EXHIBIT 10.2
[EXECUTION COPY]
CONTINGENT EQUITY INSTRUMENT
by and between
Digital Radio, L.L.C.
and
Nextel Communications, Inc.
Dated as of June 16, 1997
THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR INSTRUMENT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR UNDER ANY APPLICABLE STATE LAWS AND MAY NOT BE
TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION UNDER THE ACT OR SUCH LAWS OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED UNDER THE ACT OR SUCH LAWS AND THE RULES AND
REGULATIONS PROMULGATED THEREUNDER.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR INSTRUMENT ARE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND VOTING AS SET FORTH
IN THE SECURITIES PURCHASE AGREEMENT, DATED AS OF APRIL 4, 1995, AS
AMENDED, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE
OFFICES OF THE COMPANY. ANY REGISTRATION OF TRANSFER OF SUCH
SECURITIES ON THE BOOKS OF THE COMPANY WILL BE SUBJECT TO COMPLIANCE
WITH SUCH RESTRICTIONS.
CONTINGENT EQUITY INSTRUMENT
This CONTINGENT EQUITY INSTRUMENT (the "CEI") is dated as of June 16,
1997, by and between Nextel Communications, Inc., a Delaware corporation (the
"Company") and Digital Radio, L.L.C., a Washington limited liability company
("Buyer"). Capitalized terms used herein and not otherwise defined herein
shall have the meanings ascribed to them in the Commitment Agreement (as
defined below).
RECITALS
The Company and Buyer have entered into an Option Exercise and
Lending Commitment Agreement dated as of June 16, 1997 (the "Commitment
Agreement") pursuant to which, among other things, Seller agreed to sell, and
Buyer agreed to purchase this CEI, which, under certain circumstances, entitles
Buyer to acquire shares of the Company's Class A Common Stock, par value $.001
per share (the "Common Stock"), on the terms set forth in this CEI.
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AGREEMENT
NOW, THEREFORE, for the consideration set forth in the Commitment
Agreement, $1,610.00 paid to the Company upon the execution and delivery of
this CEI, and other good and valuable consideration, the sufficiency and
receipt of which is hereby acknowledged, the Company agrees with Buyer as
follows:
1. GRANT OF CEI.
1.1 Grant. The Company hereby grants to Buyer this CEI, exercisable
as provided herein in whole or in part at any time and from time to time during
the period from (A) the date that Investor has paid the exercise price and
exercised, in full, the Investor's First Option, through (B) 6:00 p.m., local
time in New York, New York, on July 28, 1999 (the "Exercise Period") to acquire
the number of shares of Common Stock determined at the Closing in accordance
with Section 1.3 of the Commitment Agreement (as set forth in the instrument
executed pursuant to Section 1.5(a)(ii) of the Commitment Agreement which is or
shall be attached to this CEI (as such number may be adjusted pursuant to
Section 2 hereof, the "CEI Shares")). No additional payment or other
consideration is to be paid or given upon exercise of the CEI. Buyer and its
permitted successors and assigns are hereinafter referred to as "Holder."
1.2 Shares To Be Issued; Reservation of Shares. The Company covenants
and agrees that all CEI Shares will, upon issuance, be duly authorized,
validly issued and outstanding, fully paid and non-assessable, and free from all
taxes, liens and charges with respect to the issuance thereof, except as
otherwise provided in the Commitment Agreement. The Company further covenants
and agrees that it will from time to time take all actions required to assure
that the aggregate par value of the Common Stock issuable upon exercise of this
CEI is at all times equal to or less than $1610. The Company further covenants
and agrees that, during the Exercise Period, the Company will at all times have
authorized and reserved sufficient shares of Common Stock to provide for the
exercise of this CEI in full.
2. ADJUSTMENTS TO CEI RIGHTS. ADJUSTMENTS TO OPTION RIGHTS.
2.1 Stock Combinations. If the Company combines all of the
outstanding Common Stock proportionately into a smaller number of shares, the
number of CEI Shares issuable to the Holder
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upon exercise of this CEI will be proportionately decreased, as of the
effective date of such combination.
2.2 Reorganizations. If any of the following transactions (each, a
"Special Transaction") becomes effective: (i) a capital reorganization or
reclassification of the capital stock of the Company, (ii) a consolidation or
merger of the Company with another entity or (iii) a sale or conveyance of all
or substantially all of the Company's assets, then, as a condition of any such
Special Transaction, lawful and adequate provision shall be made whereby the
Holder shall thereafter have the right to acquire and receive, at any time
after the consummation of such transaction until the expiration of the Exercise
Period, upon the basis and upon the terms and conditions specified herein, and
in lieu of the CEI Shares immediately theretofore issuable upon exercise of
this CEI, such shares of stock, other securities, cash or other assets as may
be issued or payable in and pursuant to the terms of such Special Transaction
with respect to or in exchange for a number of outstanding shares of Common
Stock equal to the number of CEI Shares immediately theretofore issuable upon
exercise in full of this CEI had such Special Transaction not taken place (pro
rated in the case of any partial exercises). In connection with any Special
Transaction, appropriate provision will be made with respect to the rights and
interests of the Holder to the end that the provisions of this CEI (including
without limitation provisions for adjustment of the Exercise Price and the
number of CEI Shares issuable upon the exercise of the CEI), will thereafter be
applicable, as nearly as may be, to any shares of stock, other securities, cash
or other assets thereafter deliverable upon the exercise of this CEI. The
Company will not effect any Special Transaction unless prior to or
simultaneously with the closing the successor entity (if other than the
Company), if any, resulting from such consolidation or merger or the entity
acquiring such assets assumes by a written instrument executed and mailed by
certified mail or delivered to the Holder (which instrument shall be in form
and substance reasonably satisfactory to Holder) at the address of the Holder
appearing on the books of the Company, the obligation of the Company or such
successor corporation to deliver to such Holder such shares of stock,
securities, cash or other assets as, in accordance with the foregoing
provisions, such Holder has rights to acquire.
2.3 Adjustment Upon Changes in Capitalization. In the event of any
change in the Common Stock by reason of stock dividends, stock splits,
recapitalizations, reclassifications or
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the like, the type and number of CEI Shares issuable upon exercise of this CEI
will be adjusted appropriately, immediately upon such change. No such
adjustment will be made on account of any dividend payable other than in stock
of the Company.
2.4 Notice. Whenever this CEI or the CEI Shares is to be adjusted
as provided herein or a dividend or distribution (in cash, stock or
otherwise and including, without limitation, any liquidating distributions) is
to be declared by the Company, or a Special Transaction is deemed by the Company
to be substantially certain to occur (other than a Special Transaction in which
the Company is the surviving entity and which would not require the execution of
a written instrument pursuant to Section 2.2 above), the Company will forthwith
cause to be sent to the Holder at the last address of the Holder shown on the
books of the Company, by first-class mail, postage prepaid, at least ten (10)
days prior to the record date specified in (A) below or at least twenty (20)
days before the date specified in (B) below, a notice stating in reasonable
detail the facts requiring such adjustment and the calculation thereof, if
applicable, and stating (if applicable):
(A) the record date of such dividend, distribution, subdivision
or combination, or, if a record is not to be taken, the date as of which
the holders of Common Stock of record to be entitled to such dividend,
distribution, subdivision or combination are to be determined (provided, that in
the event the Company institutes a policy of declaring cash dividends on a
periodic basis, the Company need only provide the relevant information called
for in this clause (A) with respect to the first cash dividend payment to be
made pursuant to such policy and thereafter provide only notice of any changes
in the amount or the frequency of any subsequent dividend payments), or
(B) the date on which a Special Transaction is expected to
become effective, and the date as of which it is expected that holders of
Common Stock of record are entitled to exchange their shares of Common
Stock for securities or other property deliverable upon consummation of the
Special Transaction.
2.5 Fractional Interests. This CEI may be exercised only for a whole
number of shares of Common Stock, other than any fraction of a share of Common
Stock which would result upon this CEI being exercised in full; provided,
however that the Company is not required to issue fractions of shares of Common
Stock on the exercise in full of this CEI. If any fraction of a share of
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Common Stock would, except for the provisions of this Section 2.5, be
issuable upon the exercise in full of this CEI, the Company may (in lieu of
issuing such fractional share) either (A) purchase such fraction for an amount
in cash equal to the current value of such fraction, computed (i) if the Common
Stock is listed or admitted to unlisted trading privileges on the NASDAQ
National Market System or any securities exchange, on the basis of the last
reported sale price of the Common Stock on such exchange on the last business
day prior to the date of exercise upon which such a sale shall have been
effected (or, if the Common Stock shall be listed or admitted to unlisted
trading privileges on more than one such exchange, on the basis of such price on
the exchange designated from time to time for such purpose by the Board of
Directors of the Company) or (ii) if the Common Stock is not so listed or
admitted to unlisted trading privileges, on the basis of the last bid price, or
if there is no reported last bid, the average of the bid prices, for the Common
Stock on the last business day prior to the date of exercise, as reported by the
National Association of Securities Dealers Automated Quotation System or any
successor thereto, or, if such computations cannot be made as aforesaid, as the
Board of Directors of the Company may in good faith determine or (B) issue a
number of whole shares determined by rounding up to the nearest whole share.
3. EXERCISE.
3.1 Exercise of this CEI. Subject to compliance with federal and
state securities laws and to Section 1.1, the Holder may exercise this CEI,
in whole or in part, at any time during the Exercise Period by surrendering this
CEI, with the form of exercise notice attached hereto as Exhibit "A" duly
executed by Holder. Upon any partial exercise of this CEI, the Company, at its
expense, will forthwith issue to the Holder for this CEI a replacement CEI
identical in all respects to this CEI, except that the number of CEI Shares
shall be reduced accordingly.
3.2 Issuance of CEI Shares. The CEI Shares acquired will be issued
to the Holder exercising this CEI as of the close of business on the date
on which all actions required to be taken by Holder, pursuant to Section 3.1,
have been taken. Certificates for the CEI Shares so purchased will be delivered
to the Holder within a reasonable time, not exceeding ten (10) days after this
CEI is surrendered.
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4. NO DILUTION OR IMPAIRMENT. The Company will not, by amendment
of its Certificate of Incorporation or Bylaws or through reorganization,
reclassification, consolidation, merger, dissolution, sale of assets or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms of this CEI, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the Holder against
dilution or other impairment. Without limiting the generality of the foregoing,
the Company will not increase the par value of any shares of Common Stock
receivable upon the exercise of this CEI above the Exercise Price, and at all
times will take all such action as may be necessary or appropriate in order that
the Company may validly and legally issue fully paid and non-assessable shares
of Common Stock upon the exercise of this CEI. In the event of actions, other
than those specified herein, affecting adversely the rights of the Holder, the
Board of Directors of the Company will make such adjustments as shall be
equitable in the circumstances to preserve for Holder the benefits of this CEI.
5. RIGHTS OF HOLDER. Holder is not, solely by virtue of this CEI
and prior to the issuance of the CEI Shares upon due exercise thereof, entitled
to any rights of a stockholder in the Company.
6. TRANSFERABILITY. Holder may not sell, assign, transfer or
otherwise dispose of this CEI, except in accordance with the terms of the
Commitment Agreement. Subject to compliance with federal and state securities
laws and with the Commitment Agreement, if applicable, the Holder may sell,
assign, transfer or otherwise dispose of any CEI Shares acquired upon any
exercise hereof at any time and from time to time.
7. LEGEND ON CEI SHARES. Certificates evidencing the CEI Shares
will bear the following legend: "THE SECURITIES REPRESENTED BY THIS
CERTIFICATE OR INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR UNDER ANY APPLICABLE STATE LAWS AND MAY NOT BE
TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION UNDER THE ACT OR SUCH LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT
OR SUCH LAWS AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER." Such
certificates will also be legended as appropriate to reflect any and all
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restrictions on transfer of such CEI Shares that are contained in the
Commitment Agreement.
8. MISCELLANEOUS.
8.1 Amendments. The parties may, from time to time, enter into
written amendments, supplements or modifications hereto for the purpose of
adding any provisions to this CEI or changing in any manner the rights of either
of the parties hereunder. No amendment, supplement or modification will be
binding on either party unless made in writing and signed by a duly authorized
representative of each party and effected in compliance with Section 9.4 of the
Commitment Agreement, if applicable.
8.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective must be in writing and, unless
otherwise expressly provided herein, are deemed to have been duly given or made
when delivered by hand or by courier, or by certified mail, or, when transmitted
by facsimile and a confirmation of transmission printed by sender's facsimile
machine. A copy of any notice given by facsimile also must be mailed, postage
prepaid, to the addressee. Notices to the respective parties hereto must be
addressed as follows:
(i) If to the Company:
Nextel Communications, Inc.
0000 Xxxx Xxxxxx Xxxxx
XxXxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx,
Vice President and General Counsel
Telecopier: (000) 000-0000
with a copy to:
Xxxxxx X. Xxxxxxx, Esq.
Xxxxx, Day, Xxxxxx & Xxxxx
North Point
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Telecopier: (000) 000-0000
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(ii) If to the Buyer:
Digital Radio, L.L.C.
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000-0000
Attention: Xxxxxx Xxxxxxxx
Telecopier: (000) 000-0000
with a copy to:
C. Xxxxx Xxxxxx, Esq.
Digital Radio, L.L.C.
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000-0000
Telecopier: (000) 000-0000
and
Xxx X. Xxxx, Esq.
Xxxxx Xxxxxx Xxxxxxxx LLP
0000 X. X. Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxx, XX 00000
Telecopier: (000) 000-0000
Any party may alter the address to which communications or copies are to be
sent by giving notice of the change of address under this Section 8.2.
8.3 Waiver By Consent. The Holder may execute and deliver to the
Company a written instrument waiving, on such terms and conditions as the
Holder may specify in such instrument, any of the requirements of this CEI
otherwise imposed on the Company.
8.4 No Implied Waiver; Rights Are Cumulative. The failure to
exercise or the delay in exercising by either party of any right, remedy,
power or privilege under this CEI, will not operate as a waiver thereof. The
single or partial exercise of any right, remedy, power or privilege under this
CEI will not preclude any other or further exercise thereof or the exercise of
any other right, remedy, power or privilege. The rights, remedies, powers and
privileges herein provided are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.
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8.5 Governing Law. This CEI and rights and obligations of the
parties hereuder are governed by, construed and interpreted in accordance with
the laws of the State of Delaware applicable to agreements executed by
residents of that state, and fully to be performed, in that state.
8.6 Severability. If any provision of this CEI is found to be
unenforceable for any reason whatsoever, such provision shall be deemed null
and void to the extent of such unenforceability but is to be deemed separable
from and is not to invalidate any other provision of this CEI.
8.7 Captions. Captions to the various paragraphs of this Agreement
are provided for convenience only and are not to be used to construe the
provisions of this CEI.
8.8 Entire Agreement. This CEI and the Commitment Agreement
constitute the entire understanding of the parties with respect to the
subject matter of this CEI and supersedes all prior discussions, agreements and
representations, whether oral or written, concerning the subject matter hereof
and whether or not executed by Buyer and the Company.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
DIGITAL RADIO, L.L.C.
By: /s/C. Xxxxx Xxxxxx
Name: C. Xxxxx Xxxxxx
Title: Vice President,
Eagle River, Investments, LLC
Manager
NEXTEL COMMUNICATIONS, INC.
By: /s/Xxxxxx X. Xxxxxxxx
Name: Xxxxxx X. Xxxxxxxx
Title: Vice President
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EXHIBIT "A"
[To be signed only upon exercise of CEI]
To Nextel Communications, Inc.:
The undersigned, the Holder of the within CEI, hereby irrevocably elects to
exercise the purchase right represented by such CEI for, and to purchase
thereunder, shares of the Class A Common Stock of Nextel
Communications, Inc. and requests that the certificates for such shares be
issued in the name of, and be delivered to, whose address is
.
Dated:
(Signature must conform in all respects to name of
Holder as specified on the face of the CEI)
Address
