Contents:
Employment Agreement - 2003
Addendum to Employment Agreement - 1997
Employment Agreement - 1996
Annex A to Employment Agreement - 1996
 

EMPLOYMENT AGREEMENT

 

 

Exhibit 10.1

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of July 1, 2003 (the “Effective Date”), by and between Nextel Communications, Inc., a Delaware corporation (the “Company”), and Timothy M. Donahue (the “Executive”).

WITNESSETH:

     WHEREAS, the Executive is an employee of the Company and serves the Company as the President and Chief Executive Officer and as a member of the Board of Directors of the Company;

     WHEREAS, the Executive and the Company are parties to an Employment Agreement dated February 1, 1996, as amended by an Addendum to Employment Agreement dated March 24, 1997 (the “Prior Employment Agreement”), and the Executive and the Company desire to enter into this new employment agreement which will supersede the Prior Employment Agreement; and

     NOW, THEREFORE, in consideration of the premises and of the covenants and agreements set forth herein and for other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the Company and the Executive agree as follows:

     1. Employment.

             (a) The Company will continue to employ the Executive and the Executive will continue to be employed by the Company upon the terms and conditions set forth herein.

             (b) The employment relationship between the Company and the Executive shall be governed by the general employment policies and practices of the Company, including without limitation, those relating to the Company’s Code of Corporate Conduct, confidential information and avoidance of conflicts, except that when the terms of this Agreement differ from or are in conflict with the Company’s general employment policies or practices, this Agreement shall control.

     2. Term. Subject to termination under Section 9, the Executive’s employment shall be for an initial term of three (3) years commencing on the Effective Date and shall continue through the third anniversary of the Effective Date (the “Employment Term”); provided, however, that at the end of the initial Employment Term and on each succeeding anniversary of the Effective Date, the Employment Term will be automatically extended by an additional year, unless twelve (12) months prior to the end of the initial Employment Term or any such succeeding anniversary date either the Executive or the Company has given the other written notice of nonrenewal.

     3. Position and Duties of the Executive.

             (a) The Executive shall serve as the President and Chief Executive Officer of the Company, and agrees to serve as an officer of any Subsidiary as may be requested from time to time by the Board of Directors of the Company (the “Board”). The Executive shall report directly to the Board. In such capacity as President and Chief Executive Officer of the Company, the Executive shall exercise general day-to-day supervisory responsibility and operational and management authority over the affairs of the Company and its Subsidiaries. For purposes of this Agreement, “Subsidiary” shall mean any entity, corporation, partnership (general or limited), limited liability company, entity, firm, business organization, enterprise, association or joint venture in which the Company directly or indirectly controls 50% or more of the voting interest.

             (b) Subject to the provisions of Section 9, during the Employment Term, the Company agrees to use its reasonable best efforts to cause the Executive to be renominated as a director of the Company (a “Director”). If so elected, the Executive shall serve as a Director of the Company; and if elected, the Executive shall also serve as (i) a member of any committee of the Board, whether now existing or hereafter created, and (ii) a member of the board of directors of any Subsidiary or affiliate of the Company.

             (c) Throughout the Employment Term, the Executive shall, except as may from time to time be otherwise agreed in writing by the Company and during reasonable vacations as set forth in Section 7 hereof and authorized leave, devote his best efforts, full attention and energies during his normal working time to the business of the Company, the responsibilities provided for the President and Chief Executive Officer in the Company’s By-laws, and such other related duties and responsibilities as may from time to time be reasonably prescribed by the Board or any committee or person delegated by the Board, in each case, within the framework of the Company’s policies and objectives.

             (d) Throughout the Employment Term and provided that such activities do not contravene the provisions of Sections 3(a) and (b) or Section 10, 11, 13 and 14 hereof and provided further the Executive does not engage in any other substantial business activity for gain, profit or other pecuniary advantage which materially interferes with the performance of his duties hereunder, the Executive may participate in any governmental, educational, charitable or other community affairs and serve as a member of the governing board of any such organization or private or public for profit companies, subject in each case to the prior approval of the Board. The Executive may retain all fees and other compensation from any such service and the Company shall not reduce his compensation by the amount of such fees.

     4. Compensation.

             (a) Base Salary. During the Employment Term the Company shall pay to the Executive a base salary of not less than one million dollars ($1,000,000) per annum (the “Base Salary”), payable at the times and in the manner consistent with the Company’s general policies regarding compensation of senior executive employees. The Base Salary will be reviewed not less than annually by the Compensation Committee of the Board (the “Compensation Committee”) and may be increased (but not decreased) in the Compensation Committee’s sole discretion. The Base Salary shall be payable in accordance with the Company’s normal payroll schedule. The Executive’s position shall be classified as pay grade EX4 or better (as adjusted for any changes to the Company’s system of classifying employees by salary grade level implemented subsequent to the Effective Date).

             (b) Incentive Compensation. The Executive will continue to be eligible to participate in any short-term and long-term incentive compensation plans, annual bonus plans and such other management incentive programs or arrangements of the Company approved by the Board that are generally available to the Company’s senior executives, including, but not limited to, the Nextel Communications, Inc. Cash Compensation Deferral Plan, as may be amended from time to time.

             (i) Annual Performance Bonus. During the Employment Term, the Executive shall be entitled to participate in an annual bonus plan (the “Bonus Plan”), with such opportunities as may be determined by the Compensation Committee (“Target Bonuses”); provided, however, that effective for the bonus year ending December 31, 2003, and thereafter during the Employment Term, the Executive will participate in the Bonus Plan at a minimum annual Target Bonus opportunity of 150% of his Base Salary and shall be entitled to receive full payment of any award under the Bonus Plan determined pursuant to such Bonus Plan (a “Bonus Award”).

             (ii) Long-Term Performance Bonus. During the Employment Term, the Executive shall be entitled to participate in the Nextel Long-Term Incentive Plan effective January 1, 2002, or any successor plan, program, agreement or arrangement (the “LTIP”), with such opportunities, if any, as may be determined by the Compensation Committee (“Target Award Opportunities”); provided, however, that for the 2004-2005 LTIP performance period, the Executive will participate in the LTIP at a minimum Target Award Opportunity of two million seven hundred thousand dollars ($2,700,000).

             (iii) Incentive bonuses, if earned, shall be paid when incentive compensation is customarily paid to the Company’s senior executives in accordance with the terms of the applicable plans, programs or arrangements.

             (iv) Pursuant to the Company’s applicable incentive or bonus plans as in effect from time to time, the Executive’s incentive compensation during the term of this Agreement may be determined according to criteria intended to qualify under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).

             (c) Equity Compensation. The Executive shall continue to be eligible to participate in the Nextel Communications, Inc. Amended and Restated Incentive Equity Plan (as amended and restated as of November 16, 2000), as may be further amended from time to time, (the “Incentive Equity Plan”).

             (i) Deferred Shares. Effective as of August 11, 2003, the Board will award to the Executive 1,000,000 Deferred Shares (as such term is defined in the Incentive Equity Plan) of common stock of the Company, par value $.001 per share (“Common Stock”), (the “Deferred Shares Award”). Subject to the terms and conditions of the deferred shares award agreement evidencing such grant, one-third (1/3) of the Deferred Shares Award shall vest and become nonforfeitable on each of the first three (3) anniversaries of the Effective Date.

             (ii) Stock Options. (A) The Board will grant to the Executive in calendar year 2004 an option to purchase a minimum of 250,000 shares of Common Stock (the “2004 Option Award”). Subject to the terms and conditions of the option agreement evidencing such grant, one-half (1/2) of the 2004 Option Award shall vest and become exercisable on each of the first two (2) anniversaries of the date of grant; provided, however, that if the second half of the 2004 Option Award has not vested on or before June 30, 2006, such installment shall vest on June 30, 2006. (B) The Board will grant to the Executive in calendar year 2005 an option to purchase a minimum of 250,000 shares of Common Stock (the “2005 Option Award”). Subject to the terms and conditions of the option agreement evidencing such grant, the 2005 Option Award shall vest on the first anniversary of the date of grant; provided, however, that if the 2005 Option Award has not vested on or before June 30, 2006, such installment shall vest on June 30, 2006.

     5. Benefits.

             (a) During the Employment Term, the Company shall make available to the Executive, on no less favorable terms and conditions than those available to other senior executives and subject to the terms and conditions of the applicable plans, participation for the Executive and his eligible dependents in (i) Company-sponsored group health, major medical, pension and profit sharing, 401(k) and employee welfare benefit plans, programs and arrangements (the “Employee Plans”) and such other usual and customary benefits in which senior executives of the Company participate from time to time, and (ii) such fringe benefits and perquisites as may be made available to senior executives of the Company as a group, including, but not limited to, long-term disability insurance, life insurance coverage and the Nextel Communications, Inc. Change of Control Retention Bonus and Severance Pay Plan, or any successor plan, program, agreement or arrangement (the “Change of Control Plan”).

             (b) The Executive acknowledges that the Company may change its benefit programs from time to time which may result in certain benefit programs being amended or terminated for its senior executives generally.

     6. Expenses. The Company shall pay or reimburse the Executive for reasonable and necessary business expenses incurred by the Executive in connection with his duties on behalf of the Company in accordance with the Company’s Travel and Expense Policy and any other of its expense policies applicable to senior executives of the Company, following submission by the Executive of reimbursement expense forms in a form consistent with such expense policies.

  7. Vacation. In addition to such holidays, sick leave, personal leave and other paid leave as is allowed under the Company’s policies applicable to senior executives generally, the Executive shall be entitled to twenty (20) days of vacation per 12-month period and subject to the terms and conditions of the Company’s vacation policy applicable to senior executives. The duration of such vacations and the time or times when they shall be taken will be determined by the Executive in consultation with the Company.

     8. Place of Performance. In connection with his employment by the Company, the Executive shall be based at the principal executive offices of the Company in the vicinity of Fairfax County, Virginia, except for travel reasonably required for Company business.

     9. Termination.

             (a) Termination by the Company for Cause or Resignation by the Executive Without Good Reason. If, prior to the expiration of the Employment Term, the Executive’s employment is terminated by the Company for Cause, as defined in Section 9(d), or if the Executive resigns from his employment hereunder without Good Reason, as defined in Section 9(f), the Executive shall not be eligible to receive Base Salary or to participate in any Employee Plans with respect to future periods after the date of such termination or resignation except for the right to receive vested benefits under any Employee Plan in accordance with the terms of such Employee Plan. Conditioned upon the Executive delivering to the Company a release in a form reasonably satisfactory to the Company with all periods for revocation expired, the Executive shall be entitled to receive a pro rata portion of any earned but unpaid Bonus Award and LTIP Target Award Opportunity, if any, to which he would otherwise be entitled for the Company’s fiscal year during which his termination of employment occurs (but not for any later years) in accordance with the then existing terms of such cash incentive compensation, which shall not be payable until the Compensation Committee has determined that any incentive targets have been achieved and the subsequent designated payout date has arrived.

             (b) Termination by the Company Without Cause or Resignation by the Executive for Good Reason. If, prior to the expiration of the Employment Term, the Executive’s employment is terminated by the Company without Cause or the Executive terminates his employment hereunder for Good Reason, conditioned upon the Executive delivering to the Company a release in a form reasonably satisfactory to the Company with all periods for revocation expired, notwithstanding any provision in the terms of any incentive compensation plan or agreement to the contrary, the Executive shall be entitled to:

             (i) receive from the Company his Base Salary then in effect for two (2) years (the “Severance Period”), payable through periodic payments with the same frequency as the Company’s payroll schedule following the termination of the Executive’s employment;

             (ii) for the Severance Period, continue participation in the Company’s health care, life and long-term disability plans, substantially on the same basis that the Executive participated in such health care, life and long-term disability plans prior to the termination of his employment; provided, however, that benefits

otherwise receivable by the Executive pursuant to this Section 9(b)(ii) shall be applied against the maximum period of continuation coverage provided under Section 4980B of the Code (“COBRA Coverage”);

             (iii) (A) receive full payment of the Bonus Award for the Company’s fiscal year during which his termination of employment occurs, (B) receive full payment of the Bonus Award for the next fiscal year following the fiscal year during which his termination of employment occurs and (C) receive payment of a pro rata portion of the Bonus Award for the second year following the fiscal year in which the Executive’s employment terminates (such pro rata formula shall be determined based on the number of months of service provided by the Executive during the fiscal year in which his termination of employment occurs), in each case at the greater of the annual Target Bonus or actual performance for such fiscal year in accordance with the then existing terms of such cash incentive compensation, which shall not be payable until the Compensation Committee has determined that any incentive targets have been achieved and the subsequent designated payout date has arrived;

             (iv) receive full payment of any Target Award Opportunity to which he would otherwise be entitled for the LTIP performance period during which his termination of employment occurs (but not for any later years) at the greater of target or actual performance for such LTIP performance period in accordance with the then existing terms of the LTIP, which shall not be payable until the Compensation Committee has determined that any incentive targets have been achieved and the subsequent designated payout date has arrived; and

             (v) accelerated vesting of any unvested Deferred Shares Award, restricted shares and stock options, including the 2004 Stock Option Award and the 2005 Stock Option Award, granted to the Executive which have not otherwise vested and any vested stock options shall remain outstanding and exercisable for the Employment Term (including any prior extensions thereof).

          Notwithstanding the foregoing, if the Executive terminates his employment for Good Reason due to the relocation of the Executive’s principal place of work, as set forth in Section 9(f)(iii), in lieu of payments set forth under Section 9(b)(i), (ii), (iii), (iv) and (v), the Executive shall be entitled to receive the compensation and benefits provided under Sections 9(b)(i), (ii) and (iii) for a maximum period of twelve (12) months.

             (c) Termination by Death or Disability. If the Executive dies or becomes Disabled, as defined in Section 9(e), prior to the expiration of the Employment Term, the Executive’s employment will terminate and the Executive, or in the case of death, notwithstanding any provisions in the terms of any incentive compensation plan or agreement to the contrary, the Executive’s beneficiary, or if none, the Executive’s estate, shall be entitled to:

             (i) receive an amount equal to 12 months Base Salary payable through periodic payments with the same frequency as the Company’s payroll schedule;

             (ii) in the case of Disability, continue participation in any health care and life plans for a period of 12 months or in the event of the Executive’s death, receive any health care benefits under the terms of the Employee Plans;

             (iii) receive a pro rata portion of the Executive’s Bonus Award and LTIP Target Award Opportunity, if any, for the Company’s fiscal year in which the Executive’s death or Disability occurs (but not for any later years) payable in accordance with the then existing terms of such cash incentive compensation, which shall not be payable until the Compensation Committee has determined that any incentive targets have been achieved and the subsequent designated payout date has arrived; and

             (iv) accelerated vesting of any unvested Deferred Shares Award, restricted shares and stock options, including the 2004 Stock Option Award and the 2005 Stock Option Award, and exercise of any unexercised vested stock options for a period of one (1) year following termination due to the Executive’s death or Disability;

provided, however, if the Executive also becomes entitled to receive benefits under a long-term disability plan (“LTD Plan”) now or hereafter paid for by the Company, then the Executive’s death or disability benefits under Section 9(c)(i) (calculated on a monthly basis) shall be reduced by the amount of the benefits paid under such LTD Plan.

(d) Cause. For purposes of this Agreement, “Cause” shall mean:

             (i) any act or omission constituting a material breach by the Executive of any provisions of this Agreement or the willful failure by the Executive to perform his duties hereunder (other than any such failure resulting from the Executive’s Disability), after demand for performance is delivered by the Company that identifies the manner in which the Company believes the Executive has not performed his duties, if, within thirty (30) days of such demand, the Executive fails to cure any such failure capable of being cured;

             (ii) any intentional act or misconduct materially injurious to the Company or any Subsidiary, financial or otherwise, or the misappropriation, fraud, embezzlement or conversion by the Executive of the Company’s or any of its Subsidiary’s property in connection with Executive’s duties or in the course of Executive’s employment with the Company;

             (iii) the conviction or plea of no contest of the Executive for any felony or the indictment of the Executive for any felony involving fraud, moral turpitude, embezzlement or theft in connection with the Executive’s duties or in the course of the Executive’s employment with the Company;

             (iv) the commission of any intentional or knowing violation of any antifraud provision of the federal or state securities laws or the Board reasonably believes that the Executive has committed any of the acts referred to in this Section 9(d)(iv);  

             (v) there is a final, non-appealable order in a proceeding before a court of competent jurisdiction or a final order in an administrative proceeding finding that the Executive committed any willful misconduct or criminal activity (excluding traffic violations or other minor offenses) which commission is materially inimical to the interests of the Company or any Subsidiary, whether for his personal benefit or in connection with his duties for the Company or any Subsidiary;

             (vi) current alcohol or prescription drug abuse affecting work performance;

             (vii) current illegal use of drugs; or

             (viii) violation of the Company’s Code of Corporate Conduct.

     For purposes of this Agreement, no act or failure to act on the part of the Executive shall be deemed “intentional” if it was due primarily to an error in judgment or negligence, but shall be deemed “intentional” only if done or omitted to be done by the Executive not in good faith and without reasonable belief that the Executive’s action or omission was in the best interest of the Company. Notwithstanding the foregoing, the Executive shall not be deemed to have been terminated for “Cause” hereunder unless and until there shall have been delivered to the Executive written notice of termination by the Company along with a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the Board then in office (excluding the Executive if the Executive is then a member of the Board) at a meeting of the Board called and held for such purpose, after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive’s counsel (if the Executive chooses to have counsel present at such meeting), to be heard before the Board, finding that, in the good faith opinion of the Board, the Executive had committed an act constituting “Cause” as herein defined and specifying the particulars thereof in detail.

(e) Disability. For purposes of this Agreement, “Disability” or “Disabled” shall mean:

             (i) the Executive’s incapacity due to physical or mental illness to substantially perform his duties and the essential functions of his position on a full-time basis for at least six (6) months in any 12-month period as determined by the Board in its reasonable discretion, and within thirty (30) days after a notice of termination is thereafter given by the Company, the Executive shall not have returned to the full-time performance of the Executive’s duties; or

             (ii) the Executive becomes eligible to receive benefits under the Company’s LTD Plan, as defined in Section 9(c);

provided, however, if the Executive shall not agree with a determination to terminate his employment because of Disability, the question of the Executive’s disability shall be subject to the certification of a qualified medical doctor agreed to by the Company and the Executive. The costs of such qualified medical doctor shall be paid for by the Company.

(f) Good Reason. For purposes of this Agreement, “Good Reason” shall mean:

             (i) the Company’s material breach of this Agreement (after failure to cure in thirty (30) days);

             (ii) the assignment of the Executive without his consent to a position, responsibilities or duties of a materially lesser status or degree of responsibility than his position, responsibilities or duties at the Effective Date; or

             (iii) relocation of the Executive’s principal place of work more than thirty (30) miles without the Executive’s consent.

          (g) No Mitigation Obligation. The Executive will not be required to mitigate the amount of any payment made pursuant to Section 9 of this Agreement by seeking other employment or otherwise. Except as otherwise provided by applicable law, the Executive’s coverage under the Company’s welfare benefit plans will terminate when the Executive becomes eligible for coverage under any employee benefit plan made available by another employer and covering the same type of benefits. The Executive shall notify the Company within thirty (30) days after becoming eligible for coverage of any such benefits.

          (h) Forfeiture. Notwithstanding the foregoing, any right of the Executive to receive termination payments and benefits hereunder shall be forfeited to the extent of any amounts payable after any breach of Section 10, 11, 12, 13, 14 or 16 by the Executive.

          10. Confidential Information; Statements to Third Parties.

          (a) During the Employment Term and on a permanent basis upon and following termination of the Executive’s employment, the Executive acknowledges that:

             (i) all information, whether reduced to writing (or in a form from which information can be obtained, translated, or derived into reasonably usable form) or maintained in the mind or memory of the Executive and whether compiled or created by the Company, which derives independent economic value from not being readily known to or ascertainable by proper means by others who can obtain economic value from the disclosure or use of such information, of a proprietary, private, secret or confidential nature concerning the Company’s business, business relationships or financial affairs (collectively, “Proprietary Information”) shall be the exclusive property of the Company, and by way of illustration, but not limitation, shall include inventions, products, processes, methods, techniques, formulas, compositions, compounds, projects, developments, sales strategies, plans, research data, clinical data, financial data, personnel data, computer programs, customer and supplier lists, trade marks, service marks, copyrights (whether registered or unregistered), artwork, and contacts at or knowledge of customers or prospective customers of the Company; and

             (ii) the Proprietary Information of the Company gained by the Executive during the Executive’s association with the Company was or will be developed by and/or for the Company through substantial expenditure of time, effort and money and constitutes valuable and unique property of the Company and that reasonable efforts have been put forth by the Company to maintain the secrecy of its Proprietary Information, that such Proprietary Information is and will remain the sole property of the Company, and that any retention or use by the Executive of Proprietary Information after the termination of the Executive’s services for the Company will constitute a misappropriation of the Company’s Proprietary Information.

          (b) The Executive further acknowledges and agrees that he will take all affirmative steps reasonably necessary or required by the Company to protect the Proprietary Information from inappropriate disclosure during and after his employment with the Company.

          (c) The Executive further agrees that all files, letters, memoranda, reports, records, data, sketches, drawings, laboratory notebooks, program listings, or other written, photographic, electronic, or other tangible material containing or constituting Proprietary Information, whether created by the Executive or others, which shall come into his custody or possession, regardless of medium, shall be and are the exclusive property of the Company to be used by him only in the performance of his duties for the Company. All such materials or copies thereof and all tangible things and other property of the Company in the Executive’s custody or possession shall be delivered to the Company (to the extent the Executive has not already returned) in good condition, on or before five (5) business days subsequent to the earlier of: (i) a request by the Company or (ii) the Executive’s termination of employment for any reason or Cause, including for nonrenewal of this Agreement, disability, termination by the Company or termination by the Executive. After such delivery, the Executive shall not retain any such materials or portions or copies thereof or any such tangible things and other property and shall execute any statements or affirmations of compliance under oath that the Company may require.

          (d) The Executive further agrees that his obligation not to disclose or to use information and materials of the types set forth in Sections 10(a), 10(b) and 10(c) above, and his obligation to return materials and tangible property, set forth in Section 10(c) above, also extends to such types of information, materials and tangible property of customers of the Company, consultants for the Company, suppliers to the Company, or other third parties who may have disclosed or entrusted the same to the Company or to the Executive.

          (e) The Executive further acknowledges and agrees that he will continue to keep in strict confidence, and will not, directly or indirectly, at any time, disclose, furnish, disseminate, make available, use or suffer to be used in any manner any Proprietary Information of the Company without limitation as to when or how the Executive may have acquired such Proprietary Information and that he will not disclose any Proprietary Information to any person or entity other than appropriate employees of the Company or use the same for any purposes (other than in the performance of his duties as an employee of the Company) without written approval of the Board, either during or after his employment with the Company.

          (f) Further the Executive acknowledges that his obligation of confidentiality will survive, regardless of any other breach of this Agreement or any other agreement, by any party hereto, until and unless such Proprietary Information of the Company has become, through no fault of the Executive, generally known to the public. In the event that the Executive is required by law, regulation, or court order to disclose any of the Company’s Proprietary Information, the Executive will promptly notify the Company prior to making any such disclosure to facilitate the Company seeking a protective order or other appropriate remedy from the proper authority. The Executive further agrees to cooperate with the Company in seeking such order or other remedy and that, if the Company is not successful in precluding the requesting legal body from requiring the disclosure of the Proprietary Information, the Executive will furnish only that portion of the Proprietary Information that is legally required, and the Executive will exercise all legal efforts to obtain reliable assurances that confidential treatment will be accorded the Proprietary Information.

          (g) The Executive’s obligations under this Section 10 are in addition to, and not in limitation or preemption of, all other obligations of confidentiality which the Executive may have to the Company under the Company’s policies, general legal or equitable principles or statutes and which will remain in full force and effect following the termination of the Executive’s employment.

          (h) During the Employment Term and following his termination of employment:

             (i) the Executive shall not, directly or indirectly, make or cause to be made any statements to any third parties criticizing or disparaging the Company, any of its Subsidiaries or any affiliates of the Company or its Subsidiaries (collectively, the “Company Group”) or commenting on the character or business reputation of the Company Group. The Executive further hereby agrees that, without the prior written consent of the Board, unless otherwise required by law, the Executive shall not (A) publicly comment in a manner adverse to the Company Group concerning the status, plans or prospects of the business of the Company Group or (B) publicly comment in a manner adverse to the Company Group concerning the status, plans or prospects of any existing, threatened or potential claims or litigation involving the Company Group; and

             (ii) the Company shall comply with its policies regarding public statements with respect to the Executive;

provided, however, that nothing herein shall be interpreted to preclude honest and good faith reporting by the Executive to appropriate Company or legal enforcement authorities.

(i) The Executive acknowledges and agrees that a violation of the foregoing provisions of this Section 10 that results in material detriment to the Company would cause irreparable harm to the Company, and that the Company’s remedy at law for any such violation would be inadequate. In recognition of the foregoing, the Executive agrees that, in addition to any other relief afforded by law or this Agreement, including damages sustained by a breach of

this Agreement and any forfeitures under Section 9(h), and without the necessity or proof of actual damages, the Company shall have the right to enforce this Agreement by specific remedies, which shall include, among other things, temporary and permanent injunctions, it being the understanding of the undersigned parties hereto that damages, the forfeitures described above and injunctions shall all be proper modes of relief and are not to be considered as alternative remedies.

     11. Non-Competition. In consideration of the Company entering into this Agreement, for a period commencing on the Effective Date and for a period ending two (2) years after the Executive’s termination of employment for any reason or Cause, including for nonrenewal of this Agreement, disability, termination by the Company or termination by the Executive:

          (a) the Executive hereby covenants and agrees that he shall not, directly or indirectly, individually or on behalf of any other person or entity do or suffer any of the following, engage or be interested in (whether as owner, stockholder, investor, partner, lender, consultant, employee, agent, director or otherwise) in any business, activity or enterprise which is then competing with or planning to compete with the business of any division or operation of the Company Group within any United States territory or state, in which the Company Group is conducting the business of providing wireless local area network (e.g., “802.11” or “Wi-Fi” wireless services) or any other business authorized by the Federal Communications Commission (“FCC”) to provide “commercial mobile radio service” as that term is defined by the FCC (47 C.F.R. § 20.3), (the “Territory”), provided, however, that the Executive’s ownership of less than one percent (1%) of any class of stock in a publicly traded corporation shall not be deemed a breach of this Section 11; and

          (b) the Executive acknowledges that due to his unique and special contributions to the Company Group in his positions as specified in Section 3, he will be privy to and ultimately responsible for every type of Proprietary Information generated by the Company Group, so that his employment in any capacity for a competing business will create an unreasonable and real risk of disclosure, inevitable or otherwise, of Proprietary Information. The Executive further acknowledges that due to his talents, skills and experience, the restrictions contained herein are reasonable and will not deprive him of his ability to obtain commensurate employment or work in a non-competing business activity or enterprise, and will not impose an undue hardship on him.

     12. Election to Extend Non-Competition and Non-Solicitation Covenants. If the Executive’s employment terminates pursuant to Section 9(b), and the Executive has delivered a release to the Company as provided in Section 9(b), the Executive may elect to extend the covenants set forth in Sections 11(a) and (b) and Sections 13(a), (b), (c) and (d) (the “Non-Competition and the Non-Solicitation Covenants”) for one additional year (the “Extension Period”) by giving the Company written notice of such election to extend no later than ninety (90) days prior to the expiration of the Severance Period. The Executive must elect to extend all of the Non-Competition and the Non-Solicitation Covenants simultaneously and may not select extension of some, but not all, of such covenants. In consideration of the Executive’s election to extend the Non-Competition and Non-Solicitation Covenants, subject to Section 20, the Executive shall be entitled to:

          (a) receive from the Company an amount equal to his annual Base Salary as of his termination date, for the Extension Period, payable through periodic payments with the same frequency as the Company’s payroll schedule during the Extension Period;

          (b) for the Extension Period, continue participation in the Company’s health care, life and long-term disability plans, substantially on the same basis that the Executive participated in such health care, life and long-term disability plans prior to the termination of his employment; provided, however, that benefits otherwise receivable by the Executive pursuant to this Section 12(b) shall be applied against the maximum period of continuation coverage provided under Section 4980B of the Code (“COBRA Coverage”), if any;

          (c) receive an amount equal to the full payment of the Bonus Award for the Extension Period, which shall be equal to (i) the Bonus Award for any remainder of the second year following the fiscal year in which the Executive’s employment terminates that the Executive would not have otherwise received pursuant to Section 9(b)(iii)(C) and (ii) any applicable pro rata portion of any Bonus Award for the third year following the fiscal year in which the Executive’s employment terminates (such pro rata formula shall be determined based on the number of months of service provided by the Executive during the fiscal year in which his termination of employment occurs), in each case at the greater of the annual Target Bonus or actual performance for such fiscal year(s) in accordance with the then existing terms of such cash incentive compensation, which shall not be payable until the Compensation Committee has determined that any incentive targets have been achieved and the subsequent designated payout day has arrived.

     Notwithstanding the foregoing, without limiting the applicability of Section 9(h) or in any way affecting the right of the Company to seek equitable remedies thereunder, in the event that the Executive breaches any of the provisions of Sections 10, 11, 12, 13, 14 or 16, or engages in any activity that would constitute a breach save for the Executive’s action being in a state where Section 11 or 13 is not enforceable as a matter of law, then the Company’s obligation to pay any remaining payments under this Section 12 that have not already been paid to the Executive shall be terminated and within ten (10) days of notice of such termination of payment, Executive shall return to the Company the cash equivalent of all payments made and benefits provided under this Section 12.

     13. Non-Solicitation. In consideration of the Company entering into this Agreement, for a period commencing on the Effective Date and for a period ending two (2) years after the Executive’s termination of employment for any reason or Cause, including for nonrenewal of this Agreement, disability, termination by the Company or termination by the Executive, the Executive hereby covenants and agrees that he shall not, directly or indirectly, individually or on behalf of any other person or entity do or suffer any of the following:

          (a) hire or employ or assist in hiring or employing any person who has been an employee, representative or agent of any member of the Company Group at any time during the Executive’s employment or solicit, aid, induce or attempt to solicit, aid, induce or persuade, directly or indirectly, such person to leave his or his employment with any member of the Company Group to accept employment with any other person or entity;

          (b) directly or indirectly induce any person who is an employee, officer or agent of the Company Group, or any of its affiliated, related or subsidiary entities to terminate such relationship; or

          (c) solicit any customer of the Company Group, or any person or entity whose business the Company Group had solicited during the one hundred and eighty (180) day period prior to termination of the Executive’s employment, within the Territory for purposes of business which is competitive to the Company Group.

          (d) For purposes of this Section 13, the term “solicit or persuade” includes, but is not limited to, (i) initiating communications with an employee of the Company Group relating to possible employment, (ii) offering bonuses or additional compensation to encourage an employee of the Company Group to terminate his or her employment, and (iii) referring employees of the Company Group to personnel or agents employed by competitors, suppliers or customers of the Company Group.

     14. Developments.

             (a) The Executive acknowledges and agrees that he will make full and prompt disclosure to the Company of all inventions, improvements, discoveries, methods, developments, software, mask works, and works of authorship, whether patentable or copyrightable or not, (i) which relate to the Company’s business and have heretofore been created, made, conceived or reduced to practice by the Executive or under his direction or jointly with others, and not assigned to prior employers, or (ii) which have utility in or relate to the Company’s business and are created, made, conceived or reduced to practice by the Executive or under his direction or jointly with others during his employment with the Company, whether or not during normal working hours or on the premises of the Company (all of the foregoing of which are collectively referred to in this Agreement as “Developments”).

             (b) The Executive further agrees to assign and does hereby assign to the Company (or any person or entity designated by the Company) all of the Executive’s rights, title and interest worldwide in and to all Developments and all related patents, patent applications, copyrights and copyright applications, and any other applications for registration of a proprietary right. However, this Section 14(b) shall not apply to Developments that the Executive developed entirely on his own time without using the Company’s equipment, supplies, facilities, or trade secret information and that does not, at the time of conception or reduction to practice, have utility in or relate to the Company’s business, or actual or demonstrably anticipated research or development. The Executive understands that, to the extent this Agreement shall be construed in accordance with the laws of any state or country which precludes a requirement in an employee agreement to assign certain classes of inventions made by an employee, this Section 14(b) shall be interpreted not to apply to any invention which a court rules or the Company agrees falls within such classes.

             (c) The Executive further agrees to cooperate fully with the Company, both during and after his employment with the Company, with respect to the procurement, maintenance and enforcement of copyrights, patents and other intellectual property rights (both in the United States and other countries) relating to Developments; provided, however, that the

Executive shall not be required to incur or pay any costs or expenses in connection with the rendering of such cooperation. The Executive will sign all papers, including, without limitation, copyright applications, patent applications, declarations, oaths, formal assignments, assignments of priority rights, and powers of attorney, and do all things that the Company may reasonably deem necessary or desirable in order to protect its rights and interests in any Development.

             (d) The Executive further acknowledges and agrees that if the Company is unable, after reasonable effort, to secure the Executive’s signature on any such papers, any executive officer of the Company shall be entitled to execute any such papers as the Executive’s agent and attorney-in-fact, and the Executive hereby irrevocably designates and appoints each executive officer of the Company as his agent and attorney-in-fact to execute any such papers on the Executive’s behalf, and to take any and all actions as the Company may deem necessary or desirable in order to protect its rights and interests in any Development, under the conditions described in this sentence.

          15. Remedies. The Executive and the Company agree that the covenants contained in Sections 10, 11, 12, 13 and 14 are reasonable under the circumstances, and further agree that if in the opinion of any court of competent jurisdiction any such covenant is not reasonable in any respect, such court will have the right, power and authority to sever or modify any provision or provisions of such covenants as to the court will appear not reasonable and to enforce the remainder of the covenants as so amended. The Executive acknowledges and agrees that the remedy at law available to the Company for breach of any of the Executive’s obligations under Sections 10, 11, 12, 13 and 14 would be inadequate and that damages flowing from such a breach may not readily be susceptible to being measured in monetary terms. Accordingly, the Executive acknowledges, consents and agrees that, in addition to any other rights or remedies that the Company may have at law, in equity or under this Agreement, upon adequate proof of the Executive’s violation of any such provision of this Agreement, the Company will be entitled to immediate injunctive relief and may obtain a temporary order restraining any threatened or further breach, without the necessity of proof of actual damage. Without limiting the applicability of this Section 15 or in any way affecting the right of the Company to seek equitable remedies hereunder, in the event that the Executive breaches any of the provisions of Sections 10, 11, 12, 13 and 14 or engages in any activity that would constitute a breach save for the Executive’s action being in a state where any of the provisions of Sections 10, 11, 12, 13, 14 or this Section 15 is not enforceable as a matter of law, then the Company’s obligation to pay any remaining severance compensation and benefits that has not already been paid to Executive pursuant to Section 9 shall be terminated and within ten (10) days of notice of such termination of payment, Executive shall return all severance compensation and the value of such benefits.

     16. Continued Availability and Cooperation.

             (a) In the event of termination of the Executive’s employment, the Executive shall cooperate fully with the Company and with the Company’s counsel in connection with any present and future actual or threatened litigation or administrative proceeding involving the Company that relates to events, occurrences or conduct occurring (or claimed to have occurred) during the period of the Executive’s employment by the Company. This cooperation by the Executive will include, but not be limited to:

             (i) making himself reasonably available for interviews and discussions with the Company’s counsel as well as for depositions and trial testimony;

             (ii) if depositions or trial testimony are to occur, making himself reasonably available and cooperating in the preparation therefor as and to the extent that the Company or the Company’s counsel reasonably requests;

             (iii) refraining from impeding in any way the Company’s prosecution or defense of such litigation or administrative proceeding; and

             (iv) cooperating fully in the development and presentation of the Company’s prosecution or defense of such litigation or administrative proceeding.

             (b) The Executive will be reimbursed by the Company for reasonable travel, lodging, telephone and similar expenses, as well as reasonable attorneys’ fees (if independent legal counsel is necessary), incurred in connection with any cooperation, consultation and advice rendered under this Agreement after the Executive’s termination of employment. The Executive shall not unreasonably withhold the Executive’s availability for such cooperation, consultation and advice.

     17. Dispute Resolution.

          (a) Any dispute between the parties under this Agreement will be resolved (except as provided below) through informal arbitration by a single arbitrator selected under the rules of the American Arbitration Association for arbitration of employment disputes conducted in Fairfax County, Virginia. Each party will be entitled to present evidence and argument to the arbitrator. The arbitrator will have the right only to interpret and apply the provisions of this Agreement and may not change any of its provisions, except as expressly provided in Section 24 and only in the event the Company has not brought an action in a court of competent jurisdiction to enforce the covenants in Sections 10, 11, 12 13 or 14. The arbitrator will permit reasonable pre-hearing discovery of facts, to the extent necessary to establish a claim or a defense to a claim, subject to supervision by the arbitrator. The determination of the arbitrator will be conclusive and binding upon the parties and judgment upon the same may be entered in any court having jurisdiction thereof. The arbitrator will give written notice to the parties stating the arbitrator’s determination, and will furnish to each party a signed copy of such determination. The expenses of arbitration will be borne equally by the Company and the Executive or as the arbitrator equitably determines consistent with the application of state or federal law; provided, however, that the Executive’s share of such expenses will not exceed the maximum permitted by law. Any arbitration or action pursuant to this Section 17 will be governed by and construed in accordance with the substantive laws of the Commonwealth of Virginia and, where applicable, federal law, without giving effect to the principles of conflict of laws of such Commonwealth.

          (b) Notwithstanding Section 17(a), the Company will not be required to seek or participate in arbitration regarding any actual or threatened breach of the Executive’s covenants in Sections 10, 11, 12 13 or 14, but may pursue its remedies, including injunctive relief, for such breach in a court of competent jurisdiction in Fairfax County, Virginia, or in the

sole discretion of the Company, in a court of competent jurisdiction where the Executive has committed or is threatening to commit a breach of the Executive’s covenants, and no arbitrator may make any ruling inconsistent with the findings or rulings of such court.

          18. Other Agreements. The provisions of this Agreement supersede the provisions of the Prior Employment Agreement. No agreements other than the agreements evidencing any grants of stock options, deferred shares and restricted shares or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement. To the extent there is a Change of Control (as defined in the Change of Control Plan) of the Company, compensation and benefits payable under this Agreement upon a termination of the Executive’s employment will be reduced dollar for dollar (but not below zero) by any compensation and benefits payable under the Change of Control Plan, it being the intent that the Executive receive the greatest of the compensation and benefits provided under the Change of Control Plan or this Agreement.

          19. Indemnification. The Company shall, to the fullest extent to which it is empowered to do so by the General Corporation Law of Delaware, or any other applicable laws, as from time to time in effect, and in the manner therein provided, indemnify and hold harmless the Executive, through the duration of the Employment Term and all statutory periods during which any such claim may be brought or asserted, from and against any actual, threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, investigative or otherwise, to which Executive is or is threatened to be made a party by reason of the fact that he is or was a director, officer, employee or agent of the Company. The Executive will be further covered by the indemnification and limitations on liability of officers and directors provided under the Company’s Certificate of Incorporation and By-laws and any separate agreement between the Company and the Executive and/or any officers and directors indemnification insurance policy now or hereafter paid for by the Company.

          20. Withholding of Taxes. The Company may withhold from any amounts payable under this Agreement all federal, state, city or other taxes as the Company is required to withhold pursuant to any law or government regulation or ruling.

          21. Successors and Binding Agreement.

             (a) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation, reorganization or otherwise) to all or substantially all of the business or assets of the Company, by agreement in form and substance satisfactory to the Executive, expressly to assume and agree to perform this Agreement in the same manner and to the same extent the Company would be required to perform if no such succession had taken place. This Agreement will be binding upon and inure to the benefit of the Company and any successor to the Company, including without limitation any persons acquiring directly or indirectly all or substantially all of the business or assets of the Company whether by purchase, merger, consolidation, reorganization or otherwise (and such successor shall thereafter be deemed the “Company” for the purposes of this Agreement), but will not otherwise be assignable, transferable or delegable by the Company.

             (b) This Agreement will inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees and legatees.

             (c) This Agreement is personal in nature and neither of the parties hereto shall, without the consent of the other, assign, transfer or delegate this Agreement or any rights or obligations hereunder except as expressly provided in Sections 21(a) and 21(b). Without limiting the generality or effect of the foregoing, the Executive’s right to receive payments hereunder will not be assignable, transferable or delegable, whether by pledge, creation of a security interest, or otherwise, other than by a transfer by the Executive’s will or by the laws of descent and distribution and, in the event of any attempted assignment or transfer contrary to this Section 21(c), the Company shall have no liability to pay any amount so attempted to be assigned, transferred or delegated.

     22. Notices. For all purposes of this Agreement, all communications, including without limitation notices, consents, requests or approvals, required or permitted to be given hereunder will be in writing and will be deemed to have been duly given when hand delivered or dispatched by electronic facsimile transmission (with receipt thereof confirmed), or five (5) business days after having been mailed by United States registered or certified mail, return receipt requested, postage prepaid, or three (3) business days after having been sent by a nationally recognized overnight courier service such as Federal Express or UPS, addressed to the Company (to the attention of the Senior Vice President and General Counsel of the Company) at its principal executive offices and to the Executive at his principal residence, or to such other address as any party may have furnished to the other in writing and in accordance herewith, except that notices of changes of address shall be effective only upon receipt.

     23. Governing Law. The validity, interpretation, construction and performance of this Agreement will be governed by and construed in accordance with the substantive laws of the Commonwealth of Virginia, without giving effect to the principles of conflict of laws of such State.

     24. Validity/Severability. If any provision of this Agreement or the application of any provision hereof to any person or circumstances is held invalid, unenforceable or otherwise illegal, the remainder of this Agreement and the application of such provision to any other person or circumstances will not be affected, and the provision so held to be invalid, unenforceable or otherwise illegal will be reformed to the extent (and only to the extent) necessary to make it enforceable, valid or legal. To the extent any provisions held to be invalid, unenforceable or otherwise illegal cannot be reformed, such provisions are to be stricken herefrom and the remainder of this Agreement will be binding on the parties and their successors and assigns as if such invalid or illegal provisions were never included in this Agreement from the first instance.

     25. Survival of Provisions. Notwithstanding any other provision of this Agreement, the parties’ respective rights and obligations under Sections 10, 11, 12 ,13, 14, 15, 16, 17 and 19 will survive any termination or expiration of this Agreement or the termination of the Executive’s employment for any reason whatsoever.

     26. Representations.

             (a) The Executive hereby represents that he is not subject to any restriction of any nature whatsoever on his ability to enter into this Agreement or to perform his duties and responsibilities hereunder, including, but not limited to any covenant not to compete with any former employer, any covenant not to disclose or use any non-public information acquired during the course of any former employment or any covenant not to solicit any customer of any former employer.

             (b) The Executive hereby represents that, except as he has disclosed in writing to the Company, he is not bound by the terms of any agreement with any previous employer or other party to refrain from using or disclosing any trade secret or confidential or proprietary information in the course of the Executive’s employment with the Company or to refrain from competing, directly or indirectly, with the business of such previous employer or any other party.

             (c) The Executive further represents that, to the best of his knowledge, his performance of all the terms of this Agreement and as an employee of the Company does not and will not breach any agreement with another party, including without limitation any agreement to keep in confidence proprietary information, knowledge or data the Executive acquired in confidence or in trust prior to his employment with the Company, and that he will not knowingly disclose to the Company or induce the Company to use any confidential or proprietary information or material belonging to any previous employer or others.

     27. Amendment; Waiver. This Agreement may not be modified, amended or waived in any manner except by an instrument in writing signed by both parties hereto. No waiver by either party hereto at any time of any breach by the other party hereto or compliance with any condition or provision of this Agreement to be performed by such other party will be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

     28. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same agreement.

     29. Headings. Unless otherwise noted, the headings of sections herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement.

     IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by an officer pursuant to the authority of its Board, and the Executive has executed this Agreement, as of the day and year first written above.

 

   

 

  NEXTEL COMMUNICATIONS, INC.

 

  By: /s/ William E. Conway, Jr.
William E. Conway, Jr.
Chairman of the Board of Directors

 

  /s/ Timothy M. Donahue
Timothy M. Donahue

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ADDENDUM TO EMPLOYMENT AGREEMENT

                                                                  EXHIBIT 10.37


                                                                          Page 1


                               ADDENDUM TO EMPLOYMENT AGREEMENT

               This Addendum to Employment Agreement ("Addendum") is entered
        into by and between Tim Donahue ("Executive") and Nextel Communications,
        Inc. ("Employer") this 24 day of March, 1997.

               The parties hereto have entered into an Employment Agreement to
        be effective on and as of February 1, 1996 ("Agreement"), setting forth
        the terms and conditions applicable to Executive's employment by
        Employer thereunder, and wish to set forth herein certain alternate
        mutually agreeable arrangements which are intended to supplant and/or
        modify certain of the provisions contained in the Agreement.
        Accordingly, for good and valuable consideration had and received, the
        parties hereby agree as follows:

               1. Employer (on behalf of itself and its appropriate affiliates)
        (" Nextel") hereby agrees, with and for the benefit of Executive, to
        attempt in good faith to negotiate and enter into arrangements with AT&T
        Wireless Inc. or its appropriate affiliates ("AT&T") providing for the
        pre-payment of an aggregate amount of $300,000 of site rental payments
        by Nextel to AT&T with respect to AT&T antenna sites as to which Nextel
        is or becomes a tenant or as to which the applicable site sharing or
        collocation arrangements provide for the making of rental payments by
        Nextel to AT&T ("AT&T Sites"), subject to the understandings that (i)
        the amount of such site rental payments shall be commercially
        reasonable, (ii) Nextel shall be entitled to dollar for dollar credit
        against rental payments as they accrue following the prepayment with
        respect to such AT&T Sites, and Nextel shall not be obligated to make
        any additional rental payments to AT&T with respect to such AT&T Sites
        unless and until the full amount so prepaid has been so credited and
        (iii) AT&T, simultaneously with such prepayment of site rental by
        Nextel, shall fully and finally release and discharge Executive from any
        and all liability with respect to an equivalent dollar amount of the
        AT&T Loan (as defined in paragraph 4.e. of the Agreement) and shall
        execute and deliver to each of Executive and Employer suitable
        documentation to evidence such release and discharge. If the matters
        described in the foregoing sentence are effected, Executive and Employer
        agree that, for purposes of paragraph 4e. of the Agreement, Employer's
        obligation to make an interest-free loan to Executive upon Executive's
        prior written request shall be reduced in dollar amount from $400,000 to
        $100,000 (and such lesser dollar amount so loaned shall be considered to
        be the "Nextel Loan" referred to in the Agreement), there shall be no
        purpose restrictions imposed on such loan, and the arrangements
        contained in paragraph 4.e. of the Agreement with respect to payments in
        respect of imputed interest on, repayment obligations concerning, full
        or partial forgiveness contingencies affecting and security interests
        relating to, the Nextel Loan shall be applicable to such loan
        notwithstanding the reduction in its dollar amount. If the matters
        described in the first sentence of this paragraph are not effected on or
        prior to June 30, 1997 (or such later date as the parties may mutually
        agree), this Addendum shall terminate and be of no further force or
        effect, and the original provisions of paragraph 4.e. of the Agreement
        shall continue in full force and effect unchanged hereby and as if this
        Addendum had not existed.


<PAGE>   2
                                                                          Page 2


               2. Except as provided (and subject to the conditions on
        effectiveness contained) in the foregoing paragraph 1, the Agreement is
        not amended or modified by this Addendum in any respect and is intended
        by the parties to continue in full force and effect. The parties intend
        that this Addendum and the Agreement shall be construed together as a
        single instrument.

               3. This addendum shall take effect upon its execution and
        delivery, subject, however, to the requirement contained in paragraph 14
        of the Agreement that the consent of Employer's Board of Directors be
        obtained, and Employer agrees with Executive to seek in good faith to
        request and recommend that such consent be granted at the earliest
        convenient opportunity.

               IN WITNESS WHEREOF, the parties have executed this Addendum as of
        the date and year first above written.


                                             NEXTEL COMMUNICATIONS, INC.


                                             /s/Thomas J. Sidman
                                             -------------------------





                                             /s/Timothy Donahue
                                             -------------------------
                                                     Tim Donahue

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                              EMPLOYMENT AGREEMENT


       This Employment Agreement is entered into by and between Tim Donahue
("Executive") and Nextel Communications, Inc., a Delaware Corporation
("Employer"), to be effective on and as of February 1, 1996.

                                   WITNESSETH:

       WHEREAS, Employer is engaged in the business of acquiring and operating
800-900 MHz wireless business including trunked and conventional specialized
Mobile Radio ("SMR") licenses and facilities, community repeater facilities,
enhanced digital mobile SMR communications systems, and related assets (the "SMR
Business");

       WHEREAS, Executive has skills and experience in wireless telephony
generally and the SMR Business specifically, and with the technology associated
with each; and

       WHEREAS, Employer desires to obtain Executive's services for the conduct
of its SMR Business, and Executive desires to be employed in such SMR Business
by and for Employer;

       NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein set forth, the parties hereto agree as follows:

       1.     Employment. Employer hereby employs Executive as the President and
Chief Operating Officer of Employer and Executive hereby accepts such employment
upon the terms and conditions hereinafter set forth.

       2.     Duties.

       a.     Executive shall perform his services as President and Chief 
Operating Officer, under the supervision of the Chairman and Chief Executive
Officer and the Operations Committee of the Board of Directors (the "Operations
Committee")) of Employer and within the framework of the policies and objectives
of Employer. In such capacity, Executive (i) shall exercise general day-to-day
supervisory responsibility and operational and management authority over
Employer and its domestic officers and executives and all of its controlled
affiliates in the United States and their respective officers and executives,
(ii) shall provide advice and input to members of Employer's Board of
Directors and the Operations Committee and shall, at their request, attend all
meetings of the Board and the Operations Committee for that purpose, and (iii)
shall

<PAGE>   2

perform such other duties as may be assigned to him from time to time by the
Board of Directors or by the Chairman, or the Operations Committee consistent
with the typical duties of such positions.

       b.     Executive shall devote his entire business time, attention and
energies to the performance of his duties and functions under this Employment
Agreement and shall not during the term of his employment hereunder be engaged
in any other substantial business activity for gain, profit or other pecuniary
advantage which materially interferes with the performance of his duties
hereunder. Executive shall faithfully, loyally and diligently perform his
assigned duties and functions and shall not engage in any activities whatsoever
which conflict with the objectives of Employer's SMR Business during the term of
his employment hereunder.

       c.     Employer shall furnish Executive with such facilities at 
Employer's corporate headquarters location and services as are suitable to his
position and adequate for the performance of his duties and functions hereunder.
It is understood that Executive's "home base" location shall be at Employer's
principal Executive officers, which currently are located in Rutherford, New
Jersey, but are to be relocated to the Washington, D.C. area during 1996, or any
other location to which Employer shall determine to relocate, subject, however,
to the provisions of paragraph 10(c).

       3.     Term. The term of this Employment Agreement shall commence on the
effective date hereof and, unless terminated earlier pursuant to paragraph 10
hereof, shall continue until February 1, 1999 (the "Initial Term"), and
thereafter shall automatically continue unless and until such time as (i) either
party hereto notifies the other, upon twelve (12) months prior written notice
served no earlier than February 1, 1999, that this Employment Agreement will be
terminated at the expiration of such twelve-month notice period, or (ii)
Executive's employment is otherwise terminated pursuant to paragraph 10 hereof
(the "Extended Term") (the Initial Term, together with the Extended Term, if
any, being referred to herein as the "Employment Term").

       4.     Compensation. Employer shall pay to Executive, as compensation for
the services agreed to be rendered by Executive hereunder, the following:

       a.     Base Salary. During the Employment Term, the Company shall pay to
Executive a salary of $275,000 per annum; provided that the amount of such base
salary may, in Employer's sole discretion, be reviewed and adjusted by Employer
from time to time during the Employment Term in light of the conditions then
existing and the services then being rendered by Executive, in which case
Executive's base salary shall be such higher amount as may be determined by
Employer (such annual base salary, as in effect from time to time, being
referred to herein as the "Base Salary"). The Base Salary shall be payable in
accordance with Employer's normal payroll schedule, less 


                                     Page 2
<PAGE>   3

appropriate deductions for federal, state and local income taxes, FICA
contributions and any other deductions required by law or authorized by
Executive.

       b.     Commencement Bonus. In addition to the Base Salary, Executive 
shall receive a commencement bonus (the "Commencement Bonus") of $300,000. The
Commencement Bonus, less appropriate deductions for federal, state, and local
income taxes, FICA contributions and any other deductions required by law or
authorized by Executive, shall be paid within thirty (30) days after the
execution hereof by Employer and Executive.

       c.     Annual Performance Bonus. In addition to the Base Salary, 
Executive shall be entitled to receive an annual performance bonus (the "Annual
Bonus") for each year of service (or any part thereof in the event of
termination of Executive's employment hereunder, in which case the Annual Bonus
shall be prorated for such partial year) during the Employment Term (each such
year or any partial such year being referred to as an "Annual Bonus Period"), in
such amount, if any, as may be determined by the Operations Committee and/or the
Board of Directors in their discretion; provided that, for the first Annual
Bonus Period of the Initial Term, the Annual Bonus shall be in an amount equal
to 75% of the Base Salary payable during such Annual Bonus Period. Each Annual
Bonus shall be payable in accordance with Employer's normal annual bonus payment
schedule, less appropriate deductions for federal, state, and local income
taxes, FICA contributions and any other deductions required by law or authorized
by Executive.

       d.     Long Term Performance Bonus. Subject to the provisions of 
paragraph 10, Executive shall be entitled to receive a performance bonus in the
amount $1,600,000 (the "Long-Term Bonus"), to be paid on such date as may be
designated by Executive pursuant to the following sentence, which day shall be a
normal business day of Employer that is not earlier than January 31, 1999 and
not later than January 3, 2000. Not later than seven days prior to the requested
payment date, Executive shall elect, by irrevocable written notice to Employer
(the "Bonus Election Notice"), either (i) to accept payment of such Long-Term
Bonus in cash, in which case (A) the Long-Term Bonus shall be payable to
Executive on the requested payment date, less appropriate deductions for
federal, state and local income taxes, FICA contributions and any other
deductions required by law or authorized by Executive, and (B) all of the
Tranche II Options (as described in Annex A attached hereto) automatically shall
expire and be canceled upon delivery of such notice; or (ii) to waive his right
to receive payment of the Long-Term Bonus, in which case (C) all of the Tranche
II Options automatically shall vest and thereafter remain in full force and
effect in accordance with their terms and (D) thereupon all of Executive's
rights or claims to receive the Long-Tem Bonus shall terminate. If Executive
fails to deliver the Bonus Election Notice to Employer by



                                     Page 3
<PAGE>   4

December 27, 1999, Executive shall be deemed to have made the election described
in the foregoing clause (ii).

       e.     Loan. In the event the currently outstanding, interest-free loan 
made by AT&T to Executive ("AT&T Loan") is not forgiven or otherwise paid other
than by Executive, a subsidiary of Employer will, upon Executive's prior written
request, make an interest-free loan to Executive in the amount of $400,000 for
the purpose of repaying the AT&T Loan (the "Nextel Loan"). To the extent
federal, state or local income taxes are payable by Executive with respect to
any imputed interest on the Nextel Loan, Employer shall, prior to the date any
such income tax is payable by Executive, promptly make an additional lump sum
payment in cash to Executive in an amount sufficient to make Executive whole
with respect to all such taxes attributable to any such imputed interest on the
Nextel Loan. The entire outstanding principal amount of the Nextel Loan shall be
due and payable on the earlier to occur of (i) the fifth anniversary of the date
of this Agreement; or (ii) if this Employment Agreement shall be terminated by
Employer as permitted pursuant to subparagraph 10(b), or by Executive other than
as permitted pursuant to subparagraph 10(c), in either case prior to such
five-year anniversary date, the Nextel Loan shall be immediately due and payable
in full by Executive to the Nextel subsidiary upon such termination; provided
that, if Executive's employment hereunder is continuing on such five-year
anniversary date, the entire outstanding principal amount of the Nextel Loan
shall be forgiven by the Nextel subsidiary on such date; and provided further
that if Executive's employment is terminated by Employer other than for Cause
(as defined in subparagraph 10(b)) prior to the fifth anniversary of the
effective date of this Agreement, a fraction of the Nextel Loan shall be
forgiven by the Nextel subsidiary, the numerator of which fraction shall be the
number of entire months that have elapsed from the effective date of this
Agreement to the effective date of such termination, and the denominator of
which fraction shall be sixty (60). The Nextel Loan shall be secured by a second
mortgage on the residence of Executive currently located in the Washington, D.C.
area.

       f.     Options. Effective on and as of January 22, 1996 (the date on 
which the Operations Committee approved Executive's employment on the terms and
conditions set forth herein), the Compensation Committee of the Board of
Directors of Employer authorized the grant to Executive, pursuant to Employer's
Incentive Equity Plan, of options to acquire 400,000 shares of Employer's Class
A voting common stock on the terms set forth in Annex A hereto (the "Original
Options"). Promptly following the effective date hereof, Employer shall take or
cause to be taken such other or further actions as may be necessary in order to
effectuate such grant of the Options to Executive. From time to time during the
Employment Term, Employer in its sole discretion, may grant Additional Options
to Executive ("Additional Options"). Except as otherwise provided herein, the
terms and conditions of such Additional Options shall

                                     Page 4
<PAGE>   5

be as determined by Employer in its sole discretion. Such Additional Options
together with the Original Options shall be referred to collectively herein as
the "Options."

       5.     Benefits. During the Employment Term, Executive shall be entitled
to participate in all group health, major medical, pension and profit sharing,
401(k) and other benefit plans maintained by Employer and provided generally to
its executive officers, on the same terms as apply to participation therein by
management generally. Further, during the Employment Term, Executive shall be
entitled to participate in all fringe benefit programs and shall receive all
perquisites if and to the extent that Employer establishes and makes available
to management generally, including, but not limited to, Employer-paid long-term
disability insurance and life insurance coverage.

       6.     Expenses. During the Employment Term, Employer shall reimburse
Executive for all reasonable travel, entertainment and other business expenses
incurred or paid by Executive in performing his duties and functions hereunder.
In particular, Employer agrees to provide Executive with $73, 613 in moving
expenses in connection with Executive's required relocation to the Washington
D.C. area for the real estate commission, real estate transfer taxes and
attorneys' fees in connection with the sale of Executive's home in New Jersey
and the loan origination fee and other closing fees in connection with the
purchase of a new residence in the Washington D.C. area. Additionally, Employer
agrees to reimburse Executive for reasonable attorneys fees in connection with
the preparation of this Agreement not to exceed $5,000.

       7.     Vacations. In addition to such holidays, sick leave and personal
time off as is allowed under the policies of Employer to management generally,
Executive shall be entitled during each twelve-month period during the
Employment Term to twenty (20) days of vacation, with full pay. The duration of
such vacations and the time or times when they shall be taken will be determined
by Executive in consultation with Employer. Such vacation time shall be accrued
at a uniform rate during each such twelve-month period and shall, to the extent
unused during any such twelve-month period, be carried over to succeeding
twelve-month periods; provided, however, that the maximum amount of vacation
that Executive may accrue and carry forward in any twelve-month period is ten
(10) days of vacation time. In addition to such other amounts as may be payable
pursuant to paragraph 10 below, Executive shall receive, within thirty days
after his employment hereunder terminates for any reason a payment (based on
Executive's Base Salary in effect at the time of such termination of employment)
for all of Executive's then accrued but unused vacation time.

       8.     Non-Competition. During the Employment Term and (except as 
provided in paragraph 10 herein) for a period of two years thereafter, Executive
shall not enter into or participate in any business competitive to the SMR
Business carried on by Employer; provided that this paragraph 8 shall not
prohibit Executive, following the

                                     Page 5
<PAGE>   6

term of his employment hereunder, from engaging in any wireless
telecommunications business other than SMR Business in any manner not involving
a breach of Executive's obligations pursuant to paragraph 9 herein. The
provisions of this paragraph 8 shall survive the expiration and/or termination
of this Employment Agreement.

       9.     Confidential Information. During the Employment Term and for a 
period of two years thereafter, Executive will not use for his own advantage or
disclose any propriety or confidential information relating to the business
operations or properties of Employer, any affiliate of Employer or any of their
respective customer, suppliers, landlords, licensors or licensees. Upon the
expiration or termination of the Employment Term, Executive will surrender and
deliver to Employer all proprietary or confidential information of every kind
relating to or connected with Employer and its affiliates and their respective
businesses, customers, suppliers, landlord, licensors and licensees. The
foregoing confidential information provisions shall not apply to information
which: (i) is or becomes publicly known through no wrongful act of the
Executive; (ii) is rightfully received from any third party without restriction
and without breach by Executive of this Employment Agreement; or (iii) is
independently developed by Executive after the term of his employment hereunder
or is independently developed by a competitor of Employer at any time. The
provisions of this paragraph 9 shall survive the expiration and/or termination
of this Employment Agreement.

       10.    Termination.

              a. Automatic Termination Upon Death. In the event of Executive's
death during the Employment Term, Executive's employment hereunder shall be
automatically terminated upon the date of death. As soon as reasonably
practicable following Executive's death, Employer shall pay to Executive's
estate (i) Executive's accrued but unpaid Base Salary, through the last day of
the month of this death, (ii) the unpaid amount of the Long-Term Bonus, if and
to the extent that Executive theretofore has submitted the Bonus Election Notice
to Employer pursuant to subparagraph 4(d) electing to be paid the Long-Term
Bonus, and (iii) any amount due hereunder for accrued but unused vacation time
as of the date of death. If Executive's employment hereunder is terminated as a
result of Executive's death at any time before he has submitted the Bonus
Election Notice pursuant to subparagraph 4(d), all of Executive's rights or
claims to elect to receive the Long-Term Bonus shall terminate immediately, and
Executive's estate shall have the vested right to retain the Tranche II options
and to exercise them in accordance with their terms.

              b. Termination by Employer. During the Initial Term, the Employer
shall be entitled to terminate, without liability, Executive's employment
hereunder only upon the establishment of "Cause" or the "Permanent Disability"
of Executive (as those terms are defined below) by giving written notice to that
effect to Executive. During 


                                     Page 6
<PAGE>   7

any Extended Term, Employer shall be entitled to terminate, without liability,
Executive's employment hereunder (i) upon the establishment of Cause or the
Permanent Disability of Executive, by giving written notice to that effect to
Executive, or (ii) for any other reason or for no reason upon twelve months
prior written notice to Executive.

              For purposes hereof, the term "Cause" means either (1) Executive's
failure to substantially perform his duties and functions as contemplated
hereunder, if such failure constitutes gross neglect or willful malfeasance; (2)
Executive's committing fraud or embezzlement or otherwise engaging in conduct
that results in Executive being convicted of a felony; (3) Executive's acting in
an intentional manner which is reasonably likely to be materially detrimental or
damaging to Employer's reputation, business, operations or relations with its
employees, suppliers or customers, without taking reasonable steps to remedy
such actions within three (3) days after receiving written notice thereof from
Employer; (4) Executive's habitual abuse of alcohol or prescription drugs or
abuse of controlled substances; or (5) Executive's committing any other material
breach of this Employment Agreement without taking reasonable steps to cease or
remedy such breach within thirty (30) days after Executive's receipt of written
notice from Employer specifically identifying the nature of and circumstances
relevant to any such claimed material breach by Executive.

       For purposed hereof, the term "Permanent Disability" means: (i)
Executive's failure to devote full normal working time as required herein to his
employment hereunder for a period of at least 30 consecutive normal business
days (or for at least a majority of the normal business days in any consecutive
ninety-day period); and (ii) the existence of an illness or incapacity (either
physical or mental) affective Executive which, in the reasonable opinion of a
Qualified Physician, is likely to be of such character or severity that
Executive would be unable to resume devoting his full normal working time as
required herein to his employment hereunder for a period of at least six
consecutive months. The term "Qualified Physician" means an impartial physician
competent to diagnose and treat the illness or condition which Executive is
believed to be suffering, selected by Employer and reasonably acceptable to
Executive (or if Executive is then incapable of acting for himself, Executive's
personal representative), who shall have personally examined Executive and shall
have personally reviewed Executive's relevant medical records; provided Employer
shall bear the costs of such Qualified Physician's services and Executive agrees
to submit to an examination by such Qualified Physician and to the disclosure of
Executive's relevant medical records to such Qualified Physician.

       The date upon which any termination effected pursuant to this
subparagraph 10(b) shall be effective is set forth in subparagraph 10(d), and
the effect of any such termination shall be as described in subparagraphs 10(c)
and (f).

                                     Page 7
<PAGE>   8

              c.    Termination by Executive. During the Initial term, Executive
shall be entitled to terminate, without liability, his employment hereunder only
upon the establishment of "Good Reason" or "Constructive Termination" (as those
terms are defined below) by giving written notice to that effect to Employer.
During any Extended Term, Executive shall be entitled to terminate, without
liability, his employment hereunder (i) upon the establishment of Good Reason or
Constructive Termination by giving notice to that effect to Employer or (ii) for
any other reason or for no reason upon twelve months prior written notice to
Employer.

              For purposes hereof, the term "Good Reason" shall mean Executive's
termination of his employment hereunder as direct result of a material
relocation by Employer of the business site where Executive performs his
principal job responsibilities or duties hereunder, other than the current
headquarters in Rutherford, New Jersey or the planned relocation to the
Washington, D.C. area.

              For purposed hereof, "Constructive Termination" shall mean
Executive's termination of his employment hereunder as a direct result of (i) a
reduction in Executive's initial Base Salary or in the maximum permitted Annual
Bonus percentage, (ii) a material change in the nature or extent of Executive's
responsibilities that is inconsistent with Executive's intended position and
status hereunder, or (iii) the material breach by the Employer of any provision
of this Agreement which continues without reasonable steps being taken to cure
such breach for a period of 30 days after written notice thereof by Executive to
Employer.

              The date upon which any termination effected pursuant to this
subparagraph 10(c) shall be effective is set forth in subparagraph 10(d), and
the effect of any such termination shall be as described in subparagraphs 10(f)
and (g).

              d.     Termination Date. In the event Executive's employment 
hereunder is terminated for circumstances constituting Cause, Permanent
Disability, Good Reason, or Constructive Termination, such termination shall
take effect upon the termination date set forth in the written notice to that
effect given by Executive to Employer or by Employer to Executive, as the case
may be (provided that if either party disputes the propriety of such
termination, the effective date of termination shall be as established by final
resolution of such dispute, whether by agreement of the parties or award of an
arbitrator as contemplated herein, in favor of the propriety of such
termination), and in any other case termination of Executive's employment
hereunder shall take effect on the date specified in the written notice thereof
delivered by Executive to Employer or by Employer to Executive, as the case may
be, (the date on which any such termination takes effect being referred to
herein as the "Termination Date"). Employer, at its option, may require
Executive to continue to perform his duties hereunder until the Termination Date
or pay to Executive such amount of compensation and benefits


                                     Page 8
<PAGE>   9

otherwise due hereunder in accordance with Employer's then existing salary
payment schedule or in one lump sum payment.

              e.     Effect of Termination by Employer For Cause. In the event
Executive's employment is terminated by Employer for Cause at any time during
the Employment Term, then (i) Employer shall pay to Executive (A) Executive's
accrued but unpaid Base Salary through the Termination Date, and (B) any amount
due hereunder for accrued but unused vacation time as of the Termination Date;
(ii) all of Executive's rights or claims to elect to receive the Long-Term Bonus
or to retain the Tranche II Options pursuant to subparagraph 4(d) hereof shall
terminate automatically shall expire; and (iii) notwithstanding any of the
provisions of Employer's Incentive Equity Plan or of any option agreement with
respect thereto to the contrary, any and all of the Options that theretofore
have vested may be exercised at any time on or before the thirtieth day
following such Termination Date and, if not so exercised, thereupon
automatically shall be canceled.

              f.     Effect of Termination for Good Reason or Upon Permanent
Disability In the event Executive's employment is terminated at any time during
the Employment Term by Executive in circumstances constituting Good Reason, or
by Employer upon the Permanent Disability of Executive, in either case, then:

                     (A)    Employer shall pay to Executive (I)  Executive's  
accrued but unpaid Base Salary through the Termination Date, (II) an amount
equal to 12 months of Executive's then existing Base Salary from the date
written notice of the termination of Executive's employment is given by
Employer, (III) the unpaid amount of the Long-Term Bonus, if and to the extent
that Executive theretofore has submitted the Bonus Election Notice to Employer
pursuant to subparagraph 4(d) electing to be paid the Long-Term Bonus, and (IV)
any amount due hereunder for accrued but unused vacation time as of the
Termination Date.

                     (B)    Employer, at its expense, shall make all benefit
payments, on behalf of Executive and Executive's dependents, for such benefits
Executive otherwise would have been entitled to receive hereunder, for 12 months
following the date written notice of the termination of Executive's employment
is given by Employer.

                     (C)    If the Termination Date occurs prior to such time as
Executive shall have submitted (or have been deemed to have submitted) the Bonus
Election Notice, Executive shall have the right to elect, by written notice
delivered to Employer within ten days following the Termination Date, either to
receive payment of the Long-Term Bonus and to forfeit the Tranche II Options
(all of which shall automatically expire upon such election) or to forgo the
Long-Term Bonus and retain the Tranche II Options (all of which shall vest upon
such election). If Executive fails 


                                     Page 9
<PAGE>   10

to deliver the Bonus Election Notice to Employer within such ten-day period,
Executive shall be deemed to have made the election to forego the Long-Term
Bonus and retain the Tranche II Options.

                     (D)    With respect to any of the Options which remain
unvested upon such Termination Date, notwithstanding any provision to the
contrary in Employer's Incentive Equity Plan and/or any stock option agreement
with respect thereto, there shall be immediate vesting of that portion of the
unvested Options which would have vested within 12 months of the date written
notice of the termination of Executive's employment is given by Employer. After
giving effect to the foregoing sentence, any Options which remain unvested shall
automatically terminate.

              g.     Effect of Wrongful or Constructive Termination

                     (i) In the event Executive's employment is terminated
during the Initial Term or the Extended Term, if any, by Executive in
circumstances constituting Constructive Termination, or by Employer in any
circumstances other than those permitted pursuant to subparagraph 10(b), and
from and after such Termination Date, (A) Executive shall not be subject to the
non-competition provisions set forth in paragraph 8 hereof, and (B) Executive
shall be entitled to receive the Base Salary, Long-Term Bonus (determined
according to the last sentence of this clause g(i), benefits, and other
treatment (including, without limitation, vesting and exercise terms for all of
the Options, subject to the last sentence of this clause g(i)), which Executive
reasonably would have expected to receive in the period from the Termination
Date to the expiration of the Initial Term (if such Termination Date occurs more
than 12 months prior to the expiration of the Initial Term) or during the 12
months following the date written notice of the termination of Executive's
employment is given by Employer (if such Termination Date occurs after the
Initial Term) all of which shall become effective upon the Termination Date. If
the Termination Date occurs prior to such time as Executive shall have submitted
(or have been deemed to have submitted) the Bonus Election Notice, Executive
shall have the right to elect, by written notice delivered to Employer within
ten days following the Termination Date, either to receive payment of the
Long-Term Bonus and to forfeit the Tranche II Options (all of which shall
automatically expire upon such election) or to forego the Long-Term Bonus and
retain the Tranche II Options (all of which shall vest upon such election). If
Executive fails to deliver the Bonus Election Notice to Employer within such
ten-day period, Executive shall be deemed to have made the election to forego
the Long-Term Bonus and retain the Tranche II Options.

                     (ii) In the event Executive's employment is terminated
during the Initial Term or the Extended Term, if any, by Executive in any
circumstances other than those permitted pursuant to subparagraph 10(c),
Executive shall forfeit any and all 


                                    Page 10
<PAGE>   11

rights and claims hereunder which have not theretofore vested, including any
rights or claims with respect to the Long-Term Bonus and/or the Tranche II
Options.

              h. Excess Parachute Payment. In the event that Employer treats any
portion of Executive's payments or benefits hereunder (including, without
limitation, under the foregoing subparagraphs 10(i) and (g) as an "excess
parachute payment" within the meaning of Section 280G of the Internal Revenue
Code ("Code") or any comparable provision of state or local tax law, or it is
otherwise asserted (including on an audit of either Employer or Executive) that
any portion of such payments or benefits is such an "excess parachute payment,"
Employer shall prior to the date on which any amount of excise tax (or penalty
or interest) must be paid in respect thereof, promptly make an additional lump
sum payment in cash to Executive in an amount sufficient, after giving effect to
all federal, state and other taxes and charges (including interest and
penalties, if any) with respect to such payment to make Executive whole for all
taxes (including withholding and social security taxes) imposed under Section
4999 of the Code, or any comparable provision of state or local tax law, with
respect to the "excess parachute payment" and all associated interest and
penalty amounts. Executive shall cooperate with Employer to minimize any such
tax liability.

              i. Miscellaneous. In the event of any termination or attempted
termination hereof: (i) if multiple events, occurrences or circumstances are
asserted as bases for such termination or attempted termination, the event,
occurrence or circumstance that is earliest in time, and any termination or
attempted termination found to be proper hereunder based thereon, shall take
precedence over the others; (ii) no termination of this Employment Agreement
shall relieve or release either party from liability hereunder based on any
breach of the terms hereof by such party occurring prior to the Termination
Date; (iii) the terms of this Employment Agreement relevant to performance or
satisfaction of any obligation hereunder expressly remaining to be performed or
satisfied in whole or in part at the Termination Date shall continue in force
until such full performance or satisfaction has been accomplished and otherwise
neither party hereto shall have any other or further remaining obligations to
other party hereunder; and (iv) the vesting and exercise provisions set forth in
Employer's Incentive Equity Plan and/or any option agreement with respect to the
Options shall continue to apply except to the extent otherwise expressly
provided in this paragraph 10 or in Annex A hereto.

              j. No Set-off. There shall be no right of setoff or counterclaim,
in respect of any actual or alleged claim, debt or obligation, against any
payments or benefits required to be made or provided to Executive hereunder
(including, without limitation, pursuant to subparagraphs 10(f) and (g) above).

                                    Page 11
<PAGE>   12

       11.    Injunctive Relief. It is agreed that the services of Executive are
unique and that any breach or threatened breach by Executive of any provision of
this Employment Agreement cannot be remedied solely by damages. Accordingly, in
the event of a breach by Executive of his obligations under this Employment
Agreement, Employer shall be entitled to seek and obtain interim restraints and
permanent injunctive relief without proving the inadequacy of damages as a
remedy, restraining Executive and any business, firm, partnership, individual,
corporation or entity participating in such breach or attempted breach. Nothing
herein, however, shall be construed as prohibiting Employer from pursuing any
other remedies available at law or in equity for such breach or threatened
breach, including the recovery of damages and the termination of the services of
Executive.

       12.    Arbitration. Any dispute or controversy arising out of or relating
to this Employment Agreement or any claimed breach hereof shall be settled, at
the request of either party, by an arbitration proceeding conducted in
accordance with the rules of the American Arbitration Association ("AAA"), with
the award determined to be appropriate by the arbitrator therein to be final,
non-appealable and binding on the parties hereto, and with judgment upon such
award as is rendered in any such arbitration proceeding available for entry and
enforcement in any court having jurisdiction of the parties hereto. The
arbitrator shall be an impartial arbitrator qualified to serve in accordance
with the rules of the AAA and shall be reasonably acceptable to each of the
Employer and the Executive. If no such acceptable arbitrator is so appointed
within 15 days after the initial request for arbitration of such disputed
matter, each of the parties promptly shall designate a person qualified to serve
as an arbitrator in accordance with the rules of the AAA, and the two persons so
designated promptly shall select the arbitrator from among those persons
qualified to serv e in accordance with the rules of the AAA. The arbitration
shall be held in the city in which Employer's corporate headquarters are located
at the time of the initiation of any such proceedings, or in such other place as
may be agreed upon at the time by the parties. The expenses of the arbitration
proceeding shall be borne by Employer, but the arbitrator's award may provide
that Executive shall reimburse Employer for an equitable share of such expenses
if Executive is not the prevailing party on any of the issues involved in such
arbitration. The Employer shall pay for and bear the cost of its own and
Executive's experts, evidence and counsel in such arbitration proceeding, but
the arbitrator's award may provide that, in addition to any other amounts or
relief due to Employer, Executive shall reimburse Employer on demand for all of
such costs of Executive's experts, evidence and counsel initially incurred by
Employer, to the extent the award finds such costs properly allocable to any
issue(s) in dispute as to which the award indicates the Employer to be the
prevailing party.

       13.    Indemnification.

                                    Page 12
<PAGE>   13

              a. Employer shall indemnify Executive to the fullest extent
permitted by Delaware law as in effect on the date hereof against all costs,
expenses, liabilities and losses (including, without limitation, attorneys'
fees, judgments, penalties and amounts paid in settlement) reasonably incurred
by Executive in connection with any action, suit or proceeding, whether civil,
criminal, administrative or investigative in which Executive is made, or is
threatened to be made, a party to or a witness in such action, suit or
proceeding by reason of the fact that he is or was an officer, director,
consultant, agent or Executive of the Employer or of any Employer's controlled
affiliates or is or was serving as an officer, consultant director, member,
Executive, trustee, agent or fiduciary of any other entity at the request of the
Employer (a "Proceeding").

              b. Employer shall advance to Executive all reasonable costs and
expenses incurred by him in connection with a proceeding within 20 days after
receipt by Employer of a written request for such advance, accompanied by an
itemized list of the costs and expenses and Executive's written undertaking to
repay to Employer on demand the amount of such advance if it shall ultimately be
determined that Executive is not entitled to be indemnified against such costs
and expenses.

              c. The indemnification provided to Executive hereunder is in
addition to, and not in lieu of, any additional indemnification to which he may
be entitled pursuant to Employer's Certificate of Incorporation or Bylaws, any
insurance maintained by Employer from time to time providing coverage to
Executive and other officers and directors of Employer, or any separate written
agreement with Executive. The provisions of this paragraph 13 shall survive any
termination of this Employment Agreement.

       14.    Amendment and Modification. This Employment Agreement contains the
entire agreement between the parties with respect to the subject matter hereof.
Subject to applicable law and upon the consent of the Board of Directors of
Employer, this Employment Agreement may be amended, modified and supplemented by
written agreement of Employer and Executive with respect to any of the terms
contained herein.

       15.    Waiver of Compliance. Any failure of either party to comply with 
any obligation, covenant, agreement or condition on its part contained herein
may be expressly waived in writing by the other party, but such waiver or
failure to insist upon strict compliance shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure. Whenever this
Employment Agreement requires or permits consent by or on behalf of any party,
such consent shall be given in writing.


                                    Page 13
<PAGE>   14

       IN WITNESS WHEREOF, the parties have executed this Employment Agreement
to be effective on and as of the day and year first above written.


                                          NEXTEL COMMUNICATIONS, INC.



                                          By:     /s/Daniel F. Akerson
                                              ---------------------------
                                          Name:  Daniel F. Akerson
                                               --------------------------
                                          Title:     Chairman/CEO
                                                -------------------------
                                                   /s/Tim Donahue
                                          -------------------------------
                                                      Tim Donahue
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ANNEX A
                         To Employment Agreement between
                           Nextel Communications, Inc.
                     and Tim Donahue dated February 1, 1996


       The Original Options shall be granted as follows:

       Tranche 1 Options: Non-qualified options to acquire 300,000 shares of
Employer Class A Common Stock awarded on January 22, 1996. The Tranche 1 Options
shall vest equally over four (4) years (25% per year) on each of January 22,
1997, January 22, 1998, January 22, 1999 and January 22, 2000. The exercise
price of the Tranche 1 Options is $13.50 per share (the average trading price on
the date of grant).

       Tranche II Options: non-qualified options to acquire 100,000 shares of
Employer's Class A Common Stock awarded on January 22, 1996. The Tranche II
Options shall vest 100% upon the election of Executive to waive the Long-Term
Bonus and retain the Tranche II Options pursuant to subparagraphs 4(c), 10(f) or
10(g) of the Employment Agreement. The exercise price of the Tranche II Options
is $13.50 per share (the average trading price on the date of grant).

       All Tranche I Options shall, to the extent not theretofore vested in
accordance with their normal terms, vest on an automatic and accelerated basis
(i) in the circumstances set forth in paragraphs 10(f) and (g) of the Employment
Agreement, and (ii) upon a "change of control" as defined in the Employer
Incentive Equity Plan (such definition of change of control to include, without
limitation, the acquisition of 51% or more of the outstanding voting stock of
Employer by a person or related group as defined in Rule 13(d)(3) of the 1934
Act) or (iii) if the Operations Committee ceases to exist, representatives of
Digital Radio L.L.C. cease to control the Operations Committee, or Craig McCaw
ceases to own or control, directly or indirectly, a majority of the voting power
of Digital Radio L.L.C. or Eagle River, Inc.

       All Original Options will have an exercise period of ten (10) years after
the relevant vesting date subject to earlier termination of the exercise period
in the event of termination of Executive's employment either (i) by Employer in
circumstances constituting Cause or (ii) by Executive other than in
circumstances constituting Good Reason or Constructive Termination; in either of
which case, the Options shall be canceled if not exercised within 30 days
following the Termination Date with respect to such termination.

                                    Page 15
<PAGE>   16

       All Original Options (and all shares issued on exercise of such Options)
will be subject to an effective Form S-8 (or other appropriate form)
registration statement and will be qualified for the treatment afforded under
Rule 16b-3.

       To the extent not otherwise provided above, or in the Employment
Agreement of which this Annex A forms a part, the terms applicable to all the
Original Options (and of any option agreement entered into in connection
therewith) shall be the standard terms normally applicable to a grant of
"non-qualified" stock options pursuant to the Nextel Communications, Inc.
Incentive Equity Plan.


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