Exhibit 10.32
RESTRICTED STOCK PURCHASE AGREEMENT, dated as of September 9, 1999,
between Nextel Partners, Inc., a Delaware corporation (the "Company"), and
Xxxxxx X. Xxxxxxx (the "Purchaser").
WHEREAS, the Purchaser is an executive officer of each of the
Company and Nextel Partners Operating Corp., a Delaware corporation and a wholly
owned subsidiary of the Company, and his continued participation is considered
by the Company to be important for the development of the Company's business;
and
WHEREAS, in recognition of Purchaser's anticipated and highly valued
contribution to the Company, the Company is willing to sell to the Purchaser,
and the Purchaser desires to purchase from the Company, shares of the Company's
Class A Common Stock, in accordance with the terms and conditions hereof.
Now, THEREFORE, the parties agree as follows:
1. Definitions. As used herein, the following terms shall have the
following meanings set forth below:
"Additional Time Shares" means Time Shares other than Initial Time
Shares.
"Adjusted IRR" means, with respect to any Initial DLJ Equity sold or
otherwise disposed of, the internal rate of return on such Initial DLJ Equity as
of the date of such sale or other disposition, determined after giving effect to
any resulting acceleration of vesting of any Shares and of any options to
purchase Class A Common Stock that occurs upon or in connection with either such
sale or disposition of Initial DLJ Equity or any event giving rising to or
causing such sale or disposition of Initial DLJ Equity.
"Beneficial Owner" means a beneficial owner as defined in Rules
13d-3, 13d-5 or 16a-1 under the Exchange Act (or any successor rules),
including the provision of such Rules that a Person shall be deemed to have
beneficial ownership of all securities that such Person has a right to acquire
within 60 days, but such provision of the Rules will apply only if(i) all
conditions (other than payment of the purchase or acquisition price of such
securities) to such Person's exercise of such rights have been satisfied and
(ii) such securities (if options, warrants, or similar derivatives) are
"in-the-money," provided that in all cases a Person shall not be deemed a
Beneficial Owner of, or to own beneficially, any securities if such beneficial
ownership (1) arises solely as a result of a revocable proxy delivered in
response to a proxy or consent solicitation made pursuant to, and in accordance
with, the Exchange Act and the applicable rules and regulations thereunder, and
(2) is not also then reportable on Schedule 13D under the Exchange Act.
"Board" means the Board of Directors of the Company.
"Build Shares" means Shares that vest in accordance with Schedule I
depending on the Company's achievement of the buildout-related performance
targets set forth on Annex A.
"Capital Stock" of any Person means any and all shares, interests,
participation or other equivalents (however designated) of stock of, or other
ownership interests in, such Person, but excluding any pay-in-kind preferred
stock, other "debt equivalents" and mandatorily redeemable "nominal equity"
securities.
"Cause" means (i) the Purchaser's conviction of a felony evidencing
criminal dishonesty or moral turpitude, (ii) a willful and material breach of
the Purchaser's duty of loyalty to the Company or any of its subsidiaries or
(iii) after 20 business days following the Purchaser's receipt of a written
notification from the Company specifying the particulars in reasonable detail,
the Purchaser's failure to comply with or to cure, as applicable, (A) a willful
and material refusal to comply with specific written directions of the Board
consistent with the Purchaser's employment agreement with the Company or any
subsidiary of the Company and capable of being performed by him or (B) a willful
and material breach of the Purchaser's duty of due care to the Company.
"Change in Control of the Company" means the occurrence of any of
the following events:
(a) any person or group (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act and the regulations thereunder) (i) is or
becomes the Beneficial Owner of more than 50% of the total Voting Stock or
Total Common Equity of the Company, or (ii) otherwise has the power to
direct the management and policies of the Company, directly or through one
or more intermediaries, whether through the ownership of voting
securities, by contract or otherwise, except that no change of control
will be deemed to have occurred under this clause (ii) as a result of
customary rights granted (A) in any indenture, credit agreement or other
agreement for borrowed money or (B) to holders of non-convertible,
mandatorily redeemable, preferred stock unless and until action occurs
that would otherwise cause a "Change in Control of the Company" as herein
defined, provided that such rights were granted pursuant to a transaction
in the financial markets and not as part of a strategic alliance or
similar transaction;
(b) the Company sells, assigns, conveys, transfers, leases or
otherwise disposes of all or substantially all of its assets to any Person
(other than to a direct or indirect wholly owned subsidiary of the
Company);
(c) the Company, directly or indirectly, consolidates with, or
merges with or into, another Person, or any Person, directly or
indirectly, consolidates with, or merges with or into, the Company, and
pursuant to such transaction (or series of transactions) either: (i) the
outstanding Voting Stock of the Company is converted into or exchanged for
cash, securities or other property, but excluding a transaction (or series
of transactions) where (A) the outstanding Voting Stock of the Company is
converted into or exchanged for Voting Stock
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of the surviving or transferee Person and (B) the holders of Voting Stock
of the Company immediately preceding such transaction receive more than
50% of the total Voting Stock and Total Common Equity of the surviving or
transferee Person in substantially the same relative proportions as such
holders had prior to such transaction; or (ii) new shares of Voting Stock
of the Company are issued so that immediately following such transaction,
the holders of Voting Stock of the Company immediately preceding such
transaction own less than 50% of the Voting Stock and Total Common Equity
of the surviving Person; or
(d) during any period of two consecutive years following the Closing
Date, individuals who at the beginning of such period constituted the
board of directors of the Company (together with any directors who are
members of the board of directors of the Company on the date of the
Closing, 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 in
connection with the Closing, or 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).
Notwithstanding the foregoing, no "Change of Control of the Company"
shall occur (i) merely by reason of any creditor of the Company
foreclosing on or otherwise causing the sale, transfer or other
disposition of all or any substantial part of the Company's assets
(including, without limitation, the Company's equity interests in its
subsidiaries) or (ii) merely by reason of a transfer by Eagle River
Investments, LLC ("Eagle River") to another Person of the Capital Stock of
the Company owned by Eagle River so long as Xxxxx 0. XxXxx ("XxXxx")
controls (as defined in Section 4.01(h) of the Shareholders' Agreement)
such Person whether or not XxXxx owns a majority of the equity interests
of such Person, unless such transfer referred to in this clause (ii),
alone or in conjunction with other transactions, results in the occurrence
of an event of the type described in any of clauses (a), (b), (c) or (d)
above.
"Change in Control of Nextel" 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) other than a
Permitted Holder (i) is or becomes the Beneficial Owner of more than 50%
of the total voting stock of Nextel ordinarily entitled to vote in the
election of directors ("Nextel Voting Stock") or Total Common Equity of
Nextel, or (ii) 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 (ii), any person
or group that succeeds to the rights currently held by XxXxx and
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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 (ii) as a result of customary rights granted (A) 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 (B) to holders of
non-convertible, mandatorily redeemable, preferred stock unless and until
action occurs that would otherwise cause a "Change in Control of Nextel"
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) 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 or a direct or indirect wholly owned subsidiary of
Nextel);
(c) 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: (i) 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
(A) the outstanding Nextel Voting Stock is converted into or exchanged for
Voting Stock of the surviving or transferee Person and (B) 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 relative
proportions as such holders had prior to such transaction; or (ii) new
shares of Nextel Voting Stock are issued so that immediately following
such transaction, the holders of Nextel Voting Stock immediately preceding
such transaction own less than 50% of the Voting Stock and Total Common
Equity of the surviving Person; or
(d) 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 date of the Closing, 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 XxXxx or the estate of XxXxx, or any successive transfer by such or
another Affiliate to another Affiliate of XxXxx, or the estate of XxXxx, shall
not by itself be a Nextel Sale (provided that, for this purpose, any such
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Affiliate shall not be controlled by any person or group other than XxXxx or the
estate of XxXxx) 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 Change in Control of Nextel,
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 (a), (b), (c) or (d) above.
"Class A Common Stock" means the Class A Common Stock, par value
$.001 per share, of the Company.
"Closing" means the initial closing of the equity investments
contemplated by the Commitment Letter.
"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.
"Commitment Letter" means the Commitment Letter, dated December 4,
1998, among the Company and the investors named therein.
"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.
"Company" has the meaning set forth in the preamble.
"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.
"Deferred Shares" means, collectively, Unvested Revenue Shares and
Unvested EBITDA Shares (including but not limited to Eligible Shares).
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"DLJ" means Xxxxxxxxx, Xxxxxx & Xxxxxxxx, Inc.
"DLJ Investors" means, collectively, DLJ Merchant Banking Partners
II, L.P. and certain other affiliates and/or clients of DLJ, that purchase in
the aggregate $74,249,720 of Series A Preferred Stock at the Closing.
"EBITDA" means, with respect to any fiscal year of the Company,
earnings of the Company for such year before interest (including without
limitation the interest component of any capital lease obligation), taxes,
depreciation and amortization for such year; provided, that for purposes of
determining whether EBITDA targets have been met hereunder, the following costs
and expenses of the Company shall, to the extent deducted from earnings in
calculating EBITDA in accordance with generally accepted accounting principles,
be added back to earnings in calculating EBITDA: (i) non-cash compensation
expenses resulting from the application of APB Opinion No. 25 to vesting of
Shares under the Restricted Stock Purchase Agreements, (ii) out-of-pocket costs
incurred by the Company (or incurred by others and reimbursed by the Company) in
connection with the transactions contemplated by the Commitment Letter to be
consummated at the Closing (whether such transactions are consummated at the
Closing or thereafter), including without limitation the contemplated offering
of high-yield bonds and the subsequent exchange of such privately issued bonds
for publicly registered bonds, (iii) prior to the IPO, the costs incurred in
complying with SEC reporting requirements relating to the Company's publicly
held bonds (if any), (iv) out-of-pocket costs and expenses incurred by the
Company (or incurred by others and reimbursed by the Company) in connection with
(A) the transactions contemplated by Section 4.18 of the Joint Venture Agreement
and (B) the matters set forth on Schedule D to the Subscription and Contribution
Agreement, dated as of January 29, 1999, among the Company and the investors
named therein, and (v) other appropriate costs and expenses to be determined by
the Board (acting in the good faith exercise of its business judgment), which
may include expenses arising under the agreements relating to the operation of
the Company to the extent not contemplated by the Company's business plan in
effect on the date hereof (on which the EBITDA targets set forth on Annex A are
based). The parties agree that (i) non-cash charges shall, to the extent
deducted from earnings, be added back to earnings in calculating EBITDA, and
(ii) extraordinary non-cash revenue not in the ordinary course of business shall
be deducted from earnings in calculating EBITDA, unless the Board (acting in the
good faith exercise of its business judgment) determines such adjustment to be
inappropriate.
"EBITDA Shares" means Shares that vest in accordance with Schedule I
depending on the Company's achievement of the EBITDA-related performance targets
set forth on Annex A.
"Eligible Shares" means, collectively, Eligible EBITDA Shares and
Eligible Revenue Shares.
"Eligible EBITDA Shares" has the meaning set forth in Schedule I.
"Eligible Revenue Shares" has the meaning set forth in Schedule I.
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"Equity Value" has the meaning set forth in the Joint Venture
Agreement, provided, that Equity Value as determined thereunder shall be subject
to challenge by the Purchaser in accordance with the same procedures and other
provisions applicable to challenges by Nextel Sub of such determination.
"Escrow Agent" has the meaning set forth in Section 5(a).
"Escrow Shares" has the meaning set forth in Section 5(a).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" means, with respect to any Shares repurchased by
the Company hereunder, the Equity Value in effect on the date of consummation of
such repurchase, subject to adjustment if the Board determines in good faith
that such Equity Value no longer reflects the fair market value of such Shares
(it being understood that the Board's determination of the Equity Value may be
challenged by the Purchaser as provided in the definition thereof). To the
extent there is not a recent determination of the Equity Value on the date of
determination of Fair Market Value, the Board will calculate the Equity Value as
of such date in good faith on the basis of available information.
"FCC" means the Federal Communications Commission.
"FCC Modifications" means changes to the agreements relating to the
governance and operation of the Company that are implemented in response to any
assertion or finding by the FCC that such agreements constitute an impermissible
change of control of the FCC licenses made available by Nextel Sub to the
Company thereunder, which changes are implemented in order to cause such
agreements to be in compliance with FCC requirements so as to reflect the intent
of the parties thereto that no impermissible change of control take place.
"Good Reason" means (i) a material adverse change in the Purchaser's
duties, responsibilities or reporting relationships, (ii) a relocation of the
Purchaser's principal office to a location more than 30 miles away from his then
current office, (iii) a reduction of salary not agreed to by the Purchaser, or
material diminution of other employee benefits (other than any change in
employee benefits approved by the Board and implemented in a non-discriminatory
fashion with respect to all participating employees), or any other material
adverse change in his working conditions, (iv) a material breach by the Company
of other obligations under the Purchaser's employment agreement with the Company
or a subsidiary of the Company that are not cured after 20 business days
following the Company's receipt of a written notification from the Purchaser
specifying the particulars in reasonable detail, and (v) from and after the
Closing, following the implementation of any FCC Modifications, if Nextel Sub
exercises control over day-to-day operating decisions, policy decisions or
personnel decisions of the Company pursuant to such FCC Modifications that
(before such modifications) would have been decisions made by the Company's
management and such control exercised by Nextel Sub is materially more extensive
(in the collective
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reasonable judgment of the Senior Managers then employed by the Company) than
that which Nextel Sub could have exercised under the agreements to which Nextel
Sub is a party relating to the governance and operation of the Company before
giving effect to the FCC Modifications. Notwithstanding the foregoing, a
termination with Good Reason under clause (v) above shall not be deemed
effective until 120 days following written notice by the Purchaser to the
Company of the occurrence of any of the foregoing and only if the foregoing
continue to occur as of such 120th day.
"Initial DLJ Equity" means the shares of Series A Preferred Stock
contemplated by the Commitment Letter to be issued to the DLJ Investors at the
Closing, regardless of whether DLJ has transferred funds in respect of such
shares, together with any shares of Class A Common Stock issuable upon
conversion thereof, and any shares of Capital Stock of the Company or other
securities into which such shares are subdivided, combined or otherwise
converted or exchanged by the Company.
"Initial Time Shares" means the Time Shares subject to vesting in
1998-99 in accordance with Schedule I, which account for 25% of the Shares.
"IPO" means the initial underwritten public offering of the
Company's equity securities pursuant to a registration statement under the
Securities Act.
"Joint Venture Agreement" means the Joint Venture Agreement dated as
of January 29, 1999 among the Company, Nextel Partners Operating Corp. and
Nextel Sub.
"Nextel" means NEXTEL Communications, Inc. and its successors and
assigns.
"Nextel Sub" means Nextel WIP Corp., a Delaware corporation and a
wholly owned indirect subsidiary of Nextel.
"Performance Shares" means, collectively, Build Shares, Revenue
Shares and EBITDA Shares.
"Permitted Holders" means, collectively, XxXxx and any entity or
entities (i) that is controlled directly or indirectly by XxXxx or the estate of
XxXxx and (ii) a majority of the equity interests of which are owned, directly
or indirectly, by XxXxx 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 "XxXxx Group"); provided that "Permitted Holders" also includes a group of
entities that is each controlled by XxXxx or the estate of XxXxx and through
which the XxXxx Group collectively own, directly or indirectly, a majority of
the equity interests of Nextel (it being understood that if the XxXxx Group
collectively owns 50% of an entity that owns 20% of Nextel's equity interests,
the XxXxx Group will be deemed to indirectly own 10% of Nextel's equity interest
though such entity).
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"Person" means any individual, corporation, partnership, limited
liability company, joint venture, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Purchaser" has the meaning set forth in the preamble.
"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.
"Revenue Shares" means Shares that vest in accordance with Schedule
I depending on the Company's achievement of the revenue-related performance
targets set forth on Annex A.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Managers" means, collectively, Xxxx Xxxxxxx, Xxxx Xxxxxxxx,
Xxxxx Xxxxxx, Xxxxx Aas, Xxxxx Xxxxxxxxx and Xxxx Xxxxxxx.
"Series A Preferred Stock" means the Series A Preferred Stock, par
value $.00l per share, of the Company.
"Series C Preferred Stock" means the Series C Preferred Stock, par
value $.001 per share, of the Company.
"Shares" has the meaning set forth in Section 2(a).
"Target Return" means, with respect to a sale or other disposition
of Initial DLJ Equity consummated (i) in 1999 or 2000, a 50% Adjusted IRR, (ii)
in 2001, a 35% Adjusted IRR, and (iii) after 2001, a 30% Adjusted IRR, in each
case based on the value of the consideration paid for the Initial DLJ Equity
sold or otherwise disposed of.
"Time Shares" means Shares that vest over time in accordance with
Section 3(a) and Schedule I, and shall include the Initial Time Shares and the
Additional Time Shares.
"Total Common Equity" of any Person 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
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immediately preceding such day. If no such Closing Price exists with respect to
shares of any such class, the value of such shares for purposes of clause (ii)
of the preceding sentence shall be determined by the Board of Directors of such
Person in good faith and evidenced by a resolution of such Board of Directors.
"Trading Days" with respect to a securities exchange or automated
quotation system means a day on which such exchange or system is open for a full
day of trading.
"Unvested Shares" means Shares (including EBITDA Shares, Performance
Shares, Revenue Shares and Time Shares) that are not Vested Shares.
"Vested Shares" means Shares that are vested in accordance with
Section 3.
"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.
2. Purchase and Sale.
(a) The Company hereby agrees to sell to the Purchaser, and the
Purchaser hereby agrees to purchase from the Company, an aggregate of 10,000
shares of the Company's Class A Common Stock, par value $.001 per share (the
"Shares"), at the price of $.0l per share.
(b) The Purchaser is delivering to the Company herewith a check
payable to the Company in the amount of the aggregate purchase price of the
Shares, and the Company is herewith delivering to the Escrow Agent, to be held
in escrow as herein provided, a duly executed certificate evidencing the Shares
issued in the name of the Purchaser.
(c) This Agreement shall not confer upon the Purchaser any right
with respect to continuation of his employment with the Company, nor shall it
interfere with or affect in any manner the right or power of the Company, or a
parent or subsidiary of the Company, to terminate any agreement with the
Purchaser in accordance with the terms thereof.
3. Vesting.
(a) Ordinary Vesting. The parties agree that the Shares shall vest
in accordance with Schedule I so long as the Purchaser is continuously employed
by the Company or a subsidiary of the Company, subject to the provisions of
Section 3(b) below; provided, further that the Company agrees and acknowledges
that, from and after the date hereof, 100% of the Initial Time Shares shall be
Vested Shares for purposes of this Agreement.
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(b) Accelerated Vesting. Notwithstanding the provisions of Section
3(a) or Schedule I to the contrary:
(i) Upon a Change in Control of the Company or a Change in
Control of Nextel, all of the Unvested Shares (including Eligible Shares,
but excluding Deferred Shares that are not Eligible Shares) shall vest
immediately.
(ii) Upon termination of the Purchaser's employment on account
of death or disability, or by the Company without Cause, (A) all of his
Unvested Time Shares shall vest immediately and (B) all of his Unvested
Performance Shares that are subject to vesting in the year of termination
(including any Performance Shares vesting in such year pursuant to Section
3(c)) shall vest at the end of such year without regard to whether the
Company achieves the applicable performance targets.
(iii) Upon resignation of the Purchaser for Good Reason, all
of his Unvested Shares shall vest immediately.
(c) Vesting of Deferred Shares. Upon the sale or other disposition
by one or more of the DLJ Investors (other than to an affiliate controlled by
DLJ), in one or more transactions, of 75% of the Initial DLJ Equity, if such DLJ
Investors shall have achieved the applicable Target Return in cash, promissory
notes, freely tradable securities or other readily marketable consideration,
then 50% of the Deferred Shares will vest immediately. For each additional one
percent of Initial DLJ Equity sold or otherwise disposed of at or above the
applicable Target Return, an additional two percent of the Deferred Shares will
vest.
4. Repurchase Rights.
(a) Unvested Shares. Subject to the provisions of Section 3, in the
event of termination of the Purchaser's employment with the Company for any
reason or for no reason, the Company shall, for 90 days following the date of
termination, have the option to repurchase all or any portion of the Unvested
Shares at a repurchase price equal to the lesser of(i) Fair Market Value and
(ii) $.0l per share.
(b) Vested Shares/Termination on Account of Death or Disability. In
the event of termination of the Purchaser's employment with the Company on
account of death or disability prior to the IPO, for 180 days following the date
of termination (i) the Company shall have the option to purchase from the
Purchaser or his estate (and the Purchaser or his estate then shall be obligated
to sell to the Company) and (ii) the Purchaser shall have the option to require
the Company to purchase from the Purchaser or his estate, in each case all or
any portion of the Vested Shares at a repurchase price per share equal to Fair
Market Value.
(c) Vested Shares/Termination without Cause or Resignation for Good
Reason. In the event of termination of the Purchaser's employment with the
Company by the Company
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without Cause or by the Purchaser for Good Reason, (i) prior to the IPO, for 90
days following the date of termination the Company shall have the option to
elect to purchase from the Purchaser (and the Purchaser or his estate then shall
be obligated to sell to the Company) all or any portion of the Vested Shares at
a repurchase price per share equal to Fair Market Value (determined as of a date
no more than ten days prior to the closing of such repurchase),provided that the
Purchaser shall have the right to elect, by notice to the Company given within
ten days after the Company's election to purchase any of such Shares, to defer
the closing of such purchase and sale for up to 18 months following the date of
termination, such purchase and sale to be at a repurchase price per share equal
to Fair Market Value (determined as of a date no more than ten days prior to the
closing of such repurchase), and (ii) prior to the IPO, for 18 months following
the date of termination the Purchaser shall have the option to require the
Company to purchase from the Purchaser all or any portion of the Vested Shares
at a repurchase price per share equal to Fair Market Value (determined as of a
date no more than ten days prior to the closing of such repurchase), provided
that in no event shall the Company be required to repurchase Shares from the
Purchaser pursuant to this clause (ii), together with options and shares of
Class A Common Stock issued upon exercise thereof repurchased from the Purchaser
pursuant to Section 6(c)(ii) of any Stock Option Agreement between the Company
and Purchaser in the form of Exhibit B to the Company's 1999 Nonqualified Stock
Option Plan, in excess of $10l,809.50 in aggregate Fair Market Value.
(d) Vested Shares/Termination for Cause or Resignation without Good
Reason. In the event of termination of the Purchaser's employment with the
Company by the Company for Cause or by the Purchaser without Good Reason, for 90
days following the date of termination the Company shall have the option to
purchase from the Purchaser all or any portion of the Vested Shares at a
repurchase price per share equal (A) in the case of the Initial Time Shares,
Fair Market Value, and (B) in the case of Shares other than the Initial Time
Shares, (x) prior to the completion of the Required Build, the lesser of Fair
Market Value and $.01 per share, (y) after completion of the Required Build, but
prior to the fourth anniversary of the Closing, 50% of Fair Market Value, and
(z) after completion of the Required Build, and on and after the fourth
anniversary of the Closing, 100% of Fair Market Value.
(e) Exercise by the Company. Any repurchase by the Company pursuant
to this Section 4 shall be exercisable by written notice to the Purchaser or his
executor (with a copy to the Escrow Agent) given within the applicable time
period, and such notice if given shall constitute an irrevocable offer by the
Company to repurchase the Shares covered thereby. Such notice shall set forth
the number of Shares to be repurchased and the aggregate repurchase price
thereof, as determined by the Board in good faith as of a date no more than ten
days prior to such repurchase. Within five days after delivery of such notice,
upon delivery by the Escrow Agent to the Company of the Shares being
repurchased, together with one or more related stock powers executed by the
Purchaser in blank, and upon receipt by the Company of a representation by the
Purchaser that he owns the Shares being repurchased, the Company shall pay to
the Purchaser in immediately available funds an amount equal to the aggregate
repurchase price of the Shares being repurchased.
12
(f) Exercise by the Purchaser. The Purchaser's right to require the
Company to repurchase Shares under Section 4(b) or (c) shall be exercisable by
written notice to the Company (with a copy to the Escrow Agent) given within the
applicable time period, and such notice if given shall constitute an irrevocable
offer by the Purchaser to sell the Shares covered thereby. Within five days
after receipt of such notice (i) the Company shall pay to the Purchaser in
immediately available funds (or as otherwise may be determined in accordance
with this Agreement) an amount equal to the aggregate repurchase price of the
Shares being repurchased and (ii) the parties agree that the Escrow Agent shall
deliver to the Company the certificate(s) for the Shares being repurchased,
together with one or more related stock powers executed by the Purchaser in
blank, which certificate(s) and power(s) are held by the Escrow Agent pursuant
to Section 5(a); provided that in the event of a repurchase of Shares pursuant
to Section 4(c)(ii), the Company shall have the option of paying the repurchase
price for such Shares, together with the repurchase price for any options and
shares of Class A Common Stock issued upon exercise thereof repurchased from the
Purchaser pursuant to Section 6(c)(ii) of any Stock Option Agreement between the
Company and the Purchaser in the form of Exhibit B to the Company's 1999
Nonqualified Stock Option Plan, (i) in a single lump sum or (ii) in annual
installments of $2 million so long as the outstanding balance of the aggregate
repurchase price is $2 million or more, with the first installment payable
within five days after delivery of the Company's notice of repurchase and the
final installment being equal to the outstanding balance of the aggregate
repurchase price.
(g) Promissory Note. If the Board determines (pursuant to a duly
adopted resolution of the Board or its compensation committee, a copy of which
shall be delivered to the Purchaser) that the Company is unable to repurchase
all or some portion of the Shares under this Section 4 for cash without
breaching the terms of any debt instruments or other agreements to which the
Company or any of its subsidiaries is a party, or that such repurchase would
otherwise have a material adverse effect on the financial condition of the
Company, the Company will pay in cash the maximum amount permitted under such
debt instruments, or that would not result in such a material adverse effect,
and deliver to the Purchaser a promissory note for the balance, payable as soon
as (and in the maximum amounts that) the terms of such debt instruments or other
agreements will permit or that will not have such a material adverse effect, but
in no event later than five years after the date of issuance (or such later date
as may be required to comply with such debt instruments or other agreements),
bearing interest at the highest rate charged from time to time under the
Company's senior credit facility, secured by the Shares being repurchased on
terms reasonably satisfactory to the Company and the Purchaser. The Purchaser
agrees that the Shares being repurchased, when so transferred to the Company,
will be free and clear of all liens, claims, encumbrances and charges caused or
created by the Purchaser.
(h) Notwithstanding anything herein to the contrary, if, prior to
completion of the Required Build, the Purchaser (i) resigns without Good Reason
or his employment with the Company is terminated for Cause and (ii) is employed
by a wireless voice communications service provider that competes (at the time
of commencement of his employment with such entity) in any of the markets of
Nextel or the Company, the Purchaser shall (upon the commencement of his
employment with such entity) refund in cash to the Company an amount (net of
taxes payable by the
13
Purchaser thereon) equal to the excess (if any) of(x) the price paid by the
Company for any Shares repurchased by the Company upon his termination over (y)
the price paid by the Purchaser for such Shares pursuant to this Agreement.
5. Escrow of Shares.
(a) Shares that are subject to repurchase by the Company pursuant to
Section 4 (collectively, "Escrowed Shares") shall be held in escrow by the
Secretary of the Company as escrow agent (the "Escrow Agent") together with one
or more stock powers executed by the Purchaser in blank and in form legally
sufficient to effect the transfer of such Shares. Shares that are no longer
subject to repurchase by the Company pursuant to Section 4 shall be released
from escrow at the Purchaser's request, and the Escrow Agent shall promptly
cause a new certificate to be issued for such released Shares and shall deliver
such certificate to the Purchaser.
(b) The Escrow Agent is hereby directed to permit transfers of
Escrowed Shares only in accordance with this Agreement or upon receipt of
instructions signed by both parties. In the event further instructions are
desired by the Escrow Agent, he shall be entitled to rely upon directions
executed by a majority of the authorized number of the Company's directors
(excluding the Purchaser if he is then a member of the Board). The Escrow Agent
shall have no liability for any act or omission hereunder while acting in good
faith in the exercise of his own judgment, and shall be entitled to
indemnification from the Company to the full extent permitted by applicable law
in respect of his service as Escrow Agent.
(c) If the Company or any assignee repurchases Shares pursuant to
Section 4, the Escrow Agent, upon receipt of written notice of such exercise
from the proposed transferee, shall take all steps necessary to accomplish such
transfer.
(d) Subject to the terms hereof, the Purchaser and each of his
permitted assigns shall, as a record owner of Shares, have all the rights of a
stockholder with respect to the Escrowed Shares while they are held in escrow,
including without limitation, the right to vote the Escrowed Shares and to
receive any cash dividends and other distributions declared thereon, provided
that any non-cash dividends or distributions shall be immediately deposited with
the Escrow Agent to be held in escrow together with the Escrowed Shares in
accordance with this Section 5. If, from time to time prior to the termination
of the Company's repurchase rights, there is (i) any stock dividend, stock split
or like change in the Shares or (ii) any merger or sale of all or substantially
all of the assets or other acquisition of the Company, any and all new,
substituted or additional securities to which the Purchaser is entitled by
reason of his ownership of Escrowed Shares shall be immediately subject to this
escrow, deposited with the Escrow Agent and included thereafter as "Escrowed
Shares" for purposes of this Agreement.
(e) So long as the Custodial Agreement of even date herewith among
the Custodian named therein and the other parties thereto is in effect, (i) the
provisions of this Section
14
5 shall have no force or effect and (ii) the Shares shall be held in custody by
the Custodian in accordance with the terms of the Custodial Agreement.
6. Legends: Transfer Restrictions.
(a) The certificates evidencing the Shares shall be endorsed with
the following legend (and any other legend required to be placed thereon by
applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933.
In addition, the certificates evidencing the Escrowed Shares shall be
endorsed with the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE
STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.
(b) Except as otherwise permitted by, and subject to the provisions
of each of, this Agreement, any stockholders' agreement to which the Purchaser
is a party, the restated certificate of incorporation of the Company, as amended
from time to time, or the Purchaser's employment agreement with the Company or a
subsidiary of the Company, none of the Escrowed Shares (or any beneficial
interest therein) shall be transferred, encumbered or otherwise disposed of in
any way.
7. Adjustments for Splits. Etc. All references to the number of
Shares and the purchase price of the Shares in this Agreement shall be
automatically adjusted to reflect any stock split, stock dividend or like change
in the shares of Class A Common Stock which may be made by the Company after the
date of this Agreement.
8. Investment Representations: Restriction on Transfer. In
connection with the purchase of the Shares, the Purchaser represents to the
Company the following:
(a) He 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 Shares. He is purchasing
these securities for investment for his 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.
(b) He understands that the Shares have not been registered under
the Securities Act by reason of a specific exemption therefrom, which exemption
depends upon, among other
15
things, the bona fide nature of his investment intent as expressed herein. In
this connection, he understands that, in the view of the SEC, the statutory
basis for such exemption may not be present if his representations meant that
his present intention was to hold these securities for a minimum capital gains
period under the tax statutes, for a deferred sale, for a market rise, for a
sale if the market does not rise, or for a year or any other fixed period in the
future.
(c) He further acknowledges and understands that the Shares must be
held indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration is available. He understands that the
certificate evidencing the Shares will be imprinted with a legend which
prohibits the transfer of the Shares unless they are registered or such
registration is not required in the opinion of counsel for the Company.
(d) The Purchaser is an "accredited investor" within the meaning of
Regulation 501 under the Securities Act of 1933, as amended, in that he is an
"executive officer" as defined in Regulation 501 or otherwise is an "accredited
investor", the Purchaser is aware that the Company is a "development stage"
company with no significant business operations or history and may be dependent
for its future success on matters that cannot now be foreseen or predicted, and
the Purchaser is not making this investment in the Company based on any
representation or warranty made to him by the Company.
(e) The Purchaser's financial situation is such that the Purchaser
can afford to bear the economic risk of holding the Shares acquired hereunder
for an indefinite period of time, the Purchaser has adequate means for providing
for his needs and contingencies and can afford to suffer the complete loss of
the investment in the Shares.
(f) The Purchaser's knowledge and experience in financial and
business matters are such that he is capable of evaluating the merits and risks
of the investment in the Shares, or the Purchaser has been advised by a
representative possessing such knowledge and experience.
(g) The Purchaser understands tat the Shares acquired hereunder are
a speculative investment which involves a high degree of risk of loss of the
entire investment therein, that there are substantial restrictions on the
transferability of the Shares, and that for an indefinite period following the
date hereof there will be no (or only a limited) public market for the Shares
and that, accordingly, it may not be possible for Purchaser to sell the Shares
in case of emergency or otherwise.
(h) The Purchaser and his representatives, including his
professional, financial, tax and other advisors, have carefully reviewed all
documents available to them in connection with the investment in the Shares, and
the Purchaser understands and has taken cognizance of all the risks related to
such investment.
(i) The Purchaser and his representatives have been given the
opportunity to examine all documents and to ask questions of, and to receive
answers from, the Company and its
16
representatives concerning the terms and conditions of the acquisition of the
Shares and related matters and to obtain all additional information which the
Purchaser or his representatives deem necessary.
(j) All information that the Purchaser has provided to the Company
and its representatives concerning the Purchaser and his financial position is
true, complete and correct.
9. General Provisions.
(a) This Agreement shall be governed by the internal laws of the
State of Delaware without regard to conflicts of law principles.
(b) This Agreement represents the entire agreement between the
parties with respect to the purchase of the Shares by the Purchaser and may be
modified or amended only by a writing signed by both parties.
(c) All notices given hereunder shall be in writing and shall be
deemed to have been duly given and received (i) when delivered personally, with
receipt acknowledged in writing by the recipient, (ii) on the tenth business day
after being sent by registered or certified mail (postage paid, return receipt
requested), (iii) one business day after being sent by a reputable overnight
delivery service, postage or delivery charges prepaid, or (iv) on the date on
which a facsimile is transmitted, in each case to the parties at their
respective addresses stated below; provided, that if the intended recipient of
any notice hereunder refuses to acknowledge receipt thereof in writing, such
notice shall be deemed to have been duly given on the date of such refusal. Any
party may change its address for notice by giving notice of the new address to
the other party in accordance with the provisions of this paragraph.
If to the Company:
Nextel Partners, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: General Counsel
Facsimile: 000-000-0000
with a copy to:
Nextel WIP Corp.
0000 Xxxx Xxxxxx Xxxxx
XxXxxx, XX 00000
Attention: General Counsel
Facsimile: 000-000-0000
17
If to Executive:
Nextel Partners, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Facsimile: 000-000-0000
and
000 00xx Xxxxxx X.
Xxxxxxx, XX 00000
(d) The rights and obligations of the Purchaser under this Agreement
may be assigned only with the prior written consent of the Company.
(e) Either party's failure to enforce any provision of this
Agreement shall not in any way be construed as a waiver of any such provision,
nor prevent that party thereafter from enforcing each and every other provision
of this Agreement. The rights granted both parties herein are cumulative and
shall not constitute a waiver of either party's right to assert all other legal
remedies available to it under the circumstances.
(f) Each party agrees, upon the reasonable request of the other
party, to execute any further documents or instruments necessary or desirable to
carry out the purposes or intent of this Agreement.
(g) Except as otherwise provided herein, any controversies or claims
arising out of, or relating to this Agreement or the breach thereof, shall be
settled by arbitration in accordance with the commercial rules of the American
Arbitration Association, which decision shall be final and binding on the
parties, and judgment upon the award rendered shall be entered in any court
having jurisdiction thereof. Any party may demand such arbitration in accordance
with the procedures set out in those rules. The arbitration shall be conducted
in New York, New York, or such other location as may be mutually agreed upon by
the parties. Special, consequential, or punitive damages shall not be awarded by
the arbitrator. In the event of any arbitration proceeding hereunder, the
Company will (x) pay the fees and expenses of the arbitrator and (y) advance the
Purchaser's documented out-of-pocket costs (including reasonable counsel fees
and expenses) on a current basis, provided, that if the Purchaser is determined
not to be the substantially prevailing party on the matters submitted for
arbitration (which determination shall be made by the arbitrator and included in
his or her decision), the Purchaser will promptly reimburse the Company for any
expenses so advanced. The Purchaser acknowledges that the Company is agreeing to
make advances to him pursuant to the preceding sentence in consideration of his
agreement to reimburse the Company for any such advances to the extent required
by the preceding sentence. The Company will in all events pay its own costs
(including counsel fees and expenses) in connection with any arbitration
proceeding hereunder.
18
(h) The Purchaser understands that he (and not the Company) shall be
responsible for his own federal, state, local or foreign tax liability and any
of his other tax consequences that may arise as a result of the transactions
contemplated by this Agreement. The Purchaser shall rely solely on the
determinations of his tax advisors or his own determinations, and not on any
statements or representations by the Company or any of its agents, with regard
to all such tax matters. The Purchaser shall notify the Company and Nextel
Partners Operating Corp. in writing if the Purchaser files an election pursuant
to Section 83(b) of the Internal Revenue Code of 1986, as amended, with the
Internal Revenue Service within 30 days from the date of the sale of the Shares
hereunder; and the Company shall file its tax returns and reports in a manner
consistent with such election, provided that such election is made on the basis
disclosed to the Company. The Company intends, in the event it does not receive
from the Purchaser evidence of a proper filing, to claim a tax deduction for and
to calculate and withhold taxes on any amount which would be taxable to the
Purchaser in the absence of such an election.
(i) To the extent legally required, the Company shall have the right
and is authorized to withhold from any payments due or transfers in connection
with the purchase of the Shares hereunder or from any compensation or other
amount owing to the Purchaser the amount (in cash, Shares, other securities or
other property) of any applicable withholding taxes in respect of the Shares and
to take such other action as may be necessary in the opinion of the Company to
satisfy all obligations for the payment of such taxes, if applicable.
* * *
19
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
NEXTEL PARTNERS, INC.
By /s/ [ILLEGIBLE]
--------------------------------
Name:
Title:
/s/ Xxxxxx X. Xxxxxxx
---------------------
XXXXXX X. XXXXXXX
Agreed to and accepted by:
/s/ Xxxxxxx Xxxxxxx
-------------------
XXXXXXX XXXXXXX
Schedule I
Vesting Schedule
The Shares shall consist of Initial Time Shares (25%), Additional Time
Shares (10%), Build Shares (21%), Revenue Shares (22%) and EBITDA Shares (22%),
which shall vest in accordance with this Schedule I, subject to the Purchaser's
continued employment with the Company or a subsidiary of the Company on the
applicable vesting date (except as otherwise provided in Section 3).
----------------------------------------------------------------------------------------------------------------
Vesting (%) 1998-99 12/31/99 12/31/00 12/31/01 12/31/02 Total
----------------------------------------------------------------------------------------------------------------
Initial Time Shares 25.00 0.00 0.00 0.00 0.00 25.00
Additional Time Shares 0.00 2.50 2.50 2.50 2.50 10.00
Build Shares 0.00 9.00 9.00 3.00 0.00 21.00
Revenue Shares 0.00 4.00 4.00 6.25 7.75 22.00
EBITDA Shares 0.00 4.00 4.00 6.25 7.75 22.00
----------------------------------------------------------------------------------------------------------------
Shares Vested (Annual) 25.00 19.50 19.50 18.00 18.00 22.00
----------------------------------------------------------------------------------------------------------------
Shares Vested (Cumulative) 25.00 44.50 64.00 82.00 100.00
----------------------------------------------------------------------------------------------------------------
Initial Time Shares
Twenty-five percent (25%) of the Shares are Initial Time Shares. One
hundred percent (100%) of the Initial Time Shares shall vest on the date hereof.
Additional Time Shares
Ten percent (10%) of the Shares are Additional Time Shares. The Additional
Time Shares shall vest in four equal installments (except as otherwise provided
in Section 3) on December 31 in each of 1999, 2000, 2001 and 2002.
Build Shares
Twenty-one percent (21%) of the Shares are Build Shares. The number of
Build Shares (on a percentage basis) available for vesting on December 31 in
each of 1999, 2000 and 2001 is set forth in the chart above.
The number of Build Shares (on a percentage basis) available for vesting
in a given year ("Adjusted Build Shares") will be determined by reference to the
following table. The percentage of annual Buildout achieved will be calculated
by dividing (i) the number of cell sites constructed
and placed (or capable of being placed) in service during such year, all as
determined by the Board, subject to a 60-day grace period into (ii) the number
of cell sites targeted for construction during such year as set forth in Annex
A.
% of Annual % of Build Shares
Buildout Achieved Available for Vesting
----------------- ---------------------
95-100 100
85-94.99 75
75-84.99 50
Less than 75 0
The number of Build Shares (on a percentage basis) that vest in a given
year will then be determined with reference to the following table:
% of Variance from % of Adjusted
Annual Build Budget Build Shares Vested
------------------- -------------------
0-9.99 100
10-14.99 90
15-19.99 80
20-25 70
Greater than 25 0
Build Shares that do not vest in accordance with the foregoing provisions
will not be eligible for vesting other than pursuant to Section 3(b).
The cell site targets set forth in Annex A may be adjusted by the Board
(acting in the good faith exercise of its business judgment) to take into
account circumstances relating to the operation of the Company to the extent not
contemplated by the Company's business plan in effect on the date hereof (on
which the cell targets set forth on Annex A are based).
Revenue Shares
Twenty-two percent (22%) of the Shares are Revenue Shares. The number of
Revenue Shares (on a percentage basis) available for vesting on December 31 in
each of 1999, 2000 and 2001 is set forth in the chart above, subject to
carry-over vesting as set forth below.
The number of Revenue Shares (on a percentage basis) that vest on December
31 in any given year, based on the percentage achievement of the annual or
cumulative (whichever results in the greater number of Revenue Shares vesting in
such year) revenue targets set forth in Annex A, will be determined by reference
to the following table:
2
% of Revenue Target % of Revenue Shares
(Annual/Cumulative) Achieved Vested in Such Year
---------------------------- -------------------
95-100 100
90-94.99 85
85-89.99 75
75-84.99 50
Less than 75 0
For purposes of determining whether cumulative revenue targets have been
achieved, revenue of the Company in excess of a prior year's or years' target(s)
may be carried over and added to the revenue of the current year, but the
maximum carry-over to such current year is 10% of the cumulative revenue target
for such current year. Revenue means all revenue (including roaming revenue)
other than equipment revenue.
Revenue Shares that do not vest in a given year will be carried forward
and be available for vesting in the following two years (i.e., through 2004 at
the latest). Any Revenue Shares that, as of any date of determination, remain
eligible for vesting in accordance with the preceding sentence, are referred to
hereinafter as "Eligible Revenue Shares." Revenue Shares that do not vest in
accordance with the foregoing provisions will be subject to deferred vesting in
accordance with Section 3(c).
The revenue targets set forth in Annex A may be adjusted by the Board
(acting in the good faith exercise of its business judgment) to take into
account circumstances relating to the operation of the Company to the extent not
contemplated by the Company's business plan in effect on the date hereof (on
which the revenue targets set forth on Annex A are based).
EBITDA Shares
Twenty-two percent (22%) of the Shares are EBITDA Shares. The number of
EBITDA Shares (on a percentage basis) available for vesting on December 31 in
each of 1999, 2000 and 2001 is set forth in the chart above, subject to
carry-over vesting as set forth below.
The number of EBITDA Shares (on a percentage basis) that vest on December
31 in any given year, based on the percentage achievement of the positive annual
or cumulative (whichever results in the greater number of EBITDA Shares vesting
in such year) EBITDA targets set forth in Annex A, will be determined by
reference to the following table:
% of EBITDA Target % of EBITDA Shares
(Annual/Cumulative) Achieved Vested in Such Year
---------------------------- -------------------
95-100 100
90-94.99 85
85-89.99 75
75-84.99 50
3
% of EBITDA Target % of EBITDA Shares
(Annual/Cumulative) Achieved Vested in Such Year
---------------------------- -------------------
Less than 75 0
The number of EBITDA Shares (on a percentage basis) that vest on December
31 in any given year, based on the variance between EBITDA achieved and the
negative annual or cumulative (whichever results in the greater number of EBITDA
Shares vesting in such year) EBITDA targets set forth in Annex A, will be
determined by reference to the following table:
% Variance of EBITDA Achieved % of EBITDA Shares
From (Annual/Cumulative) Target Vested in Such Year
------------------------------- -------------------
0-5 100
5.01-10 85
10.01-15 75
15.01-25 50
More than 25 0
For example, if the Company had EBITDA of $(80,000,000) in 1999, this would
represent a variation of 8.4% from the EBITDA target of ($73,803,000), and 85%
of the EBITDA Shares would vest.
For purposes of determining whether cumulative EBITDA targets have been
achieved, EBITDA of the Company in excess of a prior year's or years' target(s)
(which, in the case of a negative number, shall mean a smaller negative number)
may be carried over and added to the EBITDA of the current year, but the maximum
carry-over to such current year is 10% of the cumulative EBITDA target for such
current year.
EBITDA Shares that do not vest in a given year will be carried forward and
be available for vesting in the following two years (i.e., through 2004 at the
latest); provided that unless the Board determines otherwise, no EBITDA Shares
relating to fiscal year 1999 or fiscal year 2000 shall be carried forward if
negative EBITDA for such years is greater in the aggregate than 27% of the
cumulative EBITDA target for fiscal year 2000. Any EBITDA Shares that, as of any
date of determination, remain eligible for vesting in accordance with the
preceding sentence, are referred to hereinafter as "Eligible EBITDA Shares."
EBITDA Shares that do not vest in accordance with the foregoing provisions
will be subject to deferred vesting in accordance with Section 3(c).
4
Annex A
Targets
---------------------------------------------------------------------------------------------------------------
Year 1998/99 2000 2001 2002 2003 2004
---------------------------------------------------------------------------------------------------------------
Cell Sites(1) ......... 450 675 313 n/a n/a n/a
---------------------------------------------------------------------------------------------------------------
Revenue ($000)
Annual ................ 20,900 70,500 156,800 259,900 376,700 502,500
Cumulative ............ n/a 91,400 248,200 508,100 884,800 1,387,300
---------------------------------------------------------------------------------------------------------------
EBITDA ($000)
Annual ................ (31,900) (73,200) (42,600) 4,500 71,300 141,500
Cumulative ............ n/a (105,100) (147,700) (143,200) (71,900) 69,600
---------------------------------------------------------------------------------------------------------------
----------
(1) The cell site target for 2000 will be reduced by the number of cell
sites (if any) in excess of 450 constructed by the Company in 1998/99. The cell
site target for 2001 will be reduced by the number of cell sites (if any) in
excess of 675 (as such number may be reduced in accordance with the preceding
sentence) constructed by the Company in 2000.
