<PAGE> 1
[NEXTEL LOGO(R)]
PROSPECTUS
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7,168,587 STRYPES(SM)
NEXTEL STRYPES TRUST
(EXCHANGEABLE FOR SHARES OF CLASS A COMMON STOCK OF NEXTEL COMMUNICATIONS, INC.)
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Each of the Structured Yield Product Exchangeable for Stock(SM) (the
"STRYPES") of Nextel STRYPES Trust (the "Trust") offered hereby represents a
proportionate share of beneficial interest in the Trust, which entitles the
holder to receive an annual distribution of $1.015, and will be exchanged for
between 84.03% and 100% of each type of Reference Property (or, in certain
circumstances, cash, or a combination of cash and Reference Property, with an
equal value) upon conclusion of the term of the Trust on May 15, 2000 (the
"Exchange Date"). The term "Reference Property" means initially one share of
Class A Common Stock, par value $.001 per share (the "Nextel Common Stock"), of
Nextel Communications, Inc. (the "Company") and shall be subject to adjustment
from time to time prior to the Business Day (as defined herein) immediately
preceding the Exchange Date to reflect the addition or substitution of any cash,
securities and/or other property resulting from the application of the
adjustment provisions described herein. The annual distribution of $1.015 per
STRYPES is payable quarterly on each February 15, May 15, August 15 and November
15, commencing May 15, 1997. The STRYPES are not subject to redemption.
The Trust is a newly created Delaware business trust established to
purchase and hold (i) a series of zero-coupon U.S. Government securities ("U.S.
Treasury Securities") maturing on a quarterly basis through the Exchange Date
and (ii) a forward purchase contract (the "Contract") with certain existing
stockholders (the "Contracting Stockholders") of the Company relating to the
Reference Property. The Trust's investment objective is to distribute to holders
of the STRYPES on a quarterly basis $.25375 per STRYPES and, on the Exchange
Date, a percentage of each type of Reference Property (or, in certain
circumstances, cash, or a combination of cash and Reference Property, with an
equal value) per STRYPES equal to the Exchange Amount. The Exchange Amount is
equal to: (a) if the Reference Property Value (as defined herein) is greater
than or equal to $16.66 (the "Threshold Appreciation Price"), 84.03% of each
type of Reference Property, (b) if the Reference Property Value is less than the
Threshold Appreciation Price but greater than the Initial Price, a percentage of
each type of Reference Property, allocated as proportionately as practicable, so
that the aggregate value thereof equals the Initial Price and (c) if the
Reference Property Value is less than or equal to the Initial Price, 100% of
each type of Reference Property. The "Initial Price" is $14.00, which amount is
equal to the last reported sale price of the Nextel Common Stock on the Nasdaq
National Market ("NASDAQ") on March 4, 1997. Holders otherwise entitled to
receive fractional units or interests of any type of Reference Property in
respect of their aggregate holdings of STRYPES will receive cash in lieu
thereof. Pursuant to the terms of the Contract, the Contracting Stockholders are
obligated to deliver to the Trust on the Business Day immediately preceding the
Exchange Date the Reference Property required by the Trust in order to exchange
all of the STRYPES on the Exchange Date in accordance with its investment
objective. To the extent permitted by applicable law, the obligation of each
Contracting Stockholder to deliver Reference Property under the Contract may be
cash settled, at the option of such Contracting Stockholder, in whole or in
part, by delivering to the Trust on the Business Day immediately preceding the
Exchange Date, in lieu of the portion of the Reference Property otherwise
deliverable in respect of which an election to exercise the cash settlement
option is made, cash in an amount equal to the value of such Reference Property
on the Business Day immediately preceding the Exchange Date (the "Cash
Settlement Option"). In the event that all or any of the Contracting
Stockholders elect to exercise the Cash Settlement Option, holders of the
STRYPES will receive cash, or a combination of cash and Reference Property, on
the Exchange Date. AS DESCRIBED HEREIN, THE REFERENCE PROPERTY VALUE WILL
REPRESENT A DETERMINATION OF THE VALUE OF THE REFERENCE PROPERTY IMMEDIATELY
PRIOR TO THE EXCHANGE DATE. ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT THE
AMOUNT RECEIVABLE BY HOLDERS OF THE STRYPES ON THE EXCHANGE DATE WILL BE EQUAL
TO OR GREATER THAN THE ISSUE PRICE OF THE STRYPES. IF THE REFERENCE PROPERTY
VALUE IS LESS THAN THE INITIAL PRICE, SUCH AMOUNT RECEIVABLE ON THE EXCHANGE
DATE WILL BE LESS THAN THE ISSUE PRICE PAID FOR THE STRYPES, IN WHICH CASE AN
INVESTMENT IN THE STRYPES WILL RESULT IN A LOSS. See "Investment Objectives and
Policies -- General" and "-- The Contract."
(continued on following page)
SEE "RISK FACTORS," BEGINNING ON PAGE 20 OF THIS PROSPECTUS, FOR CERTAIN
CONSIDERATIONS RELEVANT TO AN INVESTMENT IN THE STRYPES.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
===========================================================================================================
PRICE TO SALES PROCEEDS TO
PUBLIC LOAD(1) TRUST(2)
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<S> <C> <C> <C>
Per STRYPES................................. $14.00 $.42 $13.58
- -----------------------------------------------------------------------------------------------------------
Total(3).................................... $100,360,218 $3,010,807 $97,349,411
===========================================================================================================
</TABLE>
(1) Each of the Company and the Contracting Stockholders have agreed to
indemnify the Underwriters against certain liabilities, including liabilities
under the Securities Act of 1933, as amended. See "Underwriting."
(2) Expenses of the offering, which are payable by the Contracting Stockholders,
are estimated to be approximately $350,000.
(3) The Trust has granted the Underwriters an option, exercisable for 30 days
from the date hereof, to purchase up to an additional 1,068,144 STRYPES to
cover over-allotments, if any. If all such STRYPES are purchased, the total
Price to Public, Sales Load and Proceeds to Trust will be $115,314,234,
$3,459,427 and $111,854,807, respectively. See "Underwriting."
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The STRYPES are offered by the several Underwriters, subject to prior
sale, when, as and if issued to and accepted by them, and subject to approval of
certain legal matters by counsel for the Underwriters and certain other
conditions. The Underwriters reserve the right to withdraw, cancel or modify
such offer and to reject orders in whole or in part. It is expected that
delivery of the STRYPES will be made through the facilities of The Depository
Trust Company on or about March 10, 1997.
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(SM) Service mark of Merrill Lynch & Co., Inc.
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<TABLE>
<S> <C>
MERRILL LYNCH & CO. DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
</TABLE>
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The date of this Prospectus is March 4, 1997.
<PAGE> 2
(continued from previous page)
In the event of a consolidation or merger of the Company or any successor
thereto into another entity, or the liquidation of the Company or any such
successor, or certain related events, or upon the occurrence of certain defaults
by any Contracting Stockholder under the Contract or the collateral arrangements
described herein, the Contract would be accelerated, the Trust's assets (other
than assets received pursuant to the Contract) would be liquidated, the net
assets of the Trust would be distributed pro rata to the holders of the STRYPES
and the term of the Trust would expire. See "Investment Objective and
Policies -- The Contract -- Reorganization Events Causing a Dissolution of the
Trust" and "-- Collateral Arrangements; Acceleration."
Reference is made to the accompanying prospectus of the Company with
respect to the shares of Nextel Common Stock which may be received by a holder
of STRYPES on the Exchange Date or upon earlier dissolution of the Trust. The
Company is not affiliated with the Trust or with any Contracting Stockholder
presently, will not receive any of the proceeds from the sale of the STRYPES and
will have no obligations with respect to the STRYPES.
The STRYPES have been approved for listing on the American Stock Exchange
("AMEX"), subject to official notice of issuance. Prior to the offering there
has been no public market for the STRYPES. Shares of closed-end investment
companies have in the past frequently traded at a discount from their net asset
values and initial public offering prices. The risks associated with this
characteristic of closed-end investment companies may be greater for investors
expecting to sell shares of a closed-end investment company soon after the
completion of an initial public offering.
The STRYPES are designed to provide investors with a current distribution
yield (the Company has not paid any dividends on the Nextel Common Stock), while
also providing the opportunity for investors to share in the appreciation, if
any, of the value of the Reference Property above the Threshold Appreciation
Price. However, the opportunity for equity appreciation afforded by an
investment in the STRYPES is less than that afforded by a direct investment in
the Reference Property because the amount receivable by a holder of a STRYPES
upon exchange on the Exchange Date will only exceed the issue price of such
STRYPES if the Reference Property Value exceeds the Threshold Appreciation
Price, which represents an appreciation of 19% over the Initial Price. In
addition, because each STRYPES will entitle the holder to receive only 84.03% of
each type of Reference Property if the Reference Property Value exceeds the
Threshold Appreciation Price, holders of the STRYPES will be entitled to receive
upon exchange only 84.03% of any appreciation of the value of the Reference
Property above the Threshold Appreciation Price.
The STRYPES may be a suitable investment for investors who are able to
understand the unique nature of the Trust and the economic characteristics of
the Contract and the U.S. Treasury Securities held by the Trust.
The Trust has adopted a fundamental policy that the Contract may not be
disposed of during the term of the Trust and that, except in limited
circumstances, the U.S. Treasury Securities may not be disposed of prior to
their respective maturities. As a result, the Trust will continue to hold the
Contract despite any significant decline in the value of the Reference Property,
including the Nextel Common Stock, or adverse changes in the financial condition
of the issuer of any Reference Security (as defined herein), including the
Company. The Trust will not be managed like a typical closed-end investment
company. The Trust will be treated as a grantor trust for United States Federal
income tax purposes and each holder of STRYPES will be treated as the owner of
its pro rata portion of the Contract and the U.S. Treasury Securities. The U.S.
Treasury Securities held by the Trust will be treated for United States Federal
income tax purposes as having original issue discount and holders of STRYPES
will be required to recognize currently as income their pro rata portion of such
original issue discount as it accrues over the term of the Trust. The quarterly
cash distributions paid to the holders of STRYPES, which distributions are
anticipated to exceed the currently includable original issue discount, will be
treated as a tax-free return of the holders' costs of the U.S. Treasury
Securities and any previously included original issue discount, and therefore
will not be considered current income to holders upon receipt thereof for United
States Federal income tax purposes. Although under current law holders of
STRYPES should not recognize income, gain or loss with respect to the Contract
over its term, holders will recognize taxable gain or loss upon receipt of cash,
if any, upon dissolution of the Trust. For a discussion of certain United States
Federal income tax considerations for holders of the STRYPES, see "Certain
United States Federal Income Tax Considerations."
This Prospectus sets forth concisely information about the Trust that a
prospective investor ought to know before investing and should be read and
retained for future reference.
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Certain persons participating in this Offering may engage in transactions
that stabilize, maintain, or otherwise affect the price of the STRYPES or the
Nextel Common Stock. Such transactions may include stabilizing, the purchase of
STRYPES to cover syndicate short positions and the imposition of penalty bids.
For a description of these activities, see "Underwriting."
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PROSPECTUS SUMMARY
The following summary should be read in conjunction with the more detailed
information appearing elsewhere in this Prospectus. Unless otherwise indicated,
the information contained in this Prospectus assumes that the Underwriters'
over-allotment option is not exercised. Unless the context otherwise requires,
the following summary assumes that on the Exchange Date the Reference Property
consists only of shares of Nextel Common Stock. As used in this Prospectus, the
"Company" refers to Nextel Communications, Inc.
THE TRUST
Nextel STRYPES Trust (the "Trust") is a newly created Delaware business
trust that will be registered as a non-diversified closed-end management
investment company under the Investment Company Act of 1940, as amended (the
"Investment Company Act"). The term of the Trust will expire on or shortly after
May 15, 2000 (the "Exchange Date"), except that the Trust may be dissolved prior
to such date under certain limited circumstances. The Trust will be treated as a
grantor trust for United States Federal income tax purposes.
THE OFFERING
The Trust is offering 7,168,587 STRYPES, each representing a proportionate
share of beneficial interest in the Trust, at an initial public offering price
of $14.00 per STRYPES (which is equal to the last reported sale price of the
Nextel Common Stock on NASDAQ on March 4, 1997, the date of the offering (the
"Offering")). The Underwriters have been granted an option, exercisable for 30
days from the date of this Prospectus, to purchase up to an aggregate of
1,068,144 additional STRYPES to cover over-allotments, if any. See
"Underwriting."
THE COMPANY
The Company's business consists principally of providing wireless
communications services to its customers utilizing specialized mobile radio
("SMR") frequencies licensed to its subsidiaries by the Federal Communications
Commission. The Company provides SMR wireless communications services in Hawaii
and in nearly all 48 states in the continental United States, including all of
the top 50 metropolitan market areas in the United States. As of December 31,
1996, the Company provided service to approximately 1,114,500 units, consisting
of 300,300 units utilizing the Company's Digital Mobile networks (as defined
below) and approximately 814,200 analog units. The Company has stated that its
business plans and efforts are to a large extent directed toward replacing the
remaining traditional analog SMR systems that it currently operates with
advanced mobile communications systems employing digital technology with a
multi-site configuration permitting frequency reuse ("Digital Mobile networks").
A customer using Nextel's Digital Mobile network is able to access mobile
telephone services and two-way radio dispatch, paging and in the future is
expected to be able to access data transmission.
Reference is made to the accompanying prospectus of the Company with
respect to the shares of Nextel Common Stock which may be received by a holder
of STRYPES on the Exchange Date or upon earlier dissolution of the Trust. The
Company is not affiliated with the Trust or with any Contracting Stockholder
presently, will not receive any of the proceeds from the sale of the STRYPES and
will have no obligations with respect to the STRYPES. THE PROSPECTUS OF THE
COMPANY IS BEING ATTACHED HERETO AND DELIVERED TO PROSPECTIVE PURCHASERS OF
STRYPES TOGETHER WITH THIS PROSPECTUS FOR CONVENIENCE OF REFERENCE ONLY. THE
PROSPECTUS OF THE COMPANY DOES NOT CONSTITUTE A PART OF THIS PROSPECTUS, NOR IS
IT INCORPORATED BY REFERENCE HEREIN.
INVESTMENT OBJECTIVE AND POLICIES
The Trust will purchase and hold a series of zero-coupon U.S. Government
securities ("U.S. Treasury Securities") maturing on a quarterly basis through
the Exchange Date, and a forward purchase contract (the "Contract") with certain
existing stockholders (the "Contracting Stockholders") of the Company relating
to the Reference Property. The Trust's investment objective is to distribute to
holders of the STRYPES ("Holders") on a quarterly basis $.25375 per STRYPES
(which amount equals the pro rata portion of the fixed quarterly distributions
from the proceeds of the maturing U.S. Treasury Securities held by the Trust)
3
<PAGE> 4
and, on the Exchange Date, a percentage of each type of Reference Property (or,
in certain circumstances, cash, or a combination of cash and Reference Property,
with an equal value) per STRYPES equal to the Exchange Amount. The Exchange
Amount is equal to: (i) if the Reference Property Value (as defined herein) is
greater than or equal to $16.66 (the "Threshold Appreciation Price"), 84.03% of
each type of Reference Property, (ii) if the Reference Property Value is less
than the Threshold Appreciation Price but greater than $14.00 (the "Initial
Price"), a percentage of each type of Reference Property, allocated as
proportionately as practicable, so that the aggregate value thereof is equal to
the Initial Price and (iii) if the Reference Property Value is less than or
equal to the Initial Price, 100% of each type of Reference Property. The term
"Reference Property" means initially one share of Nextel Common Stock and shall
be subject to adjustment from time to time prior to the Business Day (as defined
herein) immediately preceding the Exchange Date to reflect the addition or
substitution of any cash, securities and/or other property resulting from the
application of the adjustment provisions described herein. As more fully
described under "Investment Objective and Policies -- The Contract -- Reference
Property Adjustments," upon application of such adjustment provisions, in the
future the Reference Property may include, in addition to or in lieu of Nextel
Common Stock, other securities (including rights or warrants) of the Company,
securities of another issuer, cash or other property. Holders otherwise entitled
to receive fractional units or interests of any type of Reference Property in
respect of their aggregate holdings of STRYPES will receive cash in lieu
thereof. See "Investment Objective and Policies -- General" and "-- Fractional
Interests."
Pursuant to the terms of the Contract, the Contracting Stockholders are
obligated to deliver to the Trust on the Business Day immediately preceding the
Exchange Date the Reference Property required by the Trust in order to exchange
all of the STRYPES (including any STRYPES issued pursuant to the over-allotment
option granted by the Trust to the Underwriters and STRYPES issued in connection
with the formation of the Trust) on the Exchange Date in accordance with its
investment objective. To the extent permitted by applicable law, the obligation
of each Contracting Stockholder to deliver Reference Property under the Contract
may be cash settled, at the option of such Contracting Stockholder, in whole or
in part, by delivering to the Trust on the Business Day immediately preceding
the Exchange Date, in lieu of the portion of the Reference Property otherwise
deliverable in respect of which an election to exercise the cash settlement
option is made, cash in an amount equal to the value of such Reference Property
on the Business Day immediately preceding the Exchange Date (the "Cash
Settlement Option"). The Trust has made application to the Commodity Futures
Trading Commission (the "CFTC") for confirmation that the Cash Settlement Option
does not contravene any applicable provisions of the Commodity Exchange Act.
Under the Contract, the Cash Settlement Option will not be exercisable by any
Contracting Stockholder unless and until the Trust receives such confirmation or
another comparable regulatory response or legislative action from the CFTC. In
the event that all or any of the Contracting Stockholders elect to exercise the
Cash Settlement Option, Holders will receive cash, or a combination of cash and
Reference Property, on the Exchange Date. See "Investment Objective and
Policies -- The Contract."
Holders of the STRYPES will receive distributions at the rate per STRYPES
of $1.015 per annum, or $.25375 per quarter, payable quarterly on each February
15, May 15, August 15 and November 15 (or, if any such date is not a Business
Day, on the next succeeding Business Day) to Holders of record as of each
February 1, May 1, August 1 and November 1, respectively. The first distribution
(in respect of the period from March 10, 1997 until May 14, 1997) will be
payable on May 15, 1997 to Holders of record as of May 1, 1997, and will equal
$.1833 per STRYPES. See "Investment Objective and Policies -- Trust Assets."
On the Exchange Date, each outstanding STRYPES will be exchanged for
between 84.03% and 100% of each type of Reference Property (or, in the event
that all or any of the Contracting Stockholders elect to exercise the Cash
Settlement Option, cash, or a combination of cash and Reference Property, with
an equal value), depending on the Reference Property Value. AS DESCRIBED HEREIN,
THE REFERENCE PROPERTY VALUE WILL REPRESENT A DETERMINATION OF THE VALUE OF THE
REFERENCE PROPERTY IMMEDIATELY PRIOR TO THE EXCHANGE DATE. ACCORDINGLY, THERE
CAN BE NO ASSURANCE THAT THE AMOUNT RECEIVABLE BY HOLDERS OF THE STRYPES ON THE
EXCHANGE DATE WILL BE EQUAL TO OR GREATER THAN THE ISSUE PRICE OF THE STRYPES.
IF THE REFERENCE PROPERTY VALUE IS LESS THAN THE INITIAL PRICE, SUCH AMOUNT
RECEIVABLE ON THE EXCHANGE DATE WILL BE LESS THAN THE ISSUE PRICE PAID FOR THE
STRYPES, IN WHICH CASE AN INVESTMENT IN STRYPES WILL RESULT IN A LOSS. In the
event of
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<PAGE> 5
a consolidation or merger of the Company or any successor thereto into another
entity, or the liquidation of the Company or any such successor, or certain
related events, or upon the occurrence of certain defaults by any Contracting
Stockholder under the Contract or the collateral arrangements described herein,
the Contract would be accelerated, the Trust's assets (other than assets
received pursuant to the Contract) would be liquidated, the net assets of the
Trust would be distributed pro rata to the Holders of the STRYPES and the term
of the Trust would expire. See "Investment Objective and Policies -- The
Contract -- Reorganization Events Causing a Dissolution of the Trust" and
"-- Collateral Arrangements; Acceleration."
TRUST ASSETS
The Trust's assets will consist of: (i) a series of zero-coupon U.S.
Treasury Securities with face amounts and maturities corresponding to the
amounts and payment dates of the distributions payable with respect to the
STRYPES, comprising approximately 21.5% of the initial assets of the Trust, and
(ii) the Contract with the Contracting Stockholders relating to the Reference
Property, comprising approximately 78.5% of the initial assets of the Trust.
Pursuant to the terms of the Contract, the Contracting Stockholders are
obligated to deliver to the Trust on the Business Day immediately preceding the
Exchange Date an aggregate number or amount of each type of Reference Property
equal to the product of the Exchange Amount and the aggregate number of STRYPES
then outstanding, subject to the Cash Settlement Option of each Contracting
Stockholder. The purchase price under the Contract is equal to $76,420,649 in
the aggregate (assuming the Underwriters' over-allotment option is not
exercised) and is payable to the Contracting Stockholders by the Trust on or
about March 10, 1997. No other consideration is payable by the Trust to the
Contracting Stockholders in connection with its acquisition of the Contract or
the performance of the Contract by the Contracting Stockholders. See "Investment
Objective and Policies -- The Contract."
The obligations of each Contracting Stockholder under the Contract
initially will be secured by a pledge of the maximum number of shares of Nextel
Common Stock deliverable by such Contracting Stockholder pursuant the Contract
or, at the election of such Contracting Stockholder, by substitute collateral
consisting of U.S. Government obligations. See "Investment Objective and
Policies -- The Contract -- Collateral Arrangements; Acceleration."
RELATIONSHIP TO NEXTEL COMMON STOCK
Holders of the STRYPES will receive distributions at the rate of 7.25% of
the issue price per annum. The Company has not paid any dividends on the Nextel
Common Stock, and has stated that it does not plan to pay dividends on the
Nextel Common Stock for the foreseeable future. Any future determination as to
the payment of dividends will be at the discretion of the Company's Board of
Directors and will depend upon the Company's operating results, financial
condition and capital requirements, contractual restrictions, general business
conditions and such other factors as the Company's Board of Directors deems
relevant. Holders of STRYPES will not be entitled to receive any future
dividends on the Nextel Common Stock unless and until such time, if any, as the
Trust shall have delivered Nextel Common Stock in exchange for STRYPES on the
Exchange Date or upon earlier dissolution of the Trust, and unless the
applicable record date for determining stockholders entitled to receive such
dividends occurs after such delivery. See "Risk Factors -- No Stockholder
Rights."
The opportunity for equity appreciation afforded by an investment in the
STRYPES is less than that afforded by a direct investment in the Nextel Common
Stock because the amount receivable by a Holder of a STRYPES upon exchange on
the Exchange Date will only exceed the issue price of such STRYPES if the
Reference Property Value exceeds the Threshold Appreciation Price (which
represents an appreciation of 19% over the Initial Price). Moreover, each
STRYPES will entitle the Holder to receive on the Exchange Date only 84.03% (the
percentage equal to the Initial Price divided by the Threshold Appreciation
Price) of any appreciation of the value of Reference Property above the
Threshold Appreciation Price. Holders of STRYPES will realize the entire decline
in value if the Reference Property Value is less than the Initial Price. See
"Risk Factors -- Limitations on Opportunity for Equity Appreciation; Potential
Losses."
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<PAGE> 6
DILUTION
The percentage of each type of Reference Property (or the amount of cash or
combination of cash and Reference Property) that Holders of STRYPES are entitled
to receive upon exchange on the Exchange Date will not be adjusted for certain
events, such as offerings of Nextel Common Stock by the Company for cash or in
connection with acquisitions. The Company is not restricted from issuing
additional shares of Nextel Common Stock during the term of the Trust and has no
obligation to consider the interests of Holders of STRYPES for any reason.
Additional issuances of shares of Nextel Common Stock may materially and
adversely affect the price of Nextel Common Stock and, because of the
relationship of the percentage of each type of Reference Property (or the amount
of cash or combination of cash and Reference Property) to be received on the
Exchange Date to the price of the Nextel Common Stock, such other events may
adversely affect the trading price of the STRYPES. See "Risk
Factors -- Reference Property Adjustments."
TERM OF THE TRUST
The Trust will dissolve on or shortly after the Exchange Date, except if
dissolved earlier under certain limited circumstances. Promptly after the
Exchange Date, the Reference Property and/or cash to be exchanged for the
STRYPES and any other remaining Trust assets, net of any remaining Trust
expenses, if any, will be distributed pro rata to Holders. In the event that the
Company or any successor thereto is the subject of a Reorganization Event (as
defined below) or certain defaults shall have occurred with respect to any
Contracting Stockholder under the Contract or the collateral arrangements
described herein, the Contract would accelerate, the Trust's assets (other than
assets received pursuant to the Contract) would be liquidated, the net assets of
the Trust would be distributed pro rata to the Holders and the term of the Trust
would expire. See "Investment Objective and Policies -- The Contract" and
"-- Trust Dissolution," and "Risk Factors -- Limited Term."
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The Trust will be taxable as a grantor trust for United States Federal
income tax purposes. Accordingly, each Holder will be treated for United States
Federal income tax purposes as the owner of its pro rata portion of the U.S.
Treasury Securities and the Contract, and income received (including original
issue discount treated as received) by the Trust will generally be treated as
income of the Holders. See "Certain United States Federal Income Tax
Considerations."
The U.S. Treasury Securities held by the Trust will be treated for United
States Federal income tax purposes as having "original issue discount" which
will accrue over the term of the U.S. Treasury Securities. It is currently
anticipated that each quarterly cash distribution to the Holders will be treated
as a tax-free return of the Holders' costs of the U.S. Treasury Securities and
any previously included original issue discount, and therefore will not be
considered current income to Holders upon receipt thereof for United States
Federal income tax purposes. However, a Holder (whether on the cash or accrual
method of tax accounting) must recognize currently as income original issue
discount on the U.S. Treasury Securities as it accrues. See "Certain United
States Federal Income Tax Considerations."
Under existing law, a Holder should not recognize income, gain or loss upon
the Trust's entry into the Contract or over the term of the Contract. In
general, the delivery of Reference Property pursuant to the Contract will not be
taxable to the Holders. A Holder will have taxable gain or loss upon receipt of
cash, if any, upon dissolution of the Trust or to the extent that all or any of
the Contracting Stockholders elect to exercise the Cash Settlement Option and
satisfy their obligations under the Contract in whole or in part with cash. Each
Holder's initial tax basis in any Reference Property received from the Trust on
the Exchange Date or upon earlier dissolution of the Trust will be equal to its
basis in its pro rata portion of the Contract less the portion of such basis
allocable to any fractional shares of Reference Property for which cash is
received. See "Certain United States Federal Income Tax Considerations."
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<PAGE> 7
MANAGEMENT ARRANGEMENTS
The Trust will be internally managed and will not have an investment
adviser. The Trust's portfolio will not be actively managed. The administration
of the Trust will be overseen by the Trustees. The day-to-day administration of
the Trust will be carried out by The Bank of New York (or its successor) as
trust administrator (the "Administrator"). The Bank of New York (or its
successor) will also act as custodian for the Trust's assets (the "Custodian")
and as paying agent, registrar and transfer agent (the "Paying Agent") with
respect to the STRYPES. Except as aforesaid, and except for its role as
collateral agent under the Trust's Security and Pledge Agreement (see
"Investment Objective and Policies -- The Contract -- Collateral Arrangements;
Acceleration"), The Bank of New York has no other affiliation with, and is not
engaged in any other transaction with, the Trust. For their services, the
Contracting Stockholders will pay each of the Administrator, the Custodian and
the Paying Agent at the closing of the Offering a one-time, up-front amount in
respect of its fee. See "Management Arrangements."
RISK FACTORS
The Trust has adopted a fundamental policy that the Contract may not be
disposed of during the term of the Trust and that, unless the Trust dissolves
prior to the Exchange Date due to the occurrence of a "Reorganization Event"
with respect to the Company or any successor thereto or in the event of a
"Default" by any Contracting Stockholder, the U.S. Treasury Securities may not
be disposed of prior to their respective maturities. The Trust will continue to
hold the Contract despite any significant decline in the value of the Reference
Property, including the Nextel Common Stock, or adverse changes in the financial
condition of the issuer of any Reference Security (as defined herein), including
the Company.
Although the STRYPES will provide investors with a current distribution
yield (the Company has not paid any dividends on the Nextel Common Stock), the
opportunity for equity appreciation afforded by an investment in the STRYPES is
less than that afforded by a direct investment in the Nextel Common Stock. The
value of the Reference Property receivable by a Holder of a STRYPES upon
exchange on the Exchange Date will only exceed the issue price of such STRYPES
if the Reference Property Value exceeds the Threshold Appreciation Price, which
represents an appreciation of 19% over the Initial Price. Moreover, because each
STRYPES will entitle the Holder to receive only 84.03% of each type of Reference
Property if the Reference Property Value exceeds the Threshold Appreciation
Price, Holders of the STRYPES will be entitled to receive upon exchange only
84.03% of any appreciation of the value of the Reference Property above the
Threshold Appreciation Price. AS DESCRIBED HEREIN, THE REFERENCE PROPERTY VALUE
WILL REPRESENT A DETERMINATION OF THE VALUE OF THE REFERENCE PROPERTY
IMMEDIATELY PRIOR TO THE EXCHANGE DATE. ACCORDINGLY, THERE CAN BE NO ASSURANCE
THAT THE AMOUNT RECEIVABLE BY HOLDERS OF THE STRYPES ON THE EXCHANGE DATE WILL
BE EQUAL TO OR GREATER THAN THE ISSUE PRICE OF THE STRYPES. IF THE REFERENCE
PROPERTY VALUE IS LESS THAN THE INITIAL PRICE, SUCH AMOUNT RECEIVABLE ON THE
EXCHANGE DATE WILL BE LESS THAN THE ISSUE PRICE PAID FOR THE STRYPES, IN WHICH
CASE AN INVESTMENT IN STRYPES WILL RESULT IN A LOSS.
The Trust is classified as a "non-diversified" investment company under the
Investment Company Act. Consequently, the Trust is not limited by the Investment
Company Act in the proportion of its assets that may be invested in the
securities of a single issuer. Since the only securities held by the Trust will
be the U.S. Treasury Securities and the Contract, the Trust may be subject to
greater risk than would be the case for an investment company with more
diversified investments.
The trading prices of the STRYPES in the secondary market will be directly
affected by the trading prices of the Nextel Common Stock in the secondary
market. It is impossible to predict whether the price of Nextel Common Stock
will rise or fall. Trading prices of Nextel Common Stock will be influenced by
the Company's operating results and prospects and by economic, financial and
other factors and market conditions.
Holders of STRYPES will not be entitled to any rights with respect to the
Nextel Common Stock (including, without limitation, voting rights and rights to
receive any dividends or other distributions in respect thereof) unless and
until such time, if any, as the Trust shall have delivered shares of Nextel
Common Stock
7
<PAGE> 8
in exchange for STRYPES on the Exchange Date or upon earlier dissolution of the
Trust, and unless the applicable record date, if any, for the exercise of such
rights occurs after such delivery.
A bankruptcy of any of the Contracting Stockholders could adversely affect
the timing of exchange or, as a result, the amount received by the Holders of
the STRYPES. See "Risk Factors -- Risk Relating to Bankruptcy of a Contracting
Stockholder."
Holders will experience a taxable event upon receipt of cash, if any, upon
dissolution of the Trust or to the extent that all or any of the Contracting
Stockholders elect to exercise the Cash Settlement Option and satisfy their
obligations under the Contract in whole or in part with cash. Because of an
absence of authority as to the proper character of any gain or loss resulting
from such a taxable event, the ultimate tax consequences to Holders as a result
of all or any of the Contracting Stockholders electing to exercise the Cash
Settlement Option is uncertain. See "Risk Factors."
LISTING
The STRYPES have been approved for listing on the AMEX, subject to official
notice of issuance.
FEE TABLE
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load (as a percentage of offering price).................. 3%(a)
Automatic Dividend Reinvestment Plan Fees............................... Not Applicable
ANNUAL EXPENSES (as a percentage of net assets)
Management Fees(b)...................................................... 0%
Other Expenses(c)....................................................... 0%
-------------
TOTAL ANNUAL EXPENSES(C)........................................ 0%
=============
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS
- ---------------------------------------------------------------------- ---------- ----------
<S> <C> <C>
An investor would pay the following expenses on a $1,000 investment,
including the maximum sales load of $30 and assuming (1) no annual
expenses and (2) a 5% annual return throughout the periods: $ 30 $ 30
</TABLE>
- ---------------
(a) See the cover page of this Prospectus and "Underwriting."
(b) See "Management Arrangements." The Trust will be internally managed;
consequently there is no separate investment advisory fee paid by the Trust.
The Bank of New York will act as the administrator of the Trust.
(c) The organization costs of the Trust in the amount of $10,000, the costs
associated with the initial registration and offering of the STRYPES
estimated to be approximately $350,000, and approximately $370,000 in
respect of anticipated ongoing expenses over the term of the Trust will be
paid by the Contracting Stockholders. Any unanticipated expenses of the
Trust will be paid by Merrill Lynch & Co., Inc., which will be reimbursed by
the Contracting Stockholders. See "Management Arrangements -- Estimated
Expenses." Absent such arrangements, the Trust's "Other Expenses" and "Total
Annual Expenses" would be approximately 0.127% of the Trust's net assets.
The foregoing Fee Table is intended to assist investors in understanding
the costs and expenses that a shareholder in the Trust will bear directly or
indirectly. The Example set forth above assumes reinvestment of all dividends
and distributions and utilizes a 5% annual rate of return as mandated by
Securities and Exchange Commission regulations. THE EXAMPLE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF FUTURE EXPENSES OR ANNUAL RATES OF RETURN, AND
ACTUAL EXPENSES OR ANNUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE ASSUMED
FOR PURPOSES OF THE EXAMPLE.
8
<PAGE> 9
THE TRUST
Nextel STRYPES Trust is a newly created Delaware business trust and will be
registered as a closed-end management investment company under the Investment
Company Act. The Trust was formed on October 25, 1995 pursuant to a Trust
Agreement dated as of such date (as amended and restated as of February 27,
1997, the "Declaration of Trust"). The term of the Trust will expire on or
shortly after May 15, 2000, except that the Trust may be dissolved prior to such
date under certain limited circumstances. The Trust will be treated as a grantor
trust for United States Federal income tax purposes. The Trust's principal
office is located at 850 Library Avenue, Suite 204, Newark, Delaware 19715 and
its telephone number is (302) 738-6680.
USE OF PROCEEDS
The net proceeds of the Offering will be approximately $97,349,411 (or
approximately $111,854,807, if the Underwriters' over-allotment option is
exercised in full), after payment of the sales load. At the time of the closing
of the Offering, or shortly thereafter, the net proceeds of the Offering will be
used to purchase a fixed portfolio comprised of a series of zero-coupon U.S.
Treasury Securities with face amounts and maturities corresponding to the
amounts and payment dates of the distributions payable with respect to the
STRYPES and to pay the purchase price under the Contract to the Contracting
Stockholders.
INVESTMENT OBJECTIVE AND POLICIES
Unless the context otherwise requires, the following discussion assumes
that on the Exchange Date the Reference Property consists only of shares of
Nextel Common Stock.
GENERAL
The Trust will purchase and hold (i) a series of zero-coupon U.S. Treasury
Securities maturing on a quarterly basis through the Exchange Date and (ii) the
Contract with the Contracting Stockholders relating to the Reference Property.
The Trust's investment objective is to distribute to Holders on a quarterly
basis $.25375 per STRYPES (which amount equals the pro rata portion of the fixed
quarterly distributions from the proceeds of the maturing U.S. Treasury
Securities held by the Trust) and, on the Exchange Date, a percentage of the
number or amount of each type of Reference Security and other property
constituting part of the Reference Property (or, in certain circumstances, cash,
or a combination of cash, Reference Securities and other property, with an equal
value) per STRYPES equal to the Exchange Amount. The Exchange Amount is equal
to: (i) if the Reference Property Value is greater than or equal to the
Threshold Appreciation Price, 84.03% of the number or amount of each type of
Reference Security and other property constituting part of the Reference
Property, (ii) if the Reference Property Value is less than the Threshold
Appreciation Price but greater than the Initial Price, a percentage of the
number or amount of each type of Reference Security and other property
constituting part of the Reference Property, allocated as proportionately as
practicable, so that the aggregate value thereof is equal to the Initial Price
and (iii) if the Reference Property Value is less than or equal to the Initial
Price, 100% of the number or amount of each type of Reference Security and other
property constituting part of the Reference Property. THERE CAN BE NO ASSURANCE
THAT THE VALUE OF THE REFERENCE PROPERTY RECEIVABLE BY HOLDERS OF THE STRYPES ON
THE EXCHANGE DATE WILL BE EQUAL TO OR GREATER THAN THE ISSUE PRICE OF THE
STRYPES. IF THE REFERENCE PROPERTY VALUE IS LESS THAN THE INITIAL PRICE, THE
VALUE OF THE REFERENCE PROPERTY RECEIVABLE ON THE EXCHANGE DATE WILL BE LESS
THAN THE ISSUE PRICE PAID FOR THE STRYPES, IN WHICH CASE AN INVESTMENT IN
STRYPES WILL RESULT IN A LOSS. Holders otherwise entitled to receive fractional
units or interests of any Reference Security or other property constituting part
of the Reference Property in respect of their aggregate holdings of STRYPES will
receive cash in lieu thereof. See "-- Fractional Interests."
The term "Reference Property" initially means one share of Nextel Common
Stock and shall be subject to adjustment from time to time prior to the Business
Day immediately preceding the Exchange Date to reflect the addition or
substitution of any cash, securities and/or other property resulting from the
application of the adjustment provisions described below under "-- The
Contract -- Reference Property Adjustments." As more fully described below, upon
application of such adjustment provisions, in the future the Reference Property
may include, in addition to or in lieu of Nextel Common Stock, other securities
(including rights or warrants) of the Company, securities of another issuer,
cash or other property. The term "Reference Security"
9
<PAGE> 10
means, at any time, any security (as defined in Section 2(1) of the Securities
Act of 1933, as amended (the "Securities Act")) then constituting part of the
Reference Property. The term "Reference Property Value" means, subject to the
adjustment provisions described below, the sum, determined as of 10:00 A.M. (New
York City time) on the second Business Day preceding the Exchange Date, of (a)
for any portion of the Reference Property consisting of cash, the amount of such
cash, (b) for any portion of the Reference Property consisting of property other
than cash or Reference Securities, the fair market value of such property (as
determined by a nationally recognized independent investment banking firm
retained for this purpose by the Administrator) as of 10:00 A.M. (New York City
time) on the third Business Day preceding the Exchange Date, and (c) for any
portion of the Reference Property consisting of a Reference Security, an amount
equal to the average Closing Price per unit of such Reference Security on the 20
Trading Days immediately prior to, but not including, the second Trading Day
preceding the Exchange Date multiplied by the number of units of such Reference
Security constituting part of the Reference Property. The "Closing Price" of any
Reference Security on any date of determination means the closing sale price
(or, if no closing price is reported, the last reported sale price) of such
Reference Security on NASDAQ on such date or, if such Reference Security is not
listed for trading on NASDAQ on any such date, as reported in the composite
transactions for the principal United States securities exchange on which such
Reference Security is so listed, or, if such Reference Security is not listed on
a United States national or regional securities exchange, as reported by the
National Association of Securities Dealers, Inc. Automated Quotation System, or,
if such price for such Reference Security is not so reported, the last quoted
bid price for such Reference Security in the over-the-counter market as reported
by the National Quotation Bureau or similar organization, or, if such bid price
is not available, the market value of such Reference Security on such date as
determined by a nationally recognized independent investment banking firm
retained for this purpose by the Administrator. A "Trading Day" is defined as a
day on which the Reference Security the Closing Price of which is being
determined (A) is not suspended from trading on any national or regional
securities exchange or association or over-the-counter market at the close of
business and (B) has traded at least once on the national or regional securities
exchange or association or over-the-counter market that is the primary market
for the trading of such Reference Security. The term "Business Day" means any
day that is not a Saturday, a Sunday or a day on which the New York Stock
Exchange, NASDAQ, or banking institutions or trust companies in The City of New
York are authorized or obligated by law or executive order to close.
Pursuant to the terms of the Contract, the Contracting Stockholders are
obligated to deliver to the Trust on the Business Day immediately preceding the
Exchange Date the aggregate number or amount of each type of Reference Security
and other property constituting part of the Reference Property required by the
Trust in order to exchange all of the STRYPES (including any STRYPES issued
pursuant to the over-allotment option granted by the Trust to the Underwriters
and STRYPES issued in connection with the formation of the Trust) on the
Exchange Date in accordance with its investment objective. To the extent
permitted by applicable law, the obligation of each Contracting Stockholder to
deliver Reference Property under the Contract may be cash settled, at the option
of such Contracting Stockholder, in whole or in part, by delivering to the Trust
on the Business Day immediately preceding the Exchange Date, in lieu of the
portion of the number or amount of each type of Reference Security and other
property otherwise deliverable in respect of which an election to exercise the
cash settlement option is made, cash in an amount equal to the value of such
Reference Securities and other property on the Business Day immediately
preceding the Exchange Date (the "Cash Settlement Option"). The Trust has made
application to the CFTC for confirmation that the Cash Settlement Option does
not contravene any applicable provisions of the Commodity Exchange Act. Under
the Contract, the Cash Settlement Option will not be exercisable by any
Contracting Stockholder unless and until the Trust receives such confirmation or
another comparable regulatory response or legislative action from the CFTC. In
the event that all or any of the Contracting Stockholders elect to exercise the
Cash Settlement Option, Holders will receive cash, or a combination of cash,
Reference Securities and/or other property, on the Exchange Date. On or prior to
the twenty-sixth Business Day preceding the Exchange Date, the Administrator
will notify The Depository Trust Company (the "Depositary") and publish a notice
in The Wall Street Journal or another daily newspaper of national circulation
stating whether the applicable percentage of the number or amount of each type
of Reference Security and other property constituting part of the Reference
Property or cash, or a combination thereof, will be delivered in exchange for
the STRYPES on
10
<PAGE> 11
the Exchange Date. At the time such notice is published, the Reference Property
Value will not have been determined. If the Contracting Stockholders elect to
deliver Reference Property, Holders will be responsible for the payment of any
and all brokerage costs upon the subsequent sale thereof.
The Trust has adopted a fundamental policy as required by the Declaration
of Trust to invest at least 65% of its portfolio in the Contract. The Contract
will comprise approximately 78.5% of the Trust's initial assets. The Trust has
also adopted a fundamental policy that the Contract may not be disposed of
during the term of the Trust and that, unless the Trust dissolves prior to the
Exchange Date due to the occurrence of a "Reorganization Event" with respect to
the Company or any successor thereto or in the event of a "Default" by any
Contracting Stockholder, the U.S. Treasury Securities may not be disposed of
prior to their respective maturities. The foregoing fundamental policies of the
Trust may not be changed without the vote of 100% in interest of the Holders.
TRUST ASSETS
The Trust's assets primarily will consist of: (i) U.S. Treasury Securities,
and (ii) the Contract. The Trust may also make certain temporary investments.
See "-- Temporary Investments." For illustrative purposes only, the following
table shows the number of shares of Nextel Common Stock that a Holder would
receive for each STRYPES at various Reference Property Values. The table assumes
that there will be no Reference Property adjustments as described below under
"-- The Contract -- Reference Property Adjustments" and, accordingly, that on
the Exchange Date the Reference Property will consist of one share of Nextel
Common Stock. There can be no assurance that the Reference Property Value will
be within the range set forth below. Given the Initial Price of $14.00 and the
Threshold Appreciation Price of $16.66, a Holder would receive on the Exchange
Date the following number of shares of Nextel Common Stock or amount of cash (in
the event that all of the Contracting Stockholders elect to exercise the Cash
Settlement Option and satisfy their obligations under the Contract, in whole,
with cash) per STRYPES:
<TABLE>
<CAPTION>
REFERENCE PROPERTY NUMBER OF SHARES OF
VALUE NEXTEL COMMON STOCK AMOUNT OF CASH
-------------------- ------------------- --------------
<S> <C> <C>
$17.00 0.8403 $ 14.285
16.66 0.8403 14.000
16.00 0.8750 14.000
15.00 0.9333 14.000
14.00 1.0000 14.000
13.00 1.0000 13.000
12.00 1.0000 12.000
</TABLE>
The following table sets forth information regarding the distributions to
be received on the U.S. Treasury Securities, the portion of each year's
distributions that will constitute a return of capital for United States Federal
income tax purposes and the amount of original issue discount accruing, assuming
a yield-to-maturity accrual election, on the U.S. Treasury Securities with
respect to a Holder who acquires its STRYPES at the issue price from an
Underwriter pursuant to the Offering. See "Certain United States Federal Income
Tax Considerations."
<TABLE>
<CAPTION>
ANNUAL
ANNUAL GROSS ANNUAL GROSS INCLUSION OF
DISTRIBUTIONS DISTRIBUTIONS ORIGINAL ISSUE
FROM U.S. FROM U.S. ANNUAL RETURN DISCOUNT IN
TREASURY TREASURY SECURITIES PER OF CAPITAL PER INCOME PER
YEAR SECURITIES STRYPES STRYPES STRYPES
- --------------------------------------- ------------ ----------------------- -------------- --------------
<S> <C> <C> <C> <C>
1997................................... $4,952,060 $0.6908 $ 0.6738 $ 0.0170
1998................................... 7,276,116 1.0150 0.9413 0.0737
1999................................... 7,276,116 1.0150 0.8834 0.1316
2000................................... 3,638,058 0.5075 0.4210 0.0865
</TABLE>
The annual distribution of $1.015 per STRYPES is payable quarterly on each
February 15, May 15, August 15 and November 15, commencing May 15, 1997.
Quarterly distributions on the STRYPES will
11
<PAGE> 12
consist solely of the cash received from the proceeds of the maturing U.S.
Treasury Securities held by the Trust. The Trust will not be entitled to any
future dividends that may be declared on the Nextel Common Stock. See "Dividends
and Distributions."
ENHANCED YIELD; LESS POTENTIAL FOR EQUITY APPRECIATION THAN NEXTEL COMMON STOCK;
NO DEPRECIATION PROTECTION
Although the STRYPES will provide investors with a current distribution
yield (the Company has not paid any dividends on the Nextel Common Stock), the
opportunity for equity appreciation afforded by an investment in the STRYPES is
less than that afforded by a direct investment in the Nextel Common Stock. The
value of the Reference Property receivable by a Holder of a STRYPES on the
Exchange Date will only exceed the issue price of such STRYPES if the Reference
Property Value exceeds the Threshold Appreciation Price, which represents an
appreciation of 19% of the Initial Price. Moreover, because each STRYPES will
entitle the Holder to receive only 84.03% of the number or amount of each type
of Reference Security and other property constituting part of the Reference
Property if the Reference Property Value exceeds the Threshold Appreciation
Price, Holders of the STRYPES will be entitled to receive upon exchange only
84.03% (the percentage equal to the Initial Price divided by the Threshold
Appreciation Price) of any appreciation of the value of the Reference Property
above the Threshold Appreciation Price. Holders of STRYPES will realize the
entire decline in value if the Reference Property Value is less than the Initial
Price.
THE COMPANY
The Company's business consists principally of providing wireless
communications services to its customers utilizing specialized mobile radio
("SMR") frequencies licensed to its subsidiaries by the Federal Communications
Commission. The Company provides SMR wireless communications services in Hawaii
and in nearly all 48 states in the continental United States, including all of
the top 50 metropolitan market areas in the United States. As of December 31,
1996, the Company provided service to approximately 814,200 analog SMR units and
300,300 units utilizing the Company's Digital Mobile networks (as defined
below). The Company has stated that its business plans and efforts are to a
large extent directed toward replacing the remaining traditional analog SMR
systems that it currently operates with advanced mobile communications systems
employing digital technology with a multi-site configuration permitting
frequency reuse ("Digital Mobile networks"). A customer using Nextel's Digital
Mobile network is able to access mobile telephone services and two-way radio
dispatch, paging and in the future is expected to be able to access data
transmission.
The shares of Nextel Common Stock are traded on NASDAQ under the symbol
"NXTL." The following table sets forth, for the periods indicated, the reported
high and low closing sale prices of the shares of Nextel Common Stock on NASDAQ.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995:
QUARTER HIGH LOW
----------------------------------------------------------------- ------- -------
<S> <C> <C>
First............................................................ $15.625 $ 9.375
Second........................................................... 18.000 13.000
Third............................................................ 21.750 14.000
Fourth........................................................... 18.125 13.875
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996:
QUARTER HIGH LOW
----------------------------------------------------------------- ------- -------
<S> <C> <C>
First............................................................ $18.875 $13.500
Second........................................................... 23.375 16.750
Third............................................................ 20.250 14.375
Fourth........................................................... 18.500 12.750
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997:
QUARTER HIGH LOW
----------------------------------------------------------------- ------- -------
<S> <C> <C>
First (through March 4, 1997).................................... $15.750 $13.375
</TABLE>
12
<PAGE> 13
As of January 31, 1997, there were 2,929 holders of record of the Nextel
Common Stock, including Cede & Co., a nominee of the Depositary, which holds
shares of Nextel Common Stock on behalf of an indeterminate number of beneficial
owners. The Company has authority to issue shares of Class B Non-Voting Common
Stock, which are convertible on a share-for-share basis into shares of Nextel
Common Stock. As of January 31, 1997, there was a single stockholder of record
holding all of the 17,830,000 shares of Class B Non-Voting Common Stock.
The Company has not paid any dividends on the Nextel Common Stock. Certain
indentures and other agreements to which the Company is a party presently
prohibit, and are expected to operate so as to continue to prohibit, the Company
from paying dividends. The Company has stated that it does not plan to pay
dividends on the Nextel Common Stock for the foreseeable future. Any future
determination as to the payment of dividends will be at the discretion of the
Company's Board of Directors and will depend upon the Company's operating
results, financial condition and capital requirements, contractual restrictions,
general business conditions and such other factors as the Company's Board of
Directors deems relevant.
Holders of STRYPES will not be entitled to receive any future dividends on
the Nextel Common Stock unless and until such time, if any, as the Trust shall
have delivered Nextel Common Stock in exchange for STRYPES on the Exchange Date
or upon earlier dissolution of the Trust, and unless the applicable record date
for determining stockholders entitled to receive such dividends occurs after
such delivery. See "Risk Factors -- No Stockholder Rights."
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Accordingly, the Company
files reports, proxy and information statements and other information with the
Securities and Exchange Commission (the "Commission"). Copies of such material
can be inspected and copied at the public reference facilities maintained by the
Commission at the address specified under "Additional Information."
THE COMPANY IS NOT AFFILIATED WITH THE TRUST OR WITH ANY CONTRACTING
STOCKHOLDER PRESENTLY, WILL NOT RECEIVE ANY OF THE PROCEEDS FROM THE SALE OF THE
STRYPES AND WILL HAVE NO OBLIGATIONS WITH RESPECT TO THE STRYPES. THIS
PROSPECTUS RELATES ONLY TO THE STRYPES OFFERED HEREBY AND DOES NOT RELATE TO THE
COMPANY OR THE NEXTEL COMMON STOCK. THE COMPANY HAS FILED A REGISTRATION
STATEMENT ON FORM S-3 WITH THE COMMISSION WITH RESPECT TO THE SHARES OF NEXTEL
COMMON STOCK THAT MAY BE RECEIVED BY A HOLDER OF STRYPES ON THE EXCHANGE DATE OR
UPON EARLIER DISSOLUTION OF THE TRUST. THE PROSPECTUS OF THE COMPANY (THE
"NEXTEL PROSPECTUS") CONSTITUTING A PART OF SUCH REGISTRATION STATEMENT INCLUDES
INFORMATION RELATING TO THE COMPANY AND THE NEXTEL COMMON STOCK, INCLUDING
CERTAIN RISK FACTORS RELEVANT TO AN INVESTMENT IN NEXTEL COMMON STOCK. THE
NEXTEL PROSPECTUS IS BEING ATTACHED HERETO AND DELIVERED TO PROSPECTIVE
PURCHASERS OF STRYPES TOGETHER WITH THIS PROSPECTUS FOR CONVENIENCE OF REFERENCE
ONLY. THE NEXTEL PROSPECTUS DOES NOT CONSTITUTE A PART OF THIS PROSPECTUS, NOR
IS IT INCORPORATED BY REFERENCE HEREIN.
THE CONTRACT
General. Pursuant to the terms of the Contract, the Contracting
Stockholders are obligated to deliver to the Trust on the Business Day
immediately preceding the Exchange Date an aggregate number or amount of each
type of Reference Security and other property constituting part of the Reference
Property equal to the product of the Exchange Amount and the aggregate number of
STRYPES then outstanding.
To the extent permitted by applicable law, the obligation of each
Contracting Stockholder to deliver Reference Property under the Contract may be
cash settled, at the option of such Contracting Stockholder, in whole or in
part, by delivering to the Trust on the Business Day immediately preceding the
Exchange Date, in lieu of the portion of the aggregate number or amount of each
type of Reference Security and other property otherwise deliverable in respect
of which an election to exercise the Cash Settlement Option is made, cash in
13
<PAGE> 14
an amount (calculated to the nearest 1/100th of a dollar or, if there is not a
nearest 1/100th of a dollar, then to the next higher 1/100th of a dollar) equal
to the sum, determined as of 10:00 A.M. (New York City time) on the Business Day
immediately preceding the Exchange Date, of (a) for any portion of such
Reference Property consisting of cash in respect of which an election to
exercise the Cash Settlement Option is made, the amount of such cash, without
interest thereon, (b) for any portion of such Reference Property consisting of
property other than cash or Reference Securities in respect of which an election
to exercise the Cash Settlement Option is made, the fair market value (as
determined by a nationally recognized independent investment banking firm
retained for this purpose by the Administrator) as of the third Business Day
preceding the Exchange Date of such property, and (c) for any portion of such
Reference Property consisting of a Reference Security (except as described under
"Reference Property Adjustments" below) in respect of which an election to
exercise the Cash Settlement Option is made, an amount equal to the average
Closing Price per unit of such Reference Security on the 20 Trading Days
immediately prior to, but not including, the second Trading Day preceding the
Exchange Date multiplied by the number of units of such Reference Security
constituting part of the Reference Property.
Reference Property Adjustments. The Reference Property is subject to
adjustment if an issuer of a Reference Security shall: (i) subdivide or split
the outstanding units of such Reference Security into a greater number of units;
(ii) combine the outstanding units of such Reference Security into a smaller
number of units; (iii) issue by reclassification of units of such Reference
Security any units of another security of such issuer; (iv) issue rights or
warrants to all holders of such Reference Security entitling them, for a period
expiring prior to the fifteenth calendar day following the Exchange Date, to
subscribe for or purchase any of its securities or other property (other than
rights to purchase units of such Reference Security pursuant to a plan for the
reinvestment of dividends or interest); or (v) pay a dividend or make a
distribution to all holders of such Reference Security of cash, securities or
other property (excluding any cash dividend on any Reference Security consisting
of capital stock that does not constitute an Extraordinary Cash Dividend (as
defined below), excluding any payment of interest on any Reference Security
consisting of an evidence of indebtedness and excluding any dividend or
distribution referred to in clause (i), (ii), (iii) or (iv) above) or issue to
all holders of such Reference Security rights or warrants to subscribe for or
purchase any of its securities or other property (other than those referred to
in clause (iv) above) (any of the foregoing cash, securities or other property
or rights or warrants are referred to as the "Distributed Assets") (any such
event described in clause (i), (ii), (iii), (iv) or (v), a "Dilution Event").
In the case of the Dilution Events referred to in clauses (i), (ii) and
(iii) above, the Reference Property shall be adjusted to include the number of
units of such Reference Security and/or security of such issuer which a holder
of units of such Reference Security would have owned or been entitled to receive
immediately following any such event had such holder held, immediately prior to
such event, the number of units of such Reference Security constituting part of
the Reference Property immediately prior to such event. Each such adjustment
shall become effective immediately after the effective date for such
subdivision, split, combination or reclassification, as the case may be. Each
such adjustment shall be made successively.
In the case of the Dilution Event referred to in clause (iv) above, the
Reference Property shall be adjusted to include an amount in cash equal to the
fair market value (determined as described below), as of the fifth Business Day
(except as provided below) following the date on which such rights or warrants
are received by securityholders entitled thereto (the "Receipt Date"), of each
such right or warrant multiplied by the product of (A) the number of such rights
or warrants issued for each unit of such Reference Security and (B) the number
of units of such Reference Security constituting part of the Reference Property
on the date of issuance of such rights or warrants, immediately prior to such
issuance, without interest thereon. For purposes of the foregoing, the fair
market value of each such right or warrant shall be the quotient of (x) the
highest net bid, as of approximately 10:00 A.M., New York City time, on the
fifth Business Day following the Receipt Date for settlement three Business Days
later, by a recognized securities dealer in The City of New York selected by or
on behalf of the Administrator (from three (or such fewer number of dealers as
may be providing such bids) such recognized dealers selected by or on behalf of
the Administrator), for the purchase by such quoting dealer of the number of
rights or warrants (the "Aggregate Number") that a holder of such Reference
Security would receive if such holder held, as of the record date for
determination of stockholders
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<PAGE> 15
entitled to receive such rights or warrants, a number of units of such Reference
Security equal to the product of (1) the aggregate number of outstanding STRYPES
as of such record date and (2) the number of units of such Reference Security
constituting part of the Reference Property, divided by (y) the Aggregate
Number. Each such adjustment shall become effective on the fifth Business Day
following the Receipt Date of such rights or warrants. If for any reason the
Administrator is unable to obtain the required bid on the fifth Business Day
following the Receipt Date, it shall attempt to obtain such bid at successive
intervals of three months thereafter and on the third Business Day prior to the
Exchange Date until it is able to obtain the required bid, or, if earlier, until
the third Business Day prior to the Exchange Date. From the date of issuance of
such rights or warrants until the required bid is obtained or those efforts end
on that Business Day, the Reference Property shall include the number of such
rights or warrants issued for each unit of such Reference Security multiplied by
the number of units of such Reference Security constituting part of the
Reference Property on the date of issuance of such rights or warrants,
immediately prior to such issuance, and such rights or warrants constituting
part of the Reference Property shall be deemed for all purposes hereof to have a
fair market value of zero.
In the case of the Dilution Event referred to in clause (v) above, the
Reference Property shall be adjusted to include, from and after such dividend,
distribution or issuance, (x) in respect of that portion, if any, of the
Distributed Assets consisting of cash, the amount of such Distributed Assets
consisting of cash received for each unit of such Reference Security multiplied
by the number of units of such Reference Security constituting part of the
Reference Property on the date of such dividend, distribution or issuance,
immediately prior to such dividend, distribution or issuance, without interest
thereon, plus (y) in respect of that portion, if any, of the Distributed Assets
which are other than cash, the number or amount of each type of Distributed
Assets other than cash received with respect to each unit of such Reference
Security multiplied by the number of units of such Reference Security
constituting part of the Reference Property on the date of such dividend,
distribution or issuance, immediately prior to such dividend, distribution or
issuance.
An "Extraordinary Cash Dividend" means, with respect to any consecutive
12-month period, the amount, if any, by which the aggregate amount of all cash
dividends on any Reference Security consisting of capital stock occurring in
such 12-month period (or, if such Reference Security was not outstanding at the
commencement of such 12-month period, occurring in such shorter period during
which such Reference Security was outstanding) exceeds on a per share basis 10%
of the average of the Closing Prices per share of such Reference Security over
such 12-month period (or such shorter period during which such Reference
Security was outstanding); provided that, for purposes of the foregoing
definition, the amount of cash dividends paid on a per share basis will be
appropriately adjusted to reflect the occurrence during such period of any stock
dividend or distribution of shares of capital stock of the issuer of such
Reference Security or any subdivision, split, combination or reclassification of
shares of such Reference Security.
In the event of (A) any consolidation or merger of an issuer of a Reference
Security with or into another entity (other than a merger or consolidation in
which such issuer is the continuing corporation and in which the Reference
Security outstanding immediately prior to the consolidation or merger is not
exchanged for cash, securities or other property of such issuer or another
entity), (B) any sale, transfer, lease or conveyance to another corporation of
the property of an issuer of a Reference Security as an entirety or
substantially as an entirety, (C) any statutory exchange of securities of an
issuer of a Reference Security with another entity (other than in connection
with a merger or acquisition) or (D) any liquidation, dissolution, winding up or
bankruptcy of an issuer of a Reference Security (excluding any distribution in
such Dilution Event referred to in clause (v) above) (any such event described
in clause (A), (B), (C) or (D), a "Reorganization Event"), the Reference
Property shall be adjusted to include, from and after the effective date for
such Reorganization Event, in lieu of the number of units of such Reference
Security constituting part of the Reference Property immediately prior to the
effective date for such Reorganization Event, the amount or number of any cash,
securities and/or other property owned or received in such Reorganization Event
with respect to each unit of such Reference Security multiplied by the number of
units of such Reference Security constituting part of the Reference Property
immediately prior to the effective date for such Reorganization Event.
The Administrator is required, within ten Business Days following the
occurrence of an event that requires an adjustment to the Reference Property (or
if the Administrator is not aware of such occurrence, as
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<PAGE> 16
soon as practicable after becoming so aware), to provide written notice to the
Holders of the occurrence of such event and a statement in reasonable detail
setting forth the amount or number of each type of Reference Security and other
property then constituting part of the Reference Property.
No adjustments to the Reference Property will be made for certain other
events, such as offerings of Nextel Common Stock by the Company for cash or in
connection with acquisitions. Likewise, no adjustments to the Reference Property
will be made for any sales of Nextel Common Stock by the Contracting
Stockholders.
Reorganization Events Causing a Dissolution of the Trust. Notwithstanding
anything to the contrary contained in the Contract, if any Reorganization Event
with respect to the Company, or any surviving entity or subsequent surviving
entity of the Company (a "Company Successor"), occurs, the Contracting
Stockholders' obligations under the Contract shall be automatically accelerated
and the Contracting Stockholders shall be obligated to deliver to the Trust, on
the tenth Business Day after the effective date for such Reorganization Event
(the "Early Settlement Date"), the aggregate number or amount of each type of
Reference Security and other property constituting part of the Reference
Property that would be required to be delivered on such date under the Contract
if the Exchange Date were redefined to be the Early Settlement Date.
IF A REORGANIZATION EVENT WITH RESPECT TO THE COMPANY OR ANY COMPANY
SUCCESSOR OCCURS, THE TRUST'S ASSETS (OTHER THAN ASSETS RECEIVED PURSUANT TO THE
CONTRACT) WILL BE LIQUIDATED, THE NET ASSETS OF THE TRUST WILL BE DISTRIBUTED
PRO RATA TO THE HOLDERS AND THE TERM OF THE TRUST WILL EXPIRE. In such event,
the U.S. Treasury Securities will be sold by the Trust, and the proceeds
therefrom will be distributed along with Reference Property received under the
Contract on the Early Settlement Date after providing for any expenses of the
Trust.
Collateral Arrangements; Acceleration. Pursuant to a Security and Pledge
Agreement among the Contracting Stockholders, the Trust and The Bank of New
York, as collateral agent (the "Collateral Agent"), each Contracting
Stockholder's obligations under the Contract will be secured by a security
interest in the maximum number or amount of each type of Reference Security and
other property constituting part of the Reference Property (initially shares of
Nextel Common Stock) deliverable by such Contracting Stockholder under the
Contract. Unless a Contracting Stockholder is in default in its obligations
under the Security and Pledge Agreement, such Contracting Stockholder will be
permitted to substitute for the pledged Reference Property collateral consisting
of short-term, direct obligations of the U.S. Government. Any U.S. Government
obligations pledged as substitute collateral will be required to have an
aggregate market value at the time of substitution and at daily mark-to-market
valuations thereafter of not less than 150% (or, from and after any
Insufficiency Determination that shall not be cured by 4:00 P.M. (New York City
time) on the third Business Day following the day on which notice thereof is
given, as described below, 200%) of the aggregate value of the number or amount
of each type of Reference Security and other property constituting part of the
Reference Property for which such obligations are being substituted at the time
of each valuation. The Collateral Agent will promptly pay over to each
Contracting Stockholder any dividends, interest, principal or other payments
received by the Collateral Agent in respect of any collateral pledged by such
Contracting Stockholder, including any substitute collateral, unless the
relevant Contracting Stockholder is in default of its obligations under the
Security and Pledge Agreement, or unless the payment of such amount to the
relevant Contracting Stockholder would cause the collateral to become
insufficient under the Security and Pledge Agreement. Each Contracting
Stockholder shall have the right to vote any pledged units of any Reference
Security for so long as such units are owned by it and pledged under the
Security and Pledge Agreement.
If the Collateral Agent shall determine (an "Insufficiency Determination")
that U.S. Government obligations pledged by any Contracting Stockholder as
substitute collateral shall fail to meet the foregoing requirements at any
valuation, and such failure shall not be cured by 4:00 P.M. (New York City time)
on the third Business Day following the day on which notice of such
determination is given, then, unless a Collateral Event of Default (as defined
below) under the Security and Pledge Agreement shall have occurred and be
continuing, the Collateral Agent shall, if practicable, commence (i) sales of
the collateral pledged by such Contracting Stockholder consisting of U.S.
Government obligations and (ii) purchases, using the proceeds of such sales, of
each type of Reference Security and other property then constituting part of the
Reference
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<PAGE> 17
Property, in such numbers or amounts sufficient to cause the collateral pledged
by such Contracting Stockholder to meet the requirements of the Security and
Pledge Agreement. The Collateral Agent shall discontinue such sales and
purchases if at any time a Collateral Event of Default under the Security and
Pledge Agreement shall have occurred and be continuing. A "Collateral Event of
Default" under the Security and Pledge Agreement shall mean, with respect to any
Contracting Stockholder at any time, (A) if no U.S. Government obligations shall
be pledged as substitute collateral at such time, failure of the collateral
pledged by such Contracting Stockholder to consist of at least the maximum
number or amount of each type of Reference Security and other property
constituting part of the Reference Property deliverable by such Contracting
Stockholder under the Contract; and (B) if any U.S. Government obligations shall
be pledged by such Contracting Stockholder as substitute collateral for
Reference Property at such time, failure of such U.S. Government obligations to
have a market value at such time of at least 105% of the difference between (x)
the aggregate value of the maximum number or amount of each type of Reference
Security and other property constituting part of the Reference Property
deliverable by such Contracting Stockholder under the Contract and (y) the
aggregate value of the number or amount of each type of Reference Security and
other property constituting part of the Reference Property pledged by such
Contracting Stockholder as collateral at such time.
The occurrence of a Collateral Event of Default with respect to any
Contracting Stockholder under the Security and Pledge Agreement or the
bankruptcy or insolvency of any Contracting Stockholder (each such event, a
"Default") will cause an automatic acceleration of the Contracting Stockholders'
obligations under the Contract. In any such event, each Contracting Stockholder
will become obligated to deliver a number or amount of each type of Reference
Security and other property constituting part of the Reference Property,
allocated as proportionately as practicable, having an aggregate value equal to
such Contracting Stockholder's pro rata portion of the "Aggregate Acceleration
Value" of the Contract. The Aggregate Acceleration Value will be based on an
"Acceleration Value" determined by the Administrator on the basis of quotations
from independent dealers. Each quotation will be for an amount that would be
paid to the relevant dealer in consideration of an agreement between the Trust
and such dealer that would have the effect of preserving the Trust's rights to
receive the number or amount of each type of Reference Security and other
property constituting part of the Reference Property under a portion of the
Contract that corresponds to 1,000 of the STRYPES offered hereby. The
Administrator will request quotations from four nationally recognized
independent dealers on or as soon as reasonably practicable following the date
of acceleration. If four quotations are provided, the Acceleration Value will be
the arithmetic mean of the two quotations remaining after disregarding the
highest and the lowest quotations. If two or three quotations are provided, the
Acceleration Value will be the arithmetic mean of such quotations. If one
quotation is provided, the Acceleration Value will be such quotation. The
Aggregate Acceleration Value will be computed by dividing the Acceleration Value
by 1,000 and multiplying the quotient by the aggregate number of STRYPES then
outstanding, except that, if no quotations are provided, the Aggregate
Acceleration Value will be the value of the aggregate number or amount of each
type of Reference Security and other property constituting part of the Reference
Property that would be required to be delivered on such date under the Contract
if the Exchange Date were redefined to be the acceleration date. Upon the
occurrence of a Collateral Event of Default or the bankruptcy or insolvency of
any Contracting Stockholder, the number or amount of each type of Reference
Security and other property constituting part of the Reference Property
deliverable for each STRYPES will be based solely on the Aggregate Acceleration
Value described above for the Contract.
For purposes of the Security and Pledge Agreement, unless otherwise
specifically provided, the value of a number or amount of any type of Reference
Property shall be (a) for any Reference Property consisting of cash, the amount
of such cash at the time of valuation, (b) for any Reference Property consisting
of property other than cash or Reference Securities, the fair market value (as
determined by a nationally recognized independent banking firm retained for this
purpose by the Collateral Agent) as of the time of valuation of such property,
and (c) for any Reference Property consisting of a Reference Security, an amount
equal to the market price of a unit of such Reference Security at the time of
valuation multiplied by the number of units of such Reference Security then
being valued.
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Upon any acceleration, the Collateral Agent will distribute to the Trust,
for distribution pro rata to the Holders, the Aggregate Acceleration Value in
the form of Reference Property then pledged, or cash generated from the
liquidation of the U.S. Government obligations then pledged, or a combination
thereof. In addition, in the event that by the Exchange Date any substitute
collateral has not been replaced by Reference Property sufficient to meet the
obligations of any Contracting Stockholder under the Contract, the Collateral
Agent will distribute to the Trust for distribution pro rata to the Holders the
aggregate value of the Reference Property to be delivered by such Contracting
Stockholder thereunder, in the form of Reference Property then pledged by such
Contracting Stockholder plus cash generated from the liquidation of U.S.
Government obligations then pledged by such Contracting Stockholder. See
"-- Trust Dissolution."
Fractional Interests. No fractional units of any Reference Security will
be delivered if the Contracting Stockholders satisfy their obligations under the
Contract in whole or in part by delivering Reference Property. In lieu of any
fractional unit otherwise deliverable in respect of any Contracting
Stockholder's obligations under the Contract, the Trust shall be entitled to
receive an amount in cash equal to the value of such fractional unit based on
the average Closing Price per unit of such Reference Security on the 20 Trading
Days immediately prior to, but not including, the second Trading Day preceding
the Exchange Date.
To the extent practicable, the Contracting Stockholders will deliver
fractional interests of any Reference Property other than cash or a Reference
Security if the Contracting Stockholders satisfy their obligations under the
Contract in whole or in part by delivering Reference Property. If such delivery
is not practicable, in lieu of delivering any such fractional interest otherwise
deliverable in respect of any Contracting Stockholder's obligations under the
Contract, the Trust shall be entitled to receive an amount in cash equal to the
value of such fractional interest based on the fair market value (as determined
by a nationally recognized independent investment banking firm retained for this
purpose by the Administrator) as of 10:00 A.M. (New York City time) on the third
Business Day preceding the Exchange Date of such Reference Property other than
cash or a Reference Security.
Description of Contracting Stockholders. The Contracting Stockholders are
Cherrywood Holdings, Inc. and Vernon Investors, L.L.C. Specific information
regarding the holdings of Nextel Common Stock by the Contracting Stockholders is
included in the accompanying prospectus of the Company with respect to the
shares of Nextel Common Stock which may be received by a Holder of STRYPES on
the Exchange Date or upon earlier dissolution of the Trust.
Purchase Price. The purchase price under the Contract is equal to
$76,420,649 in the aggregate and is payable to the Contracting Stockholders by
the Trust on or about March 10, 1997. No other consideration is payable by the
Trust to the Contracting Stockholders in connection with its acquisition of the
Contract or the performance of the Contract by the Contracting Stockholders.
The Contract will be valued by the Trust at fair value as determined in
good faith at the direction of the Trustees (if necessary, through consultation
with accountants, bankers and other specialists). See "Net Asset Value."
THE U.S. TREASURY SECURITIES
The Trust will purchase and hold a series of zero-coupon U.S. Treasury
Securities with face amounts and maturities corresponding to the amounts and
payment dates of the distributions payable with respect to the STRYPES. Up to
21.5% of the Trust's total assets may be invested in these U.S. Treasury
Securities. In the event that the Contract is accelerated as described under
"-- Reorganization Events Causing a Disssolution of the Trust" or "-- Collateral
Arrangements; Acceleration," then any such U.S. Treasury Securities then held in
the Trust shall be liquidated by the Administrator and distributed pro rata to
the Holders, together with amounts distributed upon acceleration.
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TEMPORARY INVESTMENTS
For cash management purposes, the Trust may invest the proceeds of the U.S.
Treasury Securities and any other cash held by the Trust in short-term
obligations of the U.S. Government maturing no later than the Business Day
preceding the next following distribution date.
TRUST DISSOLUTION
The Trust will dissolve on or shortly after the Exchange Date, except if
dissolved earlier under certain limited circumstances. Although the Trust has
adopted a fundamental policy that it will not dispose of the Contract prior to
the Exchange Date, under certain circumstances the Contract may terminate prior
to the Exchange Date. In the event that the Company or any Company Successor is
the subject of a Reorganization Event or a Default shall have occurred with
respect to any Contracting Stockholder, the Trust's assets (other than assets
received pursuant to the Contract) would be liquidated, the net assets of the
Trust would be distributed pro rata to the Holders and the term of the Trust
would expire. See "-- The Contract -- Reorganization Events Causing a
Dissolution of the Trust" and "-- Collateral Arrangements; Acceleration."
FRACTIONAL INTERESTS
No fractional units of any Reference Security, or fractional interests of
any Reference Property other than cash or a Reference Security, will be
distributed by the Trust to Holders of STRYPES on the Exchange Date or upon
earlier dissolution of the Trust. All fractional units or interests to which
Holders of STRYPES would otherwise be entitled on the Exchange Date or upon
earlier dissolution of the Trust will be aggregated and liquidated by the
Administrator and, in lieu of the fractional unit or interest to which a Holder
would otherwise have been entitled in respect of the total number of STRYPES
held by such Holder, such Holder will receive its pro rata portion of the
proceeds from such liquidation (net of any brokerage or related expenses).
INVESTMENT RESTRICTIONS
The Trust has adopted a fundamental policy that the Trust may not purchase
any securities or instruments other than the U.S. Treasury Securities, the
Contract and any Reference Security received pursuant to the Contract and, for
cash management purposes, short-term obligations of the U.S. Government; issue
any securities or instruments except for the STRYPES; make short sales or
purchase securities on margin; write put or call options; borrow money;
underwrite securities; purchase or sell real estate, commodities or commodities
contracts; or make loans. The Trust has adopted a fundamental policy to invest
at least 65% of its portfolio in the Contract. The Trust has also adopted a
fundamental policy that the Contract may not be disposed of during the term of
the Trust and that, unless the Trust dissolves prior to the Exchange Date due to
the occurrence of a Reorganization Event or a Default by any Contracting
Stockholder, the U.S. Treasury Securities may not be disposed of prior to their
respective maturities.
Because of the foregoing limitations, the Trust's investments will be
concentrated initially in the telecommunications industry, which is the industry
in which the Company currently operates. However, to the extent that in the
future the Company diversifies its operations into one or more other industries,
or the Reference Property includes a Reference Security of an issuer which
operates in another industry, the Trust's investments will be less concentrated
in the telecommunications industry.
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RISK FACTORS
NO ACTIVE PORTFOLIO MANAGEMENT
It is a fundamental policy of the Trust that the Contract may not be
disposed of during the term of the Trust and that, unless the Trust dissolves
prior to the Exchange Date due to the occurrence of a Reorganization Event with
respect to the Company or any Company Successor or a Default by any Contracting
Stockholder, the U.S. Treasury Securities may not be disposed of prior to their
respective maturities. As a result, the Trust will continue to hold the Contract
despite any significant decline in the value of the Reference Property,
including the Nextel Common Stock, or adverse changes in the financial condition
of the issuer of any Reference Security, including the Company. The Trust will
not be managed like a typical closed-end investment company.
ABSENCE OF TRADING HISTORY; MARKETABILITY; POSSIBILITY OF THE STRYPES TRADING AT
A DISCOUNT FROM NET ASSET VALUE
The STRYPES have no trading history and it is not possible to predict how
they will trade in the secondary market. The trading price of the STRYPES may
vary considerably prior to the Exchange Date due to, among other things,
fluctuations in trading prices of the Nextel Common Stock (which may occur due
to changes in the Company's financial condition, results of operations or
prospects, or because of complex and interrelated political, economic, financial
and other factors that can affect the capital markets generally, the stock
exchanges or quotation systems on which the Nextel Common Stock is traded and
the market segment of which the Company is a part) and fluctuations in interest
rates and other factors that are difficult to predict and beyond the Trust's
control.
The Underwriters currently intend, but are not obligated, to make a market
in the STRYPES. There can be no assurance that a secondary market will develop
or, if a secondary market does develop, that it will provide the Holders of the
STRYPES with liquidity of investment or that it will continue for the life of
the STRYPES. The STRYPES have been approved for listing on the AMEX, subject to
official notice of issuance. There can be no assurance that the STRYPES will not
later be delisted or that trading in the STRYPES on the AMEX will not be
suspended. In the event of a delisting or suspension of trading, the Trust will
apply for listing of the STRYPES on another national securities exchange or for
quotation on another trading market. If the STRYPES are not listed or traded on
any securities exchange or trading market, or if trading of the STRYPES is
suspended, pricing information for the STRYPES may be more difficult to obtain,
and the price and liquidity of the STRYPES may be adversely affected.
The Trust is a newly organized closed-end investment company with no
previous operating history. Shares of closed-end investment companies frequently
trade at a discount from their net asset value, which is a risk separate and
distinct from the risk that the Trust's net asset value will decrease. The Trust
cannot predict whether the STRYPES will trade at, below or above their net asset
value. The risk of purchasing investments that might trade at a discount is more
pronounced for investors who wish to sell their investments in a relatively
short period of time after completion of the Trust's initial public offering
because for those investors realization of a gain or loss on their investments
is likely to be more dependent upon the existence of a premium or discount than
upon portfolio performance. The STRYPES are not subject to redemption.
REFERENCE PROPERTY ADJUSTMENTS
The Reference Property (or, in the event that all or any of the Contracting
Stockholders elect to exercise the Cash Settlement Option, the amount of cash or
combination of cash and Reference Property) that the Trust is entitled to
receive pursuant to the Contract is subject to adjustment for certain events
arising from, among others, a merger or consolidation in which the Company is
not the surviving or resulting corporation and the liquidation, dissolution,
winding up or bankruptcy of the Company, as well as stock splits and
combinations, stock dividends and certain other actions of the Company that
modify its capital structure. See "Investment Objective and Policies -- The
Contract -- Reference Property Adjustments." Such Reference Property (or the
amount of cash or combination of cash and Reference Property) to be received by
the Trust pursuant to the Contract immediately prior to the Exchange Date will
not be adjusted for other events, such as offerings of Nextel Common Stock for
cash or in connection with acquisitions. Nextel is not restricted from
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<PAGE> 21
issuing additional shares of Nextel Common Stock during the term of the Trust
and neither the Company nor the Contracting Stockholders have any obligation to
consider the interests of the Holders of the STRYPES for any reason. Additional
issuances may materially and adversely affect the price of the Nextel Common
Stock and, because of the relationship of the percentage of the Reference
Property (or the amount of cash or combination of cash and Reference Property)
to be received on the Exchange Date to the price of the Nextel Common Stock,
such other events may materially and adversely affect the trading price of the
STRYPES. There can be no assurance that the Company will not take any of the
foregoing actions, or that it will not make offerings of, or that major
shareholders will not sell any, Nextel Common Stock in the future, or as to the
amount of any such offerings or sales.
LIMITED TERM
The term of the Trust will expire on or shortly after the Exchange Date,
unless the Trust is dissolved earlier under certain limited circumstances. On or
shortly after the Exchange Date, the Trust will distribute the Reference
Property and/or cash received by the Trust pursuant to the Contract and other
net assets held by the Trust pro rata to the Holders and dissolve shortly
thereafter. In the event that the Company or any Company Successor is the
subject of a Reorganization Event or a Default shall have occurred with respect
to any Contracting Stockholder, the Trust's assets (other than assets received
pursuant to the Contract) would be liquidated, the net assets of the Trust would
be distributed pro rata to the Holders and the term of the Trust would expire.
NON-DIVERSIFIED PORTFOLIO
The Trust's assets will consist almost entirely of the Contract and the
U.S. Treasury Securities. As a result, investments in the Trust may be subject
to greater risk than would be the case for a company with a more diversified
portfolio of investments.
COMPARISON TO OTHER EQUITY SECURITIES; RELATIONSHIP TO NEXTEL COMMON STOCK
The terms of the STRYPES are similar to those of ordinary equity securities
in that the value of the Reference Property (or, in the event that all or any of
the Contracting Stockholders elect to exercise the Cash Settlement Option, the
amount of cash or combination of cash and Reference Property) that a Holder of a
STRYPES will receive on the Exchange Date is not fixed, but is based on the
Reference Property Value (see "Investment Objective and Policies -- General" and
"-- The Contract"). THERE CAN BE NO ASSURANCE THAT SUCH AMOUNT RECEIVABLE BY THE
HOLDER ON THE EXCHANGE DATE WILL BE EQUAL TO OR GREATER THAN THE ISSUE PRICE
PAID FOR THE STRYPES. IF THE REFERENCE PROPERTY VALUE IS LESS THAN THE INITIAL
PRICE, SUCH AMOUNT RECEIVABLE ON THE EXCHANGE DATE WILL BE LESS THAN THE ISSUE
PRICE PAID FOR THE STRYPES, IN WHICH CASE AN INVESTMENT IN STRYPES WILL RESULT
IN A LOSS. ACCORDINGLY, A HOLDER OF STRYPES ASSUMES THE RISK THAT THE MARKET
VALUE OF THE NEXTEL COMMON STOCK MAY DECLINE, AND THAT SUCH DECLINE COULD BE
SUBSTANTIAL. REFERENCE IS MADE TO THE ACCOMPANYING PROSPECTUS OF THE COMPANY,
INCLUDING THE INFORMATION UNDER THE CAPTION "RISK FACTORS" THEREIN.
The trading prices of the STRYPES in the secondary market will be affected
by the trading prices of the Nextel Common Stock in the secondary market. It is
impossible to predict whether the price of Nextel Common Stock will rise or
fall. Trading prices of Nextel Common Stock will be influenced by the Company's
operating results and prospects and by economic, financial and other factors and
market conditions that can affect the capital markets generally, including the
level of, and fluctuations in, the trading prices of stocks generally and sales
of substantial amounts of Nextel Common Stock in the market subsequent to the
offering of the STRYPES or the perception that such sales could occur.
LIMITATIONS ON OPPORTUNITY FOR EQUITY APPRECIATION; POTENTIAL LOSSES
The opportunity for equity appreciation afforded by an investment in the
STRYPES is less than the opportunity for equity appreciation afforded by a
direct investment in the Nextel Common Stock because the amount receivable by a
Holder of a STRYPES on the Exchange Date will only exceed the issue price of
such STRYPES if the Reference Property Value exceeds the Threshold Appreciation
Price (which represents an appreciation of 19% over the Initial Price).
Moreover, each STRYPES will entitle the Holder to receive on
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the Exchange Date only 84.03% (the percentage equal to the Initial Price divided
by the Threshold Appreciation Price) of any appreciation of the value of the
Reference Property above the Threshold Appreciation Price. See "Investment
Objective and Policies -- The Contract." Because the value of the Reference
Property is subject to market fluctuations, the value of the Reference Property
(or, in the event that the Contracting Stockholders elect to exercise the Cash
Settlement Option, the amount of cash) received by the Trust immediately prior
to the Exchange Date, determined as described herein, may be more or less than
the issue price paid for the STRYPES.
NO STOCKHOLDER RIGHTS
Holders of the STRYPES will not be entitled to any rights with respect to
the Reference Property (including, without limitation, voting rights and rights
to receive any dividends or other distributions in respect of any Reference
Security) unless and until such time, if any, as the Trust shall have delivered
the Reference Property in exchange for STRYPES on the Exchange Date or upon
earlier dissolution of the Trust, and unless the applicable record date, if any,
for the exercise of such rights occurs after such delivery. For example, in the
event that an amendment is proposed to the Restated Certificate of Incorporation
or By-Laws of the Company and the record date for determining the stockholders
of record entitled to vote on such amendment occurs prior to such delivery,
Holders of the STRYPES will not be entitled to vote on such amendment.
The Contracting Stockholders are not responsible for the determination or
calculation of the amount receivable by Holders of the STRYPES on the Exchange
Date or upon earlier dissolution of the Trust. The Contract between the Trust
and the Contracting Stockholders is a commercial transaction and does not create
any rights in, or for the benefit of, any third party, including any Holder of
STRYPES.
RISK RELATING TO BANKRUPTCY OF CONTRACTING STOCKHOLDERS
The Trust believes that the Contract will constitute a "securities
contract" for purposes of Title 11 of the United States Code (the "Bankruptcy
Code"), performance of which would not be subject to the automatic stay
provisions of the Bankruptcy Code in the event of bankruptcy of a Contracting
Stockholder. It is, however, possible that the Contract will be determined not
to qualify as a "securities contract" for this purpose, in which case the
bankruptcy of a Contracting Stockholder may cause a delay in settlement of the
Contract with such Contracting Stockholder, or otherwise subject the Contract to
the bankruptcy proceedings, which could adversely affect the time of exchange
or, as a result, the amount received by the Holders in respect of the STRYPES.
TAX MATTERS
Holders will experience a taxable event upon the exchange of STRYPES to the
extent that all or any of the Contracting Stockholders elect to exercise the
Cash Settlement Option. Because of an absence of authority as to the proper
character of any gain or loss resulting from such a taxable event, the ultimate
tax consequences to Holders as a result of an election to exercise the Cash
Settlement Option is uncertain. Accordingly, prospective investors in the
STRYPES should consult their own tax advisers in this regard. Investors should
also consult their own tax advisers concerning the proper treatment of their pro
rata share of the Trust's fees and expenses, and the application of the United
States Federal income tax laws to their particular situations as well as any
consequences of the purchase, ownership and disposition of the STRYPES arising
under the laws of any other taxing jurisdiction. The tax consequences of
investing in the STRYPES are described in greater detail under "Certain United
States Federal Income Tax Considerations."
DESCRIPTION OF THE STRYPES
Each STRYPES represents a proportionate share of beneficial interest in the
Trust, and a total of 7,168,587 STRYPES will be issued in the Offering, assuming
no exercise of the Underwriters' over-allotment option. Upon liquidation of the
Trust, Holders are entitled to share pro rata in the net assets of the Trust
available for distribution. STRYPES have no preemptive, redemption or conversion
rights. The STRYPES, when issued and outstanding, will be fully paid and
nonassessable.
Holders are entitled to one vote for each STRYPES held on all matters to be
voted on by Holders and are not able to cumulate their votes in the election of
Trustees. The Trust intends to hold annual meetings as
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required by the rules of the AMEX. The Holders have the right, upon the
declaration in writing or vote of more than two-thirds of the outstanding
STRYPES, to remove a Trustee. The Trustees will call a meeting of Holders to
vote on the removal of a Trustee upon the written request of the record Holders
of 10% of the STRYPES or to vote on other matters upon the written request of
the record Holders of 51% of the STRYPES (unless substantially the same matter
was voted on during the preceding 12 months).
BOOK-ENTRY SYSTEM
The STRYPES will be issued in the form of one or more global securities
(the "Global Securities") deposited with the Depositary and registered in the
name of a nominee of the Depositary.
The Depositary has advised the Trust and the Underwriters as follows: The
Depositary is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and a
"clearing agency" registered pursuant to Section 17A of the Exchange Act. The
Depositary was created to hold securities of persons who have accounts with the
Depositary ("participants") and to facilitate the clearance and settlement of
securities transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of certificates. Such participants
include securities brokers and dealers, banks, trust companies and clearing
corporations. Indirect access to the Depositary's book-entry system is also
available to others, such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a participant, either
directly or indirectly.
Upon the issuance of a Global Security, the Depositary or its nominee will
credit the respective STRYPES represented by such Global Security to the
accounts of participants. The accounts to be credited shall be designated by the
Underwriters. Ownership of beneficial interests in such Global Securities will
be limited to participants or persons that may hold interests through
participants. Ownership of beneficial interests by participants in such Global
Securities will be shown on, and the transfer of those ownership interests will
be effected only through, records maintained by the Depositary or its nominee
for such Global Securities. Ownership of beneficial interests in such Global
Securities by persons that hold through participants will be shown on, and the
transfer of that ownership interest within such participant will be effected
only through, records maintained by such participant. The laws of some
jurisdictions require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and such laws may
impair the ability to transfer beneficial interests in a Global Security.
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or holder of the STRYPES.
Except as set forth below, owners of beneficial interests in such Global
Securities will not be entitled to have the STRYPES registered in their names
and will not receive or be entitled to receive physical delivery of the STRYPES
in definitive form and will not be considered the owners or Holders thereof.
Payment of Reference Property or amounts payable or other consideration
deliverable on exchange of, and any quarterly distributions on, STRYPES
registered in the name of or held by the Depositary or its nominee will be made
to the Depositary or its nominee, as the case may be, as the registered owner or
the holder of the Global Security. None of the Trust, any Trustee, the
Administrator, the Paying Agent or the Custodian for the STRYPES will have any
responsibility or liability for any aspect of the records relating to, or
payments made on account of, beneficial ownership interests in a Global Security
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
The Trust expects that the Depositary, upon receipt of any payment in
respect of a Global Security, will credit immediately participants' accounts
with payments in amounts proportionate to their respective beneficial interests
in the principal amount of such Global Security as shown on the records of the
Depositary. The Trust also expects that payments by participants to owners of
beneficial interests in such Global Security held through such participants will
be governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or registered
in "street name," and will be the responsibility of such participants.
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A Global Security may not be transferred except as a whole by the
Depositary to a nominee or a successor of the Depositary. If the Depositary is
at any time unwilling or unable to continue as depositary and a successor
depositary is not appointed by the Trust within ninety days, the Trust will
issue STRYPES in definitive registered form in exchange for the Global Security
representing such STRYPES. In addition, the Trust may at any time and in its
sole discretion determine not to have any STRYPES represented by one or more
Global Securities and, in such extent, will issue STRYPES in definitive form in
exchange for all of the Global Securities representing the STRYPES. Further, if
the Trust so specifies with respect to the STRYPES, an owner of a beneficial
interest in a Global Security representing STRYPES may, on terms acceptable to
the Trust and the Depositary for such Global Security, receive STRYPES in
definitive form. In any such instance, an owner of a beneficial interest in a
Global Security will be entitled to physical delivery in definitive form of
STRYPES represented by such Global Security equal in number to that represented
by such beneficial interest and to have such STRYPES registered in its name.
TRUSTEES
The Trustees of the Trust consist of three individuals, none of whom is an
"interested person" of the Trust as defined in the Investment Company Act. The
Trustees of the Trust are responsible for the overall supervision of the
operations of the Trust and perform the various duties imposed on the trustees
of management investment companies by the Investment Company Act.
The Trustees of the Trust are:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME, AGE AND ADDRESS TITLE DURING PAST FIVE YEARS
------------------------------------------ ----------------- -----------------------
<S> <C> <C>
Donald J. Puglisi, 50..................... Managing Trustee Professor of Finance
Department of Finance University of Delaware
University of Delaware
Newark, DE 19716
William R. Latham III, 51................. Trustee Professor of Economics
Department of Economics University of Delaware
University of Delaware
Newark, DE 19716
James B. O'Neill, 57...................... Trustee Professor of Economics
Center for Economic Education University of Delaware
& Entrepreneurship
University of Delaware
Newark, DE 19716
</TABLE>
COMPENSATION OF TRUSTEES
Each unaffiliated Trustee will be paid by the Contracting Stockholders, in
respect of its annual fee and anticipated out-of-pocket expenses, a one-time,
up-front fee of $10,800. The Trust's Managing Trustee will also receive an
additional up-front fee of $3,600 for serving in that capacity. The Trustees
will not receive, either directly or indirectly, any compensation, including any
pension or retirement benefits, from the Trust. None of the Trustees receives
any compensation for serving as a trustee or director of any other affiliated
investment company.
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MANAGEMENT ARRANGEMENTS
PORTFOLIO MANAGEMENT AND ADMINISTRATION
The Trust will be internally managed and will not have an investment
adviser. The Trust's portfolio will not be actively managed. The Trustees of the
Trust will authorize the purchase of the Contract and the U.S. Treasury
Securities as directed by the Declaration of Trust. It is a fundamental policy
of the Trust that the Contract may not be disposed of during the term of the
Trust and that, unless the Trust dissolves prior to the Exchange Date due to the
occurrence of a Reorganization Event with respect to the Company or any Company
Successor or a Default by any Contracting Stockholder, the U.S. Treasury
Securities may not be disposed of prior to their respective maturities.
The Contracting Stockholders will pay all expenses incurred in the
operation of the Trust, including, among other things, accounting services,
expenses for legal and auditing services, taxes, costs of printing proxies,
listing fees, if any, stock certificates and shareholder reports, charges of the
Custodian (as defined below) and the Paying Agent (as defined below), expenses
of registering the STRYPES under Federal and state securities laws, Commission
fees, fees and expenses of Trustees, accounting and pricing costs, insurance,
interest, brokerage costs, litigation and other extraordinary or non-recurring
expenses, mailing and other expenses properly payable by the Trust. See
"-- Estimated Expenses."
ADMINISTRATOR
The day-to-day affairs of the Trust will be managed by The Bank of New
York, as trust administrator pursuant to an Administration Agreement. Under the
Administration Agreement, the Trustees have delegated most of their operational
duties to the Administrator, including without limitation, the duties to: (i)
receive invoices for and pay, or cause to be paid, all expenses incurred by the
Trust; (ii) with the approval of the Trustees, engage legal and other
professional advisors (other than the independent public accountants for the
Trust); (iii) instruct the Paying Agent to pay distributions on STRYPES as
described herein; (iv) prepare and mail, file or publish all notices, proxies,
reports, tax returns and other communications and documents, and keep all books
and records, for the Trust; (v) at the direction of the Trustees, institute and
prosecute legal and other appropriate proceedings to enforce the rights and
remedies of the Trust; and (vi) make all necessary arrangements with respect to
meetings of Trustees and any meetings of Holders of STRYPES. The Administrator
will not, however, select the independent public accountants for the Trust or
sell or otherwise dispose of the Trust assets (except in connection with an
acceleration of the Contract as described under "Investment Objective and
Policies -- The Contract -- Reorganization Events Causing a Dissolution of the
Trust" and "-- Collateral Arrangements; Acceleration," or the settlement of the
Contract on the Business Day immediately preceding the Exchange Date).
The Administration Agreement may be terminated by either the Trust or the
Administrator upon 60 days prior written notice, except that no termination
shall become effective until a successor Administrator has been chosen and has
accepted the duties of the Administrator.
Except for its roles as Administrator, Custodian, Paying Agent, registrar
and transfer agent of the Trust, and except for its role as Collateral Agent
under the Security and Pledge Agreement, The Bank of New York has no other
affiliation with, and is not engaged in any other transactions with, the Trust.
The address of the Administrator is 101 Barclay Street, New York, New York
10286.
CUSTODIAN
The Trust's custodian (the "Custodian") is The Bank of New York pursuant to
a custodian agreement (the "Custodian Agreement"). In the event of any
termination of the Custodian Agreement by the Trust or the resignation of the
Custodian, the Trust must engage a new Custodian to carry out the duties of the
Custodian as set forth in the Custodian Agreement. Pursuant to the Custodian
Agreement, all net cash received by the Trust will be invested by the Custodian
in short-term U.S. Government securities maturing on or shortly before the next
quarterly distribution date. The Custodian will also act as Collateral Agent
under the Security and Pledge Agreement and will hold a perfected security
interest in the Reference Property and U.S. Government obligations or other
assets consistent with the terms of the Contract pledged thereunder.
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<PAGE> 26
PAYING AGENT
The transfer agent, registrar and paying agent (the "Paying Agent") for the
STRYPES is The Bank of New York pursuant to a paying agent agreement (the
"Paying Agent Agreement"). In the event of any termination of the Paying Agent
Agreement by the Trust or the resignation of the Paying Agent, the Trust will
use its best efforts to engage a new Paying Agent to carry out the duties of the
Paying Agent.
INDEMNIFICATION
The Trust will indemnify each Trustee, the Administrator, the Paying Agent
and the Custodian with respect to any claim, liability, loss or expense
(including the costs and expenses of the defense against any claim or liability)
which it may incur in acting as Trustee, Administrator, Paying Agent or
Custodian, as the case may be, except in the case of willful misfeasance, bad
faith, gross negligence or reckless disregard of their respective duties or
where applicable law prohibits such indemnification. Merrill Lynch & Co., Inc.
has agreed to reimburse the Trust for any amounts it may be required to pay as
indemnification to any Trustee, the Administrator, the Paying Agent or the
Custodian. Merrill Lynch & Co., Inc. will in turn be reimbursed by the
Contracting Stockholders for all such reimbursements paid by it.
ESTIMATED EXPENSES
At the closing of the Offering the Contracting Stockholders will pay to
each of the Administrator, the Custodian and the Paying Agent a one-time,
up-front amount in respect of its fee and, in the case of the Administrator,
anticipated ongoing expenses of the Trust over the term of the Trust. The
anticipated Trust expenses to be borne by the Contracting Stockholders include,
among other things, expenses for legal and independent accountants' services,
costs of printing proxies, STRYPES certificates and Holder reports and stock
exchange fees. Organization costs of the Trust in the amount of $10,000 and
estimated costs of the Trust in connection with the initial registration and
public offering of the STRYPES in the amount of approximately $350,000 will be
paid by the Contracting Stockholders.
The amount payable to the Administrator in respect of the anticipated
ongoing expenses of the Trust was determined based on expense estimates made in
good faith on the basis of information currently available to the Trust,
including estimates furnished by the Trust's agents. Any unanticipated expenses
will be paid by Merrill Lynch & Co., Inc. Merrill Lynch & Co., Inc. will be
reimbursed by the Contracting Stockholders for all fees and expenses of the
Trust paid by it.
DIVIDENDS AND DISTRIBUTIONS
The Trust intends to distribute to Holders on a quarterly basis the
proceeds of the U.S. Treasury Securities held by the Trust, net of any Trust
expenses. The first distribution, in respect of the period from March 10, 1997
until May 14, 1997, will be made on May 15, 1997 to Holders of record as of May
1, 1997, and will equal $.1833 per STRYPES. Thereafter, distributions will be
made on August 15, November 15, February 15 and May 15 of each year to Holders
of record as of each August 1, November 1, February 1 and May 1, respectively.
Upon dissolution of the Trust as described in "Investment Objective and
Policies -- Trust Dissolution," each Holder will share pro rata in any remaining
net assets of the Trust.
NET ASSET VALUE
The net asset value of the STRYPES will be calculated by the Trust no less
frequently than quarterly by dividing the value of the net assets of the Trust
(the value of its assets less its liabilities) by the total number of STRYPES
outstanding. The Trust's net asset value will be published semi-annually as part
of the Trust's semi-annual report to Holders and at such other times as the
Trustees may determine. The U.S. Treasury Securities held by the Trust will be
valued at the mean between the last current bid and asked prices or, if
quotations are not available, as determined in good faith by the Trust under the
direction of the Trustees. Short-term investments having a maturity of 60 days
or less are valued at cost with accrued interest or discount earned included in
interest receivable. The Contract will be valued at the mean of the bid prices
received by the Trust from at least three independent broker-dealer firms
unaffiliated with the Trust who are in the business of making bids on financial
instruments similar to the Contract and with terms comparable thereto.
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<PAGE> 27
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
Set forth in full below is the opinion of Brown & Wood LLP, counsel to the
Trust, as to certain United States Federal income tax consequences of the
purchase, ownership and disposition of the STRYPES. Such opinion is based upon
laws, regulations, rulings and decisions now in effect, all of which are subject
to change (including retroactive changes) or possible differing interpretations.
The discussion below deals only with STRYPES held as capital assets and does not
purport to deal with persons in special tax situations, such as financial
institutions, insurance companies, regulated investment companies, dealers in
securities or currencies, tax-exempt entities, or persons holding STRYPES as a
hedge against currency risks or as a position in a "straddle" for tax purposes.
It also does not deal with Holders of STRYPES other than original purchasers
thereof (except where otherwise specifically noted herein). Moreover, the
discussion below does not address the tax consequences of ownership of the
Reference Property. The following discussion also does not address the tax
consequences of investing in the STRYPES arising under the laws of any state,
local or foreign jurisdiction. Persons considering the purchase of the STRYPES
should consult their own tax advisors concerning the application of the United
States Federal income tax laws to their particular situations as well as any
consequences of the purchase, ownership and disposition of the STRYPES arising
under the laws of any other taxing jurisdiction.
As used herein, the term "U.S. Holder" means a beneficial owner of STRYPES
that is for United States Federal income tax purposes (i) a citizen or resident
of the United States, (ii) a corporation, a partnership or other entity created
or organized in or under the laws of the United States or of any political
subdivision thereof, (iii) an estate that is described in Section 7701(a)(30)(D)
of the Internal Revenue Code of 1986, as amended (the "Code") or (iv) a trust
that is described in Section 7701(a)(30)(E) of the Code. As used herein, the
term "non-U.S. Holder" means a beneficial owner of STRYPES that is not a U.S.
Holder. Unless otherwise specifically provided, the following opinion of Brown &
Wood LLP assumes that on the Exchange Date the Reference Property consists only
of shares of Nextel Common Stock.
CLASSIFICATION OF THE TRUST
The Trust will be classified as a grantor trust under subpart E, Part I of
subchapter J of the Code. As such, Holders of the STRYPES will be treated for
United States Federal income tax purposes as owners of a pro rata undivided
interest in the Trust's assets which will consist of the U.S. Treasury
Securities and the Contract. Accordingly, each Holder will be required to report
on its United States Federal income tax return its pro rata share of the entire
income on the Trust's assets in accordance with such Holder's regular method of
tax accounting.
U.S. HOLDERS
As previously discussed, each U.S. Holder will be considered the owner of
its pro rata portion of the U.S. Treasury Securities and the Contract held by
the Trust. The cost to a U.S. Holder of its STRYPES will be allocated among such
U.S. Holder's pro rata portion of the U.S. Treasury Securities and the Contract
(in proportion to the relative fair market values thereof on the date on which
the U.S. Holder acquires its STRYPES) in order to determine the U.S. Holder's
initial tax basis in the U.S. Holder's pro rata portion of the U.S. Treasury
Securities and the Contract. Approximately 21.5% and approximately 78.5% of the
net proceeds of the Offering will be used by the Trust to purchase the U.S.
Treasury Securities and as payments under the Contract, respectively.
The U.S. Treasury Securities held by the Trust will be treated for United
States Federal income tax purposes as having original issue discount which will
accrue over the term of the U.S. Treasury Securities. In general, a U.S. Holder
will be treated as having purchased each U.S. Treasury Security held by the
Trust with original issue discount in an amount equal to the excess of the U.S.
Holder's pro rata portion of the amount payable on such U.S. Treasury Security
over the Holder's initial tax basis therefor as discussed above. A U.S. Holder
(whether on the cash or accrual method of tax accounting) will be required to
include such original issue discount in income for United States Federal income
tax purposes as it accrues in accordance with a constant yield method. Because
it is expected that 20% or more of the Holders of STRYPES will be accrual basis
taxpayers, original issue discount on any short-term U.S. Treasury Securities
(i.e., any U.S. Treasury Security with a maturity of one year or less from the
date it is purchased by the Trust) held by the Trust will
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<PAGE> 28
also be currently includable in income by U.S. Holders as it accrues on a
straight-line basis (unless a U.S. Holder elects to accrue such original issue
discount on a constant yield basis). A U.S. Holder's tax basis in its pro rata
portion of a U.S. Treasury Security will be increased by the amount of any
original issue discount included in income by the U.S. Holder with respect to
such U.S. Treasury Security (as described above).
Each U.S. Holder will also be treated as having entered into a pro rata
portion of the Contract. Under current law, a U.S. Holder should not be required
to recognize any income, gain or loss with respect to the Contract until the
Exchange Date. On the Exchange Date, if the Contracting Stockholders deliver
Reference Property pursuant to the Contract, a U.S. Holder will generally not
realize any taxable gain or loss upon the receipt of such Reference Property.
However, a U.S. Holder will generally be required to recognize taxable gain or
loss with respect to any cash received in lieu of fractional units of any
Reference Security, fractional interests of any Reference Property other than
cash, and any Reference Property consisting of cash. The amount of such gain or
loss recognized by a U.S. Holder will be equal to the difference, if any,
between the amount of cash received by the U.S. Holder and the portion of the
U.S. Holder's tax basis in the Contract that is allocable to the fractional
units of any Reference Security, fractional interests of any Reference Property
other than cash, and any Reference Property consisting of cash. Any such taxable
gain or loss attributable to cash received in lieu of fractional units of any
Reference Security and fractional interests of any Reference Property other than
cash will be treated as short-term capital gain or loss and, because the matter
is uncertain, any such taxable gain or loss attributable to any Reference
Property consisting of cash could be treated as short-term capital gain or loss,
as long-term capital gain or loss (depending upon the U.S. Holder's holding
period for the STRYPES), or as ordinary income or loss. A U.S. Holder will have
an initial tax basis in any Reference Property (as allocated among the Reference
Property in accordance with the relative fair market values thereof, as
determined in the Exchange Date) received thereby on the Exchange Date (other
than cash received in lieu of fractional units, fractional interests and any
Reference Property consisting of cash) in an amount equal to the U.S. Holder's
tax basis in the Contract less the portion of such tax basis that is allocable
to any fractional units of any Reference Security, fractional interests of any
Reference Property and any Reference Property consisting of cash (as described
above) and will realize taxable gain or loss with respect to any such Reference
Property received thereby on the Exchange Date only upon the subsequent sale or
disposition by the U.S. Holder of such Reference Property. In addition, a U.S.
Holder's holding period for any Reference Property received by such U.S. Holder
on the Exchange Date will begin on the day immediately following the Exchange
Date and will not include the period during which the U.S. Holder held the
related STRYPES.
Alternatively, if the Contracting Stockholders satisfy the Contract either
partially or entirely in cash on the Exchange Date, a U.S. Holder will recognize
taxable gain or loss on the Exchange Date with respect to the Contract in an
amount equal to the difference, if any, between the total amount of cash
received by such U.S. Holder on the Exchange Date and an amount equal to the
U.S. Holder's tax basis in the Contract. It is uncertain whether such gain or
loss would be treated as capital or ordinary. If such gain or loss is properly
treated as capital, then such gain or loss will be treated as long-term capital
gain or loss if the STRYPES has been held by the U.S. Holder for more than one
year as of the Exchange Date. If such gain or loss is properly treated as
ordinary gain or loss, it is possible that the deductibility of any loss
recognized on the Exchange Date with respect to the Contract by a U.S. Holder
who is an individual could be subject to the limitations applicable to
miscellaneous itemized deductions provided for under Section 67(a) of the Code.
In general, Section 67(a) of the Code provides that an individual may only
deduct miscellaneous itemized deductions for a particular taxable year to the
extent that the aggregate amount of the individuals's miscellaneous itemized
deductions for such taxable year exceed two percent of the individual's adjusted
gross income for such taxable year (the miscellaneous itemized deductions and
other itemized deductions allowable to high-income individuals, however, are
generally subject to further limitations under Section 68 of the Code).
Prospective investors in the STRYPES who are individuals should also be aware
that miscellaneous itemized deductions are not allowable in computing the United
States Federal alternative minimum tax imposed by Section 55 of the Code.
Prospective investors in the STRYPES are urged to consult their own tax advisors
concerning the character of any gain or loss realized on the Exchange Date with
respect to the Contract in the event that either (i) the Reference Property
consists of cash, Reference Securities (other than Nextel Common Stock)
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<PAGE> 29
or other property or (ii) the Contracting Stockholders elect to satisfy their
obligations under the Contract in cash on the Exchange Date as well as the
deductibility of any such loss.
In the event that some of the Contracting Stockholders satisfies their
obligations under the Contract with Reference Property and others satisfy their
obligations under the Contract with cash, a U.S. Holder would be required to
apply the foregoing rules to the STRYPES held thereby on a pro rata basis in
proportion to the amount of Reference Property and cash received thereby.
Upon the sale or other disposition of a STRYPES prior to the Exchange Date,
a U.S. Holder generally will be required to allocate the total amount realized
by such U.S. Holder upon such sale or other disposition between the U.S.
Holder's pro rata portion of the U.S. Treasury Securities and the Contract based
upon their relative fair market values (as determined on the date of
disposition). A U.S. Holder will generally be required to recognize taxable gain
or loss with respect to each such component (i.e., the U.S. Holder's pro rata
portion of the U.S. Treasury Securities and the Contract) in an amount equal to
the difference, if any, between the amount realized with respect to each such
component upon the sale or disposition of the STRYPES (as determined in the
manner described above) and the U.S. Holder's adjusted tax basis in each such
component. Any such gain or loss will generally be treated as long-term capital
gain or loss if the U.S. Holder has held the STRYPES for more than one year at
the time of disposition.
The proper treatment of the payment by the Contracting Stockholders or
Merrill Lynch of various costs and expenses associated with the organization and
operation of the Trust is uncertain. It is possible that there will be no United
States Federal income tax consequences to U.S. Holders as a result of any such
payments. However, it is possible that the Internal Revenue Service ("IRS")
could assert that any such payments constitute income to U.S. Holders. If the
IRS were to prevail in treating such payments as income to U.S. Holders, then an
individual U.S. Holder who itemizes deductions could possibly amortize and
deduct over the term of the Trust (subject to any applicable limitations such as
Section 67(a) of the Code) its pro rata portion of the one-time, up-front fees
paid to the Administrator, the Custodian and the Paying Agent, and could
possibly deduct (subject to any applicable limitations such as those in Section
67(a) of the Code) its pro rata portion of the other expenses described under
"Management Arrangements -- Estimated Expenses" incurred by the Trust resulting
from its ongoing operations (including the fees payable to the Trustees) as such
expenses are incurred. Brown & Wood LLP, counsel to the Trust, believes that a
U.S. Holder's pro rata portion of any expenses directly incurred by a U.S.
Holder in connection with the organization of the Trust, underwriting discounts
and commissions and other offering expenses should be includable in the cost to
the U.S. Holder of the STRYPES. However, there can be no assurance that the IRS
will not take a contrary view. If the IRS were to prevail in treating such
expenses as excludible from a U.S. Holder's cost of the STRYPES, such expenses
would not be includable in the basis of the assets of the Trust and should
instead, subject to the limitations provided for under Section 67(a) of the
Code, be amortizable and deductible over the term of the Trust.
POSSIBLE ALTERNATIVE CHARACTERIZATIONS OF THE CONTRACT
Brown & Wood LLP, counsel to the Trust, believes the Contract should be
treated for United States Federal income tax purposes as a prepaid forward
contract for the purchase of a variable number of shares of Nextel Common Stock.
The IRS could conceivably take the view that the Contract should be treated as a
loan to the Contracting Stockholders in exchange for a contingent debt
obligation of the Contracting Stockholders. If the IRS were to prevail in making
such an assertion, a U.S. Holder might be required to include original issue
discount in income over the term of the STRYPES based on the excess of the
anticipated value of the Nextel Common Stock to be received in respect of the
Contract over the amount paid for the Contract. In addition, a U.S. Holder would
be required to include interest (rather than capital gain) in income on the
Exchange Date in an amount equal to the excess, if any, of the value of the
Nextel Common Stock received on the Exchange Date (or the proceeds from prior
disposition of the Contract) over the aggregate of the basis of the Contract and
any interest on the Contract previously included in income (or might be entitled
to an ordinary deduction to the extent of interest previously included in income
and not ultimately received). The IRS could also conceivably take the view that
a U.S. Holder should simply include in income as interest the amount of cash
actually received each year in respect of the STRYPES.
29
<PAGE> 30
MISCELLANEOUS TAX MATTERS
Special tax rules may apply to persons holding STRYPES as part of a
"synthetic security" or other integrated investment, or as part of a straddle,
hedging transaction or other combination of offsetting positions. For instance,
Section 1258 of the Code may possibly require certain U.S. Holders of the
STRYPES who enter into hedging transactions or offsetting positions with respect
to the STRYPES to treat all or a portion of any gain realized on the STRYPES as
ordinary income in instances where such gain may have otherwise been treated as
capital gain. U.S. Holders hedging their positions with respect to the STRYPES
or otherwise holding their STRYPES in a manner described above should consult
their own tax advisors regarding the applicability of Section 1258 of the Code,
or any other provision of the Code, to their investment in the STRYPES.
NON-U.S. HOLDERS
Subject to the discussion below concerning income that is effectively
connected with a trade or business conducted by a non-U.S. Holder in the United
States, payments of interest (including original issue discount) made with
respect to the U.S. Treasury Securities will not be subject to United States
withholding tax, provided that such non-U.S. Holder complies with applicable
certification requirements. In general, for a non-U.S. Holder to qualify for
this exemption from taxation, the last United States payor in the chain of
payment prior to payment to a non-U.S. Holder (the "Withholding Agent") must
have received in the year in which a payment of interest or principal occurs, or
in either of the two preceding calendar years, a statement that (i) is signed by
the beneficial owner of the U.S. Treasury Securities under penalties of perjury,
(ii) certifies that such owner is not a U.S. Holder and (iii) provides the name
and address of the beneficial owner. The statement may be made on an IRS Form
W-8 or a substantially similar form, and the beneficial owner must inform the
Withholding Agent of any change in the information on the statement within 30
days of such change. If STRYPES are held through a securities clearing
organization or certain other financial institutions, the organization or
institution may provide a signed statement to the Withholding Agent. However, in
such case, the signed statement must be accompanied by a copy of the IRS Form
W-8 or the substitute form provided by the beneficial owner to the organization
or institution.
Any capital gain realized in respect of STRYPES by a non-U.S. Holder will
generally not be subject to United States Federal income tax if (i) such gain in
not effectively connected with a United States trade or business of such
non-U.S. Holder and (ii) in the case of an individual non-U.S. Holder, such
individual is not present in the United States for 183 days or more in the
taxable year of the sale or other disposition, or the gain is not attributable
to a fixed place of business maintained by such individual in the United States
and such individual does not have a "tax home" (as defined for United States
Federal income tax purposes) in the United States.
If any interest or gain realized by a non-U.S. Holder is effectively
connected with the non-U.S. Holder's conduct of a trade or business in the
United States, such interest or gain will be subject to regular United States
Federal income tax in the same manner as if the non-U.S. Holder were a U.S.
Holder. In addition, in such event, if such non-U.S. Holder is a foreign
corporation, such interest or gain may be included in the earnings and profits
of such non-U.S. Holder in determining such non-U.S. Holder's United States
branch profits tax liability.
BACKUP WITHHOLDING AND INFORMATION REPORTING
A beneficial owner of STRYPES may be subject to information reporting and
to backup withholding at a rate of 31 percent of certain amounts paid to the
beneficial owner unless such beneficial owner provides proof of an applicable
exemption or a correct taxpayer identification number, and otherwise complies
with applicable requirements of the backup withholding rules.
Any amounts withheld under the backup withholding rules from a payment to a
beneficial owner would be allowed as a refund or a credit against such
beneficial owner's United States Federal income tax provided the required
information is furnished to the IRS.
30
<PAGE> 31
PROSPECTIVE INVESTORS IN THE STRYPES SHOULD BE AWARE THAT THERE IS NO
AUTHORITY DIRECTLY ADDRESSING THE PROPER UNITED STATES FEDERAL INCOME TAX
TREATMENT OF THE STRYPES OR SECURITIES WITH TERMS SUBSTANTIALLY THE SAME AS THE
STRYPES, AND THAT NO RULING HAS BEEN REQUESTED FROM THE IRS WITH RESPECT TO THE
STRYPES. ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT THE IRS WILL AGREE WITH THE
FOREGOING DISCUSSION AND THAT THE IRS WILL NOT ASSERT A CONTRARY POSITION AS TO
THE PROPER UNITED STATES FEDERAL INCOME TAX TREATMENT OF THE STRYPES WHICH MIGHT
CAUSE THE CHARACTER AND TIMING OF INCOME, GAIN OR LOSS RECOGNIZED WITH RESPECT
TO A STRYPES TO DIFFER SIGNIFICANTLY FROM SUCH CHARACTER AND TIMING DISCUSSED
ABOVE. PROSPECTIVE INVESTORS IN THE STRYPES ARE THEREFORE URGED TO CONSULT WITH
THEIR OWN TAX ADVISERS PRIOR TO MAKING AN INVESTMENT IN THE STRYPES.
31
<PAGE> 32
UNDERWRITING
Subject to the terms and conditions set forth in a purchase agreement (the
"Purchase Agreement"), the Trust has agreed to sell to each of the underwriters
named below (the "Underwriters"), and each of the Underwriters, for whom Merrill
Lynch, Pierce, Fenner & Smith Incorporated and Donaldson, Lufkin & Jenrette
Securities Corporation are acting as representatives (the "Representatives"),
severally has agreed to purchase, the aggregate number of STRYPES set forth
opposite its name below.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER STRYPES
---------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................................. 3,134,294
Donaldson, Lufkin & Jenrette Securities Corporation....................... 3,134,293
Oppenheimer & Co., Inc.................................................... 500,000
Forum Capital Markets L.P................................................. 200,000
Utendahl Capital Partners, L.P............................................ 200,000
---------
Total........................................................ 7,168,587
=========
</TABLE>
In the Purchase Agreement, the several Underwriters have agreed,
respectively, subject to the terms and conditions set forth in the Purchase
Agreement, to purchase all of the STRYPES being sold pursuant to the Purchase
Agreement if any of the STRYPES are purchased. In the event of a failure to
close, any funds debited from any investor's account maintained with an
Underwriter will be credited to such account and any funds received by such
Underwriter by check or money order from any investor will be returned to such
investor by check.
The Underwriters have each advised the Trust that they propose initially to
offer the STRYPES to the public at the public offering price set forth on the
cover page of this Prospectus. The Underwriters have also advised the Trust that
they propose to offer the STRYPES to certain dealers at the initial public
offering price less a concession not in excess of $.252 per STRYPES. Such
Underwriters may allow, and such dealers may reallow, a discount not in excess
of $.10 per STRYPES to certain other dealers. After the initial public offering,
the public offering price, concession and discount may be changed. The sales
load of $.42 per STRYPES is equal to 3% of the initial public offering price.
Investors must pay for any STRYPES purchased in the initial public offering on
or before March 10, 1997.
The Trust has granted the Underwriters an option, exercisable for 30 days
from the date of this Prospectus to purchase up to an aggregate of 1,068,144
additional STRYPES to cover over-allotments, if any, at the initial public
offering price less the sales load. To the extent the Underwriters exercise such
option, the Underwriters will have a firm commitment, subject to certain
conditions, to purchase a number of additional STRYPES.
Prior to the Offering, there has been no public market for the STRYPES. The
STRYPES have been approved for listing on the AMEX, subject to official notice
of issuance.
The Contracting Stockholders and certain beneficial owners of the
Contracting Stockholders have agreed not to offer, sell, contract to sell or
otherwise dispose of, directly or indirectly, or cause to be filed a
registration statement under the Securities Act with respect to, any shares of
Nextel Common Stock, securities convertible into, exchangeable for or repayable
with such shares or rights or warrants to acquire such shares, for a period of
90 days after the date of this Prospectus without the prior written consent of
Merrill Lynch, Pierce, Fenner & Smith Incorporated.
Each of the Company and the Contracting Stockholders have agreed to
indemnify the Underwriters against certain civil liabilities, including
liabilities under the Securities Act.
32
<PAGE> 33
In connection with the formation of the Trust, ML IBK Positions, Inc., an
affiliate of Merrill Lynch, Pierce, Fenner & Smith Incorporated, and Donaldson,
Lufkin & Jenrette Securities Corporation subscribed for and purchased an
aggregate of 7,144 STRYPES for an aggregate purchase price of $100,000. Under
the Contract, the Contracting Stockholders will be obligated to deliver to the
Trust on the Business Day immediately preceding the Exchange Date a number or
amount of each type of Reference Property (or, in certain circumstances, cash,
or a combination of cash and Reference Property, with an equal value) in respect
of such STRYPES on the same terms as the STRYPES offered hereby.
Until the distribution of the STRYPES is completed, rules of the Commission
may limit the ability of the Underwriters and any selling group members to bid
for and purchase the STRYPES or shares of Nextel Common Stock. As an exception
to these rules, the Representatives are permitted to engage in certain
transactions that stabilize the price of the STRYPES or the Nextel Common Stock.
Such transactions consist of bids or purchases for the purpose of pegging,
fixing or maintaining the price of the STRYPES or the Nextel Common Stock.
If the Underwriters create a short position in the STRYPES in connection
with the Offering, i.e., if they sell more STRYPES than are set forth on the
cover page of this Prospectus, the Representatives may reduce that short
position by purchasing STRYPES in the open market. The Representatives may also
elect to reduce any short position by exercising all or part of the
over-allotment option described above.
The Representatives may also impose a penalty bid on certain Underwriters
and selling group members. This means that if the Representatives purchase
STRYPES in the open market to reduce the Underwriters' short position or to
stabilize the price of the STRYPES, they may reclaim the amount of the selling
concession from the Underwriters and any selling group members who sold those
STRYPES as part of the Offering.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of a security to the extent that it were
to discourage resales of the security.
Neither the Trust nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the STRYPES or the Nextel Common Stock.
In addition, neither the Trust nor any of the Underwriters makes any
representation that the Representatives will engage in such transactions or that
such transactions, once commenced, will not be discontinued without notice.
Certain of the Underwriters render investment banking and other financial
services to the Contracting Stockholders from time to time.
LEGAL MATTERS
Certain legal matters will be passed upon for the Trust and for the
Underwriters by their counsel, Brown & Wood LLP, New York, New York. Certain
matters of Delaware law will be passed upon for the Trust by Richards, Layton &
Finger, Wilmington, Delaware.
EXPERTS
The statement of assets, liabilities and capital included in this
Prospectus has been audited by Deloitte & Touche LLP, independent auditors, as
stated in their opinion appearing herein, and has been included in reliance upon
such opinion given on the authority of said firm as experts in auditing and
accounting.
33
<PAGE> 34
ADDITIONAL INFORMATION
The Trust has filed with the Commission, Washington D.C. 20549, a
Registration Statement under the Securities Act with respect to the STRYPES
offered hereby. Further information concerning the STRYPES and the Trust may be
found in the Registration Statement, of which this Prospectus constitutes a
part. The Registration Statement may be inspected without charge at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and copies of all or any part thereof may
be obtained from such office after payment of the fees prescribed by the
Commission. The Commission maintains a Web site at http://www.sec.gov containing
reports, proxy and information statements and other information regarding
registrants, such as the Trust, that file electronically with the Commission.
34
<PAGE> 35
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholder of Nextel STRYPES Trust:
We have audited the accompanying statement of assets, liabilities and
capital of Nextel STRYPES Trust as of February 26, 1997. This financial
statement is the responsibility of the Trust's management. Our responsibility is
to express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statement of assets, liabilities and
capital is free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statement. An audit also includes assessing the accounting principles used and
significant estimates made by the Trust's management, as well as evaluating the
overall financial statement presentation. We believe that our audit of the
financial statement provides a reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the financial position of Nextel STRYPES Trust, as of
February 26, 1997 in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
New York, New York
February 27, 1997
35
<PAGE> 36
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
FEBRUARY 26, 1997
<TABLE>
<S> <C>
ASSETS
Cash.............................................................................. $100,000
--------
Total Assets............................................................ $100,000
========
LIABILITIES
Total Liabilities................................................................. $ 0
========
NET ASSETS........................................................................ $100,000
========
CAPITAL
STRYPES, par value $.10 per STRYPES; 2 STRYPES issued and outstanding (Note
3)........................................................................... $100,000
========
</TABLE>
- ---------------
(1) The Trust was created as a Delaware business trust on October 25, 1995 and
has had no operations other than matters relating to its organization and
registration as a non-diversified, closed-end management investment company
under the Investment Company Act of 1940, as amended. Costs incurred in
connection with the organization of the Trust and ongoing administrative
expenses will be paid by the Contracting Stockholders.
(2) Offering expenses will be payable upon completion of the Offering and also
will be paid by the Contracting Stockholders.
(3) On February 26, 1997, the Trust issued one STRYPES to ML IBK Positions,
Inc., an affiliate of Merrill Lynch, Pierce, Fenner & Smith Incorporated,
and one STRYPES to Donaldson, Lufkin & Jenrette Securities Corporation, in
consideration for the purchase price of $50,000 per STRYPES.
The Amended and Restated Trust Agreement provides that prior to the
Offering, the Trust will split each of the outstanding STRYPES to be
effected on the date that the price and underwriting discount of the
STRYPES being offered to the public is determined, but prior to the sale of
the STRYPES to the Underwriters. The two outstanding STRYPES will be split
into the smallest whole number of STRYPES that would result in the per
STRYPES amount recorded as shareholders' equity, after effecting the split,
not exceeding the public offering price per STRYPES.
36
<PAGE> 37
======================================================
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFERING DESCRIBED HEREIN, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE TRUST OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES OTHER
THAN THOSE SPECIFICALLY OFFERED HEREBY, OR OF ANY SECURITIES OFFERED HEREBY, IN
ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE AN OFFER OR
SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION
THAT THERE HAS BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN
THE AFFAIRS OF THE TRUST SINCE THE DATE HEREOF OR SINCE THE DATES AS OF WHICH
INFORMATION IS SET FORTH HEREIN. IN THE EVENT THAT ANY SUCH CHANGE SHALL OCCUR
DURING THE PERIOD IN WHICH APPLICABLE LAW REQUIRES DELIVERY OF THIS PROSPECTUS,
THIS PROSPECTUS WILL BE AMENDED OR SUPPLEMENTED ACCORDINGLY.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Fee Table............................. 8
The Trust............................. 9
Use of Proceeds....................... 9
Investment Objective and Policies..... 9
Investment Restrictions............... 19
Risk Factors.......................... 20
Description of the STRYPES............ 22
Trustees.............................. 24
Management Arrangements............... 25
Dividends and Distributions........... 26
Net Asset Value....................... 26
Certain United States Federal Income
Tax Considerations.................. 27
Underwriting.......................... 32
Legal Matters......................... 33
Experts............................... 33
Additional Information................ 34
Independent Auditors' Report.......... 35
Statement of Assets, Liabilities and
Capital............................. 36
</TABLE>
PROSPECTUS RELATING TO CLASS A COMMON STOCK
OF NEXTEL COMMUNICATIONS, INC.
------------------------
UNTIL MARCH 29, 1997 (25 DAYS AFTER THE COMMENCEMENT OF THE OFFERING), ALL
DEALERS EFFECTING TRANSACTIONS IN THE STRYPES, WHETHER OR NOT PARTICIPATING IN
THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS DELIVERY
REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS
WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
======================================================
======================================================
7,168,587 STRYPES(SM)
NEXTEL STRYPES TRUST
EXCHANGEABLE FOR SHARES OF
CLASS A COMMON STOCK OF
[NEXTEL LOGO(R)]
Nextel Communications, Inc.
---------------------------
PROSPECTUS
---------------------------
MERRILL LYNCH & CO.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MARCH 4, 1997
(SM) Service mark of Merrill Lynch & Co., Inc.
======================================================
