Exhibit 10.2(v)
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Agreement is made as of this 30th day of April, 2004, by and between
NAVTEQ Corporation (formerly Navigation Technologies Corporation), a Delaware
corporation ("NAVTEQ"), and Xxxxxx Xxxxx ("GREEN" or "EXECUTIVE"), effective the
date hereof ("EFFECTIVE DATE").
1. SERVICES OF GREEN
x. Xxxxx shall continue to devote his full time and attention to the
business of NAVTEQ as its Chief Executive Officer and President and, as directed
by the Board of Directors of NAVTEQ (the "BOARD"), shall perform the services
that are consistent with such titles and duties. Green also shall continue to
serve as a member of NAVTEQ's Board of Directors during the employment period
and the failure of Green to be elected and continue as a Director (other than as
a result of his voluntary resignation) during such period shall constitute a
"NAVTEQ Breach" (as defined below) under this Agreement. Upon termination or
expiration of Green's employment for any reason, Green shall promptly resign as
a Director of NAVTEQ and its subsidiaries, as the case may be. Green may devote
reasonable time to activities such as supervision of personal investments and
activities involving professional, charitable, educational, religious and
similar types of activities, speaking engagements, and membership on other
boards of directors (whether for-profit or not-for-profit), provided such
activities do not interfere in any material way with the business of NAVTEQ, and
are consistent with the terms of this Agreement and are not competitive with the
business of NAVTEQ. Green shall be entitled to keep any amounts paid to him in
connection with such activities (E.G., director fees and honoraria).
b. The period of Green's employment under this Agreement shall continue
from the Effective Date until terminated on the earlier to occur of (i) Green's
death or a termination of Green's employment due to his Disability (as defined
below) and (ii) the date of termination of his employment by NAVTEQ or by Green
as evidenced by notice to that effect by one such party to the other. NAVTEQ may
upon notice to Green involuntarily terminate Green's employment at any time for
or without Cause (as defined below). Upon notice to NAVTEQ, Green may
voluntarily terminate his employment at any time due to or not due to a NAVTEQ
Breach or for or not for Good Cause (as such terms are defined below); provided,
any such termination by Green other than as a result of either a NAVTEQ Breach
or for Good Cause shall be effective not sooner than sixty (60) days after such
notice and, upon such notice by Green, NAVTEQ may terminate Green's employment
at any time during such sixty (60) day or longer notice period (which shall not
be regarded as an involuntary termination by NAVTEQ without Cause).
x. Xxxxx agrees that:
(i) During the period of Green's employment and for a period of
one (1) year after the termination of his employment for any reason, Green will
not, acting alone or in conjunction with others, directly or indirectly, without
the consent in writing of the Board:
(A) Engage (either as an owner, partner, stockholder,
employer, employee, consultant or otherwise) in any business or activity related
to creating, managing, adapting, applying, distributing, selling or licensing
navigable street map databases and related database creation, updating,
accessing, routing, compiling or other application software, or any logical
extensions thereof, or any other business conducted during the term of this
Agreement by NAVTEQ or any of its subsidiaries (the "NAVTEQ BUSINESSES"); it
being agreed, without limiting any of the foregoing, that Green will not
directly or indirectly provide software services to any competitor of NAVTEQ in
the NAVTEQ Businesses.
(B) Induce any customers of NAVTEQ or any of its subsidiaries
to curtail or cancel their business with NAVTEQ or any of its subsidiaries, or
induce any person or entity to do business with any competitor of NAVTEQ engaged
in any of the NAVTEQ Businesses.
(C) Solicit or canvass business in connection with the
selling or licensing of navigable street map databases or related software from
any person or entity who was a customer of NAVTEQ or any of its subsidiaries
during the period in which Green's services are or were provided to NAVTEQ or
any of its subsidiaries; or
(D) Induce, or attempt to influence, any employee of NAVTEQ
or any of its subsidiaries to terminate his or her employment.
The provisions of each of clauses (A), (B), (C), and (D) above are separate and
distinct commitments independent of each of the other clauses. It is agreed that
the ownership of equity securities of NAVTEQ or not more than five percent (5%)
of the equity securities of any company having securities listed on an exchange
or regularly traded in the over-the-counter market shall not, in itself, be
deemed inconsistent with subparagraphs 1.c.(i)(A).
If, at the time of enforcement of any of the provisions of this Section 1.c.(i),
a court holds that the restrictions stated herein are unreasonable under the
circumstances then existing, the parties hereto agree that the maximum period,
scope or geographical area reasonable under such circumstances shall be
substituted for the stated period, scope or area. The parties agree that the
covenants made in this Section 1.c.(i) shall be construed as an agreement
independent of any other provision of this Agreement and shall survive any order
of a court of competent jurisdiction terminating any other provision of this
Agreement.
(ii) Except in the course of providing services hereunder, Green
shall not, at any time, during his employment or thereafter, for any reason
whatsoever, disclose, use, transfer or sell any confidential or proprietary
information of NAVTEQ and its subsidiaries if such information has not otherwise
lawfully been disclosed or is not otherwise in the public domain, except as
required by law or pursuant to legal process.
(iii) Green agrees to cooperate with NAVTEQ by being available to
testify on behalf of NAVTEQ or any subsidiary or affiliate of NAVTEQ in any
proceeding, whether civil, criminal, administrative or investigative, and to
assist NAVTEQ, or any subsidiary or affiliate of NAVTEQ, in any such action,
suit or proceeding, by providing information, and meeting and consulting with
the Board or its representatives or counsel, or representatives or counsel of
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NAVTEQ or any subsidiary or affiliate of NAVTEQ, at reasonably convenient times
and places, as requested by such Board, representatives or counsel. NAVTEQ
agrees to reimburse Green for all expenses (including the reasonable fees and
expenses of his counsel) and time reasonably incurred in connection with his
provision of such testimony or assistance after the termination of Green's
services under this Agreement.
2. COMPENSATION
a. Compensation for Green's services shall consist of (i) the Base Annual
Compensation, (ii) the Senior Executive Bonus Plan, (iii) such customary health
and welfare benefits and perquisites as NAVTEQ provides to its executive
employees, and (iv) incentive awards from time to time as hereinafter provided
in this Agreement. NAVTEQ shall reimburse Green for reasonable expenses incurred
in performing his duties to NAVTEQ hereunder, subject to policies established by
the Board from time to time. Upon Green's retirement (or other voluntary
termination of employment) at any time at or after attaining age 55, or at any
time upon a termination of Green's employment due to his death or Disability or
for a reason set forth at Section 2.e., Green and his spouse shall each be
entitled to continuation of health benefits until they commence Medicare, at a
cost to Green of the COBRA premium charged to former employees from time to time
("RETIREE HEALTH BENEFIT").
b. The "BASE ANNUAL COMPENSATION" for Green's services shall be at the
annual rate of not less than $630,000. The Base Annual Compensation shall be
paid to Green by NAVTEQ in twenty-six (26) equal bi-weekly installments each
year. The Board shall review the Base Annual Compensation on an annual basis.
The Board shall have the right, but not the obligation, to increase (but not
decrease) Green's Base Annual Compensation from time to time, as it sees fit,
and any increased amount shall thereafter be Green's "Base Annual Compensation"
hereunder.
x. Xxxxx will also be eligible to participate in NAVTEQ's Senior
Executive Bonus Plan during the term of his employment. Green's target bonus
each year will be 100 percent of his Base Annual Compensation, with lesser or
greater bonus opportunities for performance below or above target performance
levels. One half of Green's bonus will be subject to Green's achievement of
applicable NAVTEQ milestones and objectives. Such milestones and objectives
shall be established annually by the Compensation Committee of the Board (the
"Committee"), not later than the 90th day of the fiscal year, and shall refer to
financial and other data determinable as of the end of each fiscal year of
NAVTEQ. The other half of Green's bonus will be subject to Green's achievement
of objective personal objectives established by the Committee on an annual
basis. For each year, Green's bonus, if any, will be paid to Green in a lump sum
on or before March 31 of the following year. A determination as to whether the
aforementioned milestones and objectives have been met shall be made by the
Committee within ninety (90) days after the end of each such fiscal year, and
Green's bonus, if any, shall be deemed earned as of the end of the fiscal year
for which the objectives and milestones were set.
d. If NAVTEQ terminates Green's employment for Cause, or Green's
employment terminates due to his death or Disability, or Green terminates his
employment with NAVTEQ other than as a result of either a NAVTEQ Breach or for
Good Cause, or Green's employment terminates for any reason at or after
attaining age 65 then NAVTEQ shall not be required to pay
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any compensation for such termination, and Green shall not thereafter continue
to participate in any benefit plans of NAVTEQ or its subsidiaries, except to the
extent required by law or as provided below. Green shall be entitled to receive
for the period through the date of such termination: (i) all Base Annual
Compensation accrued and unpaid, (ii) accrued and unused vacation, (iii) any
annual bonus earned and unpaid, such bonus to be received when such bonus would
have been paid to Green had Green's employment not been so terminated, and (iv)
any unreimbursed business expenses incurred through the date of such
termination. Green (or his beneficiary) shall be entitled to receive any death
or disability benefit, or any welfare benefit, to which Green may be entitled
under the terms of NAVTEQ's benefit plans, including COBRA continuation and the
Retiree Health Benefit (if applicable as provided at Section 2.a.). In the event
Green's employment terminates due to death or Disability, all stock options,
restricted stock, restricted stock units and other equity awards to Green shall
immediately fully vest, a pro rata amount of non-equity incentive awards to
Green shall vest based upon target payout and the number of days worked in the
performance period, all stock option awards shall be exercisable for eighteen
(18) months in the case of Green's death and for twelve (12) months in the case
of his Disability and all earned cash long-term incentive awards for which the
performance cycle has ended shall be immediately payable.
e. In the event that at any time prior to the date Green attains age 65:
(i) Green's employment is terminated by NAVTEQ without Cause or by Green as a
result of either a NAVTEQ Breach or for Good Cause, or (ii) Green terminates his
employment for any reason during the thirty (30) day period commencing on the
six-month anniversary after a Change of Control, then NAVTEQ will provide Green
with the following:
(i) Severance pay, payable in a lump sum within ten (10) days
following the date of termination of Green's employment, in an amount equal to
two (2) years of Base Annual Compensation and two (2) years of target bonuses.
(ii) Continuation of Green's participation in NAVTEQ's health and
welfare benefit plans for a period of two (2) years after the date of
termination, to the extent the terms of such plans so permit, followed by COBRA
continuation coverage (paid by NAVTEQ for such part, if any, of such two-year
period as the health benefit plan does not so permit), and then followed by the
Retiree Health Benefit.
(iii) All stock options, restricted stock, restricted stock units
and other equity awards to Green shall immediately fully vest, a pro rata amount
of non-equity incentive awards to Green shall vest based upon target payout and
the number of days worked in the performance period, all stock options shall be
exercisable for the unexpired balance of the stated option period, and all
earned cash long-term incentive awards for which the performance cycle has ended
shall be immediately payable.
(iv) All Base Annual Compensation accrued and unpaid, accrued and
unused vacation, any annual bonus earned and unpaid, such bonus to be received
when such bonus would have been paid to Green had Green's employment not been so
terminated, and any unreimbursed business expenses incurred through the date of
such termination.
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In the event of such a termination, the foregoing shall be Green's sole and
exclusive remedy and Green shall not be entitled to any other or further
payments, compensation or benefits from NAVTEQ, except as may be more favorable
to Green as provided in any stock option or other equity or other incentive
award previously or hereafter granted to Green.
f. For purposes of this Agreement,
(i) "CAUSE" shall mean (w) the material breach by Green of any of
his obligations under this Agreement (other than as a result of Green's death or
Disability and, with respect to a material breach by Green of any of his
obligations under Section 1.a. of this Agreement, except where Green reasonably
and in good faith believes the performance of such obligations to be not in the
best interests of NAVTEQ and its subsidiaries or the stockholders of NAVTEQ)
which is not remedied within 15 days after delivery of written notice from
NAVTEQ to Green specifying such breach, (x) Green's commission of a criminal
offense which is a felony, (y) Green's commission of any other act or omission
involving dishonesty, disloyalty or fraud with respect to NAVTEQ or any of its
operating subsidiaries or any of their business relations, or (z) the
substantial and repeated failure of Green to perform duties as reasonably
directed by the Board consistent with this Agreement (except where Green
reasonably and in good faith believes the performance of such duties to be not
in the best interests of NAVTEQ and its subsidiaries or the stockholders of
NAVTEQ);
(ii) A "NAVTEQ BREACH" shall mean a continued material failure of
NAVTEQ to comply with the terms of this Agreement, and such failure continues
for a period of more than 15 days following notice of such failure by Green to
the Board. Any such notice shall specifically state the grounds which Green
alleges constitutes a NAVTEQ Breach;
(iii) "DISABILITY" shall mean Green's incapacity due to physical or
mental illness as certified in writing by a physician selected by Green and
reasonably acceptable to NAVTEQ (it being understood that (x) such physician
shall be deemed to be reasonably acceptable to NAVTEQ if, within a period of
fifteen (15) days after Green notifies NAVTEQ of the name of such physician,
NAVTEQ does not object to the use of such physician, and (y) if Green fails to
select a physician within fifteen (15) days after a written request from NAVTEQ
to do so, NAVTEQ shall have the right to select the physician to examine Green);
(iv) "GOOD CAUSE" shall mean (x) a significant diminution by NAVTEQ
of Green's duties and responsibilities as compared to the duties and
responsibilities of Green on the Effective Date, or (y) a reduction by NAVTEQ of
Green's Base Annual Compensation or target bonus opportunity; and
(v) "CHANGE OF CONTROL" shall have the meaning ascribed to such
term in the NAVTEQ Corporation 2001 Stock Incentive Plan ("STOCK PLAN") as in
effect from time to time. The foregoing and Section 5.g to the contrary
notwithstanding, for the purpose of this Agreement, a "Change of Control" shall
not be deemed to occur solely as a result of a reduction by Philips Consumer
Electronic Services B.V. and any of its affiliates (as defined under the Stock
Plan, but for this purpose substituting Philips Consumer Electronic Services
B.V. for the Company) to which it has transferred any of its NAVTEQ securities
to less than a majority of the combined voting power of then outstanding
securities entitled to vote generally in the election of
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NAVTEQ or the surviving entity of a merger sale exchange or consolidation, as
the case may be, in such a Change of Control transaction described under the
Stock Plan.
g. NAVTEQ shall indemnify Green with respect to his performance of
services hereunder to the full extent allowed under the General Corporation Law
of the State of Delaware. NAVTEQ shall maintain officers' and directors'
liability insurance coverage for Green while employed by NAVTEQ or serving on
the Board, and at all times thereafter for the duration of any period of
limitations during which any action may be brought against Green, in such amount
and to the same extent as NAVTEQ covers other members of the Board.
h. During the term of Green's employment hereunder, NAVTEQ shall provide
Green with the following additional benefits:
(i) NAVTEQ will continue its practice of paying or reimbursing
Green for all first-class business-related travel anywhere within the United
States and for business-class business-related travel to destinations outside of
the United States.
(ii) NAVTEQ will pay Green a monthly allowance in the amount of
$3,000 for expenses related to an automobile, personal financial advice and
membership fees and dues of a downtown Chicago luncheon/dinner club designed
primarily to serve meals in a business environment. Green shall otherwise bear
all expenses and liabilities relating to these items.
(iii) NAVTEQ will purchase and maintain for the duration of Green's
employment with NAVTEQ a level-premium term life insurance policy having a death
benefit of not less than $3,500,000, payable to the beneficiary designated by
Green. Upon termination of Green's employment for any reason (other than death),
NAVTEQ shall assign such policy to Green at his option.
(iv) All stock options, restricted stock, restricted stock units
and other equity incentive awards to Green shall immediately fully vest, and a
pro rata amount of non-equity incentive awards to Green shall vest based upon
target payout and the number of days worked in the performance period, in the
event of a Change of Control of NAVTEQ.
(v) If the Company proposes to register shares of its stock under
the Securities Act, then the Company shall, prior to the expiration of any lock
up period under an agreement which Green enters into with the underwriters, file
a Form S-8 to register all shares of stock, stock options and other equity
incentive awards payable in stock to Green.
i. During the period of Green's employment hereunder, in the event NAVTEQ
completes an initial sale in an underwritten public offering registered under
the Securities Act of 1933, as amended ("SECURITIES ACT"), of shares of NAVTEQ's
common stock having an aggregate offering value of at least $25 million ("IPO"),
Green shall have the right to purchase as part of the IPO up to $5 million
($5,000,000) in shares of such stock at the IPO price to the public.
j. As of the Effective Date, Green shall be awarded restricted stock
units under the Stock Plan for 8,670,701 shares of common stock of NAVTEQ,
vesting in equal installments on the first four (4) anniversaries of the
Effective Date, and on such other terms (including
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performance conditions) as are set forth on the Restricted Stock Unit Agreement
attached hereto as Exhibit A. Commencing 2005, Green shall be eligible for an
annual equity award under the Stock Plan (or any successor plan) in such amount
and having such other terms and conditions as may be determined in the sole
discretion of the Board or the Committee.
x. Xxxxx hereby agrees that all rights he had under Sections 2.k.(ii) and
Section 2.l. of his employment agreement with NAVTEQ dated April 17, 2000
("PRIOR AGREEMENT") shall be terminated and of no force or effect and Green
further agrees that he has no right or claim to purchase any equity securities
or be granted any equity securities under such provisions of the Prior
Agreement.
l. All amounts payable to Green hereunder shall be subject to all
required withholding by NAVTEQ.
3. PROPRIETARY INFORMATION AND INVENTIONS
a. Subject to the exceptions identified in Section 3.c., the items
specified below in this Section 3.a. are hereinafter collectively called
"PROPRIETARY SUBJECT MATTER," and Green's interest in them will be the exclusive
property of NAVTEQ, its successors, assignees, or nominees:
(i) Any and all inventions, improvements and ideas (whether or not
patentable or copyrightable) which Green has made or conceived, or which he may
make or conceive, either solely or jointly with others, at any time during the
term of his employment, which relate to the NAVTEQ Businesses (as defined above)
or contemplated businesses of which Green is aware, or logical extensions
thereof (and not to business management or leadership generally).
(ii) Any suggestion, proposal, writing, drawing and the like of any
sort whatsoever, including any interest in any copyright, which Green creates or
assists in creating during his engagement with or provision of services to
NAVTEQ, which is related to the NAVTEQ Businesses (as defined above) or
contemplated businesses of which Green is aware, or logical extensions thereof
(and not to business management or leadership generally).
Green shall fully and promptly disclose to NAVTEQ all Proprietary Subject Matter
made or conceived during the term of Green's employment with NAVTEQ. Green shall
not knowingly or intentionally assign or otherwise relinquish any rights in such
Proprietary Subject Matter to any third party without the prior written consent
of the Board.
b. At the request and expense of NAVTEQ, but without further compensation
to Green beyond the provisions of this Agreement, Green shall promptly consent
to such acts and execute, acknowledge and deliver all such papers, including
without limitation patent and copyright applications, as may be necessary or
desirable in the sole discretion of NAVTEQ, to obtain, to protect, to maintain,
or to vest in NAVTEQ the entire right, title and interest in and to Proprietary
Subject Matter, and in and to any patent applications, patents, copyright
applications, copyrights, investors' certificates or other proprietary rights of
any kind relating thereto, in all countries of the world, including rendering
such assistance as NAVTEQ may request in any future contemplated or pending
litigation, Patent Office proceeding or other proceeding.
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c. (i) The Board may from time to time except from the provisions of
Sections 3.a. and 3.b. hereof Green's rights in Proprietary Subject Matter upon
a determination by the Board that such would not adversely affect, or materially
contribute to an adverse effect on, the results of operations or the financial
condition or prospects of NAVTEQ or any of its subsidiaries. Any such
determination of the Board shall be by majority vote not including Green or
directors who have been designated by or who are affiliated with Green.
(ii) The exception set forth in Section 3.c.(i) notwithstanding,
Green will not assert against NAVTEQ any claim for infringement or
misappropriation of any excepted Proprietary Subject Matter.
x. Xxxxx will not knowingly or negligently disclose, or cause others to
disclose to NAVTEQ or any of its subsidiaries, or induce NAVTEQ or any of its
subsidiaries to use, any information or material which is the property of other
individuals or companies and which there is any reason to believe is of a
proprietary or confidential nature, except with the consent of the owners of
such information or material.
e. Since the services that Green will render to NAVTEQ will include, and
Green shall have access to, NAVTEQ's knowledge and information of a private or
confidential or secret nature, Green shall not during or after the term of his
employment, except as reasonably required in the normal course of NAVTEQ's
business or as authorized in writing by the Board, publish, disclose or make use
of, or authorize anyone else to publish, disclose or otherwise make use of, any
such knowledge or information, whether of a technical or of a non-technical
nature, which in any way relates to the design, construction, manufacture or
sale of NAVTEQ's services or products.
f. All documents, written information and other items, including but not
limited to notes, sketches, manuals, blueprints, notebooks, products, tools,
fixtures, records and information relating to the services or products of NAVTEQ
or its subsidiaries, made or obtained by Green through Green's provision of
services to, or employment by, NAVTEQ, will be the exclusive property of NAVTEQ
and shall be delivered by Green to NAVTEQ upon termination of his employment
(whether such termination is caused by an act of NAVTEQ or by Green or by any
other act), or any other time as requested by NAVTEQ. Subject to the
confidentiality provisions of Section 3.e. hereof, Green may retain copies of
such papers as necessary for the sole purpose of protecting his legal interests.
4. GOVERNING LAW; ARBITRATION; INJUNCTIVE AND OTHER RELIEF
a. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware applicable to agreements made
and to be performed entirely in Delaware.
b. Each party hereby irrevocably consents to the exclusive jurisdiction
of the federal and state courts located in Chicago, Illinois with respect to any
actions which may arise in connection with this Agreement and are not required
by this Section 4 to be arbitrated. Except as provided in this Section 4, any
controversy or claim arising out of or relating to this Agreement, or the breach
thereof, shall be settled by arbitration administered by the American
Arbitration
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Association in accordance with its Commercial Arbitration Rules, and judgment on
the award rendered by the arbitrators may be entered in any court having
jurisdiction thereof.
c. Within fifteen (15) days after the commencement of arbitration, NAVTEQ
and Green shall each select one person to act as arbitrator and the two selected
shall select a third arbitrator within ten (10) days of their appointment. If
the arbitrators so selected are unable or fail to agree upon the third
arbitrator, or if either party fails to appoint an arbitrator, such arbitrator
or arbitrators shall be selected by the American Arbitration Association.
d. Each of the parties to this Agreement acknowledges that a breach of
this Agreement may cause the other party irreparable harm which may not be
adequately compensated by money damages. Therefore, in the event of a breach or
threatened breach by a party, injunctive or other equitable relief will be
available to the other party, and any arbitrator acting pursuant to this
Agreement shall have the authority to provide such injunctive or other equitable
relief. Remedies provided herein are not exclusive, except as provided in
Section 2.e.
e. The arbitrators shall have the authority to award such remedies or
relief that a court of the State of Delaware could order or grant in an action
governed by Delaware law, including, without limitation, specific performance of
any obligation created under this Agreement, the issuance of an injunction, or
the imposition of sanctions for abuse or frustration of the arbitration process.
The arbitration proceedings shall be conducted in Chicago, Illinois.
f. Notwithstanding the foregoing, any party may bring and pursue an
action in any Federal or State court located in Chicago, Illinois seeking
provisional relief, including a temporary restraining order or preliminary
injunction, pending an arbitration proceeding. Any provisional relief obtained
shall be discontinued once the arbitrators have assumed jurisdiction and ordered
such discontinuance.
5. MISCELLANEOUS
a. SURVIVAL. Notwithstanding anything in this Agreement to the contrary,
the obligations of the parties under Sections 1.c., 2.d., 2.e., 2.g., 2.h.(iii),
and 2.h.(v), 3., 4., 5. and 6. shall survive any termination of Green's
employment.
b. SUCCESSORS AND ASSIGNS. The provisions hereof shall inure to the
benefit of, and be binding upon, the successors, assigns, heirs, executors and
administrators of the parties hereto. NAVTEQ shall assign and cause a successor
to assume the obligations of NAVTEQ under this Agreement. However, nothing in
this Section 5.b. shall be construed to limit in any way Green's rights
hereunder in the event of a Change of Control as defined in Section 2.f.(v)
herein.
c. ENTIRE AGREEMENT; AMENDMENT. This Agreement is an amendment and
complete restatement of Green's Prior Agreement (and of all amendments of the
Prior Agreement entered into prior to the date hereof). This Agreement
constitutes the full and entire understanding and agreement between the parties
with regard to the subjects hereto. None of this Agreement or any term hereof
may be amended, waived, discharged or terminated, except by a written instrument
signed by both of the parties hereto.
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d. NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by certified or
registered mail, postage prepaid, delivered either by hand, or by messenger or
nationally reputable overnight courier, or transmitted by electronic telecopy
(fax) addressed:
If to NAVTEQ, at:
Navigation Technologies Corporation
Attn: General Counsel
000 Xxxxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Fax:___________________
If to Green, at:
Xxxxxx Xxxxx
0000 Xxxxx Xxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Fax:___________________
with a copy to:
Xxxxxx X. Xxxxxxx, Esq.
Vedder, Price, Xxxxxxx & Kammholz, P.C.
000 Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
or at such other addresses as any party shall have furnished to the others in
writing. All such notices and other written communications shall be effective
(i) if mailed, seven (7) days after mailing (if mailed from outside the United
States, such mailing must be by airmail and said seven (7) days shall be
fourteen (14) days); (ii) if delivered, upon delivery; or (iii) if faxed, one
(1) business day after transmission and acknowledgment of receipt by telephone
or fax.
e. DELAYS OR OMISSIONS. No delay or omission to exercise any right, power
or remedy accruing to either party hereto upon any breach or default of the
other party under this Agreement shall impair any such right, power or remedy of
such party, nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or any similar breach or default thereafter
occurring. No waiver of any single breach or default shall be deemed a waiver of
any other breach or default theretofore or thereafter occurring. Any waiver,
permit, consent or approval of any kind or character on the part of any party
hereto of any breach or default under this Agreement, or any waiver on the part
of any party hereto of any provisions or conditions of this Agreement, must be
made in writing and shall be effective only to the extent specifically set forth
in such writing. All remedies, either under this Agreement or by law or
otherwise afforded to any party, shall be cumulative and not alternative.
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f. SEPARABILITY. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Green and NAVTEQ acknowledge that the restrictive covenants herein have been
negotiated in good faith and they believe that such restrictive covenants are
reasonable and are not more restrictive or broader than are necessary to protect
the interests of the parties hereto, and would not achieve their intended
purpose if they were on different terms or for periods of time shorter than the
periods of time provided herein or applied in more restrictive geographical
areas than are provided herein. Each party further acknowledges and agrees that
the NAVTEQ Businesses are highly competitive, that NAVTEQ would not enter into
this Agreement but for the covenants contained in Section 1.c., and that such
covenants are essential to protect the value of the NAVTEQ Businesses. Green and
NAVTEQ acknowledge and confirm that competition by Green would likely cause
irreparable injury to NAVTEQ and its subsidiaries. If, however, it shall be
determined at any time by any arbitrator or court of competent jurisdiction that
this Agreement, as written, is unenforceable because the restrictions set forth
herein are unreasonable, the parties hereto agree that such portions as shall
have been determined to be unreasonably restrictive shall thereupon be deemed so
amended as to make such restrictions reasonable in the determination of such
arbitrator or court, and the said covenants, as so modified, shall be
enforceable between the parties to the same extent as if such amendments had
been made prior to the date of any alleged breach of said covenants.
g. INCONSISTENCY. In the case of any conflict between the terms of this
Agreement (the "AGREEMENT TERMS") and the provisions of any plan, policy, or
practice of NAVTEQ as in effect from time to time (the "STANDARD PROVISIONS"),
Green's rights or NAVTEQ's obligations shall be established by whichever of the
Agreement Terms or Standard Provisions would be more beneficial to Green.
h. TITLES AND SUBTITLES. The titles of the paragraphs of this Agreement
are for convenience of reference only and are not to be considered in construing
this Agreement.
i. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument. Each party may execute a separate counterpart which, taken together,
shall constitute as fully binding an agreement as if both executed the same
counterpart.
6. PARACHUTE TAX.
a. Anything in this Agreement to the contrary notwithstanding, and
whether or not Green's employment with NAVTEQ shall have terminated, in the
event that it shall be determined that any payment, distribution or other
benefit provided by NAVTEQ to or for the benefit of Green, whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise (the "PAYMENT"), Green shall be paid an additional amount (the
"GROSS-UP PAYMENT") such that the net amount retained by Green after deduction
of any excise tax imposed under Section 4999 of the Internal Revenue Code of
1986 ("CODE"), and any federal, state and local income and employment tax and
excise tax imposed upon the Gross-Up Payment, shall be an amount such that the
Green will be in the same after-tax position as if no excise tax under the Code
had been imposed. For purposes of determining the amount of the Gross-Up
Payment, Green shall be deemed to pay federal income tax and employment taxes at
11
the highest marginal rate of federal income and employment taxation in the
calendar year in which the Gross-Up Payment is to be made and state and local
income taxes at the highest marginal rate of taxation in the state and locality
of Green's residence (or, if greater, the state and locality in which Green is
required to file a nonresident income tax return with respect to the Payment) on
the relevant calculation date, net of the reduction in federal income taxes that
may be obtained from the deduction of such state and local taxes (with due
regard for any limitation on federal income tax deductions due to the amount
Green's adjusted gross income or the application of the federal alternative
minimum tax).
b. All determinations to be made under this Section 6. shall be made by a
nationally recognized independent public accountant selected by NAVTEQ
immediately prior to the Change in Control (which may be NAVTEQ's auditors) (the
"ACCOUNTING FIRM"), which firm shall provide its determinations and any
supporting calculations both to NAVTEQ and Green within ten (10) days after
receipt of notice from Green that there has been a Payment or that there will be
a Payment. If the Accounting Firm determines that no excise tax is payable by
Green, it shall furnish NAVTEQ and Green with an opinion to the effect that
there is "substantial authority" that the Payment does not constitute an "excess
parachute payment" (as those terms are defined under the Code and regulations
thereunder). Subject to any determination of an Underpayment or Overpayment
(defined below), any such determination by the Accounting Firm shall be binding
upon NAVTEQ and Green for purposes of any dispute between the parties hereto.
All fees and expenses of the Accounting Firm in performing the determinations
and obtaining such opinion referred to above shall be borne solely by NAVTEQ.
c. As a result of uncertainty in the application of Section 4999 of the
Code at the time of the initial determination by the Accounting Firm, it is
possible that the Gross-Up Payment made will have been an amount less than
NAVTEQ should have paid pursuant to this Section 6. (the "UNDERPAYMENT") or an
amount greater than NAVTEQ should have paid pursuant to this Section 6.
including, without limitation, by reason of a redetermination of the value of
any accelerated vesting of stock options (the "OVERPAYMENT"). In the event that
it is finally determined that an Underpayment exists and Green is required to
make a payment of any excise tax or related tax, the Gross-Up Payment shall be
adjusted accordingly and the shortfall shall be promptly paid by NAVTEQ to Green
or for his benefit. In the event that it is finally determined that an
Overpayment exists and NAVTEQ paid a Gross-Up Payment to Green in excess of the
amount of the Gross-Up Payment to which he is actually entitled hereunder, such
excess shall be promptly reimbursed by Green to NAVTEQ.
12
IN WITNESS WHEREOF, each of the parties has executed this Agreement as of
the date first above written.
XXXXXX XXXXX
/s/ Xxxxxx Xxxxx
-------------------------------
NAVTEQ CORPORATION
By: Xxxxxxx X.X. xx Xxxxx
---------------------------
Title: Chairman
---------------------
/s/ Xxxxxxx X.X. xx Xxxxx
-------------------------------
13
EXHIBIT A
NAVTEQ CORPORATION
RESTRICTED STOCK UNIT AGREEMENT
April 30, 2004 ("Date of Grant")
I. NOTICE OF RESTRICTED STOCK UNIT GRANT ("UNIT GRANT")
Xxxxxx Xxxxx
0000 Xxxxx Xxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
You have been granted restricted stock units ("Units") for Shares of Common
Stock of NAVTEQ Corporation (the "Company"), pursuant to the NAVTEQ Corporation
2001 Stock Incentive Plan, subject to the terms and conditions of this
Restricted Stock Unit Agreement ("Unit Agreement" or "Agreement").
Total Number of Shares Granted: 8,670,701
VESTING SCHEDULE
Except as hereafter provided, the Units subject to this Unit Grant shall
vest 2,167,675 Units on each of the first three (3) anniversaries of the Date of
Grant and 2,167,676 Units on the fourth (4th) anniversary of the Date of Grant,
(each such date a "Vesting Date" and each such Unit a "Vested Unit") subject to
your Continuous Status as an Employee on each such Vesting Date as to such Units
so vesting. Notwithstanding anything to the foregoing to the contrary, no Units
shall vest unless the Company earns $10,000 of operating income (computed in
accordance with Generally Accepted Accounting Principles and in the same manner
as the Company has historically computed its operating income in its audited
financial statements) during any single calendar month between and including May
2004 and April 2005.
ACCELERATION OF VESTING UPON TERMINATION WITHOUT CAUSE, FOR A NAVTEQ BREACH OR
GOOD CAUSE, OR DUE TO DEATH OR DISABILITY
If you are terminated for reasons other than discharge for Cause (as
defined in your Employment Agreement with the Company dated as of April 30, 2004
("Employment Agreement")) or if you terminate your employment as a result of a
NAVTEQ Breach or for Good Cause, or your employment terminates as a result of
your death or Disability (each as defined in your Employment Agreement), that
portion of your Unit Grant which has not yet vested as of the date of such
termination will immediately vest as of the date of such termination.
ACCELERATION OF VESTING UPON A CHANGE OF CONTROL OF THE COMPANY
In the event of a Change of Control of the Company (as defined in your
Employment Agreement), subject to your Continuous Status as an Employee until
such Change of Control, that portion of your Unit Grant which has not yet vested
as of the date of such event will immediately vest simultaneously with the
consummation of the Change of Control (as defined in your Employment Agreement).
DELIVERY OF SHARES
(a) Except to the extent delivery has been deferred under an applicable
deferred compensation plan of the Company, as soon as practicable after each of
the Vesting Dates, the Company shall deliver to you one (1) Share for each Unit
which became a Vested Unit on the immediately preceding Vesting Date.
(b) Within ten (10) days after the Units shall have become Vested Units
pursuant to a termination of your employment or a Change of Control, both as
provided above, the Company shall deliver to you one (1) Share for each Unit
covered by this Unit Agreement which has become a Vested Unit but only with
respect to which a Share has not yet been delivered.
(c) Upon termination of your employment by the Company for Cause or your
termination employment other than as a result of a NAVTEQ Breach or for Good
Reason, any unvested Units shall terminate and no Shares shall be delivered with
respect to such terminated Units.
NO RIGHTS AS A STOCKHOLDER PRIOR TO DELIVERY; PAYMENT OF DIVIDEND EQUIVALENTS;
ADJUSTMENT.
You shall not have any right, title or interest in, or be entitled to vote
or receive distributions in respect of, or otherwise be considered the owner of,
any of the Shares covered by this Unit Agreement, except to the extent that such
Shares have been distributed to you as provided above. Notwithstanding the
foregoing, upon the Units becoming Vested Units as provided above, you shall be
entitled to receive a cash payment in an amount equal to each cash dividend the
Company would have paid to you during the term of the Units as if you had been
the owner of record of the Shares covered by such Units on the record date for
the payment of such dividend. In lieu of receiving such payment at the time of
such Units becoming Vested Units, all or any portion of such payment may be
deferred by you pursuant to an applicable deferred compensation plan with the
approval of the Board. The Unit Agreement shall be subject to adjustment
(including, without limitation, as to the number of shares of Common Stock
covered by the Unit Agreement) pursuant to Part III, Section 7. of this Unit
Agreement, following the Date of Grant.
II. DEFINITIONS
As used herein, the following definitions shall apply:
(a) "Applicable Laws" means the legal requirements relating to the
administration of stock and stock option plans and the issuance of Shares
thereunder pursuant to U.S. state corporate laws, U.S. federal and state
securities laws, the Code and the applicable laws of any foreign country or
jurisdiction where Options, Stock Purchase Rights, or other rights in Shares
are, or will be, granted under the Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Common Stock" means the Common Stock of the Company.
(e) "Company" means NAVTEQ Corporation, a Delaware corporation.
2
(f) "Continuous Status as an Employee" means that the employment or
consulting relationship with the Company, any Parent, or Subsidiary, is not
interrupted or terminated. Continuous Status as an Employee shall not be
considered interrupted in the case of (i) any leave of absence approved by the
Company or (ii) transfers between locations of the Company or between the
Company, its Parent, any Subsidiary, or any successor. A leave of absence
approved by the Company shall include sick leave, military leave, or any other
personal leave approved by an authorized representative of the Company.
(g) "Disability" has the meaning of such term in your Employment
Agreement.
(h) "Employee" means being employed by the Company or any Parent or
Subsidiary of the Company. Neither service as a Director nor payment of a
director's fee by the Company shall be sufficient to constitute "employment" by
the Company.
(i) "Notice of Grant" means the written notice above evidencing certain
terms and conditions of the Restricted Stock Units granted herein. The Notice of
Grant is part of this Unit Agreement.
(j) "Parent" means a "parent corporation", whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(k) "Share" means a share of Common Stock.
(l) "Subsidiary" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.
III. AGREEMENT
1. GRANT OF UNITS. The Company hereby grants to you the Units with
respect to Shares of Common Stock of the Company as set forth in the Notice of
Grant in Part I above, subject to the terms and conditions of this Agreement.
2. NON-TRANSFERABILITY OF UNITS. These Units may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution or
by transfer to your spouse and descendants (whether natural or adopted) and any
entity in which you, your spouse and/or descendants collectively own a 100%
direct or indirect beneficial interest ("Permitted Transferees"), provided that
such Permitted Transferees have agreed in writing to be bound by the provisions
of this Agreement, and Shares may be distributed during your lifetime only to
you or Permitted Transferees. The terms of this Unit Agreement shall be binding
upon the executors, administrators, heirs, successors and assigns of both you
and the Permitted Transferees.
3. LOCK-UP PERIOD. You hereby agree that in connection with any
registration of the offering of any securities of the Company under the
Securities Act of 1933, as amended (the "Securities Act"), you shall not sell or
otherwise transfer any of the Shares during the 180-day period (or such longer
or shorter period as may be requested in writing by the managing underwriter and
agreed to in writing by the Company) (the "Market Standoff Period") following
the effective date of a registration statement of the Company filed under the
Securities Act. The Company may impose stop-transfer instructions with respect
to securities subject to the foregoing restrictions until the end of such Market
Standoff Period.
3
4. GRANTEE'S REPRESENTATIONS. In the event the Shares have not been
registered under the Securities Act of 1933, as amended, at the time such Shares
are distributed to you, you shall, if required by the Company, concurrently with
the distribution of Shares respecting all or any portion of these Units, deliver
to the Company your Investment Representation Statement in the form attached
hereto as Exhibit A.
5. RESTRICTIONS ON DISTRIBUTION. Shares may not be distributed under this
Unit Agreement if the issuance of such Shares upon such distribution would
constitute a violation of any Applicable Law. You represent that when you
receive a distribution of Shares pursuant to your Units, you will be acquiring
such Shares for your own account and not on behalf of others. You understand and
acknowledge that federal and state securities laws govern and restrict your
right to offer, sell or otherwise dispose of Shares distributed to you under
this Unit Agreement unless such offer, sale or other disposition thereof is
registered under the Securities Act and state securities laws, or in the opinion
of the Company's counsel, such offer, sale or other disposition is exempt from
registration or qualification thereunder. You agree that you will not offer,
sell or otherwise dispose of any Shares in any manner which would: (i) require
the Company to file any registration statement with the Securities and Exchange
Commission (or any similar filing under state law) or to amend or supplement any
such filing, (ii) violate or cause the Company to violate the Securities Act,
the rules and regulations promulgated thereunder or any other state or federal
law, or (iii) violate any agreement between yourself and the Company, including
this Unit Agreement. You further understand that the certificates for any Shares
distributed to you will bear such legends as the Company deems necessary or
desirable in connection with the Securities Act or other rules, regulations or
laws.
6. WITHHOLDING OF TAXES. Upon distribution of Shares, you may surrender
other Shares then owned by you to satisfy the Company's tax withholding
obligations. In the absence of such surrender, the Company shall be entitled, if
necessary or desirable, to withhold from any amounts due and payable by the
Company to you (or secure payment from you in lieu of withholding) the amount of
any withholding or other tax due from the Company with respect to any Shares
issued pursuant to this Agreement, and the Company may defer such issuance
unless indemnified by you to its satisfaction.
7. ADJUSTMENTS. In the event of a reorganization, recapitalization, stock
dividend or stock split, or combination or other change in the shares of Common
Stock, the Board will, in order to prevent the dilution or enlargement of rights
under your Units, make such adjustments in the number and type of Shares covered
by your Units specified herein as may be reasonably determined by the Board to
be appropriate and equitable. The issuance by the Company of shares of stock of
any class, or options or securities exercisable or convertible into shares of
stock of any class, for cash or property, or for labor or services either upon
direct sale, or upon the exercise of rights or warrants to subscribe therefor,
or upon exercise or conversion of other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of Shares of Common Stock subject to this Unit Agreement.
8. ENTIRE AGREEMENT; GOVERNING LAW. The Notice of Grant and this Unit
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and you with respect to the subject matter hereof, and
may not be modified adversely to your interest except by means of a writing
signed by the Company and you. This Agreement is governed by Delaware law,
except for that body of law pertaining to conflict of laws. Each party hereby
4
irrevocably consents to the exclusive jurisdiction of the federal and state
courts located in Chicago, Illinois with respect to any actions which may arise
in connection with this Agreement and are not required by Section 9 below to be
arbitrated.
9. ARBITRATION. Except as provided in this Section 9, any controversy or
claim arising out of or relating to this Agreement, or the breach thereof, shall
be settled by arbitration administered by the American Arbitration Association
in accordance with its Commercial Arbitration Rules, and judgment on the award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof.
Within fifteen (15) days after the commencement of arbitration, the Company
and you shall each select one person to act as arbitrator and the two selected
shall select a third arbitrator within ten (10) days of their appointment. If
the arbitrators so selected are unable or fail to agree upon the third
arbitrator, or if either party fails to appoint an arbitrator, such arbitrator
or arbitrators shall be selected by the American Arbitration Association.
Each of the parties to this Agreement acknowledges that a breach of this
Agreement may cause the other party irreparable harm which may not be adequately
compensated by money damages. Therefore, in the event of a breach or threatened
breach by a party, injunctive or other equitable relief will be available to the
other party, and any arbitrator acting pursuant to this Agreement shall have the
authority to provide such injunctive or other equitable relief.
The arbitrators shall have the authority to award such remedies or relief
that a court of the State of Delaware could order or grant in an action governed
by Delaware law, including, without limitation, specific performance of any
obligation created under this Agreement, the issuance of an injunction, or the
imposition of sanctions for abuse or frustration of the arbitration process. The
arbitration proceedings shall be conducted in Chicago, Illinois.
Notwithstanding the foregoing, any party may bring and pursue an action in
any Federal or State court located in Chicago, Illinois seeking provisional
relief, including a temporary restraining order or preliminary injunction,
pending an arbitration proceeding. Any provisional relief obtained shall be
discontinued once the arbitrators have assumed jurisdiction and ordered such
discontinuance.
10. NO GUARANTEE OF EMPLOYMENT. YOU ACKNOWLEDGE AND AGREE THAT, EXCEPT AS
SPECIFICALLY PROVIDED HEREIN, THE VESTING OF SHARES PURSUANT TO THE VESTING
SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING SERVICE AS AN EMPLOYEE AT THE WILL
OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED UNITS OR
ACQUIRING VIA DISTRIBUTION SHARES HEREUNDER). YOU FURTHER ACKNOWLEDGE AND AGREE
THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING
SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF
CONTINUED ENGAGEMENT AS AN EMPLOYEE OR CONSULTANT FOR THE VESTING PERIOD, FOR
ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH YOUR RIGHT OR THE COMPANY'S
RIGHT TO TERMINATE YOUR EMPLOYMENT AT ANY TIME, WITH OR WITHOUT CAUSE.
YOU HAVE READ AND UNDERSTAND SECTION 9, WHICH DISCUSSES ARBITRATION. YOU
UNDERSTAND THAT BY SIGNING THIS AGREEMENT, YOU
5
AGREE TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH
THIS AGREEMENT TO BINDING ARBITRATION, AND THAT THIS ARBITRATION CLAUSE
CONSTITUTES A WAIVER OF YOUR RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION
OF ALL DISPUTES RELATING TO ALL ASPECTS OF THIS RELATIONSHIP.
By your signature and the signature of the Company's representative below,
you and the Company agree that these Units are granted under and governed by the
terms of this Unit Agreement. You have reviewed this Unit Agreement in its
entirety, have had an opportunity to obtain the advice of counsel prior to
executing this Unit Agreement and fully understand all provisions of this Unit
Agreement. You further agree to notify the Company upon any change in the
residence address indicated below.
GRANTEE: NAVTEQ CORPORATION
/s/ Xxxxxx Xxxxx Xxxxxxx X.X. xx Xxxxx
------------------------------- -------------------------------
Signature By
Xxxxxx Xxxxx Chairman
------------------------------- -------------------------------
Print Name Title
/s/ Xxxxxxx X.X. xx Xxxxx
-------------------------------
0000 Xxxxx Xxxxxxx Xxxxx
-----------------------------
Xxxxxxx, Xxxxxxx 00000
-----------------------------
-----------------------------
Residence Address
CONSENT OF SPOUSE
The undersigned spouse of Xxxxxx Xxxxx has read and hereby approves the
terms and conditions of this Unit Agreement. In consideration of the Company's
granting his or her spouse the right to receive a distribution of Shares as set
forth in this Unit Agreement, the undersigned hereby agrees to be irrevocably
bound by the terms and conditions of this Unit Agreement and further agrees that
any community property interest shall be similarly bound. The undersigned hereby
appoints the undersigned's spouse as attorney-in-fact for the undersigned with
respect to any amendment or exercise of rights under this Unit Agreement.
-------------------------------
[Insert Name of Spouse]
6
EXHIBIT A
INVESTMENT REPRESENTATION STATEMENT(1)
GRANTEE:
COMPANY: NAVTEQ CORPORATION
SECURITY: COMMON STOCK
AMOUNT:
DATE:
In connection with the distribution of the above-listed Securities, the
undersigned Grantee represents to the Company the following:
a. Grantee is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities. Grantee is
acquiring these Securities for investment for Grantee's own account only and not
with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").
b. Grantee acknowledges and understands that the Securities constitute
"restricted securities" under the Securities Act and have not been registered
under the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of Grantee's
investment intent as expressed herein. In this connection, Grantee understands
that, in the view of the Securities and Exchange Commission, the statutory basis
for such exemption may be unavailable if Grantee's representation was predicated
solely upon a present intention to hold these Securities for the minimum capital
gains period specified under tax statutes, for a deferred sale, for or until and
increase or decrease in the market price of the Securities, or for a period of
one year or any other fixed period in the future. Grantee further understands
that the Securities must be held indefinitely unless they are subsequently
registered under the Securities Act and that the Company is under no obligation
to register the Securities. Grantee understands that the certificate evidencing
the Securities will be imprinted with a legend which prohibits the transfer of
the Securities unless they are registered or such registration is not required
in the opinion of counsel satisfactory to the Company[, a legend prohibiting
their transfer without the consent of the Commissioner of Corporations of the
State of California] and any other legend required under applicable state
securities laws.
A-1
c. Grantee is familiar with the provisions of Rule 701 and Rule 144, each
promulgated under the Securities Act, which in substance, permit limited public
resale of "restricted securities" acquired, directly or indirectly from the
issuer thereof, in a non-public offering subject to the satisfaction of certain
conditions. Rule 701 provides that if the issuer qualifies under Rule 701 at the
time of the grant of the Units to the Grantee, the distribution of Shares will
be exempt from registration under the Securities Act. In the event the Company
becomes subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer
period as any market stand-off agreement may require) the Securities exempt
under Rule 701 may be resold, subject to the satisfaction of certain of the
conditions specified by Rule 144, including: (1) the resale being made through a
broker in an unsolicited "broker's transaction" or in transactions directly with
a market maker (as said term is defined under the Securities Exchange Act of
1934); and, in the case of an affiliate, (2) the availability of certain public
information about the Company, (3) the amount of Securities being sold during
any three month period not exceeding the limitations specified in Rule 144(e),
and (4) the timely filing of a Form 144, if applicable.
In the event that the Company does not qualify under Rule 701 at the time
of grant of the Units, then the Securities may be resold in certain limited
circumstances subject to the provisions of Rule 144, which requires the resale
to occur not less than one year after the later of the date the requirements
were sold by the Company or the date the Securities were sold by an affiliate of
the Company, within the meaning of Rule 144; and, in the case of acquisition of
the Securities by an affiliate, or by a non-affiliate who subsequently holds the
Securities less than two years, the satisfaction of the conditions set forth in
sections (1), (2), (3) and (4) of the paragraph immediately above.
d. Grantee further understands that in the event all of the applicable
requirements of Rule 701 or 144 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rules 144 or 701 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk. Grantee understands that no assurances can be given that any
such other registration exemption will be available in such event.
Signature of Grantee:
-------------------------------
Date:
--------------------------
A-2
