Executive Purchase Agreement

AMENDED AND RESTATED

EXECUTIVE PURCHASE AGREEMENT





THIS AMENDED AND RESTATED EXECUTIVE PURCHASE AGREEMENT (this "Agreement") is made as of January 20, 1998, by and between Allegiance Telecom, L.L.C., a Delaware limited liability company (the "LLC"), Allegiance Telecom, Inc., a Delaware corporation (the "Company"), and ______________ ("Executive"). Capitalized terms used but not otherwise defined herein have the meanings ascribed to such terms in paragraph 7 hereof.



The LLC, the Company, and Executive are parties to an Executive Purchase Agreement dated as of August 13, 1997 (the "Prior Agreement"), pursuant to which Executive made capital contributions to the LLC in the amount of $7,705 (the "Initial Capital Contribution") in exchange for, and the LLC issued to Executive, 150,000 Class B Units. The parties desire for Executive to make capital contributions to the LLC in the amount of an additional $6,563 (the "Second Initial Capital Contribution") in exchange for the LLC's issuance to Executive of an additional 9,375 Class B Units. In furtherance thereof, the parties hereby agree to amend and restate the Prior Agreement as set forth herein.



NOW, THEREFORE, in consideration of the mutual promises made herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:



1. PURCHASE AND SALE OF EXECUTIVE SECURITIES.



(a) Initial Capital Contribution and Issuance of Executive Securities. Pursuant to the Prior Agreement, on August 13, 1997 (the "Prior Date"), Executive made the Initial Capital Contribution to the LLC in exchange for, and the LLC issued to Executive, 150,000 Class B Units having the rights, obligations, and preferences set forth with respect thereto in the LLC Agreement. The aggregate amount of the Initial Capital Contribution made with respect to each such Class B Unit issued pursuant to the Prior Agreement is and shall be considered Basic Contributions made with respect to such Class B Unit.



(b) Second Initial Capital Contribution and Issuance of Executive Securities. Upon execution of this Agreement, Executive shall make the Second Initial Capital Contribution to the LLC in exchange for, and the LLC shall issue to Executive, an additional 9,375 Class B Units having the rights, obligations, and preferences set forth with respect thereto in the LLC Agreement. Executive shall make the Second Initial Capital Contribution to the LLC by delivery to the LLC of a cashier's or certified check, or wire transfer of immediately available funds to an account designated by the LLC, in the aggregate amount equal to the Second Initial Capital Contribution. An aggregate amount of the Second Initial Capital Contribution equal to $4,687.50 shall be considered Basic Contributions made with respect to the 9,375 Class B Units issued hereunder (which Basic Contributions shall be deemed to have been made among such Class B Units on a pro rata basis).

















(c) Construction of Other Agreements. The parties hereto acknowledge and agree that, pursuant to the express terms of the Stock Purchase Agreement, the LLC Agreement, the Securityholders Agreement, and the Registration Agreement, this Agreement (like the Prior Agreement) is and shall be considered an "Executive Purchase Agreement" as such term is used in such agreements.



(d) Representations and Warranties of Executive. In connection with the Initial Capital Contribution and the Second Initial Capital Contribution and the issuance of the Executive Securities under the Prior Agreement and hereunder, Executive represents and warrants to each of the LLC and the Company that:



(i) The Executive Securities acquired by Executive

under the Prior Agreement and to be acquired by Executive pursuant to

this Agreement shall be acquired for Executive's own account and not

with a view to, or intention of, distribution thereof in violation of

the Securities Act or any applicable state securities laws, and the

Executive Securities shall not be disposed of in contravention of the

Securities Act or any applicable state securities laws.



(ii) Executive will serve on the Management

Committee of the LLC, is a management employee of the Company, is

sophisticated in financial matters and is able to evaluate the risks

and benefits of the investment in the Executive Securities.



(iii) Executive is able to bear the economic risk of

his investment in the Executive Securities for an indefinite period of

time and is aware that transfer of the Executive Securities may not be

possible because (A) such transfer is subject to contractual

restrictions on transfer set forth herein and in the Securityholders

Agreement, and (B) the Executive Securities have not been registered

under the Securities Act or any applicable state securities laws and,

therefore, cannot be sold unless subsequently registered under the

Securities Act and such applicable state securities laws or an

exemption from such registration is available.



(iv) Executive has had an opportunity to ask

questions and receive answers concerning the terms and conditions of

the offering of the Executive Securities issued hereunder and has had

full access to such other information concerning the Company as he has



(v) This Agreement, the LLC Agreement, the

Securityholders Agreement, and the other agreements contemplated

thereby of even date therewith constitute the legal, valid and binding

obligations of Executive, enforceable in accordance with their terms,

and the execution, delivery and performance of such agreements by

Executive and Executive's employment with the Company do not and shall

not conflict with, violate or cause a breach of any agreement, contract

or instrument to which Executive is a party or by which he is bound or

any judgment, order or decree to which Executive is subject.







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(e) Acknowledgment of At-Will Employment. As an inducement to the LLC and the Company to enter into this Agreement, and as a condition thereto, Executive acknowledges and agrees that no agreement or arrangement between the Executive and the Company or the LLC (including, without limitation, the issuance of the Executive Securities to Executive and the execution and delivery of this Agreement) shall entitle Executive to remain in the employment of the Company and its Subsidiaries or affect the right of the Company or its Subsidiaries to terminate Executive's employment at any time and for any reason.



2. VESTING OF EXECUTIVE SECURITIES.



(a) Vesting Schedule. Except as otherwise provided herein, an amount of Unvested Securities (as defined below) shall vest on each of the first four anniversaries of the Prior Date, such that the Executive Securities shall be vested on each such date in accordance with the following schedule:





Cumulative Percentage of Executive

Date Securities Vested on Such Date

- ---------------------------------------- -----------------------------------

The first anniversary of the Prior Date 25%

The second anniversary of the Prior Date 50%

The third anniversary of the Prior Date 75%

The fourth anniversary of the Prior Date 100%



Notwithstanding the foregoing sentence, and except as otherwise provided herein, the above vesting schedule shall cease and no Unvested Securities (as defined below) shall vest after the date on which Executive's employment with the Company and its Subsidiaries terminates for any reason. Executive Securities which have become vested pursuant to this Agreement are referred to herein as "Vested Securities," and all other Executive Securities are referred to herein as "Unvested Securities."



(b) Acceleration upon a Qualified Sale of the Company. All Unvested Securities shall become Vested Securities upon the consummation of a Qualified Sale of the Company (as defined below) so long as Executive is employed by the Company or any of its Subsidiaries on the date of such sale. A "Qualified Sale of the Company" means either (i) the sale, lease, transfer, conveyance or other disposition, in one or a series of related transactions, of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole, or (ii) a transaction or series of transactions (including by way of merger, consolidation, or sale of stock, but not including a Public Offering) the result of which is that the holders of the Company's outstanding voting stock immediately prior to such transaction are after giving effect to such transaction no longer, in the aggregate, the "beneficial owners" (as such term is defined in Rule 13d-3 and Rule 13d-5 promulgated under the Securities Exchange Act), directly or indirectly through one or more intermediaries, of more than 50% of the voting power of the outstanding voting stock of the







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Company, in each case where the consideration for such assets or stock in such sale or transfer consists of cash and/or publicly traded equity securities for at least 50% of the outstanding stock of the Company (e.g., 100% of such consideration would have to consist of cash and/or publicly traded equity securities if only 50.01% of such stock were sold in such transaction).



(c) Acceleration upon a Public Offering. Upon the consummation of the Company's initial Public Offering, and so long as Executive is employed by the Company or any of its Subsidiaries on the closing date of such offering, there will vest the amount of Unvested Securities which were scheduled to vest within the 365 days following such closing date (and the remaining Unvested Securities, if any, shall continue to vest 25% on each anniversary of the Prior Date in accordance with clause (a) above, such that the vesting schedule set forth in paragraph (a) above shall have been effectively accelerated by one year).



(d) Acceleration upon Death or Disability. All Unvested Shares shall become Vested Shares if Executive's employment with the Company or any of its Subsidiaries terminates by reason of Executive's death or Disability.



(e) Other Acceleration. Subject to paragraph 3(g) hereof, any Unvested Securities which the LLC (or its assignees) has not elected to repurchase in the Repurchase Notice (as defined below) (including Unvested Securities originally included in the Repurchase Notice, but for which the election to repurchase was rescinded, pursuant to the terms of paragraph 3, by all of the LLC and/or its assignees having made such election) shall thereafter be deemed Vested Securities.



3. LLC'S REPURCHASE OPTION.



(a) The Repurchase Option. Upon the termination of Executive's employment with the Company and its Subsidiaries for any reason (a "Repurchase Event"), the Executive Securities then in existence (whether held by Executive or one or more of Executive's transferees) will be subject to repurchase by the LLC at the LLC's election pursuant to the terms and conditions set forth in this paragraph 3 (the "Repurchase Option").



(b) Repurchase Price. The repurchase price (the "Repurchase Price") for any Vested Securities to be repurchased shall be the Fair Market Value of such securities. The Repurchase Price of any Unvested Securities to be repurchased shall be the lesser of (x) the Fair Market Value of such Securities, and (y) the Original Cost of such Securities (with securities having the lowest Original Cost subject to repurchase prior to securities with a higher Original Cost).



(c) Exercise of Repurchase Option. The LLC (by action of the Board) may elect to purchase all or any portion of the Executive Securities by delivering written notice (the "Repurchase Notice") to the holder or holders of the Executive Securities within 30 days after the Repurchase Event. The Repurchase Notice shall set forth the amount, type, and class of Executive Securities (including, if applicable, the amount of Unvested Securities and/or Vested Securities) to be acquired from each such holder. The Executive Securities to be repurchased by the LLC shall







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first be satisfied to the extent possible from the Executive Securities held by Executive at the time of delivery of the Repurchase Notice. If the amount of Executive Securities then held by Executive is less than the total amount of Executive Securities that the LLC has elected to purchase, the LLC shall purchase the remaining securities elected to be purchased from the other holder(s) of Executive Securities, pro rata according to the amount of Executive Securities held of record by each such other holder at the time of delivery of the Repurchase Notice. The amount of Unvested Securities and Vested Securities to be repurchased hereunder shall be deemed to be allocated among Executive and the other holders of repurchased Executive Securities (if any) pro rata according to the amount of Executive Securities to be purchased from such persons.



(d) Assignment by the LLC. The LLC, by action of the Board, will have the right to assign all or any portion of its repurchase rights hereunder to any holder of Investor Equity and/or to any executive employee of the Company or any of its Subsidiaries. Notwithstanding the foregoing, the LLC may not assign to any Person its right to pay a portion of the Repurchase Price for Executive Securities repurchased hereunder in the form of Class C Units (or, after the dissolution and liquidation of the LLC, a promissory note).



(e) Fair Market Value of Repurchased Shares.



(i) The "Fair Market Value" of Executive Securities

subject to repurchase hereunder shall be determined in accordance with

this paragraph (e).



(ii) A majority interest of the LLC and/or any

assignees of the LLC's repurchase rights (based on the amount of

Executive Securities to be purchased by each) and the holders of a

majority of the Executive Securities to be repurchased shall attempt in

good faith to agree on the Fair Market Value of the Executive

Securities. Any agreement reached by such Persons shall be final and

binding on all parties hereto.



(iii) If such Persons are unable to reach such

agreement within 20 days after the giving of Repurchase Notice, the

Fair Market Value of any Executive Securities that are publicly traded

shall be the average, over a period of 21 days consisting of the date

of the Repurchase Event and the 20 consecutive business days prior to

that date, of the average of the closing prices of the sales of such

securities on all securities exchanges on which such securities may at

that time be listed, or, if there have been no sales on any such

exchange on any day, the average of the highest bid and lowest asked

prices on all such exchanges at the end of such day, or, if on any day

such securities are not so listed, the average of the representative

bid and asked prices quoted in the Nasdaq System as of 4:00 P.M., New

York time, or, if on any day such securities are not quoted in the

Nasdaq System, the average of the highest bid and lowest asked prices

on such day in the domestic over-the-counter market as reported by the

National Quotation Bureau Incorporated, or any similar successor







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(iv) If such Persons are unable to reach agreement

pursuant to subparagraph (ii) within 20 days after the giving of

Repurchase Notice, and to the extent any Executive Securities are not

publicly traded:



(A) A majority interest of the LLC

and/or its assignees (based on the amount of Executive Securities to

be repurchased by each) and the holders of a majority of the Executive

Securities shall each, within 10 days thereafter, choose one

investment banker or other appraiser with experience in analyzing and

making determinations concerning matters in the telecommunications

industry and in valuing entities like the LLC (including the

distribution arrangements of the type described in the LLC Agreement),

and the two investment bankers/appraisers so selected shall together

select a third investment banker/appraiser similarly qualified.



(B) The three investment bankers/appraisers

shall first appraise the fair market value of the Company (based on

the assumption of an orderly, arm's length sale to a willing

unaffiliated buyer). The three investment bankers/appraisers shall

then appraise the fair market value of such non-publicly-traded

Executive Securities as follows:



1) the fair market value of

each share of Common Stock shall be equal to the fair market

value of the Company divided by the total number of shares

of Common Stock outstanding on the date of the Repurchase

Event (determined on a fully diluted basis (x) with respect

to the Preferred Stock and all other outstanding securities

convertible into the Company's Common Stock, assuming the

conversion of such Preferred Stock and other convertible

securities (without regard to any conditions or other

restrictions on such conversion), and (y) with respect to

all outstanding options, warrants and other rights or

securities exercisable or exchangeable for shares of the

Company's Common Stock, in accordance with the Treasury

Stock Method under generally accepted accounting principles

for determination of fully diluted earnings per share);



2) the fair market value of

each share of Preferred Stock shall be equal to the greater

of (x) the Liquidation Value (as defined in the Company's

certificate of incorporation) of such share, together with

all accrued but unpaid dividends thereon (as determined

under the Company's certificate of incorporation), and (y)

the fair market value (determined in accordance with

subparagraph 1) above) of the share(s) of Common Stock

(including fractional shares) into which such share of

Preferred Stock is convertible on the date of the Repurchase

Event;



3) the fair market value of

each Class B Unit shall be equal to the fair market value of

the assets (as determined in accordance with subparagraphs

1), 2), and 4) of this subparagraph (B)) that would be







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according to the terms of the LLC Agreement with respect to

such Class B Unit if the LLC were dissolved and liquidated on

the date of the Repurchase Event; and



4) the fair market value of

any other non-publicly-traded Executive Securities (or, for

purposes of subparagraph 3) above, any other assets) shall

be the fair value of such securities (or other assets),

determined on the basis of an orderly, arm's length sale to

a willing, unaffiliated buyer, taking into account all

relevant factors determinative of value.



The three investment bankers/appraisers shall, within thirty days of

their retention, provide the written results of such appraisals to the

LLC and/or its assignees and to each of the holders of Executive



(C) The "Fair Market Value" of the

non-publicly-traded Executive Securities to be repurchased shall be

the aver ...