for the shorter period, if
any, from the end of the immediately preceding six-month or shorter period, as
the case may be, to the date of determination, plus (iii) accrued and unpaid
interest to the date such Accreted Value is paid (without duplication of any
amount set forth in (ii) above), minus all amounts theretofore paid in respect
of such Security, which amounts are considered as part of the "stated
redemption price at maturity" of such Security within the meaning of Section
1273(a)(2) of the Code or any successor provisions (whether such amounts paid
were denominated principal or interest).
The Securities do not have the benefit of any sinking fund
obligations.
In the event of redemption, or purchase pursuant to an Offer to
Purchase, of this Security in part only, a new Security or Securities for the
unredeemed or unpurchased portion hereof will be issued in the name of the
Holder hereof upon the cancellation hereof.
The Indenture contains provisions for defeasance at any time of the
entire indebtedness of this Security or certain restrictive covenants and
Events of Default with respect to this Security, in each case upon compliance
with certain conditions set forth in the Indenture.
If an Event of Default shall occur and be continuing, there may be
declared due and payable the Default Amount of the Securities, in the manner
and with the effect provided in the Indenture. Prior to August 1, 2004, the
Default Amount in respect of this Security as of any
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particular date shall equal the Accreted Value of this Security as of such
date. On and after August 1, 2004, the Default Amount in respect of this
Security as of any particular date shall equal 100% of the principal amount
payable in respect of this Security at the Stated Maturity hereof. Upon payment
of (i) the Default Amount so declared due and payable and any overdue
installment of interest in respect of this Security, (ii) any overdue principal
or premium payable on redemption or repurchase of this Security and (iii) as
provided on the face hereof, any interest on any overdue Default Amount,
principal, premium or interest in respect of this Security (to the extent that
the payment of such interest shall be legally enforceable), all of the
Company's obligations in respect of the payment of the principal of and any
premium and interest on this Security shall terminate.
The Indenture provides that, subject to certain conditions, if a
Change of Control occurs, the Company shall be required to make an Offer to
Purchase for all of the Securities.
Unless the context otherwise requires, references herein to the
principal amount of any Security mean, as of any day, (i) with respect to any
portion thereof required hereunder to be redeemed or repurchased on any
redemption or repurchase date on or prior to such day, the amount due and
payable in respect of such portion upon such redemption or repurchase date
(excluding premium and interest), (ii) with respect to any portion thereof not
required to be so redeemed or repurchased, but which has been declared due and
payable prior to the Stated Maturity thereof as provided in the Indenture, the
Default Amount in respect of such portion as of such day and (iii) with respect
to any portion thereof not required so to be redeemed or repurchased and not so
declared due and payable, such portion of the principal amount of such Security
payable at Stated Maturity thereof.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities under the Indenture at
any time by the Company and the Trustee after having received the Required
Consent (defined as follows). The Indenture also contains provisions permitting
those Persons giving the Required Consent, on behalf of the Holders of all the
Securities, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Security shall be conclusive
and binding upon such Holder and upon all future Holders of this Security and
of any Security issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Security.
As used herein, "Required Consent" means, except as otherwise
expressly provided in the Indenture with respect to matters requiring the
consent of each holder of Securities affected thereby, the consent of holders
of not less than a majority in aggregate principal amount at Stated Maturity of
the Securities.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee
or for any other remedy thereunder, unless such Holder shall have previously
given the Trustee written notice of a continuing Event of Default with
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<PAGE>
respect to the Securities, the Holders of not less than 25% in principal amount
at Stated Maturity of the Securities at the time Outstanding shall have made
written request to the Trustee to institute proceedings in respect of such
Event of Default as Trustee and offered the Trustee indemnity satisfactory to
the Trustee and the Trustee shall not have received from the Holders of a
majority in principal amount at Stated Maturity of Securities at the time
Outstanding a direction inconsistent with such request, and shall have failed
to institute any such proceeding, within 60 days after receipt of such notice,
request and offer of indemnity. The foregoing shall not apply to certain suits
described in the Indenture, including any suit instituted by the Holder of this
Security for the enforcement of any payment of principal hereof or any premium
or interest hereon on or after the respective due dates expressed herein (or,
in the case of redemption, on or after the Redemption Date or, in the case of
any purchase of this Security required to be made pursuant to an Offer to
Purchase, on or after the Purchase Date.)
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of (and premium, if any)
and interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in the Borough of Manhattan, The City of New
York, duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to the Company and the Security Registrar duly executed by,
the Holder hereof or his attorney duly authorized in writing, and thereupon one
or more new Securities, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
The Securities are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, the Securities
are exchangeable for a like aggregate principal amount of Securities of like
tenor of a different authorized denomination, as requested by the Holder
surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
Interest on this Security shall be computed on the basis of a 360-day
year of twelve 30-day months.
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<PAGE>
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
The Indenture and this Security shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of laws.
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[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
________________________________________________________________________________
Please print or typewrite name and address including zip code of assignee
________________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing________________________________ attorney to transfer said Security on
the books of the Company with full power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL SECURITIES OTHER THAN EXCHANGE SECURITIES
AND UNLEGENDED OFFSHORE PHYSICAL AND GLOBAL SECURITIES]
In connection with any transfer of this Security occurring prior to
the date which is the earlier of (i) the date the Shelf Registration Statement
with respect to resales of the Securities is declared effective or (ii) the end
of the period referred to in Rule 144(k) under the Securities Act, the
undersigned confirms that without utilizing any general solicitation or general
advertising that:
[Check One]
[ ] (a) this Security is being transferred in compliance with the exemption
from registration under the Securities Act of 1933, as amended,
provided by Rule 144A thereunder.
[ ] (b) this Security is being transferred other than in accordance with (a)
above and documents are being furnished which comply with the
conditions of transfer set forth in this Security and the Indenture.
If none of the foregoing boxes is checked, the Trustee shall not be obligated
to register this Security in the name of any Person other than the Holder
hereof unless and until the conditions to any such transfer of registration set
forth herein and in Section 3.07 of the Indenture shall have been satisfied.
Date:________________________ __________________________________________
NOTICE: The signature to this assignment
must correspond with the name as written
upon the face of the within-mentioned
instrument in every particular, without
alteration or any change whatsoever.
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TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
of 1933, as amended, and is aware that the sale to it is being made in reliance
on Rule 144A and acknowledges that it has received such information regarding
the Company as the undersigned has requested pursuant to Rule 144A or has
determined not to request such information and that it is aware that the
transferor is relying upon the undersigned's foregoing representations in order
to claim the exemption from registration provided by Rule 144A.
Date:________________________ __________________________________________
NOTICE: To be executed by an executive
officer.
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OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased in its entirety
by the Company pursuant to Section 10.13 or 10.22 of the Indenture, check the
appropriate box:
[ ] 10.13 [ ] 10.22
If you want to elect to have only a part of the principal amount at
Stated Maturity of this Security purchased by the Company pursuant to Section
10.13 or 10.22 of the Indenture, state the portion of such amount:
$______________
Dated: Your Signature:_____________________________
(Sign exactly as name appears
on the other side of this
Security)
Signature Guarantee:___________________________________________
(Signature must be guaranteed by a financial institution that is a member of
the Securities Transfer Agent Medallion Program ("STAMP"), the Stock Exchange
Medallion Program ("SEMP"), the New York Stock Exchange, Inc. Medallion
Signature Program ("MSP") or such other signature guarantee program as may be
determined by the Security Registrar in addition to, or in substitution for,
STAMP, SEMP or MSP, all in accordance with the Securities Exchange Act of 1934,
as amended.)
Section 2.04. Form of Trustee's Certificate of Authentication.
Dated:
This is one of the Securities referred to in the
within-mentioned Indenture.
The Bank of New York,
as Trustee
By _________________________
Authorized Signatory
Section 2.05. Restrictive Legends.
Unless and until a Security is exchanged for an Exchange Security or
sold in connection with an effective Shelf Registration Statement pursuant to
the Registration Rights Agreement, (i) each U.S. Global Security and each U.S.
Physical Security shall bear the legend set forth below on the reverse thereof
and (ii) each Offshore Physical Security and each Offshore Global Security
shall bear the legend set forth below on the reverse thereof, until at least
the 41st
42
<PAGE>
day after the Closing Date and receipt by the Company and the Trustee of a
certificate substantially in the form of Exhibit A hereto:
"THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET
FORTH IN THE NEXT SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL
INTEREST HEREIN, THE HOLDER:
(1) REPRESENTS THAT, IF IT PURCHASED THIS NOTE DIRECTLY FROM AN
INITIAL PURCHASER IN AN EXEMPT RESALE, IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) (A "QIB"),
(2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS NOTE
EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (C) IN A OFFSHORE
TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF THE
SECURITIES ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144 UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A) (1), (2), (3) OR
(7) OF REGULATION D UNDER THE SECURITIES ACT THAT, PRIOR TO SUCH
TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS
NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF
SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT AT
MATURITY OF NOTES LESS THAN $250,000, AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH
THE SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED
UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (G)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE,
IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN
INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND.
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<PAGE>
Each Global Security, whether or not an Exchange Security, shall also
bear the following legend on the reverse thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, TO THE COMPANY OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN
THE NAME OF CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY OR SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER.
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO. HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO., OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET
FORTH IN SECTION 3.07 OF THE INDENTURE.
Each Security, whether or not an Exchange Security shall also bear the
following legend onthe reverse thereof:
"FOR THE PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED, THIS SECURITY IS BEING ISSUED WITH ORIGINAL
ISSUE DISCOUNT; FOR EACH $1,000 PRINCIPAL AMOUNT OF THIS SECURITY, THE ISSUE
PRICE IS $507.97, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT IS $492.03, THE ISSUE
DATE IS JANUARY 29, 1999 AND THE YIELD TO MATURITY IS 14% PER ANNUM."
ARTICLE 3.
The Securities
Section 3.01. Title and Terms.
The aggregate principal amount at Stated Maturity of Securities which
may be authenticated and delivered under this Indenture is limited to
$1,000,000,000 of which $800,000,000 will be issued on the date hereof, except
for Securities authenticated and delivered upon registration of transfer of, or
in exchange for, or in lieu of, other Securities pursuant to Section 3.04,
3.05, 3.08, 9.06 or 11.08 or in connection with an Offer to Purchase pursuant
to Section 10.13.
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<PAGE>
The Securities shall be known and designated as the "Senior Discount
Notes due 2009" of the Company. Their Stated Maturity shall be February 1, 2009
and they shall bear cash interest at the rate of 14% per annum, from August 1,
2004 or from the most recent Interest Payment Date to which interest has been
paid or duly provided for, as the case may be, payable semi-annually on
February 1 and August 1, commencing August 1, 2004 until the principal thereof
is paid or made available for payment.
The principal of (and premium, if any) and interest on the Securities
shall be payable at the office or agency of the Company in the Borough of
Manhattan, The City of New York maintained for such purpose and at any other
office or agency maintained by the Company for such purpose; provided, however,
that at the option of the Company, payment of interest may be made by check
mailed to the address of the Person entitled thereto as such address shall
appear in the Security Register.
The Company may be required to make an Offer to Purchase the
Securities as provided in Section 10.13.
The Securities shall be redeemable as provided in Article 2 and
Article 11.
The Securities shall be subject to Defeasance and/or Covenant
Defeasance as provided in Article 12.
Section 3.02. Denominations.
The Securities shall be issuable only in registered form without
coupons and only in denominations of $1,000 principal amount and any integral
multiple thereof.
Section 3.03. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its President or one of its Vice Presidents. The
signature of any of these officers on the Securities may be manual or
facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities executed by the Company to
the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities; and the Trustee in accordance
with such Company Order shall authenticate and deliver such Securities as in
this Indenture provided and not otherwise.
Each Security shall be dated the date of its authentication.
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<PAGE>
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such
Security has been duly authenticated and delivered hereunder.
Section 3.04. Temporary Securities.
Pending the preparation of definitive Securities, the Company may
execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as evidenced by their
execution of such Securities.
If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at any office
or agency of the Company designated pursuant to Section 10.02, without charge
to the Holder. Upon surrender for cancellation of any one or more temporary
Securities the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor a like principal amount of definitive Securities
of authorized denominations and of a like tenor. Until so exchanged the
temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities.
Section 3.05. Registration, Registration of Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office and in any other
office or agency designated pursuant to Section 10.02 being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities. The Trustee is
hereby appointed "Security Registrar" for the purpose of registering Securities
and transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security at an
office or agency of the Company designated pursuant to Section 10.02 for such
purpose, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Securities of any authorized denominations and of a like aggregate
principal amount and tenor. No such transfer shall be effected until, and such
transferee shall succeed to the rights of a Holder only upon, final acceptance
and registration of the transfer by the Security Registrar in the Security
Register. Prior to the registration of any transfer by a Holder as provided
herein, the Company, the Trustee and any agent of the Company shall treat the
person in whose name the Security is registered as the owner thereof for all
purposes whether or not the Security shall be overdue, and neither the Company,
the Trustee, nor any such agent shall be affected by notice to the contrary.
Furthermore, any Holder of a Global Security shall, by
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<PAGE>
acceptance of such Global Security, agree that transfers of beneficial
interests in such Global Security may be effected only through a book entry
system maintained by the Holder of such Global Security (or its agent) and that
ownership of a beneficial interest in the Security shall be required to be
reflected in a book entry.
At the option of the Holder, Securities may be exchanged for other
Securities (including an exchange of securities for Exchange Securities) of any
authorized denominations and of a like aggregate principal amount and tenor,
upon surrender of the Securities to be exchanged at such office or agency
provided, that no exchange of Securities for Exchange Securities shall occur
until a Registration Statement shall have been declared effective by the
Commission and that Securities that are exchanged for Exchange Securities
pursuant to such Registration Statement shall be canceled by the Trustee.
Whenever any Securities are so surrendered for exchange, the Company shall
execute, and the Trustee shall authenticate and deliver, the Securities which
the Holder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 3.04, 9.06 or 11.08 or in accordance with any
Offer to Purchase pursuant to Section 10.13, and in any such case not involving
any transfer.
The Company shall not be required (i) to issue, register the transfer
of or exchange any Security during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of
Securities selected for redemption under Section 11.04 and ending at the close
of business on the day of such mailing, or (ii) to register the transfer of or
exchange any Security so selected for redemption in whole or in part, except
the unredeemed portion of any Security being redeemed in part.
Section 3.06. Book-Entry Provisions for Global Security.
(a) The Global Security initially shall (i) be registered in the name
of the Depository for such Global Security or the nominee of such Depository;
(ii) be delivered to the Trustee as custodian for such Depository; and (iii)
bear legends as set forth in Section 2.05.
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Members of, or participants in, the Depository ("Agent Members") shall
have no rights under this Indenture with respect to any Global Security held on
their behalf by the Depository, or the Trustee as its custodian, or under the
Global Security and the Depository may be treated by the Company, the Trustee
and any agent of the Company or the Trustee as the absolute owner of such
Global Security for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Trustee or any agent of the
Company or the Trustee, from giving effect to any written certification, proxy
or other authorization furnished by the Depository or impair, as between the
Depository and its Agent Members, the operation of customary practices
governing the exercise of the rights of a holder of any Security.
(b) Transfers of a Global Security shall be limited to transfers of
such Global Security in whole, but not in part, to the Depository, its
successors or their respective nominees. Interests of beneficial owners in a
Global Security may be transferred in accordance with the rules and procedures
of the Depository and the provisions of Section 3.07. In addition, U.S.
Physical Securities and Offshore Physical Securities shall be transferred to
all beneficial owners in exchange for their beneficial interests in the U.S.
Global Securities or Offshore Global Securities, respectively, if (i) the
Depository notifies the Company that it is unwilling or unable to continue as
Depository for the U.S. Global Securities or Offshore Global Securities, as the
case may be, and a successor depository is not appointed by the Company within
90 days of such notice, (ii) an Event of Default has occurred and is continuing
and the Security Registrar has received a request therefor from the Depository
or (iii) in accordance with the rules and procedures of the Depository and the
provisions of Section 3.07.
(c) In connection with any transfer of a portion of the beneficial
interests in the Global Security to beneficial owners pursuant to paragraph (b)
of this Section, the Security Registrar shall reflect on the Security Register
the date and a decrease in the principal amount of the Global Security in an
amount equal to the principal amount of the beneficial interest in the Global
Security to be transferred, and the Company shall execute, and the Trustee
shall authenticate and deliver, one or more Physical Securities of like tenor
and amount.
(d) In connection with the transfer of an entire U.S. Global Security
or Offshore Global Security to beneficial owners pursuant to paragraph (b) of
this Section, such U.S. Global Security or Offshore Global Security shall be
deemed to be surrendered to the Trustee for cancellation, and the Company shall
execute, and the Trustee shall authenticate and deliver, to each beneficial
owner identified by the Depository in exchange for its beneficial interest in
such U.S. Global Security or Offshore Global Security, as the case may be, an
equal aggregate principal amount of U.S. Physical Securities or Offshore
Physical Securities of authorized denominations.
(e) Any Physical Security delivered in exchange for an interest in the
Global Security pursuant to paragraph (b), (c) or (d) of this Section shall,
except as otherwise provided by paragraph (d) of Section 3.07 bear the legend
regarding transfer restrictions applicable to the Physical Securities set forth
in Section 2.05.
(f) The registered holder of a Global Security may grant proxies and
otherwise authorize any person, including Agent Members and persons that may
hold interests through
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Agent Members, to take any action which a Holder is entitled to take under this
Indenture or the Securities.
Section 3.07. Special Transfer Provisions.
Unless and until a Security is exchanged for an Exchange Security or
sold in connection with an effective Shelf Registration Statement pursuant to
the Registration Rights Agreement, the following provisions shall apply:
(a) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of a Physical Security or
an interest in the Global Security prior to the removal of the Private
Placement Legend to a QIB (excluding Non-U.S. Persons):
(i) If the Security to be transferred consists of (x) (A) U.S.
Physical Securities or (B) an interest in an Offshore Global Security
prior to the removal of the Private Placement Legend, the Security
Registrar shall register the transfer if such transfer is being made by a
proposed transferor who has checked the box provided for on the form of
security stating, or has otherwise advised the Company and the Security
Registrar in writing, that the sale has been made in compliance with the
provisions of Rule 144A, to a transferee who has signed the certification
provided for on the form of Security stating, or has otherwise advised the
Company and the Security Registrar in writing, that it is purchasing the
Security for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
QIB within the meaning of Rule 144A, and is aware that the sale to it is
being made in reliance on Rule 144A and acknowledges that it has received
such information regarding the Company as it has requested pursuant to
Rule 144A or has determined not to request such information and that it is
aware that the transferor is relying upon its foregoing representations in
order to claim the exemption from registration provided by Rule 144A or
(y) an interest in a U.S. Global Security, the transfer of such interest
may be effected only through the book entry system maintained by the
Depository.
(ii) If the proposed transferee is an Agent Member, and the Security
to be transferred consists of U.S. Physical Securities, upon receipt by
the Security Registrar of the documents referred to in clause (i) and
instructions given in accordance with the Depository's and the Security
Registrar's procedures, the Security Registrar shall reflect in the
Security Register the date and an increase in the principal amount at
maturity of the U.S. Global Security in an amount equal to the principal
amount at maturity of the U.S. Physical Securities to be transferred, and
the Trustee shall cancel the U.S. Physical Securities so transferred.
(b) Transfers to Non-QIB Institutional Accredited Investors. The
following provisions shall apply with respect to the registration of any
proposed transfer of a Security to any Institutional Accredited Investor which
is not a QIB (excluding Non-U.S. Persons):
(i) The Security Registrar shall register the transfer of any
Security, whether or not such Security bears the Private Placement Legend,
if (x) the requested transfer is
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after the time period referred to in Rule 144(k) under the Securities Act
as in effect with respect to such transfer or (y) the proposed transferee
has delivered to the Security Registrar (A) a certificate substantially in
the form of Exhibit B hereto and (B) if the aggregate principal amount of
the Notes being transferred is less than $250,000 at the time of such
transfer, an Opinion of Counsel acceptable to the Company that such
transfer is in compliance with the Securities Act.
(ii) If the proposed transferor is an Agent Member holding a
beneficial interest in the U.S. Global Security, upon receipt by the
Security Registrar of (x) the documents, if any, required by the preceding
paragraph (i), and (y) instructions given in accordance with the
Depositary's and the Security Registrar's procedures, the Security
Registrar shall reflect on its books and records the date and a decrease
in the principal amount of the U.S. Global Security in an amount equal to
the principal amount of the beneficial interest in the U.S. Global
Security to be transferred, and the Company shall execute, and the Trustee
shall authenticate and deliver, one or more U.S. Physical Securities of
like tenor and amount.
(c) Transfers of Interests in the Offshore Global Securities or
Offshore Physical Securities. The following provisions shall apply with
respect to any transfer of interests in the Offshore Global Securities or
Offshore Physical Securities:
(i) prior to removal of the Private Placement Legend from an Offshore
Global Security or Offshore Physical Security pursuant to Section 2.05,
the Security Registrar shall refuse to register such transfer unless such
transfer complies with Section 3.07(a) or Section 3.07(d), as the case may
be; and
(ii) after such removal, the Security Registrar shall register the
transfer of any such Security without requiring any additional
certification.
(d) Transfers to Non-U.S. Persons at Any Time. The following
provisions shall apply with respect to any transfer of a Security to a
Non-U.S. Person:
(i) The Security Registrar shall register any proposed transfer to any
Non-U.S. Person if the Security to be transferred is a U.S. Physical
Security or an interest in a U.S. Global Security only upon receipt of a
certificate substantially in the form of Exhibit C hereto from the
proposed transferor.
(ii) (A) If the proposed Transferor is an Agent Member holding a
beneficial interest in a U.S. Global Security, upon receipt by the
Security Registrar of (x) the documents required by paragraph (i) and (y)
instructions in accordance with the Depositary's and the Security
Registrar's procedures, the Security Registrar shall
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reflect on its books and records the date and a decrease in the principal
amount of such U.S. Global Security in an amount equal to the principal
amount of the beneficial interest in the U.S. Global Security to be
transferred, and (B) if the proposed transferee is an Agent Member, upon
receipt by the Security Registrar of instructions given in accordance with
the Depositary's and the Security Registrar's procedures, the Security
Registrar shall reflect on its books and records the date and an increase
in the principal amount of the Offshore Global Security in an amount equal
to the principal amount of the U.S. Physical Securities or the U.S. Global
Security, as the case may be, to be transferred, and the Trustee shall
cancel the Physical Security, if any, so transferred or decrease the
amount of the U.S. Global Security.
(e) Private Placement Legend. Upon the transfer, exchange or
replacement of Securities not bearing the Private Placement Legend, the
Security Registrar shall deliver Securities that do not bear the Private
Placement Legend. Upon the transfer, exchange or replacement of securities
bearing the Private Placement Legend, the Security Registrar shall deliver only
Securities that bear the Private Placement Legend unless either (i) the
circumstances contemplated by Section 2.05 exist or (ii) there is delivered to
the Trustee an Opinion of Counsel reasonably satisfactory to the Company and
the Trustee to the effect that neither such legend nor the related restrictions
on transfer are required in order to maintain compliance with the provisions of
the Securities Act.
(f) General. By its acceptance of any Security bearing the Private
Placement Legend, each Holder of such a Security acknowledges the restrictions
on transfer of such Security set forth in this Indenture and in the Private
Placement Legend and agrees that it will transfer such Security only as
provided in this Indenture. The Security Registrar shall not register a
transfer of any Security unless such transfer complies with the restrictions on
transfer of such Security set forth in the Private Placement Legend and in this
Indenture. In connection with any transfer of Securities, each Holder agrees by
its acceptance of the Securities to furnish the Trustee or the Company such
certifications, legal opinions or other information as either of them may
reasonably require to confirm that such transfer is being made pursuant to an
exemption from, or a transaction not subject to, the registration requirements
of the Securities Act; provided that the Trustee shall not be required to
determine (but may rely on a determination made by the Company with respect to)
the sufficiency of any such certifications, legal opinions or other
information.
The Trustee shall retain copies of all letters, notices and other
written communications received pursuant to Section 3.06 or this Section 3.07.
The Company shall have the right to inspect and make copies of all such
letters, notices or other written communications at any reasonable time upon
the giving of reasonable written notice to the Trustee.
Section 3.08. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Security and (ii) such security or indemnity as may be required by them to save
each of them and any agent of either of them harmless, then, in the absence of
notice to the Company or the Trustee that such Security has been acquired by a
bona fide purchaser, the Company shall execute and upon its request the Trustee
shall
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authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security, a new Security of like tenor and principal amount and Bearing a
number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.
Section 3.09. Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name that Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date by virtue of having been such Holder, and such
Defaulted Interest may be paid by the Company, at its election in each case, as
provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Securities (or their respective Predecessor
Securities) are registered at the close of business on a Special Record
Date for the payment of such Defaulted Interest, which shall be fixed in
the following manner. The Company shall notify the Trustee in writing of
the amount of Defaulted Interest proposed to be paid on each Security and
the date of the proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the
date of the proposed payment, such money when deposited to be held in
trust for the benefit of the Persons entitled to such Defaulted Interest
as in this Clause provided. Thereupon the Trustee shall fix a
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Special Record Date for the payment of such Defaulted Interest which shall
be not more than 15 days and not less than 10 days prior to the date of
the proposed payment and not less than 10 days after the receipt by the
Trustee of the notice of the proposed payment. The Trustee shall promptly
notify the Company of such Special Record Date and, in the name and at the
expense of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be given to
each Holder in the manner specified in Section 1.06, not less than 10 days
prior to such Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor having been so
mailed, such Defaulted Interest shall be paid to the Persons in whose
names the Securities (or their respective Predecessor Securities) are
registered at the close of business on such Special Record Date and shall
no longer be payable pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this Clause,
such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
Section 3.10. Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Security is registered as the owner of such
Security for the purpose of receiving payment of principal of (and premium, if
any) and (subject to Section 3.09) interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
Section 3.11. Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange or for credit against any Offer to Purchase pursuant to
Section 10.13 shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee and shall be promptly canceled by it. The Company may
at any time deliver to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder which the Company may have acquired in
any manner whatsoever, and all Securities so delivered shall be promptly
canceled by the Trustee. No Securities shall be authenticated in lieu of or in
exchange for any Securities canceled as provided in this Section, except as
expressly permitted by this Indenture. All canceled Securities held by the
Trustee shall be disposed of as directed by a Company Order; provided, however,
that the Trustee shall not be required to destroy canceled Securities.
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Section 3.12. Computation of Interest.
Interest on the Securities shall be computed on the basis of a 360-day
year of twelve 30-day months.
Section 3.13. CUSIP, CINS and ISIN Numbers.
The Company in issuing the Securities may use "CUSIP," "CINS" and
"ISIN" numbers (if then generally in use), and, if so, the Trustee shall use
the "CUSIP," "CINS" and "ISIN" numbers in notices of redemption or repurchase
as a convenience to Holders; provided that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of a redemption or repurchase
and that reliance may be placed only on the other identification numbers
printed on the Securities, and any such redemption or repurchase shall not be
affected by any defect in or omission of such numbers.
ARTICLE 4.
Satisfaction and Discharge
Section 4.01. Satisfaction and Discharge of Indenture.
This Indenture shall cease to be of further effect (except as to any
surviving rights of registration of transfer or exchange of Securities herein
expressly provided for), and the Trustee, on demand of and at the expense of
the Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered (other
than (i) Securities which have been destroyed, lost or stolen and
which have been replaced or paid as provided in Section 3.08 and (ii)
Securities for whose payment money has theretofore been deposited in
trust or segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust, as provided in
Section 10.03) have been delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the Trustee
for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice
of
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redemption by the Trustee in the name, and at the expense, of the
Company,
and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust funds in
trust for the purpose an amount sufficient to pay and discharge the
entire indebtedness on such Securities not theretofore delivered to
the Trustee for cancellation, for principal (and premium, if any) and
interest to the date of such deposit (in the case of Securities which
have become due and payable) or to the Stated Maturity or Redemption
Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture pursuant to
this Article 4, the obligations of the Company to the Trustee under Section
6.07, the obligations of the Trustee to any Authenticating Agent under Section
6.14 and, if money shall have been deposited with the Trustee pursuant to
subclause (B) of Clause (1) of this Section, the obligations of the Trustee
under Section 4.02 and the last paragraph of Section 10.03 shall survive.
Section 4.02. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 10.03, all
money deposited with the Trustee pursuant to Section 4.01 shall be held in
trust and applied by it, in accordance with the provisions of the Securities
and this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with the
Trustee.
ARTICLE 5.
Remedies
Section 5.01. Events of Default.
"Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(1) failure to pay principal of (or premium, if any, on) any Security
at its Maturity; or
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(2) failure to pay any interest upon any Security when due, continued
for 30 days; or
(3) default, on the applicable Purchase Date, in the purchase of
Securities required to be purchased by the Company pursuant to an Offer to
Purchase as to which an Offer has been mailed to Holders or failure to
make an Offer to Purchase as required hereunder; or
(4) default in the performance, or breach, of Section 8.01; or
(5) default in the performance, or breach, of any covenant or warranty
of the Company in this Indenture (other than a covenant or warranty a
default whose performance or whose breach is elsewhere in this Section
specifically dealt with) or in the Securities, and continuance of such
default or breach for a period of 60 days after there has been given to
the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in aggregate principal amount at Stated Maturity
of the Outstanding Securities a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is a
"Notice of Default" hereunder; or
(6) a default or defaults under any bond(s), debenture(s), note(s) or
other evidence(s) of Debt for money borrowed by the Company or any
Restricted Subsidiary (or under any mortgage(s), indenture(s) or
instrument(s) under which there may be issued or by which there may be
secured or evidenced any Debt for money borrowed by the Company or any
Restricted Subsidiary) having, individually or in the aggregate, a
principal or similar amount outstanding of at least $25,000,000, whether
such Debt now exists or shall hereafter be created, which default or
defaults shall constitute a failure to pay any portion of the principal or
similar amount of such Debt when due and payable after the expiration of
any applicable grace period with respect thereto or shall have resulted in
such Debt becoming or being declared due and payable; or
(7) a final judgment or final judgments for the payment of money are
entered against the Company or any Restricted Subsidiary in an aggregate
amount in excess of $25,000,000 by a court or courts of competent
jurisdiction, which judgments remain undischarged or unbonded for a period
(during which execution shall not be effectively stayed) of 60 days after
the right to appeal all such judgments has expired; or
(8) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company or any Restricted
Subsidiary in an involuntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency, reorganization or other similar
law or (B) a decree or order adjudging the Company or any Restricted
Subsidiary a bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment or composition of
or in respect of the Company or any Restricted Subsidiary under any
applicable Federal or State law, or appointing a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar official of
the Company or any Restricted Subsidiary or of any substantial part of the
property of the Company or any Restricted Subsidiary, or ordering the
winding up or
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liquidation of the affairs of the Company or any Restricted Subsidiary,
and the continuance of any such decree or order for relief or any such
other decree or order unstayed and in effect for a period of 60
consecutive days; or
(9) the commencement by the Company or any Restricted Subsidiary of a
voluntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or of any
other case or proceeding to be adjudicated a bankrupt or insolvent, or the
consent by the Company or any Restricted Subsidiary to the entry of a
decree or order for relief in respect of the Company or any Restricted
Subsidiary in an involuntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency, reorganization or other similar
law or to the commencement of any bankruptcy or insolvency case or
proceeding against the Company or any Restricted Subsidiary, or the filing
by the Company or any Restricted Subsidiary of a petition or answer or
consent seeking reorganization or relief under any applicable Federal or
State law, or the consent by the Company or any Restricted Subsidiary to
the filing of such petition or to the appointment of or taking possession
by a custodian, receiver, liquidator, assignee, trustee, sequestrator or
similar official of the Company or any Restricted Subsidiary or of any
substantial part of the property of the Company or any Restricted
Subsidiary, or the making by the Company or any Restricted Subsidiary of
an assignment for the benefit of creditors, or the admission by the
Company or any Restricted Subsidiary in writing of its inability to pay
its debts generally as they become due, or the taking of corporate action
by the Company or any Restricted Subsidiary in furtherance of any such
action.
Section 5.02. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in
Section 5.01(8) or (9)) occurs and is continuing, then and in every such case
the Trustee or the Holders of not less than 25% in aggregate principal amount
at Stated Maturity of the Outstanding Securities may declare the Default Amount
of all the Securities to be due and payable immediately, by a notice in writing
to the Company (and to the Trustee if given by Holders), and upon any such
declaration such Default Amount and any accrued interest shall become
immediately due and payable. If an Event of Default specified in Section
5.01(8) or (9) occurs, the Default Amount of and any accrued interest on the
Securities then Outstanding shall ipso facto become immediately due and payable
without any declaration or other Act on the part of the Trustee or any Holder.
Prior to February 1, 2004, the "Default Amount" in respect of any
particular Security as of any particular date shall equal the Accreted Value of
the Security as of such date. On and after February 1, 2004, the Default Amount
in respect of any particular Security as of any particular date shall equal
100% of the principal amount payable in respect of the Security at the Stated
Maturity thereof.
At any time after such a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter in this Article provided, the Holders of a majority
in principal amount at Stated Maturity of the
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Outstanding Securities, by written notice to the Company and the Trustee, may
rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest on all Securities (without duplication of
any amount thereof paid or deposited pursuant to Clause (B) or (C)
below),
(B) the principal of (and premium, if any, on) any Securities which
have become due otherwise than by such declaration of acceleration
(including any Securities required to have been purchased on the
Purchase Date pursuant to an Offer to Purchase made by the Company)
and, to the extent that payment of such interest is lawful, interest
thereon at the rate provided by the Securities (without duplication of
any amount thereof paid or deposited pursuant to Clause (A) above or
Clause (C) below),
(C) to the extent that payment of such interest is lawful, interest
upon overdue interest at the rate provided by the Securities (without
duplication of any amount thereof paid or deposited pursuant to Clause
(A) or (B) above), and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel;
and
(2) all Events of Default, other than the non-payment of the principal
of Securities which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 5.13.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Unless the context otherwise requires, references in this Indenture to
the principal amount of any Security mean, as of any day, (i) with respect to
any portion thereof required thereunder to be redeemed or repurchased on any
redemption or repurchase date on or prior to such day, the amount due and
payable in respect of such portion upon such redemption or repurchase date
(excluding premium and interest), (ii) with respect to any portion thereof not
required to be so redeemed or repurchased, but which has been declared due and
payable prior to the Stated Maturity thereof, the Default Amount in respect of
such portion as of such day and (iii) with respect to any portion thereof not
required so to be redeemed or repurchased and not so declared due and payable,
such portion of the principal amount of such Security payable at Stated
Maturity thereof.
Section 5.03. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that if
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(1) default is made in the payment of any interest on any Security
when such interest becomes due and payable and such default continues for
a period of 30 days, or
(2) default is made in the payment of the principal of (or premium, if
any, on) any Security at the Maturity thereof or, with respect to any
Security required to have been purchased pursuant to an Offer to Purchase
made by the Company, at the Purchase Date thereof,
the Company will, upon demand of the Trustee, pay to the Trustee, for the
benefit of the Holders of such Securities, the whole amount then due and
payable on such Securities for principal (and premium, if any) and interest,
and, to the extent that payment of such interest shall be legally enforceable,
interest on any overdue principal (and premium, if any) and on any overdue
interest, at the rate provided by the Securities, and, in addition thereto,
such further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
Section 5.04. Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Company (or any
other obligor upon the Securities), its property or its creditors, the Trustee
shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture Act
in order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 6.07.
No provision of this Indenture shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting
the Securities or the rights of any Holder thereof or to authorize the Trustee
to vote in respect of the claim of any Holder in any such proceeding; provided,
however, that the Trustee may, on behalf of the Holders, vote for the election
of a trustee in bankruptcy or similar official and be a member of a creditors'
or other similar committee.
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Section 5.05. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto,
and any such proceeding instituted by the Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
Section 5.06. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal (or premium,
if any) or interest, upon presentation of the Securities and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
6.07; and
SECOND: To the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Securities in
respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind, according
to the amounts due and payable on such Securities for principal (and
premium, if any) and interest, respectively.
Section 5.07. Limitation on Suits.
No Holder of any Security shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to a Responsible
Officer of the Trustee of a continuing Event of Default;
(2) the Holders of not less than 25% in principal amount at Stated
Maturity of the Outstanding Securities shall have made written request to
a Responsible Officer of the Trustee to institute proceedings in respect
of such Event of Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
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(5) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
principal amount at Stated Maturity of the Outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
Section 5.08. Unconditional Right of Holders to Receive Principal, Premium and
Interest.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of (and premium, if any) and (subject to
Section 3.09) interest on such Security on the respective Stated Maturities
expressed in such Security (or, in the case of redemption, on the Redemption
Date or in the case of an Offer to Purchase made by the Company and required to
be accepted as to such Security, on the Purchase Date) and to institute suit
for the enforcement of any such payment, and such rights shall not be impaired
without the consent of such Holder.
Section 5.09. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders
shall be restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the Trustee and the Holders
shall continue as though no such proceeding had been instituted.
Section 5.10. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last
paragraph of Section 3.08, no right or remedy herein conferred upon or reserved
to the Trustee or to the Holders is intended to be exclusive of any other right
or remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or
remedy.
Section 5.11. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Security
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this Article or by law
to the Trustee or to the Holders may be exercised from
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time to time, and as often as may be deemed expedient, by the Trustee or by the
Holders, as the case may be.
Section 5.12. Control by Holders.
By giving the Required Consent, those Persons giving the Required
Consent shall have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee or exercising any trust
or power conferred on the Trustee, provided that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture, and
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
Section 5.13. Waiver of Past Defaults.
By giving the Required Consent, those Persons giving the Required
Consent may, on behalf of the Holders of all the Securities, waive any past
default hereunder and its consequences, except a default
(1) in the payment of the principal of (or premium, if any) or
interest on any Security (including any Security which is required to have
been purchased pursuant to an Offer to Purchase which has been made by the
Company), or
(2) in respect of a covenant or provision hereof which under Article 9
cannot be modified or amended without the consent of the Holder of each
Outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
Section 5.14. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit
to file an undertaking to pay the costs of such suit, and may assess costs
against any such party litigant, in the manner and to the extent provided in
the Trust Indenture Act; provided, that neither this Section nor the Trust
Indenture Act shall be deemed to authorize any court to require such an
undertaking or to make such an assessment in any suit instituted by the
Company.
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Section 5.15. Wavier of Stay of Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any usury, stay or extension law
wherever enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and the Company (to the extent
that it may lawfully do so) hereby expressly waives all benefit or advantage of
any such law and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and
permit the execution of every such power as though no such law had been
enacted.
ARTICLE 6.
The Trustee
Section 6.01. Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as provided by
the Trust Indenture Act. Notwithstanding the foregoing, no provision of this
Indenture shall require the Trustee to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
Whether or not therein expressly so provided, every provision of this Indenture
relating to the conduct or affecting the liability of or affording protection
to the Trustee shall be subject to the provisions of this Section.
Section 6.02. Notice of Defaults.
The Trustee shall give the Holders notice of any Default hereunder as
and to the extent provided by the Trust Indenture Act; provided, however, that
in the case of any Default of the character specified in Section 5.01(5), no
such notice to Holders shall be given until at least 30 days after a
Responsible Officer has actual knowledge of the occurrence thereof.
Section 6.03. Certain Rights of Trustee.
Subject to the provisions of Section 6.01:
(a) the Trustee may conclusively rely and shall be protected in acting
or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper party or parties;
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(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad
faith on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel of its selection and the
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
satisfactory to the Trustee against the costs, expenses and liabilities
which might be incurred by it in compliance with such request or
direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled (subject to reasonable confidentiality
arrangements as may be proposed by the Company) to examine the books,
records and premises of the Company, personally or by agent or attorney;
and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder.
Section 6.04. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Securities. The Trustee shall not be accountable for the
use or application by the Company of Securities or the proceeds thereof.
Section 6.05. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to
Sections 6.08 and 6.13, may otherwise deal with the
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Company with the same rights it would have if it were not Trustee,
Authenticating Agent, Paying Agent, Security Registrar or such other agent.
Section 6.06. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed in writing with the Company.
Section 6.07. Compensation and Reimbursement.
The Company agrees:
(1) to pay to the Trustee from time to time such compensation as the
Company and the Trustee shall from time to time agree in writing for all
services rendered by it hereunder (which compensation shall not be limited
by any provision of law in regard to the compensation of a trustee of an
express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(3) to indemnify the Trustee and any predecessor Trustee for, and to
hold it harmless against, any and all loss, damage, claim, liability or
expense incurred without negligence or bad faith on its part, including
taxes (other than taxes based upon, measured by or determined by the
revenue or income of the Trustee), arising out of or in connection with
the acceptance or administration of this trust, including the costs and
expenses of defending itself against any claim or liability in connection
with the exercise or performance of any of its powers or duties hereunder.
The Trustee shall have a lien prior to the Securities as to all
property and funds held by it hereunder for any amount owing to it pursuant to
this Section 6.07, except with respect to funds held in trust for the benefit
of the Holders of particular Securities.
When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 5.01(8) or Section 5.01(9), the
expenses (including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable Federal or state bankruptcy, insolvency or
other similar law.
The provisions of this Section shall survive any termination of this
Indenture.
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Section 6.08. Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.
Section 6.09. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
Person that is eligible pursuant to the Trust Indenture Act to act as such and
has a combined capital and surplus of at least $50,000,000 and its Corporate
Trust Office in the Borough of Manhattan, The City of New York. If such Person
publishes reports of condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, then for the purposes
of this Section and to the extent permitted by the Trust Indenture Act, the
combined capital and surplus of such Person shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, it shall resign immediately in the manner
and with the effect hereinafter specified in this Article.
Section 6.10. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 6.11.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If an instrument of acceptance by a successor Trustee
in accordance with the applicable requirements of Section 6.11 shall not have
been delivered to the Trustee within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of a
majority in principal amount at Stated Maturity of the Outstanding Securities,
delivered to the Trustee and to the Company. If an instrument of acceptance by
a successor Trustee in accordance with the applicable requirements of Section
6.11 shall not have been delivered to the Trustee within 30 days after the
giving of such notice of removal, the Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 6.08 after written
request therefor by the Company or by any Holder who has been a bona fide
Holder of a Security for at least six months, or
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(2) the Trustee shall cease to be eligible under Section 6.09 and
shall fail to resign after written request therefor by the Company or by
any such Holder, or
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee, or (ii) subject to Section 5.14, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor Trustee. If,
within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of
the Holders of a majority in principal amount at Stated Maturity of the
Outstanding Securities delivered to the Company and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its acceptance of such
appointment in accordance with the applicable requirements of Section 6.11,
become the successor Trustee and supersede the successor Trustee appointed by
the Company. If no successor Trustee shall have been so appointed by the
Company or the Holders and accepted appointment in accordance with the
applicable requirements of Section 6.11, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each removal
of the Trustee and each appointment of a successor Trustee to all Holders in
the manner provided in Section 1.06. Each notice shall include the name of the
successor Trustee and the address of its Corporate Trust Office.
Section 6.11. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers,
trusts and duties of the retiring Trustee; but, on request of the Company or
the successor Trustee, such retiring Trustee shall, upon payment of its
charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee and shall
duly assign, transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder. Upon request of any such
successor Trustee, the Company shall execute any and all instruments for more
fully and certainly vesting in and confirming to such successor Trustee all
such rights, powers and trusts.
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No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article.
Section 6.12. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
Section 6.13. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor).
Section 6.14. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents which shall
be authorized to act on behalf of the Trustee to authenticate Securities issued
upon original issue and upon exchange, registration of transfer or partial
redemption or partial purchase or pursuant to Section 3.08, and Securities so
authenticated shall be entitled to the benefits of this Indenture and shall be
valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. Wherever reference is made in this Indenture to the authentication
and delivery of Securities by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent and a certificate
of authentication executed on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Company and shall at all
times be a corporation organized and doing business under the laws of the
United States of America, any State thereof or the District of Columbia,
authorized under such laws to act as Authenticating Agent, having a combined
capital and surplus of not less than $50,000,000 and subject to supervision or
examination by Federal or State authority. If such Authenticating Agent
publishes reports of condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, then for the purposes
of this Section, the combined capital and surplus of such Authenticating Agent
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time an Authenticating Agent
shall cease to be eligible in accordance with the provisions of this Section,
such Authenticating Agent shall resign immediately in the manner and with the
effect specified in this Section.
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Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to all or substantially all the
corporate agency or corporate trust business of an Authenticating Agent, shall
continue to be an Authenticating Agent, provided such corporation shall be
otherwise eligible under this Section, without the execution or filing of any
paper or any further act on the part of the Trustee or the Authenticating
Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Company. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall give notice of such
appointment in the manner provided in Section 1.06, to all Holders as their
names and addresses appear in the Security Register. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder,
with like effect as if originally named as an Authenticating Agent. No
successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
The Company agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section.
If an appointment is made pursuant to this Section, the Securities may
have endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternative certificate of authentication in the following
form:
This is one of the Securities described in the within-mentioned
Indenture.
Dated:
The Bank of New York,
as Trustee
By ___________________________________,
As Authenticating Agent
By ___________________________________,
Authority Signatory
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ARTICLE 7.
Holders' Lists and Reports by Trustee and Company
Section 7.01. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee
(a) semi-annually, not more than 15 days after each January 15 and
July 15, commencing August 1, 2004 a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Holders as of such
Regular Record Date, and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the
time such list is furnished;
excluding from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.
Section 7.02. Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 7.01 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 7.01 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and the
corresponding rights and duties of the Trustee, shall be as provided by the
Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of either of them shall be held accountable by reason of
any disclosure of information as to the names and addresses of Holders made
pursuant to the Trust Indenture Act.
Section 7.03. Reports by Trustee.
(a) Within 60 days after January 15 of each year commencing January
15, , the Trustee shall transmit to Holders such reports concerning the Trustee
and its actions under this Indenture as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided pursuant thereto.
(b) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Trustee with each stock exchange upon which the
Securities are listed, with the Commission and with the Company. The Company
will promptly notify the Trustee when the Securities are listed on any stock
exchange.
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Section 7.04. Reports by Company.
The Company shall file with the Trustee and the Commission, and
transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at
the times and in the manner provided pursuant to such Act; provided that any
such information, documents or reports required to be filed with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the
Trustee within 15 days after the same is so required to be filed with the
Commission. The Trustee's receipt of such reports, information and documents
shall not constitute constructive notice of any information contained therein
or determinable from information contained therein.
ARTICLE 8.
Consolidation, Merger, Conveyance, Transfer or Lease
Section 8.01. Company May Consolidate, Etc. Only on Certain Terms.
The Company (x) shall not, in any transaction or series of related
transactions, merge or consolidate with or into, or sell, assign, convey,
transfer or otherwise dispose of its properties and assets substantially as an
entirety to, any Person, and (y) shall not permit any of its Restricted
Subsidiaries to enter into any such transaction or series of transactions if
such transaction or series of transactions, in the aggregate, would result in a
sale, assignment, conveyance, transfer or other disposition of the properties
and assets of the Company and its Restricted Subsidiaries, taken as a whole,
substantially as an entirety to any Person, unless, in each case (x) or (y), at
the time and after giving effect thereto
(i) either: (A) if the transaction or series of transactions is a
consolidation of the Company with or a merger of the Company with or into
any other Person, the Company shall be the surviving Person of such merger
or consolidation, or (B) the Person formed by any consolidation with or
merger with or into the Company, or to which the properties and assets of
the Company or the Company and its Restricted Subsidiaries, taken as a
whole, as the case may be, substantially as an entirety are sold,
assigned, conveyed or otherwise transferred (any such surviving Person or
transferee Person referred to in this clause (B) being the "Surviving
Entity"), shall be a corporation, partnership, limited liability company
or trust organized and existing under the laws of the United States of
America, any state thereof or the District of Columbia and shall expressly
assume by a supplemental indenture executed and delivered to the Trustee,
in form satisfactory to the Trustee, all the obligations of the Company
under the Securities and this Indenture and, in each case, this Indenture,
as so supplemented, shall remain in full force and effect, and
(ii) immediately before and immediately after giving effect to such
transaction or series of transactions on a pro forma basis (including any
Debt Incurred or anticipated to be Incurred in connection with or in
respect of such transaction or series of transactions), no Default or
Event of Default shall have occurred and be continuing, and
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(iii) the Company or the Surviving Entity will, at the time of such
transaction and after giving pro forma effect thereto as if such
transaction had occurred at the beginning of the applicable period, (A)
have Consolidated Net Worth immediately after the transaction equal to or
greater than the Consolidated Net Worth of the Company immediately
preceding the transaction and (B) be permitted to Incur at least $1.00 of
additional Debt pursuant to clause (a) of Section 10.08;
provided, however, that the foregoing requirements shall not apply to any
transaction or series of transactions involving the sale, assignment,
conveyance, transfer or other disposition of the properties and assets by any
Restricted Subsidiary to any other Restricted Subsidiary, or the merger or
consolidation of any Restricted Subsidiary with or into any other Restricted
Subsidiary. The Company shall not, directly or indirectly, lease all or
substantially all of its properties or assets, in one or more related
transactions, to any other Person.
In connection with any consolidation, merger, sale, assignment,
conveyance, transfer or other disposition contemplated by the foregoing
provisions, the Company shall deliver, or cause to be delivered, to the
Trustee, in form and substance reasonably satisfactory to the Trustee, an
Officers' Certificate stating that such consolidation, merger, sale,
assignment, conveyance, transfer, or other disposition and the supplemental
indenture in respect thereof (required under clause (i)(B) of the preceding
paragraph) comply with the requirements of this Indenture and an Opinion of
Counsel that the conditions of this Article 8 have been complied with. Each
such Officers' Certificate shall set forth the manner of determination of the
Company's compliance in accordance with clause (iii) of the preceding
paragraph.
For all purposes of this Indenture and the Securities (including the
provisions described in the two immediately preceding paragraphs and Section
10.08 and Section 10.10), Subsidiaries of any Surviving Entity will, upon such
transaction or series of transactions, become Restricted Subsidiaries or
Unrestricted Subsidiaries as provided pursuant to Section 10.10 and all Debt of
the Surviving Entity and its Subsidiaries that was not Debt of the Company and
its Subsidiaries immediately prior to such transaction or series of
transactions shall be deemed to have been Incurred upon such transaction or
series of transactions.
Section 8.02. Successor Substituted.
Upon any transaction or series of transactions that are of the type
described in clause (x) or (y) of, and are effected in accordance with, Section
8.01, the Surviving Entity shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture with the
same effect as if such Surviving Entity had been named as the Company herein,
and thereafter the predecessor Person shall be relieved of all obligations and
covenants under this Indenture and the Securities.
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ARTICLE 9.
Supplemental Indentures
Section 9.01. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company
herein and in the Securities; or
(2) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein conferred upon the
Company; or
(3) to comply with any requirements of the Commission in order to
effect and maintain the qualification of this Indenture under the Trust
Indenture Act; or
(4) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision
herein, or
(5) to make any other provisions with respect to matters or questions
arising under this Indenture which shall not be inconsistent with the
provisions of this Indenture, provided such action pursuant to this Clause
(5) shall not adversely affect the interests of the Holders in any
material respect (as determined in good faith by the Board of Directors).
Section 9.02. Supplemental Indenture with Consent of Holders.
After receipt of the Required Consent, given by Act of those Persons
giving the Required Consent delivered to the Company and the Trustee, the
Company, when authorized by a Board Resolution, and the Trustee may enter into
an indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the Holders under
this Indenture; provided, however, that no such supplemental indenture shall,
without the consent of the Holder of each Outstanding Security affected
thereby,
(1) change the Stated Maturity of the principal of, or any installment
of interest on, any Security, or reduce the principal amount thereof or
the rate of interest thereon or any premium payable thereon, or reduce the
Default Amount that would be due and payable on acceleration of the
Maturity thereof pursuant to Section 5.02, or change the place of payment
where, or the coin or currency in which, any Security or any premium or
interest thereon is payable, or impair the right to institute suit for the
enforcement of any such payment on or after the Stated Maturity thereof
(or, in the case of redemption, on or
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after the Redemption Date or, in the case of any Security required to be
purchased pursuant to an Offer to Purchase, on or after the applicable
Purchase Date), or
(2) reduce the percentage in principal amount at Stated Maturity of
the Outstanding Securities, the consent of whose Holders is required for
any such supplemental indenture, or the consent of whose Holders is
required for any waiver (of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences) provided
for in this Indenture, or
(3) modify any of the provisions of this Section, Section 5.13 or
Section 10.18, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Outstanding Security affected
thereby, or
(4) modify any provisions of this Indenture relating to the
calculation of Accreted Value, or
(5) following the mailing of an Offer with respect to an Offer to
Purchase pursuant to Section 10.13, modify the provisions of this
Indenture with respect to such Offer to Purchase in a manner adverse to
such Holder.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
Section 9.03. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby
of the trusts created by this Indenture, the Trustee shall receive, and
(subject to Section 6.01) shall be fully protected in relying upon, an Opinion
of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
Section 9.04. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every
Holder of Securities theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
Section 9.05. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
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Section 9.06. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities.
ARTICLE 10.
Covenants
Section 10.01. Payment of Principal, Premium and Interest.
The Company will duly and punctually pay the principal of (and
premium, if any) and interest on the Securities in accordance with the terms of
the Securities and this Indenture.
Section 10.02. Maintenance of Office or Agency.
The Company will maintain in the Borough of Manhattan, The City of New
York, an office or agency where Securities may be presented or surrendered for
payment, where Securities may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Company in respect of the
Securities and this Indenture may be served. The Company will give prompt
written notice to the Trustee of the location, and any change in the location,
of such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be
made or served at the Corporate Trust Office of the Trustee, and the Company
hereby appoints the Trustee as its agent to receive all such presentations,
surrenders, notices and demands. In the event any such notice or demands are so
made or served on the Trustee, the Trustee will promptly forward copies thereof
to the Company.
The Company may also from time to time designate one or more other
offices or agencies (in or outside the Borough of Manhattan, The City of New
York) where the Securities may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, The City of New York, for such purposes. The Company will give
prompt written notice to the Trustee of any such designation or rescission and
of any change in the location of any such other office or agency.
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Section 10.03. Money for Security Payments to be Held in Trust.
If the Company shall at any time act as its own Paying Agent, it will,
on or before each due date of the principal of (and premium, if any) or
interest on any of the Securities, segregate and hold in trust for the benefit
of the Persons entitled thereto a sum sufficient to pay the principal (and
premium, if any) or interest so becoming due until such sums shall be paid to
such Persons or otherwise disposed of as herein provided and will promptly
notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents, it will,
prior to each due date of the principal of (and premium, if any) or interest on
any Securities, deposit with a Paying Agent a sum sufficient to pay the
principal (and premium, if any) or interest so becoming due, such sum to be
held as provided by the Trust Indenture Act, and (unless such Paying Agent is
the Trustee) the Company will promptly notify the Trustee of its action or
failure so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will: (i) comply with the provisions of the Trust Indenture
Act applicable to it as Paying Agent and (ii) during the continuance of any
default by the Company (or any other obligor upon the Securities) in the making
of any payment in respect of the Securities, upon the written request of the
Trustee, forthwith pay to the Trustee all sums held in trust by such Paying
Agent as such.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held
in trust by the Company or such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which such sums were held by the
Company or such Paying Agent; and, upon such payment by any Paying Agent to the
Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of (and premium, if
any) or interest on any Security and remaining unclaimed for two years after
such principal (and premium, if any) or interest has become due and payable
shall be paid to the Company on Company Request, or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Security
shall thereafter, as an unsecured general creditor, look only to the Company
for payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease.
Section 10.04. Existence.
Subject to Article 8, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights (charter and statutory) and material franchises; provided, however, that
the Company shall not be required to preserve any such right or franchise if
the Board of Directors in good faith shall determine that the preservation
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thereof is no longer desirable in the conduct of the business of the Company
and that the loss thereof is not disadvantageous in any material respect to the
Holders.
Section 10.05. Maintenance of Properties.
The Company will cause all material properties used or useful in the
conduct of its business or the business of any Restricted Subsidiary to be
maintained and kept in good condition, repair and working order and supplied
with all necessary equipment and will cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in the
judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided, however, that nothing in this Section shall prevent the Company from
discontinuing the operation or maintenance of any of such material properties
if such discontinuance is, as determined by the Board of Directors in good
faith, desirable in the conduct of its business or the business of any
Restricted Subsidiary and not disadvantageous in any material respect to the
Holders.
Section 10.06. Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (1) all taxes, assessments and
governmental charges levied or imposed upon the Company or any of its
Restricted Subsidiaries or upon the income, profits or property of the Company
or any of its Restricted Subsidiaries, and (2) all lawful claims for labor,
materials and supplies which, if unpaid, might by law become a lien upon the
property of the Company or any of its Restricted Subsidiaries; provided,
however, that the Company shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings.
Section 10.07. Maintenance of Insurance.
The Company shall, and shall cause its Restricted Subsidiaries to,
keep at all times all of their properties which are of an insurable nature
insured against loss or damage with insurers believed by the Company to be
responsible to the extent that property of similar character is usually so
insured by corporations similarly situated and owning like properties in
accordance with good business practice.
Section 10.08. Limitation on Consolidated Debt.
The Company shall not, and shall not permit any Restricted Subsidiary
to, Incur any Debt (including Acquired Debt), other than Permitted Debt, unless
immediately after giving effect to the Incurrence of such Debt and the receipt
and application of the net proceeds therefrom (including, without limitation,
the application or use of the net proceeds therefrom to repay Debt or make any
Restricted Payment) (a) the Consolidated Debt to Annualized Operating Cash Flow
Ratio would be less than 7.0 to 1.0, or (b) in the case of any incurrence of
Debt prior to January 1, 2005 only, Consolidated Debt would be equal to or less
than 80% of Total Invested Capital.
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Section 10.09. Limitation on Restricted Payments.
The Company shall not, directly or indirectly:
(i) declare or pay any dividend on, or make any distribution to the
holders of, any shares of its Capital Stock (other than dividends or
distributions payable solely in its Capital Stock (other than
Redeemable Stock) or in options, warrants or other rights to purchase
any such Capital Stock (other than Redeemable Stock));
(ii) purchase, redeem or otherwise acquire or retire for value, or
permit any Restricted Subsidiary to, directly or indirectly, purchase,
redeem or otherwise acquire or retire for value (other than value
consisting solely of Capital Stock of the Company that is not
Redeemable Stock or options, warrants or other rights to acquire such
Capital Stock that is not Redeemable Stock), any Capital Stock of the
Company (including options, warrants or other rights to acquire such
Capital Stock);
(iii) redeem, repurchase, defease or otherwise acquire or retire
for value, or permit any Restricted Subsidiary to, directly or
indirectly, redeem, repurchase, defease or otherwise acquire or retire
for value (other than value consisting solely of Capital Stock of the
Company that is not Redeemable Stock or options, warrants or other
rights to acquire such Capital Stock that is not Redeemable Stock),
prior to any scheduled maturity, scheduled repayment or scheduled
sinking fund payment, any Debt that is subordinate (whether pursuant
to its terms or by operation of law) in right of payment to the
Securities; or
(iv) make, or permit any Restricted Subsidiary, directly or
indirectly, to make, any Investment (other than any Permitted
Investment) in any Person (other than in a Restricted Subsidiary or a
Person that becomes a Restricted Subsidiary as a result of such
Investment);
(each of the foregoing actions set forth in clauses (i) through (iv), other
than any such action that is a Permitted Investment or a Permitted
Distribution, being referred to as a "Restricted Payment") unless, at the time
of such Restricted Payment, and after giving effect thereto:
(a) no Default or Event of Default shall have occurred and be
continuing;
(b) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment
had been made at the beginning of the applicable period, have been
permitted to Incur at least $1.00 of additional Debt pursuant to
clause (a) of Section 10.08; and
(c) after giving effect to such Restricted Payment on a pro forma
basis, the aggregate amount of all Restricted Payments made on or
after the date hereof shall not exceed:
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(1) the amount of (x) the Operating Cash Flow of the Company after
December 31, 2002 through the end of the latest full fiscal quarter
for which consolidated financial statements of the Company are
available preceding the date of such Restricted Payment (treated as a
single accounting period) less (y) 150% of the cumulative Consolidated
Interest Expense of the Company after December 31, 2002 through the
end of the latest full fiscal quarter for which consolidated financial
statements are available preceding the date of such Restricted Payment
(treated as a single accounting period), plus
(2) the aggregate net proceeds (other than proceeds from a
Committed Capital Contribution), including the fair market value of
property other than cash (as determined, (A) in the case of any
property other than cash with a value less than $25.0 million, by the
Board of Directors, whose good faith determination shall be conclusive
and as evidenced by a Board Resolution, or (B) in the case of any
property other than cash with a value equal to or greater than $25.0
million, by an accounting, appraisal or investment banking firm of
national standing and evidenced by a written opinion of such firm),
received by the Company from the issuance and sale (other than to a
Restricted Subsidiary) on or after the date hereof of shares of its
Capital Stock (other than Redeemable Stock), or any options, warrants
or other rights to purchase such Capital Stock (other than Redeemable
Stock), other than shares of Capital Stock or options, warrants or
other rights to purchase Capital Stock (or shares issuable upon
exercise thereof), the proceeds of the issuance of which is used to
make a Directed Investment (unless such designation has been revoked
by the Board of Directors and the Company is able to make such
Investment pursuant to this Section 10.09 (other than as a Directed
Investment)), plus
(3) the aggregate net proceeds, including the fair market value of
property other than cash (as determined, (A) in the case of any
property other than cash with a value less than $25.0 million, by the
Board of Directors, whose good faith determination shall be conclusive
and as evidenced by a Board Resolution, or (B) in the case of any
property other than cash with a value equal to or greater than $25.0
million, by an accounting, appraisal or investment banking firm of
national standing and evidenced by a written opinion of such firm),
received by the Company from the issuance or sale (other than to a
Restricted Subsidiary) after the date hereof of any Capital Stock of
the Company (other than Redeemable Stock), or any options, warrants or
other rights to purchase such Capital Stock (other than Redeemable
Stock), upon the conversion of, or exchange for, Debt of the Company
or a Restricted Subsidiary.
The foregoing limitations in this Section 10.09 do not limit or
restrict the making of any Permitted Distribution, Permitted Investment or
Directed Investment, and none of a
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Permitted Distribution or Permitted Investment shall be counted as a Restricted
Payment for purposes of clause (c) above. In addition, the foregoing
limitations do not prevent the Company from (I) paying a dividend on Capital
Stock of the Company within 60 days after the declaration thereof if, on the
date when the dividend was declared, the Company could have paid such dividend
in accordance with the provisions of this Indenture, (II) repurchasing Capital
Stock of the Company (including options, warrants or other rights to acquire
such Capital Stock) from former employees or Directors of the Company or any
Subsidiary thereof for consideration not to exceed (A) in the case of all such
employees or directors (other than Itemized Executives), $500,000 in the
aggregate in any fiscal year, with amounts not used in any given fiscal year
being carried over into subsequent fiscal years, and (B) in the case of any
Itemized Executive, $2.0 million per Itemized Executive (plus the amount of any
proceeds of any key man life insurance received by the Company in respect of
such Itemized Executive) in any fiscal year, with the aggregate amount of such
repurchases under this clause (II)(B) not to exceed $5.0 million in any fiscal
year; provided that the aggregate amount of all such repurchases made pursuant
to this clause (II) does not exceed $17.0 million in the aggregate (not
including the amount of any proceeds of key man life insurance received by the
Company in respect to any Itemized Executive), (III) the repurchase, redemption
or other acquisition for value of Capital Stock of the Company to the extent
necessary to prevent the loss or secure the renewal or reinstatement of any
license or franchise held by the Company or any of its Subsidiaries from any
governmental agency, (IV) making a loan in the aggregate principal amount of
approximately $2.2 million to certain officer(s) of the Company as described in
the Memorandum (with Restricted Payments pursuant to this clause not being
counted as Restricted Payments for purposes of clause (c) above), (V) the
redemption, repurchase, defeasance or other acquisition or retirement for value
of Indebtedness that is subordinated in right of payment to the Securities,
including premium, if any, and accrued and unpaid interest, with the proceeds
of, or in exchange for, (a) the proceeds of a capital contribution or a
substantially concurrent offering of, shares of Capital Stock (other than
Redeemable Stock) of the Company (or options, warrants or other rights to
acquire such Capital Stock) the proceeds of which are not designated as a
Directed Investment, or (b) Debt that is at least as subordinated in right of
payment to the Securities, including premium, if any, and accrued and unpaid
interest, as the Debt being purchased, (with Restricted Payments pursuant to
this clause not being counted as Restricted Payments for purposes of clause (c)
above), (VI) the repurchase, redemption or other acquisition of Capital Stock
of the Company (or options, warrants or other rights to acquire such Capital
Stock) in exchange for, or out of the proceeds of a capital contribution or a
substantially concurrent offering of, shares of Common Stock (other than
Redeemable Stock) of the Company (or options, warrants or other rights to
acquire such Capital Stock) the proceeds of which are not designated as a
Directed Investment or (VII) other Restricted Payments not to exceed $5.0
million in the aggregate at any time outstanding (with Restricted Payments
pursuant to this clause not being counted as Restricted Payments for purposes
of clause (c) above).
Notwithstanding the foregoing, no Investment in a Person that
immediately thereafter would be a Restricted Subsidiary will be a Restricted
Payment. In addition, if any Person in which an Investment is made, which
Investment constitutes a Restricted Payment when made, thereafter becomes a
Restricted Subsidiary, all such Investments previously made in such Person
shall no longer be counted as Restricted Payments for purposes of calculating
the
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aggregate amount of Restricted Payments pursuant to clause (c) of the third
preceding paragraph or the aggregate amount of Investments pursuant to clause
(V)(a) of the immediately preceding paragraph, in each case to the extent such
Investments would otherwise be so counted.
For purposes of clause (c)(3) above, the net proceeds received by the
Company from the issuance or sale of its Capital Stock either upon the
conversion of, or exchange for, Debt of the Company or any Restricted
Subsidiary shall be deemed to be an amount equal to (a) the sum of (i) the
principal amount or accreted value (whichever is less) of such Debt on the date
of such conversion or exchange and (ii) the additional cash consideration, if
any, received by the Company upon such conversion or exchange, less any payment
on account of fractional shares, minus (b) all expenses incurred in connection
with such issuance or sale. In addition, for purposes of clause (c)(3) above,
the net proceeds received by the Company from the issuance or sale of its
Capital Stock upon the exercise of any options or warrants of the Company or
any Restricted Subsidiary shall be deemed to be an amount equal to (a) the
additional cash consideration, if any, received by the Company upon such
exercise, minus (b) all expenses incurred in connection with such issuance or
sale.
For purposes of this Section 10.09, if a particular Restricted Payment
involves a non-cash payment, including a distribution of assets, then such
Restricted Payment shall be deemed to be an amount equal to the cash portion of
such Restricted Payment, if any, plus an amount equal to the fair market value
of the non-cash portion of such Restricted Payment, as determined by the Board
of Directors (whose good faith determination shall be conclusive and evidenced
by a Board Resolution).
The amount of any Investment outstanding at any time shall be deemed
to be equal to the amount of such Investment on the date made, less the return
of capital, repayment of loans and return on capital (including interest and
dividends), in each case, received in cash, up to the amount of such Investment
on the date made.
Section 10.10. Restricted Subsidiaries.
Subject to compliance with Section 10.09, the Board of Directors may
designate any Restricted Subsidiary as an Unrestricted Subsidiary.
The designation by the Board of Directors of a Restricted Subsidiary
as an Unrestricted Subsidiary shall, for all purposes of Section 10.09
(including clause (b) thereof), be deemed to be a Restricted Payment of an
amount equal to the fair market value of the Company's ownership interest in
such Subsidiary (including, without duplication, such indirect ownership
interest in all Subsidiaries of such Subsidiary), as determined by the Board of
Directors in good faith and evidenced by a Board Resolution.
Notwithstanding the foregoing provisions of this Section 10.10, the
Board of Directors may not designate a Subsidiary of the Company to be an
Unrestricted Subsidiary if, after such designation, (a) the Company or any of
its other Restricted Subsidiaries (i) provides credit support for, or a
Guarantee of, any Debt of such Subsidiary (including any undertaking, agreement
or instrument evidencing such Debt) or (ii) is directly or indirectly liable
for any Debt
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of such Subsidiary, (b) a default with respect to any Debt of such Subsidiary
(including any right which the holders thereof may have to take enforcement
action against such Subsidiary) would permit (upon notice, lapse of time or
both) any holder of any other Debt of the Company or any Restricted Subsidiary
to declare a default on such other Debt or cause the payment thereof to be
accelerated or payable prior to its final scheduled maturity or (c) such
Subsidiary owns any Capital Stock of, or owns or holds any Lien on any property
of, any Restricted Subsidiary which is not a Subsidiary of the Subsidiary to be
so designated.
The Board of Directors, from time to time, may designate any Person
that is about to become a Subsidiary of the Company as an Unrestricted
Subsidiary, and may designate any newly-created Subsidiary of the Company as an
Unrestricted Subsidiary, if at the time such Subsidiary is created it contains
no assets (other than such de minimis amount of assets then required by law for
the formation of corporations) and no Debt. Subsidiaries of the Company that
are not designated by the Board of Directors as Restricted or Unrestricted
Subsidiaries shall be deemed to be Restricted Subsidiaries. Notwithstanding any
provisions of this Section 10.10, all Subsidiaries of an Unrestricted
Subsidiary shall be Unrestricted Subsidiaries.
Section 10.11. Transactions with Affiliates.
The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, enter into any transaction (including the purchase,
sale, lease or exchange of any property or the rendering of any service) or
series of related transactions with any Affiliate of the Company on terms that
are less favorable to the Company or such Restricted Subsidiary, as the case
may be, than those which might be obtained at the time of such transaction from
a Person that is not such an Affiliate; provided, however, that this Section
10.11 shall not limit, or be applicable to, (i) any transaction between
Unrestricted Subsidiaries not involving the Company or any Restricted
Subsidiary, (ii) any transaction between the Company and any Restricted
Subsidiary or between Restricted Subsidiaries or (iii) any Permitted
Transactions. In addition, any transaction or series of related transactions,
other than Permitted Transactions, between the Company or any Restricted
Subsidiary and any Affiliate of the Company (other than a Restricted
Subsidiary) involving an aggregate consideration of $5 million or more must be
approved in good faith by a majority of the Company's Disinterested Directors
(of which there must be at least one) and evidenced by a Board Resolution, or
if there is no Disinterested Director at such time or such transaction involves
aggregate consideration of $25.0 million or more, by an opinion as to fairness
("Fairness Opinion") to the Company or such Subsidiary from a financial point
of view issued by an accounting, appraisal or investment banking firm of
national standing. For purposes of this Section 10.11, any transaction or
series of related transactions between the Company or any Restricted Subsidiary
and an Affiliate of the Company that is approved by a majority of the
Disinterested Directors (of which there must be at least one to utilize this
method of approval) and evidenced by a Board Resolution or for which a Fairness
Opinion has been issued shall be deemed to be on terms as favorable as those
that might be obtained at the time of such transaction (or series of
transactions) from a Person that is not such an Affiliate and thus shall be
permitted under this Section 10.11.
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Section 10.12. Liens.
The Company shall not and shall not permit any of its Restricted
Subsidiaries to create, incur, assume or otherwise cause or suffer to exist or
become effective any Lien of any kind (other than Permitted Liens) upon any of
their property or assets, now owned or hereafter acquired, unless all payments
due under this Indenture and the Securities are secured on an equal and ratable
basis with the obligations so secured until such time as such obligations are
no longer secured by a Lien.
Section 10.13. Change of Control.
Upon the occurrence of a Change of Control, the Company shall be
required to make an Offer to Purchase all or any part of Outstanding Securities
at a cash purchase price equal to 101% of the Accreted Value thereof plus
Liquidated Damages, if any, on any Purchase Date prior to February 1, 2004 or
101% of the aggregate principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages, if any, to the Purchase Date on and after
February 1, 2004. The Offer to Purchase must be made within 30 days following a
Change of Control, must remain open for at least 30 and not more than 180 days
and must comply with the requirements of Rule 14e-1 under the Exchange Act and
any other applicable securities laws and regulations.
Section 10.14. Dividend and Other Payment Restrictions Affecting Subsidiaries.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (i)(a) pay dividends or make any other distributions
to the Company or any of its Restricted Subsidiaries (1) on its Capital Stock
or (2) with respect to any other interest or participation in, or measured by,
its profits, or (b) pay any indebtedness owed to the Company or any of its
Restricted Subsidiaries, (ii) make loans or advances to the Company or any of
its Restricted Subsidiaries or (iii) transfer any of its properties or assets
to the Company or any of its Restricted Subsidiaries. However, the foregoing
restrictions will not apply to encumbrances or restrictions existing under or
by reason of (a) existing Debt as in effect on the date hereof, (b) any Credit
Facility as in effect as of the date hereof (or in the case of the New Credit
Facility, as initially executed by the parties thereto), and any amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings thereof, provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings are no more restrictive, taken as a whole, with
respect to such dividend and other payment restrictions than those contained in
such Credit Facility as in effect on the date hereof (as conclusively
determined in good faith by the Board of Directors and set forth in a Board
Resolution), (c) this Indenture and the Securities, (d) applicable law, (e) any
instrument governing Debt (and any amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or refinancings
thereof, provided that such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacement or refinancings are no more
restrictive, taken as a whole, with respect to such dividend and other payment
restrictions than those contained in such Debt as in effect on the date of its
incurrence by the Company or any Restricted Subsidiary (as conclusively
determined in good faith by an executive officer of the
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Company)) or Capital Stock of a Person acquired by the Company or any of its
Restricted Subsidiaries as in effect at the time of such acquisition (except to
the extent such Debt was incurred in connection with or in contemplation of
such acquisition), which encumbrance or restriction is not applicable to any
Person, or the properties or assets of any Person, other than the Person, or
the property or assets of the Person, so acquired, provided that, in the case
of Debt, such Debt was permitted by the terms of this Indenture to be incurred,
(f) customary non-assignment provisions in leases entered into in the ordinary
course of business, (g) purchase money obligations for property acquired in the
ordinary course of business that impose restrictions of the nature described in
clause (iii) above on the property so acquired, (h) any agreement for the sale
or other disposition of a Restricted Subsidiary that restricts distributions by
that Subsidiary pending its sale or other disposition, (i) Liens securing Debt
otherwise permitted to be incurred pursuant to the provisions of the covenant
described above under Section 10.12 that limit the right of the Company or any
of its Restricted Subsidiaries to dispose of the assets subject to such Lien,
(j) provisions with respect to the disposition or distribution of assets or
property in joint venture agreements and other similar agreements entered into
in the ordinary course of business and (k) restrictions on cash or other
deposits or net worth imposed by customers under contracts entered into in the
ordinary course of business.
Section 10.15. Activities of the Company and Restricted Subsidiaries.
The Company shall not, and shall not permit any Restricted Subsidiary
to, engage in any business other than the telecommunications business and
related activities and services, including such businesses, activities and
services as the Company and the Restricted Subsidiaries are engaged in on the
Closing Date.
Section 10.16. Provision of Financial Information.
Whether or not the Company is subject to Section 13(a) or 15(d) of the
Exchange Act, or any successor provision thereto, the Company shall file with
the Commission the annual reports, quarterly reports and other documents which
the Company would have been required to file with the Commission pursuant to
such Section 13(a) or 15(d) or any successor provision thereto if the Company
were subject thereto, such documents to be filed with the Commission on or
prior to the respective dates (the "Required Filing Dates") by which the
Company would have been required to file them. The Company shall also in any
event (a) within 15 days of each Required Filing Date (i) transmit by mail to
all Holders, as their names and addresses appear in the Security Register,
without cost to such Holders, and (ii) file with the Trustee copies of the
annual reports, quarterly reports and other documents which the Company would
have been required to file with the Commission pursuant to Section 13(a) or
15(d) of the Exchange Act or any successor provisions thereto if the Company
were subject thereto and (b) if filing such documents by the Company with the
Commission is not permitted under the Exchange Act, promptly upon written
request supply copies of such documents to any prospective Holder. The
Trustee's receipt of such reports, information and documents shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein.
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Section 10.17. Statement by Officers as to Default: Compliance Certificates.
(a) The Company shall deliver to the Trustee, within 120 days after
the end of each fiscal year of the Company ending after the date hereof an
Officers' Certificate, stating whether or not to the best knowledge of the
signers thereof the Company is in default in the performance and observance of
any of the terms, provisions and conditions of this Indenture (without regard
to any period of grace or requirement of notice provided hereunder), and if the
Company shall be in default, specifying all such defaults and the nature and
status thereof of which they may have knowledge.
(b) The Company shall deliver to a Responsible Officer of the
Trustee, as soon as possible and in any event within 10 days after the Company
becomes aware of the occurrence of a Default or an Event of Default, an
Officers' Certificate setting forth the details of such Default or Event of
Default, and the action which the Company proposes to take with respect
thereto.
Section 10.18. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any
covenant or condition set forth in Section 8.01, provided pursuant to Section
9.01(2) and set forth in Sections 10.04 to 10.16, inclusive, if before the time
for such compliance the Holders of at least a majority in principal amount at
Stated Maturity of the Outstanding Securities shall, by Act of such Holders,
either waive such compliance in such instance or generally waive compliance
with such covenant or condition, but no such waiver shall extend to or affect
such covenant or condition except to the extent so expressly waived, and, until
such waiver shall become effective, the obligations of the Company and the
duties of the Trustee in respect of any such covenant or condition shall remain
in full force and effect; provided, however, with respect to an Offer to
Purchase as to which an Offer has been mailed, no such waiver may be made or
shall be effective against any Holder tendering Securities pursuant to such
Offer, and the Company may not omit to comply with the terms of such Offer as
to such Holder.
Section 10.19. Company to Supply Information Concerning Original Issue
Discount.
The Company shall provide to the Trustee on a timely basis such
information as the Trustee requires to enable the Trustee to prepare and file
any form required to be submitted by the Company with the Internal Revenue
Service and the Holders of the Securities relating to original issue discount,
including without limitation, Form 1099-OID or any successor form.
Section 10.20. Limitation on Issuances and Sales of Equity Interests in Wholly
Owned Subsidiaries.
The Company (i) shall not, and shall not permit any Restricted
Subsidiary of the Company to, transfer, convey, sell or otherwise dispose
("Transfer") of any Capital Stock in any Wholly Owned Restricted Subsidiary of
the Company to any Person (other than the Company or a Wholly Owned Restricted
Subsidiary of the Company) unless (a) such Transfer is of all the Capital Stock
in such Wholly Owned Restricted Subsidiary and (b) the cash Net Proceeds from
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such Transfer are applied in accordance with the covenant described below under
Section 10.22 and (ii) will not permit any Wholly Owned Restricted Subsidiary
of the Company to issue any of its Capital Stock (other than, if necessary,
shares of its Capital Stock constituting directors' qualifying shares) to any
Person other than to the Company or a Wholly Owned Restricted Subsidiary of the
Company. The foregoing restrictions shall not apply to (i) the creation of
Permitted Joint Ventures; (ii) any Transfer required by applicable law or
regulation, (iii) the issuance of Redeemable Stock that is otherwise permitted
to be issued pursuant to the terms of this Indenture, and (iv) Transfers in
which the Company or a Restricted Subsidiary acquired at the same time not less
than its proportionate share in such issuance of Capital Stock.
Section 10.21. Payments for Consent.
Neither the Company nor any of its Restricted Subsidiaries shall,
directly or indirectly, pay or cause to be paid any consideration, whether by
way of interest, fee or otherwise, to any Holder of any Securities for or as an
inducement to any consent, waiver or amendment of any of the terms or
provisions of this Indenture or the Securities unless such consideration is
offered to be paid or is paid to all Holders of the Securities that consent,
waive or agree to amend in the time frame set forth in the solicitation
documents relating to such consent, waiver or agreement.
Section 10.22. Asset Sales.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Company (or the
Restricted Subsidiary, as the case may be) receives consideration at the time
of such Asset Sale at least equal to the fair market value (which shall be
conclusively evidenced by a resolution of the Board of Directors set forth in
an Officers' Certificate delivered to the Trustee) of the assets or Capital
Stock issued or sold or otherwise disposed of and (ii) at least 80% of the
consideration therefor received by the Company or such Subsidiary is in the
form of cash; provided that the amount of (x) any liabilities (as shown on the
Company's or such Restricted Subsidiary's most recent balance sheet), of the
Company or any Restricted Subsidiary (other than contingent liabilities and
liabilities that are by their terms subordinated to the Notes or any guarantee
thereof) that are assumed by the transferee of any such assets and (y) any
securities, notes or other obligations received by the Company or any such
Restricted Subsidiary from such transferee that are contemporaneously (subject
to ordinary settlement periods) converted by the Company or such Subsidiary
into cash (to the extent of the cash received), shall be deemed to be cash for
purposes of this provision.
Within 360 days after the receipt of any Net Proceeds from an Asset
Sale, the Company may apply such Net Proceeds, at its option, (a) to repay Debt
under a Credit Facility or any Vendor Financing Debt or (b) to make a capital
expenditure in the same or similar line of business as the Company is engaged
in on the date hereof or in a business reasonably related thereto, +or (c) to
acquire (i) Capital Stock of an entity that is or becomes a Restricted
Subsidiary or (ii) other long-term assets that are used or useful in the same
or similar line of business as the Company or such Restricted Subsidiaries were
engaged in on the date hereof or in businesses reasonably related thereto.
Pending the final application of any such Net Proceeds, the Company may
temporarily reduce revolving credit borrowings or otherwise invest such Net
Proceeds in any
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manner that is not prohibited by this Indenture. Any Net Proceeds from Asset
Sales that are not applied or invested as provided in the first sentence of
this paragraph will be deemed to constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds exceeds $5.0 million, the Company will be
required to make an offer (an "Asset Sale Offer") to all Holders of Notes and
all holders of other Debt that is pari passu with the Notes containing
provisions similar to those set forth in this Indenture with respect to offers
to purchase or redeem with the proceeds of sales of assets to purchase the
maximum principal amount at maturity of Notes and such other pari passu Debt
that may be purchased out of the Excess Proceeds. The offer price for such
Asset Sale Offer shall be an amount in cash equal to 100% of the principal
amount (or Accreted Value, if applicable) thereof plus accrued and unpaid
interest thereon, if any, to the date of purchase, in accordance with the
procedures set forth in this Indenture and the instrument or instruments
governing such other pari passu Debt, respectively. To the extent that any
Excess Proceeds remain after consummation of an Asset Sale Offer, the Company
may use such Excess Proceeds for any purpose not otherwise prohibited by this
Indenture. If the aggregate principal amount of Notes tendered into such Asset
Sale Offer surrendered by Holders thereof exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes to be purchased on a pro rata
basis. Upon completion of such offer to purchase, the amount of Excess Proceeds
shall be reset at zero.
ARTICLE 11.
Redemption of Securities
Section 11.01. Right of Redemption.
The Securities may be redeemed at any time on or after February 1,
2004, at the Company's option, in whole or in part, upon not less than 30 or
more than 60 days' prior written notice mailed by first class mail to each
Holder's last address as it appears in the Security Register, at the Redemption
Prices (expressed as a percentage of the principal amount at maturity thereof)
set forth below, plus an amount in cash equal to all accrued and unpaid
interest to the Redemption Date, if redeemed during the twelve-month period
beginning February 1 of each of the years set forth below.
YEAR PERCENTAGE
---- ----------
2004.............................................. 107.000%
2005.............................................. 104.667%
2006.............................................. 102.333%
2007 and thereafter............................... 100.000%
In addition, in the event of one or more sales by the Company on or
prior to February 1, 2002 of at least $75.0 million of its Capital Stock (other
than Redeemable Stock), the Company may redeem up to 35% of the aggregate
Accreted Value of the Notes originally issued with the proceeds of such sale at
a Redemption Price equal to 114% of such Accreted Value on the Redemption Date,
plus Liquidated Damages, if any thereon, to the Redemption Date; provided that
at least 65% of the aggregate Accreted Value of the Notes originally issued
remain outstanding immediately after the occurrence of any such redemption
(excluding Notes held by the
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Company and its Restricted Subsidiaries); and provided, further, that such
redemption occurs within 60 days after consummation of any such sale.
Section 11.02. Applicability of Article.
Redemption of Securities at the election of the Company, as permitted
by this Indenture and the provisions of the Securities, shall be made in
accordance with such provisions and this Article.
FSection 11.03. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities pursuant to
Section 11.01 shall be evidenced by a Board Resolution. In case of any
redemption at the election of the Company pursuant to Section 11.01, the
Company shall, at least 60 days prior to the Redemption Date fixed by the
Company (unless a shorter notice shall be satisfactory to the Trustee), notify
the Trustee of such Redemption Date and of the principal amount of Securities
to be redeemed.
Section 11.04. Selection by Trustee of Securities to Be Redeemed.
In the case of any partial redemption, selection of the Securities for
redemption will be made by the Trustee in compliance with the requirements of
the principal national securities exchange, if any, on which the Securities are
listed or, if the Securities are not listed on a national securities exchange,
on a pro rata basis, by lot or by such other method as the Trustee shall deem
to be fair and appropriate; provided that no Security of $1,000 in principal
amount or less shall be redeemed in part.
The Trustee shall promptly notify the Company and each Security
Registrar in writing of the Securities selected for redemption and, in the case
of any Securities selected for partial redemption, the principal amount thereof
to be redeemed.
For all purposes of this Indenture and of the Securities, unless the
context otherwise requires, all provisions relating to the redemption of
Securities shall relate, in the case of any Securities redeemed or to be
redeemed only in part, to the portion of the principal amount of such
Securities which has been or is to be redeemed.
Section 11.05. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at his address appearing in
the Security Register.
All notices of redemption shall state (including CUSIP, CINS and ISIN
numbers, if any):
(1) the Redemption Date,
(2) the Redemption Price,
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(3) if less than all the Outstanding Securities are to be redeemed,
the identification (and, in the case of partial redemption, the principal
amounts) of the particular Securities to be redeemed, including CUSIP,
CINS and ISIN numbers,
(4) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security to be redeemed and (i) that, in the
case of a Redemption Date on or after February 1, 2004, cash interest
thereon will cease to accrue on and after said Redemption Date and (ii)
that, in the case of a Redemption Date prior to February 1, 2004, the
Accreted Value thereof will not increase after said Redemption Date,
(5) the place or places where such Securities are to be surrendered
for payment of the Redemption Price, and
(6) if the redemption is being made pursuant to the provisions of the
Securities set forth in the third paragraph of Section 2.03, a brief
description of the nature and amount of Capital Stock sold by the Company,
the aggregate purchase price thereof and the net cash proceeds therefrom
available for such redemption, the date or dates on which such sale was
completed and the percentage of the aggregate Accreted Value of
Outstanding Securities being redeemed.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company and shall be irrevocable.
Section 11.06. Deposit of Redemption Price.
On or before 10:00 a.m. New York time on any Redemption Date, the
Company shall deposit with the Trustee or with a Paying Agent (or, if the
Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 10.03) an amount of money sufficient to pay the Redemption
Price of, and (except if the Redemption Date shall be an Interest Payment Date)
any applicable accrued interest on, all the Securities which are to be redeemed
on that date.
Section 11.07. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and any applicable
accrued interest) such Securities shall not bear interest and the Accreted
Value of such Securities shall thereupon and thereafter conclusively be deemed
to be their Accreted Value determined on and as of such Redemption Date. Upon
surrender of any such Security for redemption in accordance with said notice,
such Security shall be paid by the Company at the Redemption Price, together
with any applicable accrued and unpaid interest to the Redemption Date;
provided, however, that installments of interest whose Stated Maturity is on or
prior to the Redemption Date shall be payable to the Holders of such
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Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant Record Dates according to their terms and the
provisions of Section 3.09.
If any Security called for redemption in accordance with the election
of the Company made pursuant to Section 11.01 shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate provided by the
Security.
Section 11.08. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered
at an office or agency of the Company designated for that purpose pursuant to
Section 10.02 (with, if the Company or the Trustee so requires, due endorsement
by, or a written instrument of transfer in form satisfactory to the Company and
the Trustee duly executed by, the Holder thereof or his attorney duly
authorized in writing), and the Company shall execute, and the Trustee shall
authenticate and deliver to the Holder of such Security without service charge,
a new Security or Securities, of any authorized denomination as requested by
such Holder, in aggregate principal amount at Stated Maturity equal to and in
exchange for the unredeemed portion of the principal amount at Stated Maturity
of the Security so surrendered.
ARTICLE 12.
Defeasance and Covenant Defeasance
Section 12.01. Company's Option to Effect Defeasance or Covenant Defeasance.
The Company may elect, at its option at any time, to have Section
12.02 or Section 12.03 applied to the Outstanding Securities (as a whole and
not in part) upon compliance with the conditions set forth below in this
Article. Any such election shall be evidenced by a Board Resolution.
Section 12.02. Defeasance and Discharge
Upon the Company's exercise of its option to have this Section applied
to the Outstanding Securities (as a whole and not in part), the Company shall
be deemed to have been discharged from its obligations with respect to such
Securities as provided in this Section on and after the date the conditions set
forth in Section 12.04 are satisfied (hereinafter called "Defeasance"), and
thereafter such Securities shall not be subject to redemption pursuant thereto.
For this purpose, such Defeasance means that the Company shall be deemed to
have paid and discharged the entire indebtedness represented by such Securities
and to have satisfied all its other obligations under such Securities and this
Indenture insofar as such Securities are concerned (and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging the
same), subject to the following which shall survive until otherwise terminated
or discharged hereunder: (1) the rights of Holders of such Securities to
receive, solely from the trust fund described in Section 12.04 and as more
fully set forth in such Section, payments in respect of the principal of and
any premium and interest on such Securities when payments are due, (2) the
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Company's obligations with respect to such Securities under Sections 3.04,
3.05, 3.08, 10.02 and 10.03, (3) the rights, powers, trusts, duties and
immunities of the Trustee hereunder and (4) this Article. Subject to compliance
with this Article, the Company may exercise its option to have this Section
applied to the Outstanding Securities (as a whole and not in part)
notwithstanding the prior exercise of its option to have Section 12.03 applied
to such Securities.
Section 12.03. Covenant Defeasance.
Upon the Company's exercise of its option to have this Section applied
to the Outstanding Securities (as a whole and not in part), (1) the Company
shall be released from its obligations under Section 8.01(iii), Sections 10.05
through 10.16, inclusive, and 10.20 through 10.22, inclusive and any covenant
provided pursuant to Section 9.01(2) and (2) the occurrence of any event
specified in Section 5.01(4) (with respect to Section 8.01(iii)), Section
5.01(5) (with respect to any of Sections 10.05 through 10.16, inclusive and
10.20 through 10.22, inclusive, and any such covenants provided pursuant to
Section 9.01(2)), Section 5.01(6) or Section 5.01(7) shall be deemed not to be
or result in an Event of Default, in each case with respect to such Securities
as provided in this Section on and after the date the conditions set forth in
Section 12.04 are satisfied (hereinafter called "Covenant Defeasance"). For
this purpose, such Covenant Defeasance means that, with respect to such
Securities, the Company may omit to comply with and shall have no liability in
respect of any term, condition or limitation set forth in any such specified
Section (to the extent so specified in the case of Sections 5.01(4) and
5.01(5)), whether directly or indirectly by reason of any reference elsewhere
herein to any such Section or by reason of any reference in any such Section to
any other provision herein or in any other document, but the remainder of this
Indenture and such Securities shall be unaffected thereby.
Section 12.04. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to the application of Section
12.02 or Section 12.03 to the Outstanding Securities:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee which satisfies the
requirements contemplated by Section 6.09 and agrees to comply with the
provisions of this Article applicable to it) as trust funds in trust for
the purpose of making the following payments, specifically pledged as
security for, and dedicated solely to, the benefits of the Holders of such
Securities, (A) money in an amount, or (B) U.S. Government Obligations
which through the scheduled payment of principal and interest in respect
thereof in accordance with their terms will provide, not later than one
day before the due date of any payment, money in an amount, or (C) a
combination thereof, in each case sufficient, in the opinion of a
nationally recognized firm of independent public accountants expressed in
a written certification thereof delivered to the Trustee, to pay and
discharge, and which shall be applied by the Trustee (or any such other
qualifying trustee) to pay and discharge, the principal of and any
installment of interest on such Securities on the respective Stated
Maturities thereof, in accordance with the terms of this Indenture and
such Securities. As used herein, "U.S. Government Obligation" means (x)
any security which is (i) a direct obligation of the United
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States of America for the payment of which the full faith and credit of
the United States of America is pledged or (ii) an obligation of a Person
controlled or supervised by and acting as an agency or instrumentality of
the United States of America the payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of
America, which, in either case (i) or (ii), is not callable or redeemable
at the option of the issuer thereof, and (y) any depository receipt issued
by a bank (as defined in Section 3(a)(2) of the Securities Act) as
custodian with respect to any U.S. Government Obligation which is
specified in Clause (x) above and held by such bank for the account of the
holder of such depository receipt, or with respect to any specific payment
of principal of or interest on any U.S. Government Obligation which is so
specified and held, provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific
payment of principal or interest evidenced by such depository receipt.
(2) In the event of an election to have Section 12.02 apply to the
Outstanding Securities, the Company shall have delivered to the Trustee an
Opinion of Counsel stating that (A) the Company has received from, or
there has been published by, the Internal Revenue Service a ruling or (B)
since the Closing Date there has been a change in the applicable Federal
income tax law, in either case (A) or (B) to the effect that, and based
thereon such opinion shall confirm that, the Holders of such Securities
will not recognize gain or loss for Federal income tax purposes as a
result of the deposit, Defeasance and discharge to be effected with
respect to such Securities and will be subject to Federal income tax on
the same amount, in the same manner and at the same times as would be the
case if such deposit, Defeasance and discharge were not to occur.
(3) In the event of an election to have Section 12.03 apply to the
Outstanding Securities, the Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that the Holders of such Securities will
not recognize gain or loss for Federal income tax purposes as a result of
the deposit and Covenant Defeasance to be effected with respect to such
Securities and will be subject to Federal income tax on the same amount,
in the same manner and at the same times as would be the case if such
deposit and Covenant Defeasance were not to occur.
(4) No Default with respect to the Outstanding Securities shall have
occurred and be continuing at the time of such deposit or, with regard to
any such event specified in Sections 5.01(8) and (9), at any time on or
prior to the 90th day after the date of such deposit (it being understood
that this condition shall not be deemed satisfied until after such 90th
day).
(5) Such Defeasance or Covenant Defeasance shall not cause the Trustee
to have a conflicting interest within the meaning of the Trust Indenture
Act (assuming all Securities are in default within the meaning of such
Act).
(6) Such Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any other agreement
or instrument to which the Company is a party or by which it is bound.
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(7) Such Defeasance or Covenant Defeasance shall not result in the
trust arising from such deposit constituting an investment company within
the meaning of the Investment Company Act unless such trust shall be
registered under such Act or exempt from registration thereunder.
(8) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent with respect to such Defeasance or Covenant Defeasance have been
complied with.
Section 12.05. Deposited Money and U.S. Government Obligations to Be Held in
Trust; Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section 10.03, all
money and U.S. Government Obligations (including the proceeds thereof)
deposited with the Trustee or other qualifying trustee (solely for purposes of
this Section and Section 12.06, the Trustee and any such other trustee are
referred to collectively as the "Trustee") pursuant to Section 12.04 in respect
of the Outstanding Securities shall be held in trust and applied by the
Trustee, in accordance with the provisions of such Securities and this
Indenture, to the payment, either directly or through any such Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Holders of such Securities, of all sums due and to become due
thereon in respect of principal and any premium and interest, but money so held
in trust need not be segregated from other funds except to the extent required
by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 12.04 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is
for the account of the Holders of Outstanding Securities.
Anything in this Article to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon Company Request any
money or U.S. Government Obligations held by it as provided in Section 12.04
which, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, are in excess of the amount thereof which would then be required to be
deposited to effect the Defeasance or Covenant Defeasance, as the case may be,
with respect to the Outstanding Securities.
Section 12.06. Reinstatement.
If the Trustee or the Paying Agent is unable to apply any money in
accordance with this Article with respect to any Securities by reason of any
order or judgment of any court or governmental authority enjoining, restraining
or otherwise prohibiting such application, then the obligations under this
Indenture and such Securities from which the Company has been discharged or
released pursuant to Section 12.02 or 12.03 shall be revived and reinstated as
though no deposit had occurred pursuant to this Article with respect to such
Securities, until such time as the Trustee or Paying Agent is permitted to
apply all money held in trust pursuant to Section 12.05 with respect to such
Securities in accordance with this Article; provided, however, that if the
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Company makes any payment of principal of or any premium or interest on any
such Security following such reinstatement of its obligations, the Company
shall be subrogated to the rights (if any) of the Holders of such Securities to
receive such payment from the money so held in trust.
_____________________
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all as of the day and year first above written.
NEXTEL PARTNERS, INC.
By: /s/ John D. Thompson
-------------------------------
Title: Chief Financial Officer
----------------------------
THE BANK OF NEW YORK, Trustee
By: /s/ Michele L. Russo
-------------------------------
Title: Assistant Treasurer
----------------------------
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- -------------------------------------------------------------------------------
Execution Copy
REGISTRATION RIGHTS AGREEMENT
DATED AS OF JANUARY 29, 1999
BY AND AMONG
NEXTEL PARTNERS, INC.,
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
BARCLAYS CAPITAL INC.
FIRST UNION CAPITAL MARKETS
BNY CAPITAL MARKETS, INC.
AND
NESBITT BURNS SECURITIES INC.
- -------------------------------------------------------------------------------
<PAGE>
This Registration Rights Agreement (this "AGREEMENT") is made and
entered into as of January 29, 1999, by and among Nextel Partners, Inc., a
Delaware corporation (the "COMPANY"), Donaldson, Lufkin & Jenrette Securities
Corporation, Barclays Capital Inc., First Union Capital Markets, BNY Capital
Markets, Inc. and Nesbitt Burns Securities Inc. (each an "INITIAL PURCHASER"
and together the "INITIAL PURCHASERS"), who have agreed to purchase the
Company's 14% Senior Discount Notes due 2009 (the "SERIES A NOTES") pursuant to
the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated
January 22, 1999, (the "PURCHASE AGREEMENT"), by and among the Company and the
Initial Purchasers. In order to induce the Initial Purchasers to purchase the
Series A Notes, the Company has agreed to provide the registration rights set
forth in this Agreement. The execution and delivery of this Agreement is a
condition to the obligations of the Initial Purchasers set forth in Section 3
of the Purchase Agreement. Capitalized terms used herein and not otherwise
defined shall have the meaning assigned to them the Indenture, dated January
29, 1999, between the Company and The Bank of New York, as Trustee, relating to
the Series A Notes and the Series B Notes (the "INDENTURE").
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
ACT: The Securities Act of 1933, as amended.
AFFILIATE: As defined in Rule 144 of the Act.
AFFILIATED MARKET MAKER: A Broker-Dealer who is deemed to be an
Affiliate of the Company.
BROKER-DEALER: Any broker or dealer registered under the Exchange Act.
CERTIFICATED SECURITIES: Definitive Notes, as defined in the
Indenture.
CLOSING DATE: The date hereof.
COMMISSION: The Securities and Exchange Commission.
CONSUMMATE: An Exchange Offer shall be deemed "Consummated" for
purposes of this Agreement upon the occurrence of (a) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the Series B Notes to be issued in the Exchange Offer, (b) the
maintenance of such Exchange Offer Registration Statement continuously
effective and the keeping of the Exchange Offer open for a period not less than
the period required pursuant to Section 3(b) hereof and (c) the delivery by the
Company to the Registrar under the Indenture
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of Series B Notes in the same aggregate principal amount as the aggregate
principal amount of Series A Notes tendered by Holders thereof pursuant to the
Exchange Offer.
CONSUMMATION DEADLINE: As defined in Section 3(b) hereof.
EFFECTIVENESS DEADLINE: As defined in Section 3(a) and 4(a) hereof.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
EXCHANGE OFFER: The exchange and issuance by the Company of a
principal amount of Series B Notes (which shall be registered pursuant to the
Exchange Offer Registration Statement) equal to the outstanding principal
amount of Series A Notes that are tendered by such Holders in connection with
such exchange and issuance.
EXCHANGE OFFER REGISTRATION STATEMENT: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
EXEMPT RESALES: The transactions in which the Initial Purchasers
propose to sell the Series A Notes to certain "qualified institutional buyers,"
as such term is defined in Rule 144A under the Act.
FILING DEADLINE: As defined in Sections 3(a) and 4(a) hereof.
HOLDERS: As defined in Section 2 hereof.
PROSPECTUS: The prospectus included in a Registration Statement at the
time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
RECOMMENCEMENT DATE: As defined in Section 6(d) hereof.
REGISTRATION DEFAULT: As defined in Section 5 hereof.
REGISTRATION STATEMENT: Any registration statement of the Company
relating to (a) an offering of Series B Notes pursuant to an Exchange Offer or
(b) the registration for resale of Transfer Restricted Securities pursuant to
the Shelf Registration Statement, in each case, (i) that is filed pursuant to
the provisions of this Agreement and (ii) including the Prospectus included
therein, all amendments and supplements thereto (including post-effective
amendments) and all exhibits and material incorporated by reference therein.
RULE 144: Rule 144 promulgated under the Act.
SERIES B NOTES: The Company's 14% Series B Senior Notes due 2009 to be
issued pursuant to the Indenture: (i) in the Exchange Offer or (ii) as
contemplated by Section 4 hereof.
SHELF REGISTRATION STATEMENT: As defined in Section 4 hereof.
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SUSPENSION NOTICE: As defined in Section 6(d) hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb)
as in effect on the date of the --- Indenture.
TRANSFER RESTRICTED SECURITIES: Each (A) Series A Note, until the
earliest to occur of (i) the date on which such Series A Note is exchanged in
the Exchange Offer for a Series B Note which is entitled to be resold to the
public by the Holder thereof without complying with the prospectus delivery
requirements of the Act, (ii) the date on which such Series A Note has been
disposed of in accordance with a Shelf Registration Statement (and the
purchasers thereof have been issued Series B Notes), or (iii) the date on which
such Series A Note is distributed to the public pursuant to Rule 144 under the
Act and each (B) Series B Note held by a Broker Dealer until the date on which
such Series B Note is disposed of by a Broker-Dealer pursuant to the "Plan of
Distribution" contemplated by the Exchange Offer Registration Statement
(including the delivery of the Prospectus contained therein).
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities
(each, a "HOLDER") whenever such Person owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable
federal law (after the procedures set forth in Section 6(a)(i) below have been
complied with), the Company shall (i) cause the Exchange Offer Registration
Statement to be filed with the Commission as soon as practicable after the
Closing Date, but in no event later than 120 days after the Closing Date (such
120th day being the "FILING DEADLINE"), (ii) use all commercially reasonable
efforts to cause such Exchange Offer Registration Statement to become effective
at the earliest possible time, but in no event later than 180 days after the
Closing Date (such 180th day being the "EFFECTIVENESS DEADLINE"), (iii) in
connection with the foregoing, (A) file all pre-effective amendments to such
Exchange Offer Registration Statement as may be necessary in order to cause it
to become effective, (B) file, if applicable, a post-effective amendment to
such Exchange Offer Registration Statement pursuant to Rule 430A under the Act
and (C) cause all necessary filings, if any, in connection with the
registration and qualification of the Series B Notes to be made under the Blue
Sky laws of such jurisdictions as are necessary to permit Consummation of the
Exchange Offer, and (iv) upon the effectiveness of such Exchange Offer
Registration Statement, commence and Consummate the Exchange Offer. The
Exchange Offer shall be on the appropriate form permitting (i) registration of
the Series B Notes to be offered in exchange for the Series A Notes that are
Transfer Restricted Securities and (ii) resales of Series B Notes by
Broker-Dealers that tendered into the Exchange Offer Series A Notes that such
Broker-Dealer acquired for its own account as a result of market making
activities or other trading activities (other than Series A Notes acquired
directly from the Company or any of its Affiliates) as contemplated by Section
3(c) below.
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(b) The Company shall use all commercially reasonable efforts to cause
the Exchange Offer Registration Statement to be effective continuously, and
shall keep the Exchange Offer open for a period of not less than the minimum
period required under applicable federal and state securities laws to
Consummate the Exchange Offer; provided, however, that in no event shall such
period be less than 20 Business Days. The Company shall cause the Exchange
Offer to comply with all applicable federal and state securities laws. No
securities other than the Series B Notes shall be included in the Exchange
Offer Registration Statement. The Company shall use all commercially reasonable
efforts to cause the Exchange Offer to be Consummated on the earliest
practicable date after the Exchange Offer Registration Statement has become
effective, but in no event later than 30 business days thereafter (such 30th
day being the "CONSUMMATION DEADLINE").
(c) The Company shall include a "Plan of Distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and indicate
therein that any Broker-Dealer who holds Transfer Restricted Securities that
were acquired for the account of such Broker-Dealer as a result of
market-making activities or other trading activities (other than Series A Notes
acquired directly from the Company or any Affiliate of the Company), may
exchange such Transfer Restricted Securities pursuant to the Exchange Offer.
Such "Plan of Distribution" section shall also contain all other information
with respect to such sales by such Broker-Dealers that the Commission may
require in order to permit such sales pursuant thereto, but such "Plan of
Distribution" shall not name any such Broker-Dealer or disclose the amount of
Transfer Restricted Securities held by any such Broker-Dealer, except to the
extent required by the Commission as a result of a change in policy, rules or
regulations after the date of this Agreement.
Because such Broker-Dealer may be deemed to be an "underwriter" within
the meaning of the Act and must, therefore, deliver a prospectus meeting the
requirements of the Act in connection with its initial sale of any Series B
Notes received by such Broker-Dealer in the Exchange Offer, the Company shall
permit the use of the Prospectus contained in the Exchange Offer Registration
Statement by such Broker-Dealer to satisfy such prospectus delivery
requirement. To the extent necessary to ensure that the prospectus contained in
the Exchange Offer Registration Statement is available for sales of Series B
Notes by Broker-Dealers, the Company agrees to use all commercially reasonable
efforts to keep the Exchange Offer Registration Statement continuously
effective, supplemented, amended and current as required by and subject to the
provisions of Section 6(a) and (c) hereof and in conformity with the
requirements of this Agreement, the Act and the policies, rules and regulations
of the Commission as announced from time to time, for a period of one year from
the Consummation Deadline or such shorter period as will terminate when all
Transfer Restricted Securities covered by such Registration Statement have been
sold pursuant thereto. The Company shall provide sufficient copies of the
latest version of such Prospectus to such Broker-Dealers, promptly upon
request, and in no event later than one day after such request, at any time
during such period.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Exchange Offer is not permitted by
applicable law (after the Company has complied with the procedures set forth in
Section 6(a)(i) below) or (ii) if any Holder of Transfer Restricted Securities
shall notify the Company within 20 Business Days following the Consummation
Deadline that (A) such Holder was prohibited by law or Commission
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<PAGE>
policy from participating in the Exchange Offer or (B) such Holder may not
resell the Series B Notes acquired by it in the Exchange Offer to the public
without delivering a prospectus and the Prospectus contained in the Exchange
Offer Registration Statement is not appropriate or available for such resales
by such Holder or (C) such Holder is a Broker-Dealer and holds Series A Notes
acquired directly from the Company or any of its Affiliates, then the Company
shall:
(x) cause to be filed, on or prior to 60 days after the earlier of (i) the
date on which the Company determines that the Exchange Offer Registration
Statement cannot be filed as a result of clause (a)(i) above and (ii) the date
on which the Company receives the notice specified in clause (a)(ii) above,
(such earlier date, the "FILING DEADLINE"), a shelf registration statement
pursuant to Rule 415 under the Act (which may be an amendment to the Exchange
Offer Registration Statement (the "SHELF REGISTRATION STATEMENT")), relating to
all Transfer Restricted Securities, and
(y) shall use all commercially reasonable efforts to cause such Shelf
Registration Statement to become effective on or prior to 90 days after the
Filing Deadline for the Shelf Registration Statement (such 90th day the
"EFFECTIVENESS DEADLINE").
If, after the Company has filed an Exchange Offer Registration
Statement that satisfies the requirements of Section 3(a) above, the Company is
required to file and make effective a Shelf Registration Statement solely
because the Exchange Offer is not permitted under applicable federal law (i.e.,
clause (a)(i) above), then the filing of the Exchange Offer Registration
Statement shall be deemed to satisfy the requirements of clause (x) above;
provided that, in such event, the Company shall remain obligated to meet the
Effectiveness Deadline set forth in clause (y).
To the extent necessary to ensure that the Shelf Registration
Statement is available for sales of Transfer Restricted Securities by the
Holders thereof entitled to the benefit of this Section 4(a) and the other
securities required to be registered therein pursuant to Section 6(b)(ii)
hereof, the Company shall use all commercially reasonable efforts to keep any
Shelf Registration Statement required by this Section 4(a) continuously
effective, supplemented, amended and current as required by and subject to the
provisions of Sections 6(b) and (c) hereof and in conformity with the
requirements of this Agreement, the Act and the policies, rules and regulations
of the Commission as announced from time to time, for as long as the Initial
Purchaser is deemed to be an affiliate of the Company but in no event less than
the shorter of (i) two years (as extended pursuant to Section 6(c)(i))
following the Closing or (ii) the date on which all Transfer Restricted
Securities covered by such Shelf Registration Statement have been sold pursuant
thereto.
(b) Provision by Holders of Certain Information in Connection with the
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 days after receipt of a request therefor, the
information specified in Item 507 or 508 of Regulation S-K, as applicable, of
the Act for use in connection with any Shelf Registration Statement or
Prospectus or preliminary Prospectus included therein. No Holder of Transfer
Restricted Securities shall be entitled to liquidated damages pursuant to
Section 5 hereof unless and until such Holder shall have provided
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all such information. Each selling Holder agrees to promptly furnish additional
information required to be disclosed in order to make the information
previously furnished to the Company by such Holder not materially misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement is not
filed with the Commission on or prior to the applicable Filing Deadline, (ii)
any such Registration Statement has not been declared effective by the
Commission on or prior to the applicable Effectiveness Deadline, (iii) the
Exchange Offer has not been Consummated on or prior to the Consummation
Deadline or (iv) any Registration Statement required by this Agreement is filed
and declared effective but shall thereafter cease to be effective or fail to be
usable for its intended purpose without being succeeded within 2 days by a
post-effective amendment to such Registration Statement that cures such failure
and that is itself declared effective within 5 days of filing such
post-effective amendment to such Registration Statement (each such event
referred to in clauses (i) through (iv), a "REGISTRATION DEFAULT"), then the
Company agrees to pay to each Holder of Transfer Restricted Securities affected
thereby liquidated damages in an amount equal to $.05 per week per $1,000 in
principal amount of Transfer Restricted Securities held by such Holder for each
week or portion thereof that the Registration Default continues for the first
90-day period immediately following the occurrence of such Registration
Default. The amount of the liquidated damages shall increase by an additional
$.05 per week per $1,000 in principal amount of Transfer Restricted Securities
with respect to each subsequent 90-day period until all Registration Defaults
have been cured, up to a maximum amount of liquidated damages of $.50 per week
per $1,000 in principal amount of Transfer Restricted Securities; provided that
the Company shall in no event be required to pay liquidated damages for more
than one Registration Default at any given time. Notwithstanding anything to
the contrary set forth herein, (1) upon filing of the Exchange Offer
Registration Statement (and/or, if applicable, the Shelf Registration
Statement), in the case of (i) above, (2) upon the effectiveness of the
Exchange Offer Registration Statement (and/or, if applicable, the Shelf
Registration Statement), in the case of (ii) above, (3) upon Consummation of
the Exchange Offer, in the case of (iii) above, or (4) upon the filing of a
post-effective amendment to the Registration Statement or an additional
Registration Statement that causes the Exchange Offer Registration Statement
(and/or, if applicable, the Shelf Registration Statement) to again be declared
effective or made usable in the case of (iv) above, the liquidated damages
payable with respect to the Transfer Restricted Securities as a result of such
clause (i), (ii), (iii) or (iv), as applicable, shall cease.
All accrued liquidated damages shall be paid to the Holders entitled
thereto, in the manner provided for the payment of interest in the Indenture,
on each Interest Payment Date, as more fully set forth in the Indenture and the
Notes. Notwithstanding the fact that any securities for which liquidated
damages are due cease to be Transfer Restricted Securities, all obligations of
the Company to pay liquidated damages with respect to securities shall survive
until such time as such obligations with respect to such securities shall have
been satisfied in full.
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SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the
Exchange Offer, the Company shall (x) comply with all applicable provisions of
Section 6(c) below, (y) use all commercially reasonable efforts to effect such
exchange and to permit the resale of Series B Notes by Broker-Dealers that
tendered in the Exchange Offer Series A Notes that such Broker-Dealer acquired
for its own account as a result of its market making activities or other
trading activities (other than Series A Notes acquired directly from the
Company or any of its Affiliates) being sold in accordance with the intended
method or methods of distribution thereof, and (z) comply with all of the
following provisions:
(i) If, following the date hereof there has been announced a
change in Commission policy with respect to exchange offers such as
the Exchange Offer, that in the reasonable opinion of counsel to the
Company raises a substantial question as to whether the Exchange Offer
is permitted by applicable federal law, the Company hereby agrees to
seek a no-action letter or other favorable decision from the
Commission allowing the Company to Consummate an Exchange Offer for
such Transfer Restricted Securities. The Company hereby agrees to
pursue the issuance of such a decision to the Commission staff level.
In connection with the foregoing, the Company hereby agrees to take
all such other actions as may be requested by the Commission or
otherwise required in connection with the issuance of such decision,
including without limitation (A) participating in telephonic
conferences with the Commission, (B) delivering to the Commission
staff an analysis prepared by counsel to the Company setting forth the
legal bases, if any, upon which such counsel has concluded that such
an Exchange Offer should be permitted and (C) diligently pursuing a
resolution (which need not be favorable) by the Commission staff.
(ii) As a condition to its participation in the Exchange
Offer, each Holder of Transfer Restricted Securities (including,
without limitation, any Holder who is a Broker Dealer) shall furnish,
upon the request of the Company, prior to the Consummation of the
Exchange Offer, a written representation to the Company (which may be
contained in the letter of transmittal contemplated by the Exchange
Offer Registration Statement) to the effect that (A) it is not an
Affiliate of the Company, (B) it is not engaged in, and does not
intend to engage in, and has no arrangement or understanding with any
person to participate in, a distribution of the Series B Notes to be
issued in the Exchange Offer and (C) it is acquiring the Series B
Notes in its ordinary course of business. As a condition to its
participation in the Exchange Offer each Holder using the Exchange
Offer to participate in a distribution of the Series B Notes shall
acknowledge and agree that, if the resales are of Series B Notes
obtained by such Holder in exchange for Series A Notes acquired
directly from the Company or an Affiliate thereof, it (1) could not,
under Commission policy as in effect on the date of this Agreement,
rely on the position of the Commission enunciated in Morgan Stanley
and Co., Inc. (available June 5, 1991) and Exxon Capital Holdings
Corporation (available May 13, 1988), as interpreted in the
Commission's letter to Shearman & Sterling dated July 2, 1993, and
similar no-action letters (including, if applicable, any no-action
letter obtained pursuant to clause (i) above), and (2) must comply
with the registration and prospectus delivery requirements of the Act
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in connection with a secondary resale transaction and that such a
secondary resale transaction must be covered by an effective
registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation
S-K.
(iii) Prior to effectiveness of the Exchange Offer
Registration Statement, the Company shall provide a supplemental
letter to the Commission (A) stating that the Company is registering
the Exchange Offer in reliance on the position of the Commission
enunciated in Exxon Capital Holdings Corporation (available May 13,
1988), Morgan Stanley and Co., Inc. (available June 5, 1991) as
interpreted in the Commission's letter to Shearman & Sterling dated
July 2, 1993, and, if applicable, any no-action letter obtained
pursuant to clause (i) above, (B) including a representation that the
Company has not entered into any arrangement or understanding with any
Person to distribute the Series B Notes to be received in the Exchange
Offer and that, to the best of the Company's information and belief,
each Holder participating in the Exchange Offer is acquiring the
Series B Notes in its ordinary course of business and has no
arrangement or understanding with any Person to participate in the
distribution of the Series B Notes received in the Exchange Offer and
(C) any other undertaking or representation required by the Commission
as set forth in any no-action letter obtained pursuant to clause (i)
above, if applicable.
(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Company shall:
(i) comply with all the provisions of Section 6(c) below and
use all commercially reasonable efforts to effect such registration to permit
the sale of the Transfer Restricted Securities being sold in accordance with
the intended method or methods of distribution thereof (as indicated in the
information furnished to the Company pursuant to Section 4(b) hereof), and
pursuant thereto the Company will prepare and file with the Commission a
Registration Statement relating to the registration on any appropriate form
under the Act, which form shall be available for the sale of the Transfer
Restricted Securities in accordance with the intended method or methods of
distribution thereof within the time periods and otherwise in accordance with
the provisions hereof, and
(ii) issue, upon the request of any Holder or purchaser of
Series A Notes covered by any Shelf Registration Statement contemplated by this
Agreement, Series B Notes having an aggregate principal amount equal to the
aggregate principal amount of Series A Notes sold pursuant to the Shelf
Registration Statement and surrendered to the Company for cancellation; the
Company shall register Series B Notes on the Shelf Registration Statement for
this purpose and issue the Series B Notes to the purchaser(s) of securities
subject to the Shelf Registration Statement in the names as such purchaser(s)
shall designate.
(c) General Provisions. In connection with any Registration Statement
and any related Prospectus required by this Agreement, the Company shall:
(i) use all commercially reasonable efforts to keep such
Registration Statement continuously effective and provide all
requisite financial statements for the period specified
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in Section 3 or 4 of this Agreement, as applicable. Upon the
occurrence of any event that would cause any such Registration
Statement or the Prospectus contained therein (A) to contain an untrue
statement of material fact or omit to state any material fact
necessary to make the statements therein not misleading or (B) not to
be effective and usable for resale of Transfer Restricted Securities
during the period required by this Agreement, the Company shall file
promptly an appropriate amendment to such Registration Statement
curing such defect, and, if Commission review is required, use all
commercially reasonable efforts to cause such amendment to be declared
effective as soon as practicable. Notwithstanding anything to the
contrary set forth in this Agreement, the Company's obligations to use
all commercially reasonable efforts to keep the Shelf Registration
Statement continuously effective, supplemented and amended shall be
suspended in the event continued effectiveness of the Shelf
Registration Statement or its use by Holders would, in the opinion of
counsel to the Company, require the Company to disclose a material
financing, acquisition or other corporate transaction, and the Board
of Directors of the Company shall have determined in good faith that
such disclosure is not in the best interests of the Company, but in no
event will any such suspension, individually or in the aggregate,
exceed 30 days within any twelve month period during which the Shelf
Registration Statement is otherwise required to be effective.
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the applicable Registration Statement as
may be necessary to keep such Registration Statement effective for the
applicable period set forth in Section 3 or 4 hereof, as the case may
be; cause the Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424
under the Act, and to comply fully with Rules 424, 430A and 462, as
applicable, under the Act in a timely manner; and comply with the
provisions of the Act with respect to the disposition of all
securities covered by such Registration Statement during the
applicable period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such Registration
Statement or supplement to the Prospectus;
(iii) advise each Holder and each Initial Purchaser who is
required to deliver a prospectus in connection with sales or market
making activities promptly and, if requested by such Person, confirm
such advice in writing, (A) when the Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with
respect to any applicable Registration Statement or any post-effective
amendment thereto, when the same has become effective, (B) of any
request by the Commission for amendments to the Registration Statement
or amendments or supplements to the Prospectus or for additional
information relating thereto, (C) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration
Statement under the Act or of the suspension by any state securities
commission of the qualification of the Transfer Restricted Securities
for offering or sale in any jurisdiction, or the initiation of any
proceeding for any of the preceding purposes, (D) of the existence of
any fact or the happening of any event that makes any statement of a
material fact made in the Registration Statement, the Prospectus, any
amendment or supplement thereto or any document incorporated by
reference therein untrue, or that requires the making of any
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additions to or changes in the Registration Statement in order to make
the statements therein not misleading, or that requires the making of
any additions to or changes in the Prospectus in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. If at any time the Commission shall issue
any stop order suspending the effectiveness of the Registration
Statement, or any state securities commission or other regulatory
authority shall issue an order suspending the qualification or
exemption from qualification of the Transfer Restricted Securities
under state securities or Blue Sky laws, the Company shall use all
commercially reasonable efforts to obtain the withdrawal or lifting of
such order at the earliest possible time;
(iv) subject to Section 6(c)(i), if any fact or event
contemplated by Section 6(c)(iii)(D) above shall exist or have
occurred, prepare a supplement or post-effective amendment to the
Registration Statement or related Prospectus or any document
incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of Transfer
Restricted Securities, the Prospectus will not contain an untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(v) furnish to each Holder and each Affiliated Market Maker
in connection with such exchange or sale, if any, before filing with
the Commission, copies of any Registration Statement or any Prospectus
included therein or any amendments or supplements to any such
Registration Statement or Prospectus (including all documents
incorporated by reference after the initial filing of such
Registration Statement), which documents will be subject to the review
and comment of such Persons in connection with such sale, if any, for
a period of at least five Business Days, and the Company will not file
any such Registration Statement or Prospectus or any amendment or
supplement to any such Registration Statement or Prospectus (including
all such documents incorporated by reference) to which such Persons
shall reasonably object within five Business Days after the receipt
thereof. Such Person shall be deemed to have reasonably objected to
such filing if such Registration Statement, amendment, Prospectus or
supplement, as applicable, as proposed to be filed, contains an untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading or fails to
comply with the applicable requirements of the Act;
(vi) promptly prior to the filing of any document that is to
be incorporated by reference into a Registration Statement or
Prospectus, provide copies of such document to each Holder and each
Affiliated Market Maker in connection with such exchange or sale, if
any, make the Company's representatives as shall be reasonably
requested by the Holders, Affiliated Market Makers or their counsel
available for discussion of such document and other customary due
diligence matters, and include such information in such document prior
to the filing thereof as such Persons may reasonably request;
provided, however, that such Persons shall first agree in writing
with the Company that any information that is reasonably and in good
faith designated by the Company in writing
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as confidential at the time of delivery of such information shall be
kept confidential by such Persons, unless (i) disclosure of such
information is required by court or administrative order or is
necessary to respond to inquires of regulatory authorities, (ii)
disclosure of such information is required by law (including any
disclosure requirements pursuant to federal securities laws in
connection with the filing of such Registration Statement or the use
of any Prospectus), (iii) such information becomes generally available
to the public other than as a result of a disclosure or failure to
safeguard such information by such Person or (iv) such information
becomes available to such Person from a source other than the Company
and its subsidiaries and such source is not known, after due inquiry,
by such Person to be bound by a confidentiality agreement; provided
further, that the foregoing investigation shall be coordinated on
behalf of such Persons by one representative designated by and on
behalf of such Persons and any such confidential information shall be
available from such representative to such Persons so long as any
Person agrees to be bound by such confidentiality agreement;
(vii) make available, at reasonable times, for inspection by
each Holder and each Affiliated Market Maker and any attorney or
accountant retained by such Persons, all financial and other records,
pertinent corporate documents of the Company as may be reasonably
requested and cause the Company's officers, directors and employees to
supply all information reasonably requested by any such Persons,
attorney or accountant in connection with such Registration Statement
or any post-effective amendment thereto subsequent to the filing
thereof and prior to its effectiveness;
(viii) if requested by any Holders in connection with such
exchange or sale or any Affiliated Market Maker, promptly include in
any Registration Statement or Prospectus, pursuant to a supplement or
post-effective amendment if necessary, such information as such
Persons may reasonably request to have included therein, including,
without limitation, information relating to the "Plan of Distribution"
of the Transfer Restricted Securities and the use of the Registration
Statement or Prospectus for market making activities; and make all
required filings of such Prospectus supplement or post-effective
amendment as soon as practicable after the Company is notified of the
matters to be included in such Prospectus supplement or post-effective
amendment;
(ix) furnish to each Holder in connection with such exchange
or sale and each Affiliated Market Maker, without charge, at least one
copy of the Registration Statement, as first filed with the
Commission, and of each amendment thereto, and, if requested all
documents incorporated by reference therein and all exhibits (and, if
requested exhibits incorporated therein by reference);
(x) deliver to each Holder and each Affiliated Market Maker
without charge, as many copies of the Prospectus (including each
preliminary prospectus) and any amendment or supplement thereto as
such Persons reasonably may request; the Company hereby consents to
the use (in accordance with law) of the Prospectus and any amendment
or supplement thereto by each selling Person in connection with the
offering and the sale of the Transfer Restricted Securities covered by
the Prospectus or any amendment or
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supplement thereto and all market making activities of such Affiliated
Market Maker, as the case may be;
(xi) upon the request of any Holder, enter into such
agreements and make such representations and warranties and take all
such other actions in connection therewith in order to expedite or
facilitate the disposition of the Transfer Restricted Securities
pursuant to any applicable Registration Statement contemplated by this
Agreement as may be reasonably requested by any Holder in connection
with any sale or resale pursuant to any applicable Registration
Statement. In such connection, and also in connection with market
making activities by any Affiliated Market Maker, the Company shall:
(A) upon request of any Person, furnish (or in the case of
paragraphs (2) and (3), all commercially reasonable efforts to
cause to be furnished) to each Person, upon Consummation of the
Exchange Offer or upon the effectiveness of the Shelf
Registration Statement, as the case may be:
(1) a certificate, dated such date, signed on behalf of
the Company by (x) the President or any Vice President and
(y) a principal financial or accounting officer of the
Company, confirming, as of the date thereof, the matters set
forth in Sections 9(a), 9(b) and 9(c) of the Purchase
Agreement and such other similar matters as such Person may
reasonably request;
(2) an opinion, dated the date of Consummation of the
Exchange Offer or the date of effectiveness of the Shelf
Registration Statement, as the case may be, of counsel for
the Company covering matters similar to those set forth in
paragraph (e) of Section 9 of the Purchase Agreement and such
other matter as such Person may reasonably request. Without
limiting the foregoing, such counsel may state further that
such counsel assumes no responsibility for, and has not
independently verified, the accuracy, completeness or
fairness of the financial statements, notes and schedules and
other financial data included in any Registration Statement
contemplated by this Agreement or the related Prospectus; and
(3) a customary comfort letter, dated the date of
Consummation of the Exchange Offer, or as of the date of
effectiveness of the Shelf Registration Statement, as the
case may be, from the Company's independent accountants, in
the customary form and covering matters of the type
customarily covered in comfort letters to underwriters in
connection with underwritten offerings, and affirming the
matters set forth in the comfort letters delivered pursuant
to Section 9(h) of the Purchase Agreement, and
(B) deliver such other documents and certificates as may be
reasonably requested by such Persons to evidence compliance with
the matters covered in clause (A) above and with any customary
conditions contained in the any agreement entered into by the
Company pursuant to this clause (xi);
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(xii) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders and their counsel in
connection with the registration and qualification of the Transfer
Restricted Securities under the securities or Blue Sky laws of such
jurisdictions as the selling Holders may request and do any and all
other acts or things necessary or advisable to enable the disposition
in such jurisdictions of the Transfer Restricted Securities covered by
the applicable Registration Statement; provided, however, that the
Company shall not be required to register or qualify as a foreign
corporation where it is not now so qualified or to take any action
that would subject it to the service of process in suits or to
taxation, other than as to matters and transactions relating to the
Registration Statement, in any jurisdiction where it is not now so
subject;
(xiii) in connection with any sale of Transfer Restricted
Securities that will result in such securities no longer being
Transfer Restricted Securities, cooperate with the Holders to
facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Securities to be sold and not bearing
any restrictive legends; and to register such Transfer Restricted
Securities in such denominations and such names as the selling Holders
may request at least two Business Days prior to such sale of Transfer
Restricted Securities;
(xiv) use all commercially reasonable efforts to cause the
disposition of the Transfer Restricted Securities covered by the
Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the
seller or sellers thereof to consummate the disposition of such
Transfer Restricted Securities, subject to the proviso contained in
clause (xii) above;
(xv) provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of a Registration
Statement covering such Transfer Restricted Securities and provide the
Trustee under the Indenture with printed certificates for the Transfer
Restricted Securities which are in a form eligible for deposit with
the Depository Trust Company;
(xvi) otherwise use all commercially reasonable efforts to
comply with all applicable rules and regulations of the Commission,
and make generally available to its security holders with regard to
any applicable Registration Statement, as soon as practicable, a
consolidated earnings statement meeting the requirements of Rule 158
(which need not be audited) covering a twelve-month period beginning
after the effective date of the Registration Statement (as such term
is defined in paragraph (c) of Rule 158 under the Act);
(xvii) cause the Indenture to be qualified under the TIA not
later than the effective date of the first Registration Statement
required by this Agreement and, in connection therewith, cooperate
with the Trustee and the Holders to effect such changes to the
Indenture as may be required for such Indenture to be so qualified in
accordance with the terms of the TIA; and execute and use all
commercially reasonable efforts to cause the Trustee to execute, all
documents that may be required to effect such changes and all
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other forms and documents required to be filed with the Commission to
enable such Indenture to be so qualified in a timely manner; and
(xviii)provide promptly to each Holder and Affiliated Market
Maker, upon request, each document filed with the Commission pursuant
to the requirements of Section 13 or Section 15(d) of the Exchange
Act.
(d) Restrictions on Holders. Each Holder agrees by acquisition of a
Transfer Restricted Security and each Affiliated Market Maker agrees that, upon
receipt of the notice referred to in Section 6(c)(iii)(C) or any notice from
the Company of the existence of any fact of the kind described in Section
6(c)(iii)(D) hereof (in each case, a "SUSPENSION NOTICE"), such Person will
forthwith discontinue disposition of Transfer Restricted Securities pursuant to
the applicable Registration Statement until (i) such Person has received copies
of the supplemented or amended Prospectus contemplated by Section 6(c)(iv)
hereof, or (ii) such Person is advised in writing by the Company that the use
of the Prospectus may be resumed, and has received copies of any additional or
supplemental filings that are incorporated by reference in the Prospectus (in
each case, the "RECOMMENCEMENT DATE"). Each Person receiving a Suspension
Notice hereby agrees that it will either (i) destroy any Prospectuses, other
than permanent file copies, then in such Person's possession which have been
replaced by the Company with more recently dated Prospectuses or (ii) deliver
to the Company (at the Company's expense) all copies, other than permanent file
copies, then in such Person's possession of the Prospectus covering such
Transfer Restricted Securities that was current at the time of receipt of the
Suspension Notice. The time period regarding the effectiveness of such
Registration Statement set forth in Section 3 or 4 hereof, as applicable, shall
be extended by a number of days equal to the number of days in the period from
and including the date of delivery of the Suspension Notice to the date of
delivery of the Recommencement Date.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's performance of or
compliance with Sections 3 and 4 of this Agreement will be borne by the
Company, regardless of whether a Registration Statement becomes effective,
including without limitation: (i) all registration and filing fees and
expenses; (ii) all fees and expenses of compliance with federal securities and
state Blue Sky or securities laws; (iii) all expenses of printing (including
printing certificates for the Series B Notes to be issued in the Exchange Offer
and printing of Prospectuses whether for exchanges, sales, market making or
otherwise), messenger and delivery services and telephone; (iv) all fees and
disbursements of counsel for the Company and not more than one counsel for the
Holders of Transfer Restricted Securities; (v) all application and filing fees
in connection with listing the Series B Notes on a national securities exchange
or automated quotation system pursuant to the requirements hereof; and (vi) all
fees and disbursements of independent certified public accountants of the
Company (including the expenses of any special audit and comfort letters
required by or incident to such performance).
The Company will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the
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expenses of any annual audit and the fees and expenses of any Person, including
special experts, retained by the Company.
Each Holder shall pay all underwriters discounts and commissions.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company will reimburse the
Initial Purchasers and the Holders of Transfer Restricted Securities who are
tendering Series A Notes into in the Exchange Offer and/or selling or reselling
Series A Notes or Series B Notes pursuant to the "Plan of Distribution"
contained in the Exchange Offer Registration Statement or the Shelf
Registration Statement, as applicable, for the reasonable fees and
disbursements of not more than one counsel, who shall be Latham & Watkins,
unless another firm shall be chosen by the Holders of a majority in principal
amount of the Transfer Restricted Securities for whose benefit such
Registration Statement is being prepared.
SECTION 8. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless each Holder, its
directors, officers and each Person, if any, who controls such Holder (within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act), from
and against any and all losses, claims, damages, liabilities, judgments,
(including without limitation, any legal or other expenses incurred in
connection with investigating or defending any matter, including any action
that could give rise to any such losses, claims, damages, liabilities or
judgments) caused by any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement, preliminary prospectus
or Prospectus (or any amendment or supplement thereto) provided by the Company
to any Holder or any prospective purchaser of Series B Notes or registered
Series A Notes, or caused by any untrue statement or alleged untrue statement
of a material fact or omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, except insofar as such losses, claims, damages, liabilities or
judgments are caused by an untrue statement or omission or alleged untrue
statement or omission that is based upon information relating to any of the
Holders furnished in writing to the Company by any of the Holders.
(b) Each Holder of Transfer Restricted agrees, severally and not
jointly, to indemnify and hold harmless the Company, and its directors and
officers, and each person, if any, who controls (within the meaning of Section
15 of the Act or Section 20 of the Exchange Act) the Company, to the same
extent as the foregoing indemnity from the Company set forth in section (a)
above, but only with reference to information relating to such Holder furnished
in writing to the Company by such Holder expressly for use in any Registration
Statement. In no event shall any Holder, its directors, officers or any Person
who controls such Holder be liable or responsible for any amount in excess of
the amount by which the total amount received by such Holder with respect to
its sale of Transfer Restricted Securities pursuant to a Registration Statement
exceeds (i) the amount paid by such Holder for such Transfer Restricted
Securities and (ii) the amount of any damages that such Holder, its directors,
officers or any Person who controls such Holder has
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<PAGE>
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission.
(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
"INDEMNIFIED PARTY"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "INDEMNIFYING PERSON") in
writing and the indemnifying party shall assume the defense of such action,
including the employment of counsel reasonably satisfactory to the indemnified
party and the payment of all fees and expenses of such counsel, as incurred
(except that in the case of any action in respect of which indemnity may be
sought pursuant to both Sections 8(a) and 8(b), a Holder shall not be required
to assume the defense of such action pursuant to this Section 8(c), but may
employ separate counsel and participate in the defense thereof, but the fees
and expenses of such counsel, except as provided below, shall be at the expense
of the Holder). Any indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of the indemnified party
unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed to assume the defense of such action or employ counsel
reasonably satisfactory to the indemnified party or (iii) the named parties to
any such action (including any impleaded parties) include both the indemnified
party and the indemnifying party, and the indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party (in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of the indemnified party).
In any such case, the indemnifying party shall not, in connection with any one
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys
(in addition to any local counsel) for all indemnified parties and all such
fees and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by a majority of the Holders, in the case of the parties
indemnified pursuant to Section 8(a), and by the Company, in the case of
parties indemnified pursuant to Section 8(b). The indemnifying party shall
indemnify and hold harmless the indemnified party from and against any and all
losses, claims, damages, liabilities and judgments by reason of any settlement
of any action (i) effected with its written consent or (ii) effected without
its written consent if the settlement is entered into more than twenty business
days after the indemnifying party shall have received a request from the
indemnified party for reimbursement for the fees and expenses of counsel (in
any case where such fees and expenses are at the expense of the indemnifying
party) and, prior to the date of such settlement, the indemnifying party shall
have failed to comply with such reimbursement request. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement or compromise of, or consent to the entry of judgment with respect
to, any pending or threatened action in respect of which the indemnified party
is or could have been a party and indemnity or contribution may be or could
have been sought hereunder by the indemnified party, unless such settlement,
compromise or judgment (i) includes an unconditional release of the indemnified
party from all liability on claims that are or
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<PAGE>
could have been the subject matter of such action and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act, by
or on behalf of the indemnified party.
(d) To the extent that the indemnification provided for in this
Section 8 is unavailable to an indemnified party in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, on the one hand, and the Holders, on the other hand, from their sale
of Transfer Restricted Securities or (ii) if the allocation provided by clause
8(d)(i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
8(d)(i) above but also the relative fault of the Company, on the one hand, and
of the Holder, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
judgments, as well as any other relevant equitable considerations. The relative
fault of the Company, on the one hand, and of the Holder, on the other hand,
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company, on the
one hand, or by the Holder, on the other hand, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The amount paid or payable by a party as a result
of the losses, claims, damages, liabilities and judgments referred to above
shall be deemed to include, subject to the limitations set forth in the second
paragraph of Section 8(a), any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any action
or claim.
The Company and each Holder agree that it would not be just and
equitable if contribution pursuant to this Section 8(d) were determined by pro
rata allocation (even if the Holders were treated as one entity for such
purpose) or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages, liabilities or judgments referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any
matter, including any action that could have given rise to such losses, claims,
damages, liabilities or judgments. Notwithstanding the provisions of this
Section 8, no Holder, its directors, its officers or any Person, if any, who
controls such Holder shall be required to contribute, in the aggregate, any
amount in excess of the amount by which the total received by such Holder with
respect to the sale of Transfer Restricted Securities pursuant to a
Registration Statement exceeds (i) the amount paid by such Holder for such
Transfer Restricted Securities and (ii) the amount of any damages which such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Holders' obligations to contribute pursuant
to this Section 8(c) are several in proportion to the respective principal
amount of Transfer Restricted Securities held by each Holder hereunder and not
joint.
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(e) The Company agrees that the indemnity and contribution provisions
of this Section 8 shall apply to Affiliated Market Makers to the same extent,
on the same conditions, as it applies to Holders.
SECTION 9. RULE 144A AND RULE 144
The Company agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding and during any period in which the
Company (i) is not subject to Section 13 or 15(d) of the Exchange Act, to make
available, upon request of any Holder, to such Holder or beneficial owner of
Transfer Restricted Securities in connection with any sale thereof and any
prospective purchaser of such Transfer Restricted Securities designated by such
Holder or beneficial owner, the information required by Rule 144A(d)(4) under
the Act in order to permit resales of such Transfer Restricted Securities
pursuant to Rule 144A, and (ii) is subject to Section 13 or 15 (d) of the
Exchange Act, to make all filings required thereby in a timely manner in order
to permit resales of such Transfer Restricted Securities pursuant to Rule 144.
SECTION 10. MISCELLANEOUS
(a) Remedies. The Company acknowledges and agrees that any failure by
the Company to comply with its obligations under Sections 3 and 4 hereof may
result in material irreparable injury to the Initial Purchasers or the Holders
or Affiliated Market Makers for which there is no adequate remedy at law, that
it will not be possible to measure damages for such injuries precisely and
that, in the event of any such failure, the Initial Purchasers or any Holder or
Affiliated Market Makers may obtain such relief as may be required to
specifically enforce the Company's obligations under Sections 3 and 4 hereof.
The Company further agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not, on or after the
date of this Agreement, enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders in this Agreement
or otherwise conflicts with the provisions hereof. The Company has not
previously entered into any agreement granting any registration rights with
respect to its securities to any Person. The rights granted to the Holders
hereunder do not in any way conflict with and are not inconsistent with the
rights granted to the holders of the Company's securities under any agreement
in effect on the date hereof.
(c) Amendments and Waivers. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to or departures
from the provisions hereof may not be given unless (i) in the case of Section 5
hereof and this Section 10(c)(i), the Company has obtained the written consent
of Holders of all outstanding Transfer Restricted Securities and (ii) in the
case of all other provisions hereof, the Company has obtained the written
consent of Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities (excluding Transfer Restricted Securities held
by the Company or its Affiliates). Notwithstanding the foregoing, a waiver or
consent to departure from the provisions hereof that relates exclusively to the
rights of Holders whose Transfer Restricted Securities are being tendered
pursuant to the Exchange Offer, and that does not affect directly or indirectly
the rights of other Holders whose Transfer Restricted Securities are not being
tendered pursuant to such Exchange Offer, may be
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given by the Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities subject to such Exchange Offer.
(d) Third Party Beneficiary. The Holders and Affiliated Market Makers
shall be third party beneficiaries to the agreements made hereunder between the
Company, on the one hand, and the Initial Purchaser, on the other hand, and
shall have the right to enforce such agreements directly to the extent they may
deem such enforcement necessary or advisable to protect its rights or the
rights of Holders and Affiliated Market Makers hereunder.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records
of the Registrar under the Indenture, with a copy to the Registrar
under the Indenture;
With a copy to:
Latham & Watkins
885 Third Avenue
New York, NY 10022
Telecopier No.: (212) 751-4864
Attention: Peter M. Labonski, Esq.
(ii) if to the Company:
Nextel Partners, Inc.
400 Carillon Point
Kirkland, WA 98033
Telecopier No.: (425) 828-8098
Attention: Donald Manning, Esq.
With copies to:
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019-6099
Telecopier No.: (212) 728-8111
Attention: Bruce R. Kraus, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when
receipt acknowledged, if telecopied; and on the next business day, if timely
delivered to an air courier guaranteeing overnight delivery.
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Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
Upon the date of filing of the Exchange Offer or a Shelf Registration
Statement, as the case may be, notice shall be delivered to Donaldson, Lufkin &
Jenrette Securities Corporation, on behalf of the Initial Purchasers (in the
form attached hereto as Exhibit A) and shall be addressed to: Attention: Louise
Guarneri (Compliance Department), 277 Park Avenue, New York, New York 10172.
(f) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent Holders; provided, that nothing herein shall be deemed to permit any
assignment, transfer or other disposition of Transfer Restricted Securities in
violation of the terms hereof or of the Purchase Agreement or the Indenture. If
any transferee of any Holder shall acquire Transfer Restricted Securities in
any manner, whether by operation of law or otherwise, such Transfer Restricted
Securities shall be held subject to all of the terms of this Agreement, and by
taking and holding such Transfer Restricted Securities such Person shall be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement, including the restrictions on resale
set forth in this Agreement and, if applicable, the Purchase Agreement, and
such Person shall be entitled to receive the benefits hereof.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Compliance with Form S-3. The Company agrees for the benefit of
any Affiliated Market Makers that for so long as any of the Transfer Restricted
Securities remain outstanding, if at any time sales by the Affiliated Market
Makers of the Transfer Restricted Securities will satisfy clauses 1 or 3 of the
"Transaction Requirements" specified in Form S-3 (or any comparable provision
of any successor form to Form S-3), the Company will use all commercially
reasonable efforts to comply with, and maintain their compliance with, the
"Registration Requirements" of Form S-3 (or any comparable provision of any
successor form to Form S-3).
(j) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(k) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
20
<PAGE>
(l) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect
of the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
21
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
Nextel Partners, Inc.
By: /s/ John D. Thompson
-------------------------------
Name: John D. Thompson
Title: Chief Financial Officer
Donaldson, Lufkin & Jenrette Securities Corporation
on behalf of the Initial Purchasers
By: /s/ Andrea J. Hagan
----------------------------
Name: Andrea J. Hagan
Title: Senior Vice President
22
<PAGE>
[EXECUTION COPY]
U.S. $275,000,000
CREDIT AGREEMENT,
dated as of January 29, 1999
among
NEXTEL PARTNERS OPERATING CORP.,
as the Borrower,
VARIOUS FINANCIAL INSTITUTIONS,
as the Lenders,
DLJ CAPITAL FUNDING, INC.,
as the Syndication Agent for the Lenders,
THE BANK OF NEW YORK,
as the Documentation Agent for the Lenders,
and
BANK OF MONTREAL, as the
Administrative Agent for the Lenders.
ARRANGED BY
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
<S> <C> <C>
1.1. Defined Terms 3
1.2. Use of Defined Terms 35
1.3. Cross-References 35
1.4. Accounting and Financial Determinations 36
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES,
NOTES AND LETTERS OF CREDIT
2.1. Commitments 36
2.1.1. Term Loan Commitments 36
2.1.2. Revolving Loan Commitment 36
2.1.3. Additional Commitments 37
2.1.4. Letter of Credit Commitment 38
2.1.5. Lenders Not Permitted or Required to Make Loans 38
2.1.6. Issuer Not Required to Issue Letters of Credit 38
2.2. Reduction of Commitment Amounts 38
2.2.1. Optional 38
2.2.2. Mandatory 39
2.3. Borrowing Procedure and Funding Maintenance 39
2.4. Continuation and Conversion Elections 40
2.5. Funding 40
2.6. Issuance Procedures 41
2.6.1. Other Lenders' Participation 41
2.6.2. Disbursements; Conversion to Revolving Loans 42
2.6.3. Reimbursement 42
2.6.4. Deemed Disbursements 43
2.6.5. Nature of Reimbursement Obligations 43
2.7. Register; Notes 44
</TABLE>
i
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
SECTION PAGE
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
<S> <C> <C>
3.1. Repayments and Prepayments; Application 45
3.1.1. Repayments and Prepayments 45
3.1.2. Application 49
3.2. Interest Provisions 49
3.2.1. Rates 49
3.2.2. Post-Maturity Rates 50
3.2.3. Payment Dates 50
3.3. Fees 50
3.3.1. Commitment Fee 51
3.3.2. Administrative Agent Fee 51
3.3.3. Letter of Credit Fee 51
ARTICLE IV
CERTAIN LIBO RATE AND OTHER PROVISIONS
4.1. LIBO Rate Lending Unlawful 51
4.2. Deposits Unavailable 52
4.3. Increased LIBO Rate Loan Costs, etc. 52
4.4. Funding Losses 52
4.5. Increased Capital Costs 53
4.6. Taxes 53
4.7. Payments, Computations, etc. 55
4.8. Sharing of Payments 56
4.9. Setoff 56
4.10. Mitigation 57
4.11. Replacement of Lenders 57
5.1. Initial Credit Extension 58
5.1.1. Resolutions, etc. 58
5.1.2. Delivery of Notes 58
5.1.3. Transaction Documents 58
</TABLE>
ii
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
<S> <C>
SECTION PAGE
ARTICLE V
CONDITIONS TO CREDIT EXTENSIONS
5.1.4. Closing Date Certificate 58
5.1.5. Subsidiary Guaranty 59
5.1.6. Parent Guaranty and Pledge Agreement 59
5.1.7. Security Agreements 59
5.1.8. Assignment Agreement and Consents to Assignment 60
5.1.9. Licenses 60
5.1.10. Consents 60
5.1.11. Capitalization and Structure 61
5.1.12. Vendor Contracts 61
5.1.13. Financial Information, etc. 61
5.1.14. Business Plan 61
5.1.15. Nextel Contribution, Motorola Contribution, Investors Contribution,
Borrower Equity Contribution and Senior Discount Note Issuance 61
5.1.16. Litigation 61
5.1.17. Material Adverse Change 62
5.1.18. Reliance Letters 62
5.1.19. Opinions of Counsel 62
5.1.20. Insurance 62
5.1.21. NWIP Undertaking 62
5.1.22. Cash Account; Cash Collateral Agreement 62
5.1.23. Realco Agreement; Management Agreement 63
5.1.24. Closing Fees, Expenses, etc. 63
5.1.25. Satisfactory Legal Form 63
5.2. All Credit Extensions 63
5.2.1. Compliance with Warranties, No Default, etc. 63
5.2.2. Credit Extension Request 64
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1. Organization, etc. 64
6.2. Due Authorization, Non-Contravention, etc. 64
6.3. Government Approval, Regulation, etc. 65
6.4. Validity, etc. 65
6.5. Financial Information 65
6.6. No Material Adverse Effect 65
6.7. Litigation, Labor Controversies, etc. 66
6.8. Subsidiaries 66
6.9. Ownership of Properties 66
</TABLE>
iii
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
<S> <C>
SECTION PAGE
6.10. Taxes 66
6.11. Pension and Welfare Plans 66
6.12. Environmental Warranties 67
6.13. Regulations U and X 68
6.14. Licenses; License Transfer 68
6.15. FCC Compliance 68
6.16. Accuracy of Information 69
6.17. Solvency 69
6.18. Year 2000 70
6.19. Credit Facility 70
6.20. Interests in Real Property Sufficient for Conduct of Business 70
ARTICLE VII
COVENANTS
7.1. Affirmative Covenants 70
7.1.1. Financial Information, Reports, Notices, etc. 70
7.1.2. Compliance with Laws, etc. 72
7.1.3. Maintenance of Properties 72
7.1.4. Insurance 73
7.1.5. Books and Records 73
7.1.6. Environmental Covenant 73
7.1.7. Future Subsidiaries 74
7.1.8. Future Leased Property and Future Acquisitions of Real
Property; Future Acquisition of Other Property 75
7.1.9. Use of Proceeds, etc. 76
7.1.10. Hedging Obligations 76
7.1.11. Undertaking 76
7.1.12. Landlord Consents 76
7.1.13. Year 2000 76
7.1.14. Termination Statements 77
7.2. Negative Covenants 77
7.2.1. Business Activities 77
7.2.2. Indebtedness 77
7.2.3. Liens 78
7.2.4. Financial Covenants 80
7.2.5. Investments 85
7.2.6. Restricted Payments, etc. 86
7.2.7. Capital Expenditures, etc. 87
</TABLE>
iv
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
<S> <C>
SECTION PAGE
7.2.8 Consolidation, Merger, etc. 88
7.2.9 Asset Dispositions, etc. 88
7.2.10 Modification of Certain Agreements 89
7.2.11 Transactions with Affiliates 89
7.2.12 Negative Pledges, Restrictive Agreements, etc. 90
7.2.13 Liabilities of License Subsidiary 90
ARTICLE VIII
EVENTS OF DEFAULT
8.1 Listing of Events of Default 90
8.1.1 Non-Payment of Obligations 90
8.1.2 Breach of Warranty 91
8.1.3 Non-Performance of Certain Covenants and Obligations 91
8.1.4 Non-Performance of Other Covenants and Obligations 91
8.1.5 Default on Other Indebtedness 91
8.1.6 Judgments 91
8.1.7 Pension Plans 91
8.1.8 Control of the Borrower 92
8.1.9 Bankruptcy, Insolvency, etc. 92
8.1.10. Impairment of Security, etc. 93
8.1.11. Licenses 93
8.1.12. Rights to Use 93
8.1.13 Subscription and Contribution Agreement 93
8.1.14 License Transfer 93
8.1.15 Nextel Operating Agreements 93
8.2 Action if Bankruptcy 94
8.3 Action if Other Event of Default 94
ARTICLE IX
THE ADMINISTRATIVE AGENT
9.1. Actions 94
9.2. Funding Reliance, etc 95
9.3. Exculpation 95
9.4. Successor 96
9.5. Credit Extensions by Each Agent and Issuer 96
9.6. Credit Decisions 97
</TABLE>
v
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
<S> <C>
SECTION PAGE
9.7 Copies, etc. 97
9.8 The Syndication Agent, the Documentation Agent and the Administrative
Agent 97
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1. Waivers, Amendments, etc 97
10.2. Notices 99
10.3. Payment of Costs and Expenses 99
10.4. Indemnification 99
10.5. Survival 101
10.6. Severability 101
10.7. Headings 101
10.8. Execution in Counterparts, Effectiveness, etc 101
10.9. Governing Law; Entire Agreement 101
10.10. Successors and Assigns 101
10.11. Sale and Transfer of Loans and Notes; Participations in Loans and Notes 102
10.11.1. Assignments 102
10.11.2. Participations 104
10.12. Confidentiality 104
10.13. Other Transactions 105
10.14. Forum Selection and Consent to Jurisdiction 105
10.15. Waiver of Jury Trial 106
</TABLE>
vi
<PAGE>
TABLE OF CONTENTS
(continued)
SCHEDULES:
Schedule I - Disclosure Schedule
Schedule II - Percentages and Administrative Information
Schedule III - Licenses/Network Area
Schedule IV - Investors
EXHIBITS:
Exhibit A-1 - Form of Revolving Note
Exhibit A-2 - Form of Term Note
Exhibit B-1 - Form of Borrowing Request
Exhibit B-2 - Form of Issuance Request
Exhibit C - Form of Continuation/Conversation Notice
Exhibit D - Form of Closing Date Certificate
Exhibit E - Form of Compliance Certificate
Exhibit F-1 - Form of Borrower Security and Pledge Agreement
Exhibit F-2 - Form of Subsidiary Security and Pledge Agreement
Exhibit G - Form of Parent Guaranty and Pledge Agreement
Exhibit H - Form of Subsidiary Guaranty
Exhibit I - Form of NWIP Undertaking
Exhibit J - Form of Lender Assignment Agreement
Exhibit K - Form of Cash Collateral Agreement
Exhibit L - Form of Assignment Agreement
Exhibit M-1 - Form of Realco Agreement
Exhibit M-2 - Form of Management Agreement
Exhibit N-1 - Form of New York Counsel Opinion
Exhibit N-2 - Form of FCC Counsel Opinion
Exhibit N-3 - Form of Local Counsel Opinion
vii
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of January 29, 1999, among NEXTEL
PARTNERS OPERATING CORP., a Delaware corporation (the "Borrower"), the various
financial institutions as are or may become parties hereto (collectively, the
"Lenders"), DLJ CAPITAL FUNDING, INC. ("DLJ"), as the syndication agent (the
"Syndication Agent") for the Lenders, THE BANK OF NEW YORK, as the documentation
agent (the "Documentation Agent") for the Lenders, BANK OF MONTREAL ("BOM"), as
the administrative agent (the "Administrative Agent") for the Lenders, and
Donaldson, Lufkin & Jenrette Securities Corporation, as Lead Arranger (the
Syndication Agent and the Administrative Agent are sometimes referred to herein
as the "Agents" and each as an "Agent").
W I T N E S S E T H:
WHEREAS, the Borrower is a wholly-owned Subsidiary of Nextel Partners,
Inc., a Delaware corporation (the "Parent");
WHEREAS, the Borrower intends to construct and operate a digital
wireless communications network (the "Network") utilizing (a) specialized mobile
radio ("SMR") licenses presently owned by an indirect, wholly-owned subsidiary
(the "Nextel License Subsidiary") of Nextel Communications, Inc., a Delaware
corporation ("Nextel"), (b) the Nextel brand name, (c) Nextel's national
switching infrastructure and (d) the "integrated Dispatch Enhanced Network" or
"iDEN" technology developed by Motorola, Inc., a Delaware corporation
("Motorola"), to serve the markets listed on Schedule III;
WHEREAS, subsequent to the Closing Date (such capitalized term, and
other terms used herein, to have the meanings provided in Section 1.1), the
License Transfer shall be consummated;
WHEREAS, in order to accomplish the build-out of the Network (the
"Network Build-out"), the following capital-raising transactions shall occur
prior to or contemporaneously with the making of the Initial Credit Extensions
hereunder:
(a) the Parent shall have received an equity contribution having an
aggregate implied value of approximately $131,000,000 from the issuance
of its Series B Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock to Nextel WIP Corp., a Delaware corporation ("NWIP")
and an indirect, wholly-owned Subsidiary of Nextel, in exchange for (i)
the contribution by NWIP to the Nextel License Subsidiary of the
Licenses listed on Schedule III, (ii) the commitment and obligation of
Nextel and NWIP to effect the License Transfer and (iii) the execution
and delivery by NWIP of certain agreements relating to the operation of
the Network (collectively, the "Nextel Contribution");
<PAGE>
(b) the Parent shall have received a credit in the aggregate
amount of $18,400,000 which may be used, dollar-for-dollar, against the
future purchase price of Motorola's infrastructure equipment to be used
in connection with the Network Build-out from the issuance of its
Series A Preferred Stock to Motorola having an implied value of
approximately $18,400,000 (the "Motorola Contribution");
(c) the Parent shall have received an initial cash equity
contribution of approximately $52,133,333 from the issuance of its
Series A Preferred Stock to certain investors listed on Schedule IV
hereto (collectively, the "Investors"), together with irrevocable
binding commitments from the Investors to make subsequent cash equity
contributions to the Parent as set forth in the Subscription and
Contribution Agreement (the "Investors Contribution");
(d) the Parent shall have received gross cash proceeds of
$400,000,000 from the issuance of its 14% senior unsecured discount
notes due 2009 (the "Senior Discount Notes", with the issuance thereof
being herein referred to as the "Senior Discount Notes Issuance"); and
(e) all cash and non-cash proceeds received by the Parent from
the Nextel Contribution, the Motorola Contribution, the Investors
Contribution and the Senior Discount Notes Issuance shall be
contributed by the Parent as an equity contribution to the Borrower
(the "Borrower Equity Contribution"; the Nextel Contribution, the
Motorola Contribution, the Investors Contribution, the Senior Discount
Notes Issuance and the Borrower Equity Contribution and all
transactions related thereto, including those described in the recitals
hereto and the financing described herein, being collectively referred
to as the "Transaction");
WHEREAS, in connection with the Transaction and in order to finance the
capital expenditures related to Network Build-out and the ongoing working
capital and general corporate needs of the Borrower and its Subsidiaries, the
Borrower desires to obtain the following financing facilities from the Lenders:
(a) a Term Loan Commitment pursuant to which Borrowings of
Term Loans will be made to the Borrower in a single Borrowing on the
Closing Date in a maximum, original principal amount of $175,000,000;
(b) a Revolving Loan Commitment (to include availability for
Revolving Loans and Letters of Credit) pursuant to which Borrowings of
Revolving Loans, in a maximum aggregate principal amount (together with
all Letter of Credit Outstandings) not to exceed $100,000,000, will be
made to the Borrower from time to time on and subsequent to the Closing
Date but prior to the Revolving Loan Commitment Termination Date; and
(c) a Letter of Credit Commitment pursuant to which the Issuer
will issue Letters of Credit for the account of the Borrower from time
to time on and subsequent to the
-2-
<PAGE>
Closing Date but prior to the Revolving Loan Commitment Termination
Date in a maximum aggregate Stated Amount at any one time outstanding
not to exceed $10,000,000 (provided that the aggregate outstanding
principal amount of Revolving Loans and Letter of Credit Outstandings
at any time shall not exceed the then existing Revolving Loan
Commitment Amount); and
WHEREAS, the Lenders are willing, on the terms and subject to the
conditions hereinafter set forth (including Article V), to extend such
Commitments, make such Loans to the Borrower and issue (or participate in) such
Letters of Credit;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE
DEFINITIONS AND ACCOUNTING TERMS
SECTION Defined Terms. The following terms (whether or not underscored)
when used in this Agreement, including its preamble and recitals, shall, except
where the context otherwise requires, have the following meanings (such meanings
to be equally applicable to the singular and plural forms thereof):
"Adjusted EBITDA" means, for any applicable period, the sum of (i)
Consolidated EBITDA for such period plus (ii) the aggregate amount deducted in
determining Consolidated Net Income for such period in respect of sales,
marketing and advertising expenses.
"Administrative Agent" is defined in the preamble and includes each
other Person as shall have subsequently been appointed as the successor
Administrative Agent pursuant to Section 9.4.
"Affiliate" of any Person means any other Person which, directly or
indirectly, controls, is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Plan). A Person shall be deemed to be "controlled by" any
other Person if such other Person possesses, directly or indirectly, power (i)
to vote 10% or more of the Capital Stock (on a fully diluted basis) of such
Person having ordinary voting power for the election of directors or managing
general partners, or (ii) to direct or cause the direction of the management and
policies of such Person whether by contract or otherwise.
"Agents" means, collectively, the Administrative Agent and the
Syndication Agent.
"Aggregate Service Revenue" means, for any period, all service
revenues, including subscriber revenues, toll revenues, roaming revenues,
wholesale service revenues and long-distance revenues, of the Borrower and its
Subsidiaries for such period.
-3-
<PAGE>
"Agreement" means, on any date, this Credit Agreement as originally in
effect on the Closing Date and as thereafter from time to time amended,
supplemented, amended and restated, or otherwise modified and in effect on such
date.
"Agreement in Support of Charter Obligations" means the Agreement in
Support of Charter Obligations, dated as of January 29, 1999, between NWIP and
the Parent, as amended, supplemented, amended and restated or otherwise modified
from time to time in accordance with Section 7.2.10.
"Agreement Specifying Obligations of, and Limiting Liability and
Recourse to, Nextel" means the Agreement Specifying Obligations of, and Limiting
Liability and Recourse to, Nextel, dated as of January 29, 1999, among Nextel,
the Parent and the Borrower, as amended, supplemented, amended and restated or
otherwise modified from time to time in accordance with Section 7.2.10
"Alternate Base Rate" means, for any day and with respect to all Base
Rate Loans, the higher of: (a) 0.50% per annum above the latest Federal Funds
Rate and (b) the rate of interest in effect for such day as most recently
publicly announced or established by the Administrative Agent in Chicago,
Illinois as its "prime rate". (The "prime rate" is a rate set by the
Administrative Agent based upon various factors including the Administrative
Agent's costs and desired return, general economic conditions and other factors,
and is used as a reference point for pricing some loans, which may be priced at,
above or below such announced rate.) Any change in the prime rate established or
announced by the Administrative Agent shall take effect at the opening of
business on the day of such establishment or announcement.
"Analog Management Agreement" means the Analog Management Agreement,
dated as of January 29, 1999, by and between the Borrower and NWIP, as amended,
supplemented, amended and restated or otherwise modified from time to time in
accordance with Section 7.2.10.
"Annualized Adjusted EBITDA" means, for the period ending on the last
day of any Fiscal Quarter, the product of (a) Adjusted EBITDA for the two
consecutive Fiscal Quarters ending on such last day, multiplied by (b) two.
"Annualized EBITDA" means, for the period ending on the last day of any
Fiscal Quarter, the product of Consolidated EBITDA for the two consecutive
Fiscal Quarters ending on such last day, multiplied by (b) two.
"Applicable Commitment Fee" means a fee which shall accrue at the
applicable rate per annum set forth below based upon the percentage of the
Revolving Loan Commitments which are unused as of the time of determination:
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<PAGE>
Undrawn Commitments
as a Percentage of the
Revolving Loan Commitment Commitment Fee
------------------------- --------------
greater than or equal to 67% 2.00%
greater than or equal to 33%
and less than 67% 1.25%
less than 33% 0.75%
"Applicable Margin" means at all times during the applicable periods
set forth below:
(a) with respect to the unpaid principal amount of each Term
Loan maintained as a (i) Base Rate Loan, 3.75% per annum and (ii) LIBO
Rate Loan, 4.75% per annum;
(b) from the Closing Date through (but excluding) the date
upon which the first Compliance Certificate demonstrating that
Consolidated EBITDA for the most recent Fiscal Quarter for which a
Compliance Certificate has been delivered by the Borrower to the
Administrative Agent pursuant to clause (c) of Section 7.1.1 is
positive, with respect to the unpaid principal amount of each Revolving
Loan maintained as a (i) Base Rate Loan, 3.25% per annum and (ii) LIBO
Rate Loan, 4.25% per annum; and
(c) at all times from and after the date of such delivery of
the Compliance Certificate described in clause (b) above, with respect
to the unpaid principal amount of each Revolving Loan, by reference to
the applicable Leverage Ratio and at the applicable percentage per
annum set forth below under the caption "Applicable Margin for Base
Rate Loans" or "Applicable Margin for LIBO Rate Loans", as the case may
be:
Applicable Margin For Revolving Loans
<TABLE>
<CAPTION>
Applicable Applicable
Margin For Base Margin For LIBO
Leverage Ratio Rate Loans Rate Loans
-------------- ---------- ----------
<S> <C> <C>
greater than 10.0:1 3.00% 4.00%
greater than 8.0:1 and less
than or equal to 10.0:1 2.75% 3.75%
greater than 7.0:1 and less
than or equal to 8.0:1 2.50% 3.50%
greater than 6.0:1 and less
than or equal to 7.0:1 2.25% 3.25%
-5-
<PAGE>
greater than 5.0:1 and less
than or equal to 6.0:1 1.75% 2.75%
less than or equal to 5.0:1 1.25% 2.25%
</TABLE>
The Leverage Ratio used to compute the Applicable Margin for Revolving Loans for
any day shall be the Leverage Ratio set forth in the Compliance Certificate most
recently delivered by the Borrower to the Administrative Agent pursuant to
clause (c) of Section 7.1.1. Changes in the Applicable Margin for Revolving
Loans resulting from a change in the Leverage Ratio shall become effective upon
delivery by the Borrower to the Administrative Agent of a new Compliance
Certificate pursuant to clause (c) of Section 7.1.1. If the Borrower shall fail
to deliver a Compliance Certificate within the number of days after the end of
any Fiscal Quarter as required pursuant to clause (c) of Section 7.1.1 (without
giving effect to any grace period), the Applicable Margin for Revolving Loans
from and including the first day after the date on which such Compliance
Certificate was required to be delivered to, but not including the date the
Borrower delivers to the Administrative Agent an appropriately completed
Compliance Certificate shall conclusively equal the highest Applicable Margin
for Revolving Loans set forth above.
"Approved Affiliate Agreements" means, collectively, the Transaction
Documents and agreements in respect of transactions with Affiliates which have
been approved by a majority of disinterested directors of the board of directors
of the Borrower pursuant to clause (c) of the proviso to Section 7.2.11.
"Asset Transfer and Reimbursement Agreement" means the Asset Transfer
and Reimbursement Agreement, dated as of January 29, 1999, by and between the
Borrower and NWIP, as amended, supplemented, amended and restated and otherwise
modified from time to time in accordance with Section 7.2.10.
"Assignee Lender" is defined in Section 10.11.1.
"Assignment Agreement" means the Assignment Agreement made by the
Borrower, the Parent and Realco in favor of the Administrative Agent pursuant to
Section 5.1.8, including the consents to assignment executed and delivered by
the parties to the Nextel Operating Agreements, substantially in the form of
Exhibit L hereto, as amended, supplemented, amended and restated or otherwise
modified from time to time.
"Assignor Lender" is defined in Section 10.11.1.
"Authorized Officer" means, relative to any Obligor, those of its
officers whose signatures and incumbency shall have been certified to the Agents
and the Lenders pursuant to Section 5.1.1.
-6-
<PAGE>
"Base Rate Loan" means a Loan bearing interest at a fluctuating rate
determined by reference to the Alternate Base Rate.
"BOM" is defined in the preamble.
"Borrower" is defined in the preamble.
"Borrower Equity Contribution" is defined in clause (e) of the fourth
recital.
"Borrower Security and Pledge Agreement" means the Security and Pledge
Agreement executed and delivered by an Authorized Officer of the Borrower
pursuant to Section 5.1.7, substantially in the form of Exhibit F-1 hereto, as
amended, supplemented, amended and restated or otherwise modified from time to
time.
"Borrowing" means the Loans of the same type and, in the case of LIBO
Rate Loans, having the same Interest Period made by all Lenders on the same
Business Day and pursuant to the same Borrowing Request in accordance with
Section 2.1.
"Borrowing Request" means a loan request and certificate duly executed
by an Authorized Officer of the Borrower, substantially in the form of Exhibit
B-1 hereto.
"Business Day" means any day which is neither a Saturday or Sunday nor
a legal holiday on which banks are authorized or required to be closed in New
York City or Chicago, Illinois, and, with respect to Borrowings of, Interest
Periods with respect to, payments of principal and interest in respect of, and
conversions of Base Rate Loans into, LIBO Rate Loans, any day on which dealings
in Dollars are carried on in the London interbank market.
"Capital Expenditures" means for any period, the sum, without
duplication, of (i) the aggregate amount of all expenditures of the Borrower and
its Subsidiaries for fixed or capital assets made during such period which, in
accordance with GAAP, would be classified as capital expenditures (excluding
expenditures made in connection with the replacement or restoration of assets to
the extent such replacement or restoration is financed with insurance proceeds
paid on account of the loss of or damage to the assets so replaced or restored
or awards of compensation arising from the taking by condemnation or eminent
domain of the assets so replaced), and (ii) the aggregate amount of the
principal component of all Capitalized Lease Liabilities for any capitalized
leases entered into during such period by the Borrower and its Subsidiaries.
"Capitalized Lease Liabilities" means, without duplication, all
monetary obligations of the Borrower or any of its Subsidiaries under any
leasing or similar arrangement which, in accordance with GAAP, would be
classified as capitalized leases, and, for purposes of this Agreement and each
other Loan Document, the amount of such obligations shall be the capitalized
amount thereof, determined in accordance with GAAP, and the stated maturity
thereof shall be the date of the last payment of rent or any other amount due
under such lease
-7-
<PAGE>
prior to the first date upon which such lease may be terminated by the lessee
without payment of a penalty.
"Capital Stock" means, with respect to any Person, (i) any and all
shares, interests, participations, rights or other equivalents of or interests
in (however designated) corporate or capital stock, including, without
limitation, shares of preferred or preference stock of such Person, (ii) all
partnership interests (whether general or limited) in such Person, (iii) all
membership interests or limited liability company interests in such Person, and
(iv) all other equity or ownership interests in such Person of any other type.
"Cash Account" means an account of the Borrower established and
maintained pursuant to the Borrower Security and Pledge Agreement into which the
Required Balance shall be deposited in cash or Cash Equivalent Investments.
"Cash Collateral Agreement" means the Cash Collateral Agreement
executed and delivered by the Borrower pursuant to Section 5.1.22, substantially
in the form of Exhibit K hereto, as amended, supplemented, amended and restated
or otherwise modified from time to time.
"Cash Equivalent Investment" means, at any time:
(a) any evidence of Indebtedness, maturing not more than one
year after such time, issued directly by the United States of America
or any agency thereof or guaranteed by the United States of America or
any agency thereof;
(b) commercial paper, maturing not more than nine months from
the date of issue, which is issued by (i) a corporation (other than an
Affiliate of any Obligor) organized under the laws of any state of the
United States or of the District of Columbia and rated at least A-l by
S&P or P-l by Moody's, or (ii) any Lender (or its holding company);
(c) any time deposit, certificate of deposit or bankers
acceptance, maturing not more than one year after such time, maintained
with or issued by either (i) a commercial banking institution
(including U.S. branches of foreign banking institutions) that is a
member of the Federal Reserve System and has a combined capital and
surplus and undivided profits of not less than $500,000,000, or (ii)
any Lender;
(d) short-term tax-exempt securities rated not lower than
MIG-1/1+ by either Moody's or S&P with provisions for liquidity or
maturity accommodations of 183 days or less;
(e) repurchase agreements (i) which, are entered into with any
entity referred to in clause (b) or (c) above or any other financial
institution whose unsecured long-term debt (or the unsecured long-term
debt of whose holding company) is rated at least A- or
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better by S&P or Baa1 or better by Moody's and maturing not more than
one year after such time, (ii) which, in the event treated as a secured
loan, would be secured by a fully perfected security interest in
securities of the type referred to in clause (a) above and (iii)
involving securities which have a market value at the time of such
repurchase agreement is entered into of not less than 100% of the
repurchase obligation of such counterparty entity with whom such
repurchase agreement has been entered into; or
(f) any money market or similar fund the assets of which are
comprised at least 90% of any of the items specified in clauses (a)
through (d) above and as to which withdrawals are permitted at least
every 90 days.
"Casualty Event" means the damage, destruction or condemnation, as the
case may be, of any property of the Borrower or any of its Subsidiaries.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List.
"Change in Control" means (i) the failure of the Parent at any time to
own, free and clear of all Liens and encumbrances (other than Liens permitted to
exist under clauses (a), (e) and (h) of Section 7.2.3), all right, title and
interest in 100% of the Capital Stock of the Borrower; (ii) the failure of
Nextel at any time to own, free and clear of all Liens and encumbrances (other
than Liens arising under the Shareholders' Agreement) all right, title and
interest in at least 90% (on a fully diluted basis) of the Capital Stock of the
Parent (other than the Series B Preferred Stock of the Parent) owned by Nextel
on the Closing Date; or (iii) the acquisition of ownership, directly or
indirectly, by any Person or group (within the meaning of the Securities
Exchange Act of 1934 and the rules of the Securities and Exchange Commission
thereunder as in effect on the date hereof), other than the DLJMB Entities,
Nextel and Madison Dearborn, of a number of shares of Capital Stock of the
Parent sufficient to have and exercise voting power for the election of a
majority of the board of directors of the Parent.
"Closing Date" means the Business Day on which the initial Credit
Extension is made, not to be later than January 29, 1999.
"Closing Date Certificate" means a certificate of an Authorized Officer
of the Borrower substantially in the form of Exhibit D hereto, delivered
pursuant to Section 5.1.4.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commitment" means, as the context may require, a Lender's Term Loan
Commitment, Revolving Loan Commitment or Letter of Credit Commitment.
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"Commitment Amount" means, as the context may require, the Term Loan
Commitment Amount, the Revolving Loan Commitment Amount or the Letter of Credit
Commitment Amount.
"Commitment Letter" means the commitment letter, dated December 30,
1998, among the Parent, the Lead Arranger and the Syndication Agent including
all annexes and exhibits thereto.
"Commitment Termination Date" means, as the context may require, the
Revolving Loan Commitment Termination Date or the Term Loan Commitment
Termination Date.
"Commitment Termination Event" means (i) the occurrence of any Event of
Default described in clauses (a) through (d) of Section 8.1.9 with respect to
any Obligor (excluding Subsidiaries that are not Material Subsidiaries), or (ii)
the occurrence and continuance of any other Event of Default and either (x) the
declaration of the Loans to be due and payable pursuant to Section 8.3, or (y)
in the absence of such declaration, the giving of notice by the Administrative
Agent, acting at the direction of the Required Lenders, to the Borrower that the
Commitments have been terminated.
"Committed Equity" means irrevocable binding commitments to purchase
Preferred Stock of the Parent pursuant to the Subscription and Contribution
Agreement.
"Communications Act" means the Communications Act of 1934, and any
similar or successor federal statute, and the rules and regulations and
published policies of the FCC thereunder, all as amended and as the same may be
in effect from time to time.
"Compliance Certificate" means a certificate duly completed and
executed by the president, chief executive officer, treasurer, assistant
treasurer, assistant secretary, controller or chief financial Authorized Officer
of the Borrower, substantially in the form of Exhibit E hereto.
"Consolidated Cash Interest Expense" means, for any period on a
consolidated basis for the Parent and its Subsidiaries, (a) Consolidated
Interest Expense for such period minus (b) the aggregate amount of pay-in-kind
or accreted Consolidated Interest Expense for such period not involving any
payment in cash.
"Consolidated EBITDA" means, for any applicable period, the sum
(without duplication) for the Parent and its Subsidiaries on a consolidated
basis of
(a) Consolidated Net Income,
plus
(b) the amount deducted in determining Consolidated Net Income
representing non-cash charges, including depreciation and amortization
and any non-cash expenses
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incurred by the Parent representing a valuation charge for annual
awards of management stock options or as a result of the vesting of
restricted stock,
plus
(c) the amount deducted in determining Consolidated Net Income
representing income or franchise taxes (whether paid or deferred),
plus
(d) the amount deducted in determining Consolidated Net Income
representing Consolidated Interest Expense,
plus
(e) to the extent received by the Parent or any of its
Subsidiaries, cash dividends from Investments in Permitted Joint
Ventures,
minus
(f) Restricted Payments of the type referred to in clause (b)
of Section 7.2.6 made during such period.
"Consolidated Interest Expense" means, for any applicable period, the
aggregate consolidated interest expense (whether cash or non-cash) of the Parent
and its Subsidiaries for such applicable period, as determined in accordance
with GAAP, including the portion of any payments made in respect of Capitalized
Lease Liabilities allocable to interest expense and the aggregate amount of
pay-in-kind or accreted Consolidated Interest Expense for such period not
involving a payment in cash.
"Consolidated Net Income" means, for any period, the net income of the
Parent and its Subsidiaries for such period on a consolidated basis (including
cash income received by the Parent and its Subsidiaries from Investments in
Permitted Joint Ventures), excluding extraordinary or non-recurring gains,
credits, losses and expenses.
"Contingent Liability" means any agreement, undertaking or arrangement
by which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) the indebtedness,
obligation or any other liability of any other Person (other than by
endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of Capital Stock of
any other Person. The amount of any Person's obligation under any Contingent
Liability shall (subject to any limitation set forth therein) be deemed to be
the outstanding principal amount of the debt, obligation or other liability
guaranteed thereby.
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"Continuation/Conversion Notice" means a notice of continuation or
conversion and certificate duly executed by an Authorized Officer of the
Borrower, substantially in the form of Exhibit C hereto.
"Contributed Equity" means at any time or for any period, the sum of
(a) the aggregate amount of cash which shall have been received by the Parent
and contributed to the Borrower prior to such time or during such period as
consideration for the issuance of Preferred Stock of the Parent pursuant to the
Subscription and Contribution Agreements, (b) cash proceeds from the sale by the
Parent of the Senior Notes, (c) $131,000,000, the agreed value of the Nextel
Contribution, (d) $18,400,000, the agreed value of the Motorola Contribution and
(e) the fair market value as reasonably determined by the board of directors of
the Borrower in good faith of any non-cash assets or items contributed to the
Borrower as a capital contribution or in exchange for Capital Stock of the
Borrower.
"Controlled Group" means all members of a controlled group of
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with the
Borrower, are treated as a single employer under Section 414(b) or 414(c) of the
Code or Section 4001 of ERISA, or for purposes of Section 412, Section 414(m) or
Section 414(o) of the Code.
"Copyright Security Agreement" means any Copyright Security Agreement
executed and delivered by an Obligor in substantially the form of Exhibit C to
any Security Agreement, as amended, supplemented, amended and restated or
otherwise modified from time to time.
"Covered POPs" means the aggregate number of POPs within each market or
geographical area specified on Schedule III for which facilities in commercial
operation owned by the Borrower or its Subsidiaries have achieved substantial
completion.
"Credit Extension" means, as the context may require, (i) the making of
a Loan by a Lender or (ii) the issuance of any Letter of Credit, or the
extension of any Stated Expiry Date of any previously issued Letter of Credit,
by the Issuer.
"Credit Extension Request" means, as the context may require, any
Borrowing Request or Issuance Request.
"Current Assets" means, on any date, without duplication, all assets
which, in accordance with GAAP, would be included as current assets on a
consolidated balance sheet of the Borrower and its Subsidiaries at such date as
current assets (excluding, however, amounts due and to become due from
Affiliates of the Borrower which have arisen from transactions which are neither
arm's-length and in the ordinary course of its business nor pursuant to an
Approved Affiliate Agreement).
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"Current Liabilities" means, on any date, without duplication, all
amounts which, in accordance with GAAP, would be included as current liabilities
on a consolidated balance sheet of the Borrower and its Subsidiaries at such
date, excluding current maturities of Indebtedness.
"Debt" means, without duplication, the outstanding principal amount of
all Indebtedness of the Parent and its Subsidiaries that is of the type referred
to in clause (a), (b), (c) or (e) of the definition of "Indebtedness" and any
Contingent Liability in respect of any of the foregoing.
"Default" means any Event of Default or any condition, occurrence or
event which, after notice or lapse of time or both, would, unless cured or
waived, constitute an Event of Default.
"Disbursement" is defined in Section 2.6.2.
"Disbursement Date" is defined in Section 2.6.2.
"Disbursement Due Date" is defined in Section 2.6.2.
"Disclosure Schedule" means the Disclosure Schedule attached hereto as
Schedule I, as it may be amended, supplemented or otherwise modified from time
to time by the Borrower with the written consent of the Required Lenders.
"DLJ" is defined in the preamble.
"DLJMB Entities" means DLJ Merchant Banking Partners II, L.P., DLJ
Merchant Banking II, Inc., DLJ Capital Corp., Sprout Capital VIII, L.P. and any
other Affiliates of DLJ.
"Documentation Agent" is defined in the preamble and includes each
other Person as shall have subsequently been appointed as the successor
Documentation Agent by the predecessor Documentation Agent.
"Dollar" and the sign "$" mean lawful money of the United States.
"Environmental Laws" means all applicable federal, state or local
statutes, laws, ordinances, codes, rules and regulations (including consent
decrees and administrative orders) relating to public health and safety and
protection of the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default" is defined in Section 8.1.
"Excess Cash Flow" means, for any applicable period, the excess (if
any), of
(a) Consolidated EBITDA for such applicable period;
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over
(b) the sum, without duplication (for such applicable period)
of
(i) Consolidated Cash Interest Expense (net of
interest income) for such applicable period;
plus
(ii) scheduled payments and optional and mandatory
prepayments, to the extent actually made, of the principal
amount of the Term Loans or any other funded Debt (including
the principal component of any Capitalized Lease Liabilities)
and mandatory prepayments of the principal amount of the
Revolving Loans pursuant to clause (g) of Section 3.1.1 in
connection with a reduction of the Revolving Loan Commitment
Amount, in each case for such applicable period;
plus
(iii) all federal, state, local and foreign income
and franchise taxes actually paid in cash by the Parent and
its Subsidiaries and Restricted Payments made by the Borrower
pursuant to clause (b) of Section 7.2.6 for such applicable
period;
plus
(iv) Capital Expenditures actually made or committed
to be made during such applicable period pursuant to clause
(a) of Section 7.2.7 (excluding Capital Expenditures
constituting Capitalized Lease Liabilities and by way of the
incurrence of Indebtedness permitted pursuant to clause (b) of
Section 7.2.2 to a vendor of any assets permitted to be
acquired pursuant to Section 7.2.7 to finance the acquisition
of such assets);
plus
(v) the amount of the net increase (or minus, in the
case of a net decrease) of Current Assets, other than cash and
Cash Equivalent Investments, over Current Liabilities of the
Parent and its Subsidiaries for such applicable period;
plus
(vi) Investments permitted and actually made pursuant
to clauses (d), (f), and (h) of Section 7.2.5 during such
applicable period.
"Excluded Equity Proceeds" means any proceeds received by the Parent or
the Borrower from the sale or issuance by such Person of its Capital Stock or
any warrants or options in
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respect of any such Capital Stock or the exercise of any such warrants or
options, which proceeds are received pursuant to any such sale, issuance or
exercise constituting or resulting from (i) capital contributions to, or Capital
Stock issuances by, the Parent or the Borrower (exclusive of any such
contribution or issuance resulting from a Public Offering or a widely
distributed private offering exempted from the registration requirements of
Section 5 of the Securities Act of 1933, as amended), (ii) the sale of any
Capital Stock of the Parent or the Borrower to any officer, director or employee
of such Person or any of its Subsidiaries pursuant to any subscription
agreement, incentive plan or similar arrangement with any officer, employee or
director of such Person or any of its Subsidiaries, provided such proceeds do
not exceed $5,000,000 in the aggregate, (iii) any loan made by the Parent, the
Borrower or any of their respective Subsidiaries pursuant to clause (f) of
Section 7.2.5, (iv) any Preferred Stock Issuance or (v) the Investors
Contribution.
"FCC" means the Federal Communication Commission, or any other similar
or successor agency of the federal government administering the Communications
Act.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to
(a) the weighted average of the rates on overnight federal
funds transactions with members of the Federal Reserve System arranged
by federal funds brokers, as published for such day (or, if such day is
not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York; or
(b) if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three federal
funds brokers of recognized standing selected by it.
"Fee Letter" means the confidential fee letter, dated December 30,
1998, among the Lead Arranger and the Syndication Agent.
"Fiscal Quarter" means any quarter of a Fiscal Year.
"Fiscal Year" means any period of twelve consecutive calendar months
ending on December 31 of any calendar year.
"Fixed Charge Coverage Ratio" means, at the end of any Fiscal Quarter,
the ratio computed for the period consisting of such Fiscal Quarter and each of
the three immediately prior Fiscal Quarters of
(a) Annualized EBITDA as of such Fiscal Quarter
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to
(b) the sum (without duplication) of
(i) Consolidated Cash Interest Expenses (net of
interest income) for all such Fiscal Quarters;
plus
(ii) all scheduled payments of principal of the Term
Loans and other funded Debt during all such Fiscal Quarters,
exclusive, however, of any payment in respect of principal of
the Revolving Loans, other than any such payment to the extent
resulting from a permanent decrease of the Revolving Loan
Commitment Amount;
plus
(iii) all federal, state, local and foreign income
and franchise taxes actually paid in cash by the Parent and
its Subsidiaries during such period, net (without duplication)
of all cash tax refunds received during such period; provided,
that, after giving effect to any such deductions for tax
refunds, the amount calculated pursuant to this clause (iii)
for any applicable period shall not be less than zero.
"F.R.S. Board" means the Board of Governors of the Federal Reserve
System or any successor thereto.
"GAAP" is defined in Section 1.4.
"Hazardous Material" means
(a) any "hazardous substance", as defined by CERCLA;
(b) any "hazardous waste", as defined by the Resource
Conservation and Recovery Act, as amended;
(c) any petroleum product; or
(d) any pollutant or contaminant or hazardous, dangerous or
toxic chemical, material or substance within the meaning of any other
applicable federal, state or local law, regulation, ordinance or
requirement (including consent decrees and administrative orders)
relating to or imposing liability or standards of conduct concerning
any hazardous, toxic or dangerous waste, substance or material, all as
amended or hereafter amended.
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"Hedging Obligations" means, with respect to any Person, all
liabilities of such Person under interest rate swap agreements, interest rate
cap agreements and interest rate collar agreements, and all other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates or currency exchange rates.
"herein", "hereof", "hereto", "hereunder" and similar terms contained
in this Agreement or any other Loan Document refer to this Agreement or such
other Loan Document, as the case may be, as a whole and not to any particular
Section, paragraph or provision of this Agreement or such other Loan Document.
"Impermissible Qualification" means, relative to the opinion or
certification of any independent public accountant as to any financial statement
of any Obligor, any qualification or exception to such opinion or certification
(i) which is of a "going concern" or similar nature, (ii) which relates to the
limited scope of examination of matters relevant to such financial statement, or
(iii) which relates to the treatment or classification of any item in such
financial statement and which, as a condition to its removal, would require an
adjustment to such item the effect of which would be to cause such Obligor to be
in default of any of its obligations under Section 7.2.4.
"including" means including without limiting the generality of any
description preceding such term, and, for purposes of this Agreement and each
other Loan Document, the parties hereto agree that the rule of ejusdem generis
shall not be applicable to limit a general statement, which is followed by or
referable to an enumeration of specific matters, to matters similar to the
matters specifically mentioned.
"Indebtedness" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money or for
the deferred purchase price of property or services (exclusive of
deferred purchase price arrangements in the nature of open or other
accounts payable owed to suppliers on normal terms in connection with
the purchase of goods and services in the ordinary course of business)
and all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments;
(b) all obligations, contingent or otherwise, relative to the
face amount of all letters of credit, whether or not drawn, and
banker's acceptances issued for the account of such Person;
(c) all Capitalized Lease Liabilities;
(d) net liabilities of such Person under all Hedging
Obligations;
(e) whether or not so included as liabilities in accordance
with GAAP, all Indebtedness of the types referred to in clauses (a)
through (d) above (excluding prepaid
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interest thereon) secured by a Lien on property owned or being
purchased by such Person (including Indebtedness arising under
conditional sales or other title retention agreements), whether or not
such Indebtedness shall have been assumed by such Person or is limited
in recourse; provided, however, that, to the extent such Indebtedness
is limited in recourse to the assets securing such Indebtedness, the
amount of such Indebtedness shall be limited to the fair market value
of such assets; and
(f) all Contingent Liabilities of such Person in respect of
any of the foregoing.
For all purposes of this Agreement, the Indebtedness of any Person shall include
the Indebtedness of any partnership or joint venture in which such Person is a
general partner or a joint venturer (to the extent such Person is liable for
such Indebtedness).
"Indemnified Liabilities" is defined in Section 10.4.
"Indemnified Parties" is defined in Section 10.4.
"Infrastructure Equipment Purchase Agreement" means the Infrastructure
Equipment Purchase Agreement, dated as of January 29, 1999, between Motorola and
the Borrower, as amended, supplemented, amended and restated or otherwise
modified from time to time in accordance with Section 7.2.10.
"Initial POPs" means, as of the Closing Date, 4,500,000 POPs.
"Interest Period" means, as to any LIBO Rate Loan, the period
commencing on the Borrowing date of such Loan or on the date on which the Loan
is converted into or continued as a LIBO Rate Loan, and ending on the date one,
two, three, six or, if available to all Lenders, in the Administrative Agent's
reasonable determination, nine or twelve months thereafter as selected by the
Borrower in its Borrowing Request or its Conversion/Continuation Notice;
provided, however, that:
(i) if any Interest Period would otherwise end on a day that
is not a Business Day, that Interest Period shall be extended to the
following Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month, in which event
such Interest Period shall end on the preceding Business Day;
(ii) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at the
end of such Interest Period;
(iii) no Interest Period for any Loan shall extend beyond the
Stated Maturity Date for such Loan;
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(iv) no Interest Period applicable to a Term Loan or portion
thereof shall extend beyond any date upon which is due any scheduled
principal payment in respect of such Term Loans unless the aggregate
principal amount of such Term Loans represented by Base Rate Loans, or
by LIBO Rate Loans having Interest Periods that will expire on or
before such date, equals or exceeds the amount of such principal
payment; and
(v) there shall be no more than ten Interest Periods in effect
at any one time.
"Interim Management Agreement" means the Interim Management Agreement,
dated as of January 29, 1999, by and between the Parent and NWIP, as amended,
supplemented, amended and restated or otherwise modified from time to time in
accordance with Section 7.2.10.
"Investment" means, relative to any Person, (i) any loan or advance
made by such Person to any other Person (excluding commission, travel,
relocation and similar advances to officers, directors and employees made in the
ordinary course of business), or (ii) any investment, contribution or similar
transfer made by such Person for purposes of acquiring or maintaining any
ownership or similar interest in another Person or a business of another Person
(whether through the ownership or acquisition of Capital Stock, revenues or
profits or otherwise, including by way of merger, consolidation or otherwise).
The amount of any Investment shall be the original principal or capital amount
thereof less all returns of principal or equity thereon (and without adjustment
by reason of the financial condition of such other Person) and shall, if made by
the transfer or exchange of property other than cash, be deemed to have been
made in an original principal or capital amount equal to the fair market value
of such property at the time of such transfer or exchange.
"Investors" is defined in clause (c) of the fourth recital.
"Investors Contribution" is defined in clause (c) of the fourth
recital.
"Issuance Request" means a Letter of Credit request and certificate
duly executed by an Authorized Officer of the Borrower, in substantially the
form of Exhibit B-2 attached hereto.
"Issuer" means the Administrative Agent, in its capacity as Issuer of
Letters of Credit and any other Lender as may be designated by the Borrower (and
consented to by the Administrative Agent and such Lender, such consent by the
Administrative Agent not to be unreasonably withheld) in its capacity as Issuer
of Letters of Credit.
"Itemized Executive" means any of the following individuals: (i) John
Chapple, (ii) John Thompson, (iii) David Thaler, (iv) David Aas, (v) Perry
Satterlee, and (vi) Mark Fanning.
"Joint Venture Agreement" means the Joint Venture Agreement, dated as
of January 29, 1999, by and among the Parent, the Borrower and NWIP, as amended,
supplemented, amended and restated or otherwise modified from time to time in
accordance with Section 7.2.10.
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"Lead Arranger" means Donaldson, Lufkin & Jenrette Securities
Corporation, a Delaware corporation.
"Lender Assignment Agreement" means a Lender Assignment Agreement
substantially in the form of Exhibit J hereto.
"Lenders" is defined in the preamble.
"Letter of Credit" is defined in Section 2.1.4.
"Letter of Credit Commitment" means, with respect to the Issuer, the
Issuer's obligation to issue Letters of Credit pursuant to Section 2.1.4 and,
with respect to each of the other Lenders that has a Revolving Loan Commitment,
the obligation of each such Lender to participate in such Letters of Credit
pursuant to Section 2.6.1.
"Letter of Credit Commitment Amount" means, on any date, a maximum
amount of $10,000,000, as such amount may be reduced from time to time pursuant
to Section 2.2.
"Letter of Credit Outstandings" means, on any date, an amount equal to
the sum of
(a) the then aggregate amount which is undrawn and available
under all issued and outstanding Letters of Credit (whether or not the
conditions to drawing thereunder could be satisfied on such date),
plus
(b) the then aggregate amount of all unpaid and outstanding
Reimbursement Obligations in respect of such Letters of Credit.
"Leverage Ratio" means, at the end of any Fiscal Quarter, the ratio of
(a) Total Debt outstanding at such time;
to
(b) Annualized EBITDA for the period ending on the last day of
such Fiscal Quarter.
"LIBO Rate" means, relative to any Interest Period for LIBO Rate Loans,
the rate of interest per annum (rounded upwards, if necessary, to the nearest
1/100th of 1%) for deposits in Dollars, if any, for a period equal to the
relevant Interest Period which appears on Telerate page 3750 (or any successor
page thereto) at approximately 11:00 a.m., London time, two Business Days prior
to the commencement of such Interest Period. If such a rate does not appear on
Telerate Page 3750 (or any successor page), the LIBO Rate shall be the rate of
interest per
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annum determined by the Administrative Agent to be the arithmetic mean (rounded
upwards, if necessary, to the nearest 1/100th of 1%) of the rates of interest
per annum at which Dollar deposits in the approximate amount of the Loan to be
made or continued as, or converted into, a LIBO Rate Loan by the Administrative
Agent and having a maturity comparable to such Interest Period would be offered
to the Administrative Agent in the London interbank market at its request at
approximately 11:00 a.m. (London time) two Business Days prior to the
commencement of such Interest Period.
"LIBO Rate Loan" means a Loan bearing interest, at all times during an
Interest Period applicable to such Loan, at a fixed rate of interest determined
by reference to the LIBO Rate (Reserve Adjusted).
"LIBO Rate (Reserve Adjusted)" means, relative to any Loan to be made,
continued or maintained as, or converted into, a LIBO Rate Loan for any Interest
Period, the rate of interest per annum (rounded upwards to the next 1/100th of
1%) determined by the Administrative Agent as follows:
LIBO Rate = LIBO Rate
(Reserve Adjusted) 1.00 - LIBOR Reserve Percentage
The LIBO Rate (Reserve Adjusted) for any Interest Period for LIBO Rate
Loans will be adjusted automatically as to all LIBO Rate Loans then outstanding
as of the effective date of any change in the LIBOR Reserve Percentage.
"LIBOR Office" means, relative to any Lender, the office of such Lender
designated as such on Schedule II hereto or designated in the Lender Assignment
Agreement pursuant to which such Lender became a Lender hereunder or such other
office of a Lender as shall be so designated from time to time by notice from
such Lender to the Borrower and the Administrative Agent, which shall be making
or maintaining LIBO Rate Loans of such Lender hereunder.
"LIBOR Reserve Percentage" means, relative to any Interest Period for
LIBO Rate Loans, the percentage (expressed as a decimal, rounded upward to the
next 1/100th of 1%) in effect on such day (whether or not applicable to any
Lender) under regulations issued from time to time by the F.R.S. Board for
determining the maximum reserve requirement (including any emergency,
supplemental or other marginal reserve requirement) with respect to Eurocurrency
funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of
the F.R.S.
Board).
"License" means any mobile telephone, cellular telephone, two-way
dispatch, paging and alphanumeric short-messaging license, authorization,
certificate of compliance, franchise, approval or permit issued by the FCC in
connection with the construction or operation of the Network in the markets
listed on Schedule III.
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"License Exchange" means (a) any exchange of Licenses between the
Borrower and Nextel or any Affiliate of Nextel made in accordance with Article 4
of the Joint Venture Agreement, (b) any exchange of Licenses between the Parent
or any of its Subsidiaries and Nextel or any Affiliate of Nextel which the Board
of Directors of the Parent or such Subsidiary determines in good faith, on the
date of such exchange, are, in the aggregate, of at least equivalent value, or
(c) any transaction pursuant to which the Parent or any of its Subsidiaries
transfers certain of its Licenses to Nextel or any Affiliate of Nextel in
exchange for Licenses from a third party, the purchase price for which was
funded by Nextel or any Affiliate of Nextel.
"License Subsidiary" means Nextel WIP License Corp., a Delaware
corporation, and/or any other wholly-owned Subsidiary of the Borrower designated
as a License Subsidiary by notice to the Agents; provided, however, that (i)
such Subsidiary has no obligations or liabilities other than under the
Communications Act and taxes incurred in the ordinary course in order for it to
continue to maintain its existence and (ii) all the outstanding Capital Stock of
such Subsidiary is pledged to the Administrative Agent for the benefit of the
Lenders in accordance with the terms of the Borrower Security and Pledge
Agreement.
"License Transfer" means each of the following events or conditions
shall have been certified in writing by the Borrower to the Agents to have
occurred or been satisfied, in each case pursuant to documentation reasonably
satisfactory to the Agents, and the Borrower shall have certified such
occurrence or satisfaction in writing to the Agents and the Lenders:
(a) all of the issued and outstanding shares of Capital Stock
of the Nextel License Subsidiary shall have been unconditionally
transferred and assigned, free and clear of all Liens, to the Borrower
or a License Subsidiary, and the Administrative Agent shall have
received certificates evidencing all of the issued and outstanding
shares of Capital Stock of the Nextel License Subsidiary which shall be
pledged pursuant to the Borrower Security and Pledge Agreement,
together with undated stock powers duly executed in blank;
(b) all consents and approvals necessary or required to be
obtained from the FCC or any other governmental authority or Person in
connection with such transfer and assignment of the Capital Stock of
the Nextel License Subsidiary shall have been received and are in full
force and effect;
(c) the Borrower shall represent and warrant to the Agents and
each Lender that as of the time of such transfer and assignment,
subject to Item 6.15 ("Schedule of Exceptions") to the Disclosure
Schedule, the Nextel License Subsidiary shall hold, free and clear of
all Liens and encumbrances, all of the Licenses necessary for the
Borrower to construct, install and develop the Network, and to operate
those portions of the Network for which development has been completed,
in the markets listed on Schedule III;
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(d) the Nextel License Subsidiary shall not be or have become
liable or otherwise obligated in respect of any Indebtedness (including
any Capitalized Lease Liability) other than Indebtedness which shall
have been approved in writing by the Required Lenders;
(e) the Nextel License Subsidiary shall not have created,
incurred, assumed, or entered into any agreement which by its terms
creates, incurs or assumes any Lien upon any of its assets;
(f) no Event of Default shall have then occurred and be
continuing; or if an Event of Default shall have occurred and be
continuing, the Administrative Agent, on behalf of the Lenders, shall
not have commenced to exercise the rights and remedies provided in the
Borrower Security and Pledge Agreement in respect thereof; and
(g) all consents and approvals necessary or, in the opinion of
the Administrative Agent, desirable to be obtained from any
governmental authority or regulatory body of the State of Hawaii in
order to perfect the security interest of the Administrative Agent in
Collateral owned by NPCR, Inc. shall have been received and shall be in
full force and effect.
"Lien" means any security interest, mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
charge against or interest in property, or any filing or recording of any
instrument or document in respect of the foregoing, to secure payment of a debt
or performance of an obligation or any other priority or preferential treatment
of any kind or nature whatsoever that has the practical effect of creating a
security interest in property.
"Loan" means, as the context may require, a Revolving Loan or a Term
Loan, of any type.
"Loan Document" means this Agreement, the Notes, the Letters of Credit,
each Rate Protection Agreement under which the counterparty to such agreement is
(or at the time such Rate Protection Agreement was entered into, was) a Lender
or an Affiliate of a Lender relating to Hedging Obligations of the Borrower or
any of its Subsidiaries, each Borrowing Request, each Issuance Request, the Fee
Letter, the Subsidiary Guaranty, each Mortgage (upon execution and delivery
thereof), each Security Document, the Realco Agreement, the Management Agreement
and each other agreement, document or instrument delivered in connection with
this Agreement or any other Loan Document, whether or not specifically mentioned
herein or therein.
"Madison Dearborn" means Madison Dearborn Capital Partners II L.P. and
any of its Affiliates.
"Management Agreement" means the agreement executed and delivered by
Authorized Officers of each of the Borrower and Realco pursuant to Section
5.1.23, substantially in the form
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of Exhibit M-2 hereto, as amended, supplemented, amended and restated or
otherwise modified from time to time.
"Master Site Lease Agreement" means the Master Site Lease Agreement,
dated as of January 29, 1999, between NWIP and the Parent, as amended,
supplemented, amended and restated or otherwise modified from time to time in
accordance with Section 7.2.10.
"Material Adverse Effect" means (a) a material adverse effect on the
financial condition, operations, assets, business, properties or prospects of
the Borrower and its Subsidiaries, taken as a whole, (b) a material impairment
of the legal ability or the legal right or power of the Borrower or any other
Obligor to perform its respective material obligations under the Loan Documents
to which it is or will be a party, or (c) an impairment of the validity or
enforceability of, or a material impairment of the rights, remedies or benefits
available to the Issuer, the Agents, the Lead Arranger or the Lenders under,
this Agreement or any other Loan Document.
"Material Obligor" means an Obligor that is either the Borrower, the
Parent or a Material Subsidiary.
"Material Subsidiary" means any direct or indirect Subsidiary of the
Parent which, at the date of determination, together with its Subsidiaries, (i)
contributed more than 5% of the consolidated revenues of the Parent and its
Subsidiaries for the most recent Fiscal Year of the Parent or (ii) owned more
than 5% of the consolidated assets of the Parent and its Subsidiaries as of the
end of such Fiscal Year, all as set forth on the most recently available
consolidated financial statements of the Parent for such Fiscal Year; provided,
that any Subsidiary of the Parent which holds a License, including the License
Subsidiary, shall at all times constitute a Material Subsidiary.
"Moody's" means Moody's Investors Service, Inc.
"Mortgage" means, collectively, each Mortgage or Deed of Trust executed
and delivered pursuant to the terms of this Agreement, including pursuant to
clause (b) of Section 7.1.8, in form and substance reasonably satisfactory to
the Agents.
"Motorola" is defined in the second recital.
"Motorola Contribution" is defined in clause (b) of the fourth recital.
"Net Casualty Proceeds" means, with respect to any Casualty Event, the
amount of any insurance proceeds or condemnation awards received by the Borrower
or any of its Subsidiaries in connection therewith, but excluding any proceeds
or awards required to be paid to a creditor (other than the Lenders) which holds
a first-priority Lien permitted by Section 7.2.3 on the property which is the
subject of such Casualty Event and net of reasonable and customary fees and
expenses (including reasonable attorneys fees and expenses) actually incurred in
connection
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therewith and net of taxes and other governmental costs and expenses actually
paid or estimated by the Borrower (in good faith) to be payable in cash in
connection therewith.
"Net Debt Proceeds" means, with respect to the incurrence, sale or
issuance by the Borrower or any of its Subsidiaries of any Debt (other than Debt
incurred as part of the Transaction and other Debt permitted by Section 7.2.2),
the excess of:
(a) the gross cash proceeds received by the Borrower or any of
its Subsidiaries from such incurrence, sale or issuance,
over
(b) all reasonable and customary underwriting commissions and
legal, investment banking, brokerage and accounting and other
professional fees, sales commissions and disbursements and all other
reasonable fees, expenses and charges, in each case actually incurred
in connection with such incurrence, sale or issuance.
"Net Disposition Proceeds" means, with respect to any sale, transfer or
other disposition of any assets of the Borrower or any of its Subsidiaries
(other than transfers made as part of the Transaction and other sales permitted
pursuant to clause (a) of Section 7.2.9), including any sale, transfer or other
disposition of any Capital Stock of any such Subsidiary, the excess of
(a) the gross cash proceeds received by the Borrower or any of
its Subsidiaries from any such sale, transfer or other disposition and
any cash payments received in respect of promissory notes or other
non-cash consideration delivered to the Borrower or such Subsidiary in
respect thereof,
less
(b) the sum (without duplication) of (i) all reasonable and
customary fees and expenses with respect to legal, investment banking,
brokerage, accounting and other professional fees, sales commissions
and disbursements and all other reasonable fees, expenses and charges,
in each case actually incurred in connection with such sale, transfer
or other disposition, (ii) all taxes and other governmental costs and
expenses actually paid or estimated by the Borrower (in good faith) to
be payable in cash in connection with such sale, transfer or other
disposition, (iii) payments made by the Borrower or any of its
Subsidiaries to retire Indebtedness (other than the Loans) of the
Borrower or any of its Subsidiaries that is secured by a first-priority
Lien permitted by Section 7.2.3 on the property which is the subject of
such sale, transfer or other disposition, (iv) in the case of any sale,
transfer or other disposition of any Capital Stock of any Subsidiary of
the Borrower, amounts payable to minority equity holders of such
Subsidiary, if any, and (v) appropriate amounts provided or to be
provided by the Borrower or any of its Subsidiaries as a reserve, in
accordance with GAAP, with respect to any liabilities associated with
such sale, transfer or other disposition;
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provided, however, that if, (i) after the payment of all taxes with respect to
such sale, transfer or other disposition, the amount of estimated taxes, if any,
pursuant to clause (b)(ii) above exceeded the tax amount actually paid in cash
in respect of such sale, transfer or other disposition or (ii) after providing
reserves against liabilities associated with such sale, transfer or other
disposition, the amount of estimated reserves, if any, provided pursuant to
clause (b)(v) above exceeded the amount of reserves actually drawn in cash in
respect of such sale, transfer or other disposition, the aggregate amount of all
such excess shall be immediately payable, pursuant to clause (d) of Section
3.1.1, as Net Disposition Proceeds.
"Net Equity Proceeds" means with respect to the sale or issuance by the
Borrower or Parent to any Person of any of its Capital Stock or any warrants or
options with respect to its Capital Stock or the exercise of any such warrants
or options after the Closing Date (exclusive of any proceeds constituting
Excluded Equity Proceeds), the excess of:
(a) the gross cash proceeds received by Parent, the Borrower
and the Borrower's Subsidiaries from such sale, exercise or issuance,
over
(b) all reasonable and customary underwriting commissions and
legal, investment banking, brokerage, accounting and other professional
fees, sales commissions and disbursements and all other reasonable
fees, expenses and charges, in each case actually incurred in
connection with such sale or issuance.
"Network" is defined in the second recital.
"Network Build-out" is defined in the fourth recital.
"Net Worth" means the consolidated net worth of the Borrower and its
Subsidiaries.
"Nextel" is defined in the second recital.
"Nextel Contribution" is defined in clause (a) of the fourth recital.
"Nextel License Subsidiary" is defined in the second recital.
"Nextel Operating Agreements" means, collectively, the Joint Venture
Agreement, the Interim Management Agreement, the Analog Management Agreement,
the Trademark License Agreement, the Asset Transfer and Reimbursement Agreement,
the Transition Services Agreement, the Switch Sharing Agreement, the Roaming
Agreement, the Master Site Lease Agreement, the Infrastructure Equipment
Purchase Agreement, the Agreement in Support of Charter Obligations, the
Subscriber Purchase and Distribution Agreement, the Agreement Specifying
Obligations of, and Limiting Liability and Recourse to, Nextel and all other
contracts, documents and agreements contemplated thereunder.
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"Non-U.S. Lender" means any Lender (including each Assignee Lender)
that is not (i) a citizen or resident of the United States, (ii) a corporation,
partnership or other entity created or organized in or under the laws of the
United States or any state thereof, or (iii) an estate or trust that is subject
to U.S. Federal income taxation regardless of the source of its income.
"Non-U.S. Subsidiary" means a Subsidiary of the Borrower that is not a
U.S. Subsidiary.
"Note" means, as the context may require, a Revolving Note or a Term
Note.
"NWIP" is defined in clause (a) of the fourth recital.
"NWIP Undertaking" means the undertaking agreement executed and
delivered by an Authorized Officer of NWIP pursuant to Section 5.1.21,
substantially in the form of Exhibit I hereto, as amended, supplemented, amended
and restated or otherwise modified from time to time.
"Obligations" means all obligations (monetary or otherwise) of the
Borrower and each other Obligor arising under or in connection with this
Agreement, any Rate Protection Agreement (but only if designated as an
Obligation by the Borrower), the Notes, each Letter of Credit and each other
Loan Document.
"Obligor" means the Parent, the Borrower, the Nextel License
Subsidiary, any License Subsidiary, Realco or any other Person (other than any
Agent, the Lead Arranger, or any Lender) obligated under any Loan Document.
"Organic Document" means, relative to any Obligor, its certificate of
incorporation, its by-laws and all shareholder agreements, voting trusts and
similar arrangements to which such Obligor is a party applicable to any of its
authorized shares of Capital Stock.
"Parent" is defined in the first recital.
"Parent Guaranty and Pledge Agreement" means the Guaranty and Pledge
Agreement executed and delivered by an Authorized Officer of the Parent pursuant
to Section 5.1.6, substantially in the form of Exhibit G hereto, as amended,
supplemented, amended and restated or otherwise modified from time to time.
"Participant" is defined in Section 10.11.2.
"Patent Security Agreement" means any Patent Security Agreement
executed and delivered by an Obligor in substantially the form of Exhibit A to
any Security Agreement, as amended, supplemented, amended and restated or
otherwise modified from time to time.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
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"Pension Plan" means a "pension plan", as such term is defined in
section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a
multiemployer plan as defined in section 4001(a)(3) of ERISA), and to which the
Borrower or any corporation, trade or business that is, along with the Borrower,
a member of a Controlled Group, has or within the prior six years has had any
liability, including any liability by reason of having been a substantial
employer within the meaning of section 4063 of ERISA at any time during the
preceding five years, or by reason of being deemed to be a contributing sponsor
under section 4069 of ERISA.
"Percentage" means, relative to any Lender, the applicable percentage
relating to Term Loans or Revolving Loans, as the case may be, as set forth
opposite its name on Schedule II hereto under the applicable column heading or
set forth in Lender Assignment Agreement(s) under the applicable column heading,
as such percentage may be adjusted from time to time pursuant to Lender
Assignment Agreement(s) executed by such Lender and its Assignee Lender(s) and
delivered pursuant to Section 10.11. A Lender shall not have any Commitment to
make Revolving Loans or Term Loans (as the case may be) if its percentage under
the respective column heading is zero.
"Perfection Certificate" means the Perfection Certificate executed and
delivered by an Authorized Officer of the Borrower or a Subsidiary of the
Borrower pursuant to the relevant Security Agreement, substantially in the form
of Exhibit E to the relevant Security Agreement, as amended, supplemented,
amended and restated or otherwise modified from time to time.
"Permitted Joint Venture" means any joint venture entered into by the
Parent or any of its Subsidiaries with a third party (a) for the purpose of
financing the acquisition or lease of telecommunications towers for use in the
markets listed on Schedule III or the other markets that the Borrower has the
option to include in the "Territory" (pursuant to and as defined in the Joint
Venture Agreement); provided, that the aggregate fair market value of all assets
contributed by the Parent or any of its Subsidiaries to any joint venture
pursuant to this clause (a) shall not exceed $15,000,000 (as determined in good
faith by the board of directors of the Parent) or (b) in which that the Parent
or any of its Subsidiaries (i) is responsible for the managerial control of such
joint venture, (ii) owns at least 40% of the outstanding Capital Stock of such
joint venture and (iii) such joint venture, together with all other Permitted
Joint Ventures described in this clause (b), does not cover or service more than
10% of the POPs (computed by including only a percentage of the total POPs equal
to the Parent's percentage ownership in that joint venture) covered by the
Parent at the date of determination (as determined in good faith by the board of
directors of the Parent).
"Person" means any natural person, corporation, partnership, firm,
association, trust, government, governmental agency, limited liability company
or any other entity, whether acting in an individual, fiduciary or other
capacity.
"Plan" means any Pension Plan or Welfare Plan.
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"POPs" means population equivalents as estimated by the Parent as of
1997 by extrapolation from the 1990 U.S. Census and other publicly available
information.
"Preferred Stock" means, collectively, the Series A Preferred Stock,
the Series B Preferred Stock, the Series C Preferred Stock and the Series D
Preferred Stock.
"Preferred Stock Issuance" means any issuance of Preferred Stock of the
Parent in connection with the Nextel Contribution, the Motorola Contribution or
the Investors Contribution.
"Pro Forma Balance Sheet" is defined in Section 5.1.13.
"Purchasers" is defined in the first recital.
"Quarterly Payment Date" means the last day of each of January, April,
July and October, or, if any such day is not a Business Day, the next succeeding
Business Day, commencing with April 30, 1999.
"Rate Protection Agreement" means, collectively, any interest rate
swap, cap, collar or similar agreement entered into by the Borrower pursuant to
the terms of this Agreement under which the counterparty to such agreement is
(or at the time such Rate Protection Agreement was entered into, was) a Lender
or an Affiliate of a Lender.
"Realco" means Nextel WIP Lease Corp., a Delaware corporation and a
wholly-owned Subsidiary of the Borrower, that (i) has no obligations or
liabilities other than as permitted by the Realco Agreement and (ii) has pledged
all of its outstanding Capital Stock to the Administrative Agent for the benefit
of the Lenders in accordance with the terms of the Borrower Security and Pledge
Agreement.
"Realco Agreement" means the agreement executed and delivered by
Authorized Officers of each of the Borrower and Realco pursuant to Section
5.1.23, substantially in the form of Exhibit M-1 hereto, as amended,
supplemented, amended and restated or otherwise modified from time to time.
"Register" is defined in clause (b) of Section 2.7.
"Reimbursement Obligation" is defined in Section 2.6.3.
"Related Fund" means, with respect to any Lender which is a fund that
invests in loans, any other fund that invests in loans and is controlled by the
same investment advisor as such Lender or by an Affiliate of such investment
advisor.
"Release" means a "release", as such term is defined in CERCLA.
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"Replacement Lender" is defined in Section 4.11.
"Replacement Notice" is defined in Section 4.11.
"Required Balance" means an amount equal to the lesser of (a)
$275,000,000 (as such amount may be increased through additional Term Loan
Commitments and/or Revolving Loan Commitments pursuant to Section 2.1.3) and (b)
the aggregate outstanding principal amount of all Loans and Letter of Credit
Outstandings.
"Required Lenders" means, at any time, (i) prior to the date of the
making of the initial Credit Extension hereunder, Lenders having at least 51% of
the sum of the Revolving Loan Commitments and the Term Loan Commitments; and
(ii) on and after the date of the initial Credit Extension, Lenders holding at
least 51% of the Total Exposure Amount.
"Resource Conservation and Recovery Act" means the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., as in effect
from time to time.
"Restated Certification of Incorporation" means the restated
Certificate of Incorporation of the Parent, as filed with the Secretary of State
of Delaware on January 28, 1999.
"Restricted Payments" is defined in Section 7.2.6.
"Restricted Stock Purchase Agreement" means the Restricted Stock
Purchase Agreement, dated as of November 20, 1998, as amended by Amendment No. 1
thereto, dated January 29, 1999, between the Parent and the purchasers named
therein, as amended, supplemented, amended and restated and otherwise modified
from time to time in accordance with Section 7.2.10.
"Revolving Loan" is defined in Section 2.1.2.
"Revolving Loan Commitment" is defined in Section 2.1.2.
"Revolving Loan Commitment Amount" means, on any date, $100,000,000, as
such amount may be reduced from time to time pursuant to Section 2.2.
"Revolving Loan Commitment Termination Date" means the earliest of (i)
January 29, 1999 if the Term Loans have not been made on or prior to such date,
(ii) the eighth anniversary of the Closing Date, (iii) the date on which the
Revolving Loan Commitment Amount is terminated in full or reduced to zero
pursuant to Section 2.2, and (iv) the date on which any Commitment Termination
Event occurs.
"Revolving Note" means a promissory note of the Borrower payable to any
Lender, substantially in the form of Exhibit A-1 hereto (as such promissory note
may be amended, endorsed or otherwise modified from time to time), evidencing
the aggregate Indebtedness of the
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Borrower to such Lender resulting from outstanding Revolving Loans, and also
means all other promissory notes accepted from time to time in substitution
therefor or renewal thereof.
"Roaming Agreement" means the Roaming Agreement, dated as of January
29, 1999, by and between the Borrower and NWIP, as amended, supplemented,
amended and restated or otherwise modified from time to time in accordance with
Section 7.2.10.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill,
Inc.
"Security Agreement" means, as the context may require, the Borrower
Security and Pledge Agreement or the Subsidiary Security and Pledge Agreement.
"Security Documents" means, collectively, the Parent Guaranty and
Pledge Agreement, each Security Agreement, each Copyright Security Agreement,
each Patent Security Agreement, each Trademark Security Agreement, each
Mortgage, the Cash Collateral Agreement, the Assignment Agreement (including
each Consent to Assignment executed and delivered by the parties to the Nextel
Operating Agreements) and each other security agreement or other instrument or
document executed and delivered pursuant to Sections 7.1.7 and 7.1.8 to secure
the Obligations, or any portion thereof, of any Obligor.
"Senior Debt" means all Indebtedness of the Parent and its Subsidiaries
on a consolidated basis, other than any Indebtedness in respect of the Senior
Notes.
"Senior Discount Notes" is defined in clause (d) of the fourth recital.
"Senior Discount Notes Issuance" is defined in clause (d) of the fourth
recital.
"Senior Notes" means the Senior Discount Notes and any additional
pay-in-kind notes subsequently issued from time to time under the Senior Notes
Indenture.
"Senior Notes Documents" means the Senior Notes Indenture and each of
the other documents and agreements relating to the issuance by the Parent of the
Senior Notes, in each case as in effect on the date hereof and as the same may
be amended, supplemented, amended and restated or otherwise modified from time
to time in accordance with Section 7.2.10.
"Senior Notes Indenture" means the Indenture entered into by and
between the Parent and The Bank of New York, as trustee thereunder, as in effect
on the date hereof and as the same may be amended, supplemented, amended and
restated or otherwise modified from time to time in accordance with Section
7.2.10.
"Series A Preferred Stock" means the shares of Series A Convertible
Preferred Stock, par value $0.001 per share, of the Parent having those rights
and preferences set forth in the Restated Certificate of Incorporation for
Series A Preferred Stock issued to the investors identified in Schedule A to the
Subscription and Contribution Agreement on the Closing Date.
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"Series B Preferred Stock" means the shares of Series B Preferred
Stock, par value $0.001 per share, of the Parent having those rights and
preferences set forth in the Restated Certificate of Incorporation for Series B
Preferred Stock issued to NWIP on the Closing Date.
"Series C Preferred Stock" means the shares of Series C Convertible
Preferred Stock, par value $0.001 per share, of the Parent having those rights
and preferences set forth in the Restated Certificate of Incorporation for
Series C Preferred Stock issued to NWIP on the Closing Date.
"Series D Preferred Stock" means the shares of Series D Convertible
Preferred Stock, par value $0.001 per share, of the Parent having those rights
and preferences set forth in the Restated Certificate of Incorporation for
Series D Preferred Stock issued to NWIP on the Closing Date.
"Shareholders' Agreement" means the Shareholders' Agreement, dated as
of January 29, 1999, among the Parent, NWIP, DLJ Merchant Banking Partners II,
L.P., Eagle River Investments, LLC, Motorola, and certain other investors listed
on the signature pages thereof, as amended, supplemented, amended and restated
and otherwise modified from time to time in accordance with Section 7.2.10.
"SMR" is defined in the second recital.
"Solvent" means, with respect to any Person on a particular date, that
on such date (a) the fair value of the property of such Person is greater than
the total amount of liabilities, including contingent liabilities, of such
Person, (b) the present fair salable value of the assets of such Person is not
less than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured, (c) such Person does
not intend to, and does not believe that it will, incur debts or liabilities
beyond such Person's ability to pay as such debts and liabilities mature, and
(d) such Person is not engaged in business or a transaction, and such person is
not about to engage in business or a transaction, for which such Person's
property would constitute an unreasonably small capital. The amount of
contingent liabilities at any time shall be computed as the amount that, in
light of all the facts and circumstances existing at such time, can reasonably
be expected to become an actual or matured liability.
"Stated Amount" of each Letter of Credit means the total amount
available to be drawn under such Letter of Credit upon the issuance thereof.
"Stated Expiry Date" is defined in Section 2.6.
"Stated Maturity Date" means (i) in the case of any Revolving Loan, the
eighth anniversary of the Closing Date, and (ii) in the case of any Term Loan,
the ninth anniversary of the Closing Date or, in the case of any such day that
is not a Business Day, the first Business Day following such day.
"Subscriber Purchase and Distribution Agreement" means the Subscriber
Purchase and Distribution Agreement, dated as of January 29, 1999, between
Motorola and the Borrower, as
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amended, supplemented, amended and restated or otherwise modified from time to
time in accordance with Section 7.2.10.
"Subscriber Units" means, as at any date, the aggregate number of
digital subscriber units of the Borrower and its Subsidiaries in service to
paying customers, determined as at such date in a manner consistent with the
methodology used in reporting the number of such units on the reports filed by
the Borrower with the Securities and Exchange Commission (or, prior to the time
that the Borrower files such reports, the methodology used by Nextel in such
reports), multiplied by a fraction, the numerator of which is the aggregate
amount of accounts receivable of the Borrower and its Subsidiaries arising from
such subscribers net of the aggregate amount of such accounts receivable that
are more than 90 days past due, and the denominator of which is such aggregate
amount of accounts receivable.
"Subscription and Contribution Agreement" means the Subscription and
Contribution Agreement, dated as of January 29, 1999, among the Parent and the
other investors parties thereto, as amended, supplemented, amended and restated
or otherwise modified from time to time in accordance with Section 7.2.10.
"Subsidiary" means, with respect to any Person, any corporation,
partnership or other business entity of which more than 50% of the outstanding
Capital Stock (or other ownership interest) having ordinary voting power to
elect a majority of the board of directors, managers or other voting members of
the governing body of such entity (irrespective of whether at the time Capital
Stock (or other ownership interests) of any other class or classes of such
entity shall or might have voting power upon the occurrence of any contingency)
is at the time directly or indirectly owned by such Person, by such Person and
one or more other Subsidiaries of such Person, or by one or more other
Subsidiaries of such Person.
"Subsidiary Guarantor" means, on the Closing Date, each U.S. Subsidiary
of the Borrower, and thereafter, each U.S. Subsidiary of the Borrower that is
required, pursuant to clause (a) of Section 7.1.7, to execute and deliver a
supplement to the Subsidiary Guaranty.
"Subsidiary Guaranty" means the Guaranty executed and delivered by an
Authorized Officer of each Subsidiary Guarantor pursuant to Section 5.1.5,
substantially in the form of Exhibit H hereto, as amended, supplemented, amended
and restated or otherwise modified from time to time.
"Subsidiary Security and Pledge Agreement" means the Security and
Pledge Agreement executed and delivered by an Authorized Officer of certain U.S.
Subsidiaries of the Borrower pursuant to Section 5.1.7, substantially in the
form of Exhibit F-2 hereto, as amended, supplemented, amended and restated or
otherwise modified from time to time.
"Switch Sharing Agreement" means the Switch Sharing Agreement, dated as
of January 29, 1999, by and between the Borrower and NWIP, as amended,
supplemented,
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amended and restated and otherwise modified from time to time in accordance with
Section 7.2.10.
"Syndication Agent" is defined in the preamble and includes each other
Person as shall have subsequently been appointed as the successor Syndication
Agent by the predecessor Syndication Agent and the Borrower.
"Taxes" is defined in Section 4.6.
"Term Loan" is defined in Section 2.1.1.
"Term Loan Commitment" is defined in Section 2.1.1.
"Term Loan Commitment Amount" means $175,000,000.
"Term Loan Commitment Termination Date" means the earliest of (i)
January 29, 1999, if the Term Loans have not been made on or prior to such date;
(ii) the Closing Date (immediately after the making of the Term Loans on such
date); and (iii) the date on which any Commitment Termination Event occurs.
"Term Note" means a promissory note of the Borrower payable to the
order of any Lender, in the form of Exhibit A-2 hereto (as such promissory note
may be amended, endorsed or otherwise modified from time to time), evidencing
the aggregate Indebtedness of the Borrower to such Lender resulting from
outstanding Term Loans, and also means all other promissory notes accepted from
time to time in substitution therefor or renewal thereof.
"Total Capital" means, with respect to the Parent and its Subsidiaries,
at any date, (a) the sum, without duplication, of (i) Debt outstanding on such
date plus (ii) Contributed Equity (less the portion of Contributed Equity
resulting from the proceeds of the Senior Discount Notes Issuance contributed to
the Borrower in connection with the Borrower Equity Contribution) on such date
plus (iii) Committed Equity of each Person having an irrevocable binding
commitment to purchase Preferred Stock of the Parent (but only to the extent
there is no default in respect of such Person's commitment, which default has
occurred and is continuing for a period of more than 30 days) on such date less
(b) the difference, which shall not be less than zero, of (x) the agreed value
of all Licenses contributed by the Parent or any of its Subsidiaries in
connection with Investments in Permitted Joint Ventures and (y) any return of
capital in cash or any Licenses (at a value reasonably determined by the Agents)
from such Permitted Joint Venture.
"Total Debt" means, at any time, all Debt of the Parent and its
Subsidiaries as determined on a consolidated basis.
"Total Exposure Amount" means, on any date of determination, the then
outstanding principal amount of all Term Loans and the then effective Revolving
Loan Commitment Amount
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or, in the event that the Revolving Loan Commitment is terminated, the
outstanding principal amount of all Revolving Loans and Letter of Credit
Outstandings.
"Trademark License Agreement" means the Trademark License Agreement,
dated as of January 29, 1999, between the Borrower and NWIP, as amended,
supplemented, amended and restated and otherwise modified from time to time in
accordance with Section 7.2.10.
"Trademark Security Agreement" means any Trademark Security Agreement
executed and delivered by an Obligor in substantially the form of Exhibit B to
any Security Agreement, as amended, supplemented, amended and restated or
otherwise modified from time to time.
"Transaction" is defined in clause (e) of the fourth recital.
"Transaction Documents" means each of Nextel Operating Agreements, the
Subscription and Contribution Agreement, the Restricted Stock Purchase
Agreement, the Shareholders' Agreement, the Restated Certificate of
Incorporation and all other material agreements, documents, instruments,
certificates, filings, consents, approvals, board of directors resolutions and
opinions furnished to or in connection with the Nextel Contribution, the
Motorola Contribution, the Investors Contribution, the Senior Discount Note
Issuance and the Borrower Equity Contribution and the transactions contemplated
thereby and hereby, each as amended, supplemented, amended and restated or
otherwise modified from time to time as permitted in accordance with the terms
hereof or any other Loan Document.
"Transition Services Agreement" means the Transition Services
Agreement, dated as of January 29, 1999, between the Parent, the Borrower and
NWIP, as amended, supplemented amended and restated and otherwise modified from
time to time in accordance with Section 7.2.10.
"type" means, relative to any Loan, the portion thereof, if any, being
maintained as a Base Rate Loan or a LIBO Rate Loan.
"UCC" means the Uniform Commercial Code as in effect from time to time
in the State of New York.
"United States" or "U.S." means the United States of America, its fifty
States and the District of Columbia.
"U.S. Subsidiary" means any Subsidiary of the Borrower that is
incorporated or organized in or under the laws of the United States or any state
thereof.
"Waiver" means any agreement in favor of the Administrative Agent for
the benefit of the Lenders and each Issuer in form and substance reasonably
satisfactory to the Administrative Agent.
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"Welfare Plan" means a "welfare plan", as such term is defined in
section 3(1) of ERISA and to which the Borrower has any liability.
"wholly-owned Subsidiary" means, with respect to any Person, any
Subsidiary of such Person all of the Capital Stock (including all rights and
options to purchase such Capital Stock) of which, other than directors'
qualifying shares, are owned, beneficially and of record, by such Person and/or
one or more wholly-owned Subsidiaries of such Person.
SECTION 1.2. Use of Defined Terms. Unless otherwise defined or the
context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in the Disclosure Schedule and in
each Note, Borrowing Request, Issuance Request, Continuation/Conversion Notice,
Loan Document, notice and other communication delivered from time to time in
connection with this Agreement or any other Loan Document.
SECTION 1.3. Cross-References. Unless otherwise specified, references
in this Agreement and in each other Loan Document to any Article or Section are
references to such Article or Section of this Agreement or such other Loan
Document, as the case may be, and, unless otherwise specified, references in any
Article, Section or definition to any clause are references to such clause of
such Article, Section or definition.
SECTION 1.4. Accounting and Financial Determinations. Unless otherwise
specified, all accounting terms used herein or in any other Loan Document shall
be interpreted, all accounting determinations and computations hereunder or
thereunder (including under Section 7.2.4) shall be made in accordance with
generally accepted accounting principles ("GAAP") as in effect as of December
31, 1997, but all financial statements required to be delivered hereunder or
thereunder shall be prepared in accordance with GAAP as in effect from time to
time.
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES,
NOTES AND LETTERS OF CREDIT
SECTION 2.1. Commitments. On the terms and subject to the conditions of
this Agreement (including Sections 2.1.5, 2.1.6 and Article V),
(a) each Lender severally agrees to make Loans pursuant to the
Commitments as described in this Section 2.1; and
(b) the Issuer agrees that it will issue Letters of Credit
pursuant to Section 2.1.4, and each other Lender that has a Revolving
Loan Commitment severally agrees that it will purchase participation
interests in such Letters of Credit pursuant to Section 2.6.1.
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SECTION 2.1.1. Term Loan Commitments. Subject to compliance by the
Borrower with the terms of Sections 2.1.5, 5.1 and 5.2, on (but solely on) the
Closing Date (which shall be a Business Day), each Lender that has a Percentage
in excess of zero of the Term Loan Commitment will make loans (relative to such
Lender, its "Term Loans") to the Borrower equal to such Lender's Percentage of
the aggregate amount of the Borrowing or Borrowings of Term Loans requested by
the Borrower to be made on the Closing Date (with the commitment of each such
Lender described in this Section 2.1.1 is herein referred to as its "Term Loan
Commitment". No amounts repaid or prepaid with respect to Term Loans may be
reborrowed.
SECTION 2.1.2. Revolving Loan Commitment. Subject to compliance by the
Borrower with the terms of Sections 2.1.5, 5.1 and 5.2, from time to time on any
Business Day occurring concurrently with (or after) the making of the Term Loans
but prior to the Revolving Loan Commitment Termination Date, each Lender that
has a Percentage of the Revolving Loan Commitment in excess of zero will make
loans (relative to such Lender, its "Revolving Loans") to the Borrower equal to
such Lender's Percentage of the aggregate amount of the Borrowing or Borrowings
of Revolving Loans requested by the Borrower to be made on such day. The
Borrower may from time to time borrow, prepay and reborrow Revolving Loans. The
Commitment of each Lender described in this Section 2.1.2 is herein referred to
as its "Revolving Loan Commitment".
SECTION 2.1.3. Additional Commitments. At any time that no Default has
occurred and is continuing, the Borrower may notify the Agents that the Borrower
is requesting that, on the terms and subject to the conditions contained in this
Agreement, the Lenders and/or other financial institutions not then a party to
this Agreement that are satisfactory to the Agents and the Issuer provide up to
an aggregate amount of $50,000,000 in additional Term Loan Commitments and/or
Revolving Loan Commitments. Upon receipt of such notice, and with the consent of
the Required Lenders, the Syndication Agent shall use its best commercially
reasonable efforts to arrange for the Lenders or other financial institutions to
provide such additional Term Loan Commitments and/or Revolving Loan Commitments;
provided that the Syndication Agent will first offer (a) each of the Lenders
that then has a Percentage of the Term Loan Commitment a pro rata portion of any
such additional Term Loan Commitment and (b) each of the Lenders that then has a
Percentage of the Revolving Loan Commitment a pro rata portion of any such
additional Revolving Loan Commitment. Alternatively, any Lender may commit to
provide the full amount of the requested additional Term Loan Commitment and/or
Revolving Loan Commitment and then offer portions of such additional Term Loan
Commitment and/or Revolving Loan Commitment to the other Lenders or other
financial institutions, subject to the proviso to the immediately preceding
sentence. Nothing contained in this Section 2.1.3 or otherwise in this Agreement
is intended to commit any Lender or any Agent to provide any portion of any such
additional Term Loan Commitments and/or Revolving Loan Commitments. If and to
the extent that any Lenders and/or other financial institutions agree, in their
sole discretion, to provide any such additional Term Loan Commitments and/or
Revolving Loan Commitments, (i) the Term Loan Commitment Amount shall be
increased by the amount of the additional Term Loan Commitment agreed to be so
provided, (ii) the Revolving Loan Commitment Amount shall be increased by the
amount of the additional Revolving Loan
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Commitments agreed to be so provided, (iii) the Percentages of the respective
Lenders in respect of the Term Loan Commitment and/or the Revolving Loan
Commitment shall be proportionally adjusted, (iv) at such time and in such
manner as the Borrower and the Syndication Agent shall agree (it being
understood that the Borrower and the Agents will use their best commercially
reasonable efforts to avoid the prepayment or assignment of any LIBO Rate Loan
on a day other than the last day of the Interest Period applicable thereto), the
Lenders shall assign and assume outstanding Term Loans and/or Revolving Loans
and participations in outstanding Letters of Credit, as the case may be, so as
to cause the amounts of such Term Loans, Revolving Loans and participations in
Letters of Credit held by each Lender to conform to the respective Percentages
of the Term Loan Commitment and/or the Revolving Loan Commitment of the Lenders
and (v) the Borrower shall execute and deliver any additional Notes or other
amendments or modifications to this Agreement or any other Loan Document as the
Agents may reasonably request. In no event shall any Commitment Amount or the
Percentage of any Lender be increased without the written consent of such
Lender, and no term or condition (including as to pricing, covenants and events
of default) applicable to such additional Indebtedness shall be more favorable
in any material respect to the Lenders providing such additional Indebtedness
than the terms and conditions hereunder. The Syndication Agent agrees to
negotiate with the Borrower commercially reasonable fees and expenses for the
syndication of any such additional Indebtedness, and in the event the
Syndication Agent fails to do so, the Syndication Agent may be replaced, solely
in respect of such additional Indebtedness, by an instrument in writing
delivered to the Syndication Agent and signed by the Borrower.
SECTION 2.1.4. Letter of Credit Commitment. Subject to compliance by
the Borrower with the terms of Sections 2.1.6, 5.1 and 5.2, from time to time on
any Business Day occurring concurrently with (or after) the Closing Date but
prior to the Revolving Loan Commitment Termination Date, the Issuer will (i)
issue one or more standby or commercial letters of credit (each referred to as a
"Letter of Credit") for the account of the Borrower in the Stated Amount
requested by the Borrower on such day, or (ii) extend the Stated Expiry Date of
an existing standby or commercial Letter of Credit previously issued hereunder
to a date not later than the earlier of (x) one Business Day prior to the eighth
anniversary of the Closing Date and (y) one year from the date of such
extension, subject to the proviso in the penultimate sentence of Section 2.6.
SECTION 2.1.5. Lenders Not Permitted or Required to Make Loans. No
Lender shall be permitted or required to, and the Borrower shall not request any
Lender to, make
(a) any Term Loan if, after giving effect thereto, the
aggregate original principal amount of all Term Loans of such Lender
would exceed such Lender's Percentage of the Term Loan Commitment
Amount; or
(b) any Revolving Loan if, after giving effect thereto, the
aggregate outstanding principal amount of all Revolving Loans of such
Lender, together with such Lender's Percentage of the aggregate amount
of all Letter of Credit Outstandings, would exceed such Lender's
Percentage of the Revolving Loan Commitment Amount.
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SECTION 2.1.6. Issuer Not Required to Issue Letters of Credit. No
Issuer shall be required to issue any Letter of Credit if, after giving effect
thereto, (a) the aggregate amount of all Letter of Credit Outstandings would
exceed the Letter of Credit Commitment Amount or (b) the sum of the aggregate
amount of all Letter of Credit Outstandings plus the aggregate principal amount
of all Revolving Loans then outstanding would exceed the Revolving Loan
Commitment Amount.
SECTION 2.2. Reduction of Commitment Amounts. The Commitment Amounts
are subject to reduction from time to time pursuant to this Section 2.2.
SECTION 2.2.1 Optional. The Borrower may, from time to time on any
Business Day occurring after the date of the initial Credit Extension hereunder,
voluntarily reduce the Revolving Loan Commitment Amount; provided, however, that
all such reductions shall require at least one Business Day's prior notice to
the Administrative Agent and be permanent, and any partial reduction of the
Revolving Loan Commitment Amount shall be in a minimum amount of $5,000,000 and
in an integral multiple of $500,000. Any such reduction of the Revolving Loan
Commitment Amount which reduces the Revolving Loan Commitment Amount below the
Letter of Credit Commitment Amount shall result in an automatic and
corresponding reduction of the Letter of Credit Commitment Amount, to an
aggregate amount not in excess of the Revolving Loan Commitment Amount, as so
reduced, without any further action on the part of the Issuer.
SECTION 2.2.2. Mandatory.
(a) Commencing on the fifth anniversary of the Closing Date
and on each successive Quarterly Payment Date thereafter, the Revolving
Loan Commitment Amount shall, without any further action, automatically
and permanently reduce in the amounts set forth below opposite each
such date:
Scheduled Reduction of
Date Revolving Loan Commitment
1/31/04 $ 5,000,000
4/30/04 $ 5,000,000
7/31/04 $ 5,000,000
1/31/05 $ 5,000,000
4/30/05 $ 5,000,000
7/31/05 $ 5,000,000
10/31/05 $10,000,000
1/31/06 $10,000,000
4/30/06 $15,000,000
7/31/06 $15,000,000
10/31/06 $10,000,000
1/31/07 $10,000,000
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(b) Following the prepayment in full of the Term Loans, the
Revolving Loan Commitment Amount shall, without any further action,
automatically and permanently be reduced on the date the Term Loans
would otherwise have been required to be prepaid on account of any Net
Disposition Proceeds, Excess Cash Flow, Net Equity Proceeds or Net
Casualty Proceeds, in an amount equal to the amount by which the Term
Loans would otherwise have been required to be prepaid if Term Loans
had been outstanding; provided, that, at no time shall the Revolving
Loan Commitment Amount be reduced to less than $25,000,000.
SECTION 2.3. Borrowing Procedure and Funding Maintenance. By delivering
a Borrowing Request to the Administrative Agent on or before 11:00 a.m.,
Chicago, Illinois time, on a Business Day, the Borrower may from time to time
irrevocably request, on not less than one Business Day's notice (in the case of
Base Rate Loans) or three Business Days' notice (in the case of LIBO Rate Loans)
nor more than five Business Days' notice (in the case of any Loans), that a
Borrowing be made in an aggregate amount of $5,000,000 or any larger integral
multiple of $500,000 or in the unused amount of the applicable Commitment. No
Borrowing Request shall be required, and the minimum aggregate amounts specified
under this Section 2.3 shall not apply, in the case of Revolving Loans deemed
made under Section 2.6.2 in respect of unreimbursed Disbursements. On the terms
and subject to the conditions of this Agreement, each Borrowing shall be
comprised of the type of Loans, and shall be made on the Business Day, specified
in such Borrowing Request. On or before 12:00 noon, Chicago, Illinois time, on
such Business Day each Lender shall deposit with the Administrative Agent same
day funds in an amount equal to such Lender's Percentage of the requested
Borrowing. Such deposit will be made to an account which the Administrative
Agent shall specify from time to time by notice to the Lenders. To the extent
funds are received from the Lenders, the Administrative Agent shall promptly and
in any event prior to 2:00 p.m., Chicago, Illinois time, make such funds
available to the Borrower by wire transfer to the accounts the Borrower shall
have specified in its Borrowing Request. No Lender's obligation to make any Loan
shall be affected by any other Lender's failure to make any Loan.
SECTION 2.4. Continuation and Conversion Elections. By delivering a
Continuation/ Conversion Notice to the Administrative Agent on or before 11:00
a.m., Chicago, Illinois time, on a Business Day, the Borrower may from time to
time irrevocably elect, on not less than one Business Day's notice (in the case
of a conversion of LIBO Rate Loans to Base Rate Loans) or three Business Days'
notice (in the case of a continuation of LIBO Rate Loans or a conversion of Base
Rate Loans into LIBO Rate Loans) nor more than five Business Days' notice (in
the case of any Loans) that all, or any portion in a minimum amount of
$5,000,000 and an integral multiple of $500,000 of any Loans be, in the case of
Base Rate Loans, converted into LIBO Rate Loans or, in the case of LIBO Rate
Loans, be converted into Base Rate Loans or continued as LIBO Rate Loans (in the
absence of delivery of a Continuation/ Conversion Notice with respect to any
LIBO Rate Loan at least three Business Days before the last day of the then
current Interest Period with respect thereto, such LIBO Rate Loan shall, on such
last day, automatically convert to a Base Rate Loan); provided, however, that
(x) each such conversion or continuation shall be pro rated among the applicable
outstanding Loans of all Lenders, and (y) notwithstanding any
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contrary provision hereof, if an Event of Default has occurred and is continuing
and the Administrative Agent, at the request of the Required Lenders, so
notifies the Borrower, then, so long as an Event of Default is continuing (i) no
outstanding Loans may be converted to or continued as a LIBO Rate Loan and (ii)
unless repaid, each LIBO Rate Loan shall be converted to a Base Rate Loan at the
end of the Interest Period applicable thereto.
SECTION 2.5. Funding. Each Lender may, if it so elects, fulfill its
obligation to make, continue or convert LIBO Rate Loans hereunder by causing one
of its foreign branches or Affiliates (or an international banking facility
created by such Lender) to make or maintain such LIBO Rate Loan; provided,
however, that such LIBO Rate Loan shall nonetheless be deemed to have been made
and to be held by such Lender, and the obligation of the Borrower to repay such
LIBO Rate Loan shall nevertheless be to such Lender for the account of such
foreign branch, Affiliate or international banking facility. In addition, the
Borrower hereby consents and agrees that, for purposes of any determination to
be made for purposes of Section 4.1, 4.2, 4.3 or 4.4, it shall be conclusively
assumed that each Lender elected to fund all LIBO Rate Loans by purchasing
Dollar deposits in its LIBOR Rate Office's interbank eurodollar market.
SECTION 2.6. Issuance Procedures. By delivering to the Administrative
Agent an Issuance Request on or before 11:00 a.m., Chicago, Illinois time, on a
Business Day, the Borrower may, from time to time irrevocably request, on not
less than three nor more than ten Business Days' notice (or such shorter or
longer notice as may be acceptable to the Issuer), in the case of an initial
issuance of a Letter of Credit, and not less than three nor more than ten
Business Days' notice (unless a shorter or longer notice period is acceptable to
the Issuer) prior to the then existing Stated Expiry Date of a Letter of Credit,
in the case of a request for the extension of the Stated Expiry Date of a Letter
of Credit, that the Issuer issue, or extend the Stated Expiry Date of, as the
case may be, an irrevocable Letter of Credit on behalf of the Borrower (whether
issued for the account of or on behalf of the Borrower or any of its
Subsidiaries) in such form as may be requested by the Borrower and approved by
the Issuer, for the purposes described in clause (b) of Section 7.1.9.
Notwithstanding anything to the contrary contained herein or in any separate
application for any Letter of Credit, the Borrower hereby acknowledges and
agrees that it shall be obligated to reimburse the Issuer upon each Disbursement
paid under a Letter of Credit, and it shall be deemed to be the obligor for
purposes of each such Letter of Credit issued hereunder (whether the account
party on such Letter of Credit is the Borrower or a Subsidiary of the Borrower).
Upon receipt of an Issuance Request, the Administrative Agent shall promptly
notify the Issuer and each Lender thereof. Each Letter of Credit shall by its
terms be stated to expire on a date (its "Stated Expiry Date") no later than the
earlier to occur of (i) the Revolving Loan Commitment Termination Date or (ii)
one year from the date of its issuance; provided, that notwithstanding the terms
of clause (ii) above, a Letter of Credit may, if required by the beneficiary
thereof, contain "evergreen" provisions pursuant to which the Stated Expiry Date
shall be automatically extended (in each case, to the date no later than the
earlier to occur of (x) the Revolving Loan Commitment Termination Date or (y)
one year from the date of such automatic extension), unless notice to the
contrary shall have been given to the beneficiary by the Issuer or the account
party more than a specified
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period prior to the then existing Stated Expiry Date. The Issuer will make
available to the beneficiary thereof the original of each Letter of Credit which
it issues hereunder.
SECTION 2.6.1. Other Lenders' Participation. Upon the issuance of each
Letter of Credit issued by the Issuer pursuant hereto, and without further
action, each Lender (other than the Issuer) that has a Revolving Loan Commitment
shall be deemed to have irrevocably purchased from the Issuer, to the extent of
its Percentage in respect of Revolving Loans, and the Issuer shall be deemed to
have irrevocably granted and sold to such Lender a participation interest in
such Letter of Credit (including the Contingent Liability and any Reimbursement
Obligation and all rights with respect thereto), and such Lender shall, to the
extent of its Percentage in respect of Revolving Loans, be responsible for
reimbursing promptly (and in any event within one Business Day) the Issuer for
Reimbursement Obligations which have not been reimbursed by the Borrower in
accordance with Section 2.6.3. In addition, such Lender shall, to the extent of
its Percentage in respect of Revolving Loans, be entitled to promptly receive a
ratable portion of the Letter of Credit fees payable pursuant to Section 3.3.3
with respect to each Letter of Credit and of interest payable pursuant to
Section 2.6.2 with respect to any Reimbursement Obligation. To the extent that
any Lender has reimbursed the Issuer for a Disbursement as required by this
Section, such Lender shall be entitled to receive its ratable portion of any
amounts subsequently received (from the Borrower or otherwise) in respect of
such Disbursement.
SECTION 2.6.2. Disbursements; Conversion to Revolving Loans. The Issuer
will notify the Borrower and the Administrative Agent promptly (but in any event
on the same Business Day) of the presentment for payment of any drawing under
any Letter of Credit issued by the Issuer, together with notice of the date (the
"Disbursement Date") such payment shall be made (each such payment, a
"Disbursement"). Subject to the terms and provisions of such Letter of Credit
and this Agreement, the Issuer shall make such payment to the beneficiary (or
its designee) of such Letter of Credit. Prior to 11:00 a.m., Chicago, Illinois
time, on the Business Day following the Disbursement Date (the "Disbursement Due
Date"), the Borrower will reimburse the Administrative Agent, for the account of
the Issuer, for all amounts which the Issuer has disbursed under such Letter of
Credit, together with interest thereon at the rate per annum otherwise
applicable to Revolving Loans (made as Base Rate Loans) from and including the
Disbursement Date to but excluding the Disbursement Due Date and, thereafter
(unless such Disbursement is converted into a Base Rate Loan on the Disbursement
Due Date), at a rate per annum equal to the rate per annum then in effect with
respect to overdue Revolving Loans (made as Base Rate Loans) pursuant to Section
3.2.2 for the period from the Disbursement Due Date through but excluding the
date of such reimbursement; provided, however, that unless the Borrower has
notified the Administrative Agent no later than one Business Day prior to the
Disbursement Due Date that it will reimburse the Issuer for the applicable
Disbursement, then the amount of the Disbursement shall be deemed to be a
Borrowing of Revolving Loans constituting Base Rate Loans and following the
giving of notice thereof by the Administrative Agent to the Lenders, each Lender
with a Revolving Loan Commitment (other than the Issuer) will deliver to the
Issuer on the Disbursement Due Date immediately available funds in an amount
equal to such Lender's Percentage of such Borrowing. Each conversion of
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Disbursement amounts into Revolving Loans shall constitute a representation and
warranty by the Borrower that on the date of the making of such Revolving Loans
all of the statements set forth in Section 5.2.1 are true and correct.
SECTION 2.6.3. Reimbursement. The obligation (a "Reimbursement
Obligation") of the Borrower under Section 2.6.2 to reimburse the Issuer with
respect to each Disbursement (including interest thereon) not converted into a
Base Rate Loan pursuant to Section 2.6.2, and, upon the Borrower failing or
electing not to reimburse the Issuer and the giving of notice thereof by the
Administrative Agent to the Lenders, each Lender's (to the extent it has a
Revolving Loan Commitment) obligation under Section 2.6.1 to reimburse the
Issuer or fund its Percentage of any Disbursement converted into a Base Rate
Loan, shall be absolute and unconditional under any and all circumstances and
irrespective of any setoff, counterclaim or defense to payment which the
Borrower or such Lender, as the case may be, may have or have had against the
Issuer or any such Lender, including any defense based upon the failure of any
Disbursement to conform to the terms of the applicable Letter of Credit (unless
the Issuer has committed gross negligence or willful misconduct in determining
whether or not such Disbursement was in substantial compliance with the terms of
the Letter of Credit) (if, in the Issuer's good faith opinion, such Disbursement
is determined to be appropriate) or any non-application or misapplication by the
beneficiary of the proceeds of such Letter of Credit; provided, however, that
after paying in full its Reimbursement Obligation hereunder, nothing herein
shall adversely affect the right of the Borrower or such Lender, as the case may
be, to commence any proceeding against the Issuer for any wrongful Disbursement
made by the Issuer under a Letter of Credit as a result of acts or omissions
constituting gross negligence or willful misconduct on the part of the Issuer.
SECTION 2.6.4. Deemed Disbursements. Upon the occurrence and during the
continuation of any Event of Default of the type described in clauses (a)
through (d) of Section 8.1.9 with respect to any Obligor (other than any
Subsidiary that is not a Material Subsidiary) or, with notice from the
Administrative Agent acting at the direction of the Required Lenders, upon the
occurrence and during the continuation of any other Event of Default,
(a) an amount equal to that portion of all Letter of Credit
Outstandings attributable to the then aggregate amount which is undrawn
and available under all Letters of Credit issued and outstanding shall,
without demand upon or notice to the Borrower or any other Person, be
deemed to have been paid or disbursed by the Issuer under such Letters
of Credit (notwithstanding that such amount may not in fact have been
so paid or disbursed); and
(b) the Borrower shall be immediately obligated to reimburse
the Issuer for the amount deemed to have been so paid or disbursed by
the Issuer.
Any amounts so payable by the Borrower pursuant to this Section shall be
deposited in cash with the Administrative Agent and held as collateral security
for the Obligations in connection with the Letters of Credit issued by the
Issuer. At such time as the Events of Default giving rise to the
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deemed disbursements hereunder shall have been cured or waived, the
Administrative Agent shall return to the Borrower all amounts then on deposit
with the Administrative Agent pursuant to this Section, together with accrued
interest at the Federal Funds Rate, which have not been applied to the
satisfaction of such Obligations.
SECTION 2.6.5. Nature of Reimbursement Obligations. The Borrower and,
to the extent set forth in Section 2.6.1, each Lender with a Revolving Loan
Commitment, shall assume all risks of the acts, omissions or misuse of any
Letter of Credit by the beneficiary thereof. The Issuer (except to the extent of
its own gross negligence or willful misconduct) shall not be responsible for (i)
the form, validity, sufficiency, accuracy, genuineness or legal effect of any
Letter of Credit or any document submitted by any party in connection with the
application for and issuance of a Letter of Credit, even if it should in fact
prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent
or forged, (ii) the form, validity, sufficiency, accuracy, genuineness or legal
effect of any instrument transferring or assigning or purporting to transfer or
assign a Letter of Credit or the rights or benefits thereunder or the proceeds
thereof in whole or in part, which may prove to be invalid or ineffective for
any reason, (iii) failure of the beneficiary to comply fully with conditions
required in order to demand payment under a Letter of Credit, (iv) errors,
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telex or otherwise, or (v) any loss or delay in the
transmission or otherwise of any document or draft required in order to make a
Disbursement under a Letter of Credit. None of the foregoing shall affect,
impair or prevent the vesting of any of the rights or powers granted to the
Issuer or any Lender with a Revolving Loan Commitment hereunder. In furtherance
and extension and not in limitation or derogation of any of the foregoing, any
action taken or omitted to be taken by the Issuer in good faith (and not
constituting gross negligence or willful misconduct) shall be binding upon the
Borrower, each Obligor and each such Lender, and shall not put the Issuer under
any resulting liability to the Borrower, any Obligor or any such Lender, as the
case may be.
SECTION 2.7. Register; Notes.
(a) Each Lender may maintain in accordance with its usual
practice an account or accounts evidencing the Indebtedness of the
Borrower to such Lender resulting from each Loan made by such Lender,
including the amounts of principal and interest payable and paid to
such Lender from time to time hereunder. In the case of a Lender that
does not request, pursuant to clause (b)(ii) below, execution and
delivery of a Note evidencing the Loans made by such Lender to the
Borrower, such account or accounts shall, to the extent not
inconsistent with the notations made by the Administrative Agent in the
Register, be prima facie evidence of the matters noted; provided,
however, that the failure of any Lender to maintain such account or
accounts shall not limit or otherwise affect any Obligations of the
Borrower or any other Obligor.
(b)(i) The Borrower hereby designates the Administrative Agent
to serve as the Borrower's agent, solely for the purpose of this clause
(b), to maintain a register (the "Register") on which the
Administrative Agent will record each Lender's Commitment,
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the Loans made by each Lender and each repayment in respect of the
principal amount of the Loans of each Lender and annexed to which the
Administrative Agent shall retain a copy of each Lender Assignment
Agreement delivered to the Administrative Agent pursuant to Section
10.11.1. Failure to make any recordation, or any error in such
recordation, shall not affect the Borrower's obligation in respect of
such Loans. The entries in the Register shall be prima facie evidence
of the matters noted, and the Borrower, the Administrative Agent and
the Lenders shall treat each Person in whose name a Loan (and as
provided in clause (ii) the Note evidencing such Loan, if any) is
registered as the owner thereof for all purposes of this Agreement,
notwithstanding notice or any provision herein to the contrary. A
Lender's Commitment and the Loans made pursuant thereto may be assigned
or otherwise transferred in whole or in part only by registration of
such assignment or transfer in the Register. Any assignment or transfer
of a Lender's Commitment or the Loans made pursuant thereto shall be
registered in the Register only upon delivery to the Administrative
Agent of a Lender Assignment Agreement duly executed by the Assignor
thereof. No assignment or transfer of a Lender's Commitment or the
Loans made pursuant thereto shall be effective unless such assignment
or transfer shall have been recorded in the Register by the
Administrative Agent as provided in this Section 2.7.
(ii) The Borrower agrees that, upon the request to the
Administrative Agent by any Lender, the Borrower will execute and
deliver to such Lender, as applicable, a Note evidencing the Loans made
by such Lender. The Borrower hereby irrevocably authorizes each Lender
to make (or cause to be made) appropriate notations on the grid
attached to such Lender's Notes (or on any continuation of such grid),
which notations, if made, shall evidence, inter alia, the date of, the
outstanding principal amount of, and the interest rate and Interest
Period applicable to the Loans evidenced thereby. Such notations shall,
to the extent not inconsistent with the notations made by the
Administrative Agent in the Register, be prima facie evidence of the
matters noted; provided, however, that the failure of any Lender to
make any such notations, or any error in any such notation, shall not
limit or otherwise affect any Obligations of the Borrower or any other
Obligor. The Loans evidenced by any such Note and interest thereon
shall at all times (including after assignment pursuant to Section
10.11.1) be represented by one or more Notes payable to the order of
the payee named therein and its registered assigns. Subject to the
provisions of Section 10.11.1, a Note and the obligation evidenced
thereby may be assigned or otherwise transferred in whole or in part
only by registration of such assignment or transfer of such Note and
the obligation evidenced thereby in the Register (and each Note shall
expressly so provide). Any assignment or transfer of all or part of an
obligation evidenced by a Note shall be registered in the Register only
upon surrender for registration of assignment or transfer of the Note
evidencing such obligation,
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ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1. Repayments and Prepayments; Application.
SECTION 3.1.1. Repayments and Prepayments. The Borrower shall repay in
full the unpaid principal amount of each Loan upon the Stated Maturity Date
therefor. Prior thereto, the Borrower
(a) may, from time to time on any Business Day, make a
voluntary prepayment, in whole or in part, of the outstanding principal
amount of any Loan; provided, however, that
(i) any such prepayment of the Term Loans shall be
made pro rata among Term Loans of the same type and, if
applicable, having the same Interest Period of all Lenders
that have made such Term Loans, and any such prepayment of
Revolving Loans shall be made pro rata among the Revolving
Loans of the same type and, if applicable, having the same
Interest Period of all Lenders that have made such Revolving
Loans;
(ii) the Borrower shall comply with Section 4.4 in
the event that any LIBO Rate Loan is prepaid on any day other
than the last day of the Interest Period for such Loan;
(iii) all such voluntary prepayments shall require at
least one Business Day's notice in the case of Base Rate
Loans, three Business Days' notice in the case of LIBO Rate
Loans, but no more than five Business Days' notice in the case
of any Loans, in each case in writing to the Administrative
Agent;
(iv) all such voluntary partial prepayments shall be
in an aggregate amount of $5,000,000 or any larger integral
multiple of $500,000 or in the aggregate principal amount of
all Loans of the type then outstanding; and
(v) any voluntary prepayment of Term Loans, or
mandatory prepayment of Term Loans on account of Net Debt
Proceeds pursuant to clause (c) of this Section 3.1.1, made on
or prior to the third anniversary of the Closing Date shall be
subject to the payment of a premium, as set forth below:
(A) 3.0% of the principal amount of Term Loans
prepaid pursuant to clause (a) or (c) of this Section
3.1.1 on or prior to the first anniversary of the
Closing Date;
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(B) 2.0% of the principal amount of Term Loans
prepaid pursuant to clause (a) or (c) of this Section
3.1.1 subsequent to the first anniversary and prior
to or on the second anniversary of the Closing Date;
and
(C) 1.0% of the principal amount of Term Loans
prepaid pursuant to clause (a) or (c) of this Section
3.1.1 subsequent to the second anniversary and prior
or on the third anniversary of the Closing Date;
(b) shall, no later than five Business Days following the
delivery by the Borrower of its annual audited financial reports
required pursuant to clause (b) of Section 7.1.1 (commencing with the
financial reports delivered in respect of the 2002 Fiscal Year),
deliver to the Administrative Agent a calculation of the Excess Cash
Flow for the Fiscal Year last ended and, no later than five Business
Days following the delivery of such calculation, make a mandatory
prepayment of the Term Loans in an amount equal to 50% of the Excess
Cash Flow (if any) for such Fiscal Year, to be applied as set forth in
Section 3.1.2;
(c) shall, not later than five Business Days following the
receipt of any Net Debt Proceeds by the Borrower or any of its
Subsidiaries, deliver to the Administrative Agent a calculation of the
amount of such Net Debt Proceeds and make a mandatory prepayment of the
Term Loans in an amount equal to 100% of such Net Debt Proceeds, to be
applied as set forth in Section 3.1.2; provided that any mandatory
prepayment on account of Net Debt Proceeds made on or prior to the
third anniversary of the Closing Date shall be subject to the payment
of a premium as set forth in clause (a)(v) of this Section 3.1.1;
(d) shall, not later than 30 days following the receipt of any
Net Disposition Proceeds by the Borrower or any of its Subsidiaries,
deliver to the Administrative Agent a calculation of the amount of such
Net Disposition Proceeds, and, to the extent the amount of such Net
Disposition Proceeds with respect to any single transaction or series
of related transactions exceeds $1,000,000, make a mandatory prepayment
of the Term Loans in an amount equal to 100% of such Net Disposition
Proceeds, to be applied as set forth in Section 3.1.2; provided that no
mandatory prepayment on account of such Net Disposition Proceeds shall
be required under this clause if the Borrower informs the Agents no
later than 30 days following the receipt of any such Net Disposition
Proceeds of its or its Subsidiary's good faith intention to apply such
Net Disposition Proceeds to make Capital Expenditures or to acquire
Capital Stock of an entity that is or becomes a Subsidiary Guarantor or
other long term assets that are used or useful in the same or similar
lines of business or businesses reasonably related thereto of the
Borrower on the Closing Date within 360 days following the receipt of
such Net Disposition Proceeds, with the amount of such Net Disposition
Proceeds unused after such 360 day period being applied to the Loans as
set forth in Section 3.1.2;
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(e) shall, concurrently with the receipt of any Net Equity
Proceeds by the Borrower or any of its Subsidiaries at any time after
the fifth anniversary of the Closing Date, deliver to the
Administrative Agent a calculation of the amount of such Net Equity
Proceeds, and no later than five Business Days following the delivery
of such calculation, and, to the extent that the amount of such Net
Equity Proceeds exceeds $5,000,000, make a mandatory prepayment of the
Term Loans in an amount equal to 50% of such Net Equity Proceeds to be
applied as set forth in Section 3.1.2;
(f) shall, within 60 days following the receipt by the
Borrower or any of its Subsidiaries of any Net Casualty Proceeds in
excess of $1,000,000 (individually or in the aggregate over the course
of a Fiscal Year), make a mandatory prepayment of the Term Loans in an
amount equal to 100% of such Net Casualty Proceeds, to be applied as
set forth in Section 3.1.2; provided that no mandatory prepayment on
account of Net Casualty Proceeds shall be required under this clause if
the Borrower informs the Agents no later than 60 days following the
occurrence of the Casualty Event resulting in such Net Casualty
Proceeds of its or its Subsidiary's good faith intention to apply such
Net Casualty Proceeds to the rebuilding or replacement of the damaged,
destroyed or condemned assets or property or to make Capital
Expenditures or to acquire Capital Stock of an entity that is or
becomes a Subsidiary Guarantor or other long term assets that are used
or useful in the same or similar lines of business or businesses
reasonably related thereto of the Borrower on the Closing Date and in
fact uses such Net Casualty Proceeds to rebuild or replace the damaged,
destroyed or condemned assets or property within 360 days following the
receipt of such Net Casualty Proceeds, with the amount of such Net
Casualty Proceeds unused after such 360 day period being applied to the
Loans pursuant to Section 3.1.2;
(g) shall, on each date when any reduction in the Revolving
Loan Commitment Amount shall become effective, including pursuant to
Section 3.1.2, make a mandatory prepayment of Revolving Loans and (if
necessary) deposit with the Administrative Agent cash collateral for
Letter of Credit Outstandings in an aggregate amount equal to the
excess, if any, of the sum of (i) the aggregate outstanding principal
amount of all Revolving Loans and (ii) the aggregate amount of all
Letter of Credit Outstandings over the Revolving Loan Commitment Amount
as so reduced;
(h) shall, on the Stated Maturity Date and on each Quarterly
Payment Date occurring during any period set forth below, make a
scheduled repayment of the outstanding principal amount, if any, of
Term Loans in an aggregate amount equal to the amount set forth
opposite such Stated Maturity Date or period, as applicable (as such
amounts may have otherwise been increased or reduced pursuant to this
Agreement):
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Scheduled
Principal
Period Repayment
2/1/03 - 1/31/07 $ 437,500
2/1/07 - 7/31/07 $17,500,000
8/1/07 to the Ninth
Anniversary of the
Closing Date $66,500,000
(i) shall, immediately upon any acceleration of the Stated
Maturity Date of any Loans or Obligations pursuant to Section 8.2 or
Section 8.3, repay all outstanding Loans and other Obligations, unless,
pursuant to Section 8.3, only a portion of all Loans and other
Obligations are so accelerated (in which case the portion so
accelerated shall be so prepaid).
Each prepayment of any Loans made pursuant to this Section shall be
without premium or penalty, except as may be required by clause (a)(v) of this
Section 3.1.1 and/or Section 4.4. No prepayment of principal of any Revolving
Loans pursuant to clause (a) or (g) of this Section 3.1.1 shall cause a
reduction in the Revolving Loan Commitment Amount.
SECTION 3.1.2. Application.
(a) Subject to clause (b) below, each prepayment or repayment
of principal of the Loans shall be applied, to the extent of such
prepayment or repayment, first, to the principal amount thereof being
maintained as Base Rate Loans, and second, to the principal amount
thereof being maintained as LIBO Rate Loans; provided that prepayments
or repayments of LIBO Rate Loans not made on the last day of the
Interest Period with respect thereto, shall be prepaid or repaid
subject to the provisions of Section 4.4 (together with a payment of
all accrued interest).
(b) Each voluntary prepayment of Term Loans and each mandatory
prepayment of Term Loans made pursuant to clauses (b), (c), (d), (e)
and (f) of Section 3.1.1 shall be applied, to the extent of such
prepayment, on a pro rata basis, to a prepayment of the outstanding
principal amount of all remaining Term Loans and the remaining
scheduled quarterly amortization payments in respect thereof, until all
such Term Loans have been paid in full, and thereafter, to a prepayment
of the outstanding principal amount of all Revolving Loans and a
reduction of the Revolving Loan Commitment Amount to not less than
$25,000,000; provided, however, that if the Borrower at any time elects
in writing, in its sole discretion, to permit any Lender that has Term
Loans to decline to have such
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Loans prepaid, then any Lender having Term Loans outstanding may, by
delivering a notice to the Agents at least one Business Day prior to
the date that such prepayment is to be made, decline to have such Loans
prepaid with the amounts set forth above, in which case 50% of the
amounts that would have been applied to a prepayment of such Lender's
Term Loans shall instead be applied to a prepayment of the Revolving
Loans and a reduction of the Revolving Loan Commitment Amount to not
less than $25,000,000, with the balance being retained by the Borrower.
SECTION 3.2. Interest Provisions. Interest on the outstanding principal
amount of the Loans shall accrue and be payable in accordance with this Section
3.2.
SECTION 3.2.1. Rates.
(a) Each Base Rate Loan shall accrue interest on the unpaid
principal amount thereof for each day from and including the day upon
which such Loan was made or converted to a Base Rate Loan to but
excluding the date such Loan is repaid or converted to a LIBO Rate Loan
at a rate per annum equal to the sum of the Alternate Base Rate for
such day plus the Applicable Margin for such Loan on such day.
(b) Each LIBO Rate Loan shall accrue interest on the unpaid
principal amount thereof for each day during each Interest Period
applicable thereto at a rate per annum equal to the sum of the LIBO
Rate (Reserve Adjusted) for such Interest Period plus the Applicable
Margin for such Loan on such day.
All LIBO Rate Loans shall bear interest from and including the first day of the
applicable Interest Period to (but not including) the last day of such Interest
Period at the interest rate determined as applicable to such LIBO Rate Loan.
SECTION 3.2.2. Post-Maturity Rates. After the date any principal amount
of any Loan shall have become due and payable (whether on the applicable Stated
Maturity Date, upon acceleration or otherwise), or any other monetary Obligation
(other than overdue Reimbursement Obligations which shall bear interest as
provided in Section 2.6.2) of the Borrower shall have become due and payable,
the Borrower shall pay, but only to the extent permitted by law, interest (after
as well as before judgment) on such amounts at a rate per annum equal to (a) in
the case of any overdue principal of Loans, overdue interest thereon, overdue
commitment fees or other overdue amounts in respect of Loans or other
obligations (or the related Commitments), the rate that would otherwise be
applicable to Base Rate Loans pursuant to Section 3.2.1 plus 2% and (b) in the
case of other overdue monetary Obligations, the rate that would otherwise be
applicable to Revolving Loans that were Base Rate Loans plus 2%.
SECTION 3.2.3. Payment Dates. Interest accrued on each Loan shall be
payable, without duplication:
(a) on the Stated Maturity Date therefor;
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(b) in the case of a LIBO Rate Loan, on the date of any
payment or prepayment, in whole or in part, of principal outstanding on
such Loan, to the extent of the unpaid interest accrued through such
date on the principal so paid or prepaid;
(c) with respect to Base Rate Loans, on each Quarterly Payment
Date occurring after the date of the initial Borrowing hereunder;
(d) with respect to LIBO Rate Loans, on the last day of each
applicable Interest Period (and, if such Interest Period shall exceed
three months, at intervals of three months after the first day of such
Interest Period); and
(e) on that portion of any Loans the Stated Maturity Date of
which is accelerated pursuant to Section 8.2 or Section 8.3,
immediately upon such acceleration.
Interest accrued on Loans, Reimbursement Obligations or other monetary
Obligations arising under this Agreement or any other Loan Document after the
date such amount is due and payable (whether on the Stated Maturity Date, upon
acceleration or otherwise) shall be payable upon demand.
SECTION 3.3. Fees. The Borrower agrees to pay the fees set forth in
this Section 3.3. All such fees shall be non-refundable.
SECTION 3.3.1. Commitment Fee. The Borrower agrees to pay to the
Administrative Agent for the account of each Lender that has a Revolving Loan
Commitment, for each day during the period (including any portion thereof when
any of the Lenders' Revolving Loan Commitments are suspended by reason of the
Borrower's inability to satisfy any condition of Article V) commencing on the
Closing Date and continuing to but excluding the Revolving Loan Commitment
Termination Date, a commitment fee on such Lender's Percentage of the unused
portion, whether or not then available, of the Revolving Loan Commitment Amount
(net of Letter of Credit Outstandings) for such day at a rate per annum equal to
the Applicable Commitment Fee for such day. Such commitment fees shall be
payable by the Borrower in arrears on each Quarterly Payment Date, commencing
with the first such day following the Closing Date, and on the Revolving Loan
Commitment Termination Date.
SECTION 3.3.2. Administrative Agent Fee. The Borrower agrees to pay an
annual administration fee to the Administrative Agent, for its own account, in
the amount set forth in a letter dated January 29, 1999, between the Borrower
and the Administrative Agent, payable in advance on the Closing Date and
annually thereafter.
SECTION 3.3.3. Letter of Credit Fee. The Borrower agrees to pay to the
Administrative Agent, for the pro rata account of the Issuer and each other
Lender that has a Revolving Loan Commitment Amount, a Letter of Credit fee for
each day on which there shall be any Letters of Credit outstanding on the
aggregate undrawn amount of all Letters of Credit outstanding on such day, at a
rate per annum equal to the Applicable Margin for such day for Revolving Loans
that
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are maintained as LIBO Rate Loans. The Borrower further agrees to pay to the
Issuer for its own account, for each day on which there shall be any Letters of
Credit outstanding, an issuance fee on the aggregate undrawn amount of all
Letters of Credit outstanding on such day at the rate per annum agreed by the
Borrower and such Issuer. All such fees shall be payable quarterly in arrears on
each Quarterly Payment Date and on the Revolving Loan Commitment Termination
Date.
ARTICLE IV
CERTAIN LIBO RATE AND OTHER PROVISIONS
SECTION 4.1. LIBO Rate Lending Unlawful. If any Lender shall determine
(which determination shall, upon notice thereof to the Borrower and the Lenders,
be conclusive and binding on the Borrower) that the introduction of or any
change in or in the interpretation of any law, in each case after the date upon
which such Lender shall have become a Lender hereunder, makes it unlawful, or
any central bank or other governmental authority asserts, after such date, that
it is unlawful, for such Lender to make, continue or maintain any Loan as, or to
convert any Loan into, a LIBO Rate Loan, the obligations of such Lender to make,
continue, maintain or convert any Loans as or to LIBO Rate Loans shall, upon
such determination, forthwith be suspended until such Lender shall notify the
Administrative Agent that the circumstances causing such suspension no longer
exist (with the date of such notice being the "Reinstatement Date"), and (i) all
LIBO Rate Loans previously made by such Lender shall automatically convert into
Base Rate Loans at the end of the then current Interest Periods with respect
thereto or sooner, if required by such law or assertion and (ii) all Loans
thereafter made by such Lender and outstanding prior to the Reinstatement Date
shall be made as Base Rate Loans, with interest thereon being payable on the
same date that interest is payable with respect to the corresponding Borrowing
of LIBO Rate Loans made by Lenders not so affected.
SECTION 4.2. Deposits Unavailable. If the Administrative Agent shall
have determined that
(a) Dollar deposits in the relevant amount and for the
relevant Interest Period are not available to the Administrative Agent
in its relevant market; or
(b) by reason of circumstances affecting the Administrative
Agent's relevant market, adequate means do not exist for ascertaining
the interest rate applicable hereunder to LIBO Rate Loans,
then, upon notice from the Administrative Agent to the Borrower and the Lenders,
the obligations of all Lenders under Section 2.3 and Section 2.4 to make or
continue any Loans as, or to convert any Loans into, LIBO Rate Loans shall
forthwith be suspended until the Administrative Agent shall notify the Borrower
and the Lenders that the circumstances causing such suspension no longer exist.
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SECTION 4.3. Increased LIBO Rate Loan Costs, etc. The Borrower agrees
to reimburse each Lender for any increase in the cost to such Lender of, or any
reduction in the amount of any sum receivable by such Lender in respect of,
making, continuing or maintaining (or of its obligation to make, continue or
maintain) any Loans as, or of converting (or of its obligation to convert) any
Loans into, LIBO Rate Loans (excluding any amounts, whether or not constituting
Taxes, referred to in Section 4.6) arising as a result of any change in, or the
introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in of, any law or regulation, directive, guideline, decision or request
(whether or not having the force of law) of any court, central bank, regulator
or other governmental authority that occurs after the date upon which such
Lender became a Lender hereunder. Such Lender shall promptly notify the
Administrative Agent and the Borrower in writing of the occurrence of any such
event, such notice to state, in reasonable detail, the reasons therefor and the
additional amount required fully to compensate such Lender for such increased
cost or reduced amount. Such additional amounts shall be payable by the Borrower
directly to such Lender within five days of its receipt of such notice, and such
notice shall, in the absence of manifest error, be conclusive and binding on the
Borrower.
SECTION 4.4. Funding Losses. In the event any Lender shall incur any
loss or expense (including any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such Lender
to make, continue or maintain any portion of the principal amount of any Loan
as, or to convert any portion of the principal amount of any Loan into, a LIBO
Rate Loan, but excluding any loss of margin after the date of any such
conversion, repayment, prepayment or failure to borrow, continue or convert) as
a result of
(a) any conversion or repayment or prepayment of the principal
amount of any LIBO Rate Loans on a date other than the scheduled last
day of the Interest Period applicable thereto, whether pursuant to
Section 3.1 or otherwise;
(b) any Loans not being borrowed as LIBO Rate Loans in
accordance with the Borrowing Request therefor; or
(c) any Loans not being continued as, or converted into, LIBO
Rate Loans in accordance with the Continuation/ Conversion Notice
therefor,
then, upon the written notice of such Lender to the Borrower (with a copy to the
Administrative Agent), the Borrower shall, within five days of its receipt
thereof, pay directly to such Lender such amount as will (in the reasonable
determination of such Lender) reimburse such Lender for such loss or expense.
Such written notice (which shall include calculations in reasonable detail)
shall, in the absence of manifest error, be conclusive and binding on the
Borrower.
SECTION 4.5. Increased Capital Costs. If any change in, or the
introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in of, any law or regulation, directive, guideline, decision or request
(whether or not having the force of law) of any court, central bank, regulator
or other governmental authority, in each case occurring after the applicable
Lender
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becomes a Lender hereunder, affects or would affect the amount of capital
required or expected to be maintained by any Lender or any Person controlling
such Lender, and such Lender determines (in its sole and absolute discretion)
that the rate of return on its or such controlling Person's capital as a
consequence of its Commitments, participation in Letters of Credit or the Loans
made by such Lender is reduced to a level below that which such Lender or such
controlling Person could have achieved but for the occurrence of any such
circumstance, then, in any such case upon notice from time to time by such
Lender to the Borrower, the Borrower shall immediately pay directly to such
Lender additional amounts sufficient to compensate such Lender or such
controlling Person for such reduction in rate of return. A statement of such
Lender as to any such additional amount or amounts (including calculations
thereof in reasonable detail) shall, in the absence of manifest error, be
conclusive and binding on the Borrower. In determining such amount, such Lender
may use any method of averaging and attribution that it (in its sole and
absolute discretion) shall deem applicable.
SECTION 4.6. Taxes. All payments by the Borrower of principal of, and
interest on, the Loans and all other amounts payable hereunder (including
Reimbursement Obligations), fees and expenses) shall be made free and clear of
and without deduction for any present or future income, profits, gross receipts,
excise, stamp or franchise taxes and other taxes, fees, duties, withholdings or
other charges of any nature whatsoever imposed by any taxing authority, but
excluding (i) any income, profits, gross receipts, excise, stamp or franchise
taxes and other similar taxes, fees, duties, withholding or other charges
imposed on either of the Agents as a result of a present or former connection
between the applicable lending office (or office through which it performs any
of its actions as Agent) of such Agent, and any income, profits, gross receipts,
excise, stamp or franchise taxes and other similar taxes, fees, duties,
withholding or other charges imposed on any Lender as a result of a present or
former connection between the applicable lending office of a Lender, in each
case and the jurisdiction of the governmental authority imposing such tax or any
political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from such Agent or such Lender having executed,
delivered or performed its obligations or received a payment under, or taken any
action to enforce, this Agreement and any Note) and (ii) any income, profits,
gross receipts, excise, stamp or franchise taxes and other similar taxes, fees,
duties, withholding or other charges to the extent that they are in effect and
would apply as of the date that any Person becomes a Lender or Assignee Lender,
or as of the date that any Lender changes its applicable lending office, if such
taxes become applicable as a result of such change (other than a change in an
applicable lending office made pursuant to Section 4.10 below) (such
non-excluded items being called "Taxes"). In the event that any withholding or
deduction from any payment to be made by the Borrower hereunder is required in
respect of any Taxes pursuant to any applicable law, rule or regulation, then
the Borrower will pay directly to the relevant taxing authority the full amount
required to be so withheld or deducted, promptly forward to the Administrative
Agent an official receipt or other documentation reasonably satisfactory to the
Administrative Agent evidencing such payment to such authority, and pay to the
Administrative Agent for the account of the Lenders such additional amount or
amounts as is necessary to ensure that the net amount actually received by each
Lender will equal the full amount such Lender would have received had no such
withholding or deduction been required; provided, however, that the Borrower
shall not be
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required to increase any such amounts payable to any Lender that is not
organized under the laws of the United States or a state thereof if such Lender
fails to comply with the requirements of clause (b) of Section 4.6.
Moreover, if any Taxes are directly asserted against either of the
Agents or any Lender with respect to any payment received by such Agents or such
Lender hereunder, such Agents or such Lender may pay such Taxes and the Borrower
will promptly pay to such Person such additional amount (including any
penalties, interest or expenses) as is necessary in order that the net amount
received by such Person (including any Taxes on such additional amount) shall
equal the amount of such Taxes paid by such Person; provided, however, that the
Borrower shall not be obligated to make payment to the Lenders or the Agents (as
the case may be) pursuant to this sentence in respect of interest attributable
to any Taxes, if written demand therefor has not been made by such Lenders or
the Agents within 60 days from the date on which such Lenders or the Agents knew
of the imposition of Taxes by the relevant taxing authority or for any
additional imposition which may arise from the failure of the Lenders or the
Agents to apply payments in accordance with the tax law after the Borrower has
made the payments required hereunder. After the Lenders or the Agents (as the
case may be) learn of the imposition of Taxes, such Lenders and the Agents will
act in good faith to notify the Borrower of its obligations hereunder as soon as
reasonably possible.
If the Borrower fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to the Administrative Agent, for the account
of the respective Lenders, the required receipts or other required documentary
evidence, the Borrower shall indemnify the Lenders for any incremental Taxes,
interest or penalties that may become payable by any Lender as a result of any
such failure.
(b) Each Non-U.S. Lender shall, (i) (A) on or prior to the date of the
execution and delivery of this Agreement, in the case of each Lender listed on
the signature pages hereof, or, (B) in the case of an Assignee Lender, on or
prior to the date it becomes a Lender, execute and deliver to the Borrower and
the Administrative Agent, two or more (as the Borrower or the Agents may
reasonably request) United States Internal Revenue Service Forms 4224 or Forms
1001 or, solely if such Lender is claiming complete exemption from United States
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of "portfolio interest", United States Internal Revenue Service Forms
W-8 and a certificate signed by a duly authorized officer of such Lender
representing that such Lender is not a "bank" within the meaning of Section
881(c)(3)(A) of the Code, and such other forms, documents and/or certification
(or successor forms, documents and/or certification), appropriately completed,
as may be reasonably requested by the Borrower establishing that payments to
such Lender are exempt in their entirety from withholding or deduction of Taxes;
and (ii) deliver to the Borrower and the Administrative Agent two further copies
of any such form or documents on or before the date that any such form or
document expires or becomes obsolete and after the occurrence of any event
requiring a change in the most recent such form or document previously delivered
by it to the Borrower.
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(c) If the Borrower determines in good faith that a reasonable basis
exists for contesting the imposition of a Tax with respect to a Lender or either
of the Agents, the relevant Lender or Agent, as the case may be, shall fully
cooperate with the Borrower in challenging such Tax at the Borrower's expense if
requested by the Borrower.
(d) If a Lender or an Agent shall receive a refund (including any
offset or credits from a taxing authority (as a result of any error in the
imposition of Taxes by such taxing authority) of any Taxes paid by the Borrower
pursuant to subsection 4.6(a) above), such Lender or the Agent (as the case may
be) shall promptly pay the Borrower the amount so received, with interest from
the taxing authority with respect to such refund.
(e) Each Lender and each Agent agrees, to the extent reasonable and
without material cost to it, to cooperate with the Borrower to minimize any
amounts payable by the Borrower under this Section 4.6.
SECTION 4.7. Payments, Computations, etc. Unless otherwise expressly
provided, all payments by or on behalf of the Borrower pursuant to this
Agreement, the Notes or any other Loan Document shall be made by the Borrower to
the Administrative Agent for the pro rata account of the Lenders, Agents or Lead
Arranger, as applicable, entitled to receive such payment. All such payments
required to be made to the Administrative Agent shall be made, without setoff,
deduction or counterclaim, not later than 11:00 a.m., Chicago, Illinois time, on
the date due, in same day or immediately available funds, to such account as the
Administrative Agent shall specify from time to time by notice to the Borrower.
Funds received after that time shall be deemed to have been received by the
Administrative Agent on the next succeeding Business Day. The Administrative
Agent shall promptly remit in same day funds to each Lender, Agent or Lead
Arranger, as the case may be, its share, if any, of such payments received by
the Administrative Agent for the account of such Lender, Agent or Lead Arranger,
as the case may be. All interest and fees shall be computed on the basis of the
actual number of days (including the first day but excluding the last day)
occurring during the period for which such interest or fee is payable over a
year comprised of 360 days (or, in the case of interest on a Base Rate Loan, 365
days or, if appropriate, 366 days). Whenever any payment to be made shall
otherwise be due on a day which is not a Business Day, such payment shall
(except as otherwise required by clause (i) of the definition of the term
"Interest Period") be made on the next succeeding Business Day and such
extension of time shall be included in computing interest and fees, if any, in
connection with such payment.
SECTION 4.8. Sharing of Payments. If any Lender shall obtain any
payment or other recovery (whether voluntary, involuntary, by application of
setoff or otherwise) on account of any Loan or Reimbursement Obligations (other
than pursuant to the terms of Sections 4.3, 4.4 and 4.5) in excess of its pro
rata share of payments then or therewith obtained by all Lenders entitled
thereto, such Lender shall purchase from the other Lenders such participation in
the Credit Extensions made by them as shall be necessary to cause such
purchasing Lender to share the excess payment or other recovery ratably with
each of them; provided, however, that if all or any portion of the excess
payment or other recovery is thereafter recovered from such purchasing
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Lender, the purchase shall be rescinded and each Lender which has sold a
participation to the purchasing Lender shall repay to the purchasing Lender the
purchase price to the ratable extent of such recovery together with an amount
equal to such selling Lender's ratable share (according to the proportion of (i)
the amount of such selling Lender's required repayment to the purchasing Lender
in respect of such recovery, to (ii) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. The Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section may, to the fullest extent permitted by law, exercise
all its rights of payment (including pursuant to Section 4.9) with respect to
such participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation. If under any applicable
bankruptcy, insolvency or other similar law, any Lender receives a secured claim
in lieu of a setoff to which this Section applies, such Lender shall, to the
extent practicable, exercise its rights in respect of such secured claim in a
manner consistent with the rights of the Lenders entitled under this Section to
share in the benefits of any recovery on such secured claim.
SECTION 4.9. Setoff. Each Lender shall, upon the occurrence of any
Event of Default described in clauses (a) through (d) of Section 8.1.9 with
respect to any Obligor (other than Subsidiaries that are not Material
Subsidiaries) or, with the consent of the Required Lenders, upon the occurrence
of any other Event of Default, to the fullest extent permitted by law, have the
right to appropriate and apply to the payment of the Obligations then due to it,
and (as security for such Obligations) the Borrower hereby grants to each Lender
a continuing security interest in, any and all balances, credits, deposits,
accounts or moneys of the Borrower then or thereafter maintained with or
otherwise held by such Lender; provided, however, that any such appropriation
and application shall be subject to the provisions of Section 4.8. Each Lender
agrees promptly to notify the Borrower and the Administrative Agent after any
such setoff and application made by such Lender; provided, however, that the
failure to give such notice shall not affect the validity of such setoff and
application. The rights of each Lender under this Section are in addition to
other rights and remedies (including other rights of setoff under applicable law
or otherwise) which such Lender may have.
SECTION 4.10. Mitigation. Each Lender agrees that if it makes any
demand for payment under Section 4.3, 4.4, 4.5, or 4.6, or if any adoption or
change of the type described in Section 4.1 shall occur with respect to it, it
will use reasonable efforts (consistent with its internal policy and legal and
regulatory restrictions and so long as such efforts would not be disadvantageous
to it, as determined in its sole discretion) to designate a different lending
office if the making of such a designation would reduce or obviate the need for
the Borrower to make payments under Section 4.3, 4.4, 4.5, or 4.6, or would
eliminate or reduce the effect of any adoption or change described in Section
4.1. Any demand for payment by a Lender pursuant to Sections 4.3, 4.5 or 4.6
shall be effective only if notice thereof shall have been given within 90 days
after delivery of the annual audit report for such Lender for the Fiscal Year in
which the event giving rise to such demand shall have occurred.
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SECTION 4.11. Replacement of Lenders. Each Lender hereby severally
agrees as set forth in this Section. If any Lender (a "Subject Lender") makes
demand upon the Borrower for (or if the Borrower is otherwise required to pay)
amounts pursuant to Section 4.3, 4.5 or 4.6, or gives notice pursuant to Section
4.1 requiring a conversion of such Subject Lender's LIBO Rate Loans to Base Rate
Loans or suspending such Lender's obligation to make Loans as, or to convert
Loans into, LIBO Rate Loans, the Borrower may, within 90 days of receipt by the
Borrower of such demand or notice (or the occurrence of such other event causing
the Borrower to be required to pay such compensation), as the case may be, give
notice (a "Replacement Notice") in writing to the Agents and such Subject Lender
of its intention to replace such Subject Lender with a financial institution (a
"Replacement Lender") designated in such Replacement Notice. If the Agents
shall, in the exercise of their reasonable discretion and within 30 days of
their receipt of such Replacement Notice, notify the Borrower and such Subject
Lender in writing that the designated financial institution is satisfactory to
the Agents (such consent not being required where the Replacement Lender is
already a Lender), then such Subject Lender shall, subject to the payment of any
amounts that would be due pursuant to Section 4.4 if the Borrower were then
making a prepayment in an equal amount, assign, in accordance with Section
10.11.1, all of its Commitments, Loans, Notes and other rights and obligations
under this Agreement and all other Loan Documents (including, without
limitation, Reimbursement Obligations) to such designated financial institution;
provided, however, that (i) such assignment shall be without recourse,
representation or warranty and shall be on terms and conditions reasonably
satisfactory to such Subject Lender and such designated financial institution
and (ii) the purchase price paid by such designated financial institution shall
be in the amount of such Subject Lender's Loans and its Percentage of
outstanding Reimbursement Obligations, together with all accrued and unpaid
interest and fees in respect thereof, plus all other amounts (including the
amounts demanded and unreimbursed under Sections 4.3, 4.5 and 4.6), owing to
such Subject Lender hereunder. Upon the effective date of an assignment
described above, the Borrower shall issue a replacement Note or Notes, as the
case may be, to such designated financial institution or Replacement Lender, as
applicable, and such institution shall become a "Lender" for all purposes under
this Agreement and the other Loan Documents.
ARTICLE V
CONDITIONS TO CREDIT EXTENSIONS
SECTION 5.1. Initial Credit Extension. The obligations of the Lenders
and, if applicable, the Issuer to fund the initial Credit Extension shall be
subject to the prior or concurrent satisfaction of each of the conditions
precedent set forth in this Section 5.1.
SECTION 5.1.1. Resolutions, etc. The Agents shall have received from
each Obligor (a) a copy of a good standing certificate, dated a date reasonably
close to the Closing Date, for each such Person and (b) a certificate, dated the
date of the initial Credit Extension, of its Secretary or Assistant Secretary as
to (i) resolutions of such Person's Board of Directors then in full force and
effect authorizing the execution, delivery and performance of each Loan
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Document to be executed by such Person and the transactions contemplated thereby
(ii) the incumbency and signatures of those of such Person's officers authorized
to act with respect to each Loan Document executed by such Person, and (iii) the
full force and validity of each Organic Document of such Person and copies
thereof, upon which certificates each Agent and each Lender may conclusively
rely until it shall have received a further certificate of the Secretary or
Assistant Secretary of such Obligor canceling or amending such prior
certificate.
SECTION 5.1.2. Delivery of Notes. The Agents shall have received, for
the account of each Lender so requesting Notes, such Lender's Notes duly
executed and delivered by an Authorized Officer of the Borrower.
SECTION 5.1.3. Transaction Documents. The Agents shall have received
(with copies for each Lender that shall have expressly requested copies thereof)
fully executed copies of the Transaction Documents and all certificates,
opinions and other documents delivered thereunder, certified to be true and
complete copies thereof by an Authorized Officer of the Borrower.
SECTION 5.1.4. Closing Date Certificate. Each of the Agents shall have
received, with counterparts for each Lender, the Closing Date Certificate,
substantially in the form of Exhibit D hereto, dated the date of the initial
Credit Extension and duly executed and delivered by the chief executive,
financial or accounting (or equivalent) Authorized Officer of the Borrower, in
which certificate the Borrower shall agree and acknowledge that the statements
made therein shall be deemed to be true and correct representations and
warranties of the Borrower made as of such date under this Agreement, and, at
the time such certificate is delivered, such statements shall in fact be true
and correct.
SECTION 5.1.5. Subsidiary Guaranty. The Agents shall have received the
Subsidiary Guaranty, dated the date hereof, duly executed and delivered by an
Authorized Officer of each U.S. Subsidiary of the Borrower in existence on the
date of the initial Credit Extension.
SECTION 5.1.6. Parent Guaranty and Pledge Agreement. The Agents shall
have received executed counterparts of the Parent Guaranty and Pledge Agreement,
dated as of the date hereof, duly executed and delivered by an Authorized
Officer of the Parent, together with (i) the certificates evidencing all of the
issued and outstanding shares of Capital Stock of the Borrower which shall be
pledged pursuant to the Parent Guaranty and Pledge Agreement, which certificates
shall in each case be accompanied by undated stock powers duly executed in blank
and (ii) all promissory notes, if any, evidencing intercompany Indebtedness
payable to the Parent duly endorsed to the order of the Administrative Agent,
together with Uniform Commercial Code Financing Statements (or similar
instruments) in respect of such promissory notes executed by the Parent to be
filed in such jurisdictions as the Administrative Agent may reasonably request.
SECTION 5.1.7. Security Agreements. The Agents shall have received
executed counterparts of the Borrower Security and Pledge Agreement, dated as of
the date hereof, duly executed and delivered by an Authorized Officer of the
Borrower and, in the event the Borrower
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has any U.S. Subsidiaries, executed counterparts of a Subsidiary Security and
Pledge Agreement dated as of the date hereof, duly executed and delivered by an
Authorized Officer of each such U.S. Subsidiary, together with
(a) executed copies of Uniform Commercial Code financing
statements (Form UCC-1), naming the Borrower and each such U.S.
Subsidiary (if any) as a debtor and the Administrative Agent as the
secured party, or other similar instruments or documents, to be filed
under the Uniform Commercial Code of all jurisdictions as may be
necessary or, in the opinion of the Administrative Agent, desirable to
perfect the security interests of the Administrative Agent pursuant to
such Security Agreement;
(b) the applicable Perfection Certificate;
(c) certified copies of Uniform Commercial Code Requests for
Information or Copies (Form UCC-11), or a similar search report
certified by a party acceptable to the Agents, dated a date reasonably
near to the date of the initial Credit Extension, listing all effective
financing statements which name the Borrower and each U.S. Subsidiary
(under its present name and any previous names) as the debtor and which
are filed in the jurisdictions in which filings were made pursuant to
clause (a) above, together with copies of such financing statements
(none of which shall cover any collateral described in any Security
Agreement);
(d) in the event the Borrower has any Subsidiaries,
certificates evidencing all of the issued and outstanding shares of
Capital Stock owned by the Borrower in each such Subsidiary or owned by
any other Subsidiary, which certificates shall be accompanied by
undated stock powers duly executed in blank; and
(e) all Intercompany Notes (as defined in the relevant
Security Agreement), if any, evidencing Indebtedness payable to the
Borrower or to any Subsidiary duly endorsed to the order of the
Administrative Agent, together with Uniform Commercial Code Financing
Statements (or similar instruments) in respect of such Intercompany
Notes executed by the Borrower or a Subsidiary Guarantor to be filed in
such jurisdictions as the Administrative Agent may reasonably request;
provided, however, that neither the Borrower nor any of its Subsidiaries shall
be required to pledge in excess of 65% of the outstanding voting stock of any
Non-U.S. Subsidiary. If any securities pledged pursuant to a Security Agreement
are uncertificated securities or are held through a financial intermediary, the
Administrative Agent shall have received confirmation and evidence satisfactory
to it that appropriate book entries have been made in the relevant books or
records of a financial intermediary or the issuer of such securities, as the
case may be, or other appropriate steps have been taken under applicable law
resulting in the perfection of the security interest granted in favor of the
Administrative Agent in such securities pursuant to the terms of the applicable
Security Agreement.
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SECTION 5.1.8. Assignment Agreement and Consents to Assignment. The
Agents shall have received a fully executed copy of the Assignment Agreement,
together with consents to assignment executed and delivered by the parties to
the Nextel Operating Agreements.
SECTION 5.1.9. Licenses. The Administrative Agent shall have received
from the Borrower a photocopy, certified to be true and complete, of the
Licenses presently owned by the Nextel License Subsidiary for the markets listed
on Schedule III and such Licenses shall be owned by the Nextel License
Subsidiary free and clear of all Liens (other than Liens created by any Loan
Document or imposed by the Communications Act).
SECTION 5.1.10. Consents. The Agents shall have received evidence
satisfactory to each of them that the Borrower has made appropriate filings with
the FCC in order to obtain all consents and approvals required to be obtained
from the FCC in connection with the License Transfer. Other than consents and
approvals required to be obtained from the FCC in connection with the License
Transfer, all consents and approvals required to be obtained from any
governmental authority or other Person in connection with the Transaction or the
other transactions contemplated hereby, including evidence of compliance with
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, shall have
been obtained, and all applicable waiting periods and appeal periods shall have
expired, without the imposition of any material conditions and there shall be no
governmental or judicial action, actual or threatened, that could reasonably be
expected to restrain, prevent or impose material conditions on the Transaction
or the other transactions contemplated hereby. To the extent contemplated by the
terms of this Agreement and the Subscription and Contribution Agreement, the
Transaction shall have been, or substantially simultaneously with the initial
funding of Credit Extensions on the Closing Date shall be, consummated in
accordance with the Transaction Documents and applicable law, without any
amendment to or waiver of any material terms or conditions of the Transaction
Documents not approved by the Required Lenders.
SECTION 5.1.11. Capitalization and Structure. To the extent not
expressly contemplated in the Subscription and Contribution Agreement or the
Restated Certificate of Incorporation, the Agents shall be satisfied with (a)
the corporate and capital structure of the Borrower and its Subsidiaries and (b)
the contributions to the Borrower's equity. The Agents shall be satisfied with
the corporate and capital structure of the Nextel License Subsidiary.
SECTION 5.1.12. Vendor Contracts. The Borrower shall have entered into
supply contracts with Motorola for the Network Build-Out and the acquisition of
related equipment and, to the extent material, such contracts shall be
reasonably satisfactory to the Lenders.
SECTION 5.1.13. Financial Information, etc. On the Closing Date, the
Agents shall have received, with counterparts for each Lender, a pro forma
consolidated balance sheet of the Borrower and its Subsidiaries, as of October
31, 1998 (the "Pro Forma Balance Sheet"), certified by the chief financial or
accounting Authorized Officer of the Borrower, giving effect to all pro forma
adjustments as if the Transaction had been consummated on such date, and
reflecting the
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proposed legal and capital structure of the Borrower, which legal and capital
structure shall be satisfactory in all respects to the Arranger and the
Syndication Agent.
SECTION 5.1.14. Business Plan. The Agents shall have received a
certificate dated the Closing Date executed by an Authorized Officer of the
Borrower certifying that attached thereto is a nine-year business plan of the
Borrower satisfactory to the Lenders with quarterly projections for at least the
three-year period following the Closing Date.
SECTION 5.1.15. Nextel Contribution, Motorola Contribution, Investors
Contribution, Borrower Equity Contribution and Senior Discount Note Issuance.
The Agents shall have received evidence satisfactory to each of them that (i)
NWIP made the Nextel Contribution, (ii) Motorola made the Motorola Contribution,
(iii) the amount of cash consideration received by the Parent for the sale of
its Preferred Stock to the Investors pursuant to the Subscription and
Contribution Agreement, plus the amount of additional cash consideration payable
by the Investors pursuant to irrevocable binding commitments with the Parent set
forth in the Subscription and Contribution Agreement, shall be at least
$156,400,000, (iv) the Parent received not less than $400,000,000 in gross cash
proceeds from the Senior Discount Notes Issuance and (v) the Borrower received
the Borrower Equity Contribution.
SECTION 5.1.16. Litigation. There shall exist no pending or threatened
material litigation, proceedings or investigations which (x) contests the
consummation of the Transaction or (y) could reasonably be expected to have a
material adverse effect on the financial condition, operations, assets,
businesses, properties or prospects of the Parent, the Borrower, or any of their
respective Subsidiaries or the ability of NWIP to perform its obligations under
the Nextel Operating Agreements.
SECTION 5.1.17. Material Adverse Change. There shall have occurred no
material adverse change in the financial condition, operations, assets,
business, properties or prospects of the Borrower and its Subsidiaries, taken as
a whole, or the Parent and its Subsidiaries, taken as a whole, since December
31, 1998.
SECTION 5.1.18. Reliance Letters. The Agents shall, unless otherwise
agreed, have received reliance letters, dated the date of the making of the
initial Credit Extension and addressed to each Lender and each Agent, in respect
of each of the legal opinions (other than "disclosure" and other similar
opinions) delivered in connection with the Transaction.
SECTION 5.1.19. Opinions of Counsel. The Agents shall have received
opinions, dated the date of the initial Credit Extension and addressed to the
Agents and all Lenders from
(a) Friedman Kaplan & Seiler LLP, New York counsel to each of
the Obligors, in substantially the form of Exhibit N-1 hereto;
(b) Willkie Farr & Gallagher, special FCC counsel to the
Obligors, in substantially the form of Exhibit N-2 hereto; and
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(c) Paine, Hamblen, Coffin, Brooke & Miller LLP, special
Washington counsel to the Obligors, Davis Wright Tremaine LLP, special
Hawaiian counsel to the Obligors, in substantially the form of Exhibit
N-3 hereto.
SECTION 5.1.20. Insurance. The Agents shall have received satisfactory
evidence of the existence of insurance in compliance with Section 7.1.4
(including all endorsements included therein), and the Administrative Agent
shall be named additional insured or loss payee, on behalf of the Lenders,
pursuant to documentation reasonably satisfactory to the Agents and the
Borrower.
SECTION 5.1.21. NWIP Undertaking. The Administrative Agent shall have
received the NWIP Undertaking, dated as of the date of the initial Credit
Extension, duly executed and delivered by an Authorized Officer of NWIP.
SECTION 5.1.22. Cash Account; Cash Collateral Agreement. The Agents
shall have received a copy of the Cash Collateral Agreement, dated as of the
date of the date hereof, duly executed and delivered by an Authorized Officer of
the Borrower, together with evidence that the Cash Account has been established
pursuant to the Borrower Security and Pledge Agreement and that the proceeds of
the Loans made on the Closing Date shall be deposited into the Cash Account.
SECTION 5.1.23. Realco Agreement; Management Agreement. The
Administrative Agent shall have received each of the Realco Agreement and the
Management Agreement, each dated as of the date of the initial Credit Extension,
duly executed and delivered by Authorized Officers of each of the Borrower and
Realco.
SECTION 5.1.24. Closing Fees, Expenses, etc. The Agents and the
Arranger shall have received, each for its own respective account, or, in the
case of the Administrative Agent, for the account of each Lender, as the case
may be, all fees, costs and expenses due and payable pursuant to Sections 3.3
and 10.3, if then invoiced.
SECTION 5.1.25. Satisfactory Legal Form. All documents executed or
submitted pursuant hereto by or on behalf of the Borrower or any of its
Subsidiaries or any other Obligors shall be reasonably satisfactory in form and
substance to the Agents and their counsel; the Agents and their counsel shall
have received all information, approvals, opinions, documents or instruments as
the Agents or their counsel may reasonably request.
SECTION UCC 5.1.26. Filing Service. All Uniform Commercial Code (Form
UCC-1) financing statements or other similar financing statements required
pursuant to the Loan Documents (collectively, the "Filing Statements") shall
have been delivered to CT Corporation System or another similar filing service
company reasonably acceptable to the Administrative Agent (the "Filing Agent").
The Filing Agent shall have acknowledged in writing reasonably satisfactory to
the Administrative Agent and its counsel (i) the Filing Agent's receipt of all
such Filing Statements, (ii) that such Filing Statements have either been
submitted for filing in the
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appropriate filing offices therefor or will be submitted for filing in such
appropriate offices within ten days of the Closing Date and (iii) that the
Filing Agent will notify the Administrative Agent and its counsel of the result
of such submissions within 30 days of the Closing Date.
SECTION 5.2. All Credit Extensions. The obligation of each Lender and,
if applicable, the Issuer, to make any Credit Extension (including its initial
Credit Extension) shall be subject to the satisfaction of each of the conditions
precedent set forth in this Section 5.2.
SECTION 5.2.1. Compliance with Warranties, No Default, etc. Both before
and after giving effect to any Credit Extension the following statements shall
be true and correct:
(a) the representations and warranties set forth in Article VI
and in each other Loan Document shall, in each case, be true and
correct in all material respects with the same effect as if then made
(unless stated to relate solely to an earlier date, in which case such
representations and warranties shall be true and correct in all
material respects as of such earlier date);
(b) the sum of the (A) aggregate outstanding principal amount
of all Revolving Loans and (B) the aggregate amount of all Letter of
Credit Outstandings does not exceed the then existing Revolving Loan
Commitment Amount; and
(c) no Default shall have then occurred and be continuing.
SECTION 5.2.2. Credit Extension Request. The Agents shall have received
a Borrowing Request if Loans are being requested, or an Issuance Request if a
Letter of Credit is being requested or extended. Each of the delivery of a
Borrowing Request or Issuance Request and the acceptance by the Borrower of
proceeds of any Credit Extension shall constitute a representation and warranty
by the Borrower that on the date of such Credit Extension (both immediately
before and after giving effect thereto and the application of the proceeds
thereof) the statements made in Section 5.2.1 are true and correct.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders, the Issuer and the Agents to enter into
this Agreement and to make Loans and issue Letters of Credit hereunder, the
Borrower represents and warrants unto the Agents and each Lender as set forth in
this Article VI.
SECTION 6.1. Organization, etc. Each of the Borrower and its
Subsidiaries is a corporation validly organized and existing and in good
standing under the laws of the jurisdiction of its organization, is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction where the nature of its business requires such
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qualification, except where the failure to be so qualified could not reasonably
be expected to have a Material Adverse Effect, and has full power and authority
and holds all requisite governmental licenses, permits and other approvals to
enter into and perform its Obligations under this Agreement, the Notes and each
other Loan Document to which it is a party and to own and hold under lease its
property (including the Licenses), to operate Network in the areas set forth on
Schedule III and to conduct its business substantially as currently conducted by
it, except where the failure to hold such governmental licenses, permits and
approvals could not reasonably be expected to have a Material Adverse Effect.
SECTION 6.2. Due Authorization, Non-Contravention, etc. The execution,
delivery and performance by the Borrower of this Agreement, the Notes and each
other Loan Document executed or to be executed by it, and the execution,
delivery and performance by each other Material Obligor of each Loan Document
executed or to be executed by it and each such other Material Obligor's
participation in the consummation of the Transactions are within the Borrower's
and each such other Material Obligor's corporate powers, have been duly
authorized by all necessary corporate action, and do not
(a) contravene the Borrower's or any such Material Obligor's
Organic Documents;
(b) contravene any material contractual restriction, law or
governmental regulation or court decree or order binding on or
affecting the Borrower or any such Material Obligor; or
(c) result in, or require the creation or imposition of, any
Lien (other than Liens permitted under the Loan Documents) on any of
the Borrower's or any other Material Obligor's properties.
SECTION 6.3. Government Approval, Regulation, etc. Other than consents
and approvals required to be obtained from the FCC in connection with the
License Transfer, no material authorization or approval or other action by, and
no material notice to or filing with, any governmental authority or regulatory
body or other Person is required for the due execution, delivery or performance
by the Borrower or any other Material Obligor of this Agreement, the Notes or
any other Loan Document to which it is a party, or for the Borrower's and each
such other Material Obligor's participation in the consummation of the
Transaction, except as have been duly obtained or made and are in full force and
effect. No Material Obligor is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, or a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company", within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
SECTION 6.4. Validity, etc. This Agreement constitutes, and the Notes
and each other Loan Document executed by the Borrower will, on the due execution
and delivery thereof, constitute, the legal, valid and binding obligations of
the Borrower enforceable in accordance
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with their respective terms, and each Loan Document executed pursuant hereto by
each other Material Obligor will, on the due execution and delivery thereof by
such Material Obligor, be the legal, valid and binding obligation of such
Material Obligor enforceable in accordance with its terms, in each case subject
to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general principles (whether considered in a proceeding in equity or
at law) and an implied covenant of good faith and fair dealing.
SECTION 6.5. Financial Information. The Pro Forma Balance Sheet
delivered pursuant to Section 5.1.13 has been prepared in accordance with GAAP
consistently applied, and presents fairly the consolidated financial condition
of the corporations covered thereby as at the date thereof, subject in the case
of interim financial statements to the lack of footnotes and to normal year end
audit adjustments. The Borrower and its Subsidiaries have no material
liabilities (contingent or otherwise) as of the Closing Date that are not
reflected in the Pro Forma Balance Sheet (other than as described in the
Offering Memorandum, dated January 22, 1999, with respect to the offering of the
Senior Notes).
SECTION 6.6. No Material Adverse Effect. Since December 31, 1998, there
has been no event, circumstance or condition which could reasonably be expected
to have a Material Adverse Effect.
SECTION 6.7. Litigation, Labor Controversies, etc. There is no pending
or, to the knowledge of the Borrower, overtly threatened litigation, action,
proceeding, or labor controversy affecting the Borrower or any of its
Subsidiaries, or any of their respective properties, businesses, assets or
revenues which (i) would contest the consummation of the Transaction or (ii)
could reasonably be expected to have a Material Adverse Effect, except as
disclosed in Item 6.7 ("Litigation") of the Disclosure Schedule. No materially
adverse development has occurred in any litigation, action, labor controversy,
arbitration or governmental investigation or other proceeding disclosed in Item
6.7 ("Litigation") of the Disclosure Schedule.
SECTION 6.8. Subsidiaries. The Borrower has no Subsidiaries, except
those Subsidiaries (i) which are identified in Item 6.8 ("Existing
Subsidiaries") of the Disclosure Schedule, or (ii) which are permitted to have
been acquired in accordance with Section 7.2.5. Each License Subsidiary is a
wholly-owned Subsidiary of the Borrower, and all the Capital Stock of each
License Subsidiary is directly or indirectly owned by the Borrower free and
clear of all Liens, charges or claims (other than any Lien, charge or claim
created by the Security Documents). All Licenses which are directly or
indirectly held by the Borrower or any of its Subsidiaries are owned,
beneficially and of record by a License Subsidiary, free and clear of all Liens,
charges or claims (other than any Lien, charge or claim under the Security
Documents or imposed by the Communications Act).
SECTION 6.9. Ownership of Properties. Each of the Borrower and its
Subsidiaries owns good and marketable title to, or valid leasehold interests in,
all of its properties and assets,
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real and personal, tangible and intangible, of any nature whatsoever (including
patents, trademarks, trade names, service marks and copyrights), free and clear
of all Liens, charges or claims (including infringement claims with respect to
patents, trademarks, copyrights and the like) other than any Lien, charge or
claim (i) which is permitted under Section 7.2.3 or (ii) which individually or
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
SECTION 6.10. Taxes. Each Obligor has filed all material tax returns
and reports required by law to have been filed by it and has paid all taxes and
governmental charges thereby shown to be owing, except any such taxes or charges
which are being diligently contested in good faith by appropriate proceedings
and for which adequate reserves in accordance with GAAP shall have been set
aside on its books.
SECTION 6.11. Pension and Welfare Plans. Except as disclosed in Item
6.11 ("Employee Benefit Plans") of the Disclosure Schedule, during the
twelve-consecutive-month period prior to the date of the execution and delivery
of this Agreement, no steps have been taken to terminate any Pension Plan, and
no contribution failure has occurred with respect to any Pension Plan sufficient
to give rise to a Lien under section 302(f) of ERISA. No condition exists or
event or transaction has occurred with respect to any Pension Plan which might
result in the incurrence by the Borrower or any member of the Controlled Group
of any liability, fine or penalty which could reasonably be expected to have a
Material Adverse Effect. Except as disclosed in Item 6.11 ("Employee Benefit
Plans") of the Disclosure Schedule, neither the Borrower nor any member of the
Controlled Group has any contingent liability with respect to any
post-retirement medical benefits under a Welfare Plan, other than liability for
continuation coverage described in Part 6 of Subtitle B of Title I of ERISA or
other applicable continuation of coverage laws which could reasonably be
expected to have a Material Adverse Effect.
SECTION 6.12. Environmental Warranties. Except as set forth in Item
6.12 ("Environmental Matters") of the Disclosure Schedule or as, individually or
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect:
(a) all facilities and property (including underlying
groundwater) owned or leased by the Borrower or any of its Subsidiaries
have been, and continue to be, owned or leased by the Borrower or its
Subsidiaries in compliance with all Environmental Laws;
(b) there have been no past, and there are no pending or, to
the knowledge of the Borrower, threatened claims, complaints, notices
or requests for information received by the Borrower or any of its
Subsidiaries with respect to any alleged violation of any Environmental
Law, or claims, complaints, notices or inquiries to the Borrower or any
of its Subsidiaries regarding potential liability under any
Environmental Law, in each case which have not been disclosed in
writing and in reasonable detail to the Agents;
(c) there have been no Releases of Hazardous Materials at, on
or under any property now or previously owned or leased by the Borrower
or any of its Subsidiaries;
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(d) the Borrower and its Subsidiaries have been issued and are
in compliance with all permits, certificates, approvals, licenses and
other authorizations relating to environmental matters and necessary
for their businesses;
(e) no property now or previously owned or leased by the
Borrower or any of its Subsidiaries is listed or proposed for listing
(with respect to owned property only) on (x) the National Priorities
List pursuant to CERCLA, or (y) on the CERCLIS or on any similar state
list of sites requiring investigation or clean-up;
(f) there are no underground storage tanks, active or
abandoned, including petroleum storage tanks, on or under any property
now or previously owned or leased by the Borrower or any of its
Subsidiaries;
(g) neither the Borrower nor any Subsidiary of any Borrower
has directly transported or directly arranged for the transportation of
any Hazardous Material to any location which is listed or proposed for
listing on the National Priorities List pursuant to CERCLA, on the
CERCLIS or on any similar state list or which is the subject of
federal, state or local enforcement actions or other investigations
which may lead to claims against the Borrower or such Subsidiary
thereof for any remedial work, damage to natural resources or personal
injury, including claims under CERCLA;
(h) there are no polychlorinated biphenyls or friable asbestos
present at any property now or previously owned or leased by the
Borrower or any Subsidiary of the Borrower; and
(i) no conditions exist at, on or under any property now or
previously owned or leased by the Borrower or any of its Subsidiaries
which, with the passage of time, or the giving of notice or both, are
reasonably likely to give rise to liability under any Environmental
Law.
SECTION 6.13. Regulations U and X. The Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock, and no proceeds of any Loans will be used for a purpose which violates,
or would be inconsistent with, F.R.S. Board Regulation U or X. Terms for which
meanings are provided in F.R.S. Board Regulation U or X or any regulations
substituted therefor, as from time to time in effect, are used in this Section
with such meanings.
SECTION 6.14. Licenses; License Transfer. The Licenses held by the
Nextel License Subsidiary as of the Closing Date are set forth on Schedule III
and such Licenses are all of the Licenses necessary to construct, install and
develop the Network, and to operate those portions of the Network for which
development has been completed, in the markets listed on Schedule III. Both
before and after giving effect to the License Transfer, (a) the Borrower and its
Subsidiaries have the full use and benefit of all Licenses necessary to
construct, install and develop the Network, and to operate those portions of the
Network for which development has been
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completed, in the markets listed on Schedule III, (b) such Licenses have been
duly issued by the FCC and (c) such Licenses are in full force and effect and
the Nextel License Subsidiary and the Borrower and its Subsidiaries are in
compliance in all material respects with all of the provisions of each such
License held at any time by any of them. The Borrower and the Nextel License
Subsidiary have made all filings with the FCC and any other governmental
authority, regulatory body or other Person which may be necessary or required in
order to consummate the License Transfer within 365 days following the Closing
Date. The provisions of this Section 6.14 are subject to Item 6.15 ("Schedule of
Exceptions") of the Disclosure Schedule.
SECTION 6.15. FCC Compliance. Except as set forth in Item 6.15
("Schedule of Exceptions") of the Disclosure Schedule,
(a) The Nextel License Subsidiary and the Borrower and its
Subsidiaries are in compliance with the Communications Act and all
requirements of the FCC, except where the failure to so comply could
not reasonably be expected to have a Material Adverse Effect.
(b) Neither the Nextel License Subsidiary nor the Borrower nor
any Subsidiary of the Borrower has any knowledge of any investigation,
notice of apparent liability, violation, forfeiture or any other
proceedings (other than proceedings relating to the wireless
communications industries generally) of or before the FCC, which,
individually or in the aggregate, could reasonably be expected to have
a Material Adverse Effect.
(c) No event or group of events has occurred or failed to
occur which (i) results in, or after notice or lapse of time or both
would result in, revocation, suspension, adverse modifications,
non-renewal, forfeiture with respect to, any License or group of
Licenses in any respect which could reasonably be expected to have a
Material Adverse Effect or (ii) affects or could reasonably be expected
in the future to affect any of the rights of the Nextel License
Subsidiary, the Borrower or any License Subsidiary under any License or
group of Licenses held by the Nextel License Subsidiary, the Borrower
or any License Subsidiary in any respect which could reasonably be
expected to have a Material Adverse Effect.
(d) The Nextel License Subsidiary, the Borrower and each
License Subsidiary have duly filed in a timely manner all filings,
reports, applications, documents, instruments and information required
to be filed by any of them under the Communications Act which could
reasonably be expected to have a Material Adverse Effect, and all such
filings were when made (and where required have been supplemented in
order to continue to be) true, correct and complete in any respect
which could reasonably be expected to have a Material Adverse Effect.
(e) Neither the Nextel License Subsidiary nor the Borrower has
any reason to believe that each License held by the Nextel License
Subsidiary, the Borrower or any
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Subsidiary will not be renewed in the ordinary course, except where
non-renewal could not reasonably be expected to have a Material Adverse
Effect.
SECTION 6.16. Accuracy of Information. All factual information
heretofore or contemporaneously furnished by or on behalf of the Borrower in
writing to the Agents, the Lead Arranger or any Lender for purposes of or in
connection with this Agreement or any transaction contemplated hereby or with
respect to the Transaction is, and all other such factual information hereafter
furnished by or on behalf of the Borrower to the Agents, the Lead Arranger any
Lender will be, true and accurate in every material respect on the date as of
which such information is dated or certified, the Lead Arrangers and such
Lender, and such information is not, or shall not be, as the case may be,
incomplete by omitting to state any material fact necessary to make such
information in light of the circumstances when made not materially misleading.
All projections furnished to the Agents, the Issuer or any Lender (whether
before or after the Closing Date) have been or will be prepared in good faith on
the basis of reasonable assumptions, it being understood that actual results may
differ from projections.
SECTION 6.17. Solvency. The Transaction (including the incurrence of
the initial Credit Extension hereunder, the execution and delivery by each
Subsidiary Guarantor of the Subsidiary Guaranty and the application of the
proceeds of the Credit Extensions), will not involve or result in any fraudulent
transfer or fraudulent conveyance under the provisions of Section 548 of the
Bankruptcy Code (11 U.S.C. ss. 101 et seq., as from time to time hereafter
amended, and any successor or similar statute) or any applicable state law
respecting fraudulent transfers or fraudulent conveyances. On the Closing Date,
after giving effect to the Transaction and the making of each Credit Extension
made on the Closing Date and after giving effect to the application of the
proceeds of such Credit Extensions, the Borrower and each Subsidiary Guarantor
is Solvent.
SECTION 6.18. Year 2000. Any reprogramming required to permit the
proper functioning, in and following the year 2000, of (i) the Borrower's
computer systems and equipment containing embedded microchips (including systems
and equipment supplied by others or with which Borrower's systems interface) and
the testing of all such systems and equipment, as so reprogrammed, will be
completed by June 30, 1999, except where the failure to do so could not be
reasonably expected to have a Material Adverse Effect. The cost to the Borrower
of such reprogramming and testing and of the reasonably foreseeable consequences
of year 2000 to the Borrower (including, without limitation, reprogramming
errors and the failure of others' systems or equipment) will not result in a
Default or a Material Adverse Effect. Except for such of the reprogramming
referred to in the preceding sentence as may be necessary, the computer and
management information systems of the Borrower and its Subsidiaries are and,
with ordinary course upgrading and maintenance, will continue for the term of
this Agreement to be, sufficient to permit the Borrower to conduct its business
without Material Adverse Effect.
SECTION 6.19. Credit Facility. This Agreement represents the "Credit
Facility" designated by the Parent as the "Credit Facility" for purposes of the
Indenture.
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SECTION 6.20. Interests in Real Property Sufficient for Conduct of
Business. The Borrower and its Subsidiaries own and or lease sufficient
interests in real property for the conduct of the Borrower's business as
presently conducted and as presently proposed to be conducted and no other
interests in real property are necessary for the conduct of such business other
than those the absence of which would not have a Material Adverse Effect.
ARTICLE VII
COVENANTS
SECTION 7.1. Affirmative Covenants. The Borrower agrees with the
Agents, each Lender and the Issuer that, until all Commitments have terminated,
all Letters of Credit have expired and all monetary Obligations then due have
been paid in full, the Borrower will perform, or cause to be performed, the
obligations set forth in this Section 7.1.
SECTION 7.1.1 Financial Information, Reports, Notices, etc. The
Borrower will furnish, or will cause to be furnished, to each Lender and each
Agent copies of the following financial statements, reports, notices and
information:
(a) as soon as available and in any event within 45 days after
the end of each of the first three Fiscal Quarters and 90 days after
the end of the fourth Fiscal Quarter of each Fiscal Year of the Parent,
consolidated balance sheets of the Parent and its Subsidiaries as of
the end of such Fiscal Quarter and consolidated statements of earnings
and cash flow of the Borrower and its Subsidiaries for such Fiscal
Quarter and for the period commencing at the end of the previous Fiscal
Year and ending with the end of such Fiscal Quarter, certified by the
chief financial or chief accounting Authorized Officer of the Parent;
(b) as soon as available and in any event within 90 days after
the end of each Fiscal Year of the Parent, a copy of the annual audit
report for such Fiscal Year for the Parent and its Subsidiaries,
including therein consolidated balance sheets of the Parent and its
Subsidiaries as of the end of such Fiscal Year and consolidated
statements of earnings and cash flow of the Parent and its Subsidiaries
for such Fiscal Year, in each case certified (without any Impermissible
Qualification) in a manner acceptable to the Agents and the Required
Lenders by Arthur Andersen LLP or other independent public accountants
acceptable to the Agents and the Required Lenders, together with a
report from such accountants (unless the giving of such a certificate
is contrary to accounting practice) containing a computation of, and
showing compliance with, each of the financial ratios and restrictions
contained in clauses (a), (b), (c) and (f) through (k) of Section 7.2.4
and to the effect that, in making the examination necessary for the
signing of such annual report by such accountants, they have not become
aware of any Default that has occurred and is continuing, or, if they
have become aware of such Default, describing such Default and the
steps, if any, being taken to cure it;
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(c) together with the delivery of the financial information
required pursuant to clause (a) and clause (b), a Compliance
Certificate, executed by the chief financial or chief accounting
Authorized Officer of the Borrower, showing (in reasonable detail and
with appropriate calculations and computations in all respects
satisfactory to the Agents) compliance with the financial covenants set
forth in Section 7.2.4;
(d) within 60 days after the commencement of each Fiscal Year
of the Borrower, a detailed consolidated budget for such Fiscal Year;
(e) within 30 days after the end of each Fiscal Quarter of the
Borrower, a certificate of an Authorized Officer of the Borrower
setting forth (i) the aggregate number of Subscriber Units whose
service terminated during such Fiscal Quarter, (ii) the aggregate
number of Subscriber Units added during such Fiscal Quarter, (iii) the
aggregate number of Subscriber Units at the end of such Fiscal Quarter,
(iv) revenue for such Fiscal Quarter and (v) the number of Covered POPs
during such Fiscal Quarter;
(f) as soon as possible and in any event within five Business
Days after the occurrence of each Default, a statement of an Authorized
Officer of the Borrower setting forth details of such Default and the
action which the Borrower has taken and proposes to take with respect
thereto;
(g) as soon as possible and in any event within five Business
Days after (i) the occurrence of any adverse development with respect
to any litigation, action, proceeding, or labor controversy described
in Section 6.7 which could reasonably be expected to have a Material
Adverse Effect or (ii) the commencement of any labor controversy,
litigation, action, proceeding of the type described in Section 6.7,
notice thereof and copies of all material documentation relating
thereto;
(h) promptly after the sending or filing thereof, copies of
all reports which the Parent sends to any of its security holders
generally in their capacity as security holders, and all reports and
registration statements which the Parent or any of its Subsidiaries
files with the Securities and Exchange Commission or any national
securities exchange;
(i) promptly upon becoming aware of the institution of any
steps by the Borrower or any other Person to terminate any Pension
Plan, or the failure to make a required contribution to any Pension
Plan if such failure is sufficient to give rise to a Lien under section
302(f) of ERISA, or the taking of any action with respect to a Pension
Plan which could result in the requirement that the Borrower furnish a
bond or other security to the PBGC or such Pension Plan, or the
occurrence of any event with respect to any Pension Plan which could
result in the incurrence by the Borrower of any material liability,
fine or penalty, or any material increase in the contingent liability
of the Borrower with respect to any post-retirement Welfare Plan
benefit, notice thereof and copies of all material documentation
relating thereto; and
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(j) such other information respecting the condition or
operations, financial or otherwise, of the Parent or any of its
Subsidiaries as any Lender through the Administrative Agent may from
time to time reasonably request.
SECTION 7.1.2. Compliance with Laws, etc. The Borrower will, and will
cause each of its Subsidiaries to, (a) comply in all material respects with all
applicable laws, rules, regulations and orders, except where the failure to so
comply could not reasonably be expected to have a Material Adverse Effect, (b)
maintain and preserve its corporate existence and qualification as a foreign
corporation, except where the failure to so qualify could not reasonably be
expected to have a Material Adverse Effect and (c) pay, before the same become
delinquent, all material taxes, assessments and governmental charges imposed
upon it or upon its property except to the extent being contested in good faith
by appropriate proceedings and for which adequate reserves in accordance with
GAAP shall have been set aside on its books.
SECTION 7.1.3. Maintenance of Properties. The Borrower will, and will
cause each of its Subsidiaries to, maintain, preserve, protect and keep its
properties in good repair, working order and condition (ordinary wear and tear
excepted), and make necessary and proper repairs, renewals and replacements so
that its business carried on in connection therewith may be properly conducted
at all times unless the Borrower determines in good faith that the continued
maintenance of any of its properties is no longer economically desirable, except
where the failure to do so could not reasonably be expected to have a Material
Adverse Effect.
SECTION 7.1.4. Insurance. The Borrower will, and will cause each of its
Material Subsidiaries to, maintain or cause to be maintained with responsible
insurance companies insurance with respect to its properties and business
against such casualties and contingencies and of such types and in such amounts
as is customary in the case of similar businesses and will, upon request of the
Agents, furnish to the Agents and each Lender at reasonable intervals a
certificate of an Authorized Officer of the Borrower setting forth the nature
and extent of all insurance maintained by the Borrower and its Material
Subsidiaries in accordance with this Section 7.1.4.
SECTION 7.1.5. Books and Records. The Borrower will, and will cause
each of its Material Subsidiaries to, keep books and records which accurately
reflect all of its business affairs and transactions and permit the Agents, the
Issuer and each Lender or any of their respective representatives, at reasonable
times and intervals, to discuss its financial matters with its officers and,
after reasonable notice to the Borrower and provision of an opportunity for the
Borrower to participate in such discussion, its independent public accountant
(and the Borrower hereby authorizes such independent public accountant to
discuss the Borrower's financial matters with each Lender or its representatives
whether or not any representative of the Borrower is present) and upon
reasonable notice, but, unless an Event of Default shall have occurred and be
continuing, not more than once in each Fiscal Year, to visit all of its offices
and to examine (and, at the expense of the Borrower, photocopy extracts from)
any of its books or other corporate records. The Borrower shall pay any fees of
such independent public accountant
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incurred in connection with any Agent's or any Lender's exercise of its rights
pursuant to this Section.
SECTION 7.1.6. Environmental Covenant. The Borrower will, and will
cause each of its Subsidiaries to,
(a) use and operate all of its facilities and properties in
compliance with all Environmental Laws, keep all necessary permits,
approvals, certificates, licenses and other authorizations relating to
environmental matters in effect and remain in compliance therewith, and
handle all Hazardous Materials in compliance with all applicable
Environmental Laws, except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect;
(b) promptly notify the Agents and provide copies upon receipt
of all written claims, complaints, notices or inquiries relating to the
environmental condition of its facilities and properties or compliance
with Environmental Laws which, singularly or in the aggregate, could
reasonably be expected to have a Material Adverse Effect; and
(c) provide such information and certifications which the
Agents may reasonably request from time to time to evidence compliance
with this Section 7.1.6.
SECTION 7.1.7. Future Subsidiaries. Upon any Person becoming, after the
Closing Date, a Subsidiary of the Borrower, or upon the Borrower or any
Subsidiary of the Borrower acquiring additional Capital Stock of any existing
Subsidiary, the Borrower shall promptly notify the Agents of such acquisition,
and
(a) the Borrower shall promptly cause such Subsidiary to
execute and deliver to the Administrative Agent, with counterparts for
each Lender, a supplement to the Subsidiary Guaranty and a supplement
to the Subsidiary Security and Pledge Agreement (and, if such
Subsidiary owns any real property having a value in excess of
$1,000,000, a Mortgage), together with acknowledgment copies of Uniform
Commercial Code financing statements (Form UCC-1) executed and
delivered by the Subsidiary naming the Subsidiary as the debtor and the
Administrative Agent as the secured party, or other similar instruments
or documents, filed under the Uniform Commercial Code and any other
applicable recording statutes, in the case of real property, of all
jurisdictions as may be necessary or, in the opinion of the
Administrative Agent, desirable to perfect the security interest of the
Administrative Agent pursuant to the Subsidiary Security and Pledge
Agreement or a Mortgage, as the case may be (other than the perfection
of security interests in motor vehicles owned as of the date such
entity becomes a Subsidiary); and
(b) the Borrower shall promptly deliver, or cause to be
delivered, to the Administrative Agent under a Security Agreement
certificates (if any) representing all of the issued and outstanding
shares of Capital Stock of such Subsidiary owned by the
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Borrower or any Subsidiary of the Borrower, as the case may be, along
with undated stock powers for such certificates, executed in blank, or,
if any securities subject thereto are uncertificated securities,
confirmation and evidence satisfactory to the Agents that appropriate
book entries have been made in the relevant books or records of a
securities intermediary or the issuer of such securities, as the case
may be, or other appropriate steps shall have been taken under
applicable law resulting in the perfection of the security interest
granted in favor of the Administrative Agent pursuant to the terms of a
Security Agreement;
together, in each case, with such opinions, in form and substance and from
counsel reasonably satisfactory to the Agents, as the Agents may reasonably
request; provided, however, that notwithstanding the foregoing, no Non-U.S.
Subsidiary shall be required to execute and deliver a Mortgage, a supplement to
the Subsidiary Guaranty or a supplement to the Subsidiary Security and Pledge
Agreement, nor will the Borrower or any Subsidiary of the Borrower be required
to deliver in pledge pursuant to a Security Agreement in excess of 65% of the
total combined voting power of all classes of Capital Stock of a Non-U.S.
Subsidiary entitled to vote.
SECTION 7.1.8. Future Leased Property and Future Acquisitions of Real
Property; Future Acquisition of Other Property.
(a) Prior to entering into any new lease of real property or
renewing any existing lease of real property following the Closing
Date, the Borrower shall, and shall cause each of its U.S. Subsidiaries
to, use all commercially reasonable efforts (which shall not require
the expenditure of cash or the making of material concessions under the
relevant lease) to deliver to the Administrative Agent a Waiver
executed by the lessor of any real property that is to be leased by the
Borrower or such U.S. Subsidiary for a term in excess of one year in
any state which by statute grants such lessor a "landlord's" (or
similar) Lien which is superior to the Administrative Agent's, to the
extent the value of any personal property of the Borrower or its U.S.
Subsidiaries to be held at such leased property exceeds (or it is
anticipated that the value of such personal property will, at any point
in time during the term of such leasehold term, exceed) $1,000,000.
(b) In the event that the Borrower or any of its U.S.
Subsidiaries shall acquire any real property having a value as
determined in good faith by the Administrative Agent in excess of
$1,000,000 in the aggregate, the Borrower or the applicable U.S.
Subsidiary shall, promptly after such acquisition, execute a Mortgage
and provide the Administrative Agent with
(i) evidence of the completion (or satisfactory
arrangements for the completion) of all recordings and filings
of such Mortgage as may be necessary or, in the reasonable
opinion of the Administrative Agent, desirable effectively to
create a valid, perfected first priority Lien, subject to
Liens permitted by Section 7.2.3, against the properties
purported to be covered thereby;
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(ii) mortgagee's title insurance policies in favor of
the Agents and the Lenders in amounts and in form and
substance and issued by insurers, reasonably satisfactory to
the Agents, with respect to the property purported to be
covered by such Mortgage, insuring that title to such property
is marketable and that the interests created by the Mortgage
constitute valid first Liens thereon free and clear of all
defects and encumbrances other than as permitted under Section
7.2.3 or as approved by the Agents, and such policies shall
also include, to the extent available, a revolving credit
endorsement and such other endorsements as the Agents shall
reasonably request and shall be accompanied by evidence of the
payment in full of all premiums thereon; and
(iii) such other approvals, opinions, or documents as
the Agents may reasonably request; and
(c) In accordance with the terms and provisions of this
Agreement and the other Loan Documents, provide the Administrative
Agent with evidence of all recordings and filings as may be necessary
or, in the reasonable opinion of the Administrative Agent, desirable to
create a valid, perfected first priority Lien, subject to the Liens
permitted by Section 7.2.3, against all property acquired after the
Closing Date (excluding motor vehicles, leases of motor vehicles and
leases of real property) and an executed Perfection Certificate.
SECTION 7.1.9. Use of Proceeds, etc. The Borrower shall deposit all of
the proceeds of the Loans in the Cash Account and following the release of such
funds from the Cash Account pursuant to the Borrower Security and Pledge
Agreement and the Cash Collateral Agreement shall
(a) apply the proceeds of the Loans to fund general corporate
and working capital needs of the Borrower and its Subsidiaries; and
(b) use Letters of Credit for working capital and general
corporate purposes of the Borrower and its Subsidiaries.
SECTION 7.1.10. Hedging Obligations. Within twelve months following the
Closing Date, the Administrative Agent shall have received evidence satisfactory
to it that the Borrower and its Subsidiaries have entered into interest rate
swap, cap, collar or similar arrangements designed to protect the Borrower and
its Subsidiaries against fluctuations in interest rates with respect to at least
33-1/3% of the aggregate principal amount of the Term Loans for a period of at
least three years from the Closing Date with terms reasonably satisfactory to
the Agents.
SECTION 7.1.11 Undertaking. The Borrower will cause the License
Transfer to be completed within 365 days following the Closing Date.
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SECTION 7.1.12. Landlord Consents. Within 90 days after the Closing
Date, the Borrower shall deliver to each landlord or licensor under each lease,
sublease or license listed on Item 7.1.12 of the Disclosure Schedule
(collectively, the "Leased Properties") a Waiver in a form reasonably
satisfactory to the Agents. Thereafter, the Borrower shall use good faith
efforts (which shall not require any material expenditure of cash or the making
of material concessions under the relevant lease, sublease or license) to
negotiate with said landlords or licensors for the execution and delivery to the
Agents of a Waiver in a form reasonably satisfactory to the Agents. With respect
to any real property leased by or licensed to the Borrower or any Subsidiary of
the Borrower subsequent to the Closing Date, the Borrower shall use good faith
efforts (which shall not require any material expenditure of cash or the making
of material concessions under the relevant lease, sublease or license) to obtain
from the landlord or licensor under such new lease or license an executed
Waiver, in a form reasonably satisfactory to the Agents.
SECTION 7.1.13 Year 2000. The Borrower shall take all action necessary
to assure that its computer based systems are able to effectively process data
including dates on and after January 1, 2000, except where the failure to do so
could not reasonably be expected to have a Material Adverse Effect. At the
request of the Agents or any Lender, the Borrower shall provide the Agents or
such Lender, as the case may be, with assurance reasonably acceptable to the
Agents or such Lender, as the case may be, of the Borrower's year 2000
capability.
SECTION 7.1.14. Termination Statements. Within 180 days after the
Closing Date, the Borrower shall have delivered to the Administrative Agent
executed copies of proper Uniform Commercial Code (Form UCC-3) termination
statements necessary to release all Liens and other rights of any Person
identified in a schedule to be provided by the Agents to the Borrower as soon as
possible after the Closing Date in any collateral described in the Borrower
Security and Pledge Agreement previously granted to such Person, together with
such other Uniform Commercial Code (Form UCC-3) termination statements as the
Administrative Agent may reasonably request from the Borrower.
SECTION 7.2. Negative Covenants. The Borrower agrees with the Agents,
the Issuer and each Lender that, until all Commitments have terminated, all
Letters of Credit have expired and all monetary Obligations then due have been
paid in full, the Borrower will perform, or will cause to be performed, the
obligations set forth in this Section 7.2.
SECTION 7.2.1. Business Activities. The Borrower will not, and will not
permit any of its Subsidiaries to, engage in any business activity, except for
any business in which the Borrower and its Subsidiaries are engaged on the date
hereof and such businesses as may be incidental, similar or related thereto
(including the Borrower's Investments in Permitted Joint Ventures).
SECTION 7.2.2. Indebtedness. The Borrower will not, and will not permit
any of its Subsidiaries to, create, incur, assume or suffer to exist or
otherwise become or be liable in respect of any Indebtedness, other than,
without duplication, the following:
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(a) Indebtedness in respect of the Credit Extensions and other
Obligations;
(b) Indebtedness in an aggregate principal amount not to
exceed $60,000,000 at any time outstanding which is incurred by the
Borrower or any of its Subsidiaries to a vendor (or its Affiliates) of
any assets permitted to be acquired pursuant to Section 7.2.7 to
finance its acquisition of such assets;
(c) Indebtedness existing as of the Closing Date which is
identified in Item 7.2.2(c) ("Ongoing Indebtedness") of the Disclosure
Schedule, and refinancings and replacements thereof in a principal
amount not exceeding the principal amount of the Indebtedness so
refinanced or replaced and with an average life to maturity of not less
than the then average life to maturity of the Indebtedness so
refinanced or replaced;
(d) Hedging Obligations of the Borrower or any of its
Subsidiaries in respect of the Credit Extensions;
(e) intercompany Indebtedness of (x) any Subsidiary Guarantor
owing to the Borrower or any of its Subsidiaries or (y) the Borrower to
any of its Subsidiaries, which Indebtedness (i) shall be either
evidenced by one or more promissory notes, if any, in form and
substance satisfactory to the Agents which have been duly executed and
delivered to (and indorsed to the order of) the Administrative Agent in
pledge pursuant to a Security Agreement or recorded on the relevant
books or records of the Borrower or such Subsidiary Guarantor as an
account receivable in which a security interest has been granted in
favor of the Administrative Agent pursuant to the terms of a Security
Agreement, and (ii) shall not be forgiven or otherwise discharged for
any consideration other than payment (Dollar for Dollar) in cash unless
the Agents otherwise consent;
(f) Indebtedness in respect of Capitalized Lease Liabilities
to the extent permitted by clause (a) of Section 7.2.7;
(g) Indebtedness (other than Indebtedness described in clause
(f) above) of the Borrower or any of its Subsidiaries incurred to
finance the acquisition, construction or improvement of any fixed or
capital assets, including Capitalized Lease Liabilities and any
Indebtedness assumed in connection with the acquisition of any such
assets or secured by a Lien on any such assets prior to the acquisition
thereof, and extensions, renewals and replacements of any such
Indebtedness that do not increase the outstanding principal amount
thereof or result in an earlier maturity or decreased weighted average
life thereof; provided that such Indebtedness is incurred prior to or
within 180 days after such acquisition or the completion of such
construction or improvement and shall not exceed $2,000,000 in
aggregate principal amount at any time outstanding and, provided,
further, that the aggregate principal amount of Indebtedness permitted
to be outstanding at any time by this clause (g) shall not be credited
against or reduce the amount of Indebtedness permitted to be
outstanding at any time under clause (b) of this Section 7.2.2;
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(h) other unsecured Indebtedness of the Borrower and its
Subsidiaries in an aggregate amount at any time outstanding not to
exceed $2,000,000; and
(i) unsecured Indebtedness incurred in the ordinary course of
business (including open accounts extended by suppliers on normal trade
terms in connection with purchases of goods and services, and surety
and performance bonds and similar instruments, but excluding
Indebtedness incurred through the borrowing of money or Contingent
Liabilities);
provided, however, that no Indebtedness otherwise permitted by clause (g) or (h)
may be incurred if, immediately before or after giving effect to the incurrence
thereof, any Default shall have occurred and be continuing, and provided,
further, however, that all such Indebtedness of the type described in clause
(e)(y) that is owed to Subsidiaries which are not party to the Subsidiary
Guaranty, shall be subordinated, in writing, to the Obligations upon terms
satisfactory to the Agents.
SECTION 7.2.3. Liens. The Borrower will not, and will not permit any of
its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any
of its property, revenues or assets, whether now owned or hereafter acquired,
except:
(a) Liens securing payment of the Obligations or any Hedging
Obligations owed to any Lender or any Affiliate of any Lender granted
pursuant to any Loan Document;
(b) Liens granted prior to the Closing Date to secure payment
of Indebtedness of the type permitted and described in clause (c) of
Section 7.2.2;
(c) Liens granted to secure payment of Indebtedness of the
type permitted and described in clauses (b) and (g) of Section 7.2.2;
provided that (i) each such Lien attaches only those assets acquired
with the proceeds of such Indebtedness (or other assets acquired with
proceeds of other Indebtedness to such Lender) and (ii) the principal
amount of such Indebtedness does not exceed 100% of the cost of the
relevant property;
(d) Liens on fixed or capital assets acquired, constructed or
improved by the Borrower or any Subsidiary of the Borrower; provided
that (i) such security interests secure Indebtedness permitted by
clause (g) of Section 7.2.2 , (ii) such security interests and the
Indebtedness secured thereby are incurred prior to or within 180 days
after such acquisition or the completion of such construction or
improvement, (iii) the Indebtedness secured thereby does not exceed
100% of the cost of acquiring, constructing or improving such fixed or
capital assets, and (iv) such security interests shall not apply to any
other property or assets of the Borrower or any Subsidiary of the
Borrower (or other assets acquired with proceeds of other Indebtedness
to such Lender);
(e) Liens for taxes, assessments or other governmental charges
or levies not at the time delinquent or thereafter payable without
penalty or being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on the books of such Person;
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(f) Liens of carriers, warehousemen, mechanics, materialmen,
contractors, laborers and landlords or other similar Liens (i) incurred
in the ordinary course of business for sums not overdue for a period of
more than 30 days, or (ii) being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance
with GAAP shall have been set aside on the books of such Person;
(g) Liens incurred in the ordinary course of business (i) in
connection with workmen's compensation, unemployment insurance or other
forms of governmental insurance or benefits, (ii) to secure performance
of tenders, bids, statutory obligations, leases and contracts (other
than for borrowed money) entered into in the ordinary course of
business or (iii) to secure obligations on surety or appeal bonds,
performance or return-of-money bonds or other obligations of a similar
nature;
(h) judgment Liens in existence less than 30 days after the
entry thereof or with respect to which execution has been stayed or the
payment of which is covered in full (subject to a customary deductible)
by insurance maintained with responsible insurance companies;
(i) Liens with respect to minor imperfections of title and
easements, rights-of-way, restrictions, reservations, permits,
servitudes and other similar encumbrances on real property and fixtures
which do not materially detract from the value or materially impair the
use by the Borrower or any such Subsidiary in the ordinary course of
its business of the property subject thereto;
(j) licenses, sublicenses, leases or subleases granted by the
Borrower or any of its Subsidiaries to any other Person in the ordinary
course of business;
(k) Liens in the nature of trustees' Liens granted pursuant to
any indenture governing any Indebtedness permitted by Section 7.2.2, in
each case in favor of the trustee under such indenture and securing
only obligations to pay compensation to such trustee, to reimburse its
expenses and to indemnify it under the terms thereof; and
(l) Liens of sellers of goods to the Borrower and any of its
Subsidiaries arising under Article 2 of the UCC or similar provisions
of applicable law in the ordinary course of business, covering only the
goods sold and securing only the unpaid purchase price for such goods
and related expenses.
Any term or provision of this Section to the contrary notwithstanding,
unless otherwise consented to by the Required Lenders the Borrower will not
permit any License Subsidiary to, and no such License Subsidiary shall, create,
incur, assume or suffer to exist any Lien upon or in any of its property
(including the Licenses or Capital Stock of such License Subsidiary) other than
as described in clause (a) above.
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SECTION 7.2.4. Financial Covenants.
I. For the period from and including the Closing Date through December
31, 2001:
(a) Senior Debt to Total Capital. The ratio of Senior Debt to
Total Capital as of the end of any Fiscal Quarter occurring during the
period from and including the Closing Date through December 31, 2001
shall not exceed .30:1.00.
(b) Total Debt to Total Capital. The ratio of Total Debt to
Total Capital as of the end of any Fiscal Quarter occurring during the
period from and including the Closing Date through December 31, 2001
shall not exceed .80:1.00.
II. For the period from and including the first Fiscal Quarter ending
after the Closing Date through the end of the third Fiscal Quarter of
the 2001 Fiscal Year:
(c) Aggregate Service Revenue. Aggregate Service Revenue for
any Fiscal Quarter set forth below shall not be less than the amount of
Aggregate Service Revenue set forth opposite such date:
Date Aggregate Service Revenue
3/31/99 $ 1,800,000
6/30/99 $ 3,000,000
9/30/99 $ 4,500,000
12/31/99 $ 5,800,000
3/31/00 $ 7,800,000
6/30/00 $11,500,000
9/30/00 $15,000,000
12/31/00 $20,000,000
3/31/01 $23,000,000
6/30/01 $27,000,000
9/30/01 $32,000,000
III. For the period from and including the first Fiscal Quarter ending
after the Closing Date through the end of the first Fiscal Quarter of
the 2003 Fiscal Year:
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Subscriber Units. The number of Subscriber Units on or after
any date set forth below shall not be less than the number of
Subscriber Units set forth opposite such date:
Date Subscriber Units
3/31/99 12,500
6/30/99 14,700
9/30/99 23,000
12/31/99 30,000
3/31/00 45,000
6/30/00 72,000
9/30/00 95,000
12/31/00 120,000
3/31/01 140,000
6/30/01 170,000
9/30/01 200,000
12/31/01 235,000
3/31/02 270,000
6/30/02 300,000
9/30/02 345,000
12/31/02 382,000
3/31/03 420,000
Covered POPs. As of each date set forth below, the number of
Covered POPs shall not be less than the number set forth opposite such
date:
Date Covered POPs
3/31/99 3,700,000
6/30/99 3,800,000
9/30/99 3,800,000
12/31/99 4,600,000
3/31/00 9,000,000
6/30/00 10,707,000
9/30/00 13,031,000
12/31/00 14,940,000
3/31/01 15,400,000
6/30/01 16,185,000
9/30/01 18,600,000
12/31/01 and thereafter 22,000,000
IV. For the period from and including the fourth Fiscal Quarter of the
2001 Fiscal Year through the end of the first Fiscal Quarter of the
2003 Fiscal Year:
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(f) Senior Debt to Annualized Adjusted EBITDA. The ratio of
(i) Senior Debt outstanding on the last day of any Fiscal Quarter set
forth below to (ii) Annualized Adjusted EBITDA for the period ending on
such date shall not exceed the ratio set forth opposite such date:
Fiscal Quarter Ratio of Senior Debt to
Ending On Annualized Adjusted EBITDA
12/31/01 4.75:1.00
3/31/02 3.50:1.00
6/30/02 3.50:1.00
9/30/02 3.00:1.00
12/31/02 3.00:1.00
3/31/03 2.50:1.00
(g) Total Debt to Annualized Adjusted EBITDA. The ratio of (i)
Total Debt outstanding on the last day of any Fiscal Quarter set forth
below to (ii) Annualized Adjusted EBITDA for the period ending on such
date shall not exceed the ratio set forth opposite such date:
Fiscal Quarter Ratio of Total Debt to
Ending On Annualized Adjusted EBITDA
12/31/01 20.50:1.00
3/31/02 15.25:1.00
6/30/02 10.50:1.00
9/30/02 10.00:1.00
12/31/02 9.00:1.00
3/31/03 8.00:1.00
V. For the period from and including the second Fiscal Quarter of the
2003 Fiscal Year through the Stated Maturity Date:
(h) Senior Debt to Annualized EBITDA. The ratio of (i) Senior
Debt outstanding on the last day of any Fiscal Quarter set forth below
to (ii) Annualized EBITDA for the period ending on such date shall not
exceed the ratio set forth opposite such date:
Fiscal Quarter Ratio of Senior Debt to
Ending On Annualized EBITDA
6/30/03 4.50:1.00
9/30/03 4.00:1.00
12/31/03 3.50:1.00
3/31/04 3.00:1.00
6/30/04 and thereafter 2.50:1.00
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(i) Total Debt to Annualized EBITDA. The ratio of (i) Total
Debt outstanding on the last day of any Fiscal Quarter set forth below
to (ii) Annualized EBITDA for the period ending on such date shall not
exceed the ratio set forth opposite such date:
Fiscal Quarter Ratio of Total Debt to
Ending On Annualized EBITDA
6/30/03 20.50:1.00
9/30/03 18.50:1.00
12/31/03 16.50:1.00
3/31/04 13.00:1.00
6/30/04 10.00:1.00
9/30/04 10.00:1.00
12/31/04 8.50:1.00
3/31/05 7.00:1.00
6/30/05 6.00:1.00
9/30/05 5.75:1.00
12/31/05 5.50:1.00
3/31/06 and thereafter 5.00:1.00
(j) Interest Coverage Ratio. The ratio of (i) Annualized
EBITDA on the last day of any Fiscal Quarter set forth below to (ii)
Consolidated Cash Interest Expense for such period shall not be less
than the ratio set forth opposite such date or period:
Date or Period Interest Coverage Ratio
6/30/03 to 12/31/04 1.10:1.00
3/31/05 1.15:1.00
6/30/05 to 12/31/05 1.25:1.00
3/31/06 to 6/30/06 1.75:1.00
9/30/06 and thereafter 2.00:1.00
(k) Fixed Charge Coverage Ratio. The Fixed Charge Coverage
Ratio as of the end of the any Fiscal Quarter set forth below shall not
be less than the ratio set forth opposite such period:
Period Fixed Charge Coverage Ratio
Coverage Ratio
6/30/03 to 3/31/05 1.00:1.00
6/30/05 to 9/30/05 1.10:1.00
12/31/05 and thereafter 1.25:1.00
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(l) Cash Account. The balance maintained in the Cash Account
at all times until the earlier to occur of (i) the effectiveness of the
License Transfer and (ii) 395 days after the Closing Date shall not be
less than the Required Balance.
SECTION 7.2.5. Investments. The Borrower will not, and will not permit
any of its Subsidiaries to, make, incur, assume or suffer to exist any
Investment in any other Person, except:
(a) Investments existing on the Closing Date and identified in
Item 7.2.5(a) ("Ongoing Investments") of the Disclosure Schedule;
(b) Cash Equivalent Investments;
(c) without duplication, Investments permitted as Indebtedness
pursuant to Section 7.2.2;
(d) without duplication, Investments permitted as Capital
Expenditures pursuant to Section 7.2.7;
(e) Investments by the Borrower in any of its Subsidiaries (or
any Person which, after making an Investment, becomes a Subsidiary), or
by any such Subsidiary in any Subsidiary of the Borrower, by way of
contributions to capital;
(f) Investments in the form of loans to officers, directors
and employees of the Borrower and its Subsidiaries in an aggregate
amount at any time outstanding not to exceed $2,500,000 in cash;
(g) Investments received in connection with the bankruptcy or
reorganization of suppliers and customers and in settlement of
delinquent obligations of and other disputes with customers and
suppliers arising in the ordinary course of business;
(h) Investments in Permitted Joint Ventures; or
(i) additional Investments in an aggregate amount at any time
outstanding not to exceed $2,000,000; provided, that the amount of any
such additional Investment outstanding at any time shall be deemed to
be equal to the amount of such Investment on the date made, minus the
sum of amounts received in cash in respect of such Investment
representing return of capital, repayment of loans and return on
capital (including interest and dividends) up to the amount of such
Investment on the date made;
provided, however, that
(j) any Investment which when made complies with the
requirements of the definition of the term "Cash Equivalent Investment"
may continue to be held for no more than 180 days following the date
that such Investment no longer meets the requirements of such
definition; and
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(k) no Investment otherwise permitted by clause (e) (other
than an Investment in a wholly-owned Subsidiary) or (h) shall be
permitted to be made if, immediately before or after giving effect
thereto, any Default shall have occurred and be continuing, unless such
party has irrevocably committed to making such Investment.
SECTION 7.2.6. Restricted Payments, etc. On and at all times after the
Closing Date, the Borrower will not, and will not permit any of its Subsidiaries
to, directly or indirectly, declare, pay or make any dividend, distribution or
exchange (in cash, property or obligations) or other payment on or in respect of
any Senior Notes, any shares of Preferred Stock of the Parent or any shares of
any class of Capital Stock (now or hereafter outstanding) of the Borrower or on
any warrants, options or other rights with respect to any shares of any class of
Capital Stock (now or hereafter outstanding) of the Borrower (other than (i)
dividends or distributions payable in common stock or warrants to purchase its
common stock, (ii) splits or reclassifications of its Capital Stock into
additional or other shares of a similar class of its Capital Stock (provided
that such other class of Capital Stock (x) is not (by its terms, by the terms of
any security into which it is convertible or exchangeable or otherwise)
redeemable, at the option of the holder thereof, on or prior to February 8, 2010
or convertible or exchangeable for debt securities and (y) does not require the
payment of dividends in cash) and (iii) in the case of Preferred Stock,
dividends or distributions payable in additional Preferred Stock) or apply, or
permit any of its Subsidiaries to apply, any of its funds, property or assets to
the payment, purchase, redemption, exchange, sinking fund or other retirement
of, or agree or permit any of its Subsidiaries to pay, purchase, redeem or
exchange, any Senior Notes or any shares of Preferred Stock of the Parent or any
shares of any class of Capital Stock (now or hereafter outstanding) of the
Borrower, or warrants, options or other rights with respect to any shares of
Preferred Stock of the Parent or any shares of any class of Capital Stock (now
or hereafter outstanding) of the Borrower (the foregoing prohibited acts are
herein collectively referred to as "Restricted Payments"); provided, however,
that notwithstanding the foregoing provisions,
(a) so long as (A) no Default shall have occurred and be
continuing on the date such Restricted Payment is declared or to be
made, nor would a Default result from the making of such Restricted
Payment, (B) after giving effect to the making of such Restricted
Payment the Parent and its Subsidiaries shall be in pro forma
compliance with the covenants set forth in Section 7.2.4 for the most
recent full Fiscal Quarter immediately preceding the date of the
payment of such Restricted Payment for which relevant financial
information has been delivered pursuant to clause (a) or (b) of Section
7.1.1, and (C) an Authorized Officer of the Borrower shall have
delivered a certificate to the Agents in form and substance
satisfactory to the Agents (including a calculation of compliance with
the covenants set forth in Section 7.2.4) certifying as to the accuracy
of clauses (A) and (B) above, the Borrower shall be permitted to pay
cash dividends to the Parent to the extent necessary to enable the
Parent to
(i) repurchase, redeem or otherwise acquire or retire
for value any common stock of the Parent, or any warrant,
option or other right to acquire common stock of the Parent,
from former employees or directors of the Parent or any
Subsidiary for consideration not to exceed (x) $500,000 in the
aggregate in any Fiscal Year (with unused amounts in any
Fiscal Year being carried forward to
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subsequent Fiscal Years), and (y) in the case of any Itemized
Executive, $2,000,000 per Itemized Executive (plus the amount
of any proceeds of any key man life insurance received by the
Borrower or any Subsidiary in respect of such Itemized
Executive) in any Fiscal Year up to an aggregate amount not to
exceed $5,000,000 in any Fiscal Year; provided, that the
aggregate amount of all such repurchases made pursuant to this
clause (i) shall not exceed $17,000,000 over the term of this
Agreement (excluding the amount of any proceeds of any key man
life insurance received by the Borrower or any Subsidiary in
respect of any Itemized Executive);
(ii) pay cash interest on the Senior Notes; and
(b) the Borrower shall be permitted to make Restricted
Payments to the Parent in amounts required for the Parent to pay when
due income and franchise taxes and other fees and expenses required to
maintain its corporate existence and satisfy its reporting and
financial obligations and to pay out-of-pocket costs, operating
expenses and other amounts required to be paid by the Parent during
such Fiscal Year.
SECTION 7.2.7. Capital Expenditures, etc.
(a) The Borrower will not, and will not permit any of its
Subsidiaries to, make or commit to make Capital Expenditures in any
Fiscal Year set forth below in excess of the aggregate amount set forth
opposite such Fiscal Year:
Fiscal Year Amount
1999 $275,000,000
2000 $200,000,000
2001 $110,000,000
2002 $ 50,000,000
2003 $ 60,000,000
2004 $ 70,000,000
2005 $ 80,000,000
2006 and each Fiscal Year $ 90,000,000
thereafter
provided, however, that to the extent the amount of Capital
Expenditures permitted to be made in any Fiscal Year pursuant to this
Section 7.2.7 exceeds the aggregate amount of Capital Expenditures
actually made during such Fiscal Year, up to 75% of such excess amount
may be carried forward to (but only to) the next succeeding Fiscal Year
(any such amount to be certified by the Borrower to the Administrative
Agent in the Compliance Certificate delivered for the last Fiscal
Quarter of such Fiscal Year, and any such amount carried forward to a
succeeding Fiscal Year shall be deemed to be used prior to the Borrower
and its Subsidiaries using the amount of Capital Expenditures permitted
by this Section 7.2.7 without giving effect to such carry-forward) and
provided, further, that the amount of Capital Expenditures permitted to
be made in the 1999 Fiscal Year shall not include the Motorola
Contribution or the reimbursement payment to Nextel in an amount of
approximately $115,300,000 in respect of operational networks and other
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infrastructure in Hawaii, New York and other markets contributed by
Nextel to the Parent and further contributed to the Borrower on the
Closing Date.
(b) The parties acknowledge and agree that the permitted
Capital Expenditure level set forth in clause (a) above shall be
exclusive of the amount of Capital Expenditures actually made with cash
equity capital contributions made, directly or indirectly, by any
Person other than the Borrower and its Subsidiaries, after the Closing
Date to the Borrower or any of its Subsidiaries and specifically
identified in a certificate delivered by an Authorized Officer of the
Borrower to the Agents prior to the time such capital contribution is
made.
SECTION 7.2.8. Consolidation, Merger, etc. The Borrower will not, and
will not permit any of its Subsidiaries to, liquidate or dissolve, consolidate
with, or merge into or with, any other corporation, or purchase or otherwise
acquire all or substantially all of the assets of any Person (or of any division
thereof) except
(a) any such Subsidiary (other than the License Subsidiary)
may liquidate or dissolve voluntarily into, and may merge with and
into, the Borrower (so long as the Borrower is the surviving
corporation of such combination or merger) or any other Subsidiary, and
the assets or stock of any Subsidiary may be purchased or otherwise
acquired by the Borrower or any other Subsidiary; provided that,
notwithstanding the above, a Subsidiary may only liquidate or dissolve
into, or merge with and into, another Subsidiary of the Borrower if,
after giving effect to such combination or merger, the Borrower
continues to own (directly or indirectly), and the Administrative Agent
continues to have pledged to it pursuant to a Security Agreement, a
percentage of the issued and outstanding shares of Capital Stock (on a
fully diluted basis) of the Subsidiary surviving such combination or
merger that is equal to or in excess of the percentage of the issued
and outstanding shares of Capital Stock (on a fully diluted basis) of
the Subsidiary that does not survive such combination or merger that
was (immediately prior to the combination or merger) owned by the
Borrower or pledged to the Administrative Agent; and
(b) so long as no Default has occurred and is continuing or
would occur after giving effect thereto, the Borrower or any of its
Subsidiaries may purchase all or substantially all of the assets of any
Person (or any division thereof) not then a Subsidiary, or acquire such
Person by merger, if permitted (without duplication) pursuant to
Section 7.2.7 to be made as a Capital Expenditure or if permitted
(without duplication) pursuant to Section 7.2.5 to be made as an
Investment.
SECTION 7.2.9. Asset Dispositions, etc. The Borrower will not, and will
not permit any of its Subsidiaries to, sell, transfer, lease, contribute or
otherwise convey, or grant options, warrants or other rights with respect to,
any of its assets, whether now owned or hereafter acquired (including accounts
receivable and Capital Stock of Subsidiaries) to any Person, unless
(a) such sale, transfer, lease, contribution or conveyance of
such assets is (i) in the ordinary course of its business (and does not
constitute a sale, transfer, lease,
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contribution or other conveyance of all or a substantial part of the
Borrower's and its Subsidiaries' assets, taken as a whole), is of
obsolete or worn out property or is no longer useful in the business of
the Borrower, (ii) permitted by Section 7.2.8, or (iii) between the
Borrower and one of its Subsidiaries or between Subsidiaries of the
Borrower;
(b) such sale, transfer, lease, contribution or conveyance
constitutes (i) an Investment permitted under Section 7.2.5, (ii) a
Lien permitted under Section 7.2.3 or (iii) a License Exchange;
provided, however, that the aggregate value of all Licenses exchanged
for Licenses from a third party pursuant to clause (c) of the
definition of "License Exchange" shall not exceed $20,800,000; or
(c) (i) such sale, transfer, lease, contribution or conveyance
of such assets is for fair market value and the consideration consists
solely of cash, (ii) the Net Disposition Proceeds received from such
assets, together with the Net Disposition Proceeds of all other assets
sold, transferred, leased, contributed or conveyed pursuant to this
clause (c) since the Closing Date, does not exceed (individually or in
the aggregate) $50,000,000 over the term of this Agreement and (iii) an
amount equal to the Net Disposition Proceeds generated from such sale,
transfer, lease, contribution or conveyance is applied to prepay the
Loans pursuant to the terms of clause (d) of Section 3.1.1 and Section
3.1.2.
Any term or provision of this Section to the contrary notwithstanding,
unless otherwise consented to by the Required Lenders (including pursuant to the
NWIP Undertaking) or unless the consent of the Required Lenders is not required
pursuant to the NWIP Undertaking, the Borrower will not permit any License
Subsidiary to, and no such License Subsidiary shall, sell, transfer, lease,
contribute or otherwise convey, or grant options, warrants or other rights with
respect to, any of its assets (including the Licenses or Capital Stock of such
License Subsidiary).
SECTION 7.2.10. Modification of Certain Agreements. Without the prior
written consent of the Required Lenders, the Borrower will not, and will not
permit any of its Subsidiaries to, consent to any amendment, supplement,
amendment and restatement, waiver or other modification of any of the terms or
provisions contained in, or applicable to, the Preferred Stock (or any charter
provisions relating thereto), any Senior Discount Notes (including any agreement
or indenture related thereto or to the Senior Discount Note Issuance) or any
Transaction Document or any schedules, exhibits or agreements related thereto,
in each case which would (i) adversely affect the rights or remedies of the
Lenders or the Borrower's or any other Obligor's legal ability or legal right or
power to perform its respective material obligations hereunder or under any Loan
Document to which it is a party, (ii) decrease the amount of Committed Equity
contributed in respect of the Transaction or (iii) increase the Borrower's or
any of its Subsidiaries' obligations or liabilities, contingent or otherwise and
such increase could reasonably be expected to have a Material Adverse Effect.
SECTION 7.2.11. Transactions with Affiliates. The Borrower will not,
and will not permit any of its Subsidiaries to, enter into, or cause, suffer or
permit to exist any arrangement or contract with any of its other Affiliates
(other than another Obligor) unless such arrangement or contract is fair and
equitable to the Borrower or such Subsidiary and is an arrangement or
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contract of the kind which would be entered into by a prudent Person in the
position of the Borrower or such Subsidiary with a Person which is not one of
its Affiliates; provided, however, that the Borrower and its Subsidiaries (a)
may enter into and perform their obligations under the Transaction Documents to
which each is a party as of the Closing Date, (b) may enter into any transaction
involving the issuance of equity securities, employment agreements or payment of
directors' fees and (c) may enter into any transaction which is approved by a
majority of the disinterested directors of the Borrower.
SECTION 7.2.12. Negative Pledges, Restrictive Agreements, etc. The
Borrower will not, and will not permit any of its Subsidiaries to, enter into
any agreement prohibiting
(i) the creation or assumption of any Lien upon its
properties, revenues or assets, whether now owned or hereafter acquired
(other than in the case of any assets acquired with the proceeds of any
Indebtedness permitted under clause (f) of Section 7.2.2 or subject to
Capitalized Lease Liabilities permitted under such clause (f),
customary limitations and prohibitions contained in such Indebtedness),
or (ii) the ability of the Borrower or any other Obligor to amend or
otherwise modify this Agreement or any other Loan Document; or
(b) any Subsidiary from making any payments, directly or
indirectly, to the Borrower by way of dividends, advances, repayments
of loans or advances, reimbursements of management and other
intercompany charges, expenses and accruals or other returns on
investments, or any other agreement or arrangement which restricts the
ability of any such Subsidiary to make any payment, directly or
indirectly, to the Borrower.
SECTION 7.2.13. Liabilities of License Subsidiary. The Borrower will
not permit any License Subsidiary to incur, assume or permit to exist any
liabilities (other than under the Subsidiary Guaranty and the Subsidiary
Security Agreement, the Communications Act and taxes and other liabilities
incurred in the ordinary course in order to maintain its existence) or to engage
in any business or activities other than holding of Licenses.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1. Listing of Events of Default. Each of the following events
or occurrences described in this Section 8.1 shall constitute an "Event of
Default".
SECTION 8.1.1. Non-Payment of Obligations. (a) The Borrower shall
default in the payment or prepayment when due of any principal of any Loan, (b)
the Borrower shall default in the payment when due of any Reimbursement
Obligation or deposit of cash collateral for purposes pursuant to Section 2.6.4,
or (c) the Borrower or any other Obligor shall default (and such default shall
continue unremedied for a period of three Business Days) in the payment when
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due of any interest or fee with respect to the Loans or Commitments or, on
demand after presentation of appropriate backup documentation, of any other
Obligation.
SECTION 8.1.2. Breach of Warranty. Any representation or warranty of
the Borrower or any other Obligor made or deemed to be made hereunder or in any
other Loan Document executed by it or any other writing or certificate furnished
by or on behalf of the Borrower or any other Obligor to the Agents, the Issuer,
the Lead Arranger or any Lender for the purposes of or in connection with this
Agreement or any such other Loan Document (including any certificates delivered
pursuant to Article V) is or shall be incorrect when made in any material
respect.
SECTION 8.1.3. Non-Performance of Certain Covenants and Obligations.
The Borrower shall default in the due performance and observance of any of its
obligations under clause (f) of Section 7.1.1, Sections 7.1.9, 7.1.10, 7.1.11,
the first sentence of 7.1.12 or Section 7.2.
SECTION 8.1.4. Non-Performance of Other Covenants and Obligations. The
Borrower or any other Obligor shall default in the due performance and
observance of any other agreement contained herein or in any other Loan Document
executed by it, and such default shall continue unremedied for a period of 30
days after notice thereof shall have been given to the Borrower by the
Administrative Agent at the direction of the Required Lenders.
SECTION 8.1.5. Default on Other Indebtedness. A default shall occur in
the payment when due (subject to any applicable grace period), whether by
acceleration or otherwise, of any Indebtedness (other than Indebtedness
described in Section 8.1.1) of the Borrower or any of its Material Subsidiaries
or any other Obligor having a principal amount, individually or in the
aggregate, in excess of $10,000,000, or a default shall occur in the performance
or observance of any obligation or condition with respect to such Indebtedness
if the effect of such default is to accelerate the maturity of any such
Indebtedness or such default shall continue unremedied for any applicable period
of time sufficient to permit the holder or holders of such Indebtedness, or any
trustee or agent for such holders, to cause such Indebtedness to become due and
payable prior to its expressed maturity.
SECTION 8.1.6. Judgments. Any judgment or order for the payment of
money in excess of $10,000,000 (not covered by insurance from a responsible
insurance company that is not denying its liability with respect thereto) shall
be rendered against the Borrower or any of its Material Subsidiaries or any
other Obligor and either
(a) enforcement proceedings shall have been commenced by any
creditor upon such judgment or order, or
(b) there shall be any period of 30 consecutive days during
which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect.
SECTION 8.1.7. Pension Plans. Any of the following events shall occur
with respect to any Pension Plan:
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(a) the institution of any steps by the Borrower, any member
of its Controlled Group or any other Person to terminate a Pension Plan
if, as a result of such termination, the Borrower or any such member
could be required to make a contribution to such Pension Plan, or could
reasonably expect to incur a liability or obligation to such Pension
Plan, in excess of $10,000,000; or
(b) a contribution failure occurs with respect to any Pension
Plan sufficient to give rise to a Lien under section 302(f) of ERISA.
SECTION 8.1.8. Control of the Borrower. Any Change in Control shall
occur.
SECTION 8.1.9. Bankruptcy, Insolvency, etc. The Borrower or any of its
Material Subsidiaries or any other Obligor shall
(a) become insolvent or generally fail to pay, or admit in
writing its inability to pay, debts as they become due;
(b) apply for, consent to, or acquiesce in, the appointment of
a trustee, receiver, sequestrator or other custodian for the Borrower
or any of its Material Subsidiaries or any other Obligor or any
property of any thereof, or make a general assignment for the benefit
of creditors;
(c) in the absence of such application, consent or
acquiescence, permit or suffer to exist the appointment of a trustee,
receiver, sequestrator or other custodian for the Borrower or any of
its Material Subsidiaries or any other Obligor or for a substantial
part of the property of any thereof, and such trustee, receiver,
sequestrator or other custodian shall not be discharged within 60 days,
provided that the Borrower, each Material Subsidiary and each other
Obligor hereby expressly authorizes the Agents, the Issuer and each
Lender to appear in any court conducting any relevant proceeding during
such 60- day period to preserve, protect and defend their rights under
the Loan Documents;
(d) permit or suffer to exist the commencement of any
bankruptcy, reorganization, debt arrangement or other case or
proceeding under any bankruptcy or insolvency law, or any dissolution,
winding up or liquidation proceeding, in respect of the Borrower or any
of its Material Subsidiaries or any other Obligor, and, if any such
case or proceeding is not commenced by the Borrower or such Material
Subsidiary or such other Obligor, such case or proceeding shall be
consented to or acquiesced in by the Borrower or such Material
Subsidiary or such other Obligor or shall result in the entry of an
order for relief or shall remain for 60 days undismissed; provided that
the Borrower, each Material Subsidiary and each other Obligor hereby
expressly authorizes the Agents, the Issuer and each Lender to appear
in any court conducting any such case or proceeding during such 60-day
period to preserve, protect and defend their rights under the Loan
Documents; or
(e) take any action authorizing, or in furtherance of, any of
the foregoing.
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SECTION 8.1.10. Impairment of Security, etc. (a) Any Loan Document, or
any Lien granted thereunder, shall (except in accordance with its terms), in
whole or in part, terminate, cease to be effective or cease to be the legally
valid, binding and enforceable obligation of any Obligor party thereto; (b) the
Borrower, any other Obligor or any other party shall, directly or indirectly,
contest in any manner such effectiveness, validity, binding nature or
enforceability; or (c) any Lien securing any Obligation shall, in whole or in
part, cease to be a perfected first priority Lien, subject only to those
exceptions expressly permitted by such Loan Document except to the extent any
event referred to above (a) relates to assets of the Borrower or any of its
Subsidiaries which are immaterial, (b) results from the failure of the
Administrative Agent to maintain possession of certificates representing
securities pledged under any Security Agreement or to file continuation
statements under the Uniform Commercial Code of any applicable jurisdiction or
(c) is covered by a lender's title insurance policy and the relevant insurer
promptly after the occurrence thereof shall have acknowledged in writing that
the same is covered by such title insurance policy.
SECTION 8.1.11. Licenses. The FCC shall terminate, revoke or fail to
renew one or more Licenses, which individually or in the aggregate are material,
of the Borrower or its Subsidiaries, taken as a whole.
SECTION 8.1.12. Rights to Use. The Borrower's right to use the "Nextel"
brand name or national switching infrastructure pursuant to the Trademark
License Agreement and the Switch Sharing Agreement with Nextel or to acquire
equipment incorporating the "iDEN" technology pursuant to the Infrastructure
Equipment Purchase Agreement shall terminate prior to the stated expiration
thereof, unless in either case such termination could not reasonably be expected
to have a Material Adverse Effect because the parties have entered into
replacement or successor agreements with respect thereto which are reasonably
satisfactory to the Agents, or any default or termination of any rights under
any material agreements, which occurrence or termination could reasonably be
expected to have a Material Adverse Effect, shall occur.
SECTION 8.1.13. Subscription and Contribution Agreement. Any party to
the Subscription and Contribution Agreement shall fail to comply with any
funding or contribution obligation under any such agreement, which failure shall
remain unremedied (either by cure by such Person or other Person) for a period
of five Business Days.
SECTION 8.1.14. License Transfer. The License Transfer shall fail to be
consummated within 365 days following the Closing Date.
SECTION 8.1.15. Nextel Operating Agreements. (i) Any Nextel Operating
Agreement shall terminate or fail to be renewed (except (x) in the case of the
Asset Transfer and Reimbursement Agreement, the Transition Services Agreement
and the Infrastructure Equipment Purchase Agreement, at such time as all
material obligations of the parties thereunder have been performed, (y) in the
case of the Interim Management Agreement, pursuant to Section 8(c) thereof or
(z) the Analog Management Agreement), (ii) a Material Breach (as defined in the
Joint Venture Agreement) described in Section 12.3 A, B or C of the Joint
Venture Agreement shall occur and be continuing which could reasonably be
expected to have a Material Adverse Effect, (iii) a Material Breach (other than
a Material Breach described in Section 12.3 A, B or C of the
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Joint Venture Agreement) shall occur and continue unremedied after the
expiration of all applicable grace periods and arbitration proceedings, or (iv)
NWIP shall default in the due performance and observance of any of its
obligations under the NWIP Undertaking which default could reasonably be
expected to have a Material Adverse Effect.
SECTION 8.2. Action if Bankruptcy. If any Event of Default described in
clauses (a) through (d) of Section 8.1.9 shall occur, the Commitments (if not
theretofore terminated) shall automatically terminate and the outstanding
principal amount of all outstanding Loans and all other Obligations shall
automatically be and become immediately due and payable, without notice or
demand and the Borrower shall automatically and immediately be obligated to
deposit with the Administrative Agent cash collateral in an amount equal to all
Letter of Credit Outstandings.
SECTION 8.3. Action if Other Event of Default. If any Event of Default
(other than an Event of Default described in clauses (a) through (d) of Section
8.1.9) shall occur for any reason, whether voluntary or involuntary, and be
continuing, the Administrative Agent, upon the direction of the Required
Lenders, shall by notice to the Borrower declare all or any portion of the
outstanding principal amount of the Loans and other Obligations (including
Reimbursement Obligations) to be due and payable, require the Borrower to
provide cash collateral to be deposited with the Administrative Agent in an
amount equal to the undrawn amount of all Letters of Credit outstanding and/or
declare the Commitments (if not theretofore terminated) to be terminated,
whereupon the full unpaid amount of such Loans and other Obligations which shall
be so declared due and payable shall be and become immediately due and payable,
without further notice, demand or presentment, and/or, as the case may be, the
Commitments shall terminate and the Borrower shall deposit with the
Administrative Agent cash collateral in an amount equal to all Letters of Credit
Outstandings.
ARTICLE IX
THE ADMINISTRATIVE AGENT
SECTION 9.1. Actions. Each Lender hereby appoints DLJ as its
Syndication Agent and BOM as its Administrative Agent under and for purposes of
this Agreement, the Notes and each other Loan Document. Each Lender authorizes
the Agents to act on behalf of such Lender under this Agreement, the Notes and
each other Loan Document and, in the absence of other written instructions from
the Required Lenders received from time to time by the Agents (with respect to
which each of the Agents agrees that it will comply, except as otherwise
provided in this Section or as otherwise advised by counsel), to exercise such
powers hereunder and thereunder as are specifically delegated to or required of
the Agents by the terms hereof and thereof, together with such powers as may be
reasonably incidental thereto. The Agents may execute any of their respective
duties under this Agreement, the Notes and each other Loan Document by or
through their respective employees, agents and attorneys-in-fact. Each Lender
hereby indemnifies (which indemnity shall survive any termination of this
Agreement) the Agents, pro rata according to such Lender's percentage of the
Total Exposure Amount, from and against any and all liabilities, obligations,
losses, damages, claims, costs or expenses of any kind or nature
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whatsoever which may at any time be imposed on, incurred by, or asserted
against, either of the Agents in any way relating to or arising out of this
Agreement, the Notes and any other Loan Document, including reasonable
attorneys' fees, and as to which any Agent is not reimbursed by the Borrower or
any other Obligor (and without limiting the obligation of the Borrower or any
other Obligor to do so); provided, however, that no Lender shall be liable for
the payment of any portion of such liabilities, obligations, losses, damages,
claims, costs or expenses which are determined by a court of competent
jurisdiction in a final proceeding to have resulted from such Agent's gross
negligence or wilful misconduct. An Agent shall not be required to take any
action hereunder, under the Notes or under any other Loan Document, or to
prosecute or defend any suit in respect of this Agreement, the Notes or any
other Loan Document, unless it is indemnified hereunder to its satisfaction. If
any indemnity in favor of either of the Agents shall be or become, in such
Agent's determination, inadequate, such Agent may call for additional
indemnification from the Lenders and cease to do the acts indemnified against
hereunder until such additional indemnity is given.
SECTION 9.2. Funding Reliance, etc. Unless the Administrative Agent
shall have been notified by telephone, confirmed in writing, by any Lender by
12:00 noon, Chicago, Illinois time, on the day prior to a Borrowing or
Disbursement with respect to a Letter of Credit pursuant to Section 2.6.2 that
such Lender will not make available the amount which would constitute its
Percentage of such Borrowing on the date specified therefor, the Administrative
Agent may assume that such Lender has made such amount available to the
Administrative Agent and, in reliance upon such assumption, make available to
the Borrower a corresponding amount. If and to the extent that such Lender shall
not have made such amount available to the Administrative Agent, such Lender and
the Borrower severally agree to repay the Administrative Agent forthwith on
demand such corresponding amount together with interest thereon, for each day
from the date the Administrative Agent made such amount available to the
Borrower to the date such amount is repaid to the Administrative Agent, at the
interest rate applicable at the time to Loans comprising such Borrowing.
SECTION 9.3. Exculpation. None of the Agents or the Lead Arranger nor
any of their respective directors, officers, employees or agents shall be liable
to any Lender for any action taken or omitted to be taken by it under this
Agreement or any other Loan Document, or in connection herewith or therewith,
except for its own willful misconduct or gross negligence, nor responsible for
any recitals or warranties herein or therein, nor for the effectiveness,
enforceability, validity or due execution of this Agreement or any other Loan
Document, nor for the creation, perfection or priority of any Liens purported to
be created by any of the Loan Documents, or the validity, genuineness,
enforceability, existence, value or sufficiency of any collateral security, nor
to make any inquiry respecting the performance by the Borrower of its
obligations hereunder or under any other Loan Document. None of the Agents or
the Lead Arranger nor any of their respective directors, officers, employees or
agents shall be responsible for or have any duty to ascertain, inquire into or
verify (i) any statement, warranty or representation made in connection with any
Loan Document or any borrowing hereunder, (ii) the performance or observance of
any of the covenants or agreements of any Obligor under any Loan Document,
including, without limitation, any agreement by an Obligor to furnish
information directly to each Lender, (iii) the satisfaction of any condition
specified in Article V, expect receipt of items required to be delivered solely
to the Administrative Agent, (iv) the
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existence or possible existence of any Default or Event of Default, or (v) the
financial condition of the Borrower or any other Obligor. Any such inquiry which
may be made by an Agent or the Issuer shall not obligate it to make any further
inquiry or to take any action. The Agents and the Issuer shall be entitled to
rely upon advice of counsel concerning legal matters and upon any notice,
consent, certificate, statement or writing which the Agents or the Issuer, as
applicable, believe to be genuine and to have been presented by a proper Person.
SECTION 9.4. Successor. The Syndication Agent may resign as such upon
one Business Day's notice to the Borrower and the Administrative Agent. The
Administrative Agent may resign as such at any time upon at least 30 days' prior
notice to the Borrower and all Lenders. The Administrative Agent may be removed
at any time with or without cause by written notice received by the
Administrative Agent from the Required Lenders, such removal to be effective on
the date specified in such notice. If the Administrative Agent at any time shall
resign or be removed, the Required Lenders may, with the prior consent of the
Borrower (which consent shall not be unreasonably withheld or delayed) appoint
another Lender as a successor Administrative Agent which shall thereupon become
the Administrative Agent hereunder. If no successor Administrative Agent shall
have been so appointed by the Required Lenders, and shall have accepted such
appointment, within 30 days after the retiring Administrative Agent's giving
notice of resignation or receiving notice of removal, then the retiring
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent, which shall be one of the Lenders or a commercial banking
institution organized under the laws of the U.S. (or any State thereof) or a
U.S. branch or agency of a commercial banking institution, and having a combined
capital and surplus of at least $500,000,000. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall be entitled to receive from the
retiring Administrative Agent such documents of transfer and assignment as such
successor Administrative Agent may reasonably request, and shall thereupon
succeed to and become vested with all rights, powers, privileges and duties of
the retiring Administrative Agent, and the retiring Administrative Agent shall
be discharged from its duties and obligations under this Agreement. After any
retiring Administrative Agent's resignation or removal hereunder as the
Administrative Agent, the provisions of (i) this Article IX shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was the
Administrative Agent under this Agreement, and (ii) Section 10.3 and Section
10.4 shall continue to inure to its benefit. Notwithstanding anything else to
the contrary in this Section 9.4, the Administrative Agent may at any time,
without the consent of the Borrower or any Lender, appoint an Affiliate which is
a commercial banking institution as a successor Administrative Agent.
SECTION 9.5. Credit Extensions by Each Agent and Issuer. Each Agent and
the Issuer shall have the same rights and powers with respect to (i) in the case
of the Agents, the Credit Extensions made by it or any of its Affiliates and
(ii) in the case of the Issuer, the Loans made by it or any of its Affiliates,
as any other Lender and may exercise the same as if it were not an Agent or the
Issuer. Each Agent, the Issuer and each of their respective Affiliates may
accept deposits from, lend money to, and generally engage in any kind of
business with the Borrower or any Subsidiary or Affiliate of the Borrower as if
such Agent or Issuer were not an Agent or Issuer hereunder.
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SECTION 9.6. Credit Decisions. Each Lender acknowledges that it has,
independently of the Agents, the Lead Arranger, the Issuer and each other
Lender, and based on such Lender's review of the financial information of the
Borrower, this Agreement, the other Loan Documents (the terms and provisions of
which being satisfactory to such Lender) and such other documents, information
and investigations as such Lender has deemed appropriate, made its own credit
decision to extend its Commitments. Each Lender also acknowledges that it will,
independently of the Agents, the Lead Arranger, the Issuer and each other
Lender, and based on such other documents, information and investigations as it
shall deem appropriate at any time, continue to make its own credit decisions as
to exercising or not exercising from time to time any rights and privileges
available to it under this Agreement or any other Loan Document.
SECTION 9.7. Copies, etc. The Administrative Agent shall give prompt
notice to each Lender of each notice or request required or permitted to be
given to the Administrative Agent by the Borrower pursuant to the terms of this
Agreement (unless concurrently delivered to the Lenders by the Borrower). The
Administrative Agent will distribute to each Lender each document or instrument
received for its account and copies of all other communications received by the
Administrative Agent from the Borrower for distribution to the Lenders by the
Administrative Agent in accordance with the terms of this Agreement.
SECTION 9.8. The Syndication Agent, the Documentation Agent and the
Administrative Agent. Notwithstanding anything else to the contrary contained in
this Agreement or any other Loan Document, the Syndication Agent, the
Documentation Agent and the Administrative Agent, each in such capacity, shall
have no duties or responsibilities under this Agreement or any other Loan
Document nor any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or otherwise exist against the Syndication Agent,
the Documentation Agent or the Administrative Agent, as applicable, in such
capacity except as are explicitly set forth herein or in the other Loan
Documents.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1 Waivers, Amendments, etc. The provisions of this Agreement
and of each other Loan Document may from time to time be amended, modified or
waived, if such amendment, modification or waiver is in writing and consented to
in writing by the Borrower and each Obligor party thereto and the Required
Lenders; provided, however, that no such amendment, modification or waiver which
would:
(a) modify any requirement hereunder that any particular
action be taken by all the Lenders shall be effective unless consented
to in writing by each Lender;
(b) modify this Section 10.1, or clause (a) of Section 10.10,
change the definitions of "Required Lenders" or "Interest Period",
increase any Commitment Amount or the Percentage of any Lender, reduce
any fees described in Section 3.3 (other
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than the administration fee referred to in Section 3.3.2), release any
Subsidiary Guarantor from its obligations under the Subsidiary
Guaranty, release the Parent from its obligations under the Parent
Guaranty and Pledge Agreement, or release all or substantially all of
the collateral security (except in each case as otherwise specifically
provided in this Agreement, the Subsidiary Guaranty or a Security
Agreement) or extend any Commitment Termination Date shall be made
without the written consent of each Lender adversely affected thereby;
(c) extend the due date for, or reduce the amount of, any
scheduled repayment of principal of or interest on or fees payable in
respect of any Loan or reduce the principal amount of or rate of
interest on or fees payable in respect of any Loan or any Reimbursement
Obligations (which shall in each case include the conversion of all or
any part of the Obligations into equity of any Obligor) or reduce the
amount of, or postpone the scheduled date of, any mandatory reduction
of any Commitment, without the written consent of the holder of the
Note evidencing such Loan or, in the case of a Reimbursement
Obligation, the Issuer owed, and those Lenders participating in, such
Reimbursement Obligation;
(d) affect adversely the interests, rights or obligations of
any Agent, the Issuer or the Lead Arranger (in its capacity as Agent,
Issuer or Lead Arranger), unless consented to in writing by such Agent,
the Issuer or the Lead Arranger, as the case may be;
(e) have the effect (either immediately or at some later time)
of enabling the Borrower to satisfy a condition precedent to the making
of a Revolving Loan or the issuance of a Letter of Credit without the
written consent of Lenders holding at least 51% of the Revolving Loan
Commitments; or
(f) amend, modify or waive the provisions of clause (a)(i) of
Section 3.1.1 or clause (b) of Section 3.1.2 without the written
consent of each Lender affected thereby.
No failure or delay on the part of any Agent, the Issuer, any Lender or the
holder of any Note in exercising any power or right under this Agreement or any
other Loan Document shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power or right preclude any other or further
exercise thereof or the exercise of any other power or right. No notice to or
demand on the Borrower in any case shall entitle it to any notice or demand in
similar or other circumstances. No waiver or approval by any Agent, the Issuer,
any Lender or the holder of any Note under this Agreement or any other Loan
Document shall, except as may be otherwise stated in such waiver or approval, be
applicable to subsequent transactions. No waiver or approval hereunder shall
require any similar or dissimilar waiver or approval thereafter to be granted
hereunder.
For purposes of this Section 10.1, the Syndication Agent, in
coordination with the Administrative Agent, shall have primary responsibility,
together with the Borrower, in the negotiation, preparation, and documentation
relating to any amendment, modification or waiver of this Agreement, any other
Loan Document or any other agreement or document related hereto or thereto
contemplated pursuant to this Section.
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SECTION 10.2. Notices. All notices, requests and other communications
provided to any party hereto under this Agreement or any other Loan Document
shall be in writing or by facsimile and addressed, delivered or transmitted to
such party at its address or facsimile number set forth on Schedule II hereto
or, in the case of a Lender which becomes a party hereto after the date hereof,
as set forth in the Lender Assignment Agreement pursuant to which such Lender
becomes a Lender hereunder or at such other address or facsimile number as may
be designated by such party in a notice to the other parties. Any notice, (i) if
mailed and properly addressed with postage prepaid or (ii) if properly addressed
and sent by pre-paid courier service, shall be deemed given when received, or
(iii) if transmitted by facsimile, shall be deemed given when transmitted (and
telephonic confirmation of receipt thereof has been received).
SECTION 10.3. Payment of Costs and Expenses. The Borrower agrees to pay
on demand all reasonable expenses of each Agent (including the reasonable fees
and out-of-pocket expenses of counsel to the Agents and of local or foreign
counsel, if any, who may be retained by counsel to the Agents) in connection
with
(a) the syndication by the Syndication Agent and the Lead
Arranger of the Loans, the negotiation, preparation, execution and
delivery of this Agreement and of each other Loan Document, including
schedules and exhibits, and any amendments, waivers, consents,
supplements or other modifications to this Agreement or any other Loan
Document as may from time to time hereafter be required, whether or not
the transactions contemplated hereby are consummated;
(b) the filing, recording, refiling or rerecording of the
Mortgages and the Security Agreements and/or any Uniform Commercial
Code financing statements relating thereto and all amendments,
supplements and modifications to any thereof and any and all other
documents or instruments of further assurance required to be filed or
recorded or refiled or rerecorded by the terms hereof or of any
Mortgage or any Security Agreement; and
(c) the preparation and review of the form of any document or
instrument relevant to this Agreement or any other Loan Document.
The Borrower further agrees to pay, and to save the Agents and the Lenders
harmless from all liability for, any stamp or other similar taxes which may be
payable in connection with the execution or delivery of this Agreement, the
Borrowings hereunder, the issuance of the Notes, the issuance of the Letters of
Credit, or any other Loan Documents. The Borrower also agrees to reimburse each
Agent and each Lender upon demand for all reasonable out-of-pocket expenses
(including reasonable attorneys' fees and legal expenses) incurred by such Agent
or such Lender in connection with (x) the negotiation of any restructuring or
"work-out", whether or not consummated, of any Obligations and (y) the
enforcement of any Obligations.
SECTION 10.4. Indemnification. In consideration of the execution and
delivery of this Agreement by each Lender and the extension of the Commitment,
the Borrower indemnifies, exonerates and holds each Agent, the Lead Arranger,
the Issuer and each Lender and each of their respective partners, trustees,
officers, directors, employees and agents (collectively, the "Indemnified
Parties") free and harmless from and against any and all actions, causes of
action,
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suits, losses, costs, liabilities and damages, and expenses incurred in
connection therewith (irrespective of whether any such Indemnified Party is a
party to the action for which indemnification hereunder is sought), including
reasonable attorneys' fees and disbursements (collectively, the "Indemnified
Liabilities"), incurred by the Indemnified Parties or any of them as a result
of, or arising out of, or relating to
(a) any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of any Credit
Extension;
(b) the entering into and performance of this Agreement and
any other Loan Document by any of the Indemnified Parties (including
any action brought by or on behalf of the Borrower as the result of any
determination by the Required Lenders pursuant to Article V not to make
any Credit Extension hereunder but excluding any such action in which a
court of competent jurisdiction in a final non-appealable judgment
determined that such Lenders breached their obligations hereunder in
respect of such Credit Extension);
(c) any investigation, litigation or proceeding related to any
acquisition or proposed acquisition by the Borrower or any of its
Subsidiaries of all or any portion of the stock or assets of any
Person, whether or not such Agent, the Lead Arranger, the Issuer or
such Lender is party thereto;
(d) any investigation, litigation or proceeding related to any
environmental cleanup, audit, compliance or other matter relating to
the protection of the environment or the Release by the Borrower or any
of its Subsidiaries of any Hazardous Material; or
(e) the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission, discharging or releases from, any real
property owned or operated by the Borrower or any Subsidiary thereof of
any Hazardous Material (including any losses, liabilities, damages,
injuries, costs, expenses or claims asserted or arising under any
Environmental Law), regardless of whether caused by, or within the
control of, the Borrower or such Subsidiary;
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party which are determined by a court of competent
jurisdiction in a final proceeding to have resulted from the relevant
Indemnified Party's gross negligence or wilful misconduct. Each Obligor and its
permitted successors and assigns hereby waive, release and agree not to make any
claim, or bring any cost recovery action against, any Agent, the Lead Arranger,
the Issuer or any Lender under CERCLA or any state equivalent, or any similar
law now existing or hereafter enacted, except to the extent determined by a
court of competent jurisdiction in a final proceeding to have resulted from the
gross negligence or wilful misconduct of any Indemnified Party. It is expressly
understood and agreed that to the extent that any of such Persons is strictly
liable under any Environmental Laws, such Obligor's obligation to such Person
under this indemnity shall likewise be without regard to fault on the part of
such Obligor, to the extent permitted under applicable law, with respect to the
violation or condition which results in liability of such Person. If and to the
extent that the foregoing undertaking may be
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unenforceable for any reason, such Obligor hereby agrees to make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law.
SECTION 10.5. Survival. The obligations of the Borrower under Sections
4.3, 4.4, 4.5, 4.6, 10.3 and 10.4, and the obligations of the Lenders under
Section 4.8 and Section 9.1, shall in each case survive any termination of this
Agreement, the payment in full of all Obligations and the termination of all
Commitments. The representations and warranties made by the Borrower and each
other Obligor in this Agreement and in each other Loan Document shall survive
the execution and delivery of this Agreement and each such other Loan Document.
SECTION 10.6. Severability. Any provision of this Agreement or any
other Loan Document which is prohibited or unenforceable in any jurisdiction
shall, as to such provision and such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement or such Loan Document or affecting the validity or
enforceability of such provision in any other jurisdiction.
SECTION 10.7. Headings. The various headings of this Agreement and of
each other Loan Document are inserted for convenience only and shall not affect
the meaning or interpretation of this Agreement or such other Loan Document or
any provisions hereof or thereof.
SECTION 10.8. Execution in Counterparts, Effectiveness, etc. This
Agreement may be executed by the parties hereto in several counterparts, each of
which shall be deemed to be an original and all of which shall constitute
together but one and the same agreement.
SECTION 10.9. Governing Law; Entire Agreement. THIS AGREEMENT, THE
NOTES AND EACH OTHER LOAN DOCUMENT SHALL EACH BE DEEMED TO BE A CONTRACT MADE
UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK, EXCLUDING THE
LAW OF CONFLICTS BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
This Agreement, the Notes and the other Loan Documents constitute the entire
understanding among the parties hereto with respect to the subject matter hereof
and supersede any prior agreements, written or oral, with respect thereto.
SECTION 10.10. Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that:
(a) the Borrower may not assign or transfer its rights or
obligations hereunder without the prior written consent of the
Administrative Agent and all Lenders; and
(b) the rights of sale, assignment and transfer of the Lenders
are subject to Section 10.11.
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SECTION 10.11. Sale and Transfer of Loans and Notes; Participations in
Loans and Notes. Each Lender may assign, or sell participations in, its Loans
and Commitments to one or more other Persons in accordance with this Section
10.11.
SECTION 10.11.1. Assignments. Any Lender (an "Assignor Lender"),
(a) with the written consents of the Borrower, the Agents and
(in the case of any assignment of participations in Letters of Credit
or Revolving Loan Commitments) the Issuer ((x) which consents shall not
be unreasonably delayed or withheld, (y) which consents of the Agents
and the Issuer shall not be required in the case of assignments made
(1) to DLJ or any of its Affiliates or (2) by DLJ or any of its
Affiliates to any commercial bank, fund which is regularly engaged in
making, purchasing or investing in loans or securities or other
financial institution the long-term certificate of deposit rating or
long-term senior unsecured debt rating of which as determined by S&P or
Moody's is at least BBB or Baa2 and (z) which consent of the Borrower
shall not be required at any time when an Event of Default shall have
occurred and be continuing), may at any time assign and delegate to one
or more commercial banks, funds which are regularly engaged in making,
purchasing or investing in loans or securities or other financial
institutions, and
(b) with notice to the Borrower, the Agents and (in the case
of any assignment of participations in Letters of Credit or Revolving
Loan Commitments) the Issuer, but without the consent of the Borrower,
the Agents or the Issuer, may assign and delegate to any of its
Affiliates or to any other Lender or to a Related Fund of any Lender
(each such Person described in either of the foregoing clauses as being the
Person to whom such assignment and delegation is to be made, being hereinafter
referred to as an "Assignee Lender"), all or any fraction of such Lender's total
Loans, participations in Letters of Credit and Letter of Credit Outstandings
with respect thereto and Commitments (which assignment and delegation shall be,
as among Revolving Loan Commitments, Revolving Loans and participations in
Letters of Credit, of a constant, and not a varying, percentage) in a minimum
aggregate amount equal to the lesser of (i) $1,000,000 or (ii) the then
remaining amount of such Lender's Loans and Commitments; provided, however, that
any such Assignee Lender will comply, if applicable, with the provisions
contained in Section 4.6 and the Borrower, each other Obligor and the Agents
shall be entitled to continue to deal solely and directly with such Lender in
connection with the interests so assigned and delegated to an Assignee Lender
until (x) written notice of such assignment and delegation, together with
payment instructions, addresses and related information with respect to such
Assignee Lender, shall have been given to the Borrower and the Agents by such
Lender and such Assignee Lender, (y) such Assignee Lender shall have executed
and delivered to the Borrower and the Agents a Lender Assignment Agreement,
accepted by the Agents, and (z) the processing fees described below shall have
been paid.
From and after the date that the Agents accept such Lender Assignment Agreement,
(i) the Assignee Lender thereunder shall be deemed automatically to have become
a party hereto and to the extent that rights and obligations hereunder have been
assigned and delegated to such Assignee Lender in connection with such Lender
Assignment Agreement, shall have the rights
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and obligations of a Lender hereunder and under the other Loan Documents, and
(ii) the Assignor Lender, to the extent that rights and obligations hereunder
have been assigned and delegated by it in connection with such Lender Assignment
Agreement, shall be released from its obligations hereunder and under the other
Loan Documents. Within ten Business Days after its receipt of notice that the
Administrative Agent has received an executed Lender Assignment Agreement, the
Borrower shall execute and deliver to the Administrative Agent (for delivery to
the relevant Assignee Lender), and to the extent requested, new Notes evidencing
such Assignee Lender's assigned Loans and Commitments and, if the Assignor
Lender has retained Loans and Commitments hereunder, replacement Notes in the
principal amount of the Loans and Commitments retained by the Assignor Lender
hereunder (such Notes to be in exchange for, but not in payment of, those Notes
then held by such Assignor Lender). Each such Note shall be dated the date of
the predecessor Notes. The Assignor Lender shall mark the predecessor Notes
"exchanged" and deliver them to the Borrower. Accrued interest on that part of
the predecessor Notes evidenced by the new Notes, and accrued fees, shall be
paid as provided in the Lender Assignment Agreement. Accrued interest on that
part of the predecessor Notes evidenced by the replacement Notes shall be paid
to the Assignor Lender. Accrued interest and accrued fees shall be paid at the
same time or times provided in the predecessor Notes and in this Agreement. Such
Assignor Lender or such Assignee Lender must also pay a processing fee to the
Administrative Agent upon delivery of any Lender Assignment Agreement in the
amount of $3,500, unless such assignment and delegation is by a Lender to its
Affiliate or to a Related Fund or if such assignment and delegation is by a
Lender to a Federal Reserve Bank (or, if such Lender is an investment fund, to
the trustee under the indenture to which such fund is a party in support of its
obligations to such trustee), as provided below or is otherwise consented to by
the Administrative Agent. Any attempted assignment and delegation not made in
accordance with this Section 10.11.1 shall be null and void. Nothing contained
in this Section 10.11.1 shall prevent or prohibit any Lender from pledging its
rights (but not its obligations to make Loans or participate in Letters of
Credit of Letter of Credit Outstandings) under this Agreement and/or its Loans
and/or its Notes hereunder (i) to a Federal Reserve Bank in support of
borrowings made by such Lender from such Federal Reserve Bank or (ii) in the
case of a Lender that is an investment fund, to the trustee under the indenture
to which such fund is a party in support of its obligations to such trustee;
provided that any such assignment to a trustee shall be subject to the
provisions of clause (a) of this Section 10.11.1. In the event that S&P, Moody's
or Thompson's BankWatch (or InsuranceWatch Ratings Service, in the case of
Lenders that are insurance companies (or Best's Insurance Reports, if such
insurance company is not rated by Insurance Watch Ratings Service)) shall, after
the date that any Lender with a Commitment to make Revolving Loans or
participate in Letters of Credit becomes a Lender, downgrade the long-term
certificate of deposit rating or long-term senior unsecured debt rating of such
Lender, and the resulting rating shall be below BBB-, Baa3 or C (or BB, in the
case of Lender that is an insurance company (or B, in the case of an insurance
company not rated by InsuranceWatch Ratings Service)) respectively, then the
Borrower (with the consent of the Administrative Agent and the Issuer) shall
have the right, but not the obligation, upon notice to such Lender and the
Agents, to replace such Lender with an Assignee Lender in accordance with and
subject to the restrictions contained in this Section, and such Lender hereby
agrees to transfer and assign without recourse (in accordance with and subject
to the restrictions contained in this Section) all its interests, rights and
obligations in respect of its Revolving Loan Commitment under this Agreement to
such Assignee Lender; provided, however, that (i) no such assignment shall
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conflict with any law, rule and regulation or order of any governmental
authority and (ii) such Assignee Lender shall pay to such Lender in immediately
available funds on the date of such assignment the principal of and interest and
fees (if any) accrued to the date of payment on the Loans made, and Letters of
Credit participated in, by such Lender hereunder and all other amounts accrued
for such Lender's account or owed to it hereunder.
SECTION 10.11.2. Participations. Any Lender may at any time sell to one
or more commercial banks or other Persons (each such commercial bank and other
Person being herein called a "Participant") participating interests in any of
the Loans, Commitments, participations in Letters of Credit and Letters of
Credit Outstandings or other interests of such Lender hereunder; provided,
however, that
(a) no participation contemplated in this Section shall
relieve such Lender from its Commitments or its other obligations
hereunder or under any other Loan Document;
(b) such Lender shall remain solely responsible for the
performance of its Commitments and such other obligations;
(c) the Borrower and each other Obligor and the Agents shall
continue to deal solely and directly with such Lender in connection
with such Lender's rights and obligations under this Agreement and each
of the other Loan Documents;
(d) no Participant, unless such Participant is an Affiliate of
such Lender, or is itself a Lender, shall be entitled to require such
Lender to take or refrain from taking any action hereunder or under any
other Loan Document, except that such Lender may agree with any
Participant that such Lender will not, without such Participant's
consent, agree to any reduction in the interest rate or amount of fees
that such Participant is otherwise entitled to, a decrease in the
principal amount, or an extension of the final Stated Maturity Date, of
any Loan in which such Participant has purchased a participating
interest or a release of all or substantially all of the collateral
security under the Loan Documents or any Subsidiary Guarantor that is a
Material Subsidiary under any Subsidiary Guaranty, in each case except
as otherwise specifically provided in a Loan Document; and
(e) the Borrower shall not be required to pay any amount under
Sections 4.3, 4.4, 4.5, 4.6, 10.3 and 10.4 that is greater than the
amount which it would have been required to pay had no participating
interest been sold.
The Borrower acknowledges and agrees, subject to clause (e) above, that, to the
fullest extent permitted under applicable law, each Participant, for purposes of
Sections 4.3, 4.4, 4.5, 4.6, 4.8, 4.9, 10.3 and 10.4, shall be considered a
Lender.
SECTION 10.12. Confidentiality. The Lenders shall hold all non-public
information obtained pursuant to the requirements of this Agreement in
accordance with their customary procedures for handling confidential information
of this nature and in accordance with safe and sound banking practices and in
any event may make disclosure to any of their examiners,
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Affiliates, outside auditors, counsel and other professional advisors in
connection with this Agreement or as reasonably required by any bona fide
transferee, participant or assignee or as required or requested by any
governmental agency or representative thereof or pursuant to legal process;
provided, however, that
(a) unless specifically prohibited by applicable law or court
order, each Lender shall notify the Borrower of any request by any
governmental agency or representative thereof (other than any such
request in connection with an examination of the financial condition of
such Lender by such governmental agency) for disclosure of any such
non-public information prior to disclosure of such information;
(b) prior to any such disclosure pursuant to this Section
10.12, each Lender shall require any such bona fide transferee,
participant and assignee receiving a disclosure of non-public
information to agree in writing
(i) to be bound by this Section 10.12; and
(ii) to require such Person to require any other
Person to whom such Person discloses such non-public
information to be similarly bound by this Section 10.12; and
(c) except as may be required by an order of a court of
competent jurisdiction and to the extent set forth therein, no Lender
shall be obligated or required to return any materials furnished by the
Borrower or any Subsidiary.
SECTION 10.13. Other Transactions. Nothing contained herein shall
preclude the Agents or any other Lender from engaging in any transaction, in
addition to those contemplated by this Agreement or any other Loan Document,
with the Borrower or any of its Affiliates in which the Borrower or such
Affiliate is not restricted hereby from engaging with any other Person.
SECTION 10.14. Forum Selection and Consent to Jurisdiction. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE ADMINISTRATIVE
AGENT, THE LENDERS OR THE BORROWER THAT IS BROUGHT IN THE STATE OF NEW YORK
SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW
YORK LOCATED IN NEW YORK COUNTY OF THE STATE OF NEW YORK OR IN THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT
ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT THE ADMINISTRATIVE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION
WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE BORROWER HEREBY
EXPRESSLY AND IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE
COURTS OF THE
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STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE
AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN
CONNECTION WITH SUCH LITIGATION. THE BORROWER FURTHER IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK AND EXPRESSLY AND IRREVOCABLY
APPOINTS CT CORPORATION SYSTEM AS ITS DOMICILE AND ADDRESS FOR SERVICE OF
PROCESS FOR PURPOSES OF ANY ACTION AS TO WHICH IT HAS SUBMITTED TO JURISDICTION
AS SET FORTH IN THIS SECTION 10.14, AND AGREES THAT SERVICE UPON SUCH AUTHORIZED
AGENT SHALL BE DEEMED IN EVERY RESPECT SERVICE OF PROCESS UPON THE BORROWER OR
ITS SUCCESSORS AND ASSIGNS, AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
SHALL BE TAKEN AND HELD TO BE VALID PERSONAL SERVICE UPON IT. THE BORROWER
HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF
ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM
THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING IN
THIS SECTION SHALL AFFECT THE RIGHT OF ANY AGENT, ANY LENDER OR THE ISSUER TO
SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF
ANY SUCH PERSON TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER OR ITS
PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION. TO THE EXTENT THAT THE
BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY
COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT
PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO
ITSELF OR ITS PROPERTY, THE BORROWER HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN
RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
SECTION 10.15. Waiver of Jury Trial. THE AGENTS, THE LENDERS, THE
ISSUER AND THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE
ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) BASED HEREON, OR ARISING OUT
OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN)
OR ACTIONS OF THE AGENTS, THE LENDERS, THE ISSUER OR THE BORROWER. THE BORROWER
ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION
FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO
WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
AGENTS, THE LENDERS AND THE ISSUER
-106-
<PAGE>
ENTERING INTO THIS AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT.
-107-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
NEXTEL PARTNERS OPERATING CORP.
By: /s/ John D. Thompson
----------------------------
Name: John D. Thompson
Title: Chief Financial Officer
Address: 4500 Carillon Point
Kirkland, WA 98033
Facsimile No.: (425) 828-8098
Attention: John Thompson
<PAGE>
DLJ CAPITAL FUNDING, INC.,
as the Syndication Agent and as Lender
By /s/ Harold J. Philipps
---------------------------------------
Name: Harold J. Philipps
Title: Managing Director
Address: 277 Park Avenue
10th Floor
New York, NY 10172
Facsimile No.: (212) 892-6031
Attention: Tanya Holman
-109-
<PAGE>
THE BANK OF NEW YORK,
as the Documentation Agent and as Lender
By /s/ Gerry Granovsky
-----------------------------------------
Name: Gerry Granovsky
Title: Vice President
Address: One Wall St.
16th Floor
New York, NY 10286
Facsimile No.: (212) 635-8593
Attention: Gerry Granovsky
<PAGE>
BANK OF MONTREAL, Chicago Branch
as the Administrative Agent and as Lender
By /s/ Karen Klapper
-----------------------------------------
Name: Karen Klapper
Title: Director
Address: 430 Park Avenue
New York, NY 10022
Facsimile No.: (212) 605-1648
Attention: Karen Klapper
<PAGE>
LENDERS:
BARCLAYS BANK PLC
By /s/ Daniele Iacorone
-------------------------
Name: Daniele Iacorone
Title: Associate Director
<PAGE>
FIRST UNION NATIONAL BANK
By /s/ Bruce W. Loftin
-------------------------
Name: Bruce W. Loftin
Title: Senior Vice President
<PAGE>
DRESDNER BANK AG NEW YORK & GRAND
CAYMAN BRANCHES
By /s/ William E. Lambert
-------------------------------------
Name: William E. Lambert
Title: Assistant Vice President
By /s/ Brian Haughney
-------------------------------------
Name: Brian Haughney
Title: Assistant Treasurer
<PAGE>
THE FUJI BANK, LIMITED
By /s/ Teiji Teramoto
------------------------------------
Name: Teiji Teramoto
Title: Vice President & Manager
<PAGE>
BORROWER SECURITY AND PLEDGE AGREEMENT
This BORROWER SECURITY AND PLEDGE AGREEMENT (as amended, supplemented,
amended and restated or otherwise modified from time to time, this "Security
and Pledge Agreement"), dated as of January 29, 1999, is made by NEXTEL
PARTNERS OPERATING CORP., a Delaware corporation (the "Grantor"), in favor of
BANK OF MONTREAL, as administrative agent (together with its successor(s)
thereto in such capacity, the "Administrative Agent") for each of the Secured
Parties (as defined below).
W I T N E S S E T H :
WHEREAS, pursuant to a Credit Agreement, dated as of January 29, 1999 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Credit Agreement"), among the Grantor, the various financial
institutions as are, or may from time to time become, parties thereto (each,
individually, a "Lender", and, collectively, the "Lenders"), DLJ Capital
Funding, Inc., as the syndication agent, The Bank of New York, as the
documentation agent and the Administrative Agent, the Lenders and the Issuer
have extended Commitments to make Credit Extensions to the Grantor;
WHEREAS, as a condition precedent to the making of the Credit Extensions
(including the initial Credit Extension) under the Credit Agreement, the
Grantor is required to execute and deliver this Security and Pledge Agreement;
and
WHEREAS, the Grantor has duly authorized the execution, delivery and
performance of this Security and Pledge Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce the
Lenders and the Issuer to make Credit Extensions (including the initial Credit
Extension) to the Grantor pursuant to the Credit Agreement, the Grantor agrees,
for the benefit of each Secured Party, as follows:
ARTICLE
DEFINITIONS
SECTION 1.1 Certain Terms. The following terms (whether or not
underscored) when
<PAGE>
used in this Security and Pledge Agreement, including its preamble and
recitals, shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof):
"Administrative Agent" is defined in the preamble.
"Cash Collateral" means an amount of cash and Cash Equivalent Investments
at least equal to the Required Balance which shall be held in the Cash Account
pursuant to the terms hereof.
"Collateral" is defined in Section 2.1.
"Collateral Account" is defined in Section 4.4(c).
"Commodity Account" means an account maintained by a Commodity
Intermediary in which a Commodity Contract is carried out for a Commodity
Customer.
"Commodity Contract" means a commodity futures contract, an option on a
commodity futures contract, a commodity option or any other contract that, in
each case, is (a) traded on or subject to the rules of a board of trade that
has been designated as a contract market for such a contract pursuant to the
federal commodities laws or (b) traded on a foreign commodity board of trade,
exchange or market, and is carried on the books of a Commodity Intermediary for
a Commodity Customer.
"Commodity Customer" means a Person for whom a Commodity Intermediary
carries a Commodity Contract on its books.
"Commodity Intermediary" means (a) a Person who is registered as a futures
commission merchant under the federal commodities laws or (b) a Person who in
the ordinary course of business provides clearance or settlement services for a
board of trade that has been designated as a contract market pursuant to
federal commodities laws.
"Computer Hardware and Software Collateral" means:
(a) all computer and other electronic data processing hardware,
integrated computer systems, central processing units, memory units,
display terminals, printers, features, computer elements, card readers,
tape drives, hard and soft disk drives, cables, electrical supply
hardware, generators, power equalizers, accessories and all peripheral
devices and other related computer hardware;
(b) all software programs (including both source code, object code
and all related applications and data files), whether now owned, licensed
or leased or hereafter acquired by the Grantor, designed for use on the
computers and electronic data processing
2
<PAGE>
hardware described in clause (a) above;
(c) all firmware associated therewith;
(d) all documentation (including flow charts, logic diagrams,
manuals, guides and specifications) with respect to such hardware,
software and firmware described in the preceding clauses (a) through (c);
and
(e) all rights with respect to all of the foregoing, including any
and all copyrights, licenses, options, warranties, service contracts,
program services, test rights, maintenance rights, support rights,
improvement rights, renewal rights and indemnifications and any
substitutions, replacements, additions or model conversions of any of the
foregoing.
"Control Agreement" means an agreement in form and substance satisfactory
to the Administrative Agent which provides for the Administrative Agent to have
"control" (as defined in Section 8-106 of the U.C.C., as such term relates to
Investment Property (other than certificated Securities or Commodity
Contracts), or as used in Section 9-115(e) of the U.C.C., as such term relates
to Commodity Contracts).
"Copyright Collateral" means all copyrights of the Grantor, whether
statutory or common law, registered or unregistered, now or hereafter in force
throughout the world including all of the Grantor's right, title and interest
in and to all copyrights registered in the United States Copyright Office or
anywhere else in the world and also including the copyrights referred to in
Item A of Schedule IV attached hereto, and all applications for registration
thereof, whether pending or in preparation, all copyright licenses, including
each copyright license referred to in Item B of Schedule IV attached hereto,
the right to sue for past, present and future infringements of any thereof, all
rights corresponding thereto throughout the world, all extensions and renewals
of any thereof and all proceeds of the foregoing, including licenses,
royalties, income, payments, claims, damages and proceeds of suit.
"Credit Agreement" is defined in the first recital.
"Distributions" means all stock dividends, liquidating dividends, shares
of stock resulting from (or in connection with the exercise of) stock splits,
reclassifications, warrants, options, non-cash dividends, mergers,
consolidations, and all other distributions (whether similar or dissimilar to
the foregoing) on or with respect to any Securities constituting Collateral,
but shall not include Dividends.
"Dividends" means cash dividends and cash distributions with respect to
any Securities constituting Collateral made in the ordinary course of business
and not a liquidating dividend.
"Entitlement Holder" means a Person identified in the records of a
Securities Intermediary as the Person having a Security Entitlement against the
Securities Intermediary. If a Person
3
<PAGE>
acquires a Security Entitlement by virtue of Section 8-501(b)(2) or (3) of the
U.C.C., such Person is the Entitlement Holder.
"Equipment" is defined in clause (d) of Section 2.1.
"Financial Asset" means (a) a Security, (b) an obligation of a Person or a
share, participation or other interest in a Person or in property or an
enterprise of a Person, which is, or is of a type, dealt with in or traded on
financial markets, or which is recognized in any area in which it is issued or
dealt in as a medium for investment or (c) any property that is held by a
Securities Intermediary for another Person in a Securities Account if the
Securities Intermediary has expressly agreed with the other Person that the
property is to be treated as a Financial Asset under Article 8 of the U.C.C. As
the context requires, the term Financial Asset shall mean either the interest
itself or the means by which a Person's claims to it is evidenced, including a
certificated or an uncertificated Security, a certificate representing a
Security or a Security Entitlement.
"Grantor" is defined in the preamble.
"Intellectual Property Collateral" means, collectively, the Computer
Hardware and Software Collateral, the Copyright Collateral, the Patent
Collateral, the Trademark Collateral and the Trade Secrets Collateral.
"Intercompany Note" means, with respect to the Grantor, as the payee
thereunder, a promissory note substantially in the form of Exhibit A hereto
(with such modifications as the Administrative Agent may consent to, such
consent not to be unreasonably withheld), which promissory note shall evidence
all intercompany loans which may be made from time to time by the Grantor to
any of its Subsidiaries as the maker of such promissory note, as such
promissory note, in accordance with Section 4.2.4, is amended, modified or
supplemented from time to time, together with any promissory note of such maker
taken in extension or renewal thereof or substitution therefor.
"Investment Property" means all Securities (whether certificated or
uncertificated), Security Entitlements, Securities Accounts, Commodity
Contracts and Commodity Accounts of the Grantor, whether now owned or hereafter
acquired by the Grantor.
"Inventory" is defined in clause (e) of Section 2.1
"Lender" and "Lenders" are defined in the first recital.
"Patent Collateral" means:
(a) all letters patent and applications for letters patent throughout
the world, including all patent applications in preparation for filing
anywhere in the world and
4
<PAGE>
including each patent and patent application referred to in Item A of
Schedule II attached hereto;
(b) all reissues, divisions, continuations, continuations-in-part,
extensions, renewals and reexaminations of any of the items described in
clause (a);
(c) all patent licenses, including each patent license referred to in
Item B of Schedule II attached hereto; and
(d) all proceeds of, and rights associated with, the foregoing
(including license royalties and proceeds of infringement suits), the
right to sue third parties for past, present or future infringements of
any patent or patent application, including any patent or patent
application referred to in Item A of Schedule II attached hereto, and for
breach or enforcement of any patent license, including any patent license
referred to in Item B of Schedule II attached hereto, and all rights
corresponding thereto throughout the world.
"Perfection Certificate" means a perfection certificate substantially in
the from of Exhibit E hereto.
"Receivables" is defined in clause (f) of Section 2.1.
"Related Contracts" is defined in clause (f) of Section 2.1.
"Secured Party" means, as the context may require, each Lender, the Issuer
and each Agent and each of their respective successors, transferees and
assigns.
"Secured Obligations" is defined in Section 2.2.
"Securities" means any obligations of an issuer or any shares,
participations, or other interests in a Person or in property or an enterprise
of a Person which (a) are represented by a certificate representing a security
in bearer or registered form, or the transfer of which may be registered upon
books maintained for that purpose by or on behalf of such issuer, (b) are one
of a class or series or by its terms is divisible into a class or series of
shares, participations, interests or obligations and (c) (i) are, or are of a
type, dealt with or traded on securities exchanges or securities markets or
(ii) are a medium for investment and by their terms expressly provide that they
are a security governed by Article 8 of the U.C.C.
"Securities Account" means an account to which a Financial Asset is or may
be credited in accordance with an agreement under which the Person maintaining
the account undertakes to treat the Person for whom the account is maintained
as entitled to exercise rights that comprise the Financial Asset.
"Securities Act" is defined in Section 6.2.
5
<PAGE>
"Security Entitlements" means the rights and property interests of an
Entitlement Holder with respect to a Financial Asset.
"Security and Pledge Agreement" is defined in the preamble.
"Security Intermediary" means (a) a clearing corporation or (b) a Person,
including a bank or broker, that in the ordinary course of its business
maintains securities accounts for others and is acting in that capacity.
"Sub-Agent" means a bank, savings and loan association, credit union or
other similar financial institution that (i) is reasonably acceptable to the
Syndication Agent and (ii) has delivered to the Administrative Agent an
executed Cash Collateral Agreement.
"Trademark Collateral" means:
(a) all trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, service marks,
certification marks, collective marks, logos, other source of business
identifiers, prints and labels on which any of the foregoing have appeared
or appear, designs and general intangibles of a like nature (all of the
foregoing items in this clause (a) being collectively called a
"Trademark"), now existing anywhere in the world or hereafter adopted or
acquired, whether currently in use or not, all registrations and
recordings thereof and all applications in connection therewith, whether
pending or in preparation for filing, including registrations, recordings
and applications in the United States Patent and Trademark Office or in
any office or agency of the United States of America or any State thereof
or any foreign country, including those referred to in Item A of Schedule
III attached hereto;
(b) all Trademark licenses, including each Trademark license referred
to in Item B of Schedule III attached hereto;
(c) all reissues, extensions or renewals of any of the items
described in clause (a) and (b);
(d) all of the goodwill of the business connected with the use of,
and symbolized by the items described in, clauses (a) and (b); and
(e) all proceeds of, and rights associated with, the foregoing,
including any claim by the Grantor against third parties for past, present
or future infringement or dilution of any Trademark, Trademark
registration or Trademark license, including any Trademark, Trademark
registration or Trademark license referred to in Item A and Item B of
Schedule III attached hereto, or for any injury to the goodwill associated
with the use of any such Trademark or for breach or enforcement of any
Trademark license.
6
<PAGE>
"Trade Secrets Collateral" means all common law and statutory trade
secrets and all other confidential or proprietary or useful information and all
know-how obtained by or used in or contemplated at any time for use in the
business of the Grantor (all of the foregoing being collectively called a
"Trade Secret"), whether or not such Trade Secret has been reduced to a writing
or other tangible form, including all documents and things embodying,
incorporating or referring in any way to such Trade Secret, all Trade Secret
licenses, including each Trade Secret license referred to in Schedule V
attached hereto, and including the right to sue for and to enjoin and to
collect damages for the actual or threatened misappropriation of any Trade
Secret and for the breach or enforcement of any such Trade Secret license.
"U.C.C." means the Uniform Commercial Code, as in effect from time to time
in the State of New York.
SECTION 1.2. Credit Agreement Definitions. Unless otherwise defined herein
or the context otherwise requires, terms used in this Security and Pledge
Agreement, including its preamble and recitals, have the meanings provided in
the Credit Agreement.
SECTION 1.3. U.C.C. Definitions. Unless otherwise defined herein or in the
Credit Agreement or the context otherwise requires, terms for which meanings
are provided in the U.C.C. are used in this Security and Pledge Agreement,
including its preamble and recitals, with such meanings.
ARTICLE II
SECURITY INTEREST
SECTION 2.1. Grant of Security. The Grantor hereby assigns, pledges,
hypothecates, charges, mortgages, delivers, and transfers to the Administrative
Agent, for its benefit and the ratable benefit of each of the Secured Parties,
and hereby grants to the Administrative Agent, for its benefit and the ratable
benefit of each of the Secured Parties, a security interest in all of the
following, whether now or hereafter existing or acquired by the Grantor (the
"Collateral"):
(a) all Intercompany Notes in which the Grantor has an interest
(including each Intercompany Note described in Item A of Schedule I
hereto);
(b) all payments of principal, interest and other payments and rights
with respect to each Intercompany Note in which the Grantor has an
interest;
(c) all Investment Property in which the Grantor has an interest
(including the Securities of each issuer described in Item B of Schedule I
hereto);
7
<PAGE>
(d) all equipment in all of its forms of the Grantor, wherever
located, including all parts thereof and all accessions, additions,
attachments, improvements, substitutions and replacements thereto and
therefor and all accessories related thereto (any and all of the foregoing
being the "Equipment");
(e) all inventory in all of its forms of the Grantor, wherever
located, including
(i) all raw materials and other work in process therefor,
finished goods thereof, and materials used or consumed in the
manufacture or production thereof,
(ii) all goods in which the Grantor has an interest in mass or a
joint or other interest or right of any kind (including goods in
which the Grantor has an interest or right as consignee), and
(iii) all goods which are returned to or repossessed by the
Grantor,
and all accessions thereto, products thereof and documents therefor (any
and all such inventory, materials, goods, accessions, products and
documents being the "Inventory");
(f) all accounts, contracts, contract rights, chattel paper,
documents, instruments, and general intangibles (including tax refunds) of
the Grantor, whether or not arising out of or in connection with the sale
or lease of goods or the rendering of services, and all rights of the
Grantor now or hereafter existing in and to all security agreements,
guaranties, leases and other contracts securing or otherwise relating to
any such accounts, contracts, contract rights, chattel paper, documents,
instruments, and general intangibles (any and all such accounts,
contracts, contract rights, chattel paper, documents, instruments, and
general intangibles being the "Receivables", and any and all such security
agreements, guaranties, leases and other contracts being the "Related
Contracts");
(g) in furtherance of, and not in limitation of, clause (f), any
Nextel Operating Agreement to which the Grantor is a party and the
Management Agreement (as amended or modified, an "Assigned Agreement"),
together with (i) all rights and benefits (whether monetary or otherwise)
of the Grantor to receive benefits due and to become due under or pursuant
to each Assigned Agreement, (ii) all rights of the Grantor to receive
proceeds of any insurance, indemnity, warranty, guaranty or collateral
security with respect to any Assigned Agreement, (iii) all claims of the
Grantor for damages arising out of or for breach or default under any
Assigned Agreement, (iv) all rights of the Grantor to terminate any
Assigned Agreement, to perform thereunder and to compel performance and
otherwise exercise all remedies thereunder and (v) to the extent not
included in the foregoing, all proceeds of any and all of the foregoing;
(h) all Intellectual Property Collateral of the Grantor;
8
<PAGE>
(i) the Cash Account, the Collateral Account and each lock box of the
Grantor (including all cash, checks, drafts, notes, bills of exchange,
money orders and other like instruments, if any, now owned or hereafter
acquired, held therein (or in sub-accounts thereof) and all certificates
and instruments, if any, from time to time representing or evidencing such
investments, and all interest, earnings and proceeds in respect thereof);
(j) all books, records, writings, data bases, information and other
property relating to, used or useful in connection with, evidencing,
embodying, incorporating or referring to, any of the foregoing in this
Section 2.1;
(k) all of the Grantor's other property and rights of every kind and
description and interests therein; and
(l) all products, offspring, rents, issues, profits, returns, income
and proceeds of and from any and all of the foregoing Collateral
(including proceeds which constitute property of the types described in
clauses (a) through (k), and, to the extent not otherwise included, all
payments under insurance (whether or not the Administrative Agent is the
loss payee thereof), or any indemnity, warranty or guaranty, payable by
reason of loss or damage to or otherwise with respect to any of the
foregoing Collateral).
Notwithstanding the foregoing, "Collateral" shall not include any general
intangibles or other rights described in clause (f) above arising under any
contracts, instruments, licenses, permits or leases described in such clause as
to which the grant of a security interest would constitute a violation of a
valid and enforceable restriction in favor of a third party on such grant,
unless and until any required consents shall have been obtained. The Grantor
agree to use its best efforts to obtain any such required consent.
SECTION 2.2. Security for Obligations. This Security and Pledge Agreement
secures the payment in full in cash of all monetary Obligations of the Borrower
now or hereafter existing under the Credit Agreement, the Notes and each other
Loan Document to which the Borrower is or may become a party, whether for
principal, interest, costs, fees, expenses or otherwise, and all obligations of
the Borrower and each other Obligor now or hereafter existing under this
Security and Pledge Agreement and each other Loan Document to which the
Borrower or such other Obligor is or may become a party (all such obligations
of such Borrower and such other Obligor being the "Secured Obligations").
SECTION 2.3. Delivery of Certificated Securities and Intercompany Notes.
All Collateral comprised of Intercompany Notes and certificated Securities
shall be delivered to and held by or on behalf of (and, in the case of the
Intercompany Notes, endorsed to the order of) the Administrative Agent pursuant
hereto, shall be in suitable form for transfer by delivery, and shall be
accompanied by all necessary instruments of transfer or assignment, duly
executed in blank.
SECTION 2.4. Dividends on Securities and Payments on Intercompany Notes.
In the event that any Dividend is to be paid on any Security that constitutes
Collateral or any payment of
9
<PAGE>
principal or interest is to be made on any Intercompany Note at a time when no
Default of the nature referred to in Section 8.1.9 of the Credit Agreement or
Event of Default has occurred and is continuing or would result therefrom, such
Dividend or payment may be paid directly to and retained by the Grantor. If any
such Default or Event of Default has occurred and is continuing, then any such
Dividend or payment shall be paid directly to the Administrative Agent.
SECTION 2.5. Continuing Security Interest; Transfer of Notes. This
Security and Pledge Agreement shall create a continuing security interest in
the Collateral and shall
(a) remain in full force and effect until payment in full in cash of
all Secured Obligations then due, the termination or expiration of all
Letters of Credit and the termination of all Commitments,
(b) be binding upon the Grantor, its successors, transferees and
assigns, and
(c) inure, together with the rights and remedies of the
Administrative Agent hereunder, to the benefit of the Administrative Agent
and each other Secured Party.
Without limiting the generality of the foregoing clause (c), any Lender may
assign or otherwise transfer (in whole or in part) any Note or Credit Extension
held by it to any other Person, and such other Person shall thereupon become
vested with all the rights and benefits in respect thereof granted to such
Lender under any Loan Document (including this Security and Pledge Agreement)
or otherwise, subject, however, to any contrary provisions in such assignment
or transfer, and to the provisions of Section 10.11 and Article IX of the
Credit Agreement. Upon (i) the sale, transfer or other disposition of
Collateral in accordance with the Credit Agreement or (ii) the payment in full
in cash of all Secured Obligations then due, the termination or expiration of
all Letters of Credit and the termination of all Commitments, the security
interests granted herein shall automatically terminate with respect to (x) such
Collateral (in the case of clause (i)) or (y) all Collateral (in the case of
clause (ii)). Upon any such sale, transfer, disposition or termination, the
Administrative Agent will, at the Grantor's sole expense, deliver to the
Grantor, without any representations, warranties or recourse of any kind
whatsoever, all applicable certificated Securities and all applicable
Intercompany Notes, together with all other applicable Collateral held by the
Administrative Agent hereunder, and execute and deliver to the Grantor such
documents as the Grantor shall reasonably request to evidence such termination.
SECTION 2.6. Grantor Remains Liable. Anything herein to the contrary
notwithstanding
(a) the Grantor shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein, and
shall perform all of its duties and obligations under such contracts and
agreements to the same extent as if this Security and Pledge Agreement had
not been executed,
(b) the exercise by the Administrative Agent of any of its rights
hereunder shall
10
<PAGE>
not release the Grantor from any of its duties or obligations under any
such contracts or agreements included in the Collateral, and
(c) neither the Administrative Agent nor any other Secured Party
shall have any obligation or liability under any such contracts or
agreements included in the Collateral by reason of this Security and
Pledge Agreement, nor shall the Administrative Agent or any other Secured
Party be obligated to perform any of the obligations or duties of the
Grantor thereunder or to take any action to collect or enforce any claim
for payment assigned hereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties. The Grantor represents and
warrants to each Secured Party as set forth in this Article III.
SECTION 3.2. As to Securities. All Securities issued by a Subsidiary of
the Grantor are duly authorized and validly issued, fully paid, and
non-assessable, and constitute all of the issued and outstanding Securities of
such Subsidiary.
SECTION 3.3. As to Intercompany Notes. In the case of each Intercompany
Note, all of such Intercompany Notes have been duly authorized, executed,
endorsed, issued and delivered, and are the legal, valid and binding obligation
of the issuers thereof, and are not in default.
SECTION 3.4. Location of Collateral, etc. All of the lock boxes, Equipment
and Inventory of the Grantor are respectively located at the places specified
in Section 3 of the Perfection Certificate delivered by the Grantor. None of
the Equipment and Inventory has, within the four months preceding the date of
this Security and Pledge Agreement (if then owned by the Grantor), been located
at any place other than the places specified in Section 3 of the Perfection
Certificate delivered by the Grantor. The place of business and chief executive
office of the Grantor and the office where the Grantor keeps its records
concerning the Receivables, and all originals of all chattel paper which
evidence Receivables is ________. The Grantor has no trade names. During the
four months preceding the date hereof, the Grantor has not been known by any
legal name nor has it had a federal taxpayer identification number different
from the ones set forth in Section 1(a) and 2(a), respectively, of the
Perfection Certificate delivered by the Grantor, nor has the Grantor been the
subject of any merger or other corporate reorganization, except as disclosed
pursuant to Section 1(c) of the Perfection Certificate delivered by the
Grantor. All Receivables evidenced by a promissory note or other instrument,
negotiable document or chattel paper have been duly endorsed and accompanied by
duly executed instruments of transfer or assignment, all in form and substance
satisfactory to the Administrative Agent and delivered and pledged to the
Administrative Agent pursuant to Section 4.10. If the Grantor is a party to any
Federal, state or local government contract, the Grantor shall duly comply with
the terms of the
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Federal Assignment of Claims Act, to the extent required herein to perfect the
first priority security interest in favor of the Administrative Agent.
SECTION 3.5. Ownership, No Liens, etc. The Grantor owns its Collateral
free and clear of any Lien except for the security interest created by this
Security and Pledge Agreement and, except in the case of Collateral not
consisting of Securities and Intercompany Notes, as permitted by the Credit
Agreement. No effective financing statement or other instrument similar in
effect covering all or any part of the Collateral is on file in any recording
office, except such as may have been filed in favor of the Administrative Agent
relating to this Security and Pledge Agreement or as have been filed in
connection with Liens permitted pursuant to Section 7.2.3 of the Credit
Agreement.
SECTION 3.6. Possession and Control. The Grantor has exclusive possession
and control of its Equipment and Inventory.
SECTION 3.7. Negotiable Documents, Instruments and Chattel Paper. The
Grantor has, contemporaneously herewith, delivered to the Administrative Agent
possession of all originals of all negotiable documents, instruments and
chattel paper currently owned or held by the Grantor (duly endorsed in blank,
if requested by the Administrative Agent).
SECTION 3.8.Intellectual Property Collateral. With respect to any
Intellectual Property Collateral the loss, impairment or infringement of which
might have a Material Adverse Effect:
(a) such Intellectual Property Collateral is subsisting and has not
been adjudged invalid or unenforceable, in whole or in part;
(b) such Intellectual Property Collateral is valid and enforceable;
(c) the Grantor has made all necessary filings and recordations to
protect its interest in such Intellectual Property Collateral, including
recordations of all of its interests in the Patent Collateral and
Trademark Collateral in the United States Patent and Trademark Office and
in corresponding offices throughout the world and its claims to the
Copyright Collateral in the United States Copyright Office and in
corresponding offices throughout the world;
(d) the Grantor is the exclusive owner of the entire and unencumbered
right, title and interest in and to such Intellectual Property Collateral
and no claim has been made that the use of such Intellectual Property
Collateral does or may violate the asserted rights of any third party; and
(e) the Grantor has performed and will continue to perform all acts
and has paid and will continue to pay all required fees and taxes to
maintain each and every such item of Intellectual Property Collateral in
full force and effect throughout the world, as
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applicable.
The Grantor owns directly or is entitled to use by license or otherwise, all
patents, Trademarks, Trade Secrets, copyrights, mask works, licenses,
technology, know-how, processes and rights with respect to any of the foregoing
used in, necessary for or of importance to the conduct of the Grantor's
business.
SECTION 3.9. Validity, etc. This Security and Pledge Agreement creates a
valid first priority security interest in the Collateral (subject to Section
9-306 of the U.C.C. and Liens permitted pursuant to Section 7.2.3 of the Credit
Agreement) securing the payment of the Secured Obligations, and
(a) in the case of Collateral comprised of certificated Securities or
instruments, upon the delivery of such Collateral to the Administrative
Agent, such security interest will be a valid first priority perfected
security interest;
(b) in the case of Collateral comprised of uncertificated Securities
and other Investment Property (other than certificated Securities), upon
the Administrative Agent obtaining "control" (as defined in Section 8-106
of the U.C.C., as such term relates to Investment Property (other than
certificated Securities or Commodity Contracts), or as used in Section
9-115(e) of the U.C.C., as such term relates to Commodity Contracts) of
such Collateral and the filing of the Uniform Commercial Code financing
statements delivered by the Grantor having an interest in such Collateral
to the Administrative Agent with respect to such Collateral, such security
interest will be a valid first priority perfected security interest; and
(c) in the case of all other Collateral in which a security interest
can be perfected by the filing of the Uniform Commercial Code financing
statements, upon the filing of such financing statements delivered by the
Grantor to the Administrative Agent with respect to such Collateral in the
filing offices set forth in Schedule I to the Perfection Certificate, such
security interest will be a valid first priority perfected security
interest.
The Grantor has filed all Uniform Commercial Code financing statements referred
to above in the appropriate offices therefor (or has provided the
Administrative Agent with copies thereof suitable for filing in such offices)
and has taken all of the other actions referred to above necessary to create
perfected, first-priority security interests in the applicable Collateral.
SECTION 3.10. Authorization, Approval, etc. Except as have been obtained
or made and are in full force and effect (or otherwise provided for to the
satisfaction of the Administrative Agent), no authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required either
(a) for the grant by the Grantor of the security interest granted
hereby, the pledge
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by the Grantor of any Collateral pursuant hereto or for the execution,
delivery and performance of this Security and Pledge Agreement by the
Grantor,
(b) for the perfection of or the exercise by the Administrative Agent
of its rights and remedies hereunder, or
(c) for the exercise by the Administrative Agent of the voting or
other rights provided for in this Security and Pledge Agreement, or,
except, with respect to any Securities issued by a Subsidiary of the
Grantor, as may be required in connection with a disposition of such
Securities by laws affecting the offering and sale of securities generally
or the rules and regulations of the FCC, the remedies in respect of the
Collateral pursuant to this Security and Pledge Agreement.
SECTION 3.11. Compliance with Laws. The Grantor is in compliance with the
requirements of all applicable laws (including the provisions of the Fair Labor
Standards Act), rules, regulations and orders of every governmental authority,
the non-compliance with which could reasonably be expected to have a Material
Adverse Effect or which could reasonably be expected to materially adversely
affect the value of the Collateral or the worth of the Collateral as collateral
security.
ARTICLE IV
COVENANTS
SECTION 4.1. Certain Covenants. The Grantor covenants and agrees that,
until payment in full of all Secured Obligations then due, the termination or
expiration of all Letters of Credit and the termination of all Commitments, the
Grantor will, unless the Required Lenders shall otherwise consent in writing,
perform, comply with and be bound by the obligations set forth in this Article
IV.
SECTION 4.2. As to Investment Property and Intercompany Notes; Etc.
SECTION 4.2.1. Certificated Securities. The Grantor shall cause each of
its Subsidiaries to evidence all equity interests in such Subsidiaries by
certificated Securities. The Grantor shall deliver certificates evidencing all
of the issued and outstanding shares of Capital Stock of each Person that is a
direct Subsidiary of the Grantor from to time (including, following the License
Transfer, all of the issued and outstanding shares of Capital Stock of the
Nextel License Subsidiary), which certificates shall be accompanied by undated
stock powers duly executed in blank.
SECTION 4.2.2. Investment Property (other than Certificated Securities).
With respect to any Investment Property (other than certificated Securities) of
the Grantor, the Grantor shall
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(a) cause a Control Agreement relating to such Investment Property to be
executed and delivered in favor of the Administrative Agent and (b) deliver
Uniform Commercial Code financing statements which when filed will result in
the Administrative Agent having a first priority perfected security interest in
such Investment Property.
SECTION 4.2.3. Stock Powers, etc. The Grantor agrees that all certificated
Securities constituting Collateral delivered by the Grantor pursuant to this
Security and Pledge Agreement will be accompanied by duly executed undated
blank stock powers or other equivalent instruments of transfer acceptable to
the Administrative Agent. The Grantor will, from time to time upon the request
of the Administrative Agent, promptly deliver to the Administrative Agent such
stock powers, instruments, and similar documents, satisfactory in form and
substance to the Administrative Agent, with respect to such Collateral as the
Administrative Agent may reasonably request and will, from time to time upon
the request of the Administrative Agent after the occurrence of any Event of
Default, promptly transfer any Securities constituting Collateral into the name
of any nominee designated by the Administrative Agent.
SECTION 4.2.4. Continuous Pledge. Subject to any sale or other transfer of
Collateral in accordance with Section 7.2.9 of the Credit Agreement or until
such time as all Secured Obligations then due have been paid in full, all
Letters of Credit have terminated or expired and all Commitments have
terminated, the Grantor will, at all times, keep pledged to the Administrative
Agent pursuant hereto on a first priority perfected basis all Investment
Property constituting Collateral, all Dividends and Distributions with respect
thereto, all Intercompany Notes, all interest, principal and other proceeds
received by the Administrative Agent with respect to the Intercompany Notes,
and all other Collateral and other securities, instruments, proceeds, and
rights from time to time received by or distributable to the Grantor in respect
of any of the foregoing Collateral and will not permit any Subsidiary of the
Grantor to issue any Securities which shall not have been immediately duly
pledged hereunder on a first priority perfected basis.
SECTION 4.2.5. Voting Rights; Dividends, etc. The Grantor agrees:
(a) after any Default of the nature referred to in Section 8.1.9 of
the Credit Agreement or any Event of Default shall have occurred and be
continuing, promptly upon receipt of notice thereof by the Grantor and
without any request therefor by the Administrative Agent, to deliver
(properly endorsed where required hereby or requested by the
Administrative Agent) to the Administrative Agent all Dividends,
Distributions, all interest, all principal, all other cash payments, and
all proceeds of the Collateral, all of which shall be held by the
Administrative Agent as additional Collateral for use in accordance with
clause (b) of Section 6.1; and
(b) after any Event of Default shall have occurred and be continuing
and the Administrative Agent has notified the Grantor of the
Administrative Agent's intention to exercise its voting power under this
Section 4.2.5(b)
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(i) subject to FCC approval, the Administrative Agent may
exercise (to the exclusion of the Grantor) the voting power and all
other incidental rights of ownership with respect to any Securities
or other Investment Property constituting Collateral and the Grantor
hereby grants the Administrative Agent an irrevocable proxy,
exercisable under such circumstances, to vote such Securities and
such other Collateral; and
(ii) promptly to deliver to the Administrative Agent such
additional proxies and other documents as may be necessary to allow
the Administrative Agent to exercise such voting power.
All Dividends, Distributions, interest, principal, cash payments, and proceeds
which may at any time and from time to time be held by the Grantor but which
the Grantor is then obligated to deliver to the Administrative Agent, shall,
until delivery to the Administrative Agent, be held by the Grantor separate and
apart from its other property in trust for the Administrative Agent. The
Administrative Agent agrees that unless an Event of Default shall have occurred
and be continuing and the Administrative Agent shall have given the notice
referred to in Section 4.2.5(b), the Grantor shall have the exclusive voting
power with respect to any Securities constituting Collateral and the
Administrative Agent shall, upon the written request of the Grantor, promptly
deliver such proxies and other documents, if any, as shall be reasonably
requested by the Grantor which are necessary to allow the Grantor to exercise
voting power with respect to any such Securities; provided, however, that no
vote shall be cast, or consent, waiver, or ratification given, or action taken
by the Grantor that would impair any such Collateral or be inconsistent with or
violate any provision of the Credit Agreement or any other Loan Document
(including this Security and Pledge Agreement).
SECTION 4.2.6. Amendment of Organic Documents. The Grantor will not amend,
supplement or otherwise modify, or permit, consent or suffer to occur any
amendment, supplement or modification of any terms or provisions contained in,
or applicable to, any Organic Document of any issuer of any Security comprising
the Collateral in which it has an equity interest if the effect thereof is to
impair, or is in any manner adverse to, the rights or interests of the
Administrative Agent or any other Secured Party hereunder or under the Credit
Agreement or any other Loan Document, without the prior written consent of the
Administrative Agent and the Required Lenders.
SECTION 4.3. As to Equipment and Inventory. The Grantor hereby agrees that
it shall
(a) keep all the Equipment and Inventory (other than Inventory sold
in the ordinary course of business) at the places therefor specified in
Section 3.4 or, upon 30 days' prior written notice to the Administrative
Agent, at such other places in a jurisdiction where all representations
and warranties set forth in Article III (including Section 3.9) shall be
true and correct, and all action required pursuant to the first sentence
of Section 4.10 shall have been taken with respect to the Equipment and
Inventory;
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(b) cause the Equipment to be maintained and preserved in the same
condition, repair and working order as when new, ordinary wear and tear
excepted, and in accordance with any manufacturer's manual; and forthwith,
or in the case of any loss or damage to any such Equipment, as quickly as
practicable after the occurrence thereof, make or cause to be made all
repairs, replacements, and other improvements in connection therewith
which are necessary or desirable to such end; and promptly furnish to the
Administrative Agent a statement respecting any loss or damage to any of
such Equipment which could reasonably be expected to have a Material
Adverse Effect; and
(c) pay promptly when due all property and other material taxes,
assessments and governmental charges or levies imposed upon, and all
claims (including claims for labor, materials and supplies) against, the
Equipment and Inventory, except to the extent the validity thereof is
being contested in good faith by appropriate proceedings and for which
adequate reserves in accordance with GAAP have been set aside.
SECTION 4.4. As to Receivables.
(a) The Grantor shall keep its chief executive office and the office
where it keeps its records concerning the Receivables, and all originals
of all chattel paper which evidences Receivables, located at the address
set forth in Section 3.4 and shall keep its other places of business at
the addresses set forth in Section 3 of the Perfection Certificate
delivered by the Grantor, or, upon 30 days' prior written notice to the
Administrative Agent, at such other locations in a jurisdiction where all
actions required by the first sentence of Section 4.10 shall have been
taken with respect to the Receivables and other Collateral; not change its
name or federal taxpayer identification number except upon 30 days' prior
written notice to the Administrative Agent; hold and preserve such records
and chattel paper; and permit representatives of the Administrative Agent
at any time during normal business hours to inspect and make abstracts
from such records and chattel paper. In addition, the Grantor shall give
the Administrative Agent a supplement to such Perfection Certificate on
each date a Compliance Certificate is required to be delivered to the
Administrative Agent under the Credit Agreement, which shall set forth any
changes to the information set forth in Section 3.4.
(b) The Grantor shall have the right to collect all Receivables so
long as no Default of the nature set forth in Section 8.1.9 of the Credit
Agreement nor any Event of Default shall have occurred and be continuing.
(c) After the occurrence and during the continuance of a Default of
the nature set forth in Section 8.1.9 of the Credit Agreement or an Event
of Default, upon written notice by the Administrative Agent to the Grantor
pursuant to this Section 4.4(c), all proceeds of Collateral received by
the Grantor shall be delivered in kind for deposit to an account
maintained with the Administrative Agent (the "Collateral Account").
Proceeds of
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Collateral (other than Cash Collateral) received by the Grantor shall,
prior to deposit in the Collateral Account, be held separate and apart
from, and not commingled with, any other property and in express trust for
the benefit of the Administrative Agent until delivery thereof is made to
the Collateral Account.
(d) The Administrative Agent shall have the right to apply any amount
in the Collateral Account to the payment of any Secured Obligations which
are due and payable or payable upon demand or to the payment of any
Secured Obligations at any time that an Event of Default shall have
occurred and be continuing.
(e) With respect to the Collateral Account, it is hereby confirmed
and agreed that (i) deposits in each Collateral Account are subject to a
security interest as contemplated hereby, (ii) the Collateral Account
shall be under the sole dominion and control of the Administrative Agent
and (iii) the Administrative Agent shall have the sole right of withdrawal
over the Collateral Account.
SECTION 4.5. As to Collateral.
(a) Until the occurrence and continuance of a Default of the nature
set forth in clauses (a) through (d) of Section 8.1.9 of the Credit
Agreement or an Event of Default, and such time as the Administrative
Agent shall notify the Grantor of the revocation of such power and
authority, the Grantor may in the ordinary course of its business (except
as otherwise permitted under the Credit Agreement), at its own expense,
process, store, transport, sell, lease or furnish under the contracts of
service any of the Inventory normally held by the Grantor for such
purpose, and use and consume, in the ordinary course of its business
(except as otherwise permitted under the Credit Agreement), any raw
materials, work in process or materials normally held by the Grantor for
such purpose, will, at its own expense, endeavor to collect, as and when
due, all amounts due with respect to any Collateral, including the taking
of such action with respect to such collection as the Administrative Agent
may reasonably request following the occurrence of a Default of the nature
set forth in clauses (a) through (d) of Section 8.1.9 of the Credit
Agreement or an Event of Default or, in the absence of such request, as
the Grantor may deem advisable, and may grant, in the ordinary course of
business (except as otherwise permitted under the Credit Agreement), to
any party obligated on any of the Collateral (other than Cash Collateral),
any rebate, refund or allowance to which such party may be lawfully
entitled, and may accept, in connection therewith, the return of goods,
the sale or lease of which shall have given rise to such Collateral. The
Administrative Agent, however, may, at any time following a Default of the
nature set forth in clauses (a) through (d) of Section 8.1.9 of the Credit
Agreement or an Event of Default, whether before or after any revocation
of such power and authority or the maturity of any of the Secured
Obligations, notify any parties obligated on any of the Collateral to make
payment to the Administrative Agent of any amounts due or to become due
thereunder and enforce collection of any of the Collateral by suit or
otherwise and
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surrender, release, or exchange all or any part thereof, or compromise or
extend or renew for any period (whether or not longer than the original
period) any indebtedness thereunder or evidenced thereby. Upon request of
the Administrative Agent following a Default of the nature set forth in
Section 8.1.9 of the Credit Agreement or an Event of Default, the Grantor
will, at its own expense, notify any parties obligated on any of the
Collateral to make payment to the Administrative Agent of any amounts due
or to become due thereunder.
(b) Following a Default of the nature set forth in clauses (a)
through (d) of Section 8.1.9 of the Credit Agreement or an Event of
Default, the Administrative Agent is authorized to endorse, in the name of
the Grantor, any item, howsoever received by the Administrative Agent,
representing any payment on or other proceeds of any of the Collateral.
(c) Subject to Section 4.4(c), the Grantor shall have the right to
receive and retain all cash and cash equivalent proceeds of Collateral
(other than Cash Collateral) to be applied as permitted by the Loan
Documents.
SECTION 4.6. As to Intellectual Property Collateral. The Grantor covenants
and agrees to comply with the following provisions as such provisions relate to
any Intellectual Property Collateral of the Grantor:
(a) the Grantor shall not, unless the Grantor shall either (i)
reasonably and in good faith determine (and notice of such determination
shall have been delivered to the Administrative Agent) that any of the
Patent Collateral is of negligible economic value to the Grantor, or (ii)
have a valid business purpose to do otherwise, do any act, or omit to do
any act, whereby any of the Patent Collateral may lapse or become
abandoned or dedicated to the public or unenforceable;
(b) the Grantor shall not, and the Grantor shall not permit any of
its licensees to, unless the Grantor shall either (i) reasonably and in
good faith determine (and notice of such determination shall have been
delivered to the Administrative Agent) that any of the Trademark
Collateral is of negligible economic value to the Grantor, or (ii) have a
valid business purpose to do otherwise,
(A) fail to continue to use any of the Trademark Collateral in
order to maintain all of the Trademark Collateral in full force free
from any claim of abandonment for non-use,
(B) fail to maintain as in the past the quality of products and
services offered under all of the Trademark Collateral,
(C) fail to employ all of the Trademark Collateral registered
with any
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Federal or state or foreign authority with an appropriate notice of
such registration,
(D) adopt or use any other Trademark which is confusingly
similar or a colorable imitation of any of the Trademark Collateral,
(E) use any of the Trademark Collateral registered with any
Federal or state or foreign authority except for the uses for which
registration or application for registration of all of the Trademark
Collateral has been made, and
(F) do or permit any act or knowingly omit to do any act whereby
any of the Trademark Collateral may lapse or become invalid or
unenforceable;
(c) the Grantor shall not, unless the Grantor shall either reasonably
and in good faith determine (and notice of such determination shall have
been delivered to the Administrative Agent) that any of the Copyright
Collateral or any of the Trade Secrets Collateral is of negligible
economic value to the Grantor, or have a valid business purpose to do
otherwise, do or permit any act or knowingly omit to do any act whereby
any of the Copyright Collateral or any of the Trade Secrets Collateral may
lapse or become invalid or unenforceable or placed in the public domain
except upon expiration of the end of an unrenewable term of a registration
thereof;
(d) the Grantor shall notify the Administrative Agent immediately if
it knows, or has reason to know, that any application or registration
relating to any material item of the Intellectual Property Collateral may
become abandoned or dedicated to the public or placed in the public domain
or invalid or unenforceable, or of any adverse determination or
development (including the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark
Office, the United States Copyright Office or any foreign counterpart
thereof or any court) regarding the Grantor's ownership of any of the
Intellectual Property Collateral, its right to register the same or to
keep and maintain and enforce the same;
(e) in no event shall the Grantor or any of its agents, employees,
designees or licensees file an application for the registration of any
Intellectual Property Collateral with the United States Patent and
Trademark Office, the United States Copyright Office or any similar office
or agency in any other country or any political subdivision thereof,
unless it promptly informs the Administrative Agent, and upon request of
the Administrative Agent, executes and delivers any and all agreements,
instruments, documents and papers as the Administrative Agent may
reasonably request to evidence the Administrative Agent's security
interest in such Intellectual Property Collateral and the goodwill and
general intangibles of the Grantor relating thereto or represented
thereby;
(f) the Grantor shall take all necessary steps, including in any
proceeding before the United States Patent and Trademark Office, the
United States Copyright Office or any
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similar office or agency in any other country or any political subdivision
thereof, to maintain and pursue any application (and to obtain the
relevant registration) filed with respect to, and to maintain any
registration of, the Intellectual Property Collateral, including the
filing of applications for renewal, affidavits of use, affidavits of
incontestability and opposition, interference and cancellation proceedings
and the payment of fees and taxes (except to the extent that dedication,
abandonment or invalidation is permitted under the foregoing clauses (a),
(b) and (c)); and
(g) the Grantor shall, contemporaneously herewith, execute and
deliver to the Administrative Agent a Patent Security Agreement, Trademark
Security Agreement and Copyright Security Agreement in the forms of
Exhibit B, Exhibit C and Exhibit D hereto, and shall execute and deliver
to the Administrative Agent any other document required to acknowledge or
register or perfect the Administrative Agent's interest in any part of the
Intellectual Property Collateral.
SECTION 4.7. Insurance. The Grantor will maintain or cause to be
maintained with responsible insurance companies insurance with respect to its
business and properties (including the Equipment and Inventory) against such
casualties and contingencies and of such types and in such amounts as is
customary in the case of similar businesses and will furnish a certificate of a
reputable insurance broker setting forth the nature and extent of all insurance
maintained by the Grantor in accordance with this Section. Without limiting the
foregoing, the Grantor further agrees as follows:
(a) Each policy for property insurance shall show the Administrative
Agent as loss payee.
(b) Each policy for liability insurance shall show the Administrative
Agent as an additional insured.
(c) With respect to each life insurance policy (if any), the Grantor
shall, within thirty days of the date hereof or the date on which such
policy becomes effective, execute and deliver to the Administrative Agent
a collateral assignment, notice of which has been acknowledged in writing
by the insurer.
(d) Each insurance policy shall provide that at least 30 days' prior
written notice of cancellation or of lapse shall be given to the
Administrative Agent by the insured.
(e) The Grantor shall, if so requested by the Administrative Agent,
deliver to the Administrative Agent a copy of each insurance policy.
(f) Except to the extent otherwise permitted under the Credit
Agreement, all payments in respect of property insurance and life
insurance shall be deposited to the Collateral Account and if there shall
be no Collateral Account shall be paid to the Grantor.
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SECTION 4.8. Transfers and Other Liens. The Grantor shall not:
(a) sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except Inventory in the ordinary course
of business or as permitted by the Credit Agreement; or
(b) create or suffer to exist any Lien or other charge or encumbrance
upon or with respect to any of the Collateral to secure Indebtedness of
any Person or entity, except for the security interest created by this
Security and Pledge Agreement and except as permitted by the Credit
Agreement.
SECTION 4.9. Further Assurances, etc. The Grantor agrees that, from time
to time at its own expense, it will promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary
or desirable, or that the Administrative Agent may request, in order to
perfect, preserve and protect any security interest granted or purported to be
granted hereby or to enable the Administrative Agent to exercise and enforce
its rights and remedies hereunder with respect to any Collateral. Without
limiting the generality of the foregoing, the Grantor will
(a) if any Receivable shall be evidenced by a promissory note or
other instrument, negotiable document or chattel paper, deliver and pledge
to the Administrative Agent hereunder such promissory note, instrument,
negotiable document or chattel paper duly endorsed and accompanied by duly
executed instruments of transfer or assignment, all in form and substance
satisfactory to the Administrative Agent;
(b) execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices (including any
assignment of claim form under or pursuant to the federal assignment of
claims statute, 31 U.S.C. ss. 3726, any successor or amended version
thereof or any regulation promulgated under or pursuant to any version
thereof), as may be necessary or desirable, or as the Administrative Agent
may request, in order to perfect and preserve the security interests and
other rights granted or purported to be granted to the Administrative
Agent hereby;
(c) not enter into any agreement amending, supplementing, or waiving
any provision of any Intercompany Note (including any underlying
instrument pursuant to which such Intercompany Note is issued) or
compromising or releasing or extending the time for payment of any
obligation of the maker thereof without the prior written consent of the
Administrative Agent;
(d) promptly execute and deliver all further instruments and take all
further action, that may be necessary or desirable, or that the
Administrative Agent may reasonably request, in order to perfect and
protect any security interest granted or purported to be
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granted hereby or to enable the Administrative Agent to exercise and
enforce its rights and remedies hereunder with respect to any Collateral;
(e) not take or omit to take any action the taking or the omission of
which would result in any impairment or alteration of any obligation of
the maker of any Intercompany Note or other instrument constituting
Collateral; and
(f) furnish to the Administrative Agent, from time to time at the
Administrative Agent's request, statements and schedules further
identifying and describing the Collateral and such other reports in
connection with the Collateral as the Administrative Agent may reasonably
request, all in reasonable detail.
With respect to the foregoing and the grant of the security interest hereunder,
the Grantor hereby authorizes the Administrative Agent to file one or more
financing or continuation statements, and amendments thereto, relative to all
or any part of the Collateral without the signature of the Grantor where
permitted by law. A carbon, photographic or other reproduction of this Security
and Pledge Agreement or any financing statement covering the Collateral or any
part thereof shall be sufficient as a financing statement where permitted by
law.
SECTION 4.10. As to the Cash Account.
(a) The Grantor shall establish and maintain a Cash Account pursuant
to a Cash Collateral Agreement in the name of the Administrative Agent for
the benefit of the Secured Parties. This Security and Pledge Agreement
shall constitute the Cash Collateral Agreement with respect to any Cash
Account maintained with the Administrative Agent. The Grantor may maintain
a Cash Account which is not established with the Administrative Agent so
long as the Grantor shall have obtained an executed Cash Collateral
Agreement with respect to such Cash Account. The Cash Account shall be
funded with the proceeds of the Loans made on the Closing Date, and, at
all times until the earlier to occur of (i) the License Transfer and (ii)
395 days after the Closing Date, the aggregate balance of the Cash
Accounts shall not be less than the Required Balance.
(b) Each Cash Account shall be under the sole dominion and control of
the Administrative Agent, or a Sub-Agent acting on behalf of the
Administrative Agent, and the Administrative Agent, or a Sub-Agent acting
on behalf of the Administrative Agent, shall have the sole right of
withdrawal over such Cash Account; provided however, that, the Grantor
shall be permitted to withdraw or transfer all or any portion of the
amounts on deposit in such Cash Account upon prior notice thereof to the
Agents so long as after giving effect to any such withdrawal or transfer,
the amount on deposit in such Cash Account is not less than the Required
Balance.
(c) The Grantor, or a Sub-Agent acting on behalf of the
Administrative Agent, shall furnish the Administrative Agent with monthly
statements specifying the names and
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addresses of the financial institutions where each Cash Account is
maintained, the account numbers of each Cash Account, the amounts
withdrawn or transferred from, and the balances of, each Cash Account at
the close of business on the last day of such calendar month, and such
other information relating to such Cash Account at or such times as shall
be reasonably requested by the Administrative Agent. At any time and from
time to time, the Administrative Agent shall have the right, upon
reasonable advance notice to the Grantor and at reasonable intervals, to
make test verifications of each Cash Account in any manner and through any
medium that it reasonably considers advisable and the Grantor shall
furnish all such assistance and information as the Administrative Agent
may reasonably require in connection therewith. At any time and from time
to time, upon the Administrative Agent's reasonable request, at reasonable
intervals and at the expense of the Grantor, the Grantor shall cause
independent public accountants or others satisfactory to the
Administrative Agent to furnish to the Administrative Agent reports
showing reconciliations, test verifications of, and trial balances for,
the Cash Accounts.
(d) The Grantor shall instruct the Administrative Agent, or Sub-Agent
acting on behalf of the Administrative Agent, to invest funds on deposit
in any Cash Account from time to time, at the risk and expense of the
Grantor, in Cash Equivalent Investments as the Grantor shall select (or,
so long as any Event of Default shall have occurred and be continuing, as
the Administrative Agent may in its discretion select). In the event that
the aggregate cash balance in the Cash Accounts as of any day is less than
the Required Balance, the Administrative Agent may (but shall not be
obligated to) liquidate the Cash Equivalent Investments held in any Cash
Account in such manner as the Administrative Agent may deem necessary in
order to obtain cash sufficient to maintain the Required Balance and to
pay any expenses and charges incurred in connection with effecting any
such liquidation, which expenses and charges the Administrative Agent
shall be authorized to pay with cash on deposit in the Cash Accounts.
(e) The Grantor agrees to pay any and all reasonable fees, costs and
expenses which the Administrative Agent incurs in connection with
establishing and maintaining the Cash Accounts.
(f) The Grantor's right to withdraw amounts on deposit in the Cash
Accounts (except in respect of interest, so long as the aggregate cash
balance in the Cash Accounts as of any day is not less than the Required
Balance) shall be subject at all times to the later to occur of (i) the
License Transfer and (ii) delivery to the Administrative Agent of executed
copies of the Uniform Commercial Code (Form UCC-3) termination statements
referred to in Section 7.1.14 of the Credit Agreement.
ARTICLE V
THE ADMINISTRATIVE AGENT
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SECTION 5.1. Administrative Agent Appointed Attorney-in-Fact. The Grantor
hereby irrevocably appoints the Administrative Agent the Grantor's
attorney-in-fact, with full authority in the place and stead of the Grantor and
in the name of the Grantor or otherwise, from time to time following the
occurrence and during the continuance of an Event of Default, to take any
action and to execute any instrument which the Administrative Agent may deem
necessary or advisable to accomplish the purposes of this Security and Pledge
Agreement, including:
(a) to ask, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral;
(b) to receive, endorse, and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (a) above;
(c) to file any claims or take any action or institute any
proceedings which the Administrative Agent may deem necessary or desirable
for the collection of any of the Collateral or otherwise to enforce the
rights of the Administrative Agent with respect to any of the Collateral;
and
(d) to perform the affirmative obligations of the Grantor hereunder
(including all obligations of the Grantor pursuant to Section 4.9).
The Grantor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
5.2.ab SECTION Administrative Agent May Perform. If any Grantor fails to
perform any agreement contained herein, the Administrative Agent may itself
perform, or cause performance of, such agreement, and the expenses of the
Administrative Agent incurred in connection therewith shall be payable by the
Grantor pursuant to Section 6.4.
SECTION 5.3. Administrative Agent Has No Duty. In addition to, and not in
limitation of, Section 2.6, the powers conferred on the Administrative Agent
hereunder are solely to protect its interest (on behalf of the Secured Parties)
in the Collateral and shall not impose any duty on it to exercise any such
powers. Except for reasonable care of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Administrative
Agent shall have no duty as to any Collateral or responsibility for
(a) ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relative to any Investment
Property, whether or not the Administrative Agent has or is deemed to have
knowledge of such matters, or
(b) taking any necessary steps to preserve rights against prior
parties or any other rights pertaining to any Collateral.
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SECTION 5.4. Reasonable Care. The Administrative Agent is required to
exercise reasonable care in the custody and preservation of any of the
Collateral in its possession; provided, however, the Administrative Agent shall
be deemed to have exercised reasonable care in the custody and preservation of
any of the Collateral, if it takes such action for that purpose as the Grantor
reasonably requests in writing at times other than upon the occurrence and
during the continuance of any Event of Default, but failure of the
Administrative Agent to comply with any such request at any time shall not in
itself be deemed a failure to exercise reasonable care.
ARTICLE VI
REMEDIES
SECTION 6.1. Certain Remedies. If any Event of Default shall have occurred
and be continuing:
(a) The Administrative Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein
or otherwise available to it, all the rights and remedies of a secured
party on default under the U.C.C. (whether or not the U.C.C. applies to
the affected Collateral) and also may
(i) require the Grantor to, and the Grantor hereby agrees that
it will, at its expense and upon request of the Administrative Agent
forthwith, assemble all or part of the Collateral as directed by the
Administrative Agent and make it available to the Administrative
Agent at a place to be designated by the Administrative Agent which
is reasonably convenient to both parties, and
(ii) without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or
private sale, at any of the Administrative Agent's offices or
elsewhere, for cash, on credit or for future delivery, and upon such
other terms as the Administrative Agent may deem commercially
reasonable. The Grantor agrees that, to the extent notice of sale
shall be required by law, at least ten days' prior notice to the
Grantor of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable
notification. The Administrative Agent shall not be obligated to make
any sale of Collateral regardless of notice of sale having been
given. The Administrative Agent may adjourn any public or private
sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned.
(b) All cash proceeds received by the Administrative Agent in respect
of any sale of, collection from, or other realization upon all or any part
of the collateral may, in the discretion of the Administrative Agent, be
held by the Administrative Agent as collateral
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for, and/or then or at any time thereafter applied (after payment of any
amounts payable to the Administrative Agent pursuant to Section 6.3) in
whole or in part by the Administrative Agent for the benefit of the
Secured Parties against, all or any part of the Secured Obligations in any
such order as the Administrative Agent shall elect. Any surplus of such
cash or cash proceeds held by the Administrative Agent and remaining after
payment in full of all the Obligations shall be paid over to the Grantor
or to whomsoever may be lawfully entitled to receive such surplus.
(c) The Administrative Agent may
(i) transfer all or any part of the Collateral into the name of
the Administrative Agent or its nominee, with or without disclosing
that such Collateral is subject to the lien and security interest
hereunder,
(ii) notify the parties obligated on any of the Collateral to
make payment to the Administrative Agent of any amount due or to
become due thereunder,
(iii) enforce collection of any of the Collateral by suit or
otherwise, and surrender, release or exchange all or any part
thereof, or compromise or extend or renew for any period (whether or
not longer than the original period) any obligations of any nature of
any party with respect thereto,
(iv) endorse any checks, drafts, or other writings in the
Grantor's name to allow collection of the Collateral,
(v) take control of any proceeds of the Collateral, and
(vi) execute (in the name, place and stead of the Grantor)
endorsements, assignments, stock powers and other instruments of
conveyance or transfer with respect to all or any of the Collateral.
SECTION 6.2. Securities Laws. If the Administrative Agent shall determine
to exercise its right to sell all or any of the Collateral pursuant to Section
6.1, the Grantor agrees that, upon request of the Administrative Agent, the
Grantor will, at its own expense:
(a) execute and deliver, and cause each issuer of the Collateral
contemplated to be sold and the directors and officers thereof to execute
and deliver, all such instruments and documents, and do or cause to be
done all such other acts and things, as may be necessary or, in the
opinion of the Administrative Agent, advisable to register such Collateral
under the provisions of the Securities Act of 1933, as from time to time
amended (the "Securities Act"), and to cause the registration statement
relating thereto to become effective and to remain effective for such
period as prospectuses are required by law to be furnished, and to make
all amendments and supplements thereto and to the related
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prospectus which, in the opinion of the Administrative Agent, are
necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Securities and
Exchange Commission applicable thereto;
(b) use its best efforts to qualify the Collateral under the state
securities or "Blue Sky" laws and to obtain all necessary governmental
approvals for the sale of the Collateral, as requested by the
Administrative Agent;
(c) cause each such issuer to make available to its security holders,
as soon as practicable, an earnings statement that will satisfy the
provisions of Section 11(a) of the Securities Act; and
(d) do or cause to be done all such other acts and things as may be
necessary to make such sale of the Collateral or any part thereof valid
and binding and in compliance with applicable law.
The Grantor further acknowledges the impossibility of ascertaining the amount
of damages that would be suffered by the Administrative Agent or the Secured
Parties by reason of the failure by the Grantor to perform any of the covenants
contained in this Section and, consequently, agrees that, if the Grantor shall
fail to perform any of such covenants, such covenants shall be specifically
enforceable against the Grantor.
SECTION 6.3. Indemnity and Expenses.
(a) The Grantor agrees to indemnify the Administrative Agent from and
against any and all claims, losses and liabilities arising out of or
resulting from this Security and Pledge Agreement (including enforcement
of this Security and Pledge Agreement), except claims, losses or
liabilities resulting from the Administrative Agent's gross negligence or
wilful misconduct.
(b) The Grantor will upon demand pay to the Administrative Agent the
amount of any and all reasonable expenses, including the reasonable fees
and disbursements of its counsel and of any experts and agents, which the
Administrative Agent may incur in connection with
(i) the administration of this Security and Pledge Agreement,
(ii) the custody, preservation, use or operation of, or the sale
of, collection from, or other realization upon, any of the
Collateral,
(iii) the exercise or enforcement of any of the rights of the
Administrative Agent or the Secured Parties hereunder, and
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(iv) the failure by the Grantor to perform or observe any of the
provisions hereof.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.1. Loan Document. This Security and Pledge Agreement is a Loan
Document executed pursuant to the Credit Agreement and shall (unless otherwise
expressly indicated herein) be construed, administered and applied in
accordance with the terms and provisions thereof.
SECTION 7.2. Amendments; etc. No amendment to or waiver of any provision
of this Security and Pledge Agreement nor consent to any departure by the
Grantor herefrom shall in any event be effective unless the same shall be in
writing and signed by the Administrative Agent (on behalf of the Lenders or the
Required Lenders, as the case may be), and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
SECTION 7.3. Protection of Collateral. The Administrative Agent may from
time to time, at its option, perform any act which the Grantor agrees hereunder
to perform and which the Grantor shall fail to perform after being requested in
writing so to perform (it being understood that no such request need be given
after the occurrence and during the continuance of an Event of Default).
SECTION 7.4. Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing (including telegraphic
communication) and, if to the Grantor, mailed or telecopied or delivered to it
at the address of the Borrower specified in the Credit Agreement, and, if to
the Administrative Agent, mailed or telecopied or delivered to it, addressed to
it at the address of the Administrative Agent specified in the Credit
Agreement. All such notices and other communications, when mailed and properly
addressed with postage prepaid or if properly addressed and sent by pre-paid
courier service, shall be deemed given when received; any such notice or
communication, if transmitted by telecopier, shall be deemed given when
transmitted and electronically confirmed.
SECTION 7.5. Section Captions. Section captions used in this Security and
Pledge Agreement are for convenience of reference only, and shall not affect
the construction of this Security and Pledge Agreement.
SECTION 7.6. Severability. Wherever possible each provision of this
Security and Pledge Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Security
and Pledge Agreement shall be prohibited by or invalid under such law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
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without invalidating the remainder of such provision or the remaining
provisions of this Security and Pledge Agreement.
SECTION 7.7. Counterparts. This Security and Pledge Agreement may be
executed by the parties hereto in several counterparts, each of which shall be
deemed an original and all of which shall constitute together but one and the
same agreement.
SECTION 7.8. Governing Law, Entire Agreement, etc. THIS SECURITY AND
PLEDGE AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR
PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN
RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION
OTHER THAN THE STATE OF NEW YORK. THIS SECURITY AND PLEDGE AGREEMENT AND THE
OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES
HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND THEREOF AND SUPERSEDE ANY
PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.
SECTION 7.9. Waiver of Jury Trial. THE ADMINISTRATIVE AGENT AND THE
GRANTOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE TO THE FULLEST
EXTENT PERMITTED BY LAW ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION
WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE
ADMINISTRATIVE AGENT OR THE GRANTOR IN CONNECTION HEREWITH OR THEREWITH. THE
GRANTOR ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER LOAN
DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE ADMINISTRATIVE AGENT ENTERING INTO THIS AGREEMENT AND EACH
SUCH OTHER LOAN DOCUMENT.
[REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY]
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IN WITNESS WHEREOF, the Grantor has caused this Security and Pledge
Agreement to be duly executed and delivered by its officer thereunto duly
authorized as of the date first above written.
NEXTEL PARTNERS OPERATING CORP.
By: /s/ John D. Thompson
---------------------------------------
Name: John D. Thompson
Title: Chief Financial Officer,
Treasurer and Secretary
BANK OF MONTREAL, as
Administrative Agent
By: /s/ Karen Klapper
---------------------------------------
Name: Karen Klapper
Title: Director
<PAGE>
SUBSIDIARY SECURITY AND PLEDGE AGREEMENT
----------------------------------------
This SUBSIDIARY SECURITY AND PLEDGE AGREEMENT (as amended,
supplemented, amended and restated or otherwise modified from time to time,
this "Security and Pledge Agreement"), dated as of January 29, 1999, is made by
each of the signatories hereto (each, individually, a "Grantor" and,
collectively, the "Grantors"), in favor of BANK OF MONTREAL, as administrative
agent (together with its successor(s) thereto, in such capacity, the
"Administrative Agent") for each of the Secured Parties (as defined below).
W I T N E S S E T H :
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WHEREAS, pursuant to a Credit Agreement, dated as of January 29, 1999
(as amended, supplemented, amended and restated or otherwise modified from time
to time, the "Credit Agreement"), among Nextel Partners Operating Corp., a
Delaware corporation (the "Borrower"), the various financial institutions as
are, or may from time to time become, parties thereto (each, individually, a
"Lender", and, collectively, the "Lenders"), DLJ Capital Funding, Inc., as the
syndication agent, The Bank of New York, as the documentation agent and the
Administrative Agent, the Lenders and the Issuer have extended Commitments to
make Credit Extensions to the Borrower;
WHEREAS, as a condition precedent to the making of the Credit
Extensions (including the initial Credit Extension) under the Credit Agreement,
each Grantor is required to execute and deliver this Security and Pledge
Agreement;
WHEREAS, each Grantor has duly authorized the execution, delivery and
performance of this Security and Pledge Agreement; and
WHEREAS, it is in the best interests of each Grantor to execute this
Security and Pledge Agreement inasmuch as such Grantor will derive substantial
direct and indirect benefits from the Loans made to the Borrower by the Lenders
pursuant to the Credit Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce the
Lenders and the Issuer to make Credit Extensions (including the initial Credit
Extension) to the Borrower pursuant to the Credit Agreement, each Grantor
agrees, for the benefit of each Secured Party, as follows:
ARTICLE I
<PAGE>
DEFINITIONS
SECTION 1.1.Certain Terms. The following terms (whether or not
underscored) when used in this Security and Pledge Agreement, including its
preamble and recitals, shall have the following meanings (such definitions to
be equally applicable to the singular and plural forms thereof):
"Administrative Agent" is defined in the preamble.
"Borrower" is defined in the first recital.
"Collateral Account" is defined in Section 4.4(c).
"Collateral" is defined in Section 2.1.
"Commodity Account" means an account maintained by a Commodity
Intermediary in which a Commodity Contract is carried out for a Commodity
Customer.
"Commodity Contract" means a commodity futures contract, an option on
a commodity futures contract, a commodity option or any other contract that, in
each case, is (a) traded on or subject to the rules of a board of trade that
has been designated as a contract market for such a contract pursuant to the
federal commodities laws or (b) traded on a foreign commodity board of trade,
exchange or market, and is carried on the books of a Commodity Intermediary for
a Commodity Customer.
"Commodity Customer" means a Person for whom a Commodity Intermediary
carries a Commodity Contract on its books.
"Commodity Intermediary" means (a) a Person who is registered as a
futures commission merchant under the federal commodities laws or (b) a Person
who in the ordinary course of business provides clearance or settlement
services for a board of trade that has been designated as a contract market
pursuant to federal commodities laws.
"Computer Hardware and Software Collateral" means:
(a) all computer and other electronic data processing hardware,
integrated computer systems, central processing units, memory units,
display terminals, printers, features, computer elements, card
readers, tape drives, hard and soft disk drives, cables, electrical
supply hardware, generators, power equalizers, accessories and all
peripheral devices and other related computer hardware;
(b) all software programs (including both source code, object
code and all related
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applications and data files), whether now owned, licensed or leased
or hereafter acquired by any Grantor, designed for use on the
computers and electronic data processing hardware described in clause
(a) above;
(c) all firmware associated therewith;
(d) all documentation (including flow charts, logic diagrams,
manuals, guides and specifications) with respect to such hardware,
software and firmware described in the preceding clauses (a) through
(c); and
(e) all rights with respect to all of the foregoing, including
any and all copyrights, licenses, options, warranties, service
contracts, program services, test rights, maintenance rights, support
rights, improvement rights, renewal rights and indemnifications and
any substitutions, replacements, additions or model conversions of
any of the foregoing.
"Control Agreement" means an agreement in form and substance
satisfactory to the Administrative Agent which provides for the Administrative
Agent to have "control" (as defined in Section 8-106 of the U.C.C., as such
term relates to Investment Property (other than certificated Securities or
Commodity Contracts), or as used in Section 9-115(e) of the U.C.C., as such
term relates to Commodity Contracts).
"Copyright Collateral" means all copyrights of each Grantor, whether
statutory or common law, registered or unregistered, now or hereafter in force
throughout the world including all of such Grantor's right, title and interest
in and to all copyrights registered in the United States Copyright Office or
anywhere else in the world and also including the copyrights referred to in
Item A of Schedule IV attached hereto, and all applications for registration
thereof, whether pending or in preparation, all copyright licenses, including
each copyright license referred to in Item B of Schedule IV attached hereto,
the right to sue for past, present and future infringements of any thereof, all
rights corresponding thereto throughout the world, all extensions and renewals
of any thereof and all proceeds of the foregoing, including licenses,
royalties, income, payments, claims, damages and proceeds of suit.
"Credit Agreement" is defined in the first recital.
"Distributions" means all stock dividends, liquidating dividends,
shares of stock resulting from (or in connection with the exercise of) stock
splits, reclassifications, warrants, options, non-cash dividends, mergers,
consolidations, and all other distributions (whether similar or dissimilar to
the foregoing) on or with respect to any Securities constituting Collateral,
but shall not include Dividends.
"Dividends" means cash dividends and cash distributions with respect
to any Securities constituting Collateral made in the ordinary course of
business and not a liquidating dividend.
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"Entitlement Holder" means a Person identified in the records of a
Securities Intermediary as the Person having a Security Entitlement against the
Securities Intermediary. If a Person acquires a Security Entitlement by virtue
of Section 8-501(b)(2) or (3) of the U.C.C., such Person is the Entitlement
Holder.
"Equipment" is defined in clause (d) of Section 2.1.
"Financial Asset" means (a) a Security, (b) an obligation of a Person
or a share, participation or other interest in a Person or in property or an
enterprise of a Person, which is, or is of a type, dealt with in or traded on
financial markets, or which is recognized in any area in which it is issued or
dealt in as a medium for investment or (c) any property that is held by a
Securities Intermediary for another Person in a Securities Account if the
Securities Intermediary has expressly agreed with the other Person that the
property is to be treated as a Financial Asset under Article 8 of the U.C.C. As
the context requires, the term Financial Asset shall mean either the interest
itself or the means by which a Person's claims to it is evidenced, including a
certificated or an uncertificated Security, a certificate representing a
Security or a Security Entitlement.
"Grantor" and "Grantors" are defined in the preamble.
"Intellectual Property Collateral" means, collectively, the Computer
Hardware and Software Collateral, the Copyright Collateral, the Patent
Collateral, the Trademark Collateral and the Trade Secrets Collateral.
"Intercompany Note" means, with respect to each Grantor, as the payee
thereunder, a promissory note substantially in the form of Exhibit A hereto
(with such modifications as the Administrative Agent may consent to, such
consent not to be unreasonably withheld), which promissory note shall evidence
all intercompany loans which may be made from time to time by such Grantor to
any of its Subsidiaries as the maker of such promissory note, as such
promissory note, in accordance with Section 4.2.4, is amended, modified or
supplemented from time to time, together with any promissory note of such maker
taken in extension or renewal thereof or substitution therefor.
"Investment Property" means all Securities (whether certificated or
uncertificated), Security Entitlements, Securities Accounts, Commodity
Contracts and Commodity Accounts of each Grantor, whether now owned or
hereafter acquired by such Grantor.
"Inventory" is defined in clause (e) of Section 2.1
"Lender" and "Lenders" are defined in the first recital.
"Patent Collateral" means:
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(a) all letters patent and applications for letters patent
throughout the world, including all patent applications in
preparation for filing anywhere in the world and including each
patent and patent application referred to in Item A of Schedule II
attached hereto;
(b) all reissues, divisions, continuations,
continuations-in-part, extensions, renewals and reexaminations of any
of the items described in clause (a);
(c) all patent licenses, including each patent license referred
to in Item B of Schedule II attached hereto; and
(d) all proceeds of, and rights associated with, the foregoing
(including license royalties and proceeds of infringement suits), the
right to sue third parties for past, present or future infringements
of any patent or patent application, including any patent or patent
application referred to in Item A of Schedule II attached hereto, and
for breach or enforcement of any patent license, including any patent
license referred to in Item B of Schedule II attached hereto, and all
rights corresponding thereto throughout the world.
"Perfection Certificate" means a perfection certificate substantially
in the form of Exhibit E hereto.
"Receivables" is defined in clause (f) of Section 2.1.
"Related Contracts" is defined in clause (f) of Section 2.1.
"Secured Party" means, as the context may require, each Lender, the
Issuer and each Agent and each of their respective successors, transferees and
assigns.
"Secured Obligations" is defined in Section 2.2.
"Securities" means any obligations of an issuer or any shares,
participations, or other interests in an issuer or in property or an enterprise
of an issuer which (a) are represented by a certificate representing a security
in bearer or registered form, or the transfer of which may be registered upon
books maintained for that purpose by or on behalf of such issuer, (b) are one
of a class or series or by its terms is divisible into a class or series of
shares, participations, interests or obligations and (c) (i) are, or are of a
type, dealt with or traded on securities exchanges or securities markets or
(ii) are a medium for investment and by their terms expressly provide that they
are a security governed by Article 8 of the U.C.C.
"Securities Account" means an account to which a Financial Asset is or
may be credited in accordance with an agreement under which the Person
maintaining the account undertakes to treat the Person for whom the account is
maintained as entitled to exercise rights that comprise the Financial Asset.
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"Securities Act" is defined in Section 6.2.
"Security Entitlements" means the rights and property interests of an
Entitlement Holder with respect to a Financial Asset.
"Security and Pledge Agreement" is defined in the preamble.
"Security Intermediary" means (a) a clearing corporation or (b) a
Person, including a bank or broker, that in the ordinary course of its business
maintains securities accounts for others and is acting in that capacity.
"Trademark Collateral" means:
(a) all trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, service
marks, certification marks, collective marks, logos, other source of
business identifiers, prints and labels on which any of the foregoing
have appeared or appear, designs and general intangibles of a like
nature (all of the foregoing items in this clause (a) being
collectively called a "Trademark"), now existing anywhere in the
world or hereafter adopted or acquired, whether currently in use or
not, all registrations and recordings thereof and all applications in
connection therewith, whether pending or in preparation for filing,
including registrations, recordings and applications in the United
States Patent and Trademark Office or in any office or agency of the
United States of America or any State thereof or any foreign country,
including those referred to in Item A of Schedule III attached
hereto;
(b) all Trademark licenses, including each Trademark license
referred to in Item B of Schedule III attached hereto;
(c) all reissues, extensions or renewals of any of the items
described in clause (a) and (b);
(d) all of the goodwill of the business connected with the use
of, and symbolized by the items described in, clauses (a) and (b);
and
(e) all proceeds of, and rights associated with, the foregoing,
including any claim by any Grantor against third parties for past,
present or future infringement or dilution of any Trademark,
Trademark registration or Trademark license, including any Trademark,
Trademark registration or Trademark license referred to in Item A and
Item B of Schedule III attached hereto, or for any injury to the
goodwill associated with the use of any such Trademark or for breach
or enforcement of any Trademark license.
"Trade Secrets Collateral" means all common law and statutory trade
secrets and all other confidential or proprietary or useful information and all
know-how obtained by or used in or
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contemplated at any time for use in the business of any Grantor (all of the
foregoing being collectively called a "Trade Secret"), whether or not such
Trade Secret has been reduced to a writing or other tangible form, including
all documents and things embodying, incorporating or referring in any way to
such Trade Secret, all Trade Secret licenses, including each Trade Secret
license referred to in Schedule V attached hereto, and including the right to
sue for and to enjoin and to collect damages for the actual or threatened
misappropriation of any Trade Secret and for the breach or enforcement of any
such Trade Secret license.
"U.C.C." means the Uniform Commercial Code, as in effect from time to
time in the State of New York.
SECTION 1.2. Credit Agreement Definitions. Unless otherwise defined
herein or the context otherwise requires, terms used in this Security and
Pledge Agreement, including its preamble and recitals, have the meanings
provided in the Credit Agreement.
SECTION 1.3. U.C.C. Definitions. Unless otherwise defined herein or in
the Credit Agreement or the context otherwise requires, terms for which
meanings are provided in the U.C.C. are used in this Security and Pledge
Agreement, including its preamble and recitals, with such meanings.
ARTICLE II
SECURITY INTEREST
SECTION 2.1. Grant of Security. Each Grantor hereby assigns, pledges,
hypothecates, charges, mortgages, delivers, and transfers to the Administrative
Agent for its benefit and the ratable benefit of each of the Secured Parties,
and hereby grants to the Administrative Agent for its benefit and the ratable
benefit of each of the Secured Parties, a security interest in all of the
following, whether now or hereafter existing or acquired by such Grantor (the
"Collateral"):
(a) all Intercompany Notes in which such Grantor has an interest
(including each Intercompany Note described in Item A of Schedule I
hereto);
(b) all interest and other payments and rights with respect to
each Intercompany Note in which such Grantor has an interest;
(c) all Investment Property in which such Grantor has an
interest (including the Securities of each issuer described in Item B
of Schedule I hereto);
(d) all equipment in all of its forms of such Grantor, wherever
located, including all parts thereof and all accessions, additions,
attachments, improvements, substitutions and replacements thereto and
therefor and all accessories related thereto (any and all of
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the foregoing being the "Equipment");
(e) all inventory in all of its forms of such Grantor, wherever
located, including
(i) all raw materials and other work in process therefor,
finished goods thereof, and materials used or consumed in the
manufacture or production thereof,
(ii) all goods in which such Grantor has an interest in
mass or a joint or other interest or right of any kind
(including goods in which such Grantor has an interest or right
as consignee), and
(iii) all goods which are returned to or repossessed by
such Grantor,
and all accessions thereto, products thereof and documents therefor
(any and all such inventory, materials, goods, accessions, products
and documents being the "Inventory");
(f) all accounts, contracts, contract rights, chattel paper,
documents, instruments, and general intangibles (including tax
refunds) of such Grantor, whether or not arising out of or in
connection with the sale or lease of goods or the rendering of
services, and all rights of such Grantor now or hereafter existing in
and to all security agreements, guaranties, leases and other
contracts securing or otherwise relating to any such accounts,
contracts, contract rights, chattel paper, documents, instruments,
and general intangibles (any and all such accounts, contracts,
contract rights, chattel paper, documents, instruments, and general
intangibles being the "Receivables", and any and all such security
agreements, guaranties, leases and other contracts being the "Related
Contracts");
*[(g) in furtherance of, and not in limitation of, clause (f),
the Management Agreement, and the assignment of the Grantor's rights
under the Master Site Lease Agreement (as amended or modified, an
"Assigned Agreement"), together with (i) all rights of the Grantor to
receive monies due and to become due under or pursuant to each
Assigned Agreement, (ii) all rights of the Grantor to receive
proceeds of any insurance, indemnity, warranty, guaranty or
collateral security with respect to any Assigned Agreement, (iii) all
claims of the Grantor for damages arising out of or for breach or
default under any Assigned Agreement, (iv) all rights of the Grantor
to terminate any Assigned Agreement, to perform thereunder and to
compel performance and otherwise exercise all remedies thereunder and
(v) to the extent not included in the foregoing, all proceeds of any
and all of the foregoing;]
(h) all Intellectual Property Collateral of such Grantor;
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* To be included in Subsidiary Security Agreement executed by Realco.
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(i) the Collateral Account and each lock box of such Grantor
(including all cash, checks, drafts, notes, bills of exchange, money
orders and other like instruments, if any, now owned or hereafter
acquired, held therein (or in sub-accounts thereof) and all
certificates and instruments, if any, from time to time representing
or evidencing such investments, and all interest, earnings and
proceeds in respect thereof );
(j) all books, records, writings, data bases, information and
other property relating to, used or useful in connection with,
evidencing, embodying, incorporating or referring to, any of the
foregoing in this Section 2.1;
(k) all of such Grantor's other property and rights of every
kind and description and interests therein; and
(l) all products, offspring, rents, issues, profits, returns,
income and proceeds of and from any and all of the foregoing
Collateral (including proceeds which constitute property of the types
described in clauses (a) through (k), and, to the extent not
otherwise included, all payments under insurance (whether or not the
Administrative Agent is the loss payee thereof), or any indemnity,
warranty or guaranty, payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Collateral).
Notwithstanding the foregoing, "Collateral" shall not include any general
intangibles or other rights described in clause (f) above arising under any
contracts, instruments, licenses, permits or leases described in such clause as
to which the grant of a security interest would constitute a violation of a
valid and enforceable restriction in favor of a third party on such grant,
unless and until any required consents shall have been obtained. Such Grantor
agrees to use its best efforts to obtain any such required consent.
SECTION 2.2 Security for Obligations. This Security and Pledge
Agreement secures the payment in full in cash of all monetary Obligations of
the Borrower now or hereafter existing under the Credit Agreement, the Notes
and each other Loan Document to which the Borrower is or may become a party,
whether for principal, interest, costs, fees, expenses or otherwise, and all
obligations of the Borrower and each other Obligor now or hereafter existing
under this Security and Pledge Agreement and each other Loan Document to which
the Borrower or such other Obligor is or may become a party (all such
obligations of such Borrower and such other Obligor being the "Secured
Obligations").
SECTION 2.3. Delivery of Certificated Securities and Intercompany
Notes. All Collateral comprised of Intercompany Notes and certificated
Securities shall be delivered to and held by or on behalf of (and, in the case
of the Intercompany Notes, endorsed to the order of) the Administrative Agent
pursuant hereto, shall be in suitable form for transfer by delivery, and shall
be accompanied by all necessary instruments of transfer or assignment, duly
executed in blank.
SECTION 2.4. Dividends on Securities and Payments on Intercompany
Notes. In the
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event that any Dividend is to be paid on any Security that constitutes
Collateral or any payment of principal or interest is to be made on any
Intercompany Note at a time when no Default of the nature referred to in
Section 8.1.9 of the Credit Agreement or Event of Default has occurred and is
continuing or would result therefrom, such Dividend or payment may be paid
directly to and retained by the applicable Grantor. If any such Default or
Event of Default has occurred and is continuing, then any such Dividend or
payment shall be paid directly to the Administrative Agent.
SECTION 2.5. Continuing Security Interest; Transfer of Notes. This
Security and Pledge Agreement shall create a continuing security interest in
the Collateral and shall
(a) remain in full force and effect until payment in full in
cash of all Secured Obligations then due, the termination or
expiration of all Letters of Credit and the termination of all
Commitments,
(b) be binding upon each Grantor, its successors, transferees
and assigns, and
(c) inure, together with the rights and remedies of the
Administrative Agent hereunder, to the benefit of the Administrative
Agent and each other Secured Party.
Without limiting the generality of the foregoing clause (c), any Lender may
assign or otherwise transfer (in whole or in part) any Note or Credit Extension
held by it to any other Person, and such other Person shall thereupon become
vested with all the rights and benefits in respect thereof granted to such
Lender under any Loan Document (including this Security and Pledge Agreement)
or otherwise, subject, however, to any contrary provisions in such assignment
or transfer, and to the provisions of Section 10.11 and Article IX of the
Credit Agreement. Upon (i) the sale, transfer or other disposition of
Collateral in accordance with the Credit Agreement or (ii) the payment in full
in cash of all Secured Obligations then due, the termination or expiration of
all Letters of Credit and the termination of all Commitments, the security
interests granted herein shall automatically terminate with respect to (x) such
Collateral (in the case of clause (i)) or (y) all Collateral (in the case of
clause (ii)). Upon any such sale, transfer, disposition or termination, the
Administrative Agent will, at such Grantor's sole expense, deliver to such
Grantor, without any representations, warranties or recourse of any kind
whatsoever, all applicable certificated Securities and all applicable
Intercompany Notes, together with all other applicable Collateral held by the
Administrative Agent hereunder, and execute and deliver to such Grantor such
documents as such Grantor shall reasonably request to evidence such
termination.
SECTION 2.6. Grantor Remains Liable. Anything herein to the contrary
notwithstanding
(a) each Grantor shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth
therein, and shall perform all of its duties and obligations under
such contracts and agreements to the same extent as if this Security
and Pledge Agreement had not been executed,
(b) the exercise by the Administrative Agent of any of its
rights hereunder shall
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not release any Grantor from any of its duties or obligations under
any such contracts or agreements included in the Collateral, and
(c) neither the Administrative Agent nor any other Secured Party
shall have any obligation or liability under any such contracts or
agreements included in the Collateral by reason of this Security and
Pledge Agreement, nor shall the Administrative Agent or any other
Secured Party be obligated to perform any of the obligations or
duties of any Grantor thereunder or to take any action to collect or
enforce any claim for payment assigned hereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties. Each Grantor represents
and warrants to each Secured Party as set forth in this Article III.
SECTION 3.2. As to Securities. All Securities issued by a Subsidiary
of each Grantor are duly authorized and validly issued, fully paid, and
non-assessable, and constitute all of the issued and outstanding Securities of
such Subsidiary.
SECTION 3.3. As to Intercompany Notes. In the case of each
Intercompany Note, all of such Intercompany Notes have been duly authorized,
executed, endorsed, issued and delivered, and are the legal, valid and binding
obligation of the issuers thereof, and are not in default.
SECTION 3.4. Location of Collateral, etc. All of the lock boxes,
Equipment and Inventory of such Grantor are respectively located at the places
specified in Section 3 of the Perfection Certificate delivered by such Grantor.
None of the Equipment and Inventory has, within the four months preceding the
date of this Security and Pledge Agreement (if then owned by such Grantor),
been located at any place other than the places specified in Section 3 of the
Perfection Certificate delivered by such Grantor. The place of business and
chief executive office of such Grantor and the office where such Grantor keeps
its records concerning the Receivables, and all originals of all chattel paper
which evidence Receivables is ________. Such Grantor has no trade names. During
the four months preceding the date hereof, such Grantor has not been known by
any legal name nor has it had a federal taxpayer identification number
different from the ones set forth in Section 1(a) and 2(a), respectively, of
the Perfection Certificate delivered by such Grantor, nor has such Grantor been
the subject of any merger or other corporate reorganization, except as
disclosed pursuant to Section 1(c) of the Perfection Certificate delivered by
such Grantor. All Receivables evidenced by a promissory note or other
instrument, negotiable document or chattel paper have been duly endorsed and
accompanied by duly executed instruments of transfer or assignment, all in form
and substance satisfactory to the Administrative
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Agent and delivered and pledged to the Administrative Agent pursuant to Section
4.10. If the Grantor is a party to any Federal, state or local government
contract, the Grantor shall duly comply with the terms of the Federal
Assignment of Claims Act, to the extent required herein to perfect the first
priority security interest in favor of the Administrative Agent.
SECTION 3.5. Ownership, No Liens, etc. Such Grantor owns its
Collateral free and clear of any Lien except for the security interest created
by this Security and Pledge Agreement and, except in the case of Collateral not
consisting of Securities and Intercompany Notes, as permitted by the Credit
Agreement. No effective financing statement or other instrument similar in
effect covering all or any part of the Collateral is on file in any recording
office, except such as may have been filed in favor of the Administrative Agent
relating to this Security and Pledge Agreement or as have been filed in
connection with Liens permitted pursuant to Section 7.2.3 of the Credit
Agreement.
SECTION 3.6. Possession and Control. Such Grantor has exclusive
possession and control of its Equipment and Inventory.
SECTION 3.7. Negotiable Documents, Instruments and Chattel Paper. Such
Grantor has, contemporaneously herewith, delivered to the Administrative Agent
possession of all originals of all negotiable documents, instruments and
chattel paper currently owned or held by such Grantor (duly endorsed in blank,
if requested by the Administrative Agent).
SECTION 3.8. Intellectual Property Collateral. With respect to any
Intellectual Property Collateral the loss, impairment or infringement of which
might have a Material Adverse Effect:
(a) such Intellectual Property Collateral is subsisting and has
not been adjudged invalid or unenforceable, in whole or in part;
(b) such Intellectual Property Collateral is valid and
enforceable;
(c) such Grantor has made all necessary filings and recordations
to protect its interest in such Intellectual Property Collateral,
including recordations of all of its interests in the Patent
Collateral and Trademark Collateral in the United States Patent and
Trademark Office and in corresponding offices throughout the world
and its claims to the Copyright Collateral in the United States
Copyright Office and in corresponding offices throughout the world;
(d) such Grantor is the exclusive owner of the entire and
unencumbered right, title and interest in and to such Intellectual
Property Collateral and no claim has been made that the use of such
Intellectual Property Collateral does or may violate the asserted
rights of any third party; and
(e) such Grantor has performed and will continue to perform all
acts and has paid
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and will continue to pay all required fees and taxes to maintain each
and every such item of Intellectual Property Collateral in full force
and effect throughout the world, as applicable.
Such Grantor owns directly or is entitled to use by license or otherwise, all
patents, Trademarks, Trade Secrets, copyrights, mask works, licenses,
technology, know-how, processes and rights with respect to any of the foregoing
used in, necessary for or of importance to the conduct of such Grantor's
business.
SECTION 3.9. Validity, etc. This Security and Pledge Agreement creates
a valid first priority security interest in the Collateral (subject to Section
9-306 of the U.C.C. and Liens permitted pursuant to Section 7.2.3 of the Credit
Agreement) securing the payment of the Secured Obligations, and
(a) in the case of Collateral comprised of certificated
Securities or instruments, upon the delivery of such Collateral to
the Administrative Agent, such security interest will be a valid
first priority perfected security interest;
(b) in the case of Collateral comprised of uncertificated
Securities and other Investment Property (other than certificated
Securities), upon the Administrative Agent obtaining "control" (as
defined in Section 8-106 of the U.C.C., as such term relates to
Investment Property (other than certificated Securities or Commodity
Contracts), or as used in Section 9-115(e) of the U.C.C., as such
term relates to Commodity Contracts) of such Collateral and the
filing of the Uniform Commercial Code financing statements delivered
by such Grantor having an interest in such Collateral to the
Administrative Agent with respect to such Collateral, such security
interest will be a valid first priority perfected security interest;
and
(c) in the case of all other Collateral in which a security
interest can be perfected by the filing of the Uniform Commercial
Code financing statements, upon the filing of such financing
statements delivered by such Grantor to the Administrative Agent with
respect to such Collateral in the filing offices set forth in
Schedule I to the Perfection Certificate, such security interest will
be a valid first priority perfected security interest.
Such Grantor has filed all Uniform Commercial Code financing statements
referred to above in the appropriate offices therefor (or has provided the
Administrative Agent with copies thereof suitable for filing in such offices)
and has taken all of the other actions referred to above necessary to create
perfected, first-priority security interests in the applicable Collateral.
SECTION 3.10. Authorization, Approval, etc. Except as have been
obtained or made and are in full force and effect (or otherwise provided for to
the satisfaction of the Administrative Agent), no authorization, approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body is required either
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(a) for the grant by such Grantor of the security interest
granted hereby, the pledge by such Grantor of any Collateral pursuant
hereto or for the execution, delivery and performance of this
Security and Pledge Agreement by such Grantor,
(b) for the perfection of or the exercise by the Administrative
Agent of its rights and remedies hereunder, or
(c) for the exercise by the Administrative Agent of the voting
or other rights provided for in this Security and Pledge Agreement,
or, except, with respect to any Securities issued by a Subsidiary of
such Grantor, as may be required in connection with a disposition of
such Securities by laws affecting the offering and sale of securities
generally or the rules and regulations of the FCC, the remedies in
respect of the Collateral pursuant to this Security and Pledge
Agreement.
SECTION 3.11.Compliance with Laws. Such Grantor is in compliance with
the requirements of all applicable laws (including the provisions of the Fair
Labor Standards Act), rules, regulations and orders of every governmental
authority, the non-compliance with which could reasonably be expected to have a
Material Adverse Effect or which could reasonably be expected to materially
adversely affect the value of the Collateral or the worth of the Collateral as
collateral security.
ARTICLE IV
COVENANTS
SECTION 4.1.Certain Covenants. Each Grantor covenants and agrees that,
until payment in full of all Secured Obligations then due, the termination or
expiration of all Letters of Credit and the termination of all Commitments,
such Grantor will, unless the Required Lenders shall otherwise consent in
writing, perform, comply with and be bound by the obligations set forth in this
Article IV.
SECTION 4.2. As to Investment Property and Intercompany Notes; Etc.
SECTION 4.2.1. Certificated Securities. Such Grantor shall cause each
of its Subsidiaries to evidence all equity interests in such Subsidiaries by
certificated Securities. Such Grantor shall deliver certificates evidencing all
of the issued and outstanding shares of Capital Stock of each Person that is a
direct Subsidiary of such Grantor from to time, which certificates shall be
accompanied by undated stock powers duly executed in blank.
SECTION 4.2.2. Investment Property (other than Certificated
Securities). With respect
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to any Investment Property (other than certificated Securities) of such
Grantor, such Grantor shall (a) cause a Control Agreement relating to such
Investment Property to be executed and delivered in favor of the Administrative
Agent and (b) deliver Uniform Commercial Code financing statements which when
filed will result in the Administrative Agent having a first priority perfected
security interest in such Investment Property.
SECTION 4.2.3. Stock Powers, etc. Such Grantor agrees that all
certificated Securities constituting Collateral delivered by such Grantor
pursuant to this Security and Pledge Agreement will be accompanied by duly
executed undated blank stock powers or other equivalent instruments of transfer
acceptable to the Administrative Agent. Such Grantor will, from time to time
upon the request of the Administrative Agent, promptly deliver to the
Administrative Agent such stock powers, instruments, and similar documents,
satisfactory in form and substance to the Administrative Agent, with respect to
such Collateral as the Administrative Agent may reasonably request and will,
from time to time upon the request of the Administrative Agent after the
occurrence of any Event of Default, promptly transfer any Securities
constituting Collateral into the name of any nominee designated by the
Administrative Agent.
SECTION 4.2.4. Continuous Pledge. Subject to any sale or other transfer
of Collateral in accordance with Section 7.2.9 of the Credit Agreement or until
such time as all Secured Obligations then due have been paid in full, all
Letters of Credit have terminated or expired and all Commitments have
terminated, such Grantor will, at all times, keep pledged to the Administrative
Agent pursuant hereto on a first priority perfected basis all Investment
Property constituting Collateral, all Dividends and Distributions with respect
thereto, all Intercompany Notes, all interest, principal and other proceeds
received by the Administrative Agent with respect to the Intercompany Notes,
and all other Collateral and other securities, instruments, proceeds, and
rights from time to time received by or distributable to such Grantor in
respect of any of the foregoing Collateral and will not permit any Subsidiary
of such Grantor to issue any Securities which shall not have been immediately
duly pledged hereunder on a first priority perfected basis.
4.2.5.SECTION Voting Rights; Dividends, etc. Such Grantor agrees:
(a) after any Default of the nature referred to in Section 8.1.9
of the Credit Agreement or any Event of Default shall have occurred
and be continuing, promptly upon receipt of notice thereof by such
Grantor and without any request therefor by the Administrative Agent,
to deliver (properly endorsed where required hereby or requested by
the Administrative Agent) to the Administrative Agent all Dividends,
Distributions, all interest, all principal, all other cash payments,
and all proceeds of the Collateral, all of which shall be held by the
Administrative Agent as additional Collateral for use in accordance
with clause (b) of Section 6.1; and
(b) after any Event of Default shall have occurred and be
continuing and the Administrative Agent has notified such Grantor of
the Administrative Agent's intention to exercise its voting power
under this Section 4.2.5(b)
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(i) subject to FCC approval, the Administrative Agent may
exercise (to the exclusion of such Grantor) the voting power and
all other incidental rights of ownership with respect to any
Securities or other Investment Property constituting Collateral
and such Grantor hereby grants the Administrative Agent an
irrevocable proxy, exercisable under such circumstances, to vote
such Securities and such other Collateral; and
(ii) promptly to deliver to the Administrative Agent such
additional proxies and other documents as may be necessary to
allow the Administrative Agent to exercise such voting power.
All Dividends, Distributions, interest, principal, cash payments, and proceeds
which may at any time and from time to time be held by such Grantor but which
such Grantor is then obligated to deliver to the Administrative Agent, shall,
until delivery to the Administrative Agent, be held by such Grantor separate
and apart from its other property in trust for the Administrative Agent. The
Administrative Agent agrees that unless an Event of Default shall have occurred
and be continuing and the Administrative Agent shall have given the notice
referred to in Section 4.2.5(b), such Grantor shall have the exclusive voting
power with respect to any Securities constituting Collateral and the
Administrative Agent shall, upon the written request of such Grantor, promptly
deliver such proxies and other documents, if any, as shall be reasonably
requested by such Grantor which are necessary to allow such Grantor to exercise
voting power with respect to any such Securities; provided, however, that no
vote shall be cast, or consent, waiver, or ratification given, or action taken
by such Grantor that would impair any such Collateral or be inconsistent with
or violate any provision of the Credit Agreement or any other Loan Document
(including this Security and Pledge Agreement).
SECTION 4.2.6. Amendment of Organic Documents. Such Grantor will not
amend, supplement or otherwise modify, or permit, consent or suffer to occur
any amendment, supplement or modification of any terms or provisions contained
in, or applicable to, any Organic Document of any issuer of any Security
comprising the Collateral in which it has an equity interest if the effect
thereof is to impair, or is in any manner adverse to, the rights or interests
of the Administrative Agent or any other Secured Party hereunder or under the
Credit Agreement or any other Loan Document, without the prior written consent
of the Administrative Agent and the Required Lenders.
SECTION 4.3. As to Equipment and Inventory. Such Grantor hereby agrees
that it shall
(a) keep all the Equipment and Inventory (other than Inventory
sold in the ordinary course of business) at the places therefor
specified in Section 3.4 or, upon 30 days' prior written notice to
the Administrative Agent, at such other places in a jurisdiction
where all representations and warranties set forth in Article III
(including Section 3.9) shall be true and correct, and all action
required pursuant to the first sentence
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of Section 4.10 shall have been taken with respect to the Equipment
and Inventory;
(b) cause the Equipment to be maintained and preserved in the
same condition, repair and working order as when new, ordinary wear
and tear excepted, and in accordance with any manufacturer's manual;
and forthwith, or in the case of any loss or damage to any such
Equipment, as quickly as practicable after the occurrence thereof,
make or cause to be made all repairs, replacements, and other
improvements in connection therewith which are necessary or desirable
to such end; and promptly furnish to the Administrative Agent a
statement respecting any loss or damage to any of such Equipment
which could reasonably be expected to have a Material Adverse Effect;
and
(c) pay promptly when due all property and other material taxes,
assessments and governmental charges or levies imposed upon, and all
claims (including claims for labor, materials and supplies) against,
the Equipment and Inventory, except to the extent the validity
thereof is being contested in good faith by appropriate proceedings
and for which adequate reserves in accordance with GAAP have been set
aside.
SECTION 4.4. As to Receivables.
(a)Such Grantor shall keep its chief executive office and the office
where it keeps its records concerning the Receivables, and all originals of all
chattel paper which evidences Receivables, located at the address set forth in
Section 3.4 and shall keep its other places of business at the addresses set
forth in Section 3 of the Perfection Certificate delivered by such Grantor, or,
upon 30 days' prior written notice to the Administrative Agent, at such other
locations in a jurisdiction where all actions required by the first sentence of
Section 4.10 shall have been taken with respect to the Receivables and other
Collateral; not change its name or federal taxpayer identification number
except upon 30 days' prior written notice to the Administrative Agent; hold and
preserve such records and chattel paper; and permit representatives of the
Administrative Agent at any time during normal business hours to inspect and
make abstracts from such records and chattel paper. In addition, such Grantor
shall give the Administrative Agent a supplement to such Perfection Certificate
on each date a Compliance Certificate is required to be delivered to the
Administrative Agent under the Credit Agreement, which shall set forth any
changes to the information set forth in Section 3.4.
(b) Such Grantor shall have the right to collect all Receivables so
long as no Default of the nature set forth in Section 8.1.9 of the Credit
Agreement nor any Event of Default shall have occurred and be continuing.
(c) After the occurrence and during the continuance of a Default of
the nature set forth in Section 8.1.9 of the Credit Agreement or an Event of
Default, upon written notice by the Administrative Agent to such Grantor
pursuant to this Section 4.4(c), all proceeds of Collateral received by such
Grantor shall be delivered in kind for deposit to an account of such Grantor
maintained with the Administrative Agent (the "Collateral Account"). Proceeds
of Collateral
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received by such Grantor shall, prior to deposit in the Collateral Account, be
held separate and apart from, and not commingled with, any other property and
in express trust for the benefit of the Administrative Agent until delivery
thereof is made to the Collateral Account.
(d) The Administrative Agent shall have the right to apply any amount
in the Collateral Account to the payment of any Secured Obligations which are
due and payable or payable upon demand or to the payment of any Secured
Obligations at any time that an Event of Default shall have occurred and be
continuing.
(e) With respect to the Collateral Account, it is hereby confirmed and
agreed that (i) deposits in each Collateral Account are subject to a security
interest as contemplated hereby, (ii) the Collateral Account shall be under the
sole dominion and control of the Administrative Agent and (iii) the
Administrative Agent shall have the sole right of withdrawal over the
Collateral Account.
SECTION 4.5. As to Collateral. (a) Until the occurrence and
continuance of a Default of the nature set forth in clauses (a) through (d) of
Section 8.1.9 of the Credit Agreement or an Event of Default, and such time as
the Administrative Agent shall notify such Grantor of the revocation of such
power and authority, such Grantor may in the ordinary course of its business
(except as otherwise permitted under the Credit Agreement), at its own expense,
refine, process, store, transport, sell, lease or furnish under the contracts
of service any of the Inventory normally held by such Grantor for such purpose,
and use and consume, in the ordinary course of its business (except as
otherwise permitted under the Credit Agreement), any raw materials, work in
process or materials normally held by such Grantor for such purpose, will, at
its own expense, endeavor to collect, as and when due, all amounts due with
respect to any Collateral, including the taking of such action with respect to
such collection as the Administrative Agent may reasonably request following
the occurrence of a Default of the nature set forth in clauses (a) through (d)
of Section 8.1.9 of the Credit Agreement or an Event of Default or, in the
absence of such request, as such Grantor may deem advisable, and may grant, in
the ordinary course of business (except as otherwise permitted under the Credit
Agreement), to any party obligated on any of the Collateral, any rebate, refund
or allowance to which such party may be lawfully entitled, and may accept, in
connection therewith, the return of goods, the sale or lease of which shall
have given rise to such Collateral. The Administrative Agent, however, may, at
any time following a Default of the nature set forth in clauses (a) through (d)
of Section 8.1.9 of the Credit Agreement or an Event of Default, whether before
or after any revocation of such power and authority or the maturity of any of
the Secured Obligations, notify any parties obligated on any of the Collateral
to make payment to the Administrative Agent of any amounts due or to become due
thereunder and enforce collection of any of the Collateral by suit or otherwise
and surrender, release, or exchange all or any part thereof, or compromise or
extend or renew for any period (whether or not longer than the original period)
any indebtedness thereunder or evidenced thereby. Upon request of the
Administrative Agent following a Default of the nature set forth in clauses (a)
through (d) of Section 8.1.9 of the Credit Agreement or an Event of Default,
such Grantor will, at its own expense, notify any parties obligated on any of
the Collateral, to make payment to the Administrative Agent of any amounts due
or to become due thereunder.
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(b)Following a Default of the nature set forth in clauses (a) through
(d) of Section 8.1.9 of the Credit Agreement or an Event of Default, the
Administrative Agent is authorized to endorse, in the name of such Grantor, any
item, howsoever received by the Administrative Agent, representing any payment
on or other proceeds of any of the Collateral.
(c)Subject to Section 4.4(c), such Grantor shall have the right to
receive and retain all cash and cash equivalent proceeds of Collateral to be
applied as permitted by the Loan Documents.
SECTION 4.6. As to Intellectual Property Collateral. Such Grantor
covenants and agrees to comply with the following provisions as such provisions
relate to any Intellectual Property Collateral of such Grantor:
(a) such Grantor shall not, unless such Grantor shall either (i)
reasonably and in good faith determine (and notice of such
determination shall have been delivered to the Administrative Agent)
that any of the Patent Collateral is of negligible economic value to
such Grantor, or (ii) have a valid business purpose to do otherwise,
do any act, or omit to do any act, whereby any of the Patent
Collateral may lapse or become abandoned or dedicated to the public or
unenforceable;
(b) such Grantor shall not, and such Grantor shall not permit
any of its licensees to, unless such Grantor shall either (i)
reasonably and in good faith determine (and notice of such
determination shall have been delivered to the Administrative Agent)
that any of the Trademark Collateral is of negligible economic value
to such Grantor, or (ii) have a valid business purpose to do
otherwise,
(i) fail to continue to use any of the Trademark Collateral
in order to maintain all of the Trademark Collateral in full
force free from any claim of abandonment for non-use,
(ii) fail to maintain as in the past the quality of
products and services offered under all of the Trademark
Collateral,
(iii) fail to employ all of the Trademark Collateral
registered with any Federal or state or foreign authority with
an appropriate notice of such registration,
(iv) adopt or use any other Trademark which is confusingly
similar or a colorable imitation of any of the Trademark
Collateral,
(v) use any of the Trademark Collateral registered with any
Federal or state or foreign authority except for the uses for
which registration or application
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for registration of all of the Trademark Collateral has been
made, and
(vi) do or permit any act or knowingly omit to do any act
whereby any of the Trademark Collateral may lapse or become
invalid or unenforceable;
(c) such Grantor shall not, unless such Grantor shall either
reasonably and in good faith determine (and notice of such
determination shall have been delivered to the Administrative Agent)
that any of the Copyright Collateral or any of the Trade Secrets
Collateral is of negligible economic value to such Grantor, or have a
valid business purpose to do otherwise, do or permit any act or
knowingly omit to do any act whereby any of the Copyright Collateral
or any of the Trade Secrets Collateral may lapse or become invalid or
unenforceable or placed in the public domain except upon expiration of
the end of an unrenewable term of a registration thereof;
(d) such Grantor shall notify the Administrative Agent
immediately if it knows, or has reason to know, that any application
or registration relating to any material item of the Intellectual
Property Collateral may become abandoned or dedicated to the public or
placed in the public domain or invalid or unenforceable, or of any
adverse determination or development (including the institution of, or
any such determination or development in, any proceeding in the United
States Patent and Trademark Office, the United States Copyright Office
or any foreign counterpart thereof or any court) regarding such
Grantor's ownership of any of the Intellectual Property Collateral,
its right to register the same or to keep and maintain and enforce the
same;
(e) in no event shall such Grantor or any of its agents,
employees, designees or licensees file an application for the
registration of any Intellectual Property Collateral with the United
States Patent and Trademark Office, the United States Copyright Office
or any similar office or agency in any other country or any political
subdivision thereof, unless it promptly informs the Administrative
Agent, and upon request of the Administrative Agent, executes and
delivers any and all agreements, instruments, documents and papers as
the Administrative Agent may reasonably request to evidence the
Administrative Agent's security interest in such Intellectual Property
Collateral and the goodwill and general intangibles of such Grantor
relating thereto or represented thereby;
(f) such Grantor shall take all necessary steps, including in
any proceeding before the United States Patent and Trademark Office,
the United States Copyright Office or any similar office or agency in
any other country or any political subdivision thereof, to maintain
and pursue any application (and to obtain the relevant registration)
filed with respect to, and to maintain any registration of, the
Intellectual Property Collateral, including the filing of applications
for renewal, affidavits of use, affidavits of incontestability and
opposition, interference and cancellation proceedings and the payment
of fees and taxes (except to the extent that dedication, abandonment
or invalidation is permitted under the foregoing clauses (a), (b) and
(c)); and
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(g) such Grantor shall, contemporaneously herewith, execute and
deliver to the Administrative Agent a Patent Security Agreement,
Trademark Security Agreement and Copyright Security Agreement in the
forms of Exhibit B, Exhibit C and Exhibit D hereto, and shall execute
and deliver to the Administrative Agent any other document required to
acknowledge or register or perfect the Administrative Agent's interest
in any part of the Intellectual Property Collateral.
SECTION 4.7. Insurance. Such Grantor will maintain or cause to be
maintained with responsible insurance companies insurance with respect to its
business and properties (including the Equipment and Inventory) against such
casualties and contingencies and of such types and in such amounts as is
customary in the case of similar businesses and will furnish a certificate of a
reputable insurance broker setting forth the nature and extent of all insurance
maintained by the Grantor in accordance with this Section. Without limiting the
foregoing, the Grantor further agrees as follows:
(a) Each policy for property insurance shall show the
Administrative Agent as loss payee.
(b) Each policy for liability insurance shall show the
Administrative Agent as an additional insured.
(c) With respect to each life insurance policy (if any), the
Grantor shall, within thirty days of the date hereof or the date on
which such policy becomes effective, execute and deliver to the
Administrative Agent a collateral assignment, notice of which has been
acknowledged in writing by the insurer.
(d) Each insurance policy shall provide that at least 30 days'
prior written notice of cancellation or of lapse shall be given to the
Administrative Agent by the insured.
(e) The Grantor shall, if so requested by the Administrative
Agent, deliver to the Administrative Agent a copy of each insurance
policy.
(f) Except to the extent otherwise permitted under the Credit
Agreement, all payments in respect of property insurance and life
insurance shall be deposited to the Collateral Account and if there
shall be no Collateral Account shall be paid to the Grantor.
SECTION 4.8. Transfers and Other Liens. Such Grantor shall not:
(a) sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except Inventory in the ordinary
course of business or as permitted by the Credit Agreement; or
(b) create or suffer to exist any Lien or other charge or
encumbrance upon or with
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respect to any of the Collateral to secure Indebtedness of any Person
or entity, except for the security interest created by this Security
and Pledge Agreement and except as permitted by the Credit Agreement.
SECTION 4.9. Further Assurances, etc. Such Grantor agrees that, from
time to time at its own expense, it will promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or desirable, or that the Administrative Agent may request, in order
to perfect, preserve and protect any security interest granted or purported to
be granted hereby or to enable the Administrative Agent to exercise and enforce
its rights and remedies hereunder with respect to any Collateral. Without
limiting the generality of the foregoing, such Grantor will
(a) if any Receivable shall be evidenced by a promissory note or
other instrument, negotiable document or chattel paper, deliver and
pledge to the Administrative Agent hereunder such promissory note,
instrument, negotiable document or chattel paper duly endorsed and
accompanied by duly executed instruments of transfer or assignment,
all in form and substance satisfactory to the Administrative Agent;
(b) execute and file such financing or continuation statements,
or amendments thereto, and such other instruments or notices
(including any assignment of claim form under or pursuant to the
federal assignment of claims statute, 31 U.S.C. ss. 3726, any
successor or amended version thereof or any regulation promulgated
under or pursuant to any version thereof), as may be necessary or
desirable, or as the Administrative Agent may request, in order to
perfect and preserve the security interests and other rights granted
or purported to be granted to the Administrative Agent hereby;
(c) not enter into any agreement amending, supplementing, or
waiving any provision of any Intercompany Note (including any
underlying instrument pursuant to which such Intercompany Note is
issued) or compromising or releasing or extending the time for payment
of any obligation of the maker thereof without the prior written
consent of the Administrative Agent;
(d) promptly execute and deliver all further instruments and
take all further action, that may be necessary or desirable, or that
the Administrative Agent may reasonably request, in order to perfect
and protect any security interest granted or purported to be granted
hereby or to enable the Administrative Agent to exercise and enforce
its rights and remedies hereunder with respect to any Collateral;
(e) not take or omit to take any action the taking or the
omission of which would result in any impairment or alteration of any
obligation of the maker of any Intercompany Note or other instrument
constituting Collateral; and
(f) furnish to the Administrative Agent, from time to time at
the Administrative
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Agent's request, statements and schedules further identifying and
describing the Collateral and such other reports in connection with
the Collateral as the Administrative Agent may reasonably request,
all in reasonable detail.
With respect to the foregoing and the grant of the security interest hereunder,
such Grantor hereby authorizes the Administrative Agent to file one or more
financing or continuation statements, and amendments thereto, relative to all
or any part of the Collateral without the signature of such Grantor where
permitted by law. A carbon, photographic or other reproduction of this Security
and Pledge Agreement or any financing statement covering the Collateral or any
part thereof shall be sufficient as a financing statement where permitted by
law.
ARTICLE V
THE ADMINISTRATIVE AGENT
SECTION 5.1. Administrative Agent Appointed Attorney-in-Fact. Such
Grantor hereby irrevocably appoints the Administrative Agent such Grantor's
attorney-in-fact, with full authority in the place and stead of such Grantor
and in the name of such Grantor or otherwise, from time to time following the
occurrence and during the continuance of an Event of Default, to take any
action and to execute any instrument which the Administrative Agent may deem
necessary or advisable to accomplish the purposes of this Security and Pledge
Agreement, including:
(a) to ask, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral;
(b) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clause
(a) above;
(c) to file any claims or take any action or institute any
proceedings which the Administrative Agent may deem necessary or
desirable for the collection of any of the Collateral or otherwise to
enforce the rights of the Administrative Agent with respect to any of
the Collateral; and
(d) to perform the affirmative obligations of such Grantor
hereunder (including all obligations of such Grantor pursuant to
Section 4.9).
Such Grantor hereby acknowledges, consents and agrees that the power of
attorney granted pursuant to this Section is irrevocable and coupled with an
interest.
SECTION 5.2. Administrative Agent May Perform. If any Grantor fails to
perform any agreement contained herein, the Administrative Agent may itself
perform, or cause performance
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of, such agreement, and the expenses of the Administrative Agent incurred in
connection therewith shall be payable by such Grantor pursuant to Section 6.4.
SECTION 5.3. Administrative Agent Has No Duty. In addition to, and not
in limitation of, Section 2.6, the powers conferred on the Administrative Agent
hereunder are solely to protect its interest (on behalf of the Secured Parties)
in the Collateral and shall not impose any duty on it to exercise any such
powers. Except for reasonable care of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Administrative
Agent shall have no duty as to any Collateral or responsibility for
(a) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative
to any Investment Property, whether or not the Administrative Agent
has or is deemed to have knowledge of such matters, or
(b) taking any necessary steps to preserve rights against prior
parties or any other rights pertaining to any Collateral.
SECTION 5.4. Reasonable Care. The Administrative Agent is required to
exercise reasonable care in the custody and preservation of any of the
Collateral in its possession; provided, however, the Administrative Agent shall
be deemed to have exercised reasonable care in the custody and preservation of
any of the Collateral, if it takes such action for that purpose as such Grantor
reasonably requests in writing at times other than upon the occurrence and
during the continuance of any Event of Default, but failure of the
Administrative Agent to comply with any such request at any time shall not in
itself be deemed a failure to exercise reasonable care.
ARTICLE VI
REMEDIES
SECTION 6.1. Certain Remedies. If any Event of Default shall have
occurred and be continuing:
(a) The Administrative Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for
herein or otherwise available to it, all the rights and remedies of a
secured party on default under the U.C.C. (whether or not the U.C.C.
applies to the affected Collateral) and also may
(i) require such Grantor to, and such Grantor hereby agrees
that it will, at its expense and upon request of the
Administrative Agent forthwith, assemble all or part of the
Collateral as directed by the Administrative Agent and make it
available to the Administrative Agent at a place to be
designated by the Administrative Agent which is reasonably
convenient to both parties, and
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(ii) without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public
or private sale, at any of the Administrative Agent's offices or
elsewhere, for cash, on credit or for future delivery, and upon
such other terms as the Administrative Agent may deem
commercially reasonable. Such Grantor agrees that, to the extent
notice of sale shall be required by law, at least ten days'
prior notice to such Grantor of the time and place of any public
sale or the time after which any private sale is to be made
shall constitute reasonable notification. The Administrative
Agent shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The
Administrative Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned.
(b) All cash proceeds received by the Administrative Agent in
respect of any sale of, collection from, or other realization upon all
or any part of the collateral may, in the discretion of the
Administrative Agent, be held by the Administrative Agent as
collateral for, and/or then or at any time thereafter applied (after
payment of any amounts payable to the Administrative Agent pursuant to
Section 6.3) in whole or in part by the Administrative Agent for the
benefit of the Secured Parties against, all or any part of the Secured
Obligations in any such order as the Administrative Agent shall elect.
Any surplus of such cash or cash proceeds held by the Administrative
Agent and remaining after payment in full of all the Obligations shall
be paid over to the Grantor or to whomsoever may be lawfully entitled
to receive such surplus.
(c) The Administrative Agent may
(i) transfer all or any part of the Collateral into the
name of the Administrative Agent or its nominee, with or without
disclosing that such Collateral is subject to the lien and
security interest hereunder,
(ii) notify the parties obligated on any of the Collateral
to make payment to the Administrative Agent of any amount due or
to become due thereunder,
(iii) enforce collection of any of the Collateral by suit
or otherwise, and surrender, release or exchange all or any part
thereof, or compromise or extend or renew for any period
(whether or not longer than the original period) any obligations
of any nature of any party with respect thereto,
(iv) endorse any checks, drafts, or other writings in such
Grantor's name to allow collection of the Collateral,
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(v) take control of any proceeds of the Collateral, and
(vi) execute (in the name, place and stead of such Grantor)
endorsements, assignments, stock powers and other instruments of
conveyance or transfer with respect to all or any of the
Collateral.
SECTION 6.2. Securities Laws. If the Administrative Agent shall
determine to exercise its right to sell all or any of the Collateral pursuant
to Section 6.1, such Grantor agrees that, upon request of the Administrative
Agent, such Grantor will, at its own expense:
(a) execute and deliver, and cause each issuer of the
Collateral contemplated to be sold and the directors and
officers thereof to execute and deliver, all such instruments
and documents, and do or cause to be done all such other acts
and things, as may be necessary or, in the opinion of the
Administrative Agent, advisable to register such Collateral
under the provisions of the Securities Act of 1933, as from time
to time amended (the "Securities Act"), and to cause the
registration statement relating thereto to become effective and
to remain effective for such period as prospectuses are required
by law to be furnished, and to make all amendments and
supplements thereto and to the related prospectus which, in the
opinion of the Administrative Agent, are necessary or advisable,
all in conformity with the requirements of the Securities Act
and the rules and regulations of the Securities and Exchange
Commission applicable thereto;
(b) use its best efforts to qualify the Collateral under
the state securities or "Blue Sky" laws and to obtain all
necessary governmental approvals for the sale of the Collateral,
as requested by the Administrative Agent;
(c) cause each such issuer to make available to its
security holders, as soon as practicable, an earnings statement
that will satisfy the provisions of Section 11(a) of the
Securities Act; and
(d) do or cause to be done all such other acts and things
as may be necessary to make such sale of the Collateral or any
part thereof valid and binding and in compliance with applicable
law.
Such Grantor further acknowledges the impossibility of ascertaining the amount
of damages that would be suffered by the Administrative Agent or the Secured
Parties by reason of the failure by such Grantor to perform any of the
covenants contained in this Section and, consequently, agrees that, if such
Grantor shall fail to perform any of such covenants, such covenants shall be
specifically enforceable against such Grantor.
SECTION 6.3. Indemnity and Expenses.
(a) Such Grantor agrees to indemnify the Administrative Agent
from and against
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any and all claims, losses and liabilities arising out of or resulting
from this Security and Pledge Agreement (including enforcement of this
Security and Pledge Agreement), except claims, losses or liabilities
resulting from the Administrative Agent's gross negligence or wilful
misconduct.
(b) Such Grantor will upon demand pay to the Administrative
Agent the amount of any and all reasonable expenses, including the
reasonable fees and disbursements of its counsel and of any experts
and agents, which the Administrative Agent may incur in connection
with
(i) the administration of this Security and Pledge
Agreement,
(ii) the custody, preservation, use or operation of, or the
sale of, collection from, or other realization upon, any of the
Collateral,
(iii) the exercise or enforcement of any of the rights of
the Administrative Agent or the Secured Parties hereunder, and
(iv) the failure by such Grantor to perform or observe any
of the provisions hereof.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.1. Loan Document. This Security and Pledge Agreement is a
Loan Document executed pursuant to the Credit Agreement and shall (unless
otherwise expressly indicated herein) be construed, administered and applied in
accordance with the terms and provisions thereof.
SECTION 7.2. Amendments; etc. No amendment to or waiver of any
provision of this Security and Pledge Agreement nor consent to any departure by
such Grantor herefrom shall in any event be effective unless the same shall be
in writing and signed by the Administrative Agent (on behalf of the Lenders or
the Required Lenders, as the case may be), and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
SECTION 7.3. Protection of Collateral. The Administrative Agent may
from time to time, at its option, perform any act which such Grantor agrees
hereunder to perform and which such Grantor shall fail to perform after being
requested in writing so to perform (it being understood that no such request
need be given after the occurrence and during the continuance of an Event of
Default).
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<PAGE>
SECTION 7.4. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing (including
telegraphic communication) and, if to such Grantor, mailed or telecopied or
delivered to it at the address of the Borrower specified in the Credit
Agreement, and, if to the Administrative Agent, mailed or telecopied or
delivered to it, addressed to it at the address of the Administrative Agent
specified in the Credit Agreement. All such notices and other communications,
when mailed and properly addressed with postage prepaid or if properly
addressed and sent by pre-paid courier service, shall be deemed given when
received; any such notice or communication, if transmitted by telecopier, shall
be deemed given when transmitted and electronically confirmed.
SECTION 7.5. Section Captions. Section captions used in this Security
and Pledge Agreement are for convenience of reference only, and shall not
affect the construction of this Security and Pledge Agreement.
SECTION 7.6. Severability. Wherever possible each provision of this
Security and Pledge Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Security
and Pledge Agreement shall be prohibited by or invalid under such law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining
provisions of this Security and Pledge Agreement.
SECTION 7.7. Counterparts. This Security and Pledge Agreement may be
executed by the parties hereto in several counterparts, each of which shall be
deemed an original and all of which shall constitute together but one and the
same agreement.
SECTION 7.8. Governing Law, Entire Agreement, etc. THIS SECURITY AND
PLEDGE AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR
PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN
RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION
OTHER THAN THE STATE OF NEW YORK. THIS SECURITY AND PLEDGE AGREEMENT AND THE
OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES
HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND THEREOF AND SUPERSEDE ANY
PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.
SECTION 7.9. Waiver of Jury Trial. THE ADMINISTRATIVE AGENT AND EACH
GRANTOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE TO THE FULLEST
EXTENT PERMITTED BY LAW ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION
WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF
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<PAGE>
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF
THE ADMINISTRATIVE AGENT OR SUCH GRANTOR IN CONNECTION HEREWITH OR THEREWITH.
SUCH GRANTOR ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER LOAN
DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE ADMINISTRATIVE AGENT ENTERING INTO THIS AGREEMENT AND EACH
SUCH OTHER LOAN DOCUMENT.
[REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY]
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<PAGE>
IN WITNESS WHEREOF, each Grantor has caused this Security and Pledge
Agreement to be duly executed and delivered by its officer thereunto duly
authorized as of the date first above written.
NEXTEL PARTNERS OF FLORIDA, INC.,
a Delaware corporation
By /s/ John D. Thompson
------------------------------------
Name: John D. Thompson
Title: Treasurer
NEXTEL PARTNERS OF KENTUCKY, INC.,
a Delaware corporation
By: /s/ Donald J. Manning
------------------------------------
Name: Donald J. Manning
Title: Secretary
NEXTEL PARTNERS OF LOUISIANA, INC., a
Delaware corporation
By: /s/ Donald J. Manning
------------------------------------
Name: Donald J. Manning
Title: Secretary
NEXTEL PARTNERS OF MIDWEST, INC.,
a Delaware corporation
By: /s/ John D. Thompson
------------------------------------
Name: John D. Thompson
Title: Treasurer
NCPR, INC.,
a Delaware corporation
By: /s/ John D. Thompson
------------------------------------
Name: John D. Thompson
Title: Treasurer
NEXTEL PARTNERS OF PA, INC.,
a Delaware corporation
By: /s/ Donald J. Manning
------------------------------------
Name: Donald J. Manning
Title: Secretary
NEXTEL PARTNERS OF SOUTHWEST, INC.
a Delaware corporation
By: /s/ John D. Thompson
------------------------------------
Name: John D. Thompson
Title: Treasurer
<PAGE>
NEXTEL PARTNERS OF TEXAS, INC.,
a Delaware corporation
By: /s/ Donald J. Manning
------------------------------------
Name: Donald J. Manning
Title: Secretary
NEXTEL PARTNERS OF UPSTATE NEW YORK,
INC., a Delaware corporation
By: /s/ Donald J. Manning
------------------------------------
Name: Donald J. Manning
Title: Secretary
NEXTEL PARTNERS OF WISCONSIN, INC.,
a Delaware corporation
By: /s/ Donald J. Manning
------------------------------------
Name: Donald J. Manning
Title: Secretary
NEXTEL WIP LEASE CORP.,
a Delaware corporation
By: /s/ Donald J. Manning
------------------------------------
Name: Donald J. Manning
Title: Vice President, General Counsel and Secretary
ACCEPTED
BY:
BANK OF MONTREAL,
as Administrative Agent
By: /s/ Karen Klapper
- ----------------------
Name: Karen Klapper
Title: Director
<PAGE>
PARENT GUARANTY AND PLEDGE AGREEMENT
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This PARENT GUARANTY AND PLEDGE AGREEMENT (this "Agreement"), dated as
of January 29, 1999, is made by NEXTEL PARTNERS, INC., a Delaware corporation
(the "Parent"), in favor of BANK OF MONTREAL, as administrative agent (together
with any successor(s) thereto in such capacity, the "Administrative Agent") for
each of the Secured Parties (as defined below).
W I T N E S S E T H:
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WHEREAS, pursuant to a Credit Agreement, dated as of January 29, 1999
(as amended, supplemented, amended and restated or otherwise modified from time
to time, the "Credit Agreement"), among Nextel Partners Operating Corp., a
Delaware corporation (the "Borrower"), the various financial institutions as
are or may from time to time become parties thereto (the "Lenders"), DLJ
Capital Funding, Inc., as the syndication agent, The Bank of New York, as the
documentation agent and the Administrative Agent, the Lenders and the Issuer
have extended Commitments to make Credit Extensions to, and for the benefit of,
the Borrower;
WHEREAS, as a condition precedent to the making of each Credit
Extension (including the initial Credit Extension) under the Credit Agreement,
the Parent is required to execute and deliver this Agreement;
WHEREAS, the Parent has duly authorized the execution, delivery and
performance of this Agreement; and
WHEREAS, it is in the best interests of the Parent to execute this
Agreement inasmuch as the Parent will derive substantial direct and indirect
benefits from the Credit Extensions made from time to time to the Borrower by
the Lenders and the Issuer pursuant to the Credit Agreement;
NOW, THEREFORE, for good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, and in order to induce the Lenders
and the Issuer to make each Credit Extension (including the initial Credit
Extension) to the Borrower pursuant to the Credit Agreement, the Parent agrees,
for the benefit of each Secured Party, as follows:
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ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall have the following meanings (such definitions to be equally applicable to
the singular and plural forms thereof):
"Administrative Agent" is defined in the preamble.
"Agreement" is defined in the preamble.
"Borrower" is defined in the first recital.
"Collateral" is defined in Section 2.1.
"Collateral Account" is defined in Section 5.16.
"Credit Agreement" is defined in the first recital.
"Distributions" means all stock dividends, liquidating dividends,
shares of stock resulting from (or in connection with the exercise of) stock
splits, reclassifications, warrants, options, non-cash dividends, mergers,
consolidations, and all other distributions (whether similar or dissimilar to
the foregoing) on or with respect to any Pledged Shares or other shares of
capital stock constituting Collateral, but shall not include Dividends.
"Dividends" means cash dividends and cash distributions with respect
to any Pledged Shares or other Pledged Property made in the ordinary course of
business and not a liquidating dividend.
"Lenders" is defined in the first recital.
"Parent" is defined in the preamble.
"Pledged Property" means all Pledged Shares, and all other pledged
shares of capital stock, all other securities, all other instruments which are
now being delivered by the Parent to the Administrative Agent or may from time
to time hereafter be delivered by the Parent to the Administrative Agent for
the purpose of pledge under this Agreement or any other Loan Document, and all
proceeds of any of the foregoing.
"Pledged Share Issuer" means the Borrower.
"Pledged Shares" means all shares of capital stock of the Pledged
Share Issuer which are
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delivered by the Parent to the Administrative Agent as Pledged Property
hereunder.
"Secured Obligations" is defined in Section 2.2.
"Secured Party" means, as the context may require, any Lender, the
Issuer and each Agent and each of their respective successors, transferees and
assigns.
"Securities Act" is defined in Section 7.2.
"U.C.C." means the Uniform Commercial Code as in effect from time to
time in the State of New York or, as the context may require, in any other
jurisdiction the laws of which may apply to all or a portion of the Collateral
in which a security interest is granted hereunder.
SECTION 1.2. Credit Agreement Definitions. Unless otherwise defined
herein or the context otherwise requires, terms used in this Agreement,
including its preamble and recitals, have the meanings provided in the Credit
Agreement.
SECTION 1.3. U.C.C. Definitions. Unless otherwise defined herein or in
the Credit Agreement or the context otherwise requires, terms for which
meanings are provided in the U.C.C. are used in this Agreement, including its
preamble and recitals, with such meanings.
ARTICLE II
PLEDGE
SECTION 2.1. Grant of Security Interest. The Parent hereby assigns,
pledges, hypothecates, charges, mortgages, delivers, and transfers to the
Administrative Agent, for its benefit and the ratable benefit of each of the
Secured Parties, and hereby grants to the Administrative Agent, for its benefit
and the ratable benefit of the Secured Parties, a continuing security interest
in, all of the following, whether now owned or hereafter existing or acquired
by the Parent (the "Collateral"):
(a) all issued and outstanding shares of Capital Stock of the
Pledged Share Issuer;
(b) all other Pledged Shares issued from time to time;
(c) all other Pledged Property, whether now or hereafter
delivered to the Administrative Agent in connection with this
Agreement;
(d) all Dividends, Distributions, and other payments and rights
with respect to any Pledged Property;
(e) each agreement described on Schedule I hereto (as amended or
modified, an "
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Assigned Agreement"), together with (i) all rights and benefits
(whether monetary or otherwise) of the Parent to receive benefits due
and to become due under or pursuant to each Assigned Agreement, (ii)
all rights of the Parent to receive proceeds of any insurance,
indemnity, warranty, guaranty or collateral security with respect to
any Assigned Agreement, (iii) all claims of the Parent for damages
arising out of or for breach or default under any Assigned Agreement
and (iv) all rights of the Parent to terminate any Assigned Agreement,
to perform thereunder and to compel performance and otherwise exercise
all remedies thereunder; and
(f) to the extent not included in the foregoing, all proceeds of
any and all of the foregoing Collateral.
SECTION 2.2. Security for Obligations. This Agreement secures the
payment in full in cash of all monetary Obligations of the Borrower now or
hereafter existing under the Credit Agreement, the Notes and each other Loan
Document to which the Borrower is or may become a party, whether for principal,
interest, costs, fees, expenses, or otherwise, and all obligations of the
Parent and each other Obligor whether now or hereafter existing under this
Agreement and each other Loan Document to which the Parent or such other
Obligor is or may become a party (all such obligations of the Borrower, the
Parent and such other Obligor being the "Secured Obligations").
SECTION 2.3. Delivery of Pledged Property. All certificates or
instruments representing or evidencing any Collateral, including all Pledged
Shares, shall be delivered to and held by or on behalf of the Administrative
Agent pursuant hereto, shall be in suitable form for transfer by delivery, and
shall be accompanied by all necessary instruments of transfer or assignment,
duly executed in blank.
SECTION 2.4. Dividends on Pledged Shares. In the event that any
Dividend is to be paid on any Pledged Share at a time when (x) no Default of
the nature referred to Section 8.1.9 of the Credit Agreement has occurred and
is continuing, and (y) no Event of Default has occurred and is continuing, such
Dividend may be paid directly to and retained by the Parent. If any such
Default or Event of Default has occurred and is continuing, then any such
Dividend shall be paid directly to the Administrative Agent.
SECTION 2.5. Continuing Security Interest; Transfer of Note. This
Agreement shall create a continuing security interest in the Collateral and
shall
(a) remain in full force and effect until payment in full of all
Secured Obligations then due, the termination or expiration of all
Letters of Credit and the termination of all Commitments,
(b) be binding upon the Parent and its successors, transferees
and assigns, and
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(c) inure, together with the rights and remedies of the
Administrative Agent hereunder, to the benefit of the Administrative
Agent and each other Secured Party.
Without limiting the foregoing clause (c), any Lender may assign or otherwise
transfer (in whole or in part) any Commitment, Note, Credit Extension, Hedging
Obligation or other Secured Obligation held by it to any other Person or
entity, and such other Person or entity shall thereupon become vested with all
the rights and benefits in respect thereof granted to such Lender under any
Loan Document (including this Agreement) or any document relating to such
Hedging Obligation or otherwise, subject, however, to any contrary provisions
in such assignment or transfer, and to the provisions of Section 10.11 and
Article IX of the Credit Agreement. Upon (i) the sale, transfer or other
disposition of Collateral in accordance with the Credit Agreement or (ii) the
payment in full of all Secured Obligations, the termination or expiration of
all Letters of Credit and the termination of all Commitments, the security
interest granted herein shall automatically terminate with respect to (x) such
Collateral (in the case of clause (i)) or (y) all Collateral (in the case of
clause (ii)). Upon any such termination, the Administrative Agent will, at the
Parent's sole expense, deliver to the Parent, without any representations,
warranties or recourse of any kind whatsoever, all certificates and instruments
representing or evidencing all Pledged Shares, together with all other
Collateral held by the Administrative Agent hereunder, and execute and deliver
to the Parent such documents as the Parent shall reasonably request to evidence
such termination.
SECTION 2.6. Postponement of Subrogation. The Parent agrees that it
will not exercise any rights which it may acquire by way of subrogation under
this Agreement, by any payment made hereunder or otherwise, until the prior
payment, in full and in cash, of all Secured Obligations. Any amount paid to
the Parent on account of any such subrogation rights prior to the payment in
full of all Secured Obligations shall be held in trust for the benefit of the
Secured Parties and each holder of a Note and shall immediately be paid to the
Secured Parties and each holder of a Note and credited and applied against the
Secured Obligations, whether matured or unmatured, in accordance with the terms
of the Credit Agreement; provided, however, that if all Secured Obligations
then due have been paid in full and all Commitments have been permanently
terminated, each Secured Party and each holder of a Note agrees that, at the
Parent's request, the Secured Parties and the holders of the Notes, will
execute and deliver to the Parent appropriate documents (without recourse and
without representation or warranty) necessary to evidence the transfer by
subrogation to the Parent of an interest in the Secured Obligations resulting
from such payment by the Parent. In furtherance of the foregoing, for so long
as any Obligations or Commitments remain outstanding, the Parent shall refrain
from taking any action or commencing any proceeding against the Borrower or any
other Obligor (or its successors or assigns, whether in connection with a
bankruptcy proceeding or otherwise) to recover any amounts in the respect of
payments made under this Agreement to any Secured Party or any holder of a
Note.
ARTICLE III
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GUARANTY PROVISIONS
SECTION 3.1. Guaranty. The Parent hereby absolutely, unconditionally
and irrevocably
(a) guarantees the full and punctual payment when due, whether
at stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise, of all Obligations of the Borrower and each other
Obligor now or hereafter existing under the Credit Agreement, the
Notes, any Letter of Credit and each other Loan Document to which the
Borrower or such other Obligor is or may become a party, whether for
principal, interest, Reimbursement Obligations, fees, expenses or
otherwise (including all such amounts which would become due but for
the operation of the automatic stay under Section 362(a) of the United
States Bankruptcy Code, 11 U.S.C.ss.362(a), and the operation of
Sections 502(b) and 506(b) of the United States Bankruptcy Code, 11
U.S.C.ss.502(b) andss.506(b)), and
(b) indemnifies and holds harmless each Secured Party and each
holder of a Note for any and all costs and expenses (including
reasonable attorney's fees and expenses) incurred by such Secured Party
or such holder, as the case may be, in enforcing any rights under this
Agreement;
provided, however, that the Parent shall be liable under this Agreement
only for the maximum amount of such liability that can be hereby incurred
without rendering this Agreement, as it relates to the Parent, voidable under
applicable law relating to fraudulent conveyance or fraudulent transfer, and not
for any greater amount. This Agreement constitutes a guaranty of payment when
due and not of collection, and the Parent specifically agrees that it shall not
be necessary or required that any Secured Party or any holder of any Note
exercise any right, assert any claim or demand or enforce any remedy whatsoever
against the Borrower or any other Obligor (or any other Person) before or as a
condition to the obligations of the Parent hereunder.
SECTION 3.2. Acceleration of Guaranty. The Parent agrees that, in the
event of any Default described in clauses (a) through (d) of Section 8.1.9 of
the Credit Agreement, and if such event shall occur at a time when any of the
Obligations of the Borrower and each other Obligor may not then be due and
payable, the Parent agrees that it will pay to the Lenders forthwith the full
amount which would be payable hereunder by the Parent if all such Obligations
were then due and payable.
SECTION 3.3. Guaranty and Security Interest Absolute, etc. The
provisions of this Article III shall in all respects be a continuing, absolute,
unconditional and irrevocable guaranty of payment and shall remain in full
force and effect until all Obligations of the Borrower and each other Obligor
have been paid in full in cash, all Letters of Credit have been terminated or
expired, all Rate Protection Agreements have been terminated, all obligations
of the Parent hereunder shall have been paid in full in cash and all
Commitments shall have terminated. The Parent guarantees that the Obligations
of the Borrower and each other Obligor will be paid strictly in accordance
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with the terms of the Credit Agreement, the Notes and each other Loan Document
under which they arise, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of any Secured Party or any holder of any Note with respect thereto. The
liability of the Parent under this Agreement shall be absolute, unconditional
and irrevocable irrespective of:
(a) any lack of validity, legality or enforceability of the
Credit Agreement, any Note or any other Loan Document;
(b) the failure of any Secured Party or any holder of any Note
(i) to assert any claim or demand or to enforce any right
or remedy against the Borrower, any other Obligor or any other
Person (including any other guarantor) under the provisions of
the Credit Agreement, any Note, any other Loan Document or
otherwise, or
(ii) to exercise any right or remedy against any other
guarantor of, or collateral securing, any Secured Obligations;
(c) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Secured Obligations or any other
extension, compromise or renewal of any Secured Obligation;
(d) any reduction, limitation, impairment or termination of any
Secured Obligations for any reason, including any claim of waiver,
release, surrender, alteration or compromise, and shall not be subject
to (and the Parent hereby waives any right to or claim of) any defense
or setoff, counterclaim, recoupment or termination whatsoever by
reason of the invalidity, illegality, nongenuineness, irregularity,
compromise, unenforceability of, or any other event or occurrence
affecting, any Secured Obligations or otherwise;
(e) any amendment to, rescission, waiver, or other modification
of, or any consent to departure from, any of the terms of the Credit
Agreement, any Note or any other Loan Document;
(f) any addition, exchange, release, surrender or non-perfection
of any collateral, or any amendment to or waiver or release or
addition of, or consent to departure from, any other guaranty, held by
any Secured Party or any holder of any Note securing any of the
Secured Obligations; or
(g) any other circumstance which might otherwise constitute a
defense available to, or a legal or equitable discharge of, the
Borrower, any other Obligor, any surety or any guarantor.
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SECTION 3.4. Reinstatement, etc. The Parent agrees that this Agreement
shall continue to be effective or be reinstated, as the case may be, if at any
time any payment (in whole or in part) of any of the Obligations is rescinded
or must otherwise be restored by any Secured Party or any holder of any Note,
upon the insolvency, bankruptcy or reorganization of the Borrower, any other
Obligor or otherwise, all as though such payment had not been made.
SECTION 3.5. Waiver, etc. The Parent hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Obligations of the Borrower or any other Obligor and this Agreement and any
requirement that the Administrative Agent, any other Secured Party or any
holder of any Note protect, secure, perfect or insure any security interest or
Lien, or any property subject thereto, or exhaust any right or take any action
against the Borrower, any other Obligor or any other Person (including any
other guarantor) or entity or any collateral securing the Obligations of the
Borrower or any other Obligor, as the case may be.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. Representations and Warranties, etc. The Parent
represents and warrants unto each Secured Party, as at the date of each pledge
and delivery hereunder (including each pledge and delivery of Pledged Shares)
by the Parent to the Administrative Agent of any Collateral, as set forth in
this Article.
SECTION 4.1.1. Organization, etc. The Parent (a) is a corporation
validly organized and existing and in good standing under the laws of the State
of its incorporation, is duly qualified to do business and is in good standing
as a foreign corporation under the laws of each jurisdiction where the nature
of its business requires such qualification and (b) has full power and
authority and holds all requisite governmental licenses, permits and other
approvals to (i) enter into and perform its obligations in connection with the
Transaction and under this Agreement and each other Loan Document to which it
is a party and (ii) own and hold under lease its property and to conduct its
business substantially as currently conducted by it.
SECTION 4.1.2. Due Authorization, Non-Contravention, etc. The
execution, delivery and performance by the Parent of this Agreement and the
Parent's participation in the consummation of the Transaction are within the
Parent's corporate powers, have been duly authorized by all necessary corporate
action, and do not contravene the Parent's Organic Documents, contravene any
contractual restriction, law or governmental regulation or court decree or
order binding on or affecting the Parent, or result in, or require the creation
or imposition of, any Lien on any of the Parent's properties, except pursuant
to the terms of a Loan.
SECTION 4.1.3. Validity, etc. This Agreement constitutes the legal,
valid and binding
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obligations of the Parent enforceable in accordance with its terms subject to
the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general principles (whether considered in a proceeding in equity or
at law) and an implied covenant of good faith and fair dealing.
SECTION 4.1.4. Ownership, No Liens, etc. The Parent is the legal and
beneficial owner of, and has good and marketable title to (and has full right
and authority to pledge and assign) such Collateral, free and clear of all
Liens except any Lien granted pursuant hereto in favor of the Administrative
Agent or Liens permitted pursuant to Section 7.2.3 of the Credit Agreement.
SECTION 4.1.5. Valid Security Interest. The execution and delivery of
this Agreement, together with the delivery of such Collateral to the
Administrative Agent, creates a valid, perfected, first priority security
interest in such Collateral and all proceeds thereof (subject to Section 9-306
of the U.C.C. and Liens permitted pursuant to Section 7.2.3 of the Credit
Agreement), securing the Secured Obligations. Possession by the Administrative
Agent of the Collateral is the only action necessary to perfect or protect such
security interest in the Collateral, subject to Section 9-306 of the U.C.C.
SECTION 4.1.6. As to Pledged Shares. In the case of any Pledged Shares
constituting Collateral, all of such Pledged Shares are duly authorized and
validly issued, fully paid, and non-assessable, and constitute all of the
issued and outstanding shares of capital stock of the Pledged Share Issuer,
except as otherwise permitted by the Credit Agreement. On the Closing Date, the
Parent has no direct Subsidiary other than the Pledged Share Issuer.
SECTION 4.1.7. Authorization, Approval, etc. No authorization,
approval, or other action by, and no notice to or filing with, any governmental
authority, regulatory body or any other Person is required either
(a) for the pledge by the Parent of any Collateral pursuant to
this Agreement or for the execution, delivery, and performance of this
Agreement by the Parent, or
(b) for the exercise by the Administrative Agent of the voting
or other rights provided for in this Agreement, or, except, with
respect to any Pledged Shares, as may be required in connection with a
disposition of such Pledged Shares by laws affecting the offering and
sale of securities generally or the rules and regulations of the FCC,
the remedies in respect of the Collateral pursuant to this Agreement.
SECTION 4.1.8. Credit Agreement Representations and Warranties. The
representations and warranties contained in Article VI of the Credit Agreement,
insofar as the representations and warranties contained therein are applicable
to the Parent and its properties, are true and correct in all material
respects, each such representation and warranty set forth in such Article
(insofar as applicable as aforesaid) and all other terms of the Credit
Agreement to which reference is made therein, together with all related
definitions and ancillary provisions, being hereby incorporated
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into this Agreement by reference as though specifically set forth in this
Article.
ARTICLE V
COVENANTS
SECTION 5.1. Protect Collateral; Further Assurances, etc. The Parent
will not sell, assign, transfer, pledge, or encumber in any other manner the
Collateral (except in favor of the Administrative Agent hereunder or as
permitted under the Credit Agreement). The Parent will warrant and defend the
right and title herein granted unto the Administrative Agent in and to the
Collateral (and all right, title, and interest represented by the Collateral)
against the claims and demands of all Persons whomsoever. The Parent agrees
that at any time, and from time to time, at the expense of the Parent, the
Parent will promptly execute and deliver all further instruments, and take all
further action, that may be necessary or desirable, or that the Administrative
Agent may reasonably request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable the
Administrative Agent to exercise and enforce its rights and remedies hereunder
with respect to any Collateral.
SECTION 5.2. Stock Powers, etc. The Parent agrees that all Pledged
Shares (and all other shares of Capital Stock constituting Collateral)
delivered by the Parent pursuant to this Agreement will be accompanied by duly
executed undated blank stock powers, or other equivalent instruments of
transfer acceptable to the Administrative Agent. The Parent will, from time to
time upon the request of the Administrative Agent, promptly deliver to the
Administrative Agent such stock powers, instruments, and similar documents,
satisfactory in form and substance to the Administrative Agent, with respect to
the Collateral as the Administrative Agent may reasonably request and will,
from time to time upon the request of the Administrative Agent after the
occurrence of any Event of Default, promptly transfer any Pledged Shares or
other shares of common stock constituting Collateral into the name of any
nominee designated by the Administrative Agent.
SECTION 5.3. Continuous Pledge. Subject to Section 2.4 and except as
otherwise permitted under the Credit Agreement, the Parent will, at all times,
keep pledged to the Administrative Agent pursuant hereto all Pledged Shares and
all other shares of Capital Stock constituting Collateral, all Dividends and
Distributions with respect thereto, and all other Collateral and other
securities, instruments, proceeds, and rights from time to time received by or
distributable to the Parent in respect of any Collateral and will not permit
the Pledged Share Issuer to issue any Capital Stock which shall not have been
immediately duly pledged hereunder on a first priority perfected basis.
SECTION 5.4. Voting Rights; Dividends, etc. The Parent agrees:
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(a) after any (i) Default of the nature referred to in Section
8.1.9 of the Credit Agreement or (ii) an Event of Default shall have
occurred and be continuing, promptly upon receipt thereof by the
Parent and without any request therefor by the Administrative Agent,
to deliver (properly endorsed where required hereby or requested by
the Administrative Agent) to the Administrative Agent all Dividends,
Distributions, all interest, all principal, all other cash payments,
and all proceeds of the Collateral, all of which shall be held by the
Administrative Agent as additional Collateral for use in accordance
with Section 7.4; and
(b) after any Event of Default shall have occurred and be
continuing and the Administrative Agent has notified the Parent of the
Administrative Agent's intention to exercise its voting power under
this clause
(i) the Administrative Agent may exercise (to the exclusion
of the Parent) the voting power and all other incidental rights
of ownership with respect to any Pledged Shares or other shares
of Capital Stock constituting Collateral and the Parent hereby
grants the Administrative Agent an irrevocable proxy,
exercisable under such circumstances, to vote the Pledged Shares
and such other Collateral; and
(ii) promptly to deliver to the Administrative Agent such
additional proxies and other documents as may be necessary to
allow the Administrative Agent to exercise such voting power.
All Dividends, Distributions, interest, principal, cash payments, and proceeds
which may at any time and from time to time be held by the Parent but which the
Parent is then obligated to deliver to the Administrative Agent, shall, until
delivery to the Administrative Agent, be held by the Parent separate and apart
from its other property in trust for the Administrative Agent. The
Administrative Agent agrees that unless an Event of Default shall have occurred
and be continuing and the Administrative Agent shall have given the notice
referred to in Section 5.4(b), the Parent shall have the exclusive voting power
with respect to any shares of Capital Stock (including any of the Pledged
Shares) constituting Collateral and the Administrative Agent shall, upon the
written request of the Parent, promptly deliver such proxies and other
documents, if any, as shall be reasonably requested by the Parent which are
necessary to allow the Parent to exercise voting power with respect to any such
share of Capital Stock (including any of the Pledged Shares) constituting
Collateral; provided, however, that no vote shall be cast, or consent, waiver,
or ratification given, or action taken by the Parent that would reasonably be
expected to impair any Collateral in any material respect or be inconsistent
with or violate any provision of the Credit Agreement or any other Loan
Document (including this Agreement).
SECTION 5.5. Maintenance of Corporate Existence; Payment of Net Equity
Proceeds. The Parent will cause to be taken all actions necessary to maintain
and preserve at all times its corporate existence. Upon receipt of any Net
Equity Proceeds, the Parent will repay, or cause the
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Borrower to repay, the Loans in the amounts, if any, and on the dates required
pursuant to clause (e) of Section 3.1.1 of the Credit Agreement.
SECTION 5.6. Financial Information, Reports, Notices, etc. The Parent
will furnish, or will cause to be furnished, to each Lender and each Agent
promptly after the sending or filing thereof, copies of all reports and
registration statements, if any, which the Parent or any of its Subsidiaries
files with the Securities and Exchange Commission or any national securities
exchange.
SECTION 5.7. Compliance with Laws, etc. The Parent will, and will
cause each of its Subsidiaries to, comply in all material respects with all
applicable laws, rules, regulations and orders, such compliance to include
(without limitation):
(a) the maintenance and preservation of its corporate existence
and qualification as a foreign corporation; and
(b) the payment, before the same become delinquent, of all
material taxes, assessments and governmental charges imposed upon it
or upon its property except to the extent being contested in good
faith by appropriate proceedings and for which adequate reserves in
accordance with GAAP shall have been set aside on its books.
SECTION 5.8. Business Activities. The Parent will not engage in any
business activity other than in connection with the Parent's continuing
ownership of the issued and outstanding shares of capital stock of the Borrower
and the holding of Investments permitted under Section 5.11.
SECTION 5.9. Indebtedness. The Parent will not create, incur, assume
or suffer to exist or otherwise become or be liable in respect of any
Indebtedness, other than, without duplication, the following:
(a) Indebtedness in respect of the Senior Notes; and
(b) Unsecured indebtedness incurred by the Parent in the
ordinary course of business as permitted by Section 5.8.
SECTION 5.10. Liens, etc. The Parent will not create, incur, assume,
or enter into any agreement which by its terms creates, incurs or assumes any
Lien upon any of its assets (including any shares of Capital Stock of the
Borrower), whether now owned or hereafter acquired by the Parent, except any
Lien created by this Agreement; nor will the Parent sell, transfer, contribute
or otherwise dispose of or convey (or grant any options, warrants or other
rights with respect thereto) any shares of Capital Stock of the Borrower
(except pursuant to a transaction in which all Obligations will be
simultaneously discharged in full and all Commitments will be simultaneously
terminated in full).
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SECTION 5.11. Investments. The Parent will not make, incur, assume or
suffer to exist any Investment of the Parent in any other Person, except
Investments in the Borrower.
SECTION 5.12. Fixed Assets. The Parent will not make or commit to make
any Capital Expenditure or enter into any arrangement which would give rise to
any Capitalized Lease Liability.
SECTION 5.13. Rental Obligations. The Parent will not enter into any
arrangement which involves the leasing by the Parent from any lessor of any
real or personal property (or any interest therein) other than the lease of
office space.
SECTION 5.14. Consolidation, Merger. The Parent will not wind-up,
liquidate or dissolve, consolidate or amalgamate with, or merge into or with
any other corporation or purchase or otherwise acquire all or any part of the
assets of any Person (or division thereof).
SECTION 5.15. Asset Dispositions, etc. The Parent will not sell,
transfer, lease or otherwise dispose of, or grant to any Person options,
warrants or other rights with respect to any of the Collateral.
SECTION 5.16. No Defaults. The Parent will not, and will not permit
the Borrower or any of its Subsidiaries to, take any action or fail to take any
action if such action or failure to act would result in a Default under the
Credit Agreement.
SECTION 5.17. Undertaking. Immediately upon receipt thereof, the
Parent will transfer to the Borrower all shares of Capital Stock of the Nextel
License Subsidiary contributed by NWIP to the Parent pursuant to the
[Contribution Agreement]. The Parent will cause all such shares of Capital
Stock to be re-issued in the name of the Borrower and delivered to the
Administrative Agent for the purpose of pledge under the Borrower Security and
Pledge Agreement.
SECTION 5.18. Proceeds of Collateral.
(a) After the occurrence and during the continuance of a Default
of the nature set forth in Section 8.1.9 of the Credit Agreement or an
Event of Default, upon written notice by the Administrative Agent to
the Parent pursuant to this Section 5.18, all proceeds of Collateral
received by the Parent shall be delivered in kind for deposit to an
account maintained with the Administrative Agent (the "Collateral
Account"). Proceeds of Collateral received by the Parent shall, prior
to deposit in the Collateral Account, be held separate and apart from,
and not commingled with, any other property and in express trust for
the benefit of the Administrative Agent until delivery thereof is made
to the Collateral Account. Subject to this Section 5.18, the Parent
shall have the right to receive and retain all cash and cash
equivalent proceeds of Collateral (other than Cash Collateral) to be
applied as permitted by the Loan Documents.
<PAGE>
(b) The Administrative Agent shall have the right to apply
any amount in the Collateral Account to the payment of any Secured
Obligations which are due and payable or payable upon demand or to the
payment of any Secured Obligations at any time that an Event of
Default shall have occurred and be continuing.
(c) With respect to the Collateral Account, it is hereby
confirmed and agreed that (i) deposits in each Collateral Account are
subject to a security interest as contemplated hereby, (ii) the
Collateral Account shall be under the sole dominion and control of the
Administrative Agent and (iii) the Administrative Agent shall have the
sole right of withdrawal over the Collateral Account.
ARTICLE VI
THE ADMINISTRATIVE AGENT
SECTION 6.1. Administrative Agent Appointed Attorney-in-Fact. The
Parent hereby irrevocably appoints the Administrative Agent the Parent's
attorney-in-fact, with full authority in the place and stead of the Parent and
in the name of the Parent or otherwise, from time to time in the Administrative
Agent's discretion following the occurrence and during the continuance of an
Event of Default, to take any action and to execute any instrument which the
Administrative Agent may deem necessary or advisable to accomplish the purposes
of this Agreement, including without limitation:
(a) to ask, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral;
(b) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clause
(a) above; and
(c) to file any claims or take any action or institute any
proceedings which the Administrative Agent may deem necessary or
desirable for the collection of any of the Collateral or otherwise to
enforce the rights of the Administrative Agent with respect to any of
the Collateral.
The Parent hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
SECTION 6.2. Administrative Agent May Perform. If the Parent fails to
perform any agreement contained herein, the Administrative Agent may itself
perform, or cause performance of, such agreement, and the expenses of the
Administrative Agent incurred in connection
<PAGE>
therewith shall be payable by the Parent pursuant to Section 7.4.
SECTION 6.3. Administrative Agent Has No Duty. The powers conferred on
the Administrative Agent hereunder are solely to protect its interest (on
behalf of the Secured Parties) in the Collateral and shall not impose any duty
on it to exercise any such powers. Except for reasonable care of any Collateral
in its possession and the accounting for moneys actually received by it
hereunder, the Administrative Agent shall have no duty as to any Collateral or
responsibility for (a) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Pledged Property, whether or not the Administrative Agent has or is deemed to
have knowledge of such matters, or (b) taking any necessary steps to preserve
rights against prior parties or any other rights pertaining to any Collateral.
SECTION 6.4. Reasonable Care. The Administrative Agent is required to
exercise reasonable care in the custody and preservation of any of the
Collateral in its possession; provided, however, the Administrative Agent shall
be deemed to have exercised reasonable care in the custody and preservation of
any of the Collateral if it takes such action for that purpose as the Parent
reasonably requests in writing at times other than upon the occurrence and
during the continuance of any Event of Default, but failure of the
Administrative Agent to comply with any such request at any time shall not in
itself be deemed a failure to exercise reasonable care.
ARTICLE VII
REMEDIES
SECTION 7.1. Certain Remedies. If any Event of Default shall have
occurred and be continuing:
(a) The Administrative Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for
herein or otherwise available to it, all the rights and remedies of a
secured party on default under the U.C.C. (whether or not the U.C.C.
applies to the affected Collateral) and also may, without notice
except as specified below, sell the Collateral or any part thereof in
one or more parcels at public or private sale, at any of the
Administrative Agent's offices or elsewhere, for cash, on credit or
for future delivery, and upon such other terms as the Administrative
Agent may deem commercially reasonable. The Parent agrees that, to the
extent notice of sale shall be required by law, at least ten days'
prior notice to the Parent of the time and place of any public sale or
the time after which any private sale is to be made shall constitute
reasonable notification. The Administrative Agent shall not be
obligated to make any sale of Collateral regardless of notice of sale
having been given. The Administrative Agent may adjourn any public or
private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so
<PAGE>
adjourned.
(b) The Administrative Agent may
(i) transfer all or any part of the Collateral into the
name of the Administrative Agent or its nominee, with or without
disclosing that such Collateral is subject to the lien and
security interest hereunder,
(ii) notify the parties obligated on any of the Collateral
to make payment to the Administrative Agent of any amount due or
to become due thereunder,
(iii) enforce collection of any of the Collateral by suit
or otherwise, and surrender, release or exchange all or any part
thereof, or compromise or extend or renew for any period
(whether or not longer than the original period) any obligations
of any nature of any party with respect thereto,
(iv) endorse any checks, drafts, or other writings in the
Parent's name to allow collection of the Collateral,
(v) take control of any proceeds of the Collateral, and
(vi) execute (in the name, place and stead of the Parent)
endorsements, assignments, stock powers and other instruments of
conveyance or transfer with respect to all or any of the
Collateral.
SECTION 7.2. Securities Laws. If the Administrative Agent shall
determine to exercise its right to sell all or any of the Collateral pursuant
to Section 7.1, the Parent agrees that, upon request of the Administrative
Agent, the Parent will, at its own expense:
(a) execute and deliver, and cause each issuer of the Collateral
contemplated to be sold and the directors and officers thereof to
execute and deliver, all such instruments and documents, and do or
cause to be done all such other acts and things, as may be necessary
or, in the opinion of the Administrative Agent, advisable to register
such Collateral under the provisions of the Securities Act of 1933, as
from time to time amended (the "Securities Act"), and to use its best
efforts to cause the registration statement relating thereto to become
effective and to remain effective for such period as prospectuses are
required by law to be furnished, and to make all amendments and
supplements thereto and to the related prospectus which, in the
opinion of the Administrative Agent, are necessary or advisable, all
in conformity with the requirements of the Securities Act and the
rules and regulations of the Securities and Exchange Commission
applicable thereto;
(b) use its best efforts to qualify the Collateral under the
state securities or "Blue Sky" laws and to obtain all necessary
governmental approvals for the sale of the
<PAGE>
Collateral, as requested by the Administrative Agent;
(c) cause each such issuer to make available to its security
holders, as soon as practicable, an earnings statement that will
satisfy the provisions of Section 11(a) of the Securities Act; and
(d) do or cause to be done all such other acts and things as may
be necessary to make such sale of the Collateral or any part thereof
valid and binding and in compliance with applicable law.
The Parent further acknowledges the impossibility of ascertaining the amount of
damages that would be suffered by the Administrative Agent or the Secured
Parties by reason of the failure by the Parent to perform any of the covenants
contained in this Section and, consequently, to the extent permitted under
applicable law, agrees that, if the Parent shall fail to perform any of such
covenants, such covenants shall be specifically enforceable against the Parent.
SECTION 7.3. Compliance with Restrictions. The Parent agrees that in
any sale of any of the Collateral whenever an Event of Default shall have
occurred and be continuing, the Administrative Agent is hereby authorized to
comply with any limitation or restriction in connection with such sale as it
may be advised by counsel is necessary in order to avoid any violation of
applicable law (including compliance with such procedures as may restrict the
number of prospective bidders and purchasers, require that such prospective
bidders and purchasers have certain qualifications, and restrict such
prospective bidders and purchasers to persons who will represent and agree that
they are purchasing for their own account for investment and not with a view to
the distribution or resale of such Collateral), or in order to obtain any
required approval of the sale or of the purchaser by any governmental
regulatory authority or official, and the Parent further agrees that such
compliance shall not result in such sale being considered or deemed not to have
been made in a commercially reasonable manner, nor shall the Administrative
Agent be liable nor accountable to the Parent for any discount allowed by the
reason of the fact that such Collateral is sold in compliance with any such
limitation or restriction.
SECTION 7.4. Application of Proceeds. All cash proceeds received by
the Administrative Agent in respect of any sale of, collection from, or other
realization upon, all or any part of the Collateral may, in the discretion of
the Administrative Agent, be held by the Administrative Agent as additional
collateral security for, or then or at any time thereafter be applied (after
payment of any amounts payable to the Administrative Agent pursuant to Section
10.3 of the Credit Agreement and Section 7.5) in whole or in part by the
Administrative Agent against, all or any part of the Secured Obligations in
such order as the Administrative Agent shall elect.
Any surplus of such cash or cash proceeds held by the Administrative
Agent and remaining after payment in full of all the Secured Obligations, and
the termination of all Commitments, shall be paid over to the Parent or to
whomsoever may be lawfully entitled to
<PAGE>
receive such surplus.
SECTION 7.5. Indemnity and Expenses. The Parent hereby indemnifies and
holds harmless the Administrative Agent from and against any and all claims,
losses and liabilities arising out of or resulting from this Agreement
(including enforcement of this Agreement), except claims, losses, or
liabilities resulting from the Administrative Agent's gross negligence or
wilful misconduct. Upon demand, the Parent will pay to the Administrative Agent
the amount of any and all reasonable expenses, including the reasonable fees
and disbursements of its counsel and of any experts and agents, which the
Administrative Agent may incur in connection with:
(a) the administration of this Agreement, the Credit Agreement
and each other Loan Document;
(b) the custody, preservation, use, or operation of, or the sale
of, collection from, or other realization upon, any of the Collateral;
(c) the exercise or enforcement of any of the rights of the
Administrative Agent hereunder; or
(d) the failure by the Parent to perform or observe any of the
provisions hereof.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
SECTION 8.1. Loan Document. This Agreement is a Loan Document executed
pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions thereof.
SECTION 8.2. Amendments, etc. No amendment to or waiver of any
provision of this Agreement nor consent to any departure by the Parent herefrom
shall in any event be effective unless the same shall be in writing and signed
by the Administrative Agent (on behalf of the Lenders or the Required Lenders,
as the case may be), and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it is given.
SECTION 8.3. Protection of Collateral. The Administrative Agent may
from time to time, at its option, perform any act which the Parent agrees
hereunder to perform and which the Parent shall fail to perform after being
requested in writing so to perform (it being understood that no such request
had been given after the occurrence and during the continuance of an Event of
Default).
SECTION 8.4. Addresses for Notices. All notices and other
communications provided to
<PAGE>
any party under this Agreement shall be in writing (including telecopier
communication) and (i) if to the Parent, mailed, telecopied or delivered to it,
at the address of the Borrower specified in the Credit Agreement, and (ii) if
to the Administrative Agent, mailed, telecopied or delivered to it at the
address of the Administrative Agent specified in the Credit Agreement. All such
notices and other communications, when mailed and properly addressed with
postage prepaid or if properly addressed and sent by pre-paid courier service,
shall be deemed given when received; any such notice or communication, if
transmitted by telecopier, shall be deemed given when transmitted and
electronically confirmed.
SECTION 8.5. Section Captions. Section captions used in this Agreement
are for convenience of reference only, and shall not affect the construction of
this Agreement.
SECTION 8.6. Severability. Wherever possible each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under such law, such provision shall be ineffective to
the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
SECTION 8.7.Counterparts. This Agreement may be executed by the
parties hereto in several counterparts, each of which shall be deemed to be an
original and all of which shall constitute together but one and the same
agreement.
SECTION 8.8. Governing Law, Entire Agreement, etc. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE
SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE
ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT
MATTER HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT
THERETO.
SECTION 8.9. Forum Selection and Consent to Jurisdiction. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF THE SECURED PARTIES OR THE PARENT SHALL BE
BROUGHT AND MAINTAINED EXCLUSIVELY (TO THE EXTENT PERMITTED UNDER APPLICABLE
LAW) IN THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT
SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT
THE
<PAGE>
ADMINISTRATIVE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE PARENT HEREBY EXPRESSLY AND
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK
AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY
AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH
LITIGATION. THE PARENT FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT
THE STATE OF NEW YORK. THE PARENT HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR
HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY
SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT THE PARENT HAS OR
HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY
LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS
PROPERTY, THE PARENT HEREBY IRREVOCABLY (TO THE EXTENT PERMITTED UNDER
APPLICABLE LAW) WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT.
SECTION 8.10. Waiver of Jury Trial. THE SECURED PARTIES AND THE PARENT
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT
OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE
SECURED PARTIES OR THE PARENT. THE PARENT ACKNOWLEDGES AND AGREES THAT IT HAS
RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER
PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE SECURED PARTIES ENTERING INTO THE
CREDIT AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.
NEXTEL PARTNERS, INC.
By: /s/ Donald J. Manning
---------------------------
Name: Donald J. Manning
Title: Vice President -
General Counsel
BANK OF MONTREAL,
as Administrative Agent
By: /s/ Karen Klapper
---------------------------
Name: Karen Klapper
Title: Director
<PAGE>
SUBSIDIARY GUARANTY
-------------------
This SUBSIDIARY GUARANTY (as amended, supplemented, amended and
restated or otherwise modified from time to time, this "Guaranty"), dated as of
January 29, 1999, is made by each of the signatories hereto and each other
Person which may from time to time hereafter become a party hereto pursuant to
Section 5.5 (each, individually, an "Additional Guarantor", and, collectively,
the "Additional Guarantors", and, together with each of the signatories hereto,
each, individually, a "Guarantor", and, collectively, the "Guarantors"), in
favor of Bank of Montreal, as administrative agent (together with its
successor(s) thereto, in such capacity the "Administrative Agent") for each of
the Secured Parties (as defined below).
W I T N E S S E T H:
--------------------
WHEREAS, pursuant to a Credit Agreement, dated as of January 29, 1999
(as amended, supplemented, amended and restated or otherwise modified from time
to time, the "Credit Agreement"), among Nextel Partners Operating Corp., a
Delaware corporation (the "Borrower"), the various financial institutions as
are or which may from time to time become parties thereto (each, individually,
a "Lender", and collectively, the "Lenders"), DLJ Capital Funding, Inc., as the
syndication agent, The Bank of New York, as the documentation agent and the
Administrative Agent, the Lenders and the Issuer have extended Commitments to
make Credit Extensions to the Borrower;
WHEREAS, as a condition precedent to the making of each Credit
Extension (including the initial Credit Extension) under the Credit Agreement,
each Guarantor is required to execute and deliver this Guaranty;
WHEREAS, each Guarantor has duly authorized the execution, delivery
and performance of this Guaranty; and
WHEREAS, it is in the best interests of each Guarantor to execute this
Guaranty inasmuch as such Guarantor will derive substantial direct and indirect
benefits from the Credit Extensions made from time to time to the Borrower by
the Lenders and the Issuer pursuant to the Credit Agreement;
<PAGE>
NOW THEREFORE, for good and valuable consideration the receipt of
which is hereby acknowledged, and in order to induce the Lenders and the Issuer
to make each Credit Extension (including the initial Credit Extension) to the
Borrower pursuant to the Credit Agreement, and to induce Secured Parties to
enter into Rate Protection Agreements, each Guarantor jointly and severally
agrees, for the benefit of each Secured Party, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Terms. The following terms (whether or not
underscored) when used in this Guaranty, including its preamble and recitals,
shall have the following meanings (such definitions to be equally applicable to
the singular and plural forms thereof):
"Additional Guarantor" and "Additional Guarantors" are defined in the
preamble.
"Administrative Agent" is defined in the preamble.
"Borrower" is defined in the first recital.
"Credit Agreement" is defined in the first recital.
"Guarantor" and "Guarantors" are defined in the preamble.
"Guaranty" is defined in the preamble.
"Lenders" is defined in the first recital.
"Secured Party" means, as the context may require, each Lender, the
Issuer and each Agent and each of their respective successors, transferees and
assigns.
SECTION 1.2 Credit Agreement Definitions. Unless otherwise defined
herein or the context otherwise requires, terms used in this Guaranty,
including its preamble and recitals, have the meanings provided in the
Credit Agreement.
ARTICLE II
GUARANTY PROVISIONS
-2-
<PAGE>
SECTION 2.1. Guaranty. Each Guarantor hereby jointly and severally
absolutely, unconditionally and irrevocably
(a)guarantees the full and punctual payment when due, whether at
stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise, of all Obligations of the Borrower and each other
Obligor, now or hereafter existing under the Credit Agreement, the
Notes, any Letter of Credit and each other Loan Document to which the
Borrower or such other Obligor is or may become a party, whether for
principal, interest, Reimbursement Obligations, fees, expenses or
otherwise (including all such amounts which would become due but for
the operation of the automatic stay under Section 362(a) of the United
States Bankruptcy Code, 11 U.S.C. ss.362(a), and the operation of
Sections 502(b) and 506(b) of the United States Bankruptcy Code, 11
U.S.C. ss.502(b) and ss.506(b)), and
(b) indemnifies and holds harmless each Secured Party and each
holder of a Note for any and all costs and expenses (including
reasonable attorneys' fees and expenses) incurred by such Secured
Party or such holder, as the case may be, in enforcing any rights
under this Guaranty;
provided, however, that each Guarantor shall be liable under this Guaranty only
for the maximum amount of such liability that can be hereby incurred without
rendering this Guaranty, as it relates to such Guarantor, voidable under
applicable law relating to fraudulent conveyance or fraudulent transfer, and
not for any greater amount. This Guaranty constitutes a guaranty of payment
when due and not of collection, and each Guarantor specifically agrees that it
shall not be necessary or required that any Secured Party or any holder of any
Note exercise any right, assert any claim or demand or enforce any remedy
whatsoever against the Borrower or any other Obligor (or any other Person)
before or as a condition to the obligations of such Guarantor hereunder.
SECTION 2.2. Acceleration of Guaranty. Each Guarantor agrees that, in
the event of any Default of the nature set forth in clauses (a) through (d) of
Section 8.1.9 of the Credit Agreement, and if such event shall occur at a time
when any of the Obligations of the Borrower and each other Obligor may not then
be due and payable, such Guarantor jointly and severally agrees that it will
pay to the Lenders forthwith the full amount which would be payable hereunder
by such Guarantor if all such Obligations were then due and payable.
SECTION 2.3. Guaranty Absolute, etc. This Guaranty shall in all
respects be a continuing, absolute, unconditional and irrevocable guaranty of
payment, and shall remain in full force and effect until all Obligations of the
Borrower and each other Obligor have been paid in full in cash, all obligations
of each Guarantor hereunder
-3-
<PAGE>
shall have been paid in full in cash, all Letters of Credit have been
terminated or expired, all Rate Protection Agreements have been terminated and
all Commitments shall have terminated. Each Guarantor guarantees that the
Obligations of the Borrower and each other Obligor will be paid strictly in
accordance with the terms of the Credit Agreement, the Notes and each other
Loan Document under which they arise, regardless of any law, regulation or
order now or hereafter in effect in any jurisdiction affecting any of such
terms or the rights of any Secured Party or any holder of any Note with respect
thereto. The liability of each Guarantor under this Guaranty shall be joint and
several, and shall be absolute, unconditional and irrevocable irrespective of:
(a) any lack of validity, legality or enforceability of the
Credit Agreement, any Note or any other Loan Document;
(b) the failure of any Secured Party or any holder of any Note
(i) to assert any claim or demand or to enforce any right
or remedy against the Borrower, any other Obligor or any other
Person (including any other guarantor (including any Guarantor))
under the provisions of the Credit Agreement, any Note, any
other Loan Document or otherwise, or
(ii) to exercise any right or remedy against any other
guarantor (including any Guarantor) of, or collateral securing,
any Obligations of the Borrower or any other Obligor;
(c) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations of the Borrower or
any other Obligor, or any other extension, compromise or renewal of
any Obligation of the Borrower or any other Obligor;
(d) any reduction, limitation, impairment or termination of any
Obligations of the Borrower or any other Obligor for any reason,
including any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to (and each Guarantor hereby
waives any right to or claim of) any defense or setoff, counterclaim,
recoupment or termination whatsoever by reason of the invalidity,
illegality, nongenuineness, irregularity, compromise, unenforceability
of, or any other event or occurrence affecting, any Obligations of the
Borrower, any other Obligor or otherwise;
(e) any amendment to, rescission, waiver, or other modification
of, or any consent to departure from, any of the terms of the Credit
Agreement, any Note or any other Loan Document;
-4-
<PAGE>
(f) any addition, exchange, release, surrender or non-perfection
of any collateral, or any amendment to or waiver or release or
addition of, or consent to departure from, any other guaranty, held by
any Secured Party or any holder of any Note securing any of the
Obligations of the Borrower or any other Obligor; or
(g) any other circumstance which might otherwise constitute a
defense available to, or a legal or equitable discharge of, the
Borrower, any other Obligor, any surety or any guarantor.
SECTION 2.4. Reinstatement, etc. Each Guarantor agrees that this
Guaranty shall continue to be effective or be reinstated, as the case may be,
if at any time any payment (in whole or in part) of any of the Obligations is
rescinded or must otherwise be restored by any Secured Party or any holder of
any Note, upon the insolvency, bankruptcy or reorganization of the Borrower or
any other Obligor or otherwise, all as though such payment had not been made.
SECTION 2.5. Waiver, etc. Each Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Obligations of the Borrower or any other Obligor and this Guaranty and any
requirement that the Administrative Agent, any other Secured Party or any
holder of any Note protect, secure, perfect or insure any security interest or
Lien, or any property subject thereto, or exhaust any right or take any action
against the Borrower, any other Obligor or any other Person (including any
other guarantor) or entity or any collateral securing the Obligations of the
Borrower or any other Obligor, as the case may be.
SECTION 2.6. Postponement of Subrogation, etc. Each Guarantor hereby
agrees that it will not exercise any rights which it may acquire by way of
subrogation under this Guaranty, by any payment made hereunder or otherwise,
until the prior payment in full in cash, of all Obligations of the Borrower and
each other Obligor, the termination or expiration of all Letters of Credit, the
termination of all Rate Protection Agreements and the termination of all
Commitments. Any amount paid to any Guarantor on account of any such
subrogation rights prior to the payment in full in cash of all Obligations of
the Borrower and each other Obligor shall be held in trust for the benefit of
the Secured Parties and each holder of a Note and shall immediately be paid to
the Secured Parties and each holder of a Note and credited and applied against
the Obligations of the Borrower and each other Obligor, whether matured or
unmatured, in accordance with the terms of the Credit Agreement; provided,
however, that if
(a) such Guarantor has made payment to the Secured Parties and
each holder of a Note of all or any part of the Obligations of the
Borrower and each other Obligor, and
(b) all Obligations then due of the Borrower and each other
Obligor have
-5-
<PAGE>
been paid in full in cash, all Letters of Credit have been terminated
or expired, all Rate Protection Agreements have been terminated and
all Commitments have been permanently terminated,
each Secured Party and each holder of a Note agrees that, at such Guarantor's
request, the Secured Parties and the holders of the Notes, will execute and
deliver to such Guarantor appropriate documents (without recourse and without
representation or warranty) necessary to evidence the transfer by subrogation
to such Guarantor of an interest in the Obligations of the Borrower and each
other Obligor resulting from such payment by such Guarantor. In furtherance of
the foregoing, for so long as any Obligations, Letters of Credit, Rate
Protection Agreements or Commitments remain outstanding, each Guarantor shall
refrain from taking any action or commencing any proceeding against the
Borrower or any other Obligor (or any of their respective successors or
assigns, whether in connection with a bankruptcy proceeding or otherwise) to
recover any amount in respect of any payment made under this Guaranty to any
Secured Party or any holder of a Note.
SECTION 2.7. Right of Contribution. Each Guarantor hereby agrees that
to the extent that a Guarantor shall have paid more than its proportionate
share of any payment made hereunder, such Guarantor shall be entitled to seek
and receive contribution from and against any other Guarantor hereunder who has
not paid its proportionate share of such payment. Each Guarantor's right of
contribution shall be subject to the terms and conditions of Section 2.6. The
provisions of this Section 2.7 shall in no respect limit the obligations and
liabilities of any Guarantor to the Administrative Agent and each other Secured
Party, and each Guarantor shall remain liable to the Administrative Agent and
each other Secured Party for the full amount by such Guarantor hereunder.
SECTION 2.8. Successors, Transferees and Assigns; Transfers of Notes,
etc. This Guaranty shall:
(a) be binding upon each Guarantor, and its successors,
transferees and assigns; and
(b) inure to the benefit of and be enforceable by the
Administrative Agent and each other Secured Party.
Without limiting the generality of clause (b), any Lender may assign or
otherwise transfer (in whole or in part) any Note or Credit Extension held by
it to any other Person or entity, and such other Person or entity shall
thereupon become vested with all rights and benefits in respect thereof granted
to such Lender under any Loan Document (including this Guaranty) or otherwise,
subject, however, to any contrary provisions in such assignment or transfer,
and to the provisions of Section 10.11 and Article IX of the
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<PAGE>
Credit Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties. Each Guarantor hereby
represents and warrants for itself unto each Secured Party as to all matters
contained in Article VI of the Credit Agreement and this Article III, in each
case insofar as applicable to such Guarantor or such Guarantor's properties,
together with all related definitions and ancillary provisions, all of which
are hereby incorporated into this Article III as though specifically set forth
herein.
SECTION 3.2. Organization, etc. Each Guarantor and each of its
Subsidiaries (a) is a corporation or partnership validly organized and existing
and in good standing under the laws of the jurisdiction of its incorporation or
formation, is duly qualified to do business and is in good standing as a
foreign corporation or partnership under the laws of each jurisdiction where
the nature of its business requires such qualification, and (b) has full power
and authority and holds all requisite governmental licenses, permits and other
approvals to (i) enter into and perform its obligations in connection with the
Transaction and under this Guaranty and each other Loan Document to which it is
a party and (ii) own and hold under lease its property and to conduct its
business substantially as currently conducted by it.
SECTION 3.3. Due Authorization, Non-Contravention, etc. The execution,
delivery and performance by each Guarantor and each of its Subsidiaries of this
Guaranty and each other Loan Document executed or to be executed by it, and,
where applicable, each such Guarantor's and each such other Obligor's
participation in the consummation of the Transaction, are within such
Guarantor's and such other Obligor's corporate or partnership powers, have been
duly authorized by all necessary corporate or partnership action, and do not
contravene such Guarantor's or such other Obligor's Organic Documents,
contravene any contractual restriction, law or governmental regulation or court
decree or order binding on or affecting such Guarantor or such other Obligor,
or result in, or require the creation or imposition of, any Lien on any of such
Guarantor's or such other Obligor's properties, except pursuant to the terms of
a Loan Document.
SECTION 3.4. Government Approval, Regulation, etc. No authorization or
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body or other Person, is required for the due
execution, delivery or performance by any Guarantor or any of its Subsidiaries
of this Guaranty or any other Loan Document to which it is a party, or for such
Guarantor's or such other Obligor's
-7-
<PAGE>
participation in the consummation of the Transaction, except as have been duly
obtained or made and are in full force and effect. No Guarantor or any of its
Subsidiaries is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, or a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company", within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
SECTION 3.5. Validity, etc. This Guaranty and each other Loan Document
executed, or to be executed, by any Guarantor or any of its Subsidiaries, as
the case may be, constitutes, or will on the due execution and delivery thereof
constitute, the legal, valid and binding obligations of such Guarantor or such
other Obligor enforceable in accordance with their respective terms.
ARTICLE IV
COVENANTS, ETC.
SECTION 4.1. Covenants. Each Guarantor covenants and agrees that,
until all Letters of Credit have terminated or expired, all Rate Protection
Agreements have terminated, all Commitments have terminated, all Obligations
have been paid in full in cash and all obligations of such Guarantor hereunder
shall have been paid in full in cash, such Guarantor will, and will cause each
of its Subsidiaries to, perform, comply with and be bound by all the
agreements, covenants and obligations contained in the Credit Agreement
applicable to such Guarantor, such Subsidiary or their respective properties.
Each such agreement, covenant and obligation contained in the Credit Agreement
and all related definitions and ancillary provisions are hereby incorporated
into this Guaranty as though specifically set forth herein.
ARTICLE V
MISCELLANEOUS PROVISIONS
SECTION 5.1. Loan Document. This Guaranty is a Loan Document executed
pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions thereof.
SECTION 5.2. Binding on Successors, Transferees and Assigns;
Assignment. In addition to, and not in limitation of, Section 2.8, this
Guaranty shall be binding upon each Guarantor and its successors, transferees
and assigns and shall inure to the
-8-
<PAGE>
benefit of and be enforceable by each Secured Party and each holder of a Note
and their respective successors, transferees and assigns (to the fullest extent
provided pursuant to Section 2.8); provided, however, that no Guarantor may
assign any of its obligations hereunder without the prior written consent of
all Lenders.
SECTION 5.3. Amendments, etc. No amendment to or waiver of any
provision of this Guaranty, nor consent to any departure by any Guarantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Administrative Agent (on behalf of the Lenders or the
Required Lenders, as the case may be) and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
SECTION 5.4. Notices. All notices and other communications provided to
any party hereunder shall be in writing and mailed or telecopied or delivered,
if to a Guarantor, to such Guarantor in care of the Borrower at the address of
the Borrower specified in the Credit Agreement, and, if to the Administrative
Agent, to the Administrative Agent at the address of the Administrative Agent
specified in the Credit Agreement, or as to any party, at such other address as
shall be designated by such party in a written notice to the Administrative
Agent or the Guarantors (in care of the Borrower), as the case may be,
complying as to delivery with the terms of this Section. All such notices and
other communications, if mailed and properly addressed with postage prepaid or
if properly addressed and sent by pre-paid courier service, shall be deemed
given when received; any such notice or communication, if transmitted by
facsimile, shall be deemed given when the confirmation thereof is received by
the transmitter.
SECTION 5.5. Additional Guarantors. Upon the execution and delivery by
any other Person of an instrument in the form of Annex I hereto, such Person
shall become a "Guarantor" hereunder with the same force and effect as if
originally named as a Guarantor herein. The execution and delivery of any such
instrument shall not require the consent of any other Guarantor hereunder. The
rights and obligations of each Guarantor hereunder shall remain in full force
and effect notwithstanding the addition of any new Guarantor as a party to this
Guaranty.
SECTION 5.6. No Waiver; Remedies. In addition to, and not in
limitation of, Section 2.3 and Section 2.5, no failure on the part of any
Secured Party or any holder of a Note to exercise, and no delay in exercising,
any right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
SECTION 5.7. Captions. Section captions used in this Guaranty are for
convenience of reference only, and shall not affect the construction of this
Guaranty.
-9-
<PAGE>
SECTION 5.8. Setoff. In addition to, and not in limitation of, any
rights of any Secured Party or any holder of a Note under applicable law, each
Secured Party and each such holder shall, upon the occurrence of any Default
described in any of clauses (a) through (d) of Section 8.1.9 of the Credit
Agreement or, with the consent of the Required Lenders, upon the occurrence of
any Event of Default, have the right to appropriate and apply to the payment of
the obligations of any Guarantor owing to it hereunder, whether or not then
due, and such Guarantor hereby grants to each Secured Party and each such
holder a continuing security interest in any and all balances, credits,
deposits, accounts or moneys of such Guarantor then or thereafter maintained
with such Secured Party, or such holder or any agent or bailee for such Secured
Party or such holder; provided, however, that any such appropriation and
application shall be subject to the provisions of Section 4.8 of the Credit
Agreement.
SECTION 5.9. Severability. Wherever possible each provision of this
Guaranty shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Guaranty.
SECTION 5.10. Governing Law, Entire Agreement, etc. THIS GUARANTY
SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS
OF THE STATE OF NEW YORK. THIS GUARANTY AND THE OTHER LOAN DOCUMENTS CONSTITUTE
THE ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT
MATTER HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT
THERETO.
SECTION 5.11. Forum Selection and Consent to Jurisdiction . ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
GUARANTY OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY SECURED PARTY
OR ANY GUARANTOR RELATING THERETO SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY
(TO THE EXTENT PERMITTED UNDER APPLICABLE LAW) IN THE COURTS OF THE STATE OF
NEW YORK, OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK, IN EACH CASE LOCATED IN NEW YORK COUNTY OF THE STATE OF NEW YORK;
PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR
OTHER PROPERTY MAY BE BROUGHT, AT THE ADMINISTRATIVE AGENT'S OPTION, IN THE
COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE
FOUND. EACH GUARANTOR HEREBY EXPRESSLY AND
-10-
<PAGE>
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK,
AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK,
IN EACH CASE LOCATED IN NEW YORK COUNTY OF THE STATE OF NEW YORK, FOR THE
PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE
BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. EACH
GUARANTOR IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL,
POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW
YORK. EACH GUARANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH ANY OF THEM MAY HAVE OR HEREAFTER
MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH
COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM. TO THE EXTENT THAT ANY GUARANTOR HAS OR HEREAFTER MAY
ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT FROM ANY LEGAL PROCESS
(WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN
AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, EACH
GUARANTOR HEREBY IRREVOCABLY WAIVES (TO THE EXTENT PERMITTED UNDER APPLICABLE
LAW) SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS GUARANTY AND THE
OTHER LOAN DOCUMENTS.
SECTION 5.12. Waiver of Jury Trial . EACH GUARANTOR HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH, THIS GUARANTY OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF
THE SECURED PARTIES OR ANY GUARANTOR. EACH GUARANTOR ACKNOWLEDGES AND AGREES
THAT EACH SUCH PERSON HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS
PROVISION (AND EACH OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH SUCH
PERSON IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
SECURED PARTIES ENTERING INTO THE CREDIT AGREEMENT AND EACH SUCH OTHER LOAN
DOCUMENT.
SECTION 5.13. Counterparts. This Guaranty may be executed by the
parties hereto in several counterparts, each of which shall be deemed to be an
original and all of which shall constitute together but one and the same
agreement.
-11-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Guaranty to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
NEXTEL PARTNERS OF FLORIDA, INC., a
Delaware corporation
By: /s/ Donald J. Manning
-----------------------------------
Name: Donald J. Manning
Title: Secretary
NEXTEL PARTNERS OF KENTUCKY, INC.,
a Delaware corporation
By: /s/ John D. Thompson
-----------------------------------
Name: John D. Thompson
Title: Treasurer
NEXTEL PARTNERS OF LOUISIANA, INC., a
Delaware corporation
By: /s/ John H. Chapple
-----------------------------------
Name: John H. Chapple
Title: President
NEXTEL PARTNERS OF MIDWEST, INC.,
a Delaware corporation
By: /s/ Donald J. Manning
-----------------------------------
Name: Donald J. Manning
Title: Secretary
NCPR, INC.,
a Delaware corporation
By: /s/ Donald J. Manning
-----------------------------------
Name: Donald J. Manning
Title: Vice President, General Counsel and Secretary
NEXTEL PARTNERS OF PA, INC.,
a Delaware corporation
By: /s/ John D. Thompson
-----------------------------------
Name: John D. Thompson
Title: Treasurer
NEXTEL PARTNERS OF SOUTHWEST, INC., a
Delaware corporation
By: /s/ Donald J. Manning
-----------------------------------
Name: Donald J. Manning
Title: Secretary
<PAGE>
NEXTEL PARTNERS OF TEXAS, INC., a
Delaware corporation
By: /s/ John H. Chapple
-----------------------------------
Name: John H. Chapple
Title: President
NEXTEL PARTNERS OF UPSTATE NEW YORK,
INC., a Delaware corporation
By: /s/ John D. Thompson
-----------------------------------
Name: John D. Thompson
Tide: Treasurer
NEXTEL PARTNERS OF WISCONSIN, INC.,
a Delaware corporation
By: /s/ John H. Chapple
-----------------------------------
Name: John H. Chapple
Title: President
NEXTEL WIP LEASE CORP., a
Delaware corporation
By: /s/ John D. Thompson
-----------------------------------
Name: John D. Thompson
Title: Chief Financial Officer and Treasurer
ACCEPTED BY:
BANK OF MONTREAL, as
Administrative Agent
By: /s/ Karen Klapper
----------------
Name: Karen Klapper
Title: Director
<PAGE>
[Letterhead of Willkie Farr & Gallagher]
May 14, 1999
Nextel Partners, Inc.
4500 Carillon Point
Kirkland, Washington 98033
Re: $800,000,000 14% Senior Discount Notes
due 2009 Exchange Offer
Ladies and Gentlemen:
We have acted as counsel to Nextel Partners, Inc., a Delaware
corporation (the "Company"), in connection with the filing by the Company with
the Securities and Exchange Commission on May 14, 1999 of a registration
statement (the "Registration Statement") on Form S-4 under the Securities Act
of 1933, as amended (the "Securities Act"), relating to the proposed issuance
by the Company, in exchange for up to $800,000,000 aggregate principal amount
of its 14% Senior Discount Notes due 2009 (the "Old Notes"), of up to
$800,000,000 aggregate principal amount of its 14% Senior Discount Notes due
2009 (the "New Notes"). The New Notes are to be issued pursuant to an indenture
dated January 29, 1999 (the "Indenture") between the Company and The Bank of
New York, as trustee (the "Trustee"). Capitalized terms used herein and not
otherwise defined have the meaning ascribed thereto in the Indenture.
In rendering the opinion contained herein, we have assumed (a) the due
authorization, execution and delivery of each of the Indenture, the
Registration Rights Agreement dated as of January 29, 1999 between the Company
and Donaldson, Lufkin & Jenrette Securities Corporation, Barclays Capital Inc.,
First Union Capital Markets, BNY Capital Markets, Inc. and Nesbitt Burns
Securities Inc. (the "Registration Rights Agreement"), and the New Notes by
each of the parties thereto, (b) that each such party has the legal power to
act in the capacity or capacities in which it is to act thereunder, (c) the
authenticity of all documents submitted to us are originals, (d) the conformity
to the original of all documents submitted to us as copies and (e) the
genuineness of all signatures on all documents submitted to us.
The law covered by the opinions expressed herein is limited to the law
of the State of New York, the General Corporation Law
<PAGE>
of the State of Delaware and the federal laws of the United States of America.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Company is a corporation duly incorporated and validly existing
under the laws of the State of Delaware and has the corporate power and
authority to own and operate its properties and assets and to conduct its
business as described in the Registration Statement.
2. The Indenture was duly executed and constitutes the valid and
binding obligation of the Company.
3. The Company has the corporate power and authority to issue, execute
and deliver the New Notes, and the issuance, execution and delivery of the New
Notes have been duly authorized by all necessary corporate action on the part
of the Company.
4. The New Notes, when duly issued and authenticated in accordance
with the provisions of the Indenture and delivered in exchange for the Old
Notes pursuant to the Registration Rights Agreement, will constitute valid and
binding obligations of the Company enforceable against the Company in
accordance with their terms (subject in each case to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and other similar
laws affecting creditor's rights generally from time to time in effect and to
general principles of equity, including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing, regardless of whether
considered in a proceeding in equity or at law).
This opinion is limited to matters expressly set forth herein and no
opinion is to be implied or may be inferred beyond the matters expressly stated
herein. This letter speaks only as of the date hereof and is limited to present
statutes, regulations and administrative and judicial interpretations. We
undertake no responsibility to update or supplement this letter after the date
hereof.
We consent being named in the Registration Statement and related
Prospectus as counsel who are passing upon the legality of the New Notes for
the Company and to the reference to our name under the caption "Legal Matters"
in such Prospectus. We further consent to your filing copies of this opinion as
an exhibit to the Registration Statement or any amendment thereto. In giving
such consent, we do not hereby admit that we are in the category of persons
whose consent is required under Section 7 of the Securities Act.
Very truly yours
/s/ Willkie Farr & Gallagher
2
<PAGE>
[Letterhead of Willkie Farr & Gallagher]
May 14, 1999
Nextel Partners, Inc.
4500 Carillon Point
Kirkland, Washington 98033
Re: $800,000,000 14% Senior Discount Notes
due 2009 Exchange Offer
Ladies and Gentlemen:
We have acted as counsel to Nextel Partners, Inc., a Delaware
corporation (the "Company"), in connection with the filing by the Company with
the Securities and Exchange Commission (the "Commission") on May 14, 1999 of a
registration statement (the "Registration Statement") on Form S-4 under the
Securities Act of 1933, as amended (the "Securities Act"), relating to the
proposed issuance, in exchange for $800,000,000 aggregate principal amount at
maturity of the Company's 14% Senior Discount Notes due 2009 (the "Old Notes"),
of $800,000,000 aggregate principal amount at maturity of the Company's 14%
Senior Discount Notes due 2009 (the "New Notes"). The New Notes are to be
issued pursuant to an Indenture dated January 29, 1999 (the "Indenture")
between the Company and The Bank of New York, as trustee (the "Trustee").
Capitalized terms used herein and not defined have the meanings ascribed
thereto in the Indenture.
We hereby confirm that the statements set forth in the prospectus (the
"Prospectus") forming a part of the Registration Statement under the subheading
"Material United States Federal Income Tax Consequences" accurately describe
the material federal income tax consequences to the holders of the New Notes
issued pursuant to the Prospectus.
We know that we are referred to under the heading "Legal Matters" in
the Prospectus, and we hereby consent to such use of our name therein and to
the use of this opinion for filing with the Registration Statement as Exhibit
8.1 thereto.
Very truly yours,
/s/ Willkie Farr & Gallagher
<PAGE>
EXECUTION COPY
===============================================================================
NEXTEL PARTNERS, INC.
$800,000,000
14% Senior Discount Notes due 2009
Purchase Agreement
January 22, 1999
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BARCLAYS CAPITAL INC.
FIRST UNION CAPITAL MARKETS
BNY CAPITAL MARKETS, INC.
AND
NESBITT BURNS SECURITIES INC.
===============================================================================
<PAGE>
$800,000,000
14% SENIOR DISCOUNT NOTES DUE 2009
OF NEXTEL PARTNERS, INC.
PURCHASE AGREEMENT
January 22, 1999
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BARCLAYS CAPITAL INC.
FIRST UNION CAPITAL MARKETS
BNY CAPITAL MARKETS, INC.
NESBITT BURNS SECURITIES INC.
c/o Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, New York 10172
Ladies and Gentlemen:
Nextel Partners, Inc., a Delaware corporation (the "COMPANY"),
proposes to issue and sell to Donaldson, Lufkin & Jenrette Securities
Corporation, Barclays Capital Inc., First Union Capital Markets, BNY Capital
Markets, Inc. and Nesbitt Burns Securities Inc. (each an "INITIAL PURCHASER"
and together the "INITIAL PURCHASERS") an aggregate of $800,000,000 in
principal amount at maturity of its 14% Senior Discount Notes due 2009 (the
"SERIES A NOTES"), subject to the terms and conditions set forth herein. The
Series A Notes are to be issued pursuant to the provisions of an indenture (the
"INDENTURE"), to be dated as of the Closing Date (as defined below), among the
Company and The Bank of New York, as trustee (the "TRUSTEE"). The Series A
Notes and the Series B Notes (as defined below) issuable in exchange therefor
are collectively referred to herein as the "NOTES." Capitalized terms used but
not defined herein shall have the meanings given to such terms in the
Indenture.
The Company intends to use the gross proceeds from the sale to the
Initial Purchasers of the Series A Notes together with borrowings under the
Credit Facility and other financings described in the Offering Memorandum (as
defined below) to fund the Network Build-out (as defined in the Offering
Memorandum), operating losses and working capital through 2003.
1. OFFERING MEMORANDUM. The Series A Notes will be offered and sold to
the Initial Purchasers pursuant to one or more exemptions from the registration
requirements under the Securities Act of 1933, as amended (the "ACT"). The
Company has prepared a preliminary offering memorandum, dated January 6, 1999
(the "PRELIMINARY OFFERING MEMORANDUM") and a final offering memorandum, dated
January 22, 1999 (the "OFFERING
<PAGE>
MEMORANDUM"), relating to the Series A Notes.
Upon original issuance thereof, and until such time as the same is no
longer required pursuant to the Indenture, the Series A Notes (and all
securities issued in exchange therefor, in substitution thereof or upon
conversion thereof) shall bear the following legend:
"THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE " SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS, EXCEPT AS SET FORTH IN THE NEXT SENTENCE. BY ITS ACQUISITION HEREOF
OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER:
(1) REPRESENTS THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED
IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"),
(2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS NOTE
EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO A PERSON
WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING THE
REQUIREMENTS OF RULE 903 OR 904 OF THE SECURITIES ACT, (D) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES
ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT)
THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM THE
TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL
AMOUNT AT MATURITY OF NOTES LESS THAN $250,000, AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN
OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH
THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN
INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND.
AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE
THE MEANINGS GIVEN TO THEM BY RULE 902 OF
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REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION
REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN
VIOLATION OF THE FOREGOING."
2. AGREEMENTS TO SELL AND PURCHASE.
On the basis of the representations, warranties and covenants
contained in this Agreement, and subject to the terms and conditions contained
herein, the Company agrees to issue and sell to the Initial Purchasers, and the
Initial Purchasers agree to purchase from the Company, an aggregate principal
amount at maturity of $800,000,000 of Series A Notes at a purchase price equal
to 49.400% of the principal amount at maturity thereof (the "PURCHASE PRICE").
3. TERMS OF OFFERING.
The Initial Purchasers have advised the Company that the Initial
Purchasers will make offers (the "EXEMPT RESALES") of the Series A Notes
purchased hereunder on the terms set forth in the Offering Memorandum, as
amended or supplemented, solely to persons whom the Initial Purchasers
reasonably believe to be "qualified institutional buyers" as defined in Rule
144A under the Act ("QIBS") (such persons specified in this clause being
referred to herein as the "ELIGIBLE PURCHASERS"). The Initial Purchasers will
offer the Series A Notes to Eligible Purchasers initially at a price equal to
50.797% of the principal amount at maturity thereof. Such price may be changed
at any time without notice.
Holders (including subsequent transferees) of the Series A Notes will
have the registration rights set forth in the registration rights agreement
(the "REGISTRATION RIGHTS AGREEMENT"), to be dated the Closing Date, in
substantially the form of Exhibit A hereto, for so long as such Series A Notes
constitute "TRANSFER RESTRICTED SECURITIES" (as defined in the Registration
Rights Agreement). Pursuant to the Registration Rights Agreement, the Company
will agree to file with the Securities and Exchange Commission (the
"COMMISSION") under the circumstances set forth therein, (i) a registration
statement under the Act (the "EXCHANGE OFFER REGISTRATION STATEMENT") relating
to the Company's 14% Series B Senior Discount Notes due 2009 (the "SERIES B
NOTES"), to be offered in exchange for the Series A Notes (such offer to
exchange being referred to as the "EXCHANGE OFFER") and (ii) a shelf
registration statement pursuant to Rule 415 under the Act (the "SHELF
REGISTRATION STATEMENT" and, together with the Exchange Offer Registration
Statement, the "REGISTRATION Statements") relating to the resale by certain
holders of the Series A Notes and to use its best efforts to cause such
Registration Statements to be declared and remain effective and usable for the
periods specified in the Registration Rights Agreement and to consummate the
Exchange Offer. This Agreement, the Indenture, the Notes and the Registration
Rights Agreement are hereinafter sometimes referred to collectively as the
"OPERATIVE DOCUMENTS."
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4. DELIVERY AND PAYMENT.
(a) Delivery of, and payment of the Purchase Price for, the Series A
Notes shall be made at the offices of Latham & Watkins, 885 Third Avenue, Suite
1000, New York, New York, 10022, or such other location as may be mutually
acceptable. Such delivery and payment shall be made at 9:00 a.m. New York City
time, on January 29, 1997 or at such other time on the same date or such other
date as shall be agreed upon by the Initial Purchasers and the Company in
writing. The time and date of such delivery and the payment for the Series A
Notes are herein called the "CLOSING DATE."
(b) One or more of the Series A Notes in definitive global form,
registered in the name of Cede & Co., as nominee of the Depository Trust
Company ("DTC"), having an aggregate principal amount corresponding to the
aggregate principal amount of the Series A Notes (collectively, the "GLOBAL
NOTE"), shall be delivered by the Company to the Initial Purchasers (or as the
Initial Purchasers direct) in each case with any transfer taxes thereon duly
paid by the Company against payment by the Initial Purchasers of the Purchase
Price thereof by wire transfer in immediately available funds to the order of
the Company. The Global Note shall be made available to the Initial Purchasers
for inspection not later than 9:30 a.m., New York City time, on the business
day immediately preceding the Closing Date.
5. AGREEMENTS OF THE COMPANY.
The Company hereby agrees with the Initial Purchasers as follows:
(a) To advise the Initial Purchasers promptly and, if requested by the
Initial Purchasers, confirm such advice in writing, (i) of the issuance by any
state securities commission of any stop order suspending the qualification or
exemption from qualification of any Series A Notes for offering or sale in any
jurisdiction designated by the Initial Purchasers pursuant to Section 5(e)
hereof, or the initiation of any proceeding by any state securities commission
or any other federal or state regulatory authority for such purpose and (ii) of
the happening of any event during the period referred to in Section 5(c) below
that makes any statement of a material fact made in the Preliminary Offering
Memorandum or the Offering Memorandum untrue or that requires any additions to
or changes in the Preliminary Offering Memorandum or the Offering Memorandum in
order to make the statements therein not misleading. The Company shall use all
commercially reasonable efforts to prevent the issuance of any stop order or
order suspending the qualification or exemption of any Series A Notes under any
state securities or Blue Sky laws and, if at any time any state securities
commission or other federal or state regulatory authority shall issue an order
suspending the qualification or exemption of any Series A Notes under any state
securities or Blue Sky laws, the Company shall use all commercially reasonable
efforts to obtain the withdrawal or lifting of such order at the earliest
possible time.
(b) To furnish the Initial Purchasers and those persons identified by
the Initial Purchasers to the Company as many copies of the Preliminary
Offering Memorandum and the Offering Memorandum, and any amendments or
supplements thereto, as the Initial Purchasers may reasonably request for the
time period specified in Section 5(c). Subject to the Initial Purchasers'
compliance with their representations and warranties and agreements set forth
in Section 7 hereof, the Company consents to the use of the Preliminary
Offering Memorandum and
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the Offering Memorandum, and any amendments and supplements thereto required
pursuant hereto, by the Initial Purchasers in connection with Exempt Resales.
(c) During such period as in the opinion of counsel for the Initial
Purchasers an Offering Memorandum is required by law to be delivered in
connection with Exempt Resales by the Initial Purchasers and in connection with
market-making activities of the Initial Purchasers for so long as any Series A
Notes are outstanding, (i) not to make any amendment or supplement to the
Offering Memorandum of which the Initial Purchasers shall not previously have
been advised or to which the Initial Purchasers shall reasonably object after
being so advised and (ii) to prepare promptly upon the Initial Purchasers'
reasonable request, any amendment or supplement to the Offering Memorandum
which may be necessary or advisable in connection with such Exempt Resales or
such market-making activities.
(d) If, during the period referred to in Section 5(c) above, any event
shall occur or condition shall exist as a result of which, in the opinion of
counsel to the Initial Purchasers, it becomes necessary to amend or supplement
the Offering Memorandum in order to make the statements therein, in the light
of the circumstances when such Offering Memorandum is delivered to an Eligible
Purchaser, not misleading, or if, in the opinion of counsel to the Initial
Purchasers, it is necessary to amend or supplement the Offering Memorandum to
comply with any applicable law, forthwith to prepare an appropriate amendment
or supplement to such Offering Memorandum so that the statements therein, as so
amended or supplemented, will not, in the light of the circumstances when it is
so delivered, be misleading, or so that such Offering Memorandum will comply
with applicable law, and to furnish to the Initial Purchasers and such other
persons as the Initial Purchasers may designate such number of copies thereof
as the Initial Purchasers may reasonably request.
(e) Prior to the sale of all Series A Notes pursuant to Exempt Resales
as contemplated hereby, to cooperate with the Initial Purchasers and counsel to
the Initial Purchasers in connection with the registration or qualification of
the Series A Notes for offer and sale to the Initial Purchasers and pursuant to
Exempt Resales under the securities or Blue Sky laws of such jurisdictions as
the Initial Purchasers may request and to continue such registration or
qualification in effect so long as required for Exempt Resales and to file such
consents to service of process or other documents as may be necessary in order
to effect such registration or qualification; provided, however, that the
Company shall not be required in connection therewith to qualify as a foreign
corporation in any jurisdiction in which it is not now so qualified or to take
any action that would subject it to general consent to service of process or
taxation other than as to matters and transactions relating to the Preliminary
Offering Memorandum, the Offering Memorandum or Exempt Resales, in any
jurisdiction in which it is not now so subject.
(f) So long as the Notes are outstanding, (i) to furnish as soon as
practicable after the end of each fiscal year to the record holders of the
Notes a financial report of the Company and its subsidiaries on a consolidated
basis (and a similar financial report of all unconsolidated subsidiaries, if
any), all such financial reports to include a consolidated balance sheet, a
consolidated statement of operations, a consolidated statement of cash flows
and a consolidated statement of shareholders' equity as of the end of and for
such fiscal year, together with comparable information as of the end of and for
the preceding year, certified by the Company's independent public accountants
and (ii) to furnish as soon as practicable after the end
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<PAGE>
of each quarterly period (except for the last quarterly period of each fiscal
year) to such holders, a consolidated balance sheet, a consolidated statement
of operations and a consolidated statement of cash flows (and similar financial
reports of all unconsolidated subsidiaries, if any) as of the end of and for
such period, and for the period from the beginning of such year to the close of
such quarterly period, together with comparable information for the
corresponding periods of the preceding year.
(g) So long as the Notes are outstanding, to furnish to the Initial
Purchasers as soon as available copies of all reports or other communications
furnished by the Company to its security holders or furnished to or filed with
the Commission or any national securities exchange on which any class of
securities of the Company is listed and such other publicly available
information concerning the Company and/or its subsidiaries as the Initial
Purchasers may reasonably request (without documents incorporated therein by
reference or exhibits thereto, unless requested in writing).
(h) So long as any of the Series A Notes remain outstanding and during
any period in which the Company is not subject to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), to make
available to any holder of Series A Notes in connection with any sale thereof
and any prospective purchaser of such Series A Notes from such holder, the
information ("RULE 144A INFORMATION") required by Rule 144A(d)(4) under the
Act.
(i) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of the obligations of the Company under
this Agreement, including: (i) the fees, disbursements and expenses of counsel
to the Company and accountants of the Company in connection with the sale and
delivery of the Series A Notes to the Initial Purchasers and pursuant to Exempt
Resales, and all other fees and expenses in connection with the preparation,
printing, filing and distribution of the Preliminary Offering Memorandum, the
Offering Memorandum and all amendments and supplements to any of the foregoing
(including financial statements), including the mailing and delivering of
copies thereof to the Initial Purchasers and persons designated by the Initial
Purchasers in the quantities specified herein, (ii) all costs and expenses
related to the transfer and delivery of the Series A Notes to the Initial
Purchasers and pursuant to Exempt Resales, including any transfer or other
taxes payable thereon, (iii) all costs of printing or producing this Agreement,
the other Operative Documents and any other agreements or documents in
connection with the offering, purchase, sale or delivery of the Series A Notes,
(iv) all expenses in connection with the registration or qualification of the
Series A Notes for offer and sale under the securities or Blue Sky laws of the
several states and all costs of printing or producing any preliminary and
supplemental Blue Sky memoranda in connection therewith (including the filing
fees and fees and disbursements of counsel for the Initial Purchasers in
connection with such registration or qualification and memoranda relating
thereto), (v) the cost of printing certificates representing the Series A
Notes, (vi) all expenses and listing fees in connection with the application
for quotation of the Series A Notes in the National Association of Securities
Dealers, Inc. ("NASD") Automated Quotation System - PORTAL ("PORTAL"), (vii)
the fees and expenses of the Trustee and the Trustee's counsel in connection
with the Indenture and the Notes, (viii) the costs and charges of any transfer
agent, registrar and/or depository (including DTC), (ix) any fees charged by
rating agencies for the rating of the Notes, (x) all costs
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<PAGE>
and expenses of the Exchange Offer and any Registration Statement, as set forth
in the Registration Rights Agreement, and (xi) and all other costs and expenses
incident to the performance of the obligations of the Company hereunder for
which provision is not otherwise made in this Section, but excluding fees and
expenses of counsel to the Initial Purchasers (other than fees and expenses set
forth in clause (iv) above).
(j) To use all commercially reasonable efforts to effect the inclusion
of the Series A Notes in PORTAL and to maintain the listing of the Series A
Notes on PORTAL for so long as the Series A Notes are outstanding.
(k) To obtain the approval of DTC for "book-entry" transfer of the
Notes, and to comply with all of its agreements set forth in the representation
letters of the Company to DTC relating to the approval of the Notes by DTC for
"book-entry" transfer.
(l) During the period beginning on the date hereof and continuing to
and including the Closing Date, not to offer, sell, contract to sell or
otherwise transfer or dispose of any debt securities of the Company or any
warrants, rights or options to purchase or otherwise acquire debt securities of
the Company substantially similar to the Notes (other than (i) the Notes and
(ii) commercial paper issued in the ordinary course of business), without the
prior written consent of the Initial Purchasers.
(m) Not to sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in the Act) that would be
integrated with the sale of the Series A Notes to the Initial Purchasers or
pursuant to Exempt Resales in a manner that would require the registration of
any such sale of the Series A Notes under the Act.
(n) Not to voluntarily claim, and to actively resist any attempts to
claim, the benefit of any usury laws against the holders of any Notes.
(o) To cause the Exchange Offer to be made in the appropriate form to
permit Series B Notes registered pursuant to the Act to be offered in exchange
for the Series A Notes and to comply with all applicable federal and state
securities laws in connection with the Exchange Offer.
(p) To comply with all of its agreements set forth in the Registration
Rights Agreement.
(q) To use all commercially reasonable efforts to do and perform all
things required or necessary to be done and performed under this Agreement by
it prior to the Closing Date and to satisfy all conditions precedent to the
delivery of the Series A Notes.
6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY.
As of the date hereof, the Company represents and warrants to, and
agrees with, the Initial Purchasers that:
(a) The Preliminary Offering Memorandum and the Offering Memorandum do
not, and any supplement or amendment to them will not, contain any untrue
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statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that the
representations and warranties contained in this paragraph (a) shall not apply
to statements in or omissions from the Preliminary Offering Memorandum or the
Offering Memorandum (or any supplement or amendment thereto) based upon
information relating to the Initial Purchasers furnished to the Company in
writing by the Initial Purchasers expressly for use therein. No stop order
preventing the use of the Preliminary Offering Memorandum or the Offering
Memorandum, or any amendment or supplement thereto, or any order asserting that
any of the transactions contemplated by this Agreement are subject to the
registration requirements of the Act, has been issued.
(b) Each of the Company and its subsidiaries has been duly
incorporated, is validly existing as a corporation in good standing under the
laws of its jurisdiction of incorporation and has the corporate power and
authority to carry on its business as described in the Preliminary Offering
Memorandum and the Offering Memorandum and to own, lease and operate its
properties, and each is duly qualified and is in good standing as a foreign
corporation authorized to do business in each jurisdiction in which the nature
of its business or its ownership or leasing of property requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on the business, prospects, financial condition or
results of operations of the Company and its subsidiaries, taken as a whole (a
"MATERIAL ADVERSE EFFECT")
(c) All outstanding shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid, non-assessable and not
subject to any preemptive or similar rights.
(d) The entities listed on Schedule A hereto are the only
subsidiaries, direct or indirect, of the Company. All of the outstanding shares
of capital stock of each of the Company's subsidiaries have been duly
authorized and validly issued and are fully paid and non-assessable, and are
owned by the Company, directly or indirectly through one or more subsidiaries,
free and clear of any security interest, claim, lien, encumbrance or adverse
interest of any nature (each, a "LIEN").
(e) This Agreement has been duly authorized, executed and delivered by
the Company.
(f) The Indenture has been duly authorized by the Company and, on the
Closing Date, will have been validly executed and delivered by the Company.
When the Indenture has been duly executed and delivered by the Company, the
Indenture will be a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and (ii) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles of
general applicability. On the Closing Date, the Indenture will conform in all
material respects to the requirements of the Trust Indenture Act of 1939, as
amended (the "TIA" or "TRUST INDENTURE ACT"), and the rules and regulations of
the Commission applicable to an indenture which is qualified thereunder.
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(g) The Series A Notes have been duly authorized and, on the Closing
Date, will have been validly executed and delivered by the Company. When the
Series A Notes have been issued, executed and authenticated in accordance with
the provisions of the Indenture and delivered to and paid for by the Initial
Purchasers in accordance with the terms of this Agreement, the Series A Notes
will be entitled to the benefits of the Indenture and will be valid and binding
obligations of the Company, enforceable in accordance with their terms except
as (i) the enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and (ii) rights of
acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability. On the Closing Date, the Series
A Notes will conform as to legal matters to the description thereof contained
in the Offering Memorandum.
(h) On the Closing Date, the Series B Notes will have been duly
authorized by the Company. When the Series B Notes are issued, executed and
authenticated in accordance with the terms of the Exchange Offer and the
Indenture, the Series B Notes will be entitled to the benefits of the Indenture
and will be the valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and (ii) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles of
general applicability.
(i) The Registration Rights Agreement has been duly authorized by the
Company and, on the Closing Date, will have been duly executed and delivered by
the Company. When the Registration Rights Agreement has been duly executed and
delivered, the Registration Rights Agreement will be a valid and binding
agreement of the Company, enforceable against the Company in accordance with
its terms except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights generally
and (ii) rights of acceleration and the availability of equitable remedies may
be limited by equitable principles of general applicability. On the Closing
Date, the Registration Rights Agreement will conform as to legal matters to the
description thereof in the Offering Memorandum.
(j) Neither the Company nor any of its subsidiaries is in violation of
its respective charter or by-laws or in default in the performance of any
obligation, agreement, covenant or condition contained in any indenture, loan
agreement, mortgage, lease or other agreement or instrument that is material to
the Company and its subsidiaries, taken as a whole, to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries or their respective property is bound.
(k) Except as disclosed in the Offering Memorandum, the execution,
delivery and performance of this Agreement and the other Operative Documents by
the Company, compliance by the Company with all provisions hereof and thereof
and the consummation of the transactions contemplated hereby and thereby will
not (i) require any consent, approval, authorization or other order of, or
qualification with, any court or governmental body or agency (except such as
may be required under the securities or Blue Sky laws of the various states),
(ii) conflict with or constitute a breach of any of the terms or provisions of,
or a default under, the charter or by-laws of the Company or any of its
subsidiaries or any indenture, loan agreement, mortgage, lease or other
agreement or instrument that is material to the Company and its
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subsidiaries, taken as a whole, to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries or their
respective property is bound, (iii) violate or conflict with any applicable law
or any rule, regulation, judgment, order or decree of any court or any
governmental body or agency having jurisdiction over the Company, any of its
subsidiaries or their respective property, (iv) result in the imposition or
creation of (or the obligation to create or impose) a Lien under, any agreement
or instrument to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries or their respective property is
bound, or (v) result in the termination, suspension or revocation of any
Authorization (as defined below) of the Company or any of its subsidiaries or
result in any other impairment of the rights of the holder of any such
Authorization.
(l) Except as disclosed in the Offering Memorandum, there are no legal
or governmental proceedings pending or threatened to which the Company or any
of its subsidiaries is or could be a party or to which any of their respective
property is or could be subject, which would, if adversely determined, result,
singly or in the aggregate, in a Material Adverse Effect.
(m) Neither the Company nor any of its subsidiaries has violated any
foreign, federal, state or local law or regulation relating to the protection
of human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS"), any provisions of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
any provisions of the Foreign Corrupt Practices Act or the rules and
regulations promulgated thereunder, except for such violations which, singly or
in the aggregate, would not have a Material Adverse Effect.
(n) There are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with Environmental
Laws or any Authorization, any related constraints on operating activities and
any potential liabilities to third parties) which would, singly or in the
aggregate, have a Material Adverse Effect.
(o) Except as disclosed in the Offering Memorandum, each of the
Company and its subsidiaries has such permits, licenses, consents, exemptions,
franchises, authorizations and other approvals (each, an "AUTHORIZATION") of,
and has made all filings with and notices to, all governmental or regulatory
authorities and self-regulatory organizations and all courts and other
tribunals, including without limitation, under any applicable Environmental
Laws, as are necessary to own, lease, license and operate its respective
properties and to conduct its business, except where the failure to have any
such Authorization or to make any such filing or notice would not, singly or in
the aggregate, have a Material Adverse Effect. Each such Authorization is valid
and in full force and effect and each of the Company and its subsidiaries is in
compliance with all the terms and conditions thereof and with the rules and
regulations of the authorities and governing bodies having jurisdiction with
respect thereto; and no event has occurred (including, without limitation, the
receipt of any notice from any authority or governing body) which allows or,
after notice or lapse of time or both, would allow, revocation, suspension or
termination of any such Authorization or results or, after notice or lapse of
time or both, would result in any other impairment of the rights of the holder
of any such Authorization; and such Authorizations contain no restrictions that
are burdensome to the Company or any of its
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subsidiaries; except where such failure to be valid and in full force and
effect or to be in compliance, the occurrence of any such event or the presence
of any such restriction would not, singly or in the aggregate, have a Material
Adverse Effect.
(p) The pro forma balance sheet included in the Preliminary Offering
Memorandum and the Offering Memorandum have been prepared in accordance with
generally accepted accounting principles in the United States and give effect
to assumptions used in the preparation thereof on a reasonable basis and in
good faith and present fairly, in all material respects, the proposed
transactions contemplated by the Preliminary Offering Memorandum and the
Offering Memorandum. The other pro forma financial and statistical information
and data included in the Offering Memorandum are, in all material respects,
accurately presented and prepared on a basis consistent with the pro forma
balance sheet.
(q) The Company is not and, after giving effect to the offering and
sale of the Series A Notes and the application of the net proceeds thereof as
described in the Offering Memorandum, will not be, an "investment company," as
such term is defined in the Investment Company Act of 1940, as amended.
(r) Other than the Shareholders' Agreement (as defined in the Offering
Memorandum) and the Registration Rights Agreement, there are no contracts,
agreements or understandings between the Company and any person granting such
person the right to require the Company to file a registration statement under
the Act with respect to any securities of the Company or to require the Company
to include such securities with the Notes registered pursuant to any
Registration Statement.
(s) Neither the Company nor any of its subsidiaries nor any agent
thereof acting on the behalf of them has taken, and none of them will take, any
action that might cause this Agreement or the issuance or sale of the Series A
Notes to violate Regulation G (12 C.F.R. Part 207), Regulation T (12 C.F.R.
Part 220), Regulation U (12 C.F.R. Part 221) or Regulation X (12 C.F.R. Part
224) of the Board of Governors of the Federal Reserve System.
(t) No "nationally recognized statistical rating organization" as such
term is defined for purposes of Rule 436(g)(2) under the Act (i) has imposed
(or has informed the Company that it is considering imposing) any condition
(financial or otherwise) on the Company's retaining any rating assigned to the
Company, any securities of the Company or (ii) has indicated to the Company
that it is considering (a) the downgrading, suspension, or withdrawal of, or
any review for a possible change that does not indicate the direction of the
possible change in, any rating so assigned or (b) any change in the outlook for
any rating of the Company, or any securities of the Company.
(u) Since the respective dates as of which information is given in the
Offering Memorandum other than as set forth in the Offering Memorandum
(exclusive of any amendments or supplements thereto subsequent to the date of
this Agreement), (i) there has not occurred any material adverse change or any
development involving a prospective material adverse change in the condition,
financial or otherwise, or the earnings, business, management or operations of
the Company and its subsidiaries, taken as a whole, (ii) there has not been any
material adverse change or any development involving a prospective material
adverse change in
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the capital stock or in the long-term debt of the Company or any of its
subsidiaries and (iii) neither the Company nor any of its subsidiaries has
incurred any material liability or obligation, direct or contingent.
(v) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its date, contains all the information specified in, and
meeting the requirements of, Rule 144A(d)(4) under the Act.
(w) When the Series A Notes are issued and delivered pursuant to this
Agreement, the Series A Notes will not be of the same class (within the meaning
of Rule 144A under the Act) as any security of the Company that is listed on a
national securities exchange registered under Section 6 of the Exchange Act or
that is quoted in a United States automated inter-dealer quotation system.
(x) No form of general solicitation or general advertising (as defined
in Regulation D under the Act) was used by the Company or any of its respective
representatives (other than the Initial Purchasers, as to whom the Company
makes no representation) in connection with the offer and sale of the Series A
Notes contemplated hereby, including, but not limited to, articles, notices or
other communications published in any newspaper, magazine, or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising. No
securities of the same class as the Series A Notes have been issued and sold by
the Company within the six-month period immediately prior to the date hereof.
(y) Prior to the effectiveness of any Registration Statement, the
Indenture is not required to be qualified under the TIA.
(z) No registration under the Act of the Series A Notes is required
for the sale of the Series A Notes to the Initial Purchasers as contemplated
hereby or for the Exempt Resales assuming the accuracy of the Initial
Purchasers' representations and warranties and agreements set forth in Section
7 hereof.
(aa) Each certificate signed by any officer of the Company and
delivered to the Initial Purchasers or counsel for the Initial Purchasers shall
be deemed to be a representation and warranty by the Company to the Initial
Purchasers as to the matters covered thereby.
The Company acknowledges that the Initial Purchasers and, for purposes
of the opinions to be delivered to the Initial Purchasers pursuant to Section 9
hereof, counsel to the Company and counsel to the Initial Purchasers will rely
upon the accuracy and truth of the foregoing representations and hereby
consents to such reliance.
7. INITIAL PURCHASERS' REPRESENTATIONS AND WARRANTIES.
Each Initial Purchaser represents and warrants to, and agrees with,
the Company:
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(a) Such Initial Purchaser is either a QIB or an Accredited
Institution, in either case, with such knowledge and experience in financial
and business matters as is necessary in order to evaluate the merits and risks
of an investment in the Series A Notes.
(b) Such Initial Purchaser (A) is not acquiring the Series A Notes
with a view to any distribution thereof or with any present intention of
offering or selling any of the Series A Notes in a transaction that would
violate the Act or the securities laws of any state of the United States or any
other applicable jurisdiction and (B) will be reoffering and reselling the
Series A Notes only to QIBs in reliance on the exemption from the registration
requirements of the Act provided by Rule 144A.
(c) Such Initial Purchaser agrees that no form of general solicitation
or general advertising (within the meaning of Regulation D under the Act) has
been or will be used by such Initial Purchaser or any of its representatives in
connection with the offer and sale of the Series A Notes pursuant hereto,
including, but not limited to, articles, notices or other communications
published in any newspaper, magazine or similar medium or broadcast over
television or radio, or any seminar or meeting whose attendees have been
invited by any general solicitation or general advertising.
(d) Such Initial Purchaser agrees that, in connection with Exempt
Resales, such Initial Purchaser will solicit offers to buy the Series A Notes
only from, and will offer to sell the Series A Notes only to, Eligible
Purchasers. Each Initial Purchaser further agrees that it will offer to sell
the Series A Notes only to, and will solicit offers to buy the Series A Notes
only from Eligible Purchasers that such Initial Purchaser reasonably believes
are QIBs, that agree that (x) the Series A Notes purchased by them may be
resold, pledged or otherwise transferred within the time period referred to
under Rule 144(k) (taking into account the provisions of Rule 144(d) under the
Act, if applicable) under the Act, as in effect on the date of the transfer of
such Series A Notes, only (I) to the Company or any of its subsidiaries, (II)
to a person whom the seller reasonably believes is a QIB purchasing for its own
account or for the account of a QIB in a transaction meeting the requirements
of Rule 144A under the Act, (III) in an offshore transaction (as defined in
Rule 902 under the Act) meeting the requirements of Rule 904 of the Act, (IV)
in a transaction meeting the requirements of Rule 144 under the Act, (V) to an
Accredited Institution that, prior to such transfer, furnishes the Trustee a
signed letter containing certain representations and agreements relating to the
registration of transfer of such Series A Note (the form of which may be
obtained from the Trustee) and, if such transfer is in respect of an aggregate
principal amount at maturity of Series A Notes less than $250,000, an opinion
of counsel acceptable to the Company that such transfer is in compliance with
the Act, (VI) in accordance with another exemption from the registration
requirements of the Act (and based upon an opinion of counsel acceptable to the
Company) or (VII) pursuant to an effective registration statement and, in each
case, in accordance with the applicable securities laws of any state of the
United States or any other applicable jurisdiction and (y) they will deliver to
each person to whom such Series A Notes or an interest therein is transferred a
notice substantially to the effect of the foregoing.
Such Initial Purchaser acknowledges that the Company and, for purposes
of the opinions to be delivered to each Initial Purchaser pursuant to Section 9
hereof, counsel to the Company and counsel to the Initial Purchasers will rely
upon the accuracy and truth of the foregoing representations and such Initial
Purchaser hereby consents to such reliance.
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8. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each Initial
Purchaser, its directors, its officers and each person, if any, who controls
such Initial Purchaser within the meaning of Section 15 of the Act or Section
20 of the Exchange Act, from and against any and all losses, claims, damages,
liabilities and judgments (including, without limitation, any legal or other
expenses incurred in connection with investigating or defending any matter,
including any action, that could give rise to any such losses, claims, damages,
liabilities or judgments) caused by any untrue statement or alleged untrue
statement of a material fact contained in the Offering Memorandum (or any
amendment or supplement thereto), the Preliminary Offering Memorandum or any
Rule 144A Information provided by the Company to any holder or prospective
purchaser of Series A Notes pursuant to Section 5(h) or caused by any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages, liabilities or judgments are caused by
any such untrue statement or omission or alleged untrue statement or omission
based upon information relating to the Initial Purchaser furnished in writing
to the Company by such Initial Purchaser; provided, however, that the foregoing
indemnity agreement with respect to any Preliminary Offering Memorandum shall
not inure to the benefit of any Initial Purchaser who failed to deliver a Final
Offering Memorandum, as then amended or supplemented, (so long as the Final
Offering Memorandum and any amendment or supplement thereto was provided by the
Company to the several Initial Purchasers in the requisite quantity and on a
timely basis to permit proper delivery on or prior to the Closing Date) to the
person asserting any losses, claims, damages, liabilities or judgments caused
by any untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Offering Memorandum, or caused by any untrue
statement or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact in such Preliminary Offering Memorandum
required to be stated therein or necessary to make the statements therein not
misleading, if such material misstatement or omission or alleged material
misstatement or omission was cured in the Final Offering Memorandum, as so
amended or supplemented.
(b) The Initial Purchasers agree to indemnify and hold harmless the
Company, and its directors and officers and each person, if any, who controls
(within the meaning of Section 15 of the Act or Section 20 of the Exchange Act)
the Company, to the same extent as the foregoing indemnity from the Company to
the Initial Purchasers but only with reference to information relating to the
Initial Purchasers furnished in writing to the Company by the Initial
Purchasers expressly for use in the Preliminary Offering Memorandum or the
Offering Memorandum.
(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
"INDEMNIFIED PARTY"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "INDEMNIFYING PARTY") in writing
and the indemnifying party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all fees and expenses of such counsel, as incurred (except that
in the case of any action in respect of which indemnity may be sought pursuant
to both Sections 8(a) and 8(b), the Initial Purchasers shall not be required to
assume the defense of such
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action pursuant to this Section 8(c), but may employ separate counsel and
participate in the defense thereof, but the fees and expenses of such counsel,
except as provided below, shall be at the expense of the Initial Purchasers).
Any indemnified party shall have the right to employ separate counsel in any
such action and participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of the indemnified party unless (i) the
employment of such counsel shall have been specifically authorized in writing
by the indemnifying party, (ii) the indemnifying party shall have failed to
assume the defense of such action or employ counsel reasonably satisfactory to
the indemnified party or (iii) the named parties to any such action (including
any impleaded parties) include both the indemnified party and the indemnifying
party, and the indemnified party shall have been advised by such counsel that
there may be one or more legal defenses available to it which are different
from or additional to those available to the indemnifying party (in which case
the indemnifying party shall not have the right to assume the defense of such
action on behalf of the indemnified party). In any such case, the indemnifying
party shall not, in connection with any one action or separate but
substantially similar or related actions in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (in addition to any local
counsel) for all indemnified parties and all such fees and expenses shall be
reimbursed as they are incurred. Such firm shall be designated in writing by
Donaldson, Lufkin & Jenrette Securities Corporation, in the case of the parties
indemnified pursuant to Section 8(a), and by the Company, in the case of
parties indemnified pursuant to Section 8(b). The indemnifying party shall
indemnify and hold harmless the indemnified party from and against any and all
losses, claims, damages, liabilities and judgments by reason of any settlement
of any action (i) effected with its written consent or (ii) effected without
its written consent if the settlement is entered into more than twenty business
days after the indemnifying party shall have received a request from the
indemnified party for reimbursement for the fees and expenses of counsel (in
any case where such fees and expenses are at the expense of the indemnifying
party) and, prior to the date of such settlement, the indemnifying party shall
have failed to comply with such reimbursement request. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement or compromise of, or consent to the entry of judgment with respect
to, any pending or threatened action in respect of which the indemnified party
is or could have been a party and indemnity or contribution may be or could
have been sought hereunder by the indemnified party, unless such settlement,
compromise or judgment (i) includes an unconditional release of the indemnified
party from all liability on claims that are or could have been the subject
matter of such action and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of the
indemnified party.
(d) To the extent the indemnification provided for in this Section 8
is unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages, liabilities or judgments referred to therein, then
each indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, on the one hand, and the Initial Purchasers on the other hand from the
offering of the Series A Notes or (ii) if the allocation provided by clause
8(d)(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
8(d)(i) above but also the relative fault of the Company, on the one hand, and
the Initial Purchasers, on the other hand, in
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connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative benefits received by the Company, on the
one hand and the Initial Purchasers, on the other hand, shall be deemed to be
in the same proportion as the total net proceeds from the offering of the
Series A Notes (after underwriting discounts and commissions, but before
deducting expenses) received by the Company, and the total discounts and
commissions received by the Initial Purchasers bear to the total price to
investors of the Series A Notes, in each case as set forth in the table on the
cover page of the Offering Memorandum. The relative fault of the Company, on
the one hand, and the Initial Purchasers, on the other hand, shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company, on the
one hand, or the Initial Purchasers, on the other hand, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and the Initial Purchasers agree that it would not be just
and equitable if contribution pursuant to this Section 8(d) were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or judgments referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses incurred by such
indemnified party in connection with investigating or defending any matter,
including any action, that could have given rise to such losses, claims,
damages, liabilities or judgments. Notwithstanding the provisions of this
Section 8, the Initial Purchasers shall not be required to contribute any
amount in excess of the amount by which the total discounts and commissions
received by such Initial Purchaser exceeds the amount of any damages which such
Initial Purchaser has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
(e) The remedies provided for in this Section 8 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
9. CONDITIONS OF INITIAL PURCHASERS' OBLIGATIONS.
The obligations of the Initial Purchasers to purchase the Series A
Notes under this Agreement are subject to the satisfaction of each of the
following conditions:
(a) All the representations and warranties of the Company contained in
this Agreement shall be true and correct on the Closing Date with the same
force and effect as if made on and as of the Closing Date.
(b) On or after the date hereof, (i) there shall not have occurred any
downgrading, suspension or withdrawal of, nor shall any notice have been given
of any potential or intended downgrading, suspension or withdrawal of, or of
any review (or of any potential or
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intended review) for a possible change that does not indicate the direction of
the possible change in, any rating of the Company or any securities of the
Company (including, without limitation, the placing of any of the foregoing
ratings on credit watch with negative or developing implications or under
review with an uncertain direction) by any "nationally recognized statistical
rating organization" as such term is defined for purposes of Rule 436(g)(2)
under the Act, (ii) there shall not have occurred any change, nor shall any
notice have been given of any potential or intended change, in the outlook for
any rating of the Company or any securities of the Company by any such rating
organization and (iii) no such rating organization shall have given notice that
it has assigned (or is considering assigning) a lower rating to the Notes than
that on which the Notes were marketed.
(c) Since the respective dates as of which information is given in the
Offering Memorandum other than as set forth in the Offering Memorandum
(exclusive of any amendments or supplements thereto subsequent to the date of
this Agreement), (i) there shall not have occurred any change or any
development involving a prospective change in the condition, financial or
otherwise, or the earnings, business, management or operations of the Company
and its subsidiaries, taken as a whole, (ii) there shall not have been any
change or any development involving a prospective change in the capital stock
or in the long-term debt of the Company or any of its subsidiaries and (iii)
neither the Company nor any of its subsidiaries shall have incurred any
liability or obligation, direct or contingent, the effect of which, in any such
case described in clause 9(c)(i), 9(c)(ii) or 9(c)(iii), in your judgment, is
material and adverse and, in your judgment, makes it impracticable to market
the Series A Notes on the terms and in the manner contemplated in the Offering
Memorandum.
(d) You shall have received on the Closing Date a certificate dated
the Closing Date, signed by the President and the Chief Financial Officer of
the Company, confirming the matters set forth in Sections 9(a), 9(b) and 9(c)
and stating that the Company has complied with all the agreements and satisfied
all of the conditions herein contained and required to be complied with or
satisfied on or prior to the Closing Date.
(e) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Initial Purchasers), dated the Closing
Date, of Willkie Farr & Gallagher, special counsel for the Company to the
effect that:
(i) each of the Company and its subsidiaries has been duly
incorporated, is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation and has the
corporate power and authority to carry on its business as described in
the Offering Memorandum and to own, lease and operate its properties;
(ii) each of the Company and its subsidiaries (as set forth on
Schedule A hereto) is duly qualified and is in good standing as a
foreign corporation authorized to do business in each jurisdiction in
which the nature of its business or its ownership or leasing of
property requires such qualification, except where the failure to be
so qualified would not have a Material Adverse Effect;
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(iii) all the outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid,
non-assessable and not subject to any preemptive or similar rights
except as provided in the Certificate of Incorporation or the
Shareholders' Agreement;
(iv) the Series A Notes have been duly authorized and, when
executed and authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Initial Purchasers in
accordance with the terms of this Agreement, will be entitled to the
benefits of the Indenture and will be valid and binding obligations of
the Company, enforceable in accordance with their terms except as (x)
the enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and (y) rights of
acceleration and the availability of equitable remedies may be limited
by equitable principles of general applicability;
(v) the Indenture has been duly authorized, executed and delivered
by the Company and is a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms except as
(x) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and
(y) rights of acceleration and the availability of equitable remedies
may be limited by equitable principles of general applicability;
(vi) this Agreement has been duly authorized, executed and
delivered by the Company;
(vii) The Registration Rights Agreement has been duly authorized,
executed and delivered by the Company and is a valid and binding
agreement of the Company, enforceable against the Company in
accordance with its terms, except as (x) the enforceability thereof
may be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally, (y) rights of acceleration and the
availability of equitable remedies may be limited by equitable
principles of general applicability and (z) indemnity provisions may
be unenforceable as against public policy;
(viii) the Series B Senior Notes have been duly authorized;
(ix) the statements under the captions "Business-Regulation,"
"Risk Factors-Regulation," "Business-Legal and Administrative
Proceedings" and "Description of Notes" (to the extent that it
constitutes a summary of the terms of the Notes) in the Offering
Memorandum, in each case accurately summarizes the legal matters
purported to be summarized therein;
(x) such counsel is of the opinion ascribed to it in the Offering
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Memorandum under the caption "Certain U.S. Federal Income Tax
Considerations";
(xi) Except for the post-closing authorizations and approvals
referred to in the Offering Memorandum, the execution, delivery and
performance of this Agreement and the other Operative Documents by the
Company, the compliance by the Company with all provisions hereof and
thereof and the consummation of the transactions contemplated hereby
and thereby will not (i) require any consent, approval, authorization
or other order of, or qualification with, any court or governmental
body or agency (except such as may be required under the securities or
Blue Sky laws of the various states), (ii) conflict with or constitute
a breach of any of the terms or provisions of, or a default under, the
charter or by-laws of the Company or any of its subsidiaries or any
indenture, loan agreement, mortgage, lease or other agreement or
instrument that is material to the Company and its subsidiaries, taken
as a whole, to which the Company or any of its subsidiaries is a party
or by which the Company or any of its subsidiaries or their respective
property is bound, (iii) violate or conflict with any applicable law
or any rule, regulation, judgment, order or decree of any court or any
governmental body or agency having jurisdiction over the Company, any
of its subsidiaries or their respective property, (iv) result in the
imposition or creation of (or the obligation to create or impose) a
Lien under, any agreement or instrument to which the Company or any of
its subsidiaries is a party or by which the Company or any of its
subsidiaries or their respective property is bound, or (v) result in
the termination, suspension or revocation of any Authorization (as
defined below) of the Company or any of its subsidiaries or result in
any other impairment of the rights of the holder of any such
Authorization except as enforcement of rights to indemnity or
contribution may be limited by Federal or state securities laws or
principles of public policy;
(xii) the Company is not and, after giving effect to the offering
and sale of the Series A Notes and the application of the net proceeds
thereof as described in the Offering Memorandum, will not be, an
"investment company" as such term is defined in the Investment Company
Act of 1940, as amended;
(xiii) the Indenture complies as to form in all material respects
with the requirements of the TIA, and the rules and regulations of the
Commission applicable to an indenture which is qualified thereunder.
It is not necessary in connection with the offer, sale and delivery of
the Series A Notes to the Initial Purchasers in the manner
contemplated by this Agreement or in connection with the Exempt
Resales to qualify the Indenture under the TIA;
(xiv) no registration under the Act of the Series A Notes is
required for the sale of the Series A Notes to the Initial Purchasers
as
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contemplated by this Agreement or for the Exempt Resales assuming
hat (i) each Initial Purchaser is a QIB, (ii) the accuracy of, and
compliance with, the Initial Purchasers' representations and
agreements contained in Section 7 of this Agreement, (iii) the
accuracy of the representations of the Company set forth in Sections
6(v), (w) and (x) of this Agreement; and
(xv) after due inquiry, such counsel does not know of any legal or
governmental proceedings pending or threatened to which the Company or
any of its subsidiaries is or could be a party or to which any of
their respective property is or could be subject, which might result,
singly or in the aggregate, in a Material Adverse Effect.
Nothing has come to the attention of such counsel that has led them to
believe that, as of the date of the Offering Memorandum or as of the Closing
Date, the Offering Memorandum, as amended or supplemented, if applicable
(except for the financial data included therein (including the supporting
notes), as to which such counsel does not express any belief) contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
The statement of Willkie Farr & Gallagher in the penultimate paragraph
of this section 9(e) shall be rendered to you at the request of the Company and
shall so state therein. In providing such statement with respect to the matters
covered by the penultimate paragraph of this Section 9(e), Willkie Farr &
Gallagher may state that their statement is based upon their participation in
the preparation of the Offering Memorandum and any amendments or supplements
thereto and review and discussion of the contents thereof, but is without
independent check or verification except as specified.
(f) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Initial Purchasers), dated the Closing
Date, of Friedman Kaplan & Seiler LLP, special counsel for the Company, to the
effect that:
(i) each of the Company and its subsidiaries has been duly
incorporated, is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation and has the
corporate power and authority to carry on its business as described in
the Offering Memorandum and to own, lease and operate its properties;
(ii) each of the Company and its subsidiaries (as set forth on
Schedule A hereto) is duly qualified and is in good standing as a
foreign corporation authorized to do business in each jurisdiction in
which the nature of its business or its ownership or leasing of
property requires such qualification, except where the failure to be
so qualified would not have a Material Adverse Effect;
(iii) all the outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid,
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non-assessable and not subject to any preemptive or similar rights
except as provided in the Certificate of Incorporation or the
Shareholders' Agreement;
(iv) all of the outstanding shares of capital stock of each of the
Company's subsidiaries have been duly authorized and validly issued
and are fully paid and non-assessable, and, to the best of such
counsel's knowledge, are owned by the Company, free and clear of any
Lien other than pursuant to the Credit Facility;
(v) the statements under the captions "Certain Relationships and
Related Transactions" and "Description of Capital Stock" in the
Offering Memorandum, in each case accurately summarizes the legal
matters purported to be summarized therein, subject to the
qualification that reference is made to the Agreements and the
Certificate of Incorporation referred to therein for a full
description of the matters contained therein;
(vi) neither the Company nor any of its subsidiaries is in
violation of its respective charter or by-laws and, to the best of
such counsel's knowledge after due inquiry, neither the Company nor
any of its subsidiaries is in default in the performance of any
obligation, agreement, covenant or condition contained in any
indenture, loan agreement, mortgage, lease or other agreement or
instrument that is material to the Company and its subsidiaries, taken
as a whole, to which the Company or any of its subsidiaries is a party
or by which the Company or any of its subsidiaries or their respective
property is bound; and
(vii) to the best of such counsel's knowledge after due inquiry
other than the Shareholders' Agreement, there are no contracts,
agreements or understandings between the Company and any person
granting such person the right to require the Company to file a
registration statement under the Act with respect to any securities of
the Company or to require the Company to include such securities with
the Notes registered pursuant to any Registration Statement.
Nothing has come to the attention of such counsel that has led
them to believe that, as of the date of the Offering Memorandum or as
of the Closing Date, the Offering Memorandum, as amended or
supplemented, if applicable (except for the financial statements and
other financial data included therein (including the supporting
notes), as to which such counsel does not express any belief) contains
any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
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The statement of Friedman Kaplan & Seiler LLP in the penultimate
paragraph of this Section 9(f) shall be rendered to you at the request of the
Company and shall so state therein. In providing such statement with respect to
the matters covered by the penultimate paragraph of this Section 9(f), Friedman
Kaplan & Seiler LLP may state that their statement is based upon their
participation in the preparation of the Offering Memorandum and any amendments
or supplements thereto and review and discussion of the contents thereof, but
is without independent check or verification except as specified.
(g) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Initial Purchasers), dated the Closing
Date, of Donald Manning, Esq., general counsel of the Company, to the effect
that:
each of the Company and its subsidiaries has such Authorizations
of, and has made all filings with and notices to, all governmental or
regulatory authorities and self-regulatory organizations and all
courts and other tribunals, including without limitation, under any
applicable Environmental Laws, as are necessary to own, lease, license
and operate its respective properties and to conduct its business,
except where the failure to have any such Authorization or to make any
such filing or notice would not reasonably be expected to, singly or
in the aggregate, have a Material Adverse Effect and except for such
matters as are disclosed in the Offering Memorandum. Each such
Authorization is valid and in full force and effect and each of the
Company and its subsidiaries is in compliance with all the terms and
conditions thereof and with the rules and regulations of the
authorities and governing bodies having jurisdiction with respect
thereto; and to the best of such counsel's knowledge, no event has
occurred (including the receipt of any notice from any authority or
governing body) which allows or, after notice or lapse of time or
both, would allow, revocation, suspension or termination of any such
Authorization or results or, after notice or lapse of time or both,
would result in any other impairment of the rights of the holder of
any such Authorization; except where such failure to be valid and in
full force and effect or to be in compliance or the occurrence of any
such event would not reasonably be expected to, singly or in the
aggregate, have a Material Adverse Effect and except for such matters
as are disclosed in the Offering Memorandum;
(h) The Initial Purchasers shall have received on the Closing Date an
opinion, dated the Closing Date, of Latham & Watkins, counsel for the Initial
Purchasers, in form and substance reasonably satisfactory to the Initial
Purchasers.
(i) The Initial Purchasers shall have received, at the time this
Agreement is executed and at the Closing Date, letters dated the date hereof or
the Closing Date, as the case may be, in form and substance satisfactory to the
Initial Purchasers from Arthur Andersen LLP, independent public accountants,
containing the information and statements of the type ordinarily included in
accountants' "comfort letters" to the Initial Purchasers with respect to the
financial statements and certain financial information contained in the
Offering Memorandum.
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(j) The Series A Notes shall have been approved by the NASD for
trading and duly listed in PORTAL.
(k) The Initial Purchasers shall have received a counterpart,
conformed as executed, of the Indenture which shall have been entered into by
the Company and the Trustee.
(l) The Company shall have executed the Registration Rights Agreement
and the Initial Purchasers shall have received an original copy thereof, duly
executed by the Company.
(m) Each of the Equity Investments (as defined in the Offering
Memorandum) shall have been committed at or prior to the Closing Date.
(n) The Company shall not have failed at or prior to the Closing Date
to perform or comply with any of the agreements herein contained and required
to be performed or complied with by the Company, as the case may be, at or
prior to the Closing Date.
10. EFFECTIVENESS OF AGREEMENT AND TERMINATION.
This Agreement shall become effective upon the execution and delivery
of this Agreement by the parties hereto.
This Agreement may be terminated at any time on or prior to the
Closing Date by the Initial Purchasers by written notice to the Company if any
of the following has occurred: (i) any outbreak or escalation of hostilities or
other national or international calamity or crisis or change in economic
conditions or in the financial markets of the United States or elsewhere that,
in the Initial Purchasers' judgment, is material and adverse and, in the
Initial Purchasers' judgment, makes it impracticable to market the Series A
Notes on the terms and in the manner contemplated in the Offering Memorandum,
(ii) the suspension or material limitation of trading in securities or other
instruments on the New York Stock Exchange, the American Stock Exchange, the
Chicago Board of Options Exchange, the Chicago Mercantile Exchange, the Chicago
Board of Trade or the Nasdaq National Market or limitation on prices for
securities or other instruments on any such exchange or the Nasdaq National
Market, (iii) the suspension of trading of any securities of the Company on any
exchange or in the over-the-counter market, (iv) the enactment, publication,
decree or other promulgation of any federal or state statute, regulation, rule
or order of any court or other governmental authority which in the Initial
Purchasers reasonable judgment materially and adversely affects, or will
materially and adversely affect, the business, prospects, financial condition
or results of operations of the Company and its subsidiaries, taken as a whole,
(v) the declaration of a banking moratorium by either federal or New York State
authorities or (vi) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs which in your
opinion has a material adverse effect on the financial markets in the United
States.
11. INITIAL PURCHASERS' INFORMATION.
The Company and the Initial Purchasers severally acknowledge and agree
for all purposes under this Agreement that the statements with respect to the
offering of the Notes set
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forth in the last paragraph of the outside front cover page; the stabilization
language in the first paragraph of page (ii); and the first sentence of the
third paragraph, the fourth sentence of the fourth paragraph and the sixth
paragraph under the caption "Plan of Distribution" in such Offering Memorandum
constitute the only information furnished to the Company in writing by the
Initial Purchasers expressly for use in the Offering Memorandum.
12. MISCELLANEOUS.
Notices given pursuant to any provision of this Agreement shall be
addressed as follows: (i) if to the Company, to 4500 Carillon Point, Kirkland,
Washington 98033, Attention: Donald Manning, Esq. and (ii) if to the Initial
Purchasers, Donaldson, Lufkin & Jenrette Securities Corporation , 277 Park
Avenue, New York, New York 10172, Attention: Syndicate Department, or in any
case to such other address as the person to be notified may have requested in
writing.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company and the Initial Purchasers set
forth in or made pursuant to this Agreement shall remain operative and in full
force and effect, and will survive delivery of and payment for the Series A
Notes, regardless of (i) any investigation, or statement as to the results
thereof, made by or on behalf of the Initial Purchasers, the officers or
directors of the Initial Purchasers, any person controlling the Initial
Purchasers, the Company, the officers or directors of the Company, or any
person controlling the Company, (ii) acceptance of the Series A Notes and
payment for them hereunder and (iii) termination of this Agreement.
If for any reason the Series A Notes are not delivered by or on behalf
of the Company as provided herein (other than as a result of any termination of
this Agreement pursuant to Section 10), the Company agrees to reimburse the
Initial Purchasers for all out-of-pocket expenses (including the fees and
disbursements of counsel) incurred by them. Notwithstanding any termination of
this Agreement, the Company shall be liable for all expenses which it has
agreed to pay pursuant to Section 5(i) hereof. The Company also agrees to
reimburse the Initial Purchasers and their officers, directors and each person,
if any, who controls such Initial Purchaser within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act for any and all fees and expenses
(including without limitation the fees and expenses of counsel) incurred by
them in connection with enforcing their rights under this Agreement (including
without limitation its rights under Section 8).
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the Initial
Purchasers, the Initial Purchasers' directors and officers, any controlling
persons referred to herein, the directors of the Company and their respective
successors and assigns, all as and to the extent provided in this Agreement,
and no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include a purchaser of
any of the Series A Notes from the Initial Purchasers merely because of such
purchase.
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This Agreement shall be governed and construed in accordance with the
laws of the State of New York.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth the agreement
among the Company and the Initial Purchasers.
Very truly yours,
NEXTEL PARTNERS, INC.
By: /s/ John Chapple
--------------------------------
Name: John Chapple
Title: Chief Executive Officer
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION on behalf of
the Initial Purchasers
By: /s/ Andrea J. Hagan
--------------------
Name: Andrea J. Hagan
Title: Senior Vice President
25
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CONFORMED COPY
SHAREHOLDERS' AGREEMENT
dated as of
January 29, 1999
among
NEXTEL PARTNERS, INC.
AND
THE SHAREHOLDERS NAMED HEREIN
<PAGE>
TABLE OF CONTENTS
----------------------
PAGE
----
ARTICLE 1 DEFINITIONS
Section 1.01. Definitions....................................................1
ARTICLE 2 CORPORATE GOVERNANCE AND MANAGEMENT
Section 2.01. Composition of the Board......................................13
Section 2.02. Removal.......................................................14
Section 2.03. Vacancies.....................................................14
Section 2.04. Quorum and Action by the Board................................14
Section 2.05. Notice of Meeting; Participation..............................15
Section 2.06. Actions Requiring Board, NWIP or DLJMB Approval...............15
Section 2.07. Actions Requiring Shareholder Approval........................19
Section 2.08. Subsidiary Governance.........................................19
Section 2.09. Conflicting Charter or Bylaw Provisions.......................19
Section 2.10. Initial Capitalization........................................19
Section 2.11. Stock Options.................................................20
ARTICLE 3 RESTRICTIONS ON TRANSFER
Section 3.01. General.......................................................20
Section 3.02. Legends.......................................................21
Section 3.03. Permitted Transferees.........................................22
Section 3.04. General Restrictions on Transfers.............................22
Section 3.05. Rights of First Offer.........................................24
Section 3.06. Right of First Refusal........................................26
Section 3.07. Major Investor Call Right.....................................28
Section 3.08. Special Nextel Sale Right.....................................30
ARTICLE 4 PUT AND CALL RIGHTS
Section 4.01. Non-Nextel Shareholder Put Rights.............................33
Section 4.02. Nextel Shareholder Call Right.................................40
<PAGE>
Section 4.03. Fair Market Value Calculation.................................44
Section 4.04. Management Stockholder Tag Along Right........................48
Section 4.05. Company Repurchase Rights.....................................49
ARTICLE 5 ANTI-DILUTION AND PREEMPTION RIGHTS
Section 5.01. Anti-Dilution Rights..........................................51
Section 5.02. Special NWIP Anti-Dilution Rights.............................53
Section 5.03. Special NWIP Preemption of Registration Rights................54
ARTICLE 6 REGISTRATION RIGHTS
Section 6.01. Demand Registration...........................................56
Section 6.02. Company Registration; Incidental Registration.................59
Section 6.03. Holdback Agreements...........................................61
Section 6.04. Registration Procedures.......................................62
Section 6.05. Indemnification by the Company................................65
Section 6.06. Indemnification by Participating Shareholders.................66
Section 6.07. Conduct of Indemnification Proceedings........................67
Section 6.08. Contribution..................................................68
Section 6.09. Participation in Public Offering..............................69
Section 6.10. Cooperation by the Company....................................69
Section 6.11. No Transfer of Registration Rights............................70
Section 6.12. Limitations on Subsequent Registration Rights.................70
Section 6.13. Obligation to Register Nextel and NWIP Securities.............70
ARTICLE 7 CERTAIN COVENANTS AND AGREEMENTS
Section 7.01. Confidentiality...............................................71
Section 7.02. Reports.......................................................72
Section 7.03. Subsequent Deployment of Alternative Digital
Transmission Technology.....................................72
Section 7.04. Limitations on Subsequent Changes to Company's
Operations..................................................73
Section 7.05. Delivery of Nextel Stock......................................76
Section 7.06. Senior Management Resignation.................................77
ARTICLE 8 MISCELLANEOUS
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Section 8.01. Entire Agreement..............................................78
Section 8.02. Binding Effect; Benefit.......................................78
Section 8.03. Assignability.................................................78
Section 8.04. Amendment; Waiver; Termination................................79
Section 8.05. Notices.......................................................79
Section 8.06. Fees and Expenses.............................................80
Section 8.07. Headings......................................................81
Section 8.08. Counterparts..................................................81
Section 8.09. Applicable Law................................................81
Section 8.10. Specific Enforcement..........................................82
Section 8.11. Limitations on Damages........................................82
Section 8.12. Consent to Jurisdiction; Expenses.............................82
Section 8.13. Severability..................................................83
Section 8.14. Amendments to Laws............................................83
Section 8.15. Acknowledgment of Limits on Nextel's Liability................83
<PAGE>
SHAREHOLDERS' AGREEMENT
AGREEMENT dated as of January 29, 1999 among Nextel Partners, Inc.,
(the "COMPANY"), Nextel WIP Corp. ("NWIP"), DLJ Merchant Banking Partners II,
L.P. ("DLJMB"), Madison Dearborn Capital Partners II, L.P. ("MDP"), Eagle River
Investments, LLC ("EAGLE RIVER"), Motorola, Inc. ("MOTOROLA") and the
shareholders listed on the signature pages hereto.
W I T N E S S E T H :
WHEREAS, pursuant to the Subscription Agreement (as defined below)
certain parties hereto are acquiring securities of the Company; and
WHEREAS, the parties hereto desire to enter into this Agreement to
govern certain of their rights, duties and obligations after consummation of
the transactions contemplated by such Subscription Agreement;
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.01. Definitions. (a) The following terms, as used herein,
have the following meanings:
"AFFILIATE" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with
such Person, provided that no security holder of the Company shall be deemed an
Affiliate of any other security holder solely by reason of any investment in
the Company nor shall any Person be deemed an Affiliate of the Company solely
by reason of veto, approval or similar rights granted to such Person pursuant
to any of the Transaction Documents. For the purpose of this definition, the
term "control" (including with correlative meanings, the terms "controlling",
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or
<PAGE>
cause the direction of the management and policies of such Person, whether
through the ownership of voting securities or by contract or otherwise.
"ASSET TRANSFER AGREEMENT" shall have the meaning set forth in the
Subscription Agreement.
"BENEFICIALLY OWN" shall have the meaning set forth in Rules 13d-3 or
16a-1 of the Exchange Act.
"BOARD" means the board of directors of the Company.
"BUSINESS DAY" means any day except a Saturday, Sunday or other day on
which commercial banks in New York City are required or authorized by law to
close.
"CLOSING" means the Closing Date (as defined in the Subscription
Agreement).
"CO-INVESTOR" means each Shareholder other than the Strategic
Investors, the DLJ Entities and the Management Shareholders.
"COMPANY CAPITAL STOCK" means the Company Common Stock, the
Convertible Preferred Stock, the Series B Preferred (as defined in the
Subscription Agreement), the Warrants (as defined in the Subscription
Agreement) and any other equity security issued by the Company.
"COMPANY COMMON STOCK" shall mean authorized Common Stock, par value
$.001 per share, of the Company.
"CONVERTIBLE PREFERRED STOCK" means the Series A Preferred, Series C
Preferred and Series D Preferred, each as defined in the Subscription
Agreement.
"DLJ" means Donaldson, Lufkin & Jenrette, Inc.
"DLJ FUNDS" means DLJMB, DLJ Offshore Partners II, C.V., DLJ
Diversified Partners, L.P., DLJMB Funding II, Inc., DLJ Merchant Banking
Partners II - A, L.P., DLJ Diversified Partners - A, L.P., DLJ Millennium
Partners, L.P., DLJ Millennium Partners - A, L.P., UK Investment Plan 1997
Partners, DLJ EAB Partners, L.P., DLJ ESC II L.P., DLJ First ESC L.P., DLJ Fund
Investment
<PAGE>
Partners II, L.P., DLJ Private Equity Partners Fund, L.P., and DLJ Private
Equity Employee Partners Fund, L.P.
"DLJ ENTITIES" means the DLJ Funds and MDP. The term "DLJ ENTITIES",
to the extent such entities shall have transferred any of their Shares to
Permitted Transferees, shall mean the DLJ Entities and the Permitted
Transferees of the DLJ Entities, taken together, and any right or action that
may be exercised or taken at the election of the DLJ Entities may be exercised
or taken at the election of the DLJ Entities and such Permitted Transferees.
"DLJMB TRIGGER EVENT" means the transfer of Equity Securities by one
or more of the DLJ Entities so that the Equity Securities beneficially owned by
the DLJ Entities, in the aggregate, is less than 80% of the Initial Ownership
of the DLJ Entities.
"EQUITY SECURITIES" means the Company Common Stock, the Warrants (on a
Fully Diluted basis) and the Convertible Preferred Stock.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FCC" means the Federal Communications Commission or similar
regulatory authority established in replacement thereof.
"FCC CHANGE OF CONTROL" means the granting or withholding of any
rights, powers or obligations, that either individually or in combination,
would require the approval of the FCC pursuant to Section 310(d) of the
Communications Act of 1934, as amended, or any of the FCC Rules or policies
implementing Section 310(d).
"FCC RULES" means the statutes, rules and regulations administered by
the FCC.
"FULLY DILUTED" means, with respect to any class of Company Capital
Stock and without duplication, all outstanding shares and all shares issuable
in respect of outstanding securities convertible into or exchangeable for
Company Common Stock, stock appreciation rights or options, warrants and other
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<PAGE>
irrevocable rights to purchase or subscribe for Company Common Stock or
securities convertible into or exchangeable for Company Common Stock; provided
that no Person shall be deemed to own such number of Fully Diluted shares of
such class as such Person has the right to acquire from any Person other than
the Company.
"INITIAL OWNERSHIP" means, with respect to any Shareholder, the number
of shares of Equity Securities beneficially owned (and (without duplication)
which such Persons have the right to acquire from the Company) as of the date
hereof, taking into account any stock split, stock dividend, reverse stock
split or similar event, provided that with respect to the Initial Ownership of
the DLJ Entities, in the event that either the DLJ Funds or MDP elect to
transfer Shares to a Third Party and MDP or the DLJ Funds, as the case may be,
elects to exercise its rights under Section 3.05, 3.06 or 3.07 and purchase its
Pro Rata Portion, and, in addition, offers irrevocably to purchase all of those
Shares proposed to be transferred to the Third Party that are not purchased by
the other Major Investors, the Initial Ownership of the DLJ Entities, in the
aggregate, will be reduced by the number of Shares sold by the DLJ Funds or
MDP, as the case may be, and purchased by the other Major Investors (excluding
the DLJ Funds and MDP) pursuant to Section 3.05, 3.06 or 3.07.
"INITIAL PUBLIC OFFERING" means the initial Public Offering.
"INITIAL REQUIRED BUILD" means the completion of the Build Out of all
Initial Sections (as defined in the Joint Venture Agreement) assigned to the
first or second Build Year (as defined in the Joint Venture Agreement), and of
any Option Sections (as defined in the Joint Venture Agreement) assigned to the
first or second Build Year that are included in the Territory (as defined in
the Joint Venture Agreement) through the Company's election under Section 6.2B
of the Joint Venture Agreement, but excluding any such Option Sections that are
included in the Territory as a result of the Company's response to a notice
given pursuant to Section 6.2C of the Joint Venture Agreement.
"JOINT VENTURE AGREEMENT" means that certain Joint Venture Agreement,
dated as of the date hereof, by and among the Company, Opco and NWIP, as it may
be amended from time to time.
4
<PAGE>
"LICENSE CO." means Nextel WIP License Co., a Delaware corporation,
which on the date hereof is a wholly-owned Subsidiary of NWIP and which, upon
receipt of the requisite FCC approval, will automatically become a wholly-owned
Subsidiary of the Company.
"MANAGEMENT AGREEMENT" means that certain interim Management
Agreement, dated as of the date hereof, by and among the Company, Opco, License
Co. and NWIP, as it may be amended from time to time.
"MANAGEMENT SHAREHOLDERS" means John Chapple, John Thompson,
David Thaler, David Aas, Perry Satterlee, and Mark Fanning and their Permitted
Transferees.
"NDS" means, individually, a Nextel Subsidiary operating all or any
portion of an ESMR Network (as defined in the Joint Venture Agreement) in the
United States and "the NDS" means, collectively, all of Nextel's Subsidiaries
operating all or any portion of an ESMR Network in the United States.
"NEXTEL" means Nextel Communications, Inc. and its successors and
assigns, including any surviving or transferee Person of a transaction described
in clause (iii) of the definition of Nextel Sale.
"NEXTEL AGREEMENT" means that certain Agreement Specifying Obligations
of, and Limiting Liability and Recourse to Nextel, dated as of the date hereof,
by and among Nextel, the Company, and Opco.
"NEXTEL SHAREHOLDERS" means (i) NWIP and its Permitted Transferees,
(ii) Nextel and its Subsidiaries and (iii) any person or group described in
clause (i) of the definition of Nextel Sale and any controlled Affiliate
thereof.
"1999 STOCK OPTION PLAN" means the Nextel Partners, Inc. 1999
Nonqualified Stock Option Plan as in effect on the date hereof.
"NON-NEXTEL SHAREHOLDERS" means any Shareholder other than a Nextel
Shareholder.
5
<PAGE>
"OPCO" means Nextel Partners Operating Corp., a wholly owned
subsidiary of the Company.
"PERCENTAGE OWNERSHIP" means, with respect to any Shareholder or any
group of Shareholders at any time, (i) the number of shares of Fully Diluted
Company Common Stock that such Shareholder or group of Shareholders
beneficially owns (and (without duplication) has the right to acquire from the
Company) at such time, divided by (ii) the total number of shares of Fully
Diluted Company Common Stock at such time.
"PERMITTED TRANSFEREE" means (i) in the case of a Shareholder other
than a Management Shareholder, NWIP, Motorola, Eagle River or a DLJ Entity (a)
any Affiliate of such Shareholder (collectively, "SHAREHOLDER AFFILIATES"), (b)
any general partner, limited partner, member, or shareholder of such
Shareholder or a Shareholder Affiliate that receives Shares in a bona fide
distribution pursuant to the terms of the transferor's organizational documents
(so long as such documents are not amended for the purpose of permitting such a
transfer), and any employee, officer or director of such Shareholder or a
Shareholder Affiliate, or any spouse, lineal descendant (whether natural or
adopted), sibling, parent, heir, executor, administrator, testamentary trustee,
legatee or beneficiary of any of the foregoing Persons described in this clause
(b) (collectively, "SHAREHOLDER ASSOCIATES") and (c) any trust, the
beneficiaries of which, or any corporation, limited liability company or
partnership, the stockholders, members or general or limited partner of which
include only such Shareholder, such Shareholder Affiliates or Shareholder
Associates;
(ii) in the case of a Management Shareholder (a) a spouse or lineal
descendant (whether natural or adopted), sibling, parent, heir, executor,
administrator, testamentary trustee, legatee or beneficiary of any of such
Management Shareholder, (b) any trust, the primary beneficiaries of which, or
any corporation, limited liability company or partnership, the stockholders,
members or general or limited partners of which include only the Persons named
in clause (a) or (c) any charitable remainder trust;
(iii) in the case of any DLJ Entity (a) any other DLJ Entity (except
that MDP and the DLJ Funds and their respective Permitted Transferees shall not
be Permitted Transferees of each other), (b) any general or limited partner of
any such
6
<PAGE>
entity (a "DLJ PARTNER"), and any corporation, partnership, Affiliated Employee
Benefit Trust or other entity which is an Affiliate of any DLJ Partner
(collectively, the "DLJ AFFILIATES"), (c) any managing director, general
partner, director, limited partner, officer or employee of such DLJ Entity or a
DLJ Affiliate, or the heirs, executors, administrators, testamentary trustees,
legatees or beneficiaries of any of the foregoing Persons referred to in this
clause (c) (collectively, "DLJ ASSOCIATES"), (d) any trust, the beneficiaries
of which, or any corporation, limited liability company or partnership, the
stockholders, members or general or limited partners of which, include only
such DLJ Entity, DLJ Affiliates, DLJ Associates, their spouses or their lineal
descendants (whether natural or adopted) and (e) Reed Hundt, in an amount not
to exceed $100,000 of Convertible Preferred Stock, provided that any DLJ
Partner, DLJ Affiliate, DLJ Associate, or any Person described in clause (d)
shall be deemed a Permitted Transferee only if (x) a DLJ Entity is required to
transfer Shares to such Person pursuant to the terms of such DLJ Entity's
organizational documents and (y) since the date hereof, such organizational
documents have not been amended specifically to permit a transfer of Shares to
such Person under this Agreement. For purposes of this definition, "AFFILIATED
EMPLOYEE BENEFIT TRUST" means any trust that is a successor to the assets held
by a trust established under an employee benefit plan subject to ERISA or any
other trust established directly or indirectly under such plan or any other
such plan having the same sponsor;
(iv) in the case of NWIP, any wholly-owned Subsidiary of Nextel for
so long as it remains a wholly-owned Subsidiary of Nextel;
(v) in the case of Motorola, any controlled Affiliate who is not a
Competitor for so long as it remains a controlled Affiliate of Motorola; or
(vi) in the case of Eagle River, (a) Craig O. McCaw, (b) any Person
or Persons (i) that is controlled directly or indirectly by Craig O. McCaw or
the estate of Craig O. McCaw and (ii) a majority of the equity interests of
which are owned, directly or indirectly, by Craig O. McCaw and his family, his
brothers and their families, officers and employees of such entities,
ex-spouses of such persons and estates of, and trusts for the primary benefit
of, the foregoing persons (collectively, the "MCCAW GROUP"), (c) any Affiliate
of Craig O. McCaw, (d) any current or former member or shareholder of a Person
that is controlled by Craig O. McCaw,
7
<PAGE>
provided that any such member or shareholder of a Person described in this
clause (d) shall be deemed a Permitted Transferee only if Eagle River is
required or expressly permitted pursuant to the organizational documents of
Eagle River to transfer Shares to such member or shareholder and, since the
date hereof, such organizational documents have not been amended specifically
to permit a transfer of Shares to such Person under this Agreement and (e) any
group of entities, each controlled by Craig O. McCaw or the estate of Craig O.
McCaw and through which the McCaw Group collectively owns, directly or
indirectly, a majority of the equity interests of Nextel (it being understood
that if the McCaw Group collectively owns 50% of a Person that owns 20% of
Nextel's equity interests, the McCaw Group will be deemed to indirectly own 10%
of Nextel's equity interest through such entity).
"PERSON" means an individual, corporation, limited liability company,
partnership, association, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"PUBLIC OFFERING" means any primary or secondary public offering of
Company Common Stock of the Company pursuant to an effective registration
statement under the Securities Act other than pursuant to a registration
statement filed in connection with a transaction of the type described in Rule
145 of the Securities Act or for the purpose of issuing securities pursuant to
an employee benefit plan.
"QUALIFIED DLJ ENTITIES" means (i) the DLJ Entities (other than MDP
and its Permitted Transferees), to the extent that DLJ has the power to vote or
control the vote of the Voting Stock held by such DLJ Entities and (ii) MDP and
its Permitted Transferees, to the extent that MDP (or DLJ) has the power to
vote or control the vote of the Voting Stock held by such Persons.
"QUALIFIED EAGLE RIVER ENTITIES" means Eagle River and its Permitted
Transferees to the extent that Eagle River or its Affiliates has the power to
vote or control the vote of the Voting Stock held by such Persons.
"QUALIFYING DLJ DEMAND" means a Demand Registration involving a sale
of Company Common Stock issued to the DLJ Entities upon conversion of the
Series A Preferred Stock acquired by them at the Closing that will result in
8
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either: (i) the receipt by the DLJ Entities of gross proceeds of at least $50
million or (ii) the sale of Company Common Stock by the DLJ Entities
representing more than 20% of the DLJ Entities' aggregate Initial Ownership.
"REGISTRABLE SECURITIES" means, at any time, with respect to any
Shareholder, any shares of Company Common Stock then owned by such Shareholder
until (i) a registration statement covering such Company Common Stock has been
declared effective by the SEC and such securities have been disposed of
pursuant to such effective registration statement, (ii) such securities are
sold under circumstances in which all of the applicable conditions of Rule 144
(or any similar provisions then in force) under the Securities Act are met or
such securities may be sold pursuant to Rule 144(k) or (iii) such securities
are otherwise transferred, the Company has delivered a new certificate or other
evidence of ownership for such securities not bearing the legend required
pursuant to this Agreement and such securities may be resold without subsequent
registration under the Securities Act.
"REGISTRATION EXPENSES" means (i) all registration and filing fees,
(ii) fees and expenses of compliance with securities or blue sky laws
(including reasonable fees and disbursements of counsel in connection with blue
sky qualifications of the securities registered), (iii) printing expenses, (iv)
internal expenses of the Company (including, without limitation, all salaries
and expenses of its officers and employees performing legal or accounting
duties), (v) reasonable fees and disbursements of counsel for the Company and
customary fees and expenses for independent certified public accountants
retained by the Company (including expenses relating to any comfort letters or
costs associated with the delivery by independent certified public accountants
of a comfort letter or comfort letters requested pursuant to Section 6.04(h)),
(vi) the reasonable fees and expenses of any special experts retained by the
Company in connection with such registration, (vii) reasonable fees and
expenses of up to one counsel to represent collectively all of the Shareholders
participating in the offering, (viii) fees and expenses in connection with any
review of underwriting arrangements by the National Association of Shares
Dealers, Inc. (the "NASD") including fees and expenses of any "qualified
independent underwriter" and (ix) fees and disbursements of underwriters
customarily paid by issuers or sellers of securities, but shall not include any
underwriting fees, discounts or commissions attributable to the sale of
Registrable Securities, or any out-of-pocket expenses (except as set forth in
clause
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(vii) above) of the Shareholders or any fees and expenses of underwriter's
counsel or any other fees and expenses of underwriters.
"RESTRICTED STOCK PURCHASE AGREEMENTS" means the Restricted Stock
Purchase Agreements, dated as of November 20, 1998, as amended, between the
Company and each of the Management Shareholders, as in effect on the date
hereof.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHAREHOLDER" means each Person (other than the Company) who agrees in
writing to be bound by the terms of this Agreement, whether in connection with
its execution and delivery as of the date hereof, pursuant to Sections 3.03,
3.05, 3.06, 3.07 and 8.03 or otherwise, so long as such Person beneficially
owns any Shares.
"SHARES" means shares of Company Capital Stock held by the
Shareholders.
"STRATEGIC INVESTOR" means any of NWIP, Eagle River, Motorola and
their respective Permitted Transferees.
"SUBSCRIPTION AGREEMENT" means the Subscription and Contribution
Agreement dated of even date herewith among the Company and the buyers named
therein relating to the purchase and sale of Company Capital Stock.
"SUBSIDIARY" means, with respect to any Person, any entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by such Person.
"TCW" means TCW/Crescent Mezzanine Partners II, L.P., TCW/Crescent
Mezzanine Trust II, TCW Leveraged Income Trust, L.P., TCW Leveraged Income
Trust II, L.P., TCW Shared Opportunity Fund II, L.P., TCW Shared Opportunity
Fund IIB, LLC and TCW Shared Opportunity Fund III, L.P.
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"THIRD PARTY" means a prospective purchaser of Shares from a
Shareholder in an arm's-length transaction where such purchaser is not a
Permitted Transferee of such Shareholder.
"TRANSACTION DOCUMENTS" has the meaning set forth in the Subscription
Agreement.
"UNDERWRITTEN PUBLIC OFFERING" means an underwritten Public Offering
of Company Common Stock consummated pursuant to an effective registration
statement under the Securities Act.
"VOTING STOCK" means any Company Capital Stock or Capital Stock, as
the case may be, which ordinarily has voting power for the election of
directors (or persons performing similar functions), whether at all times or
only so long as no senior class of securities has such voting power by reason
of any contingency.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
---- -------
Adverse Impact Notice 7.04(a)
Applicable Default 7.04(f)
Approved Purchaser 3.05(a)
Average Share Price 4.02(d)
Beneficial Owner 4.01(h)
Build Out 4.05(e)
Business Objectives 2.06(b)
Call Notice 3.07(b)
Call Right 3.07(a)
Called Interest 3.07(a)
Capital Stock 4.01(h)
Cause 2.02
Challenge Ceiling Price 4.03(h)
Challenge Floor Price 4.03(h)
Challenger's Representative 4.03(d)
Closing Price 4.01(h)
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Common Stock 4.01(h)
Company EBITDA 4.02(d)
Company Equity Value 4.02(d)
Company IPO 5.02(a)
Competitor 3.04(e)
Confidential Information 7.01(b)
control 4.01(h)
Default Outcome 7.04(f)
Demand Registration 6.01(a)
Disqualified Provision 7.04(f)
DLJMB Designee 2.01(a)
Eagle River Designee 2.01(a)
Election Period 4.05(e)
Event of Default 7.04(f)
Fair Market Value 4.03(a)
First Appraiser 4.03(b)
General Repurchase Date 4.05(e)
High Offering Price 5.02(a)
High Value 4.03(c)
Holders 6.01(a)
Improvements 7.04(h)
Indemnified Party 6.07
Indemnifying Party 6.07
Individual Repurchase Date 4.05(e)
Initial Offer Period 3.05(b)
Inspectors 6.04(g)
Investment Formula Price 4.03(h)
Lockup Termination Date 3.04(e)
Low Offering Price 5.02(a)
Low Value 4.03(c)
Major Investors 3.05(a)
Maximum Offering Size 6.01(f)
Mid-Range 4.03(c)
Nextel Determination 7.04(b)
Nextel Multiple 4.02(d)
Nextel Required Upgrade 7.04(a)
Nextel Required Upgrade Analysis 7.04(a)
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Nextel Sale 4.01(h)
Nextel Securities 6.13
Nextel Shares 7.05(a)
Nextel Voting Stock 4.01(h)
Nominee 2.03(a)
Notice of Challenge 4.03(d)
NWIP Call Notice 4.02(b)
NWIP Call Right 4.02(a)
NWIP Designee 2.01(a)
NWIP Preemption Put 4.01(a)
Offering Party 5.03(b)
Offering Price 5.02(b)
Option A 7.04(b)
Option B 7.04(b)
Option C 7.04(b)
Option D 7.04(c)
Option Sections 4.05(e)
Option Section Percentage 4.05(e)
Permitted Holders 4.01(h)
POPs 4.05(e)
Pre-Closing Expenditure 8.06(c)
Preemption Election Notice 5.03(b)
Preemption Notice 5.03(a)
Preemption Right 5.03(a)
Pro Rata Portion 3.05(b)
Purchase Date 7.05(a)
Put Event 4.01(a)
Put Notice 4.01(c)
Put Right 4.01(a)
Records 6.04(g)
Representatives 7.01(b)
Required Services 7.04(h)
Reselling Shareholder 4.05(e)
Second Appraiser 4.03(b)
Section 3.05 Offer 3.05(b)
Section 3.05 Offer Notice 3.05(a)
Section 3.05 Purchaser 3.05(d)
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Section 3.05 Sale 3.05(a)
Section 3.05 Sale Price 3.05(a)
Section 3.05 Shares 3.05(a)
Section 3.06 Offer 3.06(a)
Section 3.06 Offer Notice 3.06(a)
Section 3.06 Offer Period 3.06(b)
Section 3.06 Offer Price 3.06(a)
Section 3.08 Notice 3.08(a)
Section 3.08 Purchaser 3.08(a)
Section 3.08 Sale 3.08(a)
Section 3.08 Sale Price 3.08(a)
Section 5.01 Notice 5.01(a)
Section 5.02 Notice 5.02(a)
Selling Party 3.05(a)
Selling Shareholder 6.01(a)
Service Pricing Structure 7.04(h)
Shareholder 8.03
Special Nextel Sale 4.01(h)
Special Securities 4.05(e)
Start Date 4.03(b)
Superseding IPO 6.01(h)
Technology Change 7.03
Technology Change Notice 7.03
Telecommunications Company 3.04(e)
Telecommunications Revenue 3.04(e)
Third Appraiser 4.03(c)
Third Party Sale 3.07(a)
Third Value 4.03(c)
Total Common Equity 4.01(h)
Total Enterprise Value 4.02(d)
Trading Day 4.01(h)
transfer 3.01(a)
Underwriters' Range 5.02(a)
ARTICLE 2
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CORPORATE GOVERNANCE AND MANAGEMENT
Section 2.01. Composition of the Board. (a) The Board shall consist of
five members, of whom two shall be designated by DLJMB (each such director, a
"DLJMB DESIGNEE"), one shall be designated by NWIP (such director, a "NWIP
DESIGNEE"), one shall be designated by Eagle River (such director, an "EAGLE
RIVER DESIGNEE") and one shall be the chief executive officer of the Company.
(b) Each Shareholder entitled to vote for the election of directors to
the Board agrees that it will vote its shares of Equity Securities or execute
consents, as the case may be, and take all other necessary action (including
causing the Company to call a special meeting of shareholders) in order to
ensure that the composition of the Board is as set forth in this Section 2.01.
The parties to this Agreement hereby agree that as of the date hereof the Board
shall consist of the following persons: John Chapple, Timothy M. Donahue,
Andrew H. Rush, Andrew E. Sinwell, Dennis M. Weibling and that such agreement
shall constitute shareholder consent to the foregoing for purposes of the
Delaware General Corporation Law.
(c) The right of NWIP, Eagle River or DLJMB, as the case may be, to
designate one member of the Board pursuant to this Article 2 shall terminate at
such time as the number of shares of Equity Securities held by the Nextel
Shareholders, the Qualified Eagle River Entities or the Qualified DLJ Entities,
as the case may be, is less than 50% of the Nextel Shareholders', Eagle River's
or the DLJ Entities' Initial Ownership, as the case may be. The right of DLJMB
to designate a second member of the Board pursuant to this Article 2 shall
terminate at such time as the number of shares of Equity Securities held by the
Qualified DLJ Entities, in the aggregate, is less than 12% of the DLJ Entities'
Initial Ownership. So long as the Strategic Investors, in the aggregate,
beneficially own less than a majority of the Voting Stock, such Strategic
Investors' designees will constitute less than a majority of the Board.
Individuals affiliated with a particular Shareholder or group of Shareholders
shall not constitute a majority of the Board unless, at the time such
individuals are elected, such Shareholder or group of Shareholders owns a
majority of the outstanding Voting Stock, and at no time shall more than one
DLJMB Designee be designated by MDP. Subject to (and to
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the extent not inconsistent with) the foregoing, in the event that the right of
any Shareholder pursuant to this Section 2.01 to designate a member of the
Board terminates, the Board shall nevertheless continue to consist of five
members, and the member or members no longer designated by such Shareholder
shall instead be designated by the other members of the Board or (if such
members cannot reach agreement thereon within 30 days) by the holders of a
majority of the Voting Stock then outstanding. No member of the Board
designated as described in the preceding sentence will be deemed an NWIP
Designee or a DLJMB Designee for any purpose.
Section 2.02. Removal. Each Shareholder agrees that it will not vote
any of its shares of Voting Stock in favor of the removal of any director who
shall have been designated or nominated pursuant to Section 2.01 unless such
removal shall be for Cause or the Person(s) entitled to designate or nominate
such director shall have consented to such removal in writing, provided that if
the Persons entitled to designate or nominate any director pursuant to Section
2.01 shall request the removal, with or without Cause, of such director in
writing, such Shareholder shall vote its shares of Voting Stock in favor of
such removal. Removal for "CAUSE" shall mean removal of a director because of
such director's (a) willful and continued failure substantially to perform his
duties with the Company in his established position, (b) willful conduct which
is injurious to the Company or any of its Subsidiaries, monetarily or
otherwise, (c) conviction for, or guilty plea to, a felony or a crime involving
moral turpitude or (d) abuse of illegal drugs or other controlled substances or
habitual intoxication.
Section 2.03. Vacancies. If, as a result of death, disability,
retirement, resignation, removal (with or without Cause) or otherwise, there
shall exist or occur any vacancy on the Board with respect to a DLJMB Designee,
an Eagle River Designee or a NWIP Designee:
(a) the Person(s) entitled under Section 2.01 to designate or
nominate such director whose death, disability, retirement, resignation or
removal resulted in such vacancy, may, subject to the provisions of Section
2.01, designate another individual (the "NOMINEE") to fill such vacancy and
serve as a director of the Company; and
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(b) each Shareholder then entitled to vote for the election of the
Nominee as a director of the Company agrees that it will vote its shares of
Voting Stock, or execute a written consent, as the case may be, in order to
ensure that the Nominee be elected to the Board.
Section 2.04. Quorum and Action by the Board. (a) A quorum of the
Board shall consist of three directors.
(b) All actions of the Board shall require the affirmative vote of at
least a majority of the directors at a duly convened meeting of the Board at
which a quorum is present or the unanimous written consent of the Board;
provided that, in the event there is a vacancy on the Board and an individual
has been nominated to fill such vacancy, the first order of business shall be
to fill such vacancy.
Section 2.05. Notice of Meeting; Participation. (a) Unless waived by
all the directors with respect to a specific meeting, each director will
receive notice and the agenda of each meeting of the Board or any committee
thereof at least 10 days prior to such meeting, provided that if timely notice
was not provided to a director and such director attends a meeting without
objection, then such director shall be deemed to have waived this notice
requirement.
(b) The DLJMB Designee(s) will be permitted to invite two observers
to participate in any meeting of the Board, provided such observers will not be
permitted to vote at such meeting. DLJMB shall cause any such observers to
comply with the provisions of Section 7.01.
Section 2.06. Actions Requiring Board, NWIP or DLJMB Approval. (a) No
action by the Company, License Co., Opco or any other Subsidiary (including but
not limited to any action by the Board or any committee thereof or the board of
directors or any committee thereof of License Co., Opco or any other
Subsidiary) shall be taken after the date hereof with respect to (A) any of the
following matters without the affirmative approval of the Board or the relevant
board of directors, (B) any issuance of any Company Capital Stock at a per
share price lower than the per share price paid by DLJMB for the Series A
Preferred (other than an issuance described in Section 5.01(b)), without the
affirmative approval of a NWIP Designee and a DLJMB Designee, and (C) the
matters referred to in paragraphs (iv), (viii), (xi), (xvi) and (xvii) below
and any
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transaction (or series of related transactions) covered by paragraph (ix) below
that has a value in excess of $5,000,000 and is not contemplated by the
Transaction Documents, without the affirmative approval (which shall be given
or withheld within 30 days of the Company's written request therefor) of at
least one DLJMB Designee (other than an increase in the percentage of the
Company's shares of Company Common Stock available for grant under the
Company's option plans from 5.6% to 9.16%, which will require only approval of
the Board), provided that approval by a DLJMB Designee under clauses (B) and
(C) above shall no longer be required after the earlier of the Initial Public
Offering or the transfer of Equity Securities by one or more of the DLJ
Entities so that the shares of Equity Securities beneficially owned by the
Qualified DLJ Entities is, in the aggregate, less than 80% of the Initial
Ownership of the DLJ Entities, and provided further that approval of a NWIP
Designee under clause (B) above shall no longer be required after the earlier
of the Initial Public Offering and a Section 3.08 Sale:
(i) any issuance of any Company Capital Stock, except pursuant to
the express terms of the Transaction Documents;
(ii) (x) any merger or consolidation of the Company with or into
any Person, other than a wholly owned Subsidiary, or of any
Subsidiary with or into any Person other than the Company or any
other wholly-owned Subsidiary; or (y) any sale of any Subsidiary or
any significant operations of the Company or any Subsidiary or any
acquisition or disposition of assets, business, operations or
securities by the Company or any Subsidiary (in a single transaction
or a series of related transactions) having a value in each case in
this clause (y) in excess of $25,000,000;
(iii) the declaration of any dividend on or the making of any
distribution with respect to, or the redemption, repurchase or other
acquisition of, any securities of the Company or any Subsidiary,
except as expressly permitted by this Agreement, the terms of the
Series B Preferred, or the Restricted Stock Purchase Agreements;
(iv) any liquidation, dissolution, commencement of bankruptcy, or
similar proceedings with respect to the Company or any material
Subsidiary;
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(v) any incurrence, refinancing or alteration of material terms
by the Company or any Subsidiary of indebtedness for borrowed money
in excess of $25,000,000 in the aggregate (or the guaranty by the
Company or any Subsidiary of any such indebtedness), or the issuance
of any security by the Company or any Subsidiary (not including
issuances of such securities in connection with employee or stock
option plans previously approved by the Board pursuant to clause
(viii) below), in each case other than as specifically contemplated
by this Agreement or the Restricted Stock Purchase Agreements;
(vi) any capital expenditure in excess of $5,000,000 individually
or in the aggregate in an amount in excess of $25,000,000 per annum,
in either case, which is not specifically contemplated by the annual
budget or business plan of the Company or any Subsidiary;
(vii) any entering into, amending or modifying in any material
respect any agreements of the Company or any Subsidiary providing for
payments by or to the Company or such Subsidiary in excess of
$5,000,000 per annum or $25,000,000 in the aggregate;
(viii) any determination of compensation, benefits, perquisites
and other incentives for senior management of the Company or its
Subsidiaries and the approval or amendment of any plans or contracts
in connection therewith;
(ix) the entrance into any transaction between the Company or any
Subsidiary, on the one hand, and any stockholder, director, officer,
employee or Affiliate of the Company, any Subsidiary or any of the
foregoing, on the other hand, other than (X) transactions pursuant to
the express terms of the Transaction Documents, (Y) a loan from the
Company to John Thompson in an amount not to exceed $2.2 million or
(Z) transactions involving an amount less than $500,000 in the
aggregate;
(x) any appointment of any of the Chairman of the Board, Chief
Executive Officer, President, Chief Financial Officer or Chief
Operating Officer or any other executive officer in any similar
capacity of the Company or any material Subsidiary;
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(xi) any change in the Company's tax status;
(xii) any change in accounting or tax principles or policies with
respect to the financial statements, records or affairs of the
Company or any Subsidiary, except as required by generally accepted
accounting principles or by law or any other matters which could
affect any regulatory status or tax liability of the Company or any
Subsidiary, or any Shareholder with respect to the investment by such
Shareholder in the Company;
(xiii) any appointment or removal of the auditors, primary
outside legal counsel, financial advisors, underwriters (except
underwriters selected as provided in the first sentence of Section
6.04(f) unless such Demand Registration constitutes an Initial Public
Offering), investment bankers or company-wide insurance providers of
the Company or any Subsidiary;
(xiv) any amendment to the certificate of incorporation or bylaws
of the Company or any adoption of or amendment to the certificate of
incorporation or bylaws of any Subsidiary, or any change in the
composition of the board of directors of such Subsidiary from the
initial composition thereof approved by the Board, any formation of
any direct, first-tier Subsidiary of the Company other than Opco or
any formation of or acquisition of any Subsidiary that is not or will
not be a wholly-owned direct or indirect Subsidiary of the Company;
(xv) any approval of the annual business plan, budget and long
term strategic plan of the Company or any Subsidiary;
(xvi) any material modification or renewal (other than in the
ordinary course) or termination of the Management Agreement or the
Analog Management Agreement (as such term is defined in the Joint
Venture Agreement), or any other management agreement as contemplated
by the Joint Venture Agreement; or
(xvii) any modification of the long-term business strategy or
scope of the business of the Company or any material Subsidiary or
any material modification of any material customer relationships
thereof.
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(b) Notwithstanding anything in Section 2.06(a) to the contrary, no
action by the Company, License Co., Opco or any other material Subsidiary
(including but not limited to any action by the Board or any committee thereof
or the board of directors or any committee thereof of the relevant Subsidiary)
shall be taken after the date hereof with respect to any of the following
matters without the prior written approval (which shall be given or withheld
within 30 days of the Company's written request therefor) of the NWIP Designee,
provided that (A) approval by the NWIP Designee of the matters referred to in
paragraph (ii) below will no longer be required on the earlier of the date on
which (x) NWIP transfers any Shares owned by NWIP as of the date hereof to a
Person (other than the Company) that is not a Permitted Transferee and (y) the
NWIP Call Right expires and (B) approval of the NWIP Designee of any of the
matters referred to in this Section 2.06(b) will no longer be required if the
Nextel Shareholders transfer their Shares to a Third Party pursuant to Section
3.08:
(i) any material change in the technology used by the Company;
(ii) any decision to expand or broaden the scope of the Company's
business beyond building and operating an ESMR digital mobile
communications network in the Territory (as defined in the Joint
Venture Agreement) (the "BUSINESS OBJECTIVES"), including any
decision to make any acquisitions other than 800 MHZ or 900 MHZ SMR
acquisitions;
(iii) any modification or change in the Business Objectives that
is inconsistent with the Company's duties and obligations under the
Transaction Documents;
(iv) any sale, exchange or other disposition of all or
substantially all the assets of the Company;
(v) the entering into any agreement or series of agreements the
terms of which would be materially altered if Nextel or NWIP either
exercised or elected not to exercise its right to acquire the
relevant Company Capital Stock under Sections 3.05, 3.07, 4.01, 4.02,
5.02, 5.03,
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7.03 or 7.04 or otherwise acquired beneficial ownership of a majority
of the outstanding or Fully Diluted shares of Company Capital Stock.
Section 2.07. Actions Requiring Shareholder Approval. In addition to
any approvals required under Sections 2.06(a) and 2.06(b) and any approvals
required under applicable law, (x) any merger or consolidation of the Company
with or into any Person, other than a wholly-owned Subsidiary, or of any other
Subsidiary with or into any Person other than the Company or any other
wholly-owned Subsidiary, or (y) any sale of any Subsidiary or any significant
operations of the Company or any Subsidiary or any acquisition or disposition
of assets, business, operations or securities by the Company or any Subsidiary
(in a single transaction or a series of related transactions) having a value in
each case in this clause (y) in excess of $25,000,000, will require the
affirmative approval of at least 50% of the Voting Stock held by the Non-Nextel
Shareholders.
Section 2.08. Subsidiary Governance. Each of the Company and each
Shareholder agrees that the board of directors of Opco and, upon transfer of
the stock of License Co. to the Company, License Co. shall be comprised of the
individuals who are serving on the Board in accordance with Section 2.01 and
the board of directors of each other Subsidiary of the Company shall be
comprised of the president of each of the Company and Nextel or, if so
determined by the Board from time to time with respect to any such Subsidiary,
by the same number of individuals then serving on the Board, which individuals
shall be designated and subject to removal, and shall otherwise act, in the
manner specified with respect to the Board in Section 2.01 through 2.06. Each
Shareholder agrees to vote its shares of Voting Stock and to cause its
representatives on the Board, subject to his or her fiduciary duties, to vote
and take other appropriate action to effectuate the agreements in this Section
2.08 in respect of each such Subsidiary.
Section 2.09. Conflicting Charter or Bylaw Provisions. Each
Shareholder shall vote its shares of Voting Stock, and shall take all other
actions necessary, to ensure that the Company's certificate of incorporation
and bylaws facilitate and do not at any time conflict with any provision of
this Agreement.
Section 2.10. Initial Capitalization. (a) The equity capitalization of
the Company as of the date hereof is as set forth in Exhibit A hereto.
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(b) Each Shareholder agrees that immediately preceding the closing for
the Initial Public Offering, all Company Capital Stock that is convertible into
or exchangeable for Company Common Stock shall be so converted or exchanged in
accordance with the provisions of the Company's certificate of incorporation.
Section 2.11. Stock Options. Once the shares available for issuance
under the 1999 Stock Option Plan are exhausted, if, at such time, the fair
market value of the Series A Preferred (or if such Series A Preferred has been
converted into Common Stock, the Common Stock) (determined by the Board in its
reasonable discretion) represents a compound annual rate of return to the DLJ
Entities of 30% or more (calculated using the same methodology used to
calculate the Investment Formula Price), the Company shall adopt a second
option plan; provided, that if the DLJ Entities have not then achieved a
compound annual rate of return of 30% or more (using the same methodology used
to calculate the Investment Formula Price), the Board, in its reasonable
discretion, may elect to authorize a second option plan, provided, further,
that until there has occurred both an Initial Public Offering and a DLJMB
Trigger Event, the maximum number of shares of Company Common Stock issuable
upon exercise of options available under such second option plan shall in no
event exceed 3.56% of the number of shares of Fully Diluted Common Stock
outstanding at the Closing (after giving effect to the grant and exercise of
all such additional options) without the approval of DLJMB.
ARTICLE 3
RESTRICTIONS ON TRANSFER
Section 3.01. General. (a) Each Shareholder understands and agrees
that the Shares purchased pursuant to the Subscription Agreement and/or the
Restricted Stock Purchase Agreement, as the case may be, have not been
registered under the Securities Act and are restricted securities. Each
Shareholder agrees that it will not, directly or indirectly, sell, assign,
transfer, grant a participation or derivative interest in, pledge or otherwise
dispose of ("TRANSFER") any Shares (or solicit any offers to buy or otherwise
acquire, or take a pledge of
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any Shares) except in compliance with applicable federal or state securities
laws and statutes, FCC Rules and the terms and conditions of this Agreement.
(b) Any attempt to transfer any Shares not in compliance with this
Agreement shall be null and void and the Company shall not, and shall cause any
transfer agent not to, give any effect in the Company's stock records to such
attempted transfer.
(c) No (i) transfer of Shares (other than in a transaction involving
a Public Offering or, after a Public Offering, a sale pursuant to Rule 144 of
the Securities Act) or (ii) after the date hereof, issuance of Company Capital
Stock (other than mandatorily redeemable pay-in-kind non-convertible
securities) will be effective until the recipient of such securities has
executed and delivered a counterpart of this Agreement and the Custodial
Agreement agreeing to be bound hereby and thereby.
Section 3.02. Legends. (a) In addition to any other legend that may
be required, each certificate for the Shares that is issued to any Shareholder
shall bear a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD EXCEPT IN COMPLIANCE
THEREWITH. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO
SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN THE
SHAREHOLDERS' AGREEMENT DATED AS OF JANUARY 29, 1999 AND THE
CUSTODIAL AGREEMENT DATED AS OF JANUARY 29, 1999, A COPY OF EACH OF
WHICH THE COMPANY WILL MAIL TO THE HOLDER OF THIS CERTIFICATE WITHOUT
CHARGE WITHIN FIVE DAYS AFTER RECEIPT OF REQUEST THEREFOR ADDRESSED
TO
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THE SECRETARY OF THE COMPANY, AT THE ADDRESS OF THE COMPANY."
(b) If any Shares shall cease to be Registrable Securities under
clause (i) or clause (ii) of the definition thereof, the Company shall, upon
the written request of the holder thereof, issue to such holder a new
certificate evidencing such Shares without the first sentence of the legend
required by Section 3.02(a) endorsed thereon. If any Shares cease to be subject
to any and all restrictions on transfer set forth in this Agreement, the
Company shall, upon the written request of the holder thereof, issue to such
holder a new certificate evidencing such Shares without the second sentence of
the legend required by Section 3.02(a) endorsed thereon.
Section 3.03. Permitted Transferees. Notwithstanding anything in this
Agreement to the contrary, any Shareholder may at any time transfer any or all
of its Shares to one or more of its Permitted Transferees without the consent
of the Board or any other Shareholder or group of Shareholders and without
compliance with Sections 3.04 through 3.07 so long as (a) such Permitted
Transferee shall have agreed in writing to be bound by the terms of this
Agreement and shall have assumed in writing and agreed to discharge any and all
obligations of such Permitted Transferee that relate to such Shares and (b) the
transfer to such Permitted Transferee is not in violation of applicable federal
or state securities laws or FCC Rules.
Section 3.04. General Restrictions on Transfers. (a) Except as
provided in Section 3.03, each of Eagle River, Motorola and each Management
Shareholder and their respective Permitted Transferees may transfer their
Shares only after the Lockup Termination Date, subject to Sections 3.05, 3.06
and 3.07, in a transfer to any Third Party other than a Competitor, provided
that (i) if there is an Initial Public Offering prior to the Lockup Termination
Date, each such Shareholder shall be permitted to transfer Shares, subject to
Sections 3.05, 3.06 and 3.07, in an amount up to 30% of the lesser of such
Shareholder's (x) Initial Ownership (or, in the case of a Shareholder who
transferred Shares after the date hereof and the Person who became a
Shareholder pursuant to such transfer, such Shareholder's and transferee's
respective ownership interest as of the date such transfer occurred) or (y)
ownership interest as of the day after the Initial Public Offering, (ii) if
there is a Put Event under Section 4.01 or Section 12.9 of the Joint Venture
Agreement or an NWIP Call Right under Section 4.02 or 7.03, each Shareholder
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shall be permitted to sell its Shares to NWIP and (iii) if there is a Section
3.08 Sale, each Shareholder shall be permitted to sell its Shares to the
relevant Third Party.
(b) Except as provided in Section 3.03 or pursuant to a transfer to
the Company in connection with NWIP's repurchase of frequencies from the
Company pursuant to Section 4.14B of the Joint Venture Agreement, a Nextel
Shareholder may not transfer any Shares at any time prior to the exercise or
expiration of the NWIP Call Right and thereafter may transfer such Shares at
any time only pursuant to a Section 3.08 Sale and subject to Section 3.04(d).
(c) The DLJ Entities and each Co-Investor may transfer their Shares at
any time, subject to Sections 3.04(d), 3.05, 3.06 and 3.07. Notwithstanding
anything in this Agreement to the contrary, if any DLJ Entity proposes to sell
shares to a Third Party (x) in a transaction not involving a Public Offering or
(y) pursuant to a Demand Registration or Section 6.02, each of Ares Leveraged
Investment Fund, L.P., Ares Leveraged Investment Fund II, L.P., The Huff
Alternative Income Fund L.P., and TCW (each a "HIGH-YIELD INVESTOR") shall have
the nonassignable right, at its option (but following the same procedures and
subject to the same terms as those applicable to the DLJ Entities seeking to
consummate such proposed transfer), to elect to participate in such transfer on
a pro rata basis (determined based on the number of Shares that each DLJ Entity
and each High Yield Investor owns at the time of the proposed transfer). NWIP
acknowledges that any High Yield Investor that voted to sell its Company
Capital Stock to NWIP pursuant to Section 4.01(a) will be deemed to be a DLJ
Entity for purposes of the special put right for DLJ Entities under Section
4.01(b).
(d) In no event shall any Shareholder transfer Shares (i) to a
Competitor without the prior approval of the Board and NWIP or (ii) in
violation of applicable federal or state securities laws.
(e) The following terms shall have the following meanings:
"COMPETITOR" means (i) a Telecommunications Company, or (ii) any
Person beneficially owning more than 50% of the total common equity or Voting
Stock of or otherwise controlling a Telecommunications Company, or (iii) any
Person the total common equity or Voting Stock of which is more than 50%
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beneficially owned or otherwise controlled by an entity described in clause (i)
or (ii).
"LOCKUP TERMINATION DATE" means the earliest date after the Company
has completed the Initial Required Build and achieved positive Company EBITDA
for the two consecutive fiscal quarters most recently ended for which financial
statements are available, excluding the effect on Company EBITDA of the
financial performance of any Option Sections that are included in the Territory
as a result of the Company's response to a notice given pursuant to Section
6.2C of the Joint Venture Agreement.
"TELECOMMUNICATIONS COMPANY" means any Person whose total
Telecommunications Revenue is at least 10% of its revenues (calculated on a
consolidated basis).
"TELECOMMUNICATIONS REVENUE" of any Person means all revenue derived
from the transmission or exchange of non-video data or voice information by any
form of wire, cable, fiber optic or wireless transmission in geographic markets
where Nextel or the Company is either (1) doing business, or (2) holds a
telecommunications license and has publicly stated its intention to do
business, and includes the revenue that such Person derives by engaging in the
business of transmitting or exchanging video information to the extent that
Nextel or the Company offers services to transmit or exchange video information
in the relevant geographic area. For purposes of this definition, (A) Nextel
includes any entity in which Nextel holds a 10% or greater direct or indirect
ownership interest that uses an iDEN or similar technology platform compatible
with that used by Nextel and (B) the Company includes the Company and all of
its Subsidiaries.
Section 3.05. Rights of First Offer. (a) If any Shareholder desires to
transfer any Shares to any Third Party in a transaction not involving a Public
Offering or, after a Public Offering, a sale pursuant to Rule 144 of the
Securities Act , such Shareholder (the "SELLING PARTY") shall give written
notice (a "SECTION 3.05 OFFER NOTICE") to the Company and each Strategic
Investor, DLJ Entity and Management Shareholder (each a "MAJOR INVESTOR" and
collectively, the "MAJOR INVESTORS") that such Selling Party desires to effect
such a transfer (a "SECTION 3.05 SALE") and setting forth the name of the
purchaser, the number of Shares proposed to be transferred by the Selling Party
(the "SECTION 3.05
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SHARES"), and the consideration per Share (which must be payable in cash) that
such Selling Party proposes to be paid for such Shares (the "SECTION 3.05 SALE
PRICE"). In addition, if any of the DLJ Entities is the Selling Party, DLJMB
may also deliver to NWIP a list of up to five potential purchasers to whom it
proposes to sell its Shares if the Section 3.05 Shares are not purchased by the
Major Investors pursuant to this Section 3.05. Upon receipt of any such list,
NWIP will have 15 Business Days to approve each such potential purchaser, which
approval may not be unreasonably withheld. In the event NWIP approves a
potential purchaser or fails to provide a reason for withholding approval of
any such potential purchaser, prior to the expiration of the 15-day period,
such potential purchaser will be considered an "Approved Purchaser" for such
Section 3.05 Sale.
(b) The giving of a Section 3.05 Offer Notice to the Company and each
Major Investor shall constitute an irrevocable offer (the "SECTION 3.05 OFFER")
by such Selling Party to sell to such Major Investor for cash on the terms set
forth in the Section 3.05 Offer Notice the Section 3.05 Shares at the Section
3.05 Sale Price. Each Major Investor receiving a Section 3.05 Offer shall have
a 10 Business Day period (the "INITIAL OFFER PERIOD") in which to accept such
offer as to all (but not less than all) of such Major Investor's Pro Rata
Portion plus, to the extent available, any additional Shares such Major
Investor is willing to purchase, by giving a written notice of acceptance of
the Section 3.05 Offer (which notice shall include the maximum number of Shares
such Major Investor is willing to purchase) to such Selling Party (together
with a copy thereof to the other Major Investors and the Company) prior to the
expiration of such Initial Offer Period. If any Major Investor fails to so
notify the Selling Party or the Company prior to the expiration of the Initial
Offer Period, it will be deemed to have declined the Section 3.05 Offer.
If the Major Investors do not elect, in the aggregate, to purchase all
the Shares subject to such Section 3.05 Offer, the Selling Party shall not be
required to sell any Shares accepted pursuant to the Section 3.05 Offer and the
provisions of Section 3.06 or Section 3.07 shall apply. If two or more Major
Investors elect, in the aggregate, to purchase all of the Section 3.05 Shares,
then (i) each Major Investor that elected to purchase no more than its Pro Rata
Portion of the Section 3.05 Shares shall purchase its Pro Rata Portion of the
Section 3.05 Shares and (ii)
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each Major Investor (if any) that elected to purchase more than its Pro Rata
Portion of the Section 3.05 Shares shall purchase its proportionate share
(based on the number of shares of Fully Diluted Company Common Stock owned by
such Major Investor divided by the number of shares of Fully Diluted Company
Common Stock owned by all Major Investors who have elected to purchase more
than their Pro Rata Portion) of the Section 3.05 Shares remaining to be
purchased (but not to exceed the maximum number of Shares that such Major
Investor is willing to purchase) after giving effect to the purchases pursuant
to clause (i) above.
"PRO RATA PORTION" means, with respect to any Major Investor that
elects to acquire Section 3.05 Shares from a Selling Party under Section 3.05
or 3.06, or from a Third Party under Section 3.07, that fraction that would
result from dividing (i) the number of shares of Fully Diluted Company Common
Stock that such Major Investor beneficially owns (or, without duplication, has
the right to acquire from the Company) by (ii) that number of shares of Fully
Diluted Company Common Stock beneficially owned by all Major Investors (or
which, without duplication, they have the right to acquire from the Company)
other than the Shares, if any, beneficially owned by the Selling Party.
(c) If the Major Investors elect to purchase all the Shares subject
to the Section 3.05 Offer, each Major Investor that accepts the Section 3.05
Offer shall have an unconditional obligation to purchase and pay, by certified
check or wire transfer, for all Section 3.05 Shares allocated to such Major
Investor within 30 days of the expiration of the Initial Offer Period; provided
that if the purchase and sale of such Shares is subject to any prior regulatory
approval, the Selling Party and the relevant Major Investors shall use their
reasonable best efforts to obtain the necessary regulatory approvals and the
time period during which such purchase and sale may be consummated shall be
extended until the later of (i) 60 days after the expiration of the Initial
Offer Period and (ii) if applicable, five Business Days after receipt of FCC
approval. The Company will cooperate with the Selling Party and the Major
Investors in obtaining any such regulatory approval, provided that its
reasonable out-of-pocket costs are reimbursed by the Selling Party as and when
incurred.
(d) Upon the earlier to occur of (i) full rejection of the Section
3.05 Offer by all recipients thereof, (ii) the expiration of the Initial Offer
Period without the
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Major Investors electing to purchase all the Section 3.05 Shares, (iii) the
deemed rejection of the Section 3.05 Offer pursuant to Section 3.05(b) or (iv)
the failure of any Major Investor to obtain any required consent or regulatory
approval applicable specifically to it (and not the other Major Investors) for
the purchase of the Shares subject thereto within the time periods set forth in
Section 3.05(c) and the failure of the other Major Investors to agree to
purchase such Shares, the Selling Party shall have a 30-day period during which
to enter into a definitive agreement to transfer all of the Section 3.05 Shares
on substantially the same or more favorable (as to the Selling Party) terms and
conditions as were set forth in the Section 3.05 Offer Notice at a price not
less than 95% of the Section 3.05 Sale Price; provided that if such sale is not
by DLJMB to one or more Approved Purchasers, the Selling Party must, prior to
effecting a transfer pursuant to this Section 3.05, comply with the provisions
of Section 3.06 or 3.07. If the Selling Party enters into a definitive
agreement to sell the Section 3.05 Shares, the Selling Party and the purchaser
of such Section 3.05 Shares (the "SECTION 3.05 PURCHASER") shall, subject to
Section 3.06 or 3.07, use all reasonable efforts to consummate the Section 3.05
Sale as promptly as practicable (but in no event later than 270 days)
thereafter and upon consummation of the purchase and sale of such Section 3.05
Shares the Section 3.05 Purchaser shall agree in writing to be bound by the
terms of this Agreement and to assume and agree to discharge any and all
obligations of the Selling Party that relate to such Section 3.05 Shares and
arise under any of the relevant Transaction Documents. If the Selling Party
does not enter into a definitive agreement to sell the Section 3.05 Shares
within the 30- day period, or, subject to Section 3.06 or 3.07, fails to close
such transaction within 270 days after the execution of the definitive
agreement, such Shareholder may not sell any Shares without repeating the
foregoing procedures.
(e) A Major Investor's rights (but not its obligations) pursuant to
this Section 3.05 shall terminate when the number of shares of Equity
Securities held by such Major Investor is less than 25% of its Initial
Ownership.
Section 3.06. Right of First Refusal. (a) If after the Initial Offer
Period the Selling Party receives from or otherwise negotiates with the Section
3.05 Purchaser an offer to purchase for cash the Section 3.05 Shares (a
"SECTION 3.06 OFFER") and such Selling Party intends to pursue such sale of
such Shares to such Third Party, such Selling Party (other than DLJMB in a sale
to an Approved
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Purchaser) shall either (i) provide the Company and each other Major Investor
written notice of such Section 3.06 Offer (a "SECTION 3.06 OFFER NOTICE") or
(ii) sell the Section 3.05 Shares to the Section 3.05 Purchaser, but subject to
the provisions of Section 3.07. The Section 3.06 Offer Notice shall identify
the Section 3.05 Shares, the Section 3.05 Purchaser, the cash price per Share
at which a sale is proposed to be made (the "SECTION 3.06 OFFER PRICE") and all
other material terms and conditions of the Section 3.06 Offer.
(b) The receipt of a Section 3.06 Offer Notice by the Company and
each Major Investor stating that such Major Investor has the right to purchase
the Section 3.05 Shares pursuant to this Section 3.06 shall constitute an
irrevocable offer by the Selling Party to sell all the Section 3.05 Shares to
the other Major Investors for cash at the Section 3.06 Offer Price on the terms
set forth in the Section 3.06 Offer Notice. Each Major Investor receiving a
Section 3.06 Offer shall have a 10 Business Day period (the "SECTION 3.06 OFFER
PERIOD") in which to accept such offer as to all (but not less than all) of
such Major Investor's Pro Rata Portion, plus, to the extent available, any
additional Shares such Major Investor is willing to purchase, by giving a
written notice of acceptance of the Section 3.06 Offer to each other Major
Investor, the Company and the Selling Party (which notice shall include the
maximum number of Shares such Major Investor is willing to purchase) prior to
the expiration of the Section 3.06 Offer Period. If any Major Investor fails to
so notify the Selling Party or the Company prior to the expiration of the
Section 3.06 Offer Period, it will be deemed to have declined the Section 3.06
Offer.
If the Major Investors do not elect, in the aggregate, to purchase all
the Shares subject to such Section 3.06 Offer, the Selling Party shall not be
required to sell any Shares accepted pursuant to the Section 3.06 Offer. If two
or more Major Investors elect, in the aggregate, to purchase all of the Section
3.05 Shares, then (i) each Major Investor that elected to purchase no more than
its Pro Rata Portion of the Section 3.05 Shares shall purchase its Pro Rata
Portion of the Section 3.05 Shares and (ii) each Major Investor (if any) that
elected to purchase more than its Pro Rata Portion of the Section 3.05 Shares
shall purchase its proportionate share (based on the number of shares of Fully
Diluted Company Common Stock owned by such Major Investor divided by the number
of shares of Fully Diluted Company Common Stock owned by all Major Investors
who have elected to purchase more than their Pro Rata Portion) of the Section
3.05 Shares remaining to be purchased
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(but not to exceed the maximum number of Shares that such Major Investor is
willing to purchase) after giving effect to the purchases pursuant to clause
(i) above.
(c) If the Major Investors elect to purchase all the Shares subject
to the Section 3.06 Offer, each Major Investor that elects to purchase Shares
pursuant to this Section 3.06 shall have an unconditional obligation to
purchase and pay, by certified check or wire transfer, for all Section 3.05
Shares allocated to such Major Investor within 30 days of the expiration of the
Section 3.06 Offer Period; provided that if the purchase and sale of such
Shares is subject to any prior regulatory approval, the Selling Party and the
relevant Major Investors shall use their reasonable best efforts to obtain the
necessary regulatory approvals and the time period during which such purchase
and sale may be consummated shall be extended until the later of (i) 60 days
after the expiration of the Section 3.06 Offer Period and (ii) if applicable,
five Business Days after receipt of FCC approval. The Company will cooperate
with the Selling Party and the Major Investors in obtaining any such regulatory
approval, provided that its reasonable out-of-pocket costs are reimbursed by
the Selling Party as and when incurred.
(d) Upon the earlier of (i) the rejection or deemed rejection of the
Section 3.06 Offer by the Major Investors or (ii) the failure of any Major
Investor to obtain any necessary regulatory approval applicable specifically to
it (and not the other Major Investors) for the purchase of the Shares subject
thereto within the time periods set forth in Section 3.06(c) and the failure of
the other Major Investors to purchase such Shares, there shall commence a
270-day period during which the Selling Party shall have the right to close the
sale to the Section 3.05 Purchaser of any or all of the Shares subject to the
Section 3.06 Offer at a price not less than the Section 3.06 Offer Price,
provided that, upon consummation of the purchase of such Section 3.05 Shares,
the Section 3.05 Purchaser shall have agreed in writing to be bound by the
terms of this Agreement and to assume and agree to discharge any and all
obligations of the Selling Party that relate to such Section 3.05 Shares and
arise under any of the relevant Transaction Documents. If such Selling Party
does not consummate the sale of any Shares subject to the Section 3.06 Offer in
accordance with the foregoing time limitations, such Selling Party may not sell
any Shares without repeating the foregoing procedures in Section 3.05 and 3.06.
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(e) A Major Investor's rights (but not its obligations) pursuant to
this Section 3.06 shall terminate when the number of shares of Equity
Securities held by such Major Investor is less than 25% of its Initial
Ownership.
Section 3.07. Major Investor Call Right. (a) If the Selling Party
sells Shares to the Section 3.05 Purchaser (other than a sale by DLJMB to an
Approved Purchaser) without complying with the procedures set forth in Section
3.06, then upon consummation of such sale to the Section 3.05 Purchaser (a
"THIRD PARTY SALE"), the Selling Party shall notify the Major Investors within
five days of such Third Party Sale and such Major Investors shall have the
right (the "CALL RIGHT") to purchase from the Section 3.05 Purchaser all Shares
purchased by the Section 3.05 Purchaser pursuant to the Third Party Sale (the
"CALLED INTEREST"), in each case based on such Major Investor's Pro Rata
Portion (or such other allocation as may be agreed among such Major Investors
exercising the Call Right).
(b) To exercise the Call Right, the Major Investors must agree to
exercise the Call Right in respect of the entire Called Interest and must give
written notice (the "CALL NOTICE") to the Section 3.05 Purchaser no later than
the 30th day following the Third Party Sale. Upon receipt of the Call Notice,
the Section 3.05 Purchaser shall be obligated to sell the Called Interest in
accordance with the provisions of this Section 3.07.
(c) The purchase price payable per Share of Company Capital Stock
shall be an amount in cash equal to 110% of the per Share price paid by the
Third Party in the Third Party Sale.
(d) The closing for the purchase of any Called Interest pursuant to
this Section 3.07 shall occur as promptly as practicable (but in no event later
than 30 days) after receipt by the Section 3.05 Purchaser of the Call Notice,
provided that if the purchase of any Called Interest is subject to prior
regulatory approval, the Section 3.05 Purchaser and the relevant Major
Investors shall use their reasonable best efforts to obtain the necessary
regulatory approvals and the 30-day period in which the purchase may be
consummated shall be extended until the earlier of (i) the expiration of five
Business Days after all such regulatory approvals shall have been received and
(ii) 270 days after receipt by the Section 3.05 Purchaser of the Call Notice.
If the sale of the Called Interest by the Section 3.05 Purchaser to the Major
Investors is not consummated within the time periods set forth in the
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immediately preceding sentence, the Section 3.05 Purchaser will have no further
obligation to sell the Called Interest provided that, upon consummation of the
purchase of such Section 3.05 Shares, the Section 3.05 Purchaser shall have
agreed in writing to be bound by the terms of this Agreement and to assume and
agree to discharge any and all obligations of the Selling Party that relate to
such Section 3.05 Shares and arise under any of the Transaction Documents. On
or prior to the closing, the Section 3.05 Purchaser shall deliver to the
representative of the Major Investors designated in the Call Notice
certificates representing all the Shares comprising the Called Interest, duly
endorsed, together with all other documents, required to be executed in
connection with the sale of such Shares (it being understood that in no event
shall the Section 3.05 Purchaser be obligated to make any representations and
warranties, or to provide any indemnities, with respect to the Called Interest
other than indemnities concerning the Section 3.05 Purchaser's title to the
Called Interest, such title being free and clear of all liens and encumbrances,
and the Section 3.05 Purchaser's authority, power and right to enter into and
consummate the sale without contravention of any law or agreement, and without
the need for any governmental or other approval). At any such closing, the
relevant Major Investors shall deliver to the Section 3.05 Purchaser the
aggregate purchase price for the Called Interest sold by the Section 3.05
Purchaser, by wire transfer of immediately available funds to such bank account
as the Section 3.05 Purchaser shall have specified in writing no later than two
Business Days prior to the closing.
(e) A Major Investor's rights (but not its obligations) pursuant to
this Section 3.07 shall terminate when the number of shares of Equity
Securities held by such Major Investor is less than 25% of its Initial
Ownership.
Section 3.08. Special Nextel Sale Right. (a) The Nextel Shareholders
may collectively transfer all, but not less than all, of their Shares to a
Third Party after the twelfth anniversary of the date of this Agreement (a
"SECTION 3.08 SALE"), by complying with this Section 3.08. If the Nextel
Shareholders wish to consummate a Section 3.08 Sale, the Nextel Shareholders
shall provide written notice (a "SECTION 3.08 NOTICE") of such Section 3.08
Sale to the Non-Nextel Shareholders and the Company not later than the 45th day
prior to the proposed Section 3.08 Sale. The Section 3.08 Notice shall (i)
identify the Third Party transferee (the "SECTION 3.08 PURCHASER"), the number
of Shares owned by the Nextel Shareholders subject to the Section 3.08 Sale and
the form and amount of
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consideration per Share for which a transfer is proposed to be made (the
"SECTION 3.08 SALE PRICE"), (ii) enclose true and complete copies of the
documentation in Nextel's possession relating to all transactions,
relationships, agreements, arrangements and understandings (together with
written summaries of any such oral transactions, relationships, agreements,
arrangements or understandings) between Nextel and its Affiliates (but only to
Nextel's knowledge in the case of non-controlled Affiliates) on the one hand
and the Section 3.08 Purchaser and its Affiliates on the other hand and (iii)
disclose all other material terms and conditions of the Section 3.08 Sale.
Within five Business Days of the receipt of such Section 3.08 Notice, the
Company shall notify all Non-Nextel Shareholders of the date and time of a
special meeting of such Shareholders, which date will not be more than 25 days
after receipt of the Section 3.08 Notice (or such later date as required by
applicable law). At such meeting all Non-Nextel Shareholders shall be entitled
to vote whether to sell their Shares to the Section 3.08 Purchaser on the same
terms and conditions as the Nextel Shareholders. If such Non-Nextel
Shareholders elect to sell their Shares to the Section 3.08 Purchaser by the
affirmative vote of at least 50% of the then outstanding Voting Stock held by
such Non-Nextel Shareholders, all Non-Nextel Shareholders shall be required to
participate in the Section 3.08 Sale on the terms and conditions set forth in
the Section 3.08 Notice and to tender all of their Shares as set forth below.
Within five days following such vote, a representative of the Non-Nextel
Shareholders shall deliver to a representative of the Nextel Shareholders
designated in the Section 3.08 Notice a notice indicating whether the
Non-Nextel Shareholders will participate in the Section 3.08 Sale. If the
Non-Nextel Shareholders elect to participate in the Section 3.08 Sale, then, on
or prior to the date of such sale, they shall deliver to the Nextel
Shareholders certificates representing all Shares held by the Non-Nextel
Shareholders, duly endorsed, together with all other documents required to be
executed in connection with such Section 3.08 Sale or, if such delivery is not
permitted by applicable law, an unconditional agreement to deliver such Shares
pursuant to this Section 3.08(a) at the closing for such Section 3.08 Sale
against delivery to the Non-Nextel Shareholders of the consideration therefor.
If any Non-Nextel Shareholder should fail to deliver such certificates or, in
lieu thereof (as provided above) an unconditional agreement to deliver such
Shares at the closing for such Section 3.08 Sale, to the Nextel Shareholders,
such Non-Nextel Shareholder shall have irrevocably agreed that, upon the
closing of the Section 3.08 Sale, such
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Shares shall no longer be deemed to be outstanding and all rights of a
Shareholder with respect to such Shares will terminate except the right to
receive the Section 3.08 Sale Price and the Company shall (subject to reversal
under Section 3.08(b)) cause the books and records of the Company to show that
such Shares are bound by the provisions of this Section 3.08(a) and that such
Shares shall be transferred to the Section 3.08 Purchaser immediately upon
surrender for transfer by the holder thereof.
(b) If, within 270 days after the Non-Nextel Shareholders give notice
of their election to sell their Shares pursuant to this Section 3.08, the
Nextel Shareholders have not consummated the Section 3.08 Sale, the Non-Nextel
Shareholders shall not be required to sell their Shares to the Section 3.08
Purchaser, the Nextel Shareholders shall return to each of the Non-Nextel
Shareholders all certificates representing Shares that such Non-Nextel
Shareholder delivered for transfer pursuant hereto, together with any documents
in the possession of the Nextel Shareholders executed by the Non-Nextel
Shareholder in connection with such proposed transfer, and all the restrictions
on transfer contained in this Agreement or otherwise applicable at such time
with respect to Shares owned by the Non-Nextel Shareholders shall again be in
effect. No Nextel Shareholder (nor any member of the Nextel Group) shall have
any liability or responsibility to the Company or any Non-Nextel Shareholder
upon or by reason of any termination or failure to consummate a Section 3.08
Sale except as expressly set forth above in this Section 3.08(b).
(c) Promptly after the consummation of the Section 3.08 Sale by the
Section 3.08 Purchaser, the Section 3.08 Purchaser shall give notice thereof to
the Shareholders, shall remit to each of the Shareholders who have surrendered
their certificates the total consideration for the shares of Company Capital
Stock transferred pursuant hereto and shall furnish such other evidence of the
completion and time of completion of such transfer and the terms thereof as may
be reasonably requested by such Shareholders, including without limitation true
and complete copies of the closing documentation relating to the Section 3.08
Sale.
(d) The sale obligations of the Non-Nextel Shareholders under this
Section 3.08 shall be subject to the following conditions:
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(i) upon the consummation of such sale, all of the Non-Nextel
Shareholders participating therein will receive the same form and
amount of consideration per Share, or if any Non-Nextel Shareholders
are given an option as to the form and amount of consideration to be
received, all Non- Nextel Shareholders participating therein will be
given the same option;
(ii) no Non-Nextel Shareholder shall be obligated to pay more
than its pro rata share (based on the number of Shares sold) of
expenses incurred in connection with a consummated sale to the extent
such costs are incurred for the benefit of all Non-Nextel
Shareholders and are not otherwise paid by the Company or the
acquiring party; and
(iii) no Non-Nextel Shareholder shall be required to provide any
representations, indemnities or other agreements in connection with
such sale (other than representations and indemnities concerning each
Shareholder's title to the Shares, such title being free and clear of
all liens and encumbrances and such Shareholder's authority, power
and right to enter into and consummate the sale without contravention
of any law or agreement and without the need of such Shareholder to
obtain any third party (not including any governmental or regulatory)
consent or approval).
(e) If Non-Nextel Shareholders holding more than 33% of the Voting
Stock (not including any Voting Stock held by the Nextel Shareholders)
reasonably believe that, as a result of transactions, relationships, and
understandings between Nextel and the Section 3.08 Purchaser, the Section 3.08
Sale Price does not reflect the fair market value of the Shares to be sold to
the Section 3.08 Purchaser, the Non-Nextel Shareholders shall have the right,
upon consummation of the Section 3.08 Sale, through the Non-Nextel Shareholder
representative identified in this Section 3.08, to submit the Section 3.08 Sale
Price to arbitration and, if on behalf of the Non-Nextel Shareholders, the
Non-Nextel Shareholder representative so elects (which election will be binding
on all the Non-Nextel Shareholders), to receive from the Section 3.08 Purchaser
the price per share as determined by arbitration in lieu of the Section 3.08
Sale Price. If the arbitrator(s) determines that the Section 3.08 Sale Price is
greater than or equal to the fair market value of the Shares, the Non-Nextel
Shareholders shall pay the fees
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and expenses of the arbitrator(s), otherwise NWIP shall pay such fees and
expenses.
(f) The provisions of this Section 3.08 shall be superseded by the
provisions of Section 5.5 of the Restated Certificate of Incorporation when the
latter become effective.
(g) The Nextel Shareholders shall not be permitted to transfer their
Shares to the Section 3.08 Purchaser unless NWIP shall have assigned (or shall
have caused the assignment) to the Company for $1.00, not later than the
closing day of the Section 3.08 Sale any FCC licenses acquired by Nextel (or
its Subsidiaries) pursuant to Section 4.16 of the Joint Venture Agreement.
ARTICLE 4
PUT AND CALL RIGHTS
Section 4.01. Non-Nextel Shareholder Put Rights. (a) Upon the
occurrence of a Put Event (other than a Nextel Sale), the Company shall, within
five days of such Put Event, notify all Non-Nextel Shareholders of the date and
time of a special meeting of such Shareholders, which date will not be more
than 20 days after the date of the Put Event (or such later date as required by
applicable law, including any requirement to provide such Shareholders with an
effective registration statement relating to the Nextel Shares). Upon the
occurrence of a Nextel Sale, the Company shall, within 5 days of such Nextel
Sale, notify all Non-Nextel Shareholders of the occurrence of a Nextel Sale,
and at any time thereafter Non-Nextel Shareholders holding 20% or more of the
outstanding Voting Stock of such Shareholders shall have the right to require
that the Company notify all Non-Nextel Shareholders of the date and time of a
special meeting of such Shareholders, which date will not be more than 20 days
after the date the Company receives such request (or such later date as
required by applicable law, including any requirement to provide such
shareholders with an effective registration statement relating to Nextel
Shares). At such meeting the Non-Nextel Shareholders, by the affirmative vote
of more than 50% of the then outstanding Voting Stock held by such
Shareholders, will have the right (the
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"PUT RIGHT") to require NWIP to purchase all the Company Capital Stock (other
than the Series B Preferred) at a price determined in accordance with Section
4.01(d). "PUT EVENT" means any of the following events:
(i) a Nextel Sale;
(ii) the purchase by NWIP of Shares in accordance with its
Preemption Right with respect to a Qualifying DLJ Demand under
Section 5.03 (a "NWIP PREEMPTION PUT"); or
(iii) the exercise of a put right granted by the Board to the
Non- Nextel Shareholders pursuant to Section 7.04.
(b) In the event of a Special Nextel Sale, if there has not been a
DLJMB Trigger Event and the DLJ Entities voted to sell their Company Capital
Stock to NWIP pursuant to paragraph (a) above, but less than 50% of the then
outstanding Voting Stock held by the Non-Nextel Shareholders has voted to
exercise the Put Right, the DLJ Entities shall have the right to require NWIP
to purchase all of the Company Capital Stock held by the DLJ Entities for a
proportionate share of the purchase price (as determined in accordance with
Section 4.01(d)) and otherwise on generally the same terms and conditions as
set forth in this Section 4.01.
(c) To exercise the Put Right, the Non-Nextel Shareholders, acting as
a group, or, in the case of a Special Nextel Sale, DLJMB, on behalf of itself
and the other DLJ Entities, must give written notice (the "PUT NOTICE") to NWIP
no later than (i) in the case of a Nextel Sale, 545 days after the Put Event or
(ii) in the case of a Put Event other than a Nextel Sale, the 30th day after
the Put Event (or such later date if the Shareholder vote is delayed pursuant
to Section 4.01(a)). Upon receipt of the Put Notice, the Non-Nextel
Shareholders or the DLJ Entities, as the case may be, shall be obligated to
sell the relevant Company Capital Stock to NWIP and NWIP shall be obligated to
purchase such Company Capital Stock in accordance with the provisions of this
Section 4.01.
(d) The purchase price paid by NWIP for the Company Capital Stock
purchased pursuant to this Section 4.01 shall be determined as follows:
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(i) If the Put Event is a Nextel Sale which occurs prior to the
Initial Public Offering, the purchase price paid by NWIP for all
outstanding Company Capital Stock (other than the Series B Preferred)
will be the greater of (A) the Investment Formula Price (as defined
in Section 4.03(h)) and (B) the Fair Market Value of the Company as
determined in accordance with Section 4.03;
(ii) If the Put Event is a Nextel Sale which occurs after the
Initial Public Offering, the purchase price paid by NWIP for all
outstanding Company Capital Stock (other than the Series B Preferred)
will be the Fair Market Value of the Company at the time of the
purchase as determined in accordance with Section 4.03;
(iii) If the Put Event is a NWIP Preemption Put, the purchase
price paid by NWIP will be the same per share price that was paid by
NWIP to purchase the Shares subject to the Qualifying DLJ Demand; and
(iv) If the Put Event is the exercise of put rights under Section
7.04, the purchase price paid by NWIP for all outstanding Company
Capital Stock (other than the Series B Preferred) will be the
Investment Formula Price.
(e) The closing for the purchase of any Company Capital Stock
pursuant to this Section 4.01 shall occur as promptly as practicable (but in no
event later than 30 days) after receipt by NWIP of the Put Notice, provided
that if the purchase is subject to prior regulatory approval or requires the
determination of Fair Market Value in accordance with Section 4.03, NWIP and
the Shareholders shall use their reasonable best efforts to obtain the
necessary regulatory approvals and the 30 day period shall be extended until
the later of (i) the expiration of five Business Days after all such regulatory
approvals shall have been received and (ii) the determination of Fair Market
Value. On or prior to the closing, the Non-Nextel Shareholders shall deliver to
the representative of NWIP designated in the Put Notice certificates
representing all the shares of the relevant Company Capital Stock, duly
endorsed, together with all other documents, required to be executed in
connection with the sale of such Company Capital Stock (it being understood
that in no event shall any Non-Nextel Shareholder be obligated to make any
representations and warranties, or to provide any indemnities, with respect to
any matters other than title to the Company Capital Stock held by such
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Person, such title being free and clear of all liens and encumbrances, and such
Person's authority, authorization and right to enter into and consummate the
sale without contravention of any law or agreement, and without the need for
any governmental or other approval). At any such closing or as otherwise
permitted under Section 7.05, NWIP shall deliver to each selling Shareholder
such selling Shareholder's proportionate share (based on the number of shares
of Fully Diluted Common Stock that such Shareholder is deemed to be selling
pursuant to the Put Right divided by all outstanding Fully Diluted Common Stock
and taking into account Section 4.01(g)) of the purchase price for all the
outstanding Company Capital Stock as determined pursuant to Section 4.01(d), by
(i) wire transfer of immediately available funds to such bank account as such
selling Shareholder shall have specified in writing no later than two Business
Days prior to the closing or (ii) delivery of Nextel common stock as permitted
by Section 7.05. Any warrants, options or other securities exercisable or
exchangeable for, or convertible into, shares of Company Capital Stock that are
not exercised, exchanged or converted at or prior to such closing or otherwise
in accordance with Section 4.01(f) or 4.01(g) shall be canceled effective upon
such closing, and the Company's books and records shall reflect such
cancellation. If any Non-Nextel Shareholder should fail to deliver such
certificates to the NWIP representative and NWIP has placed such selling
Shareholder's proportionate share of the purchase price for the Company Capital
Stock represented by such certificates in escrow with the custodian under the
Custodial Agreement (or another escrow agent reasonably satisfactory to the
representative of the Non-Nextel Shareholders) on terms reasonably satisfactory
to the representative of the Non-Nextel Shareholders, such Shares shall no
longer be deemed to be outstanding and all rights of such Shareholder with
respect to such Shares will terminate except the right to receive the purchase
price. The Company shall cause the books and records of the Company to show
that such Shares are bound by the provisions of this Section 4.01 and that such
Shares shall be transferred to NWIP immediately upon surrender for transfer by
the holder thereof.
(f) If NWIP is required to purchase all outstanding Company Capital
Stock as set forth in this Section 4.01, vested in-the-money options and
warrants (all of which either will be exercised for cash prior to the closing
of such purchase or will be exchanged at the time of purchase for an amount
equal to the purchase price per share minus the exercise price of such option
or warrant multiplied by the
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number of Shares subject to such options or which can be purchased pursuant to
such warrants).
(g) If NWIP is required to purchase all outstanding Company Capital
Stock as set forth in this Section 4.01, unvested or out-of-the-money
derivative securities of the Company shall be treated as follows: (i) in the
case of a Put Event described in Section 4.01(a)(ii), all unvested or
out-of-the-money options and warrants issued by the Company that (A) are
granted at any time during the period from 30 days before the Company's
announcement of its intention to proceed with DLJ's delivery of its demand
until the date on which the pre-emptive purchase by NWIP is closed, and (B) are
not granted consistently with ordinary past practice of the Company's employee
compensation programs or policies, shall be terminated; (ii) all other unvested
or out of the money options or warrants (as appropriate) will be converted to
substantially identical options or warrants to acquire shares of common stock
of Nextel on the same substantive economic terms (based on the per common share
price of the Company in the pre-emptive purchase and the per common share price
of Nextel on the pre-emptive purchase date) and other terms as applied to the
Company options or warrants and (iii) all shares of Company Common Stock
subject to vesting under the Restricted Stock Purchase Agreements, and all
shares of Company Common Stock issuable upon exercise of options granted under
the 1999 Stock Option Plan, in each case that are beneficially owned by the
Management Shareholders, shall be purchased by NWIP pursuant to Section 4.01
(it being understood that NWIP's acquisition of all of the outstanding Company
Capital Stock pursuant to this Section 4.01 shall constitute a Change in
Control of the Company for purposes of the Restricted Stock Purchase Agreements
and the 1999 Stock Option Plan).
(h) The following terms shall have the following meanings:
"BENEFICIAL OWNER" means a beneficial owner as defined in Rules 13d-3,
13d-5 or 16a-1 under the Exchange Act (or any successor rules), including the
provision of such Rules that a Person shall be deemed to have beneficial
ownership of all securities that such Person has a right to acquire within 60
days, but such provision of the Rules will apply only if (i) all conditions
(other than payment of the purchase or acquisition price of such securities) to
such Person's exercise of such rights have been satisfied and (ii) such
securities (if options, warrants, or
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similar derivatives) are "in-the-money", provided that in all cases a Person
shall not be deemed a Beneficial Owner of, or to own beneficially, any
securities if such beneficial ownership (1) arises solely as a result of a
revocable proxy delivered in response to a proxy or consent solicitation made
pursuant to, and in accordance with, the Exchange Act and the applicable rules
and regulations thereunder, and (2) is not also then reportable on Schedule 13D
under the Exchange Act.
"CAPITAL STOCK" of any Person means any and all shares, interests,
participation or other equivalents (however designated) of stock of, or other
ownership interests in, such Person.
"CLOSING PRICE" on any Trading Day with respect to the per share price
of any shares of Capital Stock of any Person means the last reported sale price
regular way or, in case no such reported sale takes place on such day, the
average of the reported closing bid and asked prices regular way, in either
case on the New York Stock Exchange or if such shares of Capital Stock are not
listed or admitted to trading on such exchange, on the principal national
securities exchange on which such shares are listed or admitted to trading or,
if not listed or admitted to trading on any national securities exchange, on
the NASDAQ Stock Market or, if such shares are not listed or admitted to
trading on any national securities exchange or quoted on the NASDAQ Stock
Market and the issuer and principal securities exchange do not meet such
requirements, the average of the closing bid and asked prices in the
over-the-counter market as furnished by any New York Stock Exchange member firm
of national standing that is selected from time to time by such Person for that
purpose.
"COMMON STOCK" of any Person means Capital Stock of such Person that
does not rank prior, as to the payment of dividends or as to the distribution
of assets upon any voluntary or involuntary liquidation, dissolution or winding
up of such Person, to shares of Capital Stock of any other class of such
Person.
"CONTROL" of a Person means the power, direct or indirect, (i) to vote
or direct the voting of more than 50% of the outstanding shares of Voting Stock
of such Person, or (ii) to direct or cause the direction of the management and
policies of such Person whether by contract or otherwise.
"NEXTEL SALE" means the occurrence of any of the following events:
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(i) any person or group (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act and the rules and regulations
thereunder) other than a Permitted Holder as hereinafter defined (A)
is or becomes the Beneficial Owner of more than 50% of the total
Voting Stock of Nextel ("NEXTEL VOTING STOCK") or Total Common Equity
of Nextel, or (B) otherwise has the power to direct the management
and policies of Nextel, directly or through one or more
intermediaries, whether through the ownership of voting securities,
by contract or otherwise (without limiting the generality of this
clause (B), any person or group that succeeds to the rights currently
held by Craig O. McCaw and his Affiliates in respect of Nextel, or
otherwise has powers and rights comparable thereto, shall be deemed
for purposes of this definition to have the power to direct the
management and policies of Nextel), except that no change of control
will be deemed to have occurred under this clause (B) as a result of
customary rights granted (x) in any indenture, credit agreement or
other agreement for borrowed money unless and until there has been a
default under the terms of that agreement and the trustee or lender
exercises the rights granted therein or (y) to holders of
non-convertible, mandatorily redeemable, preferred stock unless and
until action occurs that would otherwise cause a Nextel Sale as
herein defined, provided that such rights were granted pursuant to a
transaction in the financial markets and not as part of a strategic
alliance or similar transaction;
(ii) Nextel sells, assigns, conveys, transfers, leases or
otherwise disposes of all or substantially all of its assets to any
Person (other than a Permitted Holder);
(iii) Nextel, directly or indirectly, consolidates with, or
merges with or into, another Person (other than a Permitted Holder),
or any Person (other than a Permitted Holder), directly or
indirectly, consolidates with, or merges with or into, Nextel, and
pursuant to such transaction (or series of transactions) either: (A)
the outstanding Nextel Voting Stock is converted into or exchanged
for cash, securities or other property, but excluding a transaction
(or series of transactions) where (i) the outstanding Nextel Voting
Stock is converted into or exchanged for Voting Stock of the
surviving or transferee Person and (ii) the holders of Nextel Voting
Stock
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immediately preceding such transaction receive more than 50% of the
total Voting Stock and Total Common Equity of the surviving or
transferee Person (in substantially the same proportion as such
holders had prior to such transaction), or (B) new shares of Nextel
Voting Stock are issued so that immediately following such
transaction the holders of Nextel Voting Stock immediately preceding
such transaction own less than 50% of the Voting Stock and Total
Common Equity of the surviving Person; or
(iv) during any period of two consecutive years, individuals who
at the beginning of such period constituted the board of directors of
Nextel (together with any directors who are members of the board of
directors of Nextel on the closing date, and any new directors whose
election by such board of directors or whose nomination for election
by the stockholders of Nextel was approved by a vote of 66-2/3% of
the directors then still in office who were either directors at the
beginning of such period or whose election or nomination for election
was previously so approved) cease for any reason to constitute a
majority of the board of directors of Nextel then in office;
provided that it is expressly understood and agreed that (A) the transfer of
Nextel Voting Stock and or Capital Stock in Nextel by a Permitted Holder to an
Affiliate of Craig O. McCaw or the estate of Craig O. McCaw, or any successive
transfer by such or another Affiliate to another Affiliate of Craig O. McCaw or
the estate of Craig O. McCaw shall not by itself be a Nextel Sale (provided
that, for this purpose, any such Affiliate shall not be controlled by any
Person or group other than Craig O. McCaw or the estate of Craig O. McCaw) and
(B) the direct or indirect sale or other disposition of all or any portion of
the Nextel Voting Stock and/or the Capital Stock in Nextel held now or in the
future by any Permitted Holder to any Person other than another Permitted
Holder shall not by itself be a Nextel Sale, unless such sale or disposition,
alone or in conjunction with other transactions, results in the occurrence of
an event of the type described in any of clauses (i), (ii), (iii) or (iv)
above.
"PERMITTED HOLDERS" means, collectively, Craig O. McCaw and any Person
or Persons (i) that is controlled directly or indirectly by Craig O. McCaw or
the estate of Craig O. McCaw and (ii) a majority of the equity interests of
which are owned, directly or indirectly, by Craig O. McCaw and his family, his
brothers
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and their families, officers and employees of such entities, ex-spouses of such
persons and estates of, or trusts for the primary benefit of, the foregoing
persons (collectively, the "McCaw Group"), provided that "Permitted Holders"
also includes a group of entities that is each controlled by Craig O. McCaw or
the estate of Craig O. McCaw and through which the McCaw Group collectively
own, directly or indirectly, a majority of the equity interests of Nextel (it
being understood that if the McCaw Group collectively owns 50% of a Person that
owns 20% of Nextel's equity interests, the McCaw Group will be deemed to
indirectly own 10% of Nextel's equity interest through such entity).
"SPECIAL NEXTEL SALE" means a Nextel Sale either (i) prior to an
Initial Public Offering where, as a result of any post-closing equity issuances
by the Company, the Qualified DLJ Entities no longer hold at least 50% of the
votes to be cast under Section 4.02, or (ii) after an Initial Public Offering,
where a majority of the Non-Nextel Shareholders do not vote to sell their
Company Capital Stock to NWIP.
"TOTAL COMMON EQUITY" of any Person means, as of any day of
determination, the product of (i) the aggregate number of outstanding primary
shares of Common Stock of such Person on such day (which shall not include any
options or warrants on, or securities convertible or exchangeable into, shares
of Common Stock of such Person) and (ii) the average Closing Price of such
Common Stock over the 20 consecutive Trading Days immediately preceding such
day. If no such Closing Price exists with respect to shares of any such class,
the value of such shares for purposes of clause (ii) of the preceding sentence
shall be determined by the board of directors of such Person in good faith and
evidenced by a resolution of such board of directors.
"TRADING DAY" with respect to a securities exchange or automated
quotation system means a day on which such exchange or system is open for a
full day of trading.
(i) Upon the consummation of an Initial Public Offering, the Put
Rights exercisable by the Non-Nextel Shareholders shall be superseded by the
provisions in the Company's restated certificate of incorporation, which shall
control. Notwithstanding the preceding sentence, the special Put Right set
forth in Section
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4.01(b) exercisable by the DLJ Entities shall not be superseded by the
Company's restated certificate of incorporation.
(j) Upon the consummation of a Section 3.08 Sale, all the Non-Nextel
Shareholders' Put Rights shall terminate except for the Put Right with respect
to a Nextel Sale described in Section 4.01, which right shall not terminate
until the one year anniversary of the date of the consummation of the Section
3.08 Sale.
Section 4.02. Nextel Shareholder Call Right. (a) Upon (i) the seventh
anniversary of the date of this Agreement, if as of the date of such
anniversary there has not been an Initial Public Offering and NWIP has not
exercised any of its Preemption Rights under Section 5.03, (ii) the eighth
anniversary of the date of this Agreement, if as of the date of such
anniversary there has not been an Initial Public Offering or (iii) the ninth
anniversary of the date of this Agreement, NWIP shall have the right (the "NWIP
CALL RIGHT") to purchase all the outstanding Shares held by all other
Shareholders, provided that if there has been an Initial Public Offering prior
to the exercise of the NWIP Call Right, the Board (by majority vote with the
NWIP Designee abstaining) will have the right to postpone the exercise of the
NWIP Call Right for 365 days on each of two occasions and for 180 days on one
additional occasion by giving written notice of such election to NWIP within
five Business Days after delivery of the applicable NWIP Call Notice (or after
the one-year or six-month anniversary of the postponement of the NWIP Call
Notice, as the case may be, in the event that the NWIP Call Right is
postponed); provided, that NWIP shall not be obligated to consummate the
transaction contemplated by the NWIP Call Right that has been so postponed,
unless NWIP so notifies the Shareholders and the Company not later than 90 days
following the expiration of the relevant postponement period.
(b) To exercise the NWIP Call Right, NWIP must give written notice
(the "NWIP CALL NOTICE") to the Shareholders and the Company no later than the
90th day following the later of (i) the relevant anniversary and (ii) if
applicable, the relevant postponement period. The NWIP Call Right will expire
on the later of (x) the 91st day following the ninth anniversary of the date of
this Agreement and (y) if applicable, the 91st day following the relevant
postponement period, if NWIP has not delivered a NWIP Call Notice by such time.
Upon receipt of the Call Notice, the Shareholders shall be obligated to sell
their Shares in accordance with the provisions of this Section 4.02.
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(c) The purchase price payable for all outstanding Equity Securities
shall be (i) in the event that the purchase pursuant to the exercise of the
NWIP Call Right is consummated before an Initial Public Offering, the greatest
of (A) the Company Equity Value, (B) the Company's Fair Market Value determined
in accordance with Section 4.03, and (C) the Investment Formula Price; provided
that in no event will the purchase price payable for all outstanding Company
Capital Stock (other than the Series B Preferred) be greater than an amount
that for each tranche of capital actually invested would represent a 40%
internal rate of return (calculated using the same methodology used to
calculate the Investment Formula Price) or (ii) in the event that the purchase
pursuant to the exercise of the NWIP Call Right is consummated after an Initial
Public Offering, the Company's Fair Market Value determined in accordance with
Section 4.03.
(d) The purchase price payable pursuant to Section 4.02(c) shall be
allocated to each Non-Nextel Shareholder based on such Non-Nextel Shareholder's
Percentage Ownership. For purposes of this Section 4.02(d), vested in-the-money
options, together with any shares of Common Stock or options then beneficially
owned by the Management Shareholders that vest upon the consummation of the
NWIP Call Right in accordance with the Restricted Stock Purchase Agreements or
the 1999 Stock Option Plan, as the case may be (it being understood that NWIP's
acquisition of all of the outstanding Company Capital Stock pursuant to this
Section 4.02 shall constitute a Change in Control of the Company for purposes
of the Restricted Stock Purchase Agreements and the 1999 Stock Option Plan),
will be included both in the determination of Percentage Ownership of the
Company and in the allocation of the purchase price among the Shareholders.
The following terms shall have the following meanings:
"COMPANY EBITDA" means earnings before interest, taxes, depreciation
and amortization. For purposes of calculating Company EBITDA, the Company's
accounting and other elections, the accounting treatment or presentation of
various relevant items, and the period of measurement used for the EBITDA
calculation will be the same as those made or used by Nextel in preparing its
financial reports, and the corresponding items, elections or periods of or
affecting the Company will
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be adjusted as necessary, so that, as nearly as possible, they are identical,
or are calculated, derived or stated identically to those of Nextel. In
addition, if prior to the expiration of the Nextel Call Right, the Company has
entered into an agreement that artificially accelerates or defers income or
expense during the earlier part of the term of such agreement, the calculation
of EBITDA will be adjusted, as necessary, to reflect the terms which would have
existed in the absence of such artificial acceleration or deferral.
"COMPANY EQUITY VALUE" means an amount equal to the sum of (i) the
product of (A) the Company EBITDA for the two most recent quarters for which
financial statements are available, annualized, multiplied by (B) the Nextel
Multiple, minus (ii) the Company's long term debt (including the current
portion thereof and including all amounts that would be required to be paid to
redeem in full all outstanding shares of Series B Preferred (as defined in the
Subscription Agreement) and any other equity securities issued by the Company
(other than the Equity Securities) that are redeemable, whether mandatorily or
at the option of either the Company (other than pursuant to Article XI of the
Certificate of Incorporation) or the holders thereof), plus (iii) the Company's
cash and cash equivalents.
"NEXTEL MULTIPLE" means the Total Enterprise Value of Nextel divided
by Nextel's EBITDA for the most recent two quarters for which financial
statements are available, annualized, rounded to four decimal points. For
purposes of this definition "EBITDA" means earnings before interest, taxes,
depreciation and amortization.
"TOTAL ENTERPRISE VALUE" means the sum of (i) the number of shares of
fully diluted common stock of Nextel multiplied by the Average Share Price,
plus (ii) Nextel's long term debt (including the current portion thereof),
minus (iii) Nextel's cash and cash equivalents. For purposes of this definition
"AVERAGE SHARE PRICE" shall be the average Closing Price of Nextel's common
stock for the 20 consecutive Trading Days prior to the relevant anniversary.
(e) The closing for the purchase of the Shares pursuant to this
Section 4.02 shall occur as promptly as practicable (but in no event later than
30 days) after receipt by the Shareholders of the NWIP Call Notice, provided
that if the purchase of any Shareholder's Shares is subject to prior regulatory
approval or
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requires the determination of Fair Market Value in accordance with Section
4.03, the parties will use their reasonable best efforts to obtain the
necessary regulatory approvals and the 30 day period shall be extended until
the later of (i) the expiration of five Business Days after all such regulatory
approvals shall have been received and (ii) the determination of Fair Market
Value. At the closing, each Shareholder shall deliver to NWIP certificates
representing such Shareholder's Shares, duly endorsed, together with all other
documents required to be executed in connection with the sale of such Shares
(it being understood that in no event shall a Shareholder be obligated to make
any representations and warranties, or to provide any indemnities, with respect
to any matters other than title to the Shares held by such Person, such title
being free and clear of all liens and encumbrances, and such Person's
authority, authorization and right to enter into and consummate the sale
without contravention of any law or agreement, and without the need for any
third party (not including any governmental or regulatory) consent or
approval). At any such closing or as otherwise permitted by Section 7.05, NWIP
shall deliver to each selling Shareholder such selling Shareholder's purchase
price as allocated pursuant to Section 4.02(d), by (i) wire transfer of
immediately available funds to such bank account as such selling Shareholder
shall have specified in writing no later than two Business Days prior to the
closing or (ii) delivery of Nextel common stock as permitted by Section 7.05.
Any warrants, options or other securities exercisable or exchangeable for, or
convertible into, shares of Company Capital Stock that are not exercised,
exchanged or converted by such Shareholders at or prior to such closing,
subject to Section 4.02(d), shall be canceled effective upon such closing, and
the Company's books and records shall reflect such cancellation. If any
Non-Nextel Shareholder should fail to deliver such certificates to NWIP and
NWIP has placed such selling Shareholder's proportionate share of the purchase
price for such certificates in escrow, such Shares shall no longer be deemed to
be outstanding and all rights of such Shareholder with respect to such Shares
will terminate except the right to receive the purchase price. The Company
shall cause the books and records of the Company to show that such Shares are
bound by the provisions of this Section 4.02 and that such Shares shall be
transferred to the NWIP representative immediately upon surrender for transfer
by the holder thereof.
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(f) Upon the consummation of an Initial Public Offering, the NWIP
Call Right shall be superseded by the provisions in the Company's restated
certificate of incorporation, which shall control.
Section 4.03. Fair Market Value Calculation. For purpose of this
Agreement, Fair Market Value will be determined as follows:
(a) "FAIR MARKET VALUE" of the Company means the price that would be
paid for all of the Company Capital Stock (excluding the Series B Preferred and
any mandatorily redeemable pay-in-kind non-convertible securities) by a willing
buyer to a willing seller, in an arm's-length transaction, as if the Company
were a publicly traded and non-controlled corporation and the buyer was
acquiring all of such Company Capital Stock, and assuming that the Company was
being sold in a manner designed to attract all possible participants to the
sales process (including Nextel and its Competitors, subject to the provisions
below) and to maximize stockholder value (including, if necessary, through a
public or private market sale or other disposition (including tax-free
spin-offs, if possible) of businesses prohibited by legal restrictions to be
owned by a particular buyer or class of buyer), with both buyer and seller in
possession of all material facts concerning the Company and its business. In
all cases, Fair Market Value for the Company will include a control premium and
there will be no minority or illiquidity discount. Fair Market Value of the
Company shall be determined on the assumption that in a competitive acquisition
market with Nextel and prospective buyers other than Nextel, the Company would
be at least as valuable to other prospective buyers as to Nextel. Fair Market
Value shall be determined on the assumption that the Company is at least as
valuable as if it were a part (although separable) of Nextel, with the
valuation of the Company for purposes of this sentence being derived from a
valuation of Nextel consistent with the first sentence of this paragraph but
without taking into account a control premium for Nextel (it being understood
that a control premium, however, will be applied to the Company). Fair Market
Value of the Company will not include any premium solely due to the fact that a
competitor of Nextel might be willing to pay a premium for the Company in order
to hamper or impede Nextel's growth or strategy. If the Company's stock is
publicly traded, Fair Market Value will take into consideration (i) the trading
activity and history of the Company's stock and (ii) the Company's most recent
"unaffected" public market stock price. In
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making the determination of Fair Market Value of the Company, the Company will
be given the benefit of the fact that it uses the Nextel brand name, business
and technology pursuant to the Joint Venture Agreement and the other
Transaction Documents, but there will be no discount or premium included in any
valuation of the Company relative to its business as conducted or reasonably
expected to be conducted due to the facts that (v) the Company will not own but
Nextel will directly or indirectly lease or otherwise make available to the
Company certain of its rights, assets and services pursuant to the Joint
Venture Agreement and the other Collateral Agreements, or pursuant to any other
agreements or arrangements entered into from time to time between Nextel and/or
its Subsidiaries, on the one hand, and the Company and/or its Subsidiaries, on
the other hand, (w) in certain circumstances Nextel will have the right to
acquire the Company's FCC licenses, and in such a case, the Company will not
own, but Nextel and/or its Subsidiaries will directly or indirectly make
available to the Company, the right to manage the use of the frequencies
subject to such licenses, (x) Nextel directly or indirectly has, and may
exercise, certain aspects of control over the Company's business and the
Company, (y) Nextel directly or indirectly provides certain services and other
benefits to the Company on a cost or subsidized basis and (z) there may be few
potential buyers for the Company due to any real or perceived control of the
Company exercised by Nextel or due to the fact that only Nextel has an
identical technology platform.
(b) Within 20 days after notice is given of the exercise of a Put
Right or a NWIP Call Right (i) the Non-Nextel Shareholders by the affirmative
vote of more than 50% of the Voting Common Stock held by such Shareholders (at
a special meeting of such Shareholders called by the Company and held within
such 20 day period) or, after an Initial Public Offering, the Board (by
majority vote with the NWIP Designee abstaining) will select and identify to
NWIP a nationally recognized investment banker or appraiser (the "FIRST
APPRAISER") and (ii) NWIP will select and identify to the Non-Nextel
Shareholders a nationally recognized investment banker or appraiser (the
"SECOND APPRAISER"). The date when both appraisers have been identified, is the
"START DATE". NWIP, the Company and the other Shareholders will (and NWIP will
cause Nextel to) cooperate with any appraisers appointed under this Section
4.03 and share with each such appraiser all information relevant to a valuation
of the Company. Within 30 days of the Start Date, the First Appraiser and the
Second Appraiser will each
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determine its preliminary view of the Fair Market Value of the Company in
accordance with the criteria set forth in Section 4.03(a), and will consult
with each other with respect to their respective preliminary values. On or
prior to the 45th day after the Start Date, the First Appraiser and the Second
Appraiser will each render to the Shareholders its written report on the Fair
Market Value of the Company.
(c) If the higher Fair Market Value determined under 4.03(b) (the
"HIGH VALUE") is not more than 110% of the lower Fair Market Value determined
under 4.03(b) (the "LOW VALUE"), then the Fair Market Value will be the average
of the High Value and the Low Value. If the High Value is more than 110% of the
Low Value, then, not more than 60 days after the Start Date, the First
Appraiser and the Second Appraiser will together designate another nationally
recognized investment banker or appraiser (the "THIRD APPRAISER"), who will not
be informed of the values determined by the First and Second Appraisers. The
Third Appraiser will make a determination of the Fair Market Value of the
Company in accordance with the criteria set forth in Section 4.03(a) and
deliver its written report to the Shareholders (the "THIRD VALUE") not more
than 30 days after the Third Appraiser is designated. If the Third Value is
within the middle one third of the range of values between the High Value and
the Low Value (the "MID-RANGE"), Fair Market Value will be the Third Value. If
the Third Value does not fall within the Mid-Range, the Fair Market Value will
be the average of (x) the Third Value and (y) either (i) the High Value or (ii)
the Low Value, whichever is closest to the Third Value, provided that the Fair
Market Value shall not be less than the Low Value nor greater than the High
Value.
(d) The determination of Fair Market Value under Section 4.03(c)
will be final and binding on all Non-Nextel Shareholders unless a challenge by
any such Shareholder (each, a "NOTICE OF CHALLENGE") is filed with NWIP
pursuant to this Section 4.03(d) within 20 days of the receipt by such
challenging Shareholder of the final determination under Section 4.03(c). As
soon as practicable after the end of the 20-day period for giving a Notice of
Challenge, NWIP will notify the Company and all challengers of the names and
addresses of all challengers. Not more than 10 days after receiving such
notice, the challengers will, in a writing executed by all of them, notify the
Company and NWIP of the challenger that has been selected as their
representative and who has been given irrevocable authority
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to represent the challengers for all proceedings under this Section 4.03(d)
(the "CHALLENGER'S REPRESENTATIVE"). If the Company and NWIP do not receive the
executed writing from the challengers in the 10-day period, the Company will
select a challenger by lot to act as the Challenger's Representative, and will
notify NWIP and all the challengers of the party selected. If the Challenger's
Representative is selected by lot, each challenger will have 5 days to notify
the Company and NWIP that it elects to irrevocably abandon the challenge, and
to accept its share of the Fair Market Value as determined under Section
4.03(c). Any challenger that does not abandon the challenge as described in the
preceding sentence, will be deemed to have irrevocably designated the
Challenger's Representative selected by lot as its agent for purposes of
proceedings under this Section 4.03(d). No challenger can participate in the
challenge proceeding except through the Challenger's Representative. Any
Shareholder that does not give notice and join the challengers will be paid its
appropriate share of Fair Market Value (as determined under Section 4.03(c)),
but will be forever barred from asserting any objection to Fair Market Value as
so determined. The procedures provided for in this Section 4.03(d), including
the Challenge Floor Price and Challenge Ceiling Price, each as hereinafter
defined, shall not be considered by any appraiser in determining Fair Market
Value.
(e) The determination of Fair Market Value under Section 4.03(c) will
be final and binding on NWIP unless NWIP believes that the Fair Market Value
determined under Section 4.03(c) does not reflect the true Fair Market Value or
was improperly determined and gives notice to each Non-Nextel Shareholder and
to the Company within 20 days of receiving the final determination under
Section 4.03(c) that it is initiating a proceeding under this Section 4.03(e).
Not more than 10 days after receiving a notice under the preceding sentence,
the Non-Nextel Shareholders will designate, by majority vote, a representative
and notify NWIP and the Company in writing of the identity of such
representative (or, if such designation by majority vote does not occur for any
reason, then the Company will select a representative by lot and shall notify
NWIP and the other Non-Nextel Shareholders in writing of such selection), who
will be irrevocably authorized to be the "Challenger's Representative" to act
as the agent of all Non-Nextel Shareholders in the defense of the challenge by
NWIP. No Non-Nextel Shareholder will have the right to participate in the
defense except through the Challenger's Representative.
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(f) The party or parties bringing the challenge will be required to
demonstrate to a tribunal composed of three persons with expertise in valuing
companies similar to the Company, one selected by each of NWIP and the
Challenger's Representative and the third member of the tribunal selected by
the first two members (i) that the Fair Market Value determined under Section
4.03(c) (or the underlying values determined by the Appraisers on which it was
based) was grossly incorrect or fraudulently obtained; and (ii) what the
correct Fair Market Value should be. The tribunal determining the challenge is
to determine Fair Market Value and no party will seek to have that
determination referred to an investment banker or appraiser (although they may
testify or offer evidence to the tribunal).
(g) If there is a challenge by NWIP pursuant to Section 4.03(e),
regardless of the outcome of the proceeding, the amount to be paid to the Non-
Nextel Shareholders may be higher than their proportionate share of the amount
that they would have received if the Fair Market Value were equal to the
Challenge Ceiling Price but will not be less than their proportionate share of
the amount that they would have received if the Fair Market Value were equal to
the Challenge Floor Price. If there is a challenge by the Non-Nextel
Shareholders pursuant to 4.03(d), regardless of the outcome of the proceeding,
the amount to be paid to the Non-Nextel Shareholders who participate in such
challenge may be less than their proportionate share of the amount that they
would have received if the Fair Market Value were equal to the Challenge Floor
Price but will not be more than their proportionate share of the amount that
they would have received if the Fair Market Value were equal to the Challenge
Ceiling Price.
(h) The following terms have the following meaning:
"CHALLENGE CEILING PRICE" means an amount equal to the sum of those
amounts that for each tranche of capital actually invested in the Company
(whether contributed in cash or in kind and, if in kind, valued as set forth in
Section 4.03(i)), would return to investors in each tranche (regardless of
whether there are any investors from that tranche who continue as equity
holders, and without regard to any purchase or sale transactions or the price
of such transfers among equity holders) an amount that would represent a 30%
internal rate of return on the
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amount of capital invested in connection with such tranche, compounded annually
from the date that such capital relating to such tranche was contributed to the
date of the determination.
"CHALLENGE FLOOR PRICE" means an amount equal to the sum of those
amounts that for each tranche of capital actually invested in the Company
(whether contributed in cash or in kind and, if in kind, valued as set forth in
the Section 4.03(i)), would return to investors in each tranche (regardless
whether there are any investors from that tranche who continue as equity
holders, and without regard to any purchase or sale transactions or the price
of such transfers among equity holders) an amount that would represent a 10%
internal rate of return on the amount of capital invested in connection with
such tranche, compounded annually from the date that such capital relating to
such tranche was contributed to the date of the determination.
"INVESTMENT FORMULA PRICE" means in respect of each tranche of capital
actually invested in the Company (whether contributed in cash or in kind, but
excluding the Series B Preferred Stock), an amount that would represent a 20%
internal rate of return on the amount of capital invested in connection with
such tranche (regardless of whether there are any investors from such tranche
who continue as equity holders, and without regard to any purchase or sale
transactions or the price of such transfers among equity holders), compounded
annually from the date that such capital relating to such tranche was
contributed to the date of the purchase.
(i) For purposes of calculating the Investment Formula Price,
Challenge Ceiling Price and Challenge Floor Price, except for the frequencies
or frequency rights which will be valued as provided in Exhibit 4.1 to the
Joint Venture Agreement, the Board shall place a cash equivalent value on each
non-cash capital investment made in the Company at the time such investment is
made, and such cash equivalent value shall be used in all calculations of
Investment Formula Price, Challenge Ceiling Price, and Challenge Floor Price
under this Agreement and the other relevant Transaction Documents.
Section 4.04. Management Stockholder Tag Along Right.
Notwithstanding anything herein to the contrary, if, prior to the Initial
Public Offering, NWIP or its Affiliates acquire (in one or a series of
transactions) more than 20% of the Initial
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Ownership of the DLJ Entities (other than in accordance with the provisions of
this Article 4 in connection with a purchase by NWIP or its Affiliates of all
of the Company's outstanding Company Capital Stock held by the Non-Nextel
Shareholders), the Management Shareholders will have the right, if they so
elect, to require that NWIP purchase from them, pro rata in accordance with
their ownership of Vested Shares (as defined in the Restricted Stock Purchase
Agreements), the same proportion of their aggregate Vested Shares as the
proportion of the aggregate Initial Ownership of the DLJ Entities being
acquired by NWIP or its Affiliates, at the same per share price as that being
paid to the DLJ Entities; provided, that NWIP's obligation to purchase Vested
Shares pursuant to this Section 4.04 will not exceed $20 million in the
aggregate. NWIP shall notify the Management Shareholders in advance of any such
acquisition, and the Management Shareholders shall have five days from receipt
of any such notice to elect (by notice to NWIP) to exercise their rights
pursuant to the preceding sentence. The closing of such purchase and sale shall
occur at the same time and place as the closing of the acquisition between NWIP
or its Affiliates and the DLJ Entities and at any such closing, NWIP shall
deliver to each selling Management Shareholder the purchase price by providing
the same per share consideration that it is providing to the DLJ Entities.
Section 4.05. Company Repurchase Rights. (a) The Company
repurchase rights with respect to the Special Securities are as follows:
(i) Within 30 days after the General Repurchase Date, the Company
shall repurchase from each Reselling Shareholder, and each Reselling
Shareholder shall be obligated to sell, at a repurchase price of $.01
per share, a number of shares of Class A Common Stock (or, in the
case of the DLJ Entities, Warrants) equal to the product of (A) the
number of such Reselling Shareholder's Special Securities multiplied
by (B) the Option Section Percentage.
(ii) Notwithstanding anything in the Restricted Stock Purchase
Agreements to the contrary, if an Individual Repurchase Date occurs
prior to the General Repurchase Date, within 30 days after such
Individual Repurchase Date, the Company shall repurchase from the
applicable Reselling Shareholder, and such Reselling Shareholder
shall be obligated to sell, at a repurchase price of $.01 per share,
a number of shares of Class A
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Common Stock equal to the product of (A) the number of such Reselling
Shareholder's Special Securities multiplied by (B) the Option Section
Percentage.
(b) Promptly after an applicable Repurchase Date the Company will
deliver written notice to a Reselling Shareholder. Such notice shall specify
the applicable Repurchase Date and shall set forth the number of Shares to be
repurchased from each Reselling Shareholder and the aggregate repurchase price
thereof. Within five days after delivery of such notice, upon delivery to the
Company of the Shares being repurchased, together with one or more related
stock powers executed in blank by the Reselling Shareholders, the Company shall
pay to each Reselling Shareholder, in immediately available funds, an amount
equal to the aggregate repurchase price of the Shares being repurchased
therefrom. Each Reselling Shareholder shall represent that he or it owns the
Shares being repurchased free and clear of liens other than liens created by
the Transaction Documents.
(c) Each of the Reselling Shareholders agrees and acknowledges that
the Special Securities shall not be transferred (other than to the Company)
until 30 days after the General Repurchase Date and until such time shall be
voted in the same proportion as all other Shares are voted by the Shareholders
at any meeting of the shareholders of the Company.
(d) Notwithstanding anything in this Section 4.05 to the contrary, in
the event that the Option Section Percentage is zero or a negative number, the
Company shall not repurchase from the Reselling Shareholders any Special
Securities.
(e) As used in this Section 4.05, the following terms have the
following meanings:
"BUILD OUT" shall have the meaning set forth in the Joint Venture
Agreement.
"ELECTION PERIOD" shall have the meaning set forth in the Joint
Venture Agreement.
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"GENERAL REPURCHASE DATE" means the earliest of the date of (i) the
expiration of the Election Period (as defined in the Joint Venture Agreement),
(ii) the occurrence of any of the events specified in clauses (b) or (c) of the
definition of Change in Control of the Company (as defined in the Restricted
Stock Purchase Agreements) and (iii) the purchase of the Company Capital Stock
(other than the Series B Preferred) by NWIP pursuant to Section 4.01 or 4.02.
"INDIVIDUAL REPURCHASE DATE" means, with respect to any Management
Stockholder, the date on which the Company has a right to repurchase any Class
A Common Stock from such Management Stockholder pursuant to the Restricted
Stock Purchase Agreement between such Management Stockholder and the Company.
"OPTION SECTIONS" shall have the meaning set forth in the Joint
Venture Agreement.
"OPTION SECTION PERCENTAGE" means the product of (A) 3,162,000 minus
the number of POPs represented in the Option Sections the Company has elected
to Build-Out prior to the relevant Repurchase Date divided by (B) 3,162,000.
"POPs" means population equivalents as set forth in Exhibit 6 to the
Joint Venture Agreement.
"RESELLING SHAREHOLDER" means each of Eagle River, the DLJ Entities
and the Management Stockholders.
"SPECIAL SECURITIES" means: (i) 61,880 shares of Class A Common Stock
for John Chapple, (ii) 42,770 shares of Class A Common Stock for John Thompson,
(iii) 24,570 shares of Class A Common Stock for David Thaler, (iv) 20,475
shares of Class A Common Stock for David Aas, (v) 17,290 shares of Class A
Common Stock for Perry Satterlee, (vi) 17,290 shares of Class A Common Stock
for Mark Fanning, (vii) 15,295 shares of Class A Common Stock for Eagle River,
(viii) warrants to purchase 24,957 shares of Class A Common Stock for Madison
Dearborn and (ix) warrants to purchase 26,162 shares of Class A Common Stock
for the DLJ Funds.
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ARTICLE 5
ANTI-DILUTION AND PREEMPTION RIGHTS
Section 5.01. Anti-Dilution Rights. (a) Prior to the Initial Public
Offering, the Company shall provide each Shareholder with a written notice (a
"SECTION 5.01 NOTICE") of any proposed issuance by the Company of Company
Capital Stock at least 30 days prior to the proposed issuance date. The Section
5.01 Notice shall specify the price per share at which the Company Capital
Stock is proposed to be issued and the other proposed material terms of the
issuance. Each Shareholder shall be entitled to purchase, at the price and on
the terms specified in such Section 5.01 Notice, a pro rata portion of the
Company Capital Stock proposed to be issued, based upon such Shareholder's
Percentage Ownership. A Shareholder may exercise its rights under this Section
5.01 by delivering written notice to the Company (which will make such
information available to all Shareholders) of its election to purchase Company
Capital Stock within 15 days of receipt of the Section 5.01 Notice. A delivery
of such a written notice (which notice shall specify the number of shares (or
amount) of Company Capital Stock to be purchased by the Shareholder submitting
such notice) by a Shareholder shall constitute a binding agreement of such
Shareholder to purchase, at the price and on the terms specified in the Section
5.01 Notice, the number of shares (or amount) of Company Capital Stock
specified in such Shareholder's written notice, provided that if the actual
purchase price per share of Company Capital Stock is more than the purchase
price set forth in the Section 5.01 Notice, the Company shall notify such
Shareholders prior to the issuance of such shares and each such Shareholder may
revoke its election at or prior to the time of the relevant issuance and be
released from its obligation to purchase shares pursuant to this Section 5.01.
In the case of any issuance of Company Capital Stock, the Company shall have
120 days from the date of the Section 5.01 Notice to consummate the proposed
issuance of any or all of such Company Capital Stock which the Shareholders
have not elected to purchase at the price and upon terms that are not
materially less favorable to the Company than those specified in the Section
5.01 Notice. At the consummation of such issuance, the Company shall issue
certificates representing the Company Capital Stock to be purchased by each
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Shareholder exercising anti-dilutive rights pursuant to this Section 5.01
registered in the name of such Shareholder, against payment in cash by such
Shareholder of the purchase price for such Company Capital Stock. If the
Company proposes to issue Company Capital Stock after such 120-day period, it
shall again comply with the procedures set forth in this Section.
(b) Notwithstanding Section 5.01(a), if the Company elects to Build
Out any Option Sections prior to the expiration of the Election Period, and
pursuant thereto, issues additional equity to NWIP in exchange for frequencies,
the Company and the Shareholders will comply with the Notice provisions of
Section 5.01(a) and each Non-Nextel Shareholder (other than the Management
Shareholders) that is a Shareholder as of the date hereof shall have the right,
but not the obligation, to purchase, at a purchase price of $10 per share, as
adjusted for stock splits and combinations, stock dividends and the like (which
represents the initial purchase price for Shares on the date hereof), a number
of shares of Series A Preferred (or, if the Series A Preferred has been
converted into Common Stock, Common Stock) that results in such Shareholder
maintaining the same Percentage Ownership it has on either the date immediately
prior to the date the Company issues additional equity to NWIP in exchange for
frequencies or the date hereof, whichever date results in a lower Percentage
Ownership.
(c) Notwithstanding Section 5.01(a), no Shareholder (except as
provided for NWIP in Section 5.02 solely in connection with the purchase of
Company Capital Stock issued in connection with an Initial Public Offering)
shall be entitled to purchase Company Capital Stock as contemplated by this
Section 5.01 in connection with issuances of Company Capital Stock (i) to
employees of the Company or any Subsidiary pursuant to employee benefit plans
or arrangements approved by the Board (including upon the exercise of employee
stock options), (ii) in connection with a Public Offering initiated by the
Company, (iii) in connection with any bona fide, arm's-length restructuring of
outstanding debt of the Company or any Subsidiary, (iv) in connection with any
bona fide, arm's-length direct or indirect merger, acquisition or similar
transaction, (v) in connection with the issuance of equity securities pursuant
to Article 4 of the Joint Venture Agreement, (vi) in connection with the
conversion of the Convertible Preferred into Company Common Stock or (vii) in
connection with any pro rata stock splits, combinations or reclassifications.
The Company shall not be under any obligation to consummate any proposed
issuance of Company Capital Stock,
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regardless of whether it shall have delivered a Section 5.01 Notice in respect
of such proposed issuance.
Section 5.02. Special NWIP Anti-Dilution Rights. (a) In connection
with an Initial Public Offering initiated by the Company pursuant to which the
Company will offer newly issued shares of Company Common Stock (a "COMPANY
IPO"), the Company shall provide NWIP with a written notice (a "SECTION 5.02
NOTICE") of such Initial Public Offering at least 45 days prior to the proposed
offering date. The Section 5.02 Notice shall specify (i) a range of prices (the
"UNDERWRITERS' RANGE") for the Company Common Stock as determined by the
underwriters, of which the high per share price (the "HIGH OFFERING PRICE")
will be no more than $3.00 greater than the low per share price (the "LOW
OFFERING PRICE") and (ii) the other material terms of the offering. NWIP shall
be entitled to purchase, at the Offering Price (as defined below) and otherwise
on the terms specified in such Section 5.02 Notice, NWIP's Percentage Ownership
of the Company Common Stock proposed to be issued pursuant to the Company IPO.
NWIP may exercise its rights under this Section 5.02 by delivering written
notice of its election to purchase the Company Common Stock to the Company
within 20 days of receipt of the Section 5.02 Notice. A delivery of such a
written notice (which notice shall specify the number of shares (or amount) of
Company Common Stock to be purchased by NWIP) by NWIP shall constitute a
binding agreement of NWIP to purchase, at the Offering Price (adjusted to
reflect elimination of the underwriters' discount) and otherwise on the terms
specified in the Section 5.01 Notice, the number of shares (or amount) of
Company Common Stock specified in NWIP's written notice, provided that if the
Offering Price is more than $1.00 greater than the High Offering Price, the
Company shall immediately notify NWIP and NWIP shall have 24 hours from receipt
of such notice to revoke its election and be released from its obligation to
purchase shares pursuant to this Section 5.02. The Company shall have 180 days
from the date of the Section 5.02 Notice to consummate the proposed Company
IPO, provided that if NWIP elected to purchase less than NWIP's Percentage
Ownership of the proposed Company Common Stock issuance and if the Offering
Price is more than $1.00 below the Low Offering Price, the Company shall
immediately notify NWIP and NWIP will have 24 hours from receipt of such notice
to elect whether to purchase its Percentage Ownership of the Company Common
Stock proposed to be issued pursuant to the Company IPO at the lower Offering
Price (adjusted to
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reflect elimination of the underwriters' discount). At the consummation of
such issuance, which will be simultaneous with the closing of the Company IPO,
the Company shall issue certificates representing the Company Common Stock to
be purchased by NWIP registered in the name of NWIP, against payment by
NWIP of the Offering Price (adjusted to reflect elimination of the
underwriters' discount) for such Company Common Stock.
(b) "OFFERING PRICE" means the per share price for the Company Common
Stock to be sold in the Public Offering.
(c) If the Company proposes to offer Company Common Stock after such
180-day period, the Company shall comply with the procedures set forth in this
Section 5.02 before proceeding with the Company IPO.
Section 5.03. Special NWIP Preemption of Registration Rights. (a) If,
prior to the later of (i) the completion of the Initial Required Build and (ii)
the fourth anniversary of the date of this Agreement, DLJMB requests a Demand
Registration pursuant to Section 6.01 or the Company authorizes a Company IPO,
the Company will notify NWIP at the same time that it notifies the other
Shareholders pursuant to Section 6.01 or 5.02, as the case may be, which notice
(the "PREEMPTION NOTICE") will contain the Underwriters' Range and the other
material terms of the proposed offering, including but not limited to the
number of shares of Company Common Stock to be offered and the proposed
offering date. Upon receipt of the Preemption Notice, NWIP, in addition to its
rights under Section 5.02, will have the right (the "PREEMPTION RIGHT"),
subject to Section 5.03(c), to purchase all (but not less than all) of the
Company Common Stock that (i) the Company proposes to offer in the case of a
Company IPO or (ii) the DLJ Entities and the High Yield Investors own as of the
date hereof (assuming conversion of the Series A Preferred) and propose to
offer in the case of a DLJMB Demand Registration pursuant to Section 6.01.
Except as provided in this Section 5.03, NWIP will not have any right, nor any
obligation, to purchase any shares of Company Common Stock that any other
Shareholder proposes to register in connection with the relevant Public
Offering.
(b) If NWIP elects to exercise its Preemption Right and purchase the
relevant shares of Company Common Stock, it will notify the Company and
DLJMB, as the case may be (the "OFFERING PARTY") in writing (the
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"PREEMPTION ELECTION NOTICE") within 15 days of receipt of the Preemption
Notice. The Preemption Election Notice will state, among other things, (i) the
purchase price to be paid by NWIP for the relevant shares of Company Common
Stock, which purchase price shall be the mid-point of the Underwriters Range
and (ii) the date such purchase will take place, such date not to be later than
the proposed offering date set forth in the Preemption Notice. If the Offering
Party does not receive a timely Preemption Election Notice, it may proceed with
the relevant offering, provided that if the Offering Price is more than $1.00
below the Low Offering Price, the Company shall immediately notify NWIP and
NWIP will have 24 hours from receipt of such notice to elect (by notifying the
Company and the relevant Offering Party) whether to exercise its Preemption
Right at the Lower Offering Price and provided further that if the Offering
Party proposes to offer Company Common Stock more than 90 days after receipt of
the Preemption Election Notice the Offering Party shall, subject to the first
sentence of Section 5.03(a), comply again with the procedures set forth in this
Section 5.03 (at the lower Offering Price, if applicable) before proceeding
with the offering.
(c) The first time that NWIP elects to exercise its Preemption Right
in connection with a proposed Company IPO, the Company shall have the right to
elect, by notice given to NWIP within 10 days after receipt of the applicable
Preemption Election Notice, to reduce the number of shares included in such
offering by up to 50% of the number of shares originally proposed to be
offered. For each subsequent Company IPO with respect to which NWIP elects to
exercise its Preemption Right, the Company may elect, by notice given to NWIP
within 10 days after receipt of the applicable Preemption Election Notice, to
reduce the number of shares included in such offering by up to 75% of the
number of shares originally proposed to be offered, provided that the Company
may elect, for one (and only one) such subsequent Company IPO, to withdraw the
Company IPO in its entirety. If NWIP elects to exercise its Preemption Right in
connection with a proposed DLJMB Demand Registration, DLJMB shall have the
right to elect, by notice given to NWIP and the Company within 10 days after
receipt of the applicable Preemption Election Notice, to withdraw the demand in
its entirety provided that DLJMB reimburses the Company for any out of pocket
fees and expenses incurred in connection with such proposed registration.
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(d) A delivery of the Preemption Election Notice by NWIP shall
constitute a binding agreement of NWIP to purchase all the relevant shares of
Company Common Stock that the Offering Party proposes to offer. At any closing
of NWIP's purchase of all the relevant shares of Company Common Stock that the
Offering Party proposes to offer, NWIP shall deliver to the Offering Party the
purchase price (i) by wire transfer of immediately available funds to such bank
account as the Offering Party shall have specified in writing no later than two
Business Days prior to the closing or (ii) by delivery of Nextel Shares as
permitted by Section 7.05.
(e) If NWIP purchases Shares in accordance with its Preemption Right
with respect to a Qualifying DLJ Demand, the Non-Nextel Shareholders shall have
the rights set forth in Section 4.01.
ARTICLE 6
REGISTRATION RIGHTS
Section 6.01. Demand Registration. (a) Subject to the provisions set
forth in Section 5.03 and this Section 6.01, if the Company shall receive a
written request by DLJMB (acting on behalf of the DLJ Entities collectively,
the "SELLING SHAREHOLDER"), following the earlier to occur of (x) the 42 month
anniversary of the date hereof and (y) an Initial Public Offering, that the
Company effect the registration under the Securities Act of all or a portion of
such Selling Shareholder's shares of Company Common Stock (after conversion of
Preferred Stock into Company Common Stock) and specifying the intended method
of disposition thereof, then the Company shall promptly give written notice of
such requested registration (a "DEMAND REGISTRATION") at least 30 days prior to
the anticipated filing date of the registration statement relating to such
Demand Registration to the other Shareholders and thereupon will use its
reasonable best efforts to effect, as expeditiously as possible, the
registration under the Securities Act of:
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(i) the Registrable Securities which the Company has been so
requested to register by the Selling Shareholder, then held by the
Selling Shareholder; and
(ii) subject to the restrictions set forth in Section 6.02(b),
all other Registrable Securities which any other Shareholder entitled
to request the Company to effect an Incidental Registration (as such
term is defined in Section 6.02) pursuant to Section 6.02 (all such
Shareholders, together with the Selling Shareholder, the "HOLDERS")
has requested the Company to register by written request received by
the Company within 15 days after the receipt by such Holders of such
written notice given by the Company, all to the extent necessary to
permit the disposition (in accordance with the intended methods
thereof as aforesaid) of the Registrable Securities so to be
registered.
Promptly after the expiration of the 15-day period referred to in
Section 6.01(a)(ii) hereof, the Company will notify all the Holders who have
requested that their Registrable Securities be included in the Demand
Registration of the other Holders and the number of Registrable Securities
requested to be included therein. The Selling Shareholder requesting a
registration under this Section 6.01 may, at any time prior to the effective
date of the registration statement relating to such registration, revoke such
request, without liability to any of the other Holders, by providing a written
notice to the Company revoking such request, in which case such request, so
revoked, shall be considered a Demand Registration unless such revocation arose
out of the fault of the Company or unless the Selling Shareholder reimburses
the Company for all costs incurred by the Company in connection with such
registration, in which case such request shall not be considered a Demand
Registration.
(b) In no event will the Company be required to effect more than one
Demand Registration within any six-month period. If a Company IPO or a Demand
Registration is preempted by NWIP pursuant to Section 5.03 or if the Company or
DLJMB elects to withdraw a registration pursuant to Section 5.03, neither DLJMB
nor the Company may initiate another Public Offering until 180 days after the
date NWIP elected to preempt the registration (or the date such
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Public Offering is withdrawn by the Company or DLJMB under Section 5.03(c), if
applicable).
(c) Subject to Section 6.01(e), the Company shall be obligated to
effect one Demand Registration for the Selling Shareholder prior to an Initial
Public Offering. After the Initial Public Offering, DLJMB shall be entitled to
(i) one Demand Registration, at the Company's expense, if the Registrable
Securities then owned by the Qualified DLJ Entities and initially issued to a
DLJ Entity by the Company represent at least 10% of the Fully Diluted Company
Common Stock, (ii) a second Demand Registration (at DLJMB's expense) if the
Registrable Securities then owned by the DLJ Entities (and issued to a DLJ
Entity by the Company) represent at least 5% of the Fully Diluted Company
Common Stock and (iii) a third Demand Registration (at DLJMB's expense) if the
Registrable Securities then owned by the DLJ Entities (and issued to a DLJ
Entity by the Company) represent at least 5% of the Fully Diluted Company
Common Stock; provided that the Company shall not be obligated to effect any
Demand Registration unless the aggregate proceeds expected to be received from
the sale of the Company Common Stock requested to be included in such Demand
Registration equal at least (x) $75,000,000, if such Demand Registration would
constitute an Initial Public Offering, or (y) $50,000,000 in any other Public
Offering.
(d) Except as set forth in 5.03(c) and 6.01(c), the Company will pay
all Registration Expenses in connection with any Demand Registration.
(e) A Demand Registration requested pursuant to this Section 6.01
shall not be deemed to have been effected (i) unless the registration statement
relating thereto (A) has become effective under the Securities Act and (B) has
remained effective for a period of at least 90 days (or such shorter period in
which all Registrable Securities of the Holders included in such registration
have actually been sold thereunder); provided that if after any registration
statement requested pursuant to this Section 6.01 becomes effective (x) such
registration statement is interfered with by any stop order, injunction or
other order or requirement of the SEC or other governmental agency or court and
(y) less than 75% of the Registrable Securities included in such registration
statement have been sold thereunder (provided that the Holders shall have
exercised all commercially
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reasonable efforts to effect the sale thereof during the period of
effectiveness of such registration statement), such registration statement
shall not be considered a Demand Registration or (ii) if the Maximum Offering
Size (as defined below) is reduced in accordance with Section 6.01(f) such that
less than 66 2/3% of the Registrable Securities of the Selling Shareholders
sought to be included in such registration are included unless such Selling
Shareholder elects to proceed with registration and sale of such reduced
quantity of Registrable Securities.
(f) If a Demand Registration involves an Underwritten Public Offering
and the managing underwriter shall advise the Company and the Selling
Shareholders that, in its view, (i) the number of shares of Company Common
Stock requested to be included in such registration (including Company Common
Stock which the Company proposes to be included which are not Registrable
Securities) or (ii) the inclusion of some or all of the shares of Company
Common Stock owned by the Holders, in any such case, exceeds the largest number
of shares which can be sold without having an adverse effect on such offering,
including the price at which such shares can be sold (the "MAXIMUM OFFERING
SIZE"), the Company will include in such registration, in the priority listed
below, up to the Maximum Offering Size:
(A) first, all Registrable Securities requested to be registered
by the Selling Shareholder (including any Registrable Securities
requested to be registered by the High Yield Investors) (allocated,
if necessary for the offering not to exceed the Maximum Offering Size
pro rata among the DLJ Entities and the High Yield Investors on the
basis of the relative number of Registrable Securities so requested
to be included in such registration);
(B) second, all Registrable Securities requested to be included
in such registration by any other Holder (allocated, if necessary for
the offering not to exceed the Maximum Offering Size, pro rata among
such other Holders on the basis of the relative number of Registrable
Securities so requested to be included in such registration); and
(C) third, any Company Common Stock proposed to be registered by
the Company.
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(g) Upon written notice to DLJMB, the Company may, as a matter of
right, postpone effecting a registration pursuant to this Section 6.01 on one
occasion during any period of six consecutive months for a reasonable time
specified in the notice but not exceeding 90 days (which period may not be
extended or renewed except that it may be extended for an additional 30 days if
the request for registration is made during the first quarter of any fiscal
year).
(h) Notwithstanding anything in this Section 6.01 to the contrary,
upon written notice to DLJMB, the Company may supersede a DLJMB Demand
Registration at any time prior to an Initial Public Offering by notifying DLJMB
within 30 days of the Company's receipt of DLJMB's request for a Demand
Registration that the Company is initiating a Company IPO (a "SUPERSEDING
IPO"). If the Company initiates a Superseding IPO then, subject to the
provisions of Sections 5.02 and 5.03, it must file its registration statement
with the SEC not more than 90 days after notifying DLJMB of its intent to
initiate the Superseding IPO and use its reasonable best efforts to have the
registration statement declared effective as soon as practicable thereafter. If
the Superseding IPO is not declared effective within 90 days of filing the
registration statement with the SEC, DLJMB may proceed with its Demand
Registration.
(i) DLJMB's right to have the Company effect a Demand Registration
for DLJMB prior to the Initial Public Offering will terminate when the
Qualified DLJ Entities cease to own 80% of the Initial Ownership of the
Qualified DLJ Entities.
Section 6.02. Company Registration; Incidental Registration. (a)
Subject to the provisions of Sections 5.02 and 5.03, at such time as the
Company has (i) either completed the Initial Required Build or, if such
condition has not been satisfied, received the prior approval of NWIP (which
approval will not be unreasonably withheld, it being understood that
withholding approval because the proceeds from the Company IPO will either be
insufficient to allow the Company to complete the Initial Required Build or
will not be committed to completing the Initial Required Build are among the
reasonable bases for withholding approval) or (ii) elected to supersede a
Demand Registration pursuant to Section 6.01(h), the Company may initiate a
Company IPO and register an offering of its Company
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Common Stock under the Securities Act, provided that the Company IPO will
generate gross proceeds of no less than $75,000,000.
(b) If the Company proposes to register any of its Company Common
Stock under the Securities Act (other than a registration (x) on Form S-8 or
S-4 or any successor or similar forms, (y) relating to securities issuable upon
exercise of employee stock options or in connection with any employee benefit
or similar plan of the Company or (z) in connection with a direct or indirect
merger, acquisition or other similar transaction), whether or not for sale for
its own account, it will each such time, subject to the provisions of Sections
6.02(c), give prompt written notice to each Shareholder at least 20 days prior
to the anticipated filing date of the registration statement relating to such
registration, which notice shall set forth such Shareholders' rights under this
Section 6.02 and shall offer all Shareholders the opportunity to include in
such registration statement such number of Registrable Securities as each such
Shareholder may request. Upon the written request of any such Shareholder made
within 10 days after the receipt of notice from the Company (which request
shall specify the number of Registrable Securities intended to be disposed of
by such Shareholder), the Company will use all reasonable efforts to effect the
registration under the Securities Act of all Registrable Securities which the
Company has been so requested to register by such Shareholders, to the extent
requisite to permit the disposition of the Registrable Securities so to be
registered; provided that (i) if such registration involves an Underwritten
Public Offering, all such Shareholders requesting to be included in the
Company's registration must sell their Registrable Securities to the
underwriters selected as provided in Section 6.04(f) on the same terms and
conditions as apply to the Company or the Selling Shareholder, as applicable,
and (ii) if, at any time after giving written notice of its intention to
register any Company Common Stock pursuant to this Section 6.02(b) and prior to
the effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to register such
Company Common Stock, the Company shall give written notice to all such
Shareholders and, thereupon, shall be relieved of its obligation to register
any Registrable Securities in connection with such registration. No
registration effected under this Section 6.02 shall relieve the Company of its
obligations to effect a Demand Registration to the extent required by Section
6.01. The Company will pay all Registration Expenses in connection with each
registration of Registrable Securities requested pursuant to this Section 6.02.
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(c) If a registration pursuant to this Section 6.02 involves an
Underwritten Public Offering (other than in the case of an Underwritten Public
Offering requested by any Shareholder in a Demand Registration, in which case
the provisions with respect to priority of inclusion in such offering set forth
in Section 6.01(f) shall apply) and either (A) the Board (with good reason
relating to the success of the Offering) elects to preclude the DLJ Entities,
the Strategic Investors and/or the Management Shareholders from including
shares in the Company IPO or (B) the managing underwriter advises the Company
in writing that, in its view, the number of shares of Company Common Stock
which the Company and the selling Shareholders intend to include in such
registration exceeds the Maximum Offering Size, the Company will include in
such registration, in the following priority, up to the Maximum Offering Size:
(i) first, so much of the Company Common Stock proposed to be
registered for the account of the Company as would not cause the
offering to exceed the Maximum Offering Size; and
(ii) second, all Registrable Securities requested to be included
in such registration by any Shareholder pursuant to Section 6.02
(allocated, if necessary for the offering not to exceed the Maximum
Offering Size, pro rata among such Shareholders on the basis of the
relative number of shares of Registrable Securities so requested to
be included in such registration).
Section 6.03. Holdback Agreements. With respect to each and every
Underwritten Public Offering: (a) each Shareholder agrees not to effect any
public sale or distribution, including any sale pursuant to Rule 144, or any
successor provision, under the Securities Act, of any Registrable Securities,
and not to effect any such public sale or distribution of any other security of
the Company (in each case, other than as part of such Underwritten Public
Offering) during the 14 days prior to the effective date of the applicable
registration statement (except as part of such registration) or during the
period after such effective date that such managing underwriter and the Company
shall agree (but not to exceed 180 days or any such shorter period (but not
less than 90 days) as the managing underwriter may suggest).
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(b) Each Shareholder agrees that, so long as the DLJ Entities have
the right to request one or more Demand Registrations under Section 6.01, such
Shareholder will not effect any public sale or distribution, including any sale
pursuant to Rule 144, or any successor provision, under the Securities Act, of
any Registrable Securities, or any such public sale or distribution of any
other security of the Company, from the date that the Shareholder is first
notified of the Company's intention to make a Public Offering (it being
understood that, for so long as DLJMB has the right to designate one or more
members of the Board pursuant to Section 2.01(a), a resolution of the Board
authorizing the Company to initiate a Public Offering shall constitute notice
to the DLJ Entities of such intention) through the date that is 90 days
following completion of such Public Offering, unless the underwriting group,
not including Donaldson, Lufkin & Jenrette, Inc. or any of its controlled
Affiliates, permits such sales or distributions to be made by the Shareholders
during such 90 day period.
Section 6.04. Registration Procedures. Whenever Shareholders request
that any Registrable Securities be registered pursuant to Section 6.01 or 6.02
hereof, the Company will, subject to the provisions of such Sections, use all
reasonable efforts to effect the registration and the sale of such Registrable
Securities in accordance with the intended method of disposition thereof as
quickly as practicable, and in connection with any such request:
(a) The Company will as expeditiously as possible prepare and file
with the SEC a registration statement on any form selected by counsel for the
Company and which form shall be available for the sale of the Registrable
Securities to be registered thereunder in accordance with the intended method
of distribution thereof, and use all reasonable efforts to cause such filed
registration statement to become and remain effective for a period of not less
than 90 days (or such shorter period in which all of the Registrable Securities
of the Shareholders included in such registration statement shall have actually
been sold thereunder).
(b) The Company will, if requested, prior to filing a registration
statement or prospectus or any amendment or supplement thereto, furnish to each
Shareholder and each underwriter, if any, of the Registrable Securities covered
by such registration statement copies of such registration statement as
proposed to be filed, and thereafter the Company will furnish to such
Shareholder and underwriter, if any, such number of copies of such registration
statement, each amendment and
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supplement thereto (in each case including all exhibits thereto and documents
incorporated by reference therein), the prospectus included in such
registration statement (including each preliminary prospectus) and such other
documents as such Shareholder or underwriter may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such
Shareholder. Each Shareholder shall have the right to request that the Company
modify any information contained in such registration statement, amendment and
supplement thereto pertaining to such Shareholder and the Company shall use all
reasonable efforts to comply with such request, provided, however, that the
Company shall not have any obligation to so modify any information if so doing
would cause the prospectus to contain an untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein (in light of the circumstances under which they
were made) not misleading.
(c) After the filing of the registration statement, the Company will
promptly notify each Shareholder holding Registrable Securities covered by such
registration statement of any stop order issued or threatened by the SEC or any
state securities commission under state blue sky laws and take all reasonable
actions required to prevent the entry of such stop order or to remove it if
entered.
(d) The Company will use all reasonable efforts to (i) register or
qualify the Registrable Securities covered by such registration statement under
such other securities or blue sky laws of such jurisdictions in the United
States as any Shareholder holding such Registrable Securities reasonably (in
light of such Shareholder's intended plan of distribution) requests and (ii)
cause such Registrable Securities to be registered with or approved by such
other governmental agencies or authorities as may be necessary by virtue of the
business and operations of the Company and do any and all other acts and things
that may be reasonably necessary or advisable to enable such Shareholder to
consummate the disposition of the Registrable Securities owned by such
Shareholder; provided that the Company will not be required to (A) qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this paragraph (d), (B) subject itself to taxation
in any such jurisdiction or (C) consent to general service of process in any
such jurisdiction.
(e) The Company will immediately notify each Shareholder holding such
Registrable Securities covered by such registration statement, at any time when
a
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prospectus relating thereto is required to be delivered under the Securities
Act, of the occurrence of an event requiring the preparation of a supplement or
amendment to such prospectus so that, as thereafter delivered to the purchasers
of such Registrable Securities, such prospectus will not contain an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein (in light of the
circumstances under which they were made) not misleading and promptly prepare
and make available to each such Shareholder and file with the SEC any such
supplement or amendment.
(f) The Board will pick the underwriter(s) of any and all registered
offerings of Company Common Stock, except that in connection with (i) any
Demand Registration requested by DLJMB or their Permitted Transferees, DLJMB
and the Company will agree on the lead underwriter or (ii) any registration for
the account of the Company, DLJMB has the right to veto one lead underwriter.
Any Affiliate of Donaldson, Lufkin & Jenrette, Inc. may be considered for
selection as underwriter for an Underwritten Public Offering. The Company will
enter into customary agreements (including an underwriting agreement in
customary form) and take such other actions as are reasonably required in order
to expedite or facilitate the disposition of such Registrable Securities,
including the engagement of a "qualified independent underwriter" in connection
with the qualification of the underwriting arrangements with the NASD.
(g) Upon execution of confidentiality agreements in form and
substance reasonably satisfactory to the Company, the Company will make
available for inspection by any Shareholder and any underwriter participating
in any offering pursuant to a registration statement being filed by the Company
pursuant to this Section 6.04 and any attorney, accountant or other
professional retained by any such Shareholder or underwriter (collectively, the
"INSPECTORS"), all financial and other records, pertinent corporate documents
and properties of the Company (collectively, the "RECORDS") as shall be
reasonably requested by any such Person, and cause the Company's officers,
directors and employees to supply all information reasonably requested by any
Inspectors in connection with such registration statement.
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(h) The Company will furnish to each such Shareholder and to each
such underwriter, if any, a signed counterpart, addressed to such underwriter
and the participating Shareholders, of (i) an opinion or opinions of counsel to
the Company and (ii) a comfort letter or comfort letters from the Company's
independent public accountants, each in customary form and covering such
matters of the type customarily covered by opinions or comfort letters, as the
case may be, as a majority in interest of such Shareholders or the managing
underwriter therefor reasonably requests.
(i) The Company will otherwise use all reasonable efforts to comply
with all applicable rules and regulations of the SEC, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering a period of 12 months, beginning within three months after the
effective date of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act.
(j) The Company may require each such Shareholder (i) to promptly
furnish in writing to the Company information regarding the distribution of the
Registrable Securities as the Company may from time to time reasonably request,
(ii) to provide such other information as may be legally required in connection
with such registration and (iii) to take such other acts as are reasonably
necessary under the circumstances.
(k) Each such Shareholder agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in Section
6.04(e), such Shareholder will forthwith discontinue disposition of Registrable
Securities pursuant to the registration statement covering such Registrable
Securities until such Shareholder's receipt of the copies of the supplemented
or amended prospectus contemplated by Section 6.04(e), and, if so directed by
the Company, such Shareholder will deliver to the Company all copies, other
than any permanent file copies then in such Shareholder's possession, of the
most recent prospectus covering such Registrable Securities at the time of
receipt of such notice. In the event that the Company shall give such notice,
the Company shall extend the period during which such registration statement
shall be maintained effective (including the period referred to in Section
6.04(a)), by the number of days during the period from and including the date
of the giving of notice pursuant
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to Section 6.04(e) to the date when the Company shall make available to such
Shareholder a prospectus supplemented or amended to conform with the
requirements of Section 6.04(e).
Section 6.05. Indemnification by the Company. The Company agrees to
indemnify and hold harmless each Shareholder holding Registrable Securities
covered by a registration statement, its officers, directors, employees,
partners and agents, and each Person, if any, who controls such Shareholder
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act from and against any and all losses, claims, damages, liabilities
and expenses caused by (i) any untrue statement or alleged untrue statement of
a material fact contained in any registration statement, prospectus, offering
circular or other offering document relating to the Registrable Securities (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) or any preliminary prospectus, or (ii) any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading (in the case of any
prospectus, in light of the circumstances under which they were made), except
insofar as such losses, claims, damages or liabilities are caused by any such
untrue statement or omission or alleged untrue statement or omission so made in
strict conformity with information furnished in writing to the Company by such
Shareholder or on such Shareholder's behalf expressly for use therein or (iii)
any violation by the Company of the Securities Act or any rule or regulation
promulgated thereunder applicable to the Company, or any blue sky or state
securities laws or any rule or regulation thereunder applicable to the Company;
provided that with respect to any untrue statement or omission or alleged
untrue statement or omission made in any preliminary prospectus, or in any
prospectus, as the case may be, the indemnity agreement contained in this
paragraph shall not apply to the extent that any such loss, claim, damage,
liability or expense results from the fact that a current copy of the
prospectus (or, in the case of a prospectus, the prospectus as amended or
supplemented) was not sent or given to the Person asserting any such loss,
claim, damage, liability or expense at or prior to the written confirmation of
the sale of the Registrable Securities concerned to such Person if it is
determined that the Company has provided such prospectus to such Shareholder in
a timely manner prior to such sale and it was the responsibility of such
Shareholder under the Securities Act to provide such Person with a current copy
of the prospectus (or such
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amended or supplemented prospectus, as the case may be) and such current copy
of the prospectus (or such amended or supplemented prospectus, as the case may
be) would have cured the defect giving rise to such loss, claim, damage,
liability or expense. The Company also agrees to indemnify any underwriters of
the Registrable Securities and each accountant, attorney and other Person who
participates in the offering of the Registrable Securities on behalf of the
Company or any selling shareholder, their officers and directors and each
person who controls such underwriters and other Persons on substantially the
same basis as that of the indemnification of the Shareholders provided in this
Section 6.05.
Section 6.06. Indemnification by Participating Shareholders. Each
Shareholder holding Registrable Securities included in any registration
statement agrees, severally but not jointly, to indemnify and hold harmless the
Company, its officers, directors and agents and each Person, if any, who
controls the Company within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from the Company to such Shareholder, but only (i) with respect to
information furnished in writing by such Shareholder or on such Shareholder's
behalf expressly for use in any registration statement, prospectus, offering
circular or other document relating to the Registrable Securities, or any
amendment or supplement thereto, or any preliminary prospectus or (ii) to the
extent that any loss, claim, damage, liability or expense described in Section
6.05 results from the fact that a current copy of the prospectus (or, in the
case of a prospectus, the prospectus as amended or supplemented) was not sent
or given to the Person asserting any such loss, claim, damage, liability or
expense at or prior to the written confirmation of the sale of the Registrable
Securities concerned to such Person if it is determined that it was the
responsibility of such Shareholder to provide such Person with a current copy
of the prospectus (or such amended or supplemented prospectus, as the case may
be) and such current copy of the prospectus (or such amended or supplemented
prospectus, as the case may be) would have cured the defect giving rise to such
loss, claim, damage, liability or expense. Each such Shareholder shall be
prepared, if required by the underwriting agreement, to indemnify and hold
harmless any underwriters of the Registrable Securities and each accountant,
attorney and other Person who participates in the offering of the Registrable
Securities on behalf of the Company or any selling shareholder, their officers
and directors and each person who controls such underwriters and other Persons
on substantially the same basis as that of the indemnification of the Company
provided in this Section 6.06. As a condition to including Registrable
Securities in any registration statement
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filed in accordance with Article 6, the Company may require that it shall have
received an undertaking reasonably satisfactory to it from any underwriter to
indemnify and hold it harmless to the extent customarily provided by
underwriters with respect to similar securities.
Section 6.07. Conduct of Indemnification Proceedings. In case any
proceeding (including any governmental investigation) shall be instituted
involving any Person in respect of which indemnity may be sought pursuant to
this Article 6, such Person (an "INDEMNIFIED PARTY"), after the Indemnified
Party has actual notice of any proceeding as to which indemnity may be sought,
shall promptly notify the Person against whom such indemnity may be sought (the
"INDEMNIFYING PARTY") in writing and the Indemnifying Party shall assume the
defense thereof, including the employment of counsel reasonably satisfactory to
such Indemnified Party, and shall assume the payment of all fees and expenses;
provided that the failure of any Indemnified Party so to notify the
Indemnifying Party shall not relieve the Indemnifying Party of its obligations
hereunder except to the extent that the Indemnifying Party is materially
prejudiced by such failure to notify. In any such proceeding, any Indemnified
Party shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party unless (i)
the Indemnifying Party and the Indemnified Party shall have mutually agreed to
the retention of such counsel or (ii) in the reasonable judgment of such
Indemnified Party representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. It
is understood that the Indemnifying Party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) at any time for all such Indemnified Parties,
and that all such fees and expenses shall be reimbursed as they are incurred.
In the case of any such separate firm for the Indemnified Parties, such firm
shall be designated in writing by the Indemnified Parties. The Indemnifying
Party shall not be liable for any settlement of any proceeding effected without
its written consent, but if settled with such consent, or if there be a final
judgment for the plaintiff, the Indemnifying Party shall indemnify and hold
harmless such Indemnified Parties from and against any and all losses, claims,
damages, liabilities and expenses or liability (to the extent stated above) by
reason of such settlement or judgment. No Indemnifying Party shall, without the
prior written consent of the Indemnified Party, effect any settlement of any
pending or threatened proceeding
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in respect of which any Indemnified Party is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Party, unless
such settlement includes an unconditional release of such Indemnified Party
from all liability arising out of such proceeding.
Section 6.08. Contribution. If the indemnification provided for in
this Article 6 is held by a court of competent jurisdiction to be unavailable
to the Indemnified Parties in respect of any losses, claims, damages,
liabilities or expenses referred to herein, then each such Indemnifying Party,
in lieu of indemnifying such Indemnified Party, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such losses, claims,
damages, liabilities or expenses (i) as between the Company and the
Shareholders holding Registrable Securities covered by a registration statement
and their related Indemnified Parties on the one hand and the underwriters,
other participating Persons and their related Indemnified Parties on the other,
in such proportion as is appropriate to reflect the relative benefits received
by the Company and such Shareholders on the one hand and the underwriters and
other participating Persons on the other, from the offering of the
Shareholders' Registrable Securities, or if such allocation is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits but also the relative fault of the Company and such
Shareholders on the one hand and of such underwriters and other participating
Persons on the other in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations and (ii) as between the Company and
their related Indemnified Parties on the one hand and each such Shareholder and
their related Indemnified Parties on the other, in such proportion as is
appropriate to reflect the relative fault of the Company and of each such
Shareholder in connection with such statements or omissions, as well as any
other relevant equitable considerations. The relative benefits received by the
Company and such Shareholders on the one hand and such underwriters and other
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participating Persons on the other shall be deemed to be in the same proportion
as the total proceeds from the offering (net of underwriting discounts and
commissions but before deducting expenses) received by the Company and such
Shareholders bear to the total underwriting discounts and commissions received
by such underwriters and fees received by other participating Persons, in each
case as set forth in the table on the cover page of the prospectus. The
relative fault of the Company and such Shareholders on the one hand and of such
underwriters and other participating Persons on the other shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company and such
Shareholders or by such underwriters and other participating Persons. The
relative fault of the Company on the one hand and of each such Shareholder on
the other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
such party, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The Company and the Shareholders agree that it would not be just and
equitable if contribution pursuant to this Section 6.08 were determined by pro
rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an Indemnified Party as a
result of the losses, claims, damages, liabilities or expenses referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such Indemnified Party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 6.08, no
underwriter shall be required to contribute any amount in excess of the
underwriting discount applicable to Securities purchased by such underwriter in
such offering, less the aggregate amount of any damages which such underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission, and no Shareholder shall be required
to contribute any amount in excess of the amount by which the total price at
which the Registrable Securities of such Shareholder were offered to the public
exceeds the amount of any damages which such Shareholder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled
to contribution from any person who was not guilty of such fraudulent
misrepresentation. Each Shareholder's obligation to contribute pursuant to this
Section 6.08 is several in the proportion that the proceeds of the offering
received by such Shareholder bears to the total proceeds of the offering
received by all such Shareholders and not joint.
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Section 6.09. Participation in Public Offering. No Person may
participate in any Underwritten Public Offering hereunder unless such Person
(a) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements and the provisions
of this Agreement in respect of registration rights.
Section 6.10. Cooperation by the Company. In the event any Shareholder
shall transfer any Registrable Securities pursuant to Rule 144A under the
Securities Act, the Company shall cooperate, to the extent commercially
reasonable, with such Shareholder and shall provide to such Shareholder such
information as such Shareholder shall reasonably request, provided such
Shareholder shall pay any material expenses incurred by the Company in
connection with its cooperation.
Section 6.11. No Transfer of Registration Rights. None of the rights
of Shareholders under this Article 6 shall be assignable by any Shareholder to
any Person acquiring Securities in any Public Offering or pursuant to Rule 144A
of the Securities Act.
Section 6.12. Limitations on Subsequent Registration Rights. The
Company shall not enter into any agreement with any holder or prospective
holder of any securities of the Company that would allow such holder or
prospective holder to include such securities in any registration filed
pursuant to Section 6.01 or 6.02, (a) unless under the terms of such agreement,
such holder or prospective holder may include such securities in any such
registration only to the extent that the inclusion of such securities would not
reduce the amount of the Registrable Securities of the Shareholders included
therein or (b) on terms otherwise more favorable to such holder or prospective
holder than the registration rights provided in this Agreement.
Section 6.13. Obligation to Register Nextel and NWIP Securities. In
connection with (i) any shareholder action required to be taken in connection
with the exercise of a Put Right under Section 4.01, (ii) any shareholder
action required to be taken in connection with Option B under Section 7.04(b),
or (iii) any Public
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Offering, if required by applicable law, NWIP will cause
Nextel to register the Put Rights, NWIP Call Right and/or Nextel Shares, as the
case may be (the "Nextel Securities"), on the appropriate registration form
under the Securities Act, and each of NWIP and Nextel will use its reasonable
best efforts to (A) comply with the Securities Act and the Securities Exchange
Act of 1934 and all applicable rules and regulations thereunder, (B) register
or qualify the relevant securities under applicable blue sky laws and (C)
comply with all other laws applicable to the Nextel Securities. NWIP and Nextel
will complete any such registration of the Nextel Securities in a timely manner
that permits the Shareholders and/or the Company to comply with the relevant
time periods set forth in this Agreement and the Company will use its
reasonable best efforts to assist NWIP and Nextel in the completion of any such
registration and, to the extent any Shareholder has agreed to take any action
or refrain from taking any action hereunder in connection with a registration
of the Company's Shares, such Shareholder shall take such action or refrain
from taking such action in connection with a registration of Nextel Securities,
provided that in no event will such Shareholder be obligated to refrain from
selling Nextel Shares upon receipt of such Nextel Shares pursuant to this
Agreement or the Joint Venture Agreement. NWIP and Nextel will be responsible
for paying promptly any additional costs and expenses incurred by either of
them or the Company in connection with the registration of the Nextel
Securities.
ARTICLE 7
CERTAIN COVENANTS AND AGREEMENTS
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Section 7.01. Confidentiality. (a) Each Shareholder hereby agrees that
Confidential Information (as defined below) furnished and to be furnished to it
was and will be made available in connection with such Shareholder's investment
in the Company. Each Shareholder agrees that it will use the Confidential
Information only in connection with its investment in the Company and not for
any other purpose. Each Shareholder further acknowledges and agrees that it
will not disclose any Confidential Information to any Person; provided that
Confidential Information may be disclosed (i) to such Shareholder's
Representatives (as defined below) in the normal course of the performance of
their duties or to any financial institution providing credit to such
Shareholder, (ii) to the extent required by applicable law, rule or regulation
(including complying with any oral or written questions, interrogatories,
requests for information or documents, subpoena, civil investigative demand or
similar process to which a Shareholder is subject; provided that such
Shareholder gives the Company prompt notice of such request(s), to the extent
practicable, so that the Company may seek an appropriate protective order or
similar relief (and the Shareholder shall cooperate with such efforts by the
Company, and shall in any event make only the minimum disclosure required by
such law, rule or regulation)), (iii) to any Person to whom such Shareholder is
contemplating a transfer of its Shares (provided that such transfer would not
be in violation of the provisions of this Agreement and as long as such Third
Party is advised of the confidential nature of such information and agrees to
be bound by a confidentiality agreement in form and substance satisfactory to
the Company and consistent with the provisions hereof) or (iv) if the prior
written consent of the Board shall have been obtained. Nothing contained herein
shall prevent the use (subject, to the extent possible, to a protective order)
of Confidential Information in connection with the assertion or defense of any
claim by or against the Company or any Shareholder.
(b) "CONFIDENTIAL INFORMATION" means any information concerning the
Company and Persons which are or become its Subsidiaries or the financial
condition, business, operations or prospects of the Company and Persons which
are or become its Subsidiaries in the possession of or furnished to any
Shareholder (including, without limitation, by virtue of its present or former
right to designate a director of the Company); provided that the term
Confidential Information does not include information which (i) is or becomes
generally available to the public other than as a result of a disclosure by a
Shareholder or its partners, directors, officers, employees, agents, counsel,
investment advisers or representatives (all
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such persons being collectively referred to as "REPRESENTATIVES") in violation
of the Subscription Agreement or this Agreement, (ii) is or was available to
such Shareholder on a nonconfidential basis prior to its disclosure to such
Shareholder or its Representatives by the Company or (iii) was or becomes
available to such Shareholder on a non-confidential basis from a source other
than the Company, provided that such source is or was (at the time of receipt
of the relevant information) not, to the best of such Shareholder's knowledge,
bound by a confidentiality agreement with (or other confidentiality obligation
to) the Company or another Person.
Section 7.02. Reports. The Company will furnish each Shareholder with
the quarterly and annual financial reports that the Company is required to file
with the SEC pursuant to Section 13 or Section 15(d) of the Exchange Act.
Section 7.03. Subsequent Deployment of Alternative Digital
Transmission Technology. If the NDS elect to deploy an alternative digital
transmission technology on its 800 MHZ SMR frequencies on a nationwide basis (a
"TECHNOLOGY CHANGE") NWIP must notify the Company (a "TECHNOLOGY CHANGE
NOTICE"). If such Technology Change results in the Company being unable to
provide its customers with nationwide service comparable to the service
available to such customers immediately prior to the Technology Change and the
Company notifies NWIP within 60 days of receipt of the Technology Change Notice
that the Technology Change is materially adverse to the Company, then NWIP will
have the option to either (i) provide the Company at no charge with replacement
equipment that is compatible with the Technology Change together with the
resources necessary to install such equipment so that the Company remains in
the same operational position that it was in prior to the Technology Change or
(ii) purchase all of the Company Capital Stock at a purchase price equal to (A)
if the Technology Change is implemented prior to the Initial Public Offering,
the greater of Fair Market Value (determined as if neither the Company nor the
NDS needed to implement the Technology Change and without diminishing the value
of the Company due to the fact that the Technology Change had not been
implemented) or Investment Formula Price or (B) if the Technology Change is
implemented after the Initial Public Offering, the Fair Market Value
(determined as if neither the Company nor the NDS needed to implement the
Technology Change and without diminishing the value of the Company due to the
fact that the Technology Change had not been implemented). NWIP must notify
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the Company of its election within 60 days of receipt of notice from the
Company and, if NWIP elects to purchase all the Company Capital Stock, such
purchase must be consummated within 90 days of its election or as otherwise
permitted by Section 7.05, subject to all third party consents and the receipt
of customary representations and warranties (it being understood that in no
event shall a Shareholder be obligated to make any representations and
warranties, or to provide any indemnities, other than title to the Company
Capital Stock held by such Person, such title being free and clear of all liens
and encumbrances, and such Person's authority, authorization and right to enter
into and consummate the sale without contravention of any law or agreement, and
without the need for any governmental or other approval with respect to its
Shares).
Section 7.04. Limitations on Subsequent Changes to Company's
Operations. (a) If at any time, and from time to time, after the date hereof,
NWIP requires the Company to implement a change in the Company's business,
operations or systems (including, without limitation, changes to the Service
Pricing Structure or the Required Services or changes relating to Improvements)
under the Joint Venture Agreement (each such change, a "NEXTEL REQUIRED
UPGRADE") and the Company determines that it can not implement it without
causing either (i) the offering of wireless communications services in the
Territory by the Company and its Affiliates to be materially more costly or
difficult to manage than the NDS's offering of wireless communication services
in Comparable Service Areas (as defined in the Joint Venture Agreement), or
(ii) a payment or other material default under the Company's material debt
instruments or any other material adverse financial effect on the Company and
its Subsidiaries, taken as a whole, the Company may elect not to implement the
Nextel Required Upgrade by notifying NWIP of its determination prior to the
date the Company is required to implement such Nextel Required Upgrade (the
"ADVERSE IMPACT NOTICE"). The Adverse Impact Notice shall provide (x) a brief
summary of the problems and/or costs the Company would expect to encounter in
implementing the Nextel Required Upgrade and (y) a dollar estimate of the
adverse financial impact to the Company of such implementation. Within 30 days
of providing NWIP with the Adverse Impact Notice, the Company shall prepare and
deliver to NWIP a profit and loss analysis of the Nextel Required Upgrade (the
"NEXTEL REQUIRED UPGRADE ANALYSIS") which analysis shall provide a summary of
(A) the benefits and burdens of implementing the Nextel Required Upgrade and
any Nextel Required Upgrade
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previously implemented, (B) the expected profits and losses to the Company if
the Nextel Required Upgrade is implemented, (C) any prior changes implemented
by the Company at the Nextel Group's request and (D) reasonable supporting
detail for all of the foregoing. The Company will supplement such analysis and
provide additional detail as NWIP shall reasonably request.
(b) Within 30 days of receipt of the Nextel Required Upgrade
Analysis, NWIP will notify the Company that the Company (i) will not have to
implement the Nextel Required Upgrade, (ii) will be required to implement some
or all of the Nextel Required Upgrade and will be subsidized by NWIP in
accordance with paragraph 7.04(g), or (iii) will be required to implement some
or all of the Nextel Required Upgrade and will not be subsidized by NWIP (the
"NEXTEL DETERMINATION"). The Nextel Determination shall be final and binding on
the Company unless NWIP elects alternative (iii), in which case the Board may
choose to (A) implement the Nextel Required Upgrade without a subsidy ("OPTION
A"), (B) allow the Non-Nextel Shareholders to elect whether to (x) sell all
their Company Capital Stock to Nextel at the Investment Formula Price in
accordance with Section 4.01 or (y) cause the Company to implement the Nextel
Required Upgrade without a subsidy ("OPTION B"), or (C) request arbitration to
determine the subsidy NWIP shall be required to pay in connection with the
implementation of the Nextel Required Upgrade ("OPTION C").
(c) In the event that the Board, by written notice to NWIP within 10
days of receipt of the Nextel Determination, causes the Company to elect Option
C, then the provisions of Section 12.7 of the Joint Venture Agreement shall
apply and after the arbitrators present their findings, the Company, by written
notice to NWIP within 10 days of receipt of the arbitrators determination shall
choose either Option A or Option B or elect to implement the Nextel Required
Upgrade and receive the subsidy as determined by the arbitrators ("Option D").
(d) In the event that the Board elects Option D, NWIP by written
notice to the Company within 10 days of receipt of the Company's election under
Section 7.04(c), shall: (i) inform the Company that it does not need to
implement the Nextel Required Upgrade; (ii) abide by the arbitration and pay
the subsidy; or (iii) determine the Fair Market Value of the Company generally
in accordance with Section 4.03, in which case, after such determination, it
may elect to proceed with
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option (d)(i) or (d)(ii) above or it may elect to purchase all of the Company
Capital Stock (other than the Series B Preferred) at a purchase price equal to
the higher of (A) the Investment Formula Price or (B) the Fair Market Value and
otherwise generally in accordance with Section 4.01.
(e) If NWIP elects to exercise its call option under Section
7.04(d)(iii) then the Company, by written notice to NWIP within 10 days of
receipt of NWIP's election, may elect to cancel such call by electing to
implement the change without the receipt of any subsidy from NWIP.
(f) In the event that any expenditure of funds and/or incurrence of
debt by the Company is required to implement a Nextel Required Upgrade, and
such expenditure or incurrence would result in an Applicable Default or Event
of Default under any material debt document to which the Company is a party (a
"DEFAULT OUTCOME"), then the Company and NWIP shall negotiate in good faith to
develop or identify alternative measures or procedures to (i) implement such
Nextel Required Upgrade, (ii) fund such expenditure, or (iii) substitute for
the incurrence of such debt such that the outcome would not result in such a
Default Outcome, and shall (assuming alternative measures or procedures are
identified that are reasonably acceptable to each of the Company and NWIP)
cooperate to implement the Nextel Required Upgrade as promptly as practicable.
Without limiting the generality of the foregoing, the Company shall be required
to implement a Required Service through any alternative measure or procedure
suggested by NWIP so long as such measures or procedures do not involve actions
or conditions that are reasonably likely to result in a Default Outcome and
either (A) will not result in net losses to the Company, or (B) NWIP agrees to
subsidize any such net losses. Except as provided above, if implementation of a
Nextel Required Upgrade would result in a Default Outcome, the Company shall
not be required to implement such Nextel Required Upgrade. As used herein with
respect to a Nextel Required Upgrade, an "APPLICABLE DEFAULT OR EVENT OF
DEFAULT" means any material default or event of default under any material debt
document to which the Company is a party, other than any default or event of
default under a Disqualified Provision of any such debt document. As used
herein with respect to a Nextel Required Upgrade, "DISQUALIFIED PROVISION"
means any provision (i) entered into by the Company within the 12-month period
preceding the date that NWIP notifies the Company that it is required to
implement a Nextel Required
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Upgrade (except a provision that the Company had become legally obligated to
enter into prior to such 12-month period) and (ii) if the Company has notified
NWIP of such provision, as to which NWIP has within 15 days thereafter advised
the Company in reasonable detail of the nature of such pending or potential
Nextel Required Upgrade and that NWIP believes in good faith such provision
could result in a payment or other material default or event of default
thereunder if such operational changes or upgrades occur, provided that a
provision shall not be a Disqualified Provision if a payment or other material
default or event of default under such debt document would have resulted even
if such provision had not been entered into.
(g) If NWIP is required to pay a subsidy pursuant to this Section
7.04, then the Company and NWIP shall negotiate in good faith to determine when
NWIP shall make such subsidy payments to the Company, with the first such
payment to be made no later than the date on which the Company has implemented
the Nextel Required Upgrade. The Company and NWIP agree that any subsidy paid
by NWIP to the Company will be subject to adjustment such that the subsidy will
not exceed the least of (i) the Company's anticipated aggregate net losses set
forth in the Nextel Required Upgrade Analysis, (ii) the Company's actual net
losses associated with such Nextel Required Upgrade through the date of the
subsidy payment, (iii) the anticipated cumulative losses for all Nextel
Required Upgrades net of all cumulative anticipated profits for all Nextel
Required Upgrades since the date hereof as set forth in the most recent Nextel
Required Upgrade Analysis, or (iv) the actual cumulative losses for all Nextel
Required Upgrades net of all actual cumulative profits for all Nextel Required
Upgrades from the date hereof through the date of the subsidy payment.
(h) For purposes of this Section 7.04, the following terms shall have
the following meanings:
"IMPROVEMENTS" means any changes, modifications, upgrades or
enhancements to the iDEN technology or any other Nextel or NDS network
components.
"REQUIRED SERVICES" means the Nextel and/or NDS products, services and
capabilities identified on Exhibit 6.1 to the Joint Venture Agreement.
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"SERVICE PRICING STRUCTURE" means the Nextel pricing structure
described in Exhibit 9.1A to the Joint Venture Agreement.
Section 7.05. Delivery of Nextel Stock. (a) Any payment for Company
Capital Stock purchased by NWIP from the Company or the Shareholders pursuant
to Section 4.01, 4.02, 4.04, 5.01, 5.02, 5.03, 7.03 or 7.04 may be made at
NWIP's election, by delivery of listed Nextel common stock (the "NEXTEL
SHARES"), provided that (i) NWIP delivers such Nextel Shares within 180 days of
the date of closing for the purchase of such Company Capital Stock (the
"PURCHASE DATE"), and (ii) NWIP (and Nextel with respect to Section 7.05(d)
only) agree to comply with the requirements set forth in this Section 7.05.
Notwithstanding the immediately preceding sentence, if NWIP is (i) preempting a
Company IPO pursuant to Section 5.03, the consideration paid by NWIP for the
relevant securities shall be cash unless provisions in Nextel's agreements for
borrowed money restrict Nextel's or NWIP's ability to pay cash, in which case
NWIP shall pay the applicable purchase price in cash to the extent permitted
under such agreements and deliver (within 90 days of the date of the proposed
Company IPO) an amount of Nextel Shares equivalent (in value) to the difference
between the amount of cash Nextel is permitted to pay under such agreements and
the purchase price of the securities or (ii) exercising its rights under
Section 5.01 or 5.02, the consideration paid by NWIP for the relevant
securities shall be cash or an amount of Nextel Shares equivalent (in value) to
the purchase price, which shares shall be delivered on the Purchase Date.
Notwithstanding the two preceding sentences, if NWIP elects to deliver Nextel
Shares, which election NWIP may change at any time prior to the delivery of
such shares, NWIP will use its reasonable best efforts to deliver Nextel Shares
to the Company or the Shareholders as promptly as practicable, provided that
(x) if NWIP fails to deliver the Nextel Shares or cash within 60 days of the
Purchase Date, it shall pay interest on the purchase price at a rate of 10% per
annum from the Purchase Date and (y) if NWIP fails to deliver Nextel Shares in
accordance with this Section 7.05, NWIP shall deliver cash no later than the
last day of such relevant time period.
(b) If NWIP delivers Nextel Shares, in lieu of cash, pursuant to
Section 7.05(a), NWIP shall use its reasonable best efforts to assist each
Person receiving such Nextel Shares in converting such Nextel Shares to cash
within 30 days of delivery of the Nextel Shares. In the event that Nextel
Shares are delivered to the Company in connection with NWIP's preemption of a
Company IPO, NWIP and
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the Company shall each use their reasonable best efforts to convert promptly
such Nextel Shares into cash. If such Nextel Shares are not converted into cash
within 30 days of their delivery to the Company, NWIP shall immediately pay the
required amount in cash.
(c) NWIP shall not be deemed to have delivered Nextel Shares or to
have discharged its payment obligations under this Agreement unless, at the
time of delivery of such Nextel Shares, (i) NWIP delivers to the Board and the
selling Shareholders a SEC "no action" letter or an opinion of counsel
reasonably acceptable to the Board (excluding the NWIP Designee) that provides
that, assuming that the Shareholder receiving the Nextel Shares is not an
Affiliate of Nextel, the shares to be received by that Shareholder can be
freely sold without complying with the registration requirements of the
Securities Act or (ii) the SEC has declared effective a registration statement
on the appropriate form, Nextel has caused such shares to be quoted on the
NASDAQ National Market and the recipients shall have a continuous period of 60
days from the date of delivery to sell such shares under such registration
statement.
(d) In connection with a registration pursuant to the immediately
preceding clause (c)(ii), (A) Nextel will (x) be responsible for promptly
paying all registration expenses that are substantially similar to the
Registration Expenses that will be paid by the Company pursuant to the terms of
this Agreement, (y) indemnify the relevant Shareholders on terms substantially
similar to those set forth in Sections 6.05, 6.07 and 6.08 and (z) comply with
registration procedures substantially similar to those set forth in Sections
6.04, 6.09 and 6.10 and (B) the Shareholders will indemnify Nextel on terms
substantially similar to those set forth in Sections 6.06, 6.07 and 6.08 and,
if applicable, cooperate to effect the registration on terms substantially
similar to those applicable to Shareholders as set forth in Section 6.04.
(e) For purposes of any payment by NWIP in Nextel Shares, the value
of Nextel common stock will be based on the average Closing Price of Nextel
common stock for the ten Trading Days immediately preceding the date of
delivery of the Nextel Shares. If NWIP elects to consummate a transaction with
Nextel Shares instead of cash, NWIP will take all reasonable steps requested by
the Board (with any NWIP Designee abstaining) to permit the purchase to be tax
deferred to the relevant Shareholders.
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Section 7.06. Senior Management Resignation. If either John Chapple or
John Thompson provides notice that he is resigning for Good Reason pursuant to
clause (v) of the definition of "Good Reason" as defined in their employment
agreements with the Company, within 45 days of such notice, prior to the
closing of a Section 3.08 Sale NWIP will have an obligation to replace such
executive with an executive approved by DLJMB (which approval will not be
unreasonably withheld). If NWIP is unable to complete such replacement within
such 45-day period, the Board will be responsible for replacing such
executives. In any such event, NWIP will be responsible for cash compensation
(including, without limitation, any bonus payments other than "signing" bonus
consideration) and any benefit programs for such replacement executives and
NWIP will be responsible for the cost of equity incentives (or "signing" bonus
consideration) needed to attract such replacement executives.
ARTICLE 8
MISCELLANEOUS
Section 8.01. Entire Agreement. This Agreement and the Transaction
Documents constitute the entire agreement among the parties with respect to the
subject matter hereof and thereof and supersede all prior and contemporaneous
agreements and understandings, both oral and written (including without
limitation the Memorandum of Agreement, dated as of May 1, 1998, among Wireless
Investment Partners, L.L.C., NWIP and Nextel, the letter agreement, dated
August 13, 1998, among DLJMB, DLJ Capital Corp., Nextel, the Company and Eagle
River and the letter agreement dated December 4, 1998, among DLJMB, DLJ Capital
Corp., Nextel, the Company, Eagle River, MDP and Motorola) between the parties
with respect to the subject matter hereof and thereof.
Section 8.02. Binding Effect; Benefit. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
heirs, successors, legal representatives and permitted assigns. Nothing in this
Agreement, expressed or implied, is intended to confer on any Person other than
the parties hereto and the Indemnified Parties, and their respective heirs,
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successors, legal representatives and permitted assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
Section 8.03. Assignability. Neither this Agreement nor any right,
remedy, obligation or liability arising hereunder or by reason hereof shall be
assignable by the Company or any Shareholder, except in connection with a
transfer of shares of Company Common Stock pursuant to the terms hereof. Any
Person acquiring shares of Company Capital Stock who is required by the terms
of this Agreement to agree in writing to be bound by the terms of this
Agreement shall execute and deliver to the Company an agreement to be bound by
this Agreement and shall thenceforth be a "SHAREHOLDER".
Section 8.04. Amendment; Waiver; Termination. (a) No provision of this
Agreement may be waived except by an instrument in writing executed by the
party against whom the waiver is to be effective. No provision of this
Agreement may be amended or otherwise modified except by an instrument in
writing executed by the Company with approval of the Board and holders of at
least 75% of the shares of Voting Stock held by the Shareholders at the time of
such proposed amendment or modification.
(b) In addition, any amendment or modification of any provision of
this Agreement that would have a materially disproportionate adverse effect on
one Shareholder as opposed to another Shareholder may be effected only with the
consent of such effected Shareholder. Without limiting the generality of the
foregoing, neither clause (ii) of the definition of Permitted Transferee nor
Sections 4.01(g), 4.02(d), 4.04 or 8.12(b) shall be amended or otherwise
modified without the consent of holders of at least 50% of the Fully Diluted
Common Stock then held by the Management Shareholders.
(c) This Agreement shall terminate on the fifteenth anniversary of
the date hereof unless earlier terminated. Notwithstanding the preceding
sentence, Sections 7.01, 7.03, 7.04 and 7.05 shall survive until the Joint
Venture Agreement is terminated.
Section 8.05. Notices. All notices and other communications given or
made pursuant hereto or pursuant to any other agreement among the parties,
unless otherwise specified, shall be in writing and shall be deemed to have
been
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duly given and received when sent by fax (with confirmation in writing via
first class U.S. mail) or delivered personally or on the third Business Day
after being sent by registered or certified U.S. mail (postage prepaid, return
receipt requested) to the parties at the fax number or address set forth below
or at such other addresses as shall be furnished by the parties by like notice:
if to the Company, to:
Nextel Partners, Inc.
4500 Carillon Point
Kirkland, WA 98033
Fax: (425) 828-8098
Attention: General Counsel
with a copy to:
Friedman Kaplan & Seiler LLP
875 Third Avenue, 8th Floor
New York, NY 10022
Fax: (212) 355-6401
Attention: Gary D. Friedman
and to DLJ Entities as set forth below and each other Shareholder at
its address set forth on the signature pages attached hereto
if to DLJ Entities, to:
DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
with a copy to:
Madison Dearborn Capital
Partners II, L.P.
3 First National Plaza
93
<PAGE>
Suite 3800
Chicago, Illinois 60602
Fax: 312-895-1226
and to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Fax: (212) 450-4800
Attention: John Buttrick
Any Person (other than a DLJ Entity) who becomes a Shareholder shall provide
its address and fax number to the Company, which shall promptly provide such
information to each other Shareholder.
Section 8.06. Fees and Expenses. (a) The Company shall pay the
following out-of-pocket costs and expenses of Nextel, Eagle River and DLJMB;
(i) Pre-Closing Expenditures incurred by Eagle River, the amount of which will
be estimated and provided to the Company, DLJMB and Eagle River at least ten
days prior to Closing and will be subject to post-closing adjustment and
reconciliation as set forth in Section 8.06(c), and (ii) the reasonable fees
and expenses of counsel for Nextel, Eagle River and DLJMB, incurred through the
Closing Date in connection with the preparation of this Agreement and the other
Transaction Documents and the consummation of the transactions contemplated
hereby and thereby.
(b) Except for the Company's obligation to pay the fees and expenses
set forth in Section 8.06(a) and Registration Expenses as provided herein, and
except as otherwise expressly provided in any of the other Transaction
Documents, all other attorneys' fees and expenses incurred by any
Shareholder(s) in connection with this Agreement and the other Transaction
Documents shall be paid by such Shareholder(s).
(c) The Company shall reimburse NWIP and Eagle River for Pre- Closing
Expenditures set forth in detailed written estimate provided to the Company,
DLJMB and each other Shareholder at least ten days prior to Closing. Within 60
94
<PAGE>
days after the date hereof, representatives of the Company shall meet with
representatives of NWIP and Eagle River to adjust such estimates and to agree
on the amount of any additional reimbursement by (or refund to) the Company.
Any dispute that arises as a result of such discussions shall be submitted to
arbitration in accordance with the dispute resolution procedures set forth in
Section 12.7 of the Joint Venture Agreement. "PRE-CLOSING EXPENDITURES" means
capital expenditures and operating expenses made and incurred by Nextel (and
its Affiliates) and Eagle River prior to the date hereof for assets,
properties, rights or services (other than the capital expenditures and
operating expenses paid for or reimbursed pursuant to the Asset Transfer
Agreement) in order to facilitate the construction of the Company's ESMR
Network (as defined in the Joint Venture Agreement) in the Territory.
Section 8.07. Headings. The headings contained in this Agreement are
for convenience only and shall not affect the meaning or interpretation of this
Agreement.
Section 8.08. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which together shall be deemed to be one and the same instrument.
Section 8.09. Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, without regard
to the conflicts of laws rules of such state.
Section 8.10. Specific Enforcement. Each party hereto acknowledges
that the remedies at law of the other parties for a breach or threatened breach
of this Agreement would be inadequate and, in recognition of this fact, any
party to this Agreement, without posting any bond, and in addition to all other
remedies which may be available, shall be entitled to obtain equitable relief
in the form of specific performance, a temporary restraining order, a temporary
or permanent injunction or any other equitable remedy which may then be
available.
Section 8.11. Limitations on Damages. Each party hereto acknowledges
that no party is entitled to seek or recover consequential, punitive or
exemplary damages in respect of this Agreement under any circumstances or for
any reason. Consequential damages are, without limitation, lost profits, lost
revenue and the
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<PAGE>
like but do not include the actual costs incurred in obtaining substitute
performance where there has been a failure to perform an obligation under an
agreement.
Section 8.12. Consent to Jurisdiction; Expenses. (a) Any suit, action
or proceeding seeking to enforce any provision of, or based on any matter
arising out of or in connection with, this Agreement or the transactions
contemplated hereby (other than any matter arising under Section 7.03 or 7.04,
which shall be conducted in accordance with the dispute resolution procedures
set forth in Section 12.7 of the Joint Venture Agreement) shall be brought in
any Federal Court sitting in New York, New York, or any New York State court
sitting in New York, New York, and each of the parties hereby consents to the
exclusive jurisdiction of such courts (and of the appropriate appellate courts
therefrom) in any such suit, action or proceeding and irrevocably waives, to
the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such suit, action or
proceeding in any such court or that any such suit, action or proceeding which
is brought in any such court has been brought in an inconvenient form. Process
in any such suit, action or proceeding may be served on any party anywhere in
the world, whether within or without the jurisdiction of any such court.
Without limiting the foregoing, each party agrees that service of process on
such party by any method provided in Section 8.05 shall be deemed effective
service of process on such party and consents to the personal jurisdiction of
any Federal Court sitting in New York, New York, or any New York State court
sitting in New York, New York.
(b) In any dispute arising under this Agreement (other than any
matter arising under Section 7.03 or 7.04, which shall be conducted in
accordance with the dispute resolution procedures set forth in Section 12.7 of
the Joint Venture Agreement) among any of the parties hereto, the costs and
expenses (including, without limitation, the reasonable fees and expenses of
counsel) incurred by the prevailing party shall be paid by the party that does
not prevail. In the event of any conflict between the provisions of the
preceding sentence and the corresponding provisions of the Restricted Stock
Purchase Agreements or the employment agreements between the Company and each
of the Management Shareholders and the provisions of those agreements, with
respect to any dispute involving one or more of the Management Shareholders,
the provisions of the Restricted Stock
96
<PAGE>
Purchase Agreements or the employment agreements, as the case may be, shall
prevail.
Section 8.13. Severability. If one or more provisions of this
Agreement are held to be unenforceable to any extent under applicable law, such
provision shall be interpreted as if it were written so as to be enforceable to
the maximum possible extent so as to effectuate the parties' intent to the
maximum possible extent, and the balance of the Agreement shall be interpreted
as if such provision were so excluded and shall be enforceable in accordance
with its terms to the maximum extent permitted by law.
Section 8.14. Amendments to Laws. Any reference to a section, form,
rule or regulation of the Securities Act or Exchange Act, any reference to a
law promulgated by any state or pursuant to which the FCC may exercise rule
making authority, and any reference to any rule or regulation promulgated by
the FCC, includes any successor section, form, rule, regulation or law.
Section 8.15. Acknowledgment of Limits on Nextel's Liability. Each
party hereto acknowledges that the maximum cumulative, aggregate monetary
liability of Nextel for any and all actual or alleged claims or causes of
action that arise, result from or are in any way connected with the matters
provided for or contemplated in this Agreement is limited as provided in the
Nextel Agreement.
97
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized officers as of the day and
year first above written.
NEXTEL PARTNERS, INC., a Delaware
corporation
By: /s/ John Chapple
--------------------------------------
Name: John Chapple
Title: President and Chief Executive
Officer
NEXTEL WIP CORP., a Delaware
corporation
By: /s/ Thomas J. Sidman
--------------------------------------
Name: Thomas J. Sidman
Title: President
Address: 1505 Farm Credit Drive
McLean, VA 22102
Attn: General Counsel
Fax: 703-394-3496
With a copy of notice to:
Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
Attn: Jeanne Rickert
Fax: 216-579-0212
<PAGE>
DLJ MERCHANT BANKING PARTNERS
II, L.P., a Delaware Limited Partnership
By: DLJ Merchant Banking II, Inc.,
as managing general partner
By: /s/ Ivy Dodes
------------------------------------------
Name: Ivy Dodes
Title: Vice President
Address: c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
with a copy of notice to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, NY 10017
Attn: John Buttrick
Fax: 212-450-5426
DLJ MERCHANT BANKING PARTNERS
II-A, L.P., a Delaware Limited Partnership
By: DLJ Merchant Banking II, Inc.,
as managing general partner
By: /s/ Ivy Dodes
------------------------------------------
Name: Ivy Dodes
Title: Vice President
Address: c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
<PAGE>
DLJ OFFSHORE PARTNERS II, C.V., a
Netherlands Antilles Limited Partnership
By: DLJ Merchant Banking II, Inc.,
as advisory general partner
By: /s/ Ivy Dodes
-------------------------------------------
Name: Ivy Dodes
Title: Vice President
Address: c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
DLJ DIVERSIFIED PARTNERS, L.P., a
Delaware Limited Partnership
By: DLJ Diversified Partners, Inc.,
as managing general partner
By: /s/ Ivy Dodes
-------------------------------------------
Name: Ivy Dodes
Title: Vice President
Address: c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
<PAGE>
DLJ DIVERSIFIED PARTNERS-A, L.P., a
Delaware Limited Partnership
By: DLJ Diversified Partners, Inc.,
as managing general partner
By: /s/ Ivy Dodes
-------------------------------------------
Name: Ivy Dodes
Title: Vice President
Address: c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
DLJ MILLENNIUM PARTNERS, L.P., a
Delaware Limited Partnership
By: DLJ Merchant Banking II, Inc.,
as managing general partner
By: /s/ Ivy Dodes
-------------------------------------------
Name: Ivy Dodes
Title: Vice President
Address: c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
<PAGE>
DLJ MILLENNIUM PARTNERS-A, L.P.
By: DLJ Merchant Banking II, Inc.,
as managing general partner
By: /s/ Ivy Dodes
--------------------------------------------
Name: Ivy Dodes
Title: Vice President
Address: c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
DLJMB FUNDING II, INC., a Delaware
corporation
By: /s/ Ivy Dodes
--------------------------------------------
Name: Ivy Dodes
Title: Vice President
Address: c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
<PAGE>
DLJ FIRST ESC, L.P.,
By: DLJ LBO Plans Management Corporation,
as manager
By: /s/ Ivy Dodes
----------------------------------------
Name: Ivy Dodes
Title: Vice President
Address: c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
DLJ EAB PARTNERS, L.P.
By: DLJ LBO Plans Management Corporation,
as managing general partner
By: /s/ Ivy Dodes
----------------------------------------
Name: Ivy Dodes
Title: Vice President
Address: c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
<PAGE>
DLJ ESC II, L.P.
By: DLJ LBO Plans Management Corporation,
as manager
By: /s/ Ivy Dodes
------------------------------------------
Name: Ivy Dodes
Title: Vice President
Address: c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
UK INVESTMENT PLAN 1997 PARTNERS,
a Delaware Limited Partnership
By: UK Investment Plan 1997 Partners, Inc.
as general partner
By: /s/ Ivy Dodes
------------------------------------------
Name: Ivy Dodes
Title: Vice President
Address: c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
<PAGE>
MADISON DEARBORN CAPITAL
PARTNERS II, L.P.
By: Madison Dearborn Partners II, L.P.,
its General Partner
By: Madison Dearborn Partners, Inc.,
its General Partner
By: /s/ David F. Mosher
------------------------------------------
Name: David F. Mosher
Title: Managing Director
Address: 3 First National Plaza
Suite 3800
Chicago, Illinois 60602
Fax: 312-895-1226
<PAGE>
EAGLE RIVER INVESTMENTS, LLC,
a Washington limited liability company
By: /s/ C. James Judson
-----------------------------------------
Name: C. James Judson
Title: Vice President
Address: 2300 Carillon Point
Kirkland, WA 98033-7353
Fax: 425-828-8061
MOTOROLA, INC., a Delaware corporation
By: /s/ Dan Coombes
-----------------------------------------
Name: Dan Coombes
Title: Senior Vice President and General
Manager Network Systems Group
Address: 1303 E. Algonquin Road
Schaumberg, Illinois 60196
Attn.: General Counsel
Fax: (847) 576-3628
CASCADE INVESTMENTS, L.L.C.
By: /s/ Michael Larson
-----------------------------------------
Name: Michael Larson
Title: Business Manager
Address: 2365 Carillon Point
Kirkland, Washington 98033
Attention: Michael Larson
Fax: 425-889-0288
<PAGE>
MADRONA INVESTMENT GROUP, L.L.C.
By: /s/ Tom A. Alberg
------------------------------------------
Name: Tom A. Alberg
Title: Principal
Address: 1000 Second Avenue
Suite 3700
Seattle, Washington 98014
Attention: Tom Alberg
Fax: 206-674-3010
AMPERSAND HOLDINGS, L.L.C.
By: /s/ Gregory J. Parker
------------------------------------------
Name: Gregory J. Parker
Title: President
Address: 1301 Santa Barbara Street
Santa Barbara, California 93101
Attention: Gregory Parker
Fax: 805-963-7801
STEVE HOOPER
/s/ Steve Hooper
------------------------------------------
Address: 4001 Hunts Point Road
Bellevue, Washington 98004
Fax: 425-462-9891
ARTHUR HARRIGAN
/s/ Arthur Harrigan
------------------------------------------
Address: 2300 Carillon Point
Kirkland, Washington
Fax: 425-828-8061
<PAGE>
JOHN CHAPPLE
/s/ John Chapple
------------------------------------------
Address: 4500 Carillon Point
Kirkland, Washington 98033
Fax: 425-828-8098
PERRY SATTERLEE
/s/ Perry Satterlee
------------------------------------------
Address: 4500 Carillon Point
Kirkland, Washington 98033
Fax: 425-828-8098
MARK FANNING
/s/ Mark Fanning
------------------------------------------
Address: 4500 Carillon Point
Kirkland, Washington 98033
Fax: 425-828-8098
JOHN THOMPSON
/s/ John D. Thompson
------------------------------------------
Address: 4500 Carillon Point
Kirkland, Washington 98033
Fax: 425-828-8098
DAVID THALER
/s/ David M. Thaler
------------------------------------------
Address: 4500 Carillon Point
Kirkland, Washington 98033
Fax: 425-828-8098
<PAGE>
DAVID AAS
/s/ David Aas
-----------------------------------------
Address: 4500 Carillon Point
Kirkland, Washington 98033
Fax: 425-828-8098
GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ Molly S. Fergusson
-----------------------------------------
Name: Molly S. Fergusson
Title: Manager, Operations
Address: c/o GE Capital Services
Structured Finance Group, Inc.
120 Long Ridge Road
Stamford, CT 06927
Attention: Portfolio-Operations
Fax: 203-961-2017
NMS CAPITAL, L.P.
By: NMS Capital Management, LLC,
the sole General Partner
By: /s/ Paul S. Lattanzio
-----------------------------------------
Name: Paul S. Lattanzio
Title: Member
Address: 9 West 57th Street
48th Floor
New York, NY 10019
Attn: Paul S. Lattanzio
Fax: 212-583-8273
<PAGE>
ARES LEVERAGED INVESTMENT FUND, L.P.
By: ARES Management, L.P.
By: ARES Operating Member, LLC,
its General Partner
By: /s/ Jeffrey Serota
------------------------------------------
Name: Jeffrey Serota
Title: Vice President
Address: 1999 Avenue of the Stars
Suite 1900
Los Angeles, CA 90067
Fax: 310-201-4170
ARES LEVERAGED INVESTMENT
FUND II, L.P.
By: ARES Management II, L.P.
By: ARES Operating Member II, LLC,
its General Partner
By: /s/ Jeffrey Serota
------------------------------------------
Name: Jeffrey Serota
Title: Vice President
Address: 1999 Avenue of the Stars
Suite 1900
Los Angeles, CA 90067
Fax: 310-201-4170
<PAGE>
THE HUFF ALTERNATIVE INCOME FUND, L.P.
By: /s/ Donna B. Charlton
----------------------------------------
Name: Donna B. Charlton
Title: President of General Manager
Address: 1776 On the Green
67 Park Place
Morristown, NJ 07960
Fax: 973-984-5818
TCW/CRESCENT MEZZANINE PARTNERS II, L.P.
TCW/CRESCENT MEZZANINE TRUST II
By: TCW/CRESCENT MEZZANINE II, L.P.,
its general partner or managing owner
By: TCW/CRESCENT MEZZANINE, L.L.C.,
its general partner
By: /s/ John C. Rocchio
----------------------------------------
Name: John C. Rocchio
Title: Managing Director
Address: 11100 Santa Monica Blvd.,
Suite 2000
Los Angeles, CA 90025
Fax: 310-235-5967
<PAGE>
TCW SHARED OPPORTUNITY FUND III, L.P.
By: TCW ASSET MANAGEMENT COMPANY,
as Investment Advisor
By: /s/ Robert D. Beyer
----------------------------------------
Name: Robert D. Beyer
Title: Group Managing Director
By: /s/ John C. Rocchio
----------------------------------------
Name: John C. Rocchio
Title: Managing Director
Address: 11100 Santa Monica Blvd.,
Suite 2000
Los Angeles, CA 90025
Fax: 310-235-5967
SHARED OPPORTUNITY FUND IIB, LLC
By: TCW ASSET MANAGEMENT COMPANY,
as Investment Advisor
By: /s/ Robert D. Beyer
----------------------------------------
Name: Robert D. Beyer
Title: Group Managing Director
By: /s/ John C. Rocchio
----------------------------------------
Name: John C. Rocchio
Title: Managing Director
Address: 11100 Santa Monica Blvd.,
Suite 2000
Los Angeles, CA 90025
Fax: 310-235-5967
<PAGE>
TCW SHARED OPPORTUNITY FUND II, L.P.
By: TCW INVESTMENT MANAGEMENT
COMPANY, as Investment Advisor
By: /s/ Robert D. Beyer
-----------------------------------------
Name: Robert D. Beyer
Title: Group Managing Director
By: /s/ John C. Rocchio
-----------------------------------------
Name: John C. Rocchio
Title: Managing Director
Address: 11100 Santa Monica Blvd.,
Suite 2000
Los Angeles, CA 90025
Fax: 310-235-5967
TCW LEVERAGED INCOME TRUST II, L.P.
By: TCW (LINC II), L.P.,
as General Partner
By: TCW ADVISORS (BERMUDA), LTD.,
as General Partner
By: /s/ Robert D. Beyer
-----------------------------------------
Name: Robert D. Beyer
Title: Group Managing Director
By: TCW INVESTMENT MANAGEMENT
COMPANY, as Investment Advisor
By: /s/ John C. Rocchio
-----------------------------------------
Name: John C. Rocchio
Title: Managing Director
<PAGE>
Address: 11100 Santa Monica Blvd.,
Suite 2000
Los Angeles, CA 90025
Fax: 310-235-5967
TCW LEVERAGED INCOME TRUST, L.P.
By: TCW (BERMUDA), LIMITED,
as General Partner
By: /s/ Robert D. Beyer
---------------------------------------
Name: Robert D. Beyer
Title: Group Managing Director
By: TCW INVESTMENT MANAGEMENT
COMPANY, as Investment Advisor
By: /s/ John C. Rocchio
---------------------------------------
Name: John C. Rocchio
Title: Managing Director
Address: 11100 Santa Monica Blvd.,
Suite 2000
Los Angeles, CA 90025
Fax: 310-235-5967
<PAGE>
JDT-JRT L.L.C.
By: John D. Thompson, Manager
By: /s/ John D. Thompson
-----------------------------------
Name: John D. Thompson
Title: Manager
JRC COHO L.L.C.
By: John H. Chapple, Manager
By: /s/ John H. Chapple
---------------------------------
Name: John H. Chapple
Title: Manager
<PAGE>
JOINT VENTURE AGREEMENT
by and among
Nextel Partners, Inc.,
Nextel Partners Operating Corp.,
and
Nextel WIP Corp.
Dated as of January 29, 1999
<PAGE>
NEXTEL PARTNERS, INC.
JOINT VENTURE AGREEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
RECITALS...................................................................................1
1. DEFINITIONS............................................................................1
2. OPERATING ARRANGEMENTS................................................................10
2.1 Company Responsibilities................................................10
2.2 Territory...............................................................11
2.3 Exclusivity.............................................................11
2.4 Nextel Operations.......................................................11
2.5 Sufficiency of Rights...................................................12
2.6 Nondiscrimination; Standard of Care.....................................12
2.7 Special NWIP Approval Rights............................................13
3. TERM .................................................................................14
3.1 Initial Term; Renewal Terms.............................................14
4. FREQUENCIES AND LICENSES..............................................................14
4.1 Contribution of Licenses in Initial Sections............................14
4.2 Contribution of Licenses in Option Sections.............................15
4.3 Other Acquisitions of Licenses from Nextel Group........................16
4.4 Swaps and Exchanges of Licenses with Nextel Group.......................16
4.5 Acquisitions of Licenses from Third Parties.............................17
4.6 Frequency Auctions......................................................18
4.7 Cooperation.............................................................18
4.8 Transactions to Create Contiguous Spectrum..............................18
4.9 Nextel Analog Operations................................................19
4.10 Reserved................................................................19
4.11 Compliance with FCC Rules...............................................19
4.12 FCC Proceedings.........................................................20
4.13 Transfer Restrictions...................................................22
4.14 NWIP Right of First Refusal.............................................22
4.15 Company Rights of First Refusal.........................................23
4.16 NWIP Option Upon Change in Control of the Company.......................24
4.17 Representations and Warranties..........................................25
4.18 Frequency Construction..................................................25
5. COMPANY ACCESS TO PROPRIETARY
TECHNOLOGY AND NETWORK COMPONENTS................................................26
i
<PAGE>
Page
5.1 Coordination of Equipment Orders and Purchases..........................26
5.2 Access to Vendor Equipment and Agreements...............................27
5.3 Future Improvements and Enhancements to Technology or Network...........28
5.4 [RESERVED]..............................................................30
5.5 Access to National Switching Network....................................30
5.6 Integration with Nextel Owned Switching Facilities......................30
5.7 Company Owned Network Switches and Other Facilities.....................30
5.8 Access to Systems Platform..............................................31
5.9 Certain System and Network Services.....................................32
6. BUILD-OUT REQUIREMENTS................................................................33
6.1 Required Services.......................................................33
6.2 Build-out Requirement and Target Launch Dates...........................34
6.3 Launch Criteria.........................................................35
6.4 Frequency Design Standards..............................................35
6.5 Site Acquisition Standards..............................................36
6.6 Construction Standards..................................................36
6.7 Telco Standards.........................................................37
6.8 Switching Facility Standards............................................37
6.9 Company Towers..........................................................37
6.10 Potential Relaxation of Performance Standards...........................40
7. OPERATIONS............................................................................40
7.1 Network Performance Requirements........................................40
7.2 Customer Care...........................................................40
7.3 Customer Satisfaction...................................................41
A. Measurement....................................................41
B. Sample.........................................................41
C. Targets........................................................41
7.4 Employees...............................................................41
8. MARKETING AND ADVERTISING.............................................................41
8.1 Brand Identity..........................................................41
8.2 Brand Awareness.........................................................42
8.3 Creative Services.......................................................42
8.4 Media Services..........................................................43
8.5 Direct Mail.............................................................43
8.6 Telemarketing...........................................................43
8.7 Collateral Marketing Materials..........................................44
8.8 World Wide Website......................................................44
8.9 Market Research.........................................................44
8.10 Subscriber Transfer Fee.................................................45
9. SERVICE AND EQUIPMENT PRICING.........................................................45
9.1 Service Pricing Structure...............................................45
ii
<PAGE>
Page
9.2 Service Pricing Plans - Local...........................................46
9.3 Service Pricing Plans - National........................................46
9.4 Service Pricing Plans - International...................................46
9.5 Subscriber Equipment Pricing............................................47
10. SALES AND DISTRIBUTION...............................................................47
10.1 Objective...............................................................47
10.2 Local Sales and Distribution............................................47
10.3 National Indirect Distribution..........................................48
10.4 Websites and Telemarketing..............................................48
11. NATIONAL ACCOUNTS/PRIVATE SYSTEMS....................................................48
12. BREACH; DEFAULT; DISPUTE RESOLUTION..................................................49
12.1 Non-Material Breach.....................................................49
12.2 Company's Material Breach...............................................50
12.3 NWIP's Material Breach..................................................50
12.4 Procedures for a Material Breach........................................51
12.5 Excusable Delay/Time Extension..........................................52
12.6 Alternate Dispute Resolution............................................52
12.7 Arbitration.............................................................53
12.8 Equitable Remedies......................................................53
12.9 Damages and Termination for Material Breach.............................54
A. Procedure......................................................54
B. Right to Nextel Name and Trademarks............................55
C. Determination Required for Termination Remedy..................55
D. Termination Awarded to NWIP....................................55
E. Termination Awarded to the Company.............................55
F. Limitations on Damages.........................................56
13. MISCELLANEOUS........................................................................56
13.1 Choice of Law...........................................................56
13.2 Attorneys Fees..........................................................56
13.3 Pass-Throughs...........................................................56
13.4 [RESERVED]..............................................................57
13.5 Monitoring..............................................................57
13.6 Payment.................................................................57
13.7 Company Audit Right.....................................................58
13.8 Company Personal Obligation.............................................58
13.9 Disclaimer of Partnership...............................................59
13.10 Confidentiality.........................................................59
13.11 Amendments..............................................................60
13.12 Entire Agreement........................................................60
13.13 Notices.................................................................60
13.14 Counterparts............................................................61
iii
<PAGE>
Page
13.15 Waiver..................................................................61
13.16 Third Parties...........................................................62
13.17 Schedules and Exhibits..................................................62
13.18 Headings................................................................62
13.19 Severability............................................................62
13.20 Jurisdiction............................................................62
13.21 Waiver of Jury Trial....................................................62
</TABLE>
iv
<PAGE>
EXHIBITS
Exhibit I Transaction Documents & Collateral Agreements
Exhibit 4.1 Initial Frequencies and Option Frequencies
Exhibit 4.4 Nextel Group Frequencies
Exhibit 4.13 Commitments Required of Secured Lenders
Exhibit 5.7A Charges for Company Switch and RSO Monitoring
Exhibit 5.7B Trigger Points for Network Elements
Exhibit 5.9B Charges for NDS Backbone Network
Exhibit 6 Territory (Including map, Sections and Build Areas)
Exhibit 6.1 Required Services
Exhibit 6.4 Certain Frequency Design Agreements
Exhibit 6.5 Certain Site Acquisition and Construction Agreements
Exhibit 6.9 Tower Sites Committed by Company to Another Builder
Exhibit 7.2 Certain Billing and/or Customer Care Agreements
Exhibit 9.1A Nextel Service Pricing Structure
v
<PAGE>
NEXTEL PARTNERS, INC.
JOINT VENTURE AGREEMENT
This is the JOINT VENTURE AGREEMENT (this "Agreement"), dated as of
January 29, 1999, by and among Nextel Partners, Inc., a Delaware corporation
(the "Company"), Nextel Partners Operating Corp., a Delaware corporation
("Opco"), and Nextel WIP Corp., a Delaware corporation ("NWIP"). Capitalized
terms used herein have the meanings set forth or cross referenced in Article 1,
unless otherwise stated.
RECITALS
A. Nextel Communications, Inc. ("Nextel") through its subsidiaries
operates digital networks for wireless communications services throughout the
United States. Nextel's digital networks are integrated wireless systems that
use a single transmission technology (iDEN, as defined below) to serve large
cities throughout the United States. Nextel's wireless telecommunications
service competes with, but is distinguished from, the services offered by other
telecommunications companies by, among other things, features of its subscriber
equipment (for example, push to talk transmission), and by its pricing
structure (for example, per second billing and home rate charges).
B. The Company and Opco have been formed to build and operate a
wireless communications system using iDEN technology to provide service in
certain mid-sized and smaller cities and towns throughout the United States,
most of which are not presently served by Nextel.
C. By expanding the geographic area in which such services are
offered, by providing services with similar features and functions under the
same national brand, and by allowing their subscribers to travel and obtain
service in each other's territory, the parties intend, among other things, to
make iDEN wireless communications service available to more people over a
broader area.
D. NWIP, an indirect, wholly owned subsidiary of Nextel, the Company
and Opco desire to enter into this contractual joint venture to accomplish the
foregoing.
AGREEMENT
NOW THEREFORE, the parties hereby agree as follows:
1. DEFINITIONS
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For purposes of the Agreement, the following terms have the meanings
set forth or cross referenced below:
"Accelerated Areas" -- see Section 6.2C.
"Agreement" -- see Preamble.
"Affiliate" means, with respect to the specified person, any other
person who, directly or indirectly, controls, is controlled by, is under common
control with, or is a director or officer of such specified person; provided,
that neither NWIP nor any other member of the Nextel Group shall, for purposes
of this Agreement, be considered Affiliates of the Company or any of its
Subsidiaries.
"Alternate Dispute Resolution Process" means the dispute resolution
process set forth in Section 12.6.
"Analog Management Agreement" means the Management Agreement dated the
same date as this Agreement between Opco and NWIP, as amended and in effect
from time to time.
"Analog Services" means wireless communications services provided by
Analog Systems.
"Analog Systems" means wireless communications systems that use analog
transmission technology.
"Arbitration Rules" -- see Section 12.7.
"Asset Purchase Agreement" means the Asset Transfer and Reimbursement
Agreement by and between Opco and NWIP, dated the same date as this Agreement,
as amended and in effect from time to time.
"Augmented Company Value" -- see Section 12.9E.
"Beneficial Owner" means a beneficial owner as defined in Rules 13d-3,
13d-5 or 16a-1 under the Securities Exchange Act of 1934 (the "Exchange Act")
(or any successor rules), including the provision of such Rules that a Person
shall be deemed to have beneficial ownership of all securities that such person
has a right to acquire within 60 days, but such provision of the Rules will
apply only if (i) all conditions (other than payment of the purchase or
acquisition price of such securities) to such person's exercise of such rights
have been satisfied and (ii) such securities (if options, warrants, or similar
derivatives) are "in-the-money," provided that in all cases a person shall not
be deemed a Beneficial Owner of, or to own beneficially, any securities if such
beneficial ownership (1) arises solely as a result of a revocable proxy
delivered in response to a proxy delivered in response to a proxy or consent
solicitation made pursuant to, and in accordance with, the Exchange Act and the
applicable rules and regulations thereunder, and (2) is not also then
reportable on Schedule 13D under the Exchange Act.
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"best reasonable efforts," where required of a party by this Agreement
or any of the Collateral Agreements, means the party will expend only such sums
as are normally incidental to the performance of the relevant task, such as
payment of salaries of the persons carrying out such efforts and such persons'
incidental travel and other related expenses, and in no event will require the
payment of any sum to any third-party from whom performance of the relevant
task is sought, nor the retention or compensation of outside agents, brokers,
consultants or other professionals to obtain the desired outcome.
"Board" means the Board of Directors of the Company.
"Build Areas" means the (i) MSAs, (ii) cities and towns with
populations in excess of 20,000 people that are not otherwise included within
an MSA boundary and (iii) all other rural areas, in each case, identified on
Exhibit 4.1.
"Build Out" means the completion of the construction of a Section as
described in Section 6.2A.
"Build Site" -- see Section 6.9A.
"Build Year" means the year by which the Build Out for any Build Area
must be completed. The first Build Year shall commence on the date hereof and
terminate on the day 30 days after the first anniversary of the date hereof;
the second Build Year shall commence on the day after the end of the first
Build Year and terminate 365 days later; and the third Build Year shall
commence on the day after the end of the second Build Year and terminate 365
days later.
"Business Objectives" -- see Section 2.7(ii).
"Change in Control of the Company" -- see Section 4.16B.
"Claimant" -- see Section 12.9A.
"Collateral Agreements" means the agreements identified as the
Collateral Agreements on Exhibit I.
"Company" -- see Preamble.
"Company Group" means the Company and its Subsidiaries.
"Company Indemnitees" -- see Section 4.11B.2.
"Company Transferor" -- see Section 4.14A.
"Comparable Service Areas" or "Comparable Sections" means service
areas or Sections in the Territory which are roughly equal in size and share
similar topographic, population and
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economic characteristics including but not limited to population density,
number of business customers and per capita income as service areas in the NDS
territory (and vice versa).
"Completion Notice" -- see Section 6.9B.
"Constructed Frequencies" -- see Section 4.18A
"Constructed Site" -- see Section 6.9D.
"Digital Services" means wireless communications services provided by
Digital Systems.
"Digital Systems" means wireless communications systems that use
digital transmission technology.
"Election Period" -- see Section 6.2B.
"ESMR Network" means a wide-area network of specialized mobile radio
base stations that uses iDEN digital technology to provide wireless
communications services including voice, dispatch, interconnected telephone and
data services, using SMR Frequencies.
"Equity" means (i) prior to the initial public offering of the
Company's equity securities, shares of Series C Preferred Stock, and (ii) after
the initial public offering of the Company's equity securities, shares of Class
B Common Stock.
"Equity Value" -- of a share of Equity means (i) during the first 24
months following the date hereof, the price per share of Series C Preferred
Stock issued on the date hereof, compounded on a monthly basis at an annual
rate of twenty percent (20%) per annum, (ii) after 24 months from the date
hereof and until the common stock of the Company is traded on a national stock
exchange or NASDAQ National Market (the "Interim Period"), a value set annually
by the Board that is generally applicable to issuances of Equity, including,
without limitation, for cash or property or for options for which the exercise
price is fair market value at the date of agreement by the Company at or about
the relevant time (e.g., used to set the strike price for options awarded under
the Company's incentive stock option plan during such year), and (iii) after
there has been an initial public offering of common stock of the Company, the
arithmetic average of the closing sales price for the Company's common stock on
a national stock exchange or NASDAQ National Market for the twenty trading days
immediately preceding the date as of which Equity Value is to be determined.
During the Interim Period NWIP has the right to challenge the value set by the
Board, by giving written notice to the Company not later than the later of (a)
30 days after NWIP is notified that the Board has established a new Equity
Value, or (b) 30 days after NWIP (or any other member of the Nextel Group) is
notified that it is required by this Agreement to assign licenses for
additional frequencies to the Company. In its notice NWIP will state its
proposed Equity Value. Within 10 days after receipt of the Notice, the Company
and NWIP will either mutually agree on an appraiser that will be retained and
instructed to determine the value of a share of the Company's common stock for
purposes of making payment with Equity as provided by Article 4, or will
implement the procedures of Section 4.04 of the Shareholders' Agreement to
select three appraisers. The value established by the Board and
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NWIP's proposed value will not be disclosed to the appraiser(s) who will be
instructed to complete the valuation within 30 days. If the value determined by
the appraiser(s) is closer to the value that was established by the Board, the
value determined by the Board will be the Equity Value for the applicable
period, and NWIP will reimburse the Company for any out-of pocket expenses
incurred by the Company in connection with determining the value (including,
without limitation, any fees or expenses of the appraiser(s)). If the value
determined by the appraiser(s) is closer to the value that was proposed by
NWIP, the value proposed by NWIP will be the Equity Value for the applicable
period, and the Company will reimburse NWIP for any out-of pocket expenses
incurred by NWIP in connection with determining the value (including, without
limitation, any fees or expenses of the appraiser(s)).
"Excusable Delay" -- see Section 12.5.
"Exhibit 4.1 Value" means, with respect to each Build Area in the
Territory, the per frequency dollar value of a Useable Frequency in such Build
Area as identified on Exhibit 4.1.
"Fair Market Value" means, with respect to any frequencies, the fair
market value thereof as agreed to by the parties or, if the parties fail to
agree within 10 days, as determined by arbitration in accordance with Section
12.7.
"FCC" means the Federal Communications Commission or any similar
regulatory authority established in replacement thereof.
"FCC Change of Control" means the granting or withholding of any
rights, powers or obligations, that either individually or in combination,
would require the approval of the FCC pursuant to Section 310(d) of the
Communications Act or any of the FCC Rules or policies implementing Section
310(d).
"FCC Rules" -- see Section 4.12C.
"4.14 Notice" -- see Section 4.14A.
"4.18D Frequencies" -- see Section 4.18D.
"Frequency Acquisition Amount" means $20,439,979 on the date hereof,
subject to adjustment as provided in Section 4.4 or 4.5A.
"Frequency Delay" -- see Section 12.5.
"Frequency Value" means:
(i) for purposes of Section 4.4:
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(A) with respect to Old Frequencies or New Frequencies
owned by any member of the Nextel Group on the date hereof, the
Exhibit 4.1 Value of such frequencies, and
(B) with respect to Old Frequencies or New Frequencies
that are not owned by any member of the Company Group or Nextel Group
on the date hereof, the cost to the Company or the applicable member
of the Company Group or Nextel Group, as the case may be, of such
frequencies (including incidental transaction costs and costs of any
related assets acquired with the frequencies and conveyed to the
transferee); and
(ii) for purposes of Sections 4.3 and 4.14:
(A) with respect to frequencies owned by any member of
the Nextel Group on the date hereof, the Exhibit 4.1 Value of such
frequencies, and
(B) with respect to frequencies that are not owned by any
member of the Company Group or the Nextel Group on the date hereof,
the historical cost to the Company of such frequencies (including
incidental transaction costs and costs of any related assets acquired
with the frequencies and conveyed to the Nextel Group).
"iDEN" means Motorola's integrated Dispatch Enhanced Network wireless
communications technology, or any other successor technology designated under
Section 7.03 of the Shareholders' Agreement as such may exist from time to time
and at any time during the term of this Agreement, including any Renewal Terms.
"Improvements" -- see Section 5.3A.
"Initial Assets" means the assets transferred to Opco by NWIP under
the Asset Purchase Agreement.
"Initial Asset Transfer" means the transfer of the Initial Assets to
Opco effected pursuant to the Asset Purchase Agreement.
"Initial Frequencies" means the frequencies covered by the Initial
Licenses.
"Initial Licenses" means the FCC licenses set forth on Schedule C to
the Subscription Agreement.
"Initial Sections" means the Sections of the Territory described as
Initial Sections on Exhibit 6.
"Initial Site Notice" -- see Section 6.9A.
"Initial Term" -- see Section 3.1.
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"Interim Management Agreement" means the frequency Management
Agreement, dated the same date as this Agreement, between NWIP and Opco, as
amended and in effect from time to time.
"Launch Criteria" -- see Section 6.3.
"License Co." means Nextel WIP License Corp., a Delaware corporation.
"Licensed Marks" means the "Nextel" name and the other marks licensed
to Opco under the Trademark License Agreement.
"Losses" -- see Section 4.11B.1.
"Marketing Services Vendor" means the person that, from time to time,
provides market research services and compiles customer satisfaction data for
the Company or Opco and the NDS.
"Master Site Lease" means the Master Site Lease Agreement dated the
same date as this Agreement, by and between NWIP and Opco, as amended and in
effect from time to time.
"Material Breach" means, with respect to the Company, the breaches
described in Section 12.2 and, with respect to NWIP, the breaches described in
Section 12.3.
"May 20th Frequencies" -- see Section 4.18B.
"Motorola" means Motorola, Inc., a Delaware corporation.
"MSA" means a metropolitan statistical area as defined by the U.S.
Office of Management and Budget.
"National Accounts" -- see Section 9.3.
"NDS" means, individually, a Nextel Subsidiary operating all or any
portion of an ESMR Network in the United States and "the NDS" means,
collectively, all of Nextel's Subsidiaries operating all or any portion of an
ESMR Network in the United States.
"New License" or "New Frequency" means an FCC license or SMR frequency
which is acquired by the Company from a member of the Nextel Group, but does
not include licenses or frequencies contributed to the Company by NWIP pursuant
to Sections 4.1 and 4.2
"Nextel" -- see Recitals.
"Nextel Agreement" means the Agreement Specifying Obligations of, and
Limiting Liability and Recourse to, Nextel, dated the same date as this
Agreement, among Nextel, the Company and Opco, as amended from time to time.
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"Nextel Group" means Nextel and its Subsidiaries.
"Nextel Indemnitees" -- see Section 4.11B.1.
"Nextel Retained Frequencies" -- see Section 4.4B.
"Nextel Transferor" -- see Section 4.15A.
"NWIP" -- see Preamble.
"NWIP Call Right" has the meaning set forth in the Shareholders'
Agreement and, after Section 5.1(a)(i) of the Company Amended and Restated
Certificate of Incorporation becomes effective, means the NWIP Call Right as
defined therein.
"NWIP Response" -- see Section 4.3.
"Old License" or "Old Frequency" means an FCC license or SMR frequency
which was previously contributed to the Company by a member of the Nextel
Group.
"Opco"-- see Preamble.
"Option Frequencies" -- see Section 4.2.
"Option Licenses" -- see Section 4.2.
"Option Sections" means the "Option Sections" on Exhibit 6 that may be
added to the Territory under Section 6.2.
"Option Territory" means, collectively, the Option Sections with
respect to which the Company's rights under Section 6.2 have not expired or
been exercised.
"Partner Auction" -- see Section 4.6.
"Partner Frequency" means an 800 MHz SMR or a 900 MHz SMR frequency
owned by, licensed to or managed or used by the Company (or a Company
Subsidiary).
"person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, any governmental or political subdivision or
department thereof, any governmental or regulatory body, commission, board,
bureau, agency or instrumentality, any pension, profit sharing or other benefit
plan or trust, or other entity.
"Recommended Systems" -- see Section 5.8.
"Remedial Plan" -- see Section 12.1.
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"Renewal Term" -- see Section 3.1.
"Required Services" -- see Section 6.1.
"Required Systems" -- see Section 5.8.
"Roaming Agreement" means the Roaming Agreement, dated the same date
as this Agreement, between Opco and NWIP, as amended and in effect, from time
to time.
"SCI" -- see Section 7.3C.
"Section" means each of the Sections identified in Exhibit 6, whether
an Initial Section or an Option Section.
"Section 4.3 Frequencies" -- see Section 4.3.
"Service Pricing Structure" -- see Section 9.1.
"Shareholders' Agreement" means the Shareholders Agreement, dated the
same date as this Agreement, among the Company, NWIP and the other stockholders
of the Company named therein, as amended and in effect, from time to time.
"Site Acquisition Work" means, with respect to each tower site, taking
the following actions in material compliance with all applicable laws: (i)
obtaining from a qualified surveyor a recent (i.e. prepared or updated no more
than six months before the date of the Completion Notice, if any) ground survey
depicting the boundaries and areas of the site location, all easements, rights
of way and other matters affecting title thereto, any improvements thereon,
applicable setback lines, if any, information regarding flood plain location
and any encroachments affecting the site, (ii) obtaining all building permits
and FAA and FCC approvals (if any) needed to construct the tower and related
assets on such site, (iii) obtaining all zoning approvals or designations
necessary to construct and operate the tower and related assets on such site,
(iv) obtaining an environmental transaction screening of such site and a
related report, which report shall be addressed to NWIP and to the Company, and
(v) obtaining a title commitment or abstract for the site, dated within six
months of the Completion Notice (if any), provided that the Company will not be
penalized for failure to comply with (i) - (iv) above to the extent that the
average level of compliance achieved by the NDS during the same relevant period
does not exceed the level of the Company's compliance.
"SMR Frequencies" means 800 MHz specialized mobile radio frequencies.
"Special Option Sections" means those Option Sections designated as
"Special Option Sections" on Exhibit 6.
"Subsidiary" of a specified person means a corporation, partnership,
limited liability company or other entity in which the specified person
directly or indirectly owns or controls the
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shares of stock having ordinary voting power to elect a majority of the board
of directors (or appoint other comparable managers) of such corporation,
partnership, limited liability company or other entity.
"Substantial Agreement" means each of the Collateral Agreements except
the Transition Services Agreement and the Analog Management Agreement.
"swaps" -- see Section 4.8.
"Switch Sharing Agreement" means the Switch Sharing Agreement, dated
the same date as this Agreement, between Opco and NWIP, as amended and in
effect from time to time.
"Territory" means, at the date hereof, the Initial Sections, and, if
and when the Company elects to add Option Sections under Section 6.2, will
include such Option Sections, and will also include or exclude, from time to
time, as the case may be, Sections or service areas that are removed or
returned pursuant to Section 6.2C or 6.2D.
"Total Common Equity" of the Company means, as of any day of
determination, the product of (i) the aggregate number of shares of fully
diluted common stock of the Company on such day and (ii) the average closing
price of such common stock over the 20 consecutive trading days immediately
preceding such day. If no such closing price exists with respect to shares of
any such class, the value of such shares for purposes of clause (ii) of the
preceding sentence shall be determined by the Board in good faith and evidenced
by a resolution of such Board.
"Trademark License Agreement" means the Trademark License Agreement,
dated the same date as this Agreement, between NWIP and Opco, as amended and in
effect from time to time.
"Transaction Documents" means the agreements or instruments identified
on Exhibit I.
"Trigger Point" -- see Section 5.7B.
"Upper 200" -- see Section 4.8.
"Useable Frequency" with respect to each type of Build Area has the
meaning specified in Exhibit 4.1.
"Voting Stock" of any person means capital stock of such person which
ordinarily has voting power for the election of directors (or persons
performing similar functions) of such person, whether at all times or only so
long as no senior class of securities has such voting power by reason of any
contingency.
"VPN" -- see Section 11D.
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"Year One Build Areas" are the areas identified with the number "1" in
the "PTNR Build Year" column of Exhibit 6.
2. OPERATING ARRANGEMENTS
2.1 COMPANY RESPONSIBILITIES. The Company will be responsible for the
construction and ongoing operation of an ESMR Network in the Territory. Except
as otherwise required by this Agreement or any Collateral Agreement, the
Company's responsibilities include, without limitation, the following
activities in the Territory:
A. Planning, supervising, and monitoring the Build Out of the local
ESMR Network;
B. RF design work;
C. Securing site leases or other similar real property rights to
install and maintain cell sites;
D. Acquiring and deploying the infrastructure equipment
(essentially cell sites);
E. Securing adequate financing for capital expenditures and working
capital;
F. Provisioning necessary telco facilities to connect to the
national ESMR Network of the NDS;
G. Ongoing maintenance and operation of local cell sites and telco
facilities;
H. Local area advertising and marketing;
I. Local sales and customer support;
J. Fulfillment, billing, collections, customer care, accounting,
equipment and systems monitoring and other standard general and administrative
functions;
K. Preserving and maintaining FCC licenses to use SMR Frequencies
held by the Company (or any of its Subsidiaries); and
L. Clearing of the upper 200 SMR Frequencies to create contiguous
spectrum, so long as Nextel is acting under Section 4.8.
2.2 TERRITORY. Exhibit 6 identifies (i) the Initial Sections; (ii) the
Option Sections that may be added to the Territory under Section 6.2; (iii) the
Build Areas in each Section; and (iv) the Build Year by which the Build Out for
Build Areas must be completed.
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2.3 EXCLUSIVITY. NWIP will cause the Nextel Group to recognize the
Company's exclusive right, subject to the next sentence, to build and operate
an ESMR Network and to provide wireless communications services in the
Territory and, until the Company's right to include the Option Sections in the
Territory has expired, in the Option Sections. The Company's exclusive right is
subject to the rights of NWIP and other members of the Nextel Group set forth
in Sections 2.4A, B, and C, 6.2C and D, 8.2, 8.4, 8.6, 8.8, 9.2 (the last
sentence), 9.3, 9.5, 10.3, 11, 12.1, 12.4 of this Agreement, and Sections
2.1(a) and 2.2(c) of the Roaming Agreement and to any other exceptions to or
limitations on such exclusive rights as may be agreed to in writing with any
required approval of the Board (or the Board of Directors of a relevant
Subsidiary) from time to time after the date hereof between the Company, Opco
or any other Company Subsidiary, on the one hand, and NWIP or any other member
of the Nextel Group, on the other.
2.4 NEXTEL OPERATIONS.
A. Except to the extent required to satisfy its obligations under
Section 4.18, NWIP has no obligation to contribute, assign, or otherwise
transfer to the Company any rights or assets of the Analog Systems or Analog
Services in the Territory (nor Analog Services customer revenue nor Analog
Systems fixed assets) nor, subject to 2.4D, any non-800 MHz frequencies, other
assets or contracts.
B. No member of the Nextel Group may operate Digital Systems or
provide Digital Services in the Territory using 800 MHz frequencies, except as
permitted by Sections 12.1 and 12.4. The Nextel Group may operate Analog
Systems and provide Analog Services in the Territory and the Option Territory
using 800 MHz frequencies, provided that such Analog Systems and Analog
Services (1) are not operated or offered under any of the Licensed Marks or any
similar branding or product or service identification and (2) do not involve
the use of iDEN or any other digital transmission technology with respect to
800 MHz.
C. Subject to Section 2.4D, the Nextel Group may operate Digital
Systems and provide Digital Services in the Territory and the Option Territory
using non-800 MHz frequencies, provided that such Digital Systems and Digital
Services (1) are not operated or offered under any of the Licensed Marks or any
similar branding or product or service identification, (2) do not involve the
use of iDEN or any other digital transmission technology with respect to 800
MHz frequencies and (3) do not offer interconnection with landline
telecommunications providers.
D. NWIP and the Company shall negotiate in good faith with each
other (and with any relevant third parties) to reach agreement on arrangements
whereby the Company would be permitted to have the first right to own and
operate any business that proposes to use or manage the use of 900 MHz
frequencies in the Territory and/or in the Option Territory. If the Company,
NWIP and any relevant third party are unable to reach a mutually satisfactory
agreement on such arrangements within 90 days after the start of negotiations,
NWIP, another Nextel Subsidiary or such third party may operate the business
using or managing the use of 900 MHz frequencies licensed to one or more
members of the Nextel Group, but only in compliance with Section 2.4C, and the
terms of the arrangements between NWIP or any other Nextel
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Subsidiary and any such third party are not, taken as a whole, more favorable
to such third party than the terms offered to the Company. For a period of 365
days after the conclusions of negotiations with the Company, the business using
or managing the use of the 900 MHz frequencies shall not be sold or otherwise
transferred to any third party on terms that are, taken as a whole, more
favorable to such third party than the terms that were offered to the Company.
2.5 SUFFICIENCY OF RIGHTS. During the period that any of the
Collateral Agreements is in force, NWIP will obtain from the relevant member of
the Nextel Group the ownership, leasehold, or other authorized use rights of
any NDS that are needed by NWIP to perform its obligations under each such
Collateral Agreement that is in force.
2.6 NONDISCRIMINATION; STANDARD OF CARE.
A. All products, services and systems that NWIP is required to make
available to the Company pursuant to this Agreement and the Collateral
Agreements will (1) except as provided herein or therein, be the same products,
services and systems provided to or used by the NDS, and (2) be made available
to the Company in the manner and on the schedule and at the same service levels
as provided to or used by the NDS. NWIP will provide or cause to be provided to
the Company all such products, services, and systems, and will otherwise deal
with the Company under this Agreement and the Collateral Agreements in a manner
that does not discriminate against the Company in favor of the NDS, but, except
as otherwise provided in this Agreement or the Collateral Agreements, no member
of the Nextel Group is required to provide any product, service, or system, or
take any action for or on behalf of the Company or any of its Subsidiaries that
is not provided to or taken for the NDS. Neither NWIP nor any member of the
Nextel Group will be liable for damages, or shall be subject to any claim for
monetary recovery against or from them, under this Agreement or any Collateral
Agreement with respect to such products, services or systems unless there has
been negligence or wilful misconduct in providing (or failing to provide) such
products, services or systems and where such damages or monetary recoveries are
allowed, the limitations of Section 12.9F will be applicable.
B. To the extent that, as provided herein and in the Collateral
Agreements, the Company in designing, constructing, operating and maintaining
the ESMR Network in its Territory is required to comply with requirements,
procedures and standards in effect from time to time and applicable generally
to the corresponding activities relating to the NDS ESMR Network, NWIP will
communicate to the Company such requirements, procedures and standards at the
same time and in substantially the same manner as such requirements, procedures
and standards are communicated to the NDS (which may be in writing or may be by
presentation or discussion at meetings).
C. The Company acknowledges that the products, services, and
systems used by the NDS were designed and are operated and maintained for their
businesses, and that the NDS expect to continue to develop, operate and
maintain their products, services and systems for their businesses. If the
products, services and systems made available to the Company are provided as
stated in Section 2.6A and B, and those products, services or systems are not
as effective in the Company's businesses as they are in the businesses of the
NDS, NWIP will not be
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in violation of the terms of this Agreement or any of the Collateral Agreements
with respect to any such reduced effectiveness.
D. If NWIP is required under this Agreement or any of the
Collateral Agreements to provide or cause to be provided to the Company
products, services or systems that are materially different from or not
provided to the NDS, neither NWIP nor any member of the Nextel Group will be
liable for damages, or shall be subject to any claim for monetary recovery
against or from them, under this Agreement or any Collateral Agreement with
respect to such products, services or systems unless there has been gross
negligence or wilful misconduct in providing (or failing to provide) such
products, services or systems and where such damages or monetary recoveries are
allowed, the limitations of Section 12.9F will be applicable.
E. Except as otherwise provided herein or a Collateral Agreement,
the schedule for the Company's implementation of, or compliance with, the
requirements, procedures and standards of the NDS will be the schedule in
effect at the relevant time and applicable generally to the NDS.
F. No claim can be made or relief sought for the Company's
violation of this Agreement or any Collateral Agreement to the extent that the
Company's compliance with the requirements, procedures, and standards that
apply to the NDS, equals or exceeds the compliance achieved by the NDS
generally.
2.7 SPECIAL NWIP APPROVAL RIGHTS.
No action by the Company, License Co., Opco or any other Subsidiary
(including but not limited to any action by the Board or any committee thereof
or the board of directors or any committee thereof of the relevant Subsidiary)
shall be taken after the date hereof with respect to any of the following
matters without the prior written approval (which shall be given or withheld
within 30 days of the Company's written request therefor) of the NWIP Designee
(as defined in the Shareholders' Agreement), provided, that (a) approval by the
NWIP Designee of the matters referred to in paragraph (ii) below will no longer
be required on the earlier of the date on which (x) NWIP transfers any Shares
(as defined in the Shareholders' Agreement) owned by NWIP as of the date hereof
to a Person (other than the Company) that is not a "Permitted Transferee" under
the Shareholders' Agreement and (y) the NWIP Call Right expires and (b)
approval by the NWIP Designee (as defined in the Shareholders' Agreement) of
the matters referred to in this Section 2.07 will no longer be required if the
Nextel Shareholders transfer their Shares (as defined in the Shareholders'
Agreement) pursuant to Section 3.08 of the Shareholders' Agreement:
(i) any material change in the technology used by the Company;
(ii) any decision to expand or to broaden the scope of the
Company's business beyond building and operating an ESMR digital mobile
communications network in the Territory including any decision to make any
acquisition other than 800 MHz or 900 MHz frequency licenses (the "Business
Objectives");
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(iii) any modification or change in the Business Objectives that is
inconsistent with the Company's or any of its Subsidiaries' duties and
obligations under this Agreement or any of the Transaction Documents; or
(iv) any sale, exchange or other disposition of all or
substantially all of the assets of the Company; or
(v) the entering into any agreement or series of agreements the
terms of which would be materially altered if Nextel or NWIP either exercised
or elected not to exercise its right to acquire the relevant Company Capital
Stock (as defined in the Shareholders' Agreement) under Sections 3.05, 3.07,
4.01, 4.02, 5.03, 7.03 or 7.04 of the Shareholders' Agreement or otherwise
acquired beneficial ownership of a majority of the outstanding or Fully Diluted
(as defined in the Shareholders' Agreement) shares of the Company Capital
Stock.
3. TERM
3.1 INITIAL TERM; RENEWAL TERMS. The term of this Agreement is for an
initial term of ten years, plus an additional time period equal to the period
of any postponement of the NWIP Call Right under Section 4.02(a) of the
Shareholders' Agreement (the "Initial Term"), and is subject to renewal for up
to four additional ten-year terms (each, a "Renewal Term") at the Company's
option exercisable by providing 180 days' written notice prior to the end of
the Initial Term or any Renewal Term. Any extension of the Initial Term of this
Agreement or any renewal of this Agreement for a Renewal Term will
automatically extend and continue the terms of the Collateral Agreements so
that (unless the arbitrators have determined pursuant to Section 12.9D, that
the Trademark License Agreement should be terminated) the term of those
agreements are the same as this Agreement. Either the Company or NWIP may
terminate the Collateral Agreements at any time upon or after termination of
this Agreement (unless the arbitrators have determined pursuant to Section
12.9D that the Trademark License Agreement should continue).
4. FREQUENCIES AND LICENSES
4.1 CONTRIBUTION OF LICENSES IN INITIAL SECTIONS.
A. Prior hereto, members of the Nextel Group have assigned to
License Co. the Initial Licenses. On the date hereof, NWIP is filing with the
FCC an application for approval to permit the Company to acquire all of the
outstanding capital stock of License Co. Pending FCC approval of the transfer
of the License Co. stock to the Company, NWIP has agreed to grant to the
Company certain rights to manage the use of the Initial Frequencies, subject to
the terms and conditions of the Interim Management Agreement being entered into
on the date hereof. In consideration for, among other things, entering into the
Interim Management Agreement, the Company is issuing shares of Series B
Preferred Stock, Series C Preferred Stock and Series D Preferred Stock of the
Company to NWIP pursuant to the Subscription and Contribution Agreement, in an
aggregate amount equal to the aggregate Exhibit 4.1 Value of the Initial
Frequencies (that are identified on Exhibit 4.1). Upon FCC approval for the
transfer of the stock
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of License Co. to the Company, License Co. will become a wholly owned
Subsidiary of the Company and the Interim Management Agreement will terminate
in accordance with its terms.
B. The parties will use their respective reasonable best efforts to
obtain FCC approval for the transfer of control of License Co. to the Company
and (if applicable) the arrangements contemplated by the Transaction Documents
as in effect on the date hereof.
C. Within 60 days after such FCC approval is granted, the Company
will notify NWIP of the number of Useable Frequencies that License Co. is
licensed to use in each Build Area of the Initial Sections. In the event of any
discrepancy between such number of Useable Frequencies and the number of
Useable Frequencies to which the Company is entitled as set forth on Exhibit
4.1 which discrepancy is not the result of the matters described in Part I of
Exhibit D to the Subscription and Contribution Agreement (identified on Exhibit
I), the parties will promptly make such filings and take such other actions as
are necessary to ensure that License Co. is licensed to use the number of
Useable Frequencies set forth on Exhibit 4.1 (but no more than that).
D. If, as a direct result of the ultimate outcome (including any
judicial review or appeals) of Case No. 95F 860 that is identified in Part II
of Schedule D to the Subscription and Contribution Agreement, the Company loses
the right to an Initial Frequency (a "Chadmoore Lost Frequency"), then at the
Company's request (delivered to NWIP within sixty (60) days after such ultimate
outcome), NWIP will (or will cause the appropriate member of the Nextel Group
to) make such filings and take such other actions as are necessary so that, for
each Chadmoore Lost Frequency in any Build Area, the Company receives in
replacement therefor a Nextel Retained Frequency in that Build Area (so long as
any Nextel Retained Frequency is available in that Build Area). If there are
not sufficient Nextel Retained Frequencies in a Build Area to replace all
Chadmoore Lost Frequencies in that Build Area, then at the Company's request,
NWIP will (or will cause the appropriate member of the Nextel Group to) make
such filings and take such other actions as are necessary to transfer to the
Company Nextel Retained Frequencies in any other Build Area for the Lost
Chadmoore Frequencies being replaced so long as the Exhibit 4.1 Value of such
Nextel Retained Frequencies is equal to or less than the Exhibit 4.1 Value of
Lost Chadmoore Frequencies being replaced (any Nextel Retained Frequency so
acquired, a "4.1D Frequency"). NWIP shall have no further obligations under
this Section 4.1D and shall have no other liability or obligation in respect of
or otherwise connected with any Chadmoore Lost Frequency upon the earlier to
occur of (i) all Chadmoore Lost Frequencies being replaced pursuant to this
Section 4.1D and (ii) no Nextel Retained Frequency having an Exhibit 4.1 Value
equal to or less than the Chadmoore Lost Frequencies that have not been
replaced.
4.2 CONTRIBUTION OF LICENSES IN OPTION SECTIONS. If the Company elects
to include any Option Section in the Territory pursuant to Section 6.2, NWIP
will, within 30 days thereafter, cause appropriate applications to be filed
with the FCC for the approval of the assignment to License Co. of licenses (the
"Option Licenses") for that number of Useable Frequencies for each Build Area
within such Option Section as set forth on Exhibit 4.1 (the "Option
Frequencies"). Pending FCC approval of any such assignment, NWIP will, if the
Company so requests, grant to License Co. the right to manage the use of the
Option Frequencies, subject to the terms and conditions of a management
agreement in substantially the form of the Interim Management
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Agreement, such grant to be made on or prior to the date of filing of the
transfer applications with the FCC. Upon the earlier of the granting of FCC
approval of the assignment of the Option Licenses to License Co. or, if
applicable, the granting by NWIP of management rights with respect to the
Option Frequencies, the Company will issue to NWIP a number of shares of Equity
equal to the aggregate Exhibit 4.1 Value of such frequencies divided by the
Equity Value on the date hereof, as appropriately adjusted for stock splits and
combinations, stock dividends and the like.
4.3 OTHER ACQUISITIONS OF LICENSES FROM NEXTEL GROUP. If the
Company requires frequencies in any Build Area in the Territory in addition to
the Initial Frequencies or Option Frequencies in such Build Area, the Company
may ask NWIP whether any member of the Nextel Group is licensed to use any
frequencies in such Build Area. NWIP will respond to such request within 30
days, indicating the number and its estimate of the fair market value of any
such frequencies. Within 10 days after receiving NWIP's response (the "NWIP
Response"), the Company may notify NWIP of the frequencies that it wants to use
(the "Section 4.3 Frequencies"). Within 30 days after receipt of such notice,
NWIP will cause appropriate applications to be filed with the FCC for the
approval of the assignment to License Co. of licenses for the Section 4.3
Frequencies in such Build Area. Pending FCC approval of such assignment, NWIP
will, if the Company so requests, grant to License Co. the right to manage the
use of the Section 4.3 Frequencies, subject to the terms and conditions of a
management agreement in substantially the form of the Interim Management
Agreement, such grant to be made on or prior to the date of filing of the
assignment applications with the FCC. Notwithstanding the foregoing, NWIP will
not be obligated to assign any such license, or to grant to License Co. the
right to manage the use of any such Section 4.3 Frequency, that is being used
by the Nextel Group to provide Analog Services, prior to 180 days following the
date of the Company's request. Upon the earlier of the granting of FCC approval
of the assignment of such licenses to License Co. or, if applicable, the
granting by NWIP of management rights with respect to the Section 4.3
Frequencies, the Company will (i) issue to NWIP a number of shares of Equity
equal to the aggregate Fair Market Value of the Section 4.3 Frequencies divided
by the Equity Value on the date of issuance or (ii) assign to NWIP, in
accordance with Section 4.4, Old Licenses for frequencies with an aggregate
Frequency Value equal to the aggregate Frequency Value of the Section 4.3
Frequencies; provided, that the issuance of shares by the Company or the
assignment of licenses by License Co., and the assignment of licenses or
granting of management rights by NWIP, will take place simultaneously and will
be delayed until the aggregate Fair Market Value of the Section 4.3 Frequencies
is determined.
4.4 SWAPS AND EXCHANGES OF LICENSES WITH NEXTEL GROUP. In lieu of
issuing Equity in consideration for licenses as provided in Section 4.3, the
Company may elect to assign Old Licenses for Old Frequencies to NWIP in
exchange for New Licenses for New Frequencies, in accordance with the following
provisions:
A. If the Frequency Acquisition Amount is greater than zero (after
giving effect to any proposed license or frequency exchange pursuant to this
Section 4.4), the Company may exchange an Old Frequency in any Build Area for a
New Frequency in the same or any other Build Area without NWIP's consent or
approval.
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B. After the Frequency Acquisition Amount has been reduced to zero,
the Company shall have the right to exchange:
1. for a New Frequency in any Build Area, an Old Frequency in the
same Build Area:
a. without the consent of NWIP, if the Old Frequency has
substantially the same coverage characteristics as the New Frequency, and
b. with the consent of NWIP not to be unreasonably withheld,
if the Old Frequency does not have substantially the same coverage
characteristics as the New Frequency; and
2. for a New Frequency in any Build Area, an Old Frequency in a
different Build Area, with the consent of NWIP not to be unreasonably withheld,
if the New Frequency is licensed to any member of the Nextel Group (other than
License Co.) on the date hereof. Exhibit 4.4 lists the frequencies that are
licensed on the date of this Agreement to a member of the Nextel Group (other
than License Co.) (the "Nextel Retained Frequencies").
C. For any exchange, the Company shall cause appropriate
applications to be filed with the FCC for the approval of the assignment to
NWIP (or another member of the Nextel Group designated by NWIP) of such Old
Licenses. Pending FCC approval of such assignment, the Company will, if NWIP so
requests, or will cause License Co. to, grant to NWIP (or such other member of
the Nextel Group) the right to manage the use of the frequencies subject to
such Old Licenses, subject to the terms of a management agreement in
substantially the form of the Interim Management Agreement, such grant to be
made on or prior to the date of filing of the assignment applications with the
FCC.
D. For any exchange, the aggregate Frequency Value of the Old
Frequencies being exchanged, together (if necessary) with Equity issued to NWIP
pursuant to Section 4.3, must be equal to the aggregate Frequency Value of the
New Frequencies being acquired.
E. For any exchange, the Frequency Acquisition Amount, if not
already zero, will be reduced by an amount equal to the aggregate Frequency
Value of the Old Frequencies being exchanged.
4.5 ACQUISITIONS OF LICENSES FROM THIRD PARTIES.
A. The Company may acquire FCC licenses for frequencies from third
parties on such terms as the Company and such third parties may agree, and the
Company will pay the purchase price of such licenses and otherwise be
responsible for such acquisitions; provided, that so long as the Frequency
Acquisition Amount has not been reduced to zero (after giving effect to any
transaction pursuant to this Section), the provisions of this Section 4.5A will
apply. At the closing of any such acquisition, (i) NWIP will pay the purchase
price of such licenses to the extent
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of any remaining Frequency Acquisition Amount (or any portion thereof properly
specified by the Company) to the Company or (at the Company's request) directly
to the third party seller, whereupon the Frequency Acquisition Amount will be
reduced by the amount of such payment, (ii) the third party seller will assign
such licenses to License Co. and (iii) License Co. will assign to NWIP (or
another member of the Nextel Group designated by NWIP) Old Licenses for Old
Frequencies in any Build Area with an aggregate Exhibit 4.1 Value equal to the
purchase price (or portion thereof) paid by NWIP under clause (i) above. The
Company will give NWIP at least 10 days' notice of any such closing, and it
will be a condition precedent to NWIP's obligations under this Section that the
FCC shall have granted approval for the assignment of licenses to NWIP under
clause (iii) above.
B. The Company and NWIP will coordinate their frequency acquisition
efforts, among other reasons, to avoid conflict with NWIP's activities under
Section 4.8. If any party becomes aware that licenses are available for
acquisition in the Territory or the Option Territory, it will promptly notify
the other party. For 90 days thereafter, the Company, upon notice to NWIP of
its intent to acquire such licenses, will have the exclusive right to negotiate
with the prospective seller of such licenses. If the Company elects not to
pursue the acquisition of such licenses, it will promptly notify NWIP,
whereupon any member of the Nextel Group may acquire such licenses.
4.6 FREQUENCY AUCTIONS. NWIP will have the right to participate in any
FCC auction of licenses for frequencies (whether or not in the 800 MHz
frequency band and whether in the Territory or elsewhere in the United States)
and may assign such right to any other member of the Nextel Group. The Company
will have the right to participate in any FCC auction of licenses for 800 MHz
or 900 MHz frequencies in the Territory (a "Partner Auction") either with NWIP
or NWIP's assignee (collectively referred to in this Section 4.6 as "NWIP") or
independently if NWIP elects not to participate. If both NWIP and the Company
desire to participate in a Partner Auction, NWIP and the Company will enter
into a consortium agreement to form an auction consortium to bid on and fund
the purchase of any auction licenses in the Territory acting in accordance with
FCC Rules. In the consortium agreement, the Company will control the bidding
and have the right to fund 100% of the auction cost (in which case License Co.
will be the licensee of any license awarded in the auction). If the Company
elects to withdraw from the auction, or from bidding on any individual auction
license, NWIP will have the right to assume control of the bidding and fund the
cost of the auction (or individual auction license(s), as the case may be)
independent of the Company, in which case NWIP (or another member of the Nextel
Group) will be the licensee of any such license awarded in the auction.
4.7 COOPERATION.
A. NWIP and the Company will cooperate so that, to the maximum
extent possible, those frequencies of each Nextel Subsidiary that become
Partner Frequencies are clear from co-channel interference and existing analog
customers.
B. NWIP, on behalf of the NDS, and the Company (on behalf of itself
and its Subsidiaries) will cooperate with respect to the use of frequencies
along border areas between the
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NDS ESMR Network and the ESMR Network in the Territory, to make efficient use
of spectrum, to preserve both parties' rights as incumbent licensees 22DBU
service contours and facilitate roaming by subscribers using either party's
service. Such cooperation will include, among other things, agreements between
the parties (or their relevant Subsidiaries) to co-channel short spacing to
make efficient use of spectrum.
4.8 TRANSACTIONS TO CREATE CONTIGUOUS SPECTRUM. The Company will use
its reasonable best efforts and will expend commercially reasonable funds to
achieve contiguous spectrum in the upper 200 block of the SMR Frequency
spectrum (the "Upper 200") in the Territory. The Company hereby engages NWIP,
and NWIP hereby accepts such appointment, to act as the exclusive agent of the
Company to negotiate transactions that, by exchanges of frequencies ("swaps")
or by other arrangements will give the Company (as licensee) the benefit of
additional frequencies in the Upper 200. The Company will make available for
possible exchange all Partner Frequencies that are outside the Upper 200,
except for frequencies that are then required in the existing or contemplated
operation of the ESMR Network in the Territory. NWIP will report to the Company
in writing the proposed terms of any such arrangement or transaction
(including, without limitation, any costs, and the number, location, and
precise frequencies of the Company that are subject to any such transaction),
which terms will be subject to approval by the Company. The Company (or one or
more of its Subsidiaries, and not NWIP or any member of the Nextel Group) will
(i) directly enter into exchange or other transactions affecting frequencies
licensed to the Company, (ii) be responsible for any amounts payable to the
relevant third party, and reasonable out-of-pocket costs or expenses of NWIP,
associated with the exchange or other transaction, and (iii) be entitled to the
benefit of the frequencies obtained in the Upper 200 as a result of such
transaction or arrangement.
4.9 NEXTEL ANALOG OPERATIONS.
A. The Company will be responsible for the migration of any analog
customers from frequencies being used in the Company's ESMR Network as deemed
necessary by the Company. If the Company elects to migrate any such analog
customers, the Company will contract with NWIP to provide migration management
services for a one time fee of $20 per analog unit. Such services would
include, at the Company's request, the mailing of letters to the affected
analog customers stating the terms under which such customers could migrate to
the Company's ESMR Network. The Company will be responsible for all normal
costs (such as trade-in allowances, subsidies, loading expenses, analog unit
returning or refurbishment expenses) associated with any such offers to or
migration of such analog customers, and NWIP will not be entitled to any
commission if such customer is moved to the Company's ESMR Network. NWIP will
be responsible for the operation of the affected analog system in the Territory
during the migration process. Costs, expenses, liabilities and similar amounts
incurred by reason of claims asserted by such analog customers who have been
identified for migration, or by reason of actions taken by such customers to
delay or prevent such migration, shall be divided between and borne equally by
the Company and NWIP.
B. The Company has the right to solicit any analog customer of any
Nextel Subsidiary in the Territory who is not otherwise affected by frequency
migration under
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Section 4.9A. If the Company converts any such customer to the
Company's ESMR Network, the Company will pay NWIP a one time fee of $150 per
unit as compensation for such customer.
C. Under the Analog Management Agreement, Nextel Subsidiaries will
be entitled to operate Analog Systems and offer Analog Services (on a basis
consistent with Section 2.4B) using any frequencies licensed to License Co. (or
another member of the Company Group) that are not then being used in the ESMR
Network in the Territory.
4.10 RESERVED.
4.11 COMPLIANCE WITH FCC RULES.
A. General. Subject to Section 4.12, the Company will be
responsible for complying with FCC Rules relating to all Partner Frequencies.
The Company will also be responsible for complying with all FCC or state
mandated programs (including, without limitation, federal universal service
fund, enhanced 911, telecommunications relay services for the hearing impaired,
local number portability, potential "calling party pays" services, and
potential priority access services), and for paying all applicable fees,
surcharges or taxes, applicable to or arising out of the Company's operations
in the Territory. Subject to Section 4.12, NWIP will be responsible for
complying with FCC Rules relating to any frequencies used by any Nextel
Subsidiary as part of its analog operations in the Territory.
B. Indemnification.
1. Except as provided in Section 4.12, the Company and Opco
will, jointly and severally, indemnify and hold harmless NWIP and the
other members of the Nextel Group, and their respective directors,
officers, shareholders, employees and agents (collectively, the
"Nextel Indemnitees"), from and against any and all claims,
liabilities, damages, losses and costs ("Losses") that arise under FCC
Rules from the conduct of business activities or other use of Partner
Frequencies by any member of the Company Group in a manner contrary to
law or to such indemnifying party's contractual obligations, except to
the extent that any such Losses arise out of or result from the gross
negligence or willful misconduct of any Nextel Indemnitee.
2. Except as provided in Section 4.12, NWIP will indemnify
and hold harmless the Company and Opco and the other members of the
Company Group, and their respective directors, officers, shareholders,
employees and agents (collectively, the "Company Indemnitees"), from
and against any and all Losses that arise under FCC Rules from the
conduct of business activities or other use of frequencies licensed,
managed or otherwise used by any member of the Nextel Group in a
manner contrary to law or to such indemnifying party's contractual
obligations, except to the extent that any such Losses arise out of or
result from the gross negligence or willful misconduct of any Company
Indemnitee.
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C. Construction. Except as provided in Section 4.18, the Company
will have the obligations described in Article 6 with respect to all
frequencies in its ESMR Network consistent with the Build-Out schedule of
Exhibit 6, and the Company will be responsible for any construction of Partner
Frequencies required by the FCC Rules. NWIP may from time to time require the
Company to utilize frequencies that are not Partner Frequencies in the
Company's ESMR Network to comply with FCC Rules. In such event, NWIP will grant
to License Co. the right to manage the use of such frequencies under a
management agreement in substantially the form of the Interim Management
Agreement. The Company will not be required to pay any additional consideration
to NWIP for managing the use of such included frequencies. NWIP will have the
right at any time upon ten business days' notice to amend such management
agreement so that such included frequencies are no longer subject to its terms,
except that the Company can acquire such frequencies if the Company so notifies
NWIP of its intention to acquire such frequencies pursuant to Section 4.3 prior
to the expiration of such ten business days.
4.12 FCC PROCEEDINGS.
A. Obligations of Nextel Group. As licensee, NWIP (or another
member of the Nextel Group) will represent License Co. (or other members of the
Company Group) before the FCC with respect to any matters relating to the
licenses for frequencies subject to the Interim Management Agreement (or any
other management agreement between NWIP as licensee and a member of the Company
Group as manager) and will have authority and responsibility for FCC
correspondence and filings with respect to such licenses. NWIP will timely
provide copies of such FCC correspondence and filings to the Company and will
provide a full and comprehensive flow of information on such matters to the
Company in consultation with, and with the cooperation and participation by the
Company, on any issues related to the Interim Management Agreement or any other
Collateral Agreements. The Company will timely provide information to NWIP
necessary for NWIP to make such FCC filings. NWIP (or another member of the
Nextel Group) will have primary responsibility for interacting with the FCC, in
consultation with, and with the cooperation and participation by the Company on
any issues related to frequencies that are subject to the Interim Management
Agreement (or any other management agreement between NWIP as licensee and a
member of the Company Group as manager). NWIP will pay any costs (including any
fines) related to any FCC inquiries or actions related to any breach by any
member of the Nextel Group of its obligations under this Section 4.12A.
B. Obligations of Company Group. As licensee, the Company (or a
Company Subsidiary) will represent NWIP (or other members of the Nextel Group)
before the FCC with respect to any matters relating to the licenses for
frequencies subject to the Analog Management Agreement (or any other management
agreement between NWIP as manager and a member of the Company Group as
licensee) and will have authority and responsibility for FCC correspondence and
filings with respect to such licenses. The Company will timely provide copies
of such FCC correspondence and filings to NWIP and will provide a full and
comprehensive flow of information on such matters to NWIP in consultation with,
and with the cooperation and participation by NWIP, on any issues related to
the Analog Management Agreement or any such other management agreement. NWIP
will timely provide information to the Company necessary for the Company to
make such FCC filings. The Company (or a Company Subsidiary) will have
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primary responsibility for interacting with the FCC, in consultation with, and
with the cooperation and participation by NWIP (or other members of the Nextel
Group) on any issues related to frequencies that are subject to the Analog
Management Agreement (or any other management agreement between NWIP as manager
and a member of the Company Group as licensee). The Company will pay any costs
(including any fines) related to any FCC inquiries or actions related to any
breach by any member of the Company Group of its obligations under this Section
4.12B.
C. No Unauthorized Change of Control. The parties intend that this
Agreement, either alone or together with the other Collateral Agreements, not
(i) create an unauthorized FCC Change of Control or (ii) otherwise violate the
statutes, rules or regulations administered by the FCC (collectively, "FCC
Rules"). If the FCC formally or informally advises any party that the terms of
the Interim Management Agreement, the Analog Management Agreement or any other
management agreement executed pursuant to this Agreement, either alone or
together with the terms of any of this Agreement or the Collateral Agreements,
constitute in whole or in part, an unauthorized FCC Change of Control, then
such party will promptly notify the other party, and NWIP and the Company will
negotiate (i) to resolve the FCC concerns or directives to the satisfaction of
NWIP, the Company and the FCC, and (ii) to the extent necessary, modify the
terms of any management agreement then in effect between them or this Agreement
or any other Collateral Agreements in a manner most consistent with the
arrangements described herein or therein.
4.13 TRANSFER RESTRICTIONS.
A. Except as contemplated by this Agreement, the Company will not
(and will not permit any Subsidiary to) make any direct or indirect sale,
exchange, assignment, pledge, transfer or other disposition, in whole or in
part, of (i) ownership interests in any Company Subsidiary that holds licenses
for Partner Frequencies or (ii) licenses for, or other rights to use or to
manage the use of, Partner Frequencies. Notwithstanding the provisions of the
foregoing sentence, the Company and its Subsidiaries may (i) pledge ownership
interests in any Company Subsidiary that holds licenses for Partner
Frequencies, grant a security interest in licenses held by any member of the
Company Group, and collaterally assign rights to use or to manage the use of
Partner Frequencies, in each case to senior lenders to the Company or Opco that
have granted to members of the Nextel Group the rights described on Exhibit
4.13 (or other rights as NWIP may agree), (ii) in connection with joint
ventures in which it participates in the Territory, grant rights to use or to
manage the use of Partner Frequencies on terms consistent with the provisions
of this Agreement (including without limitation this Section 4.13 and Section
4.14) and the other Collateral Agreements, and (iii) subject to NWIP's rights
under Section 4.14, sell, transfer or otherwise dispose of 4.1D Frequencies.
B. Except as contemplated by this Agreement, NWIP will not (and
will not permit any member of the Nextel Group to) make any direct or indirect
sale, exchange, assignment, pledge, transfer or other disposition, in whole or
in part, of (i) ownership interests in any member of the Nextel Group that
holds licenses for frequencies or (ii) licenses for, or other rights to use or
rights to manage the use of, frequencies, in each case that are (at the time of
such
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disposition) subject to the Interim Management Agreement or any other
management agreement with members of the Company Group.
4.14 NWIP RIGHT OF FIRST REFUSAL.
A. If any member of the Company Group (a "Company Transferor")
proposes to assign, directly or indirectly, a license for any frequency in the
Territory to a Person other than another member of the Company Group, the
Company Transferor must give NWIP written notice (the "4.14 Notice") stating
(i) the name and address of the proposed transferee, (ii) a description of the
license and frequency being transferred, (iii) a representation that the
proposed transferee has been informed of the right of first refusal provided in
this Section 4.14 and has agreed to be bound by its terms, (iv) a complete copy
of any related documents, and (v) a description of any common ownership or
other relationships between any member of the Company Group and the proposed
transferee and its Affiliates.
B. For a period of 30 days after delivery of the 4.14 Notice, NWIP
has the right to elect to purchase the license described in the 4.14 Notice on
the terms stated in this Section 4.14B. To exercise this right, NWIP must
deliver to the Company Transferor within such 30-day period a notice stating
that NWIP is irrevocably exercising its option to acquire the licenses for a
purchase price equal to the purchase price to be received from the proposed
transferee or, if less, the aggregate Frequency Value of the frequencies
subject to the license. If NWIP makes such election, within 30 days thereafter
the Company will cause the appropriate filings to made with the FCC to assign
to NWIP (or another member of the Nextel Group) such licenses, and the purchase
and sale will close within 45 days after FCC approval of the assignment of such
license is obtained. If the license covers a 4.1D Frequency, then NWIP will pay
the purchase price in cash. If the license does not cover a 4.1D Frequency, the
purchase price will be paid, at NWIP's election, in shares of Company capital
stock (other than Series B Preferred Stock) valued at the Equity Value or in
shares of Nextel common stock (valued at the average closing price of Nextel
common stock for the ten trading days preceding the date of delivery), or in
cash. If payment of the purchase price in shares of Series C or D Preferred (or
Class B Common Stock) would violate covenants of, or create an event of default
or result in other adverse consequences under any agreement for money borrowed
to which the Company is a party, the purchase price for frequencies that are
not 4.1D Frequencies may be paid in shares of Series B Preferred valued at the
fair market value of such Series B Preferred.
C. If NWIP does not irrevocably elect to acquire any license
described in the 4.14 Notice within such 30-day period, the Company Transferor
may assign such license to the transferee identified in the 4.14 Notice, on
terms that are no more favorable to the proposed transferee than those
described in the 4.14 Notice, so long as the application to transfer such
license is filed with the FCC within 60 days after delivery of the 4.14 Notice
to NWIP.
D. NWIP's rights under this Section 4.14 terminate upon the
consummation of a Section 3.08 Sale (as defined in the Shareholders' Agreement)
or a Section 5.5 Sale (as defined in the Restated Certificate of Incorporation
of the Company).
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4.15 COMPANY RIGHTS OF FIRST REFUSAL.
A. If any member of the Nextel Group (a "Nextel Transferor")
proposes to assign, directly or indirectly, a license for any 800 MHz frequency
in the Territory or the Option Territory to a Person other than another member
of the Nextel Group, the Nextel Transferor must give the Company written notice
(the "Section 4.15 Notice") stating (i) the name and address of the proposed
transferee, (ii) a description of the license and frequency being transferred,
(iii) a representation that the proposed transferee has been informed of the
right of first refusal provided in this Section 4.15 and has agreed to be bound
by its terms, and (iv) a complete copy of any related documents.
B. For a period of 30 days after delivery of the Section 4.15
Notice, the Company has the right to elect to purchase the license described in
the Section 4.15 Notice on the terms stated in this Section 4.15B. To exercise
this right, the Company must deliver to the Nextel Transferor within such
30-day period a notice stating that the Company is irrevocably exercising its
option to acquire the licenses for a cash purchase price equal to the price
offered by the proposed transferee; provided, that if the Frequency Acquisition
Amount has not then been reduced to zero, the Company may acquire the licenses
by assigning to NWIP (or another member of the Nextel Group) Old Licenses in
accordance with the provisions of Section 4.4.
C. If the Company does not irrevocably elect to acquire any license
described in the Section 4.15 Notice within such 30-day period, the Nextel
Transferor may assign such license to the transferee identified in the Section
4.15 Notice, on terms that are no more favorable to the proposed transferee
than those described in the Section 4.15 Notice, so long as the application to
transfer such license is filed with the FCC within 60 days after delivery of
the Section 4.15 Notice to the Company.
4.16 NWIP OPTION UPON CHANGE IN CONTROL OF THE COMPANY.
A. If there is a Change in Control of the Company, NWIP has the
option, exercisable within 90 days after such Change in Control, to acquire for
$1.00 the licenses covering all (but not less than all) of the Partner
Frequencies. Not more than 30 days after receiving written notice from NWIP
that it is irrevocably exercising this option, the Company will cause the
appropriate filings to made with the FCC to assign to NWIP (or another member
of the Nextel Group) either (i) the licenses for the Partner Frequencies or
(ii) the stock in License Co. or other Company Subsidiary that is the licensee
of such frequencies. Upon FCC approval of the assignment, and in consideration
thereof, NWIP as licensee and the Company (or a Company Subsidiary) as manager
will enter into a management agreement, substantially in the form of the
Interim Management Agreement, with respect to the Partner Frequencies.
B. "Change in Control of the Company" means the occurrence of any
of the following events:
(a) any person or group (as such terms are used in Sections
13(d) and 14(d) of the Exchange Act and the regulations thereunder)
(i) is or becomes the Beneficial Owner
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or more than 50% of the total Voting Stock or Total Common Equity of
the Company, or (ii) otherwise has the power to direct the management
and policies of the Company, directly or through one or more
intermediaries, whether through the ownership of voting securities, by
contract or otherwise, except that no change of control will be deemed
to have occurred under this clause (ii) as a result of customary
rights granted (A) in any indenture, credit agreement or other
agreement for borrowed money or (B) to holders of non-convertible,
mandatorily redeemable, preferred stock unless and until action occurs
that would otherwise cause a "Change in Control of the Company" as
herein defined, provided that such rights were granted pursuant to a
transaction in the financial markets and not as part of a strategic
alliance or similar transaction;
(b) the Company sells, assigns, conveys, transfers, leases or
otherwise disposes of all or substantially all of its assets to any
Person in one or a series of related transactions;
(c) the Company, directly or indirectly, consolidates with,
or merges with or into, another Person, or any Person, directly or
indirectly, consolidates with, or mergers with or into, the Company,
and pursuant to such transaction (or series of transactions) either:
(i) the outstanding Voting Stock of the Company is converted into or
exchanged for cash, securities or other property, but excluding a
transaction (or series of transactions) where (A) the outstanding
Voting Stock of the Company is converted into or exchanged for Voting
Stock of the surviving or transferee person and (B) the holders of
Voting Stock of the Company immediately preceding such transaction
received more than 50% of the total Voting Stock and Total Common
Equity of the surviving or transferee person in substantially the same
relative proportions as such holders had prior to such transaction; or
(ii) new shares of Voting Stock of the Company are issued so that
immediately following such transaction, the holders of Voting Stock of
the Company immediately preceding such transaction own less than 50%
of the Voting Stock and Total Common Equity of the surviving person;
or
(d) during any period of two consecutive years after the date
hereof, individuals who at the beginning of such period constituted
the board of directors of the Company (together with any directors who
are members of the board of directors of the Company on the date
hereof, and any new directors whose election by such board of
directors or whose nomination for election by the stockholders of the
Company was approved by a vote of 66-2/3% of the directors then still
in office who were either directors at the beginning of such period or
whose election or nomination for election was previously so approved)
cease for any reason to constitute a majority of the board of
directors of the Company then in office; provided, that no change in
the composition of the Board by reason of any substitution of one
director for another so long as both directors are nominated by the
same person, shall constitute a Change in Control of the Company for
purposes of this paragraph (d).
(e) notwithstanding the foregoing, no "Change of Control of
the Company" shall occur merely by reason of a transfer by Eagle River
Investments, LLC ("Eagle
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River") to another Person of the capital stock of the Company owned by
Eagle River so long as Craig O. McCaw ("McCaw") controls (as defined
in Section 4.01(h) of the Shareholders' Agreement) such Person whether
or not McCaw owns a majority of the equity interests of such Person,
unless such transfer, sale or disposition, alone or in conjunction
with other transactions, results in the occurrence of an event of the
type described in any of clauses (a), (b), (c) or (d) above.
C. NWIP's rights under this Section 4.16 terminate upon the
consummation of a Section 3.08 Sale (as defined in the Shareholders' Agreement)
or a Section 5.5 Sale (as defined in the Restated Certificate of Incorporation
of the Company).
4.17 REPRESENTATIONS AND WARRANTIES. In connection with any assignment
of licenses hereunder from a member of the Nextel Group to a member of the
Company Group, or vice versa, the assignee will be entitled to receive
representations and warranties by the assignor regarding such licenses and the
documents governing such assignment that are substantially identical to the
representations and warranties made by NWIP in Sections 4.01, 4.02, 4.03, 4.04
and 4.11 of the Subscription Agreement (it being understood that for purposes
of Section 4.16A only, if the Company and its Subsidiaries have pledged
ownership interests in any Company Subsidiary that holds licenses for Partner
Frequencies, granted a security interest in licenses held by any member of the
Company Group, or collaterally assigned rights to use or to manage the use of
Partner Frequencies, in each case to the Company's or Opco's senior lenders,
such pledge, security interest or collateral assignment will remain in full
force and effect notwithstanding any assignment of licenses from a member of
the Company Group to a member of the Nextel Group).
4.18 FREQUENCY CONSTRUCTION.
A. For licenses and frequencies in the Territory (licensed to or
managed by any of the Company or a member of the Nextel Group) that are
constructed on the date of this Agreement at their licensed sites with analog
scanning repeaters ( the "Constructed Frequencies"), NWIP hereby leases to the
Company for $1.00 the equipment used to construct any Partner Frequencies at
such sites until such time as such equipment is no longer needed to meet FCC
construction requirements. NWIP and the Company will each pay one half of the
ongoing operating costs associated with the Constructed Frequencies until such
time as the site, or its operation, is no longer necessary to meet FCC
construction requirements.
B. For licenses and frequencies in the Territory (licensed to or
managed by any of Partner or a member of the Nextel Group) that have a
construction deadline under FCC Rules of May 20, 1999 or earlier (the "May 20th
Frequencies"), NWIP and the Company will (a) each pay one half of the
construction or ongoing operational costs to construct and operate such
frequencies at their licensed sites, and (b) construct such frequencies using
analog scanning repeaters in a manner similar to the construction of the
Constructed Frequencies.
C. NWIP and the Company will each use their reasonable best efforts
to (a) seek orders or other action by the FCC that will provide relief from the
construction requirements, and (b) minimize the cost of the construction
required to meet the FCC construction
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requirements. Unless otherwise agreed between NWIP and the Company, they will
(i) keep all Constructed Frequencies constructed and operating, and (ii)
construct all May 20th Frequencies prior to the construction deadline under the
FCC Rules, and, following construction, will operate such frequencies. NWIP (or
another member of the Nextel Group) will manage the construction and
deconstruction process for the Constructed Frequencies and the May 20th
Frequencies for so long as construction using analog scanning repeaters is
required. Internal costs incurred by any member of the Nextel Group or by the
Company under this Section 4.18 will not be included in the construction or
operating costs to be shared by the parties.
D. If, at any time, for any reason, the parties agree that
construction or operation using analog scanning repeaters is not required or no
longer required for a Constructed Frequency or for a May 20th Frequency (such a
frequency, a "4.18D Frequency"), NWIP will no longer have responsibility for
construction or operating costs associated with a 4.18D Frequency that is a
Partner Frequency, and the Company will no longer have responsibility for
construction or operating costs associated with a 4.18D Frequency that is
licensed to a member of the Nextel Group (other than License Co. if it is still
a member of the Nextel Group).
5. COMPANY ACCESS TO PROPRIETARY
TECHNOLOGY AND NETWORK COMPONENTS
5.1 COORDINATION OF EQUIPMENT ORDERS AND PURCHASES. NWIP (on behalf of
the Nextel Group) and the Company (or Opco, in either case, on behalf of the
Company and its Subsidiaries) will each forecast periodically (not more
frequently than quarterly) its subscriber and infrastructure equipment
requirements and coordinate regarding assumptions and methodologies to create
accurate forecasts to which each will have access. The Company (on behalf of
Opco and its other Subsidiaries) and NWIP (on behalf of the Nextel Group) will
coordinate their equipment orders with the major vendors in order, to the
extent possible, to avoid potential equipment shortages. If such shortages
arise, equipment will be allocated pro-rata, to the Company, based on the
population in the Territory, and to the Nextel Group, based on the population
in the territory in which the Nextel Group has rights to operate ESMR Networks
(worldwide), as adjusted to reflect NWIP's judgment of the realistic needs for
equipment that may be relevant in markets outside the United States. In no
event will NWIP or the Nextel Group have any obligation to pay for or guarantee
purchases of equipment by the Company.
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5.2 ACCESS TO VENDOR EQUIPMENT AND AGREEMENTS.
A. Upon expiration of the Company's Infrastructure Equipment
Purchase Agreement with Motorola, NWIP will use its best reasonable efforts to
induce Motorola to enter into an agreement with Opco or to extend its agreement
with Opco, which will allow: (i) Opco to obtain the same prices then available
to the NDS for such equipment; (ii) Opco to have rights to use Motorola
trademarks and trade names comparable to those trademark and trade name usage
rights granted by Motorola to the NDS; and (iii) Opco to have access to system
upgrades, improvements and technology enhancements made available by or through
Motorola comparable to those available by or through Motorola to the NDS.
Neither NWIP nor any NDS (nor any other Nextel Subsidiary or Affiliate
operating internationally) will be obligated to make any out-of-pocket payments
or otherwise make any concessions in its agreements with Motorola in order to
achieve the Company's or Opco's objectives. If Motorola seeks to impose such
payments or obtain such concessions in connection with achieving the Company's
or Opco's objectives, NWIP will advise the Company and provide the Company with
a good faith estimate of the aggregate total dollar amount of such payments and
the cost to Nextel (on a consolidated basis) of such concessions. If the
Company indicates that it wants to achieve the objectives, the Company will be
obligated to reimburse NWIP in full for all such payments made and costs
incurred, promptly on demand after payment or incurrence by Nextel or its
Subsidiaries, for all such payments and/or concessions imposed on or incurred
by Nextel or any of its Subsidiaries (or any Nextel Affiliate operating
internationally) and NWIP's obligation to continue performance under this
Section 5.2A is conditioned on NWIP's timely receipt of such reimbursement
amounts.
B. NWIP will use its best reasonable efforts to enable the Company
to obtain from third party vendors (other than Motorola) access to equipment
and services that are of the same quality and functionality and on the same
terms and conditions as the equipment or services being purchased by the NDS
from such third party vendors. If such arrangements are obtained, the Company
will enter into direct contracts with such outside vendors for the purchase of
equipment or services. Neither NWIP nor any other member of the Nextel Group
will be obligated to make any out-of-pocket payments or otherwise make any
concessions in its agreements with such vendors in order to achieve the desired
terms for the Company. If a vendor seeks to impose such payments or obtain such
concessions in connection with achieving the desired terms for the Company,
NWIP will advise the Company and provide to the Company a good faith aggregate
estimate of the total dollar amount of any payments and the cost to the Nextel
Group (on a consolidated basis) of any concessions being sought by such vendor.
If the Company indicates that it wants to achieve the desired terms, then the
Company will be obligated to reimburse NWIP in full for all such payments made
and costs incurred, promptly on demand after payment or incurrence by any
member of the Nextel Group, for all such payments and/or concessions imposed on
or incurred by any member of the Nextel Group, and NWIP's obligation to
continue performance under this Section 5.2B is conditioned on NWIP's timely
receipt of such reimbursement amounts. If the Company is unable to obtain the
NDS terms under a separate contract with a vendor, and if the contract is a
contract for equipment or services that are material to the Company and cannot
be acquired by the Company, after using its best reasonable efforts, from any
other third party vendor on commercially reasonable terms and conditions that
are not materially less favorable than the NDS terms, then: (i) if such action
does not involve any adverse
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impact or consequence to or breach by an NDS under the terms of the relevant
contracts with such vendors, NWIP will purchase equipment or services on the
Company's behalf in order to make available to the Company the NDS terms; or
(ii) if there is an adverse impact or consequence to NWIP or an NDS, but there
are commercially reasonable accommodations to avoid such adverse impact or
consequence, NWIP will provide the Company with a description of the
commercially reasonable accommodations, and a good faith estimate of the dollar
amount required and a statement of the other actions required from the Company.
If the Company wants the benefit of the NDS terms, then the Company will pay
such amount and take such actions, and NWIP will purchase the equipment or
services on behalf of the Company in order to make available to the Company the
NDS terms. If actions to provide the Company with the benefits of a contract
would cause NWIP or an NDS to breach a contract with a third party, none of
NWIP or the NDS are required to take any action under the preceding sentence.
The Company will pay NWIP for any equipment ordered or services to be provided
through this intermediary process at the time of placing such order to ensure
that neither NWIP nor any other member of the Nextel Group has any economic
exposure to the vendor for the Company's purchases of equipment or services
and, if the amount so paid exceeds $250,000, NWIP will pay to the Company
interest earned on the relevant payment during the period until payment is made
to the vendor.
5.3 FUTURE IMPROVEMENTS AND ENHANCEMENTS TO TECHNOLOGY OR NETWORK.
A. Subject to having access to the enhancements described in this
Section 5.3 or obtained from Motorola (under separate agreements between the
Company and Motorola) or elsewhere as contemplated by Section 5.2, (i) the
Company will be required to implement any changes, modifications, upgrades, or
enhancements to the iDEN technology or other network components
("Improvements") which are also implemented and in use by NDS on a national
level or in Comparable Service Areas and (ii) the Company will be responsible
for the cost of any Improvements in the Territory and will share pro-rata based
on the population in the Territory and in the area served by the NDS (or based
on the population in the area served by Nextel and its Affiliates worldwide, to
the extent any of such Affiliates are implementing, or are planning to
implement, the Improvement outside the United States) in the cost of any
research and development expenditures incurred by the Nextel Group directly in
connection with Improvements (other than Improvements owned solely by the
Nextel Group) that are implemented on a national level or in Comparable Service
Areas (to the extent such research and development expenditures are not
otherwise charged to the Company at a switch level).
B. NWIP will use its best reasonable efforts to enable the Company
to obtain from third parties agreements between the Company and the third party
that will enable the Company to have access to any Improvements used by any of
the NDS in their national network. Only if NWIP provides the Company with
access to Improvements on the same terms as the NDS can NWIP require the
Company to implement such Improvements.
C. NWIP will make available to the Company any Improvements that
the NDS own (or claim ownership of) and are then using on a national level or
in Comparable Service Areas. Whether or not NWIP notifies the Company that the
Company is required to implement such Improvements, such Improvements will be
made available by NWIP to the Company only on
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an "as is" basis, with all faults, and without any representation or warranty
whether of title or fitness for a particular purpose (even if such Improvements
are being used by the Company for the same purpose as they are used by the NDS)
or otherwise. The Company will use any such Improvements for zero cost but at
its sole risk, and neither NWIP nor any other member of the Nextel Group will
have any liability to the Company in connection therewith, except as provided
in Section 5.3D.
D. If a third party brings a claim against the Company alleging
that the Company's use of any Improvement (other than any Improvement obtained
from Motorola) is contrary to or otherwise infringes on such third party's
rights, then NWIP will not require the Company to continue using such
Improvements unless NWIP agrees to indemnify and hold the Company harmless from
and against the excess of (1) any costs the Company incurs in connection with
such claims, over (2) the benefits (net of costs) the Company realizes through
its use of such Improvement. In addition, in the event of such third party
claims, NWIP also has the right to require the Company to immediately cease
using (upon written notice to that effect given by NWIP to the Company) the
Improvement at issue, so long as NWIP will indemnify and hold the Company
harmless from and against the excess of (i) any costs the Company incurs in
ceasing such use (including removal or decommissioning of any related
equipment), over (ii) the cumulative benefits (net of costs) the Company has
realized through its use of such Improvements prior to the time it ceases to
use them.
E. If a third party brings a claim against the Company, NWIP, or
any other member of the Nextel Group alleging that the Company's use of any
Improvement (other than any Improvement obtained from Motorola) is contrary to
or otherwise infringes on such third party's rights, and the Company is not
required to use the Improvement under this Section 5.3, the Company will
immediately cease using the Improvement if NWIP so requests in writing and, if
NWIP does not so request, and the Company wishes to continue using such
Improvement, the Company will indemnify and hold NWIP and each other member of
the Nextel Group harmless from such continued use.
F. If the Company (or any of its Affiliates) develops any
Improvements for its (or their) use, the Company will make such Improvements
available to the NDS on an "as is" basis, with all faults, and without any
representation or warranty whether of title or fitness for a particular purpose
(even if such Improvements are being used by the NDS for the same purpose as
they are used by the Company) or otherwise. The NDS will be entitled to use
such Improvements for zero cost, but at its (or their) sole risk, and neither
the Company nor any other member of the Company Group will have any liability
to the NDS in connection therewith except as provided in this Section 5.3F. If
the Company (or any of its Affiliates) license from third parties any
Improvements, the Company will use its best reasonable efforts to make those
Improvements available to the NDS on the same terms as the Company obtains the
Improvements from the third party. If a third party brings a claim against the
Company, any of its Affiliates, or any of the NDS alleging that the NDS's use
of any Improvement that is licensed by the Company to the NDS under this
Section 5.3F is contrary to or otherwise infringes on such third party's
rights, then the NDS will immediately cease using the Improvement if the
Company so requests in
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writing, and, if the Company does not so request, and the NDS wish to continue
using such Improvement, NWIP will indemnify and hold the Company harmless from
such continued use.
G. Notwithstanding anything to the contrary in this Section 5.3,
the Company's obligation to implement any Improvements is subject to Section
7.04 of the Shareholders' Agreement, provided that the Company's obligation to
implement any Improvement and Nextel's obligation to comply with such Section
7.04 terminates when no member of the Nextel Group owns an equity interest in
the Company.
5.4 [RESERVED]
5.5 ACCESS TO NATIONAL SWITCHING NETWORK. NWIP and the Company will
cooperate to establish a switch configuration for the Company's network in the
Territory, and to deploy switches in a manner which best meets the following
objectives: (i) allowing the Company to integrate its cell sites into the NDS's
national switching infrastructure; (ii) allowing both the NDS and the Company
to provide Direct Connect coverage to logical communities of interest; and
(iii) minimizing the costs to both the NDS and the Company and maximizing the
quality of service to subscribers of both the NDS and the Company; provided,
that neither NWIP nor the Company will be required to configure or deploy
switches in a manner that results in degradation of existing service. To
facilitate cooperation in network planning, representatives of the Company will
participate in regular meetings and planning for national network
configuration. The Company will be required to provide to NWIP quarterly
forecasts (or forecasts covering such other period(s) as may from time to time
be generally applicable to forecasts made by the NDS) of expected cell site
build out, traffic growth in the Territory, anticipated timetables for the
implementation of any Company-owned switches, and such other measurement
criteria as are generally supplied in forecasts made by the NDS, covering a
rolling 18-month period (or such other period as may from time to time be
generally applicable to forecasts made by the NDS), in a format and on such
additional terms as agreed to by NWIP and the Company. NWIP will cause the NDS
not to discriminate against the Company in configuring or revising their
switching networks.
5.6 INTEGRATION WITH NEXTEL OWNED SWITCHING FACILITIES. The Company
will have the option to integrate its cell sites with the NDS switching
facilities pursuant to the Switch Sharing Agreement.
5.7 COMPANY OWNED NETWORK SWITCHES AND OTHER FACILITIES.
A. The Company will have the option to install its own switching
facilities within the Territory. This may consist of deployment of a combined
interconnect and dispatch switching facility, an interconnect only switching
facility, or a dispatch only switching facility. Any Company deployment of a
switching facility will require prior coordination with NWIP, and any Company
deployment of a dispatch switching facility will require NWIP approval. NWIP
will not unreasonably withhold such approval; provided, that any switching
configuration changes that adversely impact Direct Connect communities of
interest will be among the bases for withholding approval. The Company will be
responsible for designing, installing, commissioning, managing
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and operating each switching facility that it installs in the Territory and
will be entitled to employ its own switch technicians at any Company-owned
switch. NWIP will be responsible for assuring that the monitoring services are
provided to the Company owned switching facilities for the charges set forth on
Exhibit 5.7A. The parties will agree on any other switch services that each is
to provide to the other. The Company will be responsible for the installation
and any incremental cost of any national management system hardware components
required to be installed in the Company's switch to allow NWIP to arrange for
the switching facility to be monitored on a remote basis, provided that such
equipment is comparable to equipment installed at other switching facilities of
the NDS.
B. In connection with the Company's operation of an ESMR Network in
the Territory, NWIP will provide the Company (or Opco) with access to certain
network elements owned or operated by the NDS in connection with the NDS ESMR
Network, as provided for in this Agreement or certain of the Collateral
Agreements. In light of the forecasted growth of the Company's subscriber base
and operational cell sites in the Territory, and the resulting burden on the
NDS network elements and the NDS ESMR Network, the Company (or its Affiliates)
will, subject to Section 5.5, be required to have in place its own BSC, HLR,
MSO, SMS and VMS when its subscriber unit or cell site levels reach the levels
set forth on Exhibit 5.7B, as amended by the parties from time to time during
the term of this Agreement (each a "Trigger Point"). The parties contemplate
that amendments to Exhibit 5.7B will be made to reflect changes in capacity of
the NDS network elements. At a reasonable time prior to reaching any Trigger
Point, the Company will (or will cause one or more of its Affiliates to) (i)
acquire and install (for the Company's account and at the Company's sole
expense) the appropriate network element(s) and (ii) coordinate with NWIP and
the NDS with respect to the installation and implementation of such network
element(s). At or prior to the time that it reaches any Trigger Point, the
Company will implement (or will cause its Affiliates to implement) such network
element(s). NWIP and the NDS will cooperate with the Company (and its
Affiliates) to facilitate the implementation of all network elements to be
installed by the Company pursuant to this Agreement and the transition of the
Company's subscribers from the appropriate NDS network element(s) to the
network element(s) acquired and installed by the Company and its Affiliates. If
NWIP and the Company agree that it is in the best interests of the subscribers
of the NDS and the Company to delay the Company's acquisition of one or more
network elements or to acquire one network element in lieu of another, NWIP and
the Company will do so.
5.8 ACCESS TO SYSTEMS PLATFORM. To minimize demand on system resources
associated with the accommodation of the Company's systems and to service needs
that are agreed to be met through access to and utilization of the internal
systems developed, operated and maintained by or for NDS, and in order to
maintain a consistent back-office operating process that permits an exchange of
similar network, operating, and customer information between the Company and
NDS, the Company will be required to use certain components of systems
infrastructure used by NDS that are necessary to achieve these objectives. NWIP
will identify, from time to time, the components of the NDS system
infrastructure that are necessary to enable the NDS and the Company (and its
Subsidiaries) to exchange information about their respective networks, customer
provisioning, and system usage, and any other information required to enable
consistent back-office operations (the "Required Systems"). The Company will be
responsible for
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its own internal operating costs and activities necessary to interact with
systems of the NDS. To the extent that certain operating activities, such as
customer provisioning, cannot be performed by the Company, NWIP will make
reasonably suitable arrangements for such services to be provided to or on
behalf of the Company, and the Company will pay for such services based on the
actual costs incurred by the Nextel Group. The monthly charges payable to NWIP
by the Company for Required Services will be revised, from time to time, to
reflect changes agreed to between the Company and NWIP. Other system
infrastructure components that are recommended (but not required) may, by
mutual agreement of NWIP and the Company, be obtained from NWIP on arms-length
terms or the Company may obtain them from third parties. In the future, the
Company will be permitted to implement its own operating systems if such
systems do not adversely impact the Company's interaction with or use of the
Required Systems. If the Company wishes to implement an operating system that
alters or replaces the Required Systems, the Company must first obtain NWIP's
approval, provided that such approval shall not be withheld as long as such
system does not (1) create inconsistencies between the services provided by the
NDS and the Company to their respective customers or result in inconsistencies
in network, operating and customer information exchanged between the NDS and
the Company that adversely impacts operations or ability to serve customers of
the NDS, (2) require the NDS to incur additional systems implementation or
operating costs unless such costs are paid in full by the Company, or (3)
adversely affect the ability of NWIP or any other member of the Nextel Group to
provide or arrange for the provision of any product or services to or for the
Company in accordance with the provisions of this Agreement, any Collateral
Agreement or agreement with a third party vendor or supplier.
5.9 CERTAIN SYSTEM AND NETWORK SERVICES.
A. The Company will have the right to use the NDS's SS7 network at
the price set forth in Exhibit A of the Switch Sharing Agreement.
B. The NDS own and operate backbone networks and in the future
expect to construct and operate additional backbone networks (each, an "NDS
Backbone Network") for the purpose of carrying voice, data or other signals and
traffic.
(i) The Company and Opco hereby grant to NWIP and the NDS the right
to locate NDS Backbone Network equipment in facilities and shelters transferred
by the NDS to Opco or its Affiliates that are located in p arts of the State of
Texas that are, or subsequent to the date hereof may be, part of the Territory
(collectively, the "Transferred Texas Sites"). Representatives of NWIP or the
NDS will be entitled to reasonable access, as and when requested or necessary,
to each of the Transferred Texas Sites to maintain, repair, augment or install
NDS Backbone Network equipment.
(ii) With respect to any shelters and facilities owned, acquired or
leased by Opco or its Affiliates that are now, or subsequent to the date hereof
may be, located in the Territory (collectively, the "Additional Sites"), NWIP
may, upon receipt of Opco's consent, which consent will not be unreasonably
withheld, locate NDS Backbone Network equipment at any Additional Site.
Representatives of NWIP or the NDS will be entitled to reasonable access, as
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and when requested or necessary, to each Additional Site for which consent to
locate NDS Backbone Network equipment has been given, to maintain, repair,
augment or install any such equipment. At no time will Opco or its Affiliates
be required to install additional shelters or facilities solely to accommodate
NDS Backbone Network equipment, nor will Opco or its Affiliates be obligated to
maintain possession of the Transferred Texas Sites or any Additional Sites if
they determine that it is not in their best interest to do so. If Opco decides
that it will no longer retain rights of possession to any such site, it will
promptly notify NWIP of the decision. Notwithstanding anything herein to the
contrary, the Company and Opco will have no obligation to negotiate with the
owner of any tower facilities to provide access on any tower for any NDS
Backbone Network antennas.
(iii) In exchange for the rights provided to NWIP and the NDS under
this Section 5.9B, Opco will be entitled to use each NDS Backbone Network
operating in the Territory if it pays NWIP the service charges detailed on
Exhibit 5.9B. Exhibit 5.9B will be subject to revision annually by mutual
agreement of the parties, provided, however, that in no event will NWIP or the
NDS be obligated to provide service to Opco on any NDS Backbone Network at less
than the cost to the NDS of providing such service.
(iv) Neither Opco nor any of its Affiliates will have any ownership
rights with respect to any NDS Backbone Network equipment or any portion of any
NDS Backbone Network by virtue of the terms of this Section 5.9B or the
location of any NDS Backbone Network equipment at any of the Transferred Texas
Sites or Additional Sites. Neither NWIP nor any of its Affiliates will have any
ownership rights with respect to the Transferred Texas Sites or Additional
Sites by virtue of the terms of this Section 5.9B or the location of any NDS
Backbone Network equipment at any of the Transferred Texas Sites or Additional
Sites.
(v) NWIP and the NDS will be responsible for the maintenance and
operation of the NDS Backbone Networks. Opco and its Affiliates will be
responsible for the maintenance and operation of any other equipment at any of
the Transferred Texas Sites or Additional Sites and the maintenance of the
Transferred Texas Sites and Additional Sites.
(vi) The foregoing provisions of this Paragraph B are subject to
the following: NWIP and the NDS shall exercise the rights and take the actions
permitted hereunder in such manner as shall not interfere with the use by Opco
or its Affiliates of the Transferred Texas Sites and any Additional Sites, and
shall be responsible for any liabilities, costs or expenses asserted against
Opco or any of its Affiliates and arising out of NWIP's or the NDS' exercise of
such rights or taking of such actions.
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6. BUILD-OUT REQUIREMENTS
6.1 REQUIRED SERVICES. The Company will be required to offer all
customers operating in the Territory the products, services and capabilities
identified in Exhibit 6.1, as amended from time to time by NWIP ("Required
Services"). The Company will have an opportunity to participate in and
contribute to discussions regarding modifications to the list of Required
Services, but final decisions relating to such services will be made by NWIP,
in its sole discretion, and will be binding on the Company. If a Required
Service is to be provided nationally by the NDS, the Company must implement the
service. To the extent the NDS elect to offer a Required Service that is
tailored to particular service areas based on geographic location, size, or
other factors, the Company will be required to offer that Required Service in
its service areas that are Comparable Service Areas to those service areas in
which an NDS offers such Required Service. In either case, a Required Service
must be offered by the Company in the Territory as soon as reasonably
practicable, but in no event more than six months from NWIP providing notice to
the Company of NWIP's decision to designate a Required Service, provided that
the Company will not be obligated to offer any Required Service before an NDS
has implemented such Required Service in a Comparable Service Area.
Notwithstanding anything to the contrary in this paragraph, the Company's
obligation under this Section 6.1 to implement any Required Service (not set
forth on Exhibit 6.1 on the date hereof) or to modify a Required Service is
subject to Section 7.04 of the Shareholders' Agreement, provided that the
Company's obligation to implement any Required Service and Nextel's obligation
to comply with such Section 7.04 terminates when no member of the Nextel Group
owns an equity interest in the Company.
6.2 BUILD-OUT REQUIREMENT AND TARGET LAUNCH DATES.
A. The Company must Build Out each Section by the Build Year stated
on Exhibit 6. "Build Out" means the ESMR Network in that Section (i) provides
coverage to the Build Areas for that Section; and (ii) has met the Launch
Criteria for that Section; and (iii) has commenced commercial service in that
Section; and (iv) is capable of serving Nextel subscribers roaming into the
Build Areas for that Section of the Territory. The Company will provide NWIP
with monthly updates on actual and forecasted coverage areas in the Territory.
B. The Company has the right (but not the obligation) to elect by
written notice delivered to NWIP, from time to time (but in any event prior to
the end of the Election Period), to include some or all of the Special Option
Sections in the Territory. In addition, if the Company completes the Build Out
of all Year One Build Areas in the Initial Sections before the end of the 19th
month from the date hereof (such period, as extended by any period of Excusable
Delay that extends the time in which Build Out is to be completed, the
"Election Period"), from the date that such Build Out is complete until the end
of the Election Period, the Company has the right (but not the obligation) to
elect by written notice delivered to NWIP, from time to time, to include some
or all of the Option Sections (other than the Special Option Sections) in the
Territory; provided, that such other Option Sections will be included only if
and to the extent such actions would not involve breach or violation of any
loan agreement or similar debt or related documents to which any member of the
Nextel Group is a party. NWIP shall, and shall cause the Nextel Group to, use
best reasonable efforts to obtain such amendments, waivers or consents as
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may be required to permit such Option Sections to be included without involving
or resulting in any such breach or violation. Subject to the foregoing, if the
Company elects to include an Option Section in the Territory, (1) the Company
will be required to Build Out all Build Areas in such Option Section in
accordance with Section 6.3; (2) the Company will be entitled to the Initial
Frequency Right as to such Option Section as set out in Section 4.1D; and (3)
any related fixed network equipment and operational contracts existing in or
with respect to such Option Section at the time of the Company's election will
be transferred to the Company upon payment of a cash purchase price calculated
in the same manner as the reimbursement under the Asset Purchase Agreement and
otherwise on the same terms as the Initial Asset Transfer.
C. Before the Election Period has expired, if the NDS wants to
construct Build Areas in an Option Section and the Company has not elected to
include that Option Section in the Territory, NWIP will notify the Company in
writing specifying the Build Areas the NDS desires to build out (the
"Accelerated Areas") and the revised build schedule for the Accelerated Areas
(which must be commercially reasonable in order to trigger NWIP's rights under
this provision). NWIP shall not give such notice unless the Option Section(s)
to which it relates may be included in the Territory without breaching or
violating any loan or debt agreement or similar document to which any member of
the Nextel Group is a party. Not more than 30 days after receiving the notice
from NWIP, the Company can elect to include such Option Sections in the
Territory and build out the Accelerated Areas in accordance with the revised
schedule (and any other Build Areas in that Option Section in accordance with
the original schedule), but the Company will still be obligated to build out
the Initial Sections as described in this Agreement and any relevant Collateral
Agreements. If the Company does not make the election under the preceding
sentence, NWIP or the NDS will be entitled to construct (or to cause the
construction of) that Option Section and such Option Section will no longer be
part of, or subject to inclusion in, the Territory; provided that if NWIP or
the NDS has reacquired rights to an Option Section under this Section 6.2C, but
has failed to build out the Accelerated Areas in that Option Section materially
on the revised schedule (extended by any applicable period of Excusable Delay),
that Option Section will once again become available to the Company under
Section 6.2B.
D. On or after the earlier of (i) the beginning of the 9th month
after NWIP notifies the Company that, notwithstanding a Frequency Delay, a
Build Area affected by a Frequency Delay is to be launched and the related
Build Out completed and (ii) the beginning of the 54th month after the date
hereof, with respect to any service areas within the Territory where the
Company is not providing coverage, NWIP shall have the right to give notice of
service areas for which it wishes coverage to be provided and to identify
reasonable time frames within which coverage should be provided. The Company
will then have ninety days from the date of notice to advise NWIP in writing
whether it elects to provide coverage in accordance with the terms of the
notice from NWIP. If the Company elects to provide coverage by so advising NWIP
in writing, it will diligently proceed in accordance with the schedule set
forth in the initial notice received from NWIP. If the Company elects not to
provide coverage in any of the identified service areas, NWIP or the NDS will
be entitled to do so and, upon NWIP's or the NDS' causing completion of the
Build Out and providing coverage in accordance with the schedule and other
elements of the notice, those service areas shall no longer be part of the
Territory. NWIP will pay cash to the Company, upon the transfer of all licenses
to a member of the Nextel Group designated by NWIP, for any licenses or
frequency rights previously acquired by the Company in any service area that is
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acquired or reacquired by any member of the Nextel Group pursuant to this
Section 6.2D, at the Company's actual cost to obtain licenses or rights to such
spectrum (including incidental transaction costs and costs of related assets
acquired by the Company and sold to NWIP, if any).
6.3 LAUNCH CRITERIA. Prior to offering commercial service in a
Section, the Company will be required to provide coverage to all the Build
Areas in that Section that have the earliest Build Year and to meet the general
launch criteria that are in effect at the relevant time and applicable
generally to the NDS ESMR Network (the "Launch Criteria"). The Company will
notify NWIP at least 60 days prior to the proposed launch date of any Section,
at which time NWIP will have the right, using such representatives as NWIP
designates for the purpose, promptly to review the Company's operations for
that area in order to validate compliance with all Launch Criteria. In the
event the Company believes it is necessary to launch service in a given area
prior to completing the Build Out of all Build Areas that have the earliest
Build Year in the Section (e.g., in competitive situations), the Company must
obtain NWIP's prior approval, such approval not to be unreasonably withheld,
provided, NWIP's approval of the Company's proposed launch of any Section,
Build Area or other area shall not release or excuse the Company from
satisfying its Build Out obligations with respect thereto as set forth in this
Agreement, and approval of the launch of service of any system in any area
prior to completion of the Build Out of all Build Areas in the Section will not
alter the Company's obligation to complete the Build Out of all Build Areas in
that Section in the Build Year as set out in Exhibit 6. Failure of the Build
Out of the system to comply with the Launch Criteria in the affected area will
be considered a reasonable basis for withholding approval.
6.4 FREQUENCY DESIGN STANDARDS. The Company will be responsible for
the frequency design in the Territory and will be required to adhere to
standards for the use of the radio frequencies in the ESMR Network as in effect
at the relevant time and applicable generally to the NDS ESMR Network
operations. Subject to any restrictions imposed by agreements with third
parties, NWIP will provide the Company with reasonable access to the frequency
design tools and expertise available within or to the NDS in order to
facilitate the Company's compliance with the standards, and the Company will
bear all costs and expenses associated with the Company's obtaining and
utilizing such tools and expertise. The Company will participate in periodic
frequency engineering meetings of the NDS, to the extent such access is
permitted under the terms of relevant agreements with third parties. NWIP,
through such representatives as it designates, will have the right to monitor
the frequency designs and actual frequency signal performance levels in the
Company's service areas on a regular basis in order to ensure compliance with
the required standards. If the Company requests, from time to time, and at
NWIP's sole discretion, NWIP may make suitable arrangements for frequency
design services to be provided to the Company on an arms length basis as will
be agreed between the Company and NWIP. If NWIP requests, the Company will be
required to comply with the terms of any existing regional or national
agreements that impact the Territory related to frequency design services that
are identified on Exhibit 6.4.
6.5 SITE ACQUISITION STANDARDS. The Company will be responsible for
site acquisition activities in the Territory and will be required to adhere to
the site acquisition standards that are in effect at the relevant time and
applicable generally to and followed by the
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NDS. NWIP has provided and will provide the Company, from time to time, with
standard form leases (that will be substantially identical to the form then
being used by the NDS) to be used when securing lease rights to radio
communications sites. Neither NWIP nor any other member of the Nextel Group
will be required to provide any other services to the Company related to site
acquisition. NWIP, through such representatives as it designates, will have the
right to review internal documents related to such sites, including site
leases, title documents, and other compliance documents, on a regular basis in
order to ensure compliance with the required standards. If the Company
requests, from time to time, and at NWIP's sole discretion, NWIP may make
suitable arrangements for site acquisition services to be provided to the
Company on an arms length basis as will be agreed to between the Company and
NWIP. If NWIP requests, the Company will be required to comply with the terms
of any existing regional or national agreements that impact the Territory
related to site acquisition services that are identified on Exhibit 6.5
6.6 CONSTRUCTION STANDARDS. The Company will be responsible for the
construction of its cell sites in the Territory and will be required to adhere
to the construction standards that are in effect at the relevant time and
applicable generally to construction by the NDS, including the requirement to
select from the group of pre-selected vendors designated for certain types of
equipment needed to construct cell sites; provided, however, that the Company
shall have the right to propose alternative equipment and vendors for approval
by NWIP, which approval will not be unreasonably withheld. NWIP will provide,
from time to time, the standard specifications and drawings for cell sites
(substantially in the form then being used by the NDS) in order to facilitate
the Company's compliance with such standards. Neither NWIP nor any other member
of the Nextel Group will be required to provide any other services to the
Company related to cell site construction. NWIP, through such representatives
as it designates, will have the right to inspect cell sites in the Territory in
order to ensure compliance with the construction standards. If the Company
requests, from time to time, and at NWIP's sole discretion, NWIP may make
suitable arrangements for construction services to be provided to the Company
on an arms length basis as will be agreed to between the Company and NWIP. If
NWIP requests, the Company will be required to comply with the terms of any
existing regional or national construction agreements that impact the Territory
that are identified on Exhibit 6.5.
6.7 TELCO STANDARDS. The Company will be responsible for the
provisioning and maintenance of leased lines to connect its cell sites to the
appropriate switching facility. In so doing, the Company will be required to
adhere to the telco standards that are in effect at the relevant time and
applicable generally to and followed by the NDS, including the types of
connection permitted, the requirements for contracts with other
telecommunications providers, and the manner in which such connections are
required to be brought to a switching facility of the NDS or otherwise
connected to the NDS national ESMR Network. In the event the Company installs
its own switching facility pursuant to Section 5.7, the Company will also be
responsible for all telco connections at that switching facility to the local
landline, public switched telephone network and arranging for local and long
distance origination and termination of interconnect calls being routed through
the Company's switching facility.
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6.8 SWITCHING FACILITY STANDARDS. In the event the Company elects to
purchase and install its own switching facility, the Company will be required
to adhere to the construction and operating standards that are in effect at the
relevant time and applicable generally to and followed by the NDS. The Company
also agrees to provide any operating Subsidiary of Nextel with access to any of
the Company's switching facilities and any related services provided by or for
the Company on the same terms (including at the same prices) as offered by the
NDS to the Company under the Switch Sharing Agreement.
6.9 COMPANY TOWERS.
A. Within 20 days after the beginning of each calendar quarter, the
Company shall give NWIP notice designating the number and general location of
all tower sites that the Company needs to construct as part of the Build Out of
its ESMR Network for that quarter, other than Excepted Tower Sites. As used in
this Agreement, "Excepted Tower Sites" means and tower sites located in the
Build Areas identified on Schedule 6.9. The parties agree that the Site
Acquisition Work and construction of the Excepted Tower Sites identified on
Schedule 6.9 that are located in Kentucky will be performed pursuant to the
Site Commitment Agreement dated as of July 11, 1997 with Castle Tower
Corporation ("Castle"), with such modifications thereto as the Company and
Castle may agree with the consent of NWIP, such consent not to be unreasonably
withheld. The parties agree that the Site Acquisition Work for the Excepted
Tower Sites identified on Schedule 6.9 that are located in Pennsylvania will be
performed by the Company or its contractors and the construction of such sites
will be performed by the tower aggregator or other party designated by NWIP.
When site acquisition work is complete on the Excepted Tower Sites located in
Pennsylvania, the Company shall notify NWIP and NWIP shall purchase such
Excepted Tower Sites from the Company. The purchase price shall be equal to the
Company's cost to perform the Site Acquisition Work. NWIP shall pay the Company
in cash within twenty (20) days after receiving the Company's notice for all
Excepted Tower Sites identified in the notice. Upon payment, the Company will
assign to NWIP each ground lease associated with such Excepted Tower Sites.
NWIP shall, upon completion of construction of each tower relating to each
Excepted Tower Site, allow Opco to lease space on all such Excepted Tower Sites
pursuant the Master Site Lease or a Replacement Lease (as defined below).
B. Except as set forth in Section 6.9A, NWIP will be responsible
for timely completion of all Site Acquisition Work and tower construction
relating to all tower sites designated by the Company under Section 6.9A. NWIP
may, in its discretion, hire third party contractors or consultants to perform
any Site Acquisition Work or construction; provided that NWIP must cause any
such third party contractors or consultants to abide by the terms and
conditions of this Section 6.9. Any delay in Site Acquisition Work or
construction relating to any designated tower site (or any Excepted Tower Site
for which NWIP is responsible for construction) that impedes or disrupts the
Company's Build Out of its ESMR Network in accordance with the Build Out
schedule contained in Exhibit 6 will constitute an Excusable Delay as set forth
in Section 12.5. To the extent that the delays in Site Acquisition Work or
construction of a tower (other than a delay caused by weather, acts of God or
other events beyond the control of the party performing the work) delay launch
or completion of the Build Out in any Build Area for a period of 30 days or
more and such delay is reasonably expected to have
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(or has had) a material adverse effect on the business, operations, or
financial condition of the Build Area in which the work is being done, the
Company (upon notice in writing given to NWIP) may complete, or may hire third
parties to complete, the Site Acquisition Work or tower construction at the
affected site. To compensate for the unascertainable damages that the Company
will have suffered as a result of such delay, NWIP will pay to the Company a
one time payment equal to 10% of the estimated reasonable cost (under the
circumstances, including recognition of the time constraints on the process) of
completing the Site Acquisition Work or tower construction at the affected
site. NWIP will be entitled to purchase the tower when completed at a price
equal to the Company's actual and reasonable documented out of pocket costs
incurred in order to complete the Site Acquisition Work or tower construction.
If the parties agree that the number of delays in Site Acquisition Work or
tower construction have reached an unreasonable level, then NWIP and the
Company will negotiate in good faith to structure arrangements that will
provide the Company with reasonable assurances of timely completion of any
remaining Site Acquisition Work and tower construction in the Territory while
providing NWIP the right to buy completed towers, all in a manner consistent
with the intent of the parties expressed in this Section 6.9.
C. NWIP shall, and shall cause any third party contractors or
consultants hired by NWIP to perform Site Acquisition Work or tower site
construction to, coordinate all such work with the Company in order to satisfy
the Company's needs and specifications for Build Out of its ESMR system and to
ensure conformity with the site acquisition standards described in Section 6.5
and the construction standards described in Section 6.6. NWIP will take or
cause to be taken all necessary and appropriate actions (including but not
limited to obtaining all necessary consents, permits and approvals) to ensure
that upon completion of each tower site, Opco will be permitted, subject to the
Master Site Lease, to install and locate on or at each tower site all necessary
shelters, cabling, electronics, antennas and other such equipment needed by the
Company to utilize the tower in the Company's ESMR Network. Upon completion of
each such tower site, NWIP will allow Opco to lease space on or at each tower
in accordance with the terms of the Master Site Lease (or a Replacement Lease
(defined below) if NWIP determines that a tower should be subject to a
Replacement Lease, as provided in Section 6.9 E.).
D. The Company's and NWIP's respective obligations under Section
6.9 A.- C. will expire upon that date (the "Build Stop Date") that is the
earlier of (i) the sixth anniversary of the date of this Agreement, or (ii) the
date that any tower build to suit arrangement entered into by NWIP or another
member of the Nextel Group in connection with a tower joint venture arrangement
of the type described in Section 6.9E expires. NWIP shall give the Company
notice of the expiration of the term of any such tower build to suit
arrangement at least 90 days before the expiration of the term of the
arrangement. The expiration of any such tower build to suit arrangement will
not relieve NWIP of its obligations to perform Site Acquisition Work and tower
site construction with respect to any tower site designated by the Company
before the Build Stop Date.
E. The parties contemplate that NWIP or other members of the Nextel
Group will enter into one or more joint venture arrangements with one or more
tower aggregators, and that the towers subject
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to the Master Site Lease (including any towers to later become subject to the
Master Site Lease under Section 6.9 A.-C.) will become part of those
arrangements. In connection with consummation of each such joint venture, Opco
shall, as directed by NWIP, enter into, with the tower aggregator, a new master
lease or similar agreement (a "Replacement Lease") relating to the tower sites
subject to the joint venture. As a condition to Opco's obligation to enter into
any Replacement Lease, NWIP shall ensure that the terms of the Replacement
Lease are substantially the same as the terms of the equivalent lease or
similar agreement entered into between NWIP and the tower aggregator and NWIP
shall comply with the conditions set forth in Section 6.9F. Concurrently with
the execution of each Replacement Lease, NWIP and Opco shall amend the Master
Site Lease to remove the tower sites subject to the Replacement Lease from the
Site Schedules attached to the Master Site Lease. After any Replacement Lease
has been executed, if Section 6.9 C. requires that a tower be added to the
Master Site Lease, NWIP may direct that the tower instead be added to the
Replacement Lease of NWIP's choosing.
F. Set forth below is a chart of certain financial terms that NWIP
has agreed to make available to Opco, regardless of the requirements of any
Replacement Lease. To the extent that the financial terms of any Replacement
Lease (regardless of the characterization of such financial terms) are less
beneficial to Opco than those shown below, NWIP shall, on a monthly basis,
reimburse Opco for the difference between the amount paid by Opco and the
amount Opco would have paid if the Replacement Lease had instead included the
financial terms listed below. NWIP has no obligations under this Section 6.9 F.
with respect to tower sites that are not first made subject to any Replacement
Lease before the Build Stop Date.
<TABLE>
<CAPTION>
<S> <C>
initial Per Site Rental Rate* $1,200 per set of Tenant Facilities*, per month
period during which the initial Per 3 years after the Closing Date*
Site Rental Rate* is applicable
Per Site Rental Rate* on the 3rd the lesser of: (a) $1,600 per set of Tenant Facilities*, per
anniversary of the Closing Date* month, and (b) fair market value rent per set of Tenant
Facilities*, per month
annual increases to Per Site Rental 3%
Rate* beginning on the 4th
anniversary of the Closing Date*
</TABLE>
* These terms have the meaning defined in the Master Site Lease Agreement.
G. NWIP, the Company and Opco shall deliver such further documents
or assurances as may be reasonably required by NWIP, the Company, Opco or any
tower aggregator to further confirm the execution of any Replacement Lease or
the applicability of any tower site to any Replacement Lease.
6.10 POTENTIAL RELAXATION OF PERFORMANCE STANDARDS. Without limiting
the provisions of Section 12.5, to the extent the Company, exercising its best
reasonable efforts and complying in good faith with the other provisions of
this Agreement and the Collateral Agreements, is unable to fully comply with
the performance requirements of this Agreement in any one or more international
border service areas within the Territory, due principally to a lack
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of sufficient available frequencies, the parties will negotiate in good faith
to reach agreement on is appropriate in the circumstances.
7. OPERATIONS
7.1 NETWORK PERFORMANCE REQUIREMENTS. The Company will meet or exceed
the minimum network performance requirements in effect at the relevant time and
applicable generally to the NDS ESMR Network operations, provided that the
Company will not be penalized for failure to meet such requirements to the
extent the average level of performance on such measurements achieved by the
NDS during the same relevant period does not exceed the level of the Company's
performance. Network performance for the first six months following launch in
any service area will not be included in performance measurements for either
party. At reasonable times and with advance notice, NWIP, through such
representatives as it designates, will have the right to monitor system
performance in the Territory in order to determine the Company's compliance
with the required standards.
7.2 CUSTOMER CARE. The Company will provide a minimum standard of care
to its customers as in effect at the relevant time and applicable generally to
the NDS ESMR Network operations, provided that the Company will not be
penalized for failure to meet such requirements to the extent the average level
of performance on such measurements achieved by the NDS during the same
relevant period does not exceed the level of the Company's performance.
Customer care activities, as they relate to any particular service area or
subscribers based in such service area, during the first six months following
launch in such service area, will not be included in performance measurements
for either party. NWIP will make suitable arrangements to provide the Company
access to the NDS' customer care facilities and training sessions at agreed
upon times in order to facilitate the Company's compliance with such standards.
All costs associated with such transfer of operational practices to the
Company, its employees and agents will be paid by the Company. At reasonable
times and with advance notice, NWIP, through such representatives as it
designates, will have the right to monitor the Company's customer care
activities on a regular basis in order to ensure compliance with the customer
care standards. If the Company requests, from time to time, and at NWIP's sole
discretion, NWIP may make suitable arrangements for billing and customer care
services to be provided to the Company on an arms length basis and otherwise on
such terms as the parties may agree. If NWIP requests, the Company will be
required to comply with the terms of any existing regional or national billing
and/or customer care agreements that are identified on Exhibit 7.2.
7.3 CUSTOMER SATISFACTION. Nextel has established minimum criteria
levels of customer loyalty. The Company will adhere in the Territory to the
customer loyalty measurements and targets as in effect at the relevant time and
applicable generally to the NDS ESMR Network operations, provided that the
Company will not be penalized for failure to meet such requirements to the
extent the average level of performance achieved by the NDS during the same
relevant period does not exceed the level of the Company's performance.
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A. MEASUREMENT. The Company will be required to measure customer
satisfaction within the Territory. The NDS employ a customer satisfaction
monitoring system that uses a Marketing Services Vendor. The Company will enter
into a separate contract to purchase customer satisfaction interviewing from the
Marketing Services Vendor used by the NDS as of the date of this Agreement, or
subject to NWIP's prior written approval, from a Marketing Services Vendor of
the Company's (or Opco's) choosing. NWIP will use its best reasonable efforts to
induce its Marketing Services Vendor to make those services available to the
Company at the same cost per interview as paid by the NDS. The Company and its
Marketing Services Vendor must use the 1998 questionnaire (a copy of which has
been provided to the Company), as updated from time to time by NWIP. Additional
questions may be added at the Company's discretion, but the Company recognizes
that additional questions may cause its cost per interview to be higher than
that paid by the NDS, and any additional questions will not be used for any
measurement or comparison for purposes of Section 7.3C or under the Roaming
Agreement.
B. SAMPLE. The Company will be required to conduct a minimum of 750
interviews per quarter (3,000 per annum). The Company and the NDS must adhere
to random sampling principles and will conduct surveys yielding a confidence
level of plus or minus two percent (2%).
C. TARGETS. The overall measurement of customer loyalty used by the
NDS is called the "Secure Customer Index" or "SCI." SCI is a combination of
three factors: overall customer satisfaction, a customer's willingness to
recommend the service to others, and likelihood of a customer to continue using
the service, and will be more fully defined by agreement of the parties in
accordance with the NDS approach and methodology being employed at the relevant
time. The Company will be required to maintain an SCI equal to or better than
the lesser of the then current NDS SCI goal or the average actual SCI for the
NDS for the comparable period. Survey results during the first six months
following launch in any service area will not be included in the measurement
for either party.
7.4 EMPLOYEES. The Company (on behalf of itself, Opco and other
Subsidiaries) and NWIP (on behalf of itself and other members of the Nextel
Group) agree not to actively solicit the other party's employees, but will be
flexible with regard to employee transfers to the extent they are consistent
with each company's needs and objectives.
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8. MARKETING AND ADVERTISING
8.1 BRAND IDENTITY.
A. The Company has the right to offer, provide, and market services
using Partner Frequencies, and the NDS national switching networks only under
the Licensed Marks. From time to time, if the NDS use additional trademarks or
service marks owned by any member of the Nextel Group, NWIP will amend Exhibit
A to the Trademark License Agreement to provide the Company with the right to
use such additional marks as provided. In the case of licensed or other
non-owned names or marks, NWIP will provide the Company the right to use such
name or marks, but only to the extent that use by the Company is consistent
with (and will not result in any additional costs or other adverse effects or
consequences to the Nextel Group under) the agreements with the third parties
that own or license the marks or names to Nextel, and subject to the Trademark
License Agreement, or, in the case of non-owned marks, a license agreement in
substantially the same form. If, after using its reasonable best efforts,
neither NWIP nor the Company can obtain for the Company the right to use a name
or mark that is not owned by a member of the Nextel Group and if the NDS offers
a service that is distributed and identified primarily with that name or mark,
that service cannot be a Required Service unless the Company is afforded the
right to use that name or mark on the same terms as the NDS. If Nextel elects
to make a material change in its brand identity, NWIP will notify the Company
and the Company will be required to implement such change in the same manner
and time frame as Comparable Service Areas of the NDS, provided that if such
change is to be implemented in fewer than twelve months, NWIP will compensate
the Company for its reasonable out-of-pocket costs attributable to such change.
B. The Company will have an opportunity to participate in and
contribute to discussions regarding the NDS's future marketing and advertising
plans as they relate to United States marketing, but final decisions relating
to such plans will be made by Nextel, in its sole discretion.
8.2 BRAND AWARENESS. As part of its national branding strategy, Nextel
and the NDS engage in national advertising, promotions, and sponsorships.
Unless NWIP agrees otherwise in writing, Nextel and/or the NDS retains the
exclusive right to advertise in national publications or other national media.
Nextel and the NDS can place advertisements advertising a price structure
consistent with Exhibit 9.1A in regional and/or local publications or other
regional and/or local media anywhere in the United States, but NWIP will
provide the Company advance notice of such advertising, if it is reasonably
intended or designed for circulation or exposure in the Territory.
8.3 CREATIVE SERVICES. The NDS use outside agencies for creative
development of their advertising and direct mail literature. NWIP will make
creative work developed in-house available to the Company for use in local
advertising, and NWIP will use its best reasonable efforts to induce such
outside agencies to agree to permit the Company to use creative work done for
any member of the Nextel Group on the same terms as were extended to the NDS by
the outside agency. The Company's advertising will be consistent with specific
creative standards as will be outlined from time to time by NWIP, so long as
such creative standards are substantially
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identical to those being adhered to by the NDS. The Company will have the
option to contract with any of the outside agencies used by the NDS for
creation of local advertising or direct mail literature in compliance with NWIP
standards, and the Company may also elect to use another agency provided that
any creative work used by the Company in its advertising or direct mail
literature must meet such NWIP standards. In the event the Company wishes to
deviate from the NDS creative standards for advertisements, the Company must
first obtain NWIP approval. NWIP will use its best reasonable efforts to
respond to such requests as promptly as practicable. The Company will make
available to NWIP (for use by the NDS) any creative work done by or for the
Company on the same terms as NWIP makes available to the Company creative work
done by or for the NDS.
8.4 MEDIA SERVICES. The NDS use an outside agency for planning and
placement of their advertising in the media. The Company will have the option
to contract with that outside agency for such services in the Company's local
service areas, and NWIP will use its best reasonable efforts to induce the
outside agency to agree to permit the Company to obtain the same terms for such
services as were extended to the NDS by the outside agency. The Company may
utilize other media buyers or outlets at its sole discretion. If planning and
placement of advertising are performed in-house, the Company will have access
thereto on the same basis as the NDS. The NDS and the Company each have the
right to advertise in their respective territories. Outside their territories:
A. National advertising, and any advertising, whether national,
regional or local, outside the United States, will be the exclusive right of
the Nextel Group.
B. Each of (a) NWIP, Nextel and the NDS and (b) the Company have
the right to place advertising focused within its territory that results in
incidental or unavoidable extra-territorial publication (e.g., out-of-state
newspaper distribution).
C. National indirect or national retail promotions (e.g., Hello
Direct Catalogs) will be the exclusive right of the Nextel Group.
D. Each of the Nextel Group and the Company may, subject to Section
8.8, maintain world wide website advertising.
8.5 DIRECT MAIL. Subject to the terms of any agreement between Nextel
and/or the NDS and the agency, the Company will have the option to use the
creative work developed for Nextel and the NDS by such agency for direct mail
literature and can purchase direct mail pieces from such agency. The Company
will have the option to contract with the supplier to obtain mailing lists
previously acquired by Nextel and/or the NDS from Dun and Bradstreet or other
sources that contain names of potential subscribers residing in the Territory.
NWIP will use its best reasonable efforts to induce such sources to charge the
Company no more than the same per name cost that is charged to Nextel or the
NDS by Dun and Bradstreet. The Company may use other vendors in its sole
discretion (but any materials sent out must comply with Section 8.7).
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8.6 TELEMARKETING. The NDS maintain a telemarketing operation that
handles both inbound and outbound calls. Inbound calls are generally in
response to Nextel's national advertising and the use of the 1-800-NEXTEL9
telephone number. The Company will have access to this inbound number and will
be forwarded all calls or leads, which are generated from potential customers
whose billing address is located in the Territory. Beginning one month before
service is expected to launch in a Section of the Territory, the Company will
be required to provide NWIP with contacts within the Company to receive such
leads, and the Company will insure that the designated employees contact these
leads within 72 hours of receipt. The Company may contract with any outside
vendor to handle inbound calls generated by other mediums that have been
specifically tailored by the Company (i.e., non 1-800-NEXTEL9 calls).
8.7 COLLATERAL MARKETING MATERIALS. NWIP will be responsible for
obtaining collateral materials (including, without limitation, sales sheets,
spec sheets, product brochures) that have been designed by or for the NDS, and
will make these designs available to be used by the Company. The Company will
be allowed to use collateral materials that vary materially from those designed
by or for the NDS only with the approval of NWIP. NWIP will use its best
reasonable efforts to respond to any requests for the Company's use of
previously unauthorized designs as promptly as practicable. The Company may
enter into a contract with the vendor used by the NDS for production and
fulfillment of collateral orders. The Company will have the option to contract
with any of the outside agencies used by the NDS for creation of collateral
marketing materials in compliance with the then existing standards that are in
effect with respect to substantially identical collateral marketing materials
of the NDS. NWIP will use its best reasonable efforts to enable the Company to
obtain such work at the same rates as are charged to the NDS. The Company may
elect to use another agency provided that any creative work used by the Company
in its advertising or direct mail literature must meet the then existing
relevant standards for such advertising or direct mail literature of the NDS.
The Company may elect to use another vendor for production and fulfillment
provided the designs used by the Company are approved by NWIP as provided in
this Section 8.7, such approval not to be unreasonably withheld. The Company
will make available to NWIP (for use by the NDS) any collateral marketing
materials developed by or for the Company on the same terms as the materials
available to the NDS are made available to the Company.
8.8 WORLD WIDE WEBSITE. Nextel maintains a site on the world wide web
that provides certain information, including a description of services
available to potential customers. The Company must provide a link to Nextel's
website, and NWIP will cause Nextel to provide a link to the Company's website,
but in each case with a disclaimer that, among other things, expressly
disclaims the referring party's responsibility for the accuracy and
completeness of any information on the other party's website. The Company will
be required to provide on its website and to update on a regular basis,
coverage maps, rate plans, and other relevant information for service areas
that have launched service. Except for the link to the Nextel website, any
description on the Company's website of Nextel or the NDS or services offered
by Nextel or the NDS will be used only with NWIP's prior approval. Any customer
leads that are generated from either party's website that pertain to the
service areas of the other will be forwarded to the other party as promptly as
reasonably possible. The recipient will contact these leads as promptly as
practicable. In the future, Nextel expects to automate its website to
automatically activate and
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fulfill a customer order placed on the website. If the Company elects to use
Nextel's website activation service, the Company will pay for Nextel's
operational costs of activation of customers in the Territory.
8.9 MARKET RESEARCH. The NDS conduct primary market research,
including research to support product development, market trials, advertising,
promotion, pricing, network deployment, segment identification, billing,
ergonomics, voice quality performance and retention, as they consider
appropriate to the needs, growth, and development of their respective
businesses. In the past, such research has been used to supplement new product
development, identify target customer segments, and to tailor the Nextel brand
message. The Company will have the opportunity to participate in and contribute
to discussions regarding any significant future market researching activities
proposed to be conducted by or for the NDS, but final decisions relating to
such plans will be in NWIP's sole discretion. The Company will be provided with
the results of all such market research conducted by the NDS. If the Company or
any of its Subsidiaries conduct primary market research, NWIP will be provided
with the results of all such market research.
8.10 SUBSCRIBER TRANSFER FEE. In the event a digital subscriber moves
between the territory of any NDS and the Territory and becomes a subscriber of
any NDS or of the Company in the new territory, the recipient of the
subscriber's business shall pay to the other party the sum of $200 for each
such subscriber.
9. SERVICE AND EQUIPMENT PRICING
9.1 SERVICE PRICING STRUCTURE.
A. The Company will adhere to the NDS established nationwide
service pricing structure set forth in Exhibit 9.1A as amended from time to
time by NWIP. The Company will have an opportunity to participate in and
contribute to discussions regarding modifications to the existing specific
pricing structures or introduction of new or replacement specific pricing
structures, but final decisions relating to such pricing structures will be
made by NWIP, in its sole discretion. Subject to the Company's rights to
participate in the relevant pricing structure decision making process described
in the preceding sentence, NWIP or the NDS may revise its service pricing
structure at any time in its sole discretion. The Company is required to
implement in the Territory pricing structures that NWIP or the NDS have
generally implemented in Comparable Service Areas or Comparable Sections. The
Company will be required to implement any pricing structure that is implemented
by the NDS on a national level. Pricing structure for purposes of this Section
9.1 does not include determination of the rates left to the Company's
discretion under Section 9.2. Notwithstanding anything to the contrary in this
paragraph, the Company's obligation under this Section 9.1A to implement any
service pricing structure (not set forth on Exhibit 9.1A on the date hereof) is
subject to Section 7.04 of the Shareholders' Agreement, provided that the
Company's obligation to implement any service pricing structure and Nextel's
obligation to comply with such Section 7.04 terminates when no member of the
Nextel Group owns an equity interest in the Company.
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B. The Company may, from time to time, propose to NWIP the adoption
of a service pricing structure that is outside the framework of Exhibit 9.1A.
The proposal must include (i) the proposed pricing structure, (ii) a plan to
test the proposed pricing structure in up to two Build Areas in the Territory,
(iii) the schedule for the test and the Company's proposed criteria and
methodology for determining and interpreting the results of the test. The
Company will supplement its proposal and provide such additional detail as NWIP
may reasonably request. NWIP's approval of the proposed test plan will not be
unreasonably withheld, but NWIP's approval of the test plan is not concurrence
by NWIP that the results of the test demonstrate that the proposed pricing
structure is acceptable. If NWIP approves the test plan, the Company may
implement the plan, but the Company can make no material change in the test
plan without obtaining NWIP's prior approval (which will not be unreasonably
withheld). Promptly following the conclusion of the test, the Company will
report the test results to NWIP. If the Company and NWIP agree that the test
demonstrates that the proposed pricing structure is acceptable, the Company may
implement the proposed pricing structure in the Territory. Testing or
implementation of a pricing structure that has been approved by NWIP under this
Section 9.1B will not affect (1) the service(s) that the Company is required to
provide to a customer of the NDS in the Territory, (2) the service(s) that an
NDS is required to provide to a Company customer in the service area of that
NDS, nor (3) the charges that NWIP and the Company will pay to each other for
such services under the this Agreement or any of the relevant Collateral
Agreements.
9.2 SERVICE PRICING PLANS - LOCAL. The Company will be responsible for
developing and executing local pricing plans in the Territory that are
consistent with the service pricing structure established under Section 9.1 as
well as with the capabilities of the information systems platform used by the
NDS (more specifically addressed in Section 5.8). The Company will be
responsible for setting local rates for basic monthly access and air time,
determining the number of minutes included with various plans, and determining
the price points for enhanced services (including, without limitation, voice
mail and short message service). The Company is also responsible for setting
the local price points for additional services (including, without limitation,
installation, repair, and warranty prices), and service add-ons (including,
without limitation, fees for joining DAP affinity groups, and disabling
cellular capability). Along border areas between the service areas of the
Company and NDS territories, NWIP (by coordination with the NDS) and the
Company (by coordination with Opco and its other Subsidiaries) will cooperate
with each other to promote Nextel services (whether provided by the Company or
the NDS) as opposed to the services of competitors, including avoiding the use
or implementation of pricing plans that might result in customers switching
between the Company and the NDS territories.
9.3 SERVICE PRICING PLANS - NATIONAL. The NDS enter into contracts
with customers requiring service in multiple service areas across the country
("National Accounts"). The Company will have the opportunity to participate in
and contribute to discussions regarding National Account pricing plans, but
final decisions relating to such contracts will be made by NWIP (or another
member of the Nextel Group) in its sole discretion. To maintain consistent
pricing for National Accounts, the Company will be required to honor the
pricing plans established by the NDS for National Accounts and will be entitled
to obtain the benefit of those plans in the Territory, provided that the rate,
or the negotiated discount to local rates, is the same
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for both the Company and NDS service areas except that the Company will not be
required to provide service to such customers at less than the Company's cost
of service. In the event the Company or any of its Subsidiaries fulfills the
requirements set forth in Sections 11.A and 11.B and the Company establishes
National Accounts, the NDS will be required to honor the pricing plans
established by the Company or any of its Subsidiaries for National Accounts and
will be entitled to obtain the benefit of those plans in the Territory,
provided that the rate, or the negotiated discount to local rates, is the same
for both the Company and NDS service areas, and provided that the NDS will not
be required to provide service to such customers at less than the NDS' cost of
service. If the NDS acquires a local customer, which requires service in the
Company's service area in addition to service in the NDS' service area(s), the
NDS will be permitted to establish a National Account rate plan that is
consistent with the National Accounts pricing schedule that is then in effect
and being utilized by the Company (as the same may be amended from time to
time). The National Account pricing schedule(s) in effect from time to time
will be honored by the Company and by all of the NDS; provided, that the rate,
or the negotiated discount to local rates, is the same for all of the NDS' and
the Company's service areas.
9.4 SERVICE PRICING PLANS - INTERNATIONAL. Nextel and the NDS have and
expect to continue to enter into reciprocal agreements with international
wireless carriers to further the goal of worldwide contiguous service. If such
agreements do not discriminate against the Company and the Company is entitled
to all rights and other privileges granted as part of such agreements to the
Nextel Group member that is the relevant contracting party, then after any such
agreement has been provided to the Company (if NWIP is able to make suitable
arrangements, using its best reasonable efforts with the relevant international
carrier), the Company will become a signatory party (by amendment, addendum or
other suitable means) to such agreement and thereafter will honor the terms of
such agreement. If at any time (i) none of the Company, Opco, or the Company's
other Subsidiaries are sharing elements of the NDS ESMR Network, (ii) the
Company or Opco has its own service provider code, (iii) the Company, Opco or
the Company's other Subsidiaries enter into reciprocal agreements with
international wireless carriers, and (iv) such agreements do not discriminate
against any member of the Nextel Group and the members of the Nextel Group are
entitled to all rights and other privileges granted as part of such agreements
to the Company or the Subsidiary of the Company that is the relevant
contracting party, then, after any such agreement has been provided to the
members of the Nextel Group (if the Company is able to make suitable
arrangements, using its best reasonable efforts with the relevant international
wireless carrier), the members of the Nextel Group will become signatory
parties (by amendment, addendum or other suitable means) to such agreement, and
thereafter will honor the terms of such agreements. The Company shall have no
liability under any of the agreements described in this Section 9.4 for any act
or activity thereunder involving any member of the Nextel Group or its
customers, and no member of the Nextel Group shall have any liability under any
such agreement for any act or activities thereunder involving the Company or
any of its Subsidiaries or any of their customers.
9.5 SUBSCRIBER EQUIPMENT PRICING. The Company will be responsible for
determining the price points for sale of subscriber equipment, including
handsets and accessories, for both direct and indirect distribution outlets of
the Company in the Territory, provided, that indirect dealers and national
retailers will be allowed to determine their own price points for such
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equipment. The price for equipment and accessories to be sold to National
Accounts covered by Sections 11 A-C must be consistent with Nextel's National
Accounts pricing schedule that is then in effect and is being utilized by the
NDS, as updated from time to time. The Company will purchase equipment and
accessories manufactured by or for Motorola directly from Motorola as discussed
in Section 5.2A. Except for authorized National Accounts (as discussed in
Section 11), other sales as discussed in Section 10, and as otherwise is
provided in this Section 9.5, the Company and each NDS each has the exclusive
right to sell ESMR Network subscriber equipment and accessories in its
geographic territory and neither of them will sell ESMR Network subscriber
equipment or accessories outside its territory without prior approval of the
other.
10. SALES AND DISTRIBUTION
10.1 OBJECTIVE. The sales and distribution objective of the NDS and
the Company is to maximize product placement within their respective
territories to allow them to more effectively compete with other
telecommunications service providers.
10.2 LOCAL SALES AND DISTRIBUTION. Subject to the Company's
obligations under Section 10.3 and the last sentence of this Section 10.2, the
Company will have complete flexibility in the Territory to develop and manage
both direct and indirect distribution channels at the local level. The Company
will require local indirect dealers to adhere to the same terms and conditions
as are generally applicable to any "Nextel Communications" authorized local
indirect dealer. The Company will not establish any indirect distribution
channel that will result in distribution in both NDS and the Company territory,
unless NWIP has approved such action.
10.3 NATIONAL INDIRECT DISTRIBUTION. The NDS have and expect to
continue to enter into contracts with both national authorized dealers (e.g.,
Hello Direct) and national retailers (e.g., Ritz Camera). The Company will have
the opportunity to participate in and contribute to discussions regarding
contracts with national authorized dealers and national retailers, but final
decisions relating to such contracts will be made by NWIP (or another member of
the Nextel Group) in its sole discretion. The Company will share in the
benefits available under such agreements on a basis that is equitable under the
circumstances and be required to support any national indirect distribution
outlets in the Territory that are covered by a contract with any member of the
Nextel Group. NWIP will be responsible for supporting the operational aspects
of these contracts on a national level, in effect at the relevant time and
applicable generally to the NDS, including activation and fulfillment in all
territories and management of commission payments to the national distributors.
The Company will be responsible for the costs of equipment subsidies,
commissions, and all operational costs for subscriber unit sales and activation
under these contracts in the Territory. The Company will also be responsible
for providing local training and operational support of national promotions
with such distributors and providing service that meets or exceeds the minimum
performance standards set forth in this Agreement (and the relevant Collateral
Agreements) to the customers of the distribution channel.
10.4 WEBSITES AND TELEMARKETING. The Company and NWIP (on behalf of
the NDS) will cooperate so that any sales made over the internet or using
telemarketing are made by the Company if the purchaser is in the Territory and
are made by the NDS if the subscriber is outside
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the Territory. To the extent this does not occur, the parties will make
appropriate adjustments so that the subscriber receives service from the party
with operations where the subscriber is located.
11. NATIONAL ACCOUNTS/PRIVATE SYSTEMS
A. With the Nextel national network, the NDS have a unique
opportunity to attract National Accounts and private systems users who are
national in scope and size. These accounts and users vary from time to time and
the NDS will have and exercise "exclusive" national negotiation rights to such
accounts and users as NWIP has identified in writing to date and thereafter
those that NWIP will periodically identify in writing to the Company, subject
to the Company's approval, which shall not be unreasonably withheld. The
Company is not permitted to market to these accounts or users without prior
approval from NWIP.
B. If a customer in the Territory requires multi-service-area
coverage and requests a single point of contact for fulfillment and ongoing
maintenance of the customer relationship, the Company may serve as the single
point of contact if (i) the Company is able to provide the required service at
a level at least equal to that provided by the NDS that would otherwise serve
as the single point of contact; and (ii) the Company adheres to the established
NDS National Accounts activation and fulfillment process. Otherwise, the
Company will transfer such customers to the National Accounts group or one of
the regional markets of the NDS for fulfillment and ongoing maintenance of the
customer relationship. Subject to the Company's meeting the service
requirements and adherence to the activation and fulfillment requirements set
forth above, the Company and NWIP will exercise reasonable judgment as to which
party should logically be the point of contact for a customer based on, among
other factors, location of traffic generated by the customer and location of
the customer's headquarters.
C. Each subscriber handset that is part of a National Account will
be treated as a subscriber of either the Company (or one of its Subsidiaries)
or one of the NDS based on the telephone number of the handset. Calls made by
that handset will be treated accordingly, and each of the Company and the NDS
will include in its revenue the revenue from subscribers with phone numbers
based within their respective service areas without regard to whether the bill
is prepared and sent by Nextel (or an NDS) or the Company (or one of its
Subsidiaries).
D. In addition to National Accounts, NWIP has identified a category
of customers who have traditionally built and operated private communications
systems for internal use. As part of their marketing effort, the NDS typically
seek to provide a virtual private network ("VPN") solution for such customers,
which blends the private system control and exclusivity with the national ESMR
Network of the NDS. Nextel has had discussions with Motorola regarding a
contract that would permit Motorola to market and serve specific customers who
are interested in a VPN solution on an exclusive basis. Should the Company
elect to provide a VPN solution to its customers, it will be required to do so
under the terms of any contract between any member of the Nextel Group and
Motorola and/or one or more of its Subsidiaries.
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12. BREACH; DEFAULT; DISPUTE RESOLUTION
12.1 NON-MATERIAL BREACH. Remedies for breaches of this Agreement or
any of the Collateral Agreements that are not Material Breaches as defined in
Section 12.2 or 12.3 shall be governed by this Section 12.1. If either party
gives notice to the other of a breach that is governed by this Section 12.1,
the breaching party must either (i) remedy the breach within 15 days of
receiving notice, (ii) if the breach cannot be remedied in 15 days, formulate a
reasonable plan to remedy the breach as promptly as practicable and deliver a
copy of such plan to the other party within 15 days (a "Remedial Plan") and
commence implementation of the Remedial Plan as promptly as reasonably possible
or (iii) dispute the occurrence of a breach in accordance with Sections 12.6
and 12.7 and prevail in the assertion that no breach has occurred. If the party
receiving a Remedial Plan believes that the length of time provided for remedy
of the relevant breach is unreasonably long, such party may request that a
reasonable time to effect such remediation be determined in accordance with
Sections 12.6 and 12.7. If at the expiration of the period for cure (under
clause (i) or (iii) of the preceding sentence, 15 days; under clause (ii) the
time period stated in the Remedial Plan or the time period determined pursuant
to Sections 12.6 and/or 12.7, as applicable) no cure has been accomplished, the
non-breaching party will have the right to remedy the breach with its own or
third party forces and to recover its costs of doing so from the breaching
party, or, where such a remedy is not practical, to recover damages for the
breach and to pursue any other remedy at law or under this Agreement or the
Collateral Agreements, provided, however, that in the case of a dispute under
clause (iii), the ultimate rights and obligations of the parties will be
determined pursuant to Sections 12.6 and 12.7. Notwithstanding the foregoing,
in no event will the Company be permitted to operate or to exercise any control
over the business or systems of Nextel or any of its Affiliates (other than the
Company's own business and systems), and in no event, except as provided in
this Agreement or the Collateral Agreements, is any member of the Nextel Group
permitted to operate or to exercise any control over the business or systems of
the Company. Notwithstanding anything in this Section 12.1 to the contrary, in
the event of any conflict or inconsistency, relating to or arising from any
breach involving the provision of goods, services or systems pursuant to this
Agreement or any of the Collateral Agreements, between the provisions of this
Section 12.1 and Section 2.6, the parties agree and acknowledge that Section
2.6 shall govern.
12.2 COMPANY'S MATERIAL BREACH. The Company's failure to comply with
provisions of this Agreement or any of the Collateral Agreements in any of the
following ways shall be deemed to be a Material Breach:
A. in any Build Year, a delay of 180 days or more (based on the
Schedule set out on Exhibit 6) of (i) the launch for any two Sections, or (ii)
the completion of the Build Out in any two Sections;
B. materially failing to offer a Required Service as set out in
Section 6.1;
C. failing to meet either the network performance requirements set
out in Section 7.1 or the customer care standards set out in Section 7.2 for 3
consecutive months or for 6 months in any 12-month period;
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D. failing to a material degree to adhere to the Pricing Structure
set out in Section 9.1 or to the brand strategy set out in Section 8.1;
E. repeatedly failing to pay amounts due to NWIP under this
Agreement or any of the Collateral Agreements where the cumulative amount due
is greater than $1,000,000;
F. failing to take actions or taking actions in breach of its
contractual obligations to NWIP that (i) adversely affects Partner Frequencies
and materially and adversely affects the Company's ability to launch service or
operate two or more Sections of the Territory or that (ii) adversely affects
Partner Frequencies with a fair market value of $10 million or more;
G. failing, after notice and an opportunity to cure under Section
12.1, in any other material respect to construct and operate the ESMR Network
in the Territory in compliance with its contractual obligations to NWIP;
H. any other act or omission in breach of its contractual
obligations to NWIP that, following notice and failure to cure under Section
12.1, prevents NWIP from realizing a material benefit of any of this Agreement
or any of the Transaction Documents or other agreements between the Company or
any of its Subsidiaries and NWIP or any other Transaction Documents between
NWIP and any other holder of Equity in the Company relating to the transactions
contemplated hereby.
12.3 NWIP'S MATERIAL BREACH. The Nextel Agreement no longer being in
full force and effect (or any assertion by Nextel to such effect) or NWIP's
failure to comply with provisions of this Agreement or any of the Collateral
Agreements in any of the following ways shall be deemed to be a Material
Breach:
A. materially failing to provide spectrum, access to network
systems or services, including switch access, or to Nextel developed technology
as required herein or pursuant to the terms of the relevant Transaction
Documents, as appropriate;
B. committing any act or omission in breach of its contractual
obligations to the Company that materially adversely affects the Company's
ability to operate an ESMR Network in the Territory in a manner consistent with
the ESMR Network in areas in the United States served by NWIP or the NDS;
C. committing any act or omission in breach of its contractual
obligations to the Company, including failure to timely supply spectrum, access
to network systems or services or to any Nextel developed technology required
by this Agreement or any of the Collateral Agreements, that materially delays
or otherwise materially adversely affects the Company's ability to achieve
Build Out or to launch service;
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D. repeatedly failing to pay amounts due to the Company under
this Agreement, any of the Collateral Agreements or Sections 7.03 or 7.04 of
the Shareholders' Agreement where the cumulative amount due is greater than
$1,000,000;
E. any other act or omission in violation of this Agreement,
any of the relevant Collateral Agreements, or Sections 7.03 or 7.04 of the
Shareholders' Agreement that, following notice and failure to cure under
Section 12.1, prevents the Company from realizing a material benefit of any of
this Agreement or any of the Transaction Documents or other agreements between
the Company or any of its Subsidiaries and NWIP, or any other Transaction
Documents between the Company and any other holders of Equity in the Company
relating to the transactions contemplated hereby.
12.4 PROCEDURES FOR A MATERIAL BREACH. In the event of a Material
Breach, after written notice of such a Material Breach, the breaching party
must (i) remedy the breach within 15 days of receiving notice, (ii) if the
breach cannot be remedied in 15 days, formulate a Remedial Plan and deliver a
copy of such Remedial Plan to the non-breaching party within 15 days and
commence implementation of the Remedial Plan as promptly as reasonably possible
or (iii) dispute the occurrence of a Material Breach in accordance with
Sections 12.6 and 12.7 and prevail in the assertion that no Material Breach has
occurred. If the party receiving a Remedial Plan believes that the length of
time provided for remedy of the relevant breach is unreasonably long, such
party may request that a reasonable time to effect such remediation be
determined in accordance with Sections 12.6 and 12.7. If at the expiration of
the period for cure (under clause (i) or (iii) of the preceding sentence, 15
days; under clause (ii) the time period stated in the Remedial Plan or the time
period determined pursuant to Sections 12.6 and/or 12.7, as applicable) no cure
has been accomplished, the non-breaching party will have the right to remedy
the breach with its own or third party forces and to recover its costs of doing
so from the breaching party, or, where such a remedy is not practical, to
recover damages for the breach and to pursue any other remedy at law or under
this Agreement or the relevant Collateral Agreements, provided, however, that
in the case of a dispute under clause (iii), the ultimate rights and
obligations of the parties will be determined pursuant to Sections 12.6 and
12.7. Notwithstanding the foregoing, in no event will the Company be permitted
to operate or to exercise any control over the business or systems of the
Nextel Group (other than the Company's own business and systems), and in no
event, except as provided in this Agreement or the relevant Collateral
Agreements, shall any member of the Nextel Group be permitted to operate or to
exercise any control over the business or systems of the Company.
12.5 EXCUSABLE DELAY/TIME EXTENSION. An Excusable Delay in either
party's performance of any obligation under this Agreement or any of the
relevant Collateral Agreements means any delay caused by an event that is
beyond the reasonable control of the party with the duty of performance (which
shall include the duty to exercise reasonable foresight and/or precautions) and
is not primarily attributable to the fault or negligence of that party,
including any delay arising from one of the following: acts of any government
in its sovereign capacity, which shall include zoning or licensing actions; war
or insurrection; strike or work slowdown; extreme weather; fire, earthquake,
flood, epidemic, or quarantine restriction; and acts of God. To the extent that
any delay in NWIP's or the Company's performance of any of its own obligations
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under this Agreement or any of the Collateral Agreements is proximately caused
by inability or failure of the other party or its Affiliates to fulfill its
obligations under such agreement, such delay shall also be an Excusable Delay.
Excusable Delay includes delay caused by the inability to acquire rights to use
or manage the use of frequencies but only if all commercially reasonable
efforts have been made to mitigate the consequences, including, without
limitation, construction of additional cell sites to maximize use of
frequencies that are available to the Company (such delay, a "Frequency
Delay"). Where performance is delayed by reason of an Excusable Delay, the time
for performance, and any otherwise applicable time limit, schedule or deadline,
shall be extended for a period of time equal to the period of Excusable Delay.
12.6 ALTERNATE DISPUTE RESOLUTION.
A. In the case of any dispute arising between the parties in
connection with the interpretation or performance of this Agreement, or with
the interpretation or performance of any Collateral Agreement, or any other
dispute between the parties relating to this contractual joint venture, before
either party may initiate a formal proceeding in any tribunal, including
arbitration or judicial proceedings, the parties will exhaust the Alternate
Dispute Resolution Process provided in this Section 12.6. The party wishing to
initiate a proceeding shall provide written notice to the other party that
includes all elements required to be included in the arbitration demand under
Section 12.7.
B. Within five business days of receipt of the notice, one or more
executives of each party, including at least one executive from each party not
lower than the first executive tier below President or Chief Executive Officer,
will meet and seek to resolve the dispute. Not less than 30 days after the
notice is given under Section 12.6A, if either party determines that further
progress toward resolution is not taking place at that level, that party can
give written notice to that effect, and within five business days of that
notice the executive of each party at the highest level below the Board of
Directors will meet and confer to seek to resolve the dispute. Following at
least one such meeting, upon either party's determining that no further
progress toward resolution is occurring at the highest executive level, and
providing written notice to that effect, the Alternate Dispute Resolution
Process will be concluded. Thereafter, any dispute in connection with the
interpretation or performance of this Agreement, or with the interpretation or
performance of any Collateral Agreement, or any other dispute between the
parties relating to this contractual joint venture, shall be resolved by
arbitration using the arbitration procedure set forth in Section 12.7.
12.7 ARBITRATION. If the parties are unable to resolve a dispute under
Section 12.6, either party may serve a demand for arbitration in accordance
with the Center for Public Resources Non-Administered Arbitration Rules
("Arbitration Rules") in which, in addition to any other requirements of those
Rules, the party serving the demand states the specific nature of the claimed
breach and the specific nature of and period for the cure allegedly required,
and demands a determination by the arbitrators of the parties' rights together
with any other relief sought (subject to the provisions of Sections 2.6 and
12.9F). Three arbitrators shall be chosen, and the proceedings conducted, in
general accordance with the Arbitration Rules; provided, however, (i) the
parties shall choose three arbitrators through a self-administered process of
striking names
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from a list of potential arbitrators and shall not employ the method provided
for in the Arbitration Rules; (ii) the rules of evidence employed in the
federal courts at the time shall apply; and (iii) discovery shall be permitted
in accordance with the Federal Rules of Civil Procedure. The decision of the
arbitrators will be final and binding on the parties to the maximum extent
permitted under applicable law, and a final judgment may be entered on the
award in any court of competent jurisdiction.
12.8 EQUITABLE REMEDIES.
A. The rights and obligations of the parties enumerated in this
Section 12.8 are deemed by the parties to be so unique and fundamental to their
bargain that, in the event of non-performance, it is agreed that the
appropriate remedy is injunctive or other equitable relief. With respect to
these obligations, the parties agree that damages alone are an inadequate
remedy because not all damages will be ascertainable with any reasonable degree
of certainty, and because the essence of the parties' bargain is for
performance of these obligations. With respect to these obligations, the
complex interrelationship of the elements of the parties' bargain is such that
only performance (coupled with such other relief, including, without
limitation, money damages, as any court, arbitration panel, or other
appropriate tribunal may, subject to Sections 2.6 and 12.9F, deem appropriate)
can restore the benefit of the bargain to the non- breaching party. The parties
stipulate that, in the event of a dispute over any of the items enumerated
below, neither party will urge, argue or claim that damages alone are an
adequate remedy or should be the preferred remedy if the tribunal should
determine that non-performance has occurred. The rights and obligations are:
1. NWIP's and the Company's rights to the operation of an ESMR
Network in their respective territories in accordance with this Agreement or
any of the relevant Collateral Agreements and to performance of all actions
provided for in this Agreement or in such Collateral Agreements that are
necessary to achieve such operation.
2. The Company's and NWIP's rights to the use of spectrum as
provided herein and in any applicable Collateral Agreement, where the failure
to honor such rights (following notice and an opportunity to cure) materially
and adversely affects either (i) the Company realizing the benefits of NWIP's
obligation to provide spectrum as described in Article 4 or the Interim
Management Agreement or (ii) NWIP's (or other members of the Nextel Group's)
realizing the benefits of the Company's obligation to (a) provide spectrum as
described in the Analog Management Agreement or (b) transfer to NWIP (or its
designee) any SMR Frequencies as required pursuant to Section 4.14 or 4.16, as
appropriate.
3. NWIP's obligations to provide access to network systems and
services, including switch access, and access to any Nextel developed
technology where the failure to do so (following notice and an opportunity to
cure) materially and adversely affects the Company's ability to achieve the
Build Out schedule or performance requirements required by this Agreement or
any of the relevant Collateral Agreements, provided that the Company's failure
to avail itself of opportunities to obtain equivalent technology or network
systems and services from other sources
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in a timely manner will be considered in determining whether a material,
adverse effect has resulted from NWIP's failure to perform.
4. The Company's rights (subject to its compliance with the
requirements of this Agreement or any of the relevant Collateral Agreements) to
be the exclusive operator in the Territory of a digital wireless communication
system using the Partner Frequencies.
5. NWIP's approval rights under this Agreement and any such
approval rights so designated under the Transaction Documents.
6. The Company's obligations to (i) timely meet its Build Out
obligations under Section 6.2, (ii) adhere to service pricing structures as
required by Section 9.1, (iii) take or refrain from taking particular actions
relating to the acquisition, maintenance, disposition, preservation and use of
frequencies in the Territory in accordance with Article 4, and NWIP's rights
related to each of the foregoing.
B. Where the non-breaching party cannot be fully restored to the
position it would have enjoyed in the event of timely performance of the
obligation to which an order of specific performance relates without additional
relief, including monetary compensation (subject to Sections 2.6 and 12.9F),
this subsection shall not preclude the award of such supplemental relief in
addition to (but in any event not in lieu of) specific performance. This
subsection is also not intended to limit judicial or arbitrator discretion in
ordering specific performance with respect to other obligations of the parties
where such a remedy is determined by the tribunal to be appropriate in the
circumstances.
12.9 DAMAGES AND TERMINATION FOR MATERIAL BREACH.
A. PROCEDURE. If a Material Breach occurs and is not timely cured
or disputed under clause (iii) of Section 12.4 or if the breach is not capable
of cure, then, in addition to its other remedies as provided herein, the
non-breaching party ("Claimant") may terminate this Agreement and all other
agreements in force between the parties other than the Shareholders' Agreement,
but only strictly in accordance with this subsection and subject to the
limitations on remedy provided for in this Section. Following the expiration of
the applicable notice period, Claimant must proceed as follows in order to
exercise any right of termination: (1) pursue the Alternate Dispute Resolution
Process described in Section 12.6; and (2) at the conclusion of that Process
proceed with arbitration under Section 12.7. In addition to resolving any other
issues presented by the parties, the arbitrators shall determine whether a
Material Breach has occurred, whether additional time should be allowed for
cure, whether damages should be awarded and whether and under what
circumstances a right of termination shall exist under the criteria of this
Section 12.9. Only upon and in accordance with a determination by the
arbitrators that a right of termination exists shall Claimant exercise, or
purport to exercise, any such right, and no such right shall exist except as
specifically provided in this Agreement or in the relevant Collateral
Agreements.
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B. RIGHT TO NEXTEL NAME AND TRADEMARKS. In the event the
arbitrators determine that the Company has committed a Material Breach, NWIP
shall be entitled to terminate the Trademark License Agreement and, subject to
the provisions of the Trademark License Agreement, withdraw any right the
Company has to the continued use of the Nextel name and Nextel trademarks, if
the arbitrators determine, taking into account the harm that the Material
Breach caused to the licensed marks, that termination of the Trademark License
Agreement is an appropriate remedy in the circumstances. In the event the
arbitrators determine that NWIP has committed a Material Breach, the Company
shall be entitled to maintain the Trademark License Agreement if,
notwithstanding the termination of this Agreement and all other Collateral
Agreements, the arbitrators determine that continuation of the Trademark
License is appropriate in the circumstances.
C. DETERMINATION REQUIRED FOR TERMINATION REMEDY. Termination shall
be an available remedy only if the procedure of Section 12.7 is followed and
the arbitrators make the following determinations:
(i) There has been a Material Breach.
(ii) Neither an order of specific performance nor an award of
damages nor a combination of the two will substantially restore the benefit of
the bargain to the non- breaching party in the absence of termination.
(iii) Termination is an equitable remedy under all of the facts
and circumstances, including any conditions or limitations the arbitrators
impose in connection with termination to achieve equity.
D. TERMINATION AWARDED TO NWIP. If NWIP is the Claimant and NWIP
has sought and has been awarded termination of all the agreements in force
between the parties as a remedy, then, if at that time any member of the Nextel
Group owns an equity interest in the Company, NWIP must acquire pursuant to
Section 5.1(a)(i)(C) of the Company's Restated Certificate of Incorporation for
a price equal to 80% of the Company Equity Value as described in the last
sentence of Section 5.1(a)(iii) thereof all outstanding capital stock
(excluding any shares of the Company's Series B Preferred Stock owned by any
member of the Nextel Group) and any other equity interests in the Company. The
balance of the Company Equity Value, under such Section 5.1(a)(iii) will be
retained by NWIP as liquidated damages for any breach occurring prior to or in
connection with the events giving rise to such termination and to compensate
for the unascertainable damages arising from such termination, and no
additional compensation shall be owing for any damages resulting from such a
breach or termination.
E. TERMINATION AWARDED TO THE COMPANY. If the Company is the
Claimant, and the Company has sought and has been awarded termination of all
the agreements in force between the parties as a remedy, and if at that time
any member of the Nextel Group owns an equity interest in the Company, as
liquidated damages for all breaches occurring prior to or in connection with
the events giving rise to termination and to compensate for the unascertainable
damages arising from such termination, the Company will be entitled at its
option, to entry of an
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order requiring that NWIP must pay pursuant to Section 5.1(b)(i)(D) of the
Company's Restated Certificate of Incorporation a sum equal to the amount
described in Section 5.1(b)(iii)(D) thereof and no additional compensation will
be owing for any damages from such termination, or for any breach occurring
prior to or in connection with the events giving rise to such termination. In
the event that the Company requests a ruling on its right to terminate and is
determined to be entitled to terminate one or more Substantial Agreements, but
elects not to terminate, then the Company will be entitled to entry of an order
requiring the price to be paid by NWIP upon the subsequent exercise of the NWIP
Call Right to be no less than (x) the Company Equity Value determined under the
Shareholders' Agreement as of a point in time immediately prior to the
breach(es) that resulted in the termination, plus (y) an amount equal to 20% of
the amount described in clause (x) (the "Premium"), minus (z) NWIP's
proportionate share of such sum (but the decision whether or not to exercise
such option shall remain in the sole discretion of NWIP). The Premium amount
included in the price paid by NWIP will constitute liquidated damages for any
breach occurring prior to or in connection with the events giving rise to the
right to terminate, and to compensate for the unascertainable damages arising
from such termination, and no additional compensation shall be owing for any
damages resulting from such a breach or for any breach occurring prior to or in
connection with the events giving rise to the order.
F. LIMITATIONS ON DAMAGES. Neither NWIP (nor any other member of
the Nextel Group) nor the Company (nor Opco, nor any other Affiliate of the
Company) is entitled to seek or recover consequential, punitive or exemplary
damages in respect of this Agreement or the Collateral Agreements or any other
agreement between the Company or any of its Subsidiaries, on the one hand, and
NWIP or any other member of the Nextel Group, on the other, under any
circumstances or for any reason including, without limitation, upon or in
connection with any termination of this Agreement or any of such other
agreements. Consequential damages are, without limitation, lost profits, lost
revenue and the like but do not include the actual costs incurred in obtaining
substitute performance where there has been a failure to perform an obligation
under an agreement. This Section 12.9F shall not limit any party's right to
full recovery of liquidated damages as provided in Section 12.9E.
13. MISCELLANEOUS
13.1 CHOICE OF LAW. This Agreement and each of the Collateral
Agreements shall be governed by New York law, provided that those portions of
this Agreement, the Interim Management Agreement and the Analog Management
Agreement that involve topics covered by FCC Rules shall be governed thereby.
13.2 ATTORNEYS FEES. If a dispute relating to this Agreement or any
Collateral Agreement, or any transaction or matter contemplated hereby or
thereby, results in any proceeding (arbitration, litigation or other
proceeding), the judge's, arbitrator's or panel's decision or award may provide
that the prevailing party shall be entitled to recover reasonable attorneys'
fees, expenses and costs from the non-prevailing party, and the amount of the
fees, expenses or costs so recoverable.
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13.3 PASS-THROUGHS. If the Company cannot obtain from a third party
any product or service that is necessary for the Company to perform its
obligations under one or more of this Agreement or any of the Collateral
Agreements, then, as an accommodation to the Company, NWIP will make available
to the Company the product or services that is available to the NDS that the
Company has been unable to obtain. NWIP will have no obligation to make this
accommodation if it would breach the terms of or would otherwise result in any
adverse effect or consequence (other than any additional costs or charges that
the Company will pay as required by the last sentence of this Section) to NWIP
or to any member of the Nextel Group under any agreement with a third party.
NWIP and the other members of the Nextel Group retain the right to modify or
terminate their agreements with third parties, in their sole discretion and
without any liability or responsibility to the Company. If any product or
service is made available to the Company by a pass-through as contemplated by
this Section, the Company will look solely to the third party for performance.
Neither NWIP nor any member of the Nextel Group makes any representation or
warranty and none of them will have any liability for the failure of the third
party to perform. If there is any cost or charge to any member of the Nextel
Group for a pass-through arrangement, NWIP need not make it available to the
Company until the Company has paid such cost or charge.
13.4 [RESERVED]
13.5 MONITORING. In addition to specific monitoring rights
contemplated elsewhere, the Company and NWIP will have the right to such
periodic reports from each other as they may reasonably request from time to
time, and NWIP has the right (which may be exercised at reasonable times and on
reasonable advance notice by appropriate representatives) to inspect and audit
the Company's operations to confirm compliance with this Agreement or any of
the Collateral Agreements (and the Company will have the right of access to the
NWIP and/or NDS operations also at reasonable times and on reasonable advance
notice, in order to permit the Company and its personnel to understand such
operations in order that the Company may comply with the terms of this
Agreement or any of the relevant Collateral Agreements). Absent an emergency,
inspections and audits shall be during normal business hours.
13.6 PAYMENT.
A. NWIP will submit to the Company after the end of each calendar
month a reasonably detailed invoice listing (i) all charges due and payable by
the Company or Opco to NWIP under this Agreement or any Collateral Agreement
for the prior month (including pass-throughs for telco or other third party
charges, if any), and (ii) all charges due and payable by NWIP to the Company
or Opco under this Agreement or any Collateral Agreement for the prior month.
After the amounts under clause (i) and (ii) of the preceding sentence have been
netted against each other, the party that owes the other will pay such invoice
in full within thirty (30) days of receipt thereof, without deduction or
offset.
B. In the event a billing dispute arises between the parties, the
party with an amount owing will pay 100% of the disputed amount by the payment
due date. If the Company believes that any invoice is incorrect, not more than
30 days after the date of the invoice, it will
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provide NWIP with a written explanation of the discrepancy or claimed error.
NWIP will review any written explanation received from the Company within ten
business days of receipt thereof and respond thereto by either (i) making an
appropriate correction, or (ii) sending to the Company a written explanation
with reasonably detailed supporting information describing why NWIP does not
believe a billing error has been made. If, upon review of NWIP's response, the
Company reasonably still believes that a billing error exists, the parties will
resolve their dispute under Article 12.
C. A late payment charge of the greater of one and one-half percent
(1-1/2%) per month or the maximum interest rate permitted by law will be
applied to any unpaid balance of any invoice delivered under this Section 13.6,
if the payment is not paid by the due date. Late payment charges will be
calculated by multiplying the total unpaid amount carried forward to a
subsequent invoice by the applicable interest rate. The late payment charges
hereunder are a penalty for a default of non-payment of any payment when due
and will not be deemed interest payments. This late payment charge will be in
addition to and not in lieu of any other remedies available to the party
entitled to payment.
13.7 COMPANY AUDIT RIGHT. If the Company or Opco is charged by NWIP
either based on a pass-through of charges imposed by a third party on NWIP (or
any other member of the Nextel Group) or based on a portion of the charges that
any member on the Nextel Group pays to third parties, the Company will have the
right, on reasonable advance notice and during regular business hours, to
review the books and records of the NWIP (or the Nextel Group) relating to such
third-party charges. The Company agrees that any information provided to it
pursuant to this Section 13.7 (other than that relating solely to actual pass
through charges billed to the Company) is confidential information to which
Section 13.10 shall apply.
13.8 COMPANY PERSONAL OBLIGATION.
A. All of the Company's rights under this Agreement or any of the
Collateral Agreements entered into as contemplated herein, including the
Company's rights to use any frequencies made available by any member of the
Nextel Group in the Territory and the rights to own and operate the ESMR
Network in the Territory are personal to the Company. Subject to the foregoing
and the approval of NWIP, the Company may (i) assign its rights and delegate
its duties to wholly owned direct or indirect Subsidiaries, or (ii) subcontract
or obtain from others products and services necessary to perform its
obligations under this Agreement or any of the Collateral Agreements, but, in
either case, the Company shall be and remain responsible and liable for the
due, proper, full and timely performance of such obligations. The Company is
jointly and severally liable for all obligations and liabilities of Opco and
any other Company Subsidiary arising under this Agreement or any Collateral
Agreement. If NWIP has consented to an assignment or confirmed in writing that
a particular group of the Company's or Opco's senior secured lender(s) have
complied with the requirements of Section 4.13A, the Company and Opco may make
a collateral assignment of their respective right, title and interest under
(but not any of their obligations, liabilities or duties with respect to this
Agreement and (notwithstanding any provisions of any of the Collateral
Agreements to the contrary) any of the Collateral Agreements to such lenders.
No more than one such assignment will be in effect at any time.
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B. Any assignment by the Company and/or Opco of rights under this
Agreement and any of the Collateral Agreements permitted pursuant to clause (i)
of the first sentence of paragraph A hereunder to wholly owned direct or
indirect subsidiaries must by its terms cease to be effective at any time that
the assignee ceases to be a wholly owned direct or indirect subsidiary of the
Company. No assignment of this Agreement or any Collateral Agreement (except as
expressly provided otherwise therein) by any party shall release the assignor
of any obligations, duties or liabilities hereunder or thereunder and the
assignor shall be and remain directly and fully liable, on a primary basis
together with the assignee, for all such matters. Such direct, primary
obligations, liabilities and duties of the assignor shall remain in effect and
shall not be reduced, diminished, avoided or released, in whole or in part,
notwithstanding any insolvency, bankruptcy or reorganization of any assignee.
C. Except for the Company's rights under clause (i) of paragraph A
and the last sentence of paragraph A, neither party may assign this Agreement
or any of the Collateral Agreements without the consent of the other, except
that NWIP may assign an agreement to any wholly owned direct or indirect
Subsidiary of Nextel that assumes NWIP's obligations and is approved by the
Company, provided that the Company may withhold such approval based only on the
Company's reasonable determination that the assignee lacks financial or other
capacity to perform equivalent to that of NWIP.
13.9 DISCLAIMER OF PARTNERSHIP. Neither this Agreement nor any of the
Collateral Agreements contemplated hereby, nor any other agreement between the
parties, or any action or relationship contemplated therein, creates a
partnership or any other fiduciary relationship between the parties, nor
between NWIP and any of the other stockholders of the Company. It is expressly
understood and agreed that the obligations and relationships so created are
contractual in nature, are for the benefit of and may be enforced only by the
parties signatory thereto and their permitted assignees and successors, and are
subject to the limitations on liability and disclaimers set forth therein
including those set forth in the Nextel Agreement.
13.10 CONFIDENTIALITY.
A. Except (i) for the use of information as required in connection
with any filing with the Securities and Exchange Commission, (ii) for any other
governmental filing required in order to complete the transactions contemplated
by this Agreement or by any of the Collateral Agreements, and (iii) as NWIP and
the Company may agree or consent in writing, all information received by NWIP
and the Company and their respective representatives pursuant to the terms of
this Agreement and each of the Collateral Agreements shall be kept in strictest
confidence by the receiving party and its representatives. Neither NWIP nor the
Company will make any press release or other disclosure of the transactions
contemplated in this Agreement or in any of the Collateral Agreements without
the prior written consent of the other party. Notwithstanding the foregoing, if
counsel for either NWIP or the Company advises that a press release or public
disclosure is required by law or the rules of any stock exchange or the NASDAQ
National Market, then that party must notify the other, and the parties shall
use their best reasonable efforts to cause a mutually acceptable press release
to be issued, and in all events the
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party required to make such disclosure will be free to do so. Any party may
disclose the existence and terms of this Agreement and any of the Collateral
Agreements and the transactions contemplated hereby and thereby to financial
institutions in connection with financings or as required under any agreements,
provided that confidential treatment is requested from any such person to whom
such information is disclosed.
B. The foregoing confidentiality provisions shall not apply to such
portions of the information received which (i) are or become generally
available to the public through no action by the receiving party or by such
party's representatives or (ii) are or become available to the receiving party
on a nonconfidential basis from a source, other than the disclosing party or
its Affiliates or its representatives, which the receiving party believes,
after reasonable inquiry, is not prohibited from disclosing such portions to it
by a contractual, legal or fiduciary obligation.
C. If a party or its Affiliates or representatives becomes legally
compelled by law, process or order of any court or governmental agency or
otherwise to disclose any confidential information, such party will give the
disclosing party prompt notice thereof to permit the disclosing party to seek a
protective order or to take other appropriate action. A party will be relieved
of its confidentiality obligations under this Section 13.10 only to the extent
that it becomes legally compelled to disclose confidential information, subject
to protective orders or other restrictions imposed on or granted by the court,
governmental agency or other entity receiving the confidential information. If
requested by the disclosing party, the compelled party will cooperate in
seeking to obtain protective treatment for any confidential information that
the compelled party is legally compelled to disclose.
D. NWIP and the Company hereby acknowledge that as a result of
disclosures by Nextel, NWIP, and the Company contemplated under this Agreement
and certain of the Collateral Agreements, the parties and their Affiliates may,
from time to time, have material, non-public information concerning Nextel, the
Company, and other companies. Nextel, NWIP, and the Company confirm that each
of them and their Affiliates are aware and each of them has advised their
representatives that (i) the United States securities laws may prohibit a
person who has material, non-public information from purchasing or selling
securities of any company to which such information relates, and (ii) material
non-public information shall not be communicated to any other person except as
permitted herein.
13.11 AMENDMENTS. This Agreement may be amended only by a writing
executed by the parties.
13.12 ENTIRE AGREEMENT. This Agreement and the other Transaction
Documents set forth the entire understanding of the parties hereto and thereto
with respect to the subject matter hereof and thereof, and supersede all prior
contracts, agreements, arrangements, communications, discussions,
representations and warranties, whether oral or written, between the parties,
including, but not limited to, the Memorandum of Agreement, dated as of May 1,
1998, among Wireless Investment Partners, L.L.C., NWIP and Nextel, as amended,
the letter agreement dated August 13, 1998, among DLJ Merchant Banking II, Inc.,
DLJ Capital Corp., Nextel, the Company and Eagle River Investments, LLC., and
the letter agreement dated December 4, 1998,
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among DLJ Merchant Banking II, Inc., DLJ Capital Corp., Nextel, the Company,
Eagle River Investment, LLC, and Motorola, Inc.
13.13 NOTICES. Any notice, request or other communication required or
permitted hereunder must be in writing and will be duly given: (a) when
received if personally delivered; (b) within 12 hours after being sent by
telecopy, with confirmed answerback; or (c) within 1 business day of being sent
by priority delivery by established overnight courier, to the parties at their
respective addresses set forth below.
To NWIP: Nextel WIP Corp.
1505 Farm Credit Drive
McLean, VA 22102
Attention: General Counsel
Telecopy: (703) 394-3896
With a copy to:
Jones Day Reavis & Pogue
901 Lakeside Avenue
Cleveland, OH 44114
Attention: Jeanne M. Rickert
Telecopy: (216) 579-0212
To the Company: Nextel Partners, Inc.
4500 Carillon Point
Kirkland, WA 98033
Attention: General Counsel
Telecopy: (425) 828-8098
To Opco: Nextel Partners Operating Corp.
4500 Carillon Point
Kirkland, WA 98033
Attention: General Counsel
Telecopy: (425) 828-8098
With a copy to: Friedman Kaplan & Seiler LLP
875 Third Avenue
New York, NY 10022
Attention: Gary D. Friedman
Telecopy: (212) 355-6401
Any party by written notice to the others given in accordance with this Section
13.13 may change the address or the persons to whom notices or copies thereof
and to be directed.
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13.14 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be deemed to be an original, and all of which
together will constitute one and the same instrument.
13.15 WAIVER. Except as otherwise provided in this Agreement, any
party may waive, in writing, compliance by the other parties thereto (to the
extent such compliance is for the benefit of the party giving such waiver) with
any of the terms, covenants or conditions contained in this Agreement (except
as may be imposed by law). Any waiver by any party of any violation of, breach
of, or default under, any provision of any of this Agreement, by any other
party will not be construed as, or constitute, a continuing waiver of such
provision, or waiver of any other violation of, breach of, or default under,
any other provision of this Agreement.
13.16 THIRD PARTIES. Nothing expressed or implied in this Agreement is
intended, or may be construed, to confer upon or give any person or entity
other than the parties hereto (and the indemnified persons referred to in
Sections 4.11 and 5.3) any rights or remedies hereunder or by reason of the
Collateral Agreements or any other agreement between the Company or any of its
Subsidiaries, on the one hand and NWIP or any other member of the Nextel Group,
on the other.
13.17 SCHEDULES AND EXHIBITS. The schedules and exhibits attached to
this Agreement (as the same may be amended, supplemented or otherwise modified
from time to time as provided herein) are incorporated herein and are part of
this Agreement for all purposes. Unless otherwise stated, any reference in this
Agreement to an exhibit, section or schedule is to an exhibit, section or
schedule of this Agreement.
13.18 HEADINGS. The headings in this Agreement are solely for
convenience of reference and are not to be given any effect in the construction
or interpretation of this Agreement.
13.19 SEVERABILITY. If any provision of this Agreement or the
application of such provision is invalid, illegal or unenforceable in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision of this Agreement or invalidate or render unenforceable
such provision in any other jurisdiction. The parties will, to the extent
lawful and practicable, use their best reasonable efforts to enter into
arrangements to reinstate the intended benefits of any provision held invalid,
illegal or unenforceable.
13.20 JURISDICTION. Any suit, action or proceeding seeking to enforce
any provision of, or based on any matter arising out of or in connection with,
this Agreement or the transactions contemplated hereby may only be brought in
the United States District Court for the Southern District of New York or any
New York State court sitting in New York City, and each of the parties hereby
consents to the jurisdiction of such courts (and of the appropriate appellate
courts therefrom) in any such suit, action or proceeding and irrevocably waives,
to the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such suit, action or proceeding
in any such court or that any such suit, action or proceeding which is brought
in any such court has been brought in an inconvenient forum. Process in any
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such suit, action or proceeding may be served on any party anywhere in the
world, whether within or without the jurisdiction of any such court. Without
limiting the foregoing, each party agrees that service of process on such party
as provided in Section 13.12 shall be deemed effective service of process on
such party.
13.21 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have caused this Joint Venture
Agreement to be executed this 29th day of January, 1999.
NEXTEL PARTNERS, INC.
By: /s/ John Chapple
-------------------------------------------
John Chapple, President and Chief Executive
Officer
NEXTEL PARTNERS OPERATING CORP.
By: /s/ John Thompson
-------------------------------------------
John Thompson, Chief Financial Officer
NEXTEL WIP CORP.
By:/s/ Thomas J. Sidman
-------------------------------------------
Thomas J. Sidman, President
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<PAGE>
MANAGEMENT AGREEMENT
(Interim)
THIS MANAGEMENT AGREEMENT (the "Agreement") is made and entered into as
of January 29, 1999, by and between Nextel Partners Operating Corp., a Delaware
corporation, on behalf of itself and its wholly owned subsidiaries (the
"Manager"), and Nextel WIP Corp., a Delaware corporation (the "Licensee").
Licensee is an indirect wholly owned subsidiary of Nextel Communications, Inc.
("Nextel"). Manager and Licensee are hereinafter collectively referred to as the
"Parties."
RECITALS
A. Licensee has the right to use Federal Communications Commission (the
"FCC") Licenses (as defined below), held by one or more direct or indirect,
wholly owned subsidiaries of Nextel, to operate on the frequencies identified on
Attachment A hereto.
B. Simultaneously with the execution of this Agreement, the Parties and
Nextel Partners, Inc., a Delaware corporation that owns all of the outstanding
stock of Manager ("NPI") will enter into the JV Agreement (as defined below) and
other Operating Agreements (as defined below) to enable Nextel to expand and
enhance the geographic coverage of its existing nationwide digital iDEN
Specialized Mobile Radio ("SMR") network.
C. Pursuant to the Operating Agreements, Manager will expand and market
Nextel's iDEN wireless telecommunications services in certain mid-sized and
smaller cities of the country in which such service would not otherwise be
provided in a comparable time frame.
D. Simultaneously with the execution of the Agreement, Licensee will
file an appropriate application with the FCC for approval to transfer all the
capital stock of License Co. (as defined below) to Manager.
E. Pursuant to other agreements, Nextel will receive an approximate 34
percent equity interest in NPI in exchange for (among other things) authorizing
Manager, pursuant to prescribed terms, conditions, standards and procedures, to
manage the use of the frequencies authorized by the Licenses to build and
operate in the Territory (as defined below) an iDEN digital wireless
communications system interoperable with Nextel's national network, and to
provide roaming services to each other's customers
F. The corporate governance of NPI is by a Board of Directors (the
"Board") with a minimum of five members. Nextel has the right to designate one
Board member and Eagle River Investments, L.L.C., an affiliate of Digital Radio,
L.L.C., the controlling shareholder of Nextel, has the right to designate one
Board member.
G. Pursuant to NPI's Restated Certificate of Incorporation and the JV
Agreement, for so long as Licensee owns an equity interest in NPI, without
Licensee's prior written approval neither NPI nor Manager will make any
decision: (1) to make a material change in technology; (2) to allow a sale,
exchange or other disposition of all or substantially all of its assets; or (3)
to expand or broaden the scope of NPI's business beyond the business described
in Section 2.1 of the
<PAGE>
JV Agreement, including without limitation, any decision to make any acquisition
other than 800 MHz or 900 MHz SMR acquisitions within the Term.
H. Licensee has the option to acquire all ownership of NPI under
certain circumstances and Licensee may have the right to acquire additional
equity interests in NPI, or be required to make additional contributions in
exchange for additional equity interests in NPI.
I. Licensee and Manager have each independently determined that their
respective business interests are best served by entering into this Agreement;
that Manager, in accordance with this Agreement, can build and implement iDEN
service in mid-sized and smaller cities more rapidly than Nextel acting alone,
and that the joint venture will expeditiously bring Nextel's unique wireless
communications services to persons living and working in the Territory (as
defined below) thereby facilitating expeditious deployment of Nextel's brand of
services on a ubiquitous nationwide basis.
J. The Parties are familiar with the FCC's rules and policies
concerning the responsibilities of SMR and Commercial Mobile Radio Service
("CMRS") licensees and have structured this Agreement to be in compliance
therewith.
AGREEMENT
NOW, THEREFORE, in consideration of the covenants hereinafter set
forth, the Parties agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following terms
have the meanings set forth or cross-referenced below:
BOARD -- see Recital F.
EFFECTIVE DATE -- see Section 2.
FCC -- see Recital A.
INITIAL TERM -- see Section 2.
JV AGREEMENt means the JV Agreement among Licensee, Manager and
NPI of even date herewith, as it may be amended from time to time.
LICENSE CO. means Nextel WIP License Corp., a Delaware corporation
and wholly owned subsidiary of Nextel WIP Corp.
LICENSEE -- see Preamble.
LICENSES mean the FCC licenses listed on Attachment A as the list
may be amended from time to time pursuant to the JV Agreement.
2
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3
MANAGEMENT TERM means the Initial Term together with any Renewal
Terms, until this Agreement is no longer in effect.
MANAGER -- see Preamble.
NEXTEL -- see Preamble
OPERATING AGREEMENTS means the JV Agreement together with the
Collateral Agreements (as defined in the JV Agreement).
PARTIES -- see Preamble.
RENEWAL TERM -- see Section 2.
SMR -- see Recital B.
SHAREHOLDERS' AGREEMENt means the Shareholders' Agreement of even
date herewith by and among Licensee, NPI, and the other stockholders of
NPI.
TERRITORY means the initial territory described on Attachment B as
the same may be amended from time to time pursuant to the JV Agreement.
2. EFFECTIVE DATE, TERM, RENEWALS. (a) This Agreement shall become
effective on the date hereof (the "Effective Date"). Unless terminated pursuant
to the provisions of Section 8 hereof, or the termination provisions of the JV
Agreement, this Agreement shall have an initial term of ten years from the
Effective Date subject to extension for up to an additional 42 months as set
forth in Section 4.03(a) of the Shareholders' Agreement (the "Initial Term").
(b) So long as Manager is in compliance with the requirements of
this Agreement and the JV Agreement and so long as this Agreement remains in
effect, Manager may extend this Agreement for up to four consecutive 10-year
renewal terms (each a "Renewal Term"). To exercise its renewal option, Manager
must give written notice to Licensee, delivered not more than 180 days and not
less 120 days before the Management Term would otherwise end, stating that
Manager is exercising its option to renew for an additional ten year period.
Within 30 days of receipt thereof, Licensee shall give written notice to Manager
of its acknowledgment of such renewal.
3. SYSTEM MANAGEMENT RESPONSIBILITIES. Pursuant to this Agreement,
Licensee grants Manager the right to manage the use of the frequencies
authorized by the Licenses to build out and operate an iDEN system in the
Territory pursuant to the specifications, operating and quality standards and
implementation timelines established by Licensee and set forth in the JV
Agreement and other Collateral Agreements.
<PAGE>
4
4. BRAND NAME.
a. Manager is required to use the Nextel brand name and other
Nextel trademarks to market digital iDEN services provided on Licensee's
spectrum in the Territory, subject to Nextel's standards and restrictions for
use of this intellectual property. In the event Nextel makes a material change
in its brand identity, Manager is required to implement such change as set
forth in the JV Agreement.
b. Nextel retains the exclusive right to advertise in national
publications or other national media. Manager's advertising is required to be
consistent with specific creative standards for advertising, which will be
substantially identical to those used by Nextel and its subsidiaries operating
an iDEN network in the United States. Manager may not deviate from such
creative standards unless it obtains Licensee's prior approval.
5. LICENSEE'S SYSTEM STANDARDS. In carrying out the responsibilities
described in Paragraph (3) above, Manager must comply with the JV Agreement and
the other Operating Agreements setting forth Licensee's performance standards
and requirements to assure compatibility with Nextel's nationwide iDEN network
and a consistent level of customer service and satisfaction for services and
products using frequencies authorized to the Licensee and using the Nextel
brand. Subject to the more specific terms and conditions set forth in the JV
Agreement and the Collateral Agreements, Manager must comply with the
Licensee-specified standards and requirements described below (as they may be
modified from time to time pursuant to the JV Agreement and the Collateral
Agreements).
a. REQUIRED SERVICES. Manager is required to offer all
customers operating in the Territory the products, services and capabilities
specified in Exhibit 6.1 of the JV Agreement as fundamental to Nextel's overall
product and service strategy. If Nextel provides a required service nationally,
Manager must implement the service; if Nextel provides the service in selected
areas, Manager must provide the service in comparable service areas in the
Territory, in each case no more than six months from Licensee designating it a
required service, or whenever a Nextel subsidiary implements the service in
comparable service areas, whichever occurs last.
b. BUILD-OUT AND TARGET LAUNCH DATES. Manager must comply with
specific target dates for initial build out and for launching service in areas
within the Territory as identified in Section 6.2 and Exhibit 6 of the JV
Agreement. This includes providing coverage to specific areas and corridors.
Prior to offering commercial service in an area, Manager must notify Licensee
at least 60 days prior to the proposed launch date at which time Licensee has
the right to promptly review Manager's operations for that area in order to
validate Manager's compliance with all launch criteria.
c. FREQUENCY DESIGN STANDARDS. Manager is required to adhere to
Nextel- specified standards for use of the radio frequencies subject to the
licenses in the Territory. Licensee has the right to regularly monitor the
frequency designs and actual frequency signal performance levels to assure
compliance with such standards.
<PAGE>
5
d. SITE ACQUISITION STANDARDS. Manager must adhere to
Nextel-specified site acquisition standards. Licensee will have the right to
regular review of internal documents relating to such sites, including site
leases, title documents and other compliance documents to assure compliance
with such standards.
e. SYSTEM CONSTRUCTION STANDARDS. Manager must adhere to
Nextel- specific cell site construction standards, and, subject to the
provisions of the JV Agreement, Manager is required to choose from among a
group of Nextel-approved cell site equipment vendors. Licensee has the right to
inspect cell sites in the Territory to ensure compliance.
f. TELCO STANDARDS. Manager is required to comply with
telephone network interconnection requirements including the types of
interconnection permitted, the requirements for contracts with interconnecting
telecommunications providers and the manner in which such interconnections are
made both from cell sites to Nextel's mobile switching centers ("MSCs") and
DAPs, and to the public switched telephone network.
g. ACCESS TO SWITCHING FACILITIES. Manager and Licensee will
cooperate to establish the optimum switch configuration for the Territory and
to deploy DAPs so as to allow both parties to provide seamless Direct Connect
coverage to logical communities of interest. This may include sharing switches
or DAPs. Manager will participate in regular meetings and planning with
Licensee for overall network configuration and will provide monthly forecasts
of expected cell site build out and customer traffic growth in the Territory.
h. NETWORK PERFORMANCE REQUIREMENTS. To maintain the integrity
of Nextel's national network and reputation in the marketplace, Manager must
meet specific criteria as specified in the Collateral Agreement or JV Agreement
related to the performance of the iDEN network and the level of customer
satisfaction in the Territory. Manager will be required to measure and provide
periodic reporting of its performance in a format satisfactory to Licensee.
i. CUSTOMER CARE STANDARDS. Manager is responsible for
providing a minimum level of care to its customers and to use customer
satisfaction monitoring systems or vendors to carry out this function as
specified in the JV Agreement. Additionally, in order to maintain a consistent
"back office" operating process and exchange of network, operating and customer
information, Manager may be required to use Nextel's "back office" systems
platform for activities such as order entry, order management, inventory
management, customer provisioning, and the production of call detail records
for billing purposes.
j. SERVICE AND EQUIPMENT PRICING. Manager is permitted to
manage the use of the Licenses only for services that adhere to the service
pricing structure specified in the JV Agreement that Nextel considers
fundamental to its brand identity and that differentiates Nextel's services
among wireless communications providers. Manager will have the opportunity to
participate in discussions concerning modifications to the specific pricing
structures and introducing new specific pricing structures, but final decisions
relating to pricing structures will be in Licensee's sole discretion. Manager
will be responsible for setting local pricing plans consistent with Licensee's
service pricing structure, as described above.
<PAGE>
6
6. FCC Compliance. The parties will comply with all applicable FCC
rules and regulations governing the Licenses or the Systems. Without limiting
the generality of the foregoing:
a. Licensee, at all times during which it continues to hold the
Licenses through its ownership of all of the capital stock of License Co.,
retains ultimate supervisory control over the use of the Licenses. Manager will
not represent itself as the federal licensee of SMR service offered on the iDEN
systems in the Territory or otherwise on Nextel's nationwide iDEN network.
b. With appropriate notice to, consultation with and
participation by Manager, Licensee will represent Manager (i) before all state
regulatory agencies with respect to matters within such agencies' jurisdiction
that require the representation or appearance of the owner of the Licenses and
that have not been or cannot be delegated to Manager pursuant to paragraph c.
below; and (ii) before the FCC with respect to any matters relating to the
Licenses, the operation of the systems in the Territory as it relates to any
FCC rules, regulations, policies or provisions of the Communications Act of
1934, as amended, and any FCC correspondence and filings. Licensee will, with
the assistance and cooperation of Manager, take all actions necessary to keep
the Licenses in force and shall timely prepare and submit to the FCC or any
other relevant governmental authority all reports, applications, renewals,
filings or other documents necessary to keep the Licenses and any certificates
of public convenience and necessity or other state regulatory approvals in
force and in good standing.
c. Nothing in the preceding paragraph precludes Licensee from
delegating to Manager responsibility to obtain and maintain in good standing
all business licenses required by state, local or municipal governments, to
file annual or other reports required by such governments, and to prepare and
file all federal, state and local tax returns and tax payments. Additionally,
Licensee will require Manager to assure that the iDEN systems in the Territory
comply with all applicable governmentally-mandated regulatory programs
including, but not limited to, Federal Universal Service Fund assessments,
state universal service programs, Enhanced 911, Telecommunications Relay
Services for the Speech and Hearing Impaired, local number portability, calling
party pays services, and priority access requirements. Such compliance may
include collecting applicable fees from subscribers and payment of governmental
assessments for such programs.
d. Nothing in this Agreement or the Operating Agreements is
intended to diminish or restrict Licensee's (or any other wholly owned Nextel
subsidiary's) obligations as an FCC licensee and both parties desire that this
Agreement be in compliance with the rules and regulations of the FCC. In the
event that the FCC determines that any provision of this Agreement violates any
FCC rule, policy or regulation, both parties will implement in good faith the
provisions of the Operating Agreements consistent with the intent of this
Agreement to be in compliance with FCC rules, policies and regulations. In the
event of a dispute between the parties about such implementation, the dispute
will be resolved under the applicable provisions of the JV Agreement (which
may, depending on the relevant circumstances, include Section 4.12C and/or
Article 12 of the JV Agreement).
<PAGE>
7
7. SYSTEMS REVENUES AND EXPENSES. Manager will independently finance
its build-out and operations. Manager will collect all revenues from the
operation of the iDEN systems in the Territory, subject to the terms of the
Operating Agreements. Licensee will benefit from these revenues by virtue of its
equity interest in NPI.
8. TERMINATION. This Agreement will terminate upon the occurrence of
any of the following:
(a) If Licensee acquires all equity ownership of the NPI under
the Shareholders' Agreement, or the charter documents of NPI or otherwise.
(b) Termination of the JV Agreement.
(c) The FCC approves the transfer of all of the capital stock
of License Co. to Manager, or Manager otherwise becomes the holder, or the
beneficial owner of all of the capital stock of the holder, of the Licenses.
9. NOTICES. Any notice, request or other communication required or
permitted hereunder must be in writing and shall be deemed given: (a) when
received if personally delivered; (b) within 5 days after being sent by
registered or certified mail, return receipt requested, postage prepaid; (c)
within 12 hours after being sent by telecopy, with confirmed answerback; or (d)
within 1 business day of being sent by priority delivery by established
overnight courier, to the parties at their respective addresses set forth below.
Any party by written notice to the others given in accordance with this Section
9 may change the address or the persons to whom notices or copies thereof are to
be directed.
a. If to Licensee, to:
Nextel WIP Corp.
1505 Farm Credit Drive
McLean, Virginia 22102
Attn: General Counsel
Telecopy: (703) 394-3896
b. If to Manager, to:
Nextel Partners Operating Corp.
4500 Carillon Point
Kirkland, WA 98033
Attention: General Counsel
Telecopy: (425) 828-8098
10. WAIVERS; AMENDMENT. Except as otherwise provided in this Agreement,
any party may waive, in writing, compliance by the other party thereto (to the
extent such compliance is for the benefit of the party giving such waiver) with
any of the terms, covenants or conditions contained in this Agreement (except as
may be imposed by law). Any waiver by any party of any violations of, breach of,
or default under, any provision of any of this Agreement, by any other
<PAGE>
8
party will not be construed as, or constitute, a continuing waiver of such
provision, or waiver of any other violation of, breach of, or default under,
any other provision of this Agreement. This Agreement may be amended only by a
writing executed by the parties.
11. SUCCESSORS AND ASSIGNS. Manager's rights and obligations under this
Agreement are personal to Manager and Manager may not assign any rights or
delegate any duties under this Agreement except to a direct or indirect wholly
owned subsidiary (with which Manager agrees to remain jointly and severally
liable for performance of its obligations hereunder). Licensee may not assign
its rights herein except to a wholly-owned subsidiary of Licensee, or in
accordance with the provisions of Section 13.7 of the JV Agreement.
12. GOVERNING LAW; SEVERABILITY. This Agreement is governed by and is
to be construed in accordance with the laws of the State of New York, except as
to matters governed by the rules and regulations of the FCC or the
Communications Act of 1934, as amended, which shall be governed thereby. In the
event that any provision herein is held to be invalid, void or illegal by the
FCC or any court of competent jurisdiction, the remaining provisions of this
Agreement shall remain in full force and effect and this Agreement is to be
construed to preserve the original intent of the parties hereto insofar as
practical.
13. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which is an original, but all of which together constitute
one and the same instrument.
14. INTERPRETATION. (a) This Agreement has been prepared and
negotiations in connection herewith have been carried on by the joint efforts of
the parties. This Agreement is to be construed fairly and simply and not
strictly for or against either of the parties hereto.
(b) The headings contained in this Agreement are solely for
convenience of reference and are not given any effect in the construction or
interpretation of this Agreement.
(c) This Agreement, including, without limitation, Sections 4
and 5, contains descriptions of certain rights and obligations of the parties
that are more specifically detailed in the JV Agreement, the Operating
Agreements and the Shareholders' Agreement (together with the JV Agreement and
the Operating Agreements, the "Other Agreements"). In the event of any
inconsistency between the summary descriptions (including, without limitation,
those in Sections 4 and 5 of this Agreement), and the corresponding provisions
in the Other Agreements, the provisions of the Other Agreements control. In the
event that there are additional provisions in the Other Agreements that
supplement the summary descriptions of this Agreement, the additional
provisions of the Other Agreements control.
15. ENTIRE AGREEMENT. This Agreement and the Other Agreements embody
the entire agreement and understanding between the parties hereto relating to
the subject matter hereof and supersede all prior agreements and understandings
relating to the subject matter hereof.
* * *
<PAGE>
9
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
NEXTEL PARTNERS OPERATING CORP.
(as Manager)
By: /s/ John Thompson
--------------------------------
Name: John Thompson
Title: Chief Financial Officer and
Treasurer
NEXTEL WIP CORP. (as Licensee)
By: /s/ Alan Strauss
--------------------------------
Name: Alan Strauss
Title: Vice President
<PAGE>
MANAGEMENT AGREEMENT
(Analog)
THIS MANAGEMENT AGREEMENT (the "Agreement") is made and entered into as
of January 29, 1999, by and between Nextel WIP Corp., a Delaware corporation
("NWIP"), on behalf of itself and other subsidiaries of Nextel Communications,
Inc., a Delaware corporation, (the "Manager"), and Nextel Partners Operating
Corp., a Delaware corporation, on behalf of itself and its wholly owned
subsidiaries (the "Licensee"). Manager and Licensee are hereafter collectively
referred to as the "Parties."
RECITALS
A. Pursuant to the JV Agreement, Licensee will build and operate an
ESMR Network and provide wireless communication in a designated portion of the
United States.
B. Licensee has the right to use Federal Communications Commission (the
"FCC") Licenses (as defined below) to operate on the frequencies identified on
Attachment A hereto.
C. Pursuant to this Agreement, Manager has the right to manage the use
of the Licenses to operate analog systems and offer analog services on 800 MHz
frequencies in the ESMR Network that are not being used by Licensee.
D. The Parties are familiar with the FCC's rules and policies
concerning the responsibilities of Specialized Mobile Radio ("SMR") and
Commercial Mobile Radio Service ("CMRS") licensees and have structured this
Agreement to be in compliance therewith.
AGREEMENT
NOW, THEREFORE, in consideration of the covenants hereinafter set
forth, the Parties agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following terms
have the meanings set forth or cross-referenced below:
BUSINESS means the construction and operation of the Company's
iDEN-based wireless communications system in the "Territory" (as such
term is defined in the JV Agreement).
EFFECTIVE DATE -- see Section 2.
ESMR NETWORK means a wide-area network of specialized mobile radio
base stations that uses Motorola's integrated Dispatch Enhanced Network
wireless communications technology to provide wireless communications
services including voice, dispatch, interconnected telephone and data
services, using SMR Frequencies.
FREQUENCIES means those frequencies not used by Licensee for its
Business.
<PAGE>
FCC -- see Recital B.
INITIAL TERM -- see Section 2.
JV AGREEMENT means the JV Agreement among Licensee, Manager and
Nextel Communications, Inc., of even date herewith, as it may be
amended from time to time.
LICENSEE -- see Preamble.
LICENSES mean the FCC licenses listed on Attachment A as the list
may be amended from time to time pursuant to this Agreement.
MANAGEMENT TERM means the Initial Term together with any Renewal
Terms, until this Agreement is no longer in effect.
MANAGER -- see Preamble.
PARTIES -- see Preamble.
RENEWAL TERM -- see Section 2.
SMR FREQUENCIES means 800 MHz specialized mobile radio
frequencies.
2. EFFECTIVE DATE, TERM, RENEWALS. (a) This Agreement shall become
effective on the date hereof (the "Effective Date"). Unless terminated pursuant
to the provisions of Section 8 hereof, this Agreement shall have an initial term
of ten years from the Effective Date (the "Initial Term").
(b) So long as Manager is in compliance with the requirements
of this Agreement and Licensee holds the Licenses, Manager may extend this
Agreement for up to four consecutive 10-year renewal terms (each a "Renewal
Term"). To exercise its renewal option, Manager must give written notice to
Licensee, delivered not more than 180 days and not less 120 days before the
Management Term would otherwise end, stating that Manager is exercising its
option to renew for an additional ten year period. Within 30 days of receipt
therefrom, Licensee shall give written notice to Manager of its acknowledgment
of such renewal.
3. SYSTEM MANAGEMENT RESPONSIBILITIES. Pursuant to this Agreement and
Article 4 of the JV Agreement, Licensee grants Manager the right to manage the
use of the frequencies authorized by the Licenses to operate an analog system
and offer analog services.
4. REMOVAL OR ADDITION OF FREQUENCIES. Licensee can terminate Manager's
right to manage the use of Frequencies if Licensee needs to use such Frequencies
in its ESMR Network, by giving written notice of proposed changes, and not less
than six months thereafter, Licensee may amend Attachment A to remove such
Frequencies. If Licensee is not using 800 MHz frequencies in the ESMR Network
that have not been identified on Attachment A ("Additional Frequencies"),
Licensee will notify Manager of the Additional Frequencies, and if Manager so
requests, Licensee will amend Attachment A to add the Additional Frequencies.
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5. REVENUES AND EXPENSES. During the Management Term, all direct
expenses for the operation and management of the analog systems and services
will be paid or reimbursed by Manager. Manager assumes all liabilities, known
and unknown, relating to or arising from the operation of the analog systems and
services and ownership of the assets used in such operation throughout the
Management Term. As compensation for the management services provided pursuant
to this Agreement, Manager is entitled to One Hundred Percent (100%) of the net
revenues from the operation of the analog systems and services.
6. RISK OF LOSS. Manager bears all risk of loss, damage or destruction
of the assets used in the operation of the analog systems and services during
the Management Term. In the event of such loss, damage or destruction, Manager
has the option (at its sole election) to restore, replace or repair the damaged
property to its previous condition at its own cost or expense. Manager has the
right to use all insurance proceeds to effect such restoration, replacement or
repair and to retain all excess proceeds.
7. FCC COMPLIANCE. The parties will comply with all applicable FCC
rules and regulations governing the Licenses or the analog systems and services.
Without limiting the generality of the foregoing:
a. Licensee, at all times, retains ultimate supervisory control
over the use of the Licenses.
b. With appropriate notice to, consultation with and
participation by Manager, Licensee will represent Manager (i) before all state
regulatory agencies with respect to matters within such agencies' jurisdiction
that require the representation or appearance of the owner of the Licenses and
that have not been or cannot be delegated to Manager pursuant to paragraph c.
below; and (ii) before the FCC with respect to any matters relating to the
Licenses, the operation of the analog systems as it relates to any FCC rules,
regulations, policies or provisions of the Communications Act of 1934, as
amended, and any FCC correspondence and filings. Licensee will, with the
assistance and cooperation of Manager, take all actions necessary to keep the
Licenses in force and shall timely prepare and submit to the FCC or any other
relevant governmental authority all reports, applications, renewals, filings or
other documents necessary to keep the Licenses and any certificates of public
convenience and necessity or other state regulatory approvals in force and in
good standing. Manager shall provide Licensee with all information regarding
the operation of Frequencies as Licensee shall reasonably request.
c. Nothing in the preceding paragraph precludes Licensee from
delegating to Manager responsibility to obtain and maintain in good standing
all business licenses required by state, local or municipal governments, to
file annual or other reports required by such governments, and to prepare and
file all federal, state and local tax returns and tax payments. Additionally,
Licensee will require Manager to assure that the analog systems and services
comply with all applicable governmentally-mandated regulatory programs
including, but not limited to, Federal Universal Service Fund assessments,
state universal service programs, Enhanced 911, Telecommunications Relay
Services for the Speech and Hearing Impaired, local number portability, calling
party pays services, and priority access requirements. Such compliance may
include collecting applicable fees from subscribers and payment of governmental
assessments for such programs.
<PAGE>
d. Nothing in this Agreement is intended to diminish or
restrict Licensee's obligations as an FCC licensee and both parties desire that
this Agreement be in compliance with the rules and regulations of the FCC. If
the FCC formally or informally advises Licensee that the terms of this
Agreement violate its rules or regulations, then Licensee will promptly notify
the Manager and then Licensee and Manager will negotiate (i) to resolve to the
satisfaction of Licensee, Manager and the FCC, the FCC concerns or directives
and (ii) to the extent necessary, modify the terms of this Agreement in a
manner most consistent with the arrangements described herein.
8. TERMINATION. This Agreement will terminate if Manager acquires all
equity ownership of the Licensee or the Licenses.
9. NOTICES. Any notice, request or other communication required or
permitted hereunder must be in writing and is given: (a) when received if
personally delivered; (b) 5 days after being sent by registered or certified
mail, return receipt requested, postage prepaid; or (c) 1 business day after
being sent by priority delivery by established overnight courier, to the parties
at their respective addresses set forth below.
a. If to Manager, to:
Nextel WIP Corp.
1505 Farm Credit Drive
McLean, Virginia 22102
Attention: General Counsel
Telecopy: (703) 394-3896
with a copy to:
Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, OH 44114
Attention: Jeanne M. Rickert
Telecopy: (216) 579-0212
b. If to Licensee, to:
Nextel Partners Operating Corp.
4500 Carillon Point
Kirkland, WA 98033
Attention: General Counsel
Telecopy: (425) 828-8098
with a copy to:
Friedman Kaplan & Seiler LLP
<PAGE>
875 Third Avenue
New York, New York 10022
Attention: Gary D. Friedman
Telecopy: (212) 355-6401
Any party by written notice to the others given in accordance with this Section
9 may change the address or the persons to whom notices or copies thereof are to
be directed.
10. WAIVERS; AMENDMENT. Except as otherwise provided in this Agreement,
any party may waive, in writing, compliance by the other party thereto (to the
extent such compliance is for the benefit of the party giving such waiver) with
any of the terms, covenants or conditions contained in this Agreement (except as
may be imposed by law). Any waiver by any party of any violations of, breach of,
or default under, any provision of any of this Agreement, by any other party
will not be construed as, or constitute, a continuing waiver of such provision,
or waiver of any other violation of, breach of, or default under, any other
provision of this Agreement. This Agreement may be amended only by a writing
executed by the parties.
11. SUCCESSORS AND ASSIGNS. Manager's rights and obligations under this
Agreement are personal to Manager, and Manager may not assign any rights or
delegate any duties under this Agreement except to a direct or indirect
wholly-owned subsidiary of Manager or any subsidiary of Nextel Communications,
Inc. Licensee may not assign its rights herein except to a wholly-owned
subsidiary of Licensee.
12. GOVERNING LAW; SEVERABILITY. This Agreement shall be governed by
New York law, without regard to choice of law rules that would result in the
application of another state's law, except those portions that involve topics
covered by FCC Rules shall be governed thereby. If any provision of this
Agreement or the application of such provision is invalid, illegal or
unenforceable by the FCC or any court of competent jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
of this Agreement or invalidate or render unenforceable such provision in any
other jurisdiction. The parties will, to the extent lawful and practicable, use
their best reasonable efforts to enter into arrangements to reinstate the
intended benefits of any provision held invalid, illegal or unenforceable.
13. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, and all of which
together constitute one and the same instrument.
14. CONSTRUCTION. (a) Words used in this Agreement, regardless of the
number of gender specifically used, will be deemed and construed to include any
other number, singular or plural, and any other gender, masculine, feminine or
neuter, as the context requires. The parties hereto have participated equally in
the drafting of this Agreement, and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of authorship of any provision
of this Agreement.
(b) The schedules and exhibits attached to this Agreement are
incorporated herein and are part of this Agreement for all purposes. Unless
otherwise stated, any reference in
<PAGE>
this Agreement to an exhibit, section or schedule is to an exhibit, section or
schedule of this Agreement.
(b) The headings contained in this Agreement are solely for
convenience of reference and are not given any effect in the construction or
interpretation of this Agreement
15. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties hereto relating to the subject matter hereof
and supersede all prior agreements and understandings relating to the subject
matter hereof.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
NEXTEL WIP CORP. (as Manager)
By: /s/ Alan Strauss
----------------------------------
Name: Alan Strauss
Title: Vice President
NEXTEL PARTNERS OPERATING CORP.
By: /s/ John Chapple
----------------------------------
Name: John Chapple
Title: President and Chief Executive
Officer
<PAGE>
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of January 29, 1999, between Nextel
Partners Operating Corp., a Delaware corporation (the "Company"), and John H.
Chapple ("Executive"). Capitalized terms used and not otherwise defined herein
shall have the meanings given to such terms in Section 9 or as otherwise set
forth below.
WHEREAS, the Company desires to employ Executive and to enter into
an agreement embodying the terms of such employment (this "Agreement"), and
Executive desires to accept such employment and enter into this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the Company and Executive, intending to be legally bound, hereby
agree as follows:
1. Employment. (a) Agreement to Employ. Upon the terms and subject to the
conditions hereof the Company shall employ Executive as President and Chief
Executive Officer of the Company until the Expiration Date (as defined in
Section 1(b)), any date to which this Agreement shall have been extended
pursuant to Section 1(b) or any earlier termination of this Agreement pursuant
to Section 6. Executive's office shall be located in the Seattle, Washington
metropolitan area. During the term of his employment hereunder, Executive will
devote substantially all of his business time to the performance of his duties
hereunder.
(b) Employment Period. Unless earlier terminated pursuant to
Section 6, the initial term of Executive's employment with the Company shall be
for a period of four years, commencing on the date of this Agreement and
continuing until January 29, 2003 (the "Expiration Date"). The term of this
Agreement may be extended by the Company for successive one-year terms
commencing on the Expiration Date by providing Executive notice of such
election not less than 60 days prior to the Expiration Date or the scheduled
expiration date of any renewal term.
2. Responsibility. Executive shall be responsible for providing overall
strategic and operational leadership for the Company and for such other duties
commensurate with his position that may be assigned from time to time by the
Board of Directors of the Company (the "Board"). Executive shall report
directly to the Board and shall be subject to the overall supervision of the
Board.
3. Compensation and Benefits.
(a) Salary and Bonus.
(i) The Company shall pay Executive a base salary in the annual amount of
$150,000 payable in accordance with the Company's normal payroll practices.
<PAGE>
(ii) The Company shall (subject to the Board's review and approval) establish
a performance based program pursuant to which Executive shall receive, if
performance targets are met, an additional annual cash payment of up to forty
percent (40%) of Executive's then current base salary (or such higher amount as
the Board may approve), and shall offer to Executive a benefits package
equivalent to that provided to the Company's other senior executives.
(iii) In addition to the amounts payable pursuant to paragraphs (i) and (ii)
above, in recognition of Executive's services prior to the date hereof, the
Company will on the date of the Closing make a lump sum payment to Executive in
the amount of $87,500.
(iv) Upon completion of the Required Build on or before the Scheduled
Completion Date, the Compensation Committee of the Board shall review
Executive's base salary and bonus payment in light of the performance of
Executive and the Company, and may, in its discretion, increase (but not
decrease) such base salary and bonus payment by an amount it determines to be
appropriate.
(v) If this Agreement is renewed by the Company upon expiration of the
initial four-year term, Executive's base salary and bonus payment will be
recalculated so as to place them at levels that are comparable to prevailing
market rates, based on the overall compensation packages of executives holding
comparable positions in similarly situated companies (which shall include
consideration of Executive's equity compensation arrangements in comparison to
those of executives holding comparable positions in similarly situated
companies).
(b) Expenses. Executive shall maintain his own automobile and shall carry
liability insurance in the minimum amount of $300,000. The Company shall
reimburse Executive monthly for business use of his automobile at the
prevailing IRS rate per mile. Executive shall also be reimbursed monthly for
all other reasonable out-of-pocket expenses incurred or paid by Executive while
representing the Company or conducting Company business. Executive shall be
responsible for maintaining records reasonably satisfactory to support all
claimed business usage of his automobile and to substantiate all out-of-pocket
expenses incurred for which reimbursement is sought and shall furnish such
records to the Company in accordance with its policies.
(c) Vacation. Executive shall be entitled to 15 vacation days each calendar
year, any or all of which may be carried over into a new calendar year, for a
maximum accrual of 30 days. Upon termination of Executive's services under this
Agreement, Executive will be paid for unused vacation time earned through the
last completed month of service, computed at the rate of ten hours per month.
(d) Indemnification. The Company shall indemnify and hold Executive harmless
in accordance with the terms of the Company's certificate of incorporation and
bylaws, in each case as in effect on the date hereof.
(e) D&O Insurance. The Company shall maintain directors and officers
liability insurance coverage covering Executive in amounts customary for
similarly situated companies in the telecommunications industry and with
reputable insurers. All such policies shall provide for coverage
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to Executive on the same terms and conditions applicable to the coverage
provided under such policies to the Company's other directors and officers.
4. Nondisclosure of Proprietary and Confidential Information.
(a) Confidential Information. Executive agrees to refrain (whether during or
after his employment with the Company) from disclosing or using, except as
permitted by this Agreement, any secrets or confidential information with
respect to any Covered Entity, including without limitation its trade secrets,
patents, affairs, business plans, strategic, commercial or financial
information other than information that is or becomes publicly available
through no fault of Executive (the "Confidential Information"). Executive may
disclose or communicate only such information as is reasonably required or
specifically approved by the Board or authorized management personnel of the
Company designated by the Board in connection with Executive's services.
Confidential Information may be used solely for the benefit of the Company, and
Executive shall not make any other use of such information. Executive agrees
that all materials relating to the business of any Covered Entity that are
provided or made available to Executive, or created by Executive, during the
course of Executive's services to the Company shall be and remain the property
of the Company and/or the applicable Covered Entity (subject to the terms of
any separate agreement between the Company and/or its Parent Companies and the
affected Covered Entity), whether or not such materials constitute or contain
Confidential Information, and all copies of such materials shall be returned to
the Company immediately upon the termination of Executive's services to the
Company. In the event that the Company notifies the Executive that it has
entered into a confidentiality agreement with a Covered Entity or with any
Affiliate of the Company with respect to confidential information to be
provided to the Company, the Executive shall comply with such reasonable
obligations thereunder as are applicable to the Executive.
(b) Innovations; Inventions. Executive hereby sells, transfers and assigns to
the Company all right, title and interest of Executive in and to any and all
inventions, ideas, disclosures and improvements of any kind or nature
whatsoever, whether patented or unpatented, and any and all copyrightable
materials, in either case whether made or conceived in whole or in part by
Executive alone or together with others, from January 1, 1998 to the date of
this Agreement or during the initial term of this Agreement or any renewal
term, that (i) relate to any methods, designs, products, processes, apparatus,
service or devices sold, leased used or under construction or development by
the Company or any of its subsidiaries or affiliates, (ii) relate to the
business, functions or operations of the Company or any of its subsidiaries or
affiliates or (iii) arise from, in whole or in part, the efforts of Executive
on behalf of the Company. Executive will communicate and disclose to the
Company promptly all information, data and details pertaining to any
inventions, ideas, disclosures and improvements described above, in such form
or format as the Company may reasonably request. During the term of this
Agreement or any renewal term and thereafter, Executive will execute,
acknowledge or deliver to the Company (at the Company's expense) such formal
transfers and assignments and such other papers and documents as may be
required of Executive to permit the Company to file and prosecute any patent
applications to the Company desires to file and prosecute relating to any of
the foregoing, and, as to copyrightable material, to obtain copyright thereon.
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5. Non-Competition; Non-Solicitation.
(a) In view of the unique value to the Company of Executive's services and
because of the Confidential Information to be obtained by or disclosed to
Executive as described above, Executive agrees that, during the term of this
Agreement and for a period of one year thereafter, provided that this Agreement
is not terminated by the Company without Cause or by Executive for Good Reason:
(i) Executive will not directly or indirectly assist or become associated
with any wireless voice communications service provider in any business of such
provider that competes in any of the markets of any of the Restricted Entities,
whether as a principal, partner, employee, consultant or shareholder (other
than as a holder of less than 5% of the outstanding voting shares of any
publicly traded company);
(ii) Executive will not directly or indirectly solicit for employment or
employ any employee of any of the Restricted Entities, unless such solicited
person shall have ceased to be employed by any such entity for a period of at
least six months; and
(iii) Executive will not directly or indirectly, solicit business from
customers of any of the Restricted Entities, provided that the foregoing shall
not restrict Executive or any entity with which Executive is associated from
soliciting or doing business with any customer of any of the Restricted
Entities, if such solicitation does not interfere with any business
relationship between such solicited customer and any of the Restricted
Entities.
(b) If Executive violates any provision of Section 4 or Section 5(a), the
Company shall be entitled to receive from Executive reimbursement for any and
all damages caused by such breach, provided that Executive shall not be liable
for indirect, special, consequential or punitive damages (it being understood
and agreed that this remedy is in addition to, and not a limitation on, any
injunctive relief or other rights or remedies to which the Company is or may be
entitled to at law or in equity). Executive acknowledges and agrees that the
Company's (and as applicable, each Restricted Entity's) remedies at law for a
breach or threatened breach of any provision of Section 4 or Section 5(a) would
be inadequate and, in recognition of this fact, Executive agrees that, in the
event of such a breach or threatened breach, in addition to any remedies at
law, the Company and, as to Article 4, each Covered Entity and, as to Article
5, each Restricted Entity, without posting any bond, shall be entitled to
obtain equitable relief in the form of specific performance, temporary
restraining order, temporary or permanent injunction or any other equitable
remedy which may then be available. As provided in Section 10(b) hereof, the
equitable remedies referenced in this Section 5(b) shall be in addition to, and
not in substitution for or exclusion of, any other remedies available at law or
in equity for any breach of either or both of Sections 4 or 5. Executive and
the Company each specifically acknowledge and agree that the provisions of
Sections 4 and 5 are for the express benefit of each Covered Entity (in the
case of Section 4) and each Restricted Entity and that (i) no waiver, amendment
or other modification of Sections 4 or 5 with respect to a Covered Entity or
Restricted Entity shall be effective unless it has been consented to in writing
by such Covered Entity or Restricted Entity, as the case may be, and
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(ii) each such Covered Entity and Restricted Entity shall be entitled to
enforce the provisions of Section 4 and/or 5 hereof (as appropriate) as fully
and with the same rights and effect as if such Covered Entity or Restricted
Entity were a signatory party to this Agreement.
(c) If any provisions of Section 4 or Section 5(a) are held to be invalid or
unenforceable, the remaining provisions shall nevertheless continue to be valid
and enforceable as though the invalid or unenforceable parts had not been
included.
6. Noncontravention. The execution, delivery and performance by Executive of
this Agreement does not and will not (i) violate any applicable law, rule,
regulation, judgment, injunction, order or decree or (ii) require any consent
or other action by any person under, constitute a default under (with due
notice or lapse of time or both), or give rise to any right of termination,
cancellation or acceleration of any right or obligation of Executive or to a
loss of any material benefit to which Executive is entitled under any provision
of any agreement or other instrument binding upon Executive, to the extent that
any of the foregoing would have a material adverse effect on Executive or would
prevent or otherwise render unable Executive to perform his obligations under
this Agreement.
7. Termination. This Agreement shall automatically terminate (and the term of
this Agreement shall thereupon terminate) upon the occurrence of any one of the
following events:
(a) Death of Executive.
(b) If Executive shall have been incapacitated from illness, accident or
other disability and unable to perform his normal duties hereunder for a
cumulative period of three months in any period of six consecutive months, and
no reasonable accommodation being available, upon either party giving the other
party not less than 30 days' written notice.
(c) The Expiration Date or the scheduled expiration date of any renewal or
extension thereof in compliance with Section 1(b).
(d) By the Company for Cause.
(e) By Executive for Good Reason. Upon the occurrence of any event or the
existence of any condition or circumstance constituting Good Reason, Executive
may by notice to the Board, deem a constructive termination of this Agreement
to have occurred, whereupon Executive shall be entitled to the compensation set
forth in Section 7(b).
(f) Upon not less than 30 days' written notice from Executive to the Company
of his voluntary resignation; provided, that such voluntary resignation shall
not relieve or release Executive from any breach of this Agreement at or prior
to the time of such resignation.
8. Effect of Termination.
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(a) Upon termination of this Agreement pursuant to Sections 7(a), (b), (c),
(d) or (f), the Company shall compensate Executive (or, in the event of
Executive's death, his surviving spouse, if any, or his estate), for (x)
accrued but unused vacation time, (y) any base salary earned, but unpaid, for
services rendered to the Company on or prior to the date of termination and (z)
amounts which Executive is otherwise entitled to receive under the terms of or
in accordance with any plan, policy, practice or program of, or contract or
agreement with the Company, as in effect immediately prior to the date of such
termination, (including but not limited to the Purchase Agreement), at or
subsequent to the date of termination without regard to the performance by
Executive of further services or the resolution of any contingency, but subject
to any and all rights, remedies and claims of the Company against Executive.
(b) If Executive resigns for Good Reason or his employment with the Company
is terminated without Cause, the Company shall thereupon pay Executive the
following amounts as severance benefits: (i) all amounts payable pursuant to
Section 8(a), and (ii) a lump sum equal to (x) if Executive resigns for Good
Reason, one year's base salary hereunder plus an amount equal to the most
recent annual bonus, if any, received by Executive pursuant to Section 3(a)(ii)
or (y) if Executive's employment is terminated without Cause, six months' base
salary hereunder plus an amount equal to one-half of the most recent annual
bonus, if any, received by Executive pursuant to Section 3(a)(ii).
9. Definitions. As used herein, the following terms shall have the following
meanings set forth below:
"Affiliate" means, with respect to the Company, any person or
entity who or which, directly or indirectly, controls, is controlled by, or is
under common control with, the Company or NPI.
"Cause" means (i) Executive's conviction of a felony evidencing
criminal dishonesty or moral turpitude, (ii) a willful and material breach of
Executive's duty of loyalty to the Company or its parent Nextel Partners, Inc.
or (iii) after 20 business days following Executive's receipt of written notice
from the Company specifying the particulars in reasonable detail, Executive's
failure to comply with or to cure, as applicable, (A) a willful and material
refusal to comply with specific written directions of the Board (or specific
written directions of the Chief Executive Officer) consistent with Executive's
employment agreement with NPI or the Company or any of their respective
subsidiaries and capable of being performed by him or (B) a willful and
material breach of Executive's duty of due care to the Company.
"Class A Common Stock" means the Class A Common Stock, par value
$.001 per share, of NPI.
"Closing" has the meaning specified in the Purchase Agreement.
"Covered Entities" means, collectively, the Restricted Entities and
such other entities as may from time to time be reasonably agreed to by the
Company and the Executive to be Covered Entities hereunder.
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"FCC" means the Federal Communications Commission.
"FCC Modifications" means changes to the agreements relating to the
governance and operation of the Company that are implemented in response to any
assertion or finding by the FCC that such agreements constitute an
impermissible change of control of the FCC licenses made available by NWIP to
the Company thereunder, which changes are implemented in order to cause such
agreements to be in compliance with FCC requirements so as to reflect the
intent of the parties thereto that no impermissible change of control take
place.
"Good Reason" means (i) a material adverse change in Executive's
duties, responsibilities or reporting relationships, including without
limitation Executive's not being elected to the Board as contemplated by
Section 2.01 of the Shareholders' Agreement or his removal from the Board other
than for "Cause" in accordance with the provisions of Section 2.02 of the
Shareholders' Agreement, (ii) a relocation of Executive's principal office to a
location more than 30 miles away from his then current office, (iii) a
reduction of salary not agreed to by Executive, or material diminution of other
employee benefits (other than any change in employee benefits approved by the
Board and implemented in a non-discriminatory fashion with respect to all
participating employees), or any other material adverse change in his working
conditions, (iv) a material breach by the Company of other obligations under
Executive's employment agreement with the Company or a subsidiary of the
Company that are not cured after 20 business days following the Company's
receipt of a written notification from Executive specifying the particulars in
reasonable detail, and (v) from and after the Closing, following the
implementation of any FCC Modifications, if NWIP exercises control over
day-to-day operating decisions, policy decisions or personnel decisions of the
Company pursuant to such FCC Modifications that (before such modifications)
would have been decisions made by the Company's management and such control
exercised by NWIP is materially more extensive (in the collective reasonable
judgment of the Senior Managers then employed by the Company) than that which
NWIP could have exercised under the agreements to which NWIP is a party
relating to the governance and operation of the Company before giving effect to
the FCC Modifications. Notwithstanding the foregoing, a termination with Good
Reason under clause (v) above shall not be deemed effective until 120 days
following written notice by the Executive to the Company of the occurrence of
any of the foregoing and only if the foregoing continue to occur as of such
120th day.
"Joint Venture Agreement" means the Joint Venture Agreement, to be
dated the date of the Closing, among Nextel, NPI and the Company.
"Nextel" means NEXTEL Communications, Inc., a Delaware corporation.
"NPI" means Nextel Partners, Inc., a Delaware corporation.
"NWIP" means Nextel WIP Corp., a Delaware corporation and a wholly
owned subsidiary of Nextel.
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"Parent Companies" means NPI and any other entity that directly or
indirectly owns all or substantially all of the Company's outstanding voting
capital stock.
"Purchase Agreement" means the Restricted Stock Purchase Agreement,
dated as of November 20, 1998, as amended, between Executive and the Company.
"Required Build" means the completion of the build out of all
Initial Sections (as defined in the Joint Venture Agreement) assigned to the
first or second Build Year (as defined in the Joint Venture Agreement), and of
any Option Sections (as defined in the Joint Venture Agreement) assigned to the
first or second Build Year that are included in the Territory (as defined in
the Joint Venture Agreement) through the Company's election under Section 6.2B
of the Joint Venture Agreement, but excluding any such Option Sections that are
included in the Territory (as defined in the Joint Venture Agreement) as a
result of the Company's response to a notice given pursuant to Section 6.2C of
the Joint Venture Agreement.
"Restricted Entities" means, collectively, the Company, Nextel and
the Parent Companies and their respective subsidiaries.
"Scheduled Completion Date" means 60 days after December 31, 2001.
"Senior Managers" means, collectively, John Chapple, John Thompson,
David Thaler, David Aas, Perry Satterlee and Mark Fanning.
"Shares" means the shares of Class A Common Stock purchased by
Executive pursuant to the Purchase Agreement.
10. Miscellaneous.
(a) Merger; Amendment. This Agreement (together with the Purchase Agree ment)
constitutes the entire agreement between the parties with respect to the
subject matter hereof, and may be changed, extended or modified only by an
agreement in writing signed by the parties.
(b) Assignment. The rights and obligations of the Company in this Agreement
shall inure to its benefit and be binding upon its successors in interest
(whether by merger, consolidation, reorganization, sale of stock or assets or
otherwise), provided that Executive shall not remain bound by this Agreement
unless such successor assumes all of the obligations of the Company hereunder.
This Agreement shall also inure to the benefit of Executive's heirs, executors,
administrators and legal representatives. This Agreement, being for the
personal services of Executive, shall not be assignable by Executive. Certain
provisions of Section 4 and 5 of this Agreement are, for the purposes specified
therein, intended to inure to the benefit of certain affiliates of the Company
and to be enforceable separately by them as provided therein.
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(c) Waiver of Breach. The waiver by any party of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach by any party.
(d) Arbitration. Except as otherwise provided herein, any controversies or
claims arising out of, or relating to this Agreement or the breach thereof,
shall be settled by arbitration in accordance with the commercial rules of the
American Arbitration Association, which decision shall be final and binding on
the parties, and judgment upon the award rendered shall be entered in any court
having jurisdiction thereof. Any party may demand such arbitration in
accordance with the procedures set out in those rules. The arbitration shall be
conducted in Seattle, Washington, or such other location as may be mutually
agreed upon by the parties. Special, consequential, or punitive damages shall
not be awarded by the arbitrator. In the event of any arbitration proceeding
hereunder, the Company will (x) pay the fees and expenses of the arbitrator and
(y) advance the Executive's documented out-of-pocket costs (including
reasonable counsel fees and expenses) on a current basis, provided, that if
Executive is determined not to be the substantially prevailing party on the
matters submitted for arbitration (which determination shall be made by the
arbitrator and included in his or her decision), Executive will promptly
reimburse the Company for any expenses so advanced. Executive acknowledges that
the Company is agreeing to make advances to him pursuant to the preceding
sentence in consideration of his agreement to reimburse the Company for any
such advances to the extent required by the preceding sentence. The Company
will in all events pay its own costs (including counsel fees and expenses) in
connection with any arbitration proceeding hereunder.
(e) Notices. All notices given hereunder shall be in writing and shall be
deemed to have been duly given and received (i) when delivered personally, with
receipt acknowledged in writing by the recipient, (ii) on the tenth business
day after being sent by registered or certified mail (postage paid, return
receipt requested), (iii) one business day after being sent by a reputable
overnight delivery service, postage or delivery charges prepaid, or (iv) on the
date on which a facsimile is transmitted, in each case to the Fparties at their
respective addresses stated below; provided, that if the intended recipient of
any notice hereunder refuses to acknowledge receipt thereof in writing, such
notice shall be deemed to have been duly given on the date of such refusal. Any
party may change its address for notice by giving notice of the new address to
the other party in accordance with the provisions of this paragraph.
If to the Company:
Nextel Partners Operating Corp.
4500 Carillon Point
Kirkland, WA 98033
Attention: General Counsel
Facsimile: 425-828-8098
with a copy to:
Nextel WIP Corp.
1505 Farm Credit Drive
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McLean, VA 22102
Attention: General Counsel
Facsimile: 703-394-3496
If to Executive:
John H. Chapple
Nextel Partners Operating Corp.
4500 Carillon Point
Kirkland, WA 98033
Facsimile: 425-828-8098
and
John H. Chapple
19 Apple Valley Drive
Sharon, MA 02067
(f) Severability. The invalidity or unenforceability of any particular
provision of this Agreement shall not affect the other provisions hereof, and
the Agreement shall be construed in all respects as though such invalid or
unenforceable provision were omitted.
(g) Survival. The provisions of Sections 3(d), 4, 5, 8 and 10 shall survive
any termination of this Agreement.
(h) Governing Law. This Agreement shall be interpreted according to the
internal laws of the State of New York, without regard to choice of law rules
that would result in the application of the laws of another State.
(i) Remedies Cumulative. All rights, powers and remedies provided under this
Agreement or otherwise available in respect hereof at law or in equity shall be
cumulative and not alternative, and the exercise or the beginning of the
exercise of any thereof by any party shall not preclude the simultaneous or
later exercise of any other such right, power or remedy by such party.
(j) Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
* * *
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
NEXTEL PARTNERS OPERATING CORP.
By /s/ John D. Thompson
----------------------------------
Name: John D. Thompson
Title: Chief Financial Officer,
Treasurer and Secretary
/s/ John H. Chapple
------------------------------------
JOHN H. CHAPPLE
<PAGE>
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of January 29, 1999, between
Nextel Partners Operating Corp., a Delaware corporation (the "Company"), and
John D. Thompson ("Executive"). Capitalized terms used and not otherwise
defined herein shall have the meanings given to such terms in Section 9 or as
otherwise set forth below.
WHEREAS, the Company desires to employ Executive and to enter
into an agreement embodying the terms of such employment (this "Agreement"),
and Executive desires to accept such employment and enter into this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the Company and Executive, intending to be legally bound,
hereby agree as follows:
1. Employment. (a) Agreement to Employ. Upon the terms and subject to the
conditions hereof the Company shall employ Executive as Chief Financial Officer
and Treasurer of the Company until the Expiration Date (as defined in Section
1(b)), any date to which this Agreement shall have been extended pursuant to
Section 1(b) or any earlier termination of this Agreement pursuant to Section
6. Executive's office shall be located in the Seattle, Washington metropolitan
area. The Company agrees and acknowledges that Executive may, consistent with
this Agreement and his responsibilities hereunder, devote time to other
business activities; provided, that such other business activities do not
materially interfere with the performance of Executive's duties hereunder.
Executive will disclose such activities to the Board of Directors of the
Company (the "Board") from time to time as the Board may request.
(b) Employment Period. Unless earlier terminated pursuant to
Section 6, the initial term of Executive's employment with the Company shall be
for a period of four years, commencing on the date of this Agreement and
continuing until January 29, 2003 (the "Expiration Date"). The term of this
Agreement may be extended by the Company for successive one-year terms
commencing on the Expiration Date by providing Executive notice of such
election not less than 60 days prior to the Expiration Date or the scheduled
expiration date of any renewal term.
2. Responsibility. Executive shall be responsible for supervising the
establishment, maintenance and operation of all financial and accounting
functions at the Company and for such other duties commensurate with his
position that may be assigned from time to time by the Board or (to the extent
not inconsistent with the duties assigned to him by the Board) by the chief
executive officer of the Company. Executive shall report directly to the chief
executive officer of the Company and shall be subject to the overall
supervision of the Board.
<PAGE>
3. Compensation and Benefits.
(a) Salary and Bonus.
(i) The Company shall pay Executive a base salary in the annual amount of
$150,000 payable in accordance with the Company's normal payroll practices.
(ii) The Company shall (subject to the Board's review and approval) establish a
performance based program pursuant to which Executive shall receive, if
performance targets are met, an additional annual cash payment of up to forty
percent (40%) of Executive's then current base salary (or such higher amount as
the Board may approve), and shall offer to Executive a benefits package
equivalent to that provided to the Company's other senior executives.
(iii) In addition to the amounts payable pursuant to paragraphs (i) and (ii)
above, in recognition of Executive's services prior to the date hereof, the
Company will on the date of the Closing make a lump sum payment to Executive in
the amount of $87,500.
(iv) Upon completion of the Required Build on or before the Scheduled
Completion Date, the Compensation Committee of the Board shall review
Executive's base salary and bonus payment in light of the performance of
Executive and the Company, and may, in its discretion, increase (but not
decrease) such base salary and bonus payment by an amount it determines to be
appropriate.
(v) If this Agreement is renewed by the Company upon expiration of the initial
four-year term, Executive's base salary and bonus payment will be recalculated
so as to place them at levels that are comparable to prevailing market rates,
based on the overall compensation packages of executives holding comparable
positions in similarly situated companies (which shall include consideration of
Executive's equity compensation arrangements in comparison to those of
executives holding comparable positions in similarly situated companies).
(vi) In order to induce Executive to enter into this Agreement, the Company
will on the date of the Closing, pursuant to an Option Agreement in the form
attached as Exhibit A hereto, issue to Executive options to purchase 35,000
shares of Class A Common Stock at a purchase price of $10 per share. The Option
Agreement will provide, among other things, that Executive shall have the right
to require that the Company purchase such options on the fourth anniversary of
the Closing for an aggregate purchase price of $500,000.
(b) Expenses. Executive shall maintain his own automobile and shall carry
liability insurance in the minimum amount of $300,000. The Company shall
reimburse Executive monthly for business use of his automobile at the
prevailing IRS rate per mile. Executive shall also be reimbursed monthly for
all other reasonable out-of-pocket expenses incurred or paid by Executive while
representing the Company or conducting Company business. Executive shall be
responsible for maintaining records reasonably satisfactory to support all
claimed business usage of his automobile and to substantiate all
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<PAGE>
out-of-pocket expenses incurred for which reimbursement is sought and shall
furnish such records to the Company in accordance with its policies.
(c) Vacation. Executive shall be entitled to 15 vacation days each calendar
year, any or all of which may be carried over into a new calendar year, for a
maximum accrual of 30 days. Upon termination of Executive's services under this
Agreement, Executive will be paid for unused vacation time earned through the
last completed month of service, computed at the rate of ten hours per month.
(d) Indemnification. The Company shall indemnify and hold Executive harmless in
accordance with the terms of the Company's certificate of incorporation and
bylaws, in each case as in effect on the date hereof.
(e) D&O Insurance. The Company shall maintain directors and officers liability
insurance coverage covering Executive in amounts customary for similarly
situated companies in the telecommunications industry and with reputable
insurers. All such policies shall provide for coverage to Executive on the same
terms and conditions applicable to the coverage provided under such policies to
the Company's other directors and officers.
4. Nondisclosure of Proprietary and Confidential Information.
(a) Confidential Information. Executive agrees to refrain (whether during or
after his employment with the Company) from disclosing or using, except as
permitted by this Agreement, any secrets or confidential information with
respect to any Covered Entity, including without limitation its trade secrets,
patents, affairs, business plans, strategic, commercial or financial
information other than information that is or becomes publicly available
through no fault of Executive (the "Confidential Information"). Executive may
disclose or communicate only such information as is reasonably required or
specifically approved by the Board or authorized management personnel of the
Company designated by the Board in connection with Executive's services.
Confidential Information may be used solely for the benefit of the Company, and
Executive shall not make any other use of such information. Executive agrees
that all materials relating to the business of any Covered Entity that are
provided or made available to Executive, or created by Executive, during the
course of Executive's services to the Company shall be and remain the property
of the Company and/or the applicable Covered Entity (subject to the terms of
any separate agreement between the Company and/or its Parent Companies and the
affected Covered Entity), whether or not such materials constitute or contain
Confidential Information, and all copies of such materials shall be returned to
the Company immediately upon the termination of Executive's services to the
Company. In the event that the Company notifies the Executive that it has
entered into a confidentiality agreement with a Covered Entity or with any
Affiliate of the Company with respect to confidential information to be
provided to the Company, the Executive shall comply with such reasonable
obligations thereunder as are applicable to the Executive.
(b) Innovations; Inventions. Executive hereby sells, transfers and assigns to
the Company all right, title and interest of Executive in and to any and all
inventions, ideas, disclosures and improvements of
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<PAGE>
any kind or nature whatsoever, whether patented or unpatented, and any and all
copyrightable materials, in either case whether made or conceived in whole or
in part by Executive alone or together with others, from January 1, 1998 to the
date of this Agreement or during the initial term of this Agreement or any
renewal term, that (i) relate to any methods, designs, products, processes,
apparatus, service or devices sold, leased used or under construction or
development by the Company or any of its subsidiaries or affiliates, (ii)
relate to the business, functions or operations of the Company or any of its
subsidiaries or affiliates or (iii) arise from, in whole or in part, the
efforts of Executive on behalf of the Company. Executive will communicate and
disclose to the Company promptly all information, data and details pertaining
to any inventions, ideas, disclosures and improvements described above, in such
form or format as the Company may reasonably request. During the term of this
Agreement or any renewal term and thereafter, Executive will execute,
acknowledge or deliver to the Company (at the Company's expense) such formal
transfers and assignments and such other papers and documents as may be
required of Executive to permit the Company to file and prosecute any patent
applications to the Company desires to file and prosecute relating to any of
the foregoing, and, as to copyrightable material, to obtain copyright thereon.
5. Non-Competition; Non-Solicitation.
(a) In view of the unique value to the Company of Executive's services and
because of the Confidential Information to be obtained by or disclosed to
Executive as described above, Executive agrees that, during the term of this
Agreement and for a period of one year thereafter, provided that this Agreement
is not terminated by the Company without Cause or by Executive for Good Reason:
(i) Executive will not directly or indirectly assist or become associated with
any wireless voice communications service provider in any business of such
provider that competes in any of the markets of any of the Restricted Entities,
whether as a principal, partner, employee, consultant or shareholder (other
than as a holder of less than 5% of the outstanding voting shares of any
publicly traded company);
(ii) Executive will not directly or indirectly solicit for employment or employ
any employee of any of the Restricted Entities, unless such solicited person
shall have ceased to be employed by any such entity for a period of at least
six months; and
(iii) Executive will not directly or indirectly, solicit business from
customers of any of the Restricted Entities, provided that the foregoing shall
not restrict Executive or any entity with which Executive is associated from
soliciting or doing business with any customer of any of the Restricted
Entities, if such solicitation does not interfere with any business
relationship between such solicited customer and any of the Restricted
Entities.
(b) If Executive violates any provision of Section 4 or Section 5(a), the
Company shall be entitled to receive from Executive reimbursement for any and
all damages caused by such breach, provided that Executive shall not be liable
for indirect, special, consequential or punitive damages (it being understood
and agreed that this remedy is in addition to, and not a limitation on, any
injunctive relief or
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<PAGE>
other rights or remedies to which the Company is or may be entitled to at law
or in equity). Executive acknowledges and agrees that the Company's (and as
applicable, each Restricted Entity's) remedies at law for a breach or
threatened breach of any provision of Section 4 or Section 5(a) would be
inadequate and, in recognition of this fact, Executive agrees that, in the
event of such a breach or threatened breach, in addition to any remedies at
law, the Company and, as to Article 4, each Covered Entity and, as to Article
5, each Restricted Entity, without posting any bond, shall be entitled to
obtain equitable relief in the form of specific performance, temporary
restraining order, temporary or permanent injunction or any other equitable
remedy which may then be available. As provided in Section 10(b) hereof, the
equitable remedies referenced in this Section 5(b) shall be in addition to, and
not in substitution for or exclusion of, any other remedies available at law or
in equity for any breach of either or both of Sections 4 or 5. Executive and
the Company each specifically acknowledge and agree that the provisions of
Sections 4 and 5 are for the express benefit of each Covered Entity (in the
case of Section 4) and each Restricted Entity and that (i) no waiver, amendment
or other modification of Sections 4 or 5 with respect to a Covered Entity or
Restricted Entity shall be effective unless it has been consented to in writing
by such Covered Entity or Restricted Entity, as the case may be, and (ii) each
such Covered Entity and Restricted Entity shall be entitled to enforce the
provisions of Section 4 and/or 5 hereof (as appropriate) as fully and with the
same rights and effect as if such Covered Entity or Restricted Entity were a
signatory party to this Agreement.
(c) If any provisions of Section 4 or Section 5(a) are held to be invalid or
unenforceable, the remaining provisions shall nevertheless continue to be valid
and enforceable as though the invalid or unenforceable parts had not been
included.
6. Noncontravention. The execution, delivery and performance by Executive of
this Agreement does not and will not (i) violate any applicable law, rule,
regulation, judgment, injunction, order or decree or (ii) require any consent
or other action by any person under, constitute a default under (with due
notice or lapse of time or both), or give rise to any right of termination,
cancellation or acceleration of any right or obligation of Executive or to a
loss of any material benefit to which Executive is entitled under any provision
of any agreement or other instrument binding upon Executive, to the extent that
any of the foregoing would have a material adverse effect on Executive or would
prevent or otherwise render unable Executive to perform his obligations under
this Agreement.
7. Termination. This Agreement shall automatically terminate (and the term of
this Agreement shall thereupon terminate) upon the occurrence of any one of the
following events:
(a) Death of Executive.
(b) If Executive shall have been incapacitated from illness, accident or other
disability and unable to perform his normal duties hereunder for a cumulative
period of three months in any period of six consecutive months, and no
reasonable accommodation being available, upon either party giving the other
party not less than 30 days' written notice.
5
<PAGE>
(c) The Expiration Date or the scheduled expiration date of any renewal or
extension thereof in compliance with Section 1(b).
(d) By the Company for Cause.
(e) By Executive for Good Reason. Upon the occurrence of any event or the
existence of any condition or circumstance constituting Good Reason, Executive
may by notice to the Board, deem a constructive termination of this Agreement
to have occurred, whereupon Executive shall be entitled to the compensation set
forth in Section 7(b).
(f) Upon not less than 30 days' written notice from Executive to the Company of
his voluntary resignation; provided, that such voluntary resignation shall not
relieve or release Executive from any breach of this Agreement at or prior to
the time of such resignation.
8. Effect of Termination.
(a) Upon termination of this Agreement pursuant to Sections 7(a), (b), (c), (d)
or (f), the Company shall compensate Executive (or, in the event of Executive's
death, his surviving spouse, if any, or his estate), for (x) accrued but unused
vacation time, (y) any base salary earned, but unpaid, for services rendered to
the Company on or prior to the date of termination and (z) amounts which
Executive is otherwise entitled to receive under the terms of or in accordance
with any plan, policy, practice or program of, or contract or agreement with
the Company, as in effect immediately prior to the date of such termination,
(including but not limited to the Purchase Agreement), at or subsequent to the
date of termination without regard to the performance by Executive of further
services or the resolution of any contingency, but subject to any and all
rights, remedies and claims of the Company against Executive.
(b) If Executive resigns for Good Reason or his employment with the Company is
terminated without Cause, the Company shall thereupon pay Executive the
following amounts as severance benefits: (i) all amounts payable pursuant to
Section 8(a), and (ii) a lump sum equal to (x) if Executive resigns for Good
Reason, one year's base salary hereunder plus an amount equal to the most
recent annual bonus, if any, received by Executive pursuant to Section 3(a)(ii)
or (y) if Executive's employment is terminated without Cause, six months' base
salary hereunder plus an amount equal to one-half of the most recent annual
bonus, if any, received by Executive pursuant to Section 3(a)(ii).
9. Definitions. As used herein, the following terms shall have the following
meanings set forth below:
"Affiliate" means, with respect to the Company, any person or
entity who or which, directly or indirectly, controls, is controlled by, or is
under common control with, the Company or NPI.
"Cause" means (i) Executive's conviction of a felony evidencing
criminal dishonesty or moral turpitude, (ii) a willful and material breach of
Executive's duty of loyalty to the Company or its
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parent Nextel Partners, Inc. or (iii) after 20 business days following
Executive's receipt of written notice from the Company specifying the
particulars in reasonable detail, Executive's failure to comply with or to
cure, as applicable, (A) a willful and material refusal to comply with specific
written directions of the Board (or specific written directions of the Chief
Executive Officer) consistent with Executive's employment agreement with NPI or
the Company or any of their respective subsidiaries and capable of being
performed by him or (B) a willful and material breach of Executive's duty of
due care to the Company.
"Class A Common Stock" means the Class A Common Stock, par value
$.001 per share, of NPI.
"Closing" has the meaning specified in the Purchase Agreement.
"Covered Entities" means, collectively, the Restricted Entities and
such other entities as may from time to time be reasonably agreed to by the
Company and the Executive to be Covered Entities hereunder.
"FCC" means the Federal Communications Commission.
"FCC Modifications" means changes to the agreements relating to the
governance and operation of the Company that are implemented in response to any
assertion or finding by the FCC that such agreements constitute an
impermissible change of control of the FCC licenses made available by NWIP to
the Company thereunder, which changes are implemented in order to cause such
agreements to be in compliance with FCC requirements so as to reflect the
intent of the parties thereto that no impermissible change of control take
place.
"Good Reason" means (i) a material adverse change in Executive's
duties, responsibilities or reporting relationships, (ii) a relocation of
Executive's principal office to a location more than 30 miles away from his
then current office, (iii) a reduction of salary not agreed to by Executive, or
material diminution of other employee benefits (other than any change in
employee benefits approved by the Board and implemented in a non-discriminatory
fashion with respect to all participating employees), or any other material
adverse change in his working conditions, (iv) a material breach by the Company
of other obligations under Executive's employment agreement with the Company or
a subsidiary of the Company that are not cured after 20 business days following
the Company's receipt of a written notification from Executive specifying the
particulars in reasonable detail, and (v) from and after the Closing, following
the implementation of any FCC Modifications, if NWIP exercises control over
day-to-day operating decisions, policy decisions or personnel decisions of the
Company pursuant to such FCC Modifications that (before such modifications)
would have been decisions made by the Company's management and such control
exercised by NWIP is materially more extensive (in the collective reasonable
judgment of the Senior Managers then employed by the Company) than that which
NWIP could have exercised under the agreements to which NWIP is a party
relating to the governance and operation of the Company before giving effect to
the FCC Modifications. Notwithstanding the foregoing, a termination with Good
Reason under clause (v)
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above shall not be deemed effective until 120 days following written notice by
the Executive to the Company of the occurrence of any of the foregoing and only
if the foregoing continue to occur as of such 120th day.
"Joint Venture Agreement" means the Joint Venture Agreement, to be
dated the date of the Closing, among Nextel, NPI and the Company.
"Nextel" means NEXTEL Communications, Inc., a Delaware corporation.
"NPI" means Nextel Partners, Inc., a Delaware corporation.
"NWIP" means Nextel WIP Corp., a Delaware corporation and a wholly
owned subsidiary of Nextel.
"Parent Companies" means NPI and any other entity that directly or
indirectly owns all or substantially all of the Company's outstanding voting
capital stock.
"Purchase Agreement" means the Restricted Stock Purchase Agreement,
dated as of November 20, 1998, between Executive and the Company.
"Required Build" means the completion of the build out of all
Initial Sections (as defined in the Joint Venture Agreement) assigned to the
first or second Build Year (as defined in the Joint Venture Agreement), and of
any Option Sections (as defined in the Joint Venture Agreement) assigned to the
first or second Build Year that are included in the Territory (as defined in
the Joint Venture Agreement) through the Company's election under Section 6.2B
of the Joint Venture Agreement, but excluding any such Option Sections that are
included in the Territory (as defined in the Joint Venture Agreement) as a
result of the Company's response to a notice given pursuant to Section 6.2C of
the Joint Venture Agreement.
"Restricted Entities" means, collectively, the Company, Nextel and
the Parent Companies and their respective subsidiaries.
"Scheduled Completion Date" means 60 days after December 31, 2001.
"Senior Managers" means, collectively, John Chapple, John Thompson,
David Thaler, David Aas, Perry Satterlee and Mark Fanning.
"Shares" means the shares of Class A Common Stock purchased by
Executive pursuant to the Purchase Agreement.
10. Miscellaneous.
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(a) Merger; Amendment. This Agreement (together with the Purchase Agree ment)
constitutes the entire agreement between the parties with respect to the
subject matter hereof, and may be changed, extended or modified only by an
agreement in writing signed by the parties.
(b) Assignment. The rights and obligations of the Company in this Agreement
shall inure to its benefit and be binding upon its successors in interest
(whether by merger, consolidation, reorganization, sale of stock or assets or
otherwise), provided that Executive shall not remain bound by this Agreement
unless such successor assumes all of the obligations of the Company hereunder.
This Agreement shall also inure to the benefit of Executive's heirs, executors,
administrators and legal representatives. This Agreement, being for the
personal services of Executive, shall not be assignable by Executive. Certain
provisions of Section 4 and 5 of this Agreement are, for the purposes specified
therein, intended to inure to the benefit of certain affiliates of the Company
and to be enforceable separately by them as provided therein.
(c) Waiver of Breach. The waiver by any party of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach by any party.
(d) Arbitration. Except as otherwise provided herein, any controversies or
claims arising out of, or relating to this Agreement or the breach thereof,
shall be settled by arbitration in accordance with the commercial rules of the
American Arbitration Association, which decision shall be final and binding on
the parties, and judgment upon the award rendered shall be entered in any court
having jurisdiction thereof. Any party may demand such arbitration in
accordance with the procedures set out in those rules. The arbitration shall be
conducted in Seattle, Washington, or such other location as may be mutually
agreed upon by the parties. Special, consequential, or punitive damages shall
not be awarded by the arbitrator. In the event of any arbitration proceeding
hereunder, the Company will (x) pay the fees and expenses of the arbitrator and
(y) advance the Executive's documented out-of-pocket costs (including
reasonable counsel fees and expenses) on a current basis, provided, that if
Executive is determined not to be the substantially prevailing party on the
matters submitted for arbitration (which determination shall be made by the
arbitrator and included in his or her decision), Executive will promptly
reimburse the Company for any expenses so advanced. Executive acknowledges that
the Company is agreeing to make advances to him pursuant to the preceding
sentence in consideration of his agreement to reimburse the Company for any
such advances to the extent required by the preceding sentence. The Company
will in all events pay its own costs (including counsel fees and expenses) in
connection with any arbitration proceeding hereunder.
(e) Notices. All notices given hereunder shall be in writing and shall be
deemed to have been duly given and received (i) when delivered personally, with
receipt acknowledged in writing by the recipient, (ii) on the tenth business
day after being sent by registered or certified mail (postage paid, return
receipt requested), (iii) one business day after being sent by a reputable
overnight delivery service, postage or delivery charges prepaid, or (iv) on the
date on which a facsimile is transmitted, in each case to the parties at their
respective addresses stated below; provided, that if the intended recipient of
any notice hereunder refuses to acknowledge receipt thereof in writing, such
notice shall be deemed to have been
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duly given on the date of such refusal. Any party may change its address for
notice by giving notice of the new address to the other party in accordance
with the provisions of this paragraph.
If to the Company:
Nextel Partners Operating Corp.
4500 Carillon Point
Kirkland, WA 98033
Attention: General Counsel
Facsimile: 425-828-8098
with a copy to:
Nextel WIP Corp.
1505 Farm Credit Drive
McLean, VA 22102
Attention: General Counsel
Facsimile: 703-394-3496
If to Executive:
John D. Thompson
Nextel Partners Operating Corp.
4500 Carillon Point
Kirkland, WA 98033
Facsimile: 425-828-8098
and
John D. Thompson
4624 240th Avenue S.E.
Issaquah, WA 98029
(f) Severability. The invalidity or unenforceability of any particular
provision of this Agreement shall not affect the other provisions hereof, and
the Agreement shall be construed in all respects as though such invalid or
unenforceable provision were omitted.
(g) Survival. The provisions of Sections 3(d), 4, 5, 8 and 10 shall survive any
termination of this Agreement.
(h) Governing Law. This Agreement shall be interpreted according to the
internal laws of the State of New York, without regard to choice of law rules
that would result in the application of the laws of another State.
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(i) Remedies Cumulative. All rights, powers and remedies provided under this
Agreement or otherwise available in respect hereof at law or in equity shall be
cumulative and not alternative, and the exercise or the beginning of the
exercise of any thereof by any party shall not preclude the simultaneous or
later exercise of any other such right, power or remedy by such party.
(j) Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
* * *
11
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
NEXTEL PARTNERS OPERATING CORP.
By /s/ John Chapple
----------------------------------
Name: John Chapple
Title: President and CEO
/s/ John D. Thompson
----------------------------------
JOHN D. THOMPSON
12
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NEXTEL PARTNERS, INC.
STOCK OPTION AGREEMENT
----------------------
STOCK OPTION AGREEMENT, dated as of January 29, 1999, between Nextel
Partners, Inc., a Delaware corporation (the "Company"), and John D. Thompson
("Employee").
WHEREAS, Employee and the Company have entered into an Employment
Agreement of even date herewith (the "Employment Agreement"), pursuant to which
the Company has agreed to issue to Employee options to purchase 35,000 shares
of its Class A Common Stock at a purchase price of $10.00 per share.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
GRANT OF OPTION
---------------
1.1 Grant of Option. In consideration of Employee's execution and
delivery of the Employment Agreement, and his service to date on behalf of the
Company and its Subsidiaries, and for other good and valuable consideration,
the Company hereby irrevocably grants to Employee the option (the "Option") to
purchase up to 35,000 shares of its Class A Common Stock ("Shares") upon the
terms and conditions set forth in this Agreement.
1.2 Purchase Price. The purchase price of each Share covered by the
Option shall be $10.00, without commission or other charge, subject to
adjustment as provided in Section 1.4.
1.3 No Right to Continued Employment. Nothing in this Agreement shall
confer upon Employee any right to continue in the employ of the Company or any
Subsidiary, or shall interfere with or restrict in any way the rights of the
Company and its Subsidiaries, which are hereby expressly reserved, to discharge
Employee at any time for any reason whatsoever, with or without cause.
1.4 Adjustments in Option and Purchase Price. In the event that the
Board of Directors of the Company (the "Board") determines that any dividend or
other distribution (whether in the form of cash, Shares, other securities or
other property), recapitalization, stock split, reverse stock split,
reorganization, reclassification, merger, consolidation, split-up, spin-off,
combination, repurchase, or exchange of Shares or other securities of the
Company, issuance of warrants or other rights to purchase Shares or other
securities of the Company, or other similar corporate transaction or event
affects the Shares such that an adjustment is determined by the Board to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under this Agreement, then the
Board shall, in such manner as it may deem equitable, adjust any or all of (i)
the number of Shares or other securities of the Company (or number and kind of
other securities or
14
<PAGE>
property) subject to the Option, and (ii) the grant or exercise price with
respect to the Option, or, if deemed appropriate, make provision for a cash
payment to Employee.
ARTICLE II
PERIOD OF EXERCISABILITY
2.1 Exercisability. The Option is fully and immediately vested as of
the date of this Agreement. Notwithstanding anything contained in this
Agreement to the contrary, at any time after the fourth anniversary of the date
of this Agreement, if the time period(s) specified by Section 2.2 have not
expired, Employee may surrender, without payment of the purchase price, all or
any portion of the Option for payment in cash of $14.286 per Share subject to
the Option surrendered (subject to adjustment in accordance with Section 1.4),
e.g. $500,000 if the entire Option is surrendered. Upon such surrender, the
Company shall pay such amount to Employee in cash no later than ten days after
such surrender, provided that notwithstanding anything contained in this
Agreement to the contrary, such surrender shall not be effective, and the
Option so surrendered shall remain in full force and effect, until payment in
full as aforesaid has been made to Employee in consideration thereof.
2.2 Expiration of Option. The Option may not be exercised to any
extent by anyone after the expiration of ten years from the date of this
Agreement.
ARTICLE III
EXERCISE OF OPTION
3.1 Person Eligible to Exercise. During the lifetime of Employee,
only he (or permitted successors and assigns pursuant to Section 4.1) may
exercise the Option or any portion thereof. After the death of Employee, any
exercisable portion of the Option may, prior to the time when the Option
becomes unexercisable under Section 2.2, be exercised by his personal
representative or by any person empowered to do so under Employee's will or
under the then applicable laws of descent and distribution.
3.2 Partial Exercise. The Option may be exercised in whole or in
part at any time prior to the time when the Option becomes unexercisable under
Section 2.2; provided, however, that each partial exercise shall be for not
less than 100 shares and shall be for whole shares only.
3.3 Manner of Exercise. The Option, or any exercisable
portion thereof, may be exercised solely by delivery to the Secretary of the
Company of all of the following items prior to the time when the Option or such
portion becomes unexercisable under Section 2.2:
(a) Notice in writing signed by Employee or the other person then entitled to
exercise the Option or portion, stating that the Option or portion is thereby
exercised; and
(b) (i) Full payment (in cash or by check) for the shares with respect to which
the Option or portion is thereby exercised; or
2
<PAGE>
(ii) Full payment by delivery to the Company of shares of the Company's Class A
Common Stock owned by Employee duly endorsed for transfer to the Company by
Employee or other person then entitled to exercise the Option or portion, with
an aggregate fair market value as determined in the reasonable discretion of
the Board ("Fair Market Value") equal to the Option price of the shares with
respect to which the Option or portion is thereby exercised; or
(iii) With the consent of the Board, a full recourse promissory note bearing
interest (at the lowest rate as shall then preclude the imputation of interest
under the Internal Revenue Code or successor provision) and payable upon such
terms as may be prescribed by the Board. The Board may also prescribe the form
of such note and the security to be given for such note. The Option may not be
exercised, however, by delivery of a promissory note or by a loan from the
Company when or where such loan or other extension of credit is prohibited by
law; or
(iv) Subject to the Board's consent, any combination of the considerations
provided for in the foregoing subsections (i), (ii) and (iii); and
(c) On or prior to the date the same is required to be withheld:
(i) Full payment (in cash or by check) of any amount that must be withheld by
the Company for federal, state and/or local tax purposes; or
(ii) Full payment by delivery to the Company of shares of the Company's Class A
Common Stock owned by Employee duly endorsed for transfer to the Company by
Employee or other person then entitled to exercise the Option or portion with
an aggregate Fair Market Value equal to the amount that must be withheld by the
Company for federal, state and/or local tax purposes; or
(iii) Full payment by retention by the Company of shares of the Company's Class
A Common Stock to be issued pursuant to such Option exercise with an aggregate
Fair Market Value equal to the amount that must be withheld by the Company for
federal, state and/or local tax purposes; or
(iv) Any combination of payments provided for in the foregoing subsections (i),
(ii) or (iii), subject to any restrictions imposed by the U.S. securities laws
as a result of Employee being an officer or director or otherwise; and
(d) Such representations and documents as the Board, in its absolute
discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act and any other federal or state
securities laws or regulations. The Board may, in its absolute discretion, also
take whatever additional actions it deems appropriate to effect such compliance
including, without limitation, placing legends on share certificates and
issuing stop-transfer orders to transfer agents and registrars; and
3
<PAGE>
(e) In the event the Option or portion shall be exercised pursuant to Section
3.1 by any person or persons other than Employee, appropriate proof of the
right of such person or persons to exercise the Option.
3.4 Conditions to Issuance of Stock Certificates. The Shares
deliverable upon the exercise of the Option, or any portion thereof, may be
either previously authorized but unissued shares or issued shares which have
then been reacquired by the Company. When issued upon exercise of the Option as
provided herein, such Shares shall be fully paid and nonassessable. The Company
shall not be required to issue or deliver any certificate or certificates for
Shares purchased upon the exercise of the Option or portion thereof prior to
fulfillment of all of the following conditions, provided that the Company shall
be obligated to cause all such conditions to be satisfied at the time of
exercise (except as otherwise provided in paragraph (e)):
(a) The admission of such Shares to listing on all stock exchanges on which
such class of stock is then listed; and
(b) The completion of any registration or other qualification of such Shares
under any state or federal law or under rulings or regulations of the
Securities and Exchange Commission or of any other governmental regulatory
body, which the Board shall in its absolute discretion, deem necessary or
advisable; and
(c) The obtaining of any approval or other clearance from any state or federal
governmental agency which the Board shall, in its absolute discretion,
determine to be necessary or advisable; and
(d) The payment to the Company of all amounts which, under federal, state or
local law, it is required to withhold upon exercise of the Option; and
(e) The lapse of such reasonable period of time following the exercise of the
Option as the Board may from time to time establish for reasons of
administrative convenience, but not to exceed five business days.
3.5 Rights as Shareholder. The holder of the Option shall not be,
nor have any of the rights or privileges of, a shareholder of the Company in
respect of any Shares issuable upon the exercise of any part of the Option
unless and until certificates representing such Shares shall have been issued
by the Company to such holder.
4
<PAGE>
ARTICLE IV
OTHER PROVISIONS
4.1 Option Not Transferable. Neither the Option nor any interest or
right therein or part thereof shall be available to satisfy the debts,
contracts or engagements of Employee or his successors in interest or shall be
subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be
voluntary or involuntary or by operation of law by judgment, levy, attachment,
garnishment or any other legal or equitable proceedings (including bankruptcy)
and any attempted disposition thereof shall be null and void and of no effect;
provided, however, that this Section 4.1 shall not prevent transfers by will or
by the applicable laws of descent and distribution, or transfers of all or part
of the Option to "Permitted Transferees" of Employee as defined in the
Shareholders' Agreement of the Company dated as of the date hereof.
4.2 Shares to Be Reserved. The Company shall at all times during the
term of the Option reserve and keep available such number of shares of Class A
Common Stock as will be sufficient to satisfy the requirements of this
Agreement.
4.3 Notices. Any notice to be given under the terms of this
Agreement to the Company shall be addressed to the Company in care of its
Secretary, and any notice to be given to Employee shall be addressed to him at
the address given beneath his signature hereto. By a notice given pursuant to
this Section 4.3, either party may hereafter designate a different address for
notices to be given to him. Any notice which is required to be given to
Employee shall, if Employee is then deceased, be given to Employee's personal
representative if such representative has previously informed the Company of
his status and address by written notice under this Section 4.3. Any notice
shall be deemed duly given when enclosed in a properly sealed envelope or
wrapper addressed as aforesaid, deposited (with postage prepaid) in a post
office or branch post office regularly main tained by the United States Postal
Service.
4.4 Titles. Titles are provided herein for convenience only and are
not to serve as basis for interpretation or construction of this Agreement.
4.5 Construction. This Agreement shall be administered, interpreted
and enforced under the laws of the State of Delaware.
4.6 Entire Agreement. This Agreement embodies the entire agreement
and understanding of the parties hereto with respect to the subject matter
contained herein and supersedes all prior communications, representations and
negotiations in respect thereto. To the extent that the Option is in
substitution for any prior understandings between Employee and the Company, any
and all rights, entitlements or understandings are hereby extinguished and
Employee waives any claim to any and all such prior understandings.
5
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the parties hereto as of the date first above written.
NEXTEL PARTNERS, INC.
By /s/ John Chapple
-------------------------------
Name: John Chapple
Title: President and Chief
Executive Officer
/s/ John D. Thompson
---------------------------------
JOHN D. THOMPSON
Address: 4624 240th Avenue S.E.
Issaquah, WA 98029
SS #:____________________________
6
<PAGE>
NON-NEGOTIABLE PROMISSORY NOTE
New York, New York
$2,200,000 January 29, 1999
FOR VALUE RECEIVED, the undersigned, John D. Thompson (the
"Borrower"), hereby promises to pay to Nextel Partners, Inc. (the "Company"),
on the Maturity Date, the principal sum of Two Million Two Hundred Thousand
Dollars ($2,200,000), without interest, in Acceptable Consideration, on the
terms and subject to the conditions herein set forth.
As used herein, the following terms have the following meanings:
"Acceptable Consideration" means (i) lawful money of the United
States of America, (ii) shares of Class A Common Stock, par value $.001 per
share, of the Company, valued for such purpose at Fair Market Value, or (iii)
any combination of the foregoing, in any case as the Borrower may elect in his
sole discretion.
"Fair Market Value" has the meaning specified in, and shall be
determined (as of a date no more than ten days prior to the Maturity Date) in
accordance with, the Purchase Agreement.
"Maturity Date" means the later of January 29, 2003 and the date on
which Fair Market Value is finally determined in accordance with the Purchase
Agreement.
"Purchase Agreement" means the Restricted Stock Purchase Agreement,
dated as of November 20, 1998, as amended, between the Borrower and the
Company.
The Borrower's obligation to pay the principal amount of this Note
is secured by the collateral specified in the Pledge Agreement of even date
herewith between the Borrower and the Company. The holder of this Note shall
not setoff and apply against the Borrower's obligation to pay the principal
hereof any other obligations of the holder or its affiliates owing to the
Borrower.
This Note shall be governed by, and construed in accordance with,
the internal laws of the State of New York, without regard to choice of law
principles. This Note and the Pledge Agreement referred to above embody the
entire agreement of the parties with respect to the subject matter hereof, and
supersede all prior oral and written agreements, arrangements and
understandings of the parties with respect to such subject matter. No amendment
or modification of this Note shall be effective unless the same shall be in
writing and signed by the Borrower and the holder hereof.
/s/ John D. Thompson
------------------------
John D. Thompson
<PAGE>
NEXTEL PARTNERS, INC.
1999 NONQUALIFIED STOCK OPTION PLAN
EFFECTIVE: JANUARY 29, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I DEFINITIONS......................................................1
ARTICLE II SHARES SUBJECT TO PLAN...........................................7
2.1 Shares Subject to Plan. ........................................7
2.2 Unexercised Options. ...........................................7
2.3 Changes in Company's Shares. ....................................7
ARTICLE III GRANTING OF OPTIONS..............................................7
3.1 Eligibility. ...................................................7
3.2 Granting of Options..............................................8
3.3 Limitations on Granting of Options...............................8
ARTICLE IV TERMS OF OPTIONS.................................................9
4.1 Option Agreements. .............................................9
4.2 Ordinary Vesting.................................................9
4.3 Accelerated Vesting.............................................10
4.4 Expiration of Options. ........................................10
4.5 No Right to Continued Employment. .............................11
ARTICLE V EXERCISE OF OPTIONS.............................................11
5.1 Person Eligible to Exercise. ..................................11
5.2 Partial Exercise. .............................................11
5.3 Manner of Exercise. ...........................................11
5.4 Conditions to Issuance of Stock Certificates. .................13
5.5 Rights of Shareholders. .......................................14
ARTICLE VI ADMINISTRATION..................................................14
6.1 Duties and Powers of Committee. ...............................14
6.2 Majority Rule. ................................................14
6.3 Compensation; Professional Assistance; Good Faith Actions. .....14
ARTICLE VII OTHER PROVISIONS................................................14
7.1 Options Not Transferable........................................14
7.2 Amendment, Suspension or Termination of the Plan and Options....15
7.3 Effect of Plan Upon Other Option and Compensation Plans.........15
7.4 Share Certificates..............................................15
7.5 Titles. .......................................................16
7.6 Governing Law. ................................................16
7.7 Effective Date..................................................16
</TABLE>
i
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NEXTEL PARTNERS, INC.
1999 NONQUALIFIED STOCK OPTION PLAN
Nextel Partners, Inc., a corporation organized under the laws of the
State of Delaware (the "Company"), hereby adopts this 1999 Nonqualified Stock
Option Plan, to be effective as of January 29, 1999. The purposes of this Plan
are as follows:
1. To further the growth, development and financial success of the
Company by providing additional incentives to certain of its senior management
and other key Employees who have been or will be given responsibility for the
management or administration of the Company's business affairs, by assisting
them to become owners of capital stock of the Company and thus to benefit
directly from its growth, development and financial success.
2. To enable the Company to obtain and retain the services of the type
of professional, technical and managerial employees and other persons
considered essential to the long-range success of the Company by providing and
offering them an opportunity to become owners of capital stock of the Company
pursuant to the exercise of "non-qualified" options which do not qualify under
Section 422 of the Internal Revenue Code of 1986, as amended.
ARTICLE 1
DEFINITIONS
-----------
Whenever the following terms are used in this Plan, they shall have
the meaning specified below unless the context clearly indicates to the
contrary. The masculine pronoun shall include the feminine and neuter and the
singular shall include the plural, where the context so indicates.
"Beneficial Owner" means a beneficial owner as defined in Rules 13d-3,
13d-5 or 16a-1 under the Exchange Act (or any successor rules), including the
provision of such Rules that a Person shall be deemed to have beneficial
ownership of all securities that such Person has a right to acquire within 60
days, but such provision of the Rules will apply only if (i) all conditions
(other than payment of the purchase or acquisition price of such securities) to
such Person's exercise of such rights have been satisfied and (ii) such
securities (if options, warrants, or similar derivatives) are "in-the-money,"
provided that in all cases a Person shall not be deemed a Beneficial Owner of,
or to own beneficially, any securities if such beneficial ownership (1) arises
solely as a result of a revocable proxy delivered in response to a proxy or
consent solicitation made pursuant to, and in accordance with, the Exchange Act
and the applicable rules and regulations thereunder, and (2) is not also then
reportable on Schedule 13D under the Exchange Act.
"Board" shall mean the Board of Directors of the Company.
"Capital Stock" of any Person means any and all shares, interests,
participation or other equivalents (however designated) of stock of, or other
ownership interests in, such Person, but
<PAGE>
excluding any pay-in-kind preferred stock, other "debt equivalents" and
mandatorily redeemable "nominal equity" securities.
"Change in Control of the Company" means the occurrence of any of
the following events:
(a) any person or group (as such terms are used in Sections 13(d) and 14(d) of
the Exchange Act and the regulations thereunder) (i) is or becomes the
Beneficial Owner of more than 50% of the total Voting Stock or Total Common
Equity of the Company, or (ii) otherwise has the power to direct the management
and policies of the Company, directly or through one or more intermediaries,
whether through the ownership of voting securities, by contract or otherwise,
except that no change of control will be deemed to have occurred under this
clause (ii) as a result of customary rights granted (A) in any indenture,
credit agreement or other agreement for borrowed money or (B) to holders of
non-convertible, mandatorily redeemable, preferred stock unless and until
action occurs that would otherwise cause a "Change in Control of the Company"
as herein defined, provided that such rights were granted pursuant to a
transaction in the financial markets and not as part of a strategic alliance or
similar transaction;
(b) the Company sells, assigns, conveys, transfers, leases or otherwise
disposes of all or substantially all of its assets to any Person (other than to
a direct or indirect wholly owned Subsidiary of the Company);
(c) the Company, directly or indirectly, consolidates with, or merges with or
into, another Person, or any Person, directly or indirectly, consolidates with,
or merges with or into, the Company, and pursuant to such transaction (or
series of transactions) either: (i) the outstanding Voting Stock of the Company
is converted into or exchanged for cash, securities or other property, but
excluding a transaction (or series of transactions) where (A) the outstanding
Voting Stock of the Company is converted into or exchanged for Voting Stock of
the surviving or transferee Person and (B) the holders of Voting Stock of the
Company immediately preceding such transaction receive more than 50% of the
total Voting Stock and Total Common Equity of the surviving or transferee
Person in substantially the same relative proportions as such holders had prior
to such transaction; or (ii) new shares of Voting Stock of the Company are
issued so that immediately following such transaction, the holders of Voting
Stock of the Company immediately preceding such transaction own less than 50%
of the Voting Stock and Total Common Equity of the surviving Person; or
(d) during any period of two consecutive years following the Closing Date,
individuals who at the beginning of such period constituted the Board (together
with any Directors who are members of the Board on the date of the Closing, and
any new Directors whose election by such Board or whose nomination for election
by the shareholders of the Company was approved by a vote of 66-2/3% of the
directors then still in office who were either Directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board then in
office; provided, that no change in the composition of the Board in connection
with the Closing, or by reason of any substitution of one Director for another
so long as both Directors are
2
<PAGE>
nominated by the same Person, shall constitute a Change in Control of the
Company for purposes of this paragraph (d).
Notwithstanding the foregoing, no "Change in Control of the Company"
shall occur (i) merely by reason of any creditor of the Company foreclosing on
or otherwise causing the sale, transfer or other disposition of all or any
substantial part of the Company's assets (including, without limitation, the
Company's equity interests in its subsidiaries) or (ii) merely by reason of a
transfer by Eagle River Investments, LLC ("Eagle River") to another Person of
the Capital Stock of the Company owned by Eagle River so long as Craig O. McCaw
("McCaw") controls (as defined in Section 4.01(h) of the Shareholders'
Agreement) such Person whether or not McCaw owns a majority of the equity
interests of such Person, unless such transfer referred to in this clause (ii),
alone or in conjunction with other transactions, results in the occurrence of
an event of the type described in any of clauses (a), (b), (c) or (d) above.
"Closing" means the initial closing (if any) of the equity investments
contemplated by the Commitment Letter.
"Closing Date" means the date of the Closing.
"Closing Price" on any Trading Day with respect to the per share price
of any shares of Capital Stock of any Person means the last reported sale price
regular way or, in case no such reported sale takes place on such day, the
average of the reported closing bid and asked prices regular way, in either
case on the New York Stock Exchange or if such shares of Capital Stock are not
listed or admitted to trading on such exchange, on the principal national
securities exchange on which such shares are listed or admitted to trading or,
if not listed or admitted to trading on any national securities exchange, on
the Nasdaq Stock Market or, if such shares are not listed or admitted to
trading on any national securities exchange or quoted on the Nasdaq Stock
Market and the issuer and principal securities exchange do not meet such
requirements, the average of the closing bid and asked prices in the
over-the-counter market as furnished by any New York Stock Exchange member firm
of national standing that is selected from time to time by such Person for that
purpose.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commitment Letter" means the Commitment Letter, dated December 4,
1998, among the Company and the investors named therein.
"Committee" shall mean the Board or any committee consisting of Board
members properly designated by the Board, who shall administer this Plan as
provided in Article 6 hereof. The Committee shall be composed of not less than
the minimum number of persons from time to time required by Rule 16b-3 under
the Exchange Act and Section 162(m) of the Code each of whom, to the extent
necessary to comply with Rule 16b-3 and Section 162(m) only, is a "Non-
Employee Director" and an "Outside Director" within the meaning of Rule 16b-3
and Section 162(m), respectively.
3
<PAGE>
"Company" shall mean Nextel Partners, Inc., a Delaware corporation.
"Director" shall mean a member of the Board.
"DLJ Entity" has the meaning specified in the Shareholders' Agreement.
"EBITDA" means, with respect to any fiscal year of the Company,
earnings of the Company for such year before interest (including without
limitation the interest component of any capital lease obligation), taxes,
depreciation and amortization for such year; provided, that for purposes of
determining whether EBITDA targets have been met hereunder, the following costs
and expenses of the Company shall, to the extent deducted from earnings in
calculating EBITDA in accordance with generally accepted accounting principles,
be added back to earnings in calculating EBITDA: (i) non-cash compensation
expenses resulting from the application of APB Opinion No. 25 to vesting of
Shares under the Restricted Stock Purchase Agreements, (ii) out-of-pocket costs
incurred by the Company (or incurred by others and reimbursed by the Company)
in connection with the transactions contemplated by the Commitment Letter to be
consummated at the Closing (whether such transactions are consummated at the
Closing or thereafter), including without limitation the contemplated offering
of high-yield bonds and the subsequent exchange of such privately issued bonds
for publicly registered bonds, (iii) prior to the IPO, the costs incurred in
complying with SEC reporting requirements relating to the Company's publicly
held bonds (if any), (iv) out-of-pocket costs and expenses incurred by the
Company (or incurred by others and reimbursed by the Company) in connection
with (A) the transactions contemplated by Section 4.18 of the Joint Venture
Agreement and (B) the matters set forth on Schedule D to the Subscription and
Contribution Agreement, dated as of January 29, 1999, among the Company and the
investors named therein and (v) other appropriate costs and expenses to be
determined by the Board (acting in the good faith exercise of its business
judgment), which may include expenses arising under the agreements relating to
the operation of the Company to the extent not contemplated by the Company's
business plan in effect on the date hereof (on which the EBITDA targets set
forth on Annex A to the Restricted Stock Purchase Agreements are based). The
parties agree that (i) non-cash charges shall, to the extent deducted from
earnings, be added back to earnings in calculating EBITDA, and (ii)
extraordinary non-cash revenue not in the ordinary course of business shall be
deducted from earnings in calculating EBITDA, unless the Board (acting in the
good faith exercise of its business judgment) determines such adjustment to be
inappropriate.
"Employee" shall mean any employee of the Company, or of any
corporation which is then a Parent Corporation or Subsidiary, whether such
employee is so employed at the time this Plan is adopted or becomes so employed
subsequent to the adoption of this Plan. The determination of who is an
eligible Employee shall be made by the Committee. Any decision made by the
Committee which does not constitute an abuse of discretion shall be final and
binding.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exercise Price" means the purchase price of an Option as set forth in
the Option Agreement.
4
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"IPO" shall mean the initial underwritten public offering of the
Company's equity securities pursuant to a registration statement under the
Securities Act.
"Joint Venture Agreement" means the Joint Venture Agreement, dated as
of the Closing Date, among the Company, Nextel Partners Operating Corp. and
NWIP, as amended and in effect, from time to time.
"Nextel" shall mean NEXTEL Communications, Inc., a Delaware
corporation.
"NWIP" shall mean Nextel WIP Corp., a Delaware corporation.
"Option" shall mean an option to purchase Shares granted under this
Plan.
"Option Agreement" shall mean any written agreement, contract, or
other instrument or document evidencing any Option as set forth in Section 4.1.
"Optionee" shall mean a Senior Manager or other Employee or individual
to whom an Option is granted under this Plan.
"Parent Corporation" shall mean any corporation or other entity of
which the Company is a direct or indirect Subsidiary.
"Person" shall mean an individual, corporation, limited liability
company, partnership, association, trust or other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"Plan" shall mean this 1999 Nonqualified Stock Option Plan.
"Recruiting Options" has the meaning specified in Section 3.3(b).
"Restricted Stock Purchase Agreements" shall mean the Restricted Stock
Purchase Agree ments, dated as of November 20, 1998, as amended, between each
of the Senior Managers and the Company.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Senior Manager" shall mean John Chapple, John Thompson, David Thaler,
David Aas, Perry Satterlee, Mark Fanning and any other Employee designated as a
Senior Manager by the Company.
"Service" shall mean, with respect to any Employee, the period (in
calendar days) elapsed between (i) such Employee's first day of employment as
an Employee and (ii) the day of such Employee's Termination of Employment.
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<PAGE>
"Shareholders' Agreement" shall mean the Shareholders' Agreement,
dated as of the Closing Date, among the Company, NWIP and the other
stockholders of the Company named therein, as amended and in effect, from time
to time.
"Shares" shall have the meaning set forth in Section 2.1 hereof.
"Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain then owns stock possessing 50% or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain. "Subsidiary" shall also mean any partnership,
or limited liability company, in which the Company and/or any Subsidiary owns
more than 50% of the capital or profit interests.
"Termination of Employment" shall mean, with respect to any Employee,
the date on which the employee-employer relationship between such Employee and
the Company, a Parent Corporation or a Subsidiary is terminated for any reason,
with or without cause, including, but not by way of limitation, a termination
by resignation, discharge, death or retirement, but excluding terminations
where there is a simultaneous re-employment by the Company, a Parent
Corporation or a Subsidiary. Except as otherwise provided herein or in any
Option Agreement, the Committee, in its absolute discretion, shall determine
the effect of all other matters and questions relating to Termination of
Employment, including, but not by way of limitation, the question of whether a
Termination of Employment resulted from a discharge for good cause, and all
questions of whether particular leaves of absence constitute Terminations of
Employment.
"Total Common Equity" of any Person means, as of any day of
determination, the product of (i) the aggregate number of fully diluted shares
of common stock of such Person on such day and (ii) the average Closing Price
of such common stock over the 20 consecutive Trading Days immediately preceding
such day. If no such Closing Price exists with respect to shares of any such
class, the value of such shares for purposes of clause (ii) of the preceding
sentence shall be determined by the board of directors of such Person in good
faith and evidenced by a resolution of such board of directors.
"Trading Days" with respect to a securities exchange or automated
quotation system means a day on which such exchange or system is open for a
full day of trading.
"Voting Stock" shall mean any Capital Stock which ordinarily has
voting power for the election of directors (or persons performing similar
functions), whether at all times or only so long as no senior class of
securities has such voting power by reason of any contingency.
"Years of Service" shall mean, with respect to any Employee as of any
date of deter mination, the total number of days of such Employee's Service
with the Company divided by 365.
6
<PAGE>
ARTICLE 2
SHARES SUBJECT TO PLAN
----------------------
2.1 Shares Subject to Plan. The shares of stock subject to Options
shall be shares of the Company's Class A Common Stock, par value $.001 per
share (the "Shares"). The aggregate number of such Shares which may be issued
upon exercise of Options under this Plan shall not exceed 2,022,222; provided,
that this number (i) shall be increased by the number of Shares issued pursuant
to any of the Restricted Stock Purchase Agreements that are purchased by the
Company upon termination of any Senior Manager and (ii) may be increased, at
the discretion of the Board, by the number of Shares (if any) that are
purchased by the Company pursuant to Section 4.05 of the Shareholders'
Agreement.
2.2 Unexercised Options. If any Option expires, is forfeited, or is
cancelled without having been fully exercised, the shares subject to such
Option but as to which such Option was not exercised prior to its expiration,
forfeiture or cancellation may again become shares with respect to which
Options may be granted hereunder.
2.3 Changes in Company's Shares. In the event that the Committee
determines that any dividend or other distribution (whether in the form of
cash, Shares, other securities or other property), recapitalization, stock
split, reverse stock split, reorganization, reclassification, merger,
consolidation, split-up, spin-off, combination, repurchase, or exchange of
Shares or other securities of the Company, issuance of warrants or other rights
to purchase Shares or other securities of the Company, or other similar
corporate transaction or event affects the Shares such that an adjustment is
determined by the Committee to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under this Plan, then the Committee shall, in such manner as it may deem
equitable, adjust any or all of (i) the number of Shares of the Company (or
number and kind of other securities or property) with respect to which Options
may thereafter be granted, (ii) the number of Shares or other securities of the
Company (or number and kind of other securities or property) subject to
outstanding Options, and (iii) the grant or exercise price with respect to any
Options, or, if deemed appropriate, make provision for a cash payment to the
holder of an outstanding Option.
ARTICLE 3
GRANTING OF OPTIONS
-------------------
3.1 Eligibility. Any Employee of the Company or of any corporation
which is then a Parent Corporation or a Subsidiary shall be eligible to be
granted Options in the sole discretion of the Committee. Notwithstanding any
provision of this Plan to the contrary, officers or Directors of the Company,
regardless of whether they are Employees, may be granted Options in the sole
discretion of the Committee, in the same manner as if they were Employees.
3.2 Granting of Options.
7
<PAGE>
(a) The Committee shall from time to time, in its absolute discretion:
(i) Select from among Employees (including Employees to whom Options have
previously been granted under the Plan) such of them as in its opinion should
be granted Options; and
(ii) Determine the number of Shares to be subject to such Options granted to
such Employees; and
(iii) Determine the terms and conditions of such Options, consistent with the
Plan.
(b) Upon the selection of an Employee to be granted an Option, the Committee
shall instruct the Secretary of the Company to issue such Option and may impose
such conditions to the grant of such Option as it deems appropriate. Without
limiting the generality of the preceding sentence, the Committee may, in its
discretion and on such terms as it deems appropriate, require as a condition to
the grant of an Option to an Employee that the Employee surrender for
cancellation some or all of the unexercised Options which have been previously
granted to him. An Option, the grant of which is conditioned upon such
surrender, may have an option price lower (or higher) than the option price of
the surrendered Option, may cover the same (or a lesser or greater) number of
shares as the surrendered Option, may contain such other terms as the Committee
deems appropriate and shall be exercisable in accordance with its terms,
without regard to the number of shares, price, option period or any other term
or condition of the surrendered Option.
3.3 Limitations on Granting of Options.
(a) The grant of Options to Senior Managers shall be conditioned on the
Company's achievement of performance criteria based on the buildout, revenue
and EBITDA targets set forth on Schedule I to the Restricted Stock Purchase
Agreements, and such other criteria established by the Board and the chief
executive officer of the Company. In making grants to Employees other than
Senior Managers, the Board may make such grants subject to the same performance
criteria as Senior Managers, or the Board may establish additional or different
criteria.
(b) It is intended that approximately twenty-five percent (25%) of the Options
subject to this Plan will be granted in connection with the recruitment of new
Employees other than the Senior Managers ("Recruiting Options").
(c) No more than thirty percent (30%) of the number of authorized Options shall
be granted in any calendar year.
(d) No Options may be granted after January 1, 2003.
(e) The first Options (other than Recruiting Options) to be granted under this
Plan will be awarded effective as of December 31, 1999, based on performance
goals established for eligible Employees for 1999.
8
<PAGE>
(f) It is intended that the Senior Managers will receive in the aggregate
twenty percent (20%) of the total number of Options granted in each year, but
in the sole discretion of the Committee such aggregate percentage may be
reduced, but not below ten percent (10%) of the total number of Options granted
in each year, unless such reduction below ten percent (10%) is with the consent
of the individual affected Senior Manager.
ARTICLE 4
TERMS OF OPTIONS
4.1 Option Agreements. Each Option shall be evidenced by an Option
Agreement, which shall contain such terms and conditions as the Committee shall
determine, consistent with the Plan. Unless the Committee determines otherwise,
the exercise price of each Option shall be equal to the fair market value of a
share of Class A Common Stock as of the date of grant of such Option as
determined by the Committee.
4.2 Ordinary Vesting.
(a) Except as otherwise provided herein or in any Option Agreement, the maximum
portion of an Option (expressed as a percentage of such Option) that shall be
exercisable (vested) in whole or in part shall be a function of the Optionee's
years of service from date of grant as shown on the following table:
Year of Service Exercisable Percentage
--------------
Less than 1 0%
1 33-1/3%
2 66-2/3%
3 (or more) 100%
(b) Options shall become exercisable at such times and in such installments
(which may be cumulative) as shall be provided in the terms of each individual
Option Agreement; provided, however, that by a resolution adopted after an
Option is granted the Committee may, on such terms and conditions as it may
determine to be appropriate, accelerate the time at which such Option or any
portion thereof may be exercised.
(c) Subject to the terms of any Option Agreement, no portion of an Option which
is unexercisable under Section 4.4 at Termination of Employment shall
thereafter become exercisable.
4.3 Accelerated Vesting. Subject to the terms of any Option Agreement,
upon a Change in Control of the Company, the Committee shall have the right,
exercisable in its discretion (taking into account, among other factors, the
effect on the availability of pooling treatment in connection with the Change
in Control), to accelerate the vesting of some or all of the unvested Options
then held by Employees other than Senior Managers.
9
<PAGE>
4.4 Expiration of Options. The following terms shall govern the
exercise and/or expiration of any Options:
(a) Except as otherwise provided in an Option Agreement, no Option may be
exercised to any extent by anyone after the first to occur of the following
events:
(i) The expiration of ten years and one day from the date the Option was
granted; or
(ii) Except in the case of any Optionee who is terminated by reason of
disability (within the meaning of Section 22(e)(3) of the Code), death or for
cause, the expiration of three months, or, in the case of an officer of the
Company, any Parent Corporation or any Subsidiary who is required to file Forms
3, 4 and 5 pursuant to Section 16 of the Exchange Act, seven months, from the
date of the Optionee's Termination of Employment; or
(iii) In the case of an Optionee whose termination is due to disability (within
the meaning of section 22(e)(3) of the Code), the expiration of one year from
the date of the Optionee's Termination of Employment;
(iv) In the case of an Optionee whose termination is due to death, the
expiration of one year from the date of the Optionee's death; or
(v) In the case of an Optionee whose termination is for cause, the date of
Optionee's termination of employment.
(b) Subject to the provisions of Section 4.4(a), the terms of each individual
Option shall provide when such Option expires and becomes unexercisable. The
Committee may, either by the terms of any Option or by a resolution adopted
after an Option is granted, extend any of the periods set forth in Sections
4.4(a)(ii), (iii) or (iv) on such terms and conditions as it may determine to
be appropriate, provided however that in no event shall such extension be for a
term longer than the original term of such Option.
(c) If NWIP purchases all or is required to purchase all of the outstanding
Company Capital Stock (as defined in the Shareholders' Agreement) in accordance
with any of Sections 4.01, 4.02, 7.03 or 7.04 of the Shareholders' Agreement,
or any of the corresponding provisions of the Restated Certificate of
Incorporation of the Company, any Option not exercised, exchanged or converted,
as the case may be, at or prior to the closing of such purchase, as provided in
the Shareholders' Agreement or the Restated Certificate of Incorporation, as
applicable, shall be canceled and become unexercisable upon such closing, and
the Company's books and records shall reflect such cancellation.
4.5 No Right to Continued Employment. Nothing in this Plan or in any
Option Agreement hereunder shall confer upon any Optionee any right to continue
in the employ of the Company, any Parent Corporation or any Subsidiary or shall
interfere with or restrict in any way the rights of the
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<PAGE>
Company, its Parent Corporations and its Subsidiaries, which are hereby
expressly reserved, to terminate or discharge any Optionee at any time for any
reason whatsoever, with or without cause.
ARTICLE 5
EXERCISE OF OPTIONS
-------------------
5.1 Person Eligible to Exercise. During the lifetime of the Optionee,
only he may exercise an Option granted to him, or any portion thereof. After
the death of the Optionee, any exercisable portion of an Option may, prior to
the time when such portion becomes unexercisable under Section 4.4, be
exercised by his personal representative or by any person empowered to do so
under the deceased Optionee's will or under the then applicable laws of descent
and distribution.
5.2 Partial Exercise. At any time and from time to time prior to the
time when an exercisable Option or exercisable portion thereof becomes
unexercisable under Section 4.4, such Option or portion thereof may be
exercised in whole or in part, provided, however, that the Company shall not be
required to issue fractional shares and the Committee may, by the terms of the
Option, require any partial exercise to be with respect to a specified minimum
number of shares.
5.3 Manner of Exercise. Except as otherwise provided in an Option
Agreement, an exercisable Option, or any exercisable portion thereof, may be
exercised solely by delivery to the Secretary of the Company of all of the
following prior to the time when such Option or such portion becomes
unexercisable under Section 4.4:
(a) Notice in writing signed by the Optionee or other person then entitled to
exercise such Option or portion, stating that such Option or portion is
exercised, such notice complying with all applicable rules established by the
Committee; and
(b) Payment as set forth in the following provisions and paragraph (c), below:
(i) Full payment (in cash or by check) for the Shares with respect to which
such Option or portion is thereby exercised; or
(ii) Subject to the Committee's consent, full payment by delivery to the
Company of Shares owned by Optionee duly endorsed for transfer to the Company
by Optionee or other person then entitled to exercise such Option or portion,
with an aggregate fair market value equal to the Option price of the Shares
with respect to which such Option or portion is thereby exercised; or
(iii) Subject to the Committee's consent, any combination of the considerations
provided for in the foregoing subsections (i) or (ii); and
11
<PAGE>
(c) On or prior to the date the same is required to be withheld:
(i) Full payment (in cash or by check) of any amount that must be withheld by
the Company for federal, state and/or local tax purposes; or
(ii) Subject to the Committee's consent, full payment by delivery to the
Company of Shares owned by Optionee duly endorsed for transfer to the Company
by Optionee or other person then entitled to exercise such Option or portion
with an aggregate fair market value equal to the amount that must be withheld
by the Company for federal, state and/or local tax purposes; or
(iii) Subject to the Committee's consent, full payment by retention by the
Company of Shares to be issued pursuant to such Option exercise with an
aggregate fair market value equal to the amount that must be withheld by the
Company for federal, state and/or local tax purposes; or
(iv) Subject to the Committee's consent, any combination of payments provided
for in the foregoing subsections (i), (ii) or (iii);
provided that if the Optionee is an officer of the Company required to file
Forms 3, 4 and 5 pursuant to Section 16 of the Exchange Act then if and to the
extent required by Rule 16b-3 thereunder, an election to make full payment by
the means described in Sections 5.3(c)(ii) or 5.3(c)(iii) shall be made more
than six months after grant of the Option and either made and the Option
exercised only during the period beginning on the third business day following
the date of release of quarterly or annual summary statements of sales and
earnings of the Company and ending on the twelfth business day following such
date, or irrevocably made more than six months prior to the date the amount of
tax to be withheld is determined; and
(d) Such representations and documents as the Committee, in its absolute
discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act and any other federal or state
securities laws or regulations. The Committee may, in its absolute discretion,
also take whatever additional actions it deems appropriate to effect such
compliance including, without limitation, placing legends on share certificates
and issuing stop-transfer orders to transfer agents and registrars; and
(e) In the event that the Option or portion thereof shall be exercised pursuant
to Section 5.1 by any person or persons other than the Optionee, appropriate
proof of the right of such person or persons to exercise the Option or portion
thereof; and
(f) An executed counterpart signature page to the Shareholders' Agreement,
whereby the Optionee will (subject to Section 5.4) become a Shareholder for all
purposes of said Agreement with respect to any Shares issuable upon exercise of
the Option and will be bound by all of the terms and conditions thereof; and
12
<PAGE>
(g) An executed counterpart signature page to the Custodial Agreement, dated as
of January 29, 1999, among the Custodian named therein and the shareholders of
the Company that are parties thereto, and a stock power or any other instrument
required by said Agreement, whereby the Optionee will place any Shares issuable
upon exercise of the Option into custody thereunder and will be bound by all of
the terms and conditions thereof.
5.4 Conditions to Issuance of Stock Certificates. The Shares issuable
and deliverable upon the exercise of an Option, or any portion thereof, may be
either previously authorized but unissued shares or issued shares which have
then been reacquired by the Company. The Company shall not be required to issue
or deliver any certificate or certificates for shares of stock purchased upon
the exercise of any Option or portion thereof prior to the fulfillment of all
of the following conditions:
(a) The admission of such Shares to listing on all stock exchanges on which
such class of stock is then listed;
(b) The completion of any registration or other qualification of such shares
under any state or federal law under the rulings or regulations of the
Securities and Exchange Commission or any other governmental regulatory body,
which the Committee shall, in its absolute discretion, deem necessary or
advisable; and
(c) The obtaining of any approval or other clearance from any state or federal
governmental agency which the Committee shall, in its absolute discretion,
determine to be necessary or advisable; and
(d) The lapse of such reasonable period of time following the exercise of the
Option as the Committee may establish from time to time for reasons of
administrative convenience.
5.5 Rights of Shareholders. The holders of Options shall not be, nor
have any of the rights or privileges of, shareholders of the Company in respect
of any shares purchasable upon the exercise of any part of an Option unless and
until certificates representing such shares have been issued by the Company to
such holders.
ARTICLE 6
ADMINISTRATION
--------------
6.1 Duties and Powers of Committee. It shall be the duty of ARTICLE the
Committee to conduct the general administration of the Plan in accordance with
its provisions. The Committee shall have the power to interpret the Plan, the
Options and to adopt such rules for the administration, interpretation and
application of the Plan as are consistent therewith and to interpret, amend or
revoke any such rules. Any decision of the Committee on any issue of
interpretation, fact or law that does not constitute an abuse of discretion
will be final and binding upon all participants.
6.2 Majority Rule. The Committee shall act by a majority of its members
in office. The Committee shall act in accordance with the Bylaws of the
Company.
13
<PAGE>
6.3 Compensation; Professional Assistance; Good Faith Actions. Members
of the Committee shall serve without compensation. All expenses and liabilities
incurred by members of the Committee in connection with the administration of
the Plan shall be borne by the Company. The Committee may, with the approval of
the Board, employ attorneys, consultants, accountants, appraisers, brokers or
other persons. All actions taken and all interpretations and determinations
made by the Committee in good faith shall be final and binding upon all
Optionees, the Company and all other interested persons. No member of the
Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or the Options, and
all members of the Committee shall be fully protected by the Company in respect
to any such action, determination or interpretation.
ARTICLE 7
OTHER PROVISIONS
----------------
7.1 Options Not Transferable. The Committee, in its absolute
discretion, may impose such restrictions on the transferability of the Shares
purchasable upon the exercise of an Option as it deems appropriate, provided,
that any such restriction shall be set forth in the respective Option
Agreement. Except as set forth in any Option Agreement, no Option or interest
or right therein or part thereof shall be available to satisfy the debts,
contracts or engagements of the Optionee or his successors in interest or shall
be subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be
voluntary or involuntary or by operation of law, by judgment, levy, attachment,
garnishment or any other legal or equitable proceedings (including bankruptcy),
and any attempted disposition thereof shall be null and void and of no effect.
7.2 Amendment, Suspension or Termination of the Plan and Options.
(a) This Plan may be wholly or partially amended or otherwise modified,
suspended or terminated at any time or from time to time by the Board without
obtaining approval from the Company's shareholders except as such shareholder
approval may be required pursuant to Rule 16b-3 under Section 16 of the
Exchange Act or any other legal or regulatory requirement; provided, however,
that the Board shall not modify or amend this Plan if such proposed
modification or amendment may reasonably be expected to be materially adverse
to the Senior Managers as a group or to any individual participating Employee
without obtaining the prior written consent of not less than a majority of such
Senior Managers or such individual participating Employee, respectively.
Neither the amendment, suspension nor termination of the Plan shall, without
the consent of the holder of any Option, alter or impair any rights or
obligations under any Option theretofore granted. No Option may be granted
during any period of suspension nor after termination of the Plan, and in no
event may any Option be granted under this Plan after the expiration of ten
years from the date the Plan is adopted by the Board.
(b) Subject to the terms of this Plan and applicable law, the Committee may
waive any conditions or rights under, amend any terms of, or alter, suspend,
discontinue, cancel or terminate, any Option theretofore granted, prospectively
or retroactively; provided that any such waiver, amendment,
14
<PAGE>
alteration, suspension, discontinuance, cancellation or termination that would
adversely affect the rights of an Optionee or any holder or beneficiary of any
Option theretofore granted shall not to that extent be effective without the
consent of the affected Optionee, holder or beneficiary.
7.3 Effect of Plan Upon Other Option and Compensation Plans. The
adoption of this Plan shall not affect any other compensation or incentive
plans in effect for the Company, any Parent Corporation or any Subsidiary.
Nothing in this Plan shall be construed to limit the right of the Company, any
Parent Corporation or any Subsidiary (a) to establish any other forms of
incentives or compensation for employees of the Company, any Parent Corporation
or any Subsidiary or (b) to grant or assume Options otherwise than under this
Plan in connection with any proper corporate purpose, including, but not by way
of limitation, the grant or assumption of Options in connection with the
acquisition by purchase, lease, merger, consolidation or otherwise, of the
business, stock or assets of any corporation, firm or association.
7.4 Share Certificates. Certificates issued in respect of Shares shall,
unless the Committee otherwise determines, be registered in the name of the
Optionee and shall be deposited by such Optionee, together with a stock power
endorsed in blank, with the Company. When the Optionee ceases to be bound by
any transfer restrictions set forth herein or in the Shareholders' Agreement,
the Company shall deliver such certificates to the Optionee upon request. Such
stock certificate shall carry such appropriate legends, and such written
instructions shall be given to the Company's transfer agent, as may be deemed
necessary or advisable by counsel to the Company in order to comply with the
requirements of the Securities Act, any state securities laws or any other
applicable laws and (ii) the Shareholders' Agreement. Subject to the provisions
of the Shareholders' Agreement, all certificates for Shares or other securities
of the Company or any Subsidiary delivered under the Plan pursuant to any
Option or the exercise thereof shall be subject to such stop transfer orders
and other restrictions as the Committee may deem advisable under the Plan or
the rules, regulations and other requirements of the Securities and Exchange
Commission or any stock exchange upon which such Shares or other securities are
then listed and any applicable laws or rules or regulations, and the Committee
may cause a legend or legends to be put on any such certificates to make
appropriate reference to such restrictions.
7.5 Titles. Titles are provided herein for convenience only and are not
to serve as a basis for interpretation or construction of the Plan.
7.6 Governing Law. To the extent not preempted by Federal law, this
Plan shall be governed by the internal laws of the State of Delaware without
regard to its conflict-of-law rules.
7.7 Effective Date. This Plan shall be effective as of the date first
above written.
<PAGE>
NEXTEL PARTNERS, INC.
By: /s/ John D. Thompson
-------------------------
Its: Chief Financial Officer
------------------------
15
<PAGE>
EXHIBIT 21
----------
SUBSIDIARIES OF THE COMPANY
---------------------------
NAME STATE OF INCORPORATION
---- ----------------------
Nextel Partners Operating Corp. Delaware
Nextel Partners of Florida, Inc. Delaware
Nextel Partners of Kentucky, Inc. Delaware
Nextel Partners of Louisiana, Inc. Delaware
Nextel Partners of Midwest, Inc. Delaware
NCPR, Inc. Delaware
Nextel Partners of PA, Inc. Delaware
Nextel Partners of Southeast, Inc. Delaware
Nextel Partners of Texas, Inc. Delaware
Nextel Partners of Upstate New York, Inc. Delaware
Nextel Partners of Wisconsin, Inc. Delaware
Nextel WIP Lease Corp. Delaware
Nextel Partners Equipment Corp. Nevada
1
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
(and to all references to our Firm) included in or made a part of this
registration statement.
/s/ Arthur Andersen LLP
Seattle, Washington
May 13, 1999
<PAGE>
LETTER OF TRANSMITTAL
FOR
OFFER FOR ALL OUTSTANDING 14% SENIOR DISCOUNT NOTES DUE 2009
IN EXCHANGE FOR UP TO $800,000,000 PRINCIPAL AMOUNT AT MATURITY OF
14% SENIOR NOTES DUE 2009
OF
[GRAPHIC OMITTED]
PURSUANT TO THE PROSPECTUS
DATED , 1999
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1999, UNLESS EXTENDED OR TERMINATED (THE "EXPIRATION DATE").
- --------------------------------------------------------------------------------
The Exchange Agent for the Exchange Offer is:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
By Facsimile: By Registered or Certified Mail: By Hand or Overnight Delivery:
(212) 815-4699 The Bank of New York The Bank of New York
Attention: Tolutope Adeyoju Attention: Tolutope Adeyoju 101 Barclay Street
Confirm by Telephone: 101 Barclay Street, 7 East Attention: Reorganization
(212) 815-2824 New York, NY 10286 Corporate Trust Services Window
Ground Level
New York, NY 10286
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL (THE "LETTER OF TRANSMITTAL") TO AN
ADDRESS, OR TRANSMISSION VIA FACSIMILE TO A NUMBER, OTHER THAN AS SET FORTH
ABOVE, WILL NOT CONSTITUTE A VALID TENDER OF 14.00% SENIOR DISCOUNT NOTES DUE
2009 (THE "OLD NOTES").
The Instructions contained herein should be read carefully before this
Letter of Transmittal is completed and signed.
<PAGE>
This Letter of Transmittal is to be used by registered holders of Old
Notes ("Holders") if: (i) certificates representing Old Notes are to be
physically delivered to the Exchange Agent by such Holders; (ii) tender of Old
Notes is to be made by book-entry transfer to the Exchange Agent's account at
The Depository Trust Company ("DTC" or the "Book-Entry Transfer Facility")
pursuant to the procedures set forth in the Prospectus, dated , 1999 (as the
same may be amended from time to time, the "Prospectus") under the caption "The
Exchange Offer--Procedures for Tendering" by any financial institution that is
a participant in DTC and whose name appears on a security position listing as
the owner of Old Notes or (iii) delivery of Old Notes is to be made according
to the guaranteed delivery procedures set forth in the Prospectus under the
caption "The Exchange Offer--Guaranteed Delivery Procedures," and, in each
case, instructions are not being transmitted through the DTC Automated Tender
Program ("ATOP"). DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN
ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
In order to properly complete this Letter of Transmittal, a Holder must
(i) complete the box entitled "Method of Delivery" by checking one of the three
boxes therein and supplying the appropriate information, (ii) complete the box
entitled "Description of Old Notes," (iii) if such Holder is a Participating
Broker Dealer (as defined below) and wishes to receive additional copies of the
Prospectus for delivery in connection with resales of New Notes, check the
applicable box, (iv) sign this Letter of Transmittal by completing the box
entitled "Please Sign Here", (v) if appropriate, check and complete the boxes
relating to the "Special Issuance Instructions" and "Special Delivery
Instructions," and (vi) complete the Substitute Form W-9. Each Holder should
carefully read the detailed Instructions below prior to completing this Letter
of Transmittal. See "The Exchange Offer--Procedures For Tendering" in the
Prospectus.
Holders of Old Notes that are tendering by book-entry transfer to the
Exchange Agent's account at DTC can execute the tender through ATOP for which
the transaction will be eligible. DTC participants that are accepting the
Exchange Offer should transmit their acceptance to DTC, which will edit and
verify the acceptance and execute a book-entry delivery to the Exchange Agent's
account at DTC. DTC will then send an Agent's Message to the Exchange Agent for
its acceptance. Delivery of the Agent's Message by DTC will satisfy the terms
of the Exchange Offer as to execution and delivery of a Letter of Transmittal
by the participant identified in the Agent's Message. DTC participants may also
accept the Exchange Offer by submitting a Notice of Guaranteed Delivery through
ATOP.
If Holders desire to tender Old Notes pursuant to the Exchange Offer and
(i) certificates representing such Old Notes are not lost but are not
immediately available, (ii) time will not permit this Letter of Transmittal,
certificates representing such Holder's Old Notes and all other required
documents to reach the Exchange Agent prior to the Expiration Date or (iii) the
procedures for book-entry transfer cannot be completed prior to the Expiration
Date, such Holders may effect a tender of such Old Notes in accordance with the
guaranteed delivery procedures set forth in the Prospectus under the caption
"The Exchange Offer--Guaranteed Delivery Procedures." See Instruction 2 below.
A Holder having Old Notes registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact such broker,
dealer, commercial bank, trust company or other nominee if they desire to
accept the Exchange Offer with respect to the Old Notes so registered.
THE EXCHANGE OFFER IS NOT BEING MADE TO (NOR WILL TENDERS OF OLD NOTES BE
ACCEPTED FROM OR ON BEHALF OF) HOLDERS IN ANY JURISDICTION IN WHICH THE MAKING
OR ACCEPTANCE OF THE EXCHANGE OFFER WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF
SUCH JURISDICTION.
All capitalized terms used herein and not defined herein shall have the
meaning ascribed to them in the Prospectus.
Your bank or broker can assist you in completing this form. The
instructions included with this Letter of Transmittal must be followed.
Questions and requests for assistance or for additional copies of the
Prospectus, this Letter of Transmittal and the Notice of Guaranteed Delivery
may be directed to the Exchange Agent, whose address and telephone number
appear on the front cover of this Letter of Transmittal. See Instruction 11
below.
<PAGE>
- --------------------------------------------------------------------------------
METHOD OF DELIVERY
- --------------------------------------------------------------------------------
[ ] CHECK HERE IF CERTIFICATES FOR TENDERED OLD NOTES ARE BEING
DELIVERED HEREWITH.
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY
BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE
EXCHANGE AGENT WITH A BOOK-ENTRY TRANSFER FACILITY AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution: _______________________________
Account Number:__________ Transaction Code Number:____________
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED
PURSUANT
TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO
THE
EXCHANGE AGENT PURSUANT TO INSTRUCTION 2 BELOW AND COMPLETE
THE FOLLOWING:
Name of Registered
Holder(s):____________________________________________________________
Window Ticket No. (if any):___________________________________________
Date of Execution of Notice of Guaranteed Delivery:___________________
Name of Eligible Institution that Guaranteed
Delivery:_____________________________________________________________
If Delivered by Book-Entry Transfer (yes or no):______________________
Account Number:___________ Transaction Code Number:________________
List below the Old Notes to which this Letter of Transmittal relates. If
the space provided below is inadequate, list the certificate numbers and
principal amounts on a separately signed schedule and affix the schedule to
this Letter of Transmittal.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
DESCRIPTION OF OLD NOTES
- -----------------------------------------------------------------------------------------------------
AGGREGATE
NAME(S) AND ADDRESS(ES) OF HOLDER(S) CERTIFICATE PRINCIPAL AMOUNT PRINCIPAL AMOUNT
(PLEASE FILL IN, IF BLANK) NUMBERS* REPRESENTED** TENDERED
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
TOTAL PRINCIPAL
AMOUNT OF OLD
NOTES
- -----------------------------------------------------------------------------------------------------
* Need not be completed by Holders tendering by book-entry transfer (see below).
** Unless otherwise indicated in the column labeled "Principal Amount Tendered" and subject to
the terms and conditions of the Prospectus, a Holder will be deemed to have tendered the entire
aggregate principal amount represented by the Old Notes indicated in the column labeled "Aggregate
Principal Amount Represented." See Instruction 3.
- -----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
FOR PARTICIPATING BROKER-DEALERS ONLY:
[ ] CHECK HERE AND PROVIDE THE INFORMATION REQUESTED BELOW IF YOU ARE A
PARTICIPATING BROKER-DEALER (AS DEFINED BELOW) AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND, DURING THE 30-DAY PERIOD FOLLOWING THE
CONSUMMATION OF THE EXCHANGE OFFER, 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO, AS WELL AS ANY NOTICES FROM THE COMPANY TO SUSPEND AND RESUME USE OF
THE PROSPECTUS. BY TENDERING ITS OLD NOTES AND EXECUTING THIS LETTER OF
TRANSMITTAL, EACH PARTICIPATING BROKER-DEALER AGREES TO USE ITS REASONABLE BEST
EFFORTS TO NOTIFY THE COMPANY OR THE EXCHANGE AGENT WHEN IT HAS SOLD ALL OF ITS
NEW NOTES. (IF NO PARTICIPATING BROKER-DEALERS CHECK THIS BOX, OR IF ALL
PARTICIPATING BROKER-DEALERS WHO HAVE CHECKED THIS BOX SUBSEQUENTLY NOTIFY THE
COMPANY OR THE EXCHANGE AGENT THAT ALL THEIR NEW NOTES HAVE BEEN SOLD, THE
COMPANY WILL NOT BE REQUIRED TO MAINTAIN THE EFFECTIVENESS OF THE EXCHANGE
OFFER REGISTRATION STATEMENT OR TO UPDATE THE PROSPECTUS AND WILL NOT PROVIDE
ANY NOTICES TO ANY HOLDERS TO SUSPEND OR RESUME USE OF THE PROSPECTUS.)
Provide the name of the individual who should receive, on behalf of the Holder,
additional copies of the Prospectus, and amendments and supplements thereto,
and any notices to suspend and resume use of the Prospectus:
Name:__________________________________________________________________________
Address:_______________________________________________________________________
_______________________________________________________________________________
Telephone No.:______________________
Facsimile No.:______________________
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
<PAGE>
LADIES AND GENTLEMEN:
By execution hereof, the undersigned acknowledges receipt of the
Prospectus, dated , 1999 (as the same may be amended from time to
time, the "Prospectus" and, together with the Letter of Transmittal, the
"Exchange Offer"), of Nextel Partners, Inc., a Delaware corporation (the
"Company"), and this Letter of Transmittal and instructions hereto, which
together constitute Company's offer to exchange $1,000 principal amount at
maturity of the 14% Senior Discount Notes due 2000 (the "New Notes") of the
Company, upon the terms and subject to the conditions set forth in the Exchange
Offer, for each $1,000 principal amount at stated maturity of their outstanding
14% Senior Discount Notes due 2009 (the "Old Notes").
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the principal amount of Old Notes
indicated above. Subject to, and effective upon, the acceptance for exchange of
the Old Notes tendered herewith, the undersigned hereby exchanges, assigns and
transfers to, or upon the order of, the Company all right, title and interest
in and to such Old Notes. The undersigned hereby irrevocably constitutes and
appoints the Exchange Agent as the true and lawful agent and attorney-in-fact
of the undersigned (with full knowledge that the Exchange Agent also acts as
the agent of the Company) with respect to such Old Notes with full power of
substitution (such power-of-attorney being deemed to be an irrevocable power
coupled with an interest) to (i) present such Old Notes and all evidences of
transfer and authenticity to, or transfer ownership of, such Old Notes on the
account books maintained by the Book-Entry Transfer Facility to, or upon the
order of, the Company, (ii) present such Old Notes for transfer of ownership on
the books of the Company or the trustee under the Indenture (the "Trustee"),
and (iii) receive all benefits and otherwise exercise all rights of beneficial
ownership of such Old Notes, all in accordance with the terms of and conditions
of the Exchange Offer as described in the Prospectus.
The undersigned represents and warrants that it has full power and
authority to tender, exchange, assign and transfer the Old Notes tendered
hereby and to acquire New Notes issuable upon the exchange of such tendered Old
Notes, and that, when the same are accepted for exchange, the Company will
acquire good and unencumbered title to the tendered Old Notes, free and clear
of all liens, restrictions, charges and encumbrances and not subject to any
adverse claim or right. The undersigned also warrants that it will, upon
request, execute and deliver any additional documents deemed by the Exchange
Agent or the Company to be necessary or desirable to complete the exchange,
assignment and transfer of the Old Notes tendered hereby or transfer ownership
of such Old Notes on the account books maintained by the book-entry transfer
facility.
The Exchange Offer is subject to certain conditions as set forth in the
Prospectus under the caption "The Exchange Offer -- Conditions." The
undersigned recognizes that as a result of these conditions (which may be
waived by the Company, in whole or in part, in the reasonable discretion of the
Company), as more particularly set forth in the Prospectus, the Company may not
be required to exchange any of the Old Notes tendered hereby and, in such
event, the Old Notes not exchanged will be returned to the undersigned at the
address shown above.
THE EXCHANGE OFFER IS NOT BEING MADE TO ANY BROKER-DEALER WHO PURCHASED
OLD NOTES DIRECTLY FROM THE COMPANY FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT OR TO ANY PERSON THAT IS AN "AFFILIATE" OF THE COMPANY WITHIN
THE MEANING OF RULE 405 UNDER THE SECURITIES ACT. THE UNDERSIGNED UNDERSTANDS
AND AGREES THAT THE COMPANY RESERVE THE RIGHT NOT TO ACCEPT TENDERED OLD NOTES
FROM ANY TENDERING HOLDER IF THE COMPANY DETERMINE, IN THEIR REASONABLE
DISCRETION, THAT SUCH ACCEPTANCE COULD RESULT IN A VIOLATION OF APPLICABLE
SECURITIES LAWS.
The undersigned, if the undersigned is a beneficial holder, represents,
or, if the undersigned is a broker, dealer, commercial bank, trust company or
other nominee, represents that it has received representations from the
beneficial owners of the Old Notes (the "Beneficial Owner") stating that (i)
the New Notes to be acquired in connection with the Exchange Offer by the
Holder and each Beneficial Owner of the Old Notes are being acquired by the
Holder and each such Beneficial Owner in the ordinary course of business of the
Holder and each such Beneficial Owner, (ii) the Holder and each such Beneficial
Owner are not engaged in, do not intend to engage in, and have no arrangement
or understanding with any person to participate in, a distribution of the
<PAGE>
New Notes, (iii) the Holder and each Beneficial Owner acknowledge and agree
that any person participating in the Exchange Offer for the purpose of
distributing the New Notes must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with a secondary
resale transaction of the New Notes acquired by such person and cannot rely on
the position of the staff of the Commission set forth in the no-action letters
that are discussed in the Prospectus under the caption "The Exchange Offer --
Resale of the New Notes" and may only sell the New Notes acquired by such
person pursuant to a registration statement containing the selling security
holder information required by Item 507 of Regulation S-K under the Securities
Act, (iv) if the Holder is a broker-dealer that acquired Old Notes as a result
of market-making or other trading activities, it will deliver a prospectus in
connection with any resale of New Notes acquired in the Exchange Offer (but by
so acknowledging and by delivering a prospectus, the undersigned will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act) and (v) neither the Holder nor any such Beneficial Owner is an
"affiliate," as defined under Rule 405 of the Securities Act, of the Company or
is a broker-dealer who purchased Old Notes directly from the Company for resale
pursuant to Rule 144A under the Securities Act.
In addition, if the undersigned is not a broker-dealer, the undersigned
represents that it is not engaged in, and does not intend to engage in, a
distribution of New Notes. If the undersigned is a broker-dealer that will
receive New Notes for its own account in exchange for Old Notes that were
acquired as a result of market-making activities or other trading activities,
it acknowledges that it will deliver a prospectus in connection with any resale
of such New Notes; however, by so acknowledging and by delivering a prospectus,
the undersigned will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act.
EACH BROKER-DEALER WHO ACQUIRED OLD NOTES FOR ITS OWN ACCOUNT AS A RESULT
OF MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES (A "PARTICIPATING
BROKER-DEALER"), BY TENDERING SUCH OLD NOTES AND EXECUTING THIS LETTER OF
TRANSMITTAL, AGREES THAT, UPON RECEIPT OF NOTICE FROM THE COMPANY OF THE
OCCURRENCE OF ANY EVENT OR THE DISCOVERY OF ANY FACT WHICH MAKES ANY STATEMENT
CONTAINED OR INCORPORATED BY REFERENCE IN THE PROSPECTUS UNTRUE IN ANY MATERIAL
RESPECT OR WHICH CAUSES THE PROSPECTUS TO OMIT TO A STATE A MATERIAL FACT
NECESSARY IN ORDER TO MAKE THE STATEMENTS CONTAINED OR INCORPORATED BY
REFERENCE THEREIN, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE,
NOT MISLEADING OR OF THE OCCURRENCE OR CERTAIN OTHER EVENTS SPECIFIED IN THE
REGISTRATION RIGHTS AGREEMENT, SUCH PARTICIPATING BROKER-DEALER WILL SUSPEND
THE SALE OF NEW NOTES PURSUANT TO THE PROSPECTUS UNTIL THE COMPANY HAS AMENDED
OR SUPPLEMENTED THE PROSPECTUS TO CORRECT SUCH MISSTATEMENT OR OMISSION AND HAS
FURNISHED COPIES OF THE AMENDED OR SUPPLEMENTED PROSPECTUS TO THE PARTICIPATING
BROKER-DEALER OR THE COMPANY HAS GIVEN NOTICE THAT THE SALE OF THE NEW NOTES
MAY BE RESUMED, AS THE CASE MAY BE.
EACH PARTICIPATING BROKER-DEALER SHOULD CHECK THE BOX HEREIN UNDER THE
CAPTION "FOR PARTICIPATING BROKER-DEALERS ONLY" IN ORDER TO RECEIVE ADDITIONAL
COPIES OF THE PROSPECTUS, AND ANY AMENDMENTS AND SUPPLEMENTS THERETO, FOR USE
IN CONNECTION WITH RESALES OF THE NEW NOTES, AS WELL AS ANY NOTICES FROM THE
COMPANY TO SUSPEND AND RESUME USE OF THE PROSPECTUS. BY TENDERING ITS OLD NOTES
AND EXECUTING THIS LETTER OF TRANSMITTAL, EACH PARTICIPATING BROKER-DEALER
AGREES TO USE ITS REASONABLE BEST EFFORTS TO NOTIFY THE COMPANY OR THE EXCHANGE
AGENT WHEN IT HAS SOLD ALL OF ITS NEW NOTES. IF NO PARTICIPATING BROKER-DEALERS
CHECK SUCH BOX, OR IF ALL PARTICIPATING BROKER-DEALERS WHO HAVE CHECKED SUCH
BOX SUBSEQUENTLY NOTIFY THE COMPANY OR THE EXCHANGE AGENT THAT ALL THEIR NEW
NOTES HAVE BEEN SOLD, THE COMPANY WILL NOT BE REQUIRED TO MAINTAIN THE
EFFECTIVENESS OF THE EXCHANGE OFFER REGISTRATION STATEMENT OR TO UPDATE THE
PROSPECTUS AND WILL NOT PROVIDE ANY HOLDERS WITH ANY NOTICES TO SUSPEND OR
RESUME USE OF THE PROSPECTUS.
<PAGE>
The undersigned understands that tenders of the Old Notes pursuant to any
one of the procedures described under "The Exchange Offer -- Procedures for
Tendering" in the Prospectus and in the instructions hereto will constitute a
binding agreement between the undersigned and the Company in accordance with
the terms and subject to the conditions of the Exchange Offer. All authority
herein conferred or agreed to be conferred by this Letter of Transmittal and
every obligation of the undersigned hereunder shall be binding upon the heirs,
legal representatives, successors and assigns, executors, administrators and
trustees in bankruptcy of the undersigned and shall survive the death or
incapacity of the undersigned. Tendered Old Notes may be withdrawn at any time
prior to the Expiration Date in accordance with the terms of the Exchange
Offer.
The undersigned also understands and acknowledges that the Company
reserves the right in its sole discretion to purchase or make offers for any
Old Notes that remain outstanding subsequent to the Expiration Date in the open
market, in privately negotiated transactions, through subsequent exchange
offers or otherwise. The terms of any such purchases or offers could differ
from the terms of the Exchange Offer.
The undersigned understands that the delivery and surrender of the Old
Notes is not effective, and the risk of loss of the Old Notes does not pass to
the Exchange Agent, until receipt by the Exchange Agent of this Letter of
Transmittal, or a manually signed facsimile hereof, properly completed and duly
executed, with any required signature guarantees, together with all
accompanying evidences of authority and any other required documents in form
satisfactory to the Company. All questions as to form of all documents and the
validity (including time of receipt) and acceptance of tenders and withdrawals
of Old Notes will be determined by the Company, in their sole discretion, which
determination shall be final and binding.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions," the undersigned hereby requests that any Old Notes representing
principal amounts not tendered or not accepted for exchange be issued in the
name(s) of the undersigned and that New Notes be issued in the name(s) of the
undersigned (or, in the case of Old Notes delivered by book-entry transfer, by
credit to the account at the Book-Entry Transfer Facility). Similarly, unless
otherwise indicated herein in the box entitled "Special Delivery Instructions,"
the undersigned hereby requests that any Old Notes representing principal
amounts not tendered or not accepted for exchange and certificates for New
Notes be delivered to the undersigned at the address(es) shown above. In the
event that the "Special Issuance Instructions" box or the "Special Delivery
Instructions" box is, or both are, completed, the undersigned hereby requests
that any Old Notes representing principal amounts not tendered or not accepted
for exchange be issued in the name(s) of, certificates for such Old Notes be
delivered to, and certificates for New Notes be issued in the name(s) of, and
be delivered to, the person(s) at the address(es) so indicated, as applicable.
The undersigned recognizes that the Company has no obligation pursuant to the
"Special Issuance Instructions" box or "Special Delivery Instructions" box to
transfer any Old Notes from the name of the registered Holder(s) thereof if the
Company does not accept for exchange any of the principal amount of such Old
Notes so tendered.
<PAGE>
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL HOLDERS OF OLD NOTES
REGARDLESS OF WHETHER OLD NOTES ARE BEING PHYSICALLY DELIVERED HEREWITH)
This Letter of Transmittal must be signed by the Holder(s) of Old Notes
exactly as their name(s) appear(s) on certificate(s) for Old Notes or, if
delivered by a participant in the Book-Entry Transfer Facility, exactly as
such participant's name appears on a security position listing as the owner of
Old Notes, or by person(s) authorized to become Holder(s) by endorsements and
documents transmitted with this Letter of Transmittal. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or other
person acting in a fiduciary or representative capacity, such person must set
forth his or her full title below under "Capacity" and submit evidence
satisfactory to the Company of such person's authority to so act. See
Instruction 4 below.
If the signature appearing below is not of the record holder(s) of the Old
Notes, then the record holder(s) must sign a valid bond power.
X____________________________________________________________________________
X____________________________________________________________________________
SIGNATURE(S) OF REGISTERED HOLDER(S) OR AUTHORIZED SIGNATORY
Date:____________________________________________________________________, 1999
Name(s):_______________________________________________________________________
(PLEASE PRINT)
Capacity:______________________________________________________________________
Address:_______________________________________________________________________
_______________________________________________________________________________
(INCLUDING ZIP CODE)
Area Code and Telephone No.:___________________________________________________
PLEASE COMPLETE SUBSTITUTE FORM W-9 HEREIN
[ ] CHECK HERE IF YOU ARE A BROKER DEALER WHO ACQUIRED THE OLD NOTES FOR ITS
OWN ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER TRADING ACTIVITIES AND
WISH TO RECEIVE ADDITIONAL COPIES OF THE PROSPECTUS AND COPIES OF ANY
AMENDMENTS OR SUPPLEMENTS THERETO.
Name:_____________________________________________________________________
Address:__________________________________________________________________
MEDALLION SIGNATURE GUARANTEE (SEE INSTRUCTION 4 BELOW)
Certain Signatures Must Be Guaranteed by an Eligible Institution
_________________________________________________________________________
(NAME OF ELIGIBLE INSTITUTION GUARANTEEING SIGNATURES)
_________________________________________________________________________
(ADDRESS (INCLUDING ZIP CODE) AND TELEPHONE NUMBER (INCLUDING AREA CODE) OF
FIRM)
_________________________________________________________________________
(AUTHORIZED SIGNATURE)
_________________________________________________________________________
(PRINTED NAME)
_________________________________________________________________________
(TITLE)
Dated:_________________________________________________________________, 1999
<PAGE>
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 3, 4, 5 AND 7)
To be completed ONLY if certificates for Old Notes in a principal amount not
tendered or not accepted for exchange are to be issued in the name of, or
certificates for New Notes are to be issued to the order of, someone other than
the person or persons whose signature(s) appear(s) within this Letter of
Transmittal.
Issue: Old Notes [ ]
New Notes [ ]
(CHECK AS APPLICABLE)
Name:_________________________________________________________________________
(PLEASE PRINT)
Address:______________________________________________________________________
______________________________________________________________________________
(ZIP CODE)
______________________________________________________________________________
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9 HEREIN)
Credit Old Notes not exchanged and delivered by book entry transfer to the Book
Entry Transfer Facility account set below:
______________________________________________________________________________
(BOOK ENTRY TRANSFER FACILITY ACCOUNT NUMBER)
Credit New Notes to the Book Entry Transfer Facility account set below:
______________________________________________________________________________
(BOOK ENTRY TRANSFER FACILITY ACCOUNT NUMBER)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 4 AND 5)
To be completed ONLY if certificates for Old Notes in a principal amount not
accepted for exchange or certificates for New Notes are to be sent to someone
other than the person or persons whose signature(s) appear(s) within this
Letter of Transmittal or to an address different from that shown in the box
entitled "Description of Old Notes" within the Letter of Transmittal.
Deliver: Old Notes [ ]
New Notes [ ]
(CHECK AS APPLICABLE)
Name:____________________________________________________________________
(PLEASE PRINT)
Address:_________________________________________________________________
_________________________________________________________________________
(ZIP CODE)
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Exchange Offer
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES FOR OLD NOTES OR
BOOK-ENTRY CONFIRMATIONS; WITHDRAWAL OF TENDERS.
To tender Old Notes in the Exchange Offer, physical delivery of
certificates for Old Notes or confirmation of a book-entry transfer into the
Exchange Agent's account with a Book-Entry Transfer Facility of Old Notes
tendered electronically, as well as a properly completed and duly executed copy
or manually signed facsimile of this Letter of Transmittal, or in the case of a
book-entry transfer, an Agent's Message, and any other documents required by
this Letter of Transmittal, must be received by the Exchange Agent at its
address set forth herein prior to the Expiration Date. Tenders of Old Notes in
the Exchange Offer may be made prior to the Expiration Date in the manner
described in the preceding sentence and otherwise in compliance with this
Letter of Transmittal. THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL,
CERTIFICATES FOR OLD NOTES AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE
AGENT, INCLUDING DELIVERY THROUGH DTC AND ANY ACCEPTANCE OF AN AGENT'S MESSAGE
TRANSMITTED THROUGH ATOP, IS AT THE ELECTION AND RISK OF THE HOLDER TENDERING
OLD NOTES. IF SUCH DELIVERY IS MADE BY MAIL, IT IS SUGGESTED THAT THE HOLDER
USE PROPERLY INSURED, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED AND THAT
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. NO ALTERNATIVE,
CONDITIONAL OR CONTINGENT TENDERS OF OLD NOTES WILL BE ACCEPTED. Except as
otherwise provided below, the delivery will be made when actually received by
the Exchange Agent. THIS LETTER OF TRANSMITTAL, CERTIFICATES FOR THE OLD NOTES
AND ANY OTHER REQUIRED DOCUMENTS SHOULD BE SENT ONLY TO THE EXCHANGE AGENT, NOT
TO THE COMPANY, THE TRUSTEE OR DTC.
Old Notes tendered pursuant to the Exchange Offer may be withdrawn at any
time prior to the Expiration Date. In order to be valid, notice of withdrawal
of tendered Old Notes must comply with the requirements set forth in the
Prospectus under the caption "The Exchange Offer -- Withdrawal of Tenders."
2. GUARANTEED DELIVERY PROCEDURES.
If Holders desire to tender Old Notes pursuant to the Exchange Offer and
(i) certificates representing such Old Notes are not lost but are not
immediately available, (ii) time will not permit this Letter of Transmittal,
certificates representing such Holder's Old Notes and all other required
documents to reach the Exchange Agent prior to the Expiration Date or (iii) the
procedures for book-entry transfer cannot be completed prior to the Expiration
Date, such Holders may effect a tender of Old Notes in accordance with the
guaranteed delivery procedures set forth in the Prospectus under the caption
"The Exchange Offer -- Guaranteed Delivery Procedures."
Pursuant to the guaranteed delivery procedures:
(i) such tender must be made by or through an Eligible Institution;
(ii) prior to the Expiration Date, the Exchange Agent must have received
from such Eligible Institution, at one of the addresses set forth on the cover
of this Letter of Transmittal, a properly completed and validly executed Notice
of Guaranteed Delivery (by manually signed facsimile transmission, mail or hand
delivery) in substantially the form provided with the Prospectus, setting forth
the name(s) and address(es) of the registered Holder(s) and the principal
amount of Old Notes being tendered and stating that the tender is being made
thereby and guaranteeing that, within three Nasdaq National Market ("NNM")
trading days from the date of the Notice of Guaranteed Delivery, the Letter of
Transmittal (or a manually signed facsimile thereof), properly completed and
duly executed, or, in the case of a book-entry transfer, an Agent's Message,
together with certificates representing the Old Notes (or confirmation of
book-entry transfer of such Old Notes into the Exchange Agent's account at a
Book-Entry Transfer Facility), and any other documents required by this Letter
of Transmittal and the instructions thereto, will be deposited by such Eligible
Institution with the Exchange Agent; and
(iii) the Exchange Agent must have received this Letter of Transmittal (or
a manually signed facsimile thereof), properly completed and validly executed
with any required signature guarantees, or, in the case of a
<PAGE>
book-entry transfer, an Agent's Message, together with certificates for all Old
Notes in proper form for transfer (or a Book-Entry Confirmation with respect to
all tendered Old Notes), and any other required documents within three NNM
trading days after the date of such Notice of Guaranteed Delivery.
3. PARTIAL TENDERS.
If less than the entire principal amount of any Old Notes evidenced by a
submitted certificate is tendered, the tendering Holder must fill in the
principal amount tendered in the last column of the box entitled "Description
of Old Notes" herein. The entire principal amount represented by the
certificates for all Old Notes delivered to the Exchange Agent will be deemed
to have been tendered, unless otherwise indicated. The entire principal amount
of all Old Notes not tendered or not accepted for exchange will be sent (or, if
tendered by book-entry transfer, returned by credit to the account at the
Book-Entry Transfer Facility designated herein) to the Holder unless otherwise
provided in the "Special Issuance Instructions" or "Special Delivery
Instructions" boxes of this Letter of Transmittal.
4. SIGNATURES ON THIS LETTER OF TRANSMITTAL, BOND POWERS AND ENDORSEMENTS;
GUARANTEE OF SIGNATURES.
If this Letter of Transmittal is signed by the Holder(s) of the Old Notes
tendered hereby, the signature(s) must correspond with the name(s) as written
on the face of the certificate(s) without alteration, enlargement or any change
whatsoever. If this Letter of Transmittal is signed by a participant in one of
the Book-Entry Transfer Facilities whose name is shown as the owner of the Old
Notes tendered hereby, the signature must correspond with the name shown on the
security position listing as the owner of the Old Notes.
If any of the Old Notes tendered hereby are registered in the name of two
or more Holders, all such Holders must sign this Letter of Transmittal. If any
tendered Old Notes are registered in different names on several certificates,
it will be necessary to complete, sign and submit as many separate copies of
this Letter of Transmittal and any necessary accompanying documents as there
are different names in which certificates are held.
If this Letter of Transmittal or any certificates for Old Notes or bond
powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing, and
proper evidence satisfactory to the Company of their authority so to act must
be submitted with this Letter of Transmittal.
IF THIS LETTER OF TRANSMITTAL IS EXECUTED BY A PERSON OR ENTITY WHO IS NOT
THE REGISTERED HOLDER, THEN THE REGISTERED HOLDER MUST SIGN A VALID BOND POWER,
WITH THE SIGNATURE OF SUCH REGISTERED HOLDER GUARANTEED BY A PARTICIPANT IN A
RECOGNIZED MEDALLION SIGNATURE PROGRAM (A "MEDALLION SIGNATURE GUARANTOR").
No signature guarantee is required if (i) this Letter of Transmittal is
signed by the registered Holder(s) of the Old Notes tendered herewith (or by a
participant in one of the Book-Entry Transfer Facilities whose name appears on
a security position listing as the owner of Old Notes) and certificates for New
Notes or for any Old Notes for principal amounts not tendered or not accepted
for exchange are to be issued, directly to such Holder(s) or, if tendered by a
participant in one of the Book-Entry Transfer Facilities, any Old Notes for
principal amounts not tendered or not accepted for exchange are to be credited
to such participant's account at such Book-Entry Transfer Facility and neither
the "Special Issuance Instructions" box nor the "Special Delivery Instructions"
box of this Letter of Transmittal has been completed or (ii) such Old Notes are
tendered for the account of an Eligible Institution. IN ALL OTHER CASES, ALL
SIGNATURES ON LETTERS OF TRANSMITTAL ACCOMPANYING OLD NOTES MUST BE GUARANTEED
BY A MEDALLION SIGNATURE GUARANTOR. In all such other cases (including if this
Letter of Transmittal is not signed by the Holder), the Holder must either
properly endorse the certificates for Old Notes tendered or transmit a separate
properly completed bond power with this Letter of Transmittal (in either case,
executed exactly as the name(s) of the registered Holder(s) appear(s) on such
Old Notes, and, with respect to a participant in a Book-Entry Transfer Facility
whose name appears on a security position listing as the owner of Old Notes,
exactly as the name(s) of the participant(s) appear(s) on such security
position listing), with the signature on the endorsement or bond power
guaranteed by a Medallion Signature Guarantor, unless such certificates or bond
powers are executed by an Eligible Institution.
<PAGE>
Endorsements on certificates for Old Notes and signatures on bond powers
provided in accordance with this Instruction 4 by registered Holders not
executing this Letter of Transmittal must be guaranteed by a Medallion
Signature Guarantor.
5. SPECIAL ISSUANCE AND SPECIAL DELIVERY INSTRUCTIONS.
Tendering Holders should indicate in the applicable box or boxes the name
and address to which Old Notes for principal amounts not tendered or not
accepted for exchange or certificates for New Notes, if applicable, are to be
sent or issued, if different from the name and address of the Holder signing
this Letter of Transmittal. In the case of payment to a different name, the
taxpayer identification or social security number of the person named must also
be indicated. If no instructions are given, Old Notes not tendered or not
accepted for exchange will be returned, and certificates for New Notes will be
sent, to the Holder of the Old Notes tendered.
6. TAXPAYER IDENTIFICATION NUMBER.
Each tendering Holder is required to provide the Exchange Agent with the
Holder's social security or Federal employer identification number, on
Substitute Form W-9, which is provided under "Important Tax Information" below,
or alternatively, to establish another basis for exemption from backup
withholding. A Holder must cross out item (2) in the Certification box in Part
III on Substitute Form W-9 if such Holder is subject to backup withholding.
Failure to provide the information on the form may subject such Holder to 31%
Federal backup withholding tax on any payment made to the Holder with respect
to the Exchange Offer. The box in Part I of the form should be checked if the
tendering or consenting Holder has not been issued a Taxpayer Identification
Number ("TIN") and has either applied for a TIN or intends to apply for a TIN
in the near future. If the box in Part I is checked the Holder should also sign
the attached Certification of Awaiting Taxpayer Identification Number. If the
Exchange Agent is not provided with a TIN within 60 days thereafter, the
Exchange Agent will withhold 31% on all such payments of the New Notes until a
TIN is provided to the Exchange Agent.
7. TRANSFER TAXES.
The Company will pay all transfer taxes applicable to the exchange and
transfer of Old Notes pursuant to the Exchange Offer, except if (i) deliveries
of certificates for Old Notes for principal amounts not tendered or not
accepted for exchange are registered or issued in the name of any person other
than the Holder of Old Notes tendered thereby, (ii) tendered certificates are
registered in the name of any person other than the person signing this Letter
of Transmittal or (iii) a transfer tax is imposed for any reason other than the
exchange of Old Notes pursuant to the Exchange Offer. If satisfactory evidence
of payment of such taxes or exemption therefrom is not submitted herewith, the
amount of such transfer taxes will be billed directly to such tendering Holder.
8. IRREGULARITIES.
All questions as to the form of all documents and the validity (including
time of receipt) and acceptance of all tenders and withdrawals of Old Notes
will be determined by the Company, in its sole discretion, which determination
shall be final and binding. ALTERNATIVE, CONDITIONAL OR CONTINGENT TENDERS OF
OLD NOTES WILL NOT BE CONSIDERED VALID. The Company reserves the absolute right
to reject any and all tenders of Old Notes that are not in proper form or the
acceptance of which, in the Company's opinion, would be unlawful. The Company
also reserves the right to waive any defects, irregularities or conditions of
tender as to particular Old Notes. The Company's interpretations of the terms
and conditions of the Exchange Offer (including the instructions in this Letter
of Transmittal) will be final and binding. Any defect or irregularity in
connection with tenders of Old Notes must be cured within such time as the
Company determines, unless waived by the Company. Tenders of Old Notes shall
not be deemed to have been made until all defects or irregularities have been
waived by the Company or cured. A defective tender (which defect is not waived
by the Company or cured by the Holder) will not constitute a valid tender of
Old Notes and will not entitle the Holder to New Notes. None of the Company,
the Trustee, the Exchange Agent or any other person will be under any duty to
give notice of any defect or irregularity in any tender or withdrawal of any
Old Notes, or incur any liability to Holders for failure to give any such
notice.
<PAGE>
9. WAIVER OF CONDITIONS.
The Company reserves the right, in its reasonable discretion, to amend or
waive any of the conditions to the Exchange Offer.
10 MUTILATED, LOST, STOLEN OR DESTROYED CERTIFICATES FOR OLD NOTES.
Any Holder whose certificates for Old Notes have been mutilated, lost,
stolen or destroyed should write to or telephone the Trustee at the address or
telephone number set forth on the cover of this Letter of Transmittal for the
Exchange Agent.
11. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering Old Notes and requests
for assistance or additional copies of the Prospectus, this Letter of
Transmittal, the Notice of Guaranteed Delivery or other documents may be
directed to the Exchange Agent, whose address and telephone number appear
above.
<PAGE>
IMPORTANT TAX INFORMATION
Under federal income tax laws, a Holder who tenders Old Notes prior to
receipt of the New Notes is required to provide the Exchange Agent with such
Holder's correct TIN on the Substitute Form W-9 below or otherwise establish a
basis for exemption from backup withholding. If such Holder is an individual,
the TIN is his or her social security number. If the Exchange Agent is not
provided with the correct TIN, a $50 penalty may be imposed by the Internal
Revenue Service ("IRS") and payments, including any New Notes, made to such
Holder with respect to Old Notes exchanged pursuant to the Exchange Offer may
be subject to backup withholding.
Certain Holders (including, among others, all corporations and certain
foreign persons) are not subject to these backup withholding and reporting
requirements. Exempt Holders should indicate their exempt status on the
Substitute Form W-9. A foreign person may qualify as an exempt recipient by
submitting to the Exchange Agent a properly completed IRS Form W-8, signed
under penalties of perjury, attesting to that Holder's exempt status. A Form
W-8 can be obtained from the Exchange Agent. See the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional instructions. Holders are urged to consult their own tax advisors to
determine whether they are exempt.
If backup withholding applies, the Exchange Agent is required to withhold
31% of any payments made to the Holder or other payee. Backup withholding is
not an additional Federal income tax. Rather, the Federal income tax liability
of persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained from the IRS.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments, including any New Notes, made
with respect to Old Notes exchanged pursuant to the Exchange Offer, the Holder
is required to provide the Exchange Agent with (i) the Holder's correct TIN by
completing the form below, certifying that the TIN provided on the Substitute
Form W-9 is correct (or that such Holder is awaiting a TIN) and that (A) such
Holder is exempt from backup withholding, (B) the Holder has not been notified
by the IRS that the Holder is subject to backup withholding as a result of
failure to report all interest or dividends or (C) the IRS has notified the
Holder that the Holder is no longer subject to backup withholding and (ii) if
applicable, an adequate basis for exemption.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
The Holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the registered Holder. If
the Old Notes are held in more than one name or are held not in the name of the
actual owner, consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
number to report.
<PAGE>
SUBSTITUTE FORM W-9
REQUEST FOR TAXPAYER IDENTIFICATION NUMBER AND CERTIFICATION
PAYOR'S NAME: NEXTEL PARTNERS, INC.
- --------------------------------------------------------------------------------
PAYEE INFORMATION
(Please print or type)
Individual or business name (if joint account, list first and circle the name
of person or entity whose number you furnish in Part 1 below):
- --------------------------------------------------------------------------------
Check appropriate box:
Individual/Sole proprietor [ ] Corporation [ ]
Partnership [ ] Other________________
- --------------------------------------------------------------------------------
Address (number, street, and apt. or suite no.):______________________________
- --------------------------------------------------------------------------------
City, state, and ZIP code:____________________________________________________
- --------------------------------------------------------------------------------
PART I TAXPAYER IDENTIFICATION NUMBER ("TIN")
Enter your TIN below. For individuals, this is your social security number. For
other entities, it is your employer identification number. Refer to the chart on
page 1 of the Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 (the "Guidelines") for further clarification. If you do not
have a TIN, see instructions on how to obtain a TIN on page 2 of the Guidelines,
check the appropriate box below indicating that you have applied for a TIN and,
in addition to the Part III Certification, sign the attached Certification of
Awaiting Taxpayer Identification Number.
Social security number:
[ ] [ ] [ ] - [ ] [ ] - [ ] [ ] [ ] [ ]
[ ] Applied For
Employer identification number:
[ ] [ ] - [ ] [ ] [ ] [ ] [ ] [ ] [ ]
PART II PAYEES EXEMPT FROM BACKUP WITHHOLDING
Check box (See page 2 of the Guidelines for further clarification. Even if you
are exempt from backup withholding, you should still complete and sign the
certification below):
[ ] EXEMPT
- --------------------------------------------------------------------------------
PART III CERTIFICATION
Certification Instructions: You must cross out item 2 below if you have been
notified by the Internal Revenue Service (the "IRS") that you are currently
subject to backup withholding because of underreporting interest or dividends on
your tax return (See page 2 of the Guidelines for further clarification). Under
penalties of perjury, I certify that:
1. The number shown on this form is my correct taxpayer identification number
(or I am waiting for a number to be issued to me), and
2. I am not subject to backup withholding because: (a) I am exempt from backup
withholding, (b) I have not been notified by the IRS that I am subject to backup
withholding as a result of a failure to report all interest or dividends, or (c)
the IRS has notified me that I am no longer subject to backup withholding.
SIGNATURE ___________________________ DATE____________________
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENT MADE TO YOU PURSUANT TO THE EXCHANGE
OFFER. PLEASE REVIEW THE ENCLOSED "GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9" FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATION IF YOU CHECKED THE BOX
"APPLIED FOR" IN PART I OF SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
CERTIFICATION OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify, under penalties of perjury, that a TIN has not been issued to me, and
either (a) I have mailed or delivered an application to receive a TIN to the
appropriate IRS Service Center or Social Security Administration Office, or (b)
I intend to mail or deliver an application in the near future. I understand that
I must provide a TIN to the payor within 60 days of submitting this Substitute
Form W-9 and that if I do not provide a TIN to the payor within 60 days, the
payor is required to withhold 31% of all reportable payments thereafter to me
until I furnish the payor with a TIN.
Signature _____________________________ Date ______________________________
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF ALL OUTSTANDING
14% SENIOR DISCOUNT NOTES DUE 2009
IN EXCHANGE FOR
NEW 14% SENIOR DISCOUNT NOTES DUE 2009
OF
[GRAPHIC OMITTED]
As set forth in the Prospectus dated , 1999 (as the same may be
amended from time to time, the "Prospectus") of Nextel Partners, Inc. (the
"Company") under the caption "The Exchange Offer -- Guaranteed Delivery
Procedures" and in the accompanying Letter of Transmittal (the "Letter of
Transmittal") and Instruction 2 thereto, this form or one substantially
equivalent, must be used to tender any of the Company's outstanding 14% Senior
Notes due 2009 (the "Old Notes") pursuant to the Exchange Offer, if (i)
certificates representing the Old Notes to be tendered for exchange are not
lost but are not immediately available, (ii) time will not permit a Holder's
Letter of Transmittal, certificates representing the Old Notes to be tendered
and all other required documents to reach The Bank of New York (the "Exchange
Agent") prior to the Expiration Date with respect to the Exchange Offer, or
(iii) the procedures for book-entry transfer cannot be completed prior to the
Expiration Date. This form may be delivered by an Eligible Institution by mail
or hand delivery or transmitted, via manually signed facsimile, to the Exchange
Agent as set forth below.
Terms not otherwise defined herein shall have their respective meanings as
set forth in the Prospectus.
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1999, UNLESS EXTENDED OR TERMINATED (THE "EXPIRATION DATE").
- --------------------------------------------------------------------------------
The Exchange Agent for the Exchange Offer is:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
By Facsimile: By Registered or Certified Mail: By Hand or Overnight Delivery:
(212) 815-4699 The Bank of New York The Bank of New York
Attention: Tolutope Adeyoju Attention: Tolutope Adeyoju 101 Barclay Street
Confirm by Telephone: 101 Barclay Street, 7 East Attention: Reorganization
(212) 815-2824 New York, NY 10286 Corporate Trust Services Window
Ground Level
New York, NY 10286
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION TO A
NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tender(s) to the Company, upon the terms and
subject to the conditions set forth in the Prospectus and the Letter of
Transmittal, receipt of which is hereby acknowledged, the principal amount of
Old Notes set forth below pursuant to the guaranteed delivery procedures set
forth in the Prospectus under the caption "The Exchange Offer -- Guaranteed
Delivery Procedures."
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender the Old Notes. The undersigned will, upon
request, execute and deliver any additional documents deemed by the Exchange
Agent or the Company to be necessary or desirable for the perfection of the
undersigned's tender.
Tenders may be withdrawn in accordance with the procedures set forth in
the Prospectus. The undersigned authorizes the Exchange Agent to deliver this
Notice of Guaranteed Delivery to the Company and the Trustee as evidence of the
undersigned's tender of Old Notes.
All authority herein conferred or agreed to be conferred by this Notice of
Guaranteed Delivery shall survive the death or incapacity of the undersigned
and every obligation of the undersigned under this Notice of Guaranteed
Delivery shall be binding upon the heirs, personal representatives, executors,
administrators, successors, assigns, trustees in bankruptcy and other legal
representatives of the undersigned.
<PAGE>
- --------------------------------------------------------------------------------
PLEASE SIGN AND COMPLETE
- -------------------------------------------------------------------------------
Signatures of Registered Holder(s) or Date:_______________________________
Authorized Signatory:
Address: ___________________________
_____________________________________
____________________________________
_____________________________________
- --------------------------------------------------------------------------------
Name(s) of Registered Holder(s): Area Code and Telephone No.:
_____________________________________ ____________________________________
_____________________________________ ____________________________________
- --------------------------------------------------------------------------------
Principal Amount of Notes Tendered: If Notes will be delivered by book-
entry transfer, complete the following:
_____________________________________ ____________________________________
Certificate No.(s) of Notes (if available):
_____________________________________ Depository Account No.______________
- --------------------------------------------------------------------------------
This Notice of Guaranteed Delivery must be signed by the Holder(s) exactly as
their names appear on certificates for Old Notes or on a security position
listing as the owner of Old Notes, or by person(s) authorized to become
Holder(s) by endorsements and documents transmitted with this Notice of
Guaranteed Delivery. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must set forth his or her full title below
under "Capacity" and submit evidence satisfactory to the Company of such
person's authority to so act.
Please print name(s) and address(es)
Name(s):_____________________________________________________________________
_____________________________________________________________________________
Capacity:____________________________________________________________________
Address(es):_________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
- --------------------------------------------------------------------------------
DO NOT SEND OLD NOTES WITH THIS FORM. OLD NOTES SHOULD BE SENT TO THE EXCHANGE
AGENT, TOGETHER WITH A PROPERLY COMPLETED AND VALIDLY EXECUTED LETTER OF
TRANSMITTAL AND ANY OTHER RELATED DOCUMENTS.
<PAGE>
- --------------------------------------------------------------------------------
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
- --------------------------------------------------------------------------------
The undersigned, a member firm of a registered national securities exchange or
of the National Association of Securities Dealers, Inc. or a commercial bank or
trust company having an office or correspondent in the United States, hereby
guarantees that, within three Nasdaq National Market trading days from the date
of this Notice of Guaranteed Delivery, a properly completed and duly executed
Letter of Transmittal (or a manually signed facsimile thereof), together with
certificates representing the Old Notes tendered hereby in proper form for
transfer (or confirmation of the book-entry transfer of such Old Notes into the
Exchange Agent's account at a Book-Entry Transfer Facility, pursuant to the
procedure for book-entry transfer set forth in the Prospectus under the caption
"The Exchange Offer ( Procedures for Tendering"), and any other required
documents will be deposited by the undersigned with the Exchange Agent at its
address set forth above.
Name of Firm: ______________________ ___________________________________
Authorized Signature
Address:____________________________ Name:______________________________
Area Code and
Telephone No.:______________________ Title:______________________________
Date:_______________________________
____________________________________
- --------------------------------------------------------------------------------
<PAGE>
[GRAPHIC OMITTED]
OFFER FOR ALL OUTSTANDING
14% SENIOR DISCOUNT NOTES DUE 2009
IN EXCHANGE FOR UP TO
$800,000,000 PRINCIPAL AMOUNT AT MATURITY OF
14% SENIOR DISCOUNT NOTES DUE 2009
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1999, UNLESS EXTENDED OR TERMINATED (THE "EXPIRATION DATE").
- --------------------------------------------------------------------------------
To Our Clients:
Enclosed for your consideration is a Prospectus dated , 1999 (as the
same may be amended or supplemented from time to time, the "Prospectus") and a
form of Letter of Transmittal (the "Letter of Transmittal") relating to the
offer (the "Exchange Offer") by Nextel Partners, Inc. (the "Company") to
exchange up to $800,000,000 in aggregate principal amount at maturity of its
Senior Discount Notes due 2009 (the "Old Notes") for $800,000,000 in aggregate
principal amount at maturity of its Senior Discount Notes due 2009 (the "New
Notes") upon the terms and conditions set forth in the Prospectus and the
Letter of Transmittal.
The material is being forwarded to you as the beneficial owner of Old
Notes held by us for your account or benefit but not registered in your name. A
tender of the Old Notes pursuant to the Exchange Offer may be made only by us
as the registered holder of the Old Notes, and pursuant to your instructions.
Therefore, the Company urges beneficial owners of Old Notes registered in the
name of a broker, dealer, commercial bank, trust company or other nominee to
contact such holder promptly if they wish to tender Old Notes in the Exchange
Offer.
Accordingly, we request instructions as to whether you wish us to tender
any or all Old Notes held by us for your account or benefit, pursuant to the
terms and conditions set forth in the Prospectus and Letter of Transmittal. We
urge you to read carefully the Prospectus and Letter of Transmittal before
instructing us to tender your Old Notes pursuant to the Exchange Offer.
Your instructions to us should be forwarded as promptly as practicable in
order to permit us to tender Old Notes on your behalf in accordance with the
provisions of the Exchange Offer. The Exchange Offer will expire at 5:00 p.m.,
New York City Time, on , 1999, unless extended (the "Expiration Date"). Old
Notes tendered pursuant to the Exchange Offer may be withdrawn, subject to the
procedures described in the Prospectus, at any time prior to the Expiration
Date.
If you wish to have us tender any or all of your Old Notes held by us for
your account or benefit, please so instruct us by completing, executing and
returning to us the instruction form that appears below. The accompanying
Letter of Transmittal is furnished to you for informational purposes only and
may not be used by you to tender Old Notes held by us and registered in our
name for your account or benefit.
<PAGE>
INSTRUCTIONS WITH RESPECT TO
THE EXCHANGE OFFER
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Exchange Offer made by Nextel
Partners, Inc. with respect to their Old Notes.
This will instruct you to tender the Old Notes held by you for the account
of the undersigned, upon and subject to the terms and conditions set forth in
the Prospectus and the related Letter of Transmittal.
Please tender the Old Notes held by you for my account as indicated below:
AGGREGATE PRINCIPAL AMOUNT OF OLD NOTES
_______________________________________
[ ] Please do not, tender any Old Notes
held by you for my account
Dated:_______________________, 1999 _______________________________________
_______________________________________
Signature(s)
_______________________________________
_______________________________________
_______________________________________
Please Print Name(s) here
_______________________________________
Address(es)
_______________________________________
Area Code(s) and Telephone Number(s)
_______________________________________
Tax Identification or Social
Security No.(s).
None of the Old Notes held by us for your account will be tendered unless
we receive written instructions from you to do so. Unless a specific
instruction is given in the space provided, your signature(s) hereon shall
constitute an instruction to us to tender all the Old Notes held by us for your
account.
<PAGE>
[GRAPHIC OMITTED]
OFFER FOR ALL OUTSTANDING
14% SENIOR DISCOUNT NOTES DUE 2009
IN EXCHANGE FOR
UP TO $800,000,000 PRINCIPAL AMOUNT AT MATURITY OF
14% SENIOR DISCOUNT NOTES DUE 2009
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT MIDNIGHT, NEW YORK CITY TIME, ON
, 1999, UNLESS EXTENDED OR TERMINATED (THE "EXPIRATION DATE").
- --------------------------------------------------------------------------------
To: Brokers, Dealers, Commercial Banks
Trust Companies and Other Nominees:
Enclosed for your consideration is a Prospectus dated , 1999 (as the
same may be amended or supplemented form time to time, the "Prospectus") and a
form of Letter of Transmittal (the "Letter of Transmittal") relating to the
offer (the "Exchange Offer") by Nextel Partners, Inc. (the "Company") to
exchange up to $800,000,000 in aggregate principal amount at maturity of its
Senior Discount Notes due 2009 (the "New Notes") for $800,000,000 in aggregate
principal amount at maturity of its Senior Discount Notes due 2009 (the "Old
Notes").
We are asking you to contact your clients for whom you hold Old Notes
registered in your name or in the name of your nominee. In addition, we ask you
to contact your clients who, to your knowledge, hold Old Notes registered in
their own name. The Company will not pay any fees or commissions to any broker,
dealer or other person in connection with the solicitation of tenders pursuant
to the Exchange Offer. You will, however, be reimbursed by the Company for
customary mailing and handling expenses incurred by you in forwarding any of
the enclosed materials to your clients. The Company will pay all transfer
taxes, if any, applicable to the tender any of the enclosed materials to your
clients. The Company will pay all transfer taxes, if any, applicable to the
tender of Old Notes to it or its order, except as otherwise provided in the
Prospectus and the Letter of Transmittal.
Enclosed are copies of the following documents:
1. The Prospectus;
2. A Letter of Transmittal for your use in connection with the tender of
Old Notes and for the information of your clients;
3. A form of letter that may be sent to your clients for whose accounts you
hold Old Notes registered in your name or the name of your nominee with
space provided for obtaining the clients' instructions with regard to
the Exchange Offer;
4. A form of Notice of Guaranteed Delivery; and
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
Your prompt action is requested. The Exchange Offer will expire at 5:00
p.m., New York City Time, on , 1999, unless extended (the "Expiration
Date"). Old Notes tendered pursuant to the Exchange Offer may be withdrawn,
subject to the procedures described in the Prospectus, at any time prior to the
Expiration Date.
In all cases, exchanges of Old Notes for New Notes accepted for exchange
pursuant to the Exchange Offer will be made only after timely receipt by the
Exchange Agent of (a) certificates representing such Old Notes
<PAGE>
or a confirmation of a book-entry transfer of such Old Notes, as the case may
be, (b) the Letter of Transmittal (or a facsimile thereof) promptly completed
and duly executed with any required signature guarantees, and (c) any other
documents required by the Letter of Transmittal.
Holders who wish to tender their Old Notes and (a) whose Old Notes are not
immediately available, (b) who cannot deliver their Old Notes, the Letter of
Transmittal or any other required documents to the Exchange Agent prior to the
Expiration Date or (c) who cannot complete the procedure for book-entry
transfer on a timely basis, may tender their Old Notes by following the
guaranteed delivery procedures described in the Prospectus under "The Exchange
Offer--Guaranteed Delivery Procedures."
To tender Old Notes, certificates for Old Notes, a duly executed and
properly completed Letter of Transmittal or a facsimile thereof, together with
any other required documents, must be received by the Exchange Agent as
provided the Prospectus and the Letter of Transmittal.
Additional copies of the enclosed material may be obtained from the
Exchange Agent, The Bank of New York, by calling (212) 815-2824.
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
PERSON AS AN AGENT OF THE COMPANY OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR
ANY OTHER PERSON TO MAKE ANY STATEMENTS ON BEHALF OF EITHER OF THEM WITH
RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE
PROSPECTUS AND THE LETTER OF TRANSMITTAL.
