SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
February 24, 1999 (January 29, 1999)
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NEXTEL COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-19656 36-3939651
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
1505 Farm Credit Drive, Suite 100, McLean, VA 22102
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (703) 394-3000
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(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events.
Nextel Partners Transaction: On January 29, 1999, Nextel Communications, Inc.
("Nextel"), Nextel Partners, Inc. ("Nextel Partners") and certain other parties
including Donaldson Lufkin & Jenerette, Motorola, Inc. and Eagle River, Inc.
entered into definitive agreements relating to the capitalization of Nextel
Partners. Pursuant to these agreements, Nextel Partners plans to construct a
digital wireless system utilizing iDEN technology employed in the Nextel
National Network in thirty-nine mid-size and smaller markets in the United
States containing approximately 33 million POPs.
In connection with the transaction, Nextel contributed assets and transferred
certain FCC licenses in those markets, in exchange for the $131.1 million of its
equity to Nextel and paid Nextel approximately $125.0 million in cash. Under
these agreements, Nextel Partners will offer its customers the same services as
Nextel under the Nextel brand name and customers of Nextel and Nextel Partners
will be allowed to roam between the Nextel and Nextel Partners systems without
incurring any roaming charges.
The definitive agreements also established certain circumstances in which Nextel
will have the right or the obligation to purchase the remaining equity interests
in Nextel Partners at specified prices.
On February 1, 1999, Nextel issued a press release announcing the transactions
relating to Nextel Partners. A copy of the press release is filed as Exhibit
99.1 to this report and is incorporated in this report by reference.
Tower Transaction: On February 10, 1999, Nextel and certain of its subsidiaries
and SpectraSite Holdings, Inc. ("SpectraSite") and certain of its subsidiaries
entered into definitive agreements pursuant to which certain telecommunications
towers and related assets currently owned by Nextel's subsidiaries will be
acquired by a subsidiary of SpectraSite. The agreements also would establish an
exclusive arrangement for the construction by SpectraSite of additional towers
in the United States to support the Nextel subsidiaries' and Nextel Partners'
expansion of their digital systems. The transactions are subject to a number of
significant conditions including certain regulatory approvals and the receipt of
consents from certain of Nextel and SpectraSite's lenders.
On February 11, 1999, Nextel and SpectraSite issued a press release announcing
the tower sale transaction. A copy of the press release is filed as Exhibit 99.2
to this report and is incorporated in this report by reference.
Resignation of Director: Mr. Masaaki Torimoto a director of Nextel since
February 28, 1995, tendered his resignation in such capacity effective February
4, 1999, pursuant to a letter submitted to Nextel's Chairman of the board of
directors.
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995: A number of matters and subject areas discussed in this Current Report
that are not historical or current facts deal with potential future
circumstances and developments. As such, they remain subject to certain risks
and delays that relate to contemplated coverage expansion of the Nextel National
Network, such as the successful and timely buildout of market areas by Nextel
Partners and the ability of SpectraSite to locate sites for the construction of
towers suitable for the Nextel National Network. Additionally, there are no
assurances that the implementation and system integration activities by Nextel
and Nextel Partners will occur as contemplated, or when implemented, may be
subject to coverage and capacity limitations in certain geographic areas on the
Nextel National Network. The discussion of such matters and subject areas is
qualified by the inherent risks and uncertainties surrounding future
expectations concerning Nextel's business generally. The expansion of the Nextel
National Network and Nextel Partners' construction of its digital wireless
systems may be subject to the effect of other risks and uncertainties,
including, but not limited to, general economic conditions in the geographic
areas targeted for expansion, the availability of adequate quantities of system
infrastructure and subscriber equipment to adequately meet Nextel's and Nextel
Partners' service deployment, the ability to find and secure suitable locations
for the construction of transmitter sites to be used in market areas which
Nextel and Nextel Partners have targeted for expansion and future regulatory
approvals and legislative actions relating to specialized mobile radio services.
Nextel has attempted to identify, in context, certain of the factors that it
<PAGE>
currently believes may cause actual future experience and results in its digital
mobile network business to differ from Nextel's current expectations regarding
such relevant matters or subject areas, and such risks and uncertainties are
described from time to time in Nextel's reports filed with the Securities and
Exchange Commission, including Nextel's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997 and the Quarterly Report on Form 10-Q for
the quarters ended March 31, 1998, June 30, 1998 and September 30, 1998.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired.
(b) Pro Forma Financial Information.
(c) Exhibits.
Exhibit No. Exhibit Description
10.1 - Joint Venture Agreement by and among Nextel Partners, Inc.,
Nextel Partners Operating Corp., and Nextel WIP Corp., dated
as of January 29, 1999.
10.2 - Shareholders' Agreement among Nextel Partners, Inc. and the
Shareholders named therein dated as of January 29, 1999.
10.3 - Agreement Specifying Obligations of, and Limiting Liability
and Recourse to, Nextel dated as of January 29, 1999.
99.1 - Press Release dated February 1, 1999 issued by Nextel.
99.2 - Press Release dated February 11, 1999 issued by SpectraSite
and Nextel.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NEXTEL COMMUNICATIONS, INC.
Date: February 24, 1999 By:/s/THOMAS J. SIDMAN
Thomas J. Sidman
Vice President and General Counsel
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit Description
10.1 - Joint Venture Agreement by and among Nextel Partners, Inc.,
Nextel Partners Operating Corp., and Nextel WIP Corp., dated
as of January 29, 1999.
10.2 - Shareholders' Agreement among Nextel Partners, Inc. and the
Shareholders named therein dated as of January 29, 1999.
10.3 - Agreement Specifying Obligations of, and Limiting Liability
and Recourse to, Nextel dated as of January 29, 1999.
99.1 - Press Release dated February 1, 1999 issued by Nextel.
99.2 - Press Release dated February 11, 1999 issued by SpectraSite
and Nextel.
Exhibit 10.1
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
Page
RECITALS 1
1. DEFINITIONS 1
2. OPERATING ARRANGEMENTS 10
2.1 Company Responsibilities 10
2.2 Territory 11
2.3 Exclusivity 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 15
4.4 Swaps and Exchanges of Licenses with Nextel Group 16
4.5 Acquisitions of Licenses from Third Parties 17
4.6 Frequency Auctions 17
4.7 Cooperation 18
4.8 Transactions to Create Contiguous Spectrum 18
4.9 Nextel Analog Operations 18
4.10 Reserved 19
4.11 Compliance with FCC Rules 19
4.12 FCC Proceedings 20
4.13 Transfer Restrictions 21
4.14 NWIP Right of First Refusal 22
4.15 Company Rights of First Refusal 22
4.16 NWIP Option Upon Change in Control of the Company 23
4.17 Representations and Warranties 24
5. COMPANY ACCESS TO PROPRIETARY TECHNOLOGY AND NETWORK COMPONENTS 25
5.1 Coordination of Equipment Orders and Purchases 25
5.2 Access to Vendor Equipment and Agreements 25
5.3 Future Improvements and Enhancements to Technology or
Network 26
5.4 [RESERVED] 28
<PAGE>
5.5 Access to National Switching Network 28
5.6 Integration with Nextel Owned Switching Facilities 29
5.7 Company Owned Network Switches and Other Facilities 29
5.8 Access to Systems Platform 30
5.9 Certain System and Network Services 30
6. BUILD-OUT REQUIREMENTS 32
6.1 Required Services 32
6.2 Build-out Requirement and Target Launch Dates 32
6.3 Launch Criteria 34
6.4 Frequency Design Standards 34
6.5 Site Acquisition Standards 34
6.6 Construction Standards 35
6.7 Telco Standards 35
6.8 Switching Facility Standards 35
6.9 Company Towers 36
6.10 Potential Relaxation of Performance Standards 37
7. OPERATIONS 37
7.1 Network Performance Requirements 37
7.2 Customer Care 37
7.3 Customer Satisfaction 38
A. Measurement 38
B. Sample 38
C. Targets 38
7.4 Employees 38
8. MARKETING AND ADVERTISING 39
8.1 Brand Identity 39
8.2 Brand Awareness 39
8.3 Creative Services 39
8.4 Media Services 40
8.5 Direct Mail 40
8.6 Telemarketing 40
8.7 Collateral Marketing Materials 41
8.8 World Wide Website 41
8.9 Market Research 41
8.10 Subscriber Transfer Fee 42
9. SERVICE AND EQUIPMENT PRICING 42
9.1 Service Pricing Structure 42
9.2 Service Pricing Plans - Local 43
9.3 Service Pricing Plans - National 43
9.4 Service Pricing Plans - International 44
9.5 Subscriber Equipment Pricing 44
<PAGE>
10. SALES AND DISTRIBUTION 45
10.1 Objective 45
10.2 Local Sales and Distribution 45
10.3 National Indirect Distribution 45
11. NATIONAL ACCOUNTS/PRIVATE SYSTEMS 45
12. BREACH; DEFAULT; DISPUTE RESOLUTION 46
12.1 Non-Material Breach 46
12.2 Company's Material Breach 47
12.3 NWIP's Material Breach 48
12.4 Procedures for a Material Breach 48
12.5 Excusable Delay/Time Extension 49
12.6 Alternate Dispute Resolution 49
12.7 Arbitration 50
12.8 Equitable Remedies 50
12.9 Damages and Termination for Material Breach 52
A. Procedure 52
B. Right to Nextel Name and Trademarks 52
C. Determination Required for Termination Remedy 52
D. Termination Awarded to NWIP 52
E. Termination Awarded to the Company 53
F. Limitations on Damages 53
13. MISCELLANEOUS 54
13.1 Choice of Law 54
13.2 Attorneys Fees 54
13.3 Pass-Throughs 54
13.4 [RESERVED] 54
13.5 Monitoring 54
13.6 Payment 55
13.7 Company Audit Right 55
13.8 Company Personal Obligation 55
13.9 Disclaimer of Partnershi 56
13.10 Confidentiality. 56
13.11 Amendments 57
13.12 Entire Agreement 57
13.13 Notices 57
13.14 Counterparts 58
13.15 Waiver 58
13.16 Third Parties 58
13.17 Schedules and Exhibits 59
13.18 Headings 59
13.19 Severability 59
<PAGE>
13.20 Jurisdiction 59
13.21 Waiver of Jury Trial 59
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
<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
For purposes of the Agreement, the following terms have the meanings
set forth or cross referenced below:
<PAGE>
"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.
"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
<PAGE>
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 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.
<PAGE>
"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 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,
<PAGE>
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:
(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,
<PAGE>
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.
"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.
<PAGE>
"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.
"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.
<PAGE>
"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.
"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.
<PAGE>
"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 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.
<PAGE>
"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.
"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 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:
<PAGE>
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.
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.
<PAGE>
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 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 Sufficient 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.
<PAGE>
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 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.
<PAGE>
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");
(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
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
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.
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
<PAGE>
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 Frequenc
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 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
<PAGE>
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 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 Continguous 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
<PAGE>
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 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
<PAGE>
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.
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
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
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).
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.
<PAGE>
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 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
<PAGE>
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 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,
<PAGE>
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 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
<PAGE>
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.
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
<PAGE>
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 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).
<PAGE>
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 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
<PAGE>
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 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 Swithing 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.
<PAGE>
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 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
<PAGE>
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 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.
<PAGE>
(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 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.
<PAGE>
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
<PAGE>
consents as 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
<PAGE>
NWIP, for any licenses or frequency rights previously acquired by the Company in
any service area that is 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
<PAGE>
standards that are in effect at the relevant time and applicable generally to
and followed by the 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.
<PAGE>
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 (or has had) a material adverse
effect on the business, operations, or financial condition of the Build
<PAGE>
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 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,
<PAGE>
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.
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
anniversary of the Closing Date* Tenant Facilities*, per 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*
* 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 of
sufficient available frequencies, the parties will negotiate in good faith to
reach agreement on
<PAGE>
the extent and duration of the relief from such performance requirements that 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.
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
<PAGE>
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.
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
<PAGE>
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 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
<PAGE>
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).
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
<PAGE>
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
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.
<PAGE>
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.
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
<PAGE>
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 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
<PAGE>
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
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
<PAGE>
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 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
<PAGE>
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.
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
<PAGE>
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;
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.
<PAGE>
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;
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
<PAGE>
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 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
<PAGE>
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 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.
<PAGE>
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 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'
<PAGE>
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.
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)
<PAGE>
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 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 Demages. 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.
<PAGE>
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.
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.
<PAGE>
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 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
<PAGE>
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.
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.
<PAGE>
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 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.
<PAGE>
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, among DLJ Merchant Banking II,
Inc., DLJ Capital Corp., Nextel, the Company, Eagle River Investment, LLC, and
Motorola, Inc.
13.13. 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
<PAGE>
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.
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
<PAGE>
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 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]
<PAGE>
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
Exhibit 10.2
SHAREHOLDERS' AGREEMENT
dated as of
January 29, 1999
among
NEXTEL PARTNERS, INC.
AND
THE SHAREHOLDERS NAMED HEREIN
<PAGE>
Page
TABLE OF CONTENTS
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
Section 4.03. Fair Market Value Calculation 44
<PAGE>
Section 4.04. Management Stockholder Tag Along Right 48
Section 4.05. Company Repurchase Rights 49
ARTICLE 5
Anti-Dilution 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
<PAGE>
ARTICLE 8
Miscellaneous
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. 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 cause the direction of the management and policies of such Person,
whether through the ownership of voting securities or by contract or otherwise.
<PAGE>
"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 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
<PAGE>
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
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,
<PAGE>
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.
"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.
<PAGE>
"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.
"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;
<PAGE>
(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 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
<PAGE>
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, 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 either: (i)
the receipt by the DLJ Entities of gross proceeds of at least $50 million
<PAGE>
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 (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.
<PAGE>
"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.
"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
<PAGE>
(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.
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)
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)
<PAGE>
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)
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)
<PAGE>
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)
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)
<PAGE>
transfer 3.01(a)
Underwriters' Range 5.02(a)
ARTICLE
Corporate Governance and Management
Section 2.01. Composition of the Board. 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 . 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 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 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 the extent not
inconsistent with) the foregoing, in the event that the right
<PAGE>
of any Shareholder pursuant to this Section 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 to designate or nominate
such director whose death, disability, retirement, resignation or removal
resulted in such vacancy, may, subject to the provisions of Section , designate
another individual (the "Nominee") to fill such vacancy and serve as a director
of the Company; and
(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.
<PAGE>
(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 any of the
following matters without the affirmative approval of the Board or the relevant
board of directors, 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 the matters referred to in
paragraphs (iv), (viii), (xi), (xvi) and (xvii) below and any 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:
<PAGE>
(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;
(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;
<PAGE>
(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;
(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 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;
<PAGE>
(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.
(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 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 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;
<PAGE>
(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, 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.
<PAGE>
(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 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.
<PAGE>
(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 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 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.
<PAGE>
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 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
<PAGE>
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%
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
<PAGE>
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
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
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
<PAGE>
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 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 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 Major Investors electing to purchase all the Section 3.05
Shares,
<PAGE>
(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 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 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.
<PAGE>
(b) The receipt of a Section 3.6 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 (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 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
<PAGE>
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 3.6 Offer Price,
provided that, upon consummation of the purchase of such Section 3.05 Shares,
the Section 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.
(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 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
<PAGE>
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 Stoc
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 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 3.05Purchaser the aggregate purchase
price for the Called Interest sold by the Section 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.
<PAGE>
(c) A Major Investor's rights (but not its obligations) pursuant to
this Section 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 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 Sale on the terms and conditions set forth in the Section 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
<PAGE>
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 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 shall be subject to the following conditions:
<PAGE>
(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 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.
<PAGE>
(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
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 "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.
<PAGE>
(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:
(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
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
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.
"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:
<PAGE>
(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 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
<PAGE>
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 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).
<PAGE>
"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 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
<PAGE>
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.
(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
<PAGE>
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 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
<PAGE>
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 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 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.
<PAGE>
(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 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
<PAGE>
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 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 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 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 (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
<PAGE>
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 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
<PAGE>
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.
(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:
<PAGE>
"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 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
<PAGE>
Offering, NWIP or its Affiliates acquire (in one or a series of transactions)
more than 20% of the Initial Ownership of the DLJ Entities (other than in
accordance with the provisions of this Article 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 Common
Stock equal to the product of (A) the number of such Reselling
Shareholder's Special Securities multiplied by (B) the Option Section
Percentage.
<PAGE>
(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.
"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
<PAGE>
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.
ARTICLE
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
<PAGE>
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 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
<PAGE>
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, 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 5.02
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
<PAGE>
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 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. Speical 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
<PAGE>
DLJMB, as the case may be (the "Offering Party") in writing (the "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.
(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
<PAGE>
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
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:
(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,
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
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.
(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 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
<PAGE>
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 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.
<PAGE>
(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 6.02(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).
(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
<PAGE>
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 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.
<PAGE>
(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 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
<PAGE>
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.
(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
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
in any registration statement 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 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.
<PAGE>
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 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.
<PAGE>
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 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.
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.
<PAGE>
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 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.
<PAGE>
ARTICLE
Certain Covenants and Agreements
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 such persons being collectively
referred to as "Representatives") in violation of the Subscription Agreement or
this Agreement, (ii) is or was available to such
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
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 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.
<PAGE>
(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.
"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.
<PAGE>
(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 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.
<PAGE>
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
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,
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
<PAGE>
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
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:
<PAGE>
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
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
<PAGE>
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
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.
<PAGE>
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 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
<PAGE>
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 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.
<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
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
<PAGE>
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
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
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
<PAGE>
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
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
<PAGE>
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 Thompson
Address: 4500 Carillon Point
Kirkland, Washington 98033
Fax: 425-828-8098
DAVID THALER
s/David 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. Ferguson
Name: Molly S. Ferguson
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
<PAGE>
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 Serot
Name: Jeffrey Serot
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 Serot
Name: Jeffrey Serot
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
Address: 11100 Santa Monica Blvd.,
Suite 2000
Los Angeles, CA 90025
Fax: 310-235-5967
<PAGE>
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
Exhibit 10.3
AGREEMENT SPECIFYING OBLIGATIONS OF, AND LIMITING LIABILITY
AND RECOURSE TO, NEXTEL
This AGREEMENT SPECIFYING OBLIGATIONS OF, AND LIMITING
LIABILITY AND RECOURSE TO NEXTEL (this "Agreement"), dated as of January 29,
1999, is by and among Nextel Communications, Inc., a Delaware corporation
("Nextel"), Nextel Partners, Inc., a Delaware corporation (the "Company"), and
Nextel Partners Operating Corp., a Delaware corporation ("Opco").
RECITALS
A. Nextel, through its subsidiaries, operates digital
networks for wireless communications services utilizing the integrated Dispatch
Enhanced Network ("iDEN") technology developed by Motorola, Inc. ("Motorola") in
various markets throughout the United States. Nextel desires to enhance its
ability to provide its customers with greater geographic coverage that is
consistent with its existing service, operations, and objectives, through the
medium of a contractual joint venture with the Company (the "Joint Venture").
B. Nextel, through its subsidiary, Nextel WIP Corp., a
Delaware corporation ("NWIP"), has agreed to provide certain assets and rights
to the Company and its wholly-owned subsidiary, Opco, and certain other
investors have agreed to capitalize the Company, to enable the Company and Opco
to construct and operate a digital mobile network using Motorola's iDEN
technology to offer and provide wireless telecommunications services to
customers in areas of the United States that would otherwise remain without such
iDEN-based services for the foreseeable future.
C. As a condition to providing NWIP with the frequencies
and other rights necessary to make its contribution to the Company, and as a
condition to providing NWIP with the rights to enable it to enter into the
agreements with the Company that will integrate the Company's network with the
Nextel digital mobile network for wireless telecommunications services using
Motorola's iDEN technology, Nextel requires that the Company and those investing
in the Company recognize and agree to a limit on the maximum, aggregate
potential liability of Nextel and all of its controlled affiliates, other than
NWIP (Nextel and its controlled affiliates, whether now existing or hereafter
created or acquired, other than NWIP and the Applicable Entity, if any, the
"Nextel Group"), that arise, result from or are in any way connected with, the
organization, financing, operation of, provision of goods or services to or by
the Company, or other matters as provided for or contemplated in any of the
Transaction Documents (defined below) or any other arrangement or relationship,
contractual or otherwise, as amended and in effect from time to time, among or
involving the Company, NWIP or any member of the Nextel Group.
<PAGE>
AGREEMENT
NOW, THEREFORE, to induce Nextel to make available to NWIP the
frequencies and other rights to enable NWIP to participate in the organization,
capitalization, ongoing operation of the Company and Opco, and other matters
contemplated by the Transaction Documents, and to induce the Company to enter
into the Transaction Documents, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Nextel (on behalf
of itself and the other members of the Nextel Group) and the Company and Opco
(each on its own behalf, and on behalf of its controlled affiliates) agree:
1. Nextel Group to Give NWIP Rights to Perform, etc. (a)
On the terms and subject to the limitations and conditions set forth in this
Agreement, Nextel shall or shall cause the other members of the Nextel Group to:
(i) provide NWIP with the necessary frequencies and rights to
enable NWIP to perform such obligations as it is required to perform under
the documents that are identified on Exhibit A (each, as amended and in
effect from time to time, and, collectively, the "Transaction Documents");
and
(ii) take whatever action is reasonable and necessary to
cause NWIP to perform its obligations under the Transaction Documents.
(b) Notwithstanding anything else set forth in this
Agreement, Nextel acknowledges that, subject to the limitations set forth in
Sections 4 and 5, the Company and its controlled affiliates have the right to
recover from Nextel for any liability owed to the Company, Opco or their
controlled affiliates by NWIP or any member of the Nextel Group for the failure
of NWIP or such member of the Nextel Group to perform any obligations it may
have under the Transaction Documents.
(c) Without limiting Nextel's own obligations under Section
2, the parties hereto agree that neither Nextel nor any other member of the
Nextel Group shall have any obligations to advance or otherwise contribute any
funds to NWIP to enable NWIP to perform its obligations under any of the
Transaction Documents, nor to expend any funds (or incur any liability) to
finance or assist in the financing of such obligations of NWIP.
2. Additional Nextel Obligations. Without regard to the
limitations of Sections 4 and 5, until the closing of a Section 3.08 Sale (as
defined in the Shareholders Agreement) and, as to the obligations referenced in
Subsections (a), (b), and (c) below, in those circumstances where Section
4.01(j) of the Shareholder's Agreement would be applicable:
(a) (i) Nextel will register "Nextel Securities" pursuant to,
and each of the Company and Nextel will otherwise comply with, the provisions
relating to registration of "Nextel Securities" as contemplated by, Section 6.13
of the Shareholders' Agreement identified on Exhibit A (but this clause (i) does
not extend to "Nextel Shares" under Section 7.05 of the Shareholders'
<PAGE>
Agreement); and (ii) if NWIP elects to deliver "Nextel Shares" as contemplated
by Section 7.05 of the Shareholders' Agreement, comply with Section 7.05(d) of
the Shareholders Agreement.
(b) If NWIP is required under the Shareholders' Agreement,
the Joint Venture Agreement or the Restated Certificate of Incorporation of the
Company to acquire the equity interests of other stockholders of the Company,
Nextel will, or will cause NWIP to, perform those obligations without regard to
the limitations of Sections 4 and 5 (provided, however Nextel may satisfy those
obligations by delivering freely tradeable "Nextel Shares" as provided in the
Shareholders' Agreement, Joint Venture Agreement or Restated Certificate of
Incorporation, as the case may be). Nextel agrees that those of the shareholders
of the Company who are signatory parties to the Shareholders' Agreement and the
Custodial Agreement from time to time are third party beneficiaries of Nextel's
obligations under this Section 2(b).
(c) The obligations of Nextel hereunder will continue to be
effective (or shall be reinstated), subject to the terms, conditions and
limitations set forth herein, if at any time the obligations of NWIP under the
Transaction Documents, including, without limitation, the obligation to acquire
the equity interests of the Company, are stayed, rescinded or otherwise
discharged as a result of the bankruptcy, insolvency or reorganization of NWIP.
Furthermore, for purposes of this Agreement, including Nextel's agreement in
Section 1(b), Nextel's own obligations, and the rights of the Company and its
controlled affiliates to recover from Nextel for obligations and liabilities
owed by NWIP, as the case may be, shall not be suspended or otherwise diminished
by the bankruptcy, insolvency or reorganization of NWIP or any other
circumstances relating to NWIP that could purport to render such obligations or
liabilities unenforceable against NWIP (such as, the fact that such obligation
or liability is asserted to be ultra vires on NWIP's part), provided, however,
it is expressly agreed that circumstances relating to the nature of the
obligation or liability rather than to NWIP (such as, non-performance by another
party entitling NWIP or Nextel not to perform its obligations) shall continue to
be applicable in determining the existence and scope of such obligation or
liability.
(d) Nextel will:
(i) own, directly or indirectly, free and clear of any lien,
pledge, encumbrance, charge or other security interest or right of others
therein (except such as may exist under or be granted pursuant to any of
the Transaction Documents), all the outstanding capital stock of NWIP or
such entity that owns the equity interests of the Company originally held
by NWIP (NWIP or such entity being referred to herein as the "Applicable
Entity");
(ii) cause NWIP or such other Applicable Entity not to
(except, in each case, as contemplated by or permitted pursuant to the
Transaction Documents) (A) pledge or otherwise encumber its assets for
the benefit of Nextel or any other person, (B) establish a subsidiary of
NWIP or an Applicable Entity (other than License Co. (as defined in the
Shareholders Agreement)), or commingle its assets with those of Nextel or
any other person, (C) assume or guarantee the liabilities or obligations of
Nextel or any other person, (D) acquire obligations or securities of, or
make loans or advances to, Nextel or any of its other affiliates, (E) incur
any indebtedness, liabilities or obligations other than obligations to
the Company and its affiliates under the Transaction Documents and
<PAGE>
obligations to Nextel and other members of the Nextel Group pursuant to the
agreements identified in subparagraph (F)(2) below, or pursuant to any
agreements referred to in subparagraph (F)(3) below, or (F) enter into any
agreement, arrangement or transaction with any affiliate other than (1) the
Transaction Documents and the transactions required thereunder and (2) an
agreement with members of the Nextel Group in the form attached as Exhibit
B hereto (the "NWIP Rights Agreement"), an agreement with members of the
Nextel Group in the form of Exhibit C hereto (the "ALLTA":), and an
agreement with Nextel in the form of Exhibit D hereto (the "Trademark
Rights Agreement") and (3) any other agreement between NWIP and Nextel
and/or its affiliates that is consented to by the Company; and
(iii) cause NWIP or such other Applicable Entity not to (A)
conduct any business other than exercising its rights and performing its
obligations under the Transaction Documents and activities incidental
thereto or (B) own or have any interest in any properties or assets other
than (1) capital stock, debt or other securities of the Company or any of
its subsidiaries and (2) the assets and rights assigned to NWIP under the
NWIP Rights Agreement and (3) any assets and rights held or acquired by, or
granted to NWIP or such Applicable Entity under any Transaction Documents
or other agreement between the Company and/or any of its subsidiaries and
NWIP or such Applicable Entity.
3. Specific Performance and Other Equitable Relief. (a)
The rights and obligations of the parties enumerated in Section 1(a)(i) and
(ii), and Section 2 are 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 Joint
Venture 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 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 Section 1(a)(i) and (ii) or Section 2, 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.
(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 (subject to the other provisions of this Agreement) monetary
compensation, this subsection shall not preclude the award of such supplemental
relief in addition to (but, in any event, not in lieu of) specific performance.
(c) This Section is 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.
<PAGE>
4. Limited Monetary Recourse Against Nextel. (a) The
maximum cumulative, aggregate monetary liability of Nextel and any other members
of the Nextel Group for any and all actual or alleged claims or causes of action
that arise, result from or are in any way connected with the organization,
financing, operation of, provision of goods or services to or by the Company or
Opco or their controlled affiliates, or other matters provided for or
contemplated in any of the Transaction Documents or any other arrangement or
relationship, contractual or otherwise, as amended and in effect from time to
time, among or involving the Company, Opco or their controlled affiliates and
NWIP or any member of the Nextel Group, whether brought by the Company or Opco,
or any of their controlled affiliates or by others derivatively or otherwise on
behalf of any of them, is limited as provided in Section 4(b).
(b) Except as provided in Section 2 and except with respect
to obligations arising out of an event described in clauses (i) through (vi)
below, recourse for money damages against Nextel and the other members of the
Nextel Group for any and all actual or alleged claims or causes of action that
arise, result from or are in any way connected with the organization, financing,
operation of, provision of goods or services to or by the Company, Opco, or any
of their controlled affiliates, or other matters provided for or contemplated in
any of the Transaction Documents or any other arrangement or relationship,
contractual or otherwise, as amended and in effect from time to time, among or
involving the Company, Opco, or any of their controlled affiliates, and NWIP or
any member of the Nextel Group, whether brought by the Company, Opco, or any of
their controlled affiliates or by others derivatively or otherwise on behalf of
any of them (including, without limitation, actual or alleged claims that may be
based on, arise or result from, or are in any way connected with, any actual or
alleged failure by NWIP to perform its obligations under any of the Transaction
Documents due in whole or in part to NWIP's lack of, or inability to access,
sufficient funds or financing), is limited to a cumulative, aggregate maximum of
$200 million. Such $200 million will be reduced, dollar for dollar, by the
cumulative, aggregate amount that Nextel and the other members of the Nextel
Group have advanced, expended or otherwise provided to or for the benefit of
NWIP on or after May 2, 1998, to enable NWIP to perform its obligations under
any of the Transaction Documents (each a "Section 4 Contribution"), except that
Nextel and the other members of the Nextel Group will not be deemed to have made
a Section 4 Contribution to the extent that Nextel or another member of the
Nextel Group (i) makes a contribution to the Company on the date hereof or at
any subsequent time in exchange for equity securities of the Company; (ii)
receives from the Company or its controlled affiliates goods, services, assets
or other consideration that have a value not less than the amount paid to or
otherwise transferred by Nextel or the other members of the Nextel Group to the
Company or such controlled affiliates or for which Nextel or another member of
the Nextel Group pays the consideration specified therefor in the Transaction
Documents; (iii) receives consideration from the Company or its controlled
affiliates in exchange for the provision of goods, services, assets or other
consideration, that is not less than the cost to Nextel or another member of the
Nextel Group of providing such goods, services, assets or other consideration or
that is otherwise in the amount specified therefor in the Transaction Documents;
(iv) pays damages up to net amounts due for services received by NWIP or by a
member of the Nextel Group from Opco under the Switch Sharing Agreement or the
Roaming Agreement (each as identified on Exhibit A, and as amended and in effect
from time to time); (v) provides equipment, resources or subsidy payments
pursuant to Section 7.03 or Section 7.04 of the Shareholders' Agreement; (vi)
pays amounts under Section 4.18 of the Joint Venture Agreement; or pays monetary
damages, if any, for a breach of the obligation by NWIP or a member of the
Nextel Group to deliver frequencies when required under Section 4.1D of the
Joint Venture Agreement.
<PAGE>
(c) The parties acknowledge that, assuming the Transaction
Documents are consummated in accordance with their respective terms and
conditions, Nextel and the other members of the Nextel Group have not made any
Section 4 Contributions as of the date hereof. Nextel or NWIP may submit a
report from time to time as it deems appropriate or advisable, and, in any
event, will submit a report annually, or after such time that the Nextel Group
believes it has made Section 4 Contributions exceeding $20 million in any
calendar year, each of which reports will set forth a reasonably itemized list
of all Section 4 Contributions made in the period from (i) the date hereof
through the date immediately preceding such report (in the case of the first
such report) and (ii) the cut-off date for the most recently submitted report
through a date immediately preceding such report (in the case of each subsequent
report).
(d) Nothing in this Agreement shall in any manner limit,
restrict or otherwise affect the Company's ability to make direct claims against
and recover monetary damages or other equitable relief directly from NWIP in
accordance with the standards and procedures set forth in the Joint Venture
Agreement.
5. Dispute Resolution. Any dispute between the parties
arising out of or in connection with this Agreement will be resolved under the
dispute resolution procedures set forth in the Joint Venture Agreement.
6. Subsequent Reimbursement of the Nextel Group. If, at
any time and for any reason, the Company, Opco, or any of their controlled
affiliates recovers from NWIP, any insurer or any other person, reimbursement or
payment in any amount relating to any alleged or actual claim or cause of action
for which the Company, Opco, or any of their controlled affiliates has already
received payment from any member of the Nextel Group, the Company or Opco will
immediately pay to Nextel an amount equal to such duplicate payment received
with respect to such claim or cause of action, and the amount of any such
payment made to Nextel will then reduce the aggregate Section 4 Contribution
under Section 4 unless such payment is of a type specified in clauses (i)
through (vi) of Section 4(b).
7. Nextel Representations. Nextel represents and
warrants to the Company that:
(a) Nextel is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and has all
corporate powers required to carry on its business as now conducted.
(b) The execution and delivery by Nextel of this Agreement
and the NWIP Rights Agreement and the performance by Nextel of its obligations
hereunder and thereunder are within the corporate powers of Nextel and have been
duly authorized by all necessary action on the part of Nextel. This Agreement
and the NWIP Rights Agreement, when executed, will constitute a valid and
binding agreement of Nextel, enforceable in accordance with its respective
terms, except (i) as limited by the applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting
enforcement or creditors' rights generally, or (ii) as limited by laws relating
to the availability of specific performance, injunctive relief, or other
equitable remedies.
<PAGE>
(c) The execution and delivery by Nextel of this Agreement
and the NWIP Rights Agreement and the performance by Nextel of its obligations
hereunder and thereunder require no order, license, consent, authorization or
approval of, or exemption by, or action by or in respect of, or notice to, or
filing or registration with, any governmental body, agency or official, except
as contemplated by the Subscription Agreement.
(d) The execution and delivery by Nextel of this Agreement
and the NWIP Rights Agreement and the performance by Nextel of its obligations
hereunder and thereunder do not and will not (i) violate the organizational
documents of Nextel, (ii) violate any applicable law, rule, regulation,
judgment, injunction, order or decree, (iii) 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 Nextel, any other member of the
Nextel Group or NWIP, or to a loss of any material benefit to which Nextel, any
other member of the Nextel Group or NWIP is entitled under any provision of any
agreement or other instrument binding upon Nextel, any other member of the
Nextel Group or NWIP or any of its assets or properties, to the extent that any
of the foregoing would have a material adverse effect on Nextel or would prevent
or otherwise render Nextel unable to perform its obligations hereunder or
thereunder or (iv) result in the creation or imposition of any material lien on
any property or asset of Nextel, any other member of the Nextel Group, or NWIP
to the extent that any of the foregoing would have a material adverse effect on
Nextel or would prevent or otherwise render Nextel unable to perform its
obligations hereunder or thereunder.
8. General. (a) This Agreement (i) is to be governed by, and
construed under the laws of the State of New York, without giving effect to its
principles of conflicts of laws, (ii) is binding upon the parties and their
successors and permitted assigns, (iii) contains the entire agreement of the
parties with respect to the subject matter hereof and supersedes all prior
agreements and understandings, oral or written, between the parties with respect
to such subject matter, and (iv) can only be amended by a writing executed by
the parties.
(b) Whenever possible, each provision of this Agreement is to
be interpreted to be effective and valid under applicable law, but if any
provision of this Agreement is invalid under applicable law, that provision is
ineffective to the extent of that invalidity, without invalidating the remainder
of that provision or the remaining provisions of this Agreement.
(c) The section and other headings in this Agreement are for
convenience only and do not define or limit any of its terms or affect the
meaning or interpretation of this Agreement.
(d) Neither the termination nor expiration of any of the
Transaction Documents or any other arrangements or relationships, contractual or
otherwise, as amended and in effect from time to time, among or involving the
Company, Opco, or any of their controlled affiliates, and NWIP or any member of
the Nextel Group will have any effect on this Agreement, which will remain in
full force and effect following any such event.
(e) Under no circumstances may any party hereto assign or
delegate all or any of its rights or obligations under this Agreement, except
that the Company and Opco may collaterally assign their rights and interest in
this Agreement to senior lenders to the Company or
<PAGE>
Opco that have granted to members of the Nextel Group the rights described in
Section 4.13 of the Joint Venture Agreement (or other rights as Nextel may
agree).
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their duly authorized officers, as of the day and year first
above written.
NEXTEL COMMUNICATIONS, INC.
By: s/Thomas J. Sidman
Name: Thomas J. Sidman
Title: Vice President
NEXTEL PARTNERS, INC.
By: s/John Chapple
Name: John Chapple
Title: President and Chief
Executive Officer
NEXTEL PARTNERS OPERATING CORP.
By: s/John Chapple
Name: John Chapple
Title: President and Chief
Executive Officer
<PAGE>
EXHIBIT A
Transaction Documents
Collateral Agreements
Analog Management Agreement, dated as of January 29, 1999, between
Nextel Partners Operating Corp. and Nextel WIP Corp.
Infrastructure Equipment Purchase Agreement, dated as of January 29,
1999, between Nextel Partners Operating Corp. and Motorola, Inc.
Interim Management Agreement, dated as of January 29, 1999, between
Nextel Partners Operating Corp. and Nextel WIP Corp.
Joint Venture Agreement, dated as of January 29, 1999, between Nextel
Partners, Inc., Nextel Partners Operating Corp. and Nextel WIP Corp.
Master Site Lease Agreement, dated as of January 29, 1999, between
Nextel Partners, Inc. and Nextel WIP Corp.
Roaming Agreement, dated as of January 29, 1999, between Nextel
Partners Operating Corp. and Nextel WIP Corp.
Subscriber Purchase and Distribution Agreement, dated as of January 29,
1999, between Motorola, Inc. and Nextel Partners Operating Corp.
Switch Sharing Agreement, dated as of January 29, 1999, between Nextel
Partners Operating Corp. and Nextel WIP Corp.
Trademark License Agreement, dated as of January 29, 1999, between
Nextel Partners Operating Corp. and Nextel WIP Corp.
Transition Services Agreement, dated as of January 29, 1999, among
Nextel Partners, Inc., Nextel Partners Operating Corp. and Nextel WIP Corp.
Asset and Stock Transfer and Reimbursement Agreement, dated as of
January 29, 1999, between Nextel Partners Operating Corp. and Nextel WIP Corp.
Other Agreements
Agreement Specifying Obligations of, and Limiting Liability and
Recourse to, Nextel, dated as of January 29, 1999, by and among Nextel
Communications, Inc., Nextel Partners Operating Corp. and Nextel Partners, Inc.
Agreement in Support of Charter Obligations, dated as of January 29,
1999, by and among Nextel Partners, Inc. and Nextel WIP Corp.
Custodial Agreement, dated as of January 29, 1999, by and among Nextel
Partners, Inc. and Bank of Montreal Trust Company.
Employment Agreements, dated as of January 29, 1999, between Nextel
Partners Operating Corp. and each of John Chapple, John Thompson, David Thaler,
David Aas, Perry Satterlee and Mark Fanning.
Restated Certificate of Incorporation of Nextel Partners, Inc., dated
as of January 29, 1999.
Restricted Stock Purchase Agreements, dated as of November 20, 1998, as
amended, between Nextel Partners, Inc. and each of John Chapple, John Thompson,
David Thaler, David Aas, Perry Satterlee and Mark Fanning.
Shareholders' Agreement, dated as of January 29, 1999, by and among
Nextel Partners, Inc., Nextel WIP Corp., DLJ Merchant Banking Partners II, L.P.,
Eagle River Investments, LLC, Motorola, Inc. and the other investors named
therein.
Subscription and Contribution Agreement, dated as of January 29, 1999,
by and among Nextel Partners, Inc. and the buyers named therein.
1999 Stock Option Plan of Nextel Partners, Inc., effective January 29,
1999.
<PAGE>
EXHIBIT B
Form of NWIP Rights Agreement
<PAGE>
EXHIBIT C
Form of ALLTA
<PAGE>
EXHIBIT D
Form of Trademark Rights Agreement
Exhibit 99.1
[Nextel Logo] Nextel Communications, Inc.
1505 Farm Credit Drive
McLean, VA 22102
703 394-3000
For Immediate Release
Contacts:
Nextel Media: Ben Banta (703) 394-3573
Nextel Investors: Paul Blalock (703) 394-3500
Nextel Partners Media: Bob Ratliffe (425) 828-8686
Nextel Finalizes Agreements with Nextel Partners, Inc.
McLEAN, Va. - February 1, 1999 - Nextel Communications, Inc. (NASDAQ: NXTL)
today announced that it finalized definitive agreements and consummated its
previously announced transaction with Nextel Partners, Inc. to provide digital
wireless communications services under the Nextel brand name and target
mid-sized and smaller markets throughout the United States.
"These markets are integral to Nextel's strategy of providing digital wireless
services nationwide," said Dan Akerson, chairman and CEO of Nextel
Communications, Inc. "Nextel Partners will offer its customers the same
differentiated, integrated package of digital wireless communications services
that Nextel has used to penetrate its own markets."
Over the next three years, Nextel Partners has agreed to build digital wireless
systems containing a total of 33 million POPs in 39 mid-sized and smaller
markets, including Albany, Binghamton, Buffalo, Corpus Christi, Des Moines,
Green Bay, Harrisburg, Louisville, Rochester, Syracuse as well as the state of
Hawaii, the Florida Panhandle and selected corridors along interstate highways.
Nextel has agreed to transfer certain FCC licenses in these markets to Nextel
Partners in exchange for $131 million of Nextel Partners equity. In addition,
Nextel Partners has acquired from Nextel recently launched operational digital
mobile systems and related assets in five markets covering approximately 4.5
million POPs. In exchange for such assets and for other capital and operating
expenses previously incurred by Nextel in the Nextel Partners territory, Nextel
has received cash payment totaling approximately $125 million.
"Nextel Partners has successfully attracted an experienced senior management
team and believes that its dedicated management focus will enable it to complete
the network build-out and operate effectively," said John Chapple, CEO of Nextel
Partners, Inc.
Nextel Partners has successfully raised $400 million of proceeds from the sale
of its senior discount notes and $275 million of senior debt. Additionally,
equity investors have committed $306 million in cash, equipment credits and FCC
licenses. The largest equity investors in Nextel Partners are: Nextel WIP Corp.
(a wholly owned Nextel subsidiary), DLJ Merchant Banking Partners II, L.P.,
Eagle River Investments, L.L.C., Motorola, Inc. and Madison Dearborn Capital
Partners II, L.P. Donaldson, Lufkin & Jenrette (DLJ) Securities Corporation
acted as lead initial purchaser in the offering of the senior discount notes,
DLJ Capital Funding, Inc. acted as lead arranger for the senior debt and TD
Securities (USA) Inc., an affiliate of Toronto Dominion Bank, acted as financial
advisor to Nextel.
Nextel Partners, Inc., based in Kirkland, WA is the exclusive digital mobile
wireless service provider licensed to use the Nextel brand name in 39 targeted
mid-sized and smaller markets throughout the United States which are integral to
Nextel's strategy of providing digital wireless services nationwide. The company
offers its customers the same differentiated, integrated package of digital
wireless communications services that Nextel provides customers in its markets
and provides these services in an operationally seamless fashion allowing
customers to roam between the two companies' systems with equal ease at no
additional charge.
Nextel Communications, based in McLean, VA, is the leading provider of fully
integrated wireless communications and has built the largest guaranteed
all-digital wireless network in the United States that covers 91 of the top 100
U.S. markets. The Nextel National Network offers a fully integrated wireless
communications tool with digital cellular, text/numeric paging and Nextel Direct
Connectsm - a digital two-way radio feature. In addition, through Nextel
International, Inc., Nextel has wireless operations and investments in Canada,
Mexico, Argentina, Brazil, the Philippines, Peru, Japan and Shanghai, China.
Please visit our website at http://www.nextel.com.
# # #
Nextel, the logo and Nextel Direct Connect are trademarks and/or service marks
of Nextel Communications, Inc.
Exhibit 99.2
[LOGO]
CONTACT:
Nextel- Investor Relations Nextel- Media Relations
Paul Blalock Ben Banta
703-394-3500 703-394-3573
[email protected] [email protected]
SpectraSite- Investor Relations SpectraSite- Media Relations
Dave Tomick Noreen Allen
919-468-0112 610-992-0889
[email protected] [email protected]
SpectraSite commits $1.05 billion for Nextel Tower purchase and future tower
development programs
Deal positions SpectraSite as second largest independent tower company
New York, NY--February 11, 1999--SpectraSite Communications Inc. and Nextel
Communications Inc. (NASDAQ: NXTL) today announced that they have executed
definitive agreements under which SpectraSite will purchase Nextel's tower
inventory of more than 2,000 sites and build 1,700 new towers within the next
five years to support the aggressive nationwide expansion of Nextel and Nextel
Partners Inc. The deal marks the largest award for new tower construction in
history and makes SpectraSite the second largest independent tower owner and
operator in the United States.
Under the terms of the agreement, Nextel will receive $560 million in cash and a
17 percent ownership interest in SpectraSite. SpectraSite will own nearly 2,200
towers nationwide upon closing of the transaction, and will have access to $490
million for additional new tower development programs. The company intends to
build more than 1,000 new multi-tenant towers in 1999.
Equity investors led by Welsh, Carson, Anderson & Stowe, committed approximately
$400 million in cash to SpectraSite to complete this transaction.
"The completion of this deal will enable Nextel to expedite network deployment
in both existing and new markets throughout the United States," said Tim
Donahue, President of Nextel Communications Inc. "SpectraSite's operating
capability and business strategy, along with its strong financial partners,
complement our goal of providing excellent coverage and service nationwide to
Nextel subscribers."
"We are proud to be playing an instrumental role in helping Nextel achieve its
long-term expansion goals," said Stephen Clark, CEO, SpectraSite Communications
Inc. "The Nextel deal was attractive to us because the towers were developed as
part of a complete nationwide wireless network, ideal for collocation by other
carriers. In addition, the towers are relatively new, presenting further upside
growth potential. This marks the first time that a tower company has the ability
to offer a complete nationwide network," said Clark.
-more-
<PAGE>
"Combined with our existing 1,240 owned and managed towers, we now have a
nationwide footprint with more than 3,300 strategically located, viable
collocation opportunities. This inventory, combined with our site development
expertise, will enable SpectraSite to complete network buildouts on behalf of
carriers with unprecedented speed and reliability," said Clark.
"The Nextel acquisition is a ground-breaking move for SpectraSite as it launches
a consolidation strategy in the tower industry. SpectraSite plans to
aggressively pursue additional acquisitions and major new build programs for
carriers nationwide," said Lawrence B. Sorrel, General Partner of Welsh, Carson,
Anderson & Stowe, who will be named Chairman of SpectraSite.
Welsh, Carson, Anderson & Stowe is one of the largest private equity firms in
the United States with more than $8 billion under management. J.H. Whitney &
Co., one of the first private equity firms in the United States founded and
organized SpectraSite in 1996 and will be a significant investor in this
transaction. CIBC WG Argosy Fund will also be a significant equity investor.
"We are pleased to have attracted this strong set of partners to SpectraSite.
The transaction represents a major milestone for the company, and positions
SpectraSite as a leader in this highly attractive segment of the
telecommunications industry," said Michael Stone, General Partner of J.H.
Whitney & Co.
CIBC Oppenheimer Corp. and Credit Suisse First Boston will serve as co-leads for
$550 million in senior financing. BT Alex. Brown acted as financial advisor for
Nextel in this transaction. The transaction is expected to close in the second
quarter of this year and is subject to certain regulatory approvals and third
party consents.
About SpectraSite Communications Inc.
SpectraSite Communications Inc. (www.spectrasite.com) is a leading owner and
operator of communications towers for the wireless telecommunications industry.
Upon closing of the Nextel transaction, SpectraSite will own nearly 2,200 towers
in 44 of the top 50 population centers in the United States, with clusters of
towers in major markets including Los Angeles, Chicago, San Francisco, Detroit,
Atlanta, Dallas, Boston, Cleveland, St. Louis, Seattle, Tampa, Charlotte,
Norfolk and Nashville. SpectraSite has regional offices in the New York,
Atlanta, Chicago and San Francisco areas, from which it offers comprehensive
turnkey services including project management, site acquisition services
construction and design, build-to-suit, purchase/leaseback, tower leasing, and
tower management and maintenance services to facilitate network infrastructure
buildouts.
-more-
<PAGE>
About Nextel Communications Inc.
Nextel Communications Inc. (www.nextel.com), based in McLean, VA, is the leading
provider of fully integrated wireless communications and has built the largest
guaranteed all-digital wireless network in the United States that covers
thousands of communities across the U.S. including 92 of the top 100 markets.
The Nextel National Network offers a fully integrated wireless communications
tool with digital cellular, text/numeric paging and Nextel Direct Connectsm - a
digital two-way radio feature. In addition, through Nextel International, Inc.,
Nextel has wireless operations and investments in Canada, Mexico, Argentina,
Brazil, the Philippines, Peru, Japan and Shanghai, China.
About Nextel Partners Inc.
Nextel Partners, Inc., based in Kirkland, WA is the exclusive digital mobile
wireless service provider licensed to use the Nextel brand name in 39 targeted
mid-sized and smaller markets throughout the United States which are integral to
Nextel's strategy of providing digital wireless services nationwide. The company
offers its customers the same differentiated, integrated package of digital
wireless communications services that Nextel provides customers in its markets
and provides these services in an operationally seamless fashion allowing
customers to roam between the two companies' systems with equal ease at no
additional charge.
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